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URBAN PLANNING AND URBAN AFFAIRS
PLAN "B" THESIS

MICHIGAN STATE UNIVERSITY
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Prepared by: Marc Douglas Viggiano
Read by: June Manning Thomas

August 20, 1996

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Acknowledgments

Research assistance for this paper was provided by the Center for Urban Affairs in
conjunction with Michigan State University. Funding for this project was made
possible by an Economic Development Administrative grant. Reviewer of this paper
from the Urban and Regional Planning Department, and the Urban Affairs Department,

Michigan State University East Lansing, Michigan was Dr. June Manning Thomas.

 

Abstract

By looking at the national and state economic condition the local economic
situation is more easily understood. From the national perspective, foreign competition
coupled with rapidly changing manufacturing technology, investment patterns, social
demographics, an aging infrastructure and a variety of other social and economic
factors have forever transformed the economy. This transformation affects state and
local economies, stability of our institutions, the vitality of our communities and even
the structure of our families. To try and moderate the ever changing local economy, a
model has been created to evaluate the flow of income and expenditures within a
community. This model looks at several sectors of the economy in hopes of clarifying
where dollars are being lost. In addition, the model uses community development
principles and concepts as to empower the citizens of the community so they are able
to develop strategies that will begin to capture some of the wealth that will be
entering their community in the future.

This report presents a case study of the economic and fiscal impacts on North
Lansing, Michigan. The detailed impact analysis presented in this report should
provide a foundation for similar undertakings in various communities presently and in
the future.

Over the years, numerous communities have been plagued with the lose of
population, manufacturing, industry and financial institutions which has resulted in a
depressed community and shrinking economic base. There are numerous reasons for

this devastating occurrence and few remedies. The intent of this project is to seek

ii

potential ways to revitalize the North Lansing community by locating and plugging

these economic leakages.

iii

VII.

IX.

Table of Contents

Acknowledgments
Abstract
Table of Contents
Introduction
History of Urban Decay; A National Profile
State of Michigan Profile
North Lansing Pilot Project and Economic Development Program
North Lansing Profile and Analysis
The Income and Expenditures Model
The Model in Relation to Sectors
Household Findings
Table 1
Table 2
Table 3
Business Findings
Table 4
Table 5
Public Findings
Table 6
Table 7
Table 8
Table 9
Table 10
Conclusion and Recommendations
Appendix
Team Members

Bibliography

iv

ii

iv

Introduction

Communities are made up of people that face issues such as jobs, housing,
streets and highways, water and sewer systems, pollution, and revenues. These are
common issues for urban areas everywhere, and collectively they add up to a slice of
America's urban problem. In fact, compared with most urban populations throughout
the world, America does not really have an urban problem. Most urban Americans are
better employed, better housed, better served by transportation systems and public
facilities, and live in better environmental conditions than the rest of the world(Rusk
1993, 1). But this paper has been written to shed some light on how and why our
urban areas are suffering and what is contributing to their struggle.

This paper is divided into three levels; the National, the State and the Local
levels. I have chosen to concentrate on the local level but feel that the state and
national levels have contributed to the local situation and need to be examined.

My starting point for this paper is the national level and the effects it has had
on the state and local levels of the United States. The national perspective is the
beginning of the spiral of decline for these urban areas. It is at the national level that
urban areas across the country saw the push to the suburbs and the urban areas began
to weaken. This action had a tremendous reaction to the local urban economies
through out the United States. Looking at the urban situation from a national to local
progression will help the reader understand the local condition with more clarity. I

will show that the problems of many local urban areas do not stem solely from their

own environment but have outside forces from the state and national levels. These
outside forces can revolve around the federal governments ability to set guidelines for
states which in turn may pass similar guidelines for the local governments. The
federal government has had enormous influence in the past over states in regards to
the amount of funding that will be appropriated for the state in the coming years. It is
safe to say that without the help of federal funding many state and local projects
would not be possible i.e. Empowerment Zones.

The state profile helps defines the local situation further by looking at the
states impact on the local economy. When a states economy is weak, the communities
that make up the state will feel the effects as well. Local governments are creatures
of the state and are bound to follow state laws and regulations. But when laws are
not enacted, communities can suffer. For example, if out of state landlords are
neglecting their responsibilities to their tenant and the city by not paying their taxes or
letting the building deteriorate, then a law should be passed that states: repairs and
taxes must be made within "X" number of days prior to notice or the property will be
turned over to the city.

State resources also affect the local economy. Michigan has two driving forces
that have historically provided employment for its citizens, agriculture and automotive
manufacturing. Historically, these jobs have been dominated by those living in
poorer rural or urban environments. Traditionally, these two industries have allowed
those without a formal education to find work that wouldvprovide for a family. Today,

technology and world markets are replacing those employees with machines and more

cost effective location to build new factories and plants. State officials have attempted
to create new laws, relax state regulations on building and given tax breaks to attract
business to their state. States are finding themselves in competition with one another
to attract and retain industry, manufacturing, and any field that has the potential to, or
is reducing unemployment and strengthen the states economy. Relocation, downsizing,
and bankruptcy are also factors that contribute to the loss of economy within a state.
This loss is hardest on those communities that relied on one industry for their
livelihood.

Michigan has been chosen for this paper because the community studied is
located within the state. North Lansing, the target community for this paper, was
chosen because of the data that had been compiled on the areas economic condition.
North Lansing is experiencing unemployment, increases in crime, lack of adequate
housing, and other misfortunes due in part by the downsizing of local industry and
the reluctance of new industry to locate within the area. Similar to states competing
for ways to improve their economy, communities compete with other communities to
improve local economies within the states .

In short, I will show the effects of national and state discussions on the local
levels. To help prevent further damage to this area and others like it, I will look at
existing ways to help rectify the problem of lost dollars to surrounding communities,
a problem that many urban areas face due in part to disinvestment. I will conclude
with my personal views in relation to the findings of project and overall effectiveness

this study has had on the North Lansing community.

History of Urban Decay; A National Profile

At the end of World War H, the United States witnessed a suburban housing
boom that would last for roughly fifteen years 1945-1960 (Levy 1991, 18). Factors
contributing to the boom were numerous; the rise in automobile ownership, pervasive
highway construction funded by the Bureau of Public Roads and later the National
Defense Highway Act of 1956, congestion in major metropolitan areas, noise and air
pollution, and the growth in births coupled with mortgage finance that was readily
available on attractive terms (Krueckeberg 1983, 193). " Employment was high and
incomes were rising rapidly. The nation thus had more wealth to spend on land
development, on housing, and on additional personal transportation that
suburbanization required"(Levy 1991, 18).

Of all the reasons listed, the highway system was one of the primary reason
suburban growth was so drastic. At the closing of World War H there began an even
greater surge of highway building by the Bureau of Public Roads, which was backed
by Congress, to supervise the planning of the proposed highway system (Krueckeberg
1983, 195). Highway construction continued under the National Defense Highway
Act of 1956. The Highway Act created shorter commuting distances and made
suburban living much more feasible for city employees.

