Local Initiatives Support Corporation
Report date
June 2021
What has been most instrumental to your progress?
The initial training on Opportunity Zones and how developers and investors do their work, provided in partnership with Cogent Consulting, helped key Neighborhood Intermediary partners understand the OZ program and understand the possibilities to meet neighborhood needs. This helped set the stage for working with diverse community leaders and recruiting Advisory Committee members who represent the neighborhood. The training highlighted similarities and differences between our 3 OZ linked neighborhoods. Differences include experience working with developers and the City, having active Opportunity Zone developments in their neighborhoods, and having staff with different levels of development and neighborhood planning experience. The City of Duluth is also a partner and has worked with all three areas on the development of neighborhood plans and strategies as part of the City’s Comprehensive Plan. One neighborhood has more experience in this area. It was helpful to have them provide examples to the other two areas. Another neighborhood built on this and used CARES ACT funds, along with our OZ Resources to hire neighborhood community consultants to serve community needs.
Key to ensuring neighborhood input to OZ projects is developing trusting relationships between developers, LISC and the community. LISC builds an information bridge between these entities. LISC has experience working with private developers, many of whom don't seek neighborhood engagement, nor have in-depth conversations with City programs or staff beyond code issues. A key to our progress has been LISC, in partnership with Cogent Consulting, implementing a trust building process with developers utilizing LISC’s expertise and access to resources. LISC strengthened its capacity to support developments and serve as a bridge between the community and the private sector owner/developer. Cogent Consulting added connections to investors. Playing a bridging role, LISC has been able to ensure that developers can work through barriers with an understanding of neighborhood needs and opportunities. In one case, due to the pandemic, one developer had to walk away from their project. LISC, using its community partnerships, was able to help smooth the transition to another developer. This has been a good test of the importance of LISC bridging the neighborhoods, city, and business sector.
LISC has existing relationships with the neighborhoods, residents, the City, and the development process that were critical to the fast progress needed for this innovation effort. With an understanding of and connections to the OZ Program, LISC has been able engage developers in new ways. This was still a very challenging first year since the OZ tax credit rules are complex and developers engaged in this process are different than those that LISC usually works with. With the impact of COVID 19, it was difficult to find opportunities to connect these sectors together in person, a practice preferred by Duluth citizens. But we pivoted to video conferencing immediately and once underway, enabled additional training and trust building. The partnerships with the public sector and Cogent were key to ensuring that LISC would be trusted as a messenger from the community about its needs and opportunities to the anonymous developers and investors. We also have been able to utilize both past and recent planning and development work done in partnership with neighborhood residents and community based organizations to gather feedback and ensure current and future community needs are reflected.
Key lessons learned
It has been particularly challenging to protect the desired anonymity of developers. We understand the importance and have educated community members and leaders about the reasons for that. And because of the trust we have built with neighborhoods they have been willing, so far, to allow us to be their messenger. And we are also working with them to find ways to share info on neighborhood needs, priorities and resources to ensure OZ efforts address community needs.
We were hoping that at least a few developers would be interested in presenting or having us present details of their developments to the neighborhoods and/or our advisory council. So far, only one was willing to do that as their financial stack of resources is often precarious until all of it is in place and confirmed. So we recently pivoted to test a new way to get information to developers. We plan to pull together summary information from current and past work of the neighborhood groups that we can share about neighborhood development related priorities and important needs. And, we are looking at how to share info from neighborhood canvassing and input sessions with developers at any stage of development.
We were hoping that at least a few developers would be interested in presenting or having us present details of their developments to the neighborhoods and/or our advisory council. So far, only one was willing to do that as their financial stack of resources is often precarious until all of it is in place and confirmed. So we recently pivoted to test a new way to get information to developers. We plan to pull together summary information from current and past work of the neighborhood groups that we can share about neighborhood development related priorities and important needs. And, we are looking at how to share info from neighborhood canvassing and input sessions with developers at any stage of development.
We still struggle, as does all of Duluth, to ensure that the true diversity of neighborhoods is reflected in needs discussions and on our Social Impact Investing Advisory Council. While our training on OZ with the Social Impact Investing Advisory Group has been done with three community-based non-profits and includes neighborhood residents, the three areas are quite different and are taking different approaches to this work. One neighborhood is trying a new approach that has promise, doing surveys of resident needs and prioritizing inclusion of their residents of color by door-to-door survey by people from their local areas. LISC and our partner neighborhood organizations are committed to continue to seek new ways to engage people of color and indigenous voices in our processes. Another neighborhood community based partner organization is holding neighborhood sessions that include residents and businesses. This has attracted two OZ investors to attend and share early info on their plans, as well as an opportunity for them to learn more about the neighborhood and its plans and needs.
