Sunday, December 21st, 2008

The True City

As many Midwestern cities, particularly its smaller industrial ones, continue to struggle with the loss of manufacturing jobs, people wonder how or if these places will come back and again become economically prosperous. I think the potential for economic renewal at least partly depends on whether or not a place is a true city or a shadow city. What do I mean by that?

Here is one way I categorize the economic life of cities. One can divide companies into three types:

  1. Local goods and services. These are things like banks, grocery stores, dry cleaners, coffee shops, plumbers, etc. that exist in order to provide goods and services to the people who live in a place.
  2. Branch or departmental. These are things like raising wheat, building brake components for cars, certain types of laboratory work, or any other type of specialized product that exists to service demand from elsewhere. They are often specialized and routinized.
  3. Internally generated production. These are pieces of the production puzzle, often creative or innovative, that constitute an independent economic life force in a city.

Every city has local goods and services type industries. Many of them have other companies as well, but the kind of companies and industries is important. In particular, we need to distinguish between types 2 and 3. Consider the case of Flint, Michigan. This town was extremely prosperous at one time as GM located huge numbers of auto factories there. But these factories existed only to the extent that they served a need for GM. Once they no longer served that need, they were gone. Flint, in a sense, was not a true city. It was a shadow city that existed because Detroit needed and wanted it to. Once Detroit no longer needed it, Flint began to wither. And because it did not have the independent economic life force that comes from having significant internally generated production, it has had a hard time figuring out how to revive its fortunes.

Contrast with Indianapolis. It’s a branch plant town to be sure in many ways. There are few local large companies headquartered there. But Indianapolis has significant internally generated economic fire. It has a tourism and sports industry, it has the motorsport cluster, it has significant life sciences companies like Lilly and Dow Agro Sciences that didn’t just locate a facility there because it was convenient, but which are really driving the companies. It’s got technology startups like Exact Target and Angie’s List. What’s notable is how many of these companies can generate either serial entrepeneurism or spin-offs. Chris Baggot left Exact Target to found Compendium Blogware. Scott Jones didn’t just sit around counting his money after inventing voice mail, he has started several companies since. Not all of these will be successful, of course. But the key is that many of them can be started and sustain their operations without having to convince a company in a far away place to locate there. They are local, independent sources of production. They are also often creative companies that are building new and innovative products and services.

Cities that are capable of generating this type of internal economic life force have a much greater chance at adapting to the new economy than the ones that do not. Unfortunately, many small manufacturing cities were really just branch plant towns that were there to take advantage of a certain need at a certain point in time. But they were almost totally dependent on outside actors to sustain their economic life force. Their animating power was elsewhere. That’s not to say that they don’t have assets like a skilled labor force or good infrastructure. But they are only able to deploy them profitably to the extent that economic forces elsewhere dictate.

It comes as no surprise that these types of “shadow cities” are often victims of macroeconomic forces they can’t influence or even sometimes understand. We’ve seen that for sure in the Midwest as our agricultural and manufacturing industries have gotten pummeled by structural economic changes and vast increases in productivity. But even if a place is successful today, to the extent that it either overspecializes or is dependent on outside forces to animate its economy, it is living on borrowed time.

To be successful, a city needs to be a true city, one that has a healthy and diverse mixture of businesses, and with a combination of all three types of companies. It simply must have some capacity for internally generating economic life and innovation. Starting or restarting that economic fire is the key to turning around struggling cities. Without it, they are only going to be waiting for their number of come up in the site selection lottery, and slowing shrinking away over time.

Thursday, December 18th, 2008

The Decline of the Midwest Cultural Institution

Update: I’d like to clarify and stress one point. The challenges I describe here are largely financial in nature and the result of macro trends. They are not the product of poor management or bad artistry. Thanks.

One thing the Midwest could always claim it had on the South and other up and coming areas is that its cities, person for person, had vastly better cultural institutions than their boomtown brethren. Most Midwest cities boast a full complement of traditional arts organizations – symphony, orchestra, ballet, art museum – as well as numerous theater groups and other indie arts. Many of these were built up in an era when the Midwest was top dog and it is difficult if not impossible for the newcomers to replicate them, particularly art museums, where the price of major works has soared off the charts.

But of late we’re starting to see signs that this is changing. First, the newer cities are coming on strong. Charlotte knows it is a straggler in the arts and its spending big money on facilities and organizations to upgrade its game. Similarly, Nashville is trying to do the same, building the lavish Schermerhorn Center as a home to its symphony, and also dramatically increasing the symphony’s budget and level of artistic achievement.

The Midwest, by contrast, is seeing big cracks in the facades of its organizations. Apart from Chicago, which is so big it can fund everything at world class levels, the rest of the Midwest is seeing any number of institutions suffering financial and attendance problems. I’ve covered many of these stories here. The Detroit Institute of the Arts has a massive structural deficit. The Louisville Orchestra and the St. Louis Symphony nearly went bankrupt. The Columbus Symphony was more or less gutted. The Guthrie Theater in Minneapolis may have a Jean Nouvel inspired new home, but they also had a big operating deficit to close last year.

The fact that it is symphony orchestras that have shown the biggest challenges is to be expected as they occupy what is arguably the most indefensible niche in the arts. I say this as someone who is actually a big classical music fan, especially opera. I’m actually the guy that all these organizations are falling over themselves to attract: a 30-something who is passionate about classical music and is willing to pay top dollar to attend. So it’s not like I think classical music is irrelevant or that I hate it. Quite the contrary.

The downsides of orchestras are numerous:

  1. They require a large (and therefore expensive to maintain) complement of musicians.
  2. They lend themselves to conducting and performance stars who command high fees. (Opera suffers from this as well)
  3. They perform the genres, concertos and symphonies, that I would argue benefit least from live performance versus a recording. I can pay $80+ to see a major symphony perform Beethoven’s 5th yet again, or I can stay home and listen to Carlos Kleiber’s legendary recording (original price $12) on my iPod for free anytime I want. (Yes, I know you can get tickets cheaper than that, but in the nosebleed section the comparison is even worse, IMO).
  4. They have the most fossilized repertoire. This creates an amazing challenge. Newbies probably want to hear Beethoven’s 5th for the first time. Oldtimers may get turned off by hearing it the 50th. On the other hand, they are sick and tired (or at least I am) of having tuneless modern crap shoved down their throats. And it to repeat my last point, it almost goes without saying that all of the core repertoire is available in numerous high quality CD editions at reasonable prices far below symphony tickets.

