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Wednesday, October 1st, 2014

How Detroit Streamlined Its Fight Against Blight

The PBS News Hour show did a segment yesterday about the efforts to remove blight (vacant homes) in Detroit via streamlined demolitions and incentives for investment. If the embedded video doesn’t display for you, click over to You Tube.

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Cities: Detroit

Tuesday, September 30th, 2014

Detroit Water City

Detroit’s bankruptcy judge just ruled that he can’t halt water shutoffs in the city. I make the argument that Detroit should continue with its shutoff program in my latest piece at City Journal called “Detroit Water City.”

To be sure the process was bungled out of the gate. The city first should have started with commercial accounts, for example. But in a country where we have food stamps, Medicaid, Section 8 and a slew of other poverty programs up to an including so-called “Obama phones,” does anyone really believe we never thought that poor people needed water? Of course those with bona fide hardships should get a repayment plan option and assistance where necessary. But those complaining don’t seem interested in validating actual need. The Detroit Water Project, for example, which allows donors to pay overdue water bills on behalf of Detroit residents, doesn’t even ask about whether or not the recipient is in need. It specifically boasts, with emphasis, that there’s “no paperwork required.”

As I put it in the piece:

What Detroit’s citizens need most from their government is well-functioning public services. A water utility with 50 percent delinquencies is a reflection of a city that has failed its basic responsibilities. Fixing DWSD is but one of the many changes necessary to restore Detroit—but if city officials don’t have the stomach to collect long-overdue water bills, how will they undertake tougher reforms?

Click through to read the whole thing.

Also at City Journal, Steve Eide has an article sounding a note of optimism about Detroit, reminding us of the state of the South Bronx in the 1970s. It’s called “Lessons From a Catastrophe.” Here’s an excerpt:

The most important lesson that Detroit can derive from the South Bronx’s experience is that things can get better. Many despaired over the South Bronx’s future during the 1970s out of conviction that New York City was ungovernable. How could a city incapable of preventing 14-year-olds from defacing subway cars be expected to revive a neighborhood resembling post-World War II Berlin? But the skeptics were wrong, as more effective government—as opposed to simply less or more—proved central to New York’s epic crime decline and many other municipal improvements. As encouraging as the news is about its downtown, we’ll know Detroit has turned a corner when local government has shed its reputation for dysfunction in the eyes of independent observers and, even more importantly, local taxpayers.

Monday, September 29th, 2014

Thoughts On My Neighborhood Post-Ferguson

Some folks asked me to comment on Ferguson, MO. I don’t have anything to add to the massive amount that has already been written, but it did get me thinking about my own neighborhood and the racial dynamics that exist in America.

I live in a mixed race neighborhood on the North Side of Indianapolis called various names, including South of Broad Ripple (SoBro) and Keystone-Monon. It’s a racially diverse area, mostly featuring wood frame 2-3br/1-ba worker cottages built around wartime. It’s likely always been working class or starter home housing as the smallness of the homes limits their value in a city where there are near infinite tracts of similar building stock.

If asked to guess at the racial mix, I would have said 70% white/30% black. Clicking into the NYT census viewer, I discovered that my census tract is actually 49% black/42% white. Here’s a screen shot (click to enlarge):

As you can see, my tract lies along a diagonal transition area from predominantly white to predominantly black areas. The tract immediately north of me is 82% white. The one immediately south is 62% black, and south of that black population percentage runs upwards of the 90s. It’s easy to see how difficult it can be to eyeball the makeup of the area.

Just to the west is Meridian-Kessler, one of the city’s most desirable residential neighborhoods. About a mile and a half north is the core of Broad Ripple, a commercial district known for its nightlife aimed at the 20s set.

One might think this area is primed for gentrification, but that’s not the case. As it happens, those more desirable neighborhoods I mentioned themselves have had a lot of challenges such as abandoned homes and commercial vacancies. There’s virtually nothing that could be considered gentrification in Indianapolis generally, and certainly not at extensive scale.

Because of its city location proximate to desirable commercial nodes, the area has seen an influx of young families, often in their 20s with one young child. Some savvy rehabbers have also purchased. But the backbone of the neighborhood remains the black and white working class, often homeowners.

