To fight poverty, city eyes co-op businesses
City officials want to launch new worker-owned businesses in some of the poorest parts of Rochester in hopes of creating good, reliable jobs and building wealth in high-poverty neighborhoods.
The idea has shown promise in other cities, and it could help here too, say members of Mayor Lovely Warren’s administration.
City Council will vote this month on hiring a nonprofit that helped to set up several cooperatively owned businesses in Cleveland with the similar aim of strengthening low-income neighborhoods. If council agrees, the city will pay the Democracy Collaborative $100,000 to help develop a plan for Rochester.
The co-ops would be designed to contract with major local institutions, such as hospitals and universities, to provide basic goods and services. Cleveland, for example, is home to worker-owned laundry, vegetable greenhouse and solar-energy businesses.
A letter from Warren to the City Council describes the businesses as “market-driven.” They would give hiring preference to people who live nearby.
Establishing these businesses is a central piece of a city initiative to drive down the poverty rate in one section of Rochester by a single percentage point in one year.
Officials have not yet decided which part of Rochester to target.
City leaders want to start small, identify strategies that help to curb poverty and then figure out how to expand them elsewhere. Trying to solve poverty as a whole would be “too big of a bite” at one time, Warren told City Council recently.
The city won a $1.9 million grant from the Bloomberg Philanthropies last year to expand its new Office of Innovation and Strategic Initiatives, which will spearhead the poverty project.
The city plans to hire a director of innovation who will report directly to Warren by the end of the month.
City Council also will vote this month on using a portion of the grant funding to start fleshing out staff in the innovation office.
The Democracy Collaborative was one of eight organizations that responded to a city request for proposals to help set up local cooperatives. If hired, the nonprofit would talk with deep-pocketed Rochester institutions, identify their needs and work out how employee-owned businesses could meet them.
“We’re very excited that we literally have the leading cooperative consultant company who will be coming into Rochester to help us roll this out,” said Delmonize “Del” Smith, the city’s commissioner of business and neighborhood development, in a recent presentation to City Council.
The goal is to harness millions of dollars in spending by local hospitals and universities that may now be going to businesses outside the community.
Workers who stay with a co-op business for a certain period of time would be able to get a share of ownership. This is meant to keep profits local, build wealth in the surrounding neighborhood and discourage owners from moving the business out of Rochester.
Under the model used in Cleveland, an umbrella nonprofit would be set up to oversee the cooperatives, offer them technical assistance and guidance, and run a revolving loan fund.
Smith said the city has had initial discussions about the concept with the University of Rochester, Eastman Business Park, Rochester General Hospital and the Rochester Institute of Technology.
“They all signaled, ‘This is easy for us, this is a no-brainer. Tell us how we can be involved and make it happen,’ ” Smith said.