Supreme Court Accepts Affordable Care Act Case

Last month, the Supreme Court’s docket went from boring to big with the grant of just one case: King v. Burwell. The issue in this case is whether tax credits for low and middle income health insurance purchasers are available under the Affordable Care Act (ACA) if insurance is purchased on a federal exchange rather than a state exchange. Only 16 states and the District of Columbia have established exchanges.

SC-Blog(Getty Images)

The ACA makes tax credits available to those who buy health insurance on exchanges “established by the State.” The Internal Revenue Service (IRS) interpreted that language to include insurance purchased on federal exchanges as well.

The Fourth Circuit upheld the IRS’s interpretation of King v. Burwell, concluding that the phrase “established by the State” is ambiguous when read in combination with other sections of the ACA, and could include federal exchanges. The “board policy goals of the Act,” persuaded the court that the IRS’s interpretation was permissible.

The implications of the Supreme Court ruling that health insurance purchased on federal exchanges is not eligible for subsidies is huge. Many people who want to buy insurance on the exchange would no longer be able to afford it without the subsidy. And depending on their income, many who don’t want to buy insurance would no longer be subject to the individual mandate that penalizes people for not buying insurance. Similarly, large employers that don’t offer health insurance to fulltime employees would no longer have to pay a penalty.

More significantly, the Fourth Circuit (and many others) predict the ACA would “crumble” if tax credits are unavailable on federal exchanges. The ACA bars insurers from denying coverage or charging higher premiums based on a person’s health. The tax credit combined with the individual mandate was intended to create “an influx of enrollees with below-average spending for health care,” which would counteract adverse selection, where individuals disproportionately likely to use health care drive up the cost. Such an influx is unlikely without the subsidy.

The Supreme Court generally hears cases when there is a circuit split, meaning two federal courts of appeals have decided the same issue differently. Many were surprised when the Court agreed to hear this case given there is currently no circuit split, especially considering that last month the Court refused to hear a series of cases challenging the constitutionality of same-sex marriage bans. However, the Court also accepts cases involving “important question[s] of federal law,” which this case seems to raise.

On the same day in July, a three-judge D.C. Circuit panel ruled opposite to the Fourth Circuit Court on this issue. The entire D.C. Circuit was going to re-hear the case, but it has been asked not to rule prior to Supreme Court resolution of King v. Burwell.

Wondering how the Supreme Court may rule? SCOTUSblog offers an excellent symposium on this topic.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

This Case Isn’t (Only) About a Confederate Flag License Plate

confederate flag license plate
If it were displayed on a specialty license plate, would you consider the image of a Confederate flag to be an expression of government speech or private speech? (Texas Department of Motor Vehicles)

In Walker v. Texas Division, Sons of Confederate Veterans, the Texas Department of Motor Vehicles Board rejected the Texas Division of the Sons of Confederate Veterans’ (Texas SCV) application for a specialty license plate featuring images of the Confederate Flag. The Supreme Court will decide whether this violates the First Amendment.

This case may have implications beyond the specialty license plate context. Lower courts have struggled to determine whether government websites, advertisements on city buses, memorial bricks and tiles at public schools, etc. are government speech or private speech.

Texas allows nonprofits to propose license plate designs for state approval. Texas SCV applied for a specialty plate featuring its logo, a Confederate flag framed on all four sides with the words “Sons of Confederate Veterans 1896,” and a faint Confederate flag in the background. The Board voted unanimously against the plate because it received numerous public comments objecting to it.

The Fifth Circuit ruled in favor of Texas SCV. It held that specialty license plates are private speech, not government speech. It also held that rejecting Texas SCV’s plate was impermissible viewpoint discrimination and not a permissible content-based regulation.

