Tuesday, January 31st, 2012

The Software of Placemaking by Rod Stevens

Using the tech metaphors so common now, we have tended to focus on the “hardware” of place, the land, bricks and mortar. But maybe it is time to think more in terms of the “software”, of how we program and run places day to day.

There are two masters who have done this with real estate, one on the East Coast and one on the West Coast, and they have both been at this with single properties for more than 20 years. One is Dan Biederman of the Bryant Park Corporation, who has made that Midtown Manhattan space one of the world’s most densely used parks. The other is Ron Sher, who has turned the Crossroads Mall in Bellevue, Washington into the kind of active public people place that suburban communities lust after.

Before looking at their work, however, consider the term “property management”, which practically speaking means “property maintenance”: the oversight of building systems, cleaning, security, landscaping and utilities. “Asset management”, on the other hand, is largely a financial function, overseeing fixed expenses like insurance and property taxes, lease negotiation, investor reporting and the occasional repositioning or disposition. Real estate is one of the few industries where many owners farm out marketing, to brokers, many of whom have only an episodic relationship with a property. That’s why these two men are so interesting – they have given special attention to the public space which usually gets only swept or blown. In doing so, however, they have created notable value around them.

Out in Bellevue, Washington, one of Joel Garreau’s “Edge Cities” on the east side of Seattle, the Crossroads shopping center went up at the intersection of two arterials in the first wave of growth in the 1960s. This was before a new freeway, Highway 520, would reach eastwards to a town that was virtually unknown then, Redmond. Crossroads was an enclosed shopping center, but with just 40 acres it was definitely a “junior regional”. When enclosed malls reached their zenith of construction in the 1980s, most would be twice that size.

That’s why, by the late 1980’s, Crossroads was like the flotsam on the beach left after the wave of growth had gone by. The new store chains had followed the freeways out to the new shopping centers. Apartment houses nearby had deteriorated, and gangs showed up in the mall.

When Ron Sher and his partners bought the mall in 1988, one developer had already tried to turn it around and failed. It is surprising, in fact, that Crossroads was not torn down, for this was a period when developers replaced many of the older junior regionals with serpentine power centers that ranged big box stores along one another facing a single parking lot. Lacking freeway exposure, however, this was not an option, so in many ways the centers own failure saved it. Fortunately the price was very low, so carry costs were much less of an issue than in most acquisitions.

Sher and his partners did make some large initial capital improvements, such as lopping off one end to build a new grocery store that connected with the rest of the mall, but his main emphasis was on fixing the basics of the center. Had Sher simply re-tenanted the shopping center, however, he might have failed, but he also began to program the shopping center for activity not just in the stores but in the malls themselves.

Every larger shopping center has its car shows and seasonal choirs, but Sher built a stage at the center of the mall and hired inexpensive bands on Friday night to play and draw in movie-goers an hour or so before show times. Near the entrance to the grocery store he installed a giant chess set now attracts some of the top players in the region. Just inside the main entrance, in the mall itself, he set a magazine seller up in business, and added a Starbucks and Half Price Books store that is an island of reading. On a typical morning there are about two dozen people sitting and drinking coffee there, an hour or two before the main mall stores open.

One of the most important things Sher did was to take back the marketing of the tenant spaces, by setting up his own brokerage house. This gave him early and first-hand knowledge which chain stores were in the market, so he could catch them before they signed with better-located but slower acting centers.

It was also about this time that Microsoft moved its headquarters to a freeway site about a mile north. Few people outside the area know how much Microsoft has done to diversity the region with highly skilled tech workers from other countries. Fully one-third of the people in the area now speak a language other than English in the home. Many of these new workers were young people sharing an apartment or a house.

Rather than leasing to Burger King, QFC or even Panda Express, Sher leased his food court spaces to locally-owned ethnic operators. Go there at a lunch hour and the place is crammed with hundreds if not thousands of Microsoft workers. Their presence in the area also led to the upgrading of the nearby apartment houses, which, over time, have filled with more and more middle-class families new to this country. Sher targeted their needs with stores like JoAnne Fabrics, Michaels, Reclinerland, Dress Barn and Old Navy. He also catered to everyday needs by signing a branch of the public library, a motor vehicles office and a community policing station. Ann Taylor and Z Gallerie might have brought more prestige, but these tenants brought more everyday traffic.

