As racial tensions continue to divide the public sector and slow the city's recovery, the private sector once again has stepped forward to lead. A biracial coalition of business and civic leaders has united behind the idea of a multi-tiered, public-private partnership (PPP) for economic development.
It couldn't come at a better time.
The idea of a PPP for economic development was first broached by a group called the Horizon Initiative. The group was advised by the International Economic Development Council (IEDC), which is widely considered the leading expert on such matters. Despite those credentials, the idea has not been an easy sell in New Orleans, where everything is viewed through a racial prism.
Mayor Ray Nagin praised the PPP in his state of the city address last year, promising to put up $2 million a year for three years — to be matched by a smaller but increasing annual ante from the private sector — but the concept stalled afterward. The mayor pledged to get the money from the city's economic development fund, which for years had been divvied up by a gallimaufry of politically connected nonprofits.
Nagin's support was music to the ears of big business types, but behind the scenes there was considerable opposition from some segments of the black community, particularly those who had benefited from City Hall's "business as usual" approach to economic development. At the same time, there were legitimate concerns that a "top-down" approach would never get very far down from the top rungs of the economic ladder.
That's where the biracial coalition stepped in, creating a new model that combines the two concepts but raises the bar for each. The new model calls for $400,000 from the business community in the first year, $600,000 the second year and $1,000,000 the third year. This week, the Horizon Initiative will announce it has reached its initial fundraising goal. That money will match the $2 million promised by the mayor — if he keeps his promise.
At the same time, the Economic Development Advisory Council (EDAC), which recommends ways for the City Council and the mayor to spend the city's economic development fund, has suggested another PPP aimed at helping small businesses that typically don't qualify for traditional top-down economic development programs. This partnership would have the city putting another $750,000 into an existing local, nonprofit "community development financial institution" (CDFI), which would put up an equal amount of its own money. The combined $1.5 million would then be used to help small businesses get off the ground or grow. Local nonprofit CDFIs will compete to become the city's partner, and as a lender, the winner will be regulated by the U.S. Treasury Department.
The new model thus represents a holistic approach to economic development, one that is both top-down and bottom-up.
"We wanted to make sure that the economic development fund is leveraged on both ends of the economic development spectrum," says EDAC chair Judith Dangerfield. "That's why there's going to be a private-sector match for both the PPP and the CDFI."
Getting to this point has taken "a committed group of volunteers" from the business community — the Horizon Initiative, the Chamber, the Black Chamber, the Hispanic Chamber, the Asian Chamber, the Board of Trade and the Business Council — says Horizon Initiative vice chair Virginia Miller. "Each of these volunteers has nothing to gain beyond success for our city. ... Economic success sees no color."
Now it's up to the mayor and the council. In addition to Nagin's initial support, Councilmen Arnie Fielkow and James Carter also have been big proponents of the partnerships. Now it's their turn to step up.