Transformation of West Philadelphia offers pointers on how to organize innovation districts for long-term success
University City District is an atypical Business Improvement District, which provides a master class in how to drive change through local leadership, place development, and the powerful use of data to demonstrate impact
It was a rising crime rate and several high-profile incidents, including the stabbing of an international student in 1996 near the campus of the University of Pennsylvania that convinced Philadelphia’s leaders to rethink how the area operated. The place was a magnet for excellence and innovation, but all that was at risk. Unless the area undertook a more integrated approach to its development and made the local community genuinely part of the success story, the university and other institutions were in danger of losing their appeal and global status.
“The leaders got together and they said: ‘This can’t happen anymore,” explains Nate Hommel, one of the key figures to lead a two decade long transformation of the area. “Leaders were saying: ‘People are afraid to come here. We’ve got to do something. So, let’s figure out how we can make this work’.”
University City District (UCD) is the organization that has led and executed that transformation. Nate Hommel is UCD’s longstanding Director of Planning and Design. West Philadelphia is described as one of the poorest parts of one of the poorest cities in the United States. It has needed an organization like UCD which is dedicated to detailed change and which has stayed the course in the long term. However, the significance of what has happened in this city extends far beyond its boundaries. The UCD experience provides a master class for many places. In particular, we can learn a lot about how innovation districts worldwide might execute some of their ambitions for transformation.
Understanding innovation districts
In 2020, as the pandemic spread from Asia and Europe to the Americas, The Global Institute began analyzing nine innovation districts in six countries and across five continents. Our analysis set out to better understand the advantages of districts as vehicles for heightened growth and prosperity.
Innovation districts are an emerging 21st Century model of place-based innovation worldwide. They combine academic institutions, corporate R&D, start-ups, and entrepreneurial support organizations in dynamic, mixed-use communities that strengthen proximity and knowledge spillovers. In addition to catalyzing the growth of jobs and businesses, they incubate new solutions to urgent societal challenges. They are also more focused than science parks on ensuring that local communities participate in success. Such ambitions demand collaboration to strengthen districts, addressing gaps in their infrastructure, facilities and programing. The big question is: how do you create and implement these strategies?
Many of the most ambitious innovation districts are underpinned by effective organization, according to on-the-ground research. This is what The Global Institute on Innovation Districts calls “organizing for success”. It typically involves an important set of activities that work together like a puzzle. The first step is to develop an ambitious vision, which is often founded in empirics that help to clarify a district’s unique strengths. This vision articulates the district’s unique value. Over time, districts create a governance structure, such as a not for profit or company. This process establishes a supportive organization that strategically guides and executes the cross-cutting strategies needed to address specific weaknesses or gaps.
Maturing districts demonstrate another important aspect of “organizing for success”—they identify creative ways to finance the programs, placemaking, and other cross-cutting activities that ensure districts thrive. This work commonly includes consolidating fragmented financial streams, devising new funding mechanisms, and fashioning new schemes to generate revenue.
Without these systematic approaches to organizing for success, districts tend to progress more slowly and sometimes chaotically, likely failing to make the transformative moves that strengthen a district’s value.
Learning from the Business Improvement District (BID) model
As new and existing innovation districts think about “organizing for success”, there is a model that can serve as a piece in the governance puzzle. It’s the Business Improvement District (BID) model or a BID-like structure. An example is University City District (UCD) in the United States, which serves many roles in between the buildings of West Philadelphia’s overlapping innovation district and the surrounding residential community. UCD is not a BID in its pure form—it is not legally constituted as a BID and it has no tax raising powers. UCD works diligently with local leaders and organizations to understand their views on how best to transform the area. In that process, these stakeholders become champions and have proved willing to finance the work led by UCD.
A key benefit of a legally formed BID is that it provides a guaranteed source of revenue. Through a formal legal and political process, commercial property owners within the boundaries approve the formation of a BID. They are then all legally required to pay an annual fee to the BID. There are, in other words, no “free riders”. The stability of such funding has allowed BIDs to spearhead impactful “clean and safe” strategies in urban neighborhoods around the globe. However, a limitation to their work is that these legally formed BIDs are typically confined to commercial corridors, leaving out neighborhoods that may also need support.
