Friday, December 21st, 2007

A New MPO for Indianapolis?

Every urbanized area greater than 50,000 people has a designated Metropolitan Planning Organization. This MPO is responsible for long and short range transportation planning and a variety of other things needed to qualify transportation projects for federal funding. One of the documents that MPO’s are required to put out is called a Unified Planning Work Program. This is a fairly dry document in most cases that few apart from a handful of people such as Yours Truly ever read. It is basically a list of everything an MPO plans to do in the coming year, which normally boils down to “more of the same stuff we did last year” spread across 80-100 pages.

I scanned the 2008 Indianapolis MPO UPWP document and saw some interesting things. I noted previously that Indianapolis is in dire need of a new MPO structure. This need is clearly recognized in the UPWP document. Among the problems cited:

  • The MPO only has half as many people as it needs
  • One reason being that it is still largely funded by the city of Indianapolis, even though Indy makes up an ever smaller percentage of the metro area. Mike Dearing has been going around with a tin cup begging donations from other regional governments which have mostly, to their credit, contributed.
  • The Indianapolis MPO is territory is the smallest legally allowed by law, and the boundary lines between Indianapolis, Anderson, and Columbus are blurring.

The various MPO’s are in discussions about a restructuring. Columbus may cede the portions of Johnson and Shelby Counties in its planning area to Indianapolis. And Indianapolis and Anderson are considering merging, though we will see how much appetite there is for this in Anderson. Part of this effort would include a rebranding of the MPO.

My belief is that there should be a nine-county MPO which coveres the entirety of the nine county Indianapolis area. This would be structured and funded as an intergovernmental council and not as part of the Indianapolis Department of Metropolitan Development, though the existing staff could form the nucleus of the new organization.

I also believe INDOT should restructure its districts to create a new Indianapolis District that covers the exact same geography as the new MPO. They could even share the same offices. Right now even Marion County is split between three INDOT districts, the only place in the United States I’ve been able to identify where a state’s largest city is split between multiple DOT districts. Also, INDOT has been missing in action when it comes to MPO coordination in Indianapolis (and possibly elsewhere). It basically just sends over its project change list to be amended into the LRP and IRTIP, but they do not appear to be actively engaged at the planning table. More close integration of the two planning functions would be a major win for the area.

The UPWP also cites a lack of standards and coordination in the GIS area.

Two of the major documents produced by the MPO are the Long Range Plan and the Indianapolis Regional Transportation Improvement Program, a four year short range plan. Both of these are out of date. The MPO plans to do an update to the LRP next year, but plans to leave the IRTIP as is. Most cities publish a new TIP annually. Indianapolis hasn’t done one in two years, but has simply been surviving by making quarterly amendments. The fact that they do not appear to be creating one next year either is troubling, but with the city of Indianapolis being broke, there is probably no money. This is one reason restructuring the MPO is so important. Hopefully incoming mayor Greg Ballard will make some progress on this.

There are a number of local studies that the MPO plans to support and fund next year. These are:

  • Mt. Comfort Rd. corridor study (linking I-69 to I-74 along Mt. Comfort Rd)
  • Feasibility study on a new primary arterial in the Geist area of Lawrence
  • Danville thoroughfare plan
  • Johnson County thoroughfare plan
  • Indianapolis county-wide signal corridation (the lack of a computer interconnect system controlling all signals in the county is an embarrassment)
  • Johnson County new east-west corridor study

Keep in mind these are all just studies, not construction projects.

This is some of what is going to be going on in Indianapolis transportation planning in 2008.

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Topics: Transportation
Cities: Indianapolis

Wednesday, December 19th, 2007

Power Implications of Indiana Local Government Reform

The Shepard-Kernan Commission examining local government reorganization in Indiana issued its report last week.

It is interesting to think about the implications of this in light of the “re-writing the power map” hypothesis of Savitch and Vogel. These reforms are presented as a typical “good government” reform designed to improve efficiency and accountability. But, if adopted, the very sweeping reorganization would no doubt result in a major shift in power in Indiana localities.

The most notable thing is the enormous consolidation of power under a single countywide executive. Almost all lines converge on this:

  • Consolidating three commissioners into one
  • Eliminating most constitutional elected officers such as sheriff and putting that responsibility in the hands of the county executive
  • Abolition of townships and the transfer of all their responsibilities, including fire protection and poor relief, to the county executive.

In most cases, this is likely to make the county executive by far the most powerful individual in any Indiana county. This could potentially lead to a major shift in who is viewed as the real leader in a community and dramatic changes in relationships between cities in counties.

