Friday, December 24th, 2010


Hard as it is to imagine amid the wreckage of the stimulus, American history is replete with examples of how government can actually do good things. The public support for canals, railway lines, the New Deal engineering and construction projects, the Interstate Highway, and space programs all greatly benefited the country’s economy. They underpinned first American leadership in the industrial age, and then in the information economy. In recent decades, public investment in basic infrastructure construction and maintenance has declined, even in the face of considerable population growth. – Joel Kotkin

The Census Bureau recently released not only the first 2010 Census results, but the results of its five year American Community Survey, which provides post-2000 demographic information at the census tract level for the first time. There’s a ton of fascinating detail in here, and a wonderful way to explore it is through the mapping system at the New York Times. It’s definitely worth checking out.

Apparently I wasn’t off my rocker when I suggested US rail capital costs are too high. Over at Human Transit, someone linked to Danish study (in English) that shows US capital costs/km running well ahead of Europe.

Top Stories

1. Richard Longworth: Cities on Their Own – “Both federal and state governments, including Midwestern state governments, are in deep deficit. Partly as a backlash against these deficits, voters handed power to congresspeople, governors and legislators pledged to cut those deficits. This means two things: (1) the money isn’t there, even if governments were inclined to spend it, and (2) they aren’t inclined to spend it. Government funding to cities won’t come to a halt, by any means, but it’s going to be cut back severely. Cities that had looked to Washington or state capitals to maintain or increase funding for schools, infrastructure, economic development and jobs are going to have to look somewhere else — mostly to their own resources.”

2. Portland Oregonian: Knocking the Lake Oswego Streetcar Off Its Rails – An interesting piece about how the federal regulatory process is sending costs through the roof and killing our country’s ability to invest. “If you paid a reasonably bright engineer $75 an hour and gave her 3,000 hours to work through traffic patterns, noise issues, job creation and design options, the tab would be $225,000. The draft EIS cost 19 times that amount, and no one even blinks. ‘It does seem like a lot of money,’ said Bridget Wieghart, a project manager at Metro, ‘but it’s fairly typical for this kind of process.’ Obletz breaks it down for us: $470,000 for the conceptual engineering, which TriMet couldn’t handle on its own; $440,000 for the traffic analysis, performed by David Evans and Associates; $1.37 million for additional consulting fees and the writing assignment; another $1 million for Metro’s input; $150,000 for ‘public outreach’ … And, yes, that $330,000 to Shiels Obletz Johnsen, which bills at a rate between $60 and $200 an hour. Once upon a time, the streetcar was low tech, low overhead, low design and construction costs, and worth celebrating. ‘A beautiful, streamlined process,’ Obletz says. Then the feds showed up. And the train wreck began. ”

3. 60 Minutes: State Budgets: The Day of Reckoning – “And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.”

4. WSJ: Town embraces the ugly truth: it’s a dump – “Nicolas Buissart leads an ‘Urban Safari’ that includes climbing a slag heap, exploring never-used metro stations, walking down streets reputed to be the ugliest in this country, and visiting the house where the painter Magritte’s mother lived—before she drowned herself in the canal. If this sounds like fun, hop into his van, which has no seats.”

A Physicist Solves the City?

The NYT Magazine article from last Sunday about a physicist who claims to have solved the city by reducing it to “a few exquisitely simple equations.” has been getting tons of airplay in the urbanist world.

I can’t figure out why. The article is IMO poorly written and despite its length, it doesn’t actually tell us much at all about what these equations are or what they say. We only learn three things about this:

1. Cities get more cost efficient as they grow larger
2. People are more productive in bigger cities. (“cities are valuable because they facilitate human interactions”)
3. Social pathologies of various types increase at a greater than proportional with city size.

None of these says much new. The first one is a straightforward application of scale economics. If you’ve got fixed costs and variable costs, your unit cost declines as volume increases. That’s why high volume manufacturers have a lower unit cost than small ones. The productivity can easily be taken both from Adam Smith’s division of labor principle – larger cities enable greater specialization and division of labor – and the reduction of transaction costs – both properties of cities that have long been known. As for crime and the big city? Puhleeze. So where’s the beef in this article?

Presumably urbanists get excited because West mentions Jane Jacobs and seems to endorse density and urban form. But a careful reading shows that the article itself never asserts West is claiming anything about density or urbanity in his equations, only city size. He also doesn’t explain why cities like Detroit stop growing while new ones like Atlanta spring up and many other things a casual observer can note about cities. Detroit didn’t suffer from any exhaustion of resources other than customers willing to buy its cars at a profitable price, for example.

Possibly his actual work contains more than this, but this weak article certainly doesn’t bring it to life. In short, I can’t figure out what all the excitement is about.

Innovative Roadway Design

The Reason Foundation published a paper called Innovative Roadway Design that has some suggestions even traditional urbanists might be interested in (not that they’ll like the whole thing, mind you):

People don’t like the look or feel of many of our big highways…This study argues that in too many American cities, despite much planning, we are planning highways poorly…Many of our highways have gotten too big, not because anyone wanted them to be that way, but because widening an existing highway was the simplest thing to do at each point—the line of least political resistance.

World and National Roundup

The Globe and Mail: A Tale of Two Torontos

NYT: Using waste, Swedish city shrinks its fossil fuel use

Forbes: Why can’t we do big things anymore?

Virginia Postrel: The Allure of Techno-Glamour

TNR/Brookings: Jobs jump off a cliff in the nation’s metro areas

Mashable: 5 ways cities are using social media to reverse the economic downturn

CS Monitor: Segregation hits 100 year lows in most American metros

NYT: Census data shows immigrants making paths to suburbia, not cities

WSJ: Downtowns get a fresh lease

NYT: High Line’s second phase differs from its first

WSJ: NJ Governor knew tunnel deal required repayment – Yes, Gov. Christie is now trying to welch on a contract he signed requiring New Jersey to repay the feds for federal funds already expended on the tunnel project he cancelled.

Michael Diamond: Is there a future for manufacturing in New Jersey?

Metropolis: Austin, Now What?

New Geography: Commissioner Leonard Steps Up Portland’s War on Fun

NYT: Michigan’s decade of tarnish seen in Census report

Blair Kamin/Chicago Tribune: Dubious design moves of 2010

MinnPost: Can a metro area so sharply divided by income, race, and geography continue to thrive on the national stage?

The Dream of the 90’s Is Alive in Portland

Randal O’Toole’s blog pointed me at this hilarious video, which appears to have come from the Independent Film Channel cable network, called “The Dream of the 90’s Is Alive in Portland.” (If the video doesn’t display, click here).

Bicycle Parking in Copenhagen

Here’s another great video out of Copenhagen, this one about bike parking in that city. (If the video doesn’t display, click here).

Louisville’s Economic Future

The Courier-Journal did a major series looking back an an ambitious plan to boost the region’s economic fortunes that thus far has failed:

In 1997, a group of local business and civic leaders released a blueprint for Louisville’s economic prosperity in the 21stst century — imagining that by 2010, the area would have a fast-growing population and incomes soaring past the national average. It didn’t happen.

Instead, Louisville’s economy has declined — 24,600 jobs, or about 4 percent of the 13-county Louisville-Southern Indiana total, were lost between 2000 and 2009. That leaves Louisville near the bottom of 16 competing metro areas that vie for jobs, talented workers and investment

It’s a compelling, if gloomy read. Leaders identify, correctly in my view, educational attainment as the key issue, as Louisville’s college degree attainment is very low. One item that wasn’t stressed but I also believe plays a role is that the Louisville metro region is just a bit too small to have the heft it needs to really compete in the league it aspires to.

