While the GUC is an economic and cultural engine, it is surrounded by seven low income and racially segregated neighborhoods. The median income for households in these communities is $18,500; it is $47,626 in the rest of the city . Unemployment sits at 24 percent, nearly three times the rate for the city at large . The asymmetry between the economic dynamism of GUC and the racialized poverty of its adjacent neighborhoods points towards the unevenness of Cleveland’s economic recovery. Evergreen finds one of its origin points in a larger effort undertaken by the Cleveland Foundation , a local community foundation, to harness the wealth of the GUC for the economic benefit of the neighborhoods surrounding it. A product of Cleveland’s wealthy past, the Cleveland Foundation is one of America’s largest foundations, with an endowment of $1.8 billion. In 2005 it launched the Greater University Circle Initiative, which sought to capture some of the $3 billion dollars spent by GUC institutions each year for the purposes of local economic development . In 2006, India Pierce Lee, a program director with CF, heard Ted Howard from the Democracy Collaborative give a presentation on his vision of community wealth building. The Democracy Collaborative is a leader in the growing “new economy movement,” which seeks systemic change by challenging the imperative for constant economic growth and by promoting economic equality and democracy.
The Collaborative defines community wealth building as “improving the ability of communities and individuals to increase asset ownership, anchor jobs locally,hydroponic seedlings expand the provision of public services, and ensure local economic stability” . A key part of DC’s community wealth-building strategy is harnessing procurement flows from anchor institutions whose deep rootedness in a community creates an incentive to prioritize local economic development. Ted Howard’s strategy for community wealth building mirrored priorities of the Cleveland Foundation’s recent GUC initiative. Shortly after hearing his presentation, India Pierce Lee invited him and DC to do a feasibility study for enacting their community wealth-building strategies in Cleveland. The initial plan was to encourage pre-existing Community Development Corporations to incubate new social enterprises that could harness procurement flows, but no takers could be found. The plan was too risky for local CDCs whose expertise was rooted in affordable housing development . The worker-run co-operative model was a secondary plan that developed through conversations between Howard and John Logue from the Ohio Employee Ownership Center.He had written on the successful models in Mondragon , Emilia Romagna , and Quebec ; Evergreen was designed with these models in mind, especially Mondragon. The final plan was for a network of worker owned co-operatives designed to capture procurement flows from anchor institutions, especially strategic opportunities in the emerging green economy. It is important to understand Evergreen in the context of the Democracy Collaborative’s larger vision and work.
The DC describes their mission as the pursuit of “a new economic system where shared ownership and control creates more equitable and inclusive outcomes, fosters ecological sustainability, and promotes flourishing democratic and community life” . In 2015, DC launched the “Next System Project,” an initiative seeking to “launch a national debate on the nature of ‘the next system’ … to refine and publicize comprehensive alternative political-economic system models that are different in fundamental ways from the failed systems of the past and capable of delivering superior social, economic and ecological outcomes” . The NSP includes a statement signed by a broad assemblage of the political left . Position papers on eco-socialism, commoning, and solidarity economics have been forwarded as part of the effort to debate and actualize the “next system” . Evergreen, then, should be understood as a local experiment in next system design. As we unpack below, there are limits to Evergreen’s nationwide replication. But the movement building and systemic thinking that it is part of are crucial to the growth of the co operative economy, and the transformation of neoliberal capitalism. Given Evergreen’s roots in the “next system” vision of the Democracy Collaborative, it is surprising that it would attract support from the Cleveland Foundation, a wealthy charitable foundation established by a banker and governed by members of Cleveland’s economic elite. Indeed, once the plan for Evergreen was finalized, the CF pledged $3 million of seed funding to the project . The Foundation’s support for a network of worker-owned co-operatives reveals some openness among local higher-ups to the idea of systemic reform. India Pierce Lee, for example, had previously held a post as a Director of the Empowerment Zone with the City of Cleveland’s Department of Economic Development. Empowerment zones are federally designated high-distress communities eligible for a combination of tax credits, loans, grants, and other publicly funded benefits.
