Southeast Raleigh Competitiveness Assessment

Transcription

1 Southeast Raleigh Competitiveness Assessment James H. Johnson, Jr., Ph.D. Frank Hawkins Kenan Institute of Private Enterprise Kenan-Flagler Business School Campus Box 3440 University of North Carolina at Chapel Hill Chapel Hill, North Carolina Allan Parnell, Ph.D. Cedar Grove Institute for Sustainable Communities Mebane, North Carolina June 2006

2 2 Table of Contents Executive Summary Introduction, Critical Background, and Purpose Methodology The Study Area Demographic Profile SWOT Analysis Summary and Recommendations

3 3 List of Tables 1. Types of Community Capital Assets 2. Questions Posed in a Community-Level SWOT Analysis 3. Gateways and Databases Used in the Research 4. Population by Race and Ethnicity: Southeast Raleigh, City of Raleigh, and Wake County, Census Demographic Changes by Race and Ethnicity: Southeast Raleigh, City of Raleigh, and Wake County, Educational Attainment (age 25 and older): Southeast Raleigh, City of Raleigh, and Wake County, Census Key Economic Indicators: Southeast Raleigh, City of Raleigh, and Wake County, Census Housing Characteristics: Southeast Raleigh, City of Raleigh, and Wake County, Census Distribution of Jobs by Industrial Categories: Southeast Raleigh, City of Raleigh, and Wake County, Census SWOT Results for Southeast Raleigh

4 4 List of Figures 1. A Business-oriented Conceptual Model for Enhancing Community Competitiveness 2. The Study Area 3. Percent Nonwhite Population in Raleigh, NC 4. Population Pyramids for Wake County, City of Raleigh, and Southeast Raleigh 5. Potential Brown Fields within the Development Zone

5 5 Executive Summary Using a conceptual model anchored in recent research on community competitiveness and information culled from a fifteen-year survey of several electronic databases, Southeast Raleigh s ability to compete in the new economy is evaluated by assessing the strengths, weaknesses, opportunities, and threats inherent in its existing stock of polity, financial, physical, human, cultural, and social capital. The findings suggest strongly that, given its locational advantages, Southeast Raleigh has the opportunity to become a highly attractive place to live and do business. There are, however, major challenges which must be overcome if the community is to become highly competitive in the 21 st century knowledgebased economy. Southeast Raleigh s challenges are actually the flipside of the opportunities that exist for economic development and job creation. The influx of young urban professionals and the growth of the Hispanic population are opportunities, but these changes also threaten the social fabric of the community and may present economic challenges to some long-term residents. The spillover economic development effects of downtown redevelopment could be enormous, but also pose a threat to the residents of Southeast Raleigh as property values are likely to increase in neighborhoods near downtown potentially making it difficult financially for many of the long term residents to remain in the community. Wal-Mart and other large retail businesses create opportunity, but they also threaten the viability of many small retail businesses. To balance these and other opportunities and threats Southeast Raleigh currently faces, the following four step action plan is recommended: Recommendation #1: Brand Southeast Raleigh as a sustainable community. Communities striving to brand themselves as such typically adhere to the triple bottom line principles of sustainability. In their efforts to revitalize or rebuild the community, officials strive to (1) do no harm to the physical environment and protect natural resources to the maximum extent possible, (2) adhere to principles of social justice and equity, and (3) return strong shareholder/stakeholder value. In communities branded as sustainable places, natural and historic resources are preserved, jobs are available, sprawl is contained, infill development and adaptive re-use of existing buildings are advocated, neighborhoods are secure, health care is accessible, and all citizens have the opportunity to improve their lives

6 6 Recommendation #2: Develop an image marketing campaign to promote Southeast Raleigh in the economic development marketplace. Based on the branding of the community, a multi-level marketing campaign should be launched to attract new residents and businesses to the area. The marketing materials should underscore the community s core values; highlight Southeast Raleigh s strengths--especially its strategic location in the Research Triangle, Wake County, and the city of Raleigh as well as its proximity to RDU; and leverage the websites of the city and the county as the community s primary economic development marketing tools. Recommendation #3: Leverage Southeast Raleigh s population diversity in economic development planning. Each of the demographic groups that make up the population of Southeast Raleigh is a niche market for a wide array of goods and services. Among the various groups, Hispanics probably have the greatest new economic development potential. More than $80 million of Hispanic consumer spending (8.5% of the total) leaked out of Wake County in 2004 because local businesses did not provide the goods and services that matched Hispanic consumer preferences. The business revenue, spin-off jobs, labor income, and taxes resulting from efforts to capture the Hispanic business revenue that heretofore has leaked out of Wake County would constitute a major boost to the Southeast Raleigh community. Recommendation #4: Pursue civic entrepreneurial strategies of economic development. Given declining government resources for local community and economic development, Southeast Raleigh nonprofit and religious leaders need to become even more actively involved in the resolution of the area s most pressing problems. To facilitate their ability to devise innovative solutions to local problems, the city should invest in civic entrepreneurship training for Southeast Raleigh nonprofit and religious leaders. Civic entrepreneurship training programs are designed to change the way in which nonprofit organizations and the faith community operate and the way they view themselves in relation to the for-profit sector of the economy. By acquiring skills in the nuts and bolts of sound, socially responsible business practices, they should be able to pursue a wide range of entrepreneurial approaches to community development, including leveraging the resources they currently spend with the private sector, which will generate community wealth revenue that can be used to solve pressing local problems.

