State of Green Business
4 techniques to catalyze sustainable small town redevelopment
Today, many cities fully embrace redevelopment as a strategy to revitalize whole districts, as we are witnessing in old manufacturing centers such as Detroit, Cleveland and Pittsburgh. Even smaller cities such as Lawrence, Massachusetts, and Eau Claire, Wisconsin, are getting in on the action. Instead of greenfields, brownfields and their classic, historic architecture, their raw industrial grit, are back in vogue. Redevelopment, renewal and adaptive reuse are no longer buzzwords, but well-established strategies with an impressive track record.
Our firm tends to go into places that have not seen the same degree of rebirth and renewal — places where people want to see their towns spring back to life, but cannot quite find the economic momentum to make it happen. Not all of these communities are in the country. A lot of them are in isolated corners of big cities, such as old manufacturing neighborhoods with few residents and low population density. These places have a lot of brownfields and abandoned properties with immense potential, but little in the way of a business model that can overcome the risks of economic stagnation. What is a developer to do? Are these special, historic properties doomed to disuse and eventual dilapidation?
The key word in the above paragraph is risk, although it is one discussed less frequently in economic development circles where the field tends to focus on gains, growth and potential. Just because one redevelops a brownfield does not mean that customers (or tenants) will flock to it if the community is far from customers, if it exhibits signs of social and economic decay or if it lacks sufficient amenities that many modern workers and entrepreneurs expect from their community. Any successful strategy will not only have to meet the market, but address complex risk factors that include social, political and environmental risk. The social and institutional side are discussed less often, so let us turn to those first.
A social and institutional process
Driving into a town with a boarded-up Main Street or a row of abandoned factories make it look like the community has been the victim of a destructive economic process. In truth, the devastation that is apparent on the surface is really a symptom of deeper social and institutional problems that have been going on for a very long time. Most of these communities fell victim to a severe boom/bust cycle that began with the discovery of a key resource, such as water, coal or minerals. This discovery led to the co-location of firms in one place, which then attracted both skilled and unskilled workers from other communities in search of new opportunities. However, this "growth mentality" often persists even after the core industry has matured or even begun to decline. Usually, the effects of decline really become apparent when the economy is under-diversified: There are no other industries to absorb the surplus labor from the primary industry.
What follows is a cycle through which big expectations about opportunity (the expectation that you can work in the mill for 25 years and retire with a pension) have led to disappointment, population loss or a shift to lower paying work, often in the service sector. Along with that comes a loss of local identity, followed by the erosion of important social institutions that used to bring people together and form strong bonds among neighbors.
Community sociologists call this condition disaffection, or a feeling of disconnectedness and isolation across the whole community. It is important to remember that, when undertaking a development project in one of these communities, people (and institutions) may seem isolated from one another. Everyone may know everyone in a small town, but this does not mean that they get along, or talk productively and strategically about the future of their community.
Taking action and local public activity may be relics of the past, and crime and deviant behavior may be high. This situation is especially common in small, isolated, former manufacturing communities more than agricultural communities, and it is very risky to redevelopment projects.
I have three pieces of advice for making your rural or small town project a success:
- Be more than a developer of places. You will have to be a developer of communities.
- Instead of revitalizing only buildings, you must also revitalize relationships.
- With no economic momentum in the community, if you want to sail, you will have to bring your own wind.
Below are four strategies to make redevelopment projects:
More economically viable, while internalizing external risk, diversifying offerings and amenities, all while getting community members involved to ensure that the project is culturally appropriate.
These techniques are not new. In fact, they have more in common with life in the early United States than they do with life in modern times. Back then, techniques revolved around relationships and doing for one another in very strategic ways. Blending them with modern approaches and modern situations makes them feel quite innovative, and we would like to see more of them in common use by developers across the globe.
1. Partnerships and area-wide approaches
In any community, there is always somebody doing something to make the community better. Often times, these activities happen in isolation from one another and are fragmented across the community. You, as a developer, can be a catalyzing force in bringing people together behind your project. Rather than advancing your own vision, find out what others in the community want to see.
