The Chronicle of Higher Education podcast featured a talk with Oberlin College President Marvin Krisolv about the relationship between the College and the community of Oberlin. Oberlin claims to be taking an active stake in the local economy, helping to invest in infrastructure and service programs as part of an Urban Renewal effort. Having observed many schools, I think that their success inextricably linked to the livability and opportunities in their immediate surroundings. Oberlin is not taking it far enough.
In particular, Harvard and Stanford have dramatically altered and managed the towns around them. Owning and managing the surrounding community to promote a safe, clean, and livable environment is only the first step. The next seems to be to promote the location of research institutes nearby, as well as set up space for and engage the industries of the future. Stanford has done this and more: it has been the most extreme example of helping to jump start Venture Capital firms, and the firms have a home bias that inevitably has made Silicon Valley one of the wealthiest areas of the planet.
University involvement in urban renewal seems to be the trend, but service programs are temporary and are more of a band-aid than a solution. If a university really wants to see their community improve, they need to become the spark of economic development through the active management of residential, commercial, and high tech industrial real estate, the creation of research institutes, and the support of Venture Capital.