Other cities have increased development by partnering with business leaders. Can Louisville?

There's a reason development has taken off around Cincinnati's downtown.

In 2003, then-Mayor Charlie Luken and business leaders formed a nonprofit real estate development organization tightly focused on revitalizing the area.

In the 20 years since, the Cincinnati Center Development Corporation, or 3CDC, has taken on more than $2 billion in projects, including 210 restored buildings, 20 acres of restored civic space, more than 2,300 residential units and nearly 1.4 million square feet of commercial space.

It's a vision Louisville leaders would love to see for the Derby City — leading them to launch a similar nonprofit entity: the Louisville Economic Development Alliance.

The alliance, known as LEDA, is a public-private partnership, a model that Mayor Craig Greenberg has called a "national best practice," with the administration saying it's drawn inspiration from similar entities in cities including Columbus, Cincinnati and Philadelphia.

And while Louisville's new organization may differ in structure and mission, Greenberg said he hopes LEDA will connect Louisville's disjointed economic development efforts, help reverse the city's population decline and lessen racial disparities in poverty, degree attainment and labor force participation rates.

New York University urban planning professor Tim Tompkins, who teaches courses on private-public partnerships, said such organizations are typically able to move more nimbly and take on more risk than solely governmental ones.

“In their best form, they create a hybrid culture, which mixes an understanding of the public good with an understanding of the needs of the market,” he said.

Still, others have criticized the model and have expressed fears over a perceived privatization of the government's economic development department.

As more details about LEDA emerge, here’s how it compares to similar entities in other cities.

What have public-private partnerships accomplished in other cities?

Models in other cities have honed and expanded their focus over years of operation.

Cincinnati's 3CDC is focused on revitalizing the city's central business district as well as the neighboring Over-the-Rhine district.

In addition to its retail, office and residential work, the nonprofit has leveraged public funding to tackle civic space improvements, including the renovations of Washington Park, Fountain Square and the historic Memorial Hall.

It also was a partner in the creation of three residential and service facilities for unhoused individuals.

The Philadelphia Industrial Development Corporation, or PIDC, was founded by city government and the chamber of commerce in 1958 in response to early declines in post-war manufacturing.

Today, it’s an umbrella organization that manages a private nonprofit focused on community lending that supports businesses in underserved and low-income neighborhoods, as well as a public authority that offers real estate services, tax-exempt financing and both city and state grant funding.

PIDC has settled more than 13,000 transactions, representing over $19.5 billion of financing and 3,400-plus acres of land sales, according to the organization. It estimates that it has leveraged tens of billions of dollars in investment and helped retain and create hundreds of thousands of jobs.

Another of Louisville's inspirations, The Columbus Partnership, was founded in 2002 as a nonprofit with eight CEOs and has grown to include over 70 business community leaders focused on an 11-county region. It's secured “over $10 billion in capital investment, over 50,000 direct jobs and more than $2 billion of new payroll," according to its website.

Greenberg said city officials considered these cities' models when forming LEDA.

The mayor said he does not expect LEDA to be a developer, like Cincinnati's nonprofit, but said it will "have plans in place to support programs that create more affordable housing, that help to revitalize downtown, that continue to revitalize other neighborhoods that are going to be hotbeds of economic activity."

LEDA members met for the first time in July and will spend their first year on a number of goals, including creating a three-year plan, hiring a CEO, identifying sustainable funding sources and initiating a new branding campaign for Louisville, among others.

The nonprofit will be a singular body that tracks and helps advance over 100 recommendations in the Growing Louisville Together plan released in December 2023. The creation of LEDA, itself, was one of the report's recommendations.

Who gets a seat at the table — and who chooses them?

Board makeup of public-private economic development entities varies by organization.

The vast majority of LEDA’s 55-member board are people outside government, with leaders from Churchill Downs, UPS, Brown-Forman and other big Louisville-based businesses represented.

They were selected by Greenberg and Deputy Mayor Pat Mulloy, who will serve as board chair and temporary CEO, respectively.

Three members of the Louisville Metro Council will serve as non-voting board members.

“Ultimately, a lot of the work that will happen here comes before council,” said Council President Markus Winkler, one of the three. “So I think it is a way to have a seat at the table and input in what happens, but not conflict yourself out on the back end.”

Philadelphia’s organization splits the selection of its approximately 30-member board between the city’s mayor and the local Chamber of Commerce, a non-government group. City council members serve on the board and do have a vote, as do city employees — including the city’s commerce director.

Meanwhile, Cincinnati’s nonprofit revitalization group is entirely made up of private interests, including business and foundation leaders, said Joe Rudemiller, 3CDC spokesman.

In the future, Louisville’s board will outline its own policies and procedures when it comes to choosing board members, said Cabinet for Economic Development spokesperson Caitlin Bowling.

How the government does — or doesn't — oversee the groups

Government plays an important — although different — role in similar organizations around the country.

LEDA plans to intertwine with the government beyond just the makeup of its board by “leasing” about 20 employees from the city's Cabinet for Economic Development.

Mulloy noted the reorganization means work done previously within the city government will now be performed under the LEDA umbrella. “Leased” city employees will remain civil servants, though they’ll report to the alliance’s CEO.