The urban consequences of the interstate system were very large and, so far as
it is possible to tell, unintended by Congress. One consequence was that many parts
of suburban America became far more accessible than before and better able to

compete with the urban areas. Urban manufactures relocated in non-urban areas to

take advantage of lower wage rates, lower construction costs, and lower taxes. They
were able to do so largely because the interstate highway system put formerly rural
counties within overnight trucking distance of metropolitan market areas many
hundreds of miles away(Cantanese 1988, 25). Clarence Stein predicted this movement
in the 1925 RPAA manifesto, Dinosaur Cities (Stein 1995, 18).

The decentralization of economic activity helped promote the residential
decentralization that occurred shortly after. For example, an employee whose
work-place was on or just off the highway could live further out of the urban core.
This would allow that person to capitalize on lower land values, lower taxes and in
most cases better quality of life while the employee who worked in the downtown area
was subjected to the congestion, pollution and higher cost of living.

Aside from the cause of the movement, the fact remains that massive shifts in
population and employment did occur in countless cities throughout the United States.
Focusing on the rest of the nation's central cities, we see that many have

become substantially poorer since the end of World War II. " In 1959 central cities
had only 83 percent of their proportionate share of the nation's poor. In 1958 they had
136 percent of their proportionate share. In 1958, on per capita basis, central cities
have 1.5 times as many poor people as did their suburbs. By 1985 that figure has
risen to 2.3. Even the 2.3 figures understates the real difference" (Levy 1991, 22).

In 1959 central cities had about half as many poor people per capita as non-
metropolitan areas. By 1985 per capita poverty rates were higher in central cities than

in non-metropolitan areas(Statistical Abstract of the Untied States and Bureau of the

Census, 1989). Poverty in urban areas has become more severe than it had been
twenty years ago.

The statistics listed above refer to the area within the metropolitan boundaries.
If one were to look at the national statistics for personal income the figures would
show an increase, not loss. David Rusk points out in his book Cities Without Suburbs
that it is possible to experience both an absolute increase in average personal income
and yet lose ground in relative terms. This phenomenon of national growth and local
loss occurred across the United States in many cities.

The loss of income in central cites eventually affected the population. Many
affluent central-city residents began moving to the suburbs when they realized their
cities were no longer a good investment (Stemlieb 1979). Central cities more over
became home for minorities and fewer affluent whites. According to the Census
Bureau, from 1970 to 1980 central-city population totals remained unchanged, but
central-city white populations fell by almost 6 million. Given the large disparity
between white and nonwhite incomes this change was actually as much or more a
economic than racial phenomenon. However what resulted from this move outward
was a large underclass, predominantly non-white, that in the 1960s rioted because of
the inequality in urban and suburban living (Stein 1995, 19) .

How to fix the problem of the impoverished urban area is not an easy task.
Being able to recognize and understand how the urban areas lose their economic
stability is easier to comprehend and will hopefully lead us to methods to prevent

further deterioration of these areas. The out-migration from city to suburb drained off

the more prosperous members of the urban population, simply because they were the
households which could afford new, largely single-family suburban housing. The
movement of population, particularly of an affluent population, pulled out with it the
retailing activity. Retailers followed their customers to the suburbs with the hopes of
being able to survive better there than in the city. Wholesalers moved as well to
capitalize on the increased choice of location. Manufacturing also left the urban core
for several reasons. First, the creation of the new highway systems made suburban
locations more attractive for truck-served industries. Secondly, the vacant and
sprawling suburban land allowed the building of single-story factories. Single-story
factories are said to be more efficient than their predecessor, the multi-story factory.
Lastly, the decentralization of population created a suburban labor force that was
primarily made up of skilled labor. In the field of industry, the labor force is said to
be one of the key components in the success of the business.

While middle and upper middle America was making the move to the
surrounding suburban areas, a migration into the urban areas from the rural settlements
occurred. This entering population was in search of labor position within the factories
that had recently moved to the suburbs. The reason for the influx of rural workers
was the mechanization of the agriculture industry. In 1945 agricultural employment
was about 10 million and the farm population about 25 million. By 1970 agriculture
employment was under 4 million and total farm population under 10 million(Levy
1991, 23). As one could imagine, this compounded the weakening urban economic

base while increasing the ethnic population. The majority of the population entering

these cities were Afro-American. Before World War H and the mechanization of the
agriculture industry, the agricultural industry was heavily dominated by Hispanic,
White and Afro-American labor (Kain 1968, 176). With demand for manual labor
decreasing, these people looked to the urban areas for employment.

As the job opportunities crept toward the suburbs, the migrant work force was
mired in the urban areas because of high suburban housing prices. Older, inner-city
housing stock was all most migrant workers could afford. The oldest housing tends to
be centrally located because most metropolitan areas have grown from the center
outward. This difference in housing prices was increased for the most part by the
resistance of suburban areas to building multifamily housing units.

The relocation of jobs at the same time as the cities encountered a mass
migration from rural America, created a large urban "underclass" (Wilson 1987, 7).
This underclass and the underclass of today are strapped with unemployment, welfare,
lack of family cohesiveness, and a slew of other burdens that are painfully clear. The
underclass position in the urban environment was firmly established with little hope
for change after vvitnessthe flight of the middle and upper class and the employment

opportunities they took with them to suburbia.

State of Michigan Profile
Michigan has been experiencing a phenomenal economic transition. A decline
in manufacturing employment, high foreign competition, changing investment patterns,

cuts in federal budgets, a depression in the agricultural sector, changing state policy

regarding economic development, and numerous other factors are contributing to the
growing structural deficit and fiscal crisis in the state, and fueling the deterioration of
communities.

The deterioration of many Michigan communities has been largely due to
economic and human disinvestment. Decentralization of population and the increase
in mobility have contributed to changing investment patterns in central cities.
Manufacturing industries cite high land and labor costs, climate, decaying
infrastructure, and a poorly educated labor force as contributing to the trend to
relocation. "Since the primary market segment affected in inner cities is
manufacturing, the loss to both state and city tax bases further erodes the capabilities
of Michigan communities to provide for the socioeconomic needs of their citizens"
(Center For Urban Affairs 1994).

The structural and economic problems of many Michigan communities have
been in need of help. A publication of the House Fiscal Agency (I-IFA) indicates that
Michigan, in 1993, experienced a net job loss of 11,000, a decline in per capita
personal income by 0.6 percent, and severe implications for disadvantaged minorities,
particularly resulting from reductions in both federal and state funding for several job
training programs and general assistance programs (Gregory I-IFA, 1991).

Michigan has been experiencing a pattern of population decline. This condition
is evident in many of its major cities such as Detroit, Flint, Jackson, Pontiac, and
Saginaw. These urban centers have experienced a decrease in population by 15.9

percent, 12.7 percent, 4.0 percent, 9.6 percent, and 8.8 percent between 1980 and

1990, respectively (US. Bureau of Census,1993 ). Michigan itself experienced a small
(0.36 percent) growth in population between the two census counts.