Because there’s longstanding integration and little gentrification pressure – and because unlike Ferguson this area is embedded inside of a large and diverse municipality, I haven’t sense much in the way of racial tensions. People seem quite friendly to each other to the most part. Personally I think it’s a great neighborhood and love living there. So does everyone else I’ve talked to.

On the surface, this would appear to be a successful integrated neighborhood, by American standards especially. But everything is not as it seems.

I’ve only lived here about eight months, but what I observed is similar to what I previously saw in Fountain Square, a type of parallel societies. In Fountain Square I called this “Artists and Appalachians.” In that case both groups are white. They share the same neighborhood geography, and even patronize some of the same establishments such as Peppy’s Grill and the Liquor Cabinet, but there was little social interaction between them apart from surface pleasantries.

I see the same here, only with a racial dimension. Blacks and whites get along, and even patronize some of the same stores, but there does not appear to be much in the way of real social capital that has developed between the two groups. This leaves the neighborhood extremely vulnerable to racial divisiveness if anything goes wrong.

This was illustrated to me by our local neighborhood group on the Next Door platform. This app is very popular in my neighborhood. However, judging from the avatar photos, it appears to be overwhelmingly white people who use it. Here’s an application that is building social capital in the neighborhood – I used to it meet my neighbors at the corner when I needed to borrow an extension ladder – but which has developed along racial boundaries. It seems to be spreading by word of mouth, and since existing social networks seem to be predominantly intra-race, it’s no surprise the online manifestations of them are as well.

There have been some property crimes in the area recently. This is sadly ubiquitous in all urban neighborhoods these days. My building (especially the garages) in Chicago’s Lakeview neighborhood was burglarized many times and we had to spend a lot of money to install high security doors and locks to try to stop it. My aunt and uncle just had their car stolen in the heart of Lincoln Park and even before that happened they told me theft was out of control there. These are two of the wealthiest neighborhoods in Chicago. Even in my rural hometown theft is a common occurrence.

In short, I have no reason to believe the activity in my area is that unusual, either compared to other neighborhoods, or maybe even compared to the neighborhood’s own past. But thanks to apps like Next Door, we now know about every single incident of anything that occurs, whereas before that we would all have just gone about our business blissfully unaware of a lawnmower theft a couple blocks over unless it was we ourselves or someone we knew personally that got hit. (A neighborhood old timer posted a thread on Next Door to this very effect, saying that this ebb and flow of theft has been happening since he moved in during the 1970s)

As it happens, various neighbors believe believe they identified the culprit behind many similar incidents. As it happens, he’s an 18 year old black man from the neighborhood. I don’t know if he’s guilty or not, but apparently there’s a warrant out for him and he posted pictures of himself on Facebook pointing a pistol at the camera and such.

While people were zeroing in on their culprit, I noticed some started viewing any young black guy pausing too long in front of their house as suspicious. This was only a brief blip until such time as the specific person of interest was identified. However, this adds an instant racial dimension to matters, like it or not.

This wasn’t motivated by racial animus, but rather fear of being burglarized in a place where such burglaries were in fact occurring and where there was evidence that a particular black male was committing it. People in Lincoln Park and Lakeview can afford to take a philosophical view of theft. They are wealthy enough that having say a bicycle stolen is more annoyance than threat.

By contrast, in my working class area, not everyone can just whip out their debit card every time something goes wrong. In a response to an NYT piece extolling the virtues of minimalism, Tumblr writer Vruba suggested that living with minimal possessions is luxury for the well off:

Wealth is…having options and the ability to take on risk. If you see someone on the street dressed like a middle-class person (say, in clean jeans and a striped shirt), how do you know whether they’re lower middle class or upper middle class? I think one of the best indicators is how much they’re carrying….If I were rich, I would carry a MacBook Air, an iPad mini as a reader, and my wallet. My wallet would serve as everything else that’s in my backpack now. Go out on the street and look, and I bet you’ll see that the richer people are carrying less.

In a neighborhood where some people are only a few rungs up on the ladder that provides stability in life, vigilance over your stuff is important, because it’s not easily replaced. Only half of American households could come up with $400 in an emergency. Replacing a lawn mower probably means going into credit card debt (or more credit card debt) for them.

Nevertheless, what this illustrates to me is the potential racial powder keg that lies under the surface of even seemingly placid and well-integrated communities. Race is simply an inescapable subtext to any interaction that crosses the color line, no matter how much we try to avoid it, and it adds contingent risk to social stability.