At this post, Pierce Lee saw millions of public dollars being spent on economic development – all of it directed to employers – with minimal to zero effect: few new businesses, few new jobs created . Brenner and Theodore have described empowerment zones as “neoliberal policy experiments” . Pierce Lee had experienced these experiments as failures, and was keen to try the alternative that Evergreen represented. Similarly, Howard told us how some CF board members raised ideological concerns over worker ownership, but that a willingness to try alternatives prevailed . Cleveland’s painful history of de-industrialization, out-migration, and persistent racialized poverty likely facilitated elite openness to new forms of economic development. The Cleveland Foundation provided Evergreen with crucial seed funding and technical support. “I cannot stress enough that without the people at the Cleveland Foundation, Evergreen would not have happened,” noted Candi Clouse from Cleveland State University’s Center for Economic Development during our interview . Replicating the “Cleveland Model” is challenging when an integral piece is a supportive and wealthy community foundation. The current conjuncture of “contested neoliberalism,” however, does make the availability of this support more probable. Research by DC on foundations experimenting with funding alternative economic development strategies found examples in Atlanta, Denver, and Washington, D.C. . But the authors also note how “many community foundation leaders talked about conservative boards, isolated from new ideas,4x8ft rolling benches who were reluctant to take up seemingly risky new ways” . Popular and elite frustration with neoliberalism means that foundation support for co-operative development is more possible than in previous eras, but this support remains contingent on local circumstance. Elite frustration with mainstream economic development mechanisms also played a key role in the city’s support of Evergreen. While the Cleveland Foundation provided seed funding and technical assistance, the city played a key role by helping to secure financing. Tracy Nichols, Director of Cleveland’s Department of Economic Development, had seen the plans for Evergreen and wanted to help finance it. Evergreen lost a bank loanin the 2008 financial crisis and having the City’s support in securing financing was a big step towards actualizing their plan. For Nichols, the fact that the Cleveland Foundation was providing seed funding and logistical support helped legitimate Evergreen as a safe bet for municipal resources. All three Evergreen co-operatives are capital intensive. Without clear policy frameworks for funding , putting financing in place required ingenuity. Evergreen is almost entirely debt-financed. The majority of its funds have come from two federal social financing programs: Department of Housing and Urban Development Section 108 funds, and New Market Tax Credits . Of the nearly $24 million that have been raised from federal sources for Evergreen’s development, approximately $11.5 million came from HUD section 108 loans and approximately $9.5 million came from NMTCs . The HUD Section 108 funds were established to provide communities with a source of financing for “economic development, housing rehabilitation, public facilities, and large-scale physical development projects” The HUD low-interest loans were inaccessible without the City’s sustained help; funds flow through state and local governments.
Monies from HUD provided the core financing for the $17 million, 3.25- acre greenhouse that now houses Green City Growers . The greenhouse is located on land that included residential housing prior to Evergreen’s development. Not only did Cleveland’s Department of Economic Development play a central role in securing financing, but it also facilitated the purchase of homes that needed to be demolished before construction of the greenhouse could begin. Unlike HUD Section 108 funds, New Market Tax Credits could be accessed directly by Evergreen’s founders without the City serving as intermediary. But NMTCs are also complex and would have been very challenging to negotiate without the Cleveland Foundation’s technical assistance. “We call the New Market Tax Credits a full employment program for lawyers and accountants,” reflected Howard “because there are hundreds of thousands of dollars of fees” . The Clinton Administration launched the NMTC program in 2000 as a for-profit community development tool. The goal of the program is to help revitalize low-income neighborhoods with private investment that is incentivized through federal income tax credits .5 The NMTC program is meant to be a “win-win” for investors and low-income communities, but investors win more, and at public expense . The NMTC program is arguably an example of what Peck and Ticknell call “roll-out neoliberalism” ; they argue that the neoliberal agenda “has gradually moved from one preoccupied with the active destruction and discreditation of Keynesian-welfarist and social-collectivist institutions to one focused on the purposeful construction and consolidation of neoliberalized state forms, modes of governance, and regulatory relations” . The NMTC program creates new profit opportunities for private investors at public expense: the privatization of gain and socialization of loss common to neoliberal economic policy. A framework that made federal loans available directly to community organizations would arguably be more efficient and less bureaucratic. Lacking this option, Evergreen’s founders pragmatically harnessed whatever resources they could access. Evergreen’s emergence would have been greatly facilitated by policy mechanisms that made financing and technical assistance more readily available. The international co operative movement has prioritized supportive legal frameworks as a key constituent of co-op growth , but there is not a robust literature on policy support for co operatives. Supportive legal frameworks for co-operatives are a “deeply under-researched area” . Based on our review of existing literature, however, we found that there were six primary forms of policy support that have been successfully deployed internationally: co-op recognition, financing, sectoral financing, preferential taxation, supportive infrastructure, and preferential procurement. The most developed examples of these policies are found in areas of dense co-operative concentration: the Basque region of Spain, Emilia Romagna in Northern Italy, and Quebec, Canada.6 Below is a table summarizing how these six policy forms are deployed in the co-op dense regions . The table is included to facilitate further research in the understudied area of co operative policy, and to clarify policy successes for organizers in the co-operative movement interested in emulating them. In the next section we examine “private” or ad hoc versions of the policy supports that Evergreen used and explore what these improvisations reveal about the legislative needs of the US co-op movement more broadly. Of the six enabling policy forms, Evergreen has benefitted from private and ad hoc versions of recognition, financing, supportive infrastructure, and procurement. The Mayor of Cleveland, Frank Jackson, and Ohio Senator Sherrod Brown spoke at the opening ceremonies of Green City Growers. These high-level endorsements, while not written into policy, conferred legitimacy and boosted media coverage. In terms of financing, having a wealthy foundation backstopping the initiative was a crucial first step. The Foundation’s support helped bring the City on board, giving the Department of Economic Development the confidence to access HUD 108 funds to support the co-op. As Nichols reflected: “the loans have some risk for us, but I know the Foundation is backing this initiative, and I know they don’t want it to fail. They have money. I don’t have to worry” . Without technical assistance from the Cleveland Foundation and the Ohio Employee Ownership Center , securing New Market Tax Credit funds would have been even more of a byzantine process. Both the Foundation and the OEOC offered legal support and co-op training respectively. The OEOC has received both state and federal funding, but its state funding has been largely cut. Again, the technical support Evergreen received was ad-hoc and private.