Late last year, Quinton Lucas, Mayor of Kansas City, Missouri, and Caitlin Lewis, Executive Director of Work for America, published an op-ed in Next City encouraging local governments around the country to steel themselves for the storm of federal cuts to come. But neither Lucas nor Lewis could have predicted the extent to which the Trump administration’s slew of executive orders and gutting of federal agencies could debilitate city governments across the country — to the tune of $105 billion.

Days before the inauguration, I met Iowa City city councilwoman Megan Alter and learned that nearly $63 million of her city’s $235 million budget had been put at risk. That’s nearly one third of the city’s total budget. The other two-thirds of Iowa City’s budget comprises property taxes, bonding, fees for services, licenses for permits, hotel/motel taxes and utility franchise fees.

Perhaps that’s what informed Councilwoman Alter’s line of questioning at a Mayors Innovation Project gathering, following a panel on advancing local wealth and opportunity: How do we finance the work of community wealth building in this era of executive disorder?

Locally-rooted finance as the lifeblood of CWB

Community wealth building, or CWB, is an economic development model that transforms local economies based on communities having direct ownership and control of their assets, namely land, labor, and capital.

First articulated by The Democracy Collaborative in 2005, the CWB movement has taken on a variety of shapes and forms over the past two decades, but is fundamentally rooted in five pillars: fair work, inclusive and democratic enterprise, just use of land and property, locally-rooted finance, and progressive procurement.

More recently, we have heard from practitioners around the country that the penultimate pillar is often the lifeblood of CWB activity in a particular place. Locally-rooted finance is the practice of cities and local institutions redirecting money out of market-based approaches into state-sponsored and commons-supported entities – public banks, CDFIs, credit unions, community investment vehicles, etc. — in service of the real economy.

To address the problem of “wealth supremacy” articulated by our colleague Marjorie Kelly, we need a robust set of alternative financial institutions and streams of funding so that when we are threatened by the loss of one (federal funding, in this case), the entire CWB ecosystem in a particular place does not topple like a house of cards.

How Iowa City is identifying place-based resources

In working with cities to develop action plans for advancing CWB, we encourage city leaders to begin with appreciative inquiry: What resources and opportunities does your community already have that can be supercharged by this comprehensive economic development ideology and framework?

Taking Iowa City as an example, let’s see what opportunities lie beneath the surface to continue to expand CWB activity in spite of federal rollbacks.

Fair work: In 2023, Iowa City used $3 million of its total $18.3 million allocation from the American Rescue Plan Act (ARPA) to support the nonprofit Dream City in purchasing a building and designing it to become an economic hub for aspiring Black and Brown entrepreneurs. Another $600,000 was provided to the Multicultural Development Center of Iowa to become a certified CDFI to better provide networking opportunities and microloans to residents often underrepresented in the burgeoning tech and business sectors in the city. Another $435,239 was awarded to the University of Iowa Labor Center, funding programming like the Quality Pre-apprenticeship Program, which creates a pathway for Iowans to qualify and complete a trades apprenticeship after having been exposed to a range of skilled options. All three of these investments serve as capacity building endeavors, able to advance fair work in Iowa City well beyond ARPA.

Inclusive and democratic enterprise: Leveraging the model of a self-sufficient municipal improvement district or business improvement district, commercial property owners in the Downtown District of Iowa City came together to tax themselves to improve their neighborhood. In this way, business owners share governance responsibilities, meeting their own needs for community safety and greenscaping. Iowa City is also home to Hy-Vee grocery stores — an employee-owned company, similar to an ESOP, grossing $13 billion in sales every year. With alternative ownership enterprise models in Iowa City’s proverbial water since the 1930s, city leaders can capitalize on this ethos to expand CWB in eastern Iowa.

Just use of land and property: In addition to nonprofit partners like Habitat for Humanity and Shelter House, the latter of which uses a housing first model to provide housing to 35 unhoused individuals across two apartment complexes, Iowa City also has a housing trust fund. With an initial investment of $750,000 from the City in 2020, the Fund has awarded more than $15 million in low-interest loans and grants to local nonprofits and businesses as well as supported several households in securing more affordable housing.

The City has also incentivized members of the Greater Iowa City Area Home Builders Association to use more environmentally-friendly materials for renovations and ensure that new construction is more climate-sensitive. Earlier this year, the Home Energy Rating System Grant program — which offers $1,800 in grants to builders who secure energy efficiency in new construction — won a local Better Together Award for its joint effort.

Locally-rooted finance: Though revenues from property taxes have stagnated since 2014, the City does boast an involved community foundation which oversees $67 million in charitable assets; a credit union committed to undoing financial redlining; and a supportive, culturally-competent regional bank. During the pandemic, the Community Foundation of Johnson County came together with university, government and nonprofit partners across the county to co-identify investment priorities through 2030. The community foundation already invested $50,000 in the vision, and the group’s overarching priorities — like a thriving inclusive economic ecosystem and authentic, vibrant neighborhoods and districts — align strongly with CWB principles. Originally called Project Better Together, the collaboration evolved into Better Together 2030 post-pandemic and is now partnering with the region’s economic network, Greater Iowa City, Inc., to champion the nexus of community and economic prosperity.

Progressive procurement: City leaders have yet to make a conscientious effort organizing their biggest anchor institutions under a CWB framework. But there is no lack of significant catalytic procurement capital available across the University of Iowa, its affiliated hospital system as well as the expanding footprint of Procter & Gamble in the city.

Considerations for city leaders

Though nascent in its exploration of CWB, the case of Iowa City shows how cities might get creative with existing resources and opportunities — including and beyond financial capital — to advance the work of CWB even amid drastic cuts in federal funding.

Once leaders conduct such an initial assessment, they may consider the following points of intervention:

• Can your city’s existing small business development resource centers (and other nonprofit partners) support cooperative incubation and development in addition to upskilling workers for the jobs of tomorrow?

• What do the ownership structures of the businesses across your municipal improvement districts look like? Are any of those business owners considering retirement soon? Might they consider transitioning their business to being employee-owned upon retirement?

• Are there services that private companies currently provide (for example, utilities) that the City or residents could step in to own or govern?

• For businesses that are already employee-owned, what do their governance structures look like? How much do workers really have a say in the day-to-day operations and decision-making of their employers? Can city leaders work to train employers towards that ethos and incentivize more of those behaviors?

• How can cities organize more integrated capital stacks — alongside philanthropy, local banks and other financial institutions — to finance property ownership transitions from private to public?

• Are there tracts of vacant land or property where the city could invest in social housing? Perhaps through a co-design process with allied nonprofit and financial institutional partners?

• Can the City build partnerships with labor to deliver on green infrastructure goals and projects, like those through the local Home Builders Association?

• Can city leaders work with anchors — like eds and meds — to conduct a spending analysis, determine where there might be leakages, and relocalize spending?

• Are there existing frameworks, like Better Together 2030, that might be more effectively realized through CWB activity?

Ultimately, as cities navigate the intersecting crises of today — from homelessness to transit inequity to climate change — addressing wealth inequality through broad-scale economic transformation is critical.

Such an ideological shift that prioritizes collective ownership and governance of land, labor and capital will better enable local governments to step up, as Washington scales back.

This post was originally published on Next City.