Why do I say this? Because I believe there’s little to no interracial social capital in these places that can withstand a hit to neighborhood cohesion. There’s no genuine solidarity that comes from genuinely living life together in a way that goes deeper than everyday pleasantries. Thus the risk that racial tensions can end up erupting in some way is ever present.

This is not unique at all to my neighborhood, which, as I said and want to stress again, is a great place full of great people. For example, a couple weeks ago I had drinks with someone in Cincinnati whose neighborhood had nearly identical demographics and dynamics, right down to the use of Next Door. We have tried to solve racial problems in America through institutional solutions. As important as many of those are, they are not a substitute for the human connections that allow us to weather the vagaries of life together.

How do we create interracial social capital? It’s not easy. Earlier this year I had dinner with a resident of Over the Rhine in Cincinnati who wanted to create a personal connection to his black neighbors, but wasn’t sure how. Frankly none of us at dinner had any great ideas. I suggested perhaps joining a local black church, but that only works if attending church is something you do.

As the Next Door case shows, the path of least resistance doesn’t work here. Our default pathways for building social networks follow the color lines. And heck, books have been written about the decline in social capital within white America itself. Crossing the color line is even more difficult and requires a high degree of intentionality.

I spent some time in the Walltown neighborhood of Durham, NC last week. Walltown is a historically black neighborhood adjacent to Duke University. While gentrification and university encroachment are issues, again the housing stock type limits upside on pricing. There has been some influx of white resident as well as Latinos, but a strong black presence is still there.

I visited with people from a black church there as part of a tour led by Jonathan Wilson-Hartgove, a white resident who co-founded Rutba House, a Christian intentional community (their term is “new monasticism”). Half of their spaces are allocated for those in need of transitional housing (the homeless, ex-offenders, etc), mostly people of color. I’d guess Jonathan is to the left of your average Boulder resident. He named Rutba House after a town in Iraq he was at during a private 2003 peace tour of the country during the war, which should give you an idea.

A big part of what the various faith groups there are doing is trying to do is figure out a way for blacks and whites to actually exist together in real community in Walltown, not just live in the same geography. I think he’d be the first to tell you that they’ve had at best partial success. This shows the difficulty, even with lots of people of various races committing to make it work.

What’s the answer? I don’t know, but I do believe a big part of the problem is lack of social capital at ground level. Again, this isn’t necessarily solely a matter of race, as the Fountain Square example illustrates, but in multi-racial neighborhoods the racial dimension is always present to some extent and certainly amplifies things. So it shouldn’t surprise us that even in places where everyone does appear to get along, it doesn’t necessarily take much to set things off. I think most Midwest cities could easily have social unrest with the right triggering incident. While there are some unique aspects to Ferguson such as the political geography of St. Louis metro, no city should feel superior just because it didn’t happen there.

While I don’t pretend to have all the answers, I think we ought to spend some time thinking about the ways technology can actually make things worse. Not only does social media fan the flames of every debate – Twitter and Facebook may be great for many things, but substantive discourse isn’t one of them – but apps like Next Door that are designed to create social capital may actually have the unintended side effect of deepening racial divisions. This despite the fact that the one person I know who works for Next Door is passionate about creating the kind of interracial social capital I’m describing.

This perhaps should be a cautionary tale when it comes to technology-centric views of solving urban problems. There’s no app for solving America’s persistent racial gaps.

PS: I will be aggressively moderating comments or disabling commenting on this post if necessary.

Thursday, September 25th, 2014

Highway Boondoggles

US PIRG, a left oriented activist group, last week released a report called “Highway Boondoggles,” examining eleven highway projects they say are unneeded and will cost $13 billion.

Highway spending is clearly a blind spot for conservatives, who often otherwise decry excessive government spending. But as I’ve observed for some time, there’s basically no highway boondoggle big enough that even the most fiscally conservative governor is willing to kill it.

I happen to think we do need to invest in roads, but there are a lot of massively unneeded projects. I’m not familiar with all of the eleven projects in question, but of those I’ve looked into at all, they do indeed seem dubious. The Opportunity Corridor in Cleveland being one. Double decking I-94 in Milwaukee also seems of doubtful value given that metro Milwaukee has long been one of the slowest growing large regions in the country in terms of population, and both the city and county of Milwaukee don’t want it.

Check the whole thing out.

