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Growing Taproots: Anchor Institutions, Community Development & Neighborhood Stabilization

This LISC research report provides rigorous evidence about the impact of our investments, and the work of both community organizations and “anchor institutions.” In South Minneapolis, strong community partnerships and commitments from hospitals and corporations stabilized and boosted home values, without contributing to accelerating prices and gentrification.

Executive Summary

Like many urban places, the diverse neighborhood of Phillips in South Minneapolis experienced challenges in the 1990s, including a surge of homicides that led the national media to refer to the city by the derogatory label “Murderapolis.” What followed over twenty years was a sustained effort on the part of community organizations, resident activists, the public and philanthropic sectors, and Twin Cities LISC to engage in strategic, comprehensive community development in Phillips. As the neighborhood has been home to several “anchor” institutions, including both hospitals and corporations, these organizations have also played an active and critical role.

Over time, these groups achieved many accomplishments. Project for Pride in Living (PPL), founded in 1972 by a former priest and social justice advocate, created and preserved nearly 500 units of affordable and supportive housing in strategic locations in the Phillips neighborhood alone. The community development organization Hope Community partnered with Aeon, a respected developer and manager of affordable housing, to transform a largely abandoned intersection into a thriving mixed-use yet affordable community named South Quarter, with new development at each of the intersection’s four corners. The City of Lakes Community Land Trust (CLCLT), working with other developers, acquired and rehabilitated properties that would become permanently affordable, and counseled existing homeowners during the Great Recession. The health system Allina Health and the Honeywell Corporation, with public partners, launched the Phillips Partnership around housing, safety, jobs, and infrastructure. Allina Health has continued to support many community health programs over time including the Backyard Initiative, a 10-plus-year partnership with the community-based Cultural Wellness Center. 

Photo Credit: Bruce Silcox
Photo Credit: Bruce Silcox

Around commercial corridor development, American Indian organizations created the Native American Cultural Corridor, allowing for culturally rooted businesses and institutions in what is one of the largest urban Native communities in the U.S. and the home of the American Indian Movement (AIM). A national model for cooperatively owned commercial real estate, the Mercado Central, provided a launching pad for Latino entrepreneurs, and sparked change in the neighborhood’s southern commercial corridor. East African businesses helped revitalize the neighborhood’s northern commercial corridor, supported by many community economic development associations. A large Sears facility was repurposed to become a corporate headquarters for Allina Health and a thriving market for small entrepreneurs.

LISC was involved in many of these projects, and a statistical examination of home loan values in Phillips shows that this collective effort impacted the neighborhood as a whole. Controlling for other factors, home loans in Phillips, which started out similar to other lower-income areas in Minneapolis, broke from past trends: during the period of increased LISC real estate investment (2000–2013), median home loans became higher than in matched neighborhoods by approximately 46%. However, loan values did not accelerate faster in Phillips than in similar lower-income neighborhoods, at a pace that would suggest gentrification. In other words, as a result of the efforts of community organizations, anchor institutions, government, and LISC, the neighborhood achieved both stability and revitalization. After seeing relatively higher loan values during the period of LISC investment, Phillips’s loans became indistinguishable from those of similar areas, providing further evidence that LISC’s investments contributed to impacts. While other areas of Minneapolis have seen gentrification, and the Phillips community is not immune to these pressures, the community remains overall a highly diverse, working-class neighborhood. 

This study is one of very few that provide rigorous evidence as to the neighborhoodwide impacts of community development. It also shows how hospitals and other corporate anchors may be engaged in stabilizing and revitalizing local communities. In recent years, LISC has increasingly focused on partnerships with anchor institutions such as hospitals, universities, corporations, large employers, or cultural centers, including a major new partnership with the health system ProMedica headquartered in Toledo. While many researchers and practitioners have emphasized how anchors can be a powerful force for neighborhoods, others have raised concerns about misaligned interests between anchors and communities, and the potential for partnerships to spark gentrification rather than equitable outcomes.

A mobilized, high-capacity community development infrastructure helped support neighborhood revitalization while minimizing displacement.

This case shows that a number of factors made it easier for Allina Health and other corporate actors to engage with local organizations to stabilize and revitalize the community over time. A mobilized, active community helped bring commitments from elected and appointed officials, who provided remarkably consistent support. A highcapacity set of community organizations created a “virtuous cycle” where successful investments bred more work and more success. In the words of Paul Williams, executive director of PPL:

When you have all these three components [private sector investment, government support, and community development capacity] and they work with each other, you start to see tangible results…then the whole thing reinforces itself.

Local groups did not act in lockstep, coordinating every action with each other, but were generally aligned about goals and strategies and often partnered around projects of increasing size and impact. Foundations built the capacity of local organizations while directing resources to the neighborhood. And the hospital Allina Health and local corporations acted as an “anchor” of investments, creating a general economic presence that both directly stabilized the neighborhood and provided an impetus for the public sector to invest.

Phillips residents still face multiple challenges, including a poverty rate of approximately 40%. But the fact that Phillips remains a diverse neighborhood that has experienced both stability and revitalization is in many ways proof of concept for LISC’s emerging strategy in partnering with nonprofit and corporate anchors. In places like Toledo, we engage with a mission-aligned anchor, while working with community organizations poised to direct and channel anchor investments and build local capacity.

While LISC’s role may vary with local context, by supporting community organizations, our approach helps develop a healthy neighborhood ecosystem of which the anchor is one part. In Phillips, anchors were a critical part of the neighborhood’s revitalization, but did not appear to be the only force driving change. Instead, high-capacity community organizations, activist residents, public-sector support, and immigration all played roles in stabilizing the neighborhood. (Given the lack of a single driver of community development, one might also draw the lesson that anchor partnerships where community groups are on a more equal footing may better support equitable neighborhood development.) As a whole, the case shows how a mobilized, engaged, and high-capacity community development infrastructure can overcome tensions that may occur in anchor partnerships, and support changes that can lead to revitalization while minimizing displacement.

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