Tuesday, July 14th, 2009
Cleveland has been unfairly portrayed as the epicenter of the housing crisis in America. One publication after another, national and international, has piled on. Yet why here? Clearly the Inland Empire areas, Miami condos, Phoenix, and even Minneapolis have had very bad housing situations, many of them arguably worse than Cleveland.
I guess it is just easy to pick on Cleveland, the “Mistake on the Lake”, and tales of decline there fit with a narrative that people are already primed to accept. I’ll admit to not always being so kind to Cleveland myself. So today, I wanted to highlight a couple of great positive national articles about Cleveland, while also using them to other ends.
The first is a great New York Times piece on the rebirth of the Cuyahoga River. You may recall that this river famously caught on fire 40 years ago. Today, it is a totally different story.
The first time Gene Roberts fell into the Cuyahoga River, he worried he might die. The year was 1963, and the river was still an open sewer for industrial waste. Walking home, Mr. Roberts smelled so bad that his friends ran to stay upwind of him. Recently, Mr. Roberts returned to the river carrying his fly-fishing rod. In 20 minutes, he caught six smallmouth bass. “It’s a miracle,” said Mr. Roberts, 58. “The river has come back to life.”
On Monday, people who have worked for years to clean the Cuyahoga will celebrate at its banks. “It’s just remarkable,” said Steve Tuckerman, the Cuyahoga River specialist for the Ohio Environmental Protection Agency. “I never thought I would see in my lifetime, let alone in my career, such an amazing comeback of a river.”
America has cleaned up its waters greatly since the Clean Water Act. Still, the turnaround of the Cuyahoga is amazing. Once one of America’s worst polluted industrial rivers, now you can fish there. Contrast that with, say, the Indiana Harbor Canal, which remains unsafe according to every measure the EPA tracks.
But this article holds a cautionary note, not just for Cleveland, but for almost every older American city. Despite remarkable progress in creating a river you can fish in, Cleveland is still facing $5 billion in future costs to fully comply with the Clean Water Act. That’s not a mis-print. It really is $5 billion.
Cleveland is far from alone. Indianapolis faces $3.5 billion in costs. Cincinnati in excess of $3 billion. And so it goes. In city after city the largest public works project by far is some sort of sewer remediation project, often involiving so-called “deep tunnels”, to eliminate combined sewer overflows.
To put this in perspective, the previous largest public works project in the history of Indianapolis was the entirely new terminal complex at the airport that opened last year at a cost of $1.2 billion. The sewer project is three times that. It will exceed the cost of the aiport, Lucas Oil Stadium, the new convention center, Conseco Fieldhouse, Circle Center Mall, the new Central Library, and the Cultural Trail – combined. It should come as no surprise this is destroying cities fiscally. Jefferson County, Alabama (Birmingham) is on the verge of bankruptcy. Other cities will be forced to raise water and sewer rates to ruinous levels to cover the cost.
This may clean up the water to some extent but will have offsetting environmental harms that could be worse. First, many suburban areas already have separate sanitary sewers and effective stormwater management. Thus they may not have to incur any significant compliance cost in the future. With central cities like Indianapolis forced into tripling or more their already high rates, suburban districts like Carmel, Fishers, and Noblesville look even more attractive financially. Thus, sprawl is encouraged. This leads to more automobile usage and air pollution which is actually a greater danger to human health than CSO overflows, to say nothing of CO2 emissions.
I am a supporter of clean water. I believe in it. I think the Clean Water Act was a good thing and the Cuyahoga River cleanup illustrates why. But the last ten percent is the hardest to get. Looking at the cost/benefit from a purely local point of view, is there any way Cleveland will get $5 billion worth of improved public health, economic, or recreational benefits out of this project? It is extremely unlikely. And what is the opportunity cost? Huge. Think of what you could do with $5 billion. Cleveland could solve its abandoned home problem, renew a huge chunk of its infrastructure, build more transit, invest it back in lower taxes and fees, and much more – all things that could make a huge difference in that city.
If we as a nation want to realize the vision laid out in the Clean Water Act, then I think it is imperative to do so in a way that actually net helps the environment and makes central cities more, not less attractive. The easiest way to do that is for the federal government to pick up the bulk of the costs of compliance for CSO problems. Given that every city has spent years fighting with the EPA over this, I think it is fair to say there are no solutions that have been gold plated at the municipality’s request. And by the way, the deep tunnel project that everyone uses as the example of how to do it, Chicago’s, was largely paid for by the federal government.
If you wanted to name one policy that could help keep our central cities competitive, I would argue it is federalizing the cost of CSO overflow remediation, alleviating billions of dollars of crippling liabilities in almost every large metro area.
Bonus Good Cleveland News
To bookend this with another positive article about Cleveland, our friends at the New York Times had another great piece, this one on the East Fourth Street entertainment district. The article has a fantastic photo of a street filled with people drinking and dining at sidewalk cafes, but alas I can’t reproduce it.
About a third of the $110 million project is retail space and two-thirds is housing. The redeveloped area has 14 restaurants, eight bars, a 16-lane bowling alley, a coffee shop, a theater, a nightclub and a concert stage that attracts national acts. Above the restaurants, the developer, the Cleveland-based MRN Ltd., has built 322 rental apartments.
I must say, that putting in 322 rental units was very smart. That’s not a tiny number, and rentals are doing much better than condos in this market. Quite prescient. Plus the rent at 1,200 square feet for $1,200 is pretty good.
The article also shows the tenacity of the developer who brought it into being:
Most of all, East Fourth Street reflects the stubbornness and daring of Rick Maron, the founder of MRN Ltd…..It took seven years, Mr. Maron said, to identify, locate and strike deals with more than 250 separate landowners who held title to the properties. Mr. Maron said the slow pace enabled the family to settle on a development strategy and a public-private financing plan that enabled the street to develop organically over time, like a real urban neighborhood.
The article is worth a read.