Saturday, May 30th, 2009

Louisville: A Tale of Two Cities

A former Louisvillian now living in Stockholm, recently put up an interesting blog post where he, among other things, compares Louisville to Stockholm.

The redevelopment of a major interchange project at a location in Stockholm called Slussen reminded him of the debate over 8664. Here is a picture of the Kentucky Transportation Cabinet’s plan for Spaghetti Junction in downtown Louisville

He says of this:

With driving rates continuing to decline, it only seems comical to continue building monstrous automobile infrastructure. I’m continually returning to the idea what kind of public transit a couple billion dollars could buy for Louisville, instead of the proposed 23-lane monument to yesterday’s sad love affair with the internal combustion engine.

The image you see here is not an exaggeration by the opposition, it is from the actual Ohio River Bridges Project website. It’s really quite shocking how the project absolutely dwarfs entire city blocks of houses and businesses, and is placed directly between the city and its waterfront. If you’re having any trouble imagining the size of this monster, compare it to the baseball stadium in the bottom left of the picture.

If everything goes according to plan – which construction ventures never do – the project will be finished in fifteen years. When you think about what has happened to oil prices, driving trends, and auto manufacturing, just in the last two or three years, a fifteen-year project like this is nothing short of senseless, foolish, and wasteful. It is a prefect example of doing more of the same thing and expecting different results.

Also, Kentucky has no money to build it. In fact, the state is already looking to issue GARVEE bonds (bonds to be repaid from future federal transportation grants – in effect, mortgaging the future) just to keep design on track.

An alternative plan has been put forward by a group called “8664“. They want to “86”, or tear down, a portion of the I-64 riverfront parkway. This elevated roadway cuts downtown Louisville off from the riverfront. The plan involves completing an eastern bridge, then routing through traffic over that, while converting a portion of I-64 into a surface level parkway. This is touted as reconnecting the city to the riverfront and saving a couple billion in the process. Also, a large number of buildings downtown that would otherwise be demolished for the interchange will be spared.

I think the idea is one that merits serious study and consideration. I’m not certain it is a slam dunk, frankly. Several spur type interstates have been torn down, but rarely a through route. Still, the intuitive case looks decent, and ought to be looked at. The problem is that no one in the establishment is willing to consider anything other than the current auto-centric solution that is clearly gold plated in terms of design. And with the funding crunch ongoing, why not look at lower cost solutions?

Of course, the real conflict here is simply between an auto-based mobility and economic growth world view and a world view dominated by low cost and non-auto amenities like the riverfront. These aren’t the types of debates that can be resolved rationally since they involve value choices as much as solution options.

Our blogger captures this well in his blog when he talks about the road Stockholm took versus the one Louisville did.

Stockholm, a city roughly the same size as Louisville, is literally blanketed in a web of public transit. This access grew out of investment and planning dating back to the 1940’s, when Louisville was foolishly dismantling its electric street cars. The result today in Stockholm is a beautiful city that is drastically quieter, cleaner, and more accessible to everyone than Louisville is. In my several months here I have been inside a car only a handful of times. Buses, bicycles, pedestrians – they all coexist in the same space and breathe the same air.

Just like Louisville, Stockholm was originally founded because it was a natural stopping point for shipping. The boats had to stop here and therefore a community grew around that pause in the transport of goods. Sure, Stockholm is more than half a millennium older than Louisville, but that should make its lessons of modern growth more of an example than not. Despite the age difference, the two cities share a lot of parallels and similar challenges when it comes to transit – namely, a similar population, surface area, high water table, commuter culture.

The difference is that in Stockholm they made tough choices for the greater good. They moved their air traffic away from the city instead of continuing to expand an old airport in the middle of where everyone lives. They built an extensive underground rail system which meant carving deep into the bedrock below lakes and rivers.

Both of these things happened more than sixty years ago and neither was cheap, but in the long run, they were ultimately worth it. They required sacrifices but they became gifts to future generations that people today are enjoying.

In fairness, the Stockholm metro area of almost two million people is a bit bigger than Louisville. And it is a national capital and has many other traits not shared in common with Louisville. No matter what Louisville did, it would not be Stockholm today. And, while this is not a popular view in some quarters, I do believe we need to build more and wider roads in many cases. Nevertheless, this illustrates some very important things.

  • You don’t have to be a huge city to be an internationally known and respected one. So much of what Louisville does is oriented around trying to emulate larger cities, but another, and I would argue more viable strategy, is to focus on quality over quantity.
  • Taking the road less traveled, so to speak, can pay long term dividends. Bucking the trends and carving out a unique path for yourself is what will really differentiate you over the long term.
  • Choices matter, and this is a long term game. Having the vision to do what is right for the long term future, not just taking the easy way out for today, is what makes some cities winners and other losers. You have to be willing to place some bets. Stockholm did and it paid off.

Is the Spaghetti Junction redesign the big bet the community wants to take? Or is it 8664? That’s the key question facing Louisville. Which ever way they go, it is going to dramatically shape the future of the community. My personal view is that Louisville should strongly consider the 8664 solution, which is a good mix of road expansion and amenity creation at a lower price point.

While I quoted extensively, it’s definitely worth reading the full piece for this interesting perspective on Louisville.

Friday, May 29th, 2009

Midwest Miscellany

Best Cities for a Fresh Start

Relocation Magazine recently released their rankings of “Best Cities for a Fresh Start“. The Midwest had several on the list:

  • #5 – Columbus (tie)
  • #5 – Indianapolis (tie)
  • #13 – Minneapolis-St. Paul
  • #17 – Cincinnati
  • #18 – Cleveland

More Miscellany

Richard Florida has been blogging a lot lately about Nashville, Tennessee. Check out this installment in the Nashville Effect as a sample. Which reminds me that Brendan Crain over at the Where blog recently had a great post on The New South.

Jim Russell’s Greater Youngstown 2.0 project has some interesting data on venture capital investments in the Midwest.

New York Magazine profiles transformational NYC transport commissioner Janette Sadik-Khan. One of her projects? Closing Broadway in Times Square and Herald Square to traffic.

Joel Kotkin says don’t count California out just yet.

An article on what we should do about the “uncreative class” (via Richard Florida)

An interesting contrarian take on Web 2.0.

Here’s something you don’t see every day. Detroit is looking to build a 3.4 mile, 12 stop light rail line that is privately funded. All of the money is from foundations and corporations. There’s one hiccup. The city wants to be able to county that private investment as a local match towards a federally funded extension of the system, but can’t unless it conducts an environment impact statement. (Hat tip The Overhead Wire)

A new score card from the Detroit Regional Chamber gives an updated on regional performance. The answer: not good. Also, Michigan seeks biotech future. Isn’t everybody?

The Wall Street Journal decided to compare and contrast Ann Arbor and Warren, Michigan. Also in the Journal, an article on high tech startups in the heartland. (Hat tip Brewed Fresh Daily).

As a sort of follow-up to my posting on the Future of the American Newspaper, I should note that the Chicago Tribune launched the site I alluded to in it. It is called Chicago Now, and is a Huffington Post like platform for local bloggers. It’s currently in beta. The idea is that they are luring prominent local bloggers to start using their site, with the idea that there will be a win-win, as the bloggers deliver an existing community, the synergy effects of multiple blogs on the same platform, and the Tribune’s marketing muscle. It’s pretty innovative and I think a great example of the type of low cost news gathering operations papers ought to be looking at. Low cost is imperative in the online world, so why not outsource to bloggers on a sort of profit share basis? Sounds like a plan.

I’m sure there will be kinks to work out. I noticed that they switched to teaser-only RSS feeds, which to me is a huge no-no for blogs. It comes close to violating an affordance. (Many other types of sites do this, but most blogs give full feeds). Especially since you can embed ads in RSS. With over 150 blogs in my reader, there is no way I can click to read them. Plus, registration is required, so will the commenters really come across? Will the site get infected by the typical newspaper message board crowd? We’ll see, but I’m sure they will be adjusting the model going forward based on real world results. This is definitely the type of experiment newspapers need to be trying.

Work on a $29 billion capital bill is working its way through the Illinois legislature. This includes $3 billion for roads and $2 billion for transit, with the CTA getting $910 million and $810 million. Yet again, on a per rider basis, Metra receives the lion’s share of the subsidies. It is easy to run a good system when you get all the money.

And the Chicago RTA wants to pilot paying fares with cell phones instead of tickets.

