One year after the election of Donald Trump, we gathered in South Bend, Indiana around the idea that Washington, D.C. was broken and had, in fact, been broken for some time. On November 7-8, 2017, at the Studebaker plant that was once the economic heart of the community around it, under Mayor Garcetti’s chairmanship, we launched Accelerator for America as a “do tank,” not a think tank. Our goal from the beginning has been to scale and/or replicate the best ideas for addressing economic insecurity and, in doing so, create national policy from the ground up.
Hosted by a brilliant, accomplished and then little-known mayor Pete Buttigieg, we recognized that despite the dysfunction in our nation’s capital, local leaders continue to lead — innovating, improvinging lives, and doinging their utmost to fulfill the American dream.
Twenty months later, with your guidance, Accelerator for America is a recognized center of excellence and trusted resource in transit and transportation funding and in building community wealth, the first two verticals selected by our Advisory Council. This note provides a short update on our work and the coming Oklahoma City meeting, which was made possible by our partner: The Ewing Marion Kauffman Foundation.
TRANSIT & INFRASTRUCTURE
Spurred by the success Mayor Garcetti achieved in passing Measure M in Los Angeles on the same night that Donald Trump won the White House, we recommended to our Advisory Council in South Bend that we work with cities to achieve more such investment. We provide expert counsel from our staff, support critical polling and policy research, and make connections among local and national leaders to increase the chances for success at the ballot box.
In the 2018 cycle, we worked with the city of Cincinnati, Nashville for Transit, All for Transportation in Tampa, Florida, and the Metro Now group from Washington, D.C.
Our metric for success is the value of the measures passed with our assistance. Accelerator for America and Accelerator for America Action (our c4) have raised a total of $4.2 million since our founding, making the ROI in this space tremendous. And it’s important to remember why transit and infrastructure funding remain a priority: each $1 billion of investment in transit and infrastructure creates approximately 22,307 jobs. And these are well paid, full benefit career and often union jobs because these measures sustain funding for decades. When the next recession hits, these jobs remain.
2018 Wins $9 billion, Hillsborough County (Tampa), Florida
$5 billion, Washington, D.C. Metro Transit Authority
We have proven we can replicate our work nationally and have fast become a central hub for how to pass funding for transit.
We are currently working with Cincinnati, Austin, Detroit, the California Bay Area and Phoenix (we just helped defeat the anti-light rail measure) on measures that could secure more than $150 billion in the 2019-2020 election cycle. In addition to local measures, Accelerator for America Action will continue to work with the US Conference of Mayors and others to impact federal policy to hasten the pace and increase the amount invested in local infrastructure. To that end, after the 2018 midterm elections, we fielded a national poll on infrastructure which Mayor Garcetti used in his testimony before the House Transportation and Infrastructure Committee.
Accelerator for America Action has entered into an agreement with the National Infrastructure Alliance, which consists of the United Brotherhood of Carpenters, the Operating Engineers, the Laborers and Ironworkers. The NIA will match every dollar raised from locals of the four unions for work in which we engage. Our first such effort was in Cincinnati where AFA Action again partnered with Mayor Cranley and his team to pay for a poll. We hope to continue this work across the country.
Lastly, we helped incubate the Open Mobility Foundation, initiated by Seleta Reynolds, the general manager of the Los Angeles Department of Transportation. Seleta starred at two of our meetings, calling for creation of an international platform for cities to create common standards for managing curb space, traffic flow and the array of mobility solutions that emerge. Rockefeller Foundation made a $400,000 grant to start the new foundation, which has a board and executive director.
This is yet another example of local governments collaborating to improve lives, effectively creating global policy without the involvement of national governments. No treaties. No politics. Just action.
