City Involvement in a CDC

by Sylvia
(Ohio )

Reviewed: June 12, 2024

Visitor Question: We are a small suburban city and what is the expectation of a Mayor's involvement in a CDC? Do Mayors, Council, Directors get involved and at what level. Is a city that receives no federal funding and very little County funding required to help fund a local CDC? Thank you.

Editors' Reply: Thanks for the questions about community development corporations (CDCs). Understand that a CDC is a private, non-profit corporation in almost all cases. A few CDCs might be for-profit corporations, but usually not, because they would like people to make charitable contributions that are tax deductible in the U.S.

The fact that the community development corporation is private, and almost by definition set up to do what government cannot or will not do, means that there is no obligation for a mayor, city council, or department heads to participate in the activities or governance of a CDC.

Many CDCs act in a way that is occasionally adversarial to the local government, so many times it's something of a mistake for a new CDC to expect that the mayor and paid staff will participate in and promote the CDC.

Having said all of that, if you are a calm, well-governed suburb, where politicians are well thought of, feel free to involve the mayor and councilpersons in a community development corporation.

Just anticipate what you will do if and when these particular elected officials fall out of favor or lose an election. You could have a bit of an awkward transition then, especially if the old mayor (your current one) and the new one didn't get along.

We thought we'd address something else you said--about no federal funding and very little county funding. No government is required to help fund a community development corporation. Some of them do, and personally, we'd like to see some financial support and then a more hands-off approach to serving on the board of the community development corporation or otherwise directly meddling in their affairs.

When you say you don't have any federal funding, we take it that you mean you don't have Community Development Block Grant funding. Most small suburbs don't have too much federal funding, with the possible exception of transportation dollars.

Your question makes us think you aren't fully comprehending what a community development corporation is all about, so re-check our page about the CDC concept or maybe even do a little more reading if you're seriously interested.

Once you grasp that a CDC is a private corporation to help do some of the tasks that government would be unable or unwilling to do, it will be a little easier to understand that the participation of your government officials is optional.

Nevertheless, if the mayor and council can be basically supportive of the CDC and its goals, at least, it's certainly a good thing. The paid staff of the city certainly needs to help the CDC assemble data, information, maps, and knowledge of resources. Most cities could easily create some maps for a CDC using their GIS system, and there are probably other examples of city capabilities that could be shared at very little cost.

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Sep 01, 2011
There is No Comparison
by: Anonymous

If you are a small suburb and want to start a CDC can you get funding that a city official cannot? We are next to a big city that gets a lot of funding in most cases because it is diverse and has a growing population of "poor" communities.They have several CDC's working in targeted areas Often we are compared to them. The CDC idea came from one of these comparisons but because of stats and geography we do not meet the criteria for any funding that I have found. Do you have to be labeled a CDC to get funding or can it be a group of business owners trying to revitalize the "family friendly community" and breathe life into a hard struck business district?

Editors' comment: First, can a CDC perhaps get funding that a city government cannot? Yes, because some funding sources want to make grants to non-profits, and sometimes the federal government will make grants only to local governments and not to non-profits.

Is it likely that you as a suburb, which is less diverse and maybe not as poor as the central city that you are near, can receive more funding because you form a CDC? You didn't ask the question just that way, but we're thinking that's what you mean.

The answer to that one is no, just forming something you call a CDC won't make it more likely that you receive funding. The only way for the community development corporation technique to work for you is if it is about the only vehicle that people have to make charitable contributions to that focuses solely on your suburb. And then, it only applies if there are some reasonably well off people who are quite loyal to your particular suburb.

Then your last question may reveal the real reason you asked about a CDC. If it's really revitalizing a business district, you probably need a different vehicle. Then you may need to offer incentives such as tax increment financing if it's truly necessary. You might want to form a business or community improvement district or do a special assessment for sidewalk improvements and streetscape, depending on what your state law allows.

Also please study up on retail attraction methods. As you probably can tell, we especially like the personal touch where you go in person to visit a business owner in another suburb or in your central city to see if you can convince them to establish a location in your business district.

We also like the "I will if you will" technique, where essentially you keep a list of businesses, local or otherwise, that might be willing to move or expand to your suburb if other compatible businesses did the same.

That's enough on the website. If you have more questions, please contact us directly.

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