Yesterday we shared five ways in which federal infrastructure spending is making cities poorer. That piece included this observation:
What we have not figured out -- and what we won't figure out with another flood of federal infrastructure spending -- is how to translate maintenance into growth. How do we go out and fill potholes and fix leaking pipes and have that result in additional wealth in our neighborhoods? This is a daunting challenge that requires us to rethink -- from bottom to top -- how we develop our places. We need to modernize our zoning codes, building standards, housing incentives, insurance programs, etc. There are a lot of people trying to do this, but they get cast aside every time the federal gravy train rolls into town.
Here are some of the low cost initiatives that every city across the country should prioritize.
1. The Better Block
There is no group that does more with less than The Better Block Foundation. Jason Roberts inspired us all with his TED talk and now, with the backing of the Knight Foundation, is working to scale his ideas for communities across the country.
The Better Block uses small, low cost interventions to prototype larger scale projects. Residents and stakeholders are able to co-create change and experience improvements as they go. It's a true alternative to the big project model; a more sophisticated approach with lower risk and higher returns.
America is desperately in need of fine-grained, block level solutions to address the financial productivity gap in our cities. It doesn't get better than The Better Block.
Tactical Urbanism: Short Term Action for Long Term Change by Mike Lydon and Anthony Garcia
2. Incremental Development Alliance
Corporate developers have figured out how to capitalize on federal infrastructure investments to mass produce housing. Regulations -- from local zoning to national home financing standards -- are designed to facilitate their business model, an approach that provides quick growth but ultimately makes cities poorer. There is an urgent need to make small investments in existing neighborhoods, but the corporate developer model can't deliver this without massive subsidies.
Developers R. John Anderson and Monte Anderson (no relation) have made careers out of building small, incremental projects in existing neighborhoods. Now they are doggedly training the next generation of small scale developers, giving them the tricks and insights to thrive in a development world not built for them.
The Incremental Development Alliance provides training, coaching and mentoring to individuals looking to become small developers. In an era of underemployment, where cities desperately need growth that doesn't require new public liabilities, local governments should be lining up to bring the Incremental Development Alliance to town. And they should be listening to their advice on how to become a better place for incremental development.
IDA on Facebook (very active)
3. Oswego Renaissance Association
Traditional housing programs target low income neighborhoods with expensive interventions that more often than not fail to gain much momentum. The Oswego Renaissance Association is turning that approach on its head and seeing tremendous success as a result.
With very small amounts of capital, the Association has provided matching grants and resources to blocks of individuals wanting to invest in improving the look of their street. Addressing the real problem -- a shared lack of confidence in the neighborhood -- has paid huge returns.
The key is in getting neighbors together and helping them realize their shared vision. It's slow, messy relationship-building; the antithesis of what is possible with a Washington DC -based housing approach. It succeeds, not by putting money in, but by unleashing the capital that's been pushed to the sidelines in declining neighborhoods.
Paul Stewart, executive director of the Oswego Renaissance Association, should be on the national speaking circuit helping struggling cities realize how they can tap into their own sidelined wealth.
4. Economic Gardening
What do you do when you realize your city is never going to be able to subsidize enough businesses to create the jobs you need? That is what happened to Chris Gibbons and the economic development staff in Littleton, Colorado, when missile manufacturer Martin Marietta (now Lockheed Martin) cut its workforce in half, costing the city 7,500 lost jobs and leaving 1 million square feet of vacant real estate.
There was no way to fill this hole with traditional economic development techniques. They were forced to innovate. The result: economic gardening, an approach that focuses on growing jobs in existing businesses rather than paying a business to relocate to the community. It's gardening, not hunting.
The great insight of Economic Gardening is that most job creation comes from Second Stage businesses, those that are beyond the startup phase but not yet at the size of a Stage 3 corporation. Stage 2 businesses are lead by entrepreneurs, crazy people living on the edge of chaos who don't really appreciate that they can actually fail. These special people would maybe like a handout, but they don't need it. What they desperately need -- because they are so focused on their niche expertise and are not, at heart, business people -- is basic assistance growing their operation.
Who are my competitors? What do they charge? What markets can I expand to? An Economic Gardening approach is able to answer these kind of questions, and more, for rapidly growing businesses at a fraction of the cost of traditional business handouts. The result: faster job growth, higher paying jobs, greater resiliency during economic downturns and far less risk of failure. Growing Stage 2 businesses creates market demand for more Stage 1 enterprises and, over time, develops a workforce that attracts Stage 3 employers. It's the economic development zen spot.
Every city in America should throw out the traditional chase and subsidize approach and switch to Economic Gardening.
5. Small Change
Wealthy individuals who want to invest in real estate have every opportunity to do so and, because of the way the tax and financing rules are written, receive preferential treatment when they do. The result is often very large projects -- from a city's perspective, the build-it-and-they-will-come variety -- or large numbers of standard units that fit neatly into the federal government's housing programs. Neither of these are what cities need more of right now.
Small Change is allowing the regular investor to use their resources to invest in small scale projects, improvements that often don't neatly fit standard financing models. It's a little like crowdfunding, but for real estate, and there is an expectation of a return on investment.
Want to invest in development you deem meaningful in your city? Have a property that you and your neighbors would like to see improved? Small Change offers a way. Individuals are able to invest as little as $100 to become an owner in a real estate project. After the project is developed and once it is operational, if all goes as planned, investors will receive a return.
Small Change is a national platform based in Pittsburgh. Communities around the country should take note of this concept.
There is a longer list of similarly innovative approaches we could share, none of which are based out of Washington DC and none of which receive federal money. The five we've shared here are all low-cost, low-risk endeavors with a track record of success. These are proven models.
Yet, they will all be marginalized, to one degree or another, by a flood of federal infrastructure money, spending that will stifle these and other innovations while making America's cities poorer. We need to rethink our approach. These five ideas are just a start.