As a result of our Columbia, South Carolina meeting in February 2018, you voted to engage Bruce Katz and the late Jeremy Nowak to unravel the new Opportunity Zone legislation and help the public sector actively steer capital into investments that deliver a return for private investors and the community. We developed the Investment Prospectus as a tool Investment Prospectus toolfor local communities to organize themselves and take advantage of the legislation, which has now been utilized by more than 40 cities. We are now experimenting with how we can expand on the base of the Prospectus to create wealth building tools beyond Opportunity Zones. Together with the Nowak Metro Finance Lab at Drexel University, led by our partner Bruce Katz, we are codifying those new norms.
We have focused about 70% of our effort in this realm since Columbia. In addition to the partnership with Drexel and Bruce Katz, we have hired two full time staff, Aaron Thomas and Charlotte White, to lead this work. As you will see from a paper we’ll send before the meeting, written by Bruce and Ross Baird of Blueprint Local, America is in a time of massive transition from the way we have traditionally invested in addressing poverty. Up to now, the norm has been to provide affordable housing, often concentrated in specific areas. This has often led to housing that is not well maintained and with few opportunities for its residents to build wealth.
Today, society is weighted down with unprecedented concentrations of wealth. If we imagine a barbell such as one might find in a gym, one end would be massively heavy; the other would have virtually no weight on it at all. If you tried to lift it above your head, you’d either be unable or have a very unpleasant result. Imagine it as you will. Either way, there is a lot of wealth in few hands and virtually no wealth in a lot of hands.
We know the statistics: The three wealthiest US families own as much as the bottom 50% of US families. The richest 5% of Americans own more than two-thirds of the population. The racial gap has also been exacerbated. From 1983 to 2016, median wealth for African American families has declined by more than half, from $7,323 to $3,557. While wealth among Latino families has increased in the same time frame, the base over which that increase occurred is miniscule —$4,289 in 1983 to $6,591 in 2016 — versus the base for white families, $110,160 in 1983 to $146,984 in 2016.
The system is broken.
Here’s what we intend to do about it.
We built a powerful partnership with Mastercard’s Center for Inclusive Growth. The Center has an extraordinary vision for how growth needs to happen in the US and beyond, one which we share. Its founder and President, Shamina Singh, has joined our Advisory Council and Arturo Franco from her team will join us in Oklahoma.
That partnership has allowed us to begin to address this broken system. We work closely with the Center and increasingly with the data tools it creates.
We use theOpportunity Zone legislation as a moment in time to reexamine and reimagine community development and wealth building in populations that never have had wealth. OZs are nottheanswer, but they doportend a vast increase — perhaps tens of billions or even $100 billion — of equity capital invested in some of the over 8,700 census tracts designated as OZs. Since this is a supply side tax incentive with no “guard rails,” investments will go where it’s easy to make money. That means that those investments that build wealth for people in the neighborhoods and/or that create sustainable housing may well not happen without leadership from cities and involvement of the philanthropic communities.
We began by building the Investment Prospectus tool. The goal is to help communities think intentionally about their assets, competitive advantages and their needs. The next steps:
- Continue the Prospectus process. We expect to exceed 50 by the end of this calendar year.
- Provide templates/deal books for deals that make sense for communities.
- Provide templates for structures that may work for communities, such as development corporations.
- Define deal typologies so that communities and the market have routine.
- Expand technical assistance for local communities. Everyone needs “last mile” capability.
- Experiment with community trusts, community readiness models, impact appraisal and other tools.
- Share, learn, repeat.
- Build toward new ways of engaging in community development that last beyond OZs.
Specific programs of the Accelerator:
- Investor summits and bootcamps — We have held summits in Palo Alto, Erie and plan for one in Dayton on October 30 as well as a convening with philanthropy hosted by the Irvine Foundation in California on October 9. We have held bootcamps in West Chicago, Illinois, Waterloo, Iowa, Lansing, Michigan with an upcoming bootcamp in Jackson, Mississippi. The only constraint here is staff and funding. We have perfected formats.
