Three Models for Inclusive, Community-Led Economic Development Without Displacement

An inclusive economy is one in which everyone can participate, regardless of race, gender, disability, socioeconomic status, or other factors. The U.S. economy for generations has been the opposite; economic and policy structures have excluded people of color, women, immigrants, LGBTQ+ people, working parents, and many others from opportunities. Consider just in some recent examples, underrepresentation and exclusion of Black farmers from USDA lending, the inability of BIPOC-owned businesses and sole-proprietor establishments to receive early Paycheck Participation Program subsidies, and disparities in capital access between Minority Business Enterprises (MBEs) and white-owned businesses.

In addition, traditional economic development policies have often relied on tax breaks and other incentives to attract major employers rather than cultivating local businesses, entrepreneurship, and cooperative enterprises, despite community concerns about resulting displacement and research that suggests such incentives are unnecessary and ineffective. Communities continue to reckon with the ongoing health and economic impacts of the COVID pandemic, including soaring housing costs, small business closures, and a dramatic increase in child poverty after temporary reductions spurred by emergency pandemic assistance programs. Large commercial office buildings in central business districts and Main Street commercial corridors alike face rising vacancies after COVID accelerated shifts to remote work and online retail that were already underway.

At the same time, state and local governments have channeled ARPA funds into capital access and technical assistance to support and expand small businesses, as well as innovative community ownership projects. A surge in worker organizing across major national employers has led to historic new unions and successful contract negotiations for better wages, benefits, and protections, with support from the federal government. At the neighborhood level, many jurisdictions are exploring adaptive reuse of vacant office buildings into mixed-use buildings with affordable housing, as well as commercial corridor revitalization efforts that preserve community organizations and small businesses as community assets.

Across this range of strategies, community-centered economic inclusion initiatives hold important lessons for how to dismantle inequities and promote economic opportunities without displacement.  LISC’s local partners in places like Everett, WA, Oakland, CA, and Charlotte, NC are fostering community-led initiatives that promote economic justice with residents and small businesses.

Everett, WA

LISC Puget Sound is working collaboratively with community leaders to create an economic inclusion agenda in neighborhoods including Casino Road, a neighborhood in south Everett, WA that is home to many Latinx immigrants and other people of color. Most Casino Road residents are predominantly low-income, and the neighborhood currently includes a mix of retail, commercial, industrial, and residential uses. Two new Sound Transit light rail stations are planned for the area, providing both a challenge and an opportunity. They will bring greater connectivity, but the community is concerned about the risk of displacement due to the new infrastructure and related development. One station site that the city prefers would displace 25 immigrant business owners in a small strip mall that serves as the commercial center for the community. Although LISC’s community-based organization (CBO) partners in the neighborhood have extensive experience providing social services and have deep relationships with residents, they do not have experience doing economic development. LISC is working build local CBO economic development capacity so that there will be organizations in the community that are ready to take on this work as new investment opportunities arise. Their priorities include building capacity to support small businesses, establishing new workforce development programming, and helping the community organize around land use and development opportunities in the neighborhood.

Oakland, CA

LISC Bay Area is supporting an economic inclusion agenda on West Oakland’s 7th Street, that was historically home to what was known as the Harlem of the West, a hub for Black communities on the West Coast which was established through  the Great Migration, as Black families fleeing racial terror in the Jim Crow South sought jobs at the Port of Oakland and other manufacturing hubs, only to encounter, redlining, de facto segregation, and deeply entrenched racism in the North.. However, between the 1950s and the 1960s, West Oakland’s population decreased by 20 percent as large infrastructure projects displaced residents to facilitate the movement of goods and people through the San Francisco Bay.