Sound familiar? Kansas City wants to subsidize construction of a 1,000 room downtown hotel to boost its convention business.

People in Columbus might be willing to pay for parks, but their police department is facing cuts of about 300 officers.

Wednesday, May 27th, 2009

Chicago: Preventing the Self-Destruction of Diversity

Chicago’s urban core has boomed in a way that makes most other cities jealous. Every time you turn around, it seems, another gem is added to it. The Renzo Piano designed Modern Wing at the Art Institute recently opened its doors to general, if not universal, acclaim, for example.

But while this boom is to be celebrated, and clearly it has been necessary to sustain the animating life force of the city as a whole, there are long term threats that need to be considered.

The first is that all booms tend to contain within themselves the seeds of their own collapse. We’ve seen that with the dot.com bubble, the real estate bubble, and the finance bubble, the last two of which are really weighing on Chicago. Growth feeds on itself in a type of positive reinforcement loop. If it hits a certain point, it can really take off, as in a typically “hockey stick” diagram. The problem is that some point the trend reaches the point of exhaustion, and the hangover can be a bear. Most stable systems employ negative feedback controls or stabilizers to “take away the punch bowl just as the party is getting started”.

The real challenge, however, is what Jane Jacobs called the “self destruction of diversity”. Thriving urban districts require a mixtures of users and uses acting to mutually sustain and energize a neighborhood. But what has a tendency to happen is that, as an area becomes popular, land values go up and rents go up. There is greater demand for and competition for the space. Because of this, the most economically successful use of the moment tends to become increasingly dominant. This is particularly the case if that use benefits from face to face interactions among multiple players in the space and clustering economics.

Jacobs also talked about the requirement that neighborhoods contain buildings of a mixture of ages, such that they require differing levels of economic rent. New enterprises, particularly in wholly new fields, often require space that is available at low cost. So if there are no low cost buildings in an area, tomorrow’s new industries can’t often get started in a place at all. While she didn’t quite put it this way, this notion is often paraphrased as “new ideas require old buildings”.

The boom in Chicago causes concern on both of these fronts. Firstly, the great Loop area is increasingly dominated by two uses: financial and business services for the global city function of Chicago, and entertainment/tourism. To some extent, the Loop has always had these characteristics as a typical CBD. And in many respects, the streets are far more active today than they were in an era not that long ago when the streets in the Loop really did roll up at 6pm.

The real problem is that the boom in the Loop has generated enormous opportunity for profit in the redevelopment of older buildings. Many older buildings have been demolished completely, or preserved only the form of the “facadectomy”. A number of vintage office skyscrapers have been converted to residential use. The high rent district, which used to apply mostly to the core of Loop, now extends far to the West and South instead of just the traditional north. The number of places where one can obtain low-rent space in the greater Loop area would appear to have declined significantly.

The same forces are operating in residential areas, which are increasingly taking on the cast of New Urbanist suburbs. Housing prices keep out all but the already affluent in many places. Rents have followed suit, leading to a predominance of swanky establishments catering primarily to consumption by the upscale: restaurants, clubs, boutiques, spas, etc. A number of formerly industrial districts have been reborn as more or less single use large format retail strips.

What will the long term affect of this be? I don’t know. I do think it is something worth of consideration. Affordable housing is obviously something that is on the radar of many groups. But the idea of affordable office or industrial space less so. We want the Loop to be successful, but also I think there should be policies developed that are designed to actively sustain its diversity over time.

The danger is that the Loop becomes increasingly concentrated in ever most high value specialized services. (I’ve even suggested how we might encourage this through cross-regional collaboration). This can be good in that it keeps Chicago a player at the pinnacle of the global economy. But it also exposes Chicago to the risk of niche exhaustion. And with the global city functions an artifact of globalization as we know it today, any disruption or further evolution of that model could seriously hit Chicago.

As I’ve long argued, in an ever more rapidly changing, uncertain world, it is critical for cities to have a diversity of strategies and future options for success, and not put all their eggs in one basket. Chicago needs to continue reinforcing its success, but it also needs to look at how to diversify that success so that when, as it inevitably will, economic needs change, Chicago is right there with the next new thing. While picking winners and losers is a problematic concept, at a minimum the city should be looking at how to preserve the conditions necessary for success.

Interestingly, the city has already taken some steps here. It created the concept of a “Planned Manufacturing District” to prevent residential encroachment into surviving manufacturing zones like the Kinzie Corridor. A good move. While mono-use isn’t always a good thing, for a traditionally manufacturing area, I think this is a decent strategy. We should be looking at similar means of preserving the favorable economics for new ideas in the urban core as well.

Monday, May 25th, 2009

A Crisis of Values

The LORD is long-suffering, and of great mercy, forgiving iniquity and transgression, and by no means clearing the guilty, visiting the iniquity of the fathers upon the children unto the third and fourth generation.” – Numbers 14:18

For the apparel oft proclaims the man.” – Hamlet, Act I, Scene III

John Stuart Mill said that “opinions contrary to those commonly received can only obtain a hearing by studied moderation of language and the most cautious avoidance of unnecessary offence.” I’ve tried to live that credo in my blog, but at no small risk to myself, I’m putting aside my standard garb for today, and taking up the long black cloak and broad brimmed hat of the itinerant preacher, calling the people forth to repentance.

The city of Indianapolis is replacing sewer inlets in the downtown area. But instead of replacing them with new inlets that are laid flush with the existing sidewalk, it’s installing them at a higher grade, leaving major bumps in sidewalks all over downtown. These photos illustrate.

In a downtown which has seen billions invested in improvements, how is it that something so casually unsightly, lazy, and anti-functional could get built in the present day?

It’s tempting to want to pin the blame on the engineers at places like DPW when we see things like this. But as someone who has studied the public works sector extensively for years, I’ve met many engineers at these agencies and haven’t met any of them who are either malicious or stupid. Not even one. To the contrary, I’m always impressed with how generally sharp they are, and with their desire to make their communities better places. That’s only logical. They live there too. In fact, they are the kind of guys you wouldn’t mind kicking back and having beer with. They’re not all that different from you and me.

Which is exactly the problem. The problem isn’t them, it’s us. They are an all too accurate reflection of the values of the people who live in the cities of the Midwest. Rather than engage in difficult self-reflection about our own roles in the communities where we live, it’s easier to just externalize problems by blaming them on some Other.

Our engineers are a mirror held up to ourselves. They aren’t imposing something on the unwilling. Rather, they are giving our communities exactly what they want. Consider: has anyone complained about these sewer inlets? With outrageous examples of this installation dotting prominent corners all over downtown, I think it is fair to say that every community leader has seen one at some point, as well as huge numbers of ordinary citizens. But has anyone done anything? It is debatable whether or not most people even notice them. Things like this are so normal, so expected in this city that they have become as invisible as the air we breathe. When they are pointed out, people shrug and wonder why anyone thinks it worth remarking upon.

What’s the big deal about a few sewer grates? you might ask. Keeping in mind that these are but the smallest example of the design mentality that permeates the city, I’ll explain. The Wall Street Journal recently reported on the unemployment problems that have hit places like Portland, Oregon. You see, despite the economy, young, educated people are continuing to flock there and to places like Austin and Seattle. They want to live there so badly that they are willing to put up with months of unemployment and menial jobs in order to stay in a place they consider so personally attractive.

When’s the last time you heard of a Midwest city having that problem? Even Indianapolis, one of the best performing, barely hits the national average for college degree attainment. It has a downtown that, after 30 years of investment, still requires major subsidies for virtually every development. That downtown is surrounded by miles of decaying, blighted neighborhoods, abandoned homes, vacant lots, empty factories and brownfields, severe depopulation, limited retail options and poverty in all directions. Only a narrow corridor to the north is healthy. Most cities have a so-called “favored quarter”. Indianapolis has a “favored sliver”.

I said there were two challenges for the city in attracting talent: getting an audition in the first place, and closing the deal afterward. But building a city that looks this way is like the smartest kid in the class showing up to an interview in ripped jeans and stained t-shirt. No matter how good you are, you’re not getting the job. That’s why the educated are streaming to Portland and Seattle even though there’s no room at the inn, but Indy is barely treading water and the rest of the Midwest is on the verge of drowning.

In case you didn’t get the memo, don’t expect anyone who visits to tell you this. When you visit someone’s house, do you draw conclusions about them from the way they decorate and keep the place up? Darn right, you do. Especially if it is someone you barely know otherwise. Do you tell them any bad conclusions you draw to their face? Of course not.

