Unlocking Potential in El Paso: An Investment Playbook

By Bruce Katz, Victoria Orozco, and Avanti Krovi · November 18, 2021


For the past six months, the Nowak Lab has worked to launch ACCELERATE El Paso, an initiative intended to spur an inclusive recovery by building a structured ecosystem of coaching and capital for Latino businesses. Developed in collaboration with the Aspen Institute Latinos & Society Program (AILAS)Christopher Gergen of Forward Impact, and economic development leaders in El Paso, we created an investment playbook for a major health corridor which (1) identifies opportunities for equitable economic growth, (2) strategically prioritizes shovel-ready and shovel-worthy investments, and (3) blends philanthropic and private capital with federal funding to fully launch large-scale projects.

Investment playbooks are a new and effective tool to organize assets, build stakeholder consensus and align investment. Earlier this fall, we spotlighted the development of an investment playbook in Buffalo as one of the most ambitious community transformations we have seen in the United States. The co-investing strategy is bringing together multiple sources of capital to implement a transformative vision for the East Side neighborhood. Overall investment playbooks present opportunities for investors and local leaders to connect in a mission to reinvigorate promising neighborhoods through inclusive economic development.

Below we present a unique paradigm for equitable economic development and demonstrate how to bring it to fruition, focusing on the configuration of private, public, and civic capital. First, we discuss the methodology, based on the economic and governmental context, used to identify areas with potential for outsized impact on job creation and business formation while intentionally serving under-represented communities. We then share strategies practitioners can implement as they hone in on these neighborhoods as areas for inclusive growth.

Finding Areas of Opportunity within El Paso

El Paso is a unique community sitting on the US-Mexico border, across from Ciudad Juárez, Chihuahua. As the second largest port of entry between the United States and Mexico, El Paso has more than 681,000 residents and the fifth largest share of Hispanic population of all US cities. To better understand how commercial and economic activity clustered within the city, we worked with the Hunt Institute, a local data partner housed in the University of Texas at El Paso, to develop a methodology. This methodology was designed to identify areas (census tracts in particular) that (1) had strong municipal incentives in place and a significant number of anchor institutions, who typically also have ownership over their underlying land; (2) had physical presence, through jobs or businesses, of a growing and promising industry; and (3) have been historically disinvested in and marginalized from the larger community.

Through an interview process with local practitioners and key community stakeholders, we identified several areas of interest in the city. These interviews were followed by a quantitative assessment in which we compared those census tracts along several dimensions. Ultimately, the goal was to create a scoring system to establish a data-driven perspective. Evaluating these dimensions quantitatively and qualitatively, we identified a campus (referred to as “the Medical Center for Americas, or MCA, Area”) that included a hospital network and university (anchor institutions); a growing presence in health services, which had spurred on a burgeoning “medtech” industry; and a commercial and residential community with low incomes. Using a data-driven methodology that wove these elements together, the MCA Area emerged as an area that reflects true nodes of production, innovation, and potential.

Figure 1: Identified Areas of Opportunities in El Paso
Figure 2: Scoring Chart for Areas of Opportunity

In addition to a strong narrative built around quantitative and qualitative analyses, the MCA Area included a strong community anchor that could bring multiple stakeholders in economic development together: the MCA Foundation, a nonprofit organization seeking to develop “a growing hub of innovation for the Paso del Norte region’s healthcare and biomedical industries.” Formed in 2006, the MCA Foundation was created when business, civic, and government leaders sought to transform El Paso’s economy and improve upon the need for health care. Since then, the organization has used its contracted, allocated funding from El Paso City Council, supplemented by grants and private donations, to fully build out a campus and programs. It has also fostered strong, authentic relationships with key stakeholders across civic, public, and private sectors at both the local and regional level.

The MCA Foundation has over its lifetime established the capacity and credibility needed to lead an equitable investment strategy that benefits the entire city. Many cities struggle to identify such organizations or in some cases, have not yet created such intermediaries. Finding a leading local partner, like the MCA Foundation, is crucial to equitable economic development. Such a partner needs the ability to mobilize economic coalition building among significant stakeholders — private, public, and philanthropic — who can provide the capital and operations for projects. They also need the capacity to undertake a holistic development vision and manage crucial investments that work towards it. Lastly, a leading local partner needs to demonstrate commitment to creating (and delivering) equity for the neighborhood and the region. To this last point, the Nowak Lab worked with the MCA Foundation to integrate a multi-dimensional investment strategy that would ensure tangible benefits to community members.

