Regional ownership and control

Regional Ownership and Control

A growing number of economic and community development practitioners are concerned with how to “make wealth stick.”

Classic examples of wealth not “sticking” surface all the time in the hallway conversations about development. In one common case, rural communities lament when they create and offer their high school graduates college scholarships to far-away universities; this builds the youth’s individual capital, but if the young people never return, that capital leaves the region. In another, regions complain when generous public incentives are awarded to large firms to locate there, but the firm is not locally owned, participates little in community life, only offers its lowest-wage jobs to locals, or moves away when a better location deal lures them to a different region.

In short, wealth-building is not just about increasing wealth—that is, the quantity and quality of your stocks of eight capitals. It must include making sure those stocks of capital stay in place and that people, firms, organizations and communities in the region can make decisions about how they are used and invested in the future. In WealthWorks, we call this essential ingredient of wealth building regional ownership and control.

The more that people, firms or agencies outside the region own or have decision-making control over the capitals in your region, the less you can marshal those capitals to do what makes sense for you. By increasing your local ownership and control of the region’s wealth, you can capture more return on your investments. More benefits will flow to people, places and firms in the region, and can be reinvested to generate more local benefits in the future.

Regional ownership and control can take many forms. However, it is the local or regional aspect of ownership and control that marks it as a true wealth-building strategy.

Defining regional ownership and control

In WealthWorks, regional ownership and control can take many forms. No one type of ownership or control is best. Instead, it is the local or regional aspect of ownership and control that marks it as a true wealth-building strategy.

Local ownership and control of wealth could refer to families, private business, a collective, or the community as a whole.

Photo images_money, Premshree Pillai, Larry Miller, Rusty Tanton.

Let’s define what regional ownership and control mean:

Regional ownership means that people, a firm, an organization or a jurisdiction in your region either legally has title to a particular asset, or “owns” it because it has become part of them (like a new skill, better health or a network connection).
In the first case, a town might own a community forest, a local entrepreneur might own her firm’s machines rather than renting them from outside the region, a group of cooperative members might own a food market. In the second case, when two people in your town are trained as emergency medical technicians, it reduces the need to call for emergency help from two counties over, and that individual capital is now locally owned. Or when someone in your town is elected to the state board of education, that person essentially “owns” more political capital because of their position.
Regional control means that, even without full ownership, people, a firm, an organization or a jurisdiction in your region have influence over making decisions about how to invest in and use assets or components of capital in your region. Examples of regional control are many and diverse. It might mean having a seat on a board of directors. It could include winning priority status for the use of state workforce development funds, gaining first right of refusal in the event of the sale of a local medical clinic owned by a corporation outside the region, or using participatory budgeting processes. Or it could mean having a new state Emerging Technology Center sited at your local community college—the state might still own it, but because it is at a local college with local residents staffing it, you likely can influence the Center to do work that benefits your region.

There are many examples of how to structure ownership and control, but there is also the question of: Exactly who or what in the region is the local owner or has some level of control or influence? Generally the ownership or control “belongs” to one of four types of local actors.

Individuals or families. Ownership and control of a great deal of wealth in a community belongs to people and families. Families might own homes (built capital) or land (natural capital) or businesses. People also control or influence decision making when they serve on regional boards or in elected office (political capital) or are active members of local or regional organizations (social capital). When a local individual acquires a new skill or expertise and stays in the community to use it in a local company, it increases local ownership of both his individual capital and the region’s intellectual capital.
Private business. Companies, like people, own buildings and land and equipment. They also increase ownership of regional intellectual capital when they become expert at doing or making certain things—which can attract other firms in the same sector to work near them. Or they can form trade associations in that sector, and use the new political capital that association now owns to influence critical state policy for the benefit of the sector.
Collective. Sometimes groups of people join together to share ownership or influence decisions. Groups of residents in many communities turn to cooperative ownership—of, for example, food markets, grain elevators, mobile home parks or credit unions, to name just a few—in order to keep local economic activity going and growing. Likewise, residents in a defined area might create their own non-profit organization to develop more voice in and influence over regional decisions that affect them.
Public or community. Tangible assets like buildings, land and infrastructure belong to the public at large when a legal government jurisdiction or agency owns them. Control of local resources can also be increased through changes in public laws and regulations and fee decisions. Likewise, a community-wide organization that is open to anyone’s participation can help organize or increase ownership and control. For example, setting up a United Way or community foundation can help capture local “ownership” and decision-making control over charitable gifts so that they can then be invested in the region—gifts that might otherwise have gone to causes and organizations several states away.

Both private and public, and both individual and collective, ownership are critical to a healthy regional economy. Encouraging a mix of local ownership types and structures in the region allows more stakeholders to participate in making decisions about local assets. The point in WealthWorks is simply to think systematically about how you might increase local ownership and control of wealth—whether public or private, shared or individual—in any and every economic or community development activity you undertake.

Making the case for regional ownership and control

Local ownership and control makes for healthier, more resilient regional economies. And it’s a great opportunity to be creative, or as some in the Black Belt of Alabama say, to “take what we have to make what we need.” Innovative strategies for expanding ownership and control are advancing every day. Consider these two cases:

A visitor’s bureau in the Southwest is developing an adventure bicycling trail network that crosses private, state and tribal land. To be viable, the system will require coordination among the multiple landowners. Working together, they can build infrastructure that will make the area a prime destination for cyclists. How might they structure their partnership so everyone stays at the table and benefits, while maintaining or increasing local ownership and control of the trail network?

