Community-Owned Development Enterprise

Power + Production + Protection

“Why do members of the community hear about development projects only after key decisions on the project have already been made?”

“How do we make the needs of our neighborhood the focus of new development projects?”

A community-owned development enterprise (CDE) is an organization that is governed and owned by affected community members. A CDE carries out economic development projects based on a mission of creating resilient, prosperous and healthy neighborhoods in its home community and in open and continuous dialogue with government and planning agencies. The CDE begins with a development priority set by the broader community, such as expanding affordable housing, and then creates a development plan to secure financing and implement a project to address that need. Throughout the entire process, the CDE ensures that residents continue to govern projects organized for their benefit.

Understanding the Policy

Throughout historic neighborhoods of low-income communities of color across the Bay Area, development has come to be a marker of displacement. Many residents feel new investment and development projects are bitter-sweet because neighborhood improvement is long overdue and needed, but projects are often designed to attract and serve new residents as opposed to historic residents. There is a need for a process of reinvesting in spaces that can strengthen these communities’ ability to stay in place instead of leading to further displacement. Developing a structure for historically excluded communities to own and govern their own community development needs can provide this process and potentially reverse the racialized inequality that is generating displacement in Richmond and beyond.

Over the last several years, Richmond community leaders have coalesced around a vision for community-governed and community-owned development. Initially catalyzed by the campaign to ensure that UC Berkeley’s planned Richmond campus reflected this vision, several partners continued to work in collaboration over the last year to design an organization that would be a vehicle for community-governed and owned development. The entity will be structured to be accountable to community members, and will have the financial, legal, and technical expertise to design and implement development projects. Goals, such as training and hiring local and disadvantaged workers, reducing air pollution, increasing access to healthy foods, and meeting other community needs, can be the starting point for the design of community development projects. 

This type of development will require a shift in the way residents and city leaders approach development projects. Residents will be sharing the “driver’s seat,” so they will need to shift from being oppositional to being propositional, and will need to develop all of the financial and technical skills to engage in decisions about development projects. Investors will accommodate this change as they come to understand that this is a necessary component of ownership within the community. Investors are rewarded by participating in a high barrier to entry marketplace where the long-term commitment to the community is rewarded. Investors reap the additional reward of operating in a field where the requirements for development are well known and articulated and a path to success is well marked by the community. 

Designing the Policy

In order to have a legal entity where community members can directly engage in making important decisions about budgets, financing, construction, real estate contracts and so much more, time and resources must be invested in providing those individuals with the skills and training required to meaningfully engage in those critical decisions. 

Case study research by the Haas Institute has documented several organizations that have independently come to the same decision to deeply and intentionally engage local residents in setting the development priorities and needs for their unique neighborhoods through a participatory planning process that then shapes the development projects for that community. The case studies have indicated the value of separating the mission-driven program and services work from the actual development projects. This separation reflects, 1) the ways different pieces of work are funded (philanthropic grants versus financing); and, 2) the need to shield the organization’s community-based programs and services from the risks associated with an individual development project. This also allows each development activity to have its own tailored financing and investment. A 501c3 nonprofit organization can provide the umbrella structure that supports residents in articulating an overall development agenda, while another legal entity can be created to hold each development project. This approach from case study research indicates that the Richmond CDE should strongly consider incorporating a 501c3 to hold the organization’s desired grassroots community organizing, community design, leadership development and community-driven planning work, while also creating an additional entity that can hold development projects on a case-by-case basis. The profits from individual undertakings revolves directly upward to the non-profit 501c3 parent and used to seed the next course of development activities.

Putting the Policy in Place

There are promising examples of organizations around the United States that have missions and structures like the community-owned development enterprise being pursued in Richmond. For instance, the Little Tokyo Service Center (LTSC) is a 501c3 nonprofit that provides culturally competent programs and services to the Asian and Pacific Islander community of the Little Tokyo neighborhood in downtown Los Angeles. In line with its mission, LTSC works to shape development in Little Tokyo in order to preserve one of the last three remaining "Japantowns" in California. Over the years, LTSC has engaged with more than 15 partners on 22 development projects to establish over 800 affordable housing units and 125,000 square feet of community facility space. LTSC’s long-term strategic partner, the Little Tokyo Community Council—a neighborhood council comprised of over 90 business, community leader, and community-based organizations—helps to set LTSC’s strategic development priorities and to ensure that community voice is heard and reflected in those projects. Similar approaches and achievements can be seen in the work of the East LA Community Corporation and the Codman Square Neighborhood Development Corporation (CSNDC), located in the Dorchester neighborhood of Boston.

A newer innovative approach to community-governed development is the formation of real estate cooperatives. A real estate cooperative allows for collective ownership and democratic decision making over land and its development. Recent efforts to create real estate cooperatives include the East Bay Permanent Real Estate Cooperative, and the New York City Real Estate Investment Cooperative. 

The process for creating a Community-owned Development Enterprise involves several important steps: 

  • Design the mission, operating principles and values, and legal structure for the entity

  • Recruit a board of directors that has deep and broad community representation and the legal, financial, and technical skills to design and manage development projects

  • Adopt bylaws that formalize a community governance process to set development goals and provide input to key decisions, including principles that articulate intended community benefits to be achieved in individual development activities

  • Facilitate a community engagement process that supports residents in setting a shared set of development goals and priorities

  • Create financing and development plans to meet the community’s development goals, and pursue resources

  • Carry out an initial project that aligns with the community vision and is economically feasible 

Partnership between the CDE and the city or other public agencies can increase the potential for greater community benefits from development projects. For instance, if the city contributes public land to a development project, it reduces the cost and can allow for the project to invest more intensely in programs like local hiring or greater affordability. Contracting with the city or other public agencies can also create a win-win where city projects are implemented with a greater reinvestment in the local economy and community benefits. 

Resources 

  • The East Bay Permanent Real Estate Cooperative information is online at http://ebprec.org/

  • The Sustainable Economic Law Center offers legal assistance and resources on cooperative models to housing and economic development. Information online at http://www.theselc.org/rethinking-home

  • For more information on the creation of a Richmond Community-owned Development Enterprise, contact Nwamaka Agbo at nwamaka@movementstrategy.org