7 7 Introduction, Critical Background, and Purpose Research indicates that communities that have proven to be attractive places to live and do business in the 21 st century knowledge-based economy possess a distinct set of characteristics. Highly attractive and competitive communities: Actively and aggressively pursue strategic alliances with other communities, domestically and especially internationally, with an eye toward developing not only cultural ties but also profitcentered activities that generate revenue and create jobs for the local citizenry. Create a regulatory environment that promotes and supports the generation of new community wealth via civic entrepreneurial ventures and innovations that are designed specifically to sustain and enhance the health, viability, and vitality of the community. Recognize the need for, and are committed to continuous investment in, a world-class physical infrastructure that connects them to the regional, national, and international economy. Invest heavily in their educational system (K 12, community colleges, and four-year institutions) to ensure the availability of education and training programs for their citizens so that they can compete for new economy jobs, thereby enhancing the community s attractiveness to businesses. Instill in their citizens, especially their youth, the attitudes, values, and beliefs about education and work that are key to upward mobility in the knowledge-based economy of the 21 st century. Strive to reduce, to the maximum extent possible, geographical, racial and/or ethnic, and class disparities by investing substantial resources in an array of community-building institutions (e.g., the YMCA, the YWCA, and the Boys and Girls Club) that seek to mend the social fabric and provide bridges to education and economic mainstream for their members,

8 8 especially those who are socially and economically disadvantaged. Under-girding these characteristics, as Table 1 shows, are six types of community capital assets polity, physical, financial, human, cultural, and social which interact, as specified in Figure 1, to create a healthy, highly competitive community. 1 It is important to note that the absence of any one of these six types of capital can seriously limit the ability of a community to compete in the 21 st century marketplace. But, as Figure 1 shows, it is the polity capital (i.e., the local government), which creates the conditions or climate enabling the other five types of capital to drive competitiveness. In highly competitive communities, government decisionmaking is agile and flexible, not static or bureaucratic. Assuming the business-equivalent role of managing partner, the local government is prepared almost on an ad hoc basis to foster or facilitate networks and linkages among key community stakeholders to build or develop the requisite physical, financial, human, cultural, and social capital to facilitate community economic health and competitiveness. 2 1 For a detailed discussion of the theoretical underpinnings of our model of community competitiveness, see Johnson (2002a,b). 2 To play this role effectively, the local government in a highly competitive community typically establishes a knowledge management system and data warehouse, which enables it to monitor trends and developments internal and external to the community in real time. For a detailed discussion of the importance of having such a system in place, see Holbrook (1995) and IEDN (1996, 2000).

9 9 Table 1: Types of Community Capital Assets Polity Capital: commitments from local government organizations to continuously strive to enhance the health and socioeconomic well being of local residents and advance the competitiveness of the local community in the global marketplace. Physical Capital: the network of highways, railways, airports, telecommunications (telephone, Internet, etc.) and water and sewer systems that form the infrastructure of the community. Financial Capital: traditional and non-traditional sources of revenue that support the provision of services and promote future economic growth and community development. Human Capital: individuals with the requisite education, training, and soft skills to compete for jobs in the highly integrated world economy. Cultural Capital: residents with the appropriate values, attitudes, and beliefs about their current life chances and their future opportunities in the local community. Social Capital: resources personal and institutional through which individuals maintain their social identity and receive emotional support, material aid and services, information, and new social contacts. Source: Johnson (2002a). Depending on the nature of the issue, these networks may be industry- or sector-specific, ethnic-based, or regional in composition (Kotkin, 1998). In some instances, they may involve business leaders who are staunch competitors in the local marketplace. In highly competitive communities, leaders of competing businesses often work together to solve local problems because they recognize that their coopetition or competitive collaboration will ultimately benefit their respective companies (Conlon and Giovagnoli, 1998). In other words, it is a form of enlightened self-interest.

10 10 Figure 1 A BUSINESS-ORIENTED CONCEPTUAL MODEL FOR ENHANCING COMMUNITY COMPETITIVENESS Polity Capital Physical Capital Human Capital Financial Capital Social Capital Cultural Capital Healthy/Competitive Communities Sources: Compiled by authors based on Johnson (2002a). In the remainder of this report, we apply this model in a case study assessment of the current competitive position of the Southeast Raleigh community. 3 Assessments of the competitive position of communities are most often for cities or towns, but, as we show, Southeast Raleigh is clearly differentiated from the larger community, allowing our assessment. We begin by describing the methodology employed to operationalize the model. Next, we provide a demographic and socioeconomic profile of Southeast Raleigh and then present the results of the competitive assessment. 3 Southeast Raleigh is operationalized by the Raleigh Community Development Department as Census 2000 Wake County Tracts 501, 505, 506, 507, 508, 509, 519, , , , , Block Group 1, Tract , Block Groups 1, 3, and 4, Tract , and Block Group 1, Tract For demographic comparisons, we also compiled a subset of the census tracts and census block groups which are within the city limits of Raleigh.