Consider Ft. Wayne. It is the second largest in the state and by far the largest in Allen County. Yet the county government is already powerful as well. An even more powerful county with a single executive would raise the question as to who the real community leader is. Is it the mayor of Ft. Wayne or the “mayor” of Allen County? Similar things could play out in other counties.

Interestingly, we’re already seeing outright wars in some counties over control of economic development. For example, Boone County is very unhappy about Whitestown’s annexations. These reforms would clearly strengthen the hands of the county versus cities and towns. Again, I see a particular potential for conflict in counties where there is one dominant city, of which Indiana has several.

The other interesting thing is the fire protection transfer from townships to counties. This probably makes some sense for rural areas with many township volunteer departments. But in urban areas where a town is served by a township department, I can see where local leaders would not want to cede control of their local fire department and its associated service levels, particularly where this affects critical local safety services, insurance rates, etc. A good example is Avon, where a township fire department serves the town. Would Avon really want the Avon/Washington Township fire deparment absorbed into a single county-wide system? I don’t know, but if I were them, I probably wouldn’t.

Read the full report and consider the recommendations for yourself. And consider all the implications, not just the potential for efficiency gains.

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Topics: Public Policy, Regionalism
Cities: Indianapolis

Saturday, December 15th, 2007

An Examination of City-County Consolidation

H. V. Savitch and Ronald K. Vogel of the University of Louisville wrote an article called “Suburbs Without a City“, analyzing the merger of Louisville and Jefferson County, and in the process making many good observations about or relevant to other consolidated cities like Indianapolis and Nashville.

Savitch and Vogel make the argument that the primary goal and pratical effect of merger was to re-align power relationships to put the levers of power in the hands of the business, political, and media elite. Among the changes leading to this were:

  • A strong mayor, weak council system.
  • Dissolution of the city of Louisville while retaining smaller suburb cities
  • Dilution of the voting power of minorities
  • A transfer of the locus of political power from the old central city to suburban Jefferson County

In their words, “Reformers frequently support consolidation because they assume rather than make an effort to prove its benefit…changes in local governance are often about power not bureaucratic efficiency or effectiveness. More often than not, power shapes the reception of ideas and determines who has voice in community debates. Bringing this to public attention is difficult, and elites often respond with hostility to attempts to distinguish between power and better government.” Rather than a Ruskian city without suburbs, they believe Lousville has become suburbs without a city.

They also make the argument that merger has not and will not improve efficiency or result in cost or tax savings. It is also explicitly non-redistributionist in that wealthier areas are firewalled off from having to support the less well off areas, and in fact if anything the reverse is true.

All of these features are, in so many words, said to have been imported from Indianapolis’ Unigov. I believe there is some degree of parallel between these mergers, so the experience of Indianapolis under merger is something that bears examining. You can view the structure of the Louisville Metro government online.

In 1969 a unique political alignment put Indianapolis and Indiana under the unified control of Republicans. The Mayor Richard Lugar was able to push through a legislative city-county consolidation called Unigov. Key features of Unigov:

  • A county-wide mayor, with a combined 29 member city-county council
  • Administration, planning and zoning, parks, and infrastructure development were consolidated
  • School districts, police departments, and fire departments were not consolidated. Subsequently, police departments were merged.
  • Cities and large towns (four total) were excluded from merger, but still allowed to vote for mayor. Smaller towns were semi-included in merger, but remained legal entities and retained some powers.
  • Townships were unaffected, as were all special purpose districts.

As you can see, this was in a sense a merger in name only. Many of the most important government services were not merged.

Louisville’s merger followed a similar script, with some updating.

  • A county-wide mayor with 26 council members
  • Administration, planning and zoning, parks, and infrastructure merged
  • Police and fire departments of city and county merged
  • All other incorporated municipalities excluded, including 83 incorporated towns and 19 suburban fire departments.
  • Schools were previously consolidated in the 1970’s and so were unaffected
  • Special districts unaffected
  • An “urban service district” established to provide for higher taxes in the old city limits to pay for services only delivered there.

As you can see, this is broadly similar, with a lower degree of consolidation of municipalities, but a higher degree of departmental consolidation.

As in Indianapolis, the population of the outlying county had grown to be larger than that of the old city. Thus, merger transferred the balance of political power from the “city” to the “suburbs”. In Indianapolis, this led to nearly three decades of Republican dominance, and the political marginalization of minorities. The old city of Indianapolis effectively ceased to exist as a political force, outside of downtown interests. The authors suggest a similar fate awaits Louisville, saying “the city’s autonomy, its power, and its unique qualities have been homogenized into a larger entity.”

