Thursday, December 22nd, 2011
Merry Christmas and Happy New Year everyone. I’m heading off for a holiday break and will return in 2012. I plan to enjoy the time with family and friends and hope you do to. To give you at least a little something to last you, here are a few things you might want to check out.
I’ve noted before that I really like the work that Community Research Partners does with their Benchmarking Central Ohio study. This one has a great many metrics, which makes it mostly useful as an analytical tool for other researchers than as a direct management tool for civic leaders, but given what they set out to accomplish it’s great. They compare Columbus to 15 or so regional/traditional and aspirational peers. So if you are one of those peer cities, this is also a benchmark study for you that someone took the liberty of creating gratis.
What’s more, all of the metrics that they use are available in a spreadsheet for the top 100 metros, so a ton of work in creating a benchmarking study is already there for anyone who wants to use it. I definitely recommend checking this one out.
Ed Glaeser on Why Cities Matter
Harvard economist Ed Glaeser was one of the featured speakers at the CEOs for Cities annual meeting. Here’s a brief video clip they shot with him there explaining why cities matter. (If the video doesn’t display, click here).
There are all sorts of other brief but interesting videos over on the CEOs for Cities Vimeo channel.
More Photos of New London Bus
Dezeen has a series of stunning photos of a new design for the classic London double-decker bus. I’m amazed at how many agencies (i.e., nearly all of them) can’t even produce a decent livery. This goes to show that you can actually do something amazing with a bus. There’s a lot of criticism of this design in some circles, but I’ve yet to see anyone make a serious case that this is not up to par versus any real bus operating out there. But you can make your own decision. I for one like it a heckuva lot better than what we get here in the States. (See my post on “Raising the Bar on Design” for transit and how London understands that “The Mark of a Great City is How It Treats Its Ordinary Spaces, Not Its Special Ones.” for more on this topic).
Photo via Heatherwick Studios
There are many more photos at Dezeen, including some interior ones, so be sure to click through.
See you all in 2012.
Tuesday, December 20th, 2011
[ After reading this blog post on Richard Longworth’s own blog I went out and bought Global Chicago, which I think is still relevant today, even if some of the chapters that are mere compilations of Chicago’s global assets won’t excite out of towners. I wanted to share his post with you, which takes a look at where Global Chicago stands today – Aaron. ]
A few years ago, The Chicago Council published a book called Global Chicago, with two goals in mind. The first was a wake-up call to Chicagoans that their old industrial City of the Big Shoulders was gone, replaced by a global city with new strengths and challenges. The second was an attempt — probably the first anywhere — to study globalization's impact on cities by looking hard at one of those cities.
I was talking recently with the editor of the book, Charles Madigan, then a writer and editor at the Chicago Tribune (as was I), now Presidential Writer in Residence at Roosevelt University in Chicago. We were exploring what's changed in Chicago since the book came out, and what is unchanged — or still undone.
Perhaps the biggest change is that the wake-up call no longer is needed. The educational job is done. Chicagoans get it. Maybe we can take some credit, but mostly, it's the daily evidence of globalization's effect on the city that has convinced Chicagoans that it's not their granddaddy's economy any more. "Global city" and "Global Chicago" are buzzwords now.
The book listed many problems that absolutely needed to be solved — crumbling infrastructure, an antiquated public transportation system, a school system that fails the majority of its students. The sad fact is that so many remain unresolved to this day. As The Chicago Council and other civic organizations have written since, all these issues are still at the top of the city's agenda.
But one item barely appeared at all: how to pay for all this. The book appeared after the recession of the early Bush years, just as the false boom of the past decade began. Money seemed plentiful. It was more of a matter of fixing civic priorities than of financing them. The keywords of today's headlines — "budget," "debt," "deficit," "employees," "pensions," "taxes," "fees" — appear nowhere in the book's index.
How times do change (and remember, this was less than a decade ago). Urban financing, almost a non-topic then, is the Big Issue now. Chicago still needs to fix its schools, roads, sewers, public transport. But mostly it has to figure out how to pay its bills in an era of big debts and big deficits.
The city is awash now in financing ideas, including the privatization of public services like Midway Airport and a plethora of user fees to raise money. Some of this has already happened, like the privatization of the Chicago Skyway, which seems to be working, and of the city's parking meters, which isn't. But none of these new ideas, including privatization, was even on the civic agenda when the book came out.
