Revisiting Minneapolis Cultural District Designation As Community-Based Economic Development Policy - 38th Street THRIVE Strategic Development

Revisiting Minneapolis Cultural District Designation As Community-Based Economic Development Policy - 38th Street THRIVE Strategic Development 

Luna Iman, Master of Urban and Regional Planning  

Published August 22, 2025  

The purpose of this paper is to review the Minneapolis Cultural District Designation as a community economic development policy - particularly the 38th Street strategic development plan. The designation of a cultural district itself is a multilayered policy. It’s a place-based economic development policy articulated through public-sector support of local arts and business. However, it also signifies a shift away from individual-based support of local arts and business to more collective support based on concentrated locality (Rushton, 2015). Despite having minimal ormixed empirical evidence of being an effective economic development policy, the cultural district trend continues to grow in the United States - with reportedly over 600 cultural district designations in 2017 (Ferreira Neto, 2021). 

Minneapolis’ cultural district designations have five ambitious goals: to advance racial equity, prevent displacement, fuel business and job development, foster cultural development, and establish destinations. Cultural district designation gives communities access to numerous benefits such as loans,, and technical assistance programs, and other funding (streams). While several of these incentives are  citywide policies that are  accessible  to  other Minneapolis communities, existingin a cultural district allows community members to have priority access to the benefits. For example, for the facade improvement program, eligible areas will only have a maximum grant of $5,000, priority areas have a maximum of $7,500, and cultural districts will be eligible for up to $10,000. However, since these benefits also often overlap with other policies, the focus of this paper will be the bottom-up approach of cultural districts through Strategic Development Plans.  

The 38th Street THRIVE Strategic Development Plan is aplan developed by community stakeholders of the 38th Street Cultural District. The 38th Street Cultural District is located in the Powderhorn neighborhood in Minneapolis. It is a 20-block, predominantly Black or African-American district that has existed since the 1930s, also known as Southside. The intersection between 38th Street and Chicago Avenue was the location of the murder of George Floyd back in 2020. Today, it is landmarked by the George Floyd Square, a monument built out of the community effort for resistance and to commemorate Black and African American people who became victims of police brutality. 

Despite its tragic history, currently, the cultural district’s strategic development plan is one of the most concrete bottom-up approaches done by a neighborhood after a cultural district designation. The plan shows in detail how the neighborhood will utilize the leverage provided by cultural district designation to achieve economic development and prevent displacement. To pursue the goals that are mentioned in the Minneapolis Cultural District designation, these strategies are divided into short-term (achieved within 2021-2023), mid-term (achieved within 2024-2026), and long-term (achieved within 2027-2030 and beyond). The programs are also created with specific goals in mind - ranging from preserving neighborhood legacy to attaining financial investments. In this writing, two programs from the Strategic Development Plan related to community economic development are examined briefly.  These programs include the establishment of Community Development Cooperation (CDC) to generate community ownership and a Cultural District Capital Fund to pool financial resources. 

Theoretical Studies of Cultural District Designation

One theory supporting cultural districts as an economic development tool is the shift of economic value creation in developed countries from physical industry to the production of meaning and identity (Sacco et.al, 2013). Sacco also mentioned the shift in consumer tastes in products beyond their physical features towards valuing more personal characteristics and social perception, thus the interest in art or culture. However, cultural districts are assumed to have an influence on economic development beyond the consumption of art and culture (Mommaas, 2004). Theyis assumed to have a role in knowledge production and as a driving force of innovation (Sacco et.al, 2013). Rushton (2015) argues that this clustering of the cultural sector would encourage workers and businesses to acquire new skills and knowledge through the exchange of information and ideas. More than the economic value creation shift, Rushton also pointed out that the cultural district trend shows a shift from the funding of the arts at an individual level to a more collective art and culture-based producers in a ‘walkable’ concentration. However, Rushton also questions whether this clustering creates economic outcomes beyond individual and district levels but into a wider scope of a city or state. 

There are two aspects that researchers have attempted to measure as empirical economic outcomes of cultural districts - job growth and property value.  Noonan (2013) ran a regression on 1990-2000 census data and showed that the average US cultural district designation has a significant positive impact on income, employment, and around an 8% increase in property value compared to their adjacent neighborhood. In 2018, Noonan and Breznitz did a more detailed analysis of the proximity of 143 American cultural districts and the impact on arts and digital media job growth. However, the result shows that the increase in arts and media jobs is more positively associated with their distance to arts and media educational institutions, as opposed to cultural districts.

