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November 12, 2013

New Opportunities for Alliance Building and Major Economic Development

Combining Community Organizing with an Accelerated Expansion of “The Cleveland Model”

By Gar Alperovitz and Steve Dubb

Across the country, a new form of community-based ownership has begun to develop, based on community-based structures (non-profit corporations), linked to worker-owned co-ops, that produce jobs, but that also incorporate community building as a central element of their strategy.

The Cleveland Model, developed by The Democracy Collaborative, illustrates the potential of this approach. The strategy involves tapping into the hundreds of billions in purchasing power of area hospitals, universities, and local government (in Cleveland, two leading hospitals and one university combined have more than $3 billion in purchasing power) to seed a network of green, community-worker-owned co-op businesses. To date, three co-ops have opened their doors: an ecologically advanced, commercial-scale laundry capable of handling 10 million pounds of linen a year; a solar and energy services company that installs panels for the city's largest nonprofit health, education, and municipal buildings; and the largest urban greenhouse in the United States, capable of growing 3 million heads of lettuce and 300,000 pounds of herbs a year.

As Caroline Murray, who served as executive director for 18 years of Alliance to Develop Power in western Massachusetts, puts it, for community organizers, the ownership approach provides a means for community organizers to create new economic institutions that build organizational power, provide a financing stream for organizing, create living wage jobs and community ownership of the jobs created.

The Cleveland effort, of course, is a foundation-financed “demonstration project” that has had relatively limited community involvement. That said, variations that empower community groups to use this approach are beginning to emerge. Notably, the United Steelworkers’ alliance with Mondragón, the world’s largest worker cooperative, has led to campaigns in a number of cities, including Cincinnati, Pittsburgh, Buffalo, New York City (the Bronx), Denver, Las Vegas, Reading (Pennsylvania), Chicago; Los Angeles, Sacramento, Columbia (South Carolina) and Charleston. So far, the efforts in Pittsburgh and Cincinnati are most advanced. In Cincinnati, the first cooperative, Our Harvest, a food distribution center, has already launched and ultimately intends to scale up to hundreds of employee-owners.

The potential to leverage local government, university and hospital expenditures to support community-owned businesses is quite large. One example can be seen in work currently under way, led by two Democracy Collaborative partners—City First Enterprises and Next Street LLC—in Prince George’s County in Maryland, near Washington, DC. The effort aims to address the nation’s growing stormwater management crisis. According to the U.S. Environmental Protection Agency (EPA), “up to 3.5 million people fall ill from swimming in waters contaminated by sanitary sewer overflows alone ever year.”[i]

Many U.S. cities face this stormwater challenge, including a number of Sun Belt cities. Among the cities that have been cited for violating sewage disposal laws between 2006 and 2009 are San Diego, Houston, Phoenix, San Antonio, Philadelphia, San Jose and San Francisco.[ii] Nationally, in its most recent (2008) quadrennial survey, published in 2010, the EPA estimated water infrastructure capital needs for the next 20 years at $298.1 billion, of which $106 billion are directly related to stormwater management and combined sewer overflow correction. The same EPA studies estimates an additional $334.1 billion in costs for maintaining clean drinking water infrastructure. So, in total, EPA estimates the need to spend more than $600 billion in the next 20 years; other estimates go into the trillions.[iii]

The traditional solution would be to build miles of concrete pipes that might be as much as 30 or even 35 feet wide.[iv] To minimize this construction burden, in Prince George’s County, the project goal is to create a community-worker owned business, structured similarly to the Cleveland effort, that will partner with a construction firm to maintain green infrastructure that absorbs water runoff before it reaches the sewers and to monitor compliance. Initially, the business will employ about 25 people, but is expected to grow to employ as many as 150 people, who will all own part of a worker-and-community-owned business.

Note carefully that this situation is developing fast and has major public health implications. Much of the work, too, does not have heavy educational requirements. This is work that is highly accessible to the communities where NPA works. It could be the basis of highly significant job creation— and, if developed right, could provide a valuable financial base for NPA-affiliate community organizing efforts. Potentially, one source of start-up finance could come from community benefit agreements. Often, such agreements have financed affordable housing, but there is no logical reason why this established mechanism could not be leveraged to develop a lasting infrastructure of community-owned businesses.

We believe such a model might be structured along the following lines:

1) A nonprofit community wide corporation controlled by alliances of different kinds in different communities;

2) Subsidiaries of this would be worker-owned cooperatives to do the above kind of work;

3) The nonprofit corporation representing the community would help get the contracts;

4) For this reason, profits would be split between the subsidiary worker-owned corporations and the nonprofit corporation;

5) In turn, such profits could also help fund additional community organizing efforts; and

6) Note that if contracts (letters of intent, etc.) are obtained in advance, then obtaining bank loans and other financing becomes significantly less complicated. In addition, the money raised from community benefit agreements could help provide the “pre-development” financing necessary to support feasibility studies, develop business plans, and raise capital (e.g., new markets tax credits and philanthropic investments, as well as bank loans) to finance the businesses.

For further information, please contact Steve Dubb of the Democracy Collaborative at 301-237-2135 or .

[i] American Rivers. Health Risks of Sewage, Washington, DC: American Rivers 2009, http://www.americanrivers.org/assets/pdfs/Health_Risks_of_Sewage_fact_sheetb119.pdf, accessed March 6, 2013.

[ii] Sarah Madden, Choosing Green Over Gray: Philadelphia's Innovative Stormwater Infrastructure Plan, master’s thesis in urban planning, Cambridge, MA: MIT, 2010, page 9.

[iii] U.S. Environmental Protection Agency, Clean Watersheds Needs Survey 2008: Report to Congress, Washington, DC: EPA, April 2010. See also: Emily Gordon, Jeremy Hays, Ethan Pollack, Daniel Sanchez, and Jason Walsh, Water Works:

Rebuilding Infrastructure Creating Jobs Greening the Environment, Oakland, CA: Green for All, 2011.

[iv] Robert S. Raucher, A Triple Bottom Line Assessment of Traditional and Green Infrastructure Options for Controlling CSO Events in Philadelphia's Watersheds: Final Report, Boulder, CO: Stratus Consulting, August 24, 2009.