A study of the largest 75 cities in the country, conducted by the US
Department of Commerce, revealed that in 1986 Detroit was the sixth most populous
city, its growth rate was ranked 6lst. It is unlikely if Detroits ranking has improved.
In a 1989 study, Detroit was found to have a significant change of 310 percent in its
formation of "impacted ghettos" between 1970 and 1980. The term "impacted ghettos"
refers to poor communities that have become increasingly segregated from
opportunities located in surrounding areas (National League of Cities, 1989).

Unemployment is another problem facing Michigan. In February, 1992, the
state had an unemployment rate of 9.8 percent. The cities listed above, Detroit, Flint,
Jackson, and Saginaw, had unemployment rates of 9.7 percent, 12.5 percent, 10.6
percent, and 9.4 percent, respectively (United States Department of Labor, 1993). The
average Michigan unemployment rate increased from 4.7 percent in 1961 to 8.8
percent in 1990 (House Fiscal Agency, 1991). Joblessness and diminishing real wages
have combined to increase poverty and related problems such as family breakup,
welfare dependency, and crime (Ellwood, 1988).

The unemployed constitute the heart of the issues noted above. A study of
Southeastern Michigan conducted by the Metropolitan Affairs Corporation found that
the number of chronically unemployed persons in the region grew from 262,000 in
1979 to 377,000 in 1986. The increase is even more startling if just the city of Detroit

is examined. Chronic unemployment is defined in this study as

10

"the long-term unemployed (people looking for work for more than 15 weeks);
people impeded from looking for a job because of lack of transportation,
educational deficiency, inability to find or aflord day care, and other reasons;
and those who, though able to work, have dropped out of the labor

force. "(Center For Urban Affairs, 1994)

When trying to establish the status of a community, the level of chronically
unemployed by this definition can prove to be useful. It should be noted that the
chronically unemployed are one of the most difficult communities to help.

Michigan's primary source of manufacturing for many years has been auto
related. Unfortunately, jobs in this area of manufacturing have been declining. Local
plant closings and plant relocations overseas for cheaper labor sites nationally, has
resulted in declines in blue collar jobs throughout Michigan cities. A study of
Southeast Michigan by the Lansing Economic Development Corporation revealed
124,000 manufacturing jobs have been lost between 1979 and 1986. This loss of
manufacturing jobs increased the number of chronically unemployed.

Michigan's agricultural industry has suffered as well. Mirroring the
manufacturing industry, agriculture has closed several plants, food processing
industries and has experienced the same result; unemployment. This decline has had a
severe effect on the agricultural community. Infrastructure has been neglected, water
and sewer lines have been deteriorating and the shortage of local revenues has limited
the support of these services.

Further compounding this problem is the projected 18 million jobs entering the

economy by the year 2000. These new jobs are likely to be in the service sector,

requiring higher levels of training and education. In contrast, manufacturing

ll

employment is projected to decline(Department of Labor Statistic, 1994).
In short, there will be fewer low skilled jobs and more skilled employment in
the future. If training and education is not acquired by those formally employed in

manufacturing, the chronically unemployed pool will grow deeper.

The North Lansing Pilot Project and Economic Development Program

Before delving into the North Lansing data and the community make up I
would like to introduce the project, the methodology used, the frame in which the
project was set and the goal of the members who participated in the project. This
project was started in 1994 through the collaboration of MSUs Center for Urban
Affairs, Michigan Partnership for Economic Development Assistance in cooperation
with the North Lansing community and the US. Department of Commerce, Economic
Development Administration. Those team members involved with the project have
been listed by sub-team at the end of this document.

The project consisted of helping to revive a depressed community economy
and engaging the community in the process. Although the economy was the primary
focus of this team, all aspects of the community were analysied. Areas of analysis
were chosen by the community as well as the team and consisted of: housing issues,
pollution, business closings, crime, poverty, and a host of other concerns that all
involved felt were pressing. After preliminary data had been gathered on North
Lansing, the project was divided into four sub-groups. The first group was responsible

for creating the tool that would identify the leakages within the community. The other

12

three groups focused on a particular sector: household, business, and public. Each
group would then gather both primary and secondary data and compile that
information so that the community could clearly see its overall economic situation.
The secondary data sources included household census data, consumer expenditures
patterns, business sales volume, and city employment and procurement records. Most
of this material was accessed through the university data repositories. Where
secondary data was not available, a well defined community survey for each sector
was used to more clearly determine the household income, consumer expenditure
behaviors, as well as information from businesses on the extent of their local markets
and location of suppliers. The compiled data confirmed the theory that depressed
areas have large amounts of money entering and quickly leaving the community. Since
this was a pilot project, some of the goals, methods used, and expected outcomes
were not fully achieved or have been improved upon for use in future projects.

The methodology used for the business and household sector was different
from the methodology used for the public sector. The business and household sector
teams worked closely with the Business and Community Advisory Boards to create the
two surveys. The business advisory board provided the team with information on the
451 operating businesses in the North Lansing area. To establish what questions
would be used in the final survey, a list of goals and objectives created by the
business community were used to guide the team and insure that the community
needs were being met. After the survey was completed it was distributed to all

known businesses in North Lansing. Of the known 451 active businesses identified,

13

179 surveys were returned, a response rate of 40 percent. Although this number
appears low, "if randomness is assumed, questions with a response of 165 or more,
percentages are probably (68 percent confidence) within 3 percent of the real
population and very likely (95 percent confidence) within 6 percent" (North Lansing
Business Survey, 1994).

The Community Advisory Board constructed their survey to cover two sections
of the community. The first was economic based and looked at the community's
attitude towards economic development and the household economics of the residents.
The second section dealt with issues of health, cultural awareness, education, and
services provided to the community. This portion of the survey, though vital in
understanding the residents more completely, was not as applicable to the economic
nature of this article. However, as a result of this section, the team was able to
engage the community more wholistically and inform them of the other aspects of the
project which achieved community involvement and empowerment, one of the
Community Development Principles on which the project was based and the later a
goal of the team.

The project was framed around the principles of community development. The
principle can be altered to better address a particular community but the characteristics
will always remain.

"First, community economic development represents a 'third sector' in
the development process which is able to avoid many of the limitations faced
by both the public and private sectors. Community economic development
uses the method of private development to achieve public purpose objectives.

Community economic development does not have the profit requirements
private sector nor the

14

political constraints of the public sector.

Secondly, community economic development strategies usually
encompass a comprehensive approach to the problem of low-income
communities. Most economic development efforts address only one aspect of a
community's needs--they might focus on human resources development, land or
infrastructure development etc. A community-based approach, in contrast, veils
these tasks as interrelated and links them together in the development process.

Finally, community economic development is a 'bottoms up' approach to
development which seeks to harness the resources of community residents and
institutions. The key to community economic development is the active
participation of local residents in the planning, financing and operation of
economic activity. A 'bottom up' approach to development recognizes that
resident and local organizations are in a unique position to participate in
economic activities: local residents can tailor a development strategy to satisfy
their needs and priorities." (National Congress for Community Economic
Development 1983, 10-11)

These characteristics can also be used in aiding rather than competing against
other state or local economic strategies. In the case of Michigan this would be most
useful. The goals of community economic development appears to be particularly
effective in addressing the needs of displaced workers, older communities and low-
income areas.