At the risk of going against everything I’ve said about focusing on attraction vs. retention, I do believe there are probably people Louisville is losing for no good reason. I grew up in Southern Indiana in the Louisville MSA. Out of my high school graduating class of 50, about 8-10 got college degrees. Of them, I live in Chicago, three more live in Indianapolis, and another lives in Kansas City. I believe we were the top five in GPA rank in our class. When I was in Indy, I was amazed at how many people I ran into from my tiny high school that lived there despite growing up right across the river from Louisville. This includes the girl I dated most of my senior year. I attribute this to Southern Indiana high schoolers going to Indiana state schools for tuition reasons, where they are more likely to be recruited by Indy employers than Louisville ones. I think there’s an opportunity for Louisville to pick up more Southern Indiana types coming out of school if it figured out how to better recruit at Indiana state schools. Just a piece of free advice.

Post Script

Kaid Benfield put together a delightful collection of photos of transit systems decorated for Christmas. Here’s a sample:

Thursday, December 23rd, 2010

Taking Chicago Transit from Good to Great, Part Five – Getting It Done

This is the fifth and final installment of my series on taking transit to the next level in Chicago. It has been updated from the original version.

As I write this [in 2009], Chicago has just announced another massive transit revenue shortfall. The CTA’s budget deficit for next year is a projected $300 million – an incredible percentage of the overall budget. The need for change is clearly more urgent than ever. While we probably can’t look to raise revenues in the current economy, a lot of ground work needs to be laid to get to where we need to go.

Who Should Lead the Charge for Change?

The reality is that the CTA and the existing transit agencies are not going to be able to drive this themselves. The CTA is only one of the service boards. And many of the transit projects on its own system aren’t even driven by the agency, but by other organizations like the city DOT. The CTA has its hands full just operating the system. And it doesn’t have the clout to really drive regional change.

So who does? In Chicago, it starts with the mayor. It is critically important to convince the new mayor to make transit a top priority for the city. He has to look at the CTA the same way Mayor Daley looked at Millennium Park or Chicago 2016 or the O’Hare Modernization Plan. If it isn’t important to him, it won’t be important to anyone else either.

Mayor Daley was an incredible mayor for the city in many ways. Whatever you might think of various parts of his personality or ways of running the city, I believe this is a guy that gets up every day and says to himself, “What can we do today to make Chicago a greater city?” That’s a quality of leadership all too rare in American cities.

But Daley just didn’t get it on transit. I mean, I believe he intellectually understood it – he’s reputedly quite the policy wonk – but he doesn’t feel it in his gut. If you’ve ever gotten a chance to see Daley just talk off the cuff about the city, it’s incredible. This is a guy who overflows with passion for Chicago. When he gets started on, say, education, you can tell it’s a topic close to his heart. But I’ve never heard or heard of him talking like that about transit. He doesn’t ride it, unlike Bloomberg who has made a point of regularly taking the subway to work in New York. It’s just not something that emotionally engages him.

That’s not to say it was an invalid choice. A leader is faced with infinite problems to address – budgets, the economy, crime, infrastructure, parks, economic development, taxes, education, transportation, equity, etc. – but only has finite time and resources, even in a city like Chicago. You can’t chose to do everything. Daley chose to focus his efforts elsewhere.

So the immediate critical question is whether the incoming mayor, whoever that is, puts transit on his list of top agenda items. Given that this is a longer term, not instant gratification, it doesn’t seem likely to bubble up frankly.

So who could get the mayor to put this at the top of his agenda? Ultimately, I believe it has to be the leadership of the business community. If you look at major civic change in most cities, including Chicago, the business community has been a big driver. That needs to be the case here as well.

Reputedly it was former Sara Lee CEO John Bryan who sent Daley on his legendary trip to Paris that led to a lot of the beautification efforts in Chicago. It was supposedly Lester Crown who convinced Daley to undertake the ambitious, long term, and expensive O’Hare Modernization Plan.

Similarly, what’s needed is for some current and former CEO’s to go to the new mayor and make the case for him to take on this issue. They have to make it clear that absent major investment in Chicago’s transit system, business investment in the city and especially the Loop will be threatened, and its ability to stay in the top ranks of global cities impaired. Of course, they have to really believe this themselves. I do. That’s not something that can be taken for granted given that most of them probably don’t depend on the CTA. But assuming they do, then they are the ones to do that sales job.

They also need to stay engaged to drive a community effort to make it happen, with the mayor’s full support. This probably involves creating a committee similar to Chicago 2016 – one that has participation from the key stakeholders that would be necessary to move transit forward. The beauty of this issue is that is – or should be – everyone’s issue. It’s difficult to identify a natural constituency who would oppose it. The Loop business community needs it, organized labor should definitely be on board with a big construction program, various advocacy and grass roots organizations want the CTA upgraded, and minority communities want better access to transit and enhanced mobility in their neighborhoods. If there is any one issue that should unite the White, Black, and Latino communities, it should be better transit.

The city coalition should be easy. Of course, the city isn’t the only player. The big problem is likely to be suburban areas and the power structures in Springfield. Clearly, those are areas that need to be tackled, and that’s one of the group’s key to-do’s.

The Program for Change

So what does this committee do? Here is what I see as the workstreams that need to get accomplished. Most of these can and should run in parallel:

  1. Visioning. Create the end state vision of what our city is like with an enhanced transit system. This includes a holistic, phased view of what is to be implemented. The existing plans can be used as input, but I believe we ought to rethink a bit what our system needs to look like. Many of the current proposed expansions, for example, are simply pet projects of various politicians. Again, I won’t give the answer, but simply say that we need to ask the question.
  2. Cost Reduction. Figure out how to drive major reductions in the cost of construction on rail projects.
  3. Governance. Rethinking how we ought to organize and run our transit systems, set investment policies, the city-suburb situation, etc.
  4. Financing and Legislation. Identifying the preferred financing plan and doing the ground work to get the enabling legislation through the state legislature and for maximizing federal funding.
  5. Sales and Marketing Plan. Looking at a short and long term program of making the case to the public and building that demand for the program so that when it is in Springfield and up for a vote in a referendum, there will be clear and overwhelming public support. This is where having that broad coalition is critical.

This creates the plan we need. In parallel, we should start right now, today, dramatically improving the quality of design in our system. And of course we then need to make it happen politically. Once approved, we need a clear focus on execution. I think part of the governance effort ought to look at the best way to organize the new build and capital side of the business vs. the operating side. And I think there should also be ongoing marketing as we deliver on the system to show people how the benefits are actually coming to life.

Doing this won’t be easy. It will probably take some time and cost some money just like Chicago 2016 did – money that won’t be easy to raise in this environment. Probably it would have to involve a mix of public and private funds to really put together a proper and credible plan.

Again, taking Chicago’s transit system to the next level isn’t going to be quick, easy, or cheap, but it is important to be done. Without this investment, it will be a struggle to merely maintain what we have, and a deteriorating transit system could ultimately be a major stumbling block to the city realizing its civic ambitions.

More in This Series

Part 1: Building the Vision
Part 2: Raising the Bar on Design
Part 3: Cost Control and Governance
Part 4: Paying For It

This version of this post originally ran on October 11, 2009.

Comments Off on Taking Chicago Transit from Good to Great, Part Five – Getting It Done
Topics: Transportation
Cities: Chicago

Wednesday, December 22nd, 2010

Taking Chicago Transit from Good to Great, Part Four – Paying for It

This is the fourth installment of my series on taking transit to the next level in Chicago. This one has some updates from the original version.

Other installments are:

This piece focuses on the $35 billion question – how to pay for it. Next up: wrapping it up with the strategy for getting it done.

If transit today is underfunded, how can we expect major improvements out of our agencies? The answer is, we can’t. That’s not to say that the CTA can’t and shouldn’t improve. It should, and I’d argue it has in the recent past. But we’re not going to change the game, to go from good to great, without a lot more money. So, where can we get it?

Can We Afford It?

This section is new for this version of the post. The first question perhaps is can we afford it at all. I think transit advocates and urbanists generally need to face reality that starting up a major new program at this time is a non-starter. States and localities are broke, particularly in Illinois. The job market continues to be terrible. And the public is in no mood to spend. Don’t fight the tape, people.