These are structural problems quite apart from execution and it is difficult to see how they can be addressed.

Consider the differences in comparison with other art forms.

The chamber ensemble is small, a lean, mean machine. It doesn’t have a $30 million/year mouth to feed. There is something magical about seeing a chamber performance. There’s a certain intimacy with the music and connection with the performers (often literally – as you can frequently chat with them after the show) you don’t get with the symphony.

An opera is the original multi-media art form. While you can listen to an opera CD, there’s nothing quite like seeing the theater on stage and every performance you see of an opera can be radically different in its production. (DVD and the Met high def broadcasts, the latter arguably better than being there, may yet do opera in, however).

The vocal works of the renaissance and baroque likewise lend themselves to more intimate performances in churches and the like, where the ambiance and resonance of the venue are difficult to duplicate in a home sound system. I also find that the uniqueness of the human voice across performers and performances is vastly greater than that of the various instrumental interpretations of the symphony repertoire.

Given that the symphony repertoire is not expanding, it is reasonable for a classical music fan to simply acquire a nearly complete CD collection at a fraction of the cost of what it would take to see them by an orchestra live. And in most cases available CD’s contain some of the greatest performance of all time by the greatest orchestras and conductors of all time. So you have a good chance of getting a better product to boot, as in my Carlos Kleiber example.

As the Autoextremist might put it, this adds up to a whole heaping bowl of Not Good for orchestras.

I believe the divergent fortunes of the Midwest and much of the rest of America will force communities to engage in painful soul searching and discussions about what they can realistically afford to support as cities.

I’ll use the case study of the Indianapolis Symphony Orchestra. This is a good example because Indianapolis is one of the healthier Midwest cities and its orchestra has traditionally been artistically and financially strong as well. I noted recently an Indianapolis Business Journal article on the orchestra’s financial challenges. The endowment has been slumping in a bad market, and the orchestra has been drawing down the principal for at least three years to help balance its $27 million budget. This is a collision course with disaster.

There’s a question Indianapolis is going to have to ask: What does it want its orchestra to be? Interestingly, a while back I wrote to the ISO asking if they would send me their strategic plan. I never heard back from them, so I don’t know the plan, beyond what orchestra CEO Simon Crookall said in the article, which is that he wants to boost the endowment to $200 million. But I can offer a few thoughts.

The Indianapolis Symphony falls into a niche shared with several other Midwest orchestras. It’s a full time 52 week orchestra with a sizeable budget and high levels of artistic achievement, but it is not a nationally or globally elite orchestra and it functions primarily as a local ensemble. It does not, with limited exceptions, serve as an ambassador to the city or a major brand builder in the way that the Chicago Symphony or Cleveland Orchestra do. Arguably the Cleveland Orchestra, which you may recall just made Grammophone Magazine’s list as the #7 orchestra in the world, is the most important branding mechanism that city has. Probably many people overseas only know Cleveland by its orchestra. In my view, this is an asset the city of Cleveland simply can’t afford to downgrade, despite that institution’s financial challenges. Similarly, the Cincinnati Symphony is fairly well known, tours internationally on a regular basis, has had a popular and long running series of pops recordings, and has an internationally known music director who is a regular guest conductor at major world orchestras.

Again, the ISO is does not serve this branding function, with the notable exception of its broadcast series. It is simply another artistically solid but reputationally undistinguished American orchestra. It’s function, again, is basically as a regional orchestra. The problem is that it a very expensive regional orchestra. There are other regional orchestras in America with budgets in the $10-15 million range. Also, much of its season is made up of pops concerts and other events that sell tickets, but don’t contribute to the core mission of playing the classics. The entire month of December is dedicated to a Yuletide Celebration, for example.

Perhaps it is time for Indianapolis to think the unthinkable. Should it downgrade the ISO to a part time orchestra that operates on half the budget, more focused on a core classical repertoire, that is sustainable in the long term? Because the way things are going is a collision course with financial disaster at some point once the precious endowment is clobbered by a combination of market declines and principal draws.

I will confess to being a “go big or go home” type of guy, and a very expensive orchestra that serves mostly as a local ensemble is not something I would personally go for. The community at large and symphony supporters may feel differently. But if so, they’ll need to significantly increase contribution levels and boost the endowment in order to put the ISO back on a solid base.

In my view, there are three primary options:

  1. Downgrade the orchestra
  2. Maintain the status quo, which requires some level of increased community support
  3. Upgrade the orchestra to serve a significant civic branding function

The downgrade scenario involves what I laid out before: reduce the budget to $10-15 million, reduce the number of full time musicians, go to a part time schedule (which would reduce salaries), limit the number of high priced soloists scheduled, and get to where the endowment draw maintains an inflation adjusted constant principal. Frankly, I doubt most people would be able to tell the difference aurally, just as most people probably can’t tell the difference between the ISO and the Boston Symphony.

The status quo option means that, at a minimum, the endowment needs to be boosted to enable the symphony to support its budgets without bridge funding or principal draws. This also means coming to terms with what we have in fact observed of late, which is the plateauing of the artistic level of the orchestra. Landing Raymond Leppard, of whom I will admit to being a HUGE fan, was a major coup. But recently the orchestra has been in maintain, not grow mode.

The upgrade option involves probably boosting the orchestra’s budget somewhat, though not necessarily a lot, and adding a significant branding dimension to the orchestra’s role. The cornerstone of how I would approach this would involve a restructured contract with the musicians that significantly boosted base pay – perhaps to as much as $100,000 per year, which I estimate would boost the budget by about $3.5 million, in return for elimination of broadcast and recording fees, as well as restrictive rules of other sorts. Basically it is a flat salary. Plus the musicians would agree to be supportive of upgrading the artistic talent base of the ensemble over time, including making changes to existing members if necessary (not that I’m saying it is). With this, the orchestra would start digitally recording everything and making it available for more or less free downtown, free broadcast, and more. Anything to turn the music the orchestra produces into a brand booster. The second facet would involve regular tours. If the community won’t support one major orchestra tour per year or so, this option probably isn’t a good one. This probably involves boosting the endowment to at least $300 million.