Chicago also is toying now with proposals for a casino or other forms of gambling to raise money. Back then, some leaders wanted a casino, but it never came close to being built.
When the book came out, Chicago was on an upswing, drawing in people and business from around the world, growing in jobs and output. But decline lay around the corner. Since then, as a new report by Metropolitan Strategies says, Chicago has lagged the national average in economic growth, job creation, population growth, patent output and other measures of economic vitality.
Global Chicago celebrated a global city on the make. I suspect a new edition, published now, would be a more somber book.
Since then, Chicago has tackled two huge projects and succeeded at one, failed at the other. The success was Millennium Park, the huge and glittering downtown park that has given Chicago what it always lacked, which was a Tuileries, a central meeting place where the divided and balkanized city could come together. It also has changed the face of the city by revitalizing the Loop, the tattered old business district south of the Chicago River.
The failure was the bid to get the 2016 Olympic Games to Chicago. The bid itself was anemic and inadequate, not a patch of the Olympics project that Barcelona, for instance, used to remake itself. Perhaps more than anything else, the Olympics bid was the work of a tired old guard that, after Millennium Park, had run out of ideas. It was Mayor Daley's swan song, the last big initiative before he retired.
His retirement and the election of Rahm Emanuel as mayor is the most obvious change since the book came out. The book talked about how Mayor Richard M. Daley had taken the Democratic Machine created by his father, Mayor Richard J. Daley, and adapted it to the new chores of a global city. That Machine still exists, but with new people in charge. No one knows whether they will simply pour new wine into the old bottle, as did Daley II, or will reform Chicago politics from the ground up.
The financial sector of the city suffered back then from the lack of a major locally-owned bank. That hasn't changed. But in 2004, the big LaSalle Street markets, like the Board of Trade and Chicago Mercantile Exchange, were permanent parts of the financial landscape. Now the Merc is threatening to leave town to a more tax-friendly haven.
One question not asked in the book: is it possible to have a first-class city without first-class newspapers? No need to ask the question then: Chicago had two fine papers. The papers still exist but are so crippled by job cuts, coverage restrictions and bankruptcies that no one would call them first-rate.
The book talked about the impact of immigrants on Chicago. Even then, demographic shifts were reshaping the city. Both blacks and whites have moved out of the city. Immigration into the city has slowed (possibly a blip, due to the recession), meaning that Chicago lost 200,000 people between 2000 and 2010: it's now down no less than 1 million persons, or 25 percent of its population, since its industrial peak in 1950.
But there's more to this shift than raw statistics. First, the Chicago region is sprawling, with exurban town and counties growing, mostly with whites. Latino growth is weakest in the city, strongest in the suburbs. White population is shrinking in the inner ring suburbs, but is growing strongly in the center of the city.
What's happening is something that wasn't seen when the book came out — the Europeanization of Chicago. As in many European cities, the center of Chicago is increasingly going upscale, becoming a province of wealthier white global citizens, while both blacks and Latinos are pushed out of the city into the suburbs.
One cause and result of this is improving public schools — for some Chicagoans. There is considerable anecdotal evidence of good public schools in more upscale city neighborhoods, plus private schools for those who can afford them. But all other evidence indicates that schools in less favored parts of the cities haven't improved at all, and still fail to graduate 40 or 50 percent of their students.
The book focused on continued economic vitality but seldom asked: vitality for whom? As urban financing moves front and center, Chicago has to ask itself what kind of a city it wants to be. It clearly wants to be a global city, drawing in the sort of people who can afford to live anywhere. But can it do this without pricing everyone else out of the city? Those census figures mentioned above don't give confidence.
Finally, the question of Chicago's relationship to its region is more vital now than then. This doesn't mean its relationship to the broader Midwest, although this is still important. But rather, in these straitened times, how can the city take its immediate economic region — from Milwaukee through northern Indiana and into western Michigan — and get it work together across state lines, to reinvent itself as a global megacity, as so many other cities and regions around the world are doing?
Richard C. Longworth is a Senior Fellow at the Chicago Council on Global Affairs, author of the book Caught in the Middle: America’s Heartland in the Age of Globalism, and host of www.globalmidwest.org.
