Fortis Capital Partners with Living Cities and the City of Minneapolis to Double Down on Bridging Racial Gaps in Access to Capital

Business ownership in Minneapolis is uneven by race. The City of Minneapolis has a total population of 411,500, of which 19% percent are Black, 10% Latinx, 6% Pan Asian, and 1% Native American. While Whites comprise 63.9% of the population, they own ~80% of the businesses. This implies that entrepreneurship amongst people of color is disproportionally lower.

In collaboration with the Minneapolis Innovation Team, a group of city employees that serves as in-house public sector innovation consultants to the City of Minneapolis, the City has uncovered key challenges facing entrepreneurs of color, including lack of intergenerational wealth, absence of affordable commercial space, confusing city processes, and poor access to advisor and investor networks. In addition, their exploration has laid bare that the Minneapolis’ capital ecosystem does not always work for entrepreneurs of color.

Research shows that entrepreneurs of color have lower levels of access to “friends and family money”, which can help to capitalize businesses, particularly at the early stages. Similarly, the underwriting criteria for debt products used by both traditional and alternative lenders does not meet the needs of entrepreneurs of color who lack wealth and have few fixed assets. Lastly, entrepreneurs of color do not have access to the informal sources of financial, knowledge, and social capital that are crucial in the start-up and early-stages of the business lifecycle.

The Fund

“Supporting small businesses owned by people of color is a critical part of any strategy to meaningfully address racial disparities in any community.”

To address the city’s long-standing racial wealth disparities and with the goal of shifting how the local capital ecosystem works, the City of Minneapolis and Living Cities’ Blended Catalyst Fund (BCF) made an inaugural investment in Fortis Capital and its Participation Loan Program. As a non-profit organization, with 501c(3) status, Fortis Capital aims to increase access to debt on reasonable terms for small and growing businesses owned by entrepreneurs of color.

“Living Cities has worked in Minneapolis/Saint Paul for over a decade through projects like The Integration Initiative and the Catalyst Fund, and we are excited to build on our existing partnerships and investments by working with the City of Minneapolis and Fortis Capital on their efforts to close the racial income and wealth gaps.”, said Demetric Duckett, Managing Director for Living Cities. “Supporting small businesses owned by people of color is a critical part of any strategy to meaningfully address racial disparities in any community.”

“Increasing access to financial, knowledge and social capital is and has been a driving force in the creation of Fortis Capital.”, said Jim Terrell, President and COO of Fortis. “We are positioned to use a proven lending model as well as key partnerships to reach borrowers and to serve communities that otherwise are not being adequately helped.”

By incorporating lending criteria that does not rely on strict credit/collateral guidelines but includes a review of business readiness; prioritizing borrowers who are unlikely to qualify for traditional bank financing, and offering terms and loan amounts that meet the needs of entrepreneurs of color, Fortis Capital leverages lessons from past local loan programs to bridge gaps in access to capital and increase jobs created or retained by people of color.

For the years 2014, 2015, and 2017, small business loan programs provided an average of $1.92MM of capital from the City and leveraged an average of $11.24MM from private lending partners. Borrowers estimated that these loans helped create an average of 256 jobs and retain an average of 340 jobs in the years 2014, 2015, and 2017. The Fortis Capital Participation Loan Program was designed to fill a number of gaps in the Minneapolis capital ecosystem. The program offers loan amounts and loan terms that address borrowers’ capital needs and, most importantly, it deliberately targets entrepreneurs of color.

Racial Equity Focus

Fortis Capital’s vision to provide flexible capital to entrepreneurs of color, innovate existing local loan structures to better meet the needs of disproportionally undercapitalized communities, and increase jobs and business ownership for Black and brown people, is not only appropriate for the current context, but aligned with BCF’s impact focus.

This alignment is manifested in the efforts that the City is doing to work with banks and nonprofits providing technical assistance to incentivize transformations within the local financial ecosystem. The aspiration is that as bank underwriters gain experience understanding the specific barriers faced by entrepreneurs of color, they will provide credit reference points to expand the bank’s underwriting approach.

The BCF’s inaugural investment in Fortis Capital is the result of Living Cities’ intentional focus on increasing investments in founders and capital decision-makers of color to achieve better outcomes in a country undergoing a rapid demographic shift. This investment is also an opportunity for the impact investing field to gain clarity around the structures and underwriting processes necessary to scale efforts to close racial wealth gaps.

To learn more about Fortis Capital contact Jim Terrell, from the Community Planning & Economic Development department, and Brian K. Smith, from the City of Minneapolis Innovation Team at info@fortiscap.org. For more information on Living Cities’ Capital for the New Majority Strategy, contact Thaddeus Fair, the Senior Investment Associate for this transaction, and Demetric Duckett, Managing Director at Living Cities at catalystfund@livingcities.org.