11 11 METHODOLOGY To operationalize the model, we conducted a community-level SWOT analysis, which identifies the internal (Strengths and Weaknesses) and external (Opportunities and Threats) forces that shape an area s overall health, economic well-being, and attractiveness as a place to live and do business (IEDN, 2000; Holbrook, 1995). As Table 2 shows, such an analysis strives to answer specific questions about the community s strengths, weaknesses, opportunities, and threats. Table 2: Questions Posed in a Community-Level SWOT Analysis Strengths What does the community do well? Does the community have a clear strategic vision? Does the community have an entrepreneurial orientation? Does the community culture produce a healthy environment in which to live and do business? Weaknesses What could be improved in the community? What does the community do poorly? Is the community able to finance needed infrastructure? Does the community have poor debt or cash flow? Opportunities What favorable circumstances is the community facing? What are the interesting trends? Is the community positioned to take on those trends? Is the community advanced in technology? Threats What obstacles does the community face? What are the community s competitors doing? Are the demographic and economic conditions changing? Is technology threatening the community s competitiveness? What policies are state and federal lawmakers backing? Do the policies affect the community and, if so, how? Source: Compiled by authors.

12 12 To answer these questions for Southeast Raleigh, our case study community, we engaged in the same type of community competitiveness intelligence gathering that a corporate relocation consultant pursues to develop a short list of ideal sites for a client s business relocation or expansion (IEDN, 1996). That is, we conducted an exhaustive search of publicly-available information using the electronic search engines and research indexes identified in Table 3. Because we are searching for information on a community within a city rather than an entire city, the search is constrained. We used Southeast Raleigh and the names of specific neighborhoods within the community (e.g., South Park, Idlewild, Roberts Park, Battery Park, and Worthdale) as place identifiers and combined this information with an array of search terms culled from prior research on community competitiveness. The search, which included mainly newspaper and popular articles, technical reports, government documents, and statistical information, spanned a fifteen-year period, 1991 to Because we are examining a community within a city, most of the news articles are from the News and Observer. Much information was gained directly or indirectly (through links) from the city of Raleigh and Wake County websites. The community-level SWOT results discussed below are based on our content analysis of these search results. Table 3: Gateways and Databases Used in the Research GATEWAYS DATABASES

13 13 AltaVista.com Google.com ABI Inform/ProQuest All Business Websites General Search Engine Periodicals and Newspapers ProQuest All Articles Lexis/Nexis Source: Compiled by authors. Academic Universe Statistical Universe Government Periodical Universe The Study Area Our target area in this research is the Southeast Raleigh Economic Development Zone (hereinafter referred to as the Southeast Raleigh EDZ). As Figure 2 shows, it is situated in the heart of Raleigh on the southeast side of the downtown business district, extending out to the border of Johnston County, including some unincorporated areas as well as parts of Garner. Within the Southeast Figure 2: The Study Area Raleigh EDZ, we also focus

14 14 attention to the maximum extent that data will allow on the sub-section that falls completely within the boundaries of the city of Raleigh (hereinafter referred to as Historic Southeast Raleigh See Figures 2 and 3). 4 Below, we utilize data mainly from Census but also some from the 1990 Census--to illustrate how the Southeast Raleigh EDZ and Historic Southeast Raleigh differ from the Figure 3: Percent Non-White Population broader communities of Raleigh and Wake County on key demographic, social, and economic indicators. Demographic Profile Southeast Raleigh, as Table 4 shows, is the center of Raleigh s African American community. In 2000, African Americans constituted 71.5% (36,167) of the Southeast Raleigh EDZ population (50,568) and 73.3% (25,355) of the total population of Historic Southeast Raleigh (34,574). By comparison, only 27.8% of the city of Raleigh s total population and 19.7% of Wake County s total population was African American in The portion of Southeast Raleigh that falls within the Raleigh city limits what is defined here as Historic Southeast Raleigh--is comprised of the following Census 2000 geographic units for Wake County: Census Tracts 501, 505, 506, 507, 508, 509, 519, , and

15 15 Table 4: Population by Race and Ethnicity: Southeast Raleigh, City of Raleigh and Wake County, Census 2000 Southeast Southeast EDZ Raleigh Wake County Total 34,574 50, , ,846 White 6,655 10, , ,544 (19.2%) (21.2%) (63.3%) (72.4%) African American 25,355 36,167 76, ,820 (73.3%) (71.5%) (27.8%) (19.7%) Asian , (0.5%) (0.5%) (3.4%) (3.4%) Hispanic 2,599 4,329 19,308 33,985 (7.5%) (8.6%) (7.0%) (5.4%) Note: Latino/Hispanic is not a separate racial identity in the Census, but an ethnic identity Source: Tables P2 and P4, Summary File 1, Census 2000 Despite the high concentration of African Americans in Southeast Raleigh, there were several noteworthy shifts in the size and makeup of the population in the area during the 1990s, as shown in Table 5. Historic Southeast Raleigh s total population grew (15.9%) more slowly than the total population of the Southeast Raleigh EDZ (35.9%), the entire city of Raleigh (24.7%), and Wake County (32.6%). Between 1990 and 2000, the African American population in Historic Southeast Raleigh decreased by 8.9%, while the White population grew by 20.3% and the Hispanic population grew by 91.7%. Hispanics accounted for 7.5% of Southeast Raleigh s residents in In contrast to the decline in Historic Southeast Raleigh, the African American population within the more expansive Southeast Raleigh EDZ (which includes Historic Southeast Raleigh) grew by 31.7% during the 1990s. The white population grew by almost the same percentage and the Hispanic population almost doubled (93.6%). In 2000, Hispanics accounted for a higher percentage of the Southeast Raleigh EDZ population (8.6%) than of the population of the city of Raleigh (7%) and Wake County (5.4%).

