What’s revealing about the Social Compact is the untapped buying power in urban neighborhoods—where a high concentration of people rake leaves, mow lawns, do odd jobs and would spend bundles of cash in local stores if only there were more options.
This cash economy is supercharged in neighborhoods dense with housing. In Cleveland, it adds up to $883 million per year, Social Compact CEO John Talmage told a group of city officials and developers at the Federal Reserve Bank of Cleveland on December 6, 2006.
The problem is the urban cash economy is lost on the Census, and that’s what most developers and national retail chains still rely on to make decisions when citing stores. But, Social Compact, the city of Cleveland and Key Bank—through its Community Reinvestment Act commitments—found the numbers helpful when convincing retailers such as Target and Home Depot to come to Cleveland’s Steelyard Commons. And with Dave’s Supermarket, which needed a little convincing to locate in Central at Arbor Park.
Social Compact can show a retailer where a need is being unmet, that a donut hole can be filled by, well, Dunkin Donuts—which is looking to enter Cleveland and may be hungry enough to look in neighborhood retail areas along Lorain Avenue or E. 105th Street.
“The real issue (with developers) is density,” said former Cleveland Mayor Jane Campbell, a panelist at the Fed event. “That’s the biggest change with Social Compact. We’re able to show neighborhood sites where Dunkin Donuts can locate in the city. It’s still a big challenge, though, when you don’t have a master developer like (Peter Rubin) at Shaker Square.”
Rubin was on hand, and said the key to a successful mixed-use urban redevelopment is knowing your value proposition. “Live, work, shop and play defines what we’re doing. If one of those is weak, you have a declining neighborhood.”
Grocery-store anchored development is still the norm, and what drives Whole Foods to locate at Cedar Center or Dave’s at Arbor Park is the same value proposition. Grocery stores choose to compete on convenience, selection, price or quality, Rubin said. It’s more important than proximity to other stores.
Community development corporations would be more effective if there was one organization to deal with, and with one large budget, Rubin said. CDCs should also provide the fine-grain data about their neighborhoods needed to update Social Compact and continue to make it relevant.
In their defense, CDCs like Fairfax Renaissance Development Corporation and Cudell Improvement have already used Social Compact to help some of their small business clients, Stephanie Turner, VP of Community Development Banking at KeyBank said afterward.
Turner sees potential for Social Compact in KeyBank's underwriting decisions, but the proposal needs to already have a profit-making potential.
"We think the data’s good, it validates some of the assumptions we make," she said. "But, a lot of things come into play before we make a deal. Like when we built a branch at Arbor Park (Social Compact) helped, but the city and county placing deposits in that bank were really important."