Following the principles of the community economic development, the team
was able to work with the North Lansing community in establishing a set of long and

short term opportunities. These opportunities consisted of :

1. Strengthening local citizen participation, so that those affected can meaningfully
participate in their solutions.

2. Renew local ownership, which gives residents financial security, a stake in the
neighborhood, and more control over their economic futures.

3. Establish local reinvestment, so that the community's savings help finance continued
development.

4. Invest in infrastructure that makes sense locally, so that the neighborhood's physical

15

conditions attracts and fosters economic activity.

5. Enhance local purchasing networks, which keeps money changing hands within the
neighborhood and between businesses, and creates jobs.

6. Strengthen purchasing power, with income high enough, and cost low enough, to
keep the neighborhood affordable.(revised from Working Neighborhood: Taking
Charge of Your Local Economy, The Neighborhood Works, Chicago, Illinois,
1985)

It can not be emphasized enough that those community members, local
businesses and North Lansing organizations who participated in the process of data
gathering and creating and distributing the surveys will be able to lead, inform, assist,
help others within the community act on the strategies. It is the action of the
community that will make the process sustainable.

Presented in the succeeding sections of this article will be statistical data on the
North Lansing, explanation of what the income and expenditure model is and its
intent, highlighted survey and data findings that reflect the communities concern as

they apply to each sector and the authors evaluation of the project in general with

recommendations.

North Lansing: Profile and Analysis
A statistical profile is useful to better acquaint the reader with the studied
region and those who inhabit it. North Lansing makes up 13 percent of Lansing, with
a population of 127,321 total residents, and 4 percent of the metropolitan statistical
area or MSA (MSA include all of the three counties of Clinton, Eaton and Inghan

Counties). By gender, North Lansing has 8,152 males and 8,672 females with a

16

median age of 27.8. The community is intergrated with representation by Whites,
Blacks, American Indians, Hispanics and Asians. The per capita income in dollars in
1995 was $9,066 with the household income at $6,244. Comparatively, Lansing's per
capita income was $12,232 and the MSA $14,044. The median household income for
North Lansing was $19,552 compared to Lansing $26,398 and the MSA's $32,156. In
1989 the population of North Lansing was 16,571 and over a quarter of its residents
were considered poverty status(Bureau of Census 1989, Series P. 60).

The total number of housing units in North Lansing totals 6,786 and of this
number 56 percent are owner occupied with a mortgage compared to 70 percent owner
occupied with a mortgage in the MSA. Of the total number of units in North Lansing,
51 percent were built before 1939 compared to the 22 percent built before 1939 in the
MSA(Bureau of Census 1989, Series P. 60).

Unemployment in North Lansing is extremely high with 15.6 percent of the
population out of work. Comparatively, Lansing is roughly half of that figure with
8.4% of its residents unemployed. For the tricounty area, the percentage of
unemployment is 6.7(Bureau of Census 1989, Series P. 60).

Before looking at North Lansing economy, understanding how an economy
operates in general is important. The North Lansing community will be represented as
a rain barrel. The rain water flowing into and out of the barrel will represent the
money that enters and leaves the community. The water line is indicative of the
communities prosperity. In short, the quicker money enters and remain, the faster and

higher the water line. Unfortunately every community or barrel has leaks or

17

expenditures .

The Income and Expenditures Model

Money enters a community in two ways. First, when products are sold to an
outside customer local firms earn new dollars. Also, when local people commute to
out-of-town jobs their wages are new dollars that are brought into the community.
Secondly when dollars are brought in from outside sources by the city and county
governments and by community citizens then new dollars flow into the barrel. These
unearned dollars can come from social security and other retirement payments, interest,
rent and dividend from outside investments, grants from higher governmental agencies
and foundations, and from investors from other states (Darling, 1988).

Money flows out of the barrel five ways. One, by local firms buying their
needs from outside sources. Secondly, local households going out of town to purchase
goods and services. Thirdly, through taxes and social security that are paid to
governmental units. Fourthly, local investors spend time and money on ventures that
fail or do not pay off. Finally, local residents invest in outside ventures instead of
investing in their own communities business opportunities (Darling, 1988).

The Community Income and Expenditure Model (CIEM) is based on the
observation that low-income communities are poor in terms of their accumulated
wealth (the amount of money that remains in the community) and the lack of local
institutions and or businesses. Business is not always willing to invest within poor

communities for fear of loosing their investment due to the unstable economic base.

18

This lack of investment contribute to the draining of community resources and wealth
because residents must look outside their community for goods and services. The
creation of an information base that helps a community's understanding of their asset
flow is important in the sustainablity and rehabilitation of a distressed community's
economy (Center for Urban Affairs 1994, MSU).

This model is designed to assist a local community in identifying leakages in
their economy. The model will be a tool for communities to use in analyzing the
flows of income and expenditures in their local area.

The intent of this model is to create a knowledge base to help the community
in understanding their asset flows. Communities who engage in the process of
discovering their own wealth are better equipped to improve their economic situation,
as documented by past research and practice. To identify the resources of dollar
inflows and outflows in a community a variety of primary and secondary data sources
were used. Once the knowledge base is established the community may chose to
develop multiple strategies that will reduce the outflows and improve the number of
times a dollar is spent in a community. The revitalization of a community economy
by using this model and the data generated by this project is empowering to its
residents (Center for Urban Affairs 1994, MSU). ; To help insure that the model did
not digress from the communities needs, it has been grounded in the principles of
community development. These principles were used to guide each sector in
extracting the necessary information that will assist in the rebuilding of the

communities economy.

19

The analysis in the proceeding sections is comprehensive and examines the
behavior of the three sectors, household, business and the public, and is derived from
the responses made by citizens of the community. These three sectors will reveal in
greater detail how the community lives, what type of jobs they hold, how they spend
their earnings, and where they spend their earnings.

Household Sector Findings

The household sector has a pool of 160 million dollars from which 31 million
dollars or 20 percent stays within the community. Contributing to the pool from
outside is a total of 140 million dollars. Shockingly, 129 million of the 140 million
quickly leaves, leaving behind only 8 percent for the community to add to their
economic base.

Expenditures for food in the North Lansing community were 24 million or 67
percent. Residents are purchasing clothes, hardware products, and food, to name a
few, outside the community because there aren't the facilities available locally. What
is available locally are convenience stores, restaurants and small markets. Supermarket
spending is 22 million and 19 million of that is spent outside the community with one
major supermarket capturing nearly half of the total (approximately 12 million of the
19 million lost). Only 3 million dollars remains within North Lansing. Shelter losses
are 18 percent or 15 million to areas outside this community. Those residents paying
rent, 80 percent goes to landlords or mortgage holders outside the area creating a leak
of approximately 15 million. Transportation totals 24 million, 5 of which returns to

the community.

20

Coupled with these leakages are the concerns of the citizens that are some of
the reasons why investors avoid North Lansing. The citizens are aware that to make
their community more viable and improve the quality of life, changes must occur.

