Nowak Lab Newsletters
Linked below are Nowak Metro Finance Lab newsletters, shared biweekly by Bruce Katz.
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A year ago, we wrote about how a period defined by a global pandemic, economic contraction and racial reckoning might become a catalyst for institutional transformation in cities. These profound events have simultaneously exacerbated inequities in our cities and revealed the inadequacies of the current architecture of governance within and across cities. Advancing shared prosperity and racial equity requires structural reform, which even a torrent of federal resources cannot address. Read more...
We wanted to share testimony that was presented to the Philadelphia City Council’s Committee on Fiscal Stability and Intergovernmental Cooperation on April 13, 2021. The testimony builds on two signature research products published by the Nowak Metro Finance Lab and our partners — a Federal Investment Guide to the American Rescue Plan (ARP), which shows how ARP funds will flow to 84 programs from 19 federal agencies via 7 distribution channels, and the Small Business Equity Toolkit, which shows where the top 100 metropolitan areas stood before the pandemic on the number, size and sector concentration of women and minority-owned firms. Read more...
On March 11, President Biden signed the $1.9 trillion American Rescue Plan (ARP) into law. The legislation makes historic investments intended to steer people and places across the country out of the worst economic and public health shock in a hundred years. It strives to make the large-scale impact that the moment demands. To do so, though, the federal government must harness the full capacities of local state, city, and county governments. As we move from policy design to deployment of the ARP, cities and counties must be in the driver’s seat. Read more...
The COVID-19 crisis is America’s greatest economic shock since the Great Depression. It’s landing hardest on small businesses, the heart of local economies and community life. The pandemic has revealed not only the fragility of many of these enterprises but also the profound racial, ethnic, and gender disparities in how they are supported by federal policies, private practices, and local actions. Read more...
Yesterday, President Biden signed the $1.9 trillion American Rescue Plan (ARP). The scale of intervention is historic and unprecedented as befits the devastating impact of this global pandemic.
We now shift from legislation to execution — from design to delivery. There’s a lot in the bill, including substantial flexible resources sent directly to City and County Halls. The question for cities, metros and counties now is a big one:How can communities deploy the ARP in the most efficient and equitable manner? Read more...
The Biden Administration has built the strongest climate team of any U.S. Administration. As this team and their Congressional allies begin to craft federal policies to address climate change, it is critical that they focus on how they can leverage and learn from cities, in the U.S. and beyond. Read more...
As Congress moves closer to enacting President Biden’s $1.9 trillion American Rescue Plan, focus on the elements of a broader recovery package is intensifying. While the relief package addresses the urgent, immediate challenges of the pandemic (including state and local fiscal relief) and accelerated vaccine distribution, the recovery package is intended to address the structural challenges that pre-date the public health crisis: geographically unbalanced economic growth, accelerating climate change, growing income inequities and a reckoning with systemic racism. The recovery package is the vehicle for achieving President Biden’s vision for “Building Back Better.” Read more...
We spent much of last year detailing how the COVID-19 crisis has decimated small businesses, especially Black– and Latino-owned businesses, which have long faced challenging headwinds in the US economy. In order to address these challenges, a group came together to author Big Ideas for Small Business, emphasizing the need for transformative action by the federal government, the financial industry, states, localities, corporations, and other private institutions to reshape our economy so that it works for small businesses, especially Black-, Latino-, and Women-owned businesses. Read more...
The COVID-19 pandemic is a powerful mirror for the current state of U.S. society. It has exposed deep, structural racial and ethnic disparities on income, health and wealth, and barriers to social mobility in the country. In so doing, it has devastated Latino-owned and Black-owned businesses in the U.S., exacerbating what were already substantial gaps in the number, size and growth potential of these firms. It has also catalyzed broader support for racial justice and inclusion across America — recently illustrated by President Biden’s Executive Orders on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government and preserving and fortifying DACA. Read more...
As we look back at one of the worst weeks in U.S. history, with an unprecedented assault on our democratic institutions and processes, cities need to keep an eye on what’s ahead. In the chaos and tragedy of the week it was easy to lose sight of the message coming out of Tuesday’s Senate races in Georgia: Cities get ready, there is a multi-trillion-dollar stimulus coming. Read more...
Last month we wrote that local economic stakeholders could not afford to wait for certainty about the federal balance of power before organizing their plans for recovery. We proposed a five-part roadmap to help them prepare in light of the uncertain prospect of federal stimulus. Today we examine how to advance New Localism generally, and the relationship between the federal government and American cities and metros specifically, in the Biden Administration.
