Category: Rebuilding

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Neighborhood Trusts

Local Return supports the recommendation made by the Rhode Island Foundation’s Make It Happen: Investing in Rhode Island’s Future committee to invest $50 million of American Rescue Plan Act funds in neighborhood trusts.

A neighborhood trust is a collection of funds, controlled by members of the community for the long-term benefit of the community. This is a way of getting funds directly to neighborhoods that have been hardest hit by both COVID-19 and generations of financial disinvestment — and generating economic activity, local agency, social resilience, and community wealth.

$50 million could seed nine neighborhood trusts, along with robust technical assistance for the first five years and legal support upon start-up. View the slideshow above for more details on our proposal.

Do you believe in this proposal like we do? Contact your state Representative and Senator now. Tell them:

  • The unequal impact of COVID-19 on neighborhoods stems from decades of disinvestment, racism, and systemic failures.
  • Neighborhood trusts center community decision-making, giving distressed communities local ownership and control of the resources that flow into them. People know their own needs and those of their communities best.
  • I support the proposal to use $50 million of ARPA funds (less than 5% of the Federal Relief Funds allocated to Rhode Island) for neighborhood trusts.
  • This idea has the potential to be truly transformative, and those are the kinds of investments we need to be making right now for Rhode Island’s long-term future.
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A $2.6 billion downpayment

How Rhode Island could use ARPA money to build community wealth and resilience

Congress passed the $1.9 trillion American Rescue Plan Act (ARPA) to “help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery.”[1] The ARPA consists of over 84 unique programs distributed across 19 federal agencies. Rhode Island will receive more than $2.6 billion through state and local aid and targeted investments.[2] 

This money presents an unprecedented opportunity for our small state. While the allocation processes aren’t very transparent, state and local leaders are making decisions now on how these funds should be allocated. These are momentous decisions with the potential to change lives for years to come. 

In the spirit of laying the foundation for a strong and equitable recovery, Local Return offers the following ten examples of potential community wealth-building investments that could be made on the state or local level using ARPA funds. (These suggestions build upon the eight principles we previously shared.) 

  • Individual Development Accounts: IDAs are savings accounts that help people build assets, achieve financial sustainability, and pursue long-term goals. People can use IDAs for buying a home, starting a business, paying for school, or more. The money contributed to an IDA is matched 1:1 or 2:1, helping individual savings go further.

    For example, the Genesis Center / Pawtucket Credit Union Keys To Success IDA helps people match up to $2,000 in savings for the purchase of a reliable vehicle. 
  • Local Currency Stimulus: Municipalities could give a direct stimulus payment to residents through a local currency vehicle that could be used at locally-owned businesses. This would supercharge the benefits of a “buy local” campaign and keep those stimulus dollars circulating in the local economy, creating a multiplier effect.

    For example, in Rhode Island, Bonus Bucks increase the spending power of shoppers using Supplemental Nutrition Assistance Program (SNAP) benefits at farmers markets by providing a 100% match on grocery purchases to spend on fresh fruits and vegetables. Tenino, Washington launched a local currency early during the pandemic. The city of Boston is working with Colu on the B-Local App, which provides rewards for shopping locally.  
  • Local Economy Preservation Fund: The impact of the pandemic on local businesses is still playing out. Businesses may continue to close, or out of state corporations or investors could scoop up struggling businesses. Preserving these local assets and jobs is critical. 

    For example, the Democracy Collaborative and Council for Development Finance Agencies have developed a public funding model called a Local Economy Preservation Fund, which would make equity investments in local companies that were viable pre-COVID and will be viable afterward, place them in a holding company, and provide an exit to community ownership in the recovery. LEPFs would emphasize ownership by people of color, employee ownership, or local ownership that stays local.
  • Exit to Employee and Cooperative Ownership: With our aging population, Rhode Island is facing a silver tsunami. In the coming years, small business owners will be retiring without clear succession plans, particularly in key industries like manufacturing. Employee ownership is a sound model for succession planning. Worker-owned cooperatives have been proven to reduce inequalities in the economic system. Dedicated funding, outreach, and technical assistance should be dedicated to business owners interested in exiting to local, shared ownership. 

