New study confirms economic impact of eight placemaking assets every community should have

It only takes a casual walk through downtown Ferndale for visitors to understand something fundamental about the community: Everyone is welcome.

Many businesses display rainbow flags or window stickers to indicate their support for the LGBT community. A public mural proclaims, "Remember You're Beautiful." A photo on the Facebook page "Ferndale Normal" includes a busking accordion player sporting a Spiderman mask. On event days, like Ferndale Pride, the Rainbow Run or Transgender Pride in the Park, attendees of all ages and races can be found in attendance.

"One of our goals is to make sure everyone who visits and lives in Ferndale feels welcomed and valued," says Melanie Piana, Ferndale's mayor pro tem. "Ferndale is known for that, and it's very visible."

As it turns out, that's good for Ferndale's bottom line. According to a new report from Public Sector Consultants (PSC), welcoming and diverse communities attract venture capital and create jobs. Sure enough, taxable values in Ferndale increased 4.22 percent between 2015 and 2016, one of the strongest increases among neighboring communities.

And while Ferndale's welcoming attitude feels organic, it hasn't happened by accident. The city has focused policymaking on diversity for decades, resulting in Ferndale's inclusion on the Human Rights Campaign's 2015 list of 31 All Star rated communities for municipal equality.

The report, "Creating 21st Century Communities," found relationships between eight community assets identified by the Michigan Municipal League and positive economic outcomes. While they aren't the traditional economic drivers often discussed in Michigan—tax incentives and business-friendliness—they have been critical components to the economic growth of cities that embrace them. PSC and the Michigan Municipal League hope to use these assets to change the statewide conversation on economic development and see communities benefit from leveraging them.

Some surprising economic benefits

The eight aspects found to have positive economic impacts on communities are:

• Physical design and walkability
• Community messaging and technology
• Multimodal transportation networks
• Environmental sustainability
• Arts and culture development
• Entrepreneurship
• A welcoming culture
• Education

Some of these findings were well-known to economic development leaders. But others were surprising, even to public policy pros.

"I was not aware of the significant economic impact around welcoming communities," says Shanna Draheim, a senior consultant with PSC. "It's enormous."

The report found venture capital investment to be greater in communities with higher proportions of foreign-born residents, as well as gays and lesbians. In addition, for every 100 foreign-born workers with advanced degrees in science, technology, engineering and math, an additional 262 jobs employing U.S. natives exist.

Similarly, the economic outcomes of investing in the arts are eye-opening: people with lifelong exposure to the arts are more likely to start a business; for every job created from new demand for the arts, nearly two more jobs are created. A correlation was also found between venture capital investment and clusters of artists.

"I can't say that I anticipated that," Draheim says.

Environmental sustainability is another surprisingly impactful economic driver. Grand Rapids, for example, has realized an annual net benefit of $76.14 for every tree in its municipal program, for a total benefit to the city of over $4.5 million each year.

The power of economic data

And then there are those assets the economic development world has long been hearing about, like physical design, walkability, transportation, and entrepreneurship. It was still important to uncover the relationship between these assets and real economic impact, says Draheim, because they're often not prioritized.

"For local governments, when making decisions about what they're going to invest in," she says, "there wasn't much clarity about the return on investment these assets really provide."

Now, there is. For example, the report found mixed-use, walkable developments generate 10 times as much tax revenue per acre, save almost 40 percent on up-front infrastructure costs, and result in about 10 percent lower service delivery costs than sprawl development. On the multimodality front, residential property values increase near bus or transit stops, as much as 150 percent. A reviewed study revealed properties in Delaware within 50 meters of a bike path averaged $8,800 (about 4 percent) more than similar homes further away.

That fits with outcomes Ferndale is experiencing after adding visible, protected bike lanes.

"We now have businesses that say they are moving into Ferndale because of our bike lanes," says Piana. "We have families moving into the community because of these investments to protect the safety of our streets."

A new economic development conversation

So what are Michiganders supposed to do with this data? According to PSC, the answer is twofold. First, because of the critical role of revenue sharing, state government officials should understand the economic importance of these assets.

"As a state, we need to be investing in these resources if we want to have strong communities throughout the state," says Draheim.

At the community level, she adds, doing an inventory of existing assets and evaluating their needs will help local officials prioritize the eight assets to their benefit. To be clear, the report doesn't present the assets as an all-or-nothing proposition.

"They should not get daunted by having to invest heavily in all eight of these," Draheim says. "They absolutely should approach them as they make sense in their communities."

That said, cities studied in the report that layer multiple assets, like Ann Arbor and Traverse City, experienced increased benefit. So while not all eight are required for success, just picking one and tossing the rest aside isn't a winning strategy either.

It's all about determining what's right for each community. Building on existing assets, says Draheim, is a great place to begin.

Ferndale would be the first to agree. While diversity is already a community strength, officials are expanding their policy focus to attract a greater mix of ages and income levels, as well as pave the way for their diverse voices to be included in policy decisions.

"While we continue to focus on diversity, we are also focusing on strengthening inclusion," says Piana. "We are not done. We have work to do."

Every community in Michigan can say the same. Now that they're armed with the eight community assets outlined in the Communities Report, they have a blueprint for how to keep growing.

This piece was made possible through a partnership with Public Sector Consultants.