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Issue 2: Community Scale Economics

Encouraging New Entrepreneurs, Not Just Creating Jobs

by Roberta Brandes Gratz

Al Dowe, a long-time jazz musician who plays the trombone and trumpet and has had his own band since 1974, had always dreamed of having a jazz club. Since the late 1980s, Dowe has also been teaching music in Pittsburgh public schools. Part of his jazz club dream was establishing a music school for kids, to create a student band, hire three of four teachers, hold open house for parents once a week, and offer summer outdoor concerts.

With the help of a new Pittsburgh loan program, Dowe received loan approval to purchase a modest, one-story vacant restaurant with a distinctive original Art Deco, black Carrara glass façade called the Club Café, just off Carson Street, the vibrant commercial thoroughfare (formerly a streetcar route) on Pittsburgh's South Side. The school was launched, starting with only a few students, but experiencing a demand already larger than he expected. A major new school of music could easily emerge out of this effort. Clearly, Dowe's music school dream contributes something new to Pittsburgh and gives opportunity to both paying and nonpaying students.

The modest loan program was initiated by the Pittsburgh History and Landmarks Foundation (PHLF). For two decades, PHLF has pioneered, with enormous success, the rebuilding of deteriorated low-income neighborhoods through innovative historic preservation programs that foster home ownership and community development. Local business development has always been included in its overall program, with its Preservation Loan Fund offering loans to scattered locally-owned businesses. In recent years, the fund has stepped up assistance to small neighborhood merchants with the goal of reinforcing existing local commercial corridors that provide walking-distance shopping.

In 1995, a specific new program was initiated, Working in Neighborhoods (WIN), to direct small business loans to low-income neighborhoods. "Neighborhoods need local businesses to be complete neighborhoods, Loan Fund Director Howard B. Slaughter Jr. says simply.

This seems like such a simple truth. Nowadays, however, so many housing programs focus only on housing production without helping to recreate the commercial centers that are critical to neighborhood strength and which distinguish urban neighborhoods from suburban developments. Ironically, the WIN program is financed primarily by small suburban savings banks that wanted to meet their CRA obligations but did not know how. Slaughter had an extensive banking career before taking over the Loan Fund, and knew how to set up a program on terms the banks could accept. Eleven banks put in a total of $750,000 and the Preservation Loan Fund added $250,000. Loans are at market rate for up to 15 years, with a maximum of $75,000. The goal is to create entrepreneurs, not just jobs.

From Cities Back From the Edge: New Life for Downtown by Roberta Brandes Gratz with Norman Mintz (New York: John Wiley & Sons, 1998) pages 286-287.

In Cities Back From the Edge, Gratz and Mintz reject simplistic formulas for success, favoring a more flexible approach to downtown rejuvenation. The book is filled with stories of urban recovery, favoring low-cost, modest initiatives over the large-scale efforts of traditional project planning.

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