January/February 1998

Expanding the Scope of Community Development

By Jeremy Nowak

More than four decades of suburban growth have moved demographic, political, and economic power from central cities toward their suburban counties. The change can be seen in the spatial segmentation by income and race, in the phenomenal growth of new businesses in edge cities, in how public infrastructure dollars are allocated, and in how state and national political parties organize campaigns and party platforms.

Urban economic success in a post-urban society means growing against 40 years of suburban development and overcoming the political isolation defined by a mostly suburban electorate. Nowhere is this problem experienced more profoundly than in the low- and moderate-income, predominantly minority neighborhoods of the inner city. Spatial segregation of racial groups, shaped by discriminatory banking and housing policies in an earlier period, has today given way to a new social isolation defined by increased levels of concentrated poverty and inner-city isolation from information, middle class role models, labor recruitment networks, and financial value.

The social geography of metropolitan regions requires the community development movement to expand its strategies and perspectives to both reduce the isolation of the urban poor and participate in the broader effort to support regional economic competitiveness. Strategies designed to maximize social mobility and integration – such as strategic investments in business sectors, fair housing enforcement and inclusionary housing strategies, regional revenue sharing, and subsidies for city residents to travel to jobs in the suburbs – have the potential to transform the meaning of neighborhood or community development in important ways. These strategies re-balance the focus of community development corporations (CDCs) from their traditional concern with real estate assets to a more people-centered approach. They generate a more dynamic sense of place, as a social and historical process connected to the broader economy. And finally, they offer the opportunity to expand the range of our allies and our self-interest.

Four directions help organize a more regional approach to inner-city community development:

Understanding the central role of workforce quality.

In most urban neighborhoods, the most important economic assets are the workers who reside there and the value of their skills to the regional economy. Linking neighborhood residents to the growth sectors of the region – through workforce programs, recruitment system, transportation, and childcare – builds income, expands the labor recruitment networks of inner-city households, and creates the consumer basis for increased urban business formation. Community-based organizations (CBOs) can play a role as intermediaries between neighborhood residents and regional growth, given a civic infrastructure that values and requires these connections.

Linking urban business formation to regional growth.

Relationships can exist between growth outside of low-income neighborhoods and business formation within them. No matter how disadvantaged, inner-city communities have significant business formation opportunities, especially in the area of retail franchises. Other light industrial and specialty service businesses – including small-scale assembly, warehousing, and food processing – can also be supported, especially if they can take advantage of the supply and service needs of more established central business districts or suburban business park companies. To do so requires engaging the private sector not only as philanthropist but as business investor and partner.

Viewing housing markets as mobility strategies.

Changes in the incentive and production structure of low-income housing have made many inner-city CDCs into skilled housing developers. Having become adept at the government subsidy market, CDCs have focused narrowly on the public value of how to shelter the maximum number of low-income residents and have neglected the question of how housing markets foster social mobility. This disregard for the broader economy of housing makes it difficult to position inner-city neighborhoods as objects of diverse consumer demand or as places where low- and moderate-income people can build assets. CDCs can help maximize housing choice by creating a range of homeownership opportunities for people with varying incomes, by developing the scale of units that will sustain and build values, and by helping local working class families become small-scale housing entrepreneurs and landlords.

Becoming part of the regional public policy agenda.

Partly as a result of the practitioner nature of the community development field and partly as a result of our collective narrowness of vision, community development has confined most of its policy agenda to the success of its core product – affordable housing. Rallying around the preservation of the low-income housing tax credit and other housing subsidies or around Community Reinvestment Act compliance has become the staple of community development's public and private sector policy agenda. But in an era of welfare reform, a vibrant (if uneven) economy, and new questions about the meaning and limits of metropolitan growth patterns, the agenda must be broadened. CDCs should be part of the broader conversation regarding transportation policy, regional tax sharing, work force policy, and smart growth strategies. How these issues play out directly influences the lives of inner-city residents. Yet presently, few regional planning commissions, metropolitan business associations, or transportation authorities are regularly informed by inner-city community development advocates.

There is nothing in these approaches that weakens the commitment of CDCs to the core effort of neighborhood improvement or to viewing low-income people as the key customer of those efforts. Rebuilding places and re-connecting people is never an either/or proposition. But reversing the declining social economy of many inner-city neighborhoods is not a self-referential exercise; it requires the creation of institutional and economic linkages between households and businesses within inner-city communities and the broader geography of opportunity.