So did increased programming in the malls. The calendar for a week this January shows about two dozen non commercial events, including musical performances; free tax advice; CPR lessons in Spanish; translation clinics in Hindi, Korean, Chinese and Russian; and knitting and crochet classes. Outside, Sher has met the needs of nearby apartment residents by turning an under-used part of the parking lot into community gardens. Longer term, he plans to create a plaza that will be wrapped with mid-rise housing. It’s the kind of multi-hour gathering place envisioned in town center plans, but rarely realized.

If Crossroads is an example of a profoundly suburban place reborn, Bryant Square is a example of a profoundly urban place reborn. Located at 6th and 42nd Street in midtown Manhattan, right behind the main branch of the public library, it is hard to believe that this place was once known as “Needle Park” because of the number of drug users there.

Biederman is an unusual guy to be known for running a public park, for he has degrees from both Princeton and Harvard, and he seems to know people at the Bloomberg level. But Biederman doesn’t work for Bloomberg or the City of New York. He works for and runs the Bryant Park Corporation, which is a non-profit that contracts with the city to manage the park.

How is a person who is runs a public park able to operate at such high levels? Because he has created such value around him. A study by a major accounting firm found that his turn-around had created hundreds of millions of dollars of value around the park.

The interesting thing about this park turn-around is that it is the reverse of the classic redevelopment play in which governments use their powers of eminent domain to tear down and resell land at a discounted value, and then use the increased property taxes to pay back the financing. Financially, that strategy relies on leveraging just the land value of a place, and even when it works, it usually takes ten or 20 years to realize significant results. Biederman’s strategy was to focus on what wasn’t working, the public places, and to use the improvement there to draw people and value back to buildings that were already in place, leveraging their full value, both land and improvements. Not only was this lower risk, but the return period was much shorter. Today he takes no public money to run the place, operating solely on funds from a local improvement district. Are such improvement districts the wave of the future, in lieu of traditional redevelopment?

A couple of core principles guides his work. One is opening up the park to the gaze of passers-by, a kind of “eyes on the park” strategy that made it safer for everyday people. A second is a focus on programming, to create events and activities that draw people there “6/16/12” or six days a week, 16 hours a day, 12 months a year. A third principle is providing public services at private quality standards. The lobby of the restrooms, for example, has large, real flower arrangements worthy of a Four Seasons hotel. The bathrooms there have made it a nominee for the “America’s Best Restroom” award.

Like Ron Sher, with his Peruvian flute bands, Biederman has not been afraid to buy activity. Biederman paid a New Jersey bocce ball club to change its location and play in his park, for he realized that it would draw on-lookers. He has a seasonal outdoor skating rink that is free, compared to $15 at Rockefeller Center seven blocks north. Biederman knows who his customers are, for he sends people out with clickers at different times of the day to count them, and his goal is to fill in the slack hours with activity, like movies on warm Saturday nights in the summer.

One of the most important things about Bryant Park is that Biederman trusts the public, collectively. The bathrooms are one sign of that. Another is the chairs, which are not bolted down. You can pick them up and move them, but try take one away and people will stop you or call one of the maintenance people in evidence. In fact, like Disneyland, part of the perception of quality in this place is simply seeing those people moving around and working.

What Sher and Biederman have both done is to fine-tune the management of places, in such a way that people feel it is theirs. It is true that private coffee houses are gathering places, but there is a rush and hub-bub that with each whoosh of the cappuccino machine reminds patrons that they are essentially sitting on rented seats. Sher and Biederman have created ease.