Wednesday, September 24th, 2014

Neighborhood Poverty Dynamics

Carol Coletta is now with the Knight Foundation, where she’s started up a podcast series called “Knight Cities.”

Her most recent episode is an interview with economist Joe Cortright about a study he did about the evolution of poor neighborhoods in America. This is an important, if depressing, study in which he looked at how poverty changed in city neighborhoods at the census tract level from 1970 to 2000.

I’ll use the cover art embed so you can put the face to the voice. If the embed doesn’t display for you, click over to Soundcloud.

By the way, Cortright also posted a rebuttal to the NYT Magazine piece on Portland.

Wednesday, September 24th, 2014

Paris When It Drizzles

Paris continues its run as the city people most love to shoot time lapses of. Here’s one called “Paris When It Drizzles” by Hal Bergman. If the video doesn’t display for you, click over to Vimeo. h/t Likecool

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Cities: Paris
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Tuesday, September 23rd, 2014

Midsize Midwest Cities — Where Do They Go Now? by Pete Saunders

[ Here's another piece of analytical insight from Pete Saunders, who originally posted it over at his site Corner Side Yard - Aaron. ]

There are some things I posted in the early days of this blog that probably enjoyed very little attention and received little followup on my part.  This piece on midsize Midwestern cities definitely fits that bill.  Since I started this blog nearly two years ago, the attention given to the Rust Belt seems to have grown exponentially — Detroit’s bankruptcy, Chicago’s crime, and Pittsburgh’s revitalization have occupied center stage at various times.  Unconventional ideas are emerging on how to turn around major Rust Belt cities, but smaller ones seem to escape inclusion.  So rather than repost my original post without further comment, I’ve decided to revisit and do some followup commentary.

First, the research.  Looking at 2010 U.S. Census data, I found there are 74 cities in the Midwest as I’ve described it with a population between 50,000 and 300,000.  I eliminated primary cities that fit the population threshold but were part of metro areas that had more than one million people (i.e., St. Paul, MN; Cincinnati, OH; Buffalo, NY), leaving me with 71 midsize Midwest cities.  The largest is Toledo, OH (287,208 residents) and the smallest is Elkhart, IN (50,949).  In between are cities that have become the icons of American Heartland – see the table below.


Midsize Midwest Cities 2010 City Population 2010 Metro Area Population
Toledo, OH 287,208 651,429
Lincoln, NE 258,379 302,157
Ft. Wayne, IN 253,691 416,257
Madison, WI 233,209 568,593
Des Moines, IA 203,433 569,633
Akron, OH 199,110 703,200
Aurora, IL 197,899 9,461,105
Grand Rapids, MI 188,040 774,160
Sioux Falls, SD 153,888 228,261
Rockford, IL 152,871 349,431
Joliet, IL 147,433 9,461,105
Kansas City, KS 145,786 2,035,334
Dayton, OH 141,527 841,502
Topeka, KS 127,473 233,870
Cedar Rapids, IA 126,326 257,940
Evansville, IN 117,429 358,676
Independence, MO 116,830 2,035,334
Springfield, IL 116,250 210,170
Peoria, IL 115,007 379,186
Lansing, MI 114,297 464,036
Ann Arbor, MI 113,934 344,791
Elgin, IL 108,188 9,461,105
Rochester, MN 160,769 186,011
Fargo, ND 105,549 208,777
Green Bay, WI 104,057 306,241
Flint, MI 102,434 425,790
Erie, PA 101,786 280,566
South Bend, IN 101,168 319,224
Davenport, IA 99,685 379,690
Kenosha, WI 99,218 9,461,105
Waukegan, IL 89,078 9,461,105
Lawrence, KS 87,643 110,826
Duluth, MN 86,265 279,771
Sioux City, IA 82,684 143,577
Champaign, IL 81,055 231,891
Bloomington, IN 80,405 192,714
Gary, IN 80,294 9,461,105
Racine, WI 78,860 195,408
Appleton, WI 78,086 225,666
St. Joseph, MO 76,780 127,379
Bloomington, IL 76,610 169,572
Decatur, IL 76,122 110,768
Kalamazoo, MI 74,262 326,589
Canton, OH 73,007 404,422
Muncie, IN 70,085 117,671
Waterloo, IA 68,426 167,819
Iowa City, IA 67,862 152,586
Lafayette, IN 67,140 201,789
Youngstown, OH 66,982 565,773
Oshkosh, WI 66,083 166,994
Eau Claire, WI 65,883 161,151
St. Cloud, MN 65,842 189,093
Lorain, OH 64,097 2,077,240
Janesville, WI 62,948 160,331
Hamilton, OH 62,477 2,130,151
Council Bluffs, IA 62,230 865,350
Bismarck, ND 61,272 108,779
Terre Haute, IN 60,785 172,425
Springfield, OH 60,608 138,333
Pontiac, MI 59,515 4,296,250
Ames, IA 58,965 89,542
Dubuque, IA 57,637 93,653
Owensboro, KY 57,265 114,752
Anderson, IN 56,129 131,636
Grand Forks, ND 52,838 98,461
Normal, IL 52,497 169,572
LaCrosse, WI 52,485 133,665
Manhattan, KS 52,281 127,081
Battle Creek, MI 52,347 136,146
Saginaw, MI 51,508 200,169
Elkhart, IN 50,949 197,559