Do we really think any prospective resident is going to confine their survey of the city to only the few manicured blocks in the Wholesale District and a handful other “approved” zones? What do we think will happen when people see the physical face the city all too often puts forward, one that is actively repellent to much of its target demographic? Is it likely that anyone with even modest standards and ambitions for themselves will want to live in a place with such apparently low standards? If a city looks like it doesn’t care about itself, why should it expect anyone to care to live there?

When a prospective resident or business owner sees something like these sewer inlets, what conclusions are they likely to draw about the type of city they are in and the people who live there? Pretty darn accurate ones. What do these pictures tell us about why the Midwest has failed? My friends, everything we need to know.

The problem facing the Midwest isn’t an economic crisis, it’s a spiritual crisis. I say values because let’s not pretend there are true moral issues at stake. People can make legitimately different choices about how they want to live. The problem of the Midwest is that there is a contradiction between the values of the people and their cherished ways of life, and the economic results they want and believe they are entitled to expect.

Many Midwesterners hold values that are no longer compatible with economic growth in the 21st century, don’t recognize that, and probably wouldn’t change if they did. Then when their cities, towns, and rural areas sink into the mire they rage against the forces they believe are conspiring against them: NAFTA, foreigners, corrupt politicians, greedy corporate executives, unions, you name it. And while there is no doubt that the Midwest has been heavily hit by economic forces beyond its control, it’s equally true that the people themselves were willing accomplices in their own demise.

If Indianapolis really does implode, it will be not just a leadership failure of the highest order, but also an indictment of those who follow. Until there is public demand for something different from the status quo, it will take extraordinary leadership to change the present course, and that is a commodity which is, alas, in all too short a supply.

Sadly, this way of thinking seems deeply entrenched, passed down from generation to generation like a treasured inheritance. We celebrate that families bring their children downtown to eat, shop, and play. But what are they learning while they are there? People usually talk about the “values of the street” as a way of talking about peer pressure. But in the Midwest it is literally the street. The values of the community are embodied in the very concrete on which we drive, and, on rare occasions walk. Our children are learning what is normal in this place. The very streets of the city are teaching it to them all too well.

Is there any value so cherished that we think we deserve this? I hope not. It is critical that our communities engage in deep soul-searching and reflection about what their values really are, what’s important to them, and what’s not. Some things are legitimately worth holding despite a high cost. On this Memorial Day we remember those who gave their lives in the service of our country. That’s a value worth cherishing and holding to no matter what.

But most of our values aren’t like that. Many of them aren’t even consciously considered. For those that were products of and specific to a time and place that no longer exists, it’s time to grow up and grow beyond them, to create and take on new thinking better suited to today’s world and tomorrow’s. The alternative is to retreat into nostalgia and bitterness, to cling to the some imagined, sanitized good old days, and watch our cities disintegrate around us.

For some places, it’s too late. There is no easy road back for them. But for a lot of the Midwest there is still time to rise up and meet the challenge. If we don’t, then we don’t have far to look to see what fate has in store for us.

The longest journey begins with a step, but you have to take it. We need to decide right now, today, that things like these sewer inlets are no longer acceptable, and that another one will never be installed. Our leaders, political, cultural, business, and otherwise, need to make it their personal business to ensure that we embrace creating quality of space. And our citizens need to be there supporting, encouraging, and demanding the same. Otherwise, while the region may soldier on, for the city, it’s game over.

Saturday, May 23rd, 2009

The Successful, the Stable, and the Struggling

My latest post is available over at New Geography. It is called “The Successful, the Stable, and the Struggling“. For those who enjoy arguing about “tiers” of cities, I took all metro ares over 500,000 in the Midwest and sorted them into three buckets based on population growth. The exception was Chicago, which I put into a “global city” category by itself since it is so unique.

I’ve noted this before, but all of the metros that are growing faster than the national average are state capitals except one (Kansas City). Minneapolis-St. Paul, Columbus, Indianapolis, Des Moines, and Madison are growing faster than the national average.

Anyone care to speculate on reasons why? Some possibilities:

  • Excessive state spending. I don’t have hard numbers in front of me, but generally larger cities are major exporters of funds to state government, so I’m skeptical.
  • Attracts the creative class (thundermutt hypothesis). Thunder suggests that state capitals tend to have the state’s major law firms, the newspaper of record, lobbying groups and various other hangers on of government that then to attract ambitious and talented people.
  • People churn. One theory I tabled is that since state capitals routinely have people from all over the state there, they don’t form calcified social networks. This churn creates more flexible, open social environments that are needed for economic success.

Whatever the case, I don’t know that this has been rigorously studied. It would be interesting to extend the analysis, and do some quantitative digging. Could possible be an interesting dissertation.

Thursday, May 21st, 2009

Midwest Miscellany

[ If you have problems watching more than one of the embedded You Tube videos in this post, try re-loading, then clicking the next one – I’m seeing some odd behavior. Sorry ]

Rust Wire point us an extremely powerful narrated photo essay called Detroit: The Troubled City. Unfortunately, the player format is too large for this blog, so I cant embed it, but I definitely recommend checking it out.

Speaking of Detroit, the New York Times this week had coverage of how the troubles in the auto industry are affecting even upscale suburbs in its article “Gross Pointe Blues“.

All these stories of woe, and the fetishization of decline and decay in Detroit have left many citizens defiant. Detroit News columnist Amber Arellano wrote a piece recently called “Why This Detroiter Stays“. Per Arellano:

It’s tough for some folks to understand that many of us want to be here. We didn’t end up here by inertia or lack of vision or better options. We’re educated and mobile; we can live anywhere. We choose to stay — or to return.

That is the case for my husband and I and many Generation Xers and Yers who are committed to Metro Detroit and the Rust Belt, even as the region struggles to get through this extraordinarily difficult economic crisis.

We return because we love the people and the culture. We stay because we’re proud of our roots, of who we are. We’re not naïve about this region’s daunting challenges; we’re choosing to tackle them. We’re committed to our families and communities.

I admire the fighting spirit. Yet I can’t help but wonder whether or not that fierce pride in roots and tradition isn’t actually a cause of the decline. If they really want to turn around the fortunes of that city, its residents need to do some soul searching about their own culture and values and how they contributed to creating that mess. This is a lesson not just for Detroit, but for nearly the entire Midwest. That’s an insufficiently backed claim I realize, but please stay tuned for a major post forthcoming on that topic shortly.

To end talk of Detroit on a positive note, Time Magazine has a photo essay of 13 people who explain why they love Detroit.

Over in Cleveland, the Plain Dealer tallies up the cost of inefficient government. Cuyahoga County jurisdictions have more employees and spend more money to provide similar services as other large Ohio counties.

And also via Rust Wire, the Washington Post runs a story on white collar jobs losses in Toledo.

Ok, I told myself that I wasn’t going to post this, but I can’t resist. The guy behind the “Hastily Made Cleveland Tourism Video” apparently had it rejected by the Department of Tourism, so he came up with this second attempt. I must say, it isn’t half as funny as the first one.

In Cincinnati, officials are grappling with a projected $40 million deficit that took the city by surprise. Keep in mind this is on a city population of only about 350,000 – so a big amount

IdeaFestival Louisville runs a great blog. For those of you who haven’t read it, check out this short two minute video clip they recently carried from Amy Chua about the strategic imperative of diversity. (If this video doesn’t show up, click here):

Back up in the Windy City, Crain’s Chicago Business did a major piece on the challenges facing the city’s transportation infrastructure, and the threat it poses to a city that has long been the transportation hub of America.

Here’s another video, this one a streetfilm overview of the McDonald’s Cycle Center in Millennium Park, Chicago. Hat tip Broken Sidewalk. (If you can’t see the embedded video, click here).

And lastly in the video department, here is a great video of Carmel, Indiana Mayor Jim Brainard talking about roundabouts and the benefits thereof. Hat tip to PPS’s Twitter account. This is probably a good pay it forward moment, since I’m the one that told them about Carmel’s roundabout program in the first place.

Ed Glaeser has a great piece about why globalization led to bigger cities.

And Joel Kotkin tackles the idea of the “Luxury City vs. the Middle Class“.