So before we can even think about pulling the trigger on implementing something, we need a clear change in macro-economic fortunes nationally and locally, and we need to both resolve the long term structural issues with the budgets both in Illinois and in the city of Chicago. (To put this in perspective, see “Illinois is Broke” and “Broken Budget Awaits the Next Mayor“). I wouldn’t count on much help from the feds given the recent election and the previous botched stimulus.

Speaking of the stimulus, the reality is that a program to renew Chicago’s transit infrastructure for future generations is not a “shovel-ready” project. There is a lot of planning and organizing work to do to get ready to make the pitch for money to actually do something. That work can proceed now while these other things are resolved. (If they don’t clear up in at least the next 2-3 years, we’ve got bigger problems than transit, anyway).

Also, this notion that somehow if we simply don’t spend any cash, that we’re not spending money and are showing fiscal discipline is a mirage created by the completely bogus practice known as “government accounting.” That fantasyland is a world run on cash only. There’s a reason real businesses don’t use cash accounting. It’s nothing but a gimmick. Yes, cash matters. But just because you aren’t spending cash on something doesn’t mean you aren’t incurring an expense. For example, New Jersey Governor Chris Christie is balancing his budget “without raising taxes” by, among other things, zeroing out the state’s pension contribution. But the pension liability was incurred regardless. It’s only a question of whether you fund it or kick the can down the road. Most governments have elected to kick the can, which is why so many of them are now broke. That’s not fiscal conservatism, it’s budgetary flim-flam.

Chicago is going to pay a price for its transit system, one way or another. There’s no escape from that.

Lastly, the “Mitch Daniels solution” is simply not going to work in Chicago. That is, this is not a city that can become prosperous merely by squeezing spending because it will always be cost disadvantaged versus most of the rest of the country. And the ultra high end services on which it is betting its future depend on quality of services more than minimum costs. Of course we need to manage costs aggressively, but Chicago is also going to have to choose to do some things. The “Do as little as possible” approach simply won’t work here. Transit may not be the right task to take on, but you’ve got to take on something.

Financial Facts

First, let’s start with the fact that the CTA does not control any material funding lever except fares, which are already high. The remainder of the CTA’s money, save for some minor advertising income and the like, comes from a mixture of federal capital aid, and taxes whose rate is set by state law. So any change in the funding situation will require legislative action.

Second, the CTA, Metra, and Pace are required by law to achieve 50% farebox recovery. This might not sound like much, but is much higher than most transit systems. Portland, for example, only has about 20% farebox recovery. While the CTA, as a big city system, might be expected to be higher, 50% is probably still too high. Incidentally, only a tiny handful of transit systems in the entire world that break even or turn a profit.

Third, the CTA is burdened with innumerable unfunded mandates from the state and federal government, including free rides for seniors and other discounts.

Fourth, the CTA is caught in a big pension vice. Its pension system was vastly underfunded, until it borrowed money to top it off – with repayments that comes right off the top out of the operating budget. The Illinois constitution prohibits the impairment of any pension benefit already earned.

A Fixed Cost System vs. Variable Revenues

A transit system is more or less a fixed cost system to operate once you decide on service levels. That is, the CTA decides how much seat capacity to put on the street and rail lines, and the cost to operate it is more or less fixed regardless of how many people actually ride.

However, the CTA’s tax revenues come from two principle sources: sales taxes and real estate transfer taxes. Both of these are highly cyclical. And where we are in the cycle, those revenue streams have declined massively, putting huge holes in transit budgets across America. The fact that the CTA is so dependent on fares is actually a plus right now, since fare revenue is fairly short term stable, at least in contrast to other revenue streams.

If you are going to fund a fixed cost system with variable revenues, you had better have a healthy reserve account for a rainy day. Chicago’s regional transit systems do not, which is why there are repeated “Doomsdays” as revenues decline.

You Have to Pay For It Yourself

So where is the money going to come from to improve and operate Chicago’s transit system? At the end of the day, Chicagoans are going to have to use their own money to do so.

I find it interesting that most local transit advocacy focuses on getting more money from Washington and Springfield. While a Chicago-heavy White House with Democratic control of Congress [update: no longer] might enable something to happen there, I’m not holding my breath.

Consider that there are only a handful of cities with older systems like the CTA that need upgrading. That right there creates a numbers game problem, particularly in the Senate. Likewise, historically Springfield has done little to help. Even the recent $25 billion state capital plan included a comparatively small amount for transit.

Most importantly, other cities around the country are paying for their own transit. In city after see we see transit levies placed on the ballot to raise funds to construct and operate new light rail lines and other systems. Last November, for example, the Seattle area voted to raise its own taxes in order to collect $30 billion over the life of the tax for transit improvements. This is in an area only about a third the size of Chicago.

This also creates problems in Congress. If every other city is voting to raise taxes to invest major local dollars into transit capital, why should Chicago get a pass? Also, this goes right along with the heritage of the Burnham Plan. Chicagoans voted dozens of times to allow bond issues to finance the major public works programs coming out of that plan.

The answer to me is pretty clear. To really change the transit game in Chicago means putting a tax on the ballot for the people to put up or shut up on whether they actually want a better transit system.

Parameters of the Financing

Before getting to the specific measures, I’d like to propose some basic things to use the money for.

First, I’m assuming there is that compelling vision from part one to get people to buy into the system. This probably has a mix of near term and long term items, tangible and conceptual items. That means there is probably a phasing that needs to be figured out. I would suggest that it would be a limited number of phases, with a pretty beefy first phase. If asking citizens to vote on a tax increase, they should get something pretty big and visible out of it. Also, you don’t want to go back to the well too many times. On the other hand, you can’t expect people to buy a pig in a poke either, so it probably can’t be everything in one vote.

With that backdrop, I would suggest the a ballot to raise taxes with the proceeds to be used for:

  • Establishing a CTA operating reserve of $500 million, with parameters to make sure it isn’t rapidly drained and never replenished. Metra and Pace need reserves as well, though potentially we’ve reorganized our governance at this point, remember?
  • Rolling back CTA fares to $2 and eliminating transfer surcharges.
  • Providing additional operating assistance and reducing the required farebox recovery percentage.
  • Funding debt service on a bond for a fairly healthy first phase of work. I would suggest something in the neighborhood of $15-20 billion. Potentially the actual program could be bigger when combined with federal assistance or other revenue sources such as existing TIF’s.

Sources of Funds

Typically, transit bonds are backed by increases in the sales tax. However, given the sale tax dependency of Chicago transit today, and the high Chicago sales tax rate and associated political drama around the Cook County tax, this may not be realistic. Where then could the city look? Here are some ideas:

  1. Land Value Tax. A land value tax is a tax not on dirt, but on a physical site. This does not include any improvements made to the site, such as buildings. This is an attractive form of taxation for a few reasons. Firstly, it doesn’t distort production. If you tax something, you get less of it, but since the surface of the earth is already fixed in extent, this isn’t a problem here. The marginal supply of new sites is zero no matter what. Also, it encourages people to put land to good use. Today, if someone builds a skyscraper downtown, their “reward” is a huge tax bill. But if someone tears down a historic building and puts in a surface lot, his taxes go down. That makes no sense. A LVT discourages land banking and speculation, and encourages people to invest in their property. And, the value of a site is really not a function of what any individual person does. Rather, it is a result of overall community growth and investment. This is in contrast to the value of a building, which is principally a result of what the owner does. Consider the value of the Chicago Loop. Now consider the value of the Chicago Loop without transit. The enormous site values in the Loop were created by transit, so why not capture for transit the value created by it? I can’t do this topic full justice here, but suffice to say there are many reasons why, if you have to have a tax, a land value tax is the best way to go. Its principal downsides are a lack of familiarity and a lack of experience in implementation, which would doubtless result in some bumps.
  2. Congestion Charges/Tolling. This would involve something along the lines of converting the freeways in the city into tollways, using the proceeds to fund road maintenance and operations, and also transit. It could also be used for congestion management purposes. This would require federal rule changes and no doubt much political difficulty. I do not believe a London style congestion charge around the Greater Loop area is feasible or desirable.
  3. Automobile surcharges. This could include items such as additional registration fees or parking taxes.
  4. Income taxes. Illinois income tax rate at 3% is not that high on a comparative basis. It remains to be seen where it will be after the legislature finishes addressing budget deficits, but this is one possible source of funding as well. It seems likely to me the income tax is heading higher, but even at a base of 4-5% it would still be lower than competing jurisdictions like California and New York.