UCD is neither a BID nor an innovation district. It is a Special Services Area and has a more flexible structure. This legal status allows it to cover every block of its 2.4 square mile area, including exclusively residential areas. This structure also encourages it to put more emphasis on the work with the residential community than might be found in a typical BID. These factors explain why, over UCD’s 25-year history, it has created a business model with its local stakeholders that’s different from the ones usually found in a BID.
In reality, many innovation districts offer similar services to those of UCD or a BID. They are keeping the districts clean and safe; building and managing public spaces; connecting communities with jobs in their districts, and doing placemaking, among other things. However, they are not called BIDs and they have a different funding structure than do BIDs or UCD. Nevertheless, the way that UCD structures and funds itself can offer inspiration to these and other innovation districts.
How UCD operates
Nate Hommel summarizes UCD’s remit. “Basically, we do clean and safe—we pick up trash, and we take care of graffiti,” he begins. Recalling the immediate urgent need for safety in the area after the student’s murder, he adds: “We activate public space, making it exciting and safe for people to be there. We also create economic opportunities with a workforce development branch to help lift people up in our district, so we’re not just letting the property values rise and leaving local people behind. We do economic development, helping develop corridors, strengthen them and find new services for them. We bring people together in community events and we focus on ensuring good transportation. These core principles help us to provide a comprehensive program of development.”
Clearly, this comprehensive approach offers insights for evolving innovation districts on ways to organize that work creatively between anchor institutions, companies and neighborhoods to strengthen people and place. It’s an ongoing task: despite being over 20 years old, UCD continues to demonstrate how to be nimble and responsive. For example, during the pandemic, UCD raised philanthropic funding to support local businesses that were struggling, and they helped get distressed properties restored and back on the market.
UCD´s value goes far beyond the individual services it provides. It serves as the neutral, trusted party in a place with many actors and many needs. This provides, once more, an object lesson in how, for example, innovation districts might imagine and run themselves.
UCD is trusted, in part, because it uses extensive data collection to demonstrate its value to the community and its stakeholders. First, the organization employs a full-time data scientist who works to collect and analyze data at a very granular level. The data helps the organization demonstrate to their funders, to the city, and to other stakeholders, the value and the impact of UCD programs.
The amount of data collected is extensive. It includes such figures as: the average increase in salary for workers participating in the workforce programs and the increase in employee retention for the employers participating; the foot traffic, the number of people sitting in the chairs, and the sales tax impacts generated by a new public space intervention; and other equally valuable data about all its initiatives.
This ability to show the organization’s impact with data, from before and after a project, is critical. As Nate Hommel explains, with reference to building a new parklet, “How many people are able to tell a funder: ‘Hey, look, we used to have eight people showing up here. And now there are 6,000 people’? Likewise, when people complained about the loss of a few spaces for cars, we were able to say: ‘Well, we’ve actually increased sales tax revenue by 7 percent this year because of creating this park’.”
How UCD works with innovation districts
The value that UCD can bring to local innovation districts is demonstrated by its work with The Lawn at uCity Square, a 600,000 sq. meter innovation district being developed through a partnership between Wexford Science & Technology and the University City Science Center. The district recognized that, during construction, there would be significant vacant land that would have a negative impact on its surroundings. After asking around, Wexford went to UCD to develop a temporary park on the land that became known as The Lawn, with landscaping, four repurposed shipping containers that were designed with input from the community and operated by rotating Philadelphia-based sponsors, bleachers for seating and views of the construction, food trucks, and active programing. The area is now beloved, not only by residents and workers from the surrounding community, but it has also attracted people from all over the city.
Six takeaways for innovation districts
Nate Hommel spoke to a webinar, organized by The Global Institute in July 2022, and provided a presentation which was broad in scope and inspirational in ideas. Here were six key lessons that could help innovation districts and other forms of place-based development.