The majority of the court concluded the speech in this case was private, applying the “reasonable observer test” test from Pleasant Grove City, Utah v. Summum, 555 U.S. 467 (2009), where the Court held that monuments in a public park are government speech. While governments have historically used monuments “to speak to the public” in parks, a reasonable observer would understand that specialty plates are private speech because “states have not traditionally used license plates to convey a particular message to the public.” A dissenting judge argued that Summum did not adopt a “reasonable observer test” for government speech and that, for purposes of First Amendment analysis, monuments at public parks are very analogous to specialty license plates.

The entire court agreed that the Board engaged in impermissible viewpoint discrimination because it “discriminated against Texas SCV’s view that the Confederate flag is a symbol of sacrifice, independence, and Southern heritage.” Rejecting the plate was not a permissible content-based regulation, even under the assumption that Texas bans all viewpoints on the Confederate flag. “Silencing both the view of Texas SCV and the view of those members of the public who find the flag offensive would similarly skew public debate and offend the First Amendment.”

Interestingly, the Court did not grant review in Berger v. ACLU of North Carolina. The issue in that case is whether North Carolina may offer a “Choose Life” specialty license plate without offering a pro-choice plate.

Lisa Sorenen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

State of the Reengagement Network in 2014 and Beyond

Opening the 2014 Reengagement Plus convening in Portland, Oregon last week, I observed that the Reengagement Network deserves a moment of quiet celebration. Quiet because of recent tragic events in several communities directly affecting youth; celebratory because collectively, we have had a tremendous impact this year.

Diploma - blog(Getty Images)

In my opening remarks, I outlined how NLC’s Reengagement Network has grown in size and scope since its inception, identified key opportunities for the Network in 2015 and proposed priorities to deepen and broaden our impact. Here are a few highlights:

NLC’s Andrew O. Moore delivers the opening remarks at the 2014 Reengagement Plus conveningin Portland, Oregon.

NLC’s Andrew O. Moore delivers the opening remarks at the 2014 Reengagement Plus convening in Portland, Oregon.

  • Over 250 people from 38 cities in 22 states attended the 2014 Reengagement Plus convening. It doubled in size from last year!
  • This year’s reengagement census showed nearly 24,000 young people making initial contact with reengagement programs in the network, 11,500 students placed and 70 percent of those placed in programs completing or persisting for the full school year.
  • The Workforce Innovation and Opportunity Act now includes a requirement to spend 75 percent of youth training funds on out-of-school youth, and for the first time names reengagement as an allowable activity.
  • Next steps include adopting and pursuing a goal of spreading reengagement programs to every city and town in the nation – particularly pushing reengagement ahead in the Southwest and Southeast, where activity is currently limited. Supporting and strengthening statewide reengagement networks, such as those forming in Washington and Massachusetts is also a priority.

Read the Opening Remarks in their entirety…

Andrew Moore
About the Author:
Andrew Moore is a Senior Fellow in NLC’s Institute for Youth, Education & Families.  Follow Andrew on Twitter @AndrewOMoore. Learn more about 2014 Reengagement Plus on Twitter by searching the hashtag #ReengagePDX14.

Supreme Court Rules No Pay for Passing Through Security Screenings

The Supreme Court has ruled that these employees are not required to be compensated for their time spent submitting to security screenings at work. (Getty Images)

Jesse Busk and Laurie Castro worked at warehouses filling Amazon.com orders. Their employer, Integrity Staffing Solutions, Inc., required its hourly workers to undergo a security screening before leaving the warehouse each day. Busk and Castro claimed that they were entitled to compensation for this time, and subsequently took their argument to court.

In the case of Integrity Staffing Solutions v. Busk, the Supreme Court ruled unanimously that the Fair Labor Standards Act (FLSA) does not require hourly employees to be paid for the time they spend undergoing security screenings. The ruling has significant impact on employers as well as employees working in courthouses, correctional institutions and other environments where security screenings are prevalent.

Under the FLSA, employers only have to pay “non-exempt” employees for preliminary and postliminary activities that are “integral and indispensable” to a principal activity. According to the Court, an activity is “integral and indispensable” to a principal activity “if it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” The Court concluded that security screenings were not intrinsic to retrieving and packing products, and that Integrity Staffing Solutions could have eliminated the screenings altogether without impairing employees’ ability to complete their work.