- Last mile technical assistance — Every community engaged in this new phase of economic development needs at least one person who has the financial and business skills to bring to fruition deals that the locality finds useful. We created a partnership with FUSE Corps FUSE Corpsto provide two FUSE Fellows (midcareer executives who take a year off to work in city or other government to tackle a specific matter) for California. Chan Zuckerberg Initiativeadded one, so now we will have one in each of San Bernardino, Riverside and Fresno.
We would like to generate additional fellows in Chicago to work with City Clerk Anna Valencia and the Illinois Medical District (West Chicago) as well as Erie and potentially Dayton. The policy goal is to encourage the federal government to fund a program such as this so that we could have hundreds of such skilled personnel all across the nation.
- Opportunity Zone Funds — We propose a partnership with Blueprint Local to expand the template for possible inclusive investment to communities across the country. We’ll provide you with more detail, but essentially this plan involves data science and expertise to create a community readiness plan for a given city or community that can result either in a fund run by Blueprint or locally or both. Accelerator would partner on the readiness component. Each city would raise approximately $250,000, ideally from a combination of philanthropy and potential investors. The result would be a portfolio of possible investments that meet our inclusive investment criteria. Ross Baird of Blueprint will join for our meetings.
- Sharing the wealth — Brian Murray, founder of Shift Capital, one of the most innovative real estate investors we have encountered, has come up with a template for a community trust that would own assets in an OZ (or other similarly targeted) community. The trust would benefit the residents of the neighborhood. While it’s early days, Brian and his team have secured a $5 million contingent program-related investment (PRI) from the Ford Foundation that will kick off his work in one Philadelphia neighborhood. There are many moving parts, many proof points, but our goal here is to highlight a mechanism to capture upside for existing and longtime residents as neighborhood land values increase. We look to partner with Brian and Shift as this develops. One of Brian’s partners, Matthew Grande, will join us at the meeting. We’ll also send around more information in the coming days.
- Inclusive investment — Working with Advisory Council member Mayor Quentin Hart, the Accelerator held a bootcamp in Waterloo, Iowa in June. We were joined by WSP’s John Porcari whom many of us have met at our meetings together with CEO Greg Kelly. John brought with him Andrew Petrisin. Together, they created a model for a specific deal in Waterloo that we hope results in a grocery store owned and operated by an African American entrepreneur. The store would cite in a food desert in a predominantly African American part of town. The city has contributed the land and will put up other concessionary financing. If this comes to pass, it will be a model for other communities.
Mayor Hart and WSP will bring us up to date.
This deal underscores the need for a flexible grant or mission-related investment pool that the Accelerator could access. We believe that we could provide a one to five match in a case like this that would, with $100,000, attract the other $400,000 of equity necessary to get this deal off the ground. In the worst case, the grant would be a grant; in the best case, it would either be repaid or at the least spur development of a much-needed store, changing for the better an entire community. It derisks the investment to some extent and it provides an external impetus.
This also goes into the category of “last mile” assistance. WSP has provided invaluable advice that can be replicated and transferred elsewhere.
- Thought leadership — Bruce Katz leads our work in this realm. He publishes more prolifically than anyone I’ve ever met. In fact, during the time I took to write this, Bruce has probably finished his next book. The paper on community wealth coauthored by Ross Baird will be a major part of our discussion. It’s crucial in framing how all of our work and that of others impacts the nation. You will receive the draft of that paper shortly.
Getting the message into the national political discussion — Accelerator for America Action will host a non-partisan presidential candidate forum hosted by Mayor Hart and anchored by Mayor Garcetti in Waterloo, Iowa on 6-7 December, at the time of our final Advisory Council meeting of the year. The forum will include mayors interviewing candidates on issues including infrastructure, economic development and other matters germane to American communities. at the same time as our meeting in
- We seek a partnership with the Michigan Municipal League (MML)which would have Accelerator serve as a strategic partner for the MML in economic development throughout Michigan. This relationship has grown from our visit to Lansing and Detroit in July. The leadership of the MML will join for our meeting. This can be a new model for work with other states as well.
WHY SHOULD ACCELERATOR EXIST?