Our thesis is straightforward: governing effectively to build back better from our current domestic crises will require the Biden Administration to utilize the full energy of American cities and metros (irrespective of who controls the Senate).
For many reasons, this is much easier said than done. Read more...
As our nation turns its weary and anxious eyes away from the election, we are thinking hard about what comes next. We are entering into one of the worst phases of the COVID pandemic with massive uncertainty about what type of stimulus will come and when.
Our message here is a simple one: local economic stakeholders cannot afford to wait to proceed until the federal fog of uncertainty lifts. They must start organizing now. Read more...
One of the best parts of my job is the chance to work with reflective practitioners from around the world. These individuals are often at the vanguard of problem solving in our societies, given their unusual combination of subject matter expertise and hard-earned practical experience. This is the essence of New Localism and helps explain the rise of city and metropolitan networks as key agents of change. Read more...
I am participating next week in a UK conference on Creating Communities: Places beyond the Pandemic. The conference is designed to wrestle with the central question: How can place-based policy and regeneration enhance communities and prosperity? Read more...
COVID-19 and the fallout from it confronts Philadelphia with series of overlapping health, economic, fiscal and social crises. These are perhaps the deepest crises the city has faced in modern memory, but its roots are not new. COVID-19 has accelerated and reinforced deep challenges the city was facing even before the pandemic struck — crises of equity and inclusion, of overcoming inequality and deeply concentrated urban poverty, of building a more robust, sustainable, inclusive and resilient economy. It has become something of a cliché to say a crisis is a terrible thing to waste. But we surely can’t waste this one. There is a rare opportunity and obligation to finally address the deep challenges and overlapping crises facing Philadelphia, and build the city back better. Read more...
Throughout the COVID-19 crisis, small businesses have been struggling. As discussed in earlier newsletters, federal relief efforts like the Paycheck Protection Program (PPP) have left too many behind, and the economic road to recovery will be lengthy. Throughout the summer, then, we’ve been working to understand the state of small business prior to the COVID-19 crisis, as a baseline to guide the substantial work that needs to be done during and following the pandemic. This focus has led a group of us to conduct national and state-level analyses of the Annual Business Survey, trying to understand specifically the state of Black-owned businesses in America. We have also done a deep dive into the work of foundations, think tanks, consultancies, constituency organizations, government, and academia to understand what strategies have been deployed in the past to promote economic inclusion and equitable growth. Read more...
Five months into the COVID-19 crisis, the outlook for the country’s small businesses is as murky as ever. COVID-19 cases continue to rise across the country, slowing and halting many states’ reopening plans. Even if we were as far along in combatting the virus as we had expected to be in mid-July, small businesses’ path to recovery would be extraordinarily challenging. Read more...
As Congress negotiates the next COVID-19 relief package, it is clear that the size and incentives surrounding unemployment benefits will be a major focus of contention between Republicans and Democrats in the Congress. We add another proposal to the mix: use unemployment insurance to encourage entrepreneurship as well as traditional employment. At present, in all but five states unemployment insurance only encourages employment pathways into traditional salaried jobs offered by existing companies, even though there are not enough jobs to go around. Fortunately, a solution already exists and is underway in those five states — Delaware, Mississippi, New Hampshire, New York, and Oregon. It’s time to expand it across the nation. Read more...
Our recent analysis of the US Census Bureau’s 2018 Annual Business Survey revealed that there are 124,000 Black-owned employer firms in the US, representing only 2.2% of all employer businesses even though Blacks make up 14% of the US population.[1] Black-owned employer businesses are smaller, with fewer employees, lower average revenues, and lower average payroll expenditures, than businesses overall. That’s partly because these firms concentrate in sectors of the economy that pay less and offer fewer opportunities for productive growth. Read more...
My colleagues and I recently completed an analysis of the 2018 Annual Business Survey to identify the state of Black-owned business on the eve of COVID-19. To refresh: our topline finding showed that there are 124,000 Black-owned employer firms in the US, representing only 2.2 percent of all employer businesses. Black-owned employer businesses in the U.S. are smaller, with fewer employees, lower average revenues, and lower average payroll expenditures, than businesses overall. A key — but not sole — reason for this is because these firms concentrate in sectors of the economy that pay less and offer fewer opportunities for productive growth. Read more...