Cultural district designation and property value increase are other aspects that show more consistency. Portillo & Wagner (2021) shows that within Louisiana’s cultural districts, there is an estimated 6.5-7.9% increase in residential property value relative to the comparison group. However, it needs to be considered that properties in these districts initially have around 40% lower value than their neighboring area. Thus it would take a longer time to observe whether the trend is consistent and whether property values eventually catch up. Portillo & Wagner (2021) and Noonan (2013) also express concern about how this property value increase might lead to gentrification. In this case, we will also explore several examples that communities have taken as an initiative to prevent gentrification in the next section. 

Skeptics challenge whether cultural districts actually benefit a city’s economic development. Brooks & Kushner (2001) mention cultural districts have an uncertain economic impact and invite arguments about the development of cultural districts over other public amenities with less ambiguous benefits. Ferreira Neto (2021) questions the continuing trends despite minimal empirical evidence, suggesting the presence of geographic competition and imitation mechanisms to be a stronger push factor. Certainly, further studies regarding cultural districts’ empirical benefits need to be taken. This is challenging due to the variety of cultural district policies in the US, with some giving benefits through tax credits, others by giving access to funds or programs, or a combination of multiple policies (Portillo & Wagner (2021). One possible approach is to analyze the benefits of a specific program (i.e. technical assistance programs or low-interest loans) and its correlation to certain aspects of economic growth, such as job creation, business growth, or tourism activity. 

Precedent Studies of Community-Based Initiatives

While in-depth academic studies regarding cultural districts' economic impact and their effect on the community remained scarce, there are some community-based initiatives done in notable cultural enclaves that can act as precedence studies. The first precedent is MEDA in San Francisco's Mission District. Historically, the Mission District is a predominantly Latino and immigrant neighborhood in San Francisco. However, since the dot-com boom in the Bay Area in the 1990s-2000s, the neighborhood had been significantly gentrified due to the garnered interest of primarily white, affluent newcomers, and the trend persisted well into the 2010s. As quoted from MEDA’s 2021-2024 strategic plan, around one in three Latino residents in the Mission left between 2000 and 2019, whether voluntarily or involuntarily, and the percentage of the Latino population fell from 52% to 36%. 

MEDA was initiated in 1973 as a business development organization focusing on local Latino small businesses. However, since the 1990s, when displacement started occurring, the Mission oftentimes became a target for redevelopment, MEDA shifted its agenda to include anti-displacement strategies. In 2017 through their website,  MEDA wrote that resident displacement also translated to commercial tenant displacement, particularly due to a decline in consumer base. Furthermore, this is exacerbated by the lack of commercial rent control in San Francisco. Thus, anti-displacement strategies are vital to avoid further loss of commercial and non-profit tenants and to keep the Mission as a neighborhood of opportunity for low-income communities of color. 

Thus far, MEDA has led extensive efforts to combat the housing crisis and help local businesses thrive in the Mission neighborhood. With an annual budget of 21 million dollars, MEDA has preserved and produced over 2,000 affordable residential and commercial units, assisted over 400 small businesses with coaching and technical assistance, and achieved a 98% repayment rate through its commercial development financial institution (CDFI) arm, Fondo Adelante. MEDA also actively advocates for its planning, collaborated with the city to designate a Special Use District (SUD) on its commercial corridor, and launched the Mission Action Plan 2020 as a community-responsive neighborhood plan. A case study done by Harvard Graduate School of Education’s EdRedesign Lab in March 2024 called MEDA as a leading example of how place-based collaborations can change local residents’ lives while maintaining community heritage.

What MEDA has displayed was consistent with the research done by Ghaffari et. al. (2017) on anti-gentrification strategies. Ghaffari et. al. wrote that the existence of community organizations is essential in mobilizing the population and controlling displacement. Furthermore, these organizations could also serve as a key actors for public-private and community partnerships as well as pooling financial resources, which would assist in increasing the feasibility of active anti-displacement programs. In the case study, MEDA stated 10 key takeaways for Place-Based Leaders, some of which include keeping the community’s needs and aspirations at the center of the work, building strategic partnerships through existing relationships, building leadership, using data (both quantitative and qualitative) to measure progress and needs, and braid multiple funding streams and network. 

On the other hand, a more recent case of gentrification due to what is assumed to be touristic interest and promotion happened quite close to Minneapolis, in the Pilsen district in Chicago. As reported by Block Club Chicago, Pilsen’s 18th Street commercial corridor has garnered significant attention as a tourist attraction due to it being listed by TimeOut.com as “one of the coolest streets in the world”. As a predominantly Mexican and/or Latino neighborhood, Pilsen is home to small businesses such as restaurants and art establishments like the Chicago Arts District and the National Museum of Mexican Art. The interest in the neighborhood in recent years has led to amenity improvements, rising property values, and taxes. However, this also leads to families being forced out due to the increased rents and housing unaffordability.  