16 16 Table 5: Demographic Change by Race and Ethnicity: Southeast Raleigh, City of Raleigh, and Wake County, Southeast Southeast EDZ Raleigh Wake County Total 15.9% 35.9% 24.7% 32.6% White 20.3% 31.0% 17.7% 28.7% African American -8.5% 31.7% 25.3% 28.9% Hispanic 91.7% 93.6% 84.8% 84.1% Source: Tables P2 and P4, Summary File 1, Census 2000; Table P006 and P008, 1990 Census The growth in the African American population in Southeast Raleigh outside of the city is consistent with a pattern of black suburbanization while the influx of whites, especially in Historic Southeast Raleigh, is probably indicative that gentrification the influx of young urban professionals or yuppies--is taking place (Johnson, 1983). The influx of Hispanics into the area is part of a process popularly referred to as black-to-brown population succession (Johnson and Oliver, 1985; Johnson, Farrell, and Guinn, 1997). 5 Age-sex pyramids--graphical representations of the age distributions of men and women--for Southeast Raleigh, the city of Raleigh, and Wake County are depicted in Figure 4. 5 Both the city of Raleigh and Wake County have significant Asian populations (3.4%), but Asians account for only 0.5% of Southeast Raleigh s population in 2000.

17 17 Southeast Raleigh has a higher percentage of individuals who are age 19 and younger (29.1%) than the city (25%) or the county (28%); and a higher percentage of individuals who are age 65 and older (9.6%) than the city (8.3%) or the county (7.4%). Unlikely to be full-time workers, these two age groups are often referred to as dependent populations since they typically rely on either family or institutions (e.g. Social Security) for support. In comparison to adults age 25 and older in the city of Raleigh and Wake County, a much higher percentage of Southeast Raleigh s adults did not complete high school (25% versus 11.5% and 10.7%, respectively) and a Figure 4: Populations Pyramids for Wake County, City of Raleigh, and Southeast Raleigh much lower percentage are college graduates (13.2% versus 30.3% and 29.6%, respectively) or have post-

18 18 graduate degrees (5.6% versus 14% in both Raleigh and Wake County), as shown in Table 6. Table 6: Educational Attainment (age 25 and older): Southeast Raleigh, City of Raleigh, and Wake County, Census 2000 < 12 Years High School Some College College Graduate Post Graduate Southeast Raleigh EDZ 26.3% 28.1% 21.7% 13.2% 5.6% Southeast Raleigh 24.9% 27.0% 25.7% 13.0% 6.1% Raleigh 11.5% 16.2% 27.5% 30.4% 14.4% Wake County 10.7% 17.8% 27.7% 29.6% 14.3% Source: Table P37, Summary File 3, Census 2000 Given these differences in educational attainment, it should not be surprising that both Historic Southeast Raleigh and the Southeast Raleigh EDZ lag behind the city and the county on key economic indicators (Table 7). In the Southeast Raleigh EDZ, the median family income ($39,959) was 60% of the median family income in the city ($60,003) and 54% of the median family income in Wake County ($67,149) in In Historic Southeast Raleigh the median family income ($31,189) was 52% of the median income in the City of Raleigh and 46% of the median family income in Wake County. More than a fifth of the families in the Southeast Raleigh EDZ (21.1%) and almost one quarter of the families in Historic Southeast Raleigh (24.7%) had incomes below the poverty level in A significantly smaller percentage of the families in the city of Raleigh (11.5%) and in Wake County (7.8%) had incomes below the poverty level in In 1999, the unemployment rate in Southeast Raleigh (12.9%) was almost twice the rate for the Southeast Raleigh EDZ (6.9%), more than three times the unemployment rate for the city of Raleigh as a whole (3.8%), and four times the rate in Wake County (2.9%).

19 19 Given the foregoing disparities in educational attainment, median family income, incidence of poverty, and unemployment, the housing stock in Southeast Raleigh, as might be expected, also differs significantly from the housing stock in the rest of the city and county, as shown in Table 8. Table 7 Key Economic Indicators: Southeast Raleigh, City of Raleigh, and Wake County, Census 2000 Southeast Raleigh EDZ Median Income (Families) % Poverty (Families) % Unemployed $35, % 6.9% Southeast Raleigh $31, % 12.9% Raleigh $60, % 3.8% Wake County $67, % 2.9% Source: Tables P43, P77, and P87, Summary File 3, Census A significantly smaller percentage of the housing is owner occupied in Historic Southeast Raleigh (37.1%) than in the Southeast Raleigh EDZ (48.6%), the city of Raleigh (51.6%), and in Wake County (65.9%). The median value of owner occupied homes in Southeast Raleigh ($97,073) is lower than the median value of owner-occupied homes in the Southeast Raleigh EDZ ($105,812), the city ($156,000), and the county ($162,900) (See Table 8). Paralleling trends in owner-occupied housing, the median rent in Historic Southeast Raleigh ($447) is lower than the median rent in the Southeast Raleigh EDZ ($463), the city ($627), and the county ($631).