I listed them all in a spreadsheet that included their 2010 city population and their 2010 metro area population, and started to make some early observations.  For example, metro area population is likely a better indicator of the relative “imprint” of a city, rather than primary city population.  Saginaw, MI, with a population of 51,000 but a metro area of 200,000, seems bigger than Muncie, IN, with a city population of 70,000 but a metro area population of just 118,000. And of course, cities that were relatively close to large metro areas (having a population greater than one million) seem to share more characteristics with their bigger neighbors than their smaller ones, economically and socially.

That led me to ask a few questions that could shed some light on other city characteristics:

  • Is the city a county seat or a county’s largest city, yet not the primary city of a metro area?
  • Is the city a part of or adjacent to a large metro area (with a population of more than one million)?
  • Is the city less than 60 miles from a large metro area?
  • Is the city a state capital?
  • Is the city a college town?

And that exercise led to some interesting conclusions.  Using those questions I was able to identify seven different categories of midsize Midwest cities, and the categories provide a glimpse into each city’s economic history and strengths:

  1.  Captured Satellite City: A once independent midsize city that has been pulled into the “orbit” of a larger metro area. There are eleven in this category.
  1.  Emerging Satellite City: An independent midsize city that is in the process of or on the verge of being pulled into the orbit of a larger metro area.  There are six in this group.
  1. State Capital and College Town:  A city fortunate enough to be a government center and the home of a major university.  There are just three in this category.
  1. Emerging Satellite City and College Town: A combination of points 2 and 3, they retain some measure of independence from larger metros, and benefit from having large schools.  There are only two in this group.
  1. State Capital: Self-explanatory.  There are four here.
  1. College Town: I’m defining a college town as one with a school with an enrollment greater than about 15,000 students, making the school large enough to have a significant impact on the local economy (in case you’re wondering why Notre Dame and South Bend, for example, aren’t included).  There are ten in this group.
  1.  Independent Midsize City: Ah yes, the largest group, with 35 in this category.  Too far from major metros to bask in their glory, and no state capital or university to build from.

Here’s how the cities stack up in a table:


Midsize Midwest City Categories Cities By Category
Captured Satellite City Aurora, IL; Joliet, IL; Kansas City, KS; Independence, MO; Elgin, IL; Kenosha, WI; Waukegan, IL; Gary, IN; Lorain, OH; Hamilton, OH; Pontiac, MI
Emerging Satellite City Akron, OH; Dayton, OH; Flint, MI; Racine, WI; Springfield, OH; Anderson, IN
State Capital AND College Town Lincoln, NE, Madison, WI; Lansing, MI
Emerging Satellite City AND College Town Ann Arbor, MI; Bloomington, IN
State Capital Des Moines, IA; Topeka, KS; Springfield, IL; Bismarck, ND
College Town Lawrence, KS; Champaign, IL; Bloomington, IL; Kalamazoo, MI; Muncie, IN; Iowa City, IA; Lafayette, IN; Ames, IA, Normal, IL; Manhattan, KS
Independent Midsize City Toledo, OH; Ft. Wayne, IN; Grand Rapids, MI; Sioux Falls, SD; Rockford, IL; Cedar Rapids, IA; Evansville, IN; Peoria, IL; Rochester, MN; Fargo, ND; Green Bay, WI; Erie, PA; South Bend, IN; Davenport, IA; Duluth, MN; Sioux City, IA; Appleton, WI; St. Joseph, MO; Decatur, IL; Canton, OH; Waterloo, IA; Youngstown, OH; Oshkosh, WI; Eau Claire, WI; St. Cloud, MN; Janesville, WI; Council Bluffs, IA; Terre Haute, IN; Dubuque, IA; Owensboro, KY; Grand Forks, ND; La Crosse, WI; Battle Creek, MI; Saginaw, MI; Elkhart, IN


So what do the categories suggest about each midsize city’s present and future economic prospects?