I would suggest that a land value tax and congestion charges are the best approaches, but that the income tax based approach is probably the most straightforward and easiest to implement. I don’t have the time right now to do the math, but it should be fairly straightforward to calculate the supplemental rate needed to raise the types of funds outlined above.

Chicagoans may not go for this, but I do not see any other realistic alternative to raising major funds other than local dollars. Fundamentally, if Portland, Seattle, San Francisco, Dallas, Denver, Charlotte and many more places can do it, I don’t see why a truly world class city like Chicago can’t step up to the plate and do what needs to be done, particularly when the need is evident and when you have that vision in place and the other elements needed to convince the public.

Next up, Getting It Done.

A version of this post originally ran on September 27, 2009.

Tuesday, December 21st, 2010

Census 2010 National and State Results Released

Today the Census Bureau issued the first data release from Census 2010, with national and state total population, and apportionment results.

The total population of the United States on April 1, 2010 was 308,745,538, an increase of 9.7% from 2000.

As a result of state population changes, the following states gained seats in Congress: Arizona (+1), Florida (+2), Georgia (+1), Nevada (+1), South Carolina (+1), Texas (+4), Utah (+1), Washington (+1)

And the following states lost them: Illinois (-1), Iowa (-1), Louisiana (-1), Massachusetts (-1), Michigan (-1), Missouri (-1), New Jersey (-1), New York (-2), Ohio (-2), Pennsylania (-1).

Obviously Texas is the big winner here.

Here’s a map of the US for percentage change in population from 2000-2010, with color intensity proportional to the change. Michigan is shown in red as the only state to lose population, falling below the 10 million mark. Nevada is the champ at 35%.

Here’s a map of the US for total change in population from 2000-2010, with color intensity again proportional to the change with Michigan in red. Texas is tops here, adding about 4.3 million people. California is number two, with healthy total population growth, though a rate that has slowed to virtually the national average, a big change for them.

This map I think says it all. In it I put the states the grew faster than the US as a whole in blue, and those that grew slower than the US as a whole in red:

This is a quick, preliminary look. You can download the raw data here. Shoot me a note if you see any errors.

Much more to come from Census 2010.

Sunday, December 19th, 2010

Does Policy Matter?

One thing both Republicans and Democrats seem to agree on is that public policy is of critical importance to creating economic and demographic success in various geographies. Of course, they disagree on what the right policy is, but they both seem to believe implementing some set of policies is important. But is that really the case? Let’s take a look.

Firstly, at the national level, we know that there is huge variability demographic and economic performance between states, regions, and cities. So while perhaps national policy can act as sort of general boon or a bane for localities, it can’t be deterministic.

This is also true at the state level. Let’s examine one place that many suggest is doing everything right – Texas. Texas has really been the huge winner in terms of population and job growth in America in the last decade. But a look in more detail shows that this success is hardly uniform. Here’s a map of Texas counties for population change in the last decade.

Change in population, 7/1/2000-7/1/2009. Source: Census Bureau Population Estimates Program. Positive growth in green, negative growth in red (Hey, it’s Christmas)

As you can see, population growth in Texas has been largely a “Texas Triangle” phenomenon – i.e., the cities of Austin, Dallas-Ft. Worth, Houston, and San Antonio. Much of the rest of Texas – at quick glance 119 counties – actually lost population.

Here’s a similar map of job growth:

Change in jobs, 2000-2009. Source: Quarterly Census of Employment and Wages. Positive growth in green, negative growth in red.

Even here, we can see that many Texas counties actually lost jobs.

All that supposedly wonderful Texas state policy didn’t do a lot for much of the state. My own personal view is that state policy needs to follow the dictum “First, do no harm.” I’m not convinced there’s a lot states can do to make localities prosperous. However, there’s a lot they can do to make things worse.

So what about localities? Now it gets interesting. Let’s consider the Midwest/Rust Belt region. I wrote a piece last year called “The Successful, the Stable, and the Struggling” that categorized Midwest cities into those buckets based on population growth. Other than Chicago (a unique beast), this sorting seemed to foot well to conventional views of overall urban success, economic growth, etc.

The successful cities were Des Moines, Indianapolis, Columbus, Madison, Kansas City, and Minneapolis-St. Paul. I noticed that all of these except Kansas City were state capitals with a metro region of 500,000 people or more. (Note that neither Indianapolis nor Des Moines contains their state’s major university.) I called this rule for predicting success my “Urbanophile Conjecture.”

That would imply that policy didn’t matter, but size and being a state capital did. It doesn’t necessarily explain why Springfield and Lansing never made it, but one could easily argue that Chicago and Detroit became colossi that simply sucked up everything that otherwise would have gone to the state capital. Similarly for Harrisburg, and possibly Jefferson City and Frankfort.

One might then proceed to ask why Madison and Columbus didn’t share this fate. Possibly it was the fact that Milwaukee wasn’t a mega-city or that in Ohio there were always many urban centers. But possibly it was also because they did have the state’s major university, which gave them the oomph to push them over the top where they otherwise wouldn’t have made it. (Lansing has a quality Big Ten school, but it is clearly second fiddle to U of M and Detroit is also a colossus).

But there are other ways to look at this successful group that distinguishes them. Though exhibiting a favored quarter development pattern, they all have fairly balanced metro area growth in 360 degrees. Other, more struggling areas are unbalanced in their regional growth. Is this a key?

This immediately leads to the observation that none of these places is on a major geographic barrier such as a lake or huge river that would have caused unbalanced development. Both the Twin Cities and KC were far enough upstream to make their rivers much less of an obstacle. Indeed, in places like Cincinnati and Louisville, river bridges remain huge topics of civic debate. Is it really a matter of geography, not being a state capital?

Or perhaps another matter entirely. The state capitals were chosen to be geographically near the center of the state, whereas the major cities were on the fringes. Why was that? Originally, you needed to be on a major navigable waterway for growth and connectivity. Most of the original cities bloomed early because of this. Beyond that, these water transport routes enabled the development of vast complexes of heavy industry. Those major waterways were not near the center of states, but were instead state boundaries.

I was struck by this map from a recent Brookings Institution study on the Great Lakes. It shows metro areas that were above and below the US average for manufacturing concentration in 1970:

Kansas City isn’t on this at all, but this is an almost complete overlap with my previous list. The only exception is Indianapolis, which I’ll return to in a moment. It looks like you can also predict success simply by looking at manufacturing concentration. If you were an old manufacturing city, you are going to struggle no matter what. If not, you’re much more successful.

Chicago Fed economist Bill Testa put together a remarkable chart illustrating that this week. In a blog post titled, “Can the Great Lakes Region Break Free of its Long-term Slide?,” he includes this chart of employment growth vs. 1969 manufacturing job share:

Pretty remarkable.

All of this suggests a narrative like this. “When creating states, we put state capitals in the geographic center of the state where they were usually on minor waterways. This is because we used the major waters as state boundaries. This left the state’s major cities to develop as non-capitals on the edges, where they grew into major industrial powers. Over time, state capitals that somehow didn’t have to compete with an established major urban center, or which had the state’s principal university, grew into major metropolises in their own right, and also in a geographically balanced fashion. Because they missed the heavy industrialization, they also had a greenfield situation that enabled them to be successful while their industrialized brethren wandered in the wilderness.”