Monday, December 19th, 2011
The Indiana Department of Transportation has released a draft of its 2035 long range transportation plan. The previous iteration, which seems to no longer be available online, was a pretty good plan I thought. One of the first things Mitch Daniels did when coming into office was to blow the whistle on how INDOT had basically been lying about its plans. It had promised basically everything to everybody even though there was no prospect of paying for it. He decided to face the issue of underfunding head on, the result of which was the Toll Road lease and the Major Moves highway construction plan.
As part of this, INDOT produced a new long range plan that had a much more realistic list of projects than in the past. It was probably still too much to get done. But not ridiculously so.
Well, as Major Moves has progressed and it has become clear that the state doesn’t have the money to complete all the projects as originally conceived, INDOT seems to be backsliding into its old ways. I noted the sneaky way they kicked perhaps the state’s most critical corridor upgrade out of the Major Moves program without telling anyone. Now as I’ve reviewed their new LRP draft, it’s clear long range planning is reverting to form. Here is what INDOT says about their plan:
Previous INDOT Long-Range Transportation Plans were “Project Specific” identifying specific highway expansion projects to meet identified transportation needs and stated goals. Projects included costs and ready for construction dates through 2030. or the new plan, INDOT has adopted a “Needs-Based” type plan. Needs-based plans describe overarching strategies to accomplish future results (e.g., improved mobility, safety, economic development, etc.). Needs-based plans include official public policies for solving problems or meeting projected demands, typically based on legislation and implemented through governmental programs. It also identifies the means to accomplish these policies, through strategies, or programs.
In other words, INDOT has solved the management challenge of delivering on a long range list of projects by simply deciding not to make a list at all. This allows them to acknowledge every community’s “needs” without having any tangible plan to address them. In other words, pretty much the status quo ante. A long range plan where you don’t even say what it is that you plan do is no plan at all. Indiana has abandoned long range transportation planning.
Thursday, December 15th, 2011
To anyplace that considers itself a “global city” – New York, Chicago, etc – globalization and global competitive reality are the defining lens through which they see their present and future. I happen to think that with the exception of a handful of the most exceptional cities, this is to some extent unhealthy. These cities take too narrow a view. Yet clearly there is an aspect of this global city thing that’s very relevant to them.
But to those smaller places that aren’t global cities, globalization seems curiously absent from the radar. I would define a global city as a place that is a material producer of global city services – financial and producer services related to the global economy – for export. Secondarily we might consider cities that are globally important hubs of transport, culture, political/military power, or of a particular industry.
I notice this big time when I attend events in these two different classes of cities. A civic conference in a global city will be all about globalization, or at least globalization will be used at a unifying frame for everything discussed. A similar conference in a non-global, usually smaller city will be about lots of things, but globalization won’t be one of them. This seems to be true even in very successful non-global cities.
I was talking with someone about this the other day. He spends more time than me in smaller towns and small industrial cities, and notes that globalization is a big discussion point in those places. His take was that for smaller places that have gotten chewed up by the global economy, the menace of globalization was clear, whereas for America’s tier 2/tier 3 type cities, which often tend to be quite successful, globalization hasn’t forced itself onto the radar. That’s not to say that there aren’t people in almost any city thinking about it, but it isn’t core to the civic discourse.
It seems intuitive to me that one of the most powerful economic forces in the world should be front and center for any city thinking about its future. How will they carve out a successful economic niche for themselves over the course of the 21st century?
On the other hand, for these non-global cities, it isn’t exactly clear even to me what globalization means or how they’d react to it. I mean for NYC, it’s instantly clear, but not for these places. Their networks are primarily national and regional, not global. Their economies aren’t based on trading sophisticated financial and producer services. Even though global trade, etc. mean something to them, it’s easy to view it through a traditional civic and economic development lens.
I’m talking about cities like Nashville, Indianapolis, Austin, Charlotte, Columbus, Kansas City, Providence, etc. here.
So I wanted to throw it open and ask the question: what does globalization mean to these cities and how should they be thinking about it?
