Case Study

Oklahoma City

Oklahoma City outsources components of its economic development programming to the Oklahoma City Chamber of Commerce.

The parties agree to an annual contract for services, with rigorous reporting requirements and proper oversight. This contract, which can be found in Appendix N, is an excellent example of a comprehensive engagement agreement, containing all key elements needed to define the relationship.

The arrangement was put in place during a period of economic turbulence. The leadership was provided by the mayor and the leaders of local companies, like Kerr-McGee, Devon Energy, Chesapeake Energy, Oklahoma Gas and Electric, and Opubco.

They agreed that the city should focus on infrastructure and public improvements, while the Chamber should deliver branding, marketing, and business recruitment, retention, and expansion.

Critical to the arrangement were a very high level of trust, aligned vision and goals, and shared commitment to partnership.

The chamber subsequently led a successful campaign to win residents’ approval for the city’s MAPS programs for public improvements (see case study referenced in “Reallocating Funding” Section).

The relationship between the city and chamber has evolved over two decades and changes in leadership, but it continues to be based on a shared vision for the community.

How to Adapt this Approach

1. Undertake an analysis of program returns on investment and potential cost savings. (Note: this will be challenging if program owners report only activities delivered, and not outputs and impact).
2. Identify potential organizations which have the experience and capacity to deliver the programs.
3. Draft a request for proposals which clearly defines the scope of work, output-focused key performance indicators (not activities delivered), and how the organization will be expected to engage the City.
4. Create a contract for service that clearly outlines roles, responsibilities, and expectations.
5. Require a say in the recipient organization’s governance arrangements (e.g., board observer, quarterly reporting, step in audit rights, etc.). In all likelihood, the city will become the recipient’s largest funder. As such, it is appropriate for the city to have a role in governance and oversight.
6. Make sure the contract includes output focused key performance indicators, with agreed definitions and metrics and clear milestones.

If the recipient is likely to be a chamber of commerce, or free-standing economic development corporations, satisfy yourself that the organization:

• Has a credible track record of success.
• Has performed at a high level over a long period of time.
• Will be viewed by stakeholders and residents as credible and apolitical.
• Will be able to deliver the program more effectively.
• Will be able to leverage third-party funding for the program.

How To Adapt this Action:

Although a model doesn’t yet exist for this program, this action draws on a proposal for A Homestead Act for the 21st Century by Professor Mehrsa Baradaran from University California at Irvine.

Based on this proposal, cities should follow the steps below:

1. Evaluate needs in disinvested communities
   • Host community forums and survey people who would want to start a business with available funding
   • This outreach must focus on low-income and communities of color.
2. Determine how to issue loans to companies
   • Cities can directly issue the loans, but this will require significant financial expertise.
   • Alternatively, cities can work with local banks and financial institutions (e.g., Black-owned banks, credit unions) and provide backing for loans to be issued to low-income and communities of color based on relevant criteria.
   • Neither model means that cities or banks should issue risky loans. Instead, they can prioritize criteria that are indicators of success (e.g., sound business plan, identified service gaps in communities), over ones that often cause Black and other minority-owned businesses to be rejected for funding at higher rates (e.g., lack of credit history).
3. Explore potential partners for action to maximize impact and minimize risk
   • Many philanthropic partners are dedicated to increasing access to capital for minority-owned businesses. Some may be willing to match funds.
   • Minimize risk by seeing if local non-profits, education institutions, community leaders, and businesses will serve as guarantors on loans.
4. Determine criteria for issuing loans to businesses and individuals
   • Do not use an applicant’s social network to determine loan eligibility. Instead, focus on non-discriminatory factors (e.g., history of paying bills on-time, strength of business plan).
   • Engage non-profits, CDFIs, and other community-based organizations to identify gaps in traditional lending sources.
5. Launch pilot with alternative funding source (e.g., not municipal bond) to demonstrate effectiveness of loan offerings
   • Given the unique nature of offering loans based on a separate set of criteria, a city should launch a smaller pilot (e.g., loans to 5-10 businesses based on the new scoring criteria) to demonstrate success.
6. Consider type of bond issuance
   • Although revenue bonds, tied to businesses’ potential revenue, may make sense given the bond’s purpose, cities should decide what type of bond issuance (e.g., general obligation bond) makes the most sense given their unique financial circumstances.
   • Review and follow the rules set out by the Municipal Securities Rulemaking Board.
     • Note: these rules are relevant for all municipal bond issuances.
7. Work with city council to obtain approval for bond issuance
   • It will be critical to get your city council’s backing for this project. Using researched alternative criteria should not lead to a lower default rate, but there is always inherent risk when issuing loans. Having the support of your city council and Mayor for this will ensure that you are not criticized in the short-term if there are loan repayment issues.
   • Leverage pilot findings to show the potential impact of the full bond issuance.
   • This bond issuance can help facilitate access to funding for several populations, including:
     • Low-income, Black, and other residents of color who need homeowner loans
     • Mid-size business support loans (as proposed in this toolkit)
   • Note: local circumstances will dictate how loans can be issued. Given states often prevent cities from explicitly considering race, many will want to prioritize residents based on income tracts, or other relevant measures (e.g., access to capital) that will help the city’s most vulnerable residents.
8. Issue bonds and launch a marketing campaign to make communities aware of the program and garner interest, with a particular focus on low-income and communities of color.
   • Leverage community partners, nonprofits active in these communities, and other relevant community organizations.
   • Offer information on this program at community gatherings (e.g., entrepreneurship meetups, financial empowerment center 1-1 meetings)
9. Track progress and revise program as necessary.

Case Study

Nashville, TN: Financial Empowerment Center

The Nashville Financial Empowerment Center (FEC) operates under a simple premise: that an “increase in the economic well-being of any Nashvillian improves the overall economic climate of the whole city.” Founded in 2013, the Nashville FEC is a free 1-1 counseling program for all residents in Nashville provided by the government and United Way. Counselors will help with a variety of personal finance issues — such as how to negotiate debt, what to look for in a loan, or even just general financial literacy.

The City recognized the need to establish the center because there was a relative lack of financial empowerment services in the city. After researching nonprofits that work in the space, it settled on a partnership with United Way, given the organization’s visibility and track record in this space. Nashville chose to place the FEC within the Mayor’s office to ensure prominence and attention. It has since established an office dedicated to implementing financial counseling and integrating it with other government and social services (e.g., affordable housing). Nashville set aside ~$250,000 per year to cover the shared costs with United Way.

As the FEC was growing, Nashville made a dedicated effort to attract and develop partnerships. The City hosted a summit with existing and prospective partners in the community to discuss how best to provide counseling, and identify additional opportunities for collaboration. They used these partners to better understand residents’ needs (e.g., debt reduction, increasing savings) and how the center could best reach and support residents. These same partners provide ongoing feedback to the FEC to help them continually improve their offerings. For example, they have prioritized hiring counselors who speak Spanish as a primary or secondary language after they noticed that Spanish was the main language of 12.4% of clients.

Since it was launched in 2013, the Center has helped 7,700 clients reduce their debt by $14.2 million and increase their savings by $2.9 million. It has made a concerted effort to reach out and serve low-income and people of color. 54% of FEC clients identified as African American/Black and 21.2% identified as Latino/Latina. Nearly 18% had not completed high school and 61.8% of clients had very low incomes (relative to the median income). The FEC also conducted targeted outreach to certain sectors of the population (e.g., low-wage workers, those seeking assistance with food, utility, etc.) to determine how the center could be helpful.