And the New York Times reports on New York City’s new street design manual. According to the NYT:

Imagine narrow European-style roadways shared by pedestrians, cyclists and cars, all traveling at low speeds. Sidewalks made of recycled rubber in different colors under sleek energy-efficient lamps. Mini-islands jutting into the street, topped by trees and landscaping, designed to further slow traffic and add a dash of green.

This is what New York City streets could look like, according to the Bloomberg administration, which has issued the city’s first street design manual in an effort to make over the utilitarian 1970s-style streetscape that dominates the city.

More Midwest

Chicago
Major repairs to disrupt Ford (Tribune)
CTA complaints are down, agency says (Tribune) – good news
Mayor Daley takes blame for parking meter problems (Tribune)
IDOT’s road plan focuses on maintaining the status quo (Daily Herald)

Columbus
Warehouse-building boom in Rickenbacker area produced big boxes hard to lease or sell in recession

Detroit
Court will hear credit scoring case (Detroit News)

Indianapolis
I-69 price tag now tops $3 billion (Indy Star)

Milwaukee
Out of the ashes (Journal Sentinel)

Tuesday, May 19th, 2009

Indy: Australian and Spanish Investors Hurting, Hoosier Taxpayers Smiling

The Hoosier State clearly got the better end of the bargain when it sold the Indiana Toll Road to Australia’s Macquarie and Spain’s Cintra.” – Barron’s, “The Long and Binding Road”, May 11, 2009.

That quote sums up beautifully an article in last week’s Barron’s how Indiana fleeced a consortium of “foreigners” who paid $3.5 billion to lease the Indiana Toll Road for 75 years. Barron’s estimates the value of the lease at a maximum of only $1.5 billion. Uh, oh, Spaghetti-O. My simple math says Indiana’s profit is a cool $2 billion. As Gov. Daniels put it in the article, “It was the best deal since Manhattan was sold for beads.” And according to Barron’s, “one of the most illogical prices paid for any major piece of transportation infrastructure”

I’ve written about this before, but it is worth again summarizing some of the huge reasons why Major Moves is a grand slam for Indiana:

  • The Toll Road was actually losing money when it was leased. Far from selling off the a key asset, or pawning the family silver if you will, the state actually got somebody to pay to take a liability off their hands. There was no prospect of the Toll Road ever being profitable so long as the state operated it.
  • Indiana leased the Toll Road at the peak of the bubble. All the stars were in alignment: the economy was booming, credit was readily available, interested rates were low (which increases the net present value of a future income stream), inflation was low, and gas prices were reasonable. Fast forward and we have a recession, we’ve experienced a gas spike that has people wondering about their driving choices, the era of easy money is over, and “Helicopter” Ben’s printing presses have people worried about inflation.
  • The most beautiful aspect of the lease is how it almost perfectly hedged Indiana’s future risk. In the environment above, VMT is actually down, not up like the lessee expected. Not Indiana’s problem. Oil spiked which boosted maintenance costs on the road. Not Indiana’s problem. America actually gives up cars 20 years from now and starts riding buses and trains? Not Indiana’s problem. Who knows what life in America will be like 50 years from now? I sure don’t. But whatever the case, it’s not Indiana’s problem.
  • In addition to paying to lease the road, the consortium was also required to invest something like $400 million in improvements. Electronic toll collection with EZ Pass integration, something INDOT had no plans to install, is already live. Road widening is in progress.
  • The lease proceeds are funding road improvements like the US 31 freeway upgrade, the Hoosier Heartland Corridor, and major improvements to I-465 and the Borman Expressway. As you may have read, construction cost inflation has been out of sight. By accelerating these unfunded projects, Indiana is probably getting an extra $2-3 billion in effective project throughput by getting these projects done more quickly. Realistically, without Major Moves a number of these projects would never get done. INDOT had already basically canceled the US 31 freeway upgrade in Hamilton County, for example.

Why did the consortium overpay? The same reason people overpaid for all sorts of assets during the bubble. But there’s another reason, and one not commonly understood. Mitch Daniels had Macquarie/Cintra over a barrel. You see, Mayor Daley of Chicago was also quick to grasp the financial equation here and had already leased the Chicago Skyway for a similarly inflated $1.9 billion. Now basically the only source of traffic to the Skyway is the Indiana Toll Road. Indiana’s border crossing toll was $0.50 while Chicago’s was $2. Seems unfair to me, but perhaps acceptable since Chicago’s toll was set by a judge since the Skyway was in receivership. (Daley subsequently restructured the debt, then leased the Skyway for big bucks – a genius move). I had been telling anyone at INDOT who would listen for over a decade that Indiana was being the chump here.

Mitch Daniels figured that out quickly and decided to make the consortium pay. When the Toll Road came up for lease, the same folks who took over the Skyway had no choice but to pay the maximum to make sure they controlled the Indiana Toll Road too. Otherwise a rival operator could jack up the Indiana toll to match Chicago’s and choke off their revenue stream. Checkmate.

The list of reasons why these deals were great for Indiana and Chicago goes on and on. I am always befuddled when people complain about leasing assets to “foreigners”. Well, right now those foreigners are hurtin’ for certain. Just like the Japanese investors who bought Rockefeller Center to similar sky is falling rhetoric and ended up losing a billion dollars on the deal, the toll road leases are proving that foreign money is often dumb money.

It’s like I said before. How can the US run trade deficits year after year? Well, at least partially it goes like this. They send us oil, Lexuses, TV’s, toys, etc, and in return we send them little green pieces of paper. You can’t do much with a little green piece of paper, so they send them right back to us and buy things like dot.com stocks, subprime backed mortgage securities, Rockefeller Center, Citibank stock, and the Indiana Toll Road. They might has well have piled all those dollar bills in a big heap and burned them. Thanks for the Foster’s and jamon, however.

It gets even better. A group led by Citibank – yes, Citibank – recently tried and failed to lease Midway Airport in Chicago. The deal fell through when the group couldn’t secure financing. So they had to forfeit a $126 million profit. Think about it, Mayor Daley made $126 million just by running an auction. That’s a pretty good ROI. I’m guessing Citibank thinks that breakup fee is a cheap price to pay to get out of having to close that deal.

This also shows the big advantage you can get from being progressive and a first mover. Gov. Daniels and Mayor Daley are high fiving each other right now while other states can only look on with envy. They will never get another opportunity for a multi-billion windfall like that. Gov. Rendell in Pennsylvania has to be particularly mad right now. He had a deal on the table to lease the Pennsylvania Turnpike at a nice rate. This was not nearly as good a deal as Indiana and Chicago got since people were starting to wise up, but certainly much better than they’d get now. The legislature refused to approve the deal.

By the way, Indiana also shows the right way to make use of one-time windfalls from things like the Toll Road lease. There are three basic good ways you can use one time money: pay down debt, put it in the bank, or spend it on one time expenditures, preferably major capex. You don’t want to use it to plug operating holes or on boondoggle start up programs you can’t afford to keep going once the money runs out. Indiana did two smart things. One, it put $500 million into a trust fund for future projects and contingency. Two, it spent the money on one time capital investments – the Major Moves program. Now obviously new roads come with an operating tail, but that’s true of any capital expansion. And reconstructing old roads can actually reduce opex. So all around a great move.

High Speed Rail

A couple of interesting pieces of high speed rail info came over the wire this week. Firstly, Secretary of Transportation Ray LaHood suggested the Midwest states appoint a high speed rail czar. There was much speculation as to the real meaning behind this.

And here is a classic. Amtrak’s President told a group of people in Chicago that true high speed rail is unrealistic. I don’t know about you, but I would not be taking advice on what a quality rail system would look like from someone at Amtrak.

I previously published an opus on high speed rail that you can read for yourself, but in my view, if you are going to do high speed rail, you need to do it right. High speed rail is about game changing reductions in end to end journey time + dramatic improvements in reliability and quality of experience. The 110MPH Midwest network proposal does not accomplish that, period.

Several times in the last year I saw people from the Midwest go off to Spain to ooh and ahh their high speed system and use it to tout the Midwest nework. I’ve ridden high speed rail in Spain and it’s fantastic. But the proposal on the table is nothing at all like the Spanish system. To use the system in Spain or elsewhere to sell a 110MPH system is dishonest and unproductive in the long run. There is a huge danger that an “Amtrak on steriods” solution labeled high speed rail will only ruin the high speed rail brand in the US the same way Amtrak has done it for regular passenger rail.

