2023 AARP Livable Communities Economic Development Workshop: Keynote Address by Ilana Preuss

VIDEO TRANSCRIPT: Keynote Address by Ilana Preuss

Carly Roszkowski: It's time to hear from our first speaker, Ilana Preuss. She is the founder and CEO of Recast City LLC, which works with local officials, real estate developers and civic leaders to integrate spaces for small-scale producers into redevelopment projects. She uses place-based economic development to build economic opportunity for more people.

Ilana spent some time with us earlier and shared some of her important work. So, after her prerecorded keynote presentation today, she'll also be here live to answer your questions. So, before we hear her presentation, I want to remind everyone about the Slido platform. You should see the instructions on how to ask a question and you can either go to Slido in your web browser and enter the event code Livable2023 or just scan the QR code on the screen.

During the keynote, please ask your questions and we'll address as many as we can after the presentation. Please enjoy this incredible keynote from Ilana Preuss, which lasts about 20 minutes. And again, after her presentation, we'll have Ilana here live for Q&A. Mike and I will see you on the other side.

Ilana Preuss: Hi, thank you for having me at the AARP Livable Communities Conference. My name is Ilana Preuss and today we're going to talk about great places, older entrepreneurs and small-scale manufacturing and how that all comes together in our communities and how we support small businesses and great places within our community. Good afternoon. It's great to be here with all of you. 

What we're going to talk about today is how all of this comes together — vacant storefronts, economic mobility, our economic resilience, our small businesses, and really, what does it all have to do with the soul of a place, the soul of our community? The soul of our community, to me, is really about what makes our place special. How does the personality of our community come out through our small businesses, through our storefronts, through who owns those businesses and the pride that they bring, the cherishing that they bring to our community so that our community feels valued and that we know we value it as well?

The challenge is, is that there are a lot of things in the way of us fixing this right now, where we do have a lot of vacant storefronts. The cost of renovation is very high right now because the cost of construction is very high. We also have some property owners leaving storefronts vacant because they're taking that as a loss for a tax benefit because of other profitable holdings.

In addition to that, we have a lot of properties that are more recently built but where we have too much retail, they're sitting vacant, they're not lowering the price on that because they don't want to devalue the underwriting of that property. They can't show that the property is worth less than what they originally estimated for the banks because they won't be able to resell it or the bank financing would get changed. In addition to that, we have a lot of big box stores that hold a guaranteed lease. They will pay the lease for 10 years to leave it vacant so that nobody can move into that space — no competitor can move into that space — so that it impacts the community in this enormously negative way, but there's really little to do about that.

On top of that, we have this mismatch of real estate going on. The size of spaces — the square feet in a retail space versus the amount of space needed by small business today — are just vastly different. There's very large spaces and a lot of folks who need pretty small spaces. But what are we all looking to do? What are we looking to get? We're looking to get places where people can come together.

We know from this great study done years ago called Soul of the Community, that people are tied to a place because of three main reasons: They feel included in that place, there are places to gather and there's some aesthetic beauty to that place — the natural environment or the built environment. And so, as we think about economic resilience, as we think about creating more opportunity for older entrepreneurs, as we think about how we create these great places where people can come together, we have to think about how all of that gets tied in. 

A little bit about myself. On the left, you can see this amazing electric blue dress. It's one that my mother sewed for me. She knit, she sewed, she painted, she taught us all how to use a drill and hang blinds. It was something that we all shared with everybody in our family.

And on the right, I had an amazing opportunity to give a TEDx talk all about the economic power of great places. And really, the ability to make things, the knowledge, the heritage, the culture that we each carry with us to make things and the opportunity to create businesses around that and grow our entrepreneurship ranks, as well as build community wealth through that ability, as well as creating great places is really the mainstay of it. Oh, and of course, my kids are a base part of that as well. 

But that's really where this all comes together with what we are talking about. How are we bringing what I call small-scale manufacturing businesses — any business who creates a tangible product that you can replicate or package — into our storefronts to be able to create these great places and resilient economies.

