Sunday, May 25th, 2008

Economic Development Strategies, Done Right

I met a few weeks back with a group of people trying to figure out strategies for developing the life sciences industry in Indiana. One of the ideas that came out was getting a better understanding of what has worked well in the past or elsewhere in different spaces, and one of the key ideas was understanding how and why the Indianapolis sports strategy was so successful.

As a bit of a history lesson, back in the 1970’s the city of Indianapolis decided that it wanted to try to make sports, specifically amateur sports at the time, a pillar of the growth of the city and downtown. It then embarked on a 30 plus year sustained strategy of pursing that business and intelligently deciding what strategies, assets, and actions plans the community needed to have in order to make it happen. Indianapolis was just awarded the Superbowl for 2012. In a very real sense that wasn’t a bid one or two years in the making. It was a bid and an accomplishment for which the seeds were sown 30 years ago.

I haven’t done the full research on this myself, though I would love to have the leisure to dig in and write a detailed case study on it. That’s because on the surface it would appear to have all the characteristics of what it takes to have a successful, sustainable economic growth strategy.

  • There was a clear sense of vision and purpose about what was to be achieved, rooted in the local culture.
  • It was a target market that no other city had systematically pursued, and so Indy was able to get first mover advantage.
  • There was sustained leadership from the mayor’s office, and it was a clear priority of the community.
  • The effort behind it was bi-partisan. The papers are debating today who deserves credit for the Superbowl victory, Peterson or Ballard. The truth is, they both do. The Indy sports strategy was never primarily a party matter or program, at least not in my memory.
  • There was a sustained commitment over the long haul, and no expectation of immediate riches. The city has not rested on its laurels and even today continues to invest in facilities related to sports.
  • The city took a comprehensive view of its strategy, targeting not just events, but also the governing and sanctioning bodies such as the NCAA. Bidding for events was part of a holistic pitch to an organization, not just a war of incentives as a random convention might be.
  • Perhaps most importantly, the city built what Warren Buffet might call a “wide moat” business in sports. Success always attracts competition, but Indy’s strategy built a differentiated offering that enabled it to remain a premier sports event city, even after 30+ years of other cities playing catchup and fierce competition. This was rooted in three things: a “cluster” of governing bodies that created network effects locally, a strategy to design facilities and indeed an entire downtown with a major focus on hosting sports events, and building a deep bench of civic talent, from professionals to volunteers handing out water bottles, that knows how to pull off events in a first class way.
  • It isn’t just jobs, dollars, etc., but also creates more things to do and things going on in the city, which is certainly good when wanting to make people want to live there.

Now one can perhaps argue that sports hasn’t had a jobs or money payback to justify the investment. Frankly, I don’t know the answer. But it is indisputable that the city has largely succeed in the goals it set out, and that the sports business has had a huge impact on the city’s brand image nationally and internationally.

I’ll just give one example of the latter before moving on. I visited Turkey in 2002 about the same time as the world basketball championships in Indy. This event was perceived at the time as a bit of a disaster, with attendance far below expectations. The local organizers took a financial bath on it, IIRC. But the Turkish national team was a competitor, and Turkish Airlines had painted up one of their planes with a fancy basketball mural and had a lengthy article about the team in its in-flight magazine that, while mostly focused on the Turkish angle, mentioned Indianapolis several times. There was a significant amount of sports media coverage of this as well. How much would it have cost the city of Indianapolis to get its name in the Turkish press on an advertising basis? Would anyone have ever even thought to do so?

Companies pay north of $100 million just to put their names on stadiums which are only variably mentioned on TV. How much more is the “naming rights” to an event worth for a city that will get much more media exposure? I prefer to think of this sort of thing less as a direct economic development tool than as an image and brand marketing investment, and the exposures per dollar invested is probably as good or better than private sector advertising.

But I digress. I thought about this as I saw an article talking about a similar local initiative called “MusicCrossroads”. This is effectively an attempt to replicate the amateur sports experience on a smaller model, targeting primarily amateur music this time. It seems a lot of the same people are involved. It is earlier in the process, so the jury is still out on its success, but it appears to be another great potential industry. It is an untapped market where a holistic strategy of helping organizations could build a wide moat business with similar brand benefits, this time targeting a crucial cultural element. What’s more, it is again intelligently looking at where Indianapolis can be competitive, hence the city is targeting groups like non-profit marching band organizations, not trying to create a Midwest Carnegie Hall and attack NYC head on.

It’s amazing that no one has done this before. In fact, if I were the organizers I would have taken a lower profile to build up the business more before going public. You can bet some other city will see this and start copying the strategy tomorrow. You’ve got to protect your trade secrets, fellas!

It all goes back to that strategic positioning. Find out who you are, find markets you can target where you have an advantage or where there is whitespace to grab. When you see what Indianapolis has done with sports generally, motorsports in particular (a separate initiative also worth of a case study), and others I don’t have time to go into, it is clear that there are some pretty darn sharp people out there thinking about these things locally. When you see a strategy and execution like this, it perhaps goes a way to explaining why Indianapolis has been one of the Midwest leaders in population and economic growth over the last couple of decades.

This brings us back to life sciences. Clearly there is a huge buzz around this, not just in Indy, but in every city. With declines in traditional industries, and a belief that the winning geographies have yet to be chosen in this area, it is easy to see why almost every city has a plan here.

But the plans most cities have developed have lacked serious strategic depth and realistic expectations. So often you see a local medical school (which almost every city has), wrapped up with a local hospital cluster (which almost every city has – “Pill Hill” is probably one of the most common neighborhood names in America), and whatever life sciences business happen to be around (most cities have a few) into a slick marketing strategy with lots of impressive facts and figures.

These typically go hand in hand with a variety of conventional wisdom “silver bullet” or cook book programs and beliefs. Example A) take one part university research, one part venture capital, and one part government incubator, add ice, shake and serve, then companies and jobs appear. Example B) Roll out programs to cater to the “creative class”, have indie rockers and artists hobnob with twentysomething corporate employees and CEO’s, then magically your city becomes a magnet for the world’s best talent. Example C) Massive infusions of state funds are needed to lure top professors to the local university, build gigantic laboratories, and even fund basic research.

Beyond this, there’s an expectation that there is going to be a rapid payoff, and that the rewards will be reaped in a few years for less, not take decades to achieve. In fairness, some of this is driven by electoral cycles.

Compare this to the Indianapolis sports example and see the difference. Typically you see every city stampeding into a crowded market, without a differentiated strategy, no plan to build a wide moat business, and no view of a sustained, long term commitment. Various strategies are also often associated with specific politicians and parties, such a governor, that almost forces the other party to recommend something else.

I’m not going to say that life sciences is the wrong business for most cities to invest in. In fact, it does intuitively seem like something with such a potential high payoff that it just isn’t feasible to not be in the game. Like the internet, it might not be clear today how bioscience will transform business, our world, and our lives, but it seems likely to have a major effect in some way. Like a business with no internet strategy, a city with no life sciences strategy might end up a has been.

Like with the internet, there are probably going to be a handful of big winners, and also a lot of has beens and people that lost out. The real winners in the internet weren’t the random me-too companies. It was those who figured out how to create sustained competitive advantage. And it wasn’t just pure play tech companies like Google. It was boring, normal companies that figured out how to use the internet and information technology to strategically enhance their core business and drive out costs.

For any city pursuing an economic development strategy based on life sciences, or anything else for that matter, studying the lessons of Indianapolis and its sports strategy should be required. Heck, that even applies to Indy’s own economic development efforts in other areas. The two key lessons are:

  • Don’t overlook under served markets in an attempt to pursue the same goal as everyone else. A strategy based solely on life sciences or other “hot” items is likely to be a failure for all but a fortunate few. Seeking out the niche industries, like Indy is doing with music, can be a huge. This is where real clusters form.
  • Find where you can create a lasting competitive advantage, create a holistic strategy with real depth and thought behind it, be committed for the long term without expecting immediate gigantic paybacks, and have leadership from the top without becoming partisan about it.

I guess it is what I constantly say here. Cities can’t be truly successful by copying formulas from elsewhere. Of course be aware of what is going on in the world and don’t be afraid to copy the best of what others are doing. Instead, you have to organically create value, and at least some of the time come up with the ideas other people are copying.

Bonus Indianapolis News:

Property Lines is reporting that the state has put plans to open a strip of land along the downtown canal, one that had been originally left available for future buildings during the construction of a state parking garage, to development on hold. The state wants to see what the city’s preference is.