Case Study

St. Louis Mosaic Project, St. Louis, MO

Highlights:

• The St. Louis Mosaic Project is a regional initiative, housed within the St. Louis Economic Development Partnership and the World Trade Center St. Louis.
• The effort was catalyzed by a research study which found that St. Louis could gain a competitive advantage by attracting and supporting foreign-born talent, including immigrant entrepreneurs. The project aims to make St. Louis the fastest-growing major metropolitan region for the foreign-born by 2025.
• Mosaic is run by 2.5 FTE and focuses heavily on marketing the region’s economic, civic, and cultural assets to newcomers, connecting entrepreneurs with existing small business support services, and highlighting success stories to promote diversity and inclusion.
  n the 3 years following the launch of Mosaic, between 2014-2017, the St.
• Louis metro area added 2,050 new residents. Without foreign-born individuals moving to and staying in the region, it would have instead lost more than 14,000 residents.

The St. Louis Mosaic Project launched in 2012 after a local research study found that the region’s growth could be jump-started by attracting and retaining new foreign-born residents. Mosaic is a regional initiative managed by a staff of 2.5 FTE, housed within the St. Louis Economic Development Partnership and World Trade Center St. Louis, and led by a 32-member steering committee.

Mosaic’s overarching goal is “25 by 25”: to add 25,000 new foreign-born residents to the region and become the fastest-growing major metro area for immigrants by 2025. As part of a multi-pronged approach, one of Mosaic’s primary goals is to connect immigrant entrepreneurs to local resources that will help start and grow their small businesses.

Mosaic has grown rapidly, launching new programs and engaging hundreds of partners across the region. The Mosaic Ambassador program — designed to help the region become more globally welcoming — boasts more than 850 Ambassadors, 65 Ambassador Schools, and 34 Ambassador Companies. Through Mosaic’s Global Talent Hiring Program, the staff works with international career advisors at the region’s 17 university partners to assist some of the 9,000 area international students to network and prepare to interview with local companies.

In addition, Mosaic offers a Meet-Up group designed to make social connections for trailing spouses of international executives. The group currently has nearly 500 women representing 76 different countries. A Professional Connector Program facilitates introductions between work-authorized foreign-born professionals and well-known “connectors” for career networking referrals. These professional and social connections have been proven to help newcomers achieve a true sense of belonging to their adopted hometown.

Case Study #1

Baltimore Health Corps

Baltimore City Mayor’s Office of Employment Development- Baltimore, MD

Program Overview:

• Temporary employment for over 300 community members
• Focus on career pathways within health care
• Upskilling training available
• Support services for workers

In March of 2020, the Baltimore City Health Department, Baltimore City Mayor’s Office for Employment Development (MOED), Mayor’s Office of Performance and Innovation, Baltimore Corps, the Baltimore Civic Fund, HealthCare Access Maryland, Bloomberg Philanthropies’ Innovation Team (i-team), and Jhpiego, a Johns Hopkins University affiliate, partnered to address the dual need of responding to the public health crisis caused by the pandemic and rapid reskilling and reemployment of the available workforce.

The new initiative, the Baltimore Health Corps, focuses on contact tracing, a method of identifying people exposed to the novel coronavirus, with the intent of preventing and containing transmission.

Resources:

• Baltimore Health Corps website
• Baltimore Health Corps job listings
• Baltimore Mayor’s Office of Employment Development website
• Rockefeller Foundation press release

Case Study #2

Train for Jobs SA, San Antonio, TX

Program Overview:

• Training stipend of $15/hr
• Up to $450 per week
• Up to 10,000 residents by September 2021
• Anticipate 80% receiving wraparound support

In May 2020, Workforce Solutions Alamo (WSA), in partnership with the City of San Antonio and Bexar County, established Train for Jobs SA, a training program designed to quickly upskill dislocated individuals for high-growth industries and occupations.

In addition to free training, participants also receive weekly stipends and significant wraparound services to support successful completion of the program and then placement into a job. The program was made possible through the commitment of the City of San Antonio and Bexar County officials who prioritized workforce development as their leading strategy to guide the city into and through recovery from the pandemic.

The overall goal of the program is to provide economic stability for those who are displaced as well as ensure the talent needed to support local industry is available as businesses begin to recover. Train for Jobs SA aims to serve up to 10,000 San Antonio and Bexar County residents by September 2021.