First, we have to grapple with some of the challenges we need to face, particularly how have our economic development actions excluded some people and places. That's both historically and today. We can look across age, we can look across race, ethnicity, urban, rural — whatever you want – on a neighborhood basis. We have a history of excluding some people and some places. And what do we do about it now? We need to acknowledge that we're starting in a tough place.

The first thing I want to acknowledge is, really, our loss from COVID over the last few years. We have lost over a million lives to COVID. This impacts our families. This impacts our communities. This impacts our local economies. And as much as we're really struggling to have group amnesia around this catastrophe, this trauma that we all went through, I think it's really important to acknowledge that this is a piece of something that we are still struggling with today. It's impacting the people in our communities and it's certainly impacting the small businesses in our community.

In addition to that, we have many small businesses that closed for months in 2020 and many who still continue to struggle today because of what has happened to our economy over the last few years, including ones that are still closing today because of what happened. 

On top of that, we had this great re-shifting of employment. It was called the “great resignation,” then the “great shift.” Call it what you want, but the real issue is that where people are employed — how people are employed — has completely shifted over the last three years. And that includes remote work and its impact to our downtowns. 

Before we even got to the pandemic, we were already seeing major demographic shifts going on in our community and major market shifts going on. Eighty percent of all of our counties were already seeing a decline in the working-age adult population. That's the brain drain of the youth leaving. That's the aging of our boomers. That is all different pieces going on at the same time to impact our local economies. In addition to that, we had major income inequity going on – the largest, the highest percent, or the highest difference, we've ever recorded within our country.

On top of that, we have a history of racial bias, of this racial wealth gap, where the net worth of a median white household is at least ten times that of a median Black household. And the reasoning for that is a whole history of things that we have done within this country that we need to acknowledge. And that means that when we're looking at entrepreneurship across race and ethnic lines, we really need to acknowledge these inequities that we're walking into today's situation with. 

On top of all that — bear with me, I promise we'll get to the good news soon — we know that vacant properties really impact the value of properties on that block. It impacts the property values, which impacts the property tax, which also impacts the sales revenue, which impacts the sales tax, of course, right? And we know that this is an enormous impact on both our urban and rural communities as well.

On top of all that, we've had a great, huge shift in retail use. The major national chains consolidated the number of locations. Many of them actually shrank the square footage of their stores. You're only going to see these national chains in really prime locations with strong foot traffic already. If you don't have amazing foot traffic, you're not going to be attracting any of these major stores at this point. And on top of that, we've had this major shift over the last couple of decades in jobs going from non-metro areas to metro areas, which has left a lot of rural cities and towns really struggling with what is the reason for their local economy. What is going to be supporting every different part of their population in that area?

So what does all of this have to do with vacant storefronts, older entrepreneurship and great places? It's a good thing you've asked because we're, in fact, at this transformational moment. We have this very unique opportunity right now coming out of the pandemic, really looking at what hasn't worked well in the past and doing things differently. This is where small-scale manufacturing comes into the solution.

Let me tell you who they are just briefly. Small-scale manufacturing businesses, as I said, are any business that creates a tangible product that you can replicate or package. My shorthand for it is hot sauce, handbags or hardware — everything from artisans to advanced manufacturing.

Let me give you one example. This is Sio Ceramics. Sio Ceramics creates ceramic jewelry — the most vibrant colors you've ever seen. Sio Ceramics has a micro retail storefront, 400 square feet in an artisan walkway of micro retail spaces. This business can work out of one small storefront, do production of their product there and sell in person, but they also are selling online because they're an e-commerce business and they can sell wholesale nationally. They do sell wholesale nationally and they sell at major markets, major pop-up markets in the local area. That means that this one business that is small-scale manufacturing in a 400-square-foot-space has four different sources of revenue coming into that small shop.

That means better paying jobs, right? Small-scale manufacturing jobs pay 50 to 100 percent more than retailer service jobs on average. That means a person being able to build their personal wealth and their household wealth. And that also means a nimble business because it has all these different sources of revenue coming into a storefront. It's not dependent on the foot traffic to be able to have a strong and growing business.

Here's another example. This is Woodhaven Custom Calls. They're out of a small, rural town in Alabama. They make turkey calls. During the pandemic, all of a sudden, they found that some of the people who are buying their products — both online and from wholesale distribution — were stopping in their shop because they wanted to see the product being made.