A Transition in Financing

The Delaware Valley Community Reinvestment Fund (DVCRF) – a $45 million community development financial institution – finances community development projects in the 10-county metropolitan Philadelphia region. Like many community development intermediaries around the country, DVCRF has historically been more active in housing finance than in business development or workforce programs. The more than 3,000 housing units it has financed have ranged in ownership type, location, and income qualification, with the overwhelming majority being for people with incomes below 80 percent of median income.

During the past 5 years in particular, DVCRF has tried to work with housing projects that either foster high levels of income diversity or assist with some link to labor market participation. DVCRF does this by:

DVCRF adds to the impact of these housing finance strategies on mobility by aggressively financing childcare. DVCRF provides this financing to nonprofit and for-profit childcare centers as well as home-based day care entrepreneurs in the inner city.

But the real transition in DVCRF financing has occurred in the past two years, when the fund began to engage more directly in regional activity by linking sectoral and place-based strategies and by becoming an active voice in regional policy issues. These new roles have been fashioned from three initiatives: the Philadelphia Jobs Initiative, DVCRF Ventures, and The Jobs Policy Network. While it is too early to analyze the success or failure of these forays into regional economic development, a description of their structure and inter-relationship is instructive.

Linking Neighborhoods to Economic Sectors

The Philadelphia Jobs Initiative aims to provide inner-city areas with the interventions necessary to link residents with work opportunities throughout the region. The Initiative is organized around three questions:

With support from several foundations, PJI is initially focused on an area in Northwest Philadelphia with a population of around 100,000. The initiative targets minority men, although it is open to women. It is organized around two major placement strategies: one designed to place participants in jobs in 16 weeks or less; and another that provides considerably longer-term training opportunities.

The initiative focuses on training workers in three economic sectors – healthcare, manufacturing, and data-intensive firms – while remaining flexible to the needs of the area's employment market in order to increase job placements. PJI expects to place over 500 persons annually into family-wage jobs, which PJI currently defines as jobs paying more than $7.50 an hour plus healthcare benefits. The initiative is in the process of analyzing what constitutes a family wage, taking into account family size, subsidy layering, and the cost of living in different areas.

Worker recruitment and assessment is carried out by a lead CBO in the area – the Ogontz Avenue Revitalization Corporation – and a network of churches affiliated with the Industrial Areas Foundation. The role of the CBO and churches are key to the initiative's success. Functioning as workforce intermediaries, these community groups recruit residents, assess their interests and do some initial screening of capacity, and refer them to one of the PJI training projects or in some cases directly to a job. Most importantly, the CBO and church groups stay in touch with participants and play a post-placement coaching role, helping participants through workplace or household conflicts that may limit job retention or future job mobility.

The projects funded by PJI have a record of success and are often modeled after other successful programs. Many of the programs train workers for a specific job sector, and all begin from the premise that their primary customer is the employer.

One of these programs, for example, is Philadelphia Area Accelerated Manufacturing Education (PhAME). Modeled after Focus: HOPE in Detroit, PhAME aims to prepare a world-class manufacturing workforce in the region. Targeting high-end technical manufacturing jobs, PhAME provides students with a year-long intensive program. The project has received strong support from the leading manufacturing companies in the region, which have identified existing and emerging gaps in technical workforce as a major impediment to local business growth.

Home Care Associates, long-recognized for its outstanding work in training and employing home health aides, is receiving funding from PJI to expand its program to include training and placement services for other employers in the healthcare field. Home Care uses an innovative trial placement approach – providing employees to healthcare providers on a 90-day temporary service contract after which the employee is hired on a permanent basis.

In the healthcare field, PJI also supports the Campus Boulevard Corporation (CBC), a successful healthcare administration-training program that emphasizes increasing the network of employers with whom it contracts and making training as cost-efficient as possible.

Another PJI-funded program, Metropolitan Career Center (MCC) Project Strive, is a 3-week intensive program based on the successful Strive program in New York City. Designed to prepare participants for the world of work, the program emphasizes the so-called "soft" or social skills people need to adjust to work. Strive has developed a remarkable reputation for working with people who have poor work habits, limited work skills, or insufficient social support.

By systematically linking workers to growth sectors through these various efforts, PJI tries to make the labor recruitment market more efficient by reducing the cost of labor recruitment, particularly for economic sectors made up principally of small companies. In this way, the community-based agencies have an active link to the mainstream economy.