Back to the computer analogy: one of the essential questions for the upgrade of Apple’s operating systems is backwards integration: how many old applications should they continue to support, and at what cost to speed and elegance and new features? This is the same question for effectively managing and programming real estate, be that a place to live, work, learn, shop or play. What Sher and Biederman have shown is the value and success that comes from paying attention to real and immediate needs. Get the basics right, and your customers will come along with you and draw new ones as well.

Also by Rod Stevens:
The 31-Flavors of Urban Redevelopment

Rod Stevens is a business development consultant on Bainbridge Island WA, specializing in urban ventures.

Sunday, January 29th, 2012

Urban Data the Easy Way

Some of you are familiar with my urban data platform Telestrian. I built Telestrian because I love to do posts based on analysis of basic census and economic data, but found it ridiculously painful to do because 1) all the free tools for this data suck and 2) all the tools that look like they are good are so expensive and/or hard to use I can’t buy them. So I decided to roll my own, and it is has literally cut the amount of time I spent doing data analysis by 95%. It saves me staggering amounts of time.

Now that I’ve got some experience with the platform and know what it takes to support, I’m re-launching for 2012 with a massive price cut of 88%. Telestrian is now only $49/year (not per month, per year). And you can try it for free for 30 days, no credit card required, no obligation.

They say the first rule of sales is that you have to ask for the business. Well, I’m asking for yours. If you work for an organization where you use Census and economic type data, please give Telestrian a try and buy it today. The cost is de minimis for any organization. And if you want to kit out your whole office or department, I can give you even better pricing. Just ask.

To whet your appetite, I’ll share a little of what the system can do. For more about the type of pain Telestrian was designed to take away, read my white paper. You can also see a list of features and functions.

World’s Easiest Thematic Maps

I love to do thematic maps of data. These are difficult to create without graphic design tools or complex and expensive GIS software. But for any data element in the system, Telestrian lets you create thematic maps for states and MSAs, plus national and state county maps. Map not just the raw data, but also things like percent changes, location quotients, etc. – it’s all built in. This is by far the easiest platform I’ve ever seen for creating basic thematic maps.

Here’s a map of the percentage change in population for US counties between 2000 and 2010 that I made in about 30 seconds.

This is the map that landed me on the front page of Yahoo since I was able to crank out Census analysis with compelling graphics faster than any media outlet in the country.

BTW: This isn’t Flash. It’s a picture file you can right click and save off for your presentation or whatever. And you can make it as big or small as you want with no resolution loss. (SVG is also available for graphic designers to use).

You can also make maps out of your own data by uploading a comma delimited file. (I give you the templates). This lets you map anything pretty easily even if Telestrian doesn’t include the data. For example, it doesn’t have election results, but I downloaded the 2008 presidential election info and uploaded the data to put together this results map:

Place to Place Migration

Telestrian also has place to place migration data from the IRS. You’d have to pay them $500 just to send you the raw files on CD, BTW – in the form of over 3,000 Excel spreadsheets. Telestrian processes this and make it easily queryable. It also takes the county-county data and calculates what is arguably more interesting, MSA-MSA and MSA-state migration. Plus instead of just the in and out migration the IRS gives you, gross and net migration are also available, intra-MSA migration, etc. Overall, there are more than 100 easy to use pieces of data out of this.

Here’s a quick map I did to show you what it can do. This is 2000-2010 migration for Indianapolis metro. Those metros with which Indy has net in-migration are in blue. Those with which it has net out-migration are in red.

Doing analysis like this would almost be mission impossible without this tool. It’s so painful that I only know a handful of even Ph.D. researchers doing metro-metro migration analysis. You rarely see it in regional talent studies, for example, even though a metro area’s talent networks are absolutely crucial in putting together a talent strategy. (If any research or other organizations are interested in getting the raw data behind this in a usable form, I’m happy to sell it to you. Just email me).

Data Mining

Go to your average free data site, and you’ll rapidly discover that you can look up facts or get a grid of numbers, but not much more than that. Want to know what cities grew their GDP the most last year? It’s way harder than it should be. But Telestrian has parameterized queries built in so you can answer basic questions, like, for example, the one I just asked:

Note that I only included metros over one million in this search. Setting a population threshold is one of the built-in parameters you can use. Again, this only takes like 30 seconds to make once you master the tool.