While there has not been a notable established organization like MEDA, several community initiatives have been taken up by local landlords who are not seeking profit,through the establishment of residential cooperatives to prevent further displacements. In 2024, the Pilsen Housing Cooperatives (PIHCO) currently owns three buildings in Pilsen with eighteen co-op members/shareholders and over 50 residents. Furthermore, PIHCO also aims to build new property to house 35 to 60 families in 18th Street and Peoria. Housing cooperatives are also working to mitigate displacement in other Latino communities in Chicago, such as Logan Square and Little Village. Other ideas that are discussed to improve housing affordability in the Pilsen district include using TIF as property tax relief or funding affordable housing construction. However, this is still very much debated due to how the TIF funds might contribute further to gentrification or may not be reaching the actual targeted community. While further success of the PIHCO is yet to be determined, referring to Ghaffari, et. al (2017) housing associations and housing cooperatives (Ghaffari et. al. (2017), Van Gent (2013), Diaz-Parra and Rabasco-Pozuelo, 2013) is another strategy that have the potential to eliminate displacement. 

Reviewing Community Development Corporation (CDC) and Cultural District Capital Fund as Strategic Policies 

The establishment of the Community Development Corporation (CDC) and Cultural District Capital Fund are core policies that further the 38th THRIVE Strategic Development plan from a place-based economic development policy to a more community-based development strategy. According to the Strategic Development Plan, the Community Development Corporation is created to be a stabilizing force in community development without displacement. The Community Development Corporation (CDC) will be established as a 501(c)(3) non-profit organization following the National Alliance of Community Economic Development Organizations. In this case, the role of the CDC is to represent the district in all community benefits agreements (CBA) between developers and the community, manage future development by guiding, investing, and creating real estate cooperatives to provide ownership opportunities for residents and business owners and to collaborate with neighborhood associations to make decisions on projects and events or other governance responsibilities in the district.

The CDC is also expected to expand and manage initiatives such as the Black Heritage Land Trust and Cultural District Capital Fund, cooperatives and community-owned services, and local business stock ownerships. According to the plan, the timeframe of CDC establishment is aimed to be a short-term goal achieved by 2023 - however, there hasn’t been any recent news that could be followed up on the issue.

After establishing a CDC, the mid-term goal is to establish the Thirty-Eighth Street Cultural District Capital Fund. The establishment of the Cultural District Capital Fund is aimed at pooling financial resources from the community and utilizing the equity as leverage to attract additional capital from external sources such as the City of Minneapolis and local banks or other financial institutions. The fund would then be invested in neighborhood infrastructure and property through building improvements or low-interest loans to residents and business owners. The gathered capital could also be used as a funding pipeline for community initiatives and would be managed and utilized by the CDC on behalf of the district. As a mid-term goal, the timeframe for the establishment of this program would be from June 2024 to December 2026. Some of the achievement metrics for the Cultural District Capital Fund are to identify potential sources, create a capital fundraising plan, and generate funds for around $500,000 up to more than $5,000,000. 

A key partner for the Cultural District Capital Fund is the Minneapolis Business Development Fund (BDF). The fund is a tool for assisting in redevelopment projects that have potential job creation for Minneapolis residents. They promise loans up to $75,000 and prepayment credit opportunities for each hired Minneapolis resident who’s employed for at least one year within the first three years of the loan. 

Establishing the CDC and Cultural District Capital Fund would require restructuring several asset ownership from individual to community ownership. While there has been a historic skepticism towards community ownership and forms of cooperatives in America, there is a significant difference between the historic practice itself and current practices. According to Spicer (2020), the contemporary strategies of WCO (Worker & Community Ownership) enterprises are to enter and engage with the market and develop profitable, scalable enterprises as opposed to historical practices, which aimed for a market exit. Historically, these WCOs also lack governmental support. This differs significantly from contemporary practices such as the CDC and Cultural District Capital Fund, which plans engagements with city economic development tools such as the BDF or associated benefits of cultural district designations 

At face value, these concepts align with the goal of cultural district designation and seem to be a promising solution, yet more details need to be addressed. In this case, we should examine the benefits and drawbacks of these collective ownership structures. One benefit would be through the economies of scale. Petric & Gibson (2022) mention several forms of resources that can be used to develop wealth, those being human capital, environmental capital, social capital, cultural capital, and financial capital. Especially regarding financial capital, collective means could achieve the necessary economies of scale and make it an advantage as opposed to individual means (Spicer, 2020). This provides leverage for communities that have a structural disadvantage in gaining financial capital such as rural communities or previously disinvested communities of color. Another benefit of community investment is a shift from problem-based solutions (i.e. grants to cover lack of capital) towards asset-based community development (Mathie & Cunningham, 2005).