In other words, the good demographic and economic performance of these cities is a result of common outside factors, not policy. Conversely, despite a variety of state and local policies, all of the heavy manufacturing centers have struggled. Only Chicago has partially recovered, based on its global city core that is really a city within a city.

Indianapolis was a manufacturing dependent city, but was never a truly huge industrial power, and otherwise met the criteria for success. Jim Russell notes that on Testa’s map, Indy and St. Louis started off with similar manufacturing job share, but had highly divergent fortunes. He suggests a comparative case study of the two. The only place I might look for policy influencing outcomes is Indianapolis, one reason being that I can point to fairly unique policy turning points like Unigov, the 1970 city-county merger. I get incessantly accused of being an Indianapolis homer, so I guess that’s a risk here too. (I certainly don’t believe Indianapolis overall has superior public policy to other cities today – arguably the opposite).

Looking at things like manufacturing concentration as a predictor of success is a variant of “single variable determinism.” That’s something that has always made me skeptical. As humans we have this overwhelming desire I think to reduce the world to simple cause and effect relationships, when the reality is a vast, complex, dynamic system. Nevertheless, this is interesting.

There’s an entirely different version of single variable determinism at work in the worldview of Harvard’s Ed Glaeser. In an episode of Carol Coletta’s wonderful Smart City Radio syndicated program, Glaeser lays out the case for educational attainment being the overwhelming determinant factor in urban success in cold weather cities.

The variable that predicts success among older, colder cities is overwhelming the percentage of the population with college degrees in 1960 or 1940 – places that had a longstanding connection to high human capital industries.

I’ve made liberal use of this quote myself. Glaeser outlines a similar view of water creating industrial powerhouses. Perhaps the state capital angle is what boosted the educational fortunes of those cities. I don’t know. But this is an alternative view. Still, it doesn’t really posit success as being about any particular public policy.

Yet another version of single or limited variable determinism appears in this week’s New York Times Magazine in an article titled, “A Physicist Solves the City.” This guy seems to be enamored of city size.

For those of us who love to talk about policy – left or right – this is a bit humbling. It implies that all we want to do or not do is simply irrelevant. We shouldn’t shy away from that line of thinking. I’ve long said that one thing urban planning needs to have is a healthy dose of humility and awareness of our own limitations. Too often we fall prey to the belief that we can simply reshape our cities to be the way we would like them too be. The real world isn’t always like that. The failures of urban renewal and the unintended, unforeseen consequences of programs like urban freeways should remind us of that.

The alternative, though, is fatalism. I don’t think we as human beings are programmed to simply do nothing and accept our fate. None of us, even I dare say our physicist friend above, behaves as if we really believe we live in a deterministic universe. If I’m going to go down, I want to go down swinging. While perhaps public policy of all varieties is of far less importance than we might believe, I believe we must continue to strive to improve our civic situations. We just need to do it with the proper perspective, taking due care not to fall prey to the lure of overreach and ultimately do more harm than good.

Friday, December 17th, 2010

Replay: What Is a Strategy?

I have significant professional experience in strategy development. I often write about how things are strategically good or poor, or how such-and-such seems to have no strategy. But what actually is a strategy?

There are four parts to a strategy-driven program:

  • A vision for what you want to achieve
  • A set of capabilities or programs you need to get there
  • A list of activities to bring them into reality
  • Execution, execution, execution.

There’s also continuous re-evaluation and refinement all along the way.

It starts with a vision. As they say, begin with the end in mind. A vision can be quantitative or qualitative, but since you need to be able to know when you get there, some degree of measurability is a must. Without a shared vision of what success looks like, it’s tough to get anywhere.

What is your aspiration for your city? That’s a question I love to ask since I find it very revealing. When I asked one local leader in Indianapolis, he said, “To be one of the top ten cities in America people desire to live in.” Previous generations of leaders said they wanted the city “To be the amateur sports capital of the world.” Chicago said one of its aspirations was “To host the Olympic games in 2016”. There also seems to be a local goal to elevate Chicago to the same level as London, Paris, Shanghai, etc. as one of the world’s truly elite global cities. As you can see, embedded in this is usually some notion of a target market and the need for a value proposition to serve it.

Many civic improvement programs don’t seem to have a vision of success built into them. I often cite life sciences. Practically every Midwest city has said life sciences is one of their strategic industries of the future. But what does success look like? I’ll consider one example, both good and bad, from the BioBelt program in St. Louis. They have a two part aspiration. One is to “create the premier location for plant sciences”. Premier means first, so that’s a clear aspiration. Plant sciences is a specific area to target. The other half of their goal, to be a “major center for medical sciences” is less good. Most cities have fairly large health care sector and medical school. What does it mean to be a major center? In a growth industry like life sciences it is easy to let goals like that lull you into a false sense of security because a rising tide lifts all boats. You can be adding jobs, but falling behind. Medical sciences is also a very broad term. I might prefer something like, “To be one of the top five centers for bio-informatics employment and company headquarters in America.” String a few of these together and you have the makings of a program.

As I’ve said before, the best strategies often target a whitespace opportunity where there is not an entrenched competitor and you can get first mover advantage. One could say, “To be the world’s #1 financial center”, but can you really displace New York and London? It also helps to pick something where there is an intuitive reason to believe you are well-placed to succeed. For example, Indianapolis said, implicitly, it wanted to be “one of the top three cities in the world for motorsport employment and company headquarters”. Given its massive motorsport heritage and brand, plus multiple world renowned racing facilities, this was a good pick. By the way, not all aspirations have to be around being at the top. It’s ok to shoot for average if that’s good enough for you.

The second piece of the puzzle is to figure out the capabilities and programs you need to have in order to achieve the vision. This is where the real hard work beings. If you want to be at the top of a market, you need to create a value proposition that creates differentiated appeal and which has sustainable competitive advantage. As Warren Buffet might say, you need to build a “wide moat” business. Wal-Mart figured out that the biggest driver of staple retail prices was price. It wanted to be the lowest price provider and have “always low prices”. It realized that it was in a commodity business, and thus it is all about having a cost advantage. So they built a business with huge economies of scale, purchasing power, a world class logistics infrastructure, limited discounting, no-frills buildings, world class IT, etc. to create a juggernaut.

As a city, you need to think about the capabilities you need across all the dimensions of a city. Some of these are:

  • Human Capital. For example, what types of people do you need to attract to be a leading city in the arts, life sciences, high tech, etc? This is often the most important item.
  • Legal and Regulatory Environments. This importance of this can’t be under-estimated. Some have argued that one factor in Silicon Valley’s ascendancy over Boston’s Route 128 corridor is that California does not honor non-competes and Massachusetts does. One reason Medco chose Indianapolis over Louisville for its 1,200 job mail order pharmacy system was that Indiana permitted remote verification while Kentucky did not.
  • Financial and Business Practices and Access to Capital. Is money available to achieve what you want? Will your venture capitalists fund a business based on a back of the napkin business plan, or will they put you through the wringer and make you sign most of your rights away?
  • Social Structures and Local Culture. This one is harder to change, but very important. New York and London are very open to outside ideas. Silicon Valley’s open network of firms and culture of collaboration is key to that area’s success. If you want to have an entrepreneurial culture, then it has to be more than ok to fail, it has to be expected as a normal part of business.
  • Facilities and Other Infrastructure. Do you need laboratories, incubator spaces, a race track, a cyclotron, a super-computer, etc? If, for example, like Portland, you want to be a transit, bike, and pedestrian oriented community, you need to built lots and lots of facilities just like they did. If you want to be an airport hub, you’d better have a good airport.
  • Academic and Research Capabilities. Kansas City wanted in the life sciences business and was weak on the medical school front, so it had to get local billionaires to establish an independent research institute.
  • Non-Governmental Organizations and Other Associations. Do you need an umbrella marketing group? Do you need to set up other types of associations? What about non-profits?
  • Corporate Community and Support Structures. How does the local business community need to be involved or not involved?
  • Geographic Considerations and Connections. Is your geography favorable to, say, an aspiration like “being one of the top five ports of entry for international immigrants”? Where else do you need to build connections to in order to support your ambitions?