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Fortis Capital Partners with Living Cities and the City of Minneapolis to Double Down on Bridging Racial Gaps in Access to Capital

Business ownership in Minneapolis is uneven by race. The City of Minneapolis has a total population of 411,500, of which 19% percent are Black, 10% Latinx, 6% Pan Asian, and 1% Native American. While Whites comprise 63.9% of the population, they own ~80% of the businesses. This implies that entrepreneurship amongst people of color is disproportionally lower.

In collaboration with the Minneapolis Innovation Team, a group of city employees that serves as in-house public sector innovation consultants to the City of Minneapolis, the City has uncovered key challenges facing entrepreneurs of color, including lack of intergenerational wealth, absence of affordable commercial space, confusing city processes, and poor access to advisor and investor networks. In addition, their exploration has laid bare that the Minneapolis’ capital ecosystem does not always work for entrepreneurs of color.

Research shows that entrepreneurs of color have lower levels of access to “friends and family money”, which can help to capitalize businesses, particularly at the early stages. Similarly, the underwriting criteria for debt products used by both traditional and alternative lenders does not meet the needs of entrepreneurs of color who lack wealth and have few fixed assets. Lastly, entrepreneurs of color do not have access to the informal sources of financial, knowledge, and social capital that are crucial in the start-up and early-stages of the business lifecycle.

The Fund

“Supporting small businesses owned by people of color is a critical part of any strategy to meaningfully address racial disparities in any community.”

To address the city’s long-standing racial wealth disparities and with the goal of shifting how the local capital ecosystem works, the City of Minneapolis and Living Cities’ Blended Catalyst Fund (BCF) made an inaugural investment in Fortis Capital and its Participation Loan Program. As a non-profit organization, with 501c(3) status, Fortis Capital aims to increase access to debt on reasonable terms for small and growing businesses owned by entrepreneurs of color.

“Living Cities has worked in Minneapolis/Saint Paul for over a decade through projects like The Integration Initiative and the Catalyst Fund, and we are excited to build on our existing partnerships and investments by working with the City of Minneapolis and Fortis Capital on their efforts to close the racial income and wealth gaps.”, said Demetric Duckett, Managing Director for Living Cities. “Supporting small businesses owned by people of color is a critical part of any strategy to meaningfully address racial disparities in any community.”

“Increasing access to financial, knowledge and social capital is and has been a driving force in the creation of Fortis Capital.”, said Jim Terrell, President and COO of Fortis. “We are positioned to use a proven lending model as well as key partnerships to reach borrowers and to serve communities that otherwise are not being adequately helped.”

By incorporating lending criteria that does not rely on strict credit/collateral guidelines but includes a review of business readiness; prioritizing borrowers who are unlikely to qualify for traditional bank financing, and offering terms and loan amounts that meet the needs of entrepreneurs of color, Fortis Capital leverages lessons from past local loan programs to bridge gaps in access to capital and increase jobs created or retained by people of color.

For the years 2014, 2015, and 2017, small business loan programs provided an average of $1.92MM of capital from the City and leveraged an average of $11.24MM from private lending partners. Borrowers estimated that these loans helped create an average of 256 jobs and retain an average of 340 jobs in the years 2014, 2015, and 2017. The Fortis Capital Participation Loan Program was designed to fill a number of gaps in the Minneapolis capital ecosystem. The program offers loan amounts and loan terms that address borrowers’ capital needs and, most importantly, it deliberately targets entrepreneurs of color.

Racial Equity Focus

Fortis Capital’s vision to provide flexible capital to entrepreneurs of color, innovate existing local loan structures to better meet the needs of disproportionally undercapitalized communities, and increase jobs and business ownership for Black and brown people, is not only appropriate for the current context, but aligned with BCF’s impact focus.

This alignment is manifested in the efforts that the City is doing to work with banks and nonprofits providing technical assistance to incentivize transformations within the local financial ecosystem. The aspiration is that as bank underwriters gain experience understanding the specific barriers faced by entrepreneurs of color, they will provide credit reference points to expand the bank’s underwriting approach.

The BCF’s inaugural investment in Fortis Capital is the result of Living Cities’ intentional focus on increasing investments in founders and capital decision-makers of color to achieve better outcomes in a country undergoing a rapid demographic shift. This investment is also an opportunity for the impact investing field to gain clarity around the structures and underwriting processes necessary to scale efforts to close racial wealth gaps.

To learn more about Fortis Capital contact Jim Terrell, from the Community Planning & Economic Development department, and Brian K. Smith, from the City of Minneapolis Innovation Team at info@fortiscap.org. For more information on Living Cities’ Capital for the New Majority Strategy, contact Thaddeus Fair, the Senior Investment Associate for this transaction, and Demetric Duckett, Managing Director at Living Cities at catalystfund@livingcities.org.

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Plans, Pandemic, Protests: Time For Cities to Pause & Pivot

This paper describes the immediate and possible future impacts of COVID-19 on planning in the Greater Vancouver area.