Back to Indiana for a minute, while Gov. Daniels signed the endorsement letter for high speed rail along with every other Midwest governor, I think it is fair to say that he is at heart a skeptic. He was quoted as saying that he doesn’t want to get stuck with a huge bill to run the thing. Fair enough, especially when you see the subsidies that Wisconsin and others pay Amtrak today. But there’s a big difference between saying that’s not a good end state and jumping to the conclusion that it will be the end state.

Ironically, there’s no one who would be more likely to get high speed rail actually implemented than Gov. Daniels. A Daniels-Daley reprise of their tollway coup could make a real demonstration project of a Chicago-Indy link. Believe me, I appreciate the governor’s fiscal discipline. Keeping lid on spending and taxes is critically important. I don’t think Hoosiers understand the value they are getting out of a triple AAA credit rating and the value they will get in econdev if they can stick with balanced budgets and no tax increases through this recession.

But with Indiana’s traditional industries in competition with offshore labor at pennies per hour, Indiana will never be a truly low cost place to do business again. And with its future industries dependent on attracting a labor force that is in demand and where price is an important concern but also balanced against they amenities, services, and quality of experience they way, Indiana (and the rest of the Midwest) will not be able to reach future prosperity in the 21st century through cost cutting alone. Innovation has to extend beyond the fiscal realm.

To a great extent building infrastructure isn’t a cost, its an investment. And high speed rail is something that is clearly going to be a federal led program. My belief is that the Chicago-Indy route is a perfect demonstration route for a real high speed rail line in the United States – new terrain, 200 MPH peak, etc. It won’t be cheap, but if the feds paid for it, and chartered a new operating authority to run it, and did it right, I think there could be advantages over the long term, just like their have been in other places that have built it. Enough to justify it? There’s certainly room for debate. But remember about first mover advantage? Sometimes you have to be willing to take a risk. And there isn’t that much risk in buying what is effectively a dirt cheap out of the money call option on high speed rail by forming partnerships with Mayor Daley, lobbying, and launching aggressive environmental studies, probably funded by stimulus dollars. That’s similar to what Indiana is doing with the I-70 dedicated truck lanes initiative.

Long but highly recommended are my two core postings on the subject:

Remember for something like this, the scope is the benefits, not the network.

I-465 Northeast Corridor Widening

The last part of this Indiana transportation trilogy involves the $565 million reconstruction and widening of eight miles of I-465 and two miles of I-69 in the northeast corridor. This is the most heavily congested section of road in Indiana by a mile and, now that the Borman Expressway is fixed, far and away the highest priority road project in the state – or at least it should be.

The project team recently held a Citizens Advisory Board meeting. The minutes from the meeting provide a lot of interesting updates.

The most interesting is the schedule. The project was originally scheduled to run from 2012-2016. Now this is an expensive project. How do you keep the costs from spiraling out of control? The best way to do so is to get things done faster. Construction cost inflation will eat you alive and every year of delay only jacks up the price tag. What’s more, if you do it more quickly, you get the benefits sooner. A double win. So it is great news to see that INDOT is planning to look at every possible part of this project to see what can be sped up. Impressively, some contracts might even be let this year! Here are some of them:

  • Contract one is an accelerated contract for the section between the White River and Carmel Creek bridges and could advance as early as the fall of this year (2009).
  • The mainline I-465 construction between College and Carmel Creek may be accelerated to the end of this year (2009).
  • The Keystone Avenue interchange may begin about one and a half years from now, in September 2010.
  • Another accelerated contract may be for overhead bridges at North River Road and Westfield Boulevard. The construction on these bridges could begin in late summer 2009.
  • The next contract to advance could be 82nd Street and 75th Street and may be accelerated to Year 2011.
  • The Allisonville Road interchange may be advanced to 2012.
  • Because the Fall Creek Parkway to 75th Street section does not include much right of way issues or utility conflicts, this section could be advanced to begin in 2010.
  • The largest interchange – I-465/I-69 – could advance to 2012.
  • The I-69 section could begin in late 2012 or early 2013.

Pretty cool, eh? I have to give a round of applause to INDOT on these efforts.

Also, the preferred interchanges were selected. Keystone is a partial cloverleaf, Allisonville a SPUI, and I-69/I-465/82nd St complex a hairy system interchange with several flyovers and a collector-distributor system. INDOT’s web site has the renderings.

There are two important things to get right on this project that I haven’t read about yet:

1. The roadway design – particularly bridges – need to be built to the same standards as were done on the I-465 west and northwest projects with regards to quality of design and pedestrian/bike access. In particular, the aesthetic design of the current west leg project as embodied in the 38th St. interchange and 46th St. bridge should be carried over and copied for this project. Why?

Again, it goes back to quality of space and the need to attract the labor force of the 21st century. Another of my must read archived blog posts is “The Importance of Aesthetic Design in Transportation Projects“. The only impression people will have of Indianapolis is through driving through it on the expressway. In the modern era, our roads are our public space par excellence. Cities and towns will spend huge amounts of money to make their Main Street look good. But increasingly that is not the space most people see or experience in their daily life. In the modern era, getting it right on the quality of our public spaces is absolutely imperative to attracting the labor force of the 21st century.

Let me just say that I know nothing of INDOT’s plans here. But with projects like I-69 to Evansville experiencing significant inflation caused price increases, the temptation to save on costs by eliminating “gold plating” like attractive bridges can be strong. But Indiana will never thrive in the future with an “East Berlin” style built environment. The new Indianapolis Airport, and the I-465 west and northwest projects, are great examples of what the future should look like.

That’s not to say we shouldn’t strive for cost efficiency. But let’s not mistake service level for efficiency. First go pick out the car you want in your general price range, then go dicker with the dealer. INDOT is doing it right on the Evansillve segment by looking at how to save money by cutting back on things like median widths that add effectively nothing to safety or anything else, but cost money. And on this project INDOT wants to pull things forward to save money by getting things done more quickly. That’s all good. You want to look to save on mechanical systems in the utility closet, not try to save a buck by ripping out the tile in the entry way that is the first thing people see when they walk into your house, or by trading in those stainless steel appliances in the kitchen for “harvest gold”.

And why copy the west leg designs? Two reasons. First, if you use the same designs, you save money. The tooling should already exist for the decorative railings. A lot of the engineering is already done. The bill of materials is right there. Standardization drives down unit cost enormously. Secondly, it is imperative for Indianapolis to start building a stronger sense of distinct visual identity to overcome its “Generica” image and surface appearance. Not only do those bridges look nice, if used as a standard, they can start being a design signature for the city and a major part of civic branding – all at a low marginal cost.

2. INDOT should be sure to provide ROW and horizontal clearance to accommodate five continuous through lanes plus a C/D lane between I-69 and US 31, not four as currently envisioned. Don’t build them yet, but create a road with future expansion designed into it. Deploy the capacity incrementally as you need it. Do this simple thought experiment. The I-69 corridor is the fastest growing region of the state. If three lanes is badly congested today, why would anyone believe four lanes will be adequate 30 years from now? Especially when interchanges are being upgraded to channel cars more efficiently onto the freeway. In most cases, the congestion is a matter of too many cars, not inefficient interchanges getting it off the road.

Why only the section between I-69 and US 31? Because at 56th St. INDOT built an overhead bridge that cannot have any more lanes added. It might be possible to restripe without shoulders and add a fifth lane, but the cross-section only supports four standard lanes. This is how not to do it. What we don’t want to do is to spend $565 million to add the minimum possible amount of through capacity to a road (one lane each direction), and do so in a way that we can’t ever expand it again unless we rip and replace the whole thing.

This is a once in a generation type project. We need to make sure it gets done right.

Sunday, May 17th, 2009

Columbus: The New Midwestern Star

Columbus, Ohio is by far the best performing city in Ohio. In a state that has become a byword for the challenges and pain of de-industrialization, Columbus is a clear standout, with strong economic and population growth.

A lot of the analysis of what makes Columbus different from Cleveland, Toledo, Dayton, Youngstown, and even Cincinnati often starts out by noting all the advantages Columbus had. It is the state capital. Ohio State University is there. It was not a traditional heavy manufacturing center, and so did not have that legacy to overcome.