One solution: The partners agree to a recreation easement, a binding contract stipulating that the visitor’s bureau will hold long-term development rights along the bike trail, while property ownership remains in the hands of individual partners. The bike trail is developed, tourist dollars are attracted, local residents start cycling, and benefits are captured and reinvested locally.

Several municipal governments within a region are interested in conducting energy retrofits on municipal and county buildings. This would include improvements to affordable housing units. Having searched locally, the governments were unable to find a local contractor to advise them on green building practices. While prepared to go outside the region to acquire the intellectual know-how, they know green building could be a new economic engine for the region. How might they help this outside knowledge become “owned” locally and stick in the region?

One solution: The governments bring green building experts into the region to work intentionally with the local community college to design an immediate training opportunity and a longer term career pathway in energy retrofitting. Over time, local residents are able to develop green building skills and businesses. The government can rely on local knowledge in the future, and residents increase their income through new local employment and business opportunities.

Even better, increasing local ownership and control of wealth typically appeals to common sense. This makes it easier to talk about it as a goal. And it makes it easier to get people to work together to devise creative ways to go about it. People almost intuitively understand these things about ownership and control:

It circulates more benefits locally. When local residents own or control wealth, the benefits that flow from it tend to be reinvested and circulate more within and throughout the region than to far-flung places elsewhere. For example, a locally owned manufacturing firm might see clear benefit in using local caterers serving local foods in its employee cafeteria, whereas an absentee owner might instead serve prepackaged or bulk food purchased from a national supplier.
It gets people to the table. When people own assets or have some control over how they are used, they are more likely to show up at—or be invited to—decision-making tables because they have more at stake. One simple example to illustrate the point: It’s well known that homeowners are more likely than renters to vote, and to show up and participate in town meetings and development hearings.
It gives people a stronger voice at the table. And once at the table, owners tend to have more voice or influence in decisions. For example, a community development organization becomes a more important and influential player in municipal meetings after it has purchased local land parcels.
It can help align strategies, self-interest and investments. Owning or having a say in decision-making about assets helps people see how they are connected, and how what they do affects their individual and shared economic destiny in the region. So they are more likely to communicate and collaborate. An external owner can make sudden or risky decisions that affect a community, but stakeholders in the region who have ownership and control are more likely to work together around shared interests, or to find strategies that do no harm. Likewise, when a region builds a community-wide endowment or charitable fund, it creates a structure where people from the region must come together to weigh local options and align strategies.
It can lay the foundation for future investment. How ownership and control is structured can also play an important role in the type of capital that can be attracted in the future. For example, shared ownership can provide a form of risk management for communities, because the pooled ownership of resources can lessen risk and offer a more stable platform for future investment.

Wealth building opportunity: Expand local ownership and control

Expanding local ownership and control of assets is a significant wealth-building opportunity. So, in WealthWorks, when striving to make more wealth stick through ownership and control, you start with the wealth you have in your stocks of the eight capitals.

Then, as you work together to explore and act on market opportunities, you start thinking about how to develop strategies, investments and connections so that more of the wealth you produce becomes owned or controlled in the region.

Ownership and control strategies range from clear legal mechanisms of ownership—for assets like land or buildings or patents—to more abstract strategies that build intellectual and social capital. As mentioned before, by consistently thinking “ownership and control of wealth,” economic and community developers get creative and stretch beyond their typical approaches. The table below provides some illustrations.

The examples in this section show that there are lots of options for increasing regional ownership and control—some well-known, and some less so. But all of them illustrate that more wealth can “stick.” And when it does, people in the region benefit—and investments continue to flow, accrue and generate future benefits.

In short, WealthWorks makes expanding local ownership and control an essential component of wealth building because it makes for healthier, more resilient regional economies.

Thinking ownership and control: Types and examples

Look for the highlighted ownership and control aspect in each of these examples. Can you think of another example that would fit each category?

Individual/family

Example: Ownership strategy
Strengthen or start local entrepreneurship programs to develop practical skills and networks “owned” by individuals that could lead them to jobs or start-ups in the future.

Example: Control strategy
Institute a leadership program that trains people to run for and serve in elected office.

Private business

Example: Ownership strategy
Provide technical and legal assistance from local college to local firms to apply for and receive patents on new products and processes.

Example: Control strategy
Form a business-led tourism group in the region that develops a regional “brand” (with locally set restrictions on use), a set of historic trails, and a “buy local” strategy that attracts more tourists who stay longer and purchase more local products.

Collective

Example: Ownership strategy
Convene a group of local landowners to set up a wind farm cooperative—rather than simply individually leasing their land to outside wind energy companies.

Example: Control strategy
Organize local stakeholders into a new residents’ association that negotiates a community benefits agreement with the major players in a large development deal in the region.

Public/community

Example: Ownership strategy
Establish a community foundation that attracts local donors to create pooled funds that focus on local causes. Set up a community land trust that ensures affordable housing availability over the long term.

Example: Control strategy
Create a participatory budget process that invites all residents to contribute ideas and vote for priorities in the use of jurisdiction’s resources.

Click HERE to download this table as a PDF.