Captured Satellite City: These cities have economic fortunes that are closely tied to the economic fortunes of the much larger metro area surrounding it.  Some cities seem to recognize this and have planned accordingly; others still have memories of their earlier independence and have struggled in the face of industrial restructuring.  Perhaps their future is better served by becoming low-cost urban options in otherwise suburban areas.

Emerging Satellite City: These are cities that sit on the periphery of major metro areas, and have yet to fully benefit from being “pulled” into the larger orbit.  They, too, have memories of earlier independence, and may struggle with adjusting to a more dependent future.

State Capital and College Town: With only three in this category, Madison leads the way in terms of economic strength, with Lincoln not far behind.  Lansing, despite having the capital and college attributes, has historically relied on its industrial legacy as well, possibly diluting the government and education benefits.  If it can tap those strengths maybe it can duplicate the others’ success.

Emerging Satellite City and College Town: Ann Arbor and Bloomington are truly unique in that they are the flagship universities in their respective states and are in close proximity to each state’s largest city.  Ann Arbor seems to figure more prominently in metro Detroit’s future; Bloomington remains relatively disconnected from metro Indy.  My guess is that when these cities are fully brought into the larger metro’s orbit, they — and the entire metro — will greatly benefit.

State Capital: As long as the four cities here remain state capitals, they have a reason d’etre and economic catalyst that will support them.  They will continue to have strengths that will elude other similarly-sized cities.

College Town: In many respects the college towns are similar to the state capitals, with an existing reason d’etre and economic catalyst.  The difficulty, perhaps, lies in strengthening and reinforcing the college’s links to the rest of the city and metro.

Independent Midsize City: Here, I believe, are the midsize Midwest cities whose future is most tenuous.  When people wonder about the future of smaller post-industrial cities, these are generally the ones we think of.  What can Youngstown, OH do to forestall its decline?  What strengths does Decatur, IL have that can serve as a foundation for revitalization?  What lies ahead for Terre Haute, IN?  Wtih respect to the other midsize Midwest cities, which have more clear futures (whether or not they choose to accept them), I’ll start exploring what might happen with the independent, midsize, post-industrial Midwest city.

This post originally appeared in Corner Side Yard on November 9, 2013.

Monday, September 22nd, 2014

Diverging Fortunes

This weekend’s New York Times Magazine had a story on Portland that featured Yours Truly. I recapitulated a few observations I’ve had over the years, including that it’s truly remarkable how a small city like Portland has captured so many people’s imagination, and also that “people move to Portland to move to Portland.”

A Portland writer named Steve Duin appears to have had an aneurysm over the piece and, among other things, criticized my statement about why people move to Portland, saying:

She quotes Aaron Renn, an urban-affairs analyst, who insists that while Los Angeles attracts starlets and New York the financiers, “People move to Portland to move to Portland,” as if the city is a space between Pacific Avenue and Park Place on the Monopoly board, not a vibrant, creative, accessible and accommodating urban scene.

Which only proves that he completely missed the point. All I’m saying is what he’s saying in different words, namely that people move to Portland for its lifestyle and amenities. This is exactly what every Portland booster claims, namely that what they’ve created is attractional. I’m simply pointing out the obvious: people move to Portland primarily for lifestyle and leisure, not career or economic reasons. People move to Portland because they want to live there.

Portland’s economy has actually picked up of late. Its unemployment fell below the national average in 2013 after having been above it for 14 straight years. But I want to highlight a disconnect between a couple measures of economic performance.

I’ve written many times that Portland has done very well in terms of per capita GDP. In fact, from 2001 to 2013 (the maximum range of data available from the feds), Portland was #1 out of all 52 large metros in the US in its percentage increase in real per capita GDP.