But what strikes me about Columbus is not all the advantages it has, but rather the handicaps it has when compared to other Midwestern standouts like the Twin Cities:

  • The Columbus metro area has only 15% of the state’s population, and thus does not form a significant voting block in the state house. Compare to say the Twin Cities or Chicago.
  • It is one of three major cities in Ohio (Cleveland and Cincinnati being the others), and is the smallest of them. There are also a number of mid-sized cities like Toledo, Youngstown, and Dayton. This makes Ohio an urban-friendly state, but also makes the competition for state resources intense. There is no other Midwestern state with anything like this.
  • Cincinnati and Cleveland both came of age early and were giants of their ages, which endowed them with an incredible built environment legacy and many absolute top quality high culture institutions. Since Columbus lagged, and since Ohio already had these things through Cincy and Cleveland, Columbus is comparatively lacking in both regards. It is especially notable that Columbus’ high culture institutions are very weak compared to most Midwestern cities.
  • Columbus does not have any of the top three professional sports team, again, probably because of the Cincy/Cleveland factor. People who think pro sports are overly key to urban success have to be able to explain away the Columbus example. It does have NHL and MLS franchises.
  • Columbus has a comparatively weak central business district. It has the typical office buildings and such to be sure. But its downtown mall, City Center, is closed and will be demolished. It is not a major convention destination. Nor is downtown a major entertainment district for the city.

So you can see that there are a number of structural weaknesses working against Columbus. But the one that I really think is the kicker is the name “Columbus” itself. It is just very generic and has no brand recognition. Columbus is probably the biggest city in America where the state is almost always given along with the city, i.e., “Columbus, Ohio” versus “Cincinnati”. Say Detroit, Milwaukee, Indianapolis, St. Louis and by themselves people know where you are talking about at at least something about it. But say Columbus and people probably think of a town named Columbus in their own state, like Columbus, Indiana or Columbus, Georgia. This is one area the lack of pro sports probably hurts the city badly, since cities with major league franchises are constantly getting their name on TV. (I have long endorsed viewing pro sports subsidies as basically a naming rights sponsorship, where the city pays to put its name on the team for marketing exposure. How much would it cost to buy all those TV impressions? A lot more than the cost of the team.) Heck, type “Columbus” into Wikipedia and you get back a disambiguation page.

In addition to just having a generic name shared with cities in various states, there is really nothing that would put Columbus on the mental map of the world. Louisville has the Kentucky Derby. No matter what else people may or may not know about Louisville, everyone knows the Derby and that it is in Louisville. It’s a similar story for the Indianapolis 500. But Columbus? Nothing.

I caused some pain for myself on a Columbus message board by suggesting that outside the United States, especially in Europe, Columbus, Indiana probably has better brand recognition than Columbus, Ohio and that among a certain social set if you just said, “Columbus”, the Indiana town is what would come to mind. This is because Columbus, Indiana has one of the world’s most important collections of modernist architecture by a who’s who of key architects. (It is an absolute must visit, incidentally, and be sure to sign up for the bus tour at the visitor’s center). It has an international reputation for this.

So I think in looking at Columbus, you need to be able to see its success in terms of the big headwinds the city faces in some respects. This renders its performance all the more impressive. Consider:

  • The Columbus metro population is growing at a rate of 1.1% per year, which exceeds the national average. It is the second fastest growing large city in the Midwest after Indianapolis. What’s more, its growth held steady last year in a time when most cities suffered declining performance. Indy’s growth rate has eroded the last two years running, so if trends continue, Columbus will be #1 in short order. The Columbus region is adding people at a healthy run rate of 200,000 per decade.
  • Columbus has net in-migration, including the rarity of domestic in-migration.
  • Columbus has been adding jobs at one of the strongest rates in the Midwest. While its economy has taken a hit recently like all others, it has held up much better than the Midwest. Its unemployment rate of 8.1% compares favorably to other traditionally strong Midwest economies like Indianapolis (8.7%), Minneapolis (8.4%) and Kansas City (8.2%)

Columbus’ economy is powered by many of the same things that have led other Midwest peer cities. Columbus has a very low cost of living, an increasing array of urban amenities, and very high quality of life with regards to such measures as traffic congestion. It does also have the benefit of Ohio State University, the largest university campus in the country, which has the effect of almost making Columbus America’s biggest college town. Normally a school wouldn’t make as big a splash in a city this size, but OSU is so huge, it does. This has many positive impacts such as skewing the population younger, driving international migration, increasing college degree attainment rates, and enabling research oriented spinoffs. (It probably does act as a drag on labor force as a percentage of population, however).

Columbus also seems to have benefited from longstanding enlightened leadership. Back in the 1950’s or so, one of their mayors made a key decision. He refused to extend water service to places that did not agree to be annexed. Thus Columbus was able to expand geographically where most Midwestern cities got hemmed in. So while it does not have a city-county merger in effect, Columbus takes up a huge amount of the county, with a population in the city proper of over 700,000 people. Ohio has very favorable annexation laws for cities that control utilities. If you get utility service from a city, you can’t stop them from annexing you – and you can annex across county lines, something that Columbus has already done. While it now does have cities like Dublin ringing it in some respects, there seems to be a recognition that there needs to be room for the city to continue to grow, and from what I’ve seen, annexation boundary agreements with suburbs continue to provide more or less unlimited possibilities for Columbus to continue expanding.

The corporate community is robust and engaged. Columbus seems to have a very strong economic development mindset, and a pro-business attitude. The local corporate community has been very active in things like the development of the Arena District, and has pumped a lot of money into the downtown. There can be complaints, probably with some degree of legitimacy, that development policies are overly corporate driven, but this is true everywhere. Columbus has also notably maintained a large white collar work force.

The government and citizen base seems to be supportive of fairly progressive public policies. I noted recently how citizens of the city have routinely voted for bond levies to fund various civic improvements. Even in this recession, there was just a vote for a parks levy that is partially to maintain operations, but also partially to expand the parks. Like many cities, Columbus has a lot of overgrown country roads that haven’t been upgraded, but it is trying. Last year Columbus spend $50 million on adding new sidewalks, for example. There have been other bond issues and many of them are focused on things like sidewalks and other projects to improve the quality of the overall city’s general infrastructure, not a handful of splashy mega-projects. As I’ve long said, the mark of a great city is in how it treats its ordinary spaces, not its special ones. Every small town in America makes its Main Street look nice. But the ordinary street is much more important. Columbus seems to get that.

The one thing that has failed in Columbus is light rail. It was voted down. Actually, I think that’s probably a good thing since while improved transit is certainly needed there, a very expensive light rail system probably isn’t a fit for Columbus.

Columbus, like most cities, has an urban core that has many challenges. There are a lot of areas of the old city of Columbus that are as decayed as any other place. But Columbus also has a lot of urban gems in its central city as well. German Village might well be the best historic district in the United States. It is truly incredible and a must visit. While the downtown isn’t that exciting, areas like the Short North and the entire continuous strip of urbanized development north along High St. through the University campus up to Worthington is impressive. There are a number of smaller Franklin County suburbs that are super-cool “old school old money” type places in their appearnce. Newer places like Dublin are starting to turn it on.

So what does Columbus need to do moving forward?

1. It needs to strengthen its brand. I wrote a lot about strengthening the brand of Indianapolis in this blog, but that city is one I know intimately. I don’t know Columbus well enough to judge what its essential character might be, but ultimately a real brand image needs to spring from the native soil. Columbus can’t be a world class city unless it is a world class Columbus. Great cities, like great wines, have to express their terroir. Trying to graft coolness onto a place apart from its essential character only looks pathetic. I think Columbus is still stuck in a insecure phase where it is engaging in braggadocio to make itself seem like it is one of the cool upperclassmen. The best example here is the city calling itself “The Indie Arts Capital of the World”. There is actually some goodness in this. I noted the city’s relatively weak high culture institutions, so focusing on indie arts makes sense. But is this brand likely to play in Chicago? I don’t think so. Nor do I think it works as a aspirational statement since it seems at odds with local character and difficult to achieve. This won’t be easy. The name Columbus itself is a bit of a millstone as I noted. But I think it can be done. It’s going to take a lot of digging deep and working hard, and finding an inner confidence in what Columbus is as a city.

2. Infrastructure is a problem. Columbus is growing and needs to expand its infrastructure to keep up and also improve and maintain its legacy infrastructure. The problem is that key portions of Columbus’ legacy infrastructure require very expensive upgrades that will likely suck up all available funds. This will hurt it if something creative isn’t found. For example, ODOT is going to spend over a billion dollars reconstructing part of the inner loop downtown. That is desperately needed since the road is unsafe, but is unlikely to add to Columbus’ competitive advantage as a city. And that’s a billion that can’t be spent on other things. Some locals want to put caps on the freeway to mitigate the “noose effect” it has on downtown. These are very expensive and have been considered too costly to include. This ought to be reconsidered. Yes, it won’t be cheap. But cutting out every “value added” element from a project to keep the cost down means you could ultimately end up with still an ultra-expensive project, but one that has little real boost for the city. If you’ve got lemons, you need to make lemonade. If you’re going to hold your nose and fix a problem like this, you might as well pinch a little harder and do the job right so that you get some actual value out of it.