20 20 Table 8 Housing Characteristics: Southeast Raleigh, City of Raleigh, and Wake County, Census 2000 Southeast Raleigh EDZ Home Owners Median Value (Owner Occupied) Median Rent 48.6% $105,812 $463 Southeast Raleigh 37.1% $97,073 $447 Raleigh 51.6% $156,000 $627 Wake County 65.9% $162,900 $631 Source: Tables H7, H56, and H85, Summary File 3, Census Table 9 Distribution of Jobs by Industrial Categories: Southeast Raleigh, City of Raleigh, and Wake County, Census 2000 Southeast Raleigh City of Raleigh Wake County Transformation Activities (e.g. manufacturing 18.8% 16.9% 20.0% and construction) Distributive Services (e.g. transportation, communications, 19.1% 17.8% 18.2% wholesale and retail trade) Producer Services (e.g. finance, insurance, information services 17.7% 27.2% 27.1% and other business services) Personal Services (e.g. entertainment, 15.6% 13.2% 11.2% food services) Social Services (e.g. health care, education, 28.4% 24.5% 23.2% government) Primary Activities (e.g. agriculture) 0.5% 0.4% 0.5% Source: Table P49, Summary File 3, Census 2000

21 21 Table 9 shows the distribution of employment by industry in the Southeast Raleigh EDZ, the entire city, and the county. Six industry categories are highlighted: 1. Primary activities (agricultural and mining); 2. Transformative activities (manufacturing and construction); 3. Distributive services (transportation, communication, wholesale and retail trade); 4. Producer services (finance, insurance, real estate, and business services); 5. Personal services (entertainment, repairs, food and beverage), and 6. Social services (medical, education, and government). Employment in primary activities, transformative activities, and distributive services does not differ significantly across the three geographical areas. But employment in personal and social services, which are mostly low wage jobs, is somewhat higher in Southeast Raleigh than in the city of Raleigh and Wake County. At the other end of the spectrum, employment in producer services, which include mainly high wage information economy jobs, is much lower in Southeast Raleigh (18%) than in the city (27%) and in the county (27%). Southeast Raleigh, in short, has a higher proportion of residents in dependent ages (19 and younger plus 65 and older), significantly lower education levels, lower incomes, and higher rates of both poverty and

22 22 unemployment than the city and the county. Further, in comparison to the city and the county, the median value of owner-occupied housing and median rent in Southeast Raleigh are significantly lower. SWOT Analysis If Southeast Raleigh is to compete more effectively in the global marketplace in the years ahead, local community stakeholders must understand and leverage the community s comparative advantages based on an analysis of its strengths, weaknesses, opportunities and threats. Table 10 summarizes the most significant findings of our SWOT analysis for Southeast Raleigh. Strengths Southeast Raleigh s strategic location within the Research Triangle is probably its greatest strength. Ranked repeatedly over the past two decades as one of the best places to live and do business in the U.S., the Research Triangle is a major magnet for both population and employment growth. Above and beyond the comparative advantages of being a Reseach Triangle community, Southeast Raleigh s location within Wake County consistently rated as one of the state s most vibrant communities in terms of population, economic, and employment growth as well as the quality of its public schools-- constitutes a second strength. And Southeast Raleigh s proximity to the downtown area--historically a center of state and local government that is currently being redeveloped and revitalized as a 24-hour/7-

23 23 day-a-week center of commerce, tourism, and entertainment constitutes a third strength. As a consequence of these locational advantages, Southeast Raleigh is accessible via major city streets and area freeways as well as rail connections. It is also within 30 minutes travel time of the Raleigh Durham International airport. In addition to its locational advantages, there are an array of polity capital assets city-wide and community-focused governmental and quasigovernmental agencies and organizations that can be leveraged to promote and facilitate community and economic development in Southeast Raleigh. Some of these organizations have demonstrated the ability to forge strategic alliances with national nonprofit organizations and federal governmental agencies to promote and facilitate community and economic development in Southeast Raleigh. For example, the Raleigh Housing Authority and the Community Development Authority have partnered with nonprofits and the U.S. Department of Housing and Urban Development to rehabilitate existing houses and build affordable housing in Southeast Raleigh. Other organizations exist that pursue a much broader economic and community development agenda in Southeast Raleigh. The Southeast Raleigh Assembly (SERA), for example, is a citizen advisory board to the Raleigh City Council focusing on long-term economic development. Established in 2001 as a successor to the Southeast Raleigh Improvement Commission, 6 SERA s 6 The Independent Weekly Southeast Raleigh: Forming Partnerships. September 25, 2002.