DVCRF Ventures: The Capital-Labor Linkage

Alongside the workforce initiative, DVCRF has launched a venture capital firm (DVCRF Ventures) to invest in growth-oriented businesses that have the potential to create high-quality jobs for entry-level workers. Capitalized initially with $8 million in equity from banks, insurance companies, and foundations, DVCRF Ventures is pursuing deals in similar sectors to those within which PJI is working. DVCRF Ventures identifies profitable, growing firms with sales around $1 million and aims to grow them to companies of $5-$10 million in sales.

While many of the firms in which DVCRF Ventures invests are too small and not profitable enough for conventional venture capital firms, there have been several instances in the first year of the portfolio where Ventures was able to attract other venture capital into the deals. In addition, Ventures has received significant financial and volunteer support from leading venture capitalists in the region.

DVCRF Ventures has been able to attract traditional venture capitalists for a number of reasons. First, some venture capitalists are in fact civic minded, and are willing to use their money and skills to do more than just increase their personal wealth. Others realize that DVCRF helps minimize work and risk by initially arranging deals and sharing transaction costs. Still others participate because of their familiarity with DVCRF's credibility in the marketplace. Experience developing such relationships is in itself an asset.

Further, DVCRF Ventures offers a link to the workforce projects within PJI. In many instances, employers are able to access both capital and workforce assistance at the same time. Thus, two of the early DVCRF Venture deals – CEMA Technology and Integrated Medical Management – are working with PJI to design entry-level training assistance that makes use of PJI service providers. Those two projects will result in more than 300 new jobs. Small growth companies, like the above examples, often do not have the in-house capacity to identify the most efficient sources of trained labor. And yet, their growth is partially predicated on their capacity to identify and retain an appropriate work force. By acting as both venture capitalist and human resources consultant, DVCRF is able to position itself between business growth and inner-city labor, providing value to both. Moreover, as an intermediary of capital and labor, DVCRF expands its ability to play a "systems change" role in a particular sector – making labor recruitment and training more efficient, changing public policy that affects particular sectors, and developing relationships between companies for co-bidding, marketing, expertise sharing, and investments in human resources.

The Jobs Policy Network

In order to transform the ideas, relationships, and data of PJI and DVCRF Ventures into the broader policy arena, DVCRF, in collaboration with a Philadelphia-based civic group, the 21st Century League, has sponsored a new regional organization called the Jobs Policy Network (JPN). JPN's purpose is to advocate for those public and private sector policies that will reduce the barriers to increased employment.

JPN's recommendations for a regional workforce strategy will be organized around the best data available on job availability, the nature of labor skill gaps, and the barriers that keep supply and demand from forming an efficient market. The strategy will provide direction for how a regional delivery system, or systems, can be formed. The recommendations will focus on industry sectors that will drive economic growth and hence make the region more competitive. In contrast to other work being done in this area, the JPN strategy will address the full spectrum of workers – people moving from welfare to work, incumbent workers, and higher-end technical workers. The JPN regional strategy is designed to become an organizing tool, focusing common interests in discrete public and private sector policies that are barriers to growth.

The network's members are diverse but clustered around three major groupings – employers, training providers, and workers (represented principally by labor unions, CBOs, and church leaders). During its first full year of operation, JPN is concentrating on expanding its membership (presently 75 institutions and businesses), issuing a series of policy papers, and organizing support for a statement of principles that it considers the backbone of good workforce policy. By the end of the year, JPN hopes to galvanize civic and business leaders around the development of a comprehensive work force strategy for the region.

New Allies, New Roles

The Jobs Initiative, DVCRF Ventures, and the Jobs Policy Network are just three of many possible approaches to linking low-income, inner-city residents to regional economic possibilities and growth. Viewed either separately or through their more complex relationship, these three initiatives and others require DVCRF to forge new partnerships and assume new roles. New allies range from community colleges, suburban businesses, and environmentalists, to regional business associations, venture capitalists, and transportation authorities.

Combining these new links with the more traditional relationships of community development – churches, CBOs, local businesses, and service facilities – DVCRF is re-defining the nature of its business. It no longer views its role as an intermediary as a financial and technical services process tied to discrete projects or deals, but rather as having a broader civic meaning. This new approach is as much about ideas, information, and relationships as it is about projects. The value added to low-income neighborhoods is not only directly through investments or expertise applied by businesses or community development organizations but through a more complex web of regional transactions that have low-income residents and urban neighborhoods as a significant stakeholder and customer.

Copyright 1998


Jeremy Nowak is executive director of the Delaware Valley Community Reinvestment Fund, 215-925-1130.



 
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