Now, this is a production space. This is not a retail space and it's not a production and retail space. It's just 25 people making all of these products a block off of main street. But one of the things that they realized as we talked about it was that they could be a draw for their small town main street. If they put a small retail frontage up, if they put a glass window between a small retail frontage and their production space, all of a sudden they knew that they could start drawing people. They could be part of the amenity, part of the attraction to bringing people to this small town. So this is also small-scale manufacturing.

We see it in other ways as well. Commercial shared kitchens you might have in your community reduce the barrier of entry for somebody who has a food product business. Maybe they're making it at home and they want to grow, but they can't afford a full kitchen of their own yet. This is a huge way to help people make that step. And we're seeing these grow all over the country. There are also in larger cities older industrial buildings that can be turned into multi-tenant spaces.

This is one in Philadelphia that really gives small-scale manufacturers a fully cleaned and maintained space so that they can focus on the need for all of their business pieces instead of working out the building — the small scale manufacturing building — as well.

So, part of the piece to acknowledge in all of this is community and economic development have really changed over the last few decades. And there's a way for us to build a strong and inclusive economy and have a thriving downtown, but we need to invest in a better way. We need to do it with intention and with purpose, not only about what our goal is, but who do we want to make sure is benefiting from these investments?

Do we want to make sure our older residents have an opportunity to become entrepreneurs or expand their small businesses, if that's what they want to do? Are we creating more opportunities across racial and ethnic lines for business owners to grow what they're doing and expand and build personal and family wealth? And how can we do this in a way that addresses these inequities and creates places that people love — and oh, by the way, draws in others once we create places that people love? 

It is about a different way to invest in our people, our main street and our community. And it really comes down to these four factors: We need to invest in the people who live there. We do this by actually talking to them but in a really specific way: investing in the people — the small-scale manufacturers who are in the community today. And I promise you that there are small-scale manufacturers in your community because they are everywhere.

We need to invest in that place with those people. Is it downtown? Is it a neighborhood main street? What is the place where these businesses can come and really create and grow their businesses? We need to create a new structure to support and scale those investments and we need to think long term but act now. There is such a need right now for support. We have ways of really engaging those business owners and property owners to come up with solutions that can start impacting change in the next three to six months.

And the small-scale manufacturers are really this hidden gem, this missing piece that are part of the solution. They create a number of benefits within our community. They'll help us invest in businesses that help more people build a household wealth, which I've been talking about. It allows us to build a more inclusive opportunity to bring wealth into the community.

When I talked about both Sio Ceramics and Woodhaven, they're bringing dollars into the community because they're selling online, because they're selling through wholesale. They're quite literally bringing dollars into that place. They're not dependent on the storefront — on the traffic — but they can fill storefronts. We can have space that is production and retail in the same space. This woman, as you can see, has a soap business. Off to the side, she has this huge cauldron that she uses when things are quiet to mix in her soaps, create what I call lotions and potions, and then pour them into the molds. That’s an efficient business model because she doesn't need other staff to manage the space. She doesn't need other space to do her production. She can do production and retail in the same space. And when she's selling online, she's also not necessarily as dependent on the foot traffic, but she can draw the foot traffic in because it is so cool to see things being made. It draws us into the community.

And then on top of that, as these businesses fill storefronts, it helps us break out of the cycle of loss and exclusion and grow property values.

This is the Zeke’s Coffee, a great coffee maker. This space is a coffee store up front and a coffee roaster and wholesale distributor out the back. When they moved into this block, there were a whole bunch of vacant storefronts on this block, but a residential area right behind this block. This business could move into that space because of the wholesale distribution out the back. They were not going to be making or breaking it based on foot traffic at the beginning. But, lo and behold, by having this coffee shop here, it attracted the foot traffic and all of those storefronts are filled today.

And, not surprisingly enough, when we will attract more business owners who want to be a part of what we're building when we take care of our own businesses. Knoxville, Tennessee is a great example of this. They have been working with small-scale manufacturers — they call them maker businesses — for years now. They have summits, they have trainings, they have all sorts of programming in support of this business sector and have identified it as a key entrepreneurial community.