On the other hand, looking at how much of that economic value ends up in people’s pockets tells a different story. From 2001 to 2012 (I don’t think 2013 has been released yet), Portland only ranked 40th out of 52 in its percentage increase on this metric. Portland declined from a per capita income of 104.9% of the US average in 2001 to 98.6% in 2012.

I threw this divergence into a quick chart:

portland-gdp-vs-persinc

It would be interesting to dig into these numbers. I would particularly be interested in seeing where the GDP growth is coming from, as unlike say San Jose, there’s no obvious driver I see.

Update 9/23/14: I did a quick back of the envelop calculation of total GDP growth by industry. Only a few industry totals are available, but the biggest gainer was Manufacturing, up 300%. Education, Health, and Social Assistance were #2, followed by Professional and Business Services. Natural Resources, Retail. Information, and FIRE were at the bottom.

Speaking of San Jose, I see an even more remarkable divergence there. It was #2 in per capita GDP growth over the 2001-2013 time frame. Looking at the overall Bay Area total real GDP, it increased by 30.1% from 2001 to 2013. Keep in mind I’m using the inflation adjusted figured here, so there’s no inflation in that metric. But at the same time the Bay Area lost 2.4% of its jobs.

The Bay Area grew its economy by almost a third while shedding over 75,000 jobs. Pretty remarkable.

Sunday, September 21st, 2014

Indiana Toll Road Lease Vindicated As Win For Hoosiers As Private Operator Goes Bankrupt

The genius of the Indiana Toll Road lease is now on display again as its private operator is declaring bankruptcy. Mitch Daniels once said that it was “the best deal since Manhattan was sold for beads – only this time the natives won.” We now have the proof on display.

I continue to be mystified that people can still claim this was a bad deal for the state (see former Indiana House Minority Leader Pat Bauer and this Shaw Friedman guy). Hello? If the operator is going bankrupt, it’s because they overpaid. The revenue projections they made were so inflated that the tolls couldn’t even cover the debt service. That means Indiana got way, way more than the road was actually worth.

It may well be that you can have various objections to the deal. Maybe the state should have better anticipated some compensation events. Maybe you don’t like some of the projects the proceeds were spent on (there are a few I think are dubious). But just because the deal might fall short of some theoretically perfect ideal that nothing ever achieves doesn’t mean it wasn’t a massive win for the state overall – especially financially.

Those who claim that the state could have better monetized the highway itself beyond stretch credulity. After all, the state never made a material profit on the highway in the 50 years it owned it and it had badly deteriorated in many places. To think that state would have been able to generate more than the private concessionaire paid ($3.9 billion in cash and upgrades) with a revenue stream that has proven manifestly inadequate to even keep the private firm afloat is, shall we say, a bridge too far. (You might be able to try a Laffer Curve type argument, but I’ve never heard anyone actually make it. And if cutting tolls would have optimized revenues, you can believe the private operator would have tried it).

Daniels did once say that the state would retake responsibility for the road back if the vendor declared bankruptcy. He clearly misspoke on that. The state won’t get the road back until the lease expires (though still has and never did lose ownership). But if the bankrupt or restructured entity defaults on its obligations under the lease, the state very much can take it back. So the state is protected. Who care’s who the operating entity is as long as it’s delivering on the contract?

I don’t think that government should try to sign “gotcha” deals with private parties that sends them into bankruptcy. Ideally such deals would be win-win. But given how many terrible deals have been signed with cronies and such out there, it’s good to see one where the public gets a clear win. Cintra and Macquarie are big boys who surely already protected themselves (and have a large portfolio which likely includes some big winners for them). Though a new operator may try, and they’d be crazy not to, there’s no reason for the state to renegotiate on this one.

Friday, September 19th, 2014

Metro Area Gross Domestic Product

percent-change-per-capita-gdp-2010-2013
Percent change in real per capita GDP, 2010-2013.

The Bureau of Economic Analysis is out with the preliminary numbers for 2013 metro area GDP (see the press release).

Update: Since Real Clear Policy linked this, I’ll add in a spreadsheet with per capita GDP data for all large metros.