In the case of Lousville, there was a strong desire to consolidate power into a strong-mayor. Jerry Abramson went to work for a law firm after leaving office the first go-round. It was his law firm that was the primary backer of merger. A partner in this firm actually drafted the enabling legislation. In a sense, he wrote his own job description for his comeback. This reinforces elite control over the government because of the large amounts of money needed to effectively campaign for office in the consolidated city.

Also, a large city government is so complex and difficult to manage that even an outsider would be dependent on the entrenched power structures to do anything, and so would end up co-opted. We see this happening right before our eyes in Indianapolis. Outsider Greg Ballard was elected mayor in a stunning upset. Now we hear the shrieks of outrage as he turns to establishment Republicans on his transition team. But fundamentally, he has no other option. There are literally hundreds of appointments that the mayor has to make, and as a lone outsider without a posse to bring along with him that has the experience necessary to do the jobs, he has to turn to establishment players. The large size of the city council also makes it difficult for individual reformers to make a difference. This sort of thing is exactly why no one has ever reformed Washington and no one ever will.

I won’t go into the details of the case for saying merger was to entrench the power of the elites. Read the article for yourself. While they don’t actually say so, it is clear that authors do not much care for merger and especially this aspect of it. Indeed, the term “elites” itself is pejorative and indicates their point of view. They dismiss merger as not the driver of above trend growth in Indianapolis and Nashville, and also suggest that the City-County Compact could have served indefinitely in place of merger.

I agree that merger in both Indy and Louisville was primarily designed to rewrite the power map. I tend to agree that merger in both Indy and Louisville had a tendency to reinforce the power of the elites. But that is a sort of secondary impact. Rather, I believe the most important thing merger did in both places was to make sure that all the elites were together in the same boat. This aligns their personal interests and makes it much less likely that there would be infighting in the upper classes. It is this lack of infighting itself as much as anything that leads to the dramatic increase in the elite’s power.

What is the practical effect of this? Is it good or bad? As with anything, there are pluses and minuses. On the positive front, it has really enabled the leadership of Indianapolis to rally around key decisions and ambitions. This cannot be underestimated as a source of strength in that community. When dreams of downtown retail appeared dead, and several blocks just empty holes in the ground, Indy was able to rally behind completion of the Circle Centre Mall. Look at the comparative ease with which Indianapolis built first Conseco Fieldhouse and next Lucas Oil Stadium. You can pretty much bet that any major civic project in Indy is going to get done, and at a minimum will not be torpedoed squabbles amongst civic leaders.

The downside is just the flip side. There is little serious scrutiny of any proposal as once a decision is made, community leaders close ranks behind it. The result has been a generally lower quality of project than in places with a more robust tradition of civic debate.

The contrast with Louisville could not be more telling. Louisville has long been a city characterized by high levels of mistrust and bickering. In many ways, they were the gang that couldn’t shoot straight. I have always said that in Indianapolis nothing gets criticized by the establishment, no matter how bad it is, whereas in Louisville everything is subject to intense bickering, no matter how good.

The situation there now seems to have reversed itself and is more closely following the Indianapolis model. After seemingly decades of debate over building a new downtown basketball arena, one is finally breaking ground. There has been a veritable flurry of new downtown development, much of it by the connected and receiving huge amount of tax subsidies. I don’t think it is any accident that the use of TIF districts skyrocketed after merger. This has really jump started downtown development. I do not believe most of these projects would have happened without merger.

Thus far, quality has only suffered at the margins. The arena has a poor design and an inflated price tag, for example. But projects like Museum Plaza [now apparently dead] are first class. When elites dominate a political structure, as with an aristocracy, the focus of civic virtue is on the character of the rulers. In that regard, Jerry Abramson is more in tune with quality of development than Bart Peterson, to whom doing the deal seems his passion. When Abramson finally moves on, we’ll see what happens in Louisville.

On the matter of governmental efficiency, I have long been a skeptic that consolidation brings the cost savings touted by proponents. If that were the case, federal government services would be a paragon of efficiency. The larger the bureaucracy, the less efficient it usually is in my experience. This is true not only from a cost perspective, but a speed one. How often do we observe in a corporation or other entity that good decision making is very difficult, and that even good, motivated people are ineffective at making things happen. Smaller, more entrepreneurial companies are famously more nimble and responsive.

This is something that should be kept in mind as Indiana looks to reorganize local government in an attempt to rein in property taxes. While I am a big supporter of abolishing townships, I don’t believe that this will, by itself, result in material cost savings to the taxpayer.

The last point, regarding the anti-redistributionist nature of merger, is one worth noting. While political power is redistributed away from central city residents, especially minorities, in a merger, redistribution of resources from well-off suburban areas to less well-off inner city areas is not done. In fact, there are explicit steps generally taken to make sure this doesn’t happen, and if anything the flow goes the other direction.