Eligible participants enroll via phone, and once in the program, complete a skills and career assessment. Participants may then be enrolled in high school equivalency preparation, or short-term, long-term or on-the-job training, all of which are aligned to in demand occupations in the city’s target industries and growth occupations. There are a myriad of training courses available, both on and off of their Eligible Training Provider List (ETPL).

Qualified participants are eligible to receive stipends of $15/hour (for between a minimum of 6 hours and a maximum of 30 hours per week) for actual time spent in an approved training program, up to a maximum of $450 stipend per week. The stipend is made available for the full length of the training, with a focus on participants attaining new skills or credentials and keeping them engaged after the training to advance on a career pathway.

Train for Jobs SA is also a key driver supporting the City of San Antonio’s long-term goal of decreasing economic segregation. The program developed and uses an equity matrix questionnaire to identify participants in specific areas who are more at risk and prioritize them for enrollment and additional services.

Up to 80% of program participants are anticipated to receive comprehensive wraparound support such as case management, career navigation, and connection to other Workforce Innovation and Opportunity Act (WIOA)-funded services.

Resources:

• Train for Jobs SA informational site
• Participant site
• Workforce Solutions Alamo site
• San Antonio equity maps
• San Antonio, TX press release – $2 Million Dislocated Worker Upskilling Grant
• San Antonio, TX press release – $450 Stipend for Retraining

Case Study

Wilson, North Carolina: Greenlight Community Broadband

Wilson, North Carolina (population ~50,000) was facing an uncertain and troubling economic future. The decline of the manufacturing and tobacco industries had impacted their economy and lack of job availability was causing many to leave the City. Recognizing that it needed to adapt to the changing employment landscape, the town decided to prioritize broadband installation to enable people to work remotely. Wilson met with its local cable provider and tried to convince them to expand access. But the cable company explained that it would be impractical to install high-speed internet because the City was not densely populated. After declining the City’s offer to handle the cost, the company “laughed” at Wilson’s suggestion that it would build its own wifi network. That prompted the City to create the “first-gigabit city”, establishing the Greenlight Community Broadband to provide broadband to the entire community.

After attempting to find partner companies, Wilson proceeded to build the network itself. The City borrowed $33 million to build the system, finishing construction and providing internet to the entire City by 2009. All schools have 100 mbps (or more) and the entire community is able to access gigabit speed. Greenlight is on track to pay back its loans on time.

Since providing the gigabit internet, Wilson has seen a significant increase in economic development, with businesses moving to the City and people able to more easily work remotely. Barton College has been able to attract better students, develop advanced curriculum, and better place students into jobs. Additionally, the launch of Greenlight has led to competitor prices dropping in the City. A study found that the community saved $1 million per year from more affordable rates because of Greenlight, while broadband rates have consistently increased in surrounding areas. Greenlight’s price for a 100 mbps internet connection is less than what some individuals in nearby communities pay for 10 mbps. Greenlight is community-owned and provides the full range of broadband services (e.g., installation, repair, etc.) to the community.

Note: Broadband deployment regulations vary by state. Some, such as North Carolina, prohibit municipal broadband and have prohibited Greenlight’s expansion into surrounding communities. However, there are several options to consider when deploying broadband. For some communities, short-term access can be provided through subsidies and mobile hotspots. One non-profit, Connected Nation, works with local communities to identify demand for broadband then presents this information to broadband providers to show the business case for broadband expansion. Their work expanded broadband availability in Kentucky from 60% to 95% of households.

Case Study: Balanced Public-Private Partnership

Westminster, MD: Carroll County Public Network (CCPN)

Westminster, Maryland (population ~18,000) had significant issues with broadband access and many residents lacked access. To facilitate access, the County, Public School System, Libraries, and Community College formed the Carroll County Public Network (CCPN) to focus on improving access. CCPN partnered with Ting – an internet service provider – to provide access to its residents. Westminster is responsible for network construction and owns all fiber infrastructure. Ting provides service to residents and leases access. After an initial exclusivity period, competitors will be allowed onto the network.

