Rockford Housing Authority exploring industrial laundry startup
RRSTAR By Brian Leaf Staff writer Posted Feb. 6, 2016 at 8:00 AM
ROCKFORD — Rockford Housing Authority is exploring a west side industrial laundry that could provide jobs, and perhaps wealth-building opportunities, for low-income residents.
Rockford Housing Authority, or RHA, may spend up to $62,500 to vet the idea that’s based on a model in Cleveland, where Evergreen Cooperatives pays living wages and provides paths for workers to become owners of the laundry.
RHA CEO Ron Clewer signed a $19,500 contract for a feasibility study with Thames Management Ltd., a consulting firm whose CEO is Brian McIntyre, the former director of the Small Business Development Center at Rock Valley College.
Clewer said that if there is a market niche for laundry services, RHA could pay Thames an additional $43,000 to develop a business plan that includes information on potential funding sources, customers and financial projections for the laundry. Clewer said he can spend up to $50,000 a year with a single vendor without approval from the RHA board. Taking the next $43,000 step would be up the board, he said.
The money for the studies would come from services fees generated by RHA, not federal money, Clewer said.
Jobs are sorely needed in the neighborhood bounded by School Street on the north, Preston Street in the south, Kilburn Avenue on the east and Johnston Avenue on the west. About half of residents live below the poverty line. The neighborhood got about 20 new jobs and saw a west side food desert disappear when Save-A-Lot grocery opened last summer. But opportunities for work are few.
A jobs plan could help RHA in its efforts to land a Choice Housing grant from the U.S. Department of Housing and Urban Development.
The authority is in the midst of redeveloping the 210-unit Fairgrounds Valley apartment complex in the Ellis Heights neighborhood, which is where the laundry would be built.
RHA plans to raze Fairgrounds and replace it with a 50-unit, mixed income community to deconcentrate poverty in the neighborhood. Another way to do that is by providing low-income residents with a chance to move up the economic ladder.
RHA may apply again for a Choice Neighborhoods grant. In January 2015, the Rockford City Council rejected RHA’s $28 million proposal. “When we talk about returning housing to Ellis Heights, it has to be tied to opportunity,” said Clewer. “The way to end poverty isn’t just putting roofs over someone’s head.”
Supportive services, effective schools, access to public transportation and jobs are all a part of well-functioning neighborhood, according to HUD.
Page 2 of 3 – The Cleveland model, as Evergreen’s project has come to be known nationally, has attacked the jobs and economic opportunity issue through a wealth-building approach.
Democracy Collaborative, a national nonprofit focused on wealth building in communities, says traditional approaches to job creation use incentives to attract out-of-town firms that provide jobs with little regard for wages or who is hired.
Wealth-building strategies seek out underused local assets and tap into money leaking out of communities, such as laundry that is outsourced. By paying a living wage, and providing benefits, training and ownership opportunities to low-income residents, wealth builders hope to improve the economic and social outlook for people living in distressed areas.
A living wage is the amount of income it takes to pay for basic living expenses such as food, housing, child care and medical care, Clewer said.
According to RHA figures, a living wage in Winnebago County is $10.07 an hour for an adult living alone; $22.02 an hour for an adult and one child; $26.07 an hour for an adult and two children; and $33.83 an hour for an adult and three children. Minimum wage is $8.25.
In Rockford, there have been discussions with SwedishAmerican Health System, MercyRockford Health System and OSF Saint Anthony Medical Center about an industrial laundry, Clewer said.
Hospital laundry was what Evergreen targeted in Cleveland, which it believed would provide all the work it could handle. It was more work than it could handle.
“We should have been focused on lower-tiered sectors — clinics, nursing homes, hotels — bites we could swallow early on as opposed to going after the big boys,” said Evergreen Cooperatives CEO John McMicken.
“It took many years for that to come to fruition.”
Evergreen’s businesses — it also operates an indoor hydroponic farm that grows tons of vegetables and an energy services concern that does solar installations, weatherization and cleanup work — have been widely followed nationally. It now employs 110, 40 of whom have ownership investments in their business, said McMicken. About 40 percent are ex-felons. Workers earn about $12 an hour.
While the businesses are doing better now and providing more opportunities, Cleveland has more than 40,000 people who earn less than $18,500 a year.
McMicken said the cooperative continues to look at more business opportunities.
There have been many glowing stories written about Evergreen and the wonderful things it is doing. In 2014 cooperative leaders gave unprecedented access to Steve Friess, a former Register Star reporter who taught journalism at Michigan State University. They wanted a story that went beyond the hype of turning low-income residents in to worker-owners.
Friess chronicled mistakes and lessons learned, especially when it came to creating markets for products and services, and managing expectations of worker-owners in menial jobs, such as folding laundry.
Page 3 of 3 – “A living wage job is a great way to start, but you need to build career and long-term strategy,” McMicken said.
Clewer said there are lessons to be learned from Evergreen and should a business plan be deemed feasible, those lessons would be incorporated.
“I don’t want to create something just because we may be able to create it, and then find out that people struggle with it for years,” Clewer said. “My goal is to have a real winner out of the box.”