Three Key Elements of the MCA Area Playbook

1. Creating a Paradigm: As the Nowak Lab continued its research in assessing various neighborhoods in El Paso, the team recognized the need for an operating paradigm that could guide economic development decision-makers. Our previous work on community wealthmain street regeneration, and innovation districts informed the creation of five unique dimensions in our equitable economic development strategy: entrepreneurship, innovation, community regeneration, workforce development, and infrastructure. Each of these elements can manifest in different ways, depending on the idiosyncrasies of the geography. They are described in more detail below.

Figure 3: Five Elements of Equitable Economic Development

Whether an investment playbook focuses on an innovation hub, university district, commercial corridor, or central business district, it serves as a call to action — they allow local leaders from the public, private, and civic sectors to identify transformative activities that will disrupt systematic inequalities by creating wealth for underserved residents. Some geographies may rely more on certain dimensions than others but investment across all areas is needed to ensure wealth creation for underserved communities.

2. Operationalizing the Paradigm in El Paso: Using the five dimensions showcased above, the Nowak team sought to understand how they translated in El Paso, specifically within the MCA Area. We did this by first identifying different investment needs, or local uses, within the area. The 440-acre campus already includes several anchor institutions that own land and can manage incoming development. Beyond the campus, as illustrated below, are residential neighborhoods and other community assets.

Figure 4: Greater MCA Area with Surrounding Neighborhoods and Assets

First, the MCA Foundation provided our team with specific projects within the development pipeline. Our team then categorized these projects using the five dimensions, which allowed us to understand how each dimension connected to a project, and the corresponding project cost. Beyond the MCA Foundation, we also engaged with stakeholders from the ACCELERATE El Paso Steering committee, which represented small business, government, and civic leaders. They identified additional neighborhood needs, which our team also organized in a similar manner.

Figure 5: Categorized Chart of MCA Initiatives
Figure 6: Categorized Chart of Neighborhood Needs

As visualized below, these needs come together in the aggregate to create a development vision for the area, which can ensure equitable development and wealth creation for local residents of the community, grounding the five elements of an economic development strategy in actionable steps for the MCA Area.

Figure 7: Development Vision for MCA Area

3. Braiding of Capital for Investment: Places need to strategically prioritize transformational investments and fully leverage all capital sources available. The playbook created for the MCA Area specifically focused on activating federal funds to leverage private sources of capital, as illustrated below.

Figure 8: Matching of MCA Area Local Uses with Potential Federal Sources

Working with the MCA Foundation and other stakeholders, we identified key investment needs and prioritized shovel-ready projects that aligned with the mission of inclusive economic growth. For example, the MCA is proposing the buildout of a Devise Product Realization Hub, which would support budding entrepreneurs, small to medium sized suppliers and manufacturers, and job seekers specifically in the region, and three Centers of Excellence that could possess equitable health and wellness services creating a higher quality of life. These projects meet national goals and can leverage up federal funding to achieve community purposes. We identified gaps in financing and matched various federal sources with specific local uses of each project. Within this matching process, it is crucial to keep in mind where federal subsidies should fill in gaps — as we have written before, they should fill in gaps where the market naturally cannot. Below is an example of how we started to match possible funding for the Devise Product Realization Hub.

Figure 9: Capital Stacking for Devise Product Realization Hub

The Bottom Line

The work we conducted with the MCA Foundation is emblematic of a process that can be scaled and replicated in communities across the country. How an investment playbook shapes out will depend on the distinctive shape of a locality’s market—it is an iterative process that presents unique lessons as we replicate them in different places. In this playbook, we demonstrate how a city like El Paso can capitalize on this once-in-a-generation federal opportunity by building upon its areas of opportunity. Furthermore, our work informed a unique paradigm that illustrated five key mechanisms for achieving equity. Smart practitioners who understand how to combine “the market play” with “the equity play” can create innovative strategies that allow marginalized residents, families, and communities to build up wealth and thrive.

Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University. Victoria Orozco is the Founder & CEO of Punto Lab. Avanti Krovi is a Research Officer at the Nowak Metro Finance Lab.

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