    For example, the Ohio Employee Ownership Center at Kent State University provides technical assistance, training, and outreach to business owners looking to exit their business and sell to their employees. The Small Business Development Center and Polaris Manufacturing Extension Partnership, both located within the University of Rhode Island, are natural partners to lead such an effort in Rhode Island. 
  • Community Equity Fund: Access to capital is a major barrier to business ownership for entrepreneurs of color and those in low-income communities, who often don’t have friends or family who can invest early, high-risk equity. They are limited by relying more on bootstrapping, debt, and predatory vehicles. A community-based equity fund that focuses on entrepreneurs who don’t have access to traditional financing would fill a strategic gap in our ecosystem and allow these business owners to start or grow their businesses.

    For example, the Eagle Market Streets Corporation in Asheville, North Carolina, is creating the Community Equity Fund, an innovative opportunity for small person-of-color-owned businesses experiencing barriers to traditional operating capital that offers non-traditional operating capital. 
  • Community Property Ownership: Real estate ownership is a key wealth creation strategy, but it requires money. The “post-COVID19 land grab”[3] has begun, and we know that  speculative property owners can dramatically change the character of communities. There are promising models (such as cooperatives, community land trusts, and real estate investment trusts) that allow small dollar investors to pool their resources to purchase, hold, and develop land or buildings for commercial or residential use. This collective buying power can help preserve local ownership and long-term affordability in places that are ripe for speculation. One particular area of focus should be on innovative, low-risk commercial spaces to support inclusive economic development. While it might take time to establish community ownership structures, governments could purchase and land bank key properties.

    For example, the Sawmill Community Land Trust in Albuquerque, New Mexico, develops retail, commercial, and light industrial spaces that benefit the community with job creation and needed services.
  • Social Infrastructure Grants: Communities that have experienced disproportionate impact from COVID should look inward to the assets (e.g. land, environment, industries, community partners) that exist within their places. Available funds could help provide grants to block clubs, neighborhood associations, and nonprofit organizations to improve vacant or neglected properties and put them to use for community gardens, farms, or pop-up shops.

    For example, in Montreal, a partnership between the city and Regroupement des Éco-quartiers helps residents transform neglected alleyways into ruelles vertes, beautiful spaces for community. 
  • Home Repair Grants and Loans: Aging and low-income homeowners may struggle to keep up with necessary home repairs, leaving them vulnerable to housing instability and loss of assets, and meaning their homes become susceptible to investors who want to flip the properties. State and local programs could make no-interest loans or grant funds available for home repair to preserve naturally occurring affordable housing and local ownership.

    For example, we could extend the economic benefit to Rhode Island by linking homeowners in need of services with graduates of the Building Futures construction pre-apprenticeship program and similar efforts.   
  • Support for Business Districts and Commercial Corridors: Let’s look beyond individual businesses to their environments. We saw tremendous ingenuity by businesses, neighborhoods, downtowns, commercial districts, village squares, and towns in taking community and business outside during the pandemic. Now is the chance to deepen and sustain some of those changes. Funds could be used to reactivate vacant spaces for community or business use, market businesses within a district, make physical improvements to the outdoor infrastructure, host special events, activate alleys, pursue economies of scale, establish business improvement districts, or better link commercial spaces. To be clear, funding is needed for ongoing programming and maintenance, as much or even more than capital improvements.

    For example, Rhode Island could reinvigorate and grow the Main Street Streetscape Improvement Funds from 2016-2018. 
  • Wireless networks in low-income QCTs: With work, school, government, and healthcare going remote, COVID proved that reliable, quality internet is crucial community infrastructure. Funds can be used to improve access to affordable networks.