Since the beginning of the COVID-19 crisis, my colleagues and I have chronicled the impact of the economic shutdown on small businesses in general and on small businesses owned by people of color in particular. This research has taken on new significance in recent weeks with the civil unrest following the horrific death of George Floyd and the intensified focus on police brutality and entrenched racial disparities in income, health and wealth. Read more...
Five weeks ago, we wrote about the shortcomings of the US response to the COVID-19 public health and small business crises and the need for a structural response, particularly the recommitment to, and rebuilding of, our institutions at the local, inter-local, federalist, and federal levels. Given the unprecedented fiscal impact of the crisis, we see the need for a respected federalist intermediary to address the third wave of this crisis—the oncoming state and local fiscal meltdown. Read more...
On April 8, the three of us — along with two close colleagues, Rick Jacobs and Jamie Rubin — published a piece entitled Needed: A Main Street Emergency Act. Our thesis was stark and straightforward. The COVID-19 crisis is wreaking havoc on small businesses across cities, suburban municipalities, and rural towns, particularly micro businesses that employ fewer than 20 employees and offer services vital for our communities. The local relief funds established by public, private and civic stakeholders, while fit to purpose, are already oversubscribed and undercapitalized. And the federal responses enacted as part of the CARES Act are already proving to be insufficient in scale, timing, product and distribution scope to address the needs of Main Street businesses. Read more...
The COVID-19 crisis is wreaking havoc on Main Street small businesses across the United States. Millions of small businesses have shuttered for the duration of the crisis. The hardest hit are Main Street enterprises living on the brink — restaurants, bars, coffee shops, barbershops, hair salons, auto repair shops, dry cleaners and others that provide face-to-face services. These entities, usually sole proprietorships or businesses with fewer than 20 or even 5 employees are running out of cash or already broke. Micro businesses owned by people of color are most at risk, given decades of redlining and structural racism in the financial industry. Read more...
The numbers are simply staggering. As of April 30, 30 million Americans had filed for unemployment since the onset of the COVID-19 crisis. As the United States slowly begins to re-open, the only certainty is that our uncertainty about how best to contain the contagion rules out any quick economic rebound. For the foreseeable future, our economy will stumble through a slow thaw and millions of people will be out of work. Now is the time to help these unemployed workers and young first-time college students acquire the skills they will need to thrive in our tech-powered economy. Read more...
Setting the Landscape
Weeks ago, as the extent of COVID-19’s effects on the economy were becoming a reality, we wrote that the sequencing and deployment of small business relief would be “messy and chaotic” rather than “linear”. Four weeks and one update of the CARES Act later, the situation remains as murky as ever: the spread of the virus is not yet under control, state responses are uncoordinated, and unemployment claims continue to climb. Read more...
As the demand for re-opening the economy takes hold, we must now think about how this will play out on the ground, particularly in those places — our downtowns and central business districts — that form the cores of our cities and metropolitan areas. Central business districts are not only centers of commerce but also hubs of cultural and civic life. Visible signs of revival in these places will go a long way towards accelerating the restoration of public and consumer confidence. By contrast, the persistent presence of empty streets and shuttered shops — buildings intact, but little life within them and few “feet on the street” — will retard the broader revival.Read more...
History teaches us that crises lead to institutional transformation. The United States is no exception and has a long history of new federal institutions being created in the aftermath of crises: The New Deal in response to the Great Depression, the Homeland Security Administration after 9/11, and the Consumer Financial Protection Bureau following the housing crash of 2008/2009. Read more...
The COVID-19 crisis is wreaking havoc on Main Street small businesses across the United States. Across the U.S. tens of thousands of small businesses have closed for the duration of the crisis. The hardest hit are local face-to-face Main Street services — restaurants, bars, coffee shops, barbershops, hair salons, auto repair shops, dry cleaners and others that are living on the brink. These entities, usually sole proprietorships or businesses with fewer than 25, 10 or even 5 employees are running out of cash or already broke. Read more...
As the COVID-19 crisis continues to wreak havoc on small businesses across the country, local and national actors have begun to realize the enormity of the economic challenge at hand. Shortly after a record high 3.3 million in weekly unemployment claims were announced, President Trump signed the CARES Act into law. The race to save our small businesses is on, and it promises to be a challenging one. Read more...
The impact of COVID-19 on small businesses and the places where they co-locate and concentrate — downtown, Main Streets, commercial corridors — has been immediate and devastating.
