Even when economic development programs succeed in boosting livelihoods and community investments, they too often fail to benefit the very people and places experiencing the harmful impacts of long-term, systemic economic deprivation. That’s a failure of commitment. Here, LISC program officer Teresa Garcia makes the case for a new approach to economic development that centers the communities most in need—and makes equity its guiding aim.
We’ve all seen the statistical maps revealing deep inequities across the geographies of most American cities and towns. There are oases of privilege and opportunity. And there are neighborhoods that concentrate all kinds of disadvantage. Here, residents contend with high poverty and unemployment rates, and experience poorer health; they are underserved by amenities like public transit and overexposed to polluting or destructive infrastructure.
This spatial organization tracks the historical and ongoing fault-lines of systemic racism, with people of color segregated in low-opportunity places. And we know from a growing body of research that it’s harmful to residents: over and above the effects of household poverty, living in a place of concentrated poverty curtails life prospects. Regardless of family income, for example, children who grow up in such places on average make less money as young adults, are far more likely to experience incarceration, and die younger than people who came up in other neighborhoods.
We know all this. Yet despite a passel of programs and policies to draw investment and seed opportunity in high-poverty neighborhoods, their number has grown steadily over the last 40 years. A greater share of economically poor Americans live in these systemically disadvantaged places today than did in 1980.
Our strategy for turning the tide
So, along with our colleagues at the Brookings Institution, LISC has designed and launched a place-based economic development strategy whose basic premise is simple, yet radical: effective economic development requires a shift in the balance of power. Community members and the local organizations they trust need to be not just at the table but at the wheel, collaborating with traditional power holders at the citywide and regional levels. The goal of this process isn’t overall growth but equity for folks who’ve been excluded from the benefits of growth and prosperity, time and again.
In 2019, LISC and Brookings piloted our community-centered economic inclusion (CCEI) process in three cities—Los Angeles, Philadelphia, and Indianapolis. Since then, with major funding from Kaiser Permanente, one of the country’s largest health care providers and not-for-profit health plans, we’ve scaled this work to eight additional cities, focusing on 15 urban districts in all.
In each location a cross-sector collaborative brings neighborhood stakeholders together with citywide and regional actors (including economic- and workforce-development entities, along with elected officials). They spend about nine months collecting community perspectives, analyzing market conditions, and coming up with a series of strategic action items—an economic inclusion agenda—to be carried out over three years.
An assessment of accomplishments one year after the process began in the three pilot cities as well as Detroit and San Diego found the CCEI collaboratives substantially built the capacity of community-based organizations (CBOs) and leaders, strengthened connections among them and with municipal power holders, and brought highly targeted capital to the focus neighborhoods to support local small businesses owned by people of color, advance community ownership of real estate, train locals for quality available jobs, and more.
Place-specific gains like these are significant, in part because they allow long-marginalized neighborhoods to present a high-capacity profile and united front when advocating for policy changes and competing for resources over the longer term.
For example:
- Detroit’s process delivered nearly $600,000 dollars in capacity-building grants to CBOs working in the local collaborative’s chosen focus area, the North End/Milwaukee Junction district. It also helped pull together the neighborhood’s business proprietors in a new business association, launched a business-district website, and helped a partner in the collaborative win Main Street designation for the corridor, a competitive designation that comes with prestige and technical assistance from Michigan Main Street to carry out preservation-based economic development.
- In San Diego’s City Heights, one of the city’s oldest, densest, and most diverse neighborhoods, CBOs received $1.15 million in capacity-building funds through year one of the economic inclusion process. Also important, the process established a multi-partner policy committee to push for priority changes at the municipal level, such as decriminalizing street vending and providing permits for micro-enterprise operations in home kitchens.
Economic development—with a vital difference
Our CCEI process charts a new path in economic development, seeking to avoid the inequities that invariably result when top-down programs fail to center the particular needs of chronically underserved, high-poverty neighborhoods.
Take the federal Paycheck Protection Program (PPP), for example, aimed at helping small businesses survive the COVID-19 pandemic. The program’s forgivable loans flowed readily to relatively wealthy, well-connected businesses. Meanwhile, in the districts where we work, LISC supported a host of on-the-ground business development organizations that hustled to help small-business owners overcome barriers to even applying—barriers of language, for example, and lack of access to technology and banking. These efforts certainly helped, but according to a study by the Federal Reserve Bank of St. Louis, 72 percent of PPP money flowed to households in the top 20 percent of income.