Today, 7th Street is home to more than 71 businesses and nonprofits both on and off the corridor. The area is slated for nine future major real estate development projects — two owned and being developed by community organizations and all with a promise to bring more retail to the neighborhood. One such partner is East Bay Permanent Real Estate Cooperative (EB PREC), which helps BIPOC and allied communities cooperatively organize, finance, purchase, occupy, and steward properties. This approach takes properties off the speculative market and preserves their affordability and use as assets for the community in an increasingly competitive real estate market. Another partner is Oakland and the World Enterprises, which is launching and sustaining for-profit businesses for cooperative ownership by formerly incarcerated and other economically marginalized people.

7th Street’s Economic Inclusion Strategy —coined 7th Street Thrives—is a multi-year, place-based effort to advance a collective vision of economic revitalization that honors the history and legacy of the corridor. Through this initiative, EB PREC as Community Advisor and LISC Bay Area as capacity builder are supporting the activation of underused space, assisting Black-owned businesses and other entrepreneurs of color on the corridor, and reviving the community character of the 7th Street corridor in inclusive, regenerative ways.

Charlotte, NC

LISC Charlotte has been working in the city’s Historic West End, the traditional center of Black civic, cultural, and commercial life. LISC has three local partners in the neighborhood through its administration of Fifth Third Bank’s Empowering Black Futures Program: Historic West End Partners, West Side Community Land Trust, and For The Struggle. These organizations are collectively pursuing a holistic agenda that includes housing preservation and development, homeownership counseling, small business growth, commercial corridor improvements, and capacity building for grassroots organizations. LISC is providing financial and technical support to build community partner capacity to achieve their vision. LISC is also working with the City of Charlotte's economic development office on efforts to prevent commercial displacement and support BIPOC entrepreneurs as market pressures begin to affect the neighborhood. In addition, LISC raised $1,000,000 to establish the Historic West End Commercial Development Fund, which will offer technical assistance and financing for small business and commercial developers with plans to develop in the Historic West End corridor.

These three local efforts have several things in common and provide lessons for others wishing to invest in strategies that advance inclusive economic development without displacement.

Go when and where invited

Traditional economic development strategies are carried out in a top-down manner, with government or investors coming into an area and deciding what is needed and therefore what they will fund. By contrast, in the three initiatives in Everett, Oakland, and Charlotte, community members are full participants and leaders in the process and request specific forms of support to advance their priority strategies. As investors and capacity builders, the local LISC programs do not insert themselves into neighborhoods or communities where they have not been invited. They rely on community members’ expertise and knowledge of their neighborhoods to guide their strategies and investments. To do so, LISC works with community partners that have close relationships with residents and businesses, and that are themselves part of the neighborhood.

In Casino Road, LISC is working with a CBO that is meeting with business owners and starting to assess the businesses’ needs. While local LISC staff could easily perform the assessments, the CBO’s direct relationships with businesses are both stronger and more important to leverage, since the local organizations will be there for the long term. LISC therefore shared assessment templates and is providing guidance for the process, but the organization itself is conducting the work. LISC is also connecting the CBO to small business support organizations that it can work with to help the businesses in its community.  Due to connections fostered by the LISC Puget Sound team, 52 entrepreneurs recently completed a business basics training program led by a regional micro-lending organization.

LISC Charlotte is likewise working to build the capacity of organizations that already exist in the Historic West End and represent the residents and businesses. Similarly, LISC Bay Area chose to amplify the existing work of a local community organization that was advancing a collective economic vision for the neighborhood. They offered capacity building, coordination, and resource pathways to accelerate their intended outcomes. These organizations, not outsiders, will be the conduit for investment in the community.

Build trust

Even when an outside entity is invited, there can be understandable skepticism among residents and other stakeholders, who may have participated in community engagement and planning efforts only to see their suggestions ignored, and lived the harms of cycles of disinvestment and development that accelerated displacement of friends and family members. An important first step to build greater trust is to ask questions and truly listen to the answers. Determine where you can help with the needs the people in the neighborhood themselves have identified and, more important, understand that those may not be the immediate needs you have identified. This is often referred to as “moving at the speed of trust”: understanding it may take time to get to the larger vision, finding ways to support neighborhood priorities, and demonstrating the value of a relationship or structure that may not feel familiar to residents and small businesses.

