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| Pic: Zach Klein. Policies for Shareable Cities |
The sharing economy offers enormous potential to create jobs. Sharing leverages a wide variety of resources and lowers barriers to starting small businesses. Cities can lower the cost of starting businesses by supporting innovations like shared workspaces, shared commercial kitchens, community-financed start-ups, community-owned commercial centers, and spaces for “pop-up” businesses. Cities can also lower permitting barriers for home-based micro-enterprises. Sharing is also at the heart of the employment model that is designed to keep wealth and jobs in the community: cooperatives. In the age of global economics, where even money spent locally can quickly slip from local communities, fostering cooperative enterprise creates local jobs that are rooted securely in the community. Just as important, cooperative jobs are likely to be good jobs that value dignity, creativity, democracy, and fair pay. These qualities are among the reasons co-ops are widely acknowledged as being more viable, more resilient, and healthier for their communities than conventional businesses. Supporting the growth of cooperatively owned enterprises may be one of the most important things that a city can do to support stable, fair paying, local job creation. On the surface, cooperatives may look like conventional businesses, but co-operatives stand apart from traditional enterprise on two major counts:
- Accountability to Members, not to Absentee Shareholders: A cooperative’s Board of Directors is elected - on a one-member, one-vote basis - by the members of that cooperative, who are typically either the workers or customers (or both) of the business. Unlike conventional businesses that gravitate toward deci- sions that benefit absentee shareholders, cooperatives are nearly guaranteed to make decisions that serve the interests of local workers and customers.
- Profits are Shared on the Basis of Patronage, not Capital Ownership: Unlike traditional businesses, which distribute profits to shareholders on the basis of the relative size of shareholders’ capital ownership, cooperatives distribute profits to members on the basis of each member’s contribution to the cooperative’s work or business - also known as “patronage.” In a worker cooperative, patronage is measured by the value of work contributed by the member or by the number of hours worked. In a consumer cooperative, patronage is measured by the value or quantity of purchases made by the customers. In this way, wealth spreads within the community instead of leaking to shareholders outside of the community.
HOW CAN A CITY HARNESS THE SHARING ECONOMY IN ORDER TO CREATE JOBS AND DEVELOP ENTERPRISE?
1. EXPAND ALLOWABLE HOME OCCUPATIONS TO INCLUDE SHARING ECONOMY ENTERPRISE
We recommend that cities expand allowable home occupations to
include “nano-enterprises” characteristic of the sharing economy, or
define such “nano-enterprises” as accessory uses of residences. The sharing economy has enabled an explosion of home-based
“nano-enterprises,” which are income generating activities made possible
by communities and technologies that connect people to provide for each
other in new ways - allowing one person to rent household goods to
another, to rent a room to a traveler, to rent a car to a neighbor, to
charge for the use of a parking space, or to exchange goods and services
at the neighborhood level. Unfortunately, many zoning codes are
designed to separate home life from commercial life, making it illegal
for many people to benefit from the sharing economy and generate income
at home. We recommend that cities begin to survey the many ways in which
residents are able to supplement their incomes in the sharing economy101
and adopt policies that ensure that the zoning code either allows the
activity as an accessory use of a residence, or that business licenses
and zoning approval will be granted when such activities are at a scale
unlikely to impact the intended quality of the neighborhood. See the
Food and Housing sections of this publication for examples of ways that
cities have granted citizens the ability to operate small-scale home
businesses in the sharing economy.
2. REDUCE PERMITTING BARRIERS TO ENTERPRISES THAT CREATE LOCALLY CONTROLLED JOBS AND WEALTH
We recommend that cities reduce permitting barriers and fees, and
prioritize conditional use permitting for shared workspaces,
cooperatives, community-owned businesses, and other projects that create
locally controlled jobs and local wealth. Cities can create locally controlled jobs and local wealth
retention by lowering permitting fees and granting priority business
licenses and zoning approval to projects that a) demonstrate that they
will create opportunities for a large number of start-up enterprises, b)
are cooperatively owned, or c) will be predominantly owned by a broad
range of local community members. Any business that is owned by a broad
range of local community members - either through a cooperative model or
through local crowdfunding and direct public offerings - guarantees
that the profits of the business will spread throughout the city and
re-circulate locally. Shared workspaces, kitchens, and machine shops
enrich a city by giving residents low-cost access to space and equipment
for prototyping new products or services, short-term projects, or
ongoing day-to-day work.