The SLLC’s amicus brief made similar arguments to those the Court adopted. This case is a significant victory for local governments who will now not be faced with higher payroll costs for employee security screenings or a mandate to reduce screenings to a de minimis amount.

James Ho, Ashley Johnson and Andrew LeGrand, of the law firm Gibson, Dunn & Crutcher in Dallas, TX, wrote the SLLC’s brief, which was joined by the National League of Cities, the National Association of Counties, the International City/County Management Association, the U.S. Conference of Mayors, the International Municipal Lawyers Association, the Government Finance Officers Association, the National Public Employer Labor Relations Association and the International Public Management Association for Human Resources.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

First (Only?) Environmental Case of the Supreme Court’s Term is a Big One

power plantThis coal-fired power plant is excited to receive its 15 minutes of fame when the Supreme Court rules on a complex environmental case later this term. (Getty Images)

The consolidated cases of Michigan v. Environmental Protection Agency, Utility Air Regulatory Group v. Environmental Protection Agency and National Mining Association v. Environmental Protection Agency challenge a 2012 Environmental Protection Agency (EPA) regulation intended to limit mercury and other emissions from mostly coal-fired power plants.

Before regulating emissions from electric utilities, the Clean Air Act (CAA) requires the EPA Administrator to find that regulation is “appropriate and necessary” based on a public health hazards study. The simple legal question in this complicated case is whether the EPA unreasonably refused to consider costs in making its determination that regulation was “appropriate.”

In 1990 Congress required the EPA to identify stationary sources for 189 hazardous air pollutants and adopt maximum achievable control technology standards (MACT) for limiting their emissions. But the CAA regulates emissions from electric utilities differently than from other stationary sources. Before the EPA may regulate electric utilities under the MACT program, it must perform a health hazards study and determine whether regulation of them is appropriate and necessary.

In 2000, the EPA determined it would regulate mercury and other emissions from electric utilities, but it reversed course in 2005. Then in 2012, the agency issued the final rule challenged in this case which concluded that regulating electric utilities was appropriate and necessary. The EPA “rejected the 2005 interpretation that authorizes the Agency to consider other factors (e.g., cost).”

The D.C. Circuit agreed with the EPA that it was not required to consider costs. “Appropriate” isn’t defined in the relevant section of the CAA and dictionary definitions of the term don’t mention costs.  Throughout the CAA “Congress mentioned costs explicitly where it intended the EPA to consider them.”

A dissenting judge pointed that the cost of regulation in this case is nearly $10 billion dollars annually and opined that the cost of complying will “likely knock a bunch of coal-fired electric utilities out of business and require enormous expenditures by other coal- and oil-fired electric utilities.”

States are involved in this case on both sides. During its last term, the Supreme Court ruled on two significant Clean Air Act cases: EPA v. EME Homer City Generation, involving the CAA’s Good Neighbor Provision, and Utility Air Regulatory Group v. EPA, involving greenhouse gases and stationary sources.

Lisa Sorenen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

Must All Signs Be Treated the Same?

Update: the Supreme Court heard oral arguments for this case on Monday, January 12, 2015.

yard sale signMunicipal codes treat signs differently, meaning that spray-painted signs like this might not be allowed to remain in your neighbor’s yard for longer than necessary. (Getty Images)

The Supreme Court’s decision in the case of Reed v. Town of Gilbert, Arizona could upset sign codes nationally. Most sign codes, like Gilbert’s, include different categories of temporary signs. It makes sense, for example, to give people more time to remove thousands of election signs and less time to remove a few yard sale signs. In this case, the Court will decide whether local governments may regulate temporary directional signs differently than other temporary signs.

Practically speaking, the Court could rule that all temporary signs must have the same time, place and manner requirements. NLC joined the State and Local Legal Center’s (SLLC) amicus brief asking the Court not to go that far.