This is a sample, and oriented towards thinking about industry clusters. Other aspirations might have a completely different list. And each one can lead to a whole other set of questions. As I’ve said many times, you can’t have a life sciences industry without life scientists. Why would these extremely in demand people want to pick your city? Cities are a complex, interconnected network of variables that all affect each other dynamically over time. You’ve got to think holistically and look beyond simple linear cause and effect.

Again, it’s not enough just to have answers to these questions that might work. You also have to consider the competitive situation. If your vision is attractive, then you’ll probably have lots of other people trying to get there too. They’ll see what you’ve done and copy it. Some ambitions, like having a great trail network, are available to all, but others aren’t. It’s not enough to just figure out how to serve a market, you have to serve it better than the competition. You have to build that wide moat business.

Once you’ve gotten to this, you then need to transition it into an action plan and go do it successfully. This is the realm of execution. If you don’t execute, then the greatest strategy in the world is all for naught.

As you can see, this isn’t easy.

Let’s walk through one good example, one I’ve used before, the Indianapolis quest to be America’s amateur sports event capital. That was the vision. It was easy to measure because you can total up things like events, attendance, and economic impact and compare yourself to others via league tables. It was a whitespace opportunity that targeted an underserved segment of the events market. It was also a key capability input into other aspirations like boosting the city’s downtown, improving its brand reputation and exposure, and making it a more attractive destination for companies and the labor force of the future. And the capabilities built for amateur sports are leveragable across other target areas.

What capabilities did the city establish? It created the Indiana Sport Corp. to manage the process of luring and hosting events. I don’t know if it was the first organization of its kind, but it was one of the first. It built many facilities such as the Hoosier Dome, the Natatorium, the Velodrome, etc. It leveraged the city’s strong volunteer base to create an army of people ready to help out and welcome visitors for these events. It designed its entire downtown around the facilities cluster, such as by putting its stadium directly next to the convention center, with nearby, attached, hotels, dining, and shopping. It created an approach to literally saturate and rebrand the entire downtown around the even being hosted. Perhaps most importantly, it sought out non-profit sanctioning bodies like USA Track and Field, creating a small industry mini-cluster. As part of this, it figured out how to provide services to those organizations and signed deals locking up long term event dates. This culminated with the push to lure the NCAA from Kansas City and building a museum there. They city also backed other initiatives through its life sciences effort, such as the National Institute of Fitness and Sports. And it has continued to sustain the effort. It wasn’t a one shot program but a long term effort that is ongoing.

The results were a big success. Indy is one of the top sports events cities in America, and has remained one of the top players despite a lot of new entrants trying to get a piece of the pie.

I hope this posting illustrates some of what cities need to be thinking about when it comes to defining and achieving their aspirations.

This post originally ran on November 13, 2008.

Thursday, December 16th, 2010

The Silicon Valley Advantage

Lots of cities are trying to build up high tech/internet industry clusters. I think there’s room for a lot of places to significantly boost their employment and business formation here, particularly in focused areas, but the top hubs like Silicon Valley have huge advantages that mean they’ll likely stay on top of the heap for quite some time.

A brief story about a company called Formspring illustrates this. Formspring is a spin-off of an Indianapolis online form vendor called Formstack. (Actually, Formstack was originally called Formspring, but the spinoff business became so big they changed their name). Formspring was one of those crazy social media growth juggernauts that signed up something like 15 million users in only eight months.

Of course, they needed money to keep up with this, and so went looking for investors. In the interview below from July with Formspring CEO Ade Olonoh, the interviewer described this as an “iconic super-angel funding round where every bold faced Silicon Valley name put money into you guys.”

The entire process end to end lasted 12 days. Somehow they got a conversation with Steve Anderson of Baseline Ventures. After a few phone calls over the first week, the Formspring team flew out to Silicon Valley where Steve arranged about 10 meetings over two days with a who’s who of investors, people Olonoh admitted he couldn’t have even listed on a whiteboard before the process started. Shortly thereafter the funding round was closed and Formspring relocated to Silicon Valley. Here is the entire interview, if you are interested. (If the video doesn’t display, click here).

In Silicon Valley they just plain move faster than everywhere else. That’s a huge advantage. And they have a huge reservoir of strategic investors who bring not only dollars to the table, but significant experience and expertise in growing businesses.

Another advantage is talent. In staffing up the business, Formspring was able to hire a couple people who worked on Second Life. Though the competition for developers in Silicon Valley is intense right now, the talent pool is still the world’s most robust for this type of business.

Similarly, talent and access to capital led a couple of University of Chicago entrepreneurs to relocate their enterprise to Silicon Valley. As WBEZ reports in “The One That Got Away.”

They didn’t go with the intention of staying. After all, Lieb and Mintz still had another year of B-School ahead of them. But like lots of good tech companies, the train barreled down the tracks at breakneck speed.

They took part in a summer business incubator program run by Y Combinator. By the end, they got a big, fat $3 million check from the venture-capital firm Sequoia Capital and some Valley angel investors.

But just because they got the money there didn’t mean they had to stay. They could have come back to Chicago. But they didn’t. They opened their headquarters in Mountain View, California, and now have 15 employees there and are “aggressively hiring.”

Lieb says the main reason was because Huibers lived in California already. But there was another reason that speaks to Silicon Valley’s dominance.

“We knew we needed to hire a bunch of people, and being here in the Valley is really where all that technical talent is,” Lieb said in an interview.

And even though they did talk with venture capitalists in Chicago, there aren’t as many of them and they’re more cautious, Lieb says.

Now all is not doom and gloom here. I don’t think a place like Indianapolis was a great fit for Formspring. It’s a perfect fit for B2B businesses like Exact Target, but a mass-consumer social networking site is not the city’s sweet spot. So I wouldn’t feel too bad about losing the business. Similarly, WBEZ also reported how Groupon has ignited a startup boom in Chicago.

But I think this story shows some important differences in the capabilities and ways of doing business between the Midwest generally and Silicon Valley. (For example, there appears to have been a media blackout in Indy regarding the relocation. I read about it in the New York Times). It shows why the Valley has had such staying power, and why it is so hard to build and sustain an innovative tech cluster like this over time.

Wednesday, December 15th, 2010

Bruce Katz at the Brookings Global Metro Summit

The Brookings Institution hosted an event called the Global Metro Summit in Chicago last week. Bruce Katz, director of Brookings’ Metropolitan Policy Program, gave a 30 minute speech that I think is a good summary of the Brookings worldview and prescription for our nation’s cities. Katz hits topics like exports, low carbon, innovation, ramping up industrial production, the primacy of metropolitan regions, collaboration and consolidation, and a push for a robust federal role in cities. (If the video doesn’t display for you, which it won’t if you are in Google Reader, click here).

Tuesday, December 14th, 2010

Taking Chicago Transit from Good to Great, Part Three – Cost Control and Governance

Continuing my series on taking Chicago’s public transit system to the next level, I wanted to address a few miscellaneous topics before moving on to the matter of how to pay for it. For those of you who did not see them already, click through to read part one on building the vision and part two on raising the bar on design.

Cost Reduction

I mentioned in my previous installment how we need to raise the bar on the design of the system. While some of this would be nearly free, other items, particularly L stations, would appear to legitimately cost a lot more money to do right. How do we reconcile this?