24 24 mission is to: look at issues dealing with vacant housing, expanding home ownership, improving the quality of goods and services, improving small business development, technology training for youth and environmental management. 7 SERA has been active as an advocate for the community, seeking a role in downtown redevelopment projects 8 and supporting the Southeast District Plan of the Raleigh Comprehensive Plan 9, among other actions. SERA has an excellent newsletter, which is available in the Southeast Raleigh Assembly section of the city s website. In 2005, SERA initiated the establishment of The Raleigh Area Development Authority (RADA), a not-for-profit organization whose mission is to develop mortgages, small businesses, community development and economic development in southeast Raleigh. Start-up costs ($120,000) were covered by the City of Raleigh. One of RADA s first initiatives, the Bridges to Ownership Program, will provide funds for current business owners to purchase their commercial space. 10 RADA s longer term goal is to raise $100 million from banks, federal agencies, pension funds, and insurance companies over the next 10 years to invest in the redevelopment of Southeast Raleigh. 7 gory/government/boards_and_commissions/southeast_raleigh_assembly/cat-1c Southeast_Raleigh_Assemb.html 8 News and Observer Panel wants voice in plans August 21, News and Observer Raleigh revising district plan March 26, News and Observer Raleigh Plans Help for Business Owners: January 25, The article refers to a recommendation that $40,000 of Community Development Block Grant funds be used along with $96,225 in federal loans.

25 25 If successful, RADA will significantly improve access to business capital in Southeast Raleigh It remains too early to assess the effort, but the establishment of RADA is a positive approach to meeting the capital needs of Southeast Raleigh. In addition to RADA, there are several private development groups, including F7 Development Corporation and Empire Properties, which focus on investments in Southeast Raleigh. 11 Southeast Raleigh is ripe for investments from these and other financial services and economic development institutions. Recognizing that Southeast Raleigh has not benefited from the economic growth occurring elsewhere in Wake County, the North Carolina Department of Commerce has designated the area as a state-specified economic development zone under the William S. Lee Quality Jobs and Business Expansion Act of As a consequence of this designation, new and expanding companies may qualify for tax credits for job creation, investments in machinery and equipment, worker training, economic development, and investments in business property. 12 The Raleigh Business and Technology Center (RBTC) is another valuable economic development asset serving Southeast Raleigh. Established in 2000 after 17 years of planning, the goal of the RBTC is to assist new and existing smaller businesses in areas critical to growth -- areas such as management, marketing and financial planning -- and to provide cost-effective office space and administrative services. 13 The RBTC has strong community support in Downtown Raleigh is included in this economic development zone. 13

26 26 Southeast Raleigh. The long-time advocate for this center, Dr. Preznell Robinson, President Emeritus of St. Augustine s College, is Chairman of the RBTC Board of Trustees. The board also includes the current presidents of Shaw University and St. Augustine s College, a representative from the city, the former RBTC executive director, and the President of the North Carolina Institute of Minority Economic Development. The Pacesetters Fellowship Program, an entrepreneurial support and training program for business owners in Southeast Raleigh, is one of RBTC s key initiatives. The program includes an ongoing training component, referred to as a virtual business incubator, and managerial and technical support through the provision of affordable services. SERA and the city of Raleigh are strong supporters of the Pacesetters Fellowship Program, and a majority of the current and former program participants are located within the SERA area. 14 Southeast Raleigh also has an array of social and cultural capital assets that can be leveraged in the economic development marketplace. It is, first of all, widely recognized as the historic center of Raleigh s African American community. Many of Raleigh s most influential African American community leaders in business, education, and politics have roots in Southeast Raleigh. Second, and related to its historic role as the hub of Raleigh s African American community, Southeast Raleigh has a number of very important institutional assets and cultural resources. They include many churches, which reflect the rich religious diversity that exists in the community, two major parks (i.e., 14 News and Obsever Entrepreneurs learn to prosper August 13, 2004.

27 27 Martin Luther King, Jr. Memorial Park and Chavis Park), one museum (i.e., the African American Cultural Complex), a Boys and Girls Club, and two important centers of higher education, Shaw University and St. Augustine s College, which not only provide institutional leadership but also enrich the quality of social life in the community through their sponsored programs and cultural events. Weaknesses Southeast Raleigh has significant weaknesses that hinder job creation and economic development. Many of the weaknesses are historical and structural (e.g., lack of major employers that generate spin-off businesses) and will change over time as economic development occurs. Others must be addressed directly if significant economic development and job creation is to occur in the community. There are two major weaknesses in the job creation and economic development environment: inadequate capital for investment and inadequate promotion of the Southeast Raleigh EDZ. In a 2002 report to the Raleigh Planning Department and SERA, entitled Recommendations for a New Southeast Raleigh Economic Development Initiative, Hammer Siler George Associates presented a convincing case of the need for significant investment capital in Southeast Raleigh, proposed approaches to raise the capital, and identified potential sources of capital. The newly created Raleigh Area Development Authority (RADA) may fill this void. However, it