I plan a long future posting on the canal. The canal was an absolutely stellar concept where the detailed follow-through on execution created an outcome well below the potential. The fact that this is trumpeted as a total success only goes to illustrate the local trend towards judging present success primarily in terms of the immediate past instead of against the best going on in the world around, or around the potential for what could be. If new buildings replace weedy lots, that must be good in the local estimation. There’s not enough consideration of what those buildings could be, a valid governmental concern when you consider the amount of public money invested in the canal. If the amateur sports strategy was great concept, great vision and strategy, great execution, the canal is great concept, poor vision and strategy, ok execution.

While you wait for the detailed writeup, I’ll just refer the reader back to what I said about a proposed apartment development in Broad Ripple. This land clearly should be developed, as should the parking lot at the Indiana Historical Society across the street. I wasn’t sold on any of the proposals for this lot, but certainly some type of development, preferably a mixed use of higher density residential and commercial, with some public amenities like restrooms, is called for. Like the Monon, the canal is beachfront property and the result of tens of millions in public investment. The city clearly needs to reap the return on that investment, in terms of strategic benefit to the canal district, and bringing taxable property onto the Center Township/IPS rolls.

Bonus GeneralNews

Talk about attracting talent, a great article in today’s New York Times shows how that city is a huge attractor. Called “Starting Salaries But New York Tastes“, it talks about how young people desperate to live in the city engage in all manner of strategies from making a $3.50 plate of rice and beans last two meals, to sneaking vodka into bars, to sleeping in apartments crammed tighter than a freshman college dorm. While other cities beg young, educated people to move there, a heckuva a lot of young, educated people are begging New York to let them come. They are willing to endure significant hardship to live there. That shows, perhaps in an extreme way, where cities need to get. Every city that wants to attract the 21st century labor force needs to make itself a place that those people actually want to live. It’s one thing to try to retain your own kids or urge expatriates to “come home”, but at the end of the day, you need to be an attractor of people who don’t have a historical connection to a place.

Wednesday, May 21st, 2008

Kansas City: A Downtown Profile

This one isn’t by me, but by the local newspaper. The Kansas City Star ran a three day series on downtown Kansas City. They talk a lot about the development there, including an interactive map with pictures. There’s also a lot of peer city comparisons and data available. Plus there are a number of videos with different folks.

Kansas City is one of the rare Midwest metro areas I have not visited. From what I can see, it appears to be one of the more successful. As the series authors note, however, the downtown development game is extremely competitive, and just investing to make yours better doesn’t even necessarily allow you to keep up with the Joneses. The series suggests that despite $3+ billion invested to far this decade, KC is actually in danger of falling behind. Wow. They appear to be doing great on the condo front, though, where they are among the Midwest leaders in new downtown units and residents.

Sunday, May 18th, 2008

Louisville: An Identity Crisis

Following on from my article on Cincinnati, I’ll now take a short 100 mile trip downstream to another old river city, Louisville. Louisville came of age in a similar era and traditionally viewed itself as a sort of little brother to Cincinnati. However, while Cincinnati was once the Paris of the west, Louisville never held so lofty a position, so it lacks Cincy’s grandeur. Luckily, it also appears to be missing some of the dysfunction.

See here the river city tradition as the Belle of Louisville steamboat fires up. There were obviously no emissions standards back in the day.

Straddling the Ohio River, which serves as a border of sorts between the South and Midwest, Louisville has always had a bit of an identity problem. A recent article in Leo, a local alt weekly, highlights this.

For some reason for which modern science has no accounting, the subject of Louisville’s identity keeps coming up — in bar conversations, coffee shop summits, Chamber of Commerce meetings, at church, at shows, in this newspaper — and nobody knows really what to say about it. We are a city of naturally prideful, boasting people who are, to some degree, unsure about what we’re pitching. In some ways, we grate against our inferiority complex by offering wildly optimistic comparisons: New York, Chicago, Los Angeles, Boston, Austin. It’s hard to just be Louisville.

Louisville is a jumble. It’s got that genteel Southern feel at the Derby. It’s also the place that was “strike city” in the 1970’s, a bastion of hard core unionism and industry more befitting a Rust Belt burg than a southern metropolis. It retains the legacy of Kentucky and its rivertown heritage as a traditional haven for vice. Old school leading industries have included tobacco (Brown and Williamson cigarettes), booze (Brown-Forman and other distillers), gambling (Churchill Downs), and freon (DuPont). It has extremely low educational attainment levels, but has also been home to a large number of influential creative types, especially in the indie rock world, with people like Will Oldham, Janet Bean, Slint, Rodan, VHS or Beta, and others. It is comparatively lacking in corporate headquarters. It has been a home to innovative architecture. It’s heavily segregated by race and class, but has an comparatively large number of thriving in-city neighborhoods. It is a hotbed of evangelical Christianity and also home to a large regional gay entertainment complex. It’s too small to be a true big city, but big enough to force itself into the conversation. It has a phenomenal selection of local independent restaurants.

Here is some of that innovative architecture. The Michael Graves designed Humana Building is on the right. This mid-80’s structure was one of the buildings that really created his reputation as an architect you’d actually hire for a structure you planned to build.

One of the distinguishing characteristics of Louisville is that the locus of civic identity is not downtown, but rather in the neighborhoods. Louisvillians have an immense attachment to their native soil. I’ve never been to a place where it is so frequently stated as a point of pride that “I’ve live here my whole life.” People who move away are viewed a bit strangely, as if, what’s wrong with this person?

For those in Jefferson County, what matters first is the segmentation by class and race. The West End is almost totally black, the South End working class whites, and the East End the home of the white upper classes. This class consciousness is highly pervasive and permeates people’s vision in a way I’ve rarely seen in other places.

At the next level down, Louisville has many distinct and thriving neighborhoods in the city, mostly spreading to the east and south of downtown. And one of the things that is really different about Louisville from Cincinnati is that these neighborhoods are basically still connected to the downtown. It is possible to walk or bike from downtown through Old Louisville and out to the University of Louisville, for example, without passing through a bunch of slums to get there. Similarly to the east end there is a chain of more or less intact neighbhoods extending all the way from downtown to the eastern burbs. Louisville experienced in city decline and population loss to be sure, but is never had the central city implosion that hit so many other places. The one exception is the West End, where one finds the unfortunately standard impoverished black neighborhoods. The river cuts off the West End, leaving it as an isolated island of blight in an otherwise surprisingly strong inner city, it’s residents largely ignored and forgotten.

Unfortunately in my view, the city has overly fixated on building up downtown as the heart of the region at the expense of investments in neighborhoods. As the Leo article would suggest, Louisville has a major inferiority complex and so feels compelled to invest in the trappings of big city downtowns so that it doesn’t appear to be “falling behind”. This is misguided in my view. Louisville does not have the population base, corporate base, or financial heft to compete in this game at the level it would take to build a distinguished offering.

That’s not to say Louisville doesn’t have a nice downtown. It does, including some great architecture that includes, for example, a large cast iron storefront district on west Main St. I also think that judicious investments in downtown are a good thing. It shouldn’t be left to whither on the vine, that’s for sure. But disproportionately investing in downtown ignores Louisville’s greatest strengths in favor of a game where it is not well positioned win.

Buildings along Main St.

The Kentucky Center for the Arts, also on Main St. The concentration of attractions on Main St. is one of the nicer elements of downtown.

Louisville has always self-consciously viewed and promoted itself as a city with a great arts community. Some of this is overblown, IMO, but that’s not the important thing. What’s important is that Louisville is a city where the arts are taken seriously, and where having a strong arts scene is something that is core to what the city is about. I do think this is something that should be played up and leveraged for the future.

The Louisville Science Center, a sort of children’s museum, also on Main St.

The cheesy 4th St. Live entertainment complex occupies what was once a failed downtown mall called the Galleria. Louisville bought into the dubious trend of pedestrianizing its traditional principal shopping street, in this case 4th St. While I guess having a downtown bookstore like Borders is a good thing, I can’t believe investing in cheesy bars downtown is really the key to having a great city.

Since I’m saying that it is Louisville’s neighborhoods that are so great, I probably shouldn’t spend too much time on downtown, though I must confess that’s what I mostly have photos of. In case you were wondering, downtown Louisville does have its share of classical architecture, such as this example.

Just south of downtown is a neighborhood called Old Louisville. This was actually an earlier suburb where the moneyed folk build their mansions. 2nd and 3rd Streets and awesome for just walking around and leisurely enjoying the architecture under a canopy of trees.

The Filson Club, a local historical society.

A streetscape, I believe along 2nd St.

I noted that three of the things that are great about Louisville are its neighborhoods, its great independent restaurants, and its funky arts scene. All of these are on display in the Highlands. Now the definition of the Highlands is fluid and depends on what real estate agent you are talking to. But the popular conception of its spine is the major commercial district extending outwards along Baxter Ave. and Bardstown Rd. This is an area that doesn’t photograph well, but to me has a very college town type of feel to it.