People up and down the East Coast recognize what Knoxville is doing and I've had more than a few conversations with small producers who are considering moving to Knoxville because of the support they're receiving in that community.

So, all of these things are part of a thriving community. And their people, as they're doing this work, as they're looking through this, they're realizing that small-scale manufacturers are just a hidden part of their local business sector that nobody's ever scratched the surface to figure out how they can support them and how they could really expand opportunity for more people by doing this.

One of the communities we worked with figured this out with us and they could really identify this need for a commercial shared kitchen and launched a commercial shared kitchen within the middle of the pandemic through a partnership, we helped them identify with the local university, which they've now outgrown and grown into a larger space that is core to growing the food product and the other food businesses within the community, specifically because we found that there were Black and Hispanic women-owned businesses that were bursting at the seams at home and could benefit from both a commercial shared kitchen and training that could help them grow their business.

Additionally, they found that they needed to change their zoning. So, there's big, exciting, shiny things like a commercial shared kitchen, and then there's fairly mundane, sometimes, but very essential policies that we need to change as well. So it's zoning and then it's the permitting. Once you get the zoning changed, how do you actually get something through the permitting process? We don't want the small business to, sort of, have to break its head open to figure out how to get through a permitting process.

We want to make that predictable for the small business owners so that we are customer friendly to them as well. So, this is all about making something happen. I always talk about how I'm a city planner by training but I'm the probably the most impatient planner you'll ever meet. I want to figure out what we can do today to help businesses and the places within our community and Recast City is my way of getting there these days.

So, what are we doing to take action? It's about creating great places, saving our small businesses, helping our older entrepreneurs not only launch businesses, but grow businesses that they already have. And here are a few ways we get there.

One, we need to create more equitable access to storefronts. Are the storefronts the right sizes? Do we need to work with property owners to create micro retail spaces? What's the funding we need to provide behind that? How do we create shared retail spaces or shared production spaces if that's what we need? Thinking about not only is main street full, but do the main street business owners represent the demographic diversity of our community across age, race, ethnicity, however you want to slice and dice it?

Second, there are real opportunities to fill vacant storefronts by launching pop-ups to permanent growth plans. When we have fall festivals, when we have holiday markets — whatever pop-up events you have in your community — that is an incubator opportunity. If we can work with the business owners — the entrepreneurs who are vendors at those events — and help them understand that this is not a one-off event, but this is how you use this event to start growing your business, we have the opportunity to help more of those business owners ultimately move into storefronts. So, it might be an outdoor pop-up event. It might be a pop-up series that you do indoors in storefronts that you work on with property owners, but really thinking about how we're working with community organizations and their events to create more opportunities for more small-scale manufacturers in our community to be entrepreneur vendors at the community events, but also thinking about how we help them scale. It's not a one-off event. It's part of this pipeline of growth. 

Then we also need to think about how we're matching existing funding and investment resources. Do you have a revolving loan fund in your community? Is there a CDFI that can help you? Is there a local bank you can work with?

The lack of financing for small-scale manufacturing businesses is vast. Most small product businesses are considered high risk, only because nobody understands their business model and how it can scale. But for them to scale, they're going to, they're most likely going to need a bigger piece of equipment. So how are we helping facilitate that? And is there an anchor institution that can commit to a long-term contract and use that as a way to help with the financing? And yes, we have to prep our policies — that includes zoning, that looks at looking at our permitting, that looks at, you know, everything under the sun with how people use space within the community as well.

And then really thinking about how we build community pride. Who benefits from each of our investments is a key piece of that. Thinking about, not only do we want to grow small scale manufacturing, but we want to make sure that we're benefiting our older residents. We want to make sure we're benefiting our legacy business owners. We want to make sure we're benefiting immigrant community members.

Whatever it is, let's be really specific about it and make sure that we're understanding the needs of those specific communities and then building the solutions specifically to benefit them. And, lo and behold — I know this is not a shock — when we make sure we're benefiting a community that sometimes the hardest to make sure we're benefiting many, many other people will benefit from those investments and those programs as well.