The first part introduces three initiatives, launched in 2019, to refresh city and regional plans. The second part identifies new challenges for plans to address and initial responses to COVID. The paper concludes with transferable observations on reframing plan making in the context of COVID and fiscal constraints.

Included are four planning steps that combine inspirational objectives for economic and equitable recovery, with aspirational plans for longer term resiliency, and offer actionable programs to move forward in the context of available resources.

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Back to Normal? Cities Say, ‘No Thanks’

The pandemic has fundamentally changed our perception of how we can live, work, and move. We’ve figured out how to get goods and services without jumping in the car. We’ve learned that all sorts of jobs can be done from home offices. And we’ve learned that people like, and want, to walk and bike as part of their daily journey. Cleaner air, quieter neighborhoods, and healthier residents can be among the positive outcomes of the crisis for cities that were on their heels with traffic and congestion before. Smarter mobility can help retain these benefits.

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The Cities Taking Up Calls to Defund the Police

On June 7, members of the Minneapolis city council announced something that just weeks ago might have seemed politically untenable: They would disband the Minneapolis Police Department entirely, and start over with a community-led public safety system. Though the mayor reaffirmed on Monday that he wouldn’t support the dissolution of the force, the council has secured a veto-proof majority.

“Our commitment is to do what’s necessary to keep every single member of our community safe and to tell the truth: that the Minneapolis Police are not doing that,” city councilmember Lisa Bender said at a rally. “Our commitment is to end our city’s toxic relationship with the Minneapolis Police Department, to end policing as we know it, and to recreate systems of public safety that actually keep us safe.”

Although it’s unclear how the council plans to disband the police department, the move nonetheless marks a foundational shift in how many U.S. politicians talk about policing in the city — one that reflects the growing understanding that there’s something systemic wrong with the institution.

No other city has gone as far as Minneapolis, where the killing of George Floyd sparked global protests. The Minneapolis Parks Department, the University of Minnesota, some local museums and the public school system have already severed ties with the police department.

But lawmakers in at least 15 other U.S. cities have proposed or made pledges that would divest some resources from the police. Several more have proposed taking police out of schools. Many of the ideas are more incremental in their rhetoric than Minneapolis’s, calling instead for budget cuts or reductions in officer counts. Some are waiting to conduct firmer research or get more public input before making concrete plans. Even in Minneapolis, councilmembers haven’t yet laid out details about how their proposal would work, instead promising that they’d listen to locals before determining a path. But already, in the weeks since Floyd’s death, communities have been heard — in the streets and online — sparking an acute focus on funding as a reform vehicle.

“These ideas are not new, but what we are seeing today is the emergence of a groundswell of support for them from elected officials and — most importantly — from their communities and constituents across the country,” says Sarah Johnson, the director of Local Progress, an alliance of local policymakers that advocate for progressive reforms.

As the role and pervasive power of the police has been questioned, so, too, have bloated budgets: Even as crime has fallen across the country, police and public safety have consistently made up an average of 3.7% of state and local spending, a Bloomberg Businessweek analysis of Urban Institute data found. Since the 1970s, spending on police has nearly tripled, reaching $114.5 billion in 2017.

By reducing the number of police deployed, de-militarizing them, and rethinking their role in prosecuting smaller offenses, advocates say cities could cut departments down to scale. With the money saved, cities could reallocate resources toward other public services — like schools, social workers and mental health professionals — and away from enforcement and incarceration.

Reducing police budgets

After peaceful protest in front of Mayor Eric Garcetti’s house and on the streets of Los Angeles, the city became one of the first where true police defunding will take hold. The mayor and the city council president plan to cut $100 to $150 million from the LAPD’s budget, and reinvest that, plus $100 million more, in black communities. Activists were encouraged by the move, but it falls far short of what they’re seeking: a dramatic slashing of the $1.86 billion budget to represent just 6% of the city’s discretionary fund, rather than 53%.

In New York City, despite initial resistance, Mayor Bill de Blasio agreed to propose a July budget that includes cuts to the $6 billion police budget, paired with more investment in youth and social services, though he shared few details. The city’s comptroller has urged him to reduce the budget by $1.1 billion, and councilmembers Carlos Menchaca and Brad Lander have made clear they won’t sign a budget that doesn’t “meaningfully” redirect funds from policing to coronavirus recovery and social services.

And in San Francisco, supervisor Shamann Walton has announced his own plans to redirect funding from the police to black communities like the one he represents. Details there are scarce, too, but Walton has won the support of Mayor London Breed — who, in the past, has worked to increase police presence in the city.

Rerouting funds to social services

Where defunding efforts are still nascent, understanding the gaps between spending on social services and policing will be key to determining how much funding to redirect, policymakers say.