As a non-profit, we need to ask ourselves from time-to-time if we should exist. For-profit companies may ask themselves that question, but regardless of the theoretical answer, the market provides the ultimate response. While we have expanded quickly, we must determine through metrics and at this point in our young life through anecdote, the answer.
We see numerous reasons that the answer is a resounding yes.
- We have created a network of engaged, determined and highly successful leaders in local government, organized labor, the private and NGO sectors that otherwise would never work together. The network expands and takes on new challenges while solidifying its base. We believe this alone provides value. Our new Advisory Council member Larry Jacob, of the Kauffman Foundation, and our longer-term member Cheryl Dorsey each recognized and called this out.
- We do work. That network remains coherent because the organization unites the minds and experience of the leaders to improve our product, which in turn improves the functionality of each member. If we only served as a discussion club, we’d be interesting to each other, but not unusual or maybe even very worthwhile. We talk and then we do. That’s the key to our success.
- Our work in the transit and infrastructure space is unique and successful — we have contributed to the creation of tens of thousands of jobs and billions of dollars in critical local investments. A next step is to codify what works and what does not as we advance our play book for local measures. In that regard, our c4 has hired a new campaign manager to lead the entire effort.
- Our work in the Opportunity Zone space is also unique and successful. We have developed tools now deployed by dozens of communities nationwide and our convenings have already resulted in tens of millions of dollars in investments. As with the OZ legislation in general, it’s too soon to determine the outcomes of those investments. We can, however, quantify our impact by demonstrating dollars invested.
In Erie, Pennsylvania in early August, we co-sponsored an investor summit that highlighted the enormous success in Erie. Our role has been clear: 1. Erie was a first mover in creating an Investment Prospectus, in which Bruce assisted. 2. Erie established the Erie Downtown Development Corporation(EDDC) based on the Cincinnati Center City Development Corporation (3CDC). Mayor Cranley and Steve Leeper, the CEO of 3CDC, showed us that model at our Columbia meeting. 3. Erie Insurance Corporation and others in the city capitalized an investment fund at $30 million and made its first investments with the EDDC. 4. CapZone investments attended Accelerator/Mastercard CIG investor summit at Stanford in March where CapZone learned of the heightened activity in Erie. As a result, CapZone announced a $10 million technology investment fund for Erie. 5. Erie Insurance announced a $50 million Opportunity Zone Investment Fund, the first $3 million of which was invested with the EDDC. 6. We are in the process of determining whether Erie will sponsor one more FUSE Fellow.
We plan to take a considerable amount of time in Oklahoma City on these subjects.
In addition to you, we have formed partnerships, formal and otherwise, with:
Mastercard Center for Inclusive Growth
National Infrastructure Alliance
US Conference of Mayors
Economic Innovation Group
Drexel’s Nowak Metro Finance Lab
United Brotherhood of Carpenters and Joiners
International Union of Operating Engineers
and soon the Michigan Municipal League.
All of our work requires funding. To date, we have secured approximately $4.2 million for Accelerator for America and Accelerator for America Action, our sister c4. As we head into year three with a heavy work load, great possibility and even greater demand, we seek to raise approximately $3 million per year for each of the next three years. This will allow us to plan, hire appropriately and give grants/make small investments along the way.
THE ADVISORY COUNCIL
We need to improve communication and better leverage the network that you comprise. We know that you are all busy. That said, we’d like to encourage you to share with us ideas, plans, events and direction for the Accelerator. For example, we just sent out an invitation to participate in an education event convened by Kauffman on behalf of Larry Jacob.
We hope you will share with us content to tweet and otherwise socialize and that you will do likewise with us.
Finally, please let us know what we can do better. Who is missing? In what areas should we focus?
Our next meeting will occur in Waterloo, Iowa 6-7 December. Where should we meet after that? Our friends at HNTB have suggested Milwaukee and Miami. Where do you think we should meet in 2020?
Thanks for taking the time to read this. We are very grateful for your support, engagement and innovation.
See you next week!