Addressing things that may seem like less urgent priorities to investors and technical assistance providers can be critical to build trust. These initial projects are important to the community, even if they are not the primary drivers of investment. Delivering early wins builds confidence in the relationship with you and gives you the goodwill and momentum to tackle projects that may be harder or less exciting, but are necessary.

LISC Charlotte was able to meet immediate needs in the Historic West End and other communities by designing a small business grant program using HUD sponsored dollars in partnership with City of Charlotte that deployed $790,000 to 79 small businesses during the start of the COVID-19 pandemic, as well as some additional funds from varied sources. Although it may not have been part of the initial strategy for the neighborhood, it enabled businesses to survive so that longer-term strategies could be implemented later.

LISC Puget Sound and its partners know that affordable housing and displacement are major issues for the neighborhood. Residents also expressed the need for community gathering spaces for barbecues and celebrations, and suggested upgrades to a nearby park and green space. LISC Puget Sound leveraged its partnerships with local funders and the local parks department to finance park upgrades, working with residents on design features they wanted to see. The successful park improvements created an early win that helped build trust, as well as interest in longer-term campaigns related to affordable housing and light rail development. LISC Puget Sound Deputy Director Tina Vlasaty explains, “We know we want to do technical assistance for the businesses and add new affordable housing, but if we had started there, we would not have the engagement. Really listening to what is important to the community and letting them lead is critical in building trust.”

LISC Bay Area’s engagement with merchants, nonprofits, and other partners on 7th Street clarified the lack of services and responsiveness provided to the corridor, and therefore the need to prioritize improving its public infrastructure. Now the community meets with the City of Oakland monthly to review infrastructure that needs to be fixed, like streetlights, trash collection, and other critical public service needs. The City is now making some improvements in providing services in this community that was effectively redlined for decades.

Another way to build trust is to use fun, enjoyable engagement tactics that are less formal than community meetings, surveys, or interviews. LISC and its partners in Casino Road held a neighborhood carnival as part of their landscape and economic agenda planning agenda. The carnival was an occasion to celebrate and simultaneously gather resident feedback on priorities for the community. Doing this outreach as a fun event was a way for research to feel more communal and less extractive and one-sided.

Don’t ask questions you already have the answers to

In so many neighborhoods, the residents have been through many, many community engagement processes, visioning exercises, and revitalization plans. Very few of those delivered on what they promised. This dynamic creates an understandable lack of faith in such processes and an unwillingness to engage further.

Bay Area LISC and its partners did their homework. Rather than repeating the same processes, they examined a number of key reports from other economic development planning efforts on the corridor—where only a handful of results followed. LISC Bay Area then brought summary findings to its advisory group to clarify if these recommendations were still relevant on 7th Street, which they were. Advisory group engagement helped supplement these recommendations with updated quantitative research, and qualitative findings that expanded on the neighborhood’s needs and laid the foundation for forming a collective vision.

Identify the pivotal opportunity and create a collective vision

To achieve real change, there needs to be a focal point that creates motivation and momentum for the community to come together for collective action. In Everett, this focal point was the light rail line and its possible impact on nearby commercial rents and businesses. In Oakland, 7th Street’s historic Black business corridor is potentially on the verge of a rapid change in occupancy and character as a result of nine major real estate projects planned for the corridor. In Charlotte, the movement of market forces into the Historic West End, also a touchstone Black cultural community, threatened many small and legacy businesses with higher rents and ultimately displacement.

Prior to LISC and EBPREC coming together, EBPREC in partnership with Mandela Grocery Cooperative, held a series held a series of Black Economics Salons in 2019 to engage the community around the need to secure community stewardship of land and buildings through mobilizing community and outside investors in the face of recent gentrification and displacement pressures.  Their engagement led EBPREC to purchase Esther’s Orbit Room, a jazz and blues club owned and operated by Esther Mabry, “the Grand Lady of 7th Street,” for nearly 60 years before it closed in 2009. The Black Economics Salons led to a corridor-wide vision and mission, and LISC wanted to provide greater capacity to support that effort, which led to the creation of 7th Street Thrives.

