Saving the inner cities: a call to business.

Despite decades of failed investment in America's inner cities, businesses are still faced with the great urban challenge: how to participate in urban renewal - and make it work.

Despite what you might have heard, all is not lost in America's inner cities.

Every day, the media present us with an assortment of horror stories about the inner city: hundreds of applicants in line for a handful of low-wage jobs; a drive-by gang shooting; a substance-abusing, single mother of four on welfare; children playing with used hypodermic needles in a trash-strewn lot.

But while our attention is focused on inner-city failings, residents and grassroots institutions in many decaying areas - with support from national organizations, businesses, philanthropists, and government entities - resolutely have rolled up their sleeves and gone about the unglamorous job of turning around their neighborhoods. Pfizer, for example, partnered with grassroots organizations to help rebuild a Brooklyn, NY, community, enabling the pharmaceutical giant to maintain its plant in the neighborhood. And Pfizer isn't alone.

Businesses can go far to help inner-city turnaround. By partnering with the community - working closely with local leaders and not imposing topdown management - business leaders can reap the benefits of newly rebuilt neighborhoods, and have a strong hand in community improvement. Given the scale of urban problems and the community's limited resources, local residents need their help. Local groups need sufficient financial capital, physical capital, and human capital. Equally important is "social capital" - the attitudinal, behavioral, and communal glue that holds society together through relationships among individuals, families, and organizations - to sustain problem-solving efforts in today's battered inner-city communities.

Where are communities successfully turning themselves around? What conditions allow them to do so? What ingredients go into these transformations? These were the questions my fellow trustees on a subcommittee of the Committee for Economic Development (a group of community-minded business executives) and I asked as we examined a number of grassroots initiatives through which once-faltering inner-city communities are reviving themselves. Our report, "Rebuilding Inner-City Communities: A New Approach to the Nation's Urban Crisis," argues that our nation's continuing failure to bring its distressed neighborhoods into the national mainstream imperils the American dream for residents of the inner city and for the country as a whole. By highlighting successful local community-building initiatives and advocating the expansion of partnerships to support them, the CED is seeking to establish a national community-building agenda for inner-city revitalization.

POWER OF COMMUNITY BUILDING

What does a successful community-building initiative look like?

St. Nicholas Neighborhood Preservation is a community-development corporation in the ethnically and economically diverse Greenpoint-Williamsburg section of Brooklyn. Like may CDCs, St. Nick's started in housing, but has branched out to become a force in the overall improvement of its community. In addition to managing more than a thousand units of housing, St. Nick's promotes activities for residents in such areas as crime control, job training, and home health care.

When the New York-based pharmaceutical giant Pfizer initiated its major redevelopment effort in 1984 on a 44-acre site adjacent to its East Williamsburg plant, St. Nick's joined a coalition including Pfizer, the New York City Partnership, and the city's Public Development Corp. and Department of Housing Preservation and Development. That coalition created an area with low- and middle-income housing, industrial space, a special charter school, added security, and parking facilities. By seizing this partnership opportunity, St. Nick's significantly improved the quality of life for East Williamsburg's residents, while helping private and public entities achieve their own independent goals.

Pfizer's involvement concentrated on creating a safe and secure area around its plant. The company cleaned up and fenced adjacent vacant lots, and invested $120,000 to renovate and improve security in a nearby subway station. Part of the investment went toward around-the-clock, closed-circuit television monitoring of the station.

Similarly, Newark, NJ-based New Community Corp. is a virtual conglomerate of locally driven community efforts, with major programs in housing, youth development, job creation, and retailing. One of NCC's most noteworthy accomplishments was the 1990 opening of a huge Pathmark supermarket, the first supermarket built in Newark's Central Ward since the riots of the 1960s. NCC fought in court and city hall to acquire land, assembled $16 million in financing through state and federal grants and loans from Prudential and First Fidelity, and worked with Pathmark to prove that locating a supermarket in an inner-city neighborhood could be profitable.

Another example: The Tacolcy Economic Development Corp. in Miami's Liberty City raised more than $2 million to finance a 47,000 square-foot mall in Edison Plaza, which had been destroyed during riots in 1980. TEDC persuaded the Winn-Dixie supermarket chain to open an anchor store in the mall. The supermarket, consistently profitable with $200,000 in weekly sales to 15,000 customers, is Winn-Dixie's second highest grossing store in southeast Florida. Businesses in the plaza have created 135 jobs, most filled by community residents.

The number of CDCs such as St. Nick's, NCC, and TEDC has mushroomed since 1970, from about 100 nationwide to an estimated 2,500 today. The nationwide proliferation of these locally driven, community revitalization initiatives is evidence of the commitment of residents in troubled inner-city neighborhoods to work together to turn communities around.

These partnerships also demonstrate the successful pairing of public and private sectors, as well as the active response of many businesses. CDCs typically are governed by boards that include business representatives as integral members and are funded by contributions from local and regional corporations.

That poverty, violence, and dysfunction continue to plague many inner-city communities is testimony to the need for similar initiatives in more areas.

A NATIONAL AGENDA

It's easy to be skeptical about how well investment works in America's inner cities. After all, the nation has poured billions of dollars into urban improvement - from the Great Society programs of the 1960s and the Urban Development Action grants of the 1970s, to the enterprise zones of the 1980s and the empowerment zones of the 1990s - few with marked success.