Example:
San Diego, CA - Market Creek Plaza is a model for community-owned
commercial spaces. On the surface, Market Creek Plaza may look like most
shopping malls; yet, the primary shareholders of the mall are a local
non-profit and individual members of the local community. When the mall
was developed, 50,000 shares were offered to local community members at
$10 per share.102 It is not clear whether the city of San
Diego took into account community-ownership when granting approvals for
this development; however, we recommend that cities prioritize
permitting for similar community-owned and locally crowdfunded
developments.
3. USE IDLE COMMERCIAL SPACES FOR COMMUNITY BENEFIT
We recommend that cities facilitate the temporary use of empty
commercial spaces by offering incentives for temporary leases and by
penalizing property owners and banks for allowing spaces to remain
vacant. Lowering barriers to temporary uses allows small and start-up
businesses to test their products and services without assuming the
large financial burden of a long-term lease.
Examples:
Newcastle, Australia - A community group has helped breathe new
life into this Australian city’s downtown, which had been left largely
vacant after big employers left town. The group negotiates flexible
arrangements between property owners with vacant spaces and community
members and artists who have ideas for these spaces, but no financial
resources to rent them in a formal sense. The result has fostered
economic opportunity, creativity, and collaboration for the city’s
businesses, artists, entrepreneurs, and property owners.103 We recommend that city governments take on similar intermediary roles in negotiating and incentivizing such leases.
Richmond, CA - In 2008, the City Council passed the Foreclosure
Fine Ordinance, which fines banks $1,000 a day for vacant properties
with code violations. The law, which aims to reduce the blight from
foreclosed properties, also brought in about $780,000 for the city last
fiscal year.104 Similarly, we recommend that cities impose
fines on banks or other property owners that allow commercial spaces to
sit empty. By creating a disincentive for waste, cities thereby create
an incentive for property owners to share their spaces with community
groups or small enterprises.
4. ASSIST COOPERATIVES THROUGH CITY ECONOMIC DEVELOPMENT DEPARTMENTS
We recommend that cities equip economic development departments
with the knowledge and resources to support cooperatives and other
community enterprises. Like all new businesses, cooperatives and community enterprises
need considerable technical assistance before they begin, particularly
during their infancy. Unfortunately, most economic and small business
development departments are largely uninformed about cooperatives and
can offer little assistance. City staff should be able to identify the appropriate type of
cooperative model (worker, producer, or consumer cooperatives) for
various enterprise concepts, and then be prepared to provide advice
about structure and assistance in identifying and securing funding. At a
minimum, staff should be prepared to connect aspiring entrepreneurs to
outside organizations that provide technical assistance to new co-ops.105
In addition, economic development departments can be particularly
helpful with “conversions,” the process by which retiring small business
owners can pass their businesses on to employees.
Examples:
Cleveland, Ohio - The Evergreen Cooperatives in Cleveland’s
low-income neighborhoods are models in urban wealth building. They
provide services to anchor institutions, like local hospitals and
universities, and include a green industrial laundry, a solar
installation firm, and the largest urban greenhouse in the US. The
Mayor’s Office connected the Cleveland Foundation and other Evergreen
partners to Cleveland’s Department of Economic Development for help
finding innovative sources of funding. The city’s Sustainability Office
helped identify energy incentives like Solar Tax Credits. The support of
these departments was key to accessing the financing necessary to
launch Evergreen.
Richmond, California - In 2011, the City of Richmond hired a
consultant to create, support and expand worker cooperatives. Inspired
by a visit to the large and successful Spanish network of Mondragon
cooperatives (which similarly inspired the Evergreen Cooperatives),
Richmond’s Mayor decided that a small-scale version of that network
could create meaningful economic opportunity in her city, which suffers
from high unemployment.106 The consultant, a co-founder of the worker cooperative Arizmendi Bakery Lakeshore,107
has worked with Richmond residents to form a health food co-op, an
electric bicycle co-op, and a hydroponically grown organic food co-op.
Madison, Wisconsin - In June 2012, the City of Madison’s Office of
Business Resources partnered with the University of Wisconsin’s Center
for Cooperatives to host the Madison Cooperative Business Conference. The conference focused on business conversions to employee ownership,
co-op best practices, and a census of local cooperatives. It drew
economic development professionals, entrepreneurs, and members of
existing cooperatives.108
5. MAKE GRANTS TO INCUBATE NEW COOPERATIVES
We recommend that cities work with existing non-profits that have
the knowledge of and connection to communities where cooperatives are
likely to be successful. By partnering with private foundations or by granting public funds
for cooperative workforce development, cities can capitalize on the
knowledge and expertise of organizations well situated to incubate new
cooperatives, particularly when they have a track record of working in
economically marginalized neighborhoods.
