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Monday, October 6th, 2008

Updated: What Do We Want Our Cities to Be?

In a major article [no longer online], the Indianapolis Star compares city spending there versus aspirational peers – Portland, Seattle Denver, and Charlotte – and finds that while those other cities value parks, transit, and the arts, Indy primarily values small, frugal government. This is hopefully the start of a valuable community conversation about what the city wants to be and where its priorities are and should be. While blogs are good for some things, it takes a major daily like the Star to put this in front of the community as a whole. However, this will probably amount to nothing if the Star doesn’t keep the conversation going, and there were a few weaknesses in the article the compromises its effectiveness a bit. Let’s hope this is the first of a series.

The article backs up what I’ve previously said, namely that Indianapolis does not prima facie appear to spend an outsized amount of money. The property and income tax fiascoes are legitimate and serious problems. However, the total spending levels are actually less than many other places. While Indy spends about the same on policing as the cities examined, it spends far less on other city services. At $1420 per capita, Indy’s spending is half of the western cities and even 25% less than Charlotte. Portland spends 5x what Indy does on parks, and has twice as many park acres per capita on 1/3 the land. Denver spend $462 per resident on transit and has a brand new 119 mile rail system. Indy spends $80 per resident and has the 99th largest bus system in America, with chronic funding and operational problems. Charlotte spends three times what Indy does on the arts, and you’d better do that math now because in a couple more years it will give you a divide by zero error.

Do taxes and spending matter when it comes to attracting business? You bet. Lean, efficient government that effectively delivers the service levels it promises is absolutely critical. But in the modern era, low cost doesn’t mean what it used to. Indiana used to be a low cost business location. Now, in competition with countries where labor is pennies per hour, Indiana will never be a low cost business location again. Globalization is eviscerating the traditional twin engines of the Hoosier economy, manufacturing and agriculture, and they are never coming back to the way they were. The 21st century economy will be very different from the 20th. Indy is pinning a lot of its economic hopes on the life sciences industry. But you can’t have a life sciences industry without life scientists. The 21st century labor force is one that is in high demand. The highly educated workers in bioscience, technology, etc. have choices about where to live. They want to live in communities that share their values and ambitions. They don’t want to live in cities where the neglected parks sit surrounded by rusting chain link fences, where a creaky bus system means no real transportation choices, where crime is rising, schools declining, and there are no plans to fill pothole ridden streets.

Now the article overstates things a bit. Most unfairly, it cites a $280 million Seattle library capital plan, without acknowledging the major expansion the IMCPL just completed. Indy may not have a Rem Koolhaas – and given the site of the library, thank goodness – but it does have a very nice, functional new addition. Indy actually has a pretty good library system in many respects I think. And the article fails to mention the $1.1 billion new airport terminal that is opening and, above all, the elephant in the room, sports and conventions. I’ll bet these other cities don’t spend that much more than Indy on these businesses. And, while one can question their cost effectiveness or desireability, clearly both have been key to Indy’s success.

Indianapolis may in fact be the northernmost Southern city. In many respects, that is true. Locals know that to some extent I-70 is the real Mason-Dixon line. But, as I’ve noted before, the South is booming. And I doubt you’d find most Midwestern cities of similar size have spending that much different from Indy. They are all pretty much in the same general state if you ask me, something I’ve tried to highlight with this blog.

But the question remains. What does your community want to be, whether you are in Indy or elsewhere? Do you want to play in the 21st century game? Or do you want to try to hold on to the old ways of doing things, buckle down, and pray you are a survivor? Clearly, smaller cities can’t choose to do it all. They have to pick and choose what they want to be. Trying to turn into Indy into some type of San Francisco like tax and spend republic would be a recipe for disaster because the Midwest does not (yet) have the built in appeal of places like that. The key is to figure out where you can play and where to carve out your niche. And to make sure that you don’t get left behind when it comes to the “new basics”. Government services aren’t static. They evolve over time and the goods we expect our governments to deliver grow as a our society grows. At one time cities didn’t have fire departments. It wasn’t too long ago that they didn’t care about clean water. Today, providing the amenties needed to compete in the global economy requires new thinking. I can’t say exactly what the new must-have services might be. Is it transit? The arts? Something else? We’ll see. But if you don’t place a few well-chosen bets, you are guaranteed to lose out.

Part of the problem in Indianapolis and other places is that giving money to the city can easily be viewed as pouring money down a rat hole. As property taxes spiraled, services were degrading. Why would anyone want to pay more for that? There are some key principles that need to be adhered to. One is clearly separating the desired service levels from how to deliver that service most effectively. Those are completely unrelated questions. First decide what car you want to buy that fits your general budget, then go dicker with the dealer. Next, there must be a clear linkage between outputs and inputs. When more money flows into the government’s coffers, more services need to fall out the other end of the pipe. If the city can’t draw a linkage between money in, services out, and can’t explain away variances, the public will never have the trust necessary to give the government more money even if it wants the services. How will it know it is getting anything for the money?