Gilbert’s Sign Code includes temporary directional signs, political signs and ideological signs. After being notified that its temporary directional signs announcing the time and location of church services were displayed longer than allowed, the Good News church sued Gilbert. The church claimed Gilbert’s Sign Code violates the First Amendment because temporary directional signs receive the less favorable treatment (in terms of size, location, duration, etc.) than political signs and ideological signs.

The Ninth Circuit ruled that Gilbert’s Sign Code does not violate the First Amendment because the distinctions between the three sign categories are “content-neutral”; all signs in each category are treated the same regardless of their content even if the three categories of signs are treated differently. Because the lower court concluded that the sign categories are “content-neutral,” it applied intermediate scrutiny rather than strict scrutiny. The different treatment of temporary signs would not serve a “compelling” government interest as strict scrutiny requires, but does serve a “significant” government interest as intermediate scrutiny requires.

The SLLC’s amicus brief argues that Gilbert’s Sign Code does not violate the First Amendment. Sign codes with multiple categories of temporary signs are common; they are usually classified by function, with their own time, place and manner requirements. And the fact that a temporary sign must be read to determine what kind of temporary sign it is does not render a sign code “content-based.” Finally, even when the three categories of temporary signs at issue in this case are compared with each other, they are regulated by purpose, rather than by content, meaning strict scrutiny should not apply.

Bill Brinton of the law firm Rogers Towers wrote the SLLC’s brief, which was also joined by the National Association of Counties, the International City/County Management Association, the United States Conference of Mayors, the International Municipal Lawyers Association, the American Planning Association and Scenic America.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

Why the Juvenile Justice and Delinquency Prevention Reauthorization Act Matters to Cities

The National League of Cities’ new guide for city-led juvenile justice reform outlines steps that cities can take ahead of three key proposed changes in the recently introduced federal juvenile justice bill.

JJR_Zora Murff - blog(Zora Murff)

Last week, Senator Sheldon Whitehouse (D-RI) and Senator Charles Grassley (R-IA) introduced the Juvenile Justice and Delinquency Prevention Reauthorization Act of 2014. The Juvenile Justice and Delinquency Prevention Act (JJDPA) provides state and local government agencies with federal standards and supports for juvenile justice and delinquency prevention.

Of high interest to cities are three key changes to the way state and local governments address and treat young people. The proposed bill would:

  • Remove a loop-hole that allows juvenile courts to detain youth for non-criminal acts;
  • Give local and state governments more guidance on understanding and reducing racial and ethnic disparities; and
  • Require several evidence-based steps to reduce the harm the juvenile justice system does to many young people.

NLC’s new municipal action guide, Increasing Public Safety and Improving Outcomes for Youth through Juvenile Justice Reform, documents steps cities can take ahead of these proposed changes to the law.

Repeating the Same Mistake Doesn’t Equal Lockup
Parents know that kids and teens usually need to be told something more than once in order to get them to change their behavior. “If I have to tell you one more time…” One proposed change to the JJDPA would ask courts to give youth under court supervision for non-criminal acts the same chances.

The Vera Institute of Justice's Status Offense Reform Center reveals the significant number of youth who are detained in status offense cases, which would violate the new law if approved.

An infographic from the Vera Institute of Justice’s Status Offense Reform Center showing the significant number of youth detained in status offense cases, which would violate the new law if approved.

If approved, the JJDPA would require juvenile systems to phase out the use of incarceration for repeated non-criminal status offenses, such as running away, ‘incorrigibility’ and skipping school. This would keep about 8,800 youth annually who are currently detained for repeating the same mistake out of detention and in their homes, schools and communities. This change will not affect young people under the court’s supervision who are charged with actual crimes.