So, out of all of this, I hope you take away the knowledge and the belief that you can take action on this. Because the benefit of this is creating places that people love to come together, where people really appreciate and are proud of being at events where their neighbors — their community members — are vendors, are entrepreneurs at community events and being able to buy things from them.

Where our local residents are the business owners, they're providing good paying jobs within the community. They're paying good, livable wages and they're right there in the middle of the community as well. It takes leadership, right? All of this takes leadership.

It takes people taking a stand and saying, this is important. We need to invest in our local business owners We need to invest in our local places. I'm not saying it's easy, but I'm saying it's totally doable. And it's really worth it because it's about creating a place that people are proud to call home. And so, with that, I'm very happy to take questions — answer any questions you have about small-scale manufacturing, any clarifying questions — and help you think through any of these pieces. Thank you very much. 

Mike Watson: Well, I hope you enjoyed that video as much as we did. And we're now very fortunate to have Ilana Preuss with us here live to answer your questions. Ilana, thank you so much for being here with us today. 

Ilana Preuss: My pleasure. 

Mike Watson: Awesome. So glad you're here and we're going to dive right in because the questions have been piling up throughout your presentation.

Before we jump in though just remember you can use the Slido Q&A function to ask a question if you haven't gotten there yet. We'll use this throughout the rest of the day. So, we're going to jump into our first one. Ilana, you showed a statistic during your presentation. It was a graph. It showed the stark contrast between metro areas and rural areas in terms of job growth and business growth. And one of the questions that we have here is on that topic. It's what economic development challenges are specific to rural communities and how can rural communities take advantage of the small-scale manufacturing approach? 

Ilana Preuss: It's a great question because we're seeing this struggle in all different parts of the country. So, the challenge on a lot of rural communities is that the reason that that rural community was established there — the economic reason that that community was established there — is no longer there. It might be a textile mill that used to be there. It might be a lumberyard that used to be there. There might be some industry or some transportation hub that used to be there.

But a lot has changed over the last 20, 30 years, let alone the last 50, 60 years. And so, a lot of rural communities are still these amazing places, but they have empty downtowns. Their Main Street has a dozen vacant, decaying buildings but they have amazing people there.

So the question then is, what do you do about it? Which is, thankfully, the other part of your question, which is where small scale manufacturing comes into the equation. Because, as I explained in the presentation, small-scale manufacturing businesses are not just dependent on the foot traffic, the people in that community. They are bringing dollars into that community. They are selling online. They're doing wholesale distribution. And so, through those sales, they're actually able to bring more economic opportunity, more economic investment into the community, like the example I was talking about in Alabama. 

Mike Watson: Great answer, and I think leads into this next question. You kind of mentioned some of those stores that have closed. I grew up in eastern North Carolina, and there's a lot of communities like that, that have closed and vacant storefronts. And one of the questions we have here is: What are some good ideas that a community can do with a closed big box store — but maybe not even a big box store, something else that was closed and vacant? I assume there's some great advice you have to offer there on the small-scale manufacturing front and others. 

Ilana Preuss: The big box stores are hard. I mean, I will readily admit that. That is a structure that was created for a singular purpose. We have seen some of the older Kmart footprints being reused. They're getting subdivided into artisan spaces — so lots of 500-square-foot spaces, lots of events and programming — really creating a community gathering place. It takes a very creative developer.

It takes some very specific investment. Sometimes it takes a community subsidy to really bring these properties back to life if they are central to the community. The big box stores that are out at the edge of town that are at a major intersection aren't necessarily where we want to draw a lot of energy. And so, I think that the question of what to do with those locations is going to be a little bit different.

The other thing we've seen in some of the older Kmart spaces — or big box spaces — that are central to communities is we've seen torteria — producers of tortillas — create their large-scale, relatively large-scale, tortilla manufacturing with a restaurant up front. So they're really engaging with the community, but they are doing large-scale production as well. 

Mike Watson: That's a fantastic, I think, overview of it and advice for people and ideas. One of the other ideas you mentioned here: wanting to incentivize growth and development and more of the kind of core areas. And this is one of the questions that we have here is, how do we make sure our community public spaces are accommodating for pop-ups? What small, simple improvements can we make to spaces that we already have to make them useful for economic development. 