As the article cites, Lucas Oil Stadium is a model. Many people didn’t like the deal and some still don’t. But on the whole the community seems to think it was a good idea. But most importantly, when the Lucas Oil tax increase went in, the city got a brand new stadium it can see and touch for its money. There is a tangible, real linkage between that tax and the output. Perhaps people would be willing to support a transit tax on that basis to. Implement a regional transit tax, first by enabling legislation, then by the opt-in of the counties, and link it directly to the increase in service that results. That way the debate is squarely about the desireability of the outcomes, not about more money for an amorphous government agency.

This article also highlights the challenge facing Mayor Ballard. He’s gotten hit with a financial tsunami. Indeed, absent that maelstrom, he wouldn’t be mayor today. But he’s also reaped where he did not sow. He inherited the library, Lucas Oil Stadium, the Cultural Trail, the new airport terminal, and to a lesser extent the Super Bowl. He’s had a lot of ribbon cuttings to attend. But now the pipeline is about dry. What is his legacy going to be? Clearly, his major legacy needs to be financial. If he puts the city’s house in order operationally and financially – no small feat – he’ll deserve the thanks of the citizens for years to come. The city can’t even think about taking the next step in services until it gets back on a solid base. Indeed, he has already had huge success in that he got the state to take over the ticking time bomb of the unfunded police and fire pensions, pensions that would have ruined the city in the long term.

But ultimately I don’t think just fixing the leaks in the fiscal boat and dealing with administrative paralysis is going to be sufficient to take the city forward. Indianapolis was successful with its previous strategies largely because it was forward thinking and put the key elements of success in place before they were needed. Building the Hoosier Dome was the best example. Without having done that with no team, the Colts would not be in town today. Where does the city go next? How does it differentiate itself? The time is past due to reseed the pipeline of major civic initiatives. The city can’t do it alone. But the city has never done it alone. Business, academic, and citizen groups have long been a source of strength. But the city can’t just punt to them.

I know I’ll catch flak for this because I always do, but the city needs to take a look at what Carmel is doing. Carmel realizes that its true competition isn’t the north side of the city or Greenwood. It’s true competition is Naperville, Illinois and the nicer suburbs of Atlanta. To build a desireable location for business, it has to have a desireable location for the executives of those businesses to be in. Hence its development strategy based on high service levels, new urbanism, neo-Colonial architecture, etc. The Carmel example should not be copied verbatim of course. I don’t even personally like faux Georgian architecture. But they are the poster child for a strategy led civic development strategy, and at least trying to respond to the modern economy. That’s why other suburbs in the region are upping their game. They see success and want to emulate it.

In the globalized new economy, it is generally core cities that have been prospering. Indy has made huge strides in its downtown and key northside neighborhoods. Its ethnic diversity is on the increase. But it hasn’t taken its place in the urban boomtowns yet. I don’t believe they city has to take a back seat to the suburbs or to any place else, though obviously it will need to take a different path from places like Seattle. But to truly be competitive for the future, the city needs to be ready to get in the game. Part of that is likely to involve spending some money on targeted new services, delivered efficiently and reliably. Best of luck to Mayor Ballard in stepping up to the challenge.

13 Comments
Topics: Economic Development, Public Policy, Strategic Planning
Cities: Indianapolis

13 Responses to “Updated: What Do We Want Our Cities to Be?”

  1. El Fuser says:

    First, please keep this blog going. I check this site daily for updates.

    Second, I am not sure that Indianapolis is positioned to make the kind of increases in spending that this article suggests. My hesitancy is not meant to be some anti-tax or rant on bigger government… I just don’t think Indianapolis has the helpful circumstances that have benefitted Charlotte, Seattle, and Portland.

    For the last 10 years Charlotte has riden the credit boom as the banks that were located there grew and grew. I am not sure that Charlotte will continue to see this kind of corporate fueled growth for quite sometime. Additionally, Charlotte has fully engaged the pro-sprawl patterns that contributed to the 1990’s boom of Atlanta. And as this blog has highlighted… those patterns will only come back to bite them.

    Seattle is another city that has benefitted from the major growth of Microsoft and its aerospace industries. Additionally, the resident’s of Seattle have moved further along in their adoption of smart growth ideas.

    Finally, Portland… it literally has a state mandated system that prevents the uncontrolled spread of the city further into the country side. The city has a much greater opportunity to capture the increased property tax revenue of increasingly dense development. I personally support these kind of smart growth methods… but I just don’t see the state of Indiana going light years beyond UniGov to adopt an Urban Growth Boundary and creating an elected board to to help plan the development of the region.