Ample evidence that shows incarcerating youth increases the risk they will drop out of school, have trouble finding a job and be incarcerated as adults. Based on this evidence, the current JJDPA already prohibits juvenile agencies from putting youth charged with status offenses in detention. Instead, courts put those youth under supervision in the community and, typically, place requirements on them. For example, the court will order a truant youth to attend school every day.

Making the same mistake again then violates that court order– something for which the current JJDPA allows detention. The proposed change would require juvenile courts and agencies to hold youth accountable for these violations without detaining them.

Often, what works best to hold youth accountable and change their behavior will be something in the young person’s neighborhood and community. Cities that have a robust continuum of community-based services, much like the services outlined in the guide, will see better outcomes for these 8,800 or more youth.

Reducing Racial and Ethnic Disparities
Evidence shows that racial and ethnic disparities have persisted in the state and local agencies responsible for juvenile justice, including in arrests by local law enforcement agencies. The proposed JJDPA requires juvenile justice systems to use data-driven policies and programs to ensure fairness in their decisions about youth. It also asks States to establish measurable goals for reducing disparities across the system and to share their goals and progress with the public. In our guide, we share Tucson, Ariz.’s data-driven response to racial disparities in their arrests of youth, which trains patrol officers to use an objective, decision-making tool at the point of arrest.

Do No (or Less) Harm
Judges and other juvenile justice professionals haven’t adopted the Hippocratic Oath of our medical colleagues, but perhaps we should. Based on evidence of significant harm to and subsequent negative outcomes for youth in incarceration, the revised JJDPA would take several steps to reduce the severity and risks of incarceration to young people.

The bill protects youth from being incarcerated with adults while awaiting trial and encourages states to use effective behavior modification techniques in juvenile facilities as an alternative to isolation and physical restraint practices. The bill also promotes accountability of state juvenile justice agencies by requiring more public reporting. Important to cities, it also reauthorizes the Juvenile Accountability Block Grant, which states may distribute to localities to support juvenile justice programs.

headshot_LFurr
About
the Author: Laura E. Furr is the Senior Associate for Juvenile Justice Reform in NLC’s Institute for Youth, Education, and Families. Follow Laura on Twitter at @Laura_Furr.

The Kids are Alright: The Need for City-Led Juvenile Justice Reform

A new resource is available for city leaders committed to increasing public safety and improving youth outcomes through juvenile justice reform. NLC’s Institute for Youth, Education, and Families (YEF Institute) also recently announced the selection of six cities to receive technical assistance for juvenile justice reform projects.

Infographic: Inside the Juvenile Justice SystemNLC’s new Municipal Action Guide (MAG), Increasing Public Safety and Improving Outcomes for Youth through Juvenile Justice Reform, documents the results of a year-long survey of opportunities and examples for city-led juvenile justice reform. Cities can increase public safety and improve outcomes for youth by implementing strategies that hold them accountable for their actions in more effective, equitable and developmentally appropriate ways. The guide also emphasizes that youth need individualized responses at every point in their involvement with the juvenile justice system.

Progress must include breaking down collaboration barriers among agencies and service providers that touch young people. Strong partnerships with county and state agencies can also enable city leaders to foster community-based alternatives to arrest and prosecution, reduce racial and ethnic disparities at the point of arrest and reconnect youth leaving the system with supportive community resources.

The MAG recommends several early steps in local juvenile justice reform, including:

  • Identify first steps to reforms based on existing activities.
  • Implement training to change the nature of law enforcement interactions with youth.
  • Utilize objective decision-making tools at arrest.
  • Create mechanisms for referring youth to community-based alternatives to arrest and prosecution.
  • Implement a continuum of high-quality community-based services.
  • Open community-based services to youth re-entering the community.Create agreements to support local goals and facilitate information sharing.

The MAG also highlights several local examples, including innovative programs and policies in Tucson, Ariz., Gainesville, Fla., Minneapolis, Minn., and Baltimore, Md.