28 28 remains to be seen how successful RADA will be in reaching its targeted goal of raising $100 million in investment capital for Southeast Raleigh. As noted earlier, the Southeast Raleigh EDZ is the only William S. Lee Act Development Zone in Wake County. The EDZ incentives should be a major resource to attract new businesses to Southeast Raleigh, but little has been done to promote the incentives. The Wake County Economic Development website provides links to incentives and to a map of the Southeast Raleigh EDZ, but Southeast Raleigh is never directly identified. The location is not promoted in any way. Locational advantages, information on available properties, detailed information on infrastructure all of this information is lacking. If new businesses (and jobs) are to be attracted to the Southeast Raleigh EDZ, all of this information and more should be readily available on the Wake County Economic Development website and in marketing and promotional materials. In terms of its attractiveness as a place to live and do business, Southeast Raleigh s physical capital infrastructure is a major weakness. Dilapidated and abandoned housing has long been a problem. The City has bought numerous properties and is working to rehabilitate some of them. Community based organizations, the faith community, and private companies are also engaged in housing rehabilitation and new construction in Southeast Raleigh There are more published reports in the News and Observer on efforts to address housing in Southeast Raleigh than any other topic. Examples include Southeast Raleigh renewal doesn't please everyone, April 13, The

29 29 But the extent of dilapidation is considerable exactly how extensive is difficult to ascertain because there is no readily available electronic or geocoded list of boarded and vacant housing. 16 The scale of housing needs continues to be substantial and will be for the foreseeable future. Further, the dilapidated housing is associated with a generally rundown environment. Local groups organize clean-up efforts in neighborhoods, 17 but the challenges will continue as long as housing remains substandard. Brown fields and run-down industrial sites along the Garner Road Industrial Area and in other areas in the Southeast Raleigh EDZ also detract from the attractiveness of the community (see Figure 5). In addition to brown fields and industrial older sites, Southeast Raleigh has other Locally Unwanted Land Uses (LULUs) that are typically Figure 5 perceived to have an adverse affect on property values and by extension, Road from Blight to Bloom, March 21, 2001, Neighborhood gets a boost, March 7, 2002, Urban Housing Ideas Sifted. March 31, Communication from the Raleigh Community Development Department. See also the Community Development page at 17 News and Observer St. Aug's initiates neighborhood cleanup October 27, 1997.

30 30 detract from the attractiveness of the community as a place to live and do business. Most notable in this regard is the concentration of correctional facilities (i.e., N.C. Correctional Institute for Women, Raleigh Correctional Institute for Women, and Wake Correctional Institute) in Southeast Raleigh. Crime and perceptions of crime are a continuing weakness that must be addressed to improve economic development opportunities in Southeast Raleigh. Neighborhoods have organized to address crime especially crime associated with dilapidated housing (e.g. crack houses) and poor streetlighting, 18 but these efforts have not been embedded in an overall economic development strategy and plan for the community. As previously noted, adults living in Southeast Raleigh have lower levels of education relative to the city as a whole and Wake County. Southeast Raleigh also has lower family incomes and higher rates of poverty. Owneroccupied homes have lower value, and thus lower asset value. These conditions will change with economic development, but these human capital weaknesses also make the challenges for economic development more formidable. Many residents of Southeast Raleigh doubt that the city is truly concerned about their interests. The structure and execution of some city programs and policies contribute to this distrust. 18 There are numerous examples in the published record. Two examples from the News and Observer are: Residents fret over crime April 27, 1999 and Carver Street area to get better lighting June 12, 1997.

31 31 The housing inspection and targeted code enforcement program in South Park and other neighborhoods near downtown is a notable example. 19 Residents of Historic Southeast Raleigh had long complained about the lack of attention to boarded-up and dilapidated buildings in their neighborhoods. In response, the city began a program of concentrated code enforcement in the fall of Rather than targeting clearly dilapidated structures, city officials made house-to-house code inspections mandatory in the Downtown East and Thompson-Hunter I and II neighborhoods. Where code violations were found, owners were given deadlines for repairs. Failure to meet these deadlines could result in a $325 administrative fee and potential daily fines. Residents organized and successfully challenged the city council to end this heavyhanded program. While the city reversed itself and stopped the inspections, the program added to the perception among some Southeast Raleigh community residents that the city is trying to force them out for redevelopment. A city-sponsored low-interest loan program targeting homeowners who according to published reports had to own their homes outright to qualify also created suspicion among area residents. 20 The city offered a home repair loan program with special, sometimes forgivable loans, but the restriction to those who owned their homes outright was viewed as overly restrictive. 19 There were numerous articles examining this inspections program. Examples in the News and Observer include: Residents hurry to fix houses; Southeast Raleigh residents wonder why the city pushed for repairs in their area July 7, Don't inspect homes, city told; S.E. Raleigh plea brings results. April 7, The Independent Weekly, City-sponsored terrorism in Southeast Raleigh. April 13, Officials in the Department of Community Development reported to us that this published information was incorrect. Qualification did not require full and clear ownership. We found no such correction in published reports.

32 32 Further, some residents considered this program to be too little, too late, adding to the broad suspicion of the motives of city officials. Commenting on the program, one Southeast Raleigh resident said, I think there are a lot of people who know this [land] is valuable [City officials] want this land and I think the few people who own over here [Bledsoe Avenue] know that and don't want to put themselves in a position where they are on the hook, where they... might lose what they own. In response to this expressed skepticism, a city official stated that, The loan programs are aimed at encouraging home ownership, nothing more. Whether valid or not, Southeast Raleigh long-term residents lack of confidence in the city and its intentions is an ongoing challenge that must be addressed directly if the community is to be successfully revitalized. Continued open communication between Southeast Raleigh residents and Community Development Department officials along with a more concerted effort on the part of Raleigh elected officials to communicate with the local citizenry may go a long way toward establishing residents confidence in ongoing efforts to revitalize Southeast Raleigh. Opportunities Major opportunities exist to promote and facilitate economic development in Southeast Raleigh. The opportunities are based largely on the strengths of the community, including the community leadership from SERA, faith-based