In the spirit of Burnham’s “more study, not more money” quote, I’d like to suggest we need to take a serious look at how to drive step-change reductions in the cost of heavy rail projects. Consider this: the proposed Red Line extension to 130th is 5.3 miles and $879 million – a cost of $163 million per mile – nearly $21,000 per new daily rider. This is for a line with limited ROW needs. And my numbers are very generous, since they are current year, not construction year numbers, and they exclude a $200 million yard reconstruction that is part of the project. Frankly, at those rates, highway investment actually starts to look like an attractive option. IDOT’s Dan Ryan reconstruction, which included adding a lane south from 67th or so to 95th, was about the same the cost as this proposed extension

The proposed Orange Line proposal is even more expensive on a per unit basis. It is $455 million in current year dollars for 2.26 miles – a cost of $197 million per mile. This is for 7,800 new boardings per day, or over $57,000 per boarding (likely around $100,000 per passenger assuming most people make round trips).

I’ve read of estimates up to $4 billion to renovate the North Main embankment. Just that segment would cost more than the Kennedy reconstruction + the Stevenson reconstruction + the Dan Ryan reconstruction + the Kingery reconstruction and widening + the recent resurfacings on the Edens and Calumet Expressways + the Ike bottleneck reconstruction from a while back – all combined.

I’m not saying anyone is making these up or anything, but the numbers themselves just seem way out of line.

Let’s consider some rail transit construction costs from around the world. Seoul, Korea is building a heavy rail route called the New Bundang Line as a public/private partnership. It will cost 1.1809 trillion won ($966 million) for 18.5km (11.5 miles). This is a cost of $84 million per mile – far less than Chicago’s expansions. And the New Bundang line is partially underground, requiring tunneling, and is a fully automated, driverless system with state of the art technology too. Read more here.

Madrid too has a much lower cost approach. Its Metrosur line (admittedly opened in 2003) was euro1.55B ($2.25B) for 40.5km (25 miles), including 29 new stations, six of which permit transfers with commuter rail. This is $90 million per mile, again, far less than Chicago’s proposed expansion even if you inflate the numbers to current dollars. Again, this included extensive tunneling (full on boring, not just cut and cover) in terrain where that was very difficult. See here for more info on the line, or this excerpt from an article titled simply, “Madrid confirms its low cost approach“.

Even the libertarian City Journal praised Madrid’s subway program, albeit as a foil for critiquing New York, saying, “New York might take instruction from an unlikely place: Madrid, Spain, which first opened its subway in 1919. Between 1995 and 2007, the Spanish capital swiftly and cost-effectively upgraded its subway system, building more than 150 new stations over 120 miles at costs far below New York City rates.”

It seems like every time I read about a metro line outside the United States, except in the UK, it is way cheaper than we can do. I don’t think there’s anything unique to Chicago about this. Alon Levy has contrasted the cost of subway construction in New York with the much lower costs in Tokyo, for example. We seem to have a system in the US that significantly inflates the cost of construction vs. the rest of the world. Many of the typical complaints as to why this might be would seem to have no merit. Other countries are heavily unionized and regulated, for example, so don’t blame organized labor. (South Korean unions are famously militant). Spain and Japan are not exactly low cost countries. And basically all new systems world are fully compliant with equivalents to the ADA.

Any dollar we can take out of the cost of these systems is found money. It can either be invested back into quality of design, used for more projects, or returned to the taxpayers and riders.

I would propose that we create some sort of a task force with a mandate to drive significant reductions in the cost of construction – I’m talking a target of 25-50% or greater, no excuses. This would include the CTA and FTA, but also outside experts brought in from overseas and from outside the fairly small circle of US transit consulting firms. US engineering firms need to be included, but frankly outside leadership and new seats at the table are going to be needed to really drive new thinking as these firms actually profit from higher costs. We need to examine every aspect of these systems. What is the minimum we are legally required to build? What requirements are driving excess construction costs versus overseas systems and can we eliminate them? Are there new techniques such as pre-fabrication that could drive large savings? Can we pool purchasing with NYC or elsewhere? Can off the shelf systems be used where possible instead of bespoke (admittedly, maybe difficult in an other legacy system like Chicago)? Can we use more grade level construction and street crossings instead of expensive elevated construction and viaducts? What could we do with public-private partnerships and concession agreement a la Madrid? What about real TransMilenio style BRT as an alternative to heavy rail? There would appear to be all sorts of things that could be investigated as means of materially reducing the cost of the system. Some of them might require legal or regulatory changes, but given the dollars at stake both locally and nationally, it is worth fighting that fight.

Again, we need an aggressive target for cost savings and incentives to drive results. At a minimum, someone should be able to detail why our costs are so much higher than the rest of the world’s as right now there is no prima facie reason evident.

Regional Transit Governance

Chicago has three more or less independent transit service boards: the CTA, Metra, and Pace. The RTA provides financial oversight and is also chartered with coordinating these agencies. It’s been long noted that in fact the three agencies mostly don’t cooperate that much, and there are frequent turf battles, etc.

I think a bit of this is overblown. I don’t subscribe to the idea that a lack of integration between the CTA and Metra is a major barrier to improved transit regionally. Would integrated fares and more coordinated schedules help? Sure, but that’s not the secret sauce to really moving the bar.

However, the various turf battles do lead to challenges on occasion, and the fact that these agencies are so independent in their operations leads to bad “optics” and provides ammo to those who would oppose change in the region. It’s like when the CTA had a bus on Lake St. Regardless of the merits or lack thereof of that route, it was really minor in the grand scheme of things. But it was always something people could point to as an example of misplaced priorities. (“As long as the CTA has a bus running underneath the L, I’ll never take them seriously” and such). It plays into the whole “gotcha” mentality of politics.

So this is something we should probably take a look at while putting together that vision. And there are some legitimate items that need to be addressed. Again, I won’t be prescriptive as to what that more integrated vision is, or how governance would change, just say that it ideally ought to be part of the discussion.

Unfortunately, this is likely to be the most troublesome aspect in many ways. Consider this: the CTA carries 80% of the region’s transit ridership. But the CTA gets far less than 80% of the money. This is true of the RTA tax, the stimulus, the recent capital bill, etc. Someone labeled my winning entry from the Chamber of Commerce competition as “suburb infuriating”. Actually, I’m not anti-Metra. I think they are a fantastic agency and love riding Metra trains. In fact, I budgeted for heavy increases in Metra ridership and significant investment in that system in my winning entry. The but the fact remains that the lion’s share of the region’s transportation ridership is on the CTA. All service boards aren’t created equal.

For their part, Metra also has some legitimate complaints. They’d no doubt say that since they carry passengers over longer distances, passenger-miles, not passenger counts is the best measure. There’s something to that. (Though I’d argue it leads to certain perverse outcomes such as rewarding service to far exurban areas like Elburn. Why are we using precious transit dollars to subsidize non-transit oriented sprawl developments even further from downtown? Why make it easier to live even further from downtown with this subsidy?) Also, Metra provides significant service in the city, but doesn’t receive any of the RTA sales tax in the city. It should come as no surprise to anybody that their service priorities follow the funding. And Metra is arguably the long pole in the tent when it comes to feeling the pain of transit underinvestment. As Metra trains get more crowded and turn into standing room sardine cans, this is going to very negatively affect the perception of the Loop as a business destination. It won’t take that much ridership growth to get there.

So there is a lot to consider here and it will obviously be something difficult to pull of politically, but a challenge that should be tackled along with the rest.

The “Racquet”

Lastly, I received an email followup to part one of this series from someone who had some interesting insights as to offer about why Chicagoans don’t seem to demand better transit. Presented here in an anonymized fashion.

Your discussion of what Chicagoans want or are willing to pay for vis-a-vis world-class mass transit reminds me of a concept I learned in the early ’90s.