Asset-based community development is developed as a community-driven reassessment of collective assets and to provide a linkage between internal social capital and external resources (Mathie & Cunningham, 2005). In the case of the CDC and the Cultural District Capital Fund, this gives several benefits such as more effective resource assessment and knowledge sharing through the organizations and lowering bureaucratic and administrative burdens for individuals and private entities. Establishing collective ownership could also benefit communities by protecting resources and lowering other barriers to entry for new businesses, particularily by securing land and properties through collective ownership  - which could be a significant capital investment. This collective ownership of property can also protect a community from displacement. After further examining the role of the CDC, it also follows other measures for controlling gentrification and displacement, according to Ghaffari et.al (2017), such as establishing a community land trust and being a representative for CBA, and thus follows the objective of involving the community in decision making.

Despite all of these benefits, there are still some risks and constraints related to community ownership. Mathie and Cunningham (2005) question the risk of neglecting the existing power relation within the community level in the process - as well as the balance of relations with other entities such as donors or authorities. Spicer (2020) mentions the challenge of early-stage finances and the competitive pressure against profit-maximizing businesses. Therefore some forms of risk mitigation need to be addressed to achieve program success. The first one is regarding the challenge of early-stage finances. While the document mentioned several key partners, the number of available grants, and the fundraising goal - there is not yet a clear correlation between the three. While the document is just an overview, since early-stage financing is critical in community ownership, it must be defined as clearly as possible. What would be the biggest obstacle to building new businesses in the community? What should be prioritized, acquiring property or starting capital loans? How many properties need to be acquired by the community and how much does it cost? How many businesses need to be supported for the program to start, acquire profit, and have a return on investment? How would the available grants be used to leverage the minimum required capital? These are some questions that need to be answered to ensure that the early-stage financing is done appropriately. 

The second risk is regarding the competition with profit-maximizing businesses. In this case, direct competition would not be ideal. The new businesses that open need to find their niche customer market and find businesses that could cut middlemen to save cost since lowering prices by production volume would not work in their favor as small and medium enterprises. Thus, after acquiring the necessary capital, business model study and market research are crucial for each new enterprise in the community. This could be done through engaging with the CTAP & BTAP program, which also came as a benefit for a Cultural District designation. 

Finally, the CDC and Cultural District Capital Fund will need to have proper reporting to keep checks and balances. According to Mathie and Cunningham (2005), these reports should provide details on the activity and process of community-driven development, interaction between community actors and outside partners, and specific ways in which assets are built, renewed, and mobilized in the community. These reports are also necessary to provide empirical measures of the success of the CDC and Cultural District Capital Fund. One way to measure the success is by measuring the multiplier effect of the capital injection toward local businesses. One reference cited in Petric & Gibson’s (2022) paper is the report on the economic impact of the Nova Scotia Community Economic Development Investment Fund (CEDIF). In the report, the CEDIF measures the number of investments that have been accrued in dollars as well as how many businesses the CEDIF has invested in as well as some metrics such as the annual GDP value-added, the number of jobs created, the number of annual wages, salaries and taxes in dollars, and categorizing the business based on their industries. This could be applied to measure the impact of the 38th Street Cultural District Capital Fund. 

Conclusion

In theory, cultural district designation is a reasonable economic development policy through the clustering of small businesses and a shift from individual funding to a more communal, place-based initiative. However, there is a significant lack of study that can prove the empirical economic benefits of cultural district designation. While some of these studies did suggest some benefits, such as job creation and an increase in property value, it should also be noted that, particularly with property value increases, there would be a risk for gentrification. However, do note  how cultural district designation is supposed to not only promote economic development but also act as a way to develop without displacement. 

To achieve this, we could examine the precedence of similar policies or experiences in other cities, such as the initiatives created by MEDA in San Francisco's Mission District, reflecting from the Pilsen neighborhood in Chicago, or examine how CEDIF is utilized and reported in Nova Scotia, Canada. By studying in detail from similar precedents, we could see the pattern of strategies and challenges that might appear in a place-based economic development strategy. Referring to these examples and the research done by Ghaffari et. al. (2017), establishing a Community Development Corporation (CDC) and Cultural District Capital Fund as a community-based movement is a great opportunity to move the plan forward to promote both economic growth and anti-displacement movement.

However, to ensure that the establishment of these organizations, as well as the cultural district designation achieves its aim of development without displacement, some pointed suggestions can be made. The first one is to further refine the financing strategies and to analyze the risks and priorities associated with these strategies. The second is to use data-driven studies and community-determined metrics to measure progress and engagement. The third is to create proper reporting and accountability structures. This is where the data gathered for progress measurement could also take place, but can also be further strengthened through a third-party audit and/or community-led oversight board that can ensure that the funds gathered and strategic initiatives done accurately reach the targeted community and/or individuals.

Note: The views expressed in this publication are those of the student authors and do not necessarily reflect the policies or positions of the Humphrey Public Affairs Review (HPAR) or the Humphrey School of Public Affairs.

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