Example:
New York, NY - For several years, the Center for Family Life (CFL),
a non-profit social service organization, had been incubating new
worker cooperatives in its largely immigrant Sunset Park, Brooklyn
neighborhood.109 In 2012, the New York City Council awarded
CFL a $147,000 grant to train two additional non-profits in other New
York City neighborhoods to become co-op incubators themselves.110
6. PROVIDE FINANCIAL AND IN-KIND RESOURCES TO COOPERATIVES
We recommend that cities provide grants, loans, and in-kind support
to cooperatives, and facilitate or act as intermediaries to secure
other financing opportunities for cooperatives. Cities can support the financing of cooperatives in a variety of
ways, by: 1) giving grants, 2) providing loans, 3) utilizing federal
funds from Community Development Block Grants and economic recovery
funding to support cooperatives, 4) creating loan guaranty programs, 5)
supporting the development of revolving loan funds,111 6) acting as an intermediary between cooperatives and lending institutions, and 7) offering city-owned land to cooperatives.
Examples:
Cleveland, OH - The city of Cleveland was instrumental in assisting
the Evergreen Cooperatives to secure financing to develop its ambitious
network of worker-owned cooperatives. The Evergreen Cooperatives
provide goods and services to local anchor institutions like hospitals
and universities. They relied on a series of investments from private
foundations to get off the ground. Cleveland’s Economic Development
Department acted as an intermediary for lending institutions securing
New Markets Tax Credits, and the city also dedicated its own funds
through the Federal Section 108 Loan Guarantee Program.112 Cleveland also played a major role in providing and securing land that
became the Green City Growers, a 3.25-acre hydroponic greenhouse and
worker cooperative that is part of the Evergreen Cooperatives network.
San Francisco, CA - In 2012, the city and County of San Francisco’s
Office of Economic and Workforce Development provided People Organized
to Demand Environmental and Economic Rights (¡PODER!), a non-profit
organization, a $76,000 grant to invest in its co-op development project
in the low-income Latino neighborhoods of South Mission and Excelsior.113
Richmond, CA - After reading a press account of the city’s
commitment to fostering worker cooperatives, a member of the public made
an anonymous $50,000 donation to establish the Richmond Worker
Cooperative Revolving Loan Fund. The city established an independent
non-profit to administer the fund in collaboration with the city’s
economic development department.114 The purpose of the fund
is to increase support for a growing network of Richmond-based
cooperatives through a regenerating pool of funding.115
7. PROCURE GOODS AND SERVICES FROM COOPERATIVES
We recommend that cities prioritize worker cooperatives whenever
the city contracts with private businesses for procurement of goods and
services. Where cooperatives exist, we recommend that cities - and city
institutions like schools, public hospitals, and public housing - make
an effort to prioritize procurement agreements with cooperative
businesses in an effort to support local jobs. Such preferences can be
formalized in procurement ordinances and policies.
Example:
New York, NY - Since 1985, Cooperative Home Care Associates has
provided home care services to chronically ill, disabled, and elderly
New Yorkers while creating good jobs in a sector known for its low
wages, instability, and lack of career mobility.116 The
cooperative employs nearly 2,000 workers, about half of whom are
worker-owners, and the cooperative has contracts to provide services to
several New York City agencies. Workers earn wages about 10 to 20
percent higher than the market rate, have 401(k) plans, and are
unionized.117
8. INTEGRATE COOPERATIVE EDUCATION INTO PUBLIC EDUCATION PROGRAMS
We recommend that cities integrate topics related to cooperative
enterprise into local high schools, vocational schools, and other public
education programs. The advantages of successful cooperatives are significant for
workers and communities, but cooperative principles and structures are
not always intuitive to U.S. workers accustomed to hierarchical business
structures. Thus, schools can play a valuable role in supporting
cooperatives.
Examples:
NY, New York - The Bronx Compass High School is partnering with
Green Worker Cooperatives to bring a version of the organization’s Co-op
Academy to high school students. Students in the cooperative
development class develop and present ideas for cooperative businesses
to the school community, which can choose to incubate the cooperative.118
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100 In Quebec, the survival rate for new cooperatives after five
years is 62 percent, as compared with 35 percent for all businesses.
Even after ten years, cooperatives show more resilience, with a survival
rate of 44 percent compared with 20 for all businesses. “Survival Rate
of Co-Operatives in Quebec,” Ministry of Economic Development,
Innovation, and Export in Quebec (2008), ccednet-rcdec.ca/files/ccednet/pdfs/2008-Quebec_Co-op_Survival_Re….