A yuppie running store across the street from a tattoo joint.

Seviche, one of those great restaurants I mentioned.

Not to be missed if you are on Bardstown Rd. is a quick visit to the legendary Ear X-tacy record store. Pick up a bumper sticker and slap it on your guitar case.

One of the other great assets Louisville has is a great park system designed by the firm of Fredrick Law Olmsted. Places like Iroquois Park and Cherokee Park are just lovely. You can experience a slice of Cherokee Park for yourself by driving east from downtown on I-64, where you almost don’t know you are in the city.

Louisville currently has a first class, ambitious initiative ongoing called City of Parks, which is designed to add thousands of acres of parks and trails, mostly in the outer county area. While I’m all in favor of this, it also illustrates the Savitch and Vogel theory that city-county consolidation in Louisville, which occurred recently, would lead to the center city tax base being exploited to build suburban infrastructure. I’ve written before about Louisville’s big plans. I’m not so sanguine on all of them, but really like City of Parks.

Speaking of big plans, that reminds me that one of the more innovative proposals floating out there is one that would tear down this:

That idea is called “8664“. Proponents want to tear down I-64 along the riverfront near downtown in order to reconnect downtown to the river. It is touted as a cheaper and better solution to traffic problems than the $4.1 billion Ohio River bridges plan. As financing prospects for the bridges become ever more bleak, 8664 continues to gain supporters. The establishment doesn’t even want to evaluate it, fearing it will shatter the fragile consensus around the bridges that took nearly 40 years to build.

The bridges project is an interesting case study because it highlights a problem that has long bedeviled the region: civic strife. It has proven extremely difficult to gain consensus on any major local project because of in-fighting between the various parts of town and various interest groups. The various ends of town area all suspicious of each other. Indiana and Kentucky have poor relations across the river. Mayor Jerry Abramson has long been outright hostile to any development of any type occurring outside the city limits.

The bridges project had this in spades. Indiana demanded an east end bridge to complete the I-265 link across the river. Abramson, then mayor in the pre-consolidation age, saw this as a threat and demanded a new downtown bridge instead. Wealthy residents of the east end hated the eastern bridge too, as did various environmental groups, some of which were east end fronts. In the grand spirit of political compromise, ultimately it was decided to build everything, leading to a crazy price tag and opening the door to 8664. I think it is still fair to say that nobody trusts anybody on this project, even to this day.

Fortunately, the situation generally is much improved post-merger.

Before I go too far astray, I should probably complete my neighborhood tour with this shot of Crescent Hill. This is a small commercial district along Frankfort Ave., another one of Louisville’s fantastic neighborhood arteries. It is well worth a drive out from downtown along through this, as you see the transition from Louisville’s established neighborhoods, to the older suburb of St. Matthews, and out into the full metal burbs. Heine Bros. coffee is money, by the way.

One other unique characteristic of Louisville is that it has not experienced a collar county boom. This is probably partially due to its smaller size versus places like Cincinnati. The vast bulk of people and commercial development is still inside Jefferson County. I don’t believe there is any significant Class A office space outside its borders for example. This gives Louisville the opportunity to get ready for the future before Jefferson County is full and the suburban counties really explode. Places like Oldham County have gained people, but are still largely rural in character and without a significant population or commercial base.

The key challenge facing Louisville is what to do about the transition to the 21st century globalized world. It was traditionally a manufacturing center and has a workforce and education levels with that orientation. But its manufacturing base is significantly eroded and continues to experience significant threats. Ford, which manufactures the Explorer here, has downsized considerably. General Electric’s appliance division is based here, employing 5,000 people, including a large number of white collar employees. But GE is planning to dispose of that division, and it seems likely Louisville is going to experience significant job losses, and perhaps the near total disappearance of that business.

So what should Louisville do?

I’ve long argued that Louisville should focus on being a Geneva-like jewel of a city, not a “big league city”, whatever that means. That is, focus on having the best quality of life, the best neighborhoods, etc. Strengthen the traditional city assets such as the park system, the local restaurant scene, unique architecture, and the arts community. Louisville has long appealed to offbeat, funky types of characters. It is sort of reminiscent of a college town in that respect, so taking a page from the Austin playbook and self-consciously cultivating this would be a great thing. The clear focus of civic development should be the neighborhoods, with downtown in a supporting role. This is a reversal of current priorities.

I don’t believe 21st century jobs are going to rain down on Louisville like manna from heaven, so the onus is on the city to principally drive its economic future through organic growth. I’m not totally sold on the creative class concept, but Louisville is definitely well positioned to attract that sort of person and indeed has traditionally attracted it. The question is how to turn that creative firepower into economic growth.

Lastly, I would be remiss if I did not mention Museum Plaza. This great proposal was vintage Louisville. It was innovative, unique, and would really show the world the differentiated character of the place. However, this project appears to be on life support, and likely not to secure financing. If it fell through, that would be unfortunate, but as with bridges, arenas, etc. Louisville has always seemed to find an opportunity to miss an opportunity.

Saturday, May 17th, 2008

Indiana Transportation Briefs

Apologies for not reporting this sooner, but Carmel has awarded contracts for the construction of the first two roundabout interchanges on Keystone Ave. at 106th St. and 126th St. Milestone Construction won the two contracts, valued at a total of $29 million.

My math says this is $14.5 million per interchange. If that is the average cost per interchange, then the construction cost of the six interchanges will be $87 million. The state is paying Carmel $90 million to take over Keystone. This estimate would leave only $3 million for all engineering, land acquisition, etc. for the project, which seems extremely thin. Plus there will be construction cost inflation over the next two years. Unless the cost per interchange goes down in the future, I’d say it looks challenging for Carmel to deliver this all in for the $90 million INDOT is paying them.

RW Armstrong released the final interchange design options for US 31. They also have presentation materials regarding them posted. Unfortunately, the online materials have zero context, so it is impossible to determine anything about what was said in the meeting unless you were there or until the minutes are posted.

Here are the options:

I-465 and 106th St. There are two basic options. The first includes weaving traffic on US 31 between 106th and I-465 and the second eliminates this through braided ramps and a mini-C/D system, presumably at higher cost. 106th St. is a tight diamond in both alternatives and no roundabout interchange option was presented.

Option with weaving traffic:


Option with braided ramps:


The Keystone Ave/146th/151st area includes four options, all of which involve some type of a split tight diamond interchange. One of them shows a roundabout interchange at Range Line Rd., but the presentation materials suggest this option was rejected.

Interestingly, the aerials on this really show what I’ve said all along, lifestyle centers are just strip malls by another name. Look at Clay Terrace and you’ll see that the only thing really making this different from a traditional shopping center is that the parking lots are in back and the buildings face a narrow interior street.

The renderings are difficult to see properly, even under zoom, so I’m not going to offer any real analysis here.

Basic split diamond option


Split diamond with slip ramps


Range Line Rd. interchange option

Greyhound Pass interchange option


The SR 32 interchange only has two options, a diamond option and a SPUI option. There is no roundabout interchange option here either.

Diamond option


SPUI option


The Hamilton County Commissioners and the Boone County Commissioners held a joint meeting on April 25th to discuss highway projects, principally 146th St. Hamilton County reviewed their 146th St. plan, which involved widening the road to four lanes from Spring Mill Rd. west to the county line, with access only via roundabouts at one mile intervals. Property owners along 146th would get access via frontage roads. Boone County is only planning to have two lanes on the short segment from the county line to Michigan Rd. But they are buying right of way for four lanes and hope to widen that segment to four lanes when Hamilton County’s project comes online. They are also planning for a extending the road west from Michigan Rd. to the I-65 interchange at SR 267. That would cost $38 million and there is no money. The two counties decided to jointly pursue earmarks for the project, believing the federal government would be very interested because of the potential for linking I-65 to I-69 with a major corridor. In my view, four lanes is clearly warranted east of Michigan Rd, but west of Michigan Rd. there isn’t a pressing need yet.

The two counties also agreed that they would like to see SR 32 widened to four lanes between Lebanon and Westfield. They’d at least like to see a plan put in place and right of way reserved before gridlock sets in. They also lamented the low priority put on this route by the state. I’m not sure a four lane SR 32 is needed anytime soon, except for the segments east of Ditch Rd. However, INDOT has a major moves project on the books to redo this as a two lane road with shoulders at a cost of almost $36 million that would be a complete waste of money. Better to use that cash to widen SR 32 west to Ditch Rd. now, then do the design and ROW on the remaining segments to four lanes.