Unigov retained the township structure where services such as poor relief that benefit largely inner city residents are not contributed to by suburbanites. Similarly, the inner city school district was left intact. People inside the pre-Unigov city limits paid for the Indianapolis Police Department, but people outside did not. However, everyone in the city paid for the Sheriff’s Department, which only patrolled suburban areas. The consolidated services are those like infrastructure, where the balance of spending will be to the suburbanized areas. If anything, Unigov forced poorer, inner city residents to subsidize the suburbanites in the outlying townships.

Nashville included a similar two-tier structure with an “urban service district” paid for only by central city residents. And Louisville has taken a page from the same playbook. The old city of Louisville is to be designated an urban service district where only taxes raised from that district will provide certain city services. Well-off suburban enclaves such as Prospect were excluded from merger, and can vote to provide premium services for themselves without regard as to equity elsewhere in the county.

To me the most interesting case is downtown development. Major civic attractions such as sports teams, etc. that benefit the entire county or region are located there. Yet much of the freight for paying for these community wide assets falls on the residents of the old inner city only. How is that?

One of the main vehicles for doing this is through Tax Increment Financing or TIF. Those who read my blog know I am generally skeptical of TIF’s, though think they can be useful in certain circumstances. When a certain area is declared a TIF, the current tax revenue is frozen for a long time, often 20+ years. All new taxes from new development in the district goes into special TIF fund. The money in this TIF fund is spent for the benefit of the district. Usually it is pledged for debt repayment on bonds that are issued up front to subsidize a big project in the TIF.

TIF’s hurt the central city because they take valueable property off the general tax rolls there. Let’s take a hypothetical example. An urban service district provides garbage collection paid for solely by central city taxpayers, funded by property taxes. TIF’s freeze the level of taxes collected in part of that taxing district for years and years. This means residents outside the TIF’s have to pay more to cover increased costs of services over time. TIF proponents argue that no development would have occured without the TIF bond, and while that might be true in certain blighted areas, it most certainly is not true in major downtowns.

Indianapolis is a heavy user of TIF’s downtown. Louisville had typically avoided them, and TIF laws are stricter in Kentucky than in Indiana. But since merger, Louisville has gone on a TIF orgy. It has TIF’d much if not most of downtown to support the arena, the Haymarket District, the City Center project, and Museum Plaza. I don’t think it is any accident that Louisville’s appetite for downtown TIF’s has only manifested recently in the wake of merger.

There is one aspect of Louisville’s merger that is very different from Indianapolis and very troubling to boot. Not only did every municipality other than Louisville remain intact during the merger, after a 12 year moratorium, they will be free to annex. Conceivably they could even annex territory inside the old city of Louisville itself. As the authors note, “In theory and in practice, small cities can annex parts of the former city of Lousiville. This raises some disturbing questions. First, if the former city of Louisville is supposedly protected by ‘local consolidated government’, how can parts of it be annexed? Second, what is to prevent smaller municipalities from combining with more affluent neighborhoods of the city and cutting it up? Last, would not annexation result in cherry picking parts of the city and shedding its least desirable neighborhoods to a much larger and impersonal megastructure?”

In effect, merger in Louisville meant the dissolution of the city of Louisville combined with a reoganization of county government. This is in marked contrast to Indianapolis, where most small cities were, for practical purposes, subsumed into the new consolidated city, and where all future annexations in Marion County are forbidden because the entire county outside of the excluded cities is considered part of the incorporated city of Indianapolis.

I don’t agree with everything the authors write. Nevertheless, this is a great paper with a lot of points to ponder and I would consider it required reading for anyone interested in the rationale for and consequences of merger.

Saturday, December 15th, 2007

Suburban Decay Comes to Charlotte

Thanks to Urban Indy for linking to an article about suburban decay in Charlotte. The interesting things it that this isn’t happening in older areas, but practically new starter home subdivisions. Many of these homes were very cheaply built, were sold to people with marginal credit, and are now experiencing significant blight as the housing market turns south. Cheap buildings and common areas are damaged and unsightly. Homes get converted into rentals as investors swoop in to buy them out of foreclosure. And crime is skyrocketing.

Charlotte, like Indianapolis and many places where there is ample cheap land, threw up thousands of these types of home. Many of these subdivisions are struggling, though I haven’t heard of it being this bad before. Many of these places were built as borderline disposable communities, and they appear to have a very short shelf life.

One of the Charlotte city council members referred to these starter home communities as the “projects of the future”.

