Mobilizing Community Capital

In our recent Global Trends REVISITED publication, one of our recommendations for downtowns involves mobilizing “community capital”.  With conventional lending anything but conventional, and other traditional forms of financing in flux, we see the potential for communities to invest in themselves through a variety of locally funded mechanisms including cooperatives and community-owned corporations.  The concept hit center stage this weekend as the feature story in the business section of the Sunday New York Times.

The Times story focused on a community supported retail store opening on the main street of Saranac Lake in upstate New York.  The town’s only department store closed nearly ten years ago, leaving a void for apparel and day-to-day necessities.  To replace the store, $500,000 was raised by selling shares to residents in $100 increments.  The new store, which opened last week, is structured as a for-profit enterprise, and its local shareholder base will ensure that it remains connected first and foremost to the residents of Saranac Lake.

While new to the east, community-supported stores have emerged throughout remote areas of the American West.  Perhaps the most famous prototype is The Merc in downtown Powell, Wyoming.  The Merc, a “mercantile” that replaced the town’s department store, opened in 2002 funded by $400,000 raised in $500 increments.  Today the community-owned and managed store occupies 14,000 square feet of space and is viewed as a catalyst for the revitalization of downtown.

Community capital has applications in urban areas, as well as small towns.  We have seen the potential for community capital concepts in our recent work in Denver, particularly in neighborhoods and corridors that have experienced demographic and income shifts.  For example, East Colfax now has adjacent neighborhoods with relatively high incomes while the corridor has continued to largely stagnate.  These neighborhoods are a logical area for mobilizing capital that could be invested in businesses that match their needs, ranging from coffee shops to family-oriented retail.  Other examples include the Five Points commercial district, where the adjacent Curtis Park neighborhood now has robust incomes and diversified demographics, and the Leetsdale/Parker Road corridor that divides the posh Hilltop neighborhood and surprisingly diverse Glendale.

We look forward to exploring the community capital concept in a variety of rural, suburban and urban development contexts for years to come.