The survey revealed that the residents were clearly concerned about economic
conditions. A large percentage of residents (78 percent) said that the economy of
North Lansing was no better than "fair". The biggest concern among residents who
responded to the survey was lack of jobs. Nine in ten respondents said this was a
medium or big problem, and a similar number saying job opportunities were "poor" or
"fair.” Crime control was the number one situation that residents wanted to see
improved.

Crime and the economy were, in respondents' minds, related. Sixty-five
percent said that employment opportunities for youth were a big priority. They
believed that if there were employment opportunities for these youth, juvenile crime
would drop. Seventy-six percent of the residents believe that disinvestment on the part
of business is due to the crime control problem. One respondents wrote, "businesses
will never move to North Lansing until we get crime under control.”

In terms of economic development, those who responded were in favor
provided the development was done with quality and matched the character of the
area. Of the choices given in the survey, most respondents wanted more selected

kinds of commercial, housing and industrial development (Table 1).

21

Table 1. Choices for economic development, in order of the percentage of respondents

who would like to see more in North Lansing.

 

 

 

 

 

 

 

 

 

 

 

 

Percent wanting more

Stores and services to attract people 81%
and money to North Lansing

High quality housing 75%
Stores and services for local residents 67%
Clean and quiet industry 62%
Environmental protection 58%
Historic preservation 57%
Low cost housing 43%
Subsidized housing 35%
Government office and facilities 32%
Banks and financial services 31%
Heavy industry 17%

 

 

 

 

22

More than half of the respondents favored environmental protection and historic
preservation. "Heavy industry" was one economic development choice that the
community indicated was not something they wish to see return to North Lansing.
Two groups that deviated from the norm, renters/those with low-income jobs and
residents of the historic district or "Old Town" as its referred to by its residents, were
those wanting more low cost and subsidized housing and more historic preservation.
Aside from these two groups, preferences for development were similar among the
major sections of North Lansing.

Job opportunities and unemployment were high priorities, but the strongest
interest was expressed for jobs with sufficient pay and benefits to sustain families
(Table 2). All of the ideas suggested for dealing with unemployment were considered
at least a moderate priority by most respondents. People who were unemployed,
single parents or low income were more likely to give high priority to transportation,
child care, and health care coverage. (Center for Urban Affairs, 1994)

Household Economics

In the survey a series of questions were asked relating to income and spending
in North Lansing households, with particular interest in how much came from or went
to the North Lansing community. This information would later be used in the income

and expenditures model.

23

Table 2. Ideas for dealing with unemployment, in order of percentage saying each was

a "high priority.”

 

Percent high priority

 

 

Jobs that pay enough to support a 79%
family
Health care coverage for people who 65%

take low-paying or part time jobs

 

Job training programs 63%

 

Loans more available for people 53%

starting or expanding businesses

 

 

 

 

 

Affordable child care 52%
Less welfare to encourage people to 52%
take jobs

Job placement programs 50%
Entry level jobs for young people 48%
Transportation to get to jobs 39%

 

 

 

 

24

Income. Households received income from a number of different sources (Table 3),
with 61 percent of households reporting at least one full time wage earner. Most
households without a full-time wage earner included retired residents, with about 1 in
5 including a part-time wage earner; 8 percent of respondents were reported being
unemployed and were without a wage earning spouse.

The income range for the median household was $15,000 to $20,000, comparable with
census figures for the area. Unfortunately, seventy three percent reported that "hardly
any or none (0 to 10 percent)" of their income came from within North Lansing, with
only 6 percent saying "all or nearly all.”

Housing. Eighty four percent of the community reported living in houses but
apartment residents are believed to be under-represented in the returned questionnaire.
Of those living in houses, thirty six percent reported that the house was fully paid for.
A significant number (23 percent) of houses in the community were rented. About a
third of all rental payments, averaging under $300/month, were reported to stay in
North Lansing, while only 10 percent of mortgage payment, averaging between $3 00
to $500, were made in North Lansing.

Groceries. The survey found that most grocery spending (42 percent) was done at
large supermarkets which were located outside North Lansing. The supermarket
capturing these dollars is Meijers on Lake Lansing Road. Of the respondents shopping
at this store spend on the average $85 dollars a week for groceries. Collectively they
spend $8000 dollars a week on groceries. A conservative extrapolation of the survey

sample to the 6,400 households in North Lansing indicates more than $150,000 a week

25

Table 3. Sources of household income, in order of percentage of households receiving

such income.

 

Percent of Households

 

 

 

1 full time job 39%
Social Security 36%
Savings account 36%

 

Government assistance (AFDC, Food 26%

Stamps, etc.)

 

 

 

 

 

 

 

Pension 23%
2 or more full time jobs 22%
Investments (stocks, bonds, mutual 14%
funds, etc.)

Unemployment benefits 13%
Life insurance or other insurance 7%
benefits

Renting out properties 7%
Part time jobs only 7%

 

 

 

 

26

leaving North Lansing for this one store alone. I shutter to think what that money
could do for their community.

Twenty four percent of the respondents did most of their major grocery
shopping at Tom's or McCormick’s Shop-Rite in North Lansing. About 15 percent of
the average grocery budget was spent at local convenience stores, most often the
Quality Diary stores on US-27 and Saginaw at Cedar. Unfortunately, one of the
reasons for convenience store shopping is, many of these respondents are without
personal transportation.

Other expenses. This category relates to monthly bills such as; Board of Water and
Light bills, gas bills and telephone bills. These dollars are generally lost in most
communities unless the utility company is operating within the community or owned
privately by a resident of the community. An alarming number (over 60 percent) of
the respondents indicated that they pay "Nothing" for elderly care, child care and
health insurance. The question that first came to mind was, are these benefits covered
by the government or are these people choosing to go without insurance that they may
need? Of those paying for health, life and/or other insurance, most are spending less
than $50 and nearly all less than $200. Twelve percent of respondents indicated other
major expense over $200 dollars each month, including child care, care for the sick or
elderly, and school tuition.

In short, North Lansing retains very little of the income it generates. The
community is predominantly older, retired residents and younger low-income residents.

Many of the retirees own their own home and are on fixed incomes or limited incomes

27

from Social Security. On paper this might appear to show stability within the
community, when in fact these older people can not afford to move. For those in the
low-income category, this group has the potential to get larger as the older population
shrinks.

Business Sector Findings

 

The business community within North Lansing ranges from small local service
companies to large manufacturers. Question three of the business survey asked which
category would best describe your business. Of the twenty-one categories, all but one
was represented in North Lansing, and none included more than 10 percent of the
businesses responding. In short the business community is diverse at best. Further
more, of the 179 business that responded, 96 percent were for profit organizations. Of
the 96 percent 27 percent of those were sole proprietors and 66 percent were
incorporated but privately held.. This conveys that North Lansing has the fertile
ground for business to grow. Unfortunately the survey revealed that almost half of the
businesses in North lansing receive revenue from residents or other businesses outside
the community. The majority of businesses operating in the community are those
dealing with retail sales. Manufacturing included the fewest businesses, but had the
largest average revenue and number of employees. Table 4 gives the percentages of six
general categories of business in North Lansing. This table should clarify the diversity
of the business community. Although the business community is diverse, the numbers
generating from this vast group are not. About half the businesses responding had a

annual revenues of less than 1/2 million dollars and employed fewer than 6 people.

