A conversation with inclusive economic development advisor Christine Curella.
All innovation requires investment. Innovators need resources, time, and money to create something new and realize meaningful change. Initial sources of funding matter, and what happens after an injection of capital is also critical. To truly transform sectors and societies, we must be willing to rethink entire systems and reconsider how we measure success.
Luminary Labs collaborated with Christine Curella on the Economic Development Administration’s Build Back Better Regional Challenge (BBBRC), a once-in-a-generation opportunity for America to really rethink infrastructure. We worked with a community of practice developed by National League of Cites, America Achieves, Drexel University, and the Federation of American Scientists to support the $1 billion program’s finalists — 60 coalitions driving regional innovation and transformative, inclusive growth.
Christine Curella
Christine has deep expertise in economic transformation through inclusion, and has championed innovative programs here in New York while serving as Senior Advisor to the Deputy Mayor for Strategic Policy Initiatives, and at the Mayor’s Office of Workforce Development and the NYC Economic Development Corporation. I recently spoke with her about this remarkable moment in time and how policymakers can make investments that maximize equitable impact.
Sara:
While working together to support the $1 billion Build Back Better Regional Challenge, you told me, “this is the moment we’ve all been waiting for.” Can you share a little bit about your work and why this moment is so monumental?
Christine:
My work to date has been addressing the racial wealth gap and thinking about the levers of policy and government to intervene in capital markets, built environment, real estate — all of the ways the economy is made, and where it affords or does not afford value to different communities. Historically, that’s been a project of local government, and to a lesser degree, state government. It’s bread-and-butter work on local taxes, storefront activations, housing development, and school funding.
Federal investment has always contributed to local economic development, but somewhat indirectly, through infrastructure, financial regulation, the SBIR (Small Business Innovation Research) program, and other initiatives. But this is the first time the federal government has said it is actually going to fund and invest in place-based economic development — and then, very specifically, that it is going to be looking to innovation and working with communities and municipal governments to figure out what that investment should look like. We saw a diverse array of community coalitions across the BBBRC applicants, depending on the region and what their needs were.
Sara:
You’ve also mentioned that in many of these spaces — whether it is infrastructure at large, equitable investment, or a more narrow slice like schools or public/private partnerships — this type of investment is rare. Transformative funding is always on the wishlist, but when the budget comes back, we almost never see the number that we’re hoping for. So this is obviously welcome, needed, and important — and it elevates what’s possible. You’ve also said that while infusions of capital are important, what we really need to do is rethink the system at large and how communities can survive beyond an infusion of capital.
Christine:
It happens on two different scales. At a conceptual level, it’s hard to absorb and deploy significant infusions of capital. An economic system — in the broad sense that includes government actions, markets, people, businesses, entrepreneurs — is almost like a machine. You put different things into it — investments and other choices — and depending on how the system is designed, it will generate outcomes. If the system isn’t equitably designed, putting more money in will just give you more inequity. In the end, if we want equal access and outcomes, we have to fundamentally rewire the system.
So what does that mean operationally? On an operational level, much of the money that comes from the federal government, through states, to localities and communities, is guided by certain formulas. Historically, we know how to invest in bridges, tunnels, and roads to get the outcomes we want. But how do you invest in intergenerational wealth-building, education, and human capital? Those are fundamentally different investment systems, and you need to think about the building of assets in a different way. This came up with every single BBBRC applicant we supported in the 60 regions across the country. It showed up in vastly different ways, depending on their history of land ownership, business ownership, the sectors that animate their economy, and how people are equipped with skills.
With this particular funding from the federal government, we looked at how it lands in all of the social, financial, environmental capital that makes communities thrive. This is an amazing space of innovation: trying to figure out how to design that. It’s not taking money and putting it through one system that we know doesn’t produce the right outcomes. You have to rewire that system and that money. Across a number of the Build Back Better Challenge finalists, we were thinking about questions like, “What are alternatives to just property tax value capture or subsidies to big businesses that might want to locate jobs?” We were really asking, “How do we think differently about the give and get across public and private investment and outcomes?” I hope we’re really getting at that rewiring that will allow us to absorb financial capital — and all of the other kinds of capital needs we have, including human capital and social capital. In a variety of ways, that’s how inequality has manifested.