In any scenario, the ISO and Indianapolis need to forge a much closer relationship with the IU School of Music and Bloomington. Bridging the gulf between Indy and Bloomington generally is key to regional cultural and economic growth, and it seems to me that when you’ve got what is the #1 or #2 best music school in the country next to the 15th or so largest orchestra by budget, there’s an opportunity for something a lot more special than what exists now.

Cities like Indianapolis can’t support everything. They’ve got to pick and choose. The city has decided, for example, to focus on sports and conventions, and has sunk large amounts of money into facilities for those things. Where does the orchestra fall on the list? It is a must-have or a nice to have? People like Richard Florida (Mr. Creative Class) might suggest the traditional high arts are an anachronism and that indie arts are a better focus. Others take a different view. Whatever the case, Indy is going to have to make a decision. The current course only leads to a financial crisis and likely downgraded orchestra by default some time down the road. There is no easy answer and if the community wants to preserve or even continue to elevate the ISO it is going to have to significantly increase financial its financial support.

Like I said, I’m an opera guy (I usually attend about 12-15 a year) and have never actually subscribed to any symphony. So perhaps my advice is suspect. Nevertheless, facing up to the challenges that the Midwest will have in financially supporting its cultural institutions in the modern era is something every city is going to have to do. Because of their particular challenges, orchestras represent the canary in the coal mine here. I expect most cities are going to go through one or more financial crises related to their symphony. Other organizations will follow unless the Midwest turns it around economy radically.

Tuesday, December 16th, 2008

Pride of Place

How do you know a city that takes pride in itself? It’s often the littlest things. Consider this stop sign from the city of Chicago.

At first, this looks like any ordinary stop sign. But take a closer look at the bottom and look at what we see.

The people who make street signs in the Chicago care enough, put enough pride into their work and their city, to sign the city’s name at the bottom of every sign. This tells us something very powerful about the that place. Think it is an accident of geography, luck, or history that made Chicago what it is today? Think again. There something real and something deeper, and it shows itself even in the most humble of civic adornments, the street signs. It’s like I’ve always said:

“The mark of a great city is in how it treats its ordinary spaces, not its special ones.”

Chicago obviously get it. And that’s one reason it is a truly world class city.

Sunday, December 14th, 2008

Fertilizing the Soil

Behold, there went out a sower to sow: And it came to pass that, as he sowed, some fell by the way side, and the fowls of the air came and devoured it up. And some fell on stony ground, where it had not much earth; and immediately it sprang up, because it had no depth of earth: But when the sun was up, it was scorched; and because it had no root, it withered way. And some fell among the thorns, and the thorns grew up, and choked it, and it yielded no fruit. And other fell on good ground, and did yield fruit that sprang up and increased; and brought forth, some thirty, some sixty, and some an hundred.” – Mark 4:3-8

I have talked a lot on this blog about urban strategy and about what cities can to do develop their unique niche or become big in certain industries. But I want to make very clear that I do not believe these great results can be created out of thin air by the government or other entities. Rather, true progress in a city comes from the actions of thousands of individuals and firms who choose to plant their flag and seek their fortune in a given place. It’s people deciding this is where they want to live, work, play, and raise their families. It’s entrepreneurs deciding this is the place they want to start their company. It’s big companies deciding this is the place they want to expand, or hold their convention or meeting.

I think that civic development programs have an important role to play, but that role is in fertilizing the soil, it making sure that when the seeds fall, people people do decide to seek their fortune in a place, that there is an environment there that will be nurturing and cause them to be very successful. It’s important for local communities to get the legal frameworks, culture, taxation, infrastructure, and more in place so that when the seeds of your target residents or industry profiles show up, they take root, multiply, and flourish.

This is where the Midwest fails all too often. Every city I’ve been to or read about has good stuff going on. Every city has motivated boosters, entrepreneurs, etc. But how often do these end up being just one offs? How often does, say, one or two people’s passion for great architecture inspire a movement? Or a create a huge music scene? Or build a life sciences industry cluster? It seems rare.

There’s a well known book that I, like many others, read in college called “Zen and the Art of Motorcycle Maintenance”. One of the interesting things the author notes that is in scientific research, one would think that coming up with hypotheses to test would be the hard part. But as it turns out, that’s easy. People are constantly coming up with new ideas to test. Similarly, it might seem that getting seeds to fall on your city is the hard part. But for any city of a million people or more, there are plenty of seeds falling every day. The real question is how many of them take root, and how much of a multiplier effect there is.

Why do I say the Midwest is failing on this point? Well, the Midwest is famously averse to change and its cities have extremely conservative cultures. I continue to be astonished that even places that are manifestly failing economically do not seem motivated to try anything that is really new or different than what they’ve done before. But rapid change is the reality of the globalized economic age we live today. Most of us really don’t like change. I’ve got to tell you, I personally hate it. But like it or not, constant change is here.

One of the things that goes into urban success is receptivity to new ideas, and the Midwest scores badly on this point. Even where there is often a true and sincere desire to move a city or state forward, historic culture, attitudes, legal frameworks, and business practices often combine to choke off the sprouts of goodness that start to grow. And even if a highly motivated entrepreneur does start a successful business in say the high tech industry, how often does it create a movement? Not often.

This is the challenge. I truly believe that most Midwest cities of a certain size actually have many of the ingredients of success. They just need to continue transforming their soil so that those ingredients can find full flower. That’s a long term game. And it requires visionary, courageous, sustained leadership. The cities that develop that leadership talent and leadership culture in their political, business, cultural and grass roots communities are the ones that are going to figure out how to succeed in the new economy. Those who don’t will continue to be left behind.