Give Telestrian a Try

This is just a taste of what it provides. There’s other life-savers, like the fact that the Census 2000 data has been re-baselined to current MSA definitions, so you can compare with current day data. And there are many other types of data as well.

Again, Telestrian is free to try for 30 days, so please give it a shot. Even if you did a trial in the past, just re-register and you’ll be re-enabled for another trial.

At just $49/year, it’s practically free to any organization with a budget. Buying a subscription today is a great way to support the work I do here at the Urbanophile. But more importantly, there’s huge value there that I’m confident is more than worth the price.

Now back to my regularly scheduled blog programming.

Friday, January 27th, 2012

Do Unto Localities As You Hate the Federal Government Doing Unto You

Therefore is the kingdom of heaven likened unto a certain king, which would take account of his servants. And when he had begun to reckon, one was brought unto him, which owed him ten thousand talents. But forasmuch as he had not to pay, his lord commanded him to be sold, and his wife, and children, and all that he had, and payment to be made. The servant therefore fell down, and worshipped him, saying, Lord, have patience with me, and I will pay thee all. Then the lord of that servant was moved with compassion, and loosed him, and forgave him the debt. But the same servant went out, and found one of his fellowservants, which owed him an hundred pence: and he laid hands on him, and took him by the throat, saying, Pay me that thou owest. And his fellowservant fell down at his feet, and besought him, saying, Have patience with me, and I will pay thee all. And he would not: but went and cast him into prison, till he should pay the debt. So when his fellowservants saw what was done, they were very sorry, and came and told unto their lord all that was done. Then his lord, after that he had called him, said unto him, O thou wicked servant, I forgave thee all that debt, because thou desiredst me: Shouldest not thou also have had compassion on thy fellowservant, even as I had pity on thee? And his lord was wroth, and delivered him to the tormentors, till he should pay all that was due unto him. – Matthew 18:23-34

If there’s one thing you can count on in state government, it is complaints about federal red tape, unfunded mandates, and general over reach. Witness, for example, the battle royale over the health care law, with many states suing to overturn it. I think in many ways it is totally justifiable for states to be upset that the federal government takes money from their citizens, then just sends parts of it back with string attached.

So when dealing with local governments inside of their states, you would think state level politicians would remember how it feels to be on the receiving end and avoid tangling up their localities with red tape and mandates, instead empowering them by devolving power as much as possible and not meddling.

If you think that, you think wrong.

Another example is happening before our eyes in Indiana. After years of local study and consensus building, metro Indianapolis finally came up with a consensus transit plan called Indy Connect. It is a bus centric system that, while not exactly cheap, is certainly more cost efficient than many cities’ grandiose rail plans.

Unfortunately, Indiana doesn’t allow localities to impose taxes without specific state authorization and has a long tradition of keeping municipalities on a tight leash. Legislators complain when places like Indy keep coming to the well, but the reality is they don’t have the powers they need to do things without specific state approval.

So it is with transit. In order to fund the transit system, a special local tax levy would be required. So the backers of Indy Connect went to the General Assembly to ask, not for any taxes to be imposed, but only for permission to put a referendum on the ballot that would allow locals to decide for themselves whether or not to pay for a transit system. That’s it.

Unfortunately, that was too much for the legislature, which killed the transit bill in committee. This is the same legislature that, by the way, on the very same day passed a bill out of committee allowing “creation science” to be taught in schools. Glad to see they have their priorities straight.

Lest you think this is all evil anti-transit Republicans, the transit measure failed because Democrats voted against it. The Republican committee chair insisted that the transit bill include a “right to work” provision that prohibited mandatory unionization of transit workers. Now, I think right to work is a sideshow myself. And I don’t think that Republicans should have insisted on what is clearly an ancillary matter and one they know would tweak Democrats. I would have removed the provision, especially as I believe it conflicts with federal law anyway. But for Democrats to throw transit under the bus because of it exposes the extent to which at the state level, the Democratic party is a wholly owned subsidiary of the unions. They’d rather have no transit system at all than a non-union transit system. The died in the wool blue urbanist crowd in Indy has expressed some surprise that Democrats opposed it – including, incidentally, Rep. Bill Crawford, who represents an Indianapolis inner city district that would benefit enormously from improved transit – but that’s only because they are naive about how politics works at this level. They should keep that in mind going forward.