Wednesday, December 14th, 2011
Flowing Data carried a very interesting infographic showing Foursquare checkins on planes, trains, and automobiles across the United States. Check it out:
New York’s Silicon Subway
NYU’s Rudin Center also put out an interesting infographic, this one of technology startups in New York mapped along the R-train subway:
Tuesday, December 13th, 2011
[ You may remember an older post of mine about how an independent urbanist group in Indianapolis called People for Urban Progress undertook a super-cool recycling operation for the roof the of the now demolished Hoosier Dome. Well, they’ve done it again. PUP has partnered with Indianapolis Fabrications and Ecolaborative to re-purpose the seating from the now closed Bush Stadium minor league ballpark for bus stop seating and other purposes. This might seem inferior for places that have honest to goodness bus shelters. But in Indianapolis there is very little in the way of furnishings at bus stops, so this is an upgrade. Kevin Kaster of Urban Indy provides this update. If you are interested in seeing more pictures and learning more about what PUP is up to, check out their Facebook page – Aaron. ]
The first Bush Stadium seats have been installed at the corner of Alabama and Vermont Streets. The official unveiling was took place at 10:00, and I was fortunate enough to be invited to attend the event. I chatted with Michael and Jessica Bricker from People for Urban Progress, as well as Bryan Luellen, Annette Darrow, Jessica Mitchell’, and Samantha Cross from IndyGo in the hopes of finding out some more information about the project.
Urban Indy: How did this opportunity happen?
Michael Bricker: Ryan Fitzpatrick and his brother Kevin (from organization called Ecolaborative) were working with the Bush Stadium reuse people and came up to us with the idea for salvaging the seats. We also had an intern named Ryan Gallagher, whose college thesis was based on increasing bus ridership, and he believed that increasing amenities would help towards that goal. Basically, our organization was the facilitator that brought these two ideas together.
UI: Which bus stops are next in line?
MB: College and Alabama is the pilot. There are 4 other bus stops proposed. They will be at 10th and College, 86th and the Monon, Broad Ripple and Carrollton, and Fall Creek and Meridian. After that, other organizations can sponsor their own bus stops through the PUP Stop program.
UI: Is there funding in place for maintenance?
Bryan Luellen: IndyGo will maintain them. It is possible that they might become part of the adopt-a-stop program. But the seats are pretty sturdy, and they are designed to be outside, so they will not need much maintenance.
UI: Has anyone else done this?
MB: Not that we know of. Other stadium seats may be in the private domain, but these are the first to be re-purposed for public use that we know of.
UI: How did you get the city to buy off on the project?
MB: It was pretty easy, actually. We worked with Develop Indy and the developer of the Stadium. Develop Indy helped us quickly secure access to the stadium and the seats. We have to get them out of the stadium by March 2nd.
BL: Also, IndyGo pursued a license from the city to place the bench in a public Right-of-Way.
Indianapolis Transit Expansion Proposal
This week Indianapolis business leaders also unveiled a $1.3B proposal for a major transit expansion, including doubling the footprint of the local bus system and building a commuter rail line. This faces many hurdles in getting through the state legislature and then a referendum. We’ll see if this fares any better than most transit proposals in similar sized Midwestern cities, most of which have failed. Urban Indy has the story. Here’s a map of the proposed system:
Thanks so much to Kevin Kastner and Urban Indy for this contribution.
Sunday, December 11th, 2011
It’s an interesting puzzle. The “cool cities”, the ones that are supposedly doing the best, the ones with the hottest downtowns, the biggest buzz, leading-edge new companies, smart shops, swank restaurants and hip hotels – the ones that are supposed to be magnets for talent – are often among those with the highest levels of net domestic outmigration. New York City, Los Angeles, San Francisco, Boston, Miami and Chicago – all were big losers in the 2000s. Seattle, Denver, and Minneapolis more or less broke even. Portland is the only proverbially cool city with a regional population over two million that gained any significant number of migrants.
Those who find this an occasion for a schadenfreude moment attribute it to tax and regulatory climates. Clearly, things like cost of doing business are clearly very important. And indeed this is often under-rated by cool city proponents. And other things equal, people do prefer low tax jurisdictions. Still, is this the only answer, or is there another explanation? Could it be that rather than high costs driving migration, both costs and migration are being driven by other underlying factors?
Perhaps the root problem is structural change in the economy in the age of globalization. As business became more globalized and more virtualized, this created demand for new types of financial products and producer services – notably in the law, accounting, consultancy, and marketing areas – to help businesses service and control their far flung networks. Unlike many activities, financial and producer services are subject to clustering economics, and have ended up concentrated in a relatively small number of cities around the world.
These so-called “global cities” serve as control nodes for various global networks and key production sites for these services, along with other specialized niches they long had. In effect, more distributed economic activities requires increasing centralization of select functions, particularly the most highly value-added functions. Yet these activities are not set in stone; for example, areas that were once centers for global business, like Cleveland or Detroit, are fading; others like Houston and Dallas are rising.