Six Cities to Receive Technical Assistance
Using this new resource as a foundation, the YEF Institute also launched a new technical assistance initiative. NLC selected these cities to join the initiative:

  • Gresham, Ore.
  • Las Vegas, Nev.
  • Little Rock, Ark.
  • Minneapolis, Minn.
  • New Orleans, La.
  • Philadelphia, Pa.

The technical assistance will include a Mayor’s Institute for Children and Families focused on juvenile justice reform. The YEF Institute has led Mayor’s Institutes to successfully engage multiple mayors as champions and leaders on a wide range of issues. Immediately following the Mayor’s Institute, city teams will draft action plans at a cross-site meeting. YEF Institute staff will support cities to implement these action plans during the ensuing months through site visits and regular cross-city opportunities for learning and collaboration.

City Leaders Recognized As Key Allies in National Juvenile Justice Reform Movement
The John D. and Catherine T. MacArthur Foundation’s Models for Change initiative recognizes that local leaders play a key role in juvenile justice reform, and supports NLC’s work in this area. Models for Change also brings local leaders to its annual conference, which is taking place December 15-16 this year. The conference provides key opportunities for local leaders to engage with juvenile justice experts and better understand how to become involved in local reform efforts.

This year’s conference will welcome several city leaders to Washington, D.C. A workshop featuring Councilmember Ricki Barlow from Las Vegas, Nev. and Gainesville, Fla. Chief of Police Tony Jones will provide concrete examples of local reforms and recommendations to juvenile justice practitioners on engaging local leaders early and consistently in juvenile justice reform.

headshot_LFurr
About
the Author: Laura Furr, Senior Associate for Juvenile Justice Reform in NLC’s Institute for Youth, Education, and Families. Follow Laura on Twitter at @Laura_Furr. For more information about the Municipal Leadership for Juvenile Justice Reform initiative, email Laura at furr@nlc.org.

The Who, What and Why of Google Fiber

Having your city selected for deployment of Google Fiber has many of the same subsequent effects as the development of a municipally owned network.

Google-Fiber-2Photo credit: UCFFool (Mario at Google Fiber – Kansas City, MO), via Wikimedia Commons

Google has built itself securely into our everyday lives. Between Google mail, Google chat and Google maps, few of us get through the day without relying on one of this gargantuan company’s products or programs. Most people probably default to the company’s website when they are searching for anything on the internet. In fact, the word Google is nearly ubiquitous with the web.

However, tucked into the Google empire’s large portfolio is one of its more discreet and misunderstood programs: Google Fiber. What is it? How does it differ from or compliment a municipal broadband network? Most importantly, why is Google doing this? As part of our Muni Broadband blog series, we will unpack the role of Google Fiber in the broadband game and explore the ways that it supports cities in their efforts to expand internet access.

Google Fiber provides broadband internet service to a small (yet increasing) number of cities throughout the United States. The initial locality for the service was chosen through a competition, in which cities and towns submitted applications and initiated various sorts of campaigns to garner support.

On March 30, 2011, Google announced Kansas City, Kan. as the first recipient of the fiber to the premises service. Subsequently the service was expanded to Kansas, City, Mo., and in 2013 several suburban communities in the Kansas City area were announced, along with Austin, Texas and Provo, Utah.  In February 2014, Google announced 34 additional prospective cities which they invited to be a part of a collaborative process to explore deployment options.

Google offers households and businesses three tiers of service: 1) Free broadband internet service with 5 Mb/s download speed[1] and 1 Mb/s upload speed; 2) 1 Gb/s (upload and download speed) broadband internet service for approximately $70.00 per month; and 3) 1Gb/s broadband internet service with television service for approximately $120.00 per month.

Having your city selected for deployment of Google Fiber has many of the same subsequent effects as the development of a municipally owned network. It ensures that people have access to quality, high speed internet that is affordable, and it spurs economic development. Kansas City saw a surge of start-ups and entrepreneurs following the deployment of the service, including Homes for Hackers, an incubator that hosts and supports entrepreneurs with Fiber connections so that they can develop their new business ideas. That’s why cities are so eager to compete for the chance to get it. Google pays for the infrastructure investment, and the community reaps all of the glorious benefits of municipally owned broadband without the payout and management responsibility.

