I needed to combine several solutions to make this work, here is what I did:
Gemfile
gem 'rails_12factor', group: :production
in my Heroku console
heroku labs:enable user-env-compile -a yourapp
production.rb
config.serve_static_assets = true
config.action_dispatch.x_sendfile_header="X-Accel-Redirect"
config.assets.compile = true
I didn’t need to precompile the assets locally.