Ilana Preuss: Pop-ups are a great method. Like I said, we want to always think about how pop-ups are part of this continuum of business growth. It's not a one-off event. It's part of how are we incubating businesses to help them grow? How are we helping them reach a broader market? From the policy and permitting question, a lot of the pop-up challenges come around with whether or not the pop-up events can have a universal license for all of the vendors, whether or not the vendors have to get individual licenses and what kind of insurance is required of a pop-up vendor.

And so, all of that is something that a community needs to look at and understand, is there a barrier? Because anytime somebody needs to go through a lot of paperwork and pay a fee for an event that's one day, or even three days, it's probably not worth it to them, and that's going to be a pretty big barrier. So we want to look at all of those policies from the perspective of our small business owners.

How do we make it an online form or how do we make it a blanket license for the entire event, so it's not up to each vendor — each entrepreneur — to deal with that?

The other thing to think about with open space or community spaces is how easy it is for a business owner to get a permit for them to be the host of the event. In one of the communities we worked with in Bellflower, California, they had a local business that wanted to host an event, but because they were a local business owner, they actually didn't understand all of the paperwork and all of the permitting and requirements to create this outdoor event. So, we want to simplify that process as well.

Mike Watson: That's really good guidance. And I think there were several follow-up questions folks had in here around permitting and what are some best practices there. Unfortunately, I think we only have time for one more question, and I want to be sure to get this one. So, you mentioned in your presentation the importance of equity and inclusion when you're thinking about small-scale manufacturing and economic development, and one of the questions we have here is: We know that certain communities are left out or negatively impacted as a result of economic development. How can we make economic growth and economic development beneficial for all groups in the economy? 

Ilana Preuss: Well, I think we have to start by thinking about who has been negatively impacted and who has been excluded. Because there are plenty of groups that have benefited in the past, and so I think we have to be purposeful And when we work with folks, we really go through a very specific process to say, who do we want to make sure is benefiting from this work?

Anytime we're spending time or money or energy on something, we're investing resources. And so, at the very beginning, we ask this question about what is our goal? What is that outcome we're trying to achieve? Let's be really specific about it.

But then let's also be really specific about who we want to make sure is benefiting from it. When we did work in Columbia, Missouri, we interviewed a whole bunch of small-scale manufacturing business owners and we realized that Black and Hispanic women were growing food product businesses in the community at an extraordinary rate and they were bursting at the seams at home. And that was one of the motivating factors of them creating a commercial shared kitchen that's mission-driven, to want to make sure they're benefiting that part of the community that has been historically excluded, that has been historically underserved.

And so, I think part of it is having an honest conversation about which populations within the community have historically been excluded and underserved or have been negatively impacted or displaced by more recent investments. And then, really engaging those business owners from those target communities to understand their needs, not making assumptions about what their needs are, but actually going to those business owners to understand from their perspective what works and what's really hard about having a business there, and filling in the gaps specific for those community members, knowing that it's going to benefit a lot of other people, but really working to keep that target community at the forefront of our investment and our work.

Mike Watson: Ilana, thank you so much for that. That guidance on that question — I think it reinforced a few points that we heard yesterday as well. So it's great. It's great to have that restated and reset again. So, thank you again, and thank you so much for joining us today for this conversation. It was fantastic. I want to thank you for sharing your comments with us and responding to all these questions. So thank you again. 

Ilana Preuss: My pleasure. Thank you so much for having me today. 

Mike Watson: Thank you. It was wonderful to have you. Now I'm going to kick it back to Carly to take us on in our program. So Carly. 

Carly Roszkowski: Thanks, Mike. That was fantastic. Thank you again to Ilana for joining us live. We're now going to share a video highlighting a project from the AARP Community Challenge grant program.

It's a program that provides small grants to fund quick action projects that can help communities become more livable for people of all ages. Since 2017, the AARP Community Challenge has awarded $16.3 million through more than 1,370 grants. The video will last about three minutes, and when we come back, we'll kick off a live interview with a past AARP Community Challenge grantee who is connecting members of their community with economic opportunity.