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New paper explores the connection between economic growth and opportunity in smaller legacy cities

By Torey Hollingsworth, GOPC Manager of Research and Policy A new report examining the role that funders can play in promoting equitable economic growth in smaller legacy cities was recently released by a collaborative of four Federal Reserve Banks and members of the Funders Network for Smart Growth and Livable Communities. The report features case studies from four smaller legacy cities – Cedar Rapids, IA; Chattanooga, TN; Grand Rapids, MI; and Rochester, NY – that have shown some signs of economic revitalization since the Great Recession. The report’s authors travelled to each of these cities to get a better sense of whether there was an “arc of recovery” for revitalizing smaller legacy cities and to see what lessons could be learned from these comparatively strong communities.

Instead of identifying a single arc of recovery, the authors observed that there are truly two arcs of revitalization in smaller cities: an arc of growth and an arc of opportunity. The arc of growth reflects improved economic performance, with stabilized or growing populations, increased jobs, rising household incomes, new business starts, and other signs of economic growth. The arc of opportunity, however, traces how widely the benefits of economic growth are shared within the community. While each of the cities examined were moving steadily along the arc of growth, few of them appeared to have made significant progress in spreading opportunity among all members of the community, particularly low-income and minority residents.

In studying the arc of growth, the authors found important common features among the case study cities. Economic revitalization in each of the communities was kick-started by some kind of catalytic event that convinced local leaders they had to take action. Leaders from a variety of sectors, including the business community and philanthropy, stepped in to address significant challenges. Critically, these leaders – locally-focused funders in particular - could provide access to long-term, patient capital to fund revitalization efforts that did not align well with the time-horizons of public dollars or most private capital. These projects were largely successful in reshaping downtowns, but their benefits did not spill into neighborhoods across the city.

Local stakeholders reported that conversations about revitalization were beginning to acknowledge that economic growth alone may not be sufficient to improve outcomes for all residents. This mirrors the conversation in the academic literature, which is increasingly coalescing around the notion that inclusive growth is more sustainable and robust than growth that only benefits some people. The authors conclude that local funders have a unique role to play in helping to unite the two arcs, due to their access to patient capital for revitalization projects and their role as conveners of cross-sectoral partners. In particular, funders can promote accountability in connecting growth with prosperity by continually raising the “equity question.”  

The authors also identified promising strategies that funders in the four case study cities had begun to pursue to ensure broader access to the benefits of economic growth:

  • Place-based interventions to address poverty: Funders are engaged in multi-generational, multi-pronged approaches to poverty reduction that are focused on a particular neighborhood or community.
  • Policy changes to address poverty: Funders are advocating for policies that help marginalized communities access opportunity and ensure that economic development efforts help alleviate poverty.
  • Focus on preserving affordable housing while revitalizing downtown: Funders are promoting investments in affordable and family-oriented housing near emerging employment centers.
  • Focus on business retention and supply chain recruitment: Funders are encouraging communities to place emphasis on retaining existing businesses through workforce development and focus recruitment efforts on companies in the supply chain of existing industries.
  • Develop new leaders: Funders are guiding communities to focus on ensuring the next two generations of civic leaders are cultivated and will work to connect the arcs of growth and prosperity.
  • Make evidence-based decisions:  Funders use and publicize data on neighborhood and regional conditions.

This piece raises important issues around how to ensure that urban revitalization efforts are equitable and sustainable in smaller legacy cities and beyond. As more communities recover from the Great Recession, these questions will become increasingly important in ensuring long-term growth and prosperity.