There is also evidence that co-ops - food co-ops in particular -
contribute to a stronger local economy. They do so by supporting other
local businesses (“for every dollar spent at a food co-op, $0.38 is
reinvested in the local economy compared to $0.24 at conventional
grocers”) and providing higher wages (“[c]o-op employees earn an average
of nearly $1.00 more per hour than conventional grocery workers when
bonuses and profit sharing are taken into account”). “Healthy Foods,
Healthy Communities: Measuring the Social and Economic Impact of Food
Co-Ops,” National Cooperative Grocers Association (2012), www.ncga.coop/ node/5176.
101 See the Economist’s March 9, 2013 cover story “The Rise of the
Sharing Economy,” summarizing ways in which technology has created an
enormous market for peer-to-peer rentals.
102 “Community Ownership,” Market Street Plaza, www.marketcreekplaza.com/mcp_our-story.html.
103 Goodyear, Sarah, “Cities as Software, and Hacking the Urban Landscape,” Grist (24 May 2011), www.grist.org/cities/2011-05-23-cities-as-software-and-hacking-th… See also: Renew Newcastle, www.renewnewcastle.org.
104 “City versus banks on foreclosed homes in Richmond, Calif.,”
What Went Wrong: Investigative Reporting Workshop, American University
School of Communication (8 Sep. 2011), www.americawhatwentwrong.org/blog/what-went-wrong-blog/city-versus-banks-foreclosed-homes-richmond-calif.
105 Organizations engaged in cooperative development in the United
States include the California Center for Cooperative Development,
Cooperative Development Institute, Northwest Cooperative Development
Center, Cooperation Texas, the Democracy at Work Network (DAWN), Green
Worker Co- operatives’ Co-op Academy, Women’s Action to Gain Economies
Equality (WAGES), the Green Collar Communities Clinic (GC3), TeamWorks,
Cooperative Homecare Associates, the Center for Family Life, and the
Cooperative Development Foundation.
106 Mondragon is a system of more than 260 cooperative enterprises
located in Basque country, Spain, employing approximately 85,000 people
and generating annual revenue of nearly $20 billion. Zuckerman, Dave,
“USW and Mongragon Unveil Union Co-op,” Community Wealth (13 Apr. 2012),
http://www.community-wealth.org/content/usw-and-mondragon-unveil-union-co-op. For
a critical analysis of Mondragon’s strengths and limitations in the
contemporary global economy, see Marszalek, Bernard, “The Meaning of
Mondragon,” Counterpunch (13-15 Jul. 2012), www.counterpunch.org/2012/07/13/the-meaning-of-mondragon.
107 The Arizmendi Association of Cooperatives is itself a
cooperative made up of seven member businesses: six cooperative bakeries
and a development and support collective. Members share a common
mission; share ongoing accounting; legal, educational and other support
services; and support the development of new member cooperatives through
the Association: www.arizmendi.coop/about.
108 “City to Host Madison Cooperative Business Conference,” City of Madison Press Release (23 Apr. 2012), www.cityofmadison.com/news/view.cfm?news_id=3171.
109 Not all of the cooperatives have survived, but several did, including a babysitting cooperative (www.beyondcare.coop), an eldercare cooperative (www.goldensteps.coop), and a home care cooperative (www.wecandoit.coop/).
110 The Urban Justice Center, which provides legal support to cooperatives, also shared in this grant.
111 “CDFA Spotlight: Revolving Loan Funds (RLFs),”Council of Development Financing Agencies,
112 “Chapter 1: Financing the Evergreen Cooperatives,” Evergreen Cooperatives Toolkit (2011), evergreencooperatives.com/wp-content/uploads/2011/12/Evergreen-1…..
113 C. Sciammas, Personal Interview, 7 Mar. 2013. See also: www.podersf.org.
114 See: Richmond Main Street, www.richmondmainstreet.org.
115 See: Richmond Worker Cooperative Revolving Loan Fund, www.richmondcooploans.net.
116 See: Cooperative Home Care Associates, www.chcany.org.
117 For an informative history of the Cooperative Home Care
Associates, see “A Brief History of Cooperative Home Care Associates,”
American Worker Cooperative (8 March 2011), www.american.coop/content/brief-history-cooperative-home-care-associates.
118 “First Ever Co-op Academy for Kids,” Green Worker Cooperatives (4 March 2012), www.greenworker.coop/home/2013/3/4/first-ever-coop-academy-for-kids.html.
Note: This is the final installment of a serialization of Shareable’s Policies for Sharing Cities Report, we look at jobs and jobs creation in the context of the Sharing Economy.
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