    I fully agree that Indy needs to step up its game in long term planning. The City must improve mass transit and must continually reevaluate its image. However, this must also be said for the state of Indiana. Unigov has pretty much done all it can w/in Marion County. The State of Indiana needs to realize that the Indianpolis Region, Ft. Wayne area and the Gary/Hammond areas need comprehensive planning. When the state of Indiana gets behind these ideas then Indianapolis can go forward with smarter ideas like Portland’s Metro or Minneapolis/St. Pauls Revenue Sharing programs.

    Sorry for the long comment.

  2. thundermutt says:

    Interesting take, el fuser. Was Indianapolis’ great leap forward of the 80’s and 90’s fueled by Prozac profits, Lilly stock and options, and Endowment largesse?

    Where I have to disagree with you is in the viability of increased regional planning in Indiana. Centralized planning is a 20th Century model. There are volumes of very fine plans sitting on shelves all around Central Indiana.

    The issue is funding and implementation for regional-scale civic improvements (infrastructure such as water/sewer, roads, sports arenas, airports, etc.). We don’t need a regional planning authority as much as we need a regional government authority…but such a thing would step all over our 19th Century forms of local government and its entrenched advocates. Counties and townships are anachronistic, and so far we are only tinkering around the edges in Indiana.

    I want Indianapolis to be the heart of a growing metropolitan region. And by “growing” I don’t necessarily mean “paving over bean fields”. There are abandoned railyards and the Citizens Coke plant site within the old city that would make excellent mega-distribution facilities…in places where some laborer jobs are desperately needed.

    A larger tax base does not necessarily mean higher tax rates for the people already here.

  3. Anonymous says:

    But no one goes to Naperville, Illinios remember.

  4. Anonymous says:

    Well stated article – thank you for your insights.

  5. Pantograph Trolleypole says:

    Your article on Charlotte actually got me thinking about all this. It’s been fascinating to read everyone’s take on it. I am interested in what’s been going on in Indy. I had the lady quoted in the article post in my comments and it made me wonder about both sides of what has gone on tax wise in Indy over the last few years.

  6. Anonymous says:

    Urbanophile: “Indianapolis may in fact be the northernmost Southern city. In many respects, that is true. Locals know that to some extent I-70 is the real Mason-Dixon line.”

    In this part of the country the Mason-Dizon line has always been the Ohio River. That would be about 100 miles south of I-70. In fact, Louisville is the northernmost Southern city.

  7. thundermutt says:

    Anonymous, you are wrong on facts: Wheeling, Baltimore, and Washington DC are all cities south of the Mason-Dixon line and north of Louisville.

    And here’s a little lesson on Indiana and its history:

    When you look at statistics (such as smoking rates, heart disease rates, obesity rates, education levels), Indiana turns out to be more similar to its southern neighbors than to its northern ones. The same is true with attitudes: the center of the Ku Klux Klan in 1920 was Indianapolis. A Klan leader was the most powerful man in the state. Finally, Indiana’s state constitution has fairly strong property-rights protections (even though the anti-property-tax crazies might disagree).

    I agree with Urbanophile: in many respects, Indianapolis is the northernmost “southern” city. Its progress in spite of all those factors is even more remarkable to me.

  8. Anonymous says:

    thundermutt:

    I said “in this part of the country”.

    The Mason–Dixon Line (or “Mason and Dixon’s Line”) is a demarcation line between four U.S. states, forming part of the borders of Pennsylvania, Maryland, Delaware, and West Virginia.

    Historically, the Ohio River is the extension of that line into this part of the country.

    Geographically…in this part of the country…Louisville is the northern most southern city.

  9. thundermutt says:

    I’m not ignorant of geography,a nd I don’t believe Urbanophile is either.

    Statistically and attitudinally, which is how I believe Urbanophile’s quote was intended, Indianapolis tends to look more like its southern counterparts than its Midwestern peers.

  10. The Urbanophile says:

    Right. The Southern parts of Indiana, Illinois, and Ohio are not geographically the south, but they are culturally the south to a great extent. And as thundermutt notes, the statistics on things like smoking rates, obesity, etc. back it up. Believe me, I grew up there so I know it personally.

  11. Anonymous says:

    Urban & Thunder:

    Indy is not 'southern'. Period.

    It is midwestern/redneck but not 'southern'.

    Don't get me wrong…southern/redneck is the same with a drawl.

  12. thundermutt says:

    I don’t know about Urbanophile, but when I was a kid in southern Indiana, I sure had a drawl and my friends did too.

  13. Alon Levy says:

    I question how bad Indy is. Its CSA’s population has grown 9% since 2000, the highest of all million-plus metros in the Midwest and Northeast; in the same time period, Cincinnati metro has grown 6%, Chicago 5%, Kansas City 8%, and Minneapolis 8%. Indy proper has also fully recovered from its 1970s population loss, while these four cities haven’t and have population levels at or near multidecade lows.

    Indy might look bad compared to Charlotte, but Indy participated in the industrial revolution while Charlotte didn’t; Charlotte has a lot to catch up with, and none of the legacy infrastructure the plagues the Northeast and Midwest.

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