In any case, there are still ways to pass the law, such as by inserting it into another bill that then passes. This happens routinely in Indiana and elsewhere. But this recent vote is part of a pattern of dis-empowerment of localities in recent years. Tax caps (which I support, incidentally) were one – but the rules go well beyond that to impose de fact spending caps on local government. The state has stepped up increasing control over school districts and now basically dictates per pupil funding around the state. Other busybody bills include proposals this year to limit the power of redevelopment commissions, strip state universities of their ability to set tuition, and to mandate a return to single class high school basketball. A lawmaker from Cedar Lake, 150 miles away from Indianapolis, wants to eliminate Indy’s at large council seats. If there’s one common theme, it’s that this legislature has been more about taking away the ability of others to make their own decisions rather than doing much positive themselves.

It should come as no surprise that this is showing up in the state’s economy. For example, Gov. Mitch Daniels has said of Indianapolis, “The Indy metro’s our star cylinder in the engine.” Indeed, during the 2000s metro Indy outperformed all peer regions in population and job growth.

But recently it has taken a stumble. Between December 2010 and December 2011, metro Indy lost jobs. It was the only metro with over a million people in the Midwest to lose jobs other than Cleveland. That’s right, even Detroit gained jobs. A recent Brookings Global MetroMonitor report report ranked Indianapolis 183rd out of 200 global metros and dead last in the Midwest. The recent Milken Institute top performing cities index ranked Indianapolis 121 out of 200 large US metros, down from 81 a few years ago. Obviously in the Great Recession there are complex dynamics affecting how cities perform, but I don’t think it’s any accident this stumble has occurred against a backdrop of progressive local dis-empowerment in Indiana.

I appreciate the need for lean government, particularly today. But while the logic of minimalistic government spending as a road to success makes sense in some cases, it clearly doesn’t in central Indianapolis. There we have a city burdened with legacy costs and problems. As a result, central Indianapolis is always going to have higher taxes, more crime, and worse schools than other regional areas. Always, no matter how much it cuts. It cannot make itself competitive by cost cutting alone, as the exodus from Center Township shown in the last Census illustrates. Instead, it has to built a differentiated environment that is not in direct cost competition with suburbs. Obviously it has to keep a keen eye on the bottom line, but it can’t simply rely on cost cutting alone to drive success.

Transit is a big part of trying to do that. There’s no guarantee of success. But given the history, more of same is highly unlikely to work. The heart of the proposal is a quality urban bus system for the central core. This creates a more differentiated environment, better serves the mobility needs of carless residents, and links central city residents with emerging suburban job centers (which is one reason business has been so on board with the plan). It’s also comparatively cost efficient.

Let’s hope the legislature comes to its senses on this one. The idea that what happens to the urban core of Indy doesn’t matter to the state is ludicrous. The fate of Indianapolis and Indiana are bi-directionally linked. There can’t be a successful Indianapolis without a successful Indiana – but also vice versa.

Some have reported that Indianapolis has accounted for something like 80% of the economic growth in the state. Contrary to popular belief, it sends far more to state government than it gets back in taxes. Indianapolis, as the governor noted, is the economic engine of the state. But that engine is sputtering. Given that there’s no precedent for a region to thrive with an urban core that dies, we can expect that if central Indianapolis ultimately fails, it will take the region with it, and with that likely the state. The trajectory of the state economically, especially the central 2/3rd that are in Indy’s economic area, would be quite different indeed even if metro Indy merely regresses to say a Cincinnati level of growth.

Who knows what the state will ultimately do, but the micro-management of localities that occurs all too often not just in Indiana, but across America, is crippling the metro areas that are the economic drivers of our economy.