Sara:
This is a persistent struggle across sectors — transformative innovation requires both upfront investment and a vision to achieve sustainability over the long run. We can pump as much money as we want into rethinking education, but if school funding continues to rely heavily on property taxes, nothing changes.
The same is true in health. Transformational innovations require a significant capital commitment to advance foundational science and clear regulatory hurdles. However, if the innovation does not find a path to reimbursement, it will not succeed in the market. This is what we found so compelling in the current work to advance the development of an artificial kidney. By issuing the Advancing Kidney Health initiative, the federal government incentivized innovation toward human clinical trials and directed Medicare to develop and test payment models.
The success of mRNA vaccine development can be attributed to a combination of federal injections of capital to accelerate development and an advance market commitment. The countries that found the political, social, and financial will to provide both “pull” and “push” funding effectively changed the system.
Humans are really not great at long-term systemic change; anything beyond our own lifespan, or even half of our lifespan, is hard to fathom. It takes courage to imagine and advocate for the changes that have to be put in place that will only reap benefits later, and in some cases, people and organizations are not willing to do that. Short-termism rules our capital markets and our politics. Maybe the question is, if we know we are prone to short-termism but want to solve long-term systemic problems, how do we structure programs to incentivize longer-term outcomes?
Christine:
For me, the “aha moment” from the BBBRC is that, fundamentally, we need more flexibility in the ways that government uses public dollars. This impacts everything from balanced budget requirements to whether and how we can tax and get income and revenue. The ways that capital has been innovated puts money into the market with entrepreneurs, and we get a lot out of that. But the public sector infrastructure around that — tax incentives, tax abatements — has not seen a lot of innovation. They need to be integrated. We really need to rethink how we put out more public dollars to get more private investment, and to make sure that we get public return.
There’s a tremendous amount of potential to innovate in areas such as designing municipal bond finances. This may not be the most glamorous topic — but those mechanisms are an important starting place. Government at every level is going to change in the coming decades, especially as it relates to innovation, and I don’t think we’ve really thought about those institutional questions. We have a fixed idea of what’s good, what’s bad, and how we account for it — but I think we need to be more innovative in how government operates and uses its funding to get public outcomes.
Sara:
Health is a good reference point here as well. There’s so much work to be done, even if we’re just considering a small slice of innovation like digital health. Bakul Patel is just stepping down from his role as the Food and Drug Administration’s first Chief Digital Health Officer; he has been instrumental in defining SaMD (software as a medical device), streamlining regulatory pathways with the pre-cert program, and launching the agency’s Digital Health Center of Excellence. We need more of this in government — individuals with track records of coming up with new systems. In the case of digital health, that means figuring out regulations and reimbursement while also working with innovators as they advance the science and technology. We should be investing in people who have the latitude to rethink processes or create parallel processes.
You’ve shared similar stories with me about economic development processes, including rethinking how we support small and midsize businesses.
Christine:
On a conceptual level, the question is to figure out the risk of inaction, or what the future holds — and then understand the changes we need to make now. I’m thinking of two examples. During my time in the Mayor’s Office, we worked on a whole suite of initiatives to catalyze businesses where workers had some stake in ownership. Part of this was because we knew that the majority of privately held businesses, in New York City and also nationally, are privately held by retiring Baby Boomers. If there’s no succession plan or a path to continue the business through family, we’d stand to lose those businesses. If there are not outside exits for most of those companies, we stand to lose those jobs and the valuable resources and services they create in communities. So we mapped that risk very clearly. We also realized that 80% of the workers in those businesses in New York City were people of color; losing those businesses would mean a critical loss of jobs, wealth-building opportunities, and vital services. Once we understood the risk and the scale, we solved around that problem.