It will be interesting to see what happens. As I noted in my latest brief on Indiana annexation, municipalities are stepping up to take the lead on development in Indiana now, not counties. And municipalities take a jaundiced view of these types of developments. Many of them are implementing minimum design standards to mandate, for example, brick facades, and various anti-monotony ordinances designed to keep these places out. This pushes the developers further out on the fringe. Speculating, this could start leading to a development pattern where there are alternating rings of thriving and decaying communities, with some of the worst on the actual suburban fringe. There’s a thriving downtown at the core, ringed with traditional urban decay and some older, decaying suburbs. Then you’ve got a ring of newer, properous, higher end suburban communities, then you’ve got an exurban ring of cheaper suburbs where the development standards are lighter, featuring new suburban decay. We’ll have to see how it all plays out.

Saturday, December 8th, 2007

Are Cities Necessary?

The Columbus Dispatch is doing a major week-long series called “On the Brink” on the future of cities in Ohio. It is profiling each of the seven largest cities in the state. It started with an overview that featured this commentary:

Today, however, most of Ohio’s seven largest cities are teetering. With the exception of Columbus, they have shed more than one-third of their population and watched as income, home values and other economic indicators dropped below national averages while poverty, job losses, crime and foreclosures skyrocketed.

But experts warn that Ohio is ignoring the urban plight at its own peril. They say that today’s inner-city problems are spreading to the suburbs, as a rotten core eventually makes the whole apple bad. ‘If we don’t take care of our cities’ problems, they’re guaranteed to swallow up regions outside city borders,’ said Cuyahoga County Treasurer Jim Rokakis.”

Ohio’s major cities haven’t thrown in the towel. All are adopting different strategies to build on their strengths, preserve their assets and build a stable future. But they start by accepting a hard truth: The good old days of Ohio’s big cities are gone — forever. ‘You can’t go home again,’ said Hunter Morrison, director of the Center for Urban and Regional Studies at Youngstown State University. ‘You can’t go back to what you once were. … You can’t bring them back. You can reframe them, you can rethink them, you can reposition them, but you cannot restore them to what they once were.’

Today I’m going to take a bit of a Devil’s Advocate view of cities. As we think about the severe decay that has destroyed cities like Cleveland and Detroit, it is worth asking ourselves whether in fact most of these places should even try to be saved, at least in the way that city leaders want them to be. I’m not saying I advocate this, but it is worth at least asking the question. So in the spirit of a provocative thought experiment, let’s consider the case against cities.

I was prompted to think of this question with regards to Cleveland when I saw the media coverage about a proposed I-90 interchange in Avon. Avon is a rapidly suburbanizing area just outside Cuyahoga County. A developer building a major complex there needed access to the interstate and offered to pay to build an interchange. Because of the nature of regional transportation planning, this interchange required the permission of the MPO to be built. But the MPO is dominated by Cleveland and Cuyahoga County entities. They threatened to veto the interchange unless Avon agreed to kickback tax revenue to the project for them. This was, IMO, blatant extortion and a demand for tribute. Apparently unable to attract any development on their own, Cleveland and Cuyahoga County have apparently decided to try to fund themselves by figuring out how to tap into their neighbors’ development.

Those who support the Cleveland position claim that what’s really happening is that suburban sprawl is sucking the life out of the central city. What’s more, this isn’t driven by the market place, but by huge subsidies. When developers build, governments will be forced to spend millions to provide infrastructure, so this subsidy needs to be taken into account.

As I thought about that, I started thinking about our central cities and came to the conclusion that, for the most part, they are actually in a worse state than greenfield sprawl. They’ve got infrastructure, but it is built to an obsolete standard and it is way overdue for replacement to boot. The question is, would it be cheaper to just abandon the city and build brand new communities in the suburbs, or to try to somehow renew the city itself?

I don’t have an economic analysis in front of me, but gut feel tells me that there’s a case to be made that it would actually be cheaper to build new, and thus the subsidy clearly goes the other direction. Consider some of the ills facing our inner cities:

  • Aging, combined sewer systems. Many of these need enormous repair just to keep properly functional. What’s more, pretty much the biggest public works project in every metro area today is something that flies under the radar, namely a billion or multi-billion project to separate sewers or dig “deep tunnels” in order to keep these old sewers from overflowing during heavy rains.
  • Aging, leaking water pipes also require extensive repair
  • Old industrial sites have enormous pollution problems. Nuvo (an Indianapolis alt-weekly) once did a story on how even soil on residential properties in inner city Indianapolis feature high levels of poisonous lead. It would be virtually impossible to clean this up.
  • Tens of thousands of abandoned homes in almost any city of any size.
  • An aging housing stock, mostly made up of buildings of no historical significance and little distinctive character. These are build to older standards and feature small bedrooms, non-code electric and plumbing lines, lead paint, etc. Many if not most occupied residences require extensive renovations.
  • Crumbling streets, sidewalks, park facilities, etc.
  • Horrible schools and other troubled institutions with no near term prospects for improvement.
  • Huge unfunded liabilities like the Indianapolis pre-1977 police and fire pensions.