In Chicago, for instance, the public dollars that go to supporting public health, family services, the department for people with disabilities, and libraries combined is about $1 billion, says Chicago alderman Rossana Rodriguez-Sanchez, who’s joined with the city’s progressive caucus to lead calls to defund the police. In contrast, the 13,000-member-strong police department’s budget has grown every year for the past eight years, reaching $1.78 billion in 2020; $153 million of the city’s budget is earmarked for police misconduct settlements.

“As we have created this austerity situation where poverty has increased and the gaps between the rich and the poor have increased, we’ve also created this really huge police department that has lots of military equipment and a lot of surveillance,” she said. “I don’t think it’s a coincidence.” Though she says more research needs to be done before the council identifies a target number for divestment, she says the city could start by getting Chicago police officers out of public schools, and halt plans to build a new $100 million police academy. (Mayor Lori Lightfoot has resisted calls to cut police funding in the past.)

Rodriguez-Sanchez says public support is growing for non-financial reforms, too, including a push to create a Civilian Police Accountability Council, which would introduce more public oversight over the police department. The ordinance is currently held up in the city’s public safety committee.

“Imagine the kind of support services we can have if we divest resources from punishment to funding basic human needs,” she wrote on Twitter.

Smaller cities have similarly disparate spending priorities. While more than 33.5% of St. Louis, Missouri’s general fund and 20% of its total city budget went to policing in 2019, only 2.3% of the city budget went to mental health according to an analysis by Local Progress.

“We’ve continued to underfund social services and human services while putting upwards of 50% of our budget into policing and jails,” said Megan Ellyia Green, a St. Louis councilmember who worked with Durham Mayor Pro Tempore Jillian Johnson on an op-ed advocating for police divestment in January.

A sales tax passed in 2017 to hire more police officers and give raises to existing ones has raised $50 million a year; Green says she wants the city to divert those funds into “violence interruptors, social workers and substance abuse counselors,” and ”to start to go after the root causes of crime in our city.”

She’s also joining activists in calling on the city to close a medium-security jail nicknamed “the Workhouse,” where only about 100 primarily non-violent offenders are held, the vast majority of whom are awaiting trial but cannot afford bail. Recent reforms have already shrunk the jail’s budget from $16 million to closer to $8 million, but Green notes those funds could be saved if it was shuttered entirely. Incarcerated people could be transferred into St. Louis’ Justice Center, “but the goal should be to have the maximum amount of people not within our jails, and provide people with the supports they need to wait for their day in court at home,” she said.

Reducing officer counts

Where the cop-to-population ratio is especially high, lawmakers are emphasizing the need to shrink head counts. Washington, D.C., for example, employs about 3,800 officers. That means the Metropolitan Police Department (MPD) has 55 officers per every 10,000 residents, a proportion that city councilmember David Grosso notes is double the national average. In a proposed amendment to councilmember Charles Allen’s police reform bill — which would “find savings in MPD’s budget” — Grosso offered a plan to limit the number of sworn officers to 3,500, and to put a hiring freeze on the department if it exceeds that number.

Two city councilmembers in Hartford, a city of 122,000 in Connecticut, have proposed what Local Progress believes to be “the largest percent reduction currently being proposed among cities with largest police-to-population ratio.” The policymakers, Wildaliz Bermudez and Josh Michtom, are calling for a 25% cut of the police budget. That would translate into an estimated $9 million in savings cut from “areas within the department least likely to reduce violent crime and most likely to contribute to the criminalization of Black and Brown people.”

While the national momentum is unprecedented, city leaders like St. Louis Councilmember Green and Durham Mayor Pro Tempure Johnson, have been nudging reforms for years. Last summer, Durham’s city council denied a $1.2 million proposal to fund 18 new police officers, instead raising wages for part-time government workers in a city where crime has consistently declined. To determine future policing priorities, Durham created a community safety task force, charged with things like looking at how the city deals with crisis response and investigating alternatives to school policing.

“The police chief and the sheriff have been strong advocates of broad reforms to the criminal legal system, but the questions around defunding or divesting obviously go further than reform,” she said. “We can make policing better, but policing is never going to be the right solution for certain problems.”

Johnson is planning on analyzing the city’s 911 calls to gain more clarity on which could be fielded by community health workers or people trained in crisis intervention instead of law enforcement.

“If we could divert 20% of the calls that are currently being responded to by police to other agencies, that’s a huge difference,” she said. Redirecting resources doesn’t have to stop with 911, she added: “You don’t need to be armed to direct traffic or lead a parade through a crowd. What kinds of jobs could we create in the city for unarmed safety officers to be able to do that kind of work?”