Oftentimes, local organizations already have figured out where there are major barriers to development, or major advantages, you have not considered. They can help to co-create the project to be more culturally appropriate. This community spirit can be written right into the by-laws of your project’s business entity, ensuring strong connections with local organizations and possibly local oversight. And, if the community has buy-in, they are more likely to accept the project as one of their own and are less likely to fight you at city hall. After all, you are working with, not against, the community.
Sometimes, brownfield and abandoned properties are very small, spread widely across the community, and the cost of remediating each one individually is cost prohibitive. Cities such as Indianapolis have had success in treating multiple, government-owned properties across the city like one giant property, drastically reducing the cost of EPA assessment and remediation. Instead of thinking property-by-property, zoom out to see the bigger picture across the community. Perhaps other property owners will want to get involved.
2. New economy techniques
"New Economy" techniques are not new, but they feel that way. These economic strategies come from thinkers who were inspired by alternative economist E.F. Schumacher, and especially his book "Small is Beautiful." This book asked what an economy would look like if it prioritized boosting community wealth, rebuilding community life, upholding social justice and harmonizing with the environment over the pursuit of pure profit.
Schumacher’s (and friends) conclusion was to think small: Smaller economic activity; and alternative business forms that cycle profits back to the community. Instead of launching a typical for-profit development venture, the following business forms can enhance community involvement and defray risk:
Many owners, less risk. Cooperatives have been used since the 1800s as a way to maximize the purchasing and production power of small farmers and manufacturers. Cooperatives work just as well for housing, where the risk of owning and maintaining a home is spread across all homeowners in the cooperative. Co-op businesses draw their membership directly from the community, providing a loyal customer base.
Community land trusts
Community land trusts buy the land under properties in order to sell the buildings (and improvements) on top. Land trusts ensure that land values remain affordable in perpetuity, and can be used to ensure that historically important properties are reused by the community instead of being knocked down.
Sometimes, the best use for a property is empty space, done tastefully. Commons areas give the community room to breathe and a space for interaction, festivals, markets and public activities. They can beautify the community and raise property values in the surrounding area.
CSAs and CSIs provide agricultural and other products directly to local community members, ensuring a continuous customer base that keeps profits in the community.
3. Hybridizing strategies
Any of the above strategies provide viable alternatives to traditional redevelopment. But alternative strategies really gain their power when they are blended effectively. Hybrid strategies diversify projects much like a stock portfolio, ensuring that each project has more than one single use at any time. This is especially useful in places that lack zoning, or have flexible zoning regulations. When projects have a single use, such as redeveloping a warehouse to become affordable housing or a maker space, there is a real possibility that the project could fail, taking all investment with it. This is especially destructive in a small town. However, by launching affordable housing jointly with a food hub and a food entrepreneurship incubator, the risk of failure of one project is more likely to be buffered by the other two. In the event of a failure, project coordinators can quickly "pivot," replacing the failing activity with another activity that may not have been as apparent prior to the launch of the project. Hybridization not only puts eggs into more than one basket but produces the "wiggle room" necessary to tweak the overall business model.
Put simply, grants are going out of style. Good redevelopment projects in rural areas and small towns should not rely on external grant funding that is not directly controlled by the community, as this brings external risk to the table. Good projects should have a viable business model from the first day of planning that can support the project in perpetuity. Building on what we know about hybridization, not all hybrid projects have the same profit potential.
A community may really want a food hub, and may need affordable housing. Some clever market research will show that a related idea, a commercial kitchen and food business incubator, actually has a much higher profit potential than the other two ideas. If your project must be launched in segments, always begin with the highest profit potential activity first. This can then support the other activities as they all grow at different rates. Thus, the commercial kitchen can kick-start the launch of the food hub, opening access to local food, which enhances the commercial kitchen incubator. This power duo then can be used to launch affordable housing (a low-profit venture), which can house more potential food entrepreneurs, and so on.
Just because a community is rural, remote, small or isolated does not mean that property redevelopment and community revitalization are not possible. It just means that a different set of techniques need to be blended together to address the social and institutional risks associated with such projects. We look forward to hearing how you are applying (or plan to apply) these techniques in your own communities. Like redevelopment itself, we hope these and other innovative techniques will become more commonplace in economic development circles. Often times, the key to reconstituting community life is not building back to the original density. It’s building more diverse projects at a smaller scale.