Friday, April 5, 2013

High-yield Investment in Urban Neighborhoods

Dwarfed by money thrown at wars and bailouts, investment in urban communities yields real value

Modest investment in the heart of America's cities and its urban neighbors yields real value--real change, real hope, real progress. Public funds directed here are unimaginably dwarfed by expenditures on recent wars, rebuilding in Afghanistan and Iraq, and bailouts for stockbrokers, banks, the housing market and automakers. The relative fraction that is invested in urban infrastructure and community renewal has a high return on investment—even before one factors in positively changed lives.

One can only imagine what human and economic value might blossom from the heart of our cities if strategic private and public investments were taken to the next level. I'm looking for local leaders in the private, public and nonprofit sectors who readily recognize this—and will move boldly in this direction.

In Indianapolis, a combination of resident-driven planning and public and private investment is reviving urban neighborhoods. Mapleton-Fall Creek, Near Eastside, and Fountain Square areas offer three examples. Given the reality of diminishing levels of direct public funding and a sluggish economy, their revival is something of a small miracle.

But emerging urban neighborhood miracles are not magic. They are the result of an ever-precarious and always-fragile balance of positive factors. Isn’t that what most breakthrough investments are about?

Three critical factors make up this fragile but fruitful balancing act: (1) creative public funding opportunities, (2) grassroots neighborhood planning and decision-making and (3) strategic private partnership and investment.

Creative public funding opportunities

The reality of diminishing levels of direct public funding has fostered creative thinking about the use of limited funds. Highly-valued Community Development Block Grants (CDBG) and Housing and Urban Development (HUD) resources have been reduced. But local efforts to leverage other investment and carefully direct resources to low-income and vulnerable neighborhoods have stretched taxpayer dollars significantly.

One cannot underestimate the valuable impacts of Enterprise Zones, Tax Increment Financing (TIF) Districts and other tax incentives on urban neighborhood development. The Local Initiatives Support Corporation (LISC) has worked with local government officials and nonprofit leaders to ensure these initiatives brighten the invitation to significant private investment in Indianapolis’ neighborhoods.

Granted, none of these financing tools is perfect, and sequestration may unnecessarily put them at risk. There is always tension between what is most immediately needed in local neighborhoods and policies developed in Washington, D.C., and managed locally by government structures. A healthy give-and-take relationship among all is essential.

Grassroots neighborhood planning and decision-making

A second factor in high-yield neighborhood investment is grassroots neighborhood planning and decision-making. When and where urban neighbors are valued as stakeholders and invited to identify problems and solutions, the investment yield will be significantly higher.

Within the past six years, in cooperation with the Department of Metropolitan Development and LISC, a handful of Community Development Corporations (CDCs) and community centers facilitated the Greater Indianapolis Neighborhood Initiative (GINI). GINI is a grassroots, neighborhood-specific planning effort focused on Indy’s most vulnerable urban communities. The comprehensive quality-of-life strategies that emerged through GINI chart a clear course for revitalization for each neighborhood area. These quality-of-life priorities and strategies are now being implemented by neighbors and community-based organizations.

Initiatives emerging from urban neighborhood problem solving have power to impact and change macro practices, patterns and norms. Individual Development Accounts (IDAs), an idea fostered by Michael Sherradin in Assets of the Poor, were incubated and developed on the Near Eastside of Indianapolis. In time, IDAs became national policy. Hundreds of low-income neighbors have used this tax-sheltered, matched savings account to gain critically-needed assets--purchase their own homes, complete college or vocational training, or start their own businesses.

In her book Common Purpose, Lisbeth Schorr documents how numerous small, local initiatives that have gone to scale. In each, public funding and private partnership came only after initial, grass-roots successes.

Strategic private partnership and investment

The third factor in high-yield neighborhoods is the development of strategic private partnerships and investment. Once looked to primarily for charitable support of nonprofit organizations or crisis relief, for-profit organizations have become vital partners in urban renewal.

Creative tax incentives for individuals and corporations to invest in urban renewal efforts may have been—and still are—a way to get otherwise disinterested folks involved, but initial participation has moved into strategic partnerships. Businesses have recognized that it is not good business to write off sections of the city—and the patrons who live in them. On the contrary, as they have worked with effective local nonprofits, corporations that once redlined urban neighborhoods are now leading in reinvestment.

The tipping point for corporations to make it worth their interest to invest in urban community development was long in coming. After many years of nonprofits and CDCs pioneering strategies in high-risk areas on shoestring budgets, partnerships with the private sector now flourish. The way is clear for private individuals, small businesses and large corporations to explore direct partnerships with neighborhood-focused nonprofits and utilize an array of tax incentives and public policy programs to engage to revitalize the city as never before.

The quality of life for all residents of a city and metropolitan area is integrally linked to the quality of life in its urban neighborhoods. There, investment in affordable housing, youth outreach, education, effective public safety strategies, parks and recreation, and arts, social and cultural opportunities pay big dividends. I hope you will join other leaders in taking a modest investment in Indianapolis neighborhoods to the next level.

John Franklin Hay

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