Initially designed for only businesses, the network has since broadened to include residents due to its popularity. Adoption rates have been high and one IT company even moved their operations to Westminster – a town of 18,000 residents – because of the improved connectivity and other low costs. The agreement requires Ting to answer all customer calls with a human representative.

Case Study #1

Personal Protective Equipment (PPE) Grant and Procurement Fund – Baltimore, MD

In April 2020, the Baltimore Development Corporation (BDC) established two funds to help Baltimore manufacturers meet local demand for PPE by frontline workers and residents.

BDC created a $150,000 PPE Grant Fund to help manufacturers off-set costs to convert operations to PPE production. The fund awarded grants of up to $15,000 to fund equipment modifications, materials, and labor associated with the manufacturing of specific PPE needs identified by public health officials.

BDC’s ability to engage local manufacturers rapidly was aided by the Made In Baltimore program, which had built communication channels and trusted relationships prior to the pandemic. The program helped to identify and vet which businesses would be able to handle a rapid emergency pivot and response.

Critically, the City allocated $400,000 for a Local Procurement Fund to purchase locally made PPE for frontline City workers. The fund was administered by BDC, which streamlined the procurement process, thereby creating immediate demand for makers and kept City procurement dollars local.

In terms of impact:

• The grant fund supported 15 businesses, 53% of which were women-owned and 33% minority owned. It supported the production of 84,000 masks, 30,000 face shields, and 33,000 gallons of sanitizer.
• The procurement fund contracted 6 businesses, 50% of which were minority-owned or led. It procured 45,000 face masks, 2,500 face shields, and 16,200 isolation gowns.

Case Study#2

Resurgence Small Business Fund – Atlanta, GA

In August 2020, Invest Atlanta, the City’s economic development authority, launched a $17 million fund providing grants to small businesses trying to safely reopen and adapt to the COVID-19 environment.

Eligible applicants can be awarded up to $40,000 and an additional $10,000 for technical assistance in finance, legal, workforce, and technology from 13 business support organizations contracted by the City.

The Resurgence Small Business Fund is weighted towards businesses that are in lower-income communities, MWBEs, long-term growth sectors, longevity of business in Atlanta, those that have not received other COVID-19 relief, and businesses who have demonstrated planning for reopening and adaptation to COVID-19.

It is funded through the CARES Act, and grants are provided on a reimbursable basis.

Case Study

San Francisco, CA: Surety Bonds Program

San Francisco created a surety bond program to enable local businesses to compete effectively for government contracts. For local businesses that need funds to compete for government contracts, the city government will guarantee up to 40 percent of the face amount of the bond, or $750,000. Launched in the mid-1990s, the city started the surety bond program as a pilot program for their international airport expansion project. Based on the positive feedback and success from the pilot, the city established the broader surety bonds program.

The Surety Bonds program was established as a complement to the local business preference program and enables small businesses to compete for government contracts. As long as a business has been deemed eligible, they can apply for the surety bond. All city departments contribute a certain amount of their contracting budget to provide the guarantee for the bonds. Despite concerns about the potential cost of the government having to guarantee loans, only 2 projects with a surety bond have defaulted in the 20+ year history of the program.

Part of this success is due to the associated technical assistance. Most businesses that are receiving support are required to attend the bonding assistance training program. This programming includes assistance for completing bond applications and the pre-bond surety profile, help developing financial statements and establishing internal financial control systems, and how to implement accurate financial reporting tools.

Note: Although the program does not have defined metrics, the attached document highlights what should be considered with implementation. This includes tracking the # of businesses that apply for the program, the number of businesses awarded surety bonds, how many successfully win contracts, and long-term benefits (e.g., if a business is able to compete for other large contracts in the future).

While the San Francisco program focuses on city procurement and government contracting, cities should design programs that assist businesses in contracts with anchor institutions and other large corporations based in your city. Programs can be launched with a focus on government contracting – which may be easier to set parameters for – but with a goal of expanding for all larger contracts in the community.