An article about Bike to Work Day notes that Indianapolis has the second lowest percentage of residents commuting by bicycle of any large metro area. Only Kansas City was worse. By contrast, top city Portland had a percentage of bicycle commuters 35 times as high as Indianapolis. There was extensive coverage of the dearth of bike lanes in Indy. Meanwhile, just north of the border in Carmel, things are much different. The city has built miles of on street and off street bike paths, and recently designated 100 miles of bike routes and loops. Other suburban towns such as Fishers and Plainfield are also building extensive trail networks.

Tuesday, May 13th, 2008

Double Trouble

Property Lines reports that the Metropolitan Development Commission tabled a proposed apartment development [dead link] by Buckingham Cos. along the Monon Trail in Broad Ripple. Some local residents were complaining about the proposal, just as most non-single family home developments are frequently opposed, even in the central city.

This is an important test case for the new Ballard administration. As recently noted, the city’s financial condition is dire. The need for increased assessed valuation, especially inside the IPS district, is critical. The question is whether or not the city has the will to do the right thing, or whether it will continue giving free reign to a minority of NIMBY’s who continue to hold back development in the city.

I am not per se running a development blog, but I do comment on projects of interest, particularly those that illuminate strategic choices the city has to make, and those which have a major impact on the city. This clearly falls into the former camp as I believe it offers a microcosm of the type of choices the city is going to continually be called on to make, ones that will shape the future competitiveness of both the central city and the region as a whole.

I’m not going to outright support the proposal since I haven’t seen enough detail. The rendering posted didn’t blow me away. It looks a bit too suburban apartment complex for my take. But as a concept – and believe me, it is as a concept that these NIMBY’s oppose it – it has so much going for it as to be a veritable slam dunk.

  • It is badly needed taxable investment inside the old city limits, that is, the IPS district. As an apartment complex, it is doubly beneficial since that is subject to a 2% property tax cap instead of 1% for other residential. Growth is good.
  • It is a market driven development with no subsidies or abatements requested. Even better.
  • Unlike what opponents seem to suggest, building developments that cater principally to people without children is actually a good thing. There’s a double benefit for the city. First it reaps the taxes. Then it doesn’t have to shell out to pay for school for more kids. When I lived in Evanston, Illinois, I attended a public hearing very much like that one to argue in favor of a condo midrise. The leader of the opposition group was a single family home owner with three kids. The property taxes coming from her house didn’t even cover the cost of educating one of those kids. That’s not to say children are bad. But to pay for the educational costs, it takes a mixture of single family homes, apartments, condos, and businesses. The city and schools can’t be funded solely on the backs of single family homes.
  • It is a great example of market-driven densification in the old city. This isn’t planner driven, top down change. Rather, this is bottoms up free market forces driving higher densities in line with modern trends towards more people wanting urban living. This is better for the environment, doesn’t require expensive sewer lines and the like to be installed like greenfield development would, and adds to the critical mass in Broad Ripple. This is exactly the sort of thing the city needs to be allowing to happen.
  • This allows the city to reap the harvest from the Monon Trail investment and maximize the use of that amenity. This is the R on the I the city made in building the Monon. This is beachfront property, and it is time to take advantage of that.
  • Strategically, it adds to the attractiveness of Broad Ripple as a place for the 21st century labor force. Let’s face it, Indy isn’t exactly overrun with neighborhoods that are havens for recent college grads, who are the subject of fierce competition between cities and regions. If Indianapolis isn’t able to attract that labor force of the future, it will fall behind in the long term. The opponents claim they are for the children. Caring about their kids also means caring about whether there will be a place for them in Indiana when they grow up. Indianapolis needs to be working hard to build up its attractiveness as a place for younger singles and couples. This is a great way to do that.

This gets again to the heart of the strategic choices cities have to make. As I noted in my “What Business Are You In?” post, traditionally Midwest cities have all been selling more or less the same value proposition: a good place to raise a family with many urban amenities without the big city price tag. But trying to be attractive to families with children means you are implicitly (or in the case of the opponents here, explicitly) hostile to anyone else. The 21st century economy, the knowledge economy, increasingly relies on people who don’t fit that profile such as younger college grads who have not yet married, those who have put off having kids, gays, etc. If you want to change the value proposition to more closely target those people, you end up angering your current customer base. This is a bit of a dilemma.

Fundamentally, I do not believe that the central city of Indianapolis has much of a future trying to be a family friendly commodity player. It is simply at too much of a competitive disadvantage (higher taxes, worse schools, more crime) versus the collar counties and its own suburban reaches. That’s a loser’s game. Trying to play it is a recipe for stagnation and slow decline as those with roots in a neighborhood die off or move out, and few newcomers are attracted in.

Instead, the city needs to follow the economic law of comparative advantage and try to specialize in the areas where it is best positioned to compete. This is in the type of development that the market is trying to bring to Broad Ripple and downtown, but which is all too often stymied or watered down by NIMBY’s. That’s why I say a great city needs a diversity of neighborhoods, cities, suburbs, and towns, each with its own target market. Across regions of course, Broad Ripple is nothing special, so the challenge is still out there to figure out a differentiator versus other competitor cities.

I was just in Nashville, Tennessee, where you see significant densification taking place throughout the city. Nashville has some of the feel of an incipient boomtown. The amount of in city development outstrips Indy significantly based on my own cursory survey. Why is that, given that Nashville doesn’t appear to have anything on Indy and in many ways is inferior? Why did a lot of these Sunbelt towns take off while the Midwest stagnated? One reason is simply that they want it more. Places like Nashville are unabashedly pro-growth. They’ve got their complainers to be sure. But public policy clearly favors letting developers put in developments like this. (Heck, Atlanta, a city whose central core was built out on much the same scale and model as Indianapolis, even has skyscrapers sprouting everywhere in town). The Midwest has always been much more oppositional to change and progress, a hallmark of its famous conservatism. This is a huge deadweight drag on the city’s development and future economic growth. Eventually businesses like Buckingham tire of it and move on to greener pa$ture$ where they are actually wanted.

Changing that will take leaders with courage. People who aren’t thinking about appeasing a few noisy critics in the short term, but about building a long term future for the city. I’ve frequently cited Mayor Jim Brainard in Carmel as just this sort of person. His vision for that city may yet be proven wrong by events. But one thing he hasn’t lacked is the stomach to take on exceptionally vicious and vocal critics who have savaged his every proposal in his quest to densify central Carmel. Mayor Brainard was willing to lay it on the line at the ballot box, where his critics were roundly exposed as a disaffected minority who didn’t speak for most folks in Carmel.

I’m sure Mayor Ballard isn’t spending his days worrying about whether individual developments get approved through the zoning process. But how these choices play out will be a major part of the legacy of his administration. Will he set a policy where avoiding noise and opposition leads to a lack of development in the central city? Or will he embrace a policy of championing the future and the changes that are needed to be ready for a 21st century that’s very different from the 20th? I think it is important to set the tone from the top, and to articulate a strong public policy presumption in favor of market driven modest densification of the central city, especially downtown in and in already urbanized districts like Broad Ripple. I believe that, as with Carmel, the opposition has far less popular support than its leaders would credit. The 150 or so people who will live in these apartments likely outnumber the opponents.

That’s not to say that quality should be ignored or that clearly out of character developments such as downtown strip malls should be approved. I’d argue the bar needs to be set much higher on the quality front. Again, as I said, the specific proposal that was brought forward looks like it could use improvement. But the city should set down a marker for what it expects developers to bring to the table, then be aggressive in supporting projects that are basically in line. Key to this is updating the comprehensive plans and creating a urban zoning ordinance for the old city area.

We’ll just have to see how it plays out.

The other story in my mind is a proposal to install a digital billboard at 82nd and Allisonville Rd. My preferred public policy for any city anywhere couldn’t be clearer: no more expansion of billboard advertising, period. This would include allowing people to convert traditional billboards to digital. Those digital billboards pump out more light than the Second Coming. They are literally visible for miles if you have line of sight to them. No other development, not even a baseball stadium, would be allowed to pump that much light onto adjoining properties. Plus, digital billboards are brighter, allow frequent ad changes that attract attention, and require no effort to change. This means putting them in simply allows huge windfall profits for the billboard company with no corresponding public benefit. Digital billboards are currently not allowed in Marion County, and the shouldn’t be. Think again about the competitiveness of northern Marion County versus Hamilton County. How many billboards are there in Hamilton County? Not many, and there won’t ever be any new ones. Think about that.

That’s not that I think all signage and advertising is bad. I’m on record as saying that the sign ordinance in Indy is in many respects too restrictive. An even illuminated advertising can be good. I think about all those big commercial arteries in Asia lit up in crazy neon. Or Times Square. At some point in the future I’ll write up my thoughts on this. But generic billboards aren’t the answer. These are pure urban blight.