Place-based programs can miss the mark, too, failing to attract investment to places most in need or, when they do, neglecting to ensure those investments benefit existing residents. State enterprise zone programs, for instance, give businesses tax and other incentives to locate or expand in disadvantaged urban areas; yet there is very little evidence to indicate these programs boost employment or income for existing low-income residents. The federal Opportunity Zone program, established by 2017 legislation, designates thousands of census tracts across the U.S. where investors can minimize the taxes they owe on capital gains by investing to spur development and job growth. These investments have concentrated in relatively high-income zones that were already growing—while the tax subsidy is benefitting households in the 99th percentile of income, literally the 1 percent.
Initiatives designed around the needs of investors—or even around the aspiration for across-the-board economic boons that supposedly “lift all boats”—will never alleviate the deep structural issues that exclude certain places and people from broader city and regional economies, sometimes for generations. Because economic inclusion doesn’t happen by accident, our CCEI approach makes it priority one, and it does this in a few ways.
- Intentional site selection. To kick off the process, a local LISC office or other lead agency, in consultation with partners, selects one or more sub-geographies of a city to focus on. It’s vital that these be places with real, documented disadvantages—high poverty, housing cost burdens, and unemployment for example. But it’s also important that they have certain things going for them that will give the process traction, including strong community buy-in and clusters of undervalued assets (e.g. anchor institutions, industrial infrastructure, a lively arts tradition, or walkable business corridors). Finally, the site should be populous and large enough for local change to affect the economy and balance of equity citywide.
In Western New York, for instance, the collaborative group chose the East Side of Buffalo, home, overwhelmingly, to Black and other people of color (and made tragically famous last May by the racist gunman who slaughtered shoppers and workers at a Tops grocery). East Buffalo has suffered long disinvestment as the city lost population in the latter twentieth century, and its poverty and unemployment rates are much higher than those of the surrounding region. But it’s an immensely resilient, connected community. What’s more, the zone is replete with medical and other campuses, and is the focus of new state and city investment.
- Integrated cross-sector leadership. The groups that steer the years-long CCEI process bring together people who are closest to their neighborhood’s problems and priorities—ordinary residents, advocate leaders, and community organizations—with those in a position to affect policy and resource provision, including city government officials, representatives of anchor institutions and philanthropies, and key personnel from city and regional economic-, business-, and workforce-development agencies.
From the Far Eastside of Indianapolis, one resident-organizer told us the Indy collaborative’s meetings represented the first time some city officials had the chance to hear directly from neighborhood people. “[The city] sees us now,” the organizer said. “[The process] gave the city the opportunity to get all the grassroots orgs together that work collectively and have been for a long time.”
- A strong focus on existing strengths and connections to regional opportunities. Instead of courting outside investors and plopping down new developments, planners develop strategies to build on the existing assets that make a neighborhood distinctive. In South Los Angeles, for instance, the Crenshaw District has been a center of Black culture and commerce since the 1970s. LA’s CCEI collaborative has already directed resources for placemaking in the district, to bolster its legacy small businesses, and to connect neighborhood youth to regional work opportunities in design, entertainment, and virtual tech.
This economic inclusion process is not government initiated or led. So it demands a lot from participating planners, including fundraising to fully implement the strategies laid out in each group’s economic inclusion agenda. That work, though time-consuming, builds power in the long run.
When we call the process “community-centered,” we mean just that. At its heart are community members—the people who, more than anyone else, truly know, love, and invest in their particular place. Influence and ideas should flow from them outward to the holders of power at the city and regional levels. In that direction, we believe, lies economic justice.
About The Author
Teresa Garcia, Program Officer, Economic Development
Teresa leads LISC's community-centered economic inclusion and place-based economic development work in cities and neighborhoods across the country. Teresa has nearly 8 years of experience in program and project management including planning, supporting and leading a range of diverse capital projects from $20,000 facade improvements to ground up developments valued at $17 million. Teresa has a Masters in Urban Planning from Hunter College, a Masters of Arts in American Studies from CSU Fullerton and is a Certified Project Management Professional (PMP).