“Almost overnight, downtowns have eerily become lifeless movie sets — literally former shells of their former selves; the buildings are intact (unlike after a flood), but there is little or no business being transacted given the imperative of social distancing and the collapse of basic consumerism,” we contend in our new report, “Why Erie's Downtown is a Proxy for the Nation: The Future of Main Street Businesses amidst the Covid-19 Crisis.” “If we can keep businesses alive, then the bounce back will be rapid and pronounced. If businesses collapse, then the recovery will be slow and painful.” Read more...
The public health system in the United States, suffering from budget and staffing cuts precipitated by the Great Recession and current administration’s decisions, does not have the capacity to address the coronavirus crisis. We are equally concerned that our current suite of disaster relief and financing programs are unable to respond to the devastating blow dealt to America’s small businesses. Tuesday evening, Treasury Secretary Steve Mnuchin warned that, absent stimulus and intervention, unemployment in the U.S. could reach 20% in the near future. Read more...
It’s hard to avoid the topic of billionaires in Democratic politics these days. Senator Sanders has focused on the 400 wealthiest people who together control $2.9 trillion to justify his agenda of broadly expanding the welfare state. Senator Warren on the other hand, has proposed a wealth tax on households worth more than half-a-billion which would raise $3.25 trillion of federal revenue over the next decade. Vice President Biden, the frontrunner after Super Tuesday, shows less outright hostility to billionaires. Nonetheless, his proposal for raising revenue is similarly oriented to those of Warren and Sanders in focusing on taxing wealth rather than work (especially through capital gain tax increases and closing foreign tax havens). Read more...
In my first newsletter this year, The Year of Advancing Community Wealth, I wrote the following,
“…we need to codify the new governance features and innovative practices used by leading urban institutions and intermediaries so we can speed replication horizontally across cities.”
Read more...
On Monday, Iowa gave a significant boost to the candidacy of Pete Buttigieg, the mayor of South Bend, Indiana. Although the results (incredibly) are not final, Mayor Pete defied recent expectations set by the national media, political pundits and a raft of polls. His performance has prompted me to re-publish an oped that appeared in the Financial Times on December 15, 2019. The opinion piece was my effort to explain how a little-known mayor of a small city could ascend so quickly in in the scrum that is Democratic Party politics. Read more...
In the early days of this year, we’ve both been heartened by the changing behavior of institutional investors towards climate: divesting from the bad and investing in the good.
Earlier this month, for example, New York City Mayor Bill DeBlasio and London Mayor Sadiq Kahn launched the latest version of their Divest/Invest campaign to persuade cities to move pension fund investments out of fossil fuel industries. A growing number of cities around the world — New York City, London, Auckland, Berlin, Copenhagen, Melbourne, Oslo and Stockholm — have signed on and C40 Cities, the international group now led by Los Angeles Mayor Eric Garcetti, has released a high quality toolkit to guide city actions. Read more...
A New Year is a time to plan, which is always a bit daunting for someone like me who likes to dabble, gets easily distracted and is always captured (if not obsessed) by the new and novel. But I did spend some time during the holiday break thinking about how to make 2020 The Year of Advancing Community Wealth, drawing upon the work that I have been doing with Ross Baird, Rick Jacobs, my colleagues at Drexel and a group of remarkable practitioners and organizations from around the country. Read more...
I am thrilled to co-author this newsletter with Megan Humes, a Senior Associate with the Centre for Public Impact (CPI), a nonprofit founded by Boston Consulting Group.
For the past several months, Megan and I (ably assisted by Dan Vogel at CPI and guided by Matt Bergheiser and Sarah Steltz at University City District) have conducted a City Case of the West Philadelphia Skills Initiative. Read more...
In October 2018 I visited Dayton for the first time as part of an Opportunity Zones effort I had undertaken in partnership with Accelerator for America. I did not know then that Mayor Nan Whaley and Shelley Dickstein, her indefatigable City Manager, had a surprise in store for me. They and their colleagues took me for a tour of the Dayton Arcade, an historical gem that was on the verge of rebirth and renewal. Read more...
Anyone who spends 10 minutes watching a Democratic presidential debate knows that we are living through a period of grand re-questioning. None of this should be surprising to urbanists, since cities are at the vanguard of solving the world’s toughest challenges (e.g., growing climate challenges, rising income, wealth, health and spatial disparities) from the bottom up. Given their lead position, cities around the world are re-examining conventional norms around growth, governance and finance and, in the process, creating the new urban social and sustainable contract. Read more...