Sunday, May 11th, 2008

Indianapolis: Mayor Ballard 100 Day Report

I don’t know who started this whole 100 day thing, but it is now de rigeur for everyone taking on a major executive position in government to have some sort of 100 day plan or results. In that light, newly installed Indianapolis Mayor Greg Ballard published his “100 Day Report” on April 9.

I personally think it’s unfair to judge someone based on 100 days in office. You can’t turn a battleship like the city of Indianapolis on a dime. What’s more, with the various checks and balances in place in government, even a strong mayor can’t just snap his fingers and have the troops change direction the way a corporate CEO can. Nevertheless, Mayor Ballard actually has produced three major accomplishments, and has taken action on a slew of fronts. The main results delivered are:

  • Taking over IMPD to start putting his stamp on crime reduction efforts. (As an aside, somebody please hurry up and rename this department back to IPD – there’s nothing metropolitan about it).
  • Getting the state legislature to take over the pre-1977 police and fire pensions. The benefit of this cannot be overstated as it removes a huge unfunded liability off the city’s books.
  • Finding ways to save 15-20% on the $1.8 billion combined sewer overflow deep tunnel project. At the high end, that $360 million, assuming it can all really be delivered. I hadn’t heard anything about it before reading this document, but it is simply an incredible number.

The other thing this report is designed to do is to paint a picture of a city with a far bleaker financial and operational challenges than suspected. Of course, anyone taking over in a turnaround situation is always going to say that things are far worse than believed. Whatever the spin might be, we all knew the situation was bad, and this just puts some numbers behind it. Among other things, local government in Marion County has a structural deficit today of $151 million, and that will only go up. It will increase to $361 million by 2012.

I will talk through some of the details of this report, but before doing so, let’s take a step back and consider the big picture.

People like to talk about running government like a business. Mayor Ballard has a business and military background – he actually taught at Indiana Business College for a while, I believe – and this clearly appeals to him. However, what is generally meant by that is professionalizing operations and management to drive better financial controls, results, and efficiency.

But that’s only half of the equation. To me the more interesting part is to consider the strategic elements. What is your target market? What is your value proposition to the serve it? How does your value proposition compare to the competition? Can you serve that market given the competition while achieving acceptable growth and margins? These questions are almost never asked or pondered by any city leader anywhere. Instead, they jump straight into management of the operations.

All of the problems facing the city of Indianapolis are fundamentally strategic problems. Poor financials and operational challenges are merely the manifestations of a strategically untenable position. Even if the city’s budget were balanced, crime reduced to historical levels, streets paved, etc., there would not be a material change in the civic trendlines towards slow center city growth, suburban outmigration, and more or less average performance as a region versus the US as a whole.

As I’ve often said, while I’m all for low taxes, no matter how low the taxes in Marion County get, they will always be higher than the collar counties. Hamilton County, Hendricks County, etc. are always going to have lower taxes, newer infrastructure, more current homes and businesses, better schools, and lower crime rates. If you are selling an inferior product at a higher price, don’t be surprised if you don’t have many takers. (In fact, property values become a sort of equalization lever here – which is why we see declining assessed value in three of the largest townships). And that’s just city and collar counties as a whole. Will any of this give Central Indiana a more Sunbelt economic profile versus a Midwest one? I don’t think so.

Don’t get me wrong, the operational and financial challenges are real and absolutely need to be solved. No matter what else you do, if you have a crime problem and are considered an unsafe place to live and visit, you won’t succeed. Perhaps nothing was as key to the turnaround in New York City as Mayor Giuliani’s breaking the back of crime there. But that’s a necessary, not a sufficient condition. New York City had an absolutely fabulous value proposition to a large (and affluent) target market, and one where there are effectively no competitors other than one or two other global cities like London. Its operational problems had only masked this. Once the crime, the dirtiness, the financial black holes, etc. where swept away, this value proposition shined through. Assuming Indy does this same, what value proposition will we uncover, and who will it appeal to?

As we know, the traditional strategic positioning of the Midwest as an agricultural and industrial center is being destroyed by globalization. Most Midwest cities and states continue to experience an enormous brain drain problem, and indeed an overall population loss problem (net domestic outmigration). Indianapolis has performed much better than most, but is still struggling with the same forces. Continuing on the same, that is to say the default, strategy is unlikely to do more than allow the city to stay even with national averages, while continuing to lose ground to the Sunbelt and other New Economy Centers. The key challenge for Mayor Ballard is to define and articulate a strategy for the city and region that will adjust the strategic focus to put the city on a new trajectory.

Fortunately, Indianapolis actually has a pretty good hand to play. It is well positioned to take advantage of the future if it wants to. I don’t have time to lay out my thoughts here today, but the answers to the strategic questions about the city and its future is something everyone locally should be thinking about. For additional background reading, I suggest reading a few older posts, especially “What Business Are You In?” (which is borderline required reading if you ask me). You might also find “The Importance of Aesthetics in Transportation Facilities” and the introduction to my series on Carmel of interest.

Obviously I bring this topic up because the 100 Day Report is almost completely lacking any strategy component. There was only one exception, namely the statement that the city needs to raise its international profile. “If Indianapolis is to remain competitive in an increasingly global economy, it must improve its international profile.” The introduction to the report actually says it all in once sentence: “Fixing existing problems is one step toward improving Indianapolis, but making our city competitive for generations to come requires a broader vision and a commitment to make Indianapolis a truly international city.” There is no indication of what this broader vision might be however, or any indication that the administration is actively working on it. Now back to our regularly scheduled programming.

The report cycles through the various city departments, talking about existing conditions, short term actions taken, and often some mention of future plans. But this was not intended to be a four year action blueprint by any means. I’m not going to go through each one, but rather highlight some of the more interesting items.

The first is a new management tool called IndyStat. Because, there are no measures of performance or outcomes today, and Ballard wants to implement some, with results managed in quarterly review meetings. Two sample charts were included, both from the Mayor’s Action Center. One was a graph of budgeted vs. actual expenditures. The other was a chart of the top ten call types. This is Operations Management 101. If the city wasn’t even creating basic measures like these, how in the heck did anyone ever manage anything? I feel sorry for Mayor Ballard. He seems to have landed in a maelstrom of problems without even the most basic tools to manage them. It is easy to see why there hasn’t been much traction on strategy if the city can’t even track budgeted vs. actual expenditures. It will be interesting to see what comes out of IndyStat, but I’d consider this a very important initiative.

The finances are truly scary. The mayor commissioned an accounting firm to produce a ten year projection of revenues and expenses for all government bodies in Marion County. Again, I’ve never seen anything like this, so from a data perspective we are already seeing major progress. In 2007, all governmental units together spent a bit less than $3 billion, or about $3400 per capita. That’s a big number, but actually it seems lower than what I would have expected, considering it is all inclusive. It does not appear on a prima facie basis to me that Marion County is over the top in spending versus other big cities. The budget of the City of Chicago alone is $5.6 billion, with the Chicago Public Schools adding another $5.8 billion on top of that. Those two items alone would imply $3.6 billion in spending in Marion County on a similar per capita basis, and that doesn’t include all of the other taxing districts like Cook County, the CTA, etc. The budget of New York City alone is a staggering $53 billion.

The big problem is that costs are going up, up, up. The city-county portion of the budget (excluding the Health and Hospital Corporation) increased from about $850 million in 2006 to $1.25 billion in 2008. That’s a CAGR of almost 10%, over three times the rate of inflation.

The real problem with government spending isn’t the taxes per se. It is that there does not seem to be any rational link between what is paid and what is delivered in services. Taxes and spending go up and up, but services never improve and in fact seem to degrade year on year. The travesty isn’t that Marion County spends $3 billion a year. The travesty is that it spends $3 billion per year and has a horrible crime rate, pothole ridden streets, way too many unimproved roads, a decrepit, rusting fleet of city vehicles, awful schools, etc. As the streets get worse every year, taxes keep going up. It’s no wonder people are so mad. How can the cost of government have gone up so much in the last two years with no improvement in services to show for it?

One more example. People complain about the poor public transit in Indianapolis. But looking at IndyGo’s budget, it went up from about $33 million in 2000 to $52 million in 2008. That’s a CAGR of about 6% – double the rate of inflation. (Admittedly, we’ve seen quite a fuel cost spike, so perhaps that accounts for things here).

The net result is that the city is facing a $26 million deficit this year. All taxing units combined are in deficit to the tune of $151 million. And things fall off a cliff from there, with the structural budget deficit growing to $361 million by 2012. This implies serious spending cuts and/or significant tax increases. With the state capping property taxes and no local option sales tax in Indiana, that probably leaves income taxes and fee increases as the revenue levers.