Experience shows that investment in the inner city can and does work. But there are pitfalls: Investment will fail if it supports programs that are imposed on communities from the top down; if it deals with individual problems in isolation; or if it undermines what residents want for themselves. Equally daunting are the barriers created by political turf battles, which can derail or delay the best-structured plans.

The best programs are engineered to do the following:

* Add value to initiatives that are created and led by communities.

* Draw upon residents' knowledge of local strengths and weaknesses.

* Take comprehensive approaches to multiple problems.

* Encourage community participation.

For years, urban efforts have been launched with little participation from the individuals whose lives are to be affected and little regard for the communities in which they live. Traditional urban programs also have tended to treat inner-city residents as passive program recipients, rather than as potential partners in problem solving. Failure to enlist local institutions and citizens as key players in urban policy has left essential resources untapped, ignored local priorities, and produced decades of missed opportunities.

Boston's Codman Square, near Dorchester, is the result of successful community-improvement efforts that drew on residents, businesses, and grassroots organizations. Once silent and abandoned, Codman Square is attracting residents, retailers, and shoppers. This turnaround has been effected in large part by the Codman Square Neighborhood Development Corp., which, while solidly rooted in the neighborhood, has forged strong and sophisticated local and national links to support networks. These networks include:

* The Metropolitan Boston Housing Partnership, a public-private partnership organized to rehabilitate housing, assist building management, and promote tenant leadership and responsibility.

* The Neighborhood Development Support Collaborative, a nonprofit organization that improves the fiscal, organizational, and program capacity of Boston's CDCs. NDSC, in turn, is supported by seven Boston-area funders, including the United Way and five foundations.

* The Local Initiatives Support Corp., a national intermediary organization founded by the Ford Foundation to support community development initiatives. In 35 communities nationwide, LISC has been a major catalyst for bolstering community-driven housing and retail development.

The lesson from Codman Square and other neighborhoods with vital, entrepreneurial CDCs is that resident- and community-based institutions are the best front-line implementers of community-targeted initiatives. Although this approach may reduce the role of government agencies, corporations, and philanthropies in service delivery, it does not lessen their responsibilities. But it does mean a change in attitude and focus and a willingness of both business and government to work in partnership to make resources available so community groups can do the work they are designed to do.

BUSINESS' KEY ROLE

America's major corporations have a key role to play within a national community-building agenda. Most business leaders, however, have yet to fully embrace the role of partner in inner-city community-building efforts. The diversity in circumstances among companies has led to varying levels of support for inner-city community building. But no matter what a company's resources, knowledge, or location, it has strengths to offer the community. There are several ways businesses can play a role in community-building. These include:

* Using emerging inner-city resources in business activities. Although opportunities vary widely, almost any company can utilize inner-city resources in some way. Particularly where community-building efforts have begun to create a more stable environment, companies should consider urban neighborhoods as locations for plants and offices, minority-owned firms as subcontractors or suppliers, inner-city residents as employees, and inner-city communities as commercial and consumer markets.

Firms also can encourage other companies to expand or relocate to inner-city communities. Brooklyn Union Gas, for example, provides a number of incentives to businesses in its service area, including special gas rates and business assistance. Brooklyn Union Gas was the catalyst in the development of MetroTech Center, a commercial, academic, and office complex in downtown Brooklyn. MetroTech, now the location of our corporate headquarters, has created new economic activity in Brooklyn and revitalized the area with 14,000 jobs.

* Joining local and national systems of support for inner-city community building. One question we can ask ourselves is, are we exercising the same leadership, the same degree of commitment on behalf of our city neighborhoods as we do on our local sports teams or other civic activities? Often, the answer is no.

Locally, Brooklyn Union Gas has promoted community-building efforts by providing financial, long-range planning, and public-relations support to a range of grassroots community development organizations. We typically have leveraged such support by working with other corporate and philanthropic organizations.

Nationally, nonprofit organizations such the Enterprise Foundation and LISC have provided crucial financing and technical support to CDCs in troubled inner-city areas. Enterprise and LISC have brokered networks that link neighborhood groups with local partnerships including key leaders from business, government, and the philanthropic sector.

* Guiding corporate charitable activities toward inner-city community building. The St. Paul Cos., a St. Paul, MN-based diversified financial company, targets a substantial share of its giving to building community development institutions. In contrast to grants that support identifiable projects on a year-by-year basis, the St. Paul Cos. makes multiyear commitments for core operating support to a range of organizations involved in community development. Rather than fund individual projects, the St. Paul Cos. lets the groups it supports set their own agendas. A particular and unusual focus of this giving is human-resource and operations development, in that much of the company's giving is aimed at retaining core staff and developing efficient operating systems.

In more and more communities, local efforts are solving inner-city problems and rebuilding distressed areas. Through a community-building approach, incorporating intelligent leadership and a long-term commitment from the business community, America's inner cities once again can become centers of economic growth and development.

Robert B. Catell is president and chief executive of Brooklyn Union Gas, a public utility serving the New York City boroughs of Brooklyn, Queens, and Staten Island. Catell is a trustee on the Committee for Economic Development, a nonpartisan business research and education organization. CED's statement on restoring inner-city neighborhoods, "Rebuilding Inner-City Communities: A New Approach to the Nation's Urban Crisis," was published in March 1995.