Yet unlike the Texas cities, which retain a strong middle-class and middle-echelon economy, many of the more elite, established urban centers – for example New York and London – increasingly create parallel economies and labor markets in those cities. These cities now generally contain two kinds of people and firms: those who are part of the global city functions and those who are not. Those who are engaged in global city functions operate in a world of very high value-added activities; specialized, niche skill markets; and rising demand conditions. Those skills are not readily acquired outside of global cities. Often, they are sub-specialized to particular places as different global cities specialize in different niches.
In many cases, these functions have not yet migrated to India or China or often even another global city. This tends to inflate salaries significantly for these specialized, niche skill jobs.
On the other hand, many people who once thrived in these cities have not benefited from these economic forces. They often are in occupations where labor arbitrage is feasible, and their jobs can either be off-shored, or readily transferred to lower cost locales in the US. This includes manufacturing work, but also important but less specialized white collar occupations like basic accounting, loan officers, corporate IT, and HR. In short, the routine side of the traditional monolithic corporate headquarters and services firm.
In effect, in these global cities, two economic geographies share the same physical geography – and those economic geographies are in conflict. One set requires catering to high skill, highly paid workers and firms where cost is a secondary concern. The other involves occupations and industries where cost is very much a concern. The occupants of these two geographies have very different public policy priorities. Which of them will win out?
In a global city, particularly a mature and expensive one, the elite geography wins. It is generating the most money, and with money comes power and influence. Additionally, the high wage workers in these industries are simply able to pay more for real estate and other items. Their mere paychecks are driving up costs in the city they live in. They are re-ordering the city in their own high income image, aided and abetted by a speculative financial fueled housing bubble.
The prestige of these industries burnishes the civic brand, making them attractive to civic boosters. What’s more, leaders in global cities feel that these are their businesses of their future. For them the attractiveness of concentrating in areas where you think you can create a “wide moat” advantage makes sense.
This is why cities like Portland, Minneapolis, Denver, and Seattle haven’t fared nearly so badly – they aren’t really full metal global cities and thus, while not always cheap, have remained relatively affordable versus places like San Francisco and New York.
At the same time it is not easy for these more expensive cities to adopt a low tax, low cost approach. For many reasons, places like San Francisco, New York, and London will never, no matter what they do, be able to match Atlanta, Houston, or Dallas, or even Chicago in a war on costs. That would be a suicide mission. Their logical strategy is to follow the law of comparative advantage, and specialize where you have the best competitive position in the market, and that’s global city functions.
Many other cities have followed this strategy, but with differing success. Fearing to end up like the next Michigan and Detroit pair, many states and cities have invested heavily to build up urban amenities to cater to the global city firms and their workers: transit systems, showplace public buildings, art and culture events, bike lanes, and beautification. Cost fell by the wayside as a concern, as did investments in priorities of the traditional middle class.
This explains why, for example, not only have taxes gone up, but things like schools and other basic services have declined so badly in places like California. Traditional primary and secondary education is not important to industries where California is betting its future. Silicon Valley, Hollywood, and biotech draw their workers from the best and brightest of the world. They source globally, not locally. Their labor force is largely educated elsewhere. Basic education and investments in poorer neighborhoods has no ROI for those industries. With the decline of high tech manufacturing in Silicon Valley, even previously critical institutions such as community colleges are no longer as needed.
The same goes for growth and sprawl. They are playing a game of quality over quantity. They specialize in elite urban areas and elite suburbs or exurbs. For example, San Francisco also has Marin, Palo Alto and Los Altos Hills. New York has, in addition to Manhattan, Greenwich and northern Westchester. The only thing they need size for is sheer scale in certain urban functions, and they already have it. Growth is unnecessary for them and only brings problems.
It also explains the highly pro-immigration stance of these cities, as a large service class is needed for globalization’s new aristocrats. Immigrants are needed as low cost labor in the burgeoning restaurant and hotel business. In America’s global cities immigrant housekeepers, landscapers, and nannies are common. They may not dress like His Lordship’s butler, but that doesn’t make them any less servants.
Lastly, it explains why we have seen the same polarizing class pattern so consistently despite broad geographic and socio-political differences between places like Los Angeles, Boston, and Chicago, to say nothing of overseas locales like London. A common global phenomenon probably has a common underlying cause.