Google’s choice to host their services in particular cities hinges on several variables. Some cities have existing infrastructure-pipes and fibers already in the ground that make them attractive prospects. Geography always plays into the cost-benefit analysis of prospective infrastructure projects. Another concern is whether right-of-way and other administrative negotiations will go smoothly.

Because the types of agreements and negotiations necessary for Google Fiber projects to run smoothly become increasingly complex in large cities, some have argued that there is less likelihood that we will see Google Fiber deploy in cities like Chicago or New York. Some cities, like Washington, D.C., have non-compete agreements with large telecom companies that keep away Google Fiber as well as the possibility of opening up existing high-speed fiber to residents.

While it’s a shame to think about the fact that some communities might have a better chance at securing these services than others, the ultimate remaining question is not where but why. Why is Google, a multi-billion dollar corporation, investing in pricey broadband infrastructure on which they will see virtually no return? In the organization’s vast portfolio, Google Fiber is one of the smaller projects. However, Google’s announcements of new service locations are impactful, especially with communications service providers (CSPs) who are already selling internet and television service in these areas.

AT&T, for instance, has committed to comparable, high speed service in several of the prospective Fiber locations announced by Google, and some speculate that this might just be the tech giant’s plan. By deploying high speed, low cost broadband service in communities across the nation, Google is both raising the bar for existing service and injecting more competition into the market.

Despite the enthusiasm surrounding these deployments, they tend to move very slowly, mostly because this is new territory for both Google and its host cities. Kansas City saw departures from the originally promised deployment timeline, and Austin promoted the service for over a year before residents were able to begin signing up.

Additionally, new roll outs of service have forced Google to squarely face the reality of the digital divide. In Kansas City, Google found that only the more affluent neighborhoods were signing up for the service, and that there were large swaths of the city without internet access. To address this disparity, Google hired a field team to promote the new service to low subscribing communities and initiated several programs and grant funding opportunities around digital literacy. With new opportunities come new challenges, and Google has worked with cities to overcome some of the initial hurdles.

In a way, Google Fiber has the same impact on the broadband game in communities as the build out of municipal broadband networks. It offers better, more affordable service, deflects the power of telecom monopolies and duopolies, and promotes economic development. It is no wonder that cities across the country are begging for the service. The difference is the seemingly philanthropic position of the service provider, Google. Perhaps Fiber is meant to catalyze improved internet services in the market, or perhaps Google is trying to dominate the connectivity market. Either way, cities win.

[1] Free for up to 10 years per address.

Nicole DuPuis bio photoAbout the Author: Nicole DuPuis is the Senior Associate for Infrastructure in NLC’s Center for City Solutions and Applied Research. Follow Nicole on Twitter at @nicolemdupuis.

The Evolution of Economic Gardening and What it Means for Big Business

This post originally appeared in the November edition of Site Selection magazine.

Cleveland-OhioThe City of Cleveland, Ohio, has made cultivation of second-stage companies a central cog in its anchor strategy, in part through development of post-incubator space. (Getty Images)

Economic gardening is an economic development approach that targets second stage businesses – small, local businesses with the potential and desire to grow.  This “grow from within” development strategy started in Littleton, Colo., in 1989 after the relocation of a major employer devastated the local economy. Precisely because of this harsh history, economic gardening became associated with small businesses, specifically eschewing economic recruitment or a focus on larger employers.

According to Chris Gibbons, director of business/industry affairs for the City of Littleton and co-creator of economic gardening, “The relocation of manufacturing plants offshore and the general decline of economic health in parts of the country have reduced the effectiveness of traditional economic ‘hunting.’ ” For these reasons, economic gardening in its purest form has been adopted in many smaller, more rural and harder-hit areas of the country.