What would be cheaper, fixing the infrastructural, educational, and environmental nightmares of our current cities, or just building new in the burbs? I know where I’d put my money. Today we’ve got the technology and the wealth to build brand new, modern towns that are oriented around modern design standards and modes of living, and which are much, much more environmentally friendly and clean.

There are also enormous potential benefits to the residents of our inner cities, who are today largely poor and minority. This is a terrible environment in which to be raising our next generation. Surrounded by lead paint and soil, horrible housing, terrible schools, and with only other people in poverty nearby, that certainly puts people in a handicapped position in life. I’ve noticed in influx of minorities into suburban Avon, Indiana where I used to live. They obviously came to the rational conclusion that this was a better life for them and their family than Indianapolis. Why not try to extend this model further? Rather than trying to say we need to reinvest in inner cities in the name of justice, why not invest instead to help those inner city people become participants in the American Dream without necessarily spending a lot of money on the built environment. Rather than try to improve the central city schools, instead get the children into better schools, ones where 90% of the students aren’t mired in poverty.

I think of the billions each city I talk about in this blog out there has spent to try to bring back downtown. While that has succeeded at some level, even today almost no downtown development occurs in these places without some level of government subsidy. And it has done little to nothing to bring back neighborhoods outside of downtown.

Perhaps cities might want to keep a historic downtown intact and invested in as a focus for visitors, a governmental center, a gathering place, an urban playground, etc. But beyond that, why not just demolish the surrounding neighborhoods, clean up the worst environmental problems, and turn the old inner city into a gigantic central park for the metro area? The billions spent on downtown surely would have paid to take care of this. Then you don’t even have to try to solve the problems. Help the people, not the buildings or the streets or the sewer lines.

But isn’t a thriving central city necessary to a successful metro region? Tellingly, most of the arguments in favor of this are negative arguments. That is, they stress the negative effects a festering, cancerous mass at the core of the region would have on the suburbs, but don’t necessarily give a positive vision of how a thriving central city would help the suburbs. Take a look at those Dispatch quotes above about a “rotting core” and “swallowing up” regions outside the core for classic examples of this. I actually agree with that. But rather than trying to convince the cancer cells to go back to being normal, why not just cut out the tumor instead? Remove the diseased tissue, and let the healthy places go on living. And again think of the potential enormous improvement in the prospects of inner city residents if they are able to get into safer neighborhoods with better housing and better schools in the suburbs. Also, most central cities are already economically irrelevant in their metro area region. It may still represent the single largest employment base, but nearly all new jobs are being created elsewhere.

Now perhaps this is too radical a prescription. Nevertheless, I don’t get the sense, contrary to what the Dispatch says, that most central cities have come to terms with their place in the world. They instead take a look around at the handful of largest cities in America and the world, like New York, Chicago, San Francisco, and Boston, see the thriving hordes of people in robust neighborhoods, shiny transit systems, many visitors, etc. and think that is what they can be someday. But that is just not realistic for the vast majority of places. Cleveland is not going to be Chicago, no matter what it does.

The one place, interestingly that appears to be coming to grips with this is Youngstown. It has embraced the permanent decline in its fortunes. Perhaps not with enthusiasm, but with realism. It is a poster child of the Shrinking Cities movement. It has decided that rather than trying to completely revive its inner city, it is going to try to right-size itself for a permanent population of 80,000. This includes large scale demolition and abandonment, a reorientation of city services, and trying to provide the best quality of life for the people that remain.

The Youngstown approach is not likely to win many converts among the crowd of civic boosters who constantly pine to be a “world class city”. (Never mind that many true world class cities like Geneva, Switzerland are far smaller than your typical decaying American metropolis like Cleveland). However, it might be something that smaller cities like Youngstown will go along with. If Youngstown is able to show success with this, perhaps others will imitate it.

The Youngstown path is clearly not for every place. But it illustrates the type of thinking that needs to go on. The Indianapolis Business Journal had a great cover story [dead link] on property tax reform and the possible impact on Indianapolis. Some fear that this will starve the city of funds. Also, this article shows how Indianapolis is losing the battle to attract citizens, as people rationally conclude they are better off living in a brand new suburban environment that is both better and features lower taxes.