Saturday, December 13th, 2008

News Briefs

Our friends over at Broken Sidewalk have a great post on how sidewalks are often polluted with poles and other obstructions that would never be tolerated in a street. It’s a great read. Here’s a sample photo:

The left leaning American Prospect talks about NYC’s pedestrian and bike friendliness programs.

The Web Urbanist profiles 15 great library designs.

Stephen Bayley rips on the new urbanist aesthetic and even takes a gratuitous swipe at Ft. Wayne in the Guardian.

Time Magazine talks about how failing cities can reinvent themselves.

Much has been written about the need for the Midwest to think regionally. Well, similar discussions are ongoing in the South. Here’s a couple of articles, one pro and another con.

Since I’ve said nice things about Charlotte, it is worth noting that the banking sector troubles are affecting that town. The Economist has the story.

CEO’s for Cities has a couple of great blog postings on Austin, Texas. You can read them here and here. Here is a great quote from Mayor Will Wynn: “I’m as nostalgic as the next person, but nostalgia doesn’t help deal with growth. The fact is attractive cities attract people. Which side of the sword do you want to be on? If you are not growing, young people are leaving.” And in discussing a presentation by local leader Pike Powers, the blog notes, “Asked about how to overcome internecine funding wars that occur in every state, Pike advised the leaders to ‘construct artificial devices and don’t be afraid to embarrass people. That’s leadership.’ He also admonished them to recognize the power in the ‘unadulterated brashness of saying, “We’re going there”‘ as Austin did when it proclaimed itself in 1991 the Live Music Capital. ‘It works more often than not.'”

American City Business Journals publishes its economic strength rankings. Here’s how our cities stack up. Note that I’ve got a few quibbles with the methodology, but the general thrust of their rankings seems right. Not a stellar outing for the Midwest

  • #47 – Kansas City
  • #57 – Indianapolis
  • #60 – Milwaukee
  • #61 – Louisville
  • #65 – Chicago
  • #72 – Minneapolis-St. Paul
  • #76 – Columbus
  • #91 – Cincinnati
  • #96 – Cleveland
  • #100 – Detroit

Chicago. Chicago is privatizing its parking meters in a transaction that will raise $1.2 billion.

CTA President Ron Huberman releases his December President’s report. Highlights include major progress in eliminating slow zones (down to only 6% of trackage) and increased ridership.

Cincinnati. The airport is at a turning point, with Delta downsizing the passenger counts expected to only be 10 million next year, down from a peak of 22 million.

Columbus. A nice article on high tech Columbus.

Nationwide Children’s Hospital is looking to add up to 2,400 jobs.

Detroit. Time Magazine says Detroit is still waiting for the Renaissance.

Michigan economy stuck in an eight year recession.

Twin City Sidewalks excoriates Livonia.

Indianapolis. The MPO approves expanding a transit study to put together a regional concept plan.

From the Not Good Dept., the IBJ reports that the Indianapolis Symphony Orchestra has been drawing down the principal in its endowment to balance the budget.

Louisville. The city unveils its version of the sewer overflow fix.

Milwaukee. A neighborhood wants to literally print its own money.

Twin Cities. Minnesota is $5.2 billion in the hole.

Thursday, December 11th, 2008

Infrastructure Stimulus

There’s been much written about the proposed Obama infrastructure stimulus plan. In the short term, pumping some extra money into the infrastructure pipeline looks like a good idea. With national VMT in decline, states are getting less in transportation funds from gas taxes than they expect. Increasing federal funds is a good way to make sure we don’t take a dip, and can even ramp up construction incrementally. We can also start chipping away at the backlog of transit projects.

The biggest opportunity probably comes from the capacity gap opened up by the decline in private sector construction. What do I mean by that? Simply, the ecosystem that supports major construction projects is only so big. There are only so many contractors with so much bonding power, so much asphalt and concrete capacity, so much quarry capacity, so many engineers, etc. While some of this can be expanded with extra shifts or additional manpower, the fact is, massively increasing the ability of a state or country to output projects requires a major fixed cost investment that acts with a lag. It’s like a widget factory. You can add a third shift or try to squeeze out efficiency gains, but at some point the only way to increase output materially is to build a bigger widget factory.

The nation’s ability to output major construction projects is split between the private and public sector. In the last couple of years, demand has exceeded supply, the result of which manifested itself in construction inflation that outpaced the overall inflation rate. Today, with private sector construction in a slump, there’s extra capacity available for the public sector. The key is not to try to “oversubscribe” the available capacity and end up just boosting prices again and pumping more profits into the pockets of the supply base without adding to the output materially.

Of course, one constraint on our ability to do this is whether or not there are projects locked and loaded that can be started immediately with funds. I suspect there aren’t nearly as many of those as have been touted, at least not when federal regs are taken into account. Indiana leased its toll road for billions, but it is going to take a few years for all those projects to work their way through the system. A project where the ROW has not been acquired, the environmental work not done, etc. can’t be started even if you have the money and the capacity.

If we as a nation are going to make a commitment to increased infrastructure spending over the long haul, which we probably need to do to support our increasing population, to maintain/refresh our aging physical plant, and to adapt to changes in living styles, technology, and social priorities, then we need to do a few things today to enable us to really boost the overall capacity of the country to product output.

One is to provide some degree of predictability over the long term from a public policy perspective so that private industry feels confident in expanding capacity. If there’s only a one time infusion of cash, it isn’t likely anyone is going to try to satisfy that demand by building the proverbial new plant. Instead, businesses will adjust via the price mechanism. So providing some reasonable predictability to an increased level of spending over a long enough time horizon to enable people to believe they are going to recover their capital expenditures is important.

The other is to revisit the mandates we put on civic construction projects. NEPA and other federal regulations were implemented for very good reasons, reasons we shouldn’t dismiss. While it is easy to get jealous of, say, China’s ability to just crank out projects, I for one am glad we’re a country where things like property rights and the environment matter, and where the public gets a say. Still, there’s a difference between designing a system to minimize the number of innocent people who get convicted and minimizing the number of guilty who go free. Today, the system is designed to try to throw as many roadblocks as possible in the way of bad projects. The problem is, people who back bad projects are able to game the system and play a war of attrition to ultimately get a lot of them through anyway. But that mechanism also puts a huge amount of roadblocks, and even can ultimately kill, a lot of good projects too.