Indiana’s legislature ought to take a hard look in the mirror and ask why they have to try to act like the city council for the whole state. Given that there’s no federalism at the state-local level, that’s certainly their constitutional right. But if they want to be in that business, they, like the ungrateful servant, deserve every drop of torment the federal government chooses to inflict on them.

Thursday, January 26th, 2012

The Case for Quality of Space

Last November I was privileged to be able to speak at a community conversation event in Franklin, Indiana – a town of about 25,000 people south of Indianapolis that is an old county seat on the edge of suburban expansion – sponsored by Indiana Humanities and Ball State University’s Bowen Center for Public Affairs.

The topic of the evening was quality of space and what, if anything, Franklin should do in this area. There had recently been some big disputes over downtown redevelopment projects I believe.

I gave a talk that set the stage for this conversation. In it I make the case for why high quality of place is of importance to a community. I root it in a business case analysis based on globalization and structural changes in the economy, the impact of that on Indiana’s competitive positioning, and a real life example of the potential payoff. I then talk a little bit ways to actually make quality of space happen.

The video is below, followed by an outline of the talk. I hope you enjoy. (If the video doesn’t display for you, click here).

I. The Case for Quality of Space

A. History of Globalization and Structural Economic Changes: Indiana has gone from competitively advantaged to competitively disadvantaged.

B. The Impact of Economic Change: Indiana has trailed the country in jobs and incomes

C. Implications of the Situation:

  1. If nothing changes, expect more of the same poor results. This means real change, not just tweaks.
  2. Indiana cannot be competitive purely on a cost basis ever again. Even domestically, there are cheaper locations like Texas, and overseas competitors are much cheaper. Cost control and quality regulations are still very important, but cost cannot be the sole basis of competition.
  3. Indiana must compete today at least in part by creating a civic product people want to buy on its own merits, not just because it’s the cheapest thing on the market – because it isn’t.

D. But Doesn’t Franklin Already Have High Quality of Space/Place?: Yes. Yet consider:

  1. Much of what makes the high quality of a community like Franklin is the people who live there and their shared history. Newcomers can’t judge a community by this yet.
  2. Much of what makes our communities physically great was built a long time ago. The question is how we build on that legacy to meet the challenge of the 21st century.

II. The Benefits of Quality of Space: Columbus, Indiana Case Study

A. Why a Case Study of Columbus? It’s nearby for locals to check out themselves, it has a strong and comprehensive commitment to quality of space, and is closer to a typical blue collar community than say a Big Ten college town.

B. Columbus Economic Performance: Outperforms all non-Big Ten college town Indiana peers and also has outperformed the nation as a whole on jobs and income.

C. How Much Did Columbus Pay for Its Quality of Space Plan?

  1. Columbus tax expenditures per person are higher than most peers. They did spend money on this. Not free.
  2. But Columbus tax rates are among the lowest of its peers.
  3. How is this? Columbus has the largest tax base.

D. Two Fallacies of Government

  1. Democrat Fallacy: The only thing that determines government revenue is the tax rate.
  2. Republican Fallacy: The only thing that determines tax bills is government spending.
  3. Both claims are based on short term thinking. Need to evaluate the life cycle implications of policy choices. Columbus spent more but pays less now because they understand total cost of ownership.

III. Bringing Quality of Space to Life

A. Four Planks in a Quality of Space Program

  1. First Class Public Buildings: We used to build them this way, so doing it today is following an old tradition, not doing something different.
  2. Focus on Value per Dollar: It’s not always about more money. A bit part of it is making sure the money you do spend gets the full value per dollar.
  3. Find Low Cost, Fast, High Impact Items
  4. Build on Unique Qualities: In Franklin’s case, Franklin College

B. Closing Caveats

  1. Quality of space is a long term game. You don’t see immediate results from a trail. Columbus took 60 years to get where it is today. Indy’s downtown sports strategy started 40 years ago, but it is just now getting to host the Superbowl.
  2. Make sure that whatever you do is specific to your community. Don’t let somebody else sell you an off the shelf solution that merely copies what others are doing.