Reflections on inclusive, collaborative or resourceful problem-solving
While all are important, resourcefulness has been the most important. Once LISC’s team learned about Opportunity Zones we knew that could be helpful to address stagnated neighborhood development priorities as well as help developments that struggle to obtain all the financing they need. So LISC staff became fully informed about Opportunity Zones, as well as worked to connect neighborhood leaders and partners to training on OZs. LISC also engaged Cogent Consulting to build access to investors for Duluth projects and to help create processes to streamline the relationships with developers. By bringing those resources to the partnering neighborhoods we were able to initiate fresh energy and new creativity. Also critical to this was having grant funds that could be given to the neighborhood organizations to add staffing to expand on their own community needs research. Now, we are working to ensure communication remains open and that we also open the door to social impact investment efforts beyond OZ projects that will also address community-based needs and opportunities.
Other key elements of Community Innovation
While not in the formal collaboration, local private foundations were also instrumental to progress. They were informed about Opportunity Zones and the potential for Duluth and lent their moral and some financial support to move this forward. And, our hope is that they will remain active as we continue into Year 2 and work to secure and increase social impact investment support in these neighborhoods.
The role of active collaboration facilitation is key. Besides being the convener, we added stronger processes that helped significantly. LISC now has strong communication with neighborhood development organizations and with developers on the OZ process, a stronger way of tracking and assessing developments, and of engaging with the developers. We have also taken on the role of aggregating information across neighborhoods that can be shared with developers. LISC Duluth’s role has evolved into working to serve as a bridge in this process of adding a new development tool to address community needs. And we are clearly still in the learning stage.
The role of active collaboration facilitation is key. Besides being the convener, we added stronger processes that helped significantly. LISC now has strong communication with neighborhood development organizations and with developers on the OZ process, a stronger way of tracking and assessing developments, and of engaging with the developers. We have also taken on the role of aggregating information across neighborhoods that can be shared with developers. LISC Duluth’s role has evolved into working to serve as a bridge in this process of adding a new development tool to address community needs. And we are clearly still in the learning stage.
Understanding the problem
There are a number of high priority empty buildings and empty lots in Duluth’s OZ neighborhoods that don’t yet have new developments or redevelopments underway. And there are also many community-identified needs that are going unmet in the OZ neighborhoods. But, progress is underway. There are 2 buildings that were empty too long, that will soon be public models for how that can change with neighborhood needs clear, with more access to diverse funding, and with LISC helping to bridge information and access to local and national resources. We see that a combination of active awareness and support by neighborhoods and LISC’s active behind the scenes support, creativity, resourcefulness and work in convening and making key connections is working. We are learning and testing new ideas and building connections which can clearly make a difference. To date, LISC and Cogent Consulting have tracked 33 transactions, have 23 active and are intensively working with 4 high priority, neighborhood need aligned developments. And the momentum is growing, thanks in large part to resources made available through this Bush Foundation Community Innovation Grant.
If you could do it all over again...
It would be that we need to understand that many developers and most investors want to be anonymous, as much as possible. And, in some cases, developers may have non-disclosure agreements in place that require this. So, no amount of encouragement will change that in the early stages of projects. What we have learned that we need to work to find ways to help to bridge the community-based organizations and their priorities with developers and investors who are seeking a win-win for their investors, their bottom line and the community. And, we need to also look at ways to ensure confidentiality, understand the need for projects to produce a return on investment, and also build on LISC’s strengths as a partner, convener and connector. As a part of this, one lesson we are learning is how to designate key roles for our staff to play in building trust and new relationships. And, also make sure we help connect with the City as a partner and resource early on in this work. And finally, to seek creative ways to be a bridge between the developers and the community but work to ensure that community voices and needs are heard and included.
One last thought
LISC’s OZ grant from the Bush Foundation came when the true severity of COVID-19 was just beginning to be understood. Our ability to launch and connect with community groups, identify and maintain developers and move forward on building community-driven connections and partnerships was severely impacted by the pandemic. We are now gaining momentum but also realizing that OZ and OZ investors differ greatly from our usual community development partners and LISC’s role needs to be as trusted connector and resource to OZ developers and the investment community, and we need to carefully develop and pursue this bridging the community role. We are learning, and looking for ways to broaden potential efforts to include social impact investors for non-OZ, community-driven projects, including working with the foundation sector and looking at ways to ensure connections to projects that will address community-driven needs such as food access, digital inclusion and opportunities for job and wealth creation by BIPOC organizations. We also need to monitor and help to influence the future of the OZ program, and adapt our ongoing work to focus on community needs, priorities and opportunities.