Obstacles to reform

Even where political will is growing, obstacles to passing legislation at the city level remain. Baltimore Mayor Bernard C. “Jack” Young’s proposed budget, which the council will vote on this week, is set to allocate more than $500 million to the police — more than three times the spending on “housing and community development, employment development, homeless services, recreation and parks, art and culture, health, and civil rights” combined, the Baltimore Fishbowl notes. Although a few city councilmembers in Baltimore have expressed support for police budget cuts, the city’s strong-mayor leadership means that even if the council votes to defund, it can’t decide where the money is reinvested. Leadership change may accelerate things: In an upset Monday, councilmember Bill Henry — a longtime advocate for diverting police funds into things like supporting youth — won Baltimore’s comptroller seat, giving him the power to audit city agencies. And the primary election for Baltimore mayor will mean new leadership at the top, too.

Even in Minneapolis, it’s unclear what bold pledges to disband the police will or can mean in practice. Councilmembers haven’t yet taken a vote or elaborated on what a plan might look like and activists question whether eliminating the department is even a good idea without clear plans about what will replace it. Michelle Gross, president of the Minneapolis chapter of Communities United Against Police Brutality, told the Associated Press the promise was “just plain optics.”

Getting police out of schools

While policymakers work to reduce the number of police on the streets, public school systems like Minneapolis’s that have contracts with local departments or employ their own officers are taking similarly bold steps in their hallways.

“We have such a dearth of funding in education and a lack of prioritization in education. We can’t afford to waste money by paying police officers to come in and not just disrupt education, but really funnel kids away from the educational system and into the criminal system,” said Sylvia Torres-Guillén, the ACLU of California’s director of education equity. “Studies have shown that students are more likely not to graduate from high school if they are arrested. Every time law enforcement touches a student, they are more likely not to complete school.”

Public schools in Rochester, New York, cut five out of 12 “school resource officers” — agents from the Rochester police department — from its budget in May, and the city is pushing to cut the rest. Contracts between police and Denver public schools may be phased out, too, as reforms gain the support of the majority of the school board members and the superintendent.

And in Portland, the superintendent of public schools has decided to “discontinue” its use of school resource officers entirely, heeding the demands of the city council’s lone black member, Jo Ann Hardesty, has been making since she took office in 2019.

When the final city budget vote is cast on June 10, Hardesty wrote in an op-ed that she “will be re-introducing a series of amendments to not only disband the three aforementioned Portland police specialty units, but to move that money out of the Portland police budget and into policing alternatives such as Portland Street Response.”

“This is only the beginning,” she wrote.

The volume of messages from constituents supporting efforts to defund the police has never been higher, Green, Johnson, and Rodriguez-Sanchez told CityLab.

“I think we’re finally getting to the point where we’re recognizing that policing does not equate [with] public safety,” said Green. “And that if we’re perpetually underfunding all these support services that can actually prevent crime, that’s actually causing us to have higher crime rates.”

CORRECTION: This article has been updated to correct the spelling of Josh Mishtom’s name.

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How Cities Offload the Cost of Police Brutality

The uprising in Minneapolis that started in response to the police killing of George Floyd will leave the city with millions of dollars of damage in its wake. The city may be poised to spend millions more on the legal costs associated with the trials of at least one of the officers responsible for Floyd’s death, especially if civil lawsuits gain traction.

Other cities should be paying attention. The triple-combination shock of pandemic, social unrest, and potential police legal fees seen in Minneapolis could very likely be the future many cities will face, especially those that have a history of police violence. Add in the additional shock of climate change — floods, hurricanes, torrential winds — in a city already pummeled by the public health crisis and riots, and a city could find itself critically underwater, financially and otherwise. Storms, disease outbreaks, and other acts of nature are unpredictable; but the costs of police violence are much more manageable to rein in on the front end.

In Minneapolis, a metro that has been plagued by several other prominent police brutality incidents in recent years, there are actions the city could have taken but weren’t. The Minneapolis police union blocked the city from incorporating new reforms for the police department — including new rules for the deployment of neck restraints, as was used to kill Floyd.

Instead, cities like Minneapolis make taxpayers pay for police violence on the back end, after a police officer has already injured or killed a civilian, and after he’s been tried or the case has been settled. This is true for most large cities, where the legal costs for defending police are usually paid out of the city’s own general funds, or through issuing bonds, either way paid with taxpayer funds. Cities are effectively using their residents to mortgage police violence — a proposition that may grow less and less palatable as families’ finances are depleted by other circulating disasters.  

“The question is: How commonly known is the money spent by cities to pay for cases to go away?” says William D. Green, history professor at Augsburg University in Minneapolis. “The fact that that’s unclear is a problem, because it allows the city to pay this thing off and then flip it under the table. This needs to be clarified. I suspect that there are very few taxpayers who have any clue how much the city pays out annually for settling cases and how that payment is covered, if you’re talking about accountability.”

Minneapolis is already very familiar with how how much this could cost the city — it paid more than $25 million for police misconduct between 2003 and 2019, including $20 million in one 2019 payout alone for the police killing of Justine Ruszczyk. The city agreed to pay nearly $800,000 for the police killing of Terrance Franklin in February.