On Sunday, the Nowak Metro Finance Lab at Drexel University, Accelerator for America and Blueprint Local released Towards a New System of Community Wealth, a new paper by the two of us, Jihae Lee, and Daniel Palmer.
The paper makes some large observations and offers some big ideas for reform and transformation.
Read more...
On a visit to West Chicago earlier this year, the two of us had a chance to tour the Illinois Medical District and surrounding neighborhoods and participate in a discussion about Opportunity Zones organized by Accelerator for America and Anna Valencia, Chicago’s dynamic City Clerk.
The Illinois Medical District, or “The IMD” as it is popularly known, is the second largest urban medical district in the United States. Formed in 1941 by state legislation, it consists of 560 acres of medical research facilities, labs, a biotechnology business incubator, four major hospitals, two medical universities and more than 40 health related facilities. The IMD has more than 29,000 employees, 50,000 daily visitors and generates $3.4 billion in economic opportunity. Read more...
Dozens of mayors will descend upon Copenhagen next week for a meeting of C40, a network of the world’s leading cities committed to addressing climate change. The urgency of the gathering cannot be understated. With climate impact and climate advocacy on a meteoric rise, cities are at the vanguard of both mitigation and adaptation solutions. This is because many cities possess the powers and resources to reorient key sectors of the economy, particularly the energy, buildings and transportation sectors, that disproportionately drive carbon emissions. Cities also represent networks of public, private and civic leaders and institutions that are pragmatic at the core and less likely to be hijacked by partisan rancor and ideological polarization, the curse of our times. Read more...
The other night I re-watched Marshall Corry’s 2005 documentary, Street Fight, about the 2002 Mayoral race in Newark, New Jersey that pitted Cory Booker versus Sharpe James. I highly recommend this film: you will get the full measure of Cory Booker not only as an exceptional leader but as an individual accustomed to battling long odds.
The title of the documentary prompted this newsletter. There is another street fight underway in the United States between major forces: small business versus big box, owner-occupants versus absentee landlords and quality versus parasitic capital. Read more...
During the depths of the Great Recession, the jargon “Too Big to Fail” became commonplace jargon in the effort to restore order to a financial system run amok. The consolidation of financial power has multiple implications. During my exploration of Opportunity Zones, I have observed a fundamental disconnect between the compartmentalized lending and investment practices of large financial institutions (and silo-driven federal and state governments for that matter) and the small, integrated but still nascent regeneration efforts of innovative practitioners in urban communities. I call this disconnect “Too Big to Function.” Read more...
Several months ago, in a paper I wrote for the Knight Foundation (download paper), I identified the lack of local capacity as one of the major barriers to Opportunity Zone success. Read more...
As many of you know from my work with Jeremy Nowak on The New Localism as well as previous newsletters, I regard this period as an era of profound shift in power and responsibility. We are moving from a system of 20th century problem solving that was top down, led by national governments and specialized, vertically organized agencies to a 21st century modus operandi that is bottom up and designed and delivered by horizontal networks of institutions and leaders across multiple sectors and disciplines. Read more...
Eighteen months have passed since the Opportunity Zone incentive created a renewed focus on investing in America’s economically distressed neighborhoods. Through our respective work, in close collaboration with Accelerator for America, we have traveled to over fifty communities across the U.S. to understand and help implement pieces of this new way to invest in American communities. Read more...
Over the past several months I have become intensely focused on how anchor institutions can work harder for the cities where they are anchored. Here is a piece I authored for The Future of Universities Thoughtbook about the role universities should play by the year 2040. The book should be published by the end of August. Read more...
Yesterday the Nowak Metro Finance Lab at Drexel University released the first in a series of City Cases: Cincinnati’s Over-The-Rhine: A Private Led Model for Revitalizing Urban Neighborhoods. Creation of this series was a high priority of Jeremy Nowak and myself in starting our new venture at Drexel, now (unbelievably) a year old. We believed that cities, given their immense and growing responsibilities, require new governance and finance models that organize public, private and civic capital in novel ways. Most 20th century institutions, frankly, are ill-equipped to meet the challenges of our times. They are too tired, too compartmentalized and too narrowly focused (on “housing” or “convention centers” or “stadia” or “community development”) to take the holistic view necessary to drive transformative change. Read more...