We’ve now got enough data that it’s worthwhile to start tracking the trend vs. a 2010 base instead of 2010. With that, here are the top ten large metros by real per capita GDP:


Rank Metro Area 2013
1 San Jose-Sunnyvale-Santa Clara, CA 100,115
2 San Francisco-Oakland-Hayward, CA 78,844
3 Seattle-Tacoma-Bellevue, WA 74,701
4 Boston-Cambridge-Newton, MA-NH 74,643
5 Washington-Arlington-Alexandria, DC-VA-MD-WV 73,461
6 Houston-The Woodlands-Sugar Land, TX 72,258
7 New York-Newark-Jersey City, NY-NJ-PA 69,074
8 Portland-Vancouver-Hillsboro, OR-WA 68,810
9 Hartford-West Hartford-East Hartford, CT 66,870
10 Salt Lake City, UT 62,008

San Jose cracks the $100,000 barrier, though that’s in part to the Bay Area being split into two metros, and the base year for constant dollar calculations getting switched from 2005 to 2009. But still impressive.

This list is similar to what we’ve seen before. But how are things changing? Let’s look at the top ten large metros for percent change in their real per capita GDP from 2010 to 2013:


Rank Metro Area 2010 2013 Pct Change
1 Houston-The Woodlands-Sugar Land, TX 63,816 72,258 13.23%
2 San Jose-Sunnyvale-Santa Clara, CA 89,806 100,115 11.48%
3 Portland-Vancouver-Hillsboro, OR-WA 63,025 68,810 9.18%
4 Columbus, OH 50,370 54,493 8.19%
5 Grand Rapids-Wyoming, MI 41,248 44,482 7.84%
6 Charlotte-Concord-Gastonia, NC-SC 51,819 55,802 7.69%
7 Oklahoma City, OK 45,993 49,441 7.50%
8 Salt Lake City, UT 57,790 62,008 7.30%
9 Nashville-Davidson–Murfreesboro–Franklin, TN 50,464 54,112 7.23%
10 Detroit-Warren-Dearborn, MI 46,314 49,653 7.21%

A full map of this metric is at the top of this post.

Houston’s #1 showing is very impressive. This is a per capita value remember, so they aren’t on top just by virtue of adding lots of people. And they are in the top ten for 2013 per capita, so it’s not like they started on a low base or something.

Portland and San Jose continues their strong showing in this metric (more on these metros to come next week). Two metros in Michigan made the top ten, though some of that I’d speculate must come from the auto industry recovery, meaning it’s cyclical in nature.

I’ll throw in the total real GDP figures as well, but obviously these heavily align to population. Here are the ten biggest metro GDPs in 2013 (amounts in millions of dollars):


Row Geography 2013
1 New York-Newark-Jersey City, NY-NJ-PA 1,377,989
2 Los Angeles-Long Beach-Anaheim, CA 775,967
3 Chicago-Naperville-Elgin, IL-IN-WI 550,793
4 Houston-The Woodlands-Sugar Land, TX 456,177
5 Washington-Arlington-Alexandria, DC-VA-MD-WV 437,085
6 Dallas-Fort Worth-Arlington, TX 413,627
7 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 358,091
8 San Francisco-Oakland-Hayward, CA 356,081
9 Boston-Cambridge-Newton, MA-NH 349,652
10 Atlanta-Sandy Springs-Roswell, GA 288,175

And the top ten in total real GDP growth percentage, 2010-2013.


Rank Metro Area 2010 2013 Pct Change
1 Houston-The Woodlands-Sugar Land, TX 379,595 456,177 20.17%
2 San Jose-Sunnyvale-Santa Clara, CA 165,435 192,184 16.17%
3 Austin-Round Rock, TX 86,546 98,126 13.38%
4 Portland-Vancouver-Hillsboro, OR-WA 140,717 159,266 13.18%
5 Charlotte-Concord-Gastonia, NC-SC 115,229 130,318 13.09%
6 Oklahoma City, OK 57,856 65,246 12.77%
7 Nashville-Davidson–Murfreesboro–Franklin, TN 84,572 95,124 12.48%
8 Dallas-Fort Worth-Arlington, TX 368,015 413,627 12.39%
9 Salt Lake City, UT 63,090 70,719 12.09%
10 San Antonio-New Braunfels, TX 80,101 89,463 11.69%

Richard Florida posted some thoughts on this data over at City Lab. I’m less bothered than he is by Washington, DC’s poor performance, however. Much like Detroit’s cyclical upswing, I think short term turbulence in DC from the sequester and fiscal challenges was to be expected.

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