Tuesday, January 24th, 2012

Ten 2012 Trends That Will Affect Planning and Economic Development by Chuck Eckenstahler

[ Chuck Eckenstahler, semi-retired in 2008 from a 35-year career as an active full-time municipal planner, economic developer and real estate consultant, sent me an email with some thoughts in response to my post about Detroit building its way back to prosperity. This led me to his blog and the post below with some thoughts about the trends that will drive planning and economic development in 2012. He graciously gave me permission to repost it here – Aaron. ]

Last December I posted 25 Future Trends That Will Impact Economic Development. This was my attempt to identify key trends that would shape the daily concerns of planners and economic developers in 2011.

With the help of my colleague Craig Hullinger, we circulated the “write-up” to a wide audience of active and retired planners, economic development practitioners, city managers and academics.

We got a lot of feedback that began conversations leading to the conclusion that job creation and household wealth would be the major “drivers” of government inspired planning and economic development in 2011.

I believe the wisdom of these folks were correct and as we close out 2011 the need for job growth and increasing household income remain a top priority for the successful future economic revitalization of the global, national and local economies.

Below are my thoughts on the leading trends that will impact planning and economic developers in 2012.

1. Land Use Plans to focus on abandoned land and buildings not “greenfields”.

With the change in consumer spending patterns – reduced disposable income and increased reliance on internet purchases – plus the backlog of vacant home and commercial properties in (or soon will be) subject to foreclosure, there will be a reduce demand for new construction directing planners and economic development attention on reuse of buildings. It’s the same for vacant building sites currently serviced by municipal infrastructure.

The notion of incentivizing new development will be discouraged in favor of planning and economic development strategies that focus on reuse and redeployment of vacant land and buildings.

2. Financial support for planning to be reduced.

Federal and State budget reductions are inevitable. With planning and economic development activities being discretionary “non-mandated” government activities, planning and economic development program support will be targeted for budget reduction, probably to a greater extend than mandated government programs.

Planners and economic developers will be asked to “do more with less” and to seek non-governmental funding support from private contributions, foundations and fees for services provided. The planner and economic developer job description will now include a new component titled “fund raising”.

3. Economic feasibility will be required of all new initiatives.

Since the early 1970’s with Florida’s comprehensive state/local growth management act, planners were expected to include a degree of economic feasibility into the planning process, especially when implementation of plans included reliance upon federal and state funding sources. However, rarely has economic feasibility or benefit/cost analysis been applied consistently and in non-technical easily understood meaningful ways.

With heightened demand for sparse governmental funds, plans and economic development strategies requiring funding commitments, especially those by local governments, will be subject to intense scrutiny and most likely only funded upon sound economic benefit/cost analysis.

The era of planning and economic development strategies that “sound good” but rely upon undocumented funding sources is unacceptable today to citizens and elected officials alike.

Planners and economic developers will be expected to fully justify funding requests by easily communicated economic analyses relying on projected benefits for use of government funds.

4. Job creation “tops” all other concerns.

Gallup pollster Jim Clifton (see The Coming Jobs War) calculates that global unemployment is over 50% and globally there is a 1.8 billion job shortfall. He opines that jobs……jobs……and jobs will be the most important government mission in the future.

He further opines the US must have a 7% GDP growth rate to retain its global presence and decrease US unemployment; almost doubling the most generous US GDP growth rate being discussed in the media today.

For planners and economic developers, this is unhappy news drawing attention to heightened future demand for state and local action to create jobs.

For planners and economic developers, the increased global competition for jobs, pulse a likely anemic US GDP growth rate in 2012 will create intense pressure for programs and action that create new jobs.

5. Service area geographic sizing to become the major planning criteria.

In the Midwest, our local government geographic sizing was created by the Northwest treaties in the late 1800’s when the principal means of communication was a horseback ride to personally speak with someone. With internet and wireless communications today, we almost instantaneously communicate “with anyone – anywhere”. We have the ability to instantaneously bundle-up work assignments and ship them anywhere around the world to be completed and returned.