Other organizations, including PIDC and 3CDC, operate with private funding — including corporate contributions — and have their own staff.

The differences in ties to government go beyond employees, though.

In Cincinnati, 3CDC views the city as one of its “clients.”

“They don't have any oversight, per se, but we aren’t going rogue and doing projects without first making sure that the city is on the same page with whatever major project or initiative we're working on," Rudemiller said.

A strictly private entity can be more nimble than government, he added.

“I think we're able to set our agenda, share that with the city and have some of those conversations a little bit more pointedly — if behind closed doors, essentially — and come up with what that strategy may be,” Rudemiller said.

With a majority of its funding coming from the public, LEDA is subject to Kentucky’s open records and open meetings law, The Courier Journal previously reported.

LEDA intends to operate in its first year with a $5.6 million budget — about 63% of which are taxpayer dollars. The budget comes from three sources: $1.5 million from the city’s 2024-2025 budget; around $2 million in salaries tied to the “leased” government positions; and about $2 million in board member dues.

Still, some have criticized LEDA, saying it's a privatization of government. Former city employee Terri Hathaway has filed an ethics complaint against Greenberg, Mulloy and head of the Cabinet for Economic Development Jeff O’Brien.

“This structure will overwhelmingly privatize the city’s economic development pipeline while enabling multiple streams of public subsidies for the organization and the projects it prioritizes,” she wrote in the complaint.

Winkler and Greenberg have stressed neither the city nor council are giving up decision-making power.

Given LEDA’s goal to become financially self-sustaining without public dollars, it’s unclear to what extent the government and the public will have input on its activities as time goes on.

Greenberg said while the organization may “evolve over time,” a culture of collaboration will be key as it works on projects and identifies policies that are inhibiting Louisville’s economic growth.

“LEDA may identify opportunities, but it's going to take whoever the mayor is and whoever's on Metro Council to close the deal and provide incentives if that's necessary,” he said. “We need a strong organization, driven by the private sector like LEDA, to bring those issues to our attention to really drive advocacy of those, but it's going to take the public sector’s partnership.”

What controversies have the groups faced?

The very nature of these public-private partnerships has drawn scrutiny and skepticism.

Philadelphia’s model has drawn occasional concerns from government watchdogs over it operating outside of the traditional checks and balances of government.

“As a separate nonprofit corporation, PIDC is able to circumvent debt-protection and bidding requirements and spend money outside of the usual appropriation process, without the transparency normally expected from government departments,” wrote Carolyn Adams, professor emeritus at Temple University in Philadelphia, in the Encyclopedia of Greater Philadelphia.

The Columbus Partnership has faced similar concerns for establishing a “system of close ties” and creating one group of people with the power to make decisions, according to Columbus news nonprofit, Matter.

In its role as a developer, Cincinnati’s 3CDC has drawn criticism for its work in revitalizing the city’s Over-the-Rhine district, accused of gentrifying the area and pushing out long-term residents of the predominantly Black neighborhood as the group bought and fixed up vacant buildings and property values rose.

Louisville Metro Councilman Jecorey Arthur, who represents downtown and some surrounding neighborhoods, raised concern at a budget committee meeting in May over "privatization of our public economic development department."

Councilwoman Shameka Parrish-Wright cited concerns with LEDA as the reason for her “no” vote for the city's operating budget in June.

The lack of some of the checks and balances that help these organizations move swiftly and stay nimble are the very grounds for concern about accountability, self-dealing and the voice of the public.

Tompkins, the NYU professor, said conflict of interest policies are a classic safeguard against improper influences. Other means of checks and balances can include requiring the groups to release annual reports and to seek reauthorization after a certain number of years from either the mayor or legislative body.

“It is important to have those really clear boundaries about conflict of interest disclosures,” Tompkins said. “You don't necessarily have a bunch of roadblocks when a deal is being made initially, but you have really powerful post audit tools, so that somebody can go back and be like, ‘Wait, you know, a year after this deal, we're not so sure that those 3,000 jobs that were promised happened or not.’”

LEDA, which seeks to become a 501(c)(6) nonprofit, has adopted a conflict of interest policy, which mandates that board members and officers disclose actual or perceived conflicts of interests and warns that nondisclosure could lead to removal from the board.

Further asks from the city’s general fund would also be natural points for legislators to evaluate the nonprofit and press for accountability, Tompkins said.

Ultimately, LEDA still has room to grow and many more details to nail down in the future.

"Louisville has ebbed and flowed in terms of how it's done economic development in all kinds of different ways over the last 10 or 20 years," Mulloy said. "And we're not making anything permanent or non-modifiable and non-changeable, but trying to build something that spans mayoral administrations ... It's the business, not-for-profit community, and frankly, the education community at the heart of this."

Reach growth and development reporter Matthew Glowicki at mglowicki@courier-journal.com or 502-582-4000. Reach reporter Eleanor McCrary at EMcCrary@courier-journal.com or at @ellie_mccrary on X, formerly known as Twitter.

This article originally appeared on Louisville Courier Journal: How Louisville's new economic development group compares to other cities