It is interesting to me that the city-county budget is 43% funded by property taxes. While reputedly cities have many more revenue levers than schools, libraries, etc. it is very clear that Indianapolis is very heavily dependent on property taxes to fund its operations. If you stripped out state grants and counted only locally raised revenue, the property tax dependency is even higher. Marion County governments as a whole only raise 3% of their money through income taxes by contrast.

As I noted earlier, three large townships, Center, Warren, and Wayne, are experiencing assessed value declines. This is really contributing to the property tax squeeze and highlights the need for renewed growth in those townships.

There is a lot to digest and address here, but it looks like Ballard is starting to get a handle on the macro-level budget. I am very pleased to see that he is taking a comprehensive view, and not just limiting things to the city-county budget he directly controls. Again, the key is to understand why costs are going up so fast when service levels are actually going down. Fix that, and your problems are largely solved. And re-establishing the link between what you pay and what you get, as would be the case with any consumer product, is critical to re-establishing public trust.

One thing I would look at is unit cost pricing. What is the cost per unit of service delivered? Heck, just defining what your service units are would be an improvement over today. For example, what is the cost per call of the Mayor’s Action Center? How does the cost vary by channel (e.g., phone vs. internet form)? Can you drive traffic to lower cost channels like the internet? This also enables various service level discussions. “Well, if we have people on hold an average of five minute, it will cost $x per call, but if we staff up to eliminate queues that would cost $y per call”. This is how you tie spending to output.

One area the mayor plans to save money is through “value engineering” capital projects. The report says they’ve already identified $500 million in potential savings, which includes the sewer project savings I outlined before. I’m all in favor of efficiencies, but it is easy to engineer for “value” by cutting corners. You can save money on a road project by using thinner asphalt or not including sidewalks, for example. But that’s not really efficiency, that’s just saying you want a degraded, lower end product that costs less.

The other levers of savings going forward are consolidation and cross-departmental synergies. I don’t hold out any hope that consolidation will save any real money. Typically, larger bureaucracies cost more and are less efficient. For example, pay and benefits are likely to get rounded up to the high water mark when combining agencies to avoid angering staff with pay cuts. Cross-departmental synergies such as centralized purchasing and contracting for services probably makes a lot of sense. We’ll have to see what is found.

Other key items mentioned include crime, of course. This is Ballards “Job #1″ and rightly so. Public safety is the paramount function of government. Any government which fails in this role has forfeited its right to govern. Without public safety, significant future progress on any other point is more or less hopeless. To quote Julian Simon, “No food, one problem. Much food, many problems.” So it is here with public safety. I can’t say much on this topic since I don’t know a lot about it, but I’m glad to see the mayor taking personal accountability for it.

On the economic development front, the city is creating a new agency, Indianapolis Economic Development, Inc. (IEDI). I’m not sure why a new organization is needed or what it is intended to do. There is also a review of subsidies underway, which is a good idea.

Another big program of the mayor’s is the abandoned housing program. He’s appointed a liaison and is looking into various laws. I suspect this is going to be thorny problem. The report doesn’t even tell us how many abandoned homes there are in Indianapolis, but the number 10,000 has been thrown around a lot. In the old city, many home are simply obsolete and not worth renovating. They have no particular architectural or historic value, are too small and not laid out in line with modern lifestyles, and have major structural and/or infrastructure problems. I believe the ultimately a very large number of these need to be demolished. But this program would cost tens of millions to do. For the inner city, one of the great things the mayor could do to encourage redevelopment is to redo the city’s completely inappropriate zoning code, which effectively mandates suburban style development even in established urban area. An urban area zoning code that avoids all the crazy variances and the like you need to do anything inside the old city limits would be helpful.

Education is a big priority of the mayor. He doesn’t control the schools, and unlike mayors in some cities he hasn’t shown any appetite for trying to take them over. But leveraging the bully pulpit to put education on the agenda for the public is definitely the right thing to do. The jobs of the 21st century will require more education than ever, and there is a huge challenge ahead here.

Public works. The report notes that $1 billion is needed to bring the streets, bridges, curbs, and sidewalks up to good repair. But my belief is that if someone handed the city a check for a billion to do this, it would be mostly money wasted. The current streets are very poorly designed and conceptually obsolete. The entire concept of what a street is needs to be rethought before money is poured into concrete. Before spending too much on infrastructure repair, the strategic vision of the future of the city needs to be in place, so that you are building towards the future, not just doing the civic equivalent of installing brand new buggy manufacturing equipment in your factory.

Lastly, the one item that did seem to be strategically driven was the focus on raising the city’s international profile. The Latino Affairs Division has been renamed the International and Cultural Affairs Division. Obviously it is early days and not a lot has happened yet. But strategically this is definitely right on and a critically important piece of the puzzle for building the future of the city.

The full report itself is easy, breezy reading, so I recommend checking it out for yourself.

Saturday, May 10th, 2008

Cincinnati: A Midwest Conundrum

I recently had the privilege of spending a couple of days in Cincinnati. As always, I was completely blown away by all the great things this city has. There is simply not a city in the Midwest apart from Chicago that has anything near the great assets of Cincy. It is an embarrassment of riches.

Yet, I’m always befuddled as well as I puzzle a great conundrum: if Cincinnati is so great, how come it isn’t the San Francisco of the Midwest instead of a typical, modestly stagnated Midwestern city? I don’t profess to have the answers, but it just goes to show that having one of the country’s greatest collection of urban assets does nothing for you by itself.

What is so great about Cincinnati? Let’s list some of the things:

  • The fabulous geography. Cincinnati sits along the picturesque Ohio River (an asset in its own right), and is built in a very hilly area. This leads to a great urban geography, and stunning views. For example, here’s a shot of the Ohio River as seen from Mt. Adams.

Incidentally, the spot where this was taken from is only 10 minutes from the heart of downtown. I did not have the opportunity to take that many pictures, but I did snap a few of Mt. Adams, which is one of Cincinnati’s many wonderful neighborhoods. I’ll have more from there below.

  • Spectacular, dense urban neighborhoods with wonderful architecture. Cincinnati was the Queen City of the Midwest when Chicago was little more than a trading post. It ruled the riverboat era just as Chicago ruled the railroad one. Because Cincinnati was a large city even in the 1830’s, it was built in a very dense style, with a lot of very unique 19th century architecture that is of a style very different from the a typical Midwest city. Pretty much all over the city you’ll find extremely urban corridors that in some respects are denser than Chicago. Parts of Cincy actually remind me of Brooklyn. I don’t have a lot of examples to show, but here are a couple. First, Cincinnati’s City Hall:

That one could be in many Midwestern cities, but check out these houses from Mt. Adams:

With the hills, and houses like those, hopefully you can see why I made the San Francisco analogy.

  • Innovative new architecture. Cincinnati is famously conservative, but has embraced modern architecture with a vengeance. The University of Cincinnati is loading its campus up with buildings by the world’s top architects, including people like Michael Graves. Covington, Kentucky just erected a tower by Daniel Libeskind. And the Contemporary Art Center was designed by Zaha Hadid. Here is that structure:

  • The patchwork quilt of towns. Unlike the model of Columbus, which had a central city annex far out into the suburban reaches, Cincinnati remained a fairly small city geographically, surrounded by a patchwork quilt of small suburbs. Now some cite the downsides of this and in fact lay some of Cincy’s problems at the feet of this municipal fragmentation. But it definitely has the positive of having created a ton of quaint little towns, each with their own unique character and identity. Here, for example, is Montgomery.

  • Top notch cultural institutions. Because Cincinnati was a big city early, its moneyed classes were able to endow great regional institutions such as the Cincinnati Art Museum, the Cincinnati Symphony Orchestra, and Cincinnati Children’s Hospital. I can’t think of a similar sized city in America with this collection of top rank institutions.
  • Many major corporate headquarters. I don’t know how many Fortune 500 HQ’s are in Cincinnati, but it is a lot and more than any comparable city I know. And these aren’t legacy headquarters of shrinking industrial companies from a bygone era. These are companies that have largely figured out how to compete in the modern world. We’re talking Procter and Gamble, by far the largest consumer goods company in the world, and the most successful. This company is too big and so strong it seems inconceivable it could ever go out of business or be acquired, unlike corporate champions in most places. Kroger came away standing from a bruising battle with Wal-Mart to emerge as America’s largest grocery chain. Toyota’s North American headquarters is in the area. There are many other major companies around as well.
  • A genuine regional culture. Much like a European town, Cincy has managed to hold onto various aspects of its local culture and not end up totally homogenized into Generica like most of the rest of the Midwest. Most famously there is Cincinnati style chili. But there are other interesting things, like Cincinnati Bell telephone, an independent regional Bell affiliate that somehow never got swept up into ownership by AT&T, and a local independent third political party called the Charter Party.
  • Major regional assets. Because of its status as the largest regional city and its top location between major regional population centers, Cincy has many regional assets other cities can only dream of, including a Delta airline hub with non-stop flights to places like Paris, the Kings Island amusement park, and an IKEA store.