I saw one quote that was most telling: “Michael Hicks, who has analyzed Daniels’ plan, said residents of many U.S. cities are willing to pay a tax premium to live closer to the urban center. They perceive value for the higher cost of living. He said that’s not the case here. ‘The disconnect in Indiana, and I can’t stress this enough, is there is no linkage between the quality of public services and the price we pay by taxes'”. That hits at the difference between a place like New York City and Indianapolis. In NYC, people are willing to pay a premium to live there and to receive the high level of services that they get. In Indianapolis, people aren’t willing to pay a premium for a product that is not sufficiently positively differentiated from the ones the suburbs are selling, and which costs more for fewer services to boot.

If a central city wants to survive and thrive, an alternative to the Youngstown approach is to figure out how to sell a differentiated product that people are willing to pay a premium to buy. However, most cities today appear to be aiming to turn themselves into mini-NYC’s, focusing on re-creating the 19th century urban form in the hopes that this will itself magically revitalize the city through attracting a “creative class” of young singles and gays along with a few empty nesters.

Now trying to appeal to these groups isn’t a bad strategy when you have a horrible school system that few parents would voluntarily send their kids to. The problem here is that:

  • This notion of the creative class is overblown. I plan to write a future article on this
  • None of the cities in question will ever be able to build real competition to NYC, SF, Chicago, Boston, etc.
  • Every other city is doing the same thing, making the approach not very differentiated, at least not between metro areas.
  • It will likely not appeal to more than a narrow segment of the population. Even Chicago, which has had probably the largest urban condo building boom of any American city, is losing population. The creative class is flocking, but everyone else is leaving, driven out by rising taxation and soaring real estate prices.
  • It is focused on the economic elite, and thus is an incredibly regressive economic policy. Cities that have somewhat successfully followed the model, such as Portland, have become relatively unaffordable.

So where should cities go? I honestly don’t know the answer. Probably this notion of urban development has something to it. As I’ve noted many times, this mode of living will appeal to some such as yours truly, even if that is a minority of people. And because the central city is the only game in town, it can act as a sort of monopoly provider in this regard. But as I just noted, that probably isn’t the only answer.

Any answer requires an honest appraisal of the situation and the willingness to implement unpopular solutions as was the case in Youngstown. It also requires a central city to understand what it is, and just as importantly what it is not. Now shooting for something that you aren’t, aspiring to be something greater, is certainly a sentiment I am much in agreement with. But it takes more than the “build it and they will come” approach I’ve seen from most places.

Ultimately it takes acknowledging that the city, to a great extent, no longer really is the economic or demographic heart of a region. Figuring out the best role the central city can play in a metro area is crucial. It can’t always be the dominant player at everything, as places like Cleveland apparently feel they are entitled to be.

Solving the problem of the American inner city is an incredibly difficult challenge. There are no silver bullet solutions. If there were, it would already have been found by now. But the standard approaches advocated by planners and others – rail transit, etc. – are nothing more than the silver bullet du jour. Previous silver bullets such as “urban renewal” proved to be disastrous, so one would think that previous experiences with this sort of thing would inspire a bit of humility in current generations of planners. Alas not. There is way too much conventional wisdom out there, and not enough hard thinking and reflecting going on outside of a few places like Youngstown.

Thursday, November 29th, 2007

Ohio Facing $3.5 Billion Road Construction Shortfall

The Ohio Department of Transportation this week unveiled its 2008-2009 business plan. This plan calls for a “new dialogue on how best to determine Ohio’s transportation priorities and identify the fairest ways to finance them”.

Why this new dialog? Basically Ohio is facing a convergence of an over-committed road building program and an inflation rate for new construction that vastly exceeded the previous (ridiculously low) estimates. Typically Ohio overcommits to 20% of projects. This is done so that if one project hits a delay, another project can be slotted in its place. However, the Transportation Review Advisory Council recently over-committed by 47%. On the inflation front, ODOT has experienced 41% inflation in construction costs since only 2004. Prior to 2005, ODOT didn’t even take inflation into account in its construction projections, with a paltry 1% forecasted rate. The commodities boom and oil price spikes, exacerbated by the collapse of the dollar, led to much greater inflation. Add it all up, and Ohio is $3.5 billion short.

In addition to laying this on the table, ODOT has some interesting items in this report. Some of these are of the motherhood and apple pie variety one would expect, but are nonetheless good to read and think about. For example, their new mission statement:

“To seamlessly link Ohio’s highways, railways, transit, aviation and port facilities, the Ohio Department of Transportation will promote a world-class, integrated multi-modal transportation system that is efficient, cost-effective and reliable for all of the state’s citizens, businesses and travelers.”

Multi-modality is a big theme, as is world class. What that means in reality remains to be seen.