28

Table 4. General Businesses

 

 

 

 

 

 

Construction and building trades 14%
Manufacturing A 9%

Wholesale trades and services 19%
Retail trades 30%
Personal services, including health 15%
Financial and professional services 15%

 

 

 

 

Of the 66 percent previously mentioned incorporated and privately held
businesses, at least 53 percent occupied free-standing business properties, and 58
percent owned their business property. Again we see that business appears to be
good in the North Lansing area. If one were to look at how much this "low- income"
community generated in 1993, one might not think it was "low-income".

North Lansing businesses generated revenues of approximately $500,000,000 in
1993, more than 80 percent of that left North Lansing in the form of labor costs,
goods and services, rent and mortgages, profit and taxes. The North Lansing slice of
the pie is$62,000,000 dollars. Of this sixty two million, less than one million is profit
compared to the fifty million of profit that left the area.

"North Lansings share of cost expenditure in each category is a minor
portion of the whole. (It must be noted, as well, that there is no standard to

suggest what that share should be.) Responses indicate that North Lansing
receives less than 20 percent of the payroll, less than 15 percent of goods and

29

materials expenditures, and less than 30 percent of rent and mortgage

payments. Further, since 82 percent of the respondents lived outside of North

Lansing, it is likely that at a similar share of business profits left the

community."(Center for Urban Affairs,1994)

When asked to rate the business climate of North Lansing, respondents had
more criticisms than compliments. The issue of crime emerged as the biggest concern
for business people in the community. Table 5 gives the percentage breakdown

concerning crime in the area.

Table 5. Percentage Breakdown Concerning Crime

 

 

 

 

"Medium" or "big" crime problem 83%
“Poor” or "fair" crime control 75%
Aspect "most would like to improve" 45%
"Large" effect on plans to continue 55%

business in North Lansing

 

Business a victim of crime 60%

 

 

 

 

More than half of the businesses reported being victims of crimes ranging from
vandalism to armed robbery and those open during evening hours were even more
likely to be crime victims. Many indicated that the crime problem would have an
affect on their decision to continue business in North Lansing.

Coupled with crime are problems of an ongoing poor economy, closing

businesses, empty buildings, low quality of housing, and lack of job opportunities for

30

North Lansing residents and local work force that lack the skills for current positions.
Significantly, business proprietors who also lived in North Lansing were more likely
than others to give low ratings to most aspects of the business climate.

To help promote the development of North Lansing, businesses, government
and individuals identified different strategies for business development in the area.
The survey asked to prioritize which strategy would be a high priority. The
respondents felt that "delaying tax increases following business expansion or
improvements" would significantly increase the number of improvements to local
businesses. Accordingly, the respondents felt that "low interest loans for business
expansion or improvement" was equally as important. It is difficult to interpret these
responses. On one side the community is showing willingness to improve their
business which would lead one to believe they are optimistic about the future of the
area On the other side, many of the business dollars leave the area, revealing that
local residents are not local business owners. My belief is, if the business community
was enhanced from outside or inside investment, the long term effect would be more
conducive for residents of North Lansing to start businesses with less risk of failure
due to an environment. For example, McDonald's does extensive preliminary research
of an area before breaking ground and Burger King saves those research dollars and
moves in "next door". In short, get the development moving by giving low interest
loans and capitalize on the progress later.

Public Sector Findings

Unlike the two previous sectors, the public sector did not use a survey to

31

compile its data. The members of this group were provided with records that revealed
the number of people employed by the city and privately for Lansing. These records
were then broken down into categories which included pay scale (hourly, biweekly,
salary and contract), city departments, vendors and zip-codes. Information pertaining
to property tax for both residential and commercial properties was provided by the tax
assessors office in Lansing. On several occasion data could only be provided on a tri-
county bases which made the extrapolation process less than exciting.

The reason for breaking down similar data into various categories was to reveal
more clearly the economic condition of North Lansing residents employed by the city.
This information also raises other questions about the community capability to preform
certain jobs. At a glance one can see the large imbalance of hourly employees to
salaried employees by department. The majority of North Lansing residents employed
by the city are hourly employees.

Another question that quickly comes to mind is, what to do with a population
that can not meet the need of the market? I believe North Lansing is experiencing a
lack of utilization for its population for what ever reason.

These and other probing question need to be analysed but the purpose to this
article to present the data that generates those questions that will hopefully enable the
citizens of North Lansing to reach sustainablity.

Looking at the data generated in 1993, the direct economic impacts on North
Lansing from wage expenditures by the City of Lansing were 65 jobs totaling an

income of $887,942.94 and an average income of $13,694.28 per job.

32

Table 6 indicates that 40 percent (26) of the 65 City jobs going to North
Lansing residents were hourly jobs.

Table 6. City Employment of North Lansing Residents

 

 

 

 

 

 

# Employed Total Income Total Avg.
Income
Hourly 26 546,602.29 21,023.16
Bi-weekly 25 62,702,41 2,508.09
Salary 8 278,638.24 34,829.78
Contract 6 2,185.50 364.25
TOTAL 65 887,942.94 13,660.61

 

 

 

 

 

 

These hourly jobs make up over 61 percent of all income from City jobs going to
North Lansing residents. The average income per job in this compensation category
was $21,023.

Eight of the 65 City jobs going to North Lansing residents were salary jobs.
These jobs accounted for 31 percent of all income from City jobs going to North
Lansing residents. Of all the City jobs going to North Lansing residents, salary jobs
were the best paid. Average income per salary job was $34,829 a year.

Tenty-five of the City jobs that went to North Lansing residents compensated
on a bi-weekly basis. These jobs registered the lowest average income per job. The
total income from these jobs was $62,702 and the average income per job was $2,508.

Te 6 other City jobs to North Lansing residents were contracted to the City.

33

Of the four types of jobs, as distinguished by form of compensation, that were
available to North Lansing residents, contracted jobs registered the least total income
as well as the least average income per job. Total income going to North Lansing
resident from this group was $2,185. This average to an income of $364.25 per job.

The 65 jobs going to North Lansing residents were concentrated in 10 of the
City’s 29 administrative departments (Table 7). The Parks Department accounted for
nearly half of all jobs going to North Lansing residents. The 32 jobs in this
Department accounted for 27.47 percent of the total income from the City going to
North Lansing residents. Although we were not privy to the task of each job it could
be assumed that the position is manual labor oriented. The 8 hourly jobs in the
Department of O&M accounted for nearly a quarter of the total City income going to
North Lansing residents. The 4 salary jobs allocated to North Lansing residents by the
Police Department accounted for about 18 percent of the City’s income going to North
Lansing residents. Another 13.56 percent of City income going to North Lansing
residents was attributed to 4 jobs in the WWPT Department. The Parking Department
accounted for 4 jobs and 5.86 percent of all income going to North Lansing residents.
One job in the Fire, Attorney and Central Garage Departments respectively, went to
North Lansing residents. The income from each of these jobs exceeded the combined
income of the 7 jobs in the Election Department. These Election Department jobs, all
offering bi-weekly compensation, accounted for less than 1/2 of one percent of the
total income going to North Lansing residents. What does this data mean?

