A team from Colorado State University has been working closely with Denver city officials to bring jobs and retail outlets such as grocery and clothing stories to inner-city neighborhoods in Denver.
A key goal of the Mayor’s Office of Economic Development, the Community Planning and Development Office and Colorado State economists is to keep money in 16 selected communities that fall below Denver’s median per-household income based on 1990 census data. The team examined the 16 neighborhoods using census data from nine ZIP codes that are roughly contiguous with the communities.
"Denver as a whole has been benefiting from a strong economy," said Mayor Wellington Webb. "However, there are many residents and neighborhoods that have only seen very limited benefits from this growth. That is why I have decided to focus resources on these neighborhoods."
A 15-month-long effort has used census information within nine ZIP codes to establish that many of the neighborhoods in these areas are underserved by retail establishments and services. Stephan Weiler, assistant professor of economics at Colorado State, said by providing retailers with hard data on unmet demand for goods and services, the city and Colorado State researchers are able to offer convincing reasons for bringing retail outlets and jobs to the neighborhoods. Weiler, a specialist in regional economics, said the hope is that some or all of these neighborhoods return to being successful and self-sufficient.
The study focused on the prospects for grocery, clothing, and home product stores. The combination of clothing and home products could also suggest the potential for department stores. Spending in the community and hiring local residents would circulate money in the neighborhoods and would enhance household incomes.
"I’m hoping this will prove to be a useful project for the communities’ residents," Weiler said. "We can show retailers and their backers the opportunities that retail establishments and services can provide in these areas."
The project cost $105,000. A federal Economic Development Administration grant contributed one-half of the funding, with Colorado State and the city of Denver providing 35 percent and 15 percent, respectively.
City planners and economic development specialists, Colorado State graduate students and Weiler undertook the project in five phases. First, they targeted neighborhoods by socio-economic status. Next, they looked at supply (existing retail shops and services) and demand (what was being spent in the community and elsewhere).
Then they looked for gaps. For example, in five of the ZIP codes, household expenditures were less than gross sales in supermarkets, indicating that the food stores were bringing in outside customers and doing well. In four ZIP codes, however, supermarket sales were far below household food expenditures, indicating potential for more local food enterprises and, possibly, jobs for local residents.
A fourth part of the study was to look at the multiplier effect. When jobs are created by, say, a supermarket, and community employees spend their wages in the neighborhood, other businesses (e.g., hair stylists, construction, etc.) benefit. The phenomenon is called the multiplier effect and on average generates a two-to-one spinoff, helping other businesses and pumping more money into the neighborhood. Local businesses would produce a multiplier effect.
Finally, the investigators connected the economic needs they discovered to current research (including Weiler’s) that shows how information affects entrepreneurship in the economy. The point is to show potential investors, bankers and others that backing neighborhood businesses is a good investment, economically and socially.
"It’s tough to be a risk taker," Weiler said. "Getting some of these retail enterprises started will require convincing bankers and possibly the public sector about the viability of these shops. We’re trying to give all these players the information they need to make such decisions."
Webb has been supportive of the effort since its inception and said community-based jobs and retail outlets would strengthen the areas. He acknowledged the work of the Mayor’s Office of Economic Development, the Community Planning and Development Office and Colorado State.
"As a result of this effort, I believe that many residents will be in a position to improve their economic circumstances, that these neighborhoods will be even better places to live and that families will be able to meet more of their needs within their community," the mayor said.