However, many government services remain modeled on the notion they must be provided on the basis of “a one-day horse ride” from home.

While all states allow governments to share services and even consolidate for greater financial efficiencies, it’s a rare occurrence.

Historic political isolationism based on the loss of political control permeates the inability to explore changes to service area geography that may reduce financial operating costs for services provided.

As governmental revenues become more strained and where taxpayers will not increase government revenue, planners and economic developers will be called upon to engage in municipal service consolidation conversations to exact efficiencies that stabilize or reduce government service costs.

6. Utility maintenance “trumps” new expansions.

While at the state and national level we call for more infrastructure funding for “big project” roads and bridges, back home at the local level most communities maintain underutilized water, sewer, storm drain and subdivision streets built with the notion that new development, most often new residential home owners, would pay user fees and local taxes to operate and maintain the local infrastructure.

In the absence of new construction requiring new utility connections plus the abundance of demolitions of no-longer needed homes and commercial buildings, in some communities the actual number of utility “paying” connections is being reduced or “at best” remaining stable. Most utilities were originally sized to service more users anticipated by 10-20 years of future growth but in actuality, now and maybe for considerable time into the future, will remain underutilized.

The cost of operations and long-term maintenance in almost all cases was based on revenues obtained from anticipated future new connections. With operation and maintenance cost increasing and revenue possibly decreasing, or at best stable, local government budgets in the future will focus on maintenance of the existing infrastructure rather than funding new expansion.

Planners and economic developers will be pressured by budget constraints to seek development projects that increase the number of utility connections allowing the amortization of operation and maintenance cost over a larger number of utility bill payers.

7. Tax payers demanded greater efficiencies to guide new growth.

I think everyone will agree that tax payers are overwhelmingly against tax increases and expect greater efficiencies from government to “hold the line” on cost increases resulting in the need for additional tax revenue.

With this in mind, it will be more difficult to undertake new programs requiring additional tax revenue from tax payers. Likewise, tax abatements or deferral of tax revenues as economic development incentives will also be subject to questioning and higher degree scrutiny.

Planners and economic developers will be discouraged from advocating projects that require forgiveness of tax revenues and encouraged to seek projects that have short-termed positive tax revenue income, especially for local governments that rely upon real estate taxes and/or local captured sales taxes to fund local government operations.

8. Federal and State paralysis over local funding freezes local government decision making.

The “we can’t do that now, because we don’t know what’s going to happen” governmental decision making paralysis will continue into 2012. Government funding uncertainty, due to uncertain federal, state budgets, coupled with uncertainty about local real estate and sales tax revenue has already become the mantra of government decision making today.

Many economists forecast several more years of this uncertainty, making the budget making job most difficult for elected officials. This uncertainty already results in postponement and cancellation of projects that in “better times” would contribute to an economic development stimulus to the local economy.

Recognizing that uncertainty will continue into 2012, planners and economic developers will find slim support for projects that require funding beyond approved budgets and greater pressure from elected and appointed officials to seek external project funding sources.

9. Local municipal insolvency and bankruptcy strikes fear deciding long-term funding.

Over the past 3-years there have been 49 municipal bankruptcies, according to the nationally leading municipal bankruptcy law firm of Chapman & Cutler. The most publicized being Jefferson County Alabama’s $3 billion revenue bond sewer fund driven bankruptcy – the largest in history. Media reports predict the potential for other bankruptcies is having a major impact on the $2.9 trillion municipal bond investment market, where 2/3 are revenue bonds – those viewed as “safe investments” by investors because they are “backed” by a utility revenue stream that is likely to continue even in the worst of economic times.

With questions about the future of federal, state and local revenues, today most government officials are a bit leery of committing to long-term projects, especially those that commingle sources of funds from multiple government programs and revenue sources based on new growth.

In 2012, planners and economic developers will be saddled with questions about municipal solvency both in efforts to package financing for necessary municipal infrastructure investments and to assure new businesses desiring