The traditional middle class, feeling the squeeze, is simply moving to where its own kind is king and its own priorities are catered to. In a battle of conflicting economic geographies, the one with higher value added wins, displacing others in what Jane Jacobs termed the “self-destruction of diversity”. First, an attractive environment draws diverse uses, then one becomes economically dominant and, through superior purchasing power, displaces other uses over time. The story ends when that dominant economic activity exhausts itself – the true danger facing global cities, though fortunately they are generally not dependent on just one small niche. It’s basic comparative advantage.
If you are just an average middle class guy, why live in one of those global cities anyway? Unless you have roots there that you value, take advantage of something you can’t get anywhere else such as by having a passion for world class opera, or are one of globalization’s courtiers – a hanger on like a high end chef, artist, or indie rocker, perhaps – why put up with the high cost and hassles? It makes no sense. You’re better off living in suburban Cincinnati than suburban Chicago.
And frankly, the folks on the global city side prefer it if you leave anyway. Immigrants are unlikely to start trouble, but a middle class facing an economic squeeze and threat to its way of life might raise a ruckus. That won’t happen if enough of them move to Dallas and rob the rest of critical mass and resulting political clout.
Many of those leaving are college educated, especially, when they get older, get married, and start having families. A relatively large number of these people could be replaced by a smaller number of elite bankers, biotech PhDs, and celebrity chefs. In that case, both “narratives” could hold simultaneously. One type of talent moves in, while a greater number of a different kind moves out. As with trade generally, this could even be viewed as a win-win in some regard.
Again, it is easy to blame the costs and public policy. Clearly there is room for improvement in governance such as reigning in out of control civil service pay and pensions in places like California and New York. But what is more pernicious is the rising income gap in America, and the likely outcomes it drives when a city acquires a small elite economic class with incomes that far outstrip the average, and lacks strong economic linkages to the rest of the city other than for personal services. It sets in motion economic logic that undermines the traditional middle class, which then starts leaving, exacerbating the gap.
For years we worried that a large, stable middle class with a permanent, largely minority underclass constituted an unjust order. As it turns out, the alternatives are sometimes worse. Ultimately some American cities have come to take on the cast of their third world brethren, a perhaps somewhat less extreme version of Mexico City or São Paulo, where vast wealth and glitter exist side by side with the favelas.
This explains why America’s global cities often feel more kinship with their international peers than with many of the places in their own country. The global cities, which now enjoy something of a political ascendency, are also sundering the American commonwealth. Taking steps to prevent a further widening of the income gap may be the only way to save these cities’ middle class – and maintain the solidarity of the country.
This post originally appeared in New Geography on November 23, 2009.
Wednesday, December 7th, 2011
Here’s yet another cool city time lapse video, this one from Ho Chi Minh City (Saigon). Enjoy! (If the video doesn’t display, click here).
JSK on NBC
NBC News had a segment with Brian Williams that has drawn some fire from the urbanist crowd. I haven’t seen it, but I did see this portion of it in which Janette Sadik-Khan shows off Times Square and talks about what New York City is up to on the transport front. (There will be a short preroll add on this video. If the video doesn’t display for you, click here).
Tuesday, December 6th, 2011
[ I’m sure high on the list of items Rahm wishes his administration had not inherited is the parking meter lease. As we just passed the third year anniversary of its signing, Bike Walk Lincoln Park reminds us what this is a about. H/t to Grid Chicago for the heads up on this – Aaron. ]
You may have noticed that we try to keep upbeat on this blog, but there’s one topic that’s really testing our abilities to remain chipper: Chicago’s parking meter lease deal.
December 4, 2011 marks the three-year anniversary of our city council approving the deal that traded our right to collect revenue on parking meters in exchange for a large-but-not-large-enough lump sum of money. Why are we talking about this parking meter deal on a bike/walk blog? We’ll get to that.
First, let’s review some basics (all reference links are provided at the end of the post):
- Under the lease agreement, Chicago Parking Meters, LLC, paid the city $1,156,500,000 in exchange for the right to keep the revenue earned from Chicago’s parking meters for the following 75 years.
- Chicago Parking Meters, LLC (CPM LLC) was an entity formed for the purpose of the deal. The name makes it sound like a local entity, but in fact it is made up mostly of investors from Morgan Stanley and Abu Dhabi.
