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Connecting to regional markets

The rising tide, when it comes, will not lift your boat.

Not if your boat is a distressed inner-city neighborhood; and not if you and your strategic partners have neglected to find better ways to connect your community’s economy to that of your metropolitan region.

Panelists Jim Capraro, Maria Rosario Jackson, G. Lamont Blackstone and India Pierce Lee discuss how neighborhoods can connect to regional markets and beyond.

Photos by Gordon Walek

It was a sobering opening message, and one that lent urgency to the brain-storming that followed at the June 20th session of Connecting To Markets, the final seminar of a three-conference series organized by the Institute for Comprehensive Community Development, the Urban Institute, and six branches of the Federal Reserve Bank.

Not that any of the 100 community development practitioners gathered at the Federal Reserve Bank of Chicago— or those attending via video link at Fed Banks in Boston, Pittsburgh, Houston, Minneapolis and San Francisco—figured their neighborhoods can wait for recovery as one might for a bus.

Broken connection

There were knowing nods all around when guest speaker Teresa Lynch, senior vice president at the Initiative for a Competitive Inner City, outlined their study of how major U.S. metros fared over the last 10 years vis-à-vis their poorest neighborhoods.

Turns out that, on average, the statistical correlation between regional job growth and job growth in poor neighborhoods is less than zero, as in minus 0.2 percent. 

“Regional employment growth is not enough,” said Lynch, and she went on to list some familiar reasons: lack of private capital formation, inferior physical infrastructure, low rents that don’t justify new construction, small business owners lacking “friends and family” networks used by owners elsewhere.

“But inner cities are not just problems to be solved,” she said, “There are also huge opportunities.”

"Inner cities are not just problems to be solved," said ICIC's Teresa Lynch. "There are also huge opportunities." She's flanked by Treasury Department official Don Graves.

Much of the day’s conversation identified and explained those opportunities, beginning with the need to identify regional “clusters” of economic opportunity with an eye toward linking local efforts to those sectors.

But be careful, Lynch cautioned, to focus on clusters that have some pre-existing nexus to the poor neighborhood, such as an adjacent medical center. And try, she said, to emphasize growing export markets … so as not to beggar other regions and their poor neighborhoods in a zero-sum game.

Obama aides concur

Paying close attention in the Chicago auditorium were two senior economic development officials from the Obama administration. Both said the discussion was on target. Both warned that looming federal budget cuts make it essential for  community and economic development activities to tie more directly into private sector investment.

“We’re at a make-or-break point for the country,” said Don Graves, executive director of the President’s Council on Jobs and Competitiveness and deputy assistant secretary for community development at the U.S. Treasury.

“It’s a point where we have to do more with less,” Graves said. “The federal government isn’t going to be able to come up with more funding, and certainly state and local governments not only don’t have funding like before, they are contracting.

“Some organizations are going to be the losers,” Graves warned of the coming funding crunch. “So we have to do a better job as leaders in our communities of picking strategic direction, and then bringing the right organizations to the table that fit that direction. And then make hard choices. What are the key needs of the community? How are we going to get there … and with community buy-in?”

Jonathan Greenblatt, director of the White House office of Social Innovation and Civic Participation, cited Chicago's Green Exchange as being at the "intersection of private entrepreneurship and urban renewal."

Jonathan Greenblatt, special assistant to the President and director of the White House Office of Social Innovation and Civic Participation, reminded the conference that nonprofits are themselves a major part of the U.S. economy, accounting for 5.5 percent of GDP.

But more importantly, he said, they are relied on for ideas on how to bring opportunity to areas often passed over by the for-profit sector.

“Yesterday we visited the Green Exchange,” Greenblatt said of the old factory redeveloped with LISC assistance as an enviro-hip business incubator in Chicago’s Logan Square neighborhood. “This is a case where green and urban overlap. It sits at the intersection of private entrepreneurship and urban renewal, of green and sustainable business supporting community development. These are worlds that need to continue to come together, and the President is committed to seeing this kind of thing continue to blossom.”

Bus driver’s insight

Lest the discussion get too theoretical, Jim Capraro opened his morning panel of experts by describing one of his first jobs— driving a CTA bus up and down Archer Avenue in Chicago. The veteran community organizer, now senior fellow at the ICCD, remembered that most riders on his after-midnight runs were blue-collar immigrants headed for downtown’s imposing skyscrapers … where they worked as janitors, cleaning ladies and boilermen. 

“That bus,” said Capraro, “was a ‘transportation linkage’ to the downtown ‘service sector.’ It enabled income to flow into our neighborhoods— neighborhoods that export labor to downtown like major corporations export product overseas.”

Linkages to regional and global markets are possible, said Jim Capraro, but only when neighborhoods recognize and seize opportunities.

When Capraro went on to lead the Greater Southwest Development Corp., he never forgot the importance of transportation linkages, which is one reason why GSDC strongly supported development of the CTA’s rapid transit line to an expanding MidwayAirport.

Lesson learned: key local linkages to regional, national and even global markets are possible, but only when neighborhoods recognize opportunities and seize them in real time.

Panelist G. Lamont Blackstone, a retail consultant who has helped develop inner-city shopping centers from Harlem to San Diego, also urged local practitioners to think big.

“Focus on mega-trends that are going to be drivers of global economic growth,” he said. “Think tourism. Think lodging. Think energy efficiency, for example the transition from incandescent light bulbs to LED and what have you.”

India Pierce Lee, program director for the Cleveland Foundation, explained how have-not neighborhoods surrounding Case Western Reserve, Cleveland Clinic and University Hospitals managed to tap into the $3 billion worth of purchases those anchor institutions make each year.