It means that the majority of positions held by residents of North Lansing are

34

Table 7. North Lansing Resident Employees by City Department

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Department # Employed Total Income Average Income
Parks

Hourly. 9 167,352.97 18,594.77
Bi-weekly 15 24,475.82 1,631.72
Salary. 2 49,892.55 24,946.27
Corr. 6 2,185.50 364.25
Election

Hr. 0 0 0
Bi. 7 1,665.00 237.86
Sal. 0 0 0
Con. 0 0 0
Parla'ng

Hr. 1 15,808.20 15,808.20
Bi. 3 36,251.59 12,083.86
Sal. 0 0 0
Con. 0 0 0
0 & M

Hr. 8 219,750.48 27,468.81
Bi. 0 0 0

 

 

 

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sal. 0 0
Con. 0 0
SchlPoIice

Hr. 8,534.50 2,844.83
Bi. 0 0
Sal. 0 0
Con. 0 0
WWPT

Hr. 120,3 77.64 30,094.41
Bi. 0 0
Sal. 0 0
Corr. 0 0
Centgar

Hr. 14,778.64 14,778.50
Bi. 0 0
Sal. 0 0
Con. 0 0
Attorney

Hr. 0 0
Bi. 0 0

 

 

 

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sal. 22,866.07 22,866.07
Con. 0 0
Police

Hr. 0 0
Bi. 0 0
Sal. 162,422.53 40,605.63
Con. 0 0
Fire

Hr. 0 0
Bi. 0 0
Sal. 43,457.09 3,457.09
Con. 0 0

 

 

 

 

37

 

low paying positions. It also is saying those position that merit a salary or higher wage
are virtually unattainable to members of the North Lansing community. This scenario
is similar throughout most of the city employment position.

If a comparison is drawn between jobs going to North Lansing residents, jobs
going to Lansing residents and jobs created in the region by the City, North Lansing
represents little over 3 percent. In regards to income, the $887,942 from the 65 jobs
held by North Lansing residents, represent 3.36 percent of the total income from City
jobs. This income represents 1.88 percent of all income generated from the jobs
created by the City.

Utilization of the North Lansing residents was illuded to earlier. A formula has
been constructed to establish a rate of utilization by multiplying the number of North
Lansing employees by 1,000 and dividing by the North Lansing population of 16,775,
we get a North Lansing resident participation rate of 3.87. As seen from Table 8, the
resident utilization rate for North Lansing is much lower than the resident utilization
rate for other Lansing areas as measured by zip codes. Although the picture seems
dark for North Lansing, their is money coming into the community. Table 9 shows
that in 1993, 14 businesses made sales to the City totaling $862,430. Unfortunately
these dollars were not dispersed community wide. Instead, one company, Snell
Environmental Group Inc. captured over 87 percent. Snell is an architectural service
management consulting firm. Of the remaining 13 percent, 10.36 went to five
additional companies. Michigan Company Inc. captured 3.43 percent of the City

revenue, ACE Wrecking Co.seized 2.41 percent, Bomor Restoration, a general

38

contractor specializing in single family homes, received 2.34 percent and Aaron
Enterprises, accounted for the remaining 2.18 percent of the City revenue for
procurement going to North Lansing. These five firms accounted for over 97 percent

of North Lansing business receipts from the City.

Table 8. Resident Utilization Rate (Em X 1,000/ZIP Population)

 

 

 

 

 

 

 

 

 

ZIP EMPLOYEES POPULATION EMPLOYEE
PARTIC. RATE

48906 256 29,067 8.81

48910 504 34,641 14.50

48911 347 39,544 8.80

48912 1911 18,963 10.07

48915 127 9,915 12.81

48917 164 30,765 5.30

48933 35 4,254 8.20

N. LANSING 65 16,775 3.87

 

 

 

 

 

 

39

Table 9 North Lansing Business Summary

VENDOR NAME

Aaron Enterprises

ACE Wrecking

Adams Heating & Air Cond.
Advance Glove & Safety Co.
Bettys Buttons & Tshirts
Bomor Restoration Inc.
Builders Exchange of Lan.
Cristo Rey Comm. Center
Cusack, Tim

Custom Mailers, Inc.

Delta Printing Co.

Loaves and Fishes

Maloney Carpet Company
Michigan Company Inc.

Mid State Air & Tool Co.
Miller, Wyinonaann

Mosher, David

Mosher, David & Caera, Sylv
New Growth Institute

Sickel Cell Detection and Inf
Snell Environmental Group
Stowe Brothers Towing
United Exterminators

TOTAL

FY 93
18,793.35
20,810.00
0.00

0.00

0.00
20,172.24
100.00
106,420.50
200.00
99.98
645.24
10,000.00
2,497.00
29,599.24
780.10
0.00
5,212.00
9,005.00
0.00

0.00
750,673.92
828.00
3,215.00

979,051.57

FY 94
8,999.30
5,645.00
1,592.00
0.00
49.22
5,417.27
100.00
90,251.00
0.00
0.00
0.00
15,000.00
0.00
19,198.42
0.00
160.00
0.00
0.00
15,000.00
3,000.00
405,030.89
3,131.00
2,185.00

574,759.10

In addition, two North Lansing nonprofit organizations received revenue from

the City totaling $116,420. Cristo Rey Community Center accounted for 91.4 percent

of this total. The remainder went to Loaves and Fishes.

Taxes are always an outflow of income regardless of the community. City

property tax gives insight to what type of community one might be studying. Table

10 shows that the City collected $1,861,974 from North Lansing property owners.

Residential property taxes accounted for over 63 percent of this total. Commercial

40

Table 10. The Amount of Property Taxes Paid by North Lansing Property Owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential
Residential 1994 SEV for North Lansing $67,454,000
1994 tax rate X.0174
Total Residential Property Tax $1,173,699.60
Commercial
Residential 1994 SEV for North Lansing $31,320,600
1994 tax rate X.0174
Commercial Property Tax $544,978.44
Commercial Facility Tax $2,863.90
Total Commercial Property Tax $547,842.32
Industrial
Industrial 1994 SEV for North Lansing $4,705,350
1994 tax rate X.0174
Industrial Property Tax $81,873.09
Industrial Facility Tax $58,668.95
Total Industrial Property Tax $140,432.06

 

 

1994Grand Total Property Taxes Paid

 

$1,861,974.00

 

41

 

property taxes accounted for an additional 28.42 percent. The remaining 7.54 percent
came from Industrial property tax. Looking at these numbers, one could tell that
North Lansing is predominantly a bedroom community with a small business
community and possibly one or two large industries.
"An estimated $1,574,000 was paid in city income tax by North Lansing
residents in 1990. This amount is calculated by taking the 1990 per capita
income for North Lansing in the amount of $9,389, and multiplying it by the
1990 North Lansing population of 16,775. (See Appendix A for a more

extensive rational for the method used to calculate these figures). Note that
these figures were the latest figures available"(Center For Urban Affairs 1994).

