With $200,000 and two ideas, these guys aim to revive Rust Belt cities

When Hajj Flemings looked at his hometown of Detroit, he noticed a strange discrepancy. In midtown and downtown, businesses were thriving, people were excited to explore the area, and signs of a growing economy abounded. But go one mile east or west and suddenly that sense of development disappeared.

"As we transform cities, what happens is that it's not transformed equally for everyone," Flemings said. "We really displace some people, and opportunities for business owners are gone."

Many Detroit neighborhoods, and home to minority populations, were getting left behind. Flemings, a digital brand strategist and CEO of marketing agency Brand Camp University, set out to correct that imbalance. He envisioned a project that could help local business owners elevate their stories and build a brand to attract people to their neighborhods. He called it Rebrand Detroit.

"When you ride into a neighborhood, do you even know you're in that neighborhood?" Flemings said. "Our goal was to change that."

Since most neighborhood business owners work 10 to 12 hours a day and don't have the extra time or money to hire a marketing strategist, Flemings took a unique approach to the problem.

He applied to the Knight Cities Challenge, an initiative of the Knight Foundation that invites individuals and entrepreneurs to develop and implement ideas that improve cities. The foundation grants $5 million per year to fund a variety of projects in the 26 cities where brothers John and James Knight once published newspapers.

Since it began in 2015 — the year Flemings applied — the challenge has funded nearly 70 projects from more than 11,000 applicants. It is currently accepting applications for the next round of funding until Nov. 3.

The aim is to revitalize American cities by supporting projects that help the cities attract and retain talent, expand economic opportunity and create a stronger culture of civic engagement.

"Every city is struggling with those challenges," said George Abbott, project leader for the Knight Cities Challenge. "We believe we need new innovations to address those."

Detroit is still recovering from the economic downturn. Hit hard by the Great Recession, a decline in manufacturing and a collapsing auto industry, the city was forced to file bankruptcy in 2013. Other American cities in the Rust Belt have been equally devastated by the U.S. economy's shift from manufacturing to services. As they recover and rebuild, entrepreneurs can play a key role.

"We're looking for powerful ideas," Abbott said. "From anywhere, from anyone."

The Knight Foundation wants to fund ideas that may seem risky to others. By providing an 18-month grant, it hopes to encourage innovators to test out a new thought and gather data that will allow them and the foundation to improve efforts in the future, Abbott said.

Flemings is using his grant of near $150,000 to write and promote stories on local business owners and provide them with professional photos they can use for marketing. He also started an accelerator and helps businesses develop a digital strategy, including creating a website and correcting inaccurate information on third-party sites, like Yelp and Google Maps.

Susan Murphy, owner of Pages Bookshop, is one of the local business owners with whom Flemings consulted. Murphy's bookshop is located on an eight-lane boulevard called Grand River that was built for the golden age of Detroit's auto dominance, and that has created a unique problem when it comes to the unequal distribution of foot traffic. "Grand River is designed to move traffic and doesn't have many walkable places," Murphy said.

Murphy has watched as private money, led by Quicken Loans founder Dan Gilbert, has revitalized downtown Detroit and also kept the city's funding focus on the same central area. "Resources from the city are not coming this way," Murphy said about the residential area on the northwest side of Detroit where her business is. "When you get that kind of money [from Gilbert] coming, you're bound to see some redevelopment, but it doesn't help me at all," she said.

The city has been working with a consultant to reconfigure Grand River, but Murphy says the situation as a business owner is still "touch and go." The only other retailer near her is closing, but a new restaurant is opening up on the same block. Most of the legacy development is commercial — insurance, doctor and dentist offices.

"I do feel confident. The neighborhood has everything going for it," Murphy said, pointing to high-income residents and a strong family foundation. Flemings didn't only help Murphy with promotion but led Murphy to engage with the community and think about ways her bookshop can be transformed from a retailer to a center of knowledge where there is a connection between authors and customers and the store. "Slowly things will change. That's OK. The neighborhood just needs to see consistent progress," Murphy said.

In Akron, Ohio, Chris Horne took a different approach to promoting local businesses. As publisher of a local arts-and-culture magazine called The Devil Strip, Horne met with many independent business owners and area organizations that were trying to market their services. Rather than offering them a standard print advertisement, Horne decided to use his $52,000 Knight grant to launch Unbox Akron, a subscription service that celebrates the city's unique offerings with a monthly selection of local goods and experiences delivered in a box.

"I was looking for different ways to help small businesses and creative people reach an audience and engage them in a more real way," Horne said. "I wanted people to be engaged, not just sit at home and receive a box but have a box that entices them to go out and do things in Akron."

Unbox Akron has shipped more than 10 boxes since it launched in Dec. 2015, reaching about 100 subscribers each month. Most boxes cost about $25.

With products like Norka craft soda and homemade St. Augustine and Suds soap, the box is meant to get people to think local first rather than buying mass-market goods, Horne said. It also offers experiences, like tickets to a Verb Ballets performance, so people go out in the city instead of staying home to watch Netflix.

Originally founded in 1924, Norka (its name is Akron spelled backward) has deep roots in the city. It ceased operations in 1962 but was revived by Michael Considine, its founder and president, in 2015 as a craft soda maker. Considine said the beverage brand was a "hometown favorite" with Akronites for almost 40 years, and with the company's rebirth, "so much of what we do is centered around hometown pride and community involvement."

"The response to the revival of this nostalgic sodapop has been incredible. While there are some that remember Norka in it's heyday, there is also a whole new generation that we're introducing Norka to," Considine said. "With the help of local projects like Unbox Akron, we've been able to bring this Akron icon back to life and generate support across the area and beyond."

Much like Detroit, Akron — once a leading tire producer — was hit hard by the decline in manufacturing. The city is now working to rebrand itself as a hub of "industrial intellect" and manufacturing innovation. Horne says entrepreneurial projects like his own, alongside tech start-ups, are reinvigorating the city.

"There's a lot of energy around smaller businesses that are doing something unique," he said. "It's adding a spark to the Rust Belt."

Horne and Flemings are just two of the many entrepreneurs who have embraced the Knight Cities Challenge. Other grant recipients have launched projects that streamline city development regulations to help reshape commercial districts in Detroit and created services that provide new American residents with a customizable food truck to start their own businesses in North Dakota.

The only requirement is an innovative idea.

"We're not looking to fund you just to continue doing what you're doing," Abbott said. "You need to stand out as providing a new solution or something we can learn from." As long as the project meets that bar, any and all ideas are welcome. "If you have a good idea for the city and want to make it happen, we want to hear from you," Abbott said.

— By Aneri Pattani, CNBC.com