Also, they lay out a series of core values. Interestingly, two of them are “High Ethical Standards – We will uphold the sacred duty of telling the truth” and “Financial Responsibility, Efficiency, and Accountability – Money matters. We will be good stewards of the public trust”. I believe there had been some bridge inspection bribery problems in Ohio. But beyond that, this seems to indicate a department that wants to shoot straight with the public about the real cost of projects and state’s ability to pay for them, not indulge in chicken in every pot politics.

There is a lot of other good stuff in there. For example, ODOT is legally prohibited from starting any new major build projects until it completes its entire list of committed “Tier 1” projects. This sounds good in theory, but in practice will put big constraints on the department, especially as the list of uncompleted projects gets smaller. There is a lot more, so check out the full report.

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Topics: Transportation
Cities: Cincinnati, Cleveland, Columbus (Ohio)

Wednesday, November 28th, 2007

Projected Metro Area GDP Growth and Impact of Housing Market

The US Conference of Mayors issued a report with a forecast of metro area GDP growth, along with the projected drag from the subprime mortgage fallout. Below is where some of the cities I covered stacked up. I’m not sure how this was calculated. I’ve run several articles, for example, stressing the severity of the foreclosure problem in Cleveland, but that city is projected to have no impact from it. Caveat emptor.

City GDP Growth Subprime Impact
Charlotte 4.0% (1.0%)
Minneapolis 3.3%
Indianapolis 2.6%
Columbus 2.5%
Milwaukee 2.5%
Nashville 2.5% (0.7%)
Portland 2.2% (0.7%)
Kansas City 1.9% (0.7%)
Louisville 1.7% (0.6%)
Cleveland 1.6%
Cincinnati 1.5% (0.5%)

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Topics: Economic Development

Sunday, November 25th, 2007

Metropolitan Area GDP

The US Bureau of Economic Analysis provides a lot of interesting facts and figures that aren’t so well known to most people. One of these is its analysis of metropolitan area and state GDP. I think it would be interesting to slice this by GDP/person. It’s probably on there, but if not you could easily do the analysis yourself. Here’s a map of percent change in GDP from 2004 to 2005 by metro and micropolitan area.
It doesn’t take a lot of fancy analysis to see that the slow-growing Midwest is near the bottom here. Keep in mind, big driver of GDP is people, so slow population growth translates into slow GDP growth, ceteris paribus. Interesting the Iowa is doing so well, however.

Here is the 2005 total metropolitan are GDP for some of the metros I track.

City 2005 GDP ($M)
Minneapolis 171,361
Charlottee 106,408
Cleveland 99,388
Portland 95,573
Kansas City 91,169
Cincinnati 90,963
Indianapolis 87,645
Columbus 82,745
Nashville 68,639
Milwaukee 73,333
Louisville 50,108

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Topics: Economic Development

Monday, November 19th, 2007

The Real Basis of a Local Economy

The big economic development news in Indianapolis the last couple of weeks was the announcement that Medco would build a mail order pharmacy center there employing 1,300. That was big news in both the mainstream media and the blog world, and articles posted about it drew significant comments.

But I was more attracted to a Sunday Indy Star profile of a much smaller local company called AIT Laboratories [dead link]. This is a lab outfit offering toxicology and other services that employs 160. The online version of this article only attracted four comments.

The profile in itself was interesting, but I also was particularly taken by this passage:

Central Indiana is becoming a hub of specialized laboratory and service companies. Dozens of outfits — from clinical-trial operations to toxicology labs to specialized biological-storage companies — employ more than 6,000 people in Indiana, according to BioCrossroads, a life-sciences initiative that invests in emerging Indiana companies.

This is where the real economic base and future of a city is built. It is in a thriving SME sector of companies like AIT. These companies don’t usually make the headlines. But they are the fundamental base of any economic ecosystem. If Indianapolis is to realize its dream of being a life sciences hub, it won’t be because of a handful of Medcos. It will be because of dozens of AIT’s. Some will succeed, others fail, but this is where a dynamic local economy is built. Cities shouldn’t lose sight of this in the competition for major plants, etc.

Sunday, November 18th, 2007

Quote, Unquote

I noticed this 1964 quotation amongst the many articles written to mark the death of Norman Mailer.

Modern architecture . . . tends to excite the Faustian and empty appetites of the architect’s ego rather than reveal an artist’s vision of our collective desire for shelter which is pleasurable, substantial, intricate, intimate, delicate, detailed, foibled, rich in gargoyle, guignol, false closet, secret stair, witch’s hearth, attic, grandeur, kitsch, a world of buildings as diverse as the need within the eye for stimulus and variation. For beware: the ultimate promise of modern architecture is collective sightlessness for the species. Blindness is the fruit of your design.

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

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Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

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