- Build a broad revenue base and monetize the value of what you provide. UCD has three primary buckets of funding that make up its more than $10 million budget: contributions from Board members; fee-for-service revenue; and philanthropy. Key to this funding structure is that fact that its 27-member Board of Directors draws contributions from a broad range of actors, including large institutions, real estate developers, property owners, businesses, and individuals. Another important part of its funding structure is its fees-for-service revenues, generated by such activities as contracting out UCD´s internal landscaping team called Green City Works, by contracting out workers from its other workforce training program, and by performing fee-for- service placemaking and landscaping projects for other entities.
- Have constant conversations with your stakeholders. The nature of the UCD Board contributions means that UCD is negotiating contribution commitments with each member every three years. In between those negotiations, leadership may change as one of the members or a new developer may move into the area. UCD is constantly reminding people of the value of what it does. While this is time consuming, it also gives UCD an opportunity to clarify what people need, and then be more responsive and more effective. As Nate described: “A part of our president’s job is to convince funders that our work is viable and necessary so they continue to support us. . . We need to be good partners to all of the different local players and anchor institutions for the district to thrive.”
- Define the value of your district. UCD has creatively defined its valuable, deep work with the community, and with the anchors and innovation districts within its boundaries. It is the “middle child”, says Nate Hommel, who just keeps working, mediating where necessary, solving problems, and negotiating. As described earlier, understanding its unique role in the district has allowed UCD to be effective at what it is, as well as to maintain support from board members and philanthropic partners, and to monetize its value. It is filling a role that no other organization in this complex district is providing.
- Monetize your value. UCD is entrepreneurial in monetizing its value. A perfect example is Wexford going to UCD to solve a problem. UCD had the technical experience around creating public spaces, the trust of various stakeholders, and the relationships with the city to develop The Lawn at uCity Square innovation district. Another good example is Green City Works, where UCD had years of experience with workforce development, on the one hand, and a requirement to maintain its public spaces on the other. Green City Works became the vehicle to bring not only its own landscaping work in house and provide quality jobs to the local community, but also to generate revenue for UCD by selling its services to companies and institutions around the city on a fee-for-service basis.
- Appreciate that perfect is the enemy of good. As Nate described: “You have to build trust. So do a small project first and blow their minds with a parklet or something and make them really excited. You know, you can fail at $5,000 easier than failing with $5 million.” Starting with temporary versions of a new park, parklet, or program allows an organization to test an idea without a large upfront investment. That idea can then be evaluated and improved with multiple iterations, or it can be dropped, if it is a failure. Importantly, proving the value of an initiative allows an organization to then go to the anchors and other stakeholders and ask them to put “skin in the game” that will convert that project into a permanent one.
- Build off existing organizations. Some BIDs overlap with, or operate adjacent to, innovation districts. Rather than trying to create a new BID that can take care of “clean and safe” and other typical BID services in an innovation district, it is better to build off these existing organizations. This can happen by sitting down with the BID and finding out what they would need to provide the services that the innovation district needs. This can start off as a fee for service arrangement. If successful, expanding the BID to cover the innovation district can be explored.
Conclusion: Operate like ‘a company with a moral compass’
As new and existing innovation districts consider how best to organize for success, there are many aspects of the University City District model that offer inspiration in terms of development of services and good stakeholder engagement.
UCD’s experience suggests many pointers to innovation districts and to other forms of place-based organizations on the importance of finding what UCD calls the “sweet spot”, where they can offer the most value to stakeholders. Around such sweet spots, these forms of organization can build broad support, develop new funding streams, experiment, and continue to grow.
Julie Wagner, founder of The Global Institute on Innovation Districts, comments: “I am particularly struck with the way in which UCD sits in conference rooms with potential sponsors to hash out how to transform the area and also how UCD encourages different parties to finance these changes. UCD organizes its activities, and operates, like a company with a moral compass, which is an approach that could work successfully for many innovation districts.”