- Mayor Daley’s administration had been working on the possible deal for about 18 months but pressured the aldermen to pass the proposed deal within 48 hours of ever bringing it to their attention.
- There was no public input or review process.
- Only two bids were submitted, and the higher bid was quickly accepted.
- Six months later, the city’s Inspector General released a detailed financial analysis of the bids and concluded that even using conservative estimates, we should have received nearly $1 billion more than what was accepted.
- Most of the $1.1565 billion we received from the deal is already spent and gone.
- We have 72 years left to go on the contract.
- It’s grim.
According to most recent documents posted on the city’s website, as of June 30, 2011, 2.5 years into the deal, we had already spent $879 million of the money we received. It’s true that much of the money was used to pay off big debts the city had incurred in the years prior to 2008, including projects like building Millennium Park. That’s money that we owed, and paid off, and is now off the books. However, it’s disheartening to realize that three-quarters of the money from the lease deal is already spent, with 96% of the lease term still in front of us (72 more years!).
Most disturbing is that $400 million was specifically earmarked to be a “revenue replacement fund”, the investment earnings on which was to provide a steady stream of approximately $20 million a year to make up for the fact that we’re not earning that money any longer from our parking meters. Unfortunately, in 2010, contrary to the stated plan, $210 million was transferred out of that fund for other uses, so we only had $178 million left, as of June 30, 2011. That’s not going to earn enough to replace our lost parking meter revenue. Again, for the next 72 years.
But here’s the part that affects us most as pedestrians and bicyclists: Under the lease deal, the city retains ownership of the actual street, the physical land on which people park. However, CPM LLC now has the lawful right to earn parking fees on every single 20-foot stretch of curb that was already a metered parking space on December 4, 2008.
So now, if the city planners feel there’s a need to eliminate a metered parking space, they cannot do so unless they create a new comparable space nearby to make up for the lost one, or they need to negotiate with CPM LLC and pay cold, hard cash to make up for CPM LLC’s lost revenue.
How much is each spot valued? In a very rough calculation, CPM LLC paid us approximately $32,000 in 2008 for each of the existing 36,000 parking spaces. (If this is way off base, please let us know in the comments section, or e-mail us at email@example.com. (We’re not finance whizzes, just lay people with a calculator.)
So if visibility for pedestrians at a crosswalk would be improved by removing one parking space on either side of the crossing, on either side of the street, city planners now have to create four new metered spots in the area to make up for it, or negotiate and pay in the range of $128,000 in cash to CPM LLC.
Or let’s say it would be beneficial to remove parking to install a protected bike lane on a half-mile stretch of street that currently has 25 metered parking spaces on each side: City planners would have to create 50 new metered spaces somewhere else close by, or negotiate and pay CPM LLC in the range of, um, wow, $1.6 million.
You can see why the parking meter lease deal will make it very difficult for our current forward-thinking planners to shape our city’s streets in order to serve the needs of its citizens. For the next 72 years. Ouch.
OK, think positive, think pro-active. There must be something we can do in response to this. Well, after receiving heavy criticism, William Blair and Company, the group that advised the Daley folks through the parking meter lease deal process, published a document defending their recommendations.
Much of the document seems like a desperate attempt to shine a good light on an all-around unfortunate situation, but one of their arguments resonated with us: The city’s residents got screwed under the lease deal — we’re paraphrasing from the report here — but only if you assume that the parking meters will continue to generate equal or increasing amounts of revenue in the future, which is not necessarily the case. It’s worth quoting from the Blair report at length:
The concession agreement requires [CPM LLC] to operate the System for 75 years, regardless of changes in population, economic activity, technology, patterns of behavior, and the myriad other factors that might affect the economic value of the System. There was no such thing as a parking meter 75 years ago — the first ones were installed in 1935. … A lot can and will change in 75 years. … There is substantial uncertainty associated with the future availability and cost of motor fuel, vehicle-sourced pollution and emissions, improvements in public transportation, and so on. Just as the application of improved meter technology may enhance the value of the System, it is also true that technological innovations may adversely impact the value of the System. For example, it may be that individual motor vehicles are replaced by other forms of personal transportation that do not require as much or even any street parking. [CPM LLC] has assumed all risks associated with declines in System utilization, including declines related to rate increases and those driven by technology, fuel costs, attractive transportation alternatives and other factors.