Case Study

San Francisco, CA: Local Business Enterprise Program

The City of San Francisco has implemented a local business enterprise (LBE) preference program that is designed to increase the number of government contracts going to local small businesses in the city. The program — enacted carefully to be in accordance with state and federal contracting laws — enables local small businesses to compete for contracts. The local business enterprise preference program was accompanied by strong technical assistance. It was implemented after a 2004 State Superior Court decision ruled that the previous local business preference program had violated Proposition 209, a local ordinance prohibiting discrimination based on race.

The new local business preference program was formed with this context in mind and focuses on goals for engaging local businesses. The Mayor sets a goal for the City every year and the City provides bid discounts, set-asides, and subcontracting opportunities to make it easier for local businesses to win contracts. There is also a Human Rights Commission which is focused on increasing minority-business engagement.

San Francisco created a free LBE certification process to determine eligible businesses. The city provides a 10% discount on bids for government contracts. The 10% threshold was chosen after the city conducted a disparity study to determine an appropriate rate to counteract lower prices that larger corporations may be able to provide.

To be certified, a business must maintain their principal place of business within City limits and have a majority of principals based in that office. They must also pay at least 51% of their payroll taxes to the City to demonstrate that a majority of their employees are based in their city. The City defines eligible businesses as local small businesses if their average gross annual receipts in the previous three years do not exceed several set limits: (1) public works/construction – $14,000,000; (2) specialty construction contractors – $7,000,000; (3) goods/materials/equipment and general services – $7,000,000; (4) professional services and architect/engineering – $2,500,000; and (5) trucking – $3,500,000. A City office has been given responsibility for review and enforcement and review of these limits. The City has also linked this initiative with its Surety Bonds program to enable small businesses to have a better chance of winning government contracts (this action is included later in the toolkit).

One of the biggest challenges that the City has encountered is ensuring that small businesses are able to complete contracts. Some business owners have never applied for a government contract, nor completed a large-scale project. To address this, the City provides significant technical assistance during the certification process and facilitates connections to other entrepreneurs who can provide insights into this work.

Other Examples:

Chicago also has several programs to support local businesses and advantage them during government procurement processes. The Mid-Sized Business Initiative (MBI) is designed to enhance procurement opportunities for midsize businesses to work with Chicago. The program sets aside certain construction contracts to be made exclusively available to qualified, midsize, local businesses. There are two tiers of contracts: MBI-1 projects with an estimated value of between $10 and $20 million and MBI-2 which are $3 and $10 million in size. To qualify, a business must meet several requirements, including qualifying as a midsize business. This program focuses on construction, but the city has also created a non-construction version, the Non-Construction Mid-Sized Business Initiative (NMBI).

Background:

City assets can include both physical real estate and enterprise (e.g., database) and physical infrastructure (e.g., street lighting).

Cities that are facing funding shortfalls should look at opportunities to monetize or privatize assets. In this way, they may be able to address short-to mid-term budget gaps, avoid layoffs and service cuts, fund new programs, and/or respond to a crisis or unexpected event.

City assets that are commonly commercialized include parking garages, parking meters, airports, landfills, utilities, and infrastructure assets, such as bridges.

Case Study

Surprise, AZ – TechCelerator

During the 2009 Great Recession, the city of Surprise, AZ (a suburb of Phoenix) created a technology incubator to support entrepreneurs. The incubator is housed in a 60,000 ft2, city-owned building, which had previously served as the Surprise City Hall. The city’s economic development team convinced the city’s management not to sell the property while the real estate market was depressed.

Instead, the team rolled up their sleeves and, with volunteers and a shoestring budget of $1,000, created the incubator. This involved making physical improvements to the building, reusing existing furniture, fixtures, and equipment, and assigning a part-time staff person to manage the facility.

The incubator offers start-up space, small business assistance, an incubator, affiliate services, co-working space, and global concierge services (soft landing for international businesses).

It also offers below market rent to local startups, as well as administrative support and access to advisers who help the startups “graduate” from the facility within three to five years. The hope is that these startups will then set up shop in the city of Surprise.