It takes a decade or so to pull off a major road or transit project in this country. With even small amounts of inflation, this will double or more the price tag of the project between the time it is started, and the time construction starts. For example, the head of the Cincinnati MPO bemoaned the fact that delays from federal red tape were going to add another billion dollars to the cost of the Brent Spence Bridge replacement. Will that billion dollars in cost end up adding a billion dollars in value to the output? I don’t think so. On the other hand, when projects like the replacement for the I-35W bridge in Minneapolis are fast tracked, they can get done start to finish in a year or two. And it appears to be a quality project.

There’s got to be a happy medium in here somewhere. There’s got to be a way to tune the dials so that we as a country can still keep in the analysis that gets us what we want in terms of protecting our values, without imposing a huge financial penalty that incrementally gets us little or nothing.

Why is this important? Well, we need to pay for this increased infrastructure building somehow. There are a couple of ways to do that. One is to raise taxes or tolls. The other is to get more efficient by reducing the cost. Spending on infrastructure tends to be viewed in terms of dollars. But money is an input not an output. There is an embedded assumption that the output per dollar is constant, but it doesn’t have to be. If by speeding up, say, major transit projects by 3-5 years whacks the cost by 50%, that’s a huge increase in potential output with no increase in spending. How about that? Free money.

This is clearly an area where great analysis is required and is not a no-brainer. But I hope it is something that the Obama administration takes a hard look at as a creative funding mechanism.

Monday, December 8th, 2008

High Mast High Jinks in Chicago

You may recall from my previous post on the streetlights of Chicago that the Windy City has possibly the best street lighting of any city in the world. I have been less than fully enthusiastic about the new decorative lighting the city has installed, however. Well, not to be outdone, IDOT has gotten in on the act of degrading its lighting design.

On its freeways too, Chicago is an amazingly well lit city. I’ve always said that IDOT does it right. Well, not any more. I mean, the roads are still better lit than any city in America, but instead of tasteful, reasonably human scaled individual light standards like these on the Kennedy Expressway

IDOT is now installing continuous “high mast” tower lighting, as in this scene on the Dan Ryan. (You should click to enlarge this to get the full effect).

Yuck. I’ve always hated this. High mast lighting towers are awful anywhere, but they are a particular abomination in the city center. They resemble nothing so much as cell phone towers, and the way IDOT has lined the sides of the Stevenson, Dan Ryan, and Kingery with them makes you feel like you are driving through a veritable cell tower forest. These huge towers are completely out of scale to the human and urban fabric, and, unlike the individual standards that mimic normal street lighting, do not engage properly with the road. They stand apart from it as surely as any self-referential suburban office complex ever did. (IDOT is slightly better than normal on this last point, I must admit). I’d never use them anywhere, but if you must, then they should be out in the countryside keeping company with roadside truck stops and Stuckey’s. At least there they serve a semi-utilitarian function of giving you ample warning that you’re about to come upon a place where you can fill up.

Sorry for the tilt on the Kennedy photo. I had to stick my camera around a pole to get a clear shot because of the protective railings that are up on the overpasses.

An Urbanophile gold star to the first person can tell me how many high mast towers are visible in the Dan Ryan picture, and whether or not that is a world record for all time most high mast towers in a single photo fame.

Saturday, December 6th, 2008

The Future of the American Suburb

The suburbanized messes we create become despised by their own inhabitants tomorrow. These dispersions lack any reasonable degree of innate vitality, staying power, or inherent usefulness as settlements. Few of them, and these only the most expensive as a rule, hold their attraction much longer than a generation; then they begin to decay in the pattern of city gray areas. Indeed, a immense amount of today’s city gray belts was yesterday’s dispersion closer to ‘nature’. Of the buildings on the thirty thousand acres of already blighted or already fast-blighting residential areas of Northern New Jersey, for example, half are less than forty years old. Thirty years from now, we shall have accumulated new problems of blight and decay over acreages so immense that in comparison the present problems of the great cities’ gray belts will look piddling. Nor, however destructive, is this something which happens accidentally or without the use of will. This is exactly what we, as a society, have willed to happen.” – Jane Jacobs, “The Death and Life of Great American Cities”

Blogger Paul Ogden casts stones at Carmel Mayor Jim Brainard about the cost overruns on the Keystone Ave. interchange project in Carmel, Indiana. Not only did Mayor Brainard lie about the costs, he says, but the city’s big spending ways finally caught up with it. Since I’ve lauded Carmel before (see this three part series, one, two, and three) and have generally endorsed Brainard’s vision, I thought I would offer my response.

Ogden is mixing three unrelated points: honesty, efficiency, and service levels. On the honesty point, it is a no brainer. If Mayor Brainard deceived the voters, then he deserves a pie in the face for it. But that is orthogonal to spending. On that front, I’ve long said we must separate efficient delivery of services at low costs, which I think we can all agree on, from what level of service you want to buy in the first place. First decide on the car that fits your general budget, then go dicker with the dealer. It is clear that Ogden thinks Carmel is purchasing too high a service level.

While one can certainly quibble with many of their projects, I think that Ogden’s attitude typifies the Midwestern mindset. Whatever it is the government is doing, it’s always too much and the price too high. In short, the implicit advocacy is for a least common denominator, el-cheapo approach.

That might have worked back in the days when the Midwest dominated a commodity marketing like manufacturing. But now it is in competition with China, Mexico, etc. In an era of competition against labor making pennies per hour, the Midwest will never be a low cost place to do business, on a global basis, again, no matter how low its states and cities cut taxes.

The driver of the 21st century economy in a high cost locale like the United States is clearly something else. Many states, including most of the Midwest and Indiana, are hanging their hat on industries like life sciences. But you can’t have a life sciences industry without life scientists. The skills that drive these industries are in demand. The people who have them have choices about where to live. The marginal cost difference in taxes saved in a least common denominator town is not going to overcome the poor quality of life and the sparse amenities these places offer. There’s a new ante in the game. Government services aren’t static. They change over time as the times progress. Sometimes services need to be added. Sometime they need to be retired. I can only imagine the howls of protest back in the 1800’s when forward thinking cities decided they needed to pay for “luxuries” like police and fire departments, which for centuries did not exist in many cities.