Did you catch the part about other forms of personal transportation? Essentially, the Blair folks are pointing out that CPM LLC will not reach their best economic outcome under the deal if “individual motor vehicles are replaced by other forms of personal transportation that do not require as much or even any street parking.” We can think of a number of forms of transportation that already fit this description: bicycling, walking and taking public transit!
So if you want to be a good citizen and maximize Chicago’s outcome from the parking meter lease deal, do your part and avoid metered parking spots whenever you can. The money you spend locally on walking shoes, bike equipment and CTA fare stays right here in our city. Let’s minimize the gains of Morgan Stanley and the Abu Dhabi investors by choosing active transportation. Remember, every time you feed the meter, they win again.
More reading on the topic, if you can stomach it:
The Reader’s article summarizing the timeline of the deal.
The City of Chicago’s website page that has links to all the asset lease agreements, including the parking meter lease contract, as well as updated financial disclosure documents.
The Inspector General David Hoffman’s June 2, 2009 report on the lease deal (warning: this one’s particularly depressing to read). [ Note: I personally believe that the Inspector General’s valuation is off base, but this is still worth reading – Aaron. ]
Link directly to PDF of the document from William Blair and Company defending its recommendations.
Excerpt in Rolling Stone of the book Griftopia, which discusses Chicago’s parking meter lease deal starting on page 4.
Urban issues analyst Aaron Renn, The Urbanophile, discusses ways the deal hamstrings us.
This post originally appeared in Bike Walk Lincoln Park on December 1, 2011.
Sunday, December 4th, 2011
The Indianapolis Convention and Visitors Association created this parody video of the Chicago Bears “Superbowl Shuffle” to market the city to meeting and event planers. (If the video doesn’t display, click here). It was posted to You Tube though, and ended up provoking a firestorm of reaction locally, as people piled on saying how it was so cheesy and lame that it embarrassed the city. This meme went mini-viral, even earning some national attention, as in this particularly brutal Deadspin post.
Is the video cheesy? Yes. Then again, so was the original Bears video, of which there are tons of similar parodies out there. Watching this, I can’t believe that it was ever anything other than what the ICVA says it was: a piece of industry marketing. The whole thing is about hotel rooms, for goodness sake. On that level, I don’t think it’s that much different from various other types of promotional gimmicks I’ve ever seen. Perhaps the ICVA erred in letting it get out “into the wild,” but I don’t see how anyone could really think this was intended as aimed directly at tourists.
But I think this brings up a couple salient points of relevance to smaller cities. First, this is part of an increasing trend of people in Indy taking extreme exception to what they believe as second rate stuff. I started noticing this a few years ago when the city first proposed an extremely bland generic design for a new convention anchor hotel, and it continues to get stronger ever day, as things like this and the chorus of dissent over the dubious proposal to rename Georgia St show.
I think this is extremely healthy. Like too many cities, Indy has long lacked a strong culture of self-critique. And as is especially true in the Midwest, there’s been an acceptance of mediocrity that wouldn’t be tolerated in other parts of the country. But increasingly locals are saying no more and are aggressively stepping up to demand better for their city. This ability to self-criticize and to have a robust, engaged citizenry that demands excellence can only be a good thing.
Secondly, cities like Indy want to be taken seriously on the national stage. Well, be careful what you wish for. Now you are in the fish bowl. You’ve finally got people to pay attention to you, now they are going to start making judgements. Things you could get away with when you were drifting in obscurity get called out when you try to play in the big leagues. So second tier cities like Indy really need to, as the ICVA might put it themselves, raise their game and get a lot sharper in the face they put forward. All cities cities need to realize that to play at a higher level, they have to bring a new standard to the table in everything that they do. Especially as they aren’t going to be getting any free passes from the folks who are already in the cool kids club.
Again, this isn’t just an Indy thing. It applies to all similar sized cities who want to move up to the next level. You’re playing in a whole new league and the game is a lot tougher than what you’re used to.
So while I think the criticism over the video itself is largely misplaced, I think the overall sentiment behind it is positive. And hopefully this does let the local powers that be know that there’s a new expectation level among their own citizens. People have started to take seriously all that talk about “world class city” and unsurprisingly they are expecting the city to deliver on it. And to operate at the place it wants to, the city has to bring a level of polish and sophistication to its marketing, design, etc. that it has never had to in the past. Because to the extent that you realize your ambition to have a place in a national civic conversation, you’re going to get scrutiny like you’ve never experienced in your life. Game on.