The coming of light rail to Casino Road created an opportunity and an urgency to preserve local businesses that served the community, all of which are immigrant businesses with Spanish-speaking owners. The changes also created an opportunity to try to drive change in a way that would benefit the community, starting with having a community voice in the discussion of what constitutes “highest and best use” of land parcels in the neighborhood. LISC Puget Sound is supporting advocacy efforts by a partner to gather community opinions and devise a strategy to advocate as a group for that preference and for the long-term vitality of the businesses.

Build capacity to carry out the vision

Once the course of action is collectively identified, the local players need to be able to collectively execute it. This requires ensuring that the community-based organizations are financially and organizationally sound and have the knowledge and skills to carry out the different elements of the plan. It may also require bringing additional capacity into the neighborhood to bolster what is already there. In the latter case, it is important that outside parties are providing support, not taking over what should be a community-driven effort.

LISC Puget Sound is connecting Casino Road CBOs to organizations that can provide what the neighborhood businesses need. LISC does not expect the CBOs to do everything themselves or suddenly to become experts in economic development. These local organizations have space in and the connections to the community and they are doing the work to bring the immigrant business owners together. LISC is making connections between these community groups and existing service providers that have the necessary expertise but have not served the community before. In discussing capacity, it is important to note that LISC is compensating the community-based organizations for their connections, outreach, and the assets they bring to the table. “There have been a lot of extractive practices in the past where we expect organizations led by people of color to just do what is good for their community without being compensated. We want to be mindful that we properly value the expertise, connections and relationships that our partners are bringing to the table,”  says Vlasaty.

Working to bring vibrancy back to Charlotte’s Historic West End, LISC is building the capacity of CBO and business development organizations (BDO) so they can support small businesses that are the soul of the community. LISC Charlotte provided funding to BDOs such as HBC Consulting, Exceptional Business Solutions, Women’s Business Center of Charlotte, Aspire Community Capital, City Start Up Labs, and Carolina Small Business Development Fund to provide technical assistance to small businesses. To date, the BDOs have served more than 1,700 small businesses in Charlotte.

Direct investment where it needs to go

Local governments, intermediaries, and philanthropic funders have the resources local efforts depend on, but it there is often a mismatch between those being funded and those doing the work of equitable and inclusive development. LISC Puget Sound’s Vlasaty notes, “We have heard that funders would love to invest in the community, but they don’t know where the capacity is, and what to invest in. The takeaway is that philanthropic and government money often follows the path of least resistance, organizations with long track records and well-defined projects, which can favor the same organizations year after year.” LISC is therefore focused on helping create a set of well-articulated, ready projects that 1) serve the neighborhood’s expressed needs and 2) can be carried out by organizations with best positioned to do the work. By building capacity among the CBOs already embedded in the neighborhood, LISC is trying to remove the perceived barriers for funders and frame where investment can go.

LISC Charlotte is working with the city and philanthropic funders to marshal additional resources for the Historic West End. This includes making sure funders are aware of both the needs and the opportunities in the neighborhood. LISC creates pathways such as the Historic West End Commercial Development Fund for financial investment to flow into the community and provides technical assistance to community groups and business development organizations to ensure that groups receiving the funding can accomplish their goals effectively.

Conclusion

On Wall Street and in downtowns around the country, declining in-person work is driving near-record office vacancies, with implications for nearby businesses, the urban tax base, and public services. But on Main Street, LISC and its partners are addressing some of the same technological and economic changes behind downtown vacancies to support entrepreneurs of color facing displacement. Inclusive economic development is a strategy to produce not just better outcomes for long-excluded entrepreneurs but a process to get there – allowing meaningful community decision-making, mobilizing existing expertise and assets, and ultimately directing investment in ways that do not displace existing residents or businesses.

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