“Working with the city we’re creating a network of for-profit businesses that are worker-owned,” Lee explained.  “We talked to the CEOs of these institutions, told them we’re not trying to change anything you’re doing, and over time an amazing partnership developed … It’s a way to create jobs.”

Maria Rosario Jackson, senior research associate at the Urban Institute, argued for another way to regard arts and culture as an economic development tool. Much has been made, she said, of sociologist Richard Florida’s identification of a new “creative class” that’s moving in and revitalizing urban neighborhoods. But just as important, she said, is the creative stamp placed on neighborhoods by those who already live there.

The Urban Institute's Maria Rosario Jackson emphasized the value of arts and culture as an economic development tool.

“I’m talking about beautiful places that are authentic because the people who live there have made them that way,” she said. “Research tells us this plays a role in social cohesion, in attachment to place, even education and health outcomes.”

Getting local

Over box lunches, and as the video-connected cities detached to their own local discussions, Mawra Joy Zohdy, of business consultant McKinsey & Company, went over the elaborate study of Chicago’s business prospects presented earlier  this year to Mayor Rahm Emanuel by World Business Chicago.

Sure, the Chicago area has a $500 billion economy that would rank around 20th among the world’s nations. But its productivity is falling, its transportation lines are rusting and its workforce isn’t keeping up with the education and training required by a globalizing economy. Worse, she said, these challenges are most acute in low-income city neighborhoods.

“We need to leverage all the assets of the region,” said Zohdy in response to a follow-up question about where neighborhoods fit into the region’s big picture. “It’s not just about the big businesses and their headquarters … it’s the small businesses, the minority businesses. Fostering the right connections between and amongst our communities is critical.”

Chicago’s afternoon panel featured David Baum, whose Baum Realty developed the Green Exchange; Gloria Castillo, president of Chicago United; Jackie Samuel of South Chicago’s Claretian Associates; and moderator Eileen Figel, director of the Institute.

Green Exchange developer David Baum with Jonathan Greenblatt and Don Graves at his office building in Chicago's Logan Square neighborhood.

Spin-offs

Baum told the history of “Green Exchange” and its “catalytic effect” on the neighborhood as employment there shot past 1,100 and local restaurants, for instance, began adding staff. The building also has become a de facto learning center where young entrepreneurs come to learn urban gardening and other “green” skills.

Castillo described Chicago United’s Five Forward Initiative in which 28 companies that belong to the business leadership group commit to purchasing minimum amounts from five minority-owned vendors for five years.

“We’re helping small minority firms grow to scale,” Castillo said. “Nobody can build a business when corporate purchasing agents say: ‘Well, when I find an opportunity, maybe we’ll buy something from you.’ You need a commitment.”

Jackie Samuel, New Communities director at Claretian Associates, described the magical power the arts have to pull young people together in South Chicago and move them into a cycle of virtuous behaviors.

“If you’re going to plan for a community’s quality of life,” Samuel said, “you had better plan for every aspect of life, and the arts are right there in the middle.”

Around the U.S.

At the Minneapolis Fed, much of the afternoon session centered on the dearth of resources—public or private—available to at-risk neighborhoods; and the over-concentration of what resources do exist on affordable housing … rather than other needs such as workforce development or home-grown economic development.

There was also a sense of being under-appreciated by powers-that-be and their drop-in-the-bucket skepticism. 

“We undervalue ourselves (as community developers) when we give in to the discussion of scale,” said Andriana Abariotes, executive director of Twin Cities LISC. “Right now community development is ‘nice to do.’ We need to make ourselves ‘need to do.’ It’s up to us to talk about the importance of our work and how it all adds up.” 

At the Pittsburgh branch of the Cleveland Fed, Eve Picker, founder there of cityLAB, pointed out the demographics of many inner-city neighborhoods skew toward older adults, not the 25-40 year-olds whose arrival typically can “turn around” a neighborhood.

The adjunct professor at Carnegie Mellon University added that without younger “creative workers” many neighborhoods are “treading water to maintain what’s there, and what’s there isn’t working.”   

Perhaps because Houston’s energy sector has muted the impact of the Great Recession, much of the discussion there dwelt on an issue that has faded of late up North—gentrification.

“How do you build on human capital, [while] you do not want gentrification to occur?” asked Michaelle Wormly, executive director, WOMAN, INC.  She wondered out loud how a neighborhood might attract modern, market-driven retailing so that “mom and pop” shops are not displaced.

But Neal Rackleff, director of Houston’s Housing and Community Development Department, urged conferees to focus on what the larger economy is saying.

“I think too often we end up trying to sort of ignore or hope that economic realities will go away,” he complained, “and that if we can throw enough money at an area, (if) we have enough charrettes and draw enough pretty pictures, somehow an area will magically economically transform. That’s just not reality.”

Back in Chicago, ICCD director Figel summed up the thinking of many.

“Just because our region is adding jobs doesn’t mean our low-income neighborhoods are going to benefit. That means we’ve got to be intentional—very intentional—about how our communities are positioning for growth.”

Get ready, then, to float those boats.

_____________________________________________________

Read a Q&A with Deputy Assistant Treasury Secretary Don Graves about community development in Chicago.

Watch a video of the 6.20.12 national panel discussion here:

Watch a video of the 6.20.12 Chicago regional panel discussion here:

View photos from the event here:

 

 More information: Eileen Figel, efigel@InstituteCCD.org

Keywords: Connecting to Markets

Posted in Chicago, Commercial and Economic Development

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