Paying out any amount for police violence in the months ahead — including the social unrest Floyd’s killing triggered — will be a hurtpiece for Minneapolis coffers while Covid-19 is still running amok. The city was already forecasting that it would lose as much as $125 million this year for closures mandated to help stop spread of the coronavirus.

For Minneapolis, police misconduct settlements normally come out of its self-insurance policy, which is filled and replenished by city departments and agencies, which are themselves funded through property taxes and fees paid by the public. Property taxes increased under former Minneapolis Mayor R.T. Rybak in part to pay off a huge deficit in the city’s self-insurance fund.

But this isn’t the only way that cities cover the expenses of reckless policing. Oftentimes cities — large ones in particular — issue bonds to cover these costs. Such bonds have been crucial for the city of Chicago, which has been plagued with police violence and misconduct lawsuits over the last couple of decades. In 2017, Chicago took out $225 million in general obligation bonds to pay off police settlement debts, according to a letter to one of the bondholders from the Action Center on Race & the Economy [ACRE]. The letter was part of a campaign ACRE launched to raise awareness about how banks profit from these settlements through the fees and interests that they charge cities for underwriting the bond.

ACRE calls them “police brutality bonds,” and describes them in a 2018 report as financial instruments that transfer resources and extract wealth from black and poor communities to Wall St., through the fees banks charge cities for the bonds. These bonds are mostly used when a city is already suffering from revenue shortages — as is the case with plenty of cities right now under Covid-19 pressure — but “leave the root causes of the revenue shortage unaddressed,” reads the report.

Police reform advocates argue that the money from these police lawsuit bonds — along with outsized police budgets — would be better used for fixing infrastructure, schools, and hospitals in black and low-income communities.

“Police budgets, not only in Minneapolis, but in most major cities, are an enormous percentage of the budget, and before the pandemic there were lots of groups on the ground in Minneapolis that were calling for a divestment from the police — and not just because of incidents of police misconduct, but also because of the effect that it has on all sorts of other programs when cities are struggling,” said Maurice BP-Weeks, co-executive director of ACRE. “You can remember that after the last recession everything was cut, but police budgets weren’t.”

According to Local Progress, a coalition of local elected officials, funding for Minneapolis’ police and corrections department grew 41% between 2009 and 2019 — outpacing the growth of the city’s general fund in that time period — and made up 37% of the general fund in fiscal year 2019.

Like Green, Weeks says there’s not enough transparency in bond issuances, for the public or even for the bondholders, which is troubling for a city’s financial health. Bonds issued by cities are assigned a particular credit rating assessing a city’s ability to pay, and this rating can affect borrowing costs. Traditionally, rating agencies focus on factors like a city’s tax base, liquidity, and budgetary performance to determine a city’s creditworthiness.

But police brutality bonds don’t adequately account for non-financial shocks to the systems — what’s called environmental, social, and governance risks (ESGs), such as a city’s risk from climate change, according to Activest, an organization that advocates for racial justice in municipal finance. It’s not even clear that rating agencies adequately consider climate change risks when dealing with sustainability or “green” bonds. Former Moody’s SVP Bill Harrington addressed this in an op-ed he wrote earlier this year:

To direct debt capital to sustainability projects, the bond world should tell each credit rating agency to overhaul methodologies so that, at the very least, exposures to physical risks such as fire and flooding are core inputs in assessing issuer ability to repay their bondholders. … No existing methodology requires a credit rating committee to include physical risks, let alone other ESG exposures in baseline determinations of issuers’ ability to pay. Nor does any methodology specify how physical or other ESG exposures will drive issuer upgrades and downgrades today, let alone sector upgrades and downgrades over time.  

Activest is pushing for ratings agencies to downgrade credit ratings based on things like a history of police abuses, the potential for riots, and the sturdiness of a city’s health-care system, particularly in a pandemic. This is similar to when Moody’s downgraded Michigan State University’s credit rating just before the school issued a bond to pay off legal settlements related to its gymnastics team doctor Larry Nasser’s sexual assault cases.

“The rating agencies cited the ongoing need for improvements in risk management, uncertainty of additional liability, and the need for greater investment in risk management as factors in the downgrades,” reads a white paper Activest published last year. “Yet to date, it does not appear that rating agencies have downgraded communities that have failed on risk management with respect to police misconduct.”

Activest and ACRE are in partnership for a campaign to stop cities from using bonds to cover police misconduct debt. They contend that if a city has to borrow money to cover legal costs related to police violence, banks should not be allowed to profit off of that, in terms of interest and fees. The organization is also calling for police officers to take out their own individual liability policies to pay their own settlements.

According to UCLA law professor Joanna Schwartz, who authored one of the most comprehensive studies on how cities pay for police legal expenses, it may not be a good idea for police to pay for their own misconduct. They may not be able to pay if left to their own financial devices, which means the people injured or the families of the people killed by police wouldn’t collect justice. She recommends a hybrid system, where both the city and individual officers split the costs of legal expenses and settlements related to misconduct.