Out of those start-up seedlings has come a harvest of second-stage businesses – companies that have moved past the start-up phase of development but are not yet fully mature. They have a proven product and a market for their goods or services often reaching beyond the local area, bringing dollars into the community, and generating a substantial economic impact.

As the outsized impact of second-stage businesses became more apparent, as cities came to realize that typical small business programs didn’t meet the needs of these unique businesses, and with a desire to strengthen the broader business ecosystem, cities across the country have therefore adapted economic gardening to their local circumstances. What has evolved is a second-stage strategy that leverages larger employers in meaningful ways to accelerate smaller businesses.

Where to Connect?

According to the Edward Lowe Foundation, between 1995 and 2012, second-stage companies represented 11.6 percent of establishments, but 33.9 percent of jobs. Employee numbers and revenue ranges vary by industry, but the population of firms with 10 to 100 employees and/or $750,000 to $50 million in receipts includes the vast majority of second-stage companies.

“Second-stagers now face more strategic issues as they strive to gain a stronger foothold in the market and win more customers,” says the foundation. “Second-stagers wrestle with refining core strategy, adapting to industry changes, expanding their markets, building a management team and embracing new leadership roles.”

4 quadrants (2)According to the U.S. Small Business Administration, economic gardening addresses these unique needs by providing infrastructure, connectivity and market intelligence.

In Kansas City, Mo., KCSourceLink connects small businesses to a network of more than 200 nonprofit resource organizations in the region that provide business-building services.

“In the 11 years we’ve been working in the entrepreneurial ecosystem, we’ve determined that second-stage companies are a key segment, creating jobs and stability in the community,” says Maria Meyers, director of the UMKC Innovation Center and KCSourceLink founder. “Resource partner organizations in the network – such as the Helzberg Entrepreneurial Mentoring Program, the Small Business and Technology Development Center and the World Trade Center – provide second-stage companies with critical connections to larger corporations, mentoring and market opportunities.”

From Vacant to Vibrant

A key trait of second-stage companies is their readiness to grow, both physically and with new market reach. Acceleration of growth firms has actually become an attraction strategy for some suburban communities located outside of larger innovation hubs such as Boston, Austin, Cleveland and Kansas City.

These communities may not have a high density of traditional start-up supports, but can offer value-add to companies seeking to expand, such as affordable wet-lab space.

In turn, some innovation hubs are focusing not only on the growth of start-up and second-stage companies, but on retaining them as well. In order to do that, these cities need to provide both the physical space and the market opportunities for them to continue to grow from within -and this where the opportunities lie to engage larger businesses.

The City of Cleveland’s rallying point for second-stage companies is actually its anchor strategy, an economic development approach that leverages the economic power of major employers such as hospitals and universities to build wealth in neighborhoods and grow other industries and businesses.

In Cleveland, anchor institutions were incubating some great start-ups, but as they reached second stage, they left for the suburbs, or were purchased and moved to other locations. In an effort to further capture value from their anchor strategy, the City of Cleveland partnered with local developer Fred Geis to create space for second-stage companies. This “post incubator space” came with all the amenities these growth companies seek, as well as incentives from the city and continued engagement with hospitals and universities.

“The three buildings in the Midtown Tech Center have allowed us to capitalize on our Anchor Strategy, attracting companies like Cleveland Heart Lab that have grown from 15 jobs when they exited the incubator to over 115 high-paying technical jobs now,” says Tracey Nichols, director of economic development for the City of Cleveland. “These former vacant properties have brought 389 jobs to the area since 2012.”

Although economic gardening arose as the antithesis to larger employers, the approach as a solo strategy disconnected from retention/attraction efforts is rare. More often, as in Cleveland, economic gardening has evolved as an integral part of a broader economic development portfolio, leading to a more strengthened and supportive business ecosystem.

christy-mcfarlandAbout the Author: Christiana K. McFarland is NLC’s Research Director. Follow Christy on Twitter at @ckmcfarland.