We did the same mapping around two other sectors, one in the health and social care sectors, where the economics may not pan out for those workers and businesses, but they’re the most vital services. We had to figure out other ways to aggregate, scale, and sustain those businesses. In economic development, we often look at individual projects and it’s hard to quantify one business or even one sector in the scale of the entire economy. We need the right tools to match those scales, and one of those tools is collective action. In the case of healthcare and social care, rather than thinking about how to scale and grow individual businesses, we think like any other value-creating entity, where we’re trying to aggregate at the sector space and see how we can create value.
There’s another project we worked on in New York City: the Financial Inclusion Challenge. We have a tremendous amount of unbanked and underbanked New Yorkers. Across the country, 3,000 banks closed in 2020, and a number of those were in New York City. We had whole districts that were not served by a bricks-and-mortar bank. Branches are high-cost for banks, despite decades of policy. And just having a bank does not ensure financial security. What we did was actually talk to communities and entrepreneurs. We catalyzed work and got innovations from 70 fintechs from around the world, partnered with communities, and tried to rewire the dialogue between government, fintechs, and communities. And this was a space where there were no solutions. We were sitting with a crisis, and it was a huge moment. As you pointed out with the development of mRNA vaccines, crisis is obviously a moment for innovation and opportunity. At least a million New Yorkers aren’t banked or use alternative, often predatory services, and so we asked, “What can we do?” We launched an innovation and pilot, aligning with community organizations, existing financial institutions, and with the city, to try to unlock the policies that would otherwise inhibit this. We had to figure out how to form unlikely partnerships with and outside of government to overcome these real bottlenecks and crises.
Sara:
Make no mistake, these infusions of capital are important. But let’s say a policymaker wants to make the most of this unprecedented spending. Say they want to do more than write a check — they want to change a system. They’re thinking about the long term, maybe 50 years from now. What would you tell them to do or consider? Is it funding formulas, public-private partnerships?
Christine:
My first thought is: Ownership matters. Most city funding, in New York City and across the country, comes from property tax. We want prices to increase. That’s how we get property taxes, and then we try to repair on the other side with employment programs, social services, and homelessness services. Those things are not aligned; those goals don’t line up. One could argue that our budget should actually be smaller. If small, commercial landlords are helping small businesses that create good jobs, then why are we levying and pulling taxes from property owners? You have to follow the money and figure out at every step, how are you building assets?
Many of us look for what ownership determines, who gets what piece of the pie, and how that’s distributed. Especially in economic development, there is a focus on the ribbon cutting and the number of jobs created. Many of those are projections based on multipliers that only ever rarely come through. The most sound way that we can really say we’re investing income that really will be sustained, that can be catalytic, is by tracing every piece of that through: Who’s the property owner? Who’s going to be the tenant? Who will be the workers? What’s their stake in this? And how is the public funding it? We always use the term “if but for,” referring to whether this would or would not happen without public investment. Instead, I’d ask, “if but for this project, who would capture the wealth created?” That’s a fundamentally different question. Most economic analysis is tax return to the city and maybe a jobs number. Is this fundamentally asking who stands to benefit? And how do we start to weave that in as we follow every piece of the investment through every project and initiative?
Sara:
“If, but for” is a helpful mindset. In healthcare, it really is the path to reimbursement, and “if, but for” is “who else is going to benefit from the incentives in healthcare right now?” In the case of the Artificial Kidney Prize, the executive order made it clear that it is longer sufficient to reimburse dialysis with the outcomes we have today. Across different spaces, it’s the same challenge: From time to time, there are waves of excitement and injections of capital. But if a path to reimbursement — or an advance market commitment, or ownership — doesn’t happen on the other side, there’s no constant flow of money that’s sustainable.
Christine:
What’s been so amazing in these new federal investments and all these spaces is, we’re naming the “for whom we care.” In healthcare, we’re solving for systemic outcomes. The same is true in equity and economic development. To fundamentally realize more inclusive outcomes, we have to say that’s our goal, and then figure out how to rewire. Then figure out how to back into that across each of these workstreams, if you will, for programs and investments.
Photo by Jesús Mirón García