3. Improve the quality of urban design. Columbus isn’t bad, but its built environment is rather generic. It needs to improve the quality of its architecture and public space, and what’s more use design as a way of expressing its brand. This is a huge opportunity area for cities like Columbus to create a differentiated physical environment at modest incremental cost. It seems to be something that doesn’t register with people, however. Indianapolis, as I’ve noted, has some simply superb examples of design in a handful of locations – but refuses to do anything with them. I am utterly befuddled by this. Even Chicago is backsliding on this front. It’s a big opportunity area for Columbus.

4. Tune-up the economic development engine. Columbus is doing well here – it’s hard to argue with the results. But I think a pro-active scan to find some specific niches where Columbus can create sustainable competitive advantage and get the benefits of being a first mover are would be good to do. I think the future is about micro-clusters made up of many small and medium sized businesses that in aggregate will add up to what say a single major HQ or factory might have had. Only looking at general mega-clustures like life sciences is not enough. Also, OSU brings huge numbers of outsiders to the area for four years. They probably had a great time. How can the city turn the OSU university alumni network into an urban alumni network?

On the whole, I think Columbus is rocking and rolling. Because of its weak name recognition and the fact that it is in Ohio, I think it flies almost completely under the radar. But this an impressive city and one that is arguably the best positioned of any Midwestern metro to really prosper in the 21st century economy. For those of you who haven’t been to Columbus, I strongly suggest a visit. This is not a Cincinnati or Chicago like place where you will be immediately wowed by the coolness of the built environment. But I think it will surprise you nevertheless. Before you go, drop by Columbus Underground and let the crew there tell you what you ought to see and do.

I don’t have pictures of all of the cool areas of Columbus, but here are a few samples for you.

Some scenes from German Village.

Here are some shots from the core of downtown. First the Ohio State House. Yup, no dome.

City Hall (I think)

Moving a bit north to the Arena District. I like to call this Columbus’ “Downtown 2.0″. They got it wrong bigtime the first time around by trying to spread major projects like City Center Mall around in order to act as anchors. The right approach is clustering multiple types of uses in a single district, which the city did right in the Arena District.

The downtown arena is named for Nationwide Insurance, which is the prime mover behind much of the downtown redevelopment.

The Columbus Convention Center. I’m not sold on the architecture, frankly, though they made an effort to do something other than the standard box.

Restaurants in the vicinity.

The Hyatt Regency Hotel. I’ve always thought buildings like this have a bit of an Orwellian aura about them. It looks like some Eastern Bloc country’s defense department.

Moving along to the north, we get to to a neighborhood called the Short North. The one photo I have of it in my archives doesn’t do it justice. Lots of arts related businesses here.

One of those old moneyesque suburbs I mentioned is Worthington in northern Franklin County. Here are a couple snaps.

The main street in north suburban Delaware, the eponymous county seat of the fast growing county in Ohio.

My take on more Midwest cities:

Chicago: A Declaration of Independence
Cincinnati: A Midwest Conundrum
Cleveland: What’s Wrong?
Detroit: Do the Collapse
Louisville: An Identity Crisis

Thoughts on branding from Indianapolis that are relevant to Columbus, as well as a concept brand positioning for Louisville

The Brand Promise of Indianapolis
Our Product is Better Than Our Brand
Louisville: Vice City

Thoughts on Urban Design that are relevant to Columbus

15 Quick, Easy, and Cheap Ways to Make a Big Urban Design Impact in Indianapolis

Thursday, May 14th, 2009

The Rise of the New Grass Roots – Part 2: The Applications

This is a follow-up to my first post discussing the rise of the new grass roots, and the phenomena of new platforms for new voices, network bridging, and open source economic development. This entry discusses how cities might be able to leverage this for civic improvement.

So what does civic leadership need to do to take advantage of this? Partially, the beautiful answer is Nothing. The great part of a bottoms up movement is that it doesn’t require anything from the top. The types of networks of networks that are being created will generate their own value. Indeed they are formed because they provide value to the people who participate.

In the new economy, growth is going to depend on a constellation of smaller firms, not a handful of megaliths. These small, nimble businesses leverage services from their network and so need to have one to survive. The idea flow in the globalized economy is faster than ever. Cities need to be able to tap into the global conversation and extended networks are how it happens. And in an era of rapid change and an uncertain future, you need to have a lot of diverse irons in the fire to have a successful cities. All of these argue for the rich tapestry and diversity of extended networks and open source approaches enabled by the new social media and interconnectivity we enjoy today in the digital age.

So while cities don’t need to do anything to exploit these networks, they should certainly be encouraging them to form. If these types of robust blogs, locally oriented social networks, and open source support organizations aren’t forming, that’s a big point of concern. On the other hand, civic leadership should take care not to smother them with too much unwanted or unneeded “help”. Sometimes the best policy is hands off.

But I do think there is opportunity for active collaboration between the establishment, or what we might think of as top-down leadership, and the new grass roots, or what we might call the bottoms up world.

There are lots of different theories out there about the best way to drive change. Some people think you need top down leadership, some a bottoms up movement. I happen to think that often the most powerful approach is a combination of both.

Now, there is an inevitable tension between these two approaches. In fact, some of it is healthy tension. But often in a civic space where there are lots of only loosely related people with many diverse points of views and goals, this tension can devolve into suspicion, contempt, or other very dysfunctional states. I think there are barriers on both sides to dealing with the other constructively, and self-awareness of that is a big part of how to start making it better.

First, let’s consider the grass roots/bottoms up crowd. Why does any such movement or organization start? Often it is because of some dissatisfaction with community leadership or the status quo. Thus right from the get go grass roots people tend to define themselves in opposition to the establishment. Other than by exerting political pressure by obtain a sizable constituency, this can limit what can be accomplished.

So many blogs are started by people with an axe to grind. Various organization out there get started because there is a perceived gap or disagreement with policy. This could be an anti-tax movement, a pro-transit movement, etc. While I think there is very much scope to advocate for change, people need to be aware that you attract more flies with honey than vinegar.

Also, this highlights that often grass roots type advocates and people are focused on a single issue of particular importance to them. But political and civic leadership are faced with large numbers of issues and large numbers of groups with positions on them. Communities are diverse, and the people who live in them have diverse goals, dreams, aspirations, politics, and policy preferences. While the things we all are passionate about might seem self-evident to us, they may not to others, and there are always, always trade-offs to be made in balancing the multiple, and often conflicting goals and objectives we have as communities.

And lastly, I’ve noticed that many grass roots type people do not have experience in large organizations or with trying to get thing done inside of a political process with numerous stakeholders who don’t always agree. I frequently see a lot of frustration regarding an inability to get things done and contempt for leadership that seems feckless. Sometimes I share this frustration and there are definitely leaders who are not good and communities with generally poor leadership. On the other hand, we need to be realistic about what can be achieved over what time scales, and also value the skills and experiences that leadership types bring to the table and the processes that get to results. One man’s “power broker” is another man’s “person who can get things done”. The ability to get things done at all in a high complex, high friction environment should not be discounted. Communities aren’t dictatorships where some king just gets to say, “Let it be done.”

For leadership people, I think there are also new attitudes that need to be put in place to add the ability to work with non-traditional, emerging stakeholders to their repertoire. When I think of civic leadership or the establishment, I think of people who have longstanding personal and professional relationships, often characterized by high trust and extensive personal knowledge of the other parties. They are also used to interacting in person and keeping deliberations face to face and not out in a public setting. The open source processes of open debate in a public, virtual forum is a foreign one, and one with which many people are not comfortable.

The new economy networked mindset is more about loose networks of people who are open and sharing. Trust is not often as high, put people tend to extend a provisional trust to others fairly readily. And the nature of the network means that a person’s reputation rapidly spreads. So people to want to retain a good reputation to retain access to the network, and that is often obtained by active participation and giving to others in order to build up a reputational bank account balance.