“The city would be required to impose meaningful consequences on their officers,” said Schwartz. “Whether that means the officer needs to pay some portion of the judgment, or whether the officer needs to have some sort of employment consequence, or some other consequence, so that the officer is meaningfully deterred and punished without compromising the ability of the plaintiff to be made whole.”

Police reform activists in Minneapolis actually suggested the city do something similar to this in 2016. They wanted a system where the city would pay law enforcement liability insurance premiums for each individual police officer, but if an officer acted recklessly such that the insurance company increased their premium or deductible, the officer would be responsible for paying the difference. It was proposed for a ballot referendum, but the state legislature blocked it from happening, saying that it violated laws mandating that cities wholly indemnify police officers. The Minneapolis city council sided with the state and voted against the ballot referendum, which the state supreme court also supported.

But for ACRE, Activest, the Movement for Black Lives, and a growing network of organizations calling for cities to divest from police, it’s imperative that police officers and departments bear some part of the costs of their own wrongful actions, rather than making taxpayers foot the whole cost.

“We understand this issue to be a systemic issue and not one of just a couple of bad apples,” says BP-Weeks. “But [making police pay] would bring a transformative shock to the system of funding the police, and call into question real systemic issues about how police violence happens and how police training happens. That’s what we’re looking for ultimately.”

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America’s Cities Were Designed to Oppress

This moment is heartbreaking. Again. It is emotionally exhausting. Again. It is enraging to watch yet another black body plead not to be executed in public. Again.

There is nothing more representative of the state of and abuse of power in America than the scene that transpired in Washington, D.C. on Monday night: After watching U.S. cities erupt for days with pain and grief in response the police murder of George Floyd, President Donald Trump emerged from his White House bunker to forcibly remove clergy and tear-gas Black Lives Matter protesters — all in order to pose with a Bible in front of D.C.’s St. John’s Church. The Episcopal diocese oversees the 1815 structure and has expressed outrage at the action. It’s important to understand his intentions, as the president did all of this to marshal the physical architectural symbolism of the church to buttress his claims of moral, political, and racial authority. It was an escalation on the highest level, from the highest office.

For nearly every injustice in the world, there is an architecture that has been planned and designed to perpetuate it. That’s a key principle of the Design Justice movement, upon which I base my practice. Design Justice seeks to dismantle the privilege and power structures that use architecture as a tool of oppression and sees it as an opportunity to envision radically just spaces centered on the liberation of disinherited communities.

That built-in oppression takes many forms. It’s in the planning decisions that target non-white communities for highway projects and “urban renewal” schemes conceived to steer economic benefits away from existing residents. It’s in a design philosophy that turned neighborhoods into mazes of “defensible space” that often criminalize blackness under the guise of safety. And it’s in the proliferation of public spaces that often fail to let certain cultural communities congregate without fear of harassment.

This moment, like so many others, rose out of the state-sanctioned murder of black people. It emerged from the killing of George Floyd, and Tony McDade, before that, Breonna Taylor, before that Ahmaud Arbery, and so many others. It grew out of the specter of impending violence that follows black and brown people daily. And it grew out of the apathy of this nation toward a black community so profoundly sickened by our built environment that a global pandemic disproportionately impacts us.

Rebellion is a response to a prolonged dehumanization of a people unwilling to be participants in their own demise; it is often the soft power of the built environment that provides the preconditions for that dehumanization and the atrocities that follow.

Right now, our obligation to each other, to the built environment, and in solidarity with black lives is to hold all complicit actors in these systems accountable. The profession of architecture is as complicit as any. This is a profession swarming with “white moderates more devoted to order than to justice,” to quote everyone’s favorite civil rights leader, Dr. King. Now the field is faced with another critical moment to act in accordance with justice over order. It is not clear if we will make the right choice.

When it comes to violence against black people in America, history repeats itself so precisely that it can be hard to place any given moment into context. The script has shown us that the violence inherent in the economic and cultural deconstruction of black neighborhoods, usually under the pretense of economic development, precipitates the displacement of living communities, accelerates inequities, amplifies the fears of white society, and makes acceptable the use of force by police to protect even the slightest inconvenience of land and property.

The design professions should know that our colleagues are hurting. Back in June 1968, when America’s cities were again the site of protest, civil rights leader Whitney M. Young Jr. spoke before the annual convention of the American Institute of Architects, a gathering of nearly all white men. “You are not a profession that has distinguished itself by your social and civic contributions to the cause of civil rights,” he told them. “You are most distinguished by your thunderous silence.”

We failed to respond, and now we are here, again. Alas, the response now, as it was then, is likely to be woefully short of a material change demanded from those most impacted by our work.   