But with all of this, something is clearly missing. Cincinnati did not escape the problems of other Rust Belt cities. What’s more, it has continued to be a growth laggard, far trailing the nation and the Midwestern growth leaders like Minneapolis and Columbus. Where Cincinnati was once markedly larger than places like Indianapolis and Columbus, the gap has narrowed significantly. Cincinnati continues to show below US average population growth, net outmigration, very low levels of international migration and percentages of foreign born population. The city of Cincinnati has lost significant population, and Hamilton County’s population as a whole has been in steep decline.

Drive around Cincinnati and you’ll notice that much of the great architecture is in a shocking state of disrepair. While the buildings weren’t wholesale cleared as part of the botched urban renewal movement, the city still has a sort of bombed out feel in many places. In almost any direction from downtown you quickly transition to very poor, crime ridden, almost 100% black neighborhoods. I don’t have stats on segregation, but Cincy to me has the feel of an almost totally segregated city. I looked closely for a single white person in large tracts of the city and didn’t see one. Notably, Cincinnati has been famous for poor race relations, and there was a high profile race riot back in 2001.

As I often do, I was listening to local radio as I drove around, in this case 700 WLW, “the nation’s station”. (This is another incredible Cincinnati story – read the history on WLW sometime). One of their talk show hosts was a typical right wing firebrand named Bill Cunningham. What I found most notable about him was how he spent about a one hour segment bashing the black community and the ethics and morals of black Cincinnati. There was apparently one of those all too common urban tragedies that occurred when a young mother of four was shot and killed in front of her children and dozens of witnesses at someplace called the Fay Apartments (which sounds like a locally notorious housing project). No one came forward to identify the shooter. Now that’s certainly bad behavior to say the least, and in no way justifiable. But this guy’s race baiting was just over the top and caller after caller dialed in to say how the dysfunctional the black community was. It is clear that there are still major, major race relations problems in Cincinnati.

Cunningham also boasted of how he had “moved to Kenwood” so he rarely had to set foot in the city, something he was quite thankful for. I’ve seen this same sentiment voiced multiple times in articles and comments in the Cincinnati Enquirer. Cincy also appears to have a serious city-suburb divide.

Cunningham also had a guest that talked about how to protect your children from pornography, which reminded me that Cincy was the place that famously tried to shut out an art exhibit by Robert Mapplethorpe. And where until quite recently one could not even purchase a Playboy magazine. Influential citizens such as billionaire Carl Linder are very active in various decency campaigns.

I can’t say what role these things have played in stagnating Cincinnati. And in a sense, relative decline has been ongoing since the end of the river era and the beginning of the railroad one. Because of geography, Cincinnati, unlike St. Louis, never had a chance to become America’s rail hub. So it certainly can’t be blamed for that. Still, it is interesting me that such an incredible place hasn’t experienced one of America’s great urban renaissances. I believe the potential is still there, albeit latent at the moment.

It just goes to show that what I said in my pecha kucha presentation was true: cities are about people, not just buildings. All the great geography, architecture, etc. in the world isn’t a sufficient condition to create a thriving, dynamic city.

Here are a few more pictures of Mt. Adams. Be sure to spend some time walking around here if you visit Cincinnati. Many of the other great urban neighborhoods are best seen by car.

The city as seen from Mt. Adams.

I also spent some time checking out the northern suburbs. Like most cities, Cincinnati has seen a major suburban boom. With much of Hamilton County “full”, development has moved to the collar counties for much the same reason as other places: cheap land, lower taxes, lower crime, better schools. Many of these counties are now getting pretty large in their own right, with Butler County at 358,000, Warren County at 203,390, and Clermont County at 193,000. Northern Kentucky is also a major growth area, and is home to a large number of riverfront attractions, urban neighborhoods, significant modern office space, and the Cincinnati airport. This is the most thriving part of the state of Kentucky.

Cincinnati follows a traditional US urban development pattern, with the north more affluent than the south. It’s east-west development follows the river currents rather than the prevailing winds, however, with the east more prosperous than the west. While the suburban areas have been thriving, the areas I visited in Butler and Warren County were not particularly impressive. Butler County was an established industrial county in its own right, and so has its own share of older urban/suburban decay problems. But what I particularly noticed was a lack of most of the hallmarks of neo-suburban American development. I’m sure I probably missed some examples, but I did not see one New Urbanist development, not one lifestyle center, and only one roundabout. While there were some quaint towns with charming historic districts, the newer development seemed much more in line with the early 90’s than the mid-00’s. The most advanced town in terms of neo-suburban development was Mason in Warren County, the home of King’s Island.

Here are a few pictures. First, downtown Hamilton, the Butler County seat.

A historic streetscape in Lebanon, in Warren County.

Lastly, a lovely landscaped parkway in Mason. I think this is Mason-Montgomery Road, a main arterial in the area.

For those who do not live there, I would strongly encourage a visit to Cincinnati. It has plenty to see for a long weekend, whether you are a hip, urban couple or a family with kids. For anyone who is trying to understand the challenge of the Midwestern American city, this is a very important example to consider. Cincinnati is an outlier in many respects. In fact, Richard Longworth doesn’t even count it as Midwestern in his recent book. But often it is the outlier cases that best help us see things from new perspectives.

Saturday, May 10th, 2008

New Urbanist Developments in Atlanta

I saw an interesting thread on this over at skycrapercity, and thought I would repost some of the renderings and photos here. Note that many of these proposed developments are actually in the suburbs. I’m not endorsing these developments by posting them here, but thought they would be of interest to readers.

Proposed in Roswell


From this the AJC: “The man who turned an abandoned steel mill in midtown Atlanta into the booming Atlantic Station minicity unveiled his plans Tuesday for bringing that style of intown living to the northside suburbs.

The $2 billion development, which would be built along Ga. 400 in Roswell, calls for 3,000 residential units and as much as 750,000 square feet of office space in five high-rise towers.

The high-rises would be surrounded by European-style plazas, a 2 1/2-acre lake, a community center and lots of green space — even on rooftops, where people can gather high above their community.”

Here was one called Global Station proposed for Gwinett County. Supposedly it is dead, which might be a good thing since the design is questionable.


Something called The Manhattan at the Perimeter Center.


High Street in Dunwoody

Belmont Hills in Smyrna

Westtown Atlanta


Now onto the photos of actual projects. This is Atlantic Station in Midtown.


Inman Park Village


North Highland Lofts


Downtown Woodstock (town in Cherokee County)


There are some additional photos (and of course lively debate) over in the original SSC page.

Wednesday, May 7th, 2008

A New Rail Transit Plan for Indianapolis

Readers of this blog know that I am a skeptic on light rail in Indianapolis (and other similar sized cities). However, the Central Indiana Regional Transit Authority, a multi-county group studying transit options, is about to put forth a plan that gets closer to something I would be willing to endorse.

Their idea is to start with a commuter rail line in the northeast corridor, using diesel multiple unit (DMU) trainsets (basically self-powered cars, with each one having its own diesel-electric engines rather than relying on a locomotive car or overhead power lines). This would run at peak periods only. Union Station would be the downtown terminal. The line could be build in 2-4 years if funding is found. According to cwilson at skyscrapercity, Mayor Ballard is actually backing this now, seeing it as a potential economic development tool more so than a pure transportation project. He’s also pushing to include an airport line.

This scaled down plan has a lot going for it, at least if they do it right. Among them, it will cost less. If you start with commuter rail only, you can probably get away with a single track line with some sidings. Also, you don’t need to install expensive overhead power lines. And you’ve probably got more limited stations that don’t need barrier systems, high platform loading, etc. And it can be done faster. What’s more, it makes things far easier for running on regular rail lines. The FRA has extremely strict rules on rail safety in the US, far stricter than Europe. A passenger train on a line that also carries standard trains has to be able to withstand a collision with a freight train. This means it has to weight lots, etc. Most light rail cars don’t qualify. DMU cars, on the other hand, might be easier to get through.

This plan is also in line with my suggestions to start small and build up. I say start with bus to prove the business case at low cost and then convert to rail later. This is sort of doing that, by taking the Fishers express bus service and upgrading it to a commuter rail line. Later it could be converted to a light rail line with more frequent service, or double tracking. For example, the Metra Wisconsin Central service in Chicago started with basically five trains inbound in the morning and outbound in the evening at peak periods only on a single track line, and then expanded from there. A similar dynamic could work here.