There is actually a lot of goodness in this. Again I would refer to my post on the importance of social structures to urban success for further information. A lot of the reason Silicon Valley triumphed over Route 128 was is willingness to embrace this more open culture vs. the traditional establishment culture of Boston.

Leadership cultures also value having everyone on board with the solution. There is no doubt this is powerful and grass roots types should recognize that refighting yesterday’s battles over and over gets us nowhere. On the other hand, in the world we are in, where adapting to rapid change and diverse bets are critical to a winning hand, the establishment needs to be more tolerant of messier processes and less of a unifed front. As they used to say about internet standards, it was about “rough consensus and running code”.

And lastly the leadership culture needs to be open to new ideas from new sources. If the civic leadership community believes it has all the answers, that’s a very dangerous attitude.

So assuming these two groups learn to collaborate, where is the value to be found? I’ll suggest a few areas.

You may remember my recent post “They’re Not Current” discussing that while civic leadership people often have excellent political, business, organizational, financial, and other skills, they are often not as plugged into the latest and greatest thinking. Heck, nobody can be as fast as the world is changing. But by keeping a close relationship with these new voices, new networks, and new organizations, they can get access to a pipeline of ideas that could have big benefits for the city.

I’ll give one example. I heard this second hand, so it might not be fully accurate. So keep that in mind. But Indianapolis recently was awarded the 2012 Super Bowl. As part of preparing the bid, the team leading basically sent out a call for people to “come on down” and bring their ideas. Supposedly two of the ideas that were key to the winning bid: putting canopies over the downtown streets to create a “Super Bowl Village” effect and the legacy project on the near East Side, were both suggested by people who would not normally have been involved in the bid at all. Being able to tap into a wider pool of knowledge and ideas and really helped improve a major civic effort. There are potentially huge benefits here.

Obviously the economic development angle can be big. Much of this is accomplished by staying out of the way. But by keeping engaged with these open networks, civic leadership can identify things that are obstacles to small and medium sized businesses, to innovative businesses, etc. and can use their power and clout to help get them changed and to create the environment that will help them thrive. If you aren’t actually out talking and interacting with the people running startups, then you are only speculating about what types of policies those companies might want.

And also there is the power of outsiders. This is more true of an organization than a larger framework like civic leadership, but when you are on the inside, you are constrained. You can’t go out writing a blog post or a message board entry saying something that is contrary to the party line. If you are involved in local economic development, for example, how likely is it that you can say something critical of local econdev efforts? Not very likely. Similarly, if you are an architect in a city, you probably aren’t going to be going on record criticizing one of your fellows across town. The risk is just too high.

But if you are an outsider, you are free to say what you think. This is a great power and often a useful service. Sometimes a blogger such as myself can say things that other people might wish they could say, but can’t. That doesn’t mean, let me quickly add, that I’m a mouthpiece for anyone else. I’m my own man here. (At work, it is quite a different story. There, I am part of the team – and when I’m on the team, I’m on the team). But new voices and social networks, etc. can give voice to important things and hopefully be useful to the leadership community in understanding what a community wants, and in generating ammunition they can use in helping to make a city a better place.

Again, these are some observations and speculations. We’ve long had neighborhood groups and single issue activist groups, etc. But those were reliant on traditional communications approaches for a long time. This meant that they required very dedicated leadership that often dominated the group and/or needed big funding. Today, as with startup companies, the price of admission is lower than ever. Anyone can start a blog, for example. This explosion of new voices, new platforms, new networks, and new organizations is just now making itself felt. I can’t say exactly what it will end up doing, but I do believe that the places where it works “right” are going to be among those that are successful in the 21st century.

Tuesday, May 12th, 2009

Transit Pricing Reconsidered

This is a follow-up to my posting “Small Cities Should Have Fareless Transit”. Assuming that fareless transit isn’t feasible, or that we are talking about larger cities where it is realistic to generate significant revenue at the farebox, what might be a more rational approach to pricing? It strikes me that the idea of a single flat fare throughout the day, perhaps with a modest rush hour surcharge, is a legacy of the old private streetcar systems. But is this rational in the current day?

First let’s ask ourselves what the goal of our pricing policy would be. To me, there are two basic goals one can pursue: revenue maximization or ridership maximization. I would suggest that maximizing ridership is a better goal. Unlike private transport systems, no one operates public systems to earn a profit. They are operated to provide mobility benefits, and hopefully generate positive externalities like reduced emissions, neighborhood revitalization, congestion relief, etc. You only get the system benefits if there are riders.

Also, transit is basically a fixed cost system. That is, once a city has decided to put a certain level of capacity on the street, the cost is not highly variable depending on the ridership. Adding one more rider to a bus with empty seats has a cost of nearly zero. It is only when you need to expand capacity that you have to worry about incremental cost, and this is conceptually similar to building a new factory. That is, it’s an expansion of the fixed cost base moreso than variable cost.

As with an airline, every seat on a train or bus that goes empty expires worthless. We want to fill those seats up and make use of that capacity. How can we do that? I’d suggest that one way is through a more intelligent pricing policy. To do this, we, like an airline, should do a customer segmentation analysis and look at who rides (or potentially would ride) transit and why, and what the value is to them. Airlines know that business fliers are willing to pay more than leisure fliers, so they price accordingly, and use things like Saturday night stay requirements to help enforce it. Of course, people hate airlines for this. So we’d need to be cautious in our approach.

Two simple segments are commuters and non-commuters. A commute trip is more like a business flight. The demand is inelastic. Also, traditional commute trips to the CBD markets best served by transit often feature pricing characteristics for driving that make transit, even with a significant fare, more attractive.

I’ll use myself as an example. My Chicago residence is 5.5 miles from my Loop office. This takes about 35 minutes door to door by transit, not a great speed to put it mildly. The door to door trip by car is 20-25 minutes. However, the parking garage next to my office charges $29/day to park. Even with monthly parking, the price is significant. This makes a $2.25 base one way fare for transit a bargain. Even if prices went up, I’m unlikely to switch to driving. Also, what If I have a dinner on the near north side afterward? Do I take my car and pay yet again to valet park? Or do I cab back and forth, then drive home? Again transit, even with a taxi ride home after dinner, is a better deal.

The case for the non-commute, off peak trip is much different. I’ll use myself as an example again. Mrs. Urbanophile and I decide to go to dinner at a restaurant a couple miles down the street. We can either a) drive there in five minutes and park for free on the street or b) take a 15-20 minute bus ride at a cost of nearly $9 for two people. Transit isn’t very attractive in that case. Transit gets progressively worse as you add members to your party, as each person has to pay a fare. If you’ve got three or four people, it even might be cheaper to cab it – and faster too.

Clearly the logic is different in each of these cases. Driving to work is not only more expensive – by a lot – than transit, it also introduces constraints and problems. For many non-peak, non-commute trips, there is literally no value lever – price, end-to-end journey time, and quality of experience – that is favorable to transit. It should come as no surprise that there are many city dwellers who use transit for getting to work, but for nothing else. To maximize ridership, however, we need to capture more trips to fill up this fixed cost system that is underutilized during big parts of the day.

One way to make it more convenient to take transit is to reduce off peak fares – by a lot. This could be through outright fare cutting and/or things like letting additional members of your party travel at no charge after the first person pays. (Perhaps cheating could be regulated by only posting back the difference on the return trip when using the same electronic fare medium). This might not get it totally auto competitive, but it might not need to. Get it convenient enough and perhaps families ditch one of their cars – a significant personal savings.

If the lost revenue is material, then perhaps it can be recouped through rush hour surcharges. As this travel is relatively inelastic, ridership is less likely to be suppressed as a result of fare increases. This swap of peak for off peak fares also helps insulate rush hour surcharges as hurting the poor. As the poor are more likely to be transit-dependent, the off-peak fare cuts could more than make up the different on rush hour surcharges.

Rush hour surcharges can also have the added benefit of shifting demand from peak to shoulder periods. Some transit systems are overloaded at peak. Rather than investing huge amounts of money to add new capacity that is only needed during very short windows the day, why not use pricing to smooth out the peaks and save that money? Adding capacity at the peak of the peak is the most costly period at which to do it. Perhaps better to spend that money on opening new routes instead, or something more potentially useful to the community. Some basic, voluntary policy changes, such as businesses agreeing to give flexible work schedules to enable shoulder commuting to workers who prove they ride transit by enrolling in pre-tax payroll deductions for transit, could really smooth the way for this.

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