    For example, ONE Neighborhood Builders created ONE|NB Connects: Community WiFi, a mesh WiFi network that covers 5 million square feet of Olneyville (about half the neighborhood and roughly two-thirds of all neighborhood residents).

These are just ten examples of specific investments that could keep federal recovery dollars circulating longer and multiplying more in Rhode Island, leading to deeper and broader benefits for Rhode Islanders. We strongly urge state and local officials to prioritize investments like these that address long-standing wealth gaps. Wealth matters because it leads to resilience, one’s ability to withstand challenges, persist, and adapt. While COVID did not discriminate, wealthier households had more options to stay safe and recover. 

One last note: Investments should be strategically woven together and targeted to (and, importantly, implemented in partnership with) the most historically marginalized communities. Not surprisingly, the communities hardest hit by COVID are also those which have the largest and most long-standing disparities in health, economic, and social outcomes. We should follow Treasury’s lead and start with the 52 Qualified Census Tracts in Rhode Island.[4]  

Investing $2.6 billion wisely, where it can have deep and long-lasting benefit, is a tremendous opportunity and a formidable challenge. We offer these ideas to provoke creative thinking and productive dialogue, and we would be pleased to help moving forward. 

Footnotes:

[1] Treasury.gov

[2] Economic Progress Institute of Rhode Island

[3] Phrase borrowed from Nikishka Iyengar and John Haines, Next City op-ed. 

[4] Qualified Census Tracts must have 50 percent of households with incomes below 60 percent of the Area Median Gross Income or have a poverty rate of at least 25 percent. According to HUD, Rhode Island has 52 QCTs.

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Join us to talk about Community Investing in RI

To build a just local economy and strengthen our community resilience, we need a more robust set of tools. Local investing is one potential solution. On Wednesday, August 4, Local Return is hosting a community planning session around local investment. 

We’ll continue the conversation we started at Local Investment 101, a workshop series with Community Economist Michael H. Shuman.

All are welcome; previous participation in the workshop series is not required. Please register in advance. (This event is in-person.)

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Community Conversation with Karen Figueroa and Pam Jennings

“It’s giving people real power over the money and decisions that impact their community under the assumption that it’s the people that use those spaces and are walking the streets and in the schools every day that…have a pretty good knowledge of what changes and what things they would like to see happen.”

This, says Pam Jennings, is participatory budgeting. 

Last year, Pam and Central Falls City Council President Jessica Vega taught a semester-long elective class at Central Falls High School on participatory budgeting, with an actual budget of $10,000 available to spend. Karen Figueroa, then a junior, enrolled in the class and served on the project’s steering committee. “I thought that it was really cool how students could be able to change something in the school,” she said. 

Students submitted their ideas — about 300 of them — and the class organized them into similar themes. Committees within each theme worked together to develop plans for how the $10,000 could be used. Then the students voted, using real voting machines, on ballots printed in three languages. The winning idea? Improving the school’s bathrooms. “We finally have real mirrors,” said Karen, who will be studying political science at Salve Regina University next year. “And we also finally have soap and enough paper towels and toilet paper in the bathrooms. Most of the time, we didn’t have any of that.”

People know best what they and their communities need, and decisions for how resources are allocated should be made as close to the ground as possible. This fundamental principle applies to all community investments, and we hope our leaders will keep it in mind as millions of federal recovery dollars flow into the state.

Follow along with Central Falls Warriors for Change.

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A Call to Action: Building Local Wealth and Resilience

COVID has changed us. The global pandemic has hit home — for many of us, quite literally, in sickness, death of a loved one, loss of a job or business, or drastically different daily realities. We are hopeful to see vaccinations and signs of reemergence, but many of us are still grieving, exhausted, and wary of an uncertain future. For Black and Indigenous people, people of color, and poor and working-class people, the impacts have been felt even more acutely, as was true of the recession a decade ago.

