Will Chattanooga Miss Another Reinvestment Opportunity?

Saturday, June 16, 2018

In April, First Tennessee Bank and the National Community Reinvestment Coalition announced an agreement on a $3.9 billion reinvestment plan for economic development in low to moderate income communities under the 1977 Community Reinvestment Act. The Chattanooga Times Free Press soon followed with an article reviewing the plan in depth. The plan presented Chattanooga, as well as other communities in First Tennessee’s region, with a rare opportunity to stem or even reverse the decline of areas blighted by 50 years of disinvestment. 

Like many cities, Chattanooga still has its share of long declining inner city market areas. Unlike most, Chattanooga has a history of missing major opportunities to reinvest in those areas without wholesale displacement and gentrification of the surrounding neighborhoods.

In 1993, the Clinton administration rolled out its Community Empowerment Initiative creating the New Markets Tax Credit, Brownfields, and Empowerment Zone programs with coordinated planning and preferences in related existing programs like CRA. Empowerment Zone and Enterprise Community designations were awarded to applicants presenting the best community-based strategic plans, not just for how more than a $100 million in tax incentives and block grant funds would be used, but first and foremost, for how the community would make the best use of its own resources.

The city of Chattanooga mounted a meager attempt to win a first round Empowerment Zone or Enterprise Community designation. Planning and community development staff held some under-attended community meetings and repackaged existing Southside plans, but failed to meet the criteria for “bottom up community-based strategic planning” as required by the legislation and specified in the program guidelines. The irony, program guidelines described a process quite similar to Chattanooga’s own Vision 2000 conducted by Chattanooga Venture less than a decade earlier. Indeed, with Al Gore as chairman of the federal Community Empowerment Board directing the initiative, Empowerment Zone criteria for “strategic visioning” were very much influenced by the success of Vision 2000. 

In 1998, when a second round of Empowerment Zone program designations was offered, an effort was made to involve Chattanooga Venture in facilitating a more competitive community-based planning process, but then Mayor Kinsey did not agree to endorse it. No application was submitted, and Chattanooga Venture soon folded. In 2001, Empowerment Zone round three, then Mayor Corker took the easy route to garner one of the Bush administration’s new Renewal Community designations providing limited tax incentives for mostly outside investment, but without funding to help communities implement their own strategies bottom up. 

The Empowerment Zone program dovetailed with the 1977 Community Reinvestment Act. By supporting Empowerment Zone strategic planning processes, banking institutions more readily achieved CRA compliance. The Community Empowerment Initiative gave communities leverage to ensure financial institutions would indeed reinvest in low income areas as the CRA legislation intended. The current First Tennessee Bank-NCRC community reinvestment plan agreement was reached in order to improve First Tennessee’s CRA compliance rating. Over the 25 years that preceded it, community-based solutions worked their way bottom up into the First Tennessee-NCRC plan. Many of those solutions stemmed from the Clinton Community Empowerment Initiative with which Chattanooga had little experience of its own. 

The First Tennessee-NCRC community reinvestment plan is the first in the history of CRA to include Chattanooga, yet Chattanooga’s civic leaders appear to be going about business as usual. With so little related experience, Chattanooga may fail to grasp the enormity of the opportunity and the need to engage the community to make the most of it. Given the deafening silence since the First Tennessee plan was first reported, it is fair to ask if Chattanooga will miss another opportunity to reinvest in its own people and communities. 

The city fails to leverage lesser resources for related purposes routinely, in part because local redevelopment priorities have been incompatible with the strategies written into the criteria for federal programs, as well as for any number of private nonprofit funding sources. Whether the sources are government agency, nonprofit organizations, or the new First Tennessee community reinvestment plan, they all seek to leverage other investments in the purposes they fund. They do not tend to fund projects toward which the recipients are not willing to commit their own resources. City government and other organizations involved in economic development need to commit their own resources, including technical assistance and neutral facilitation, to help the community leverage First Tennessee reinvestments to expand emerging community-based solutions on a strategic scale. 

If Chattanooga’s civic and community leaders can come together on an implementation strategy, the community can leverage First Tennessee reinvestments to stop the ongoing gentrification of working class neighborhoods. With a community action plan for housing security, Chattanooga can leverage reinvestments to promote home ownership, stabilize rents, and achieve measurable outcomes for homefullness instead of forever throwing money at the problem of homelessness. With a substantial investment under the First Tennessee-NCRC plan, a community-based residential capital trust can protect and grow homeowner equity, keeping the wealth of the community in the community.

By redirecting tax incentives and public improvements for economic development from North Shore, Downtown, and Southside development to longsuffering industrial, commercial, and community market areas, Chattanooga can leverage more impactful economic reinvestments from First Tennessee. Instead of displacing poor people, Chattanooga can set criteria for tax incentives, public improvements, and First Tennessee reinvestments to build the wealth of the community from within. By leveraging its own redevelopment resources more effectively, Chattanooga can secure reinvestments in the strengths of people through access to capital lending and investment, technical assistance, micro-lending, working capital, and professional services.

Finally, and perhaps most importantly, by seeding the formation of a strong, sustainable nonprofit economic development corporation to carry out the implementation strategy, the city of Chattanooga and other organizations involved in economic development can leverage First Tennessee investment in the startup. Under the First Tennessee-NCRC plan, the community development corporation can use reinvestment funds to develop new tools, partnerships, and financial resources for economic development. Isn’t it time Chattanooga’s blighted inner city market areas finally have a RiverCity Company of their own?

Chattanooga’s civic leadership cannot ensure that the community benefits fully from this opportunity by going about business as usual. Memphis, Atlanta, and other progressive cities in the First Tennessee region are already prepared to leverage more than their share of the $3.9 billion.

Without local leadership commits to community action, transparency, accountability, and community empowerment in the disbursement of First Tennessee community investments here, Chattanooga will certainly miss another major opportunity to reinvest in its own people and communities.

Frank Wrinn



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