In short, the imbalance in North Lansing's city employees is a lose. Those
earning a salary compared to those working for an hourly rate show a difference in
yearly income of ruffly $13,000.00 dollars. The majority of those dollars are leaving
the North Lansing area never to return. Outside of city employees, other businesses
within North Lansing have had decent earnings over the past two years (1993 and
1994). These dollars that are generated in the community are significant, but are not
enough to make a significant contribution to North Lansing. If 87 percent of captured
city revenue is held by one company, there is little room for other companys in the
community to capture the remaining 13 percent. This consistent imbalance is what has
fostered the loses North Lansing is presently experiencing. If there were more balance
throughout the community in the way of earnings, I believe North Lansing would be

capture more city revenue thus creating a more economically sound community.

42

Conclusion and Recommendations

Using the national and state profiles as a backdrop for the local situation, they
have provided the understanding of how communities like North Lansing find
themselves mired in a declining environment. Of the many problems facing North
Lansing, loss of income is pervasive on all levels. For this reason I feel it should
receive top priority by those in the community. To aid in the fight to prevent more
dollars from escaping the team created the income and expenditures model which
identifies leakages within the community. Unfortunately, the community is faced with
other issues besides those of an economic nature. As shown through the surveys and
statistical data, the community needs change in areas of crime, housing, manufacturing,
employment, transportation, etc. to make itself sustainable for the future. Fortunately,
the people of North Lansing believe that with help from economic development
organizations and community efforts their situation can take a positive turn.

When respondents were asked, how likely they were to continue in business in
North Lansing and what they would do if they could not continue in North Lansing,
they responded positively with 66 percent likely or almost certain that they would be
in business within the next five years. This optimistic outlook need to be channeled
into positive physical changes. Changes in neighborhood upkeep, community policing,
removal of debris and/or abandoned vehicle or empty residential lots, are areas that the
residents can accomplish themselves.

It is not enough to pin point where leakages are. It is almost worse knowing

where they are and not doing anything about them. Traditionally, distressed

43

communities have looked to provide economic incentives to corporation through
reduced taxes and regulations. This plan does not always solve the unemployment
problem that exist as well. Companies may agree to locate within a community but
hire from surrounding ares. For this reason the effectiveness of the strategy is still in
question.

Other strategies have looked towards income redistribution and relocation of
the poor. In the case of North Lansing, people like their community and would rather
stay than be relocated. And studies have shown that income redistribution temporarily
solves the problem of economic distress. Some believe that this strategy, in the long
run, contributes to the cycle of poverty found in inner cities.

Economic development needs to become involved in assistance to existing
business within the community. If taxes are to be reduced for incoming businesses,
why not reduce the taxes for those businesses that already exist? A number of efforts
have been prompted by organization such as the Economic Development Corporations
(EDCs), Downtown Development Authorities (DDAs), Community Growth Alliances
(CGAs) and other economic development authorities. These groups are involved in
numerous efforts to provide, site and local assistance, job training and expeditions of
city permit processes. These groups have been instrumental in acquiring federal
resources and established connections with the state economic development revenue
bonds for renovation and expansion of industrial and commercial facilities.

Unfortunately, an estimated 220 Economic Development Corporations exist in

Michigan. Many times this results in competition for the same business or industry

44

looking to locate within the state. What is created is known as a buyer's market,
where businesses pit one community against the other for the best offer. This
competition have many wondering if the economic development dollar is working for
the citizens or against them if in the long run they are paying higher taxes due to the
subsidies given to the incoming business.

Certain industries can help provide ways of increasing the number of outside
dollars a community generates. The construction industry can use investment capital
from outside sources to construct new roads, highways and buildings, while possibly
providing jobs to nonskilled residents. Not only are residents earning an income, they
are contributing to the community which could increase their sense of community. In
the case of North Lansing, the housing stock is old and could use updating or
replacing.

A regional shopping center or outlet center would provide goods to the
community that they acquired outside their district. The centers would also be able to
hire from the community for positions in the retail stores.

These examples still require outside investors. If the community is serious
about making a change in their community, then I believe they must start by using
sweat equity. Improvements such as reducing the amount of trash in a park does not
take federal funds or big business investments. Establishing a sense of community
pride will only help attract business investment .

The outcome of this pilot project on North Lansing has not been seen yet.

What has been seen are other communities using the model to generate data to acquire

45

funds that can be used for their community. The process that was used engaged the
residents and empowered them to continue working for a better quality of life. The
income and expenditures model is currently being used on a new project in South
West Detroit. The idea of trying to harness community assets has become the subject
of Lee Beaulac and William T. Johnson, two key note speakers in the 1996 summer
session at Kellogg Center, Michigan State University.

Personally, I feel that the work that was done in North Lansing was
enlightening and brought insight to my limited understanding of what an urban
problem consists of. Rusk said, "America doesn't really have an urban problem".

That is relative to where you are in America.

46

APPENDIX A

Determining the Amount of City Income Taxes Paid by North Lansing Residents

Median Income Method
1990 Census Median Household Income $19,966
Number of Households 6,156

City Income Taxes Paid $19,966 * 6,156 * 1% = $1,229,106

Median Nonfamily Household Income $17,659

Number of Nonfamily Households 2,137

City Income Taxes Paid ($17,659 * 2,137) * 1% = $377,372
Based on the Median Incomes reported in the 1990 Census, it can be estimated that
$1,606,478 was paid in city income taxes for fiscal year 1990-1991 for all households in

North Lansing.

Income Method

'6
a
-r
i:
an
50

 

 

1990 Census Per Capita Income for North Lansing $9,389
1990 Census Population for North Lansing 16,775

City Income Taxes Paid ($9,389 * 16,775) "‘ 1% = $1,575,004

47

When comparing the median household and nonfamily household income to the per capita
income in determining the amount paid in City Income Taxes, a discrepancy of $31,474 is

found.

The lower figure of $1,575,004 is used to represent the amount of city income taxes due to
the fact that not every resident or household files a tax return and also to account for tax
deductions, write-offs, and income that may have been reported to the Census but is not

taxed by the city.

48

 

Team Members

Business Sector Committee

Dr. Dona Anderson, Co-chair
Joel Lichty, Co-chair

Tim Achers

Cynthia Lidtke

Household Sector Committee

Dr. Rex LaMore, Co-chair
Joel Lichty, Co-chair

Dr. John Schweiter

Jane Ledesma

Cynthia Litdke

Public Sector Committee

Dr. Rene Rosenbaum, Chair
Vince Richardson

Mary Jo Lopez

Marc Viggiano

Rick Kibbbey

Strategy Committee

John Melcher

Jane Ledesma

Joel Lichty

Dr. John Schweiter
Dr. Rene Rosenbaum
Cynthia Litdke

49

 

 

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