And yet at this time, we must look forward. There is no going back to normal. The damage has been too deep, plus normal wasn’t very good for many of us. COVID has revealed much; as Rhode Islanders, no longer can we claim not to see the disparate outcomes and burdens that persist across our society, fragility of neighborhood businesses, ways systemic racism has been baked into our economy, and even unintentional effects of misguided actions or failures to plan in ways that support all members of our community. And the full economic impact of the pandemic has yet to be felt; there are more challenges ahead for small, locally owned businesses. 

This is our moment to move toward a stronger future, to build deep and wide community wealth and resilience. Wealth allows us — individually and collectively — to control our own economic destiny; it is necessary for resilience: our ability to withstand challenges and persist, adapt, and transform ourselves.[1] Building community wealth and resilience starts small and local. It will require deep stores of imagination, agility, collaboration, patience, persistence, and courage.

A large influx of stimulus money is quickly arriving, and we need to be prepared.[2] Learning from the past, we have an opportunity to ensure that the coming economic recovery period is more just, more inclusive, and better able to build sustainable, shared prosperity for all Rhode Islanders, especially the most vulnerable. In that spirit, we humbly offer the following eight principles to guide Rhode Island’s path forward. 

  • People and place at the center. Regardless of race, gender, class, or zip code, people should have power, choice, and ownership.[3] Wisdom and resilience abound within communities who have faced oppression. Prioritize places that have experienced decades of disinvestment, and let the people who live in those places guide decisions. 
  • Local first. New and existing programs, policies, and spending should be designed and implemented to connect and build upon the assets we already have: the small businesses that drive our local economy, places that make our state special, and groups working to make our state better. 
  • No silver bullet. Economic self-reliance requires a diversity of sectors, size of companies, and types of jobs. It also requires an ecosystem of supports. 
  • Define value. Markets aren’t neutral or inevitable, and all economic activities aren’t equal in value. Our policies and programs should incentivize environmental sustainability, inclusivity, racial justice, and innovation — and we should be able to see these benefits in our community.[4] 
  • Ownership is fundamental. Wealth comes from ownership of assets. Local ownership means local decision-making and local benefits; studies have shown that money spent at local businesses generates as much as a 76% greater return to the local economy than money spent at national chains.[5] Policies and programs should prioritize ownership of assets and invest in locally owned enterprises.
  • Collaborative governance. Too much done under the cover of economic development is about exclusion. People know best what they and their communities need. Decisions for how resources are allocated should be made as close to the ground as possible. 
  • Reclaim finance as a tool for community. Most of our financial investments don’t touch  the businesses and communities we care about. Nationally, Americans invest nearly $56 trillion in stocks, bonds, and other funds, almost all of it in global corporations.[6]  Let’s develop new ways to connect capital to our own communities.
  • Assume abundance rather than scarcity. Focusing on and building the assets in our communities, we can grow an inclusive economy and shared prosperity. 

We offer these principles to help spark a new conversation. We’re committed to listening and learning, and we hope our public systems, institutions, and every household will join us. There are appropriate roles each of us need to play. Rhode Island has been here before, in this moment between crisis and recovery. We have the opportunity to learn from our past experiences and prepare for a better future. 

Signed,
Local Return Board of Directors
Sue AnderBois, Josh Daly, Jessica David, Carmen Diaz-Jusino, Raul Figueroa, and Lisa Raiola

Local Return seeks to build community wealth in Rhode Island, particularly in neighborhoods that have experienced historical disinvestment. We are a new organization focused on building the local community investment ecosystem, advocating for local policies and practices that support a vibrant and just local economy, and increasing community consciousness. 

Footnotes:

[1] Our gratitude to Marjorie Kelly for this definition of community wealth-building
[2] H/t Bruce Katz, Colin Higgins, Andrew Petrisin, Michael Saadine
[3] Our gratitude to Common Future for this apt aspiration
[4] H/t Mariana Mazzucato
[5] H/t Institute for Local Self Reliance
[6] Thank you, Michael H. Shuman