Beyond that, when you take the low cost uber alles approach, you’re building an environment that has no staying power. All you have to do to see where the Ogden approach leads is to drive around the formerly booming suburban areas of Marion County and see what they look like now. Take a look at the places that were the Fishers of their day back in the 60’s or 70’s. Or if you live elsewhere, go to the same places in your town. You’ll see rampant suburban decay, vacant commercial parcels, struggling retail, empty big boxes, and unmaintained homes. This is the future of the American suburb that doesn’t take care to build something with staying power.

As long as you are on the edge of growth, that growth wave powers as if by magic new subdivisions, strip malls, shiny new schools, fire stations, and so on. These seem so wonderful because not only are they new, but they are better than what came before in older generation places. But what happens in 25-40 years? When today’s boomburgs are full, with no more land to develop, when they are competing with newer sprawl on the fringe, with developments that represent the next generation of design, what will happen? If today’s sprawlburbs think their fate is any different than yesterdays’, they are in for a rude shock.

That’s why it is imperative for suburbs on the edge of growth to take advantage of their day in the sun to build an environment that will be sustainable, thinking not just about today, but about the long term. Lifestyle centers, like enclosed malls before them, will be an obsolete format at some point. Will your town’s commercial districts be able to handle the transition? And so on, and so on.

That’s why what Carmel is doing is so smart. Again, the specifics are up for debate, and there is no guarantee that their strategy will succeed, but they are doing their best to create a unique, differentiated environment that will hopefully, once the town has matured, remain relevant in the future. It’s a lessson well worth heeding.

Another point is also relevant not just locally but nationally. Other than the City Center/PAC and Central Park, both investments that can certainly be challenged as to their merits, the majority of Carmel’s spending and debt has gone towards roads. We’re talking 50 roundabouts, 5% of the entire US total, and many, many miles of arterial street improvements, including this Keystone project. With infrastructure like the road network, there is no question that you are paying one way or the other. The only debate is in what currency. Will you pay in dollars or will you pay in congestion, pollution, and reduced quality of life and attractiveness of your town? That’s the choice at hand. I’m very confident that any economic analysis of the Keystone Ave. project would show that, even at $140 million, the project will generate strong net positive benefits in user costs alone.

Some people say we can’t afford to upgrade our transportation infrastructure. The fact is, we can’t afford not to. Every year that goes by the price only goes up, up, up. While with the recession on, construction inflation may even go into reverse this year, the long run trend is clear. The price of civic sector construction projects is increasing at a rate in excess of consumer price inflation. This means every year you don’t fix the problem, there’s not just another year of congestion and suffering, but the price tag for fixing it only grows further and further out of reach. Just ask Hendricks County as they struggle to figure out how to pay for a Ronald Reagan Parkway project that has spiraled out of control on costs over the decade plus the county didn’t build it. Ask Louisville, Kentucky which spent 40 years debating where to build a bridge, only to discover they now face a $4.1 billion price tag to do it.

So with this, as with other things, Carmel is ahead of the game. One can enjoy the pain they are going through now to get the project done. But when you fast forward and see what Fishers and Noblesville are going to go through because SR 37 is not getting fixed, I think you’ll see Carmel is probably making the right move by holding their nose and paying the $140 million to fix their problems today rather than punting them down the road to the next generation. Other places across America should be paying attention.

I want to stress that I’m not someone who is any fan of high government spending. My tax bills are beyond unbelievable, and I’m not eager to see them go up. There’s plenty of government spending out there I’d love the opportunity to take the scalpel too. I think this economy creates a golden opportunity to attack the fat in government, such as eliminating Indiana’s 1008 townships. But I think we need to take a long term view and not a short term one. Think about the staying power and long run competitiveness of the communities we are building. Look at the ruins of formerly prosperous places that did not do this, and the immense costs that we pay as a society today for that. The best way to keep taxes and spending low in the long term is to make sure we build healthy, growing, prosperous communities for the future, not engaging in the save a buck at any cost today mentality or passing the buck on dealing with critical problems to the next generation.

Wednesday, December 3rd, 2008

No Parking, No Problem

I wrote the essay below in 1997. Despite a few anachronisms, I think it holds up rather well. While I wrote it about Indianapolis, it’s broadly applicable, particularly to small and medium sized cities. I hope you enjoy.

It is almost considered a truism in Indianapolis that one of the biggest obstacles to getting people to come downtown to shop, see the sights, etc. is a lack of free, convenient parking. People driving in from the suburbs are forced to either park on the street, where they will most likely have a bit of a walk to their destination, or have to pay to park in an off street lot or garage. Suburban malls, office parks, etc. all have large free surface parking lots right in front of the door. This provides them with an advantage, and keeps people away from downtown. Right?

Wrong.

In fact, nothing could be further from the truth. The reality of the matter is that parking has virtually nothing to do with whether people do or don’t come downtown. It is a deciding factor at the margin in the worst case.

This is obvious after thinking about it. To paraphrase Denis Leary, I’ve got two words for people who think parking hassles are the reason suburbanites don’t like to come downtown – Broad Ripple. Broad Ripple is a city neighborhood. There are some free off street spaces, but not nearly enough to fulfill the demand on Friday and Saturday nights. I have personally been forced to walk six blocks or more from where I parked my car to the Broad Ripple Ave. strip. Articles containing horror stories about Broad Ripple parking are standard fare in local papers. Yet throngs of people drive from every part of the metro area and beyond to eat, drink, shop and party in Broad Ripple. Parking hassles have not stopped Broad Ripple from becoming a huge success.

Or consider Christmas shopping season at Keystone at the Crossing. Yet another parking nightmare, the day after Thanksgiving and most weekends in December leave many would be shoppers cruising a full lot waiting for a space to free up. This after already enduring the traffic jams on 82nd St., Keystone Ave., and Allisonville Rd. to get there. But again, this does not appear to deter the thousands of people who throng to the North Side mall’s upscale shops and restaurants.