As the 2020 campaign takes hold, Democratic candidates have been issuing ambitious proposals about the platform role of the federal government: helping people live productive lives via a robust and secure safety net and (mostly) enhanced investments in health care and housing. We have been hearing much less about how the federal government helps places build prosperous futures by mobilizing the energies and expertise of sub-national players like states, counties, cities, universities and non-profits around issues like innovation, infrastructure and climate change. Read more...
Over the past several months, I have been working with a disparate group of colleagues on two signature studies. Julie Wagner, Tom Osha and I have been writing an update to the 2014 report, “The Rise of Innovation Districts,” in collaboration with the new Global Institute on Innovation Districts. At the same time, Karen Black, Luise Noring and I have been preparing an analysis of Cincinnati’s Center City Development Corporation (3CDC), in collaboration with Drexel’s Lindy Institute for Urban Innovation and Accelerator for America. Both reports are near completion and will be released in June. Read more...
In 1969, the Indiana state legislature consolidated the city and county governments of Indianapolis and surrounding Marion County. In one act, “Unigov” increased Indianapolis’ population by about 250,000 and its land area by about 275 square miles, establishing it as one of the top U.S. cities (its population of 863,000 in 2017 made it the 16th most populous city in the United States). Read more...
As I engage with dozens of communities around the country on Opportunity Zones, I am often asked “Where are the philanthropies?” The question is rooted in some simple math and hard market realities. The Opportunity Zones tax incentive could generate tens of billions of dollars in market equity investment in low-income communities, which could, in turn, leverage hundreds of billions of dollars more in conventional lending, concessionary capital and public subsidy. Most Opportunity Zones are in desperate need of such investments given their high rates of poverty and vacancy and the absence of businesses and business demand. Yet there is a disconnect today between the orientation of capital allocators (who have access to countless tax advisors, accountants and lawyers) and community advocates (who are more familiar with policy or subsidy driven tools). Read more...
Today, the Department of Housing and Urban Development issued a Request for Information, seeking public guidance on how HUD can leverage the economic and social impact of Opportunity Zones. As part of the Request, HUD crunched the numbers and revealed the remarkable way in which Opportunity Zones overlap with public and assisted housing, home to millions of low-income Americans. Read more...
Over the past ten days, I have been in Israel and the United Kingdom exploring how to adapt US market dynamics and tools — innovation districts, opportunity zones, city investment prospectuses — to foreign shores. As often happens when I leave the United States, a trip abroad has sharpened my sense of the special assets that America possesses at home and some of our keenest liabilities. Read more...
On Monday, Accelerator for America, Drexel University’s Nowak Metro Finance Lab, the Economic Innovation Group and The Governance Project hosted a packed Opportunity Zone Investor Summit at Stanford. The Summit celebrated a milestone: over the past year, 27 cities have used a common template to design Opportunity Zone Investment Prospectuses to help communicate their assets and unveil projects that are investor ready and community enhancing. While cities have largely constituted the first wave of Prospectus adopters, the tool is already being applied at the metropolitan and neighborhood scales and could form a useful tool for states and rural counties. Read more...
Our continued visits to Opportunity Zones across the country (most recently Austin, Dayton, Kansas City, Norfolk, Baltimore, and San Antonio) and our conversations with literally dozens of practitioners reinforce our sense that the new federal tax incentive is (unexpectedly and slowly) driving the creation of a new system of community economic development. The process of invention is messy, haphazard and chaotic even by U.S. standards, made more complicated by the fact that a new class of investors and a relentless market orientation has been introduced into a system that has been largely dominated by a closed loop of actors motivated by either federal bank regulation or social impact. Read more...
The Opportunity Zone incentive is a new community investment tool established by Congress in the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income communities. The Act creates a tax incentive for investors to re-invest their capital gains into dedicated Qualified Opportunity Funds (“QOF”). Of the 8,762 census tracts across the county that have been designated as Opportunity Zones, 2,905 (33%) either contain a hospital or are ½ a mile from a hospital. While much of the early attention given to Opportunity Zone investing has focused on many of the “usual suspect” cities, hospitals and healthcare systems are a unique institution in that they’re represented in almost every kind of community—serving big city neighborhoods, mid-sized cities, small towns, and rural areas. Hospitals can play a leading role in efforts to attract, organize, and even make QOF investments in the communities that they serve. Read more...
