Newsletters

In the six months since we launched the Innovative Finance project a central theme has emerged: delivering capital to where it’s needed most — namely, to millions of underserved entrepreneurs — is a central challenge for an inclusive economic recovery.

Somewhat unexpectedly, the large sums of federal and private capital currently available for investment have illustrated a more fundamental truth in our country’s small business finance system. Capital is not the problem, delivery is.

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.

As Congress continues to deliberate over the size and scope of the reconciliation bill and the timing of the infrastructure and innovation bills, it is clear that implementation of whatever passes will devolve down to networks of public, private, civic and community leaders and institutions in cities and metros across the country. The federal government is about to invest trillions of dollars through hundreds of programs across dozens of agencies. These programs will run through different distribution channels at different times and in accordance with different rules. Some funding will be allocated via block grants, others through competitions, still others through financial products and tax incentives.

In several weeks, the global community will gather in Glasgow for COP 26, the 26th United Nations Climate Change conference. There is no doubt that the “Conference of the Parties” will discuss in detail the role of cities in driving down carbon emissions as well as adapting to the disruptive effects of climate change. We urge the Summit to go one step further and make urban governance a critical element of transformational change.

A strong focus on cities and urban governance is critical for multiple reasons. Most cities around the world actually exacerbate carbon emissions due to the dirty sources of their energy, the excessive level of dependence on automobiles for intra-city mobility and the low energy efficiency of their buildings. They also, increasingly, bear the brunt of climate change, due to the consequences that extreme weather has for urban populations (e.g., flooding, droughts, and heat waves hit vulnerable populations and disadvantaged neighborhoods the hardest) and urban infrastructure (e.g., the flooding of public transit systems, the collapse of highways, roads and other infrastructures, the contamination of scarce drinking water and the surface overflow of sewer systems).

If you have been following the news lately, you may have noticed the attention being paid to the complexity of Congressional deliberations. While important to modernizing America and meeting the moment, these deliberations are but an early step in achieving the Biden Administration’s ambitious agenda. We believe that history will show that appropriating federal resources was actually the easy part of the process; spending federal resources in efficient, effective and equitable ways — “smart spending” in a nutshell — is what should keep us all up at night.

The announcement of the Economic Development Administration’s (EDA) $1 billion Build Back Better Regional Challenge (BBBRC) has created a scramble not seen since the 2017 competition for Amazon’s HQ2.

While the Amazon HQ2 competition focused on winning the physical presence of a single (very large) employer in a single location, the BBBRC seeks to strengthen a wide range of industry clusters, spanning healthcare, advanced manufacturing, AI, clean energy, ag-tech, and more, across dozens of regions and equip a geographically diverse set of communities to have dynamic and resilient local economies. Ultimately, 20 to 30 regions will each receive between $25 million and $100 million to execute on economic development strategies to grow industry clusters.

In July, we wrote a memo detailing how states are spending their State and Local Fiscal Recovery Funds (SLFR funds). Here we follow-up on this piece by examining how cities are using these flexible funds. This newsletter focuses on three areas where City Halls are moving forward with their SLFR funds:

1. A description of the different approaches that cities are taking to allocate funds;
2. An overview of transparency and documentation of ARPA flexible funds; and
3. A look into trends around timelines of city appropriations and how ARPA funding has fit into the traditional budget cycles of cities.

With enactment of the $1.9 trillion American Rescue Plan, the recent bipartisan infrastructure deal and Congressional movement on innovation and workforce funding, it is clear that the federal government is actively engaging in an unprecedented multi-act effort to spur an equitable economic recovery. The combination of new resources, the Biden Administration’s commitment to high-poverty “qualified census tracts,” and existing federal programs and tax incentives raises the prospect of creating a new practice of Community Wealth that systematically regenerates disinvested neighborhoods and lifts disadvantaged residents by upgrading skills, growing entrepreneurs, increasing incomes and building assets.

In April 2021, the Nowak Metro Finance Lab at Drexel University and Accelerator for America released the Federal Investment Guide to the American Rescue Plan. The guide broke down the Biden Administration’s $1.9 trillion COVID relief package from a “bottom-up” perspective. The guide summarized how funding would flow to over 84 individual programs, originating from 19 federal agencies and through seven different distribution channels.

Today, we’re revisiting our analysis of the American Rescue plan (“ARPA”) and presenting a complementary portrait of how ARPA funds have flowed downward to a single geography, Philadelphia, the home of the Nowak Metro Finance Lab. This new analysis can be found in our new report, released this week, “Localizing and Sequencing the American Rescue Plan Act: Estimating the Impact in Philadelphia.”

Regular readers of New Localism will know that we have spent the better part of 2021 focusing extensively on two topics: (1) how local leaders can strategically deploy recovery funds, and; (2) how to drive an inclusive small business recovery. Our argument here, based on a new white paper and research memo we’ve developed over the past month, is that to do both these things well local leaders across sectors must engage their state governments now (and visa versa).

The driver of this engagement should be two relatively flexible pieces of funding in the American Rescue Plan Act (ARPA) that states are receiving (both administered by the U.S. Treasury): the much discussed $350 billion State and Local Fiscal Relief Fund (SLFRF) and the much less discussed, but crucial, $10 billion State Small Business Credit Initiative (SSBCI).