It is essential to name the manner in which our profession’s silence is assent. In its purest form, we have an obligation to protect the people’s health, safety, and welfare in and through the spaces we design. This commitment extends beyond the boundary of our buildings and landscapes and into the public realm. We narrow and neglect these commitments often on the backs of the perpetually marginalized and to the detriment of the field. Architecture has been the backdrop and often the instigator for violence on black bodies throughout this nation’s history. This is the case, in large part, because white America has found it all too easy to transpose its capital and beliefs into physical space, allowing the architecture to covertly project power in the name of white supremacy without the burden of having to sustain the unpleasant acts of overt racism themselves.

With this simple deed, we’ve restricted the freedom of movement to those deemed unworthy by the declaration of the built environment — and thus authorized countless acts of violence in the name of protecting land, property and the public realm.

For example: In 2019, Minneapolis approved the extension of CPTED (crime prevention through environmental design) practices for all new developments. While CPTED principles are said to help discourage crime by orienting building windows and entrances to aid in providing “eyes on the street” that monitor activity, in practice this strategy can end up serving the same suppressive purpose as stop-and-frisk policing — to assure that anyone considered suspicious is made to feel uncomfortable. The problem is when you are black in this country, you live daily with the heavy weight of the world’s distrust on your shoulders. In a city like Minneapolis, whose police officers used force against black people at a rate at least seven times that of white residents, such design practices could help create the very conditions that led to Mr. Floyd’s murder.

America has never fully recognized racism as a complex cooperative system dependent upon its institutions — academic, political, commercial, and otherwise — to resign themselves to complicity. As a result, the design profession, like many others, has been unable to find a reason to acknowledge the compounding effects of each act of violence on the psyche of Black America. The rebellion you see across our country is fundamentally rooted in this conflict, rooted in the notion that black lives are deemed disposable in white society, justified solely for the act of being — in place.

For some, there will be an impulse to equate property loss to the loss of life. Don’t.

For others, there will be an instinct that swells from the pits of whiteness to declare the fury and rage of the protesters as invalid because the disorder on the streets looks like “chaos,” not dissent.

To those challenging the credibility of this mass movement, I urge you to remember that nearly every riot you’ve ever heard of, starting with the American Revolution, was preceded by the murder of black people and escalated by an oppressive militarized force. We have seen throughout our history that to label an uprising as a riot is in itself a declaration of authorization that serves to assuage the white moderate, to justify the expansion of state-sanctioned violence on its people, and to mask the manifest rage of black and brown people pleading for justice in the face of a dispassionate system.

The first step towards dismantling unjust systems is to clearly articulate a direction out of our malaise and into action. Here is the start to a path forward through the efforts of Design Justice and in alignment with the demands of the Movement for Black Lives.

  • Cities and towns should reallocate funds supporting police departments and reinvest in the critical needs of disinherited neighborhoods and communities. Anyone who has worked with marginalized communities knows of multiple projects unable to find footing due to the lack of investment and resources. The design profession must be an actor in the visioning of these spaces.  
  • Cease all efforts to implement defensible space and CPTED crime prevention through environmental design tactics that often promote unwarranted interaction with the police.
  • Architects should stop supporting the carceral state through the design of prisons, jails, and police stations. All of these spaces inflict harm and extraction on black bodies far beyond that of other communities.
  • Stop using area mean income, or AMI, to determine “affordability” in our communities. Instead root the distribution of state and federal resources in a measure that reflects the extraction of generational wealth from black communities.
  • Advocate for policies and procedures that support a genuinely accessible public realm, free from embedded oppression.
  • Ensure communities’ self-determination through an established procedure that incorporates community voice in process and community benefits agreements in action for all publicly accountable projects.
  • Detangle our contractual relationships with power and capital to better serve neighborhoods and communities from a position of service and not from a place of extraction, freeing ourselves from the fee-for-service model and building power through black and brown development of the built environment.
  • Invest in and secure the place-keeping of black cultural spaces.
  • Redesign our design training and licensing efforts to reflect the history of spatial injustice and build new measures to ground our work in service of liberating spaces.

The design profession has a role to play in the short- and long-term outcomes of justice, and we would be wise to revisit our past to find direction. We must act swiftly and sustain our efforts to reconstitute our profession as a co-conspirator to justice. Justice requires us to repair a past of inequity, to make whole those subjected to oppression in the present, and to remove barriers to progress in the future.

One day it will inevitably be one of us — the ones you deem palatable for your committees, boardrooms, and Ivy League schools — who becomes a victim of police violence. You will never know the prevailing grief of a people destined to mourn our loved ones before they are gone because we refuse to seek justice before trauma. Where will you stand when it’s one of your “diversity hires” left bloodied and breathless in the street?

This is as much a call to action as it is an act of healing. Join the Design Justice movement. Don’t let this become another moment of inaction when our nation so clearly needs us to stand for, fight for, and build a just future.

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