33 33 organizations, businesses, and nonprofit groups that support entrepreneurs and community development. Other opportunities come from the area s proximity to major redevelopment projects in downtown Raleigh and from the potential growth of large retail stores in the Southeast Raleigh EDZ. The changing face of Southeast Raleigh is also the basis for opportunities, with new residents, including a rapidly growing Hispanic population, buying and renovating houses as well as starting new businesses. 21 There are also opportunities for business recruitment within the Southeast Raleigh EDZ, especially companies that would occupy vacant or abandoned industrial properties. Efforts of community leaders and the city over the past decade have improved considerably the environment for existing small businesses and laid the foundation for new small business formation, growth, and expansion in Southeast Raleigh. The Raleigh Business and Technology Center is positioned to increase the delivery of services and training to both established and fledgling small businesses through its virtual business incubator and business-support services. SERA is providing a strong link to city government to advocate for a range of community improvements that affect--directly or indirectly--the business environment in Southeast Raleigh. With this increased support, small businesses have greater opportunities not just to survive, but to grow and provide jobs in the community. 21 News and Observer Yuppies buy SE Raleigh houses; Rising costs leave older blacks wary February 3, 2006.

34 34 The proximity of Southeast Raleigh to the large and ongoing downtown redevelopment projects provide significant opportunities. Public and private funds are being invested in the Fayetteville Street project, the new convention center, proposed office towers, and other projects. These large scale projects provide opportunity for both businesses and individuals. Further, transportation and other infrastructure improvements being made as part of the redevelopment projects will assist community development and the economic environment in Southeast Raleigh. If these projects are successful in creating a more vibrant and active downtown, the spillover economic impact should be significant as new businesses serving the growing downtown are created in Southeast Raleigh. Similarly, development of the Dix property may also provide further opportunities for Southeast Raleigh. Southeast Raleigh s proximity to corporate headquarters in downtown Raleigh (e.g., RBC Centura and Progress Energy) is an opportunity for businesses that can serve the employees of these institutions. There are also opportunities for business contracts, employment, and community investment from these corporations. New large-scale retail development, such as the proposed Wal-Mart Super Center on Rock Quarry Road, may also provide an opportunity for Southeast Raleigh. 22 The large number of small stores with limited merchandise has been identified by Southeast Raleigh residents as a problem. With the arrival of a large retailer providing an increased range of goods and 22 News and Observer Growth surge attracts retailer; Wal-Mart heads to Southeast Raleigh: November 22, 2005

35 35 services, the community has the opportunity for not only employment growth but also more competitively priced goods and services. Further, additional large retailers may follow Wal-Mart if the store is successful. That the racial and ethnic composition of Southeast Raleigh especially within the city is changing presents a unique set of economic development opportunities. As discussed earlier, the number of African Americans living in Southeast Raleigh declined during the 1990s, while the Hispanic population began to grow rapidly. If this trend continues as is likely there will be new opportunities to serve the Hispanic market. 23 In 2004, according to a recent study (Kasarda and Johnson, 2006), the buying power of Hispanics in the Raleigh MSA was $1,179,932,000. The proportion of this buying power that was expended locally rippled through the metropolitan economy creating total business revenues or an overall economic impact of $1,196,144,000. Hispanic consumer expenditures also generated 10,100 spin off jobs, $281 million in spin-off labor income, and almost $58 million in state sales taxes. In Wake County, where most of the Hispanics in the Raleigh MSA are concentrated, the Hispanic buying power was $932 million in Hispanic consumer spending rippled through the Wake County economy creating a total economic impact of $945 million. A major opportunity exists here because local businesses in Wake County do not provide all of the goods and services that match Hispanic 23 See

36 36 consumer preferences. In such instances, Hispanic spending takes place outside the county commonly termed leakage. Research indicates that $80,711,000, or 8.5% of the Hispanic consumer purchasing power, actually leaked out of Wake County in 2004 (Kasarda and Johnson, 2006). Aspiring entrepreneurs and existing businesses in Southeast Raleigh, where a majority of the county s Hispanics are concentrated, stand to benefit if they can find ways to forestall leakage and tap this growing market. Given Southeast Raleigh s proximity to the banks located in downtown Raleigh, notably the headquarters of RBC Centura as well as the other banks, an excellent opportunity exists to leverage private investment dollars to redevelop and revitalize Southeast Raleigh. The 2002 report by Siler George and Hammer Associates, Recommendations for a New Southeast Raleigh Economic Development Initiative, emphasized the excellent opportunity that exists for the banks to address the capital needs of the community. The fact that Southeast Raleigh has been designated as a specialized economic development zone should serve as an incentive for the banks to invest in Southeast Raleigh. In striving to revitalize Southeast Raleigh, a unique opportunity also exists to leverage the presence of brown fields, one of the locally unwanted land uses in the community, by marketing them to firms that specialize in the remediation and redevelopment of contaminated sites. One of the leading brown field redevelopment firms in the world, Cherokee Investment Partners ( is located here in North Carolina. To market the