In last week’s Social Enterprise World Forum, the Democracy Collaborative discussed how they engaged ‘anchor institutions’ to generate local economic development by helping them shift their procurement policies to incorporate more local and sustainable choices. It’s a chicken and egg problem, of course, in that if the supply for something can’t be met locally, an anchor institution like a hospital or non-profit needs to get those goods and services somewhere else, but until the demand from the anchor institutions exists, it is hard to convince investors that a small business supplying those goods and services is a good idea.
The benefits of green economic development versus simply economic development are clear. Less use of resources locally (water, energy, etc.) means that the area sends less of its money outside the community, and opens up resources for other businesses in the area. Green jobs tend to be higher paying jobs, generating more wealth within the community. And of course, with all the interest in green, incentives from governments, non-profits, and consumers are all in place to help green companies succeed.
So how did Cleveland translate their economic renewal initiative into green jobs?
The Democracy Collective started by suggesting a couple of green businesses that could help serve the community. Then they interviewed the community and found that the desires/suggestions were a ton more. A solar-powered, energy efficient industrial scale laundry facility turned out to be business #1 that got started. Energy efficiency and solar installation retrofits was #2. Local organic food production is in the planning/development stages and is #3. These were big businesses, not microenterprise, as was originally thought. Each of these has at least 40-50 employees, with foreseeable plans for up to 100.
As the needs grew for economic development expertise, the Collective had to find business plan specialists, financing, workforce development trainers, community land trusts, and other partners. (Community land trusts are set up now to buy the land while it’s really cheap–they can then ensure stable rents for businesses, as well as a good return on investment on the land, if the community development efforts continue to succeed and land values go up).
Market studies they conducted showed that not all green businesses were equally viable, however. The studies, however, gave them the roadmap for getting some green businesses started quickly and developing others as needs and demand grew.
The laundry business, primarily a response to the large medical community need for washing medical garments, was the most likely candidate for success, and was thus the first effort of the group. It is gearing toward capacity of 10,000,000 pounds of medical laundry per year. Currently the company serves about 20% of this demand, but has only been in operation for 6 months. They were able to tie into nursing homes first, competing for the VA contract, which is closing down their in-house laundry, and long term should have the major player, the University Hospital, too.
The next business started was the Ohio Cooperative Solar (OCS). OCS installs solar panels during the summer and focuses almost exclusively on weatherization during the winter. So far, the cooperative is doubling in sales pretty much monthly! OCS employs roughly 100 people, and with the incredible need for weatherization in Cleveland and its surrounding areas, continued growth for the foreseeable future is a good bet. OCS found that working with non-profit partners was a major bonus–the non-profits can’t take the tax incentives, but they can ‘lease their roof’ to the co-op, which then can get the tax credits. It created a win-win.
Green City Growers (GCG), scheduled for Fall 2010, is the third green business the group is launching. GCG is a year round hydroponic veggie greenhouse located in a former industrial area. It’s a 5 acre facility that can grow up to 4 million heads of lettuce a year, and has the potential to become a major player in the regional food network. Projections are that it should employ up to 50 people.
The next green businesses planned are a community newspaper and a construction firm (mostly for remodels and renovations of existing/dilapidated buildings).
So where does the financing come from? A group called the Evergreen Fund is at the center of the whole process in Cleveland. It’s a 501(c)3 loan fund that will have a revolving line. It lends to these first businesses which then pay back into it later and help other green businesses get started.
Cleveland is well on its way to greening its economic center and revitalizing a community that suffered greatly from the old economic model of focusing on attracting large outside businesses to create jobs in the city.
Find out more at www.democracycollaborative.org.