Of course, there is no funding for this plan. So that is a huge barrier. That includes both capital and operating funds. There are also physical challenges. The Nickle Plate line to Fishers probably requires significant track and signal upgrades. The entire rail line south of 21st St. is gone, and rebuilding a connection to Union Station could be costly and problematic because of the busy CSX freight line through downtown. On the plus side, the line itself is already owned by local governments.

As for an airport line, there is also a rail line, already double tracked, that runs from downtown almost to the airport. This would require upgrades as well, freight carrier coordination, etc., but the line is there.

As noted in the Star article, the express bus service to various suburbs ends in a year or two when federal funding runs out. Any funding mechanism put in place to support light rail should absolutely preserve express bus routes, at least where the rail line doesn’t serve. This shows that transit has actual staying power, and builds the constituency for it over time. For example, keeping bus service to Greenwood keeps that city interested, and paves the way for potentially future rail expansion along the existing Louisville and Indiana line to the south. If the express bus service is allowed to lapse along with the federal grant, it would be hard for me to take transit seriously in Indianapolis.

The use of Union Station as a terminal probably makes some sense from an implementation perspective. However, this is not close to the major office employment centers downtown, which are mostly north of there. This highlights again one key advantage bus has over rail. I’m not sure where the Fishers express bus lets out, but there is no reason it couldn’t be, say, Meridian and Ohio. This puts it practically at the front door of most of the major office buildings downtown. Union Station is half a mile away (a ten minute walk). Also, an express bus is just that. Although the rail line to Fishers has a more direct route, a non-stop bus might actually be faster on a door to door basis since there are fewer, if any, intermediate stops.

From a purely transportation standpoint, it will still likely be difficult to cost-justify the rail system. But a less costly and more realistic system that can be in service quickly might be the type of investment that a city could justify making on some other basis. This makes it not much different from a stadium or convention center I guess.

Monday, May 5th, 2008

Pecha Kucha: Urban Aphorisms

I was privileged to participate in Pecha Kucha Indy Vol. 2 on April 25th. For those of you unfamiliar with the pecha kucha format, please take a look at the first presentation I gave back in February. I’d recommend this in any case, since not only is it a great presentation, if I do say so myself, but it is helpful background for the more recent one.

For those of you who did not attend my most recent performance, the presentation and script are included below. It is a series of aphorisms about what makes a great city, organized around three themes:

  • A city must follow its own unique path to greatness
  • The most precious asset of any city is people
  • Indianapolis can’t go it alone as just a central city

The vast bulk of the content is not specific to Indianapolis, so if anyone wants to adapt this to another city, please feel free.

  • Rather than a tactical list of suggestions on urban design, I’m presenting more general themes about what it takes to be a world class city, applied to Indianapolis.

  • “Given a choice between a real suburb, and a city trying to act like a suburb, people will choose the real suburb every time.”
  • Downtown Arby’s and Subway isn’t going to cut it, folks.
  • If you’re selling an inferior version of the same thing on offer in the collar counties, only with higher taxes, more crime, and worse schools, don’t be surprised that you don’t have many takers.
  • This applies just as much if not more to the townships as to downtown.


  • “Given a choice between a real big city, and a small city trying to act like a big city, people will choose the real big city every time.”
  • This one is a bit harder to take for some people, I suspect.
  • But Indianapolis isn’t Chicago and it never will be.
  • Sure, better density downtown would be great, so would better transit, etc. I’m all in favor of that.
  • But at the end of the day, none of that will make us Boston.
  • If you think a few infill buildings on Mass Ave. and the like are going to make people coming out of school want to live here instead of San Francisco, you’re dreaming.
  • It just isn’t feasible for Indianapolis to recreate the 19th century urban form outside of select districts. Nor is it desireable.


  • Ultimately, “Indianapolis can only be a world class city by being a world class Indianapolis.”
  • We’ve got to build a city built on what we are, not what we’re not.
  • Like a good wine, a great city has to express its terroir.
  • And you know what? Naptown’s got nothing to be ashamed of.
  • Indy doesn’t have to imitate any other place to go to the next level.
  • Yes, look what’s going on in the world, but don’t mindlessly copy.
  • Instead, get to where other people are copying us.
  • Austin and Portland charted their own path to success. Similarly, we can chart our own path.


  • “People follow jobs, but to an even greater extent jobs follow people.”
  • I always hear people blame the Hoosier brain drain on a lack of jobs.
  • But that reverses cause and effect. Yes, there’s a circular relationship, but I’d argue that having the people comes first.
  • One of the first things any company looks at when deciding where to set up shop is the availability of a qualified labor force.
  • You can’t have a life sciences industry without life scientists.
  • Put enough smart, ambitious, creative motivated people together and good things are going to happen.
  • We have to make Indianapolis be a place people want to live, and to be one of the destinations of choice for the 21st century labor force.

  • “If a city shows it doesn’t care about itself, why should it expect other people to care to live there?”
  • Like it or not, the physical appearance of a city sends a powerful message about it.
  • It’s like Shakespeare said, “For the apparel oft proclaims the man.”
  • What are we proclaiming?
  • What do we want to proclaim?
  • Let’s start acting like it.
  • “Ecce Urbs”


  • “Talented, educated, ambitious people want to live in cities where the civic aspiration matches their personal aspirations.”
  • The talented and ambitious, people with big dreams and big plans for themselves, are going to choose to live in places with other people who share their values, and where the city itself has the same ambition level.
  • Indianapolis can’t be successful in the war for talent by being a city where good enough is good enough.
  • And you know what? Never underestimate the motivating power of excellence, or as Daniel Burnham said, “Make no small plans. They have no power to fire men’s souls”.
  • We need to lay out an ambitious vision, one that gets people excited and that creates an emotional connection with a city in the type of people we are trying to attract.
  • You might not agree with their vision, but I think Carmel’s done a great job of this.


  • “Cities are about people, not just buildings. You can’t love the neighborhood if you hate the neighbors.”
  • So often I hear talk soley neighborhood improvement solely in terms of buildings.
  • People say, “Wow, that building would make great condos – you could even put a Starbucks in the ground floor.”
  • But it isn’t hard to imagine who might live in those condos, or drink coffee at that Starbucks.
  • A city can’t survive on gentrification alone. The broader community has to be a participant in its success.
  • That’s why I’m a bit down on the idea of the “creative class” as the road to riches. That’s good so far as it goes, but it’s a really self-consciously elitist vision, one catering to the most privileged in society.
  • Where does the working class figure in to this equation, for example?
  • We had something a lot like this back in the 80’s – back then it was called “trickle down economics”.


  • “A great city needs great suburbs”
  • Nobody is asking you to move to the suburbs, or even like what they represent.
  • But a successful community needs a variety of neighborhoods, each serving a different customer.
  • I happen to believe places like Carmel and Zionsville are a big asset to Indianapolis, just as Indianapolis is a big asset to them.
  • And in a globalized economy, the competition isn’t Indianapolis vs. Greenwood or Avon. It’s Indianapolis versus Kansas City, Dallas, Portland, India, China, London, etc.
  • Fighting amongst ourselves is like beggars fighting over table scraps.
  • We need to find a way to bring the central city up, not tear the suburbs down.


  • “There can’t be a successful Indianapolis without a successful Indiana”
  • Unlike New York, there isn’t a huge cultural disconnect between Indy and the rest of the state.
  • People in Indy are Hoosiers, and I think that’s a source of strength, not weakness. It’s part of that unique culture for us to build our own greatness on.
  • A world class Indianapolis will be a world class Hoosier city.
  • But while the Indy metro area has 25% of the state’s population, it has 60% of the population growth and 80% of the economic growth. That’s not healthy.
  • Like it or not, Indy is dependent on the state for critical infrastructure funds and many other things.
  • The challenge is to help bring the rest of the state along with us on the journey.



  • “So many Midwest cities are shadows of their former glory, but Indianapolis has never been more important than it is today.”
  • So many Midwestern cities are just pale shadows of their former greatness.
  • Detroit is imploding.
  • Cleveland has gone from the fifth largest city in American to the 39th.
  • Heck, Chicago isn’t even the Second City anymore.
  • No matter what those cities do, they’ll never be as important as they used to be.
  • But Indy’s never been a larger, more influential, more important player in the nation and the world than it is today.
  • No, we’re not in the truly big leagues yet. But we’re at our highest point ever and still rising.
  • While other Midwestern towns try to turn around decline, we’re like a rocket still on its way up.
  • I think that makes a big difference.
  • Because a rising Indianapolis, one that sets forth an ambitious vision, one that is inclusive of the whole community and state, can be a formidable force in America’s future.
  • I believe this city has all the ingredients it needs to step up and take its rightful place as the next great American city.
  • “Indianapolis – this is our time!” [Borrowed from the title of a skycrapercity post by Cory Wilson just prior to the Colts-Bears Superbowl game]
  • Thank you.

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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