And parking at Broad Ripple and the Fashion Mall is a piece of cake compared to finding a parking spot in places like San Francisco, Chicago, or New York. In those places, there aren’t even any illegal spots available. All the fire hydrants are taken. But people are willing to drive from 50 miles out in the suburbs to dine out in San Francisco’s North Beach neighborhood. People from Indianapolis and beyond travel to Chicago to shop Michigan Ave., dine out in Lincoln Park, or take in a touring Broadway show in the Loop, where $15 charges for parking are commonplace and on street parking is a near impossibility. New York is of course the nation’s premier tourist mecca and no one even thinks about trying to park there.

Why is it that all these places (especially our very own Broad Ripple) are so successful despite their lack of parking, yet so many people continue to focus on parking as major problem downtown? The real problem with downtown attractions is not that they are inconvenient to get to or that parking is such a hassle. The problem is that far to many of them are not providing something that people want.

The erstwhile downtown Aryes and Lazarus department stores provide the perfect example. They did not lose customers and close because people had to pay to park. They closed because they abandoned the flagship store concept and had worse stores downtown than they did in the suburbs. Who’s going to drive downtown to shop at Lazarus when there is a better Lazarus closer to home at Castleton Square Mall? Nobody, that’s who. On the other hand, people will drive a long way to get to the state’s only Nordstrom, which is doing a thriving business a block south of where Ayres used to be.

Similarly, the numerous generic bars on South Meridian failed to provide anything people could not get closer to home. They failed because of bad business decisions, not because people had to pay $3 to park. The South Meridian establishments that did provide a unique, desirable product – like the Slippery Noodle Inn and Hollywood Bar and Filmworks – have continued to thrive and even expand.

The Symphony doesn’t have any problems drawing a crowd, nor does the Circle Centre Mall or the Pacers. Interestingly, attendance at Pacer games has increased markedly in recent years. This did not coincide with a reduction in parking rates (or even ticket prices). Instead, the team started winning games. Not surprisingly, that’s when fans started showing up.

The truth is, parking has virtually nothing to do with whether or not people come downtown or not. It is simply an easy scapegoat for people to whine about when answering surveys. The fact is, people who don’t come downtown stay away because there is nothing there they want. Provide these people with real attractions and they will come, regardless of parking. The Circle Centre Mall and its associated upscale restaurants provide the best example of this.

“So what?” you might ask. Paying to park or walking a couple of blocks is surely not a positive thing for downtown. Anything that could be done to help alleviate parking hassles would have to be a positive for downtown.

To a certain extent that is true. I definitely feel that downtown should be as convenient as possible within reason. However, the city has developed a fixation about parking that is unhealthy. Much like a modern day Will Rogers, the city never met the parking lot it didn’t like. This has resulted in a downtown that has an incredible amount of land devoted to surface parking lots. Many of which, unfortunately, were built on the sites of demolished historic buildings. I have never been to a major city that has more downtown surface parking than Indianapolis. (This opinion was also recently offered by a consultant working on a transportation visioning study for the region). And surface parking is a curse on any downtown.

Look at the places that we consider the most thriving parts of downtown such as Illinois St. near Circle Centre, Monument Circle, and “skyscraper row” along Ohio St. These are also the areas the have the least surface parking. The parts of downtown considered the least revitalized – like the area around Market Square Arena and the southeast quadrant of the Mile Square – are also the areas with the greatest amount of land devoted to surface parking.

It is easy to understand this. In reality, a parking lot is a vacant lot. And a vacant lot offers no attractions that tourists or suburbanites will come to see. It offers no office space for people to work in. It offers no place for downtown residents to live.

Unfortunately, the city does not seem believe that we have enough surface parking lots. It continues to require off street spots for every new downtown building. This essentially mandates surface parking lots for smaller projects which cannot support a parking garage on their own. It also ignores the fact many projects, because of the unique urban scale of downtown, might not need parking. For example, small businesses might cater only to neighborhood residents and office workers within walking distance. Some housing might cater to those who do not own cars and use public transportation or walking to get around.

Consider the effect of city rules in the Canal district. Almost every residential and business structure there has private off street parking. Most of this is in the form of large, ugly, suburban style surface lots that consume valuable downtown land. Since these lots are private, those wishing to visit the Canal itself and the USS Indianapolis memorial cannot use them. The net result is that these lots sit empty (and often padlocked shut) on weekends and after business hours, giving area around the Canal a desolate and uninviting aura. During the day, on street parking is rarely ever used. Even at mid-afternoon, Indiana Ave. and Senate Ave. have virtually no cars parked on them. The Canal corridor is also almost completely devoid of retail establishments. Anyone living or working there must either drive or face a long walk to do even the simplest of things such as buy a gallon of milk or eat lunch in a restaurant.

Rather than having each business or residence have a private lot, a better approach is to build large off street garages that multiple buildings (and the general public) can use and to maximize usage of on street parking. This might include allowing parking on West St. during non-rush hour periods, widening St. Clair St. to provide parking on both sides (currently there is no parking at all), and removing the parking meters along Senate Ave.

This approach was taken along Mass Ave. The city narrowed the street to provide only two lanes of traffic and added perpendicular parking on both sides along with landscaping and antique street light replicas that make the street more inviting and pedestrian friendly. The result: numerous storefront businesses cater to the neighbors and visitors and often feature residential units or offices on upper floors. This area still has a way to go before it can be considered at truly thriving urban neighborhood, but it is on the right track. Hopefully the city will allow the vacant lots that remain to be converted from surface parking to better uses. This is the model that should be followed elsewhere downtown.

The best bet for the redevelopment of still hurting sections of downtown is to make sure they are selling something people want to buy – not ensuring that they have a huge parking lot. If we continue building surface parking lots, we will only have succeeded in building downtown replicas of suburban shopping malls, apartment complexes, and office parks which experience has shown (see Lazarus, Aryes, Sports, etc. as mentioned above) people are not willing to go out of their way to visit.