The concept is “Racquet”. I learned of it related to organizational behavior but it sounds like the inhabitants of Chicago may have a racquet as well. A racquet is when folks have something they complain about and commiserate about but don’t fix it. Upon delving into the roots of racquets one finds that the folks don’t really want it fixed – the subject of the racquet is a unifying force that if corrected will remove the common complaint and thus the unifying force. The cultural changes that would ensue from the change in practices that “no one wants” are not acceptable to the people (the complainers).

I worked for a rapidly growing company in the early 90’s. We were a company with many cowboys. We (the top 70 leaders in the company) commiserated on any number of things. The CEO hired two consultants to help “transform” the company into a modern, international company with cohesive leadership. They introduced us to the “racquet” theory. In corporate organizational behavior, it is important to break the racquets. It is also difficult. But, I imagine far easier in a company with some semblance of common objectives that it would be in a each-man-for-himself city.

More Chicago

Chicago Transit: From Good to Great
Part 1: Building the Vision
Part 2: Raising the Bar on Design
Part 3: Cost Control and Governance (this post)
Part 4: Paying For It
Part 5: Getting It Done

Other Transportation Related Articles
The Urbanophile Wins Chicagoland Chamber of Commerce Transit Competition
Transportation and the Burnham Plan
Metropolitan Linkages (high speed rail benefits case)
High Speed Rail (implementation)

This post originally ran on September 15, 2009.

Sunday, December 12th, 2010

Minneapolis-St. Paul: White, Liberal, and Cold

As we are experiencing an early winter storm here in the Midwest, one that is particularly slamming the Twin Cities – the Metrodome roof just collapsed – perhaps it is time for a brief look at the Twin Cities.

Minneapolis-St. Paul has always been a bit of an outlier in the Midwest. Its economy was originally based around grains and such, not the auto and metals axes that supported the rest of the Midwest. So it had a very different trajectory than most other regional cities. The economy, along with its location far to the north, meant that it experienced the Great Migration to an extent far less than other cities. Today, the Twin Cities are among the least diverse in the Midwest. The black population of Hennepin County is only 11% and Ramsey County 10%, compared to 26% for Cook County, Illinois, which is more representative of Midwest industrial cities. This, along with its Scandinavian demographics, give the Twin Cities a not entirely undeserved reputation as white cities, though there has been significant international immigration of late.

Minnesota is also famously liberal. Home to politicians like Hubert Humphrey and Walter Mondale, Minnesota has long been known as a progressive bastion, something perhaps related to its Scandinavian heritage. Richard Longworth, for example, noted that in 1978 33 of the 37 corportations that donated 5% of profits to charity were located in Minnesota. The Twin Cities have a large gay population and it is among the most gay-friendly locales in the country. Yet the picture is more nuanced than that. Republicans have often been elected there. The current governor is a fairly conservative Republican. And as immigrants have moved in and the economy changed, state politics have shifted to the right and now more closely resemble American than previously.

And of course there is the weather. It gets cold in Minnesota, making Minneapolis perhaps one of the few cities that can justify its downtown skywalk system. Unlike places like Chicago, however, where people hunker down for the winter or migrate to warmer climates, Minnesotans embrace the winter and winter sports. Their love of the outdoors doesn’t stop in December, and many people enjoy outdoor winter activities.

White, liberal, cold. In my view that sums up the easy popular outside stereotype of the Twin Cities. And like many, it is not without its grain of truth.

Interestingly, that rep is not that different, except for the cold part, from places like Portland and Seattle, places to which the Twin Cities are sometimes compared. Indeed, we see that it is similarly very educated, with a metro area college degree attainment of 37.6%, #8 in the country among metro areas with more than one million people. There’s also a surprisingly strong biking community. The city of Minneapolis has 3.9% of all workers commuting by bicycle, which is #7 out of all cities in the US, trailing only Portland among larger cities. They built a light rail line. The Twin Cities clearly deserve a place in the top ranks of urban progressivist cities.

Indeed, despite the weather and lack of diversity (the political climate’s affect depends on one’s own orientation), the Twin Cities enjoy a strong reputation, especially regionally. Interestingly, when I visited there last spring, a lot of the locals were concerned that, like many other Midwest cities, they have low brand awareness in the marketplace and are often a cipher to people out there in the world. That may be true to some extent, but I can tell you that they are far ahead of most Midwest cities in this arena. Especially within the region, people clearly know the Twin Cities and hold them in very high regard, even if they don’t think a comparison is necessarily fair. One example, an uber-hip person in Indianapolis was talking about some aspect of that city he felt was particularly strong compared to the rest of the Midwest. When I brought up the example of Minneapolis, he said, “Yeah, but everything about that city is just cool.”

So I think the Twin Cities have a positive brand image, from an urbanist perspective at least. And I can tell you from my time visiting and working there that it’s a great city. I could definitely enjoy living there, though there are some caveats I’ll get to in a minute. And it’s not just cool living either. The city is home to many corporations like Best Buy, Target, and 3M as well as a major hub for Oracle and a large American Express facility. There are tons of white collar, knowledge industry type jobs there. Its per capita income is well above the US average, as is its per capita GDP. This is a city that appears to have transitioned well to the new economy, even if employment is a challenge and it has experienced some serious housing bust issues.

The other advantage it has is the the metro area has the trifecta of being the largest metro in the state, the state capital, and home to the main state university. It also has a large share of the state’s population, giving it influence in the statehouse that a Columbus or Indianapolis could only dream of. The geographic downside is that it is remote, and geographically located near the fringe of the US, though it does have good air connectivity.

There are some caveats for outsiders, however. Although the region is below my large Midwest metro average for percentage of residents who were born in their current state of residence (possibly also affected by being a bi-state metro), I definitely get the impression of lots of Minnesotans every time I go there. That’s not necessarily bad, but as with many Midwest towns, it reinforces the feeling of being an outsider if you aren’t one, at least to me.

Possibly that’s a bit because the Twin Cities is a bit of an isolate in the Midwest. In Chicago, you always run into people from where ever it is you are from, especially if that’s in the Midwest. I don’t experience that in the Twin Cities. Indeed, looking at the numbers, other than Chicago and Wisconsin, the Twin Cities do not appear to draw a major number of migrants from other Midwest cities. Denver, San Diego, and Seattle send more people to the Twin Cities than do Detroit, Kansas City or St. Louis. It gets more people from Portland than from Columbus or Indianapolis. The Twin Cities seem more connected to other talent hubs than the rest of the Midwest.

The other thing I notice about the Twin Cities is a very old money feel to it. Perhaps it is just the local style, but the natives I know there often seem to have a somewhat patrician bearing and speaking style. Virtually everyone I’ve met who is a native whose origins I can conclusively identify is somehow connected to money or power. And even for those I can’t, there are strongly indicative things, like a stray mention that, “I grew up in a house along the other side of the lake.” Perhaps because I grew up in a poor rural area, I notice that stuff more, and it’s a little disconcerting. It gives off the impression that there’s a club, and you’re not ever going to get to be a member.

In short, while I really like the city and think I might enjoy living in it, I’m not entirely comfortable there. And I know I’m not the only one. I know multiple people who moved to Minneapolis and left it because of difficulty fitting in or penetrating the social structures there. This might be one cultural weakness of the city. In the type of dynamic, diverse world we live in, cities that turn off a significant number of people can be limited on the talent front. Also, the fact that I’ve heard reports of difficult to penetrate and navigate social structures is also not a good thing.

Nevertheless, given the strong structural advantages of the region, its educated workforce, its air connections, the strong and diverse base of employers, and its ability to attract immigrants, Minneapolis-St. Paul looks to be a successful place going forward, unless they screw it up somehow. What I don’t see yet is a catalyst for turning the region into a real economic dynamo that would strongly grow employment, population, etc. It strikes me that the most likely course is a more restrained and stable path into the future. Regardless, the economic state of the Twin Cities is one which many Midwest towns would dearly love to have.

PS: Here’s a video of the collapse of the Metrodome roof from the inside (if the video doesn’t display, click here):

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

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Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

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