The Inclusive Growth Toolkit Helps Erie Rebuild

A novel tool from the Center helps drive investment to overlooked, underinvested areas.

The Inclusive Growth Toolkit Helps Erie Rebuild

November 12, 2020 Erie, PA

Natasha Pacley discovered a talent for cooking at a young age at her grandmother’s side. She had her sights set on sharing those recipes with the world, but life would intervene before she could get back to her love. Homeless at age 18, Natasha found her way to culinary school and worked her way back to stability.

With her new café, Taste of Love, Natasha is soon to join eight other vendors in a new food hall set to open next summer in downtown Erie, including two Syrian refugees selling shawarmas, an African American entrepreneur whose dream is to bring healthy food to the community via smoothies and two women who operate a business that made Yelp’s list of “Top Ten Places in America to Get a Hot Dog.”  

The story of Natasha’s transformation follows the city of Erie’s own transformation in many ways. Down on its luck, losing population in droves, its downtown shuttered and poverty rates on the rise, Erie has weathered a tough few decades.

But, like Natasha, Erie is not one to dwell on the past. Leaders there are busy securing the $100 million they estimate is needed to jumpstart the city’s renewal, and a new toolkit from the Mastercard Center for Inclusive Growth helped them make the case to investors—including for a much needed grocery store in downtown Erie’s food desert. 

Assessing potential in Erie’s downtown core

Blending open-source data with a proprietary layer of insights based on Mastercard’s aggregated and anonymized transaction data, the Inclusive Growth Score (IGS) provides a hyperlocal snapshot of neighborhoods at the census tract level and their progress toward not simply growth but inclusive growth benefiting everyone. The IGS uses 18 different socioeconomic indicators related to place, community and economy—such as the open-source data-based level of inequality, early education enrollment or health coverage disparities—as well as economic development conditions such as small business loans, new businesses, consumer spending patterns and more. 

Each census tract has a combined score that ranks its levels of inclusion and growth relative to other census tracts. The inclusion score can be thought of as the share of a given resource or asset, like health insurance or affordable housing, that people have access to. Growth is the change in the indicators from year to year. Together they signal whether the growth is inclusive. A deeper dive into the various socioeconomic metrics can help users explore the potential for specific types of investments.

In 2019, the Erie Downtown Development Corporation (EDDC) sought out the Center to help make the case to investors that Erie’s downtown could support a grocery store in a building the EDDC had purchased as part of a $125 million transformation of its downtown core.

Using the IGS, the Center’s analysis revealed significant potential given the neighborhood’s commercial diversity, increasing small business loans and per capita spending, as well as ample affordable housing and low commute times—all indicators of upside potential for investors.

The analysts also noted that a grocery store could help improve the city’s employment score by creating jobs for those with less education. 

A deep dive reveals new sources of purchasing power

The downtown was considered a food desert in 2019 and a grocery store was much needed. But, large chain grocery stores have very thin margins and often shy away from places like Erie. One of the biggest hurdles faced by EDDC in luring investors was overcoming perceptions that high poverty rates coincide with a weak market for a grocery store.

But, a deep-dive analysis leveraging Mastercard insights showed a more nuanced story. The analysis indicated that consumers were coming from all across Erie to downtown. Further—and this is where the tailored Mastercard analytics add unique value—those commuters appear to have been spending significantly on restaurants and other food purchases in their own neighborhoods and thus would likely spend money downtown if there were stores to spend in, like a grocery store.  

That final insight helped cement the deal, said Matthew Wachter, vice president of finance and development at EDDC.

“The Center was very helpful,” said Wachter. “They were able to harness data, think outside the box and look at the buying power of the commuting workforce. It’s a very powerful argument in the end.”

A full-service grocery store will now open in summer 2021 along with a butcher shop and distillery—a $22 million project all-in, supporting mostly women and minority-owned businesses.

For Erie and other small cities, insights like these have an added benefit, said Wachter. The information can help cities grab the attention of top-tier investors, who often bypass smaller cities like Erie for lack of good data and the sizable investment it would take to generate the insights. Instead, major investors tend to stay with the cities they know, like New York and Los Angeles. 

“The tool can help communities like Erie overcome that legwork for the major investors,” Wachter said.

The IGS also offers social impact investors a way to track progress on inclusive growth and that hard-to-pin-down thing called “social good.” Not an easy task.

In Erie, for example, the downtown core scored 37 (out of 100) in 2018 on the combined Inclusive Growth Score, putting it below average relative to other, similar census tracts. Wachter is hoping it can help show investors the positive impact they are making over time.

“The score provides a third-party validation of the impact,” said Wachter, showing that the investment is actually making a difference. “That’s an extremely valuable tool for the social impact investment class.”

For Natasha Pacley and others, the food hall and grocery store investments are simply life-altering.

“I can just imagine what this food hall is going to do for me,” she said in a recent video. “I feel like with all that’s going on today, this food hall is going to do some different things for the city. This is something that we’ve needed for a long time.” 

Open for business in Erie. Natasha Pacley, Owner, Taste of Love.