The city should lower the priority given to parking, eliminate or reduce most minimum parking space requirements, and make it more difficult to build surface parking lots. Instead it should concentrate on building a unique urban environment that will draw locals and visitors alike to a thriving downtown full of highly desirable attractions people are willing to walk a couple of blocks to get to.

Monday, December 1st, 2008

An American Commonwealth

A commenter in my Detroit posting said, “The Feds absolutely should not get into the game of helping turn around Detroit or Cleveland or Michigan or Ohio or anywhere else. It is the competition for jobs, talent, investment, and population that should be protected. The problem with usurping that natural competition among locales is that you fail to address the poor leadership and local inertia that contributed to the urban decline in the first place.”

I agree with a lot of this. People and businesses have choices about where to locate, and competition between those locations is key to maintaining efficient, innovative, and responsive governance. The government should not choose winners and losers. And clearly the leadership of much of the Midwest has not met the challenge it is facing.

But I think this misses a more important point. America cannot survive and thrive as a country if it is divided into a two tier society. We have to maintain the concept of a true commonwealth, where the prosperity of the county is broadly shared, and the costs of protecting it broadly borne. While there will be winners and losers, when entire broad sections of the entire country are in dire straits, where people struggle to obtain the basics, employment and wages are in seemingly permanent decline for a certain class of the population, this is not a recipe for civic health. The United States can survive with an Appalachian region, a relatively small, isolated, self-contained, and persistent blemish of poverty. But it will not thrive or reach its potential if a good 1/4 to 1/3 of the country does not see itself as benefiting from the globalized 21st century economy we live in today. Revolutions have happened over less in some countries. I won’t suggest that will happen here, but clearly at least some of the extreme polarization we’ve seen of late in our politics must be driven by the increasing polarization between the haves and have nots.

Does the Midwest deserve some of the blame for its current conditions? No doubt. But again, who among us can truly say that we’ve never done anything which could not have, by rights, ruined our lives permanently? I know I can’t. If such a thing has not yet happened to me, it’s not for lack of trying. I have been blessed with a pretty good life which I attribute to three primary things – good genes, good upbringing, and good luck – none of which I had anything to do with and which I must attribute to Providence. Others have not been so fortunate, or have taken the proverbial bullet while I dodged one. I doubt there is anyone who can say honestly that the the good things they have are all the just due of their actions, or that they did not sow a bitter harvest that they somehow avoided reaping. There but for the grace of God goes you and I.

What’s more, people in Detroit and the rest of these struggling Midwestern places are our fellow citizens. How can we go on reveling in what we have while they are left behind to lose their life’s possessions when they can’t afford the payments on the storage locker they rented after getting their house foreclosed on? Today, they need us. Just as in the past and perhaps again in the future, we’ll need them. As I’ve said before, it’s not charity. It’s a common people sticking together for the common good. Even purely selfish motives must concede that the situation in the Midwest and industrial Northeast is a deadweight drag on our economy.

Note that I’m not advocating a bailout. I’m not talking about the government protecting gold plated union contracts, politically connected car dealers, or any city’s delusions of future grandeur. Rather, it is realistic, pragmatic assistance that honestly addresses the fundamental challenges, and the in many cases unpleasant answers, facing a broad swath of this country. We’re not talking about picking the winners and losers. The losers have already been chosen. It’s now about helping the losers to pick themselves up, dust themselves off and get back in the game. I won’t be so arrogant as to say my suggestions are The Answer. But at least we need to be willing to try some new and different things so that we eventually arrive to an answer.

In a similar vein, the burdens of society must broadly be shared. I’m also concerned about the class warfare rhetoric being used to demonize the “top 2%” or whomever, as well as tax policies that are again separating America into a two-tier society: those who pay taxes and those who collect benefits. According to the Tax Foundation, out of 134 million tax returns filed, 43 million paid no income taxes whatsoever. That’s almost a third of everyone filing. And plenty of people surely didn’t file because they didn’t owe any taxes at all. The top 50% of filers pay virtually all income taxes. The top 1% already pay over 40% of all income taxes (versus receiving 20% of income) and pay as much in taxes as the bottom 95% combined.

While one can debate its utilitarian merits, I’ve certainly got no ethical issue with strongly progressive taxation. But when a small group of individuals pay the vast bulk of all income taxes, this is likewise not healthy for a society. Everyone except the poorest of the poor needs to have a personal financial stake in lean, efficient government, and in rational provision of services. Income taxes fail the test, and unfortunately that is the tax that dominates discussion of federal taxation policy. (Individual income taxes are the largest single source of federal revenues).

A great example of what I’m talking about happened in Indiana a year ago. For various reasons, property taxes in much of the state skyrocketed. Property taxes are progressive, but also broadly paid by all homeowners, and indirectly by renters. The result was a broad-based outrage that led to serious and significant reform to how Indiana organized and financed its local government. Several elected officials lost their jobs in the process, and a number of positions are being eliminated entirely as some functions are consolidated. Additional government consolidation it being proposed for next year. Had only a small slice of the population paid the bulk of that tax, it is unlikely any real reform would have happened.

Clearly there are other taxes such as sales taxes that are more regressive. So let us not make the mistake of viewing income taxes as the sole source of government funds. But the principle remains. Just as we should not view the suffering of a large chunk of our fellow citizens as their own personal problem to solve, neither should we view the financing of our big dreams and plans for our cities as someone else’s to fund. The principle should be clear, not absolute equality or an absence of winners and losers, but an American commonwealth, with prosperity broadly shared and costs broadly borne.

Update: I’d like to clarify the taxation point. I’m not saying you can’t have a strongly progressive taxation system or make the top 1-2% pay the bulk of the taxes. What I have a problem with is when large numbers of people don’t pay anything at all into the federal government’s top revenue category. Right now it looks like about 1/3 of households pay zero and probably another 1/4 pay next to nothing. Regardless of how much they pay of the total collected, which can be very small, almost everyone, say 85-90% of households should pay something, and something that is financially meaningful to them so that they have a stake in the tax rate and spending policies.

PS: If you want to see the reason why this is an imperative, watch this must see video from October that appeared on France24 TV (in English – hat tip Tales from the Rust Belt via Burgh Diaspora).

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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