In the past couple months, the national media has been replete with stories about the pitfalls of Opportunity Zones. Some stories have focused on the curious selection of robust, gentrifying areas Zones, raising the prospect that scarce federal resources will be allocated for projects that would have happened anyway and merely spark more gentrification. Other stories have focused on projects that either benefit well-off global companies or have little social value. There is even a Trump angle to explore given the real estate interests of the Kushner clan. Read more...
In the past week, there has been a flurry of articles about mayors (and former mayors) running for president (see, e.g., http://time.com/5510973/pete-buttigieg-mayors-president/). The announcements of South Bend Mayor Pete Buttigieg and former San Antonio Mayor Julian Castro (and the likely announcements of former mayors like Senator Cory Booker and (former) Colorado Governor John Hickenlooper) have clearly captivated the media. Read more...
As many of us involved in cities know, the indirect effects of large policy changes are often more important than the direct ones. The development of cities in the latter half of the 20th century was driven more by the Interstate Highway Act (negative) and the Immigration Reform Act of 1965 (positive) than by any law with “Urban” or “City” in the title. The Opportunity Zones tax incentive is shaping up as another federal intervention with multiple, indirect effects. Read more...
Happy New Year! As many of you know, I (and a group of fellow travelers) have become virtually obsessed with building a new set of local institutions that align with our 21st century economy and society and unlock and deploy capital for a new kind of purposeful growth. Read more...
For the past year, US cities have been transfixed by Amazon’s intention to build a second headquarters. An incredible 238 cities prepared bids to woo the tech behemoth and, in many cases, offered a plethora of incentives, ranging from enormous tax abatements to infrastructure improvements, free land and special fiber broadband networks. Read more...
Last week Accelerator for America and the Nowak Metro Finance Lab at Drexel University released a policy brief entitled “Opportunity Zone Investment Prospectus Guide.” The paper, co-authored by Ken Gross and myself, can be found here. Read more...
On November 14-16, we held a “soft” launch of the Nowak Metro Finance Lab at Drexel University with a several-day hands-on working session among a high-level group of reflective U.S. and European practitioners. Read more...
With election fever rightly seizing the land, I have spent the past several weeks visiting six separate cities — Albuquerque, Cleveland, Dayton, Madison, New Orleans and Winston-Salem. This whirlwind travel has given me a chance to tour dozens of Opportunity Zones and get an on the ground feel for market condition, practitioner energy, investment possibilities and social challenges. Read more...
Yesterday Accelerator for America and the Nowak Metro Finance Lab at Drexel University released a policy brief entitled “From Transactions to Transformation: How Cities Can Maximize Opportunity Zones.” Read more...
I have been thinking a lot about Jane Jacobs recently and how her writing informs our thinking about metropolitan finance in general and Opportunity Zones in particular. One of my favorite chapters in The Death and Life of Great American Cities is chapter 16, where Jacobs spelled out her views on “gradual money and cataclysmic money.” Read more...
As Jeremy Nowak and I wrote in a previous newsletter, realizing the full potential of the Opportunity Zone tax incentive will require a broad group of urban institutions to act with purpose and discipline. To that end, we began to ponder a set of steps cities could take to create a suite of modern institutions with the capital resources, public sector relationships, community standing, and private sector credibility to effect change. Here are the steps we were considering: Read more...
As the Opportunity Zones incentive evolves, two dominant, overly simplistic narratives have taken hold. On one hand, there is the view that all cities should merely compile and bundle a list of investable projects and reveal the true strength of the market for some distant investor on Wall Street or in Silicon Valley who have no connection to the city in question. This perspective treats the market failure that Opportunity Zones was intended to resolve as one primarily involving information and marketing rather than underlying business demand and market realities. Read more...
The enactment of the Investing in Opportunity Act and the designation of Opportunity Zones across the United States compels cities and investors to rethink the interplay between sub-city geographies and private capital. Consider this: US cities have evolved along distinct demographic, economic and cultural lines but have followed similar development patterns over the past 100 to 150 years. As Chris Leinberger and others have shown, a familiar set of urban archetypes have emerged across cities. Read more...
As many of you know, my good friend and business partner Jeremy Nowak passed away on July 28th at the age of 66 due to complications from a heart attack. There has been an outpouring of grief and appreciation in Jeremy’s beloved hometown of Philadelphia. And for good reason. Jeremy lived a remarkable life in the service of his city and, more broadly, disadvantaged places and people in the United States and beyond. He had a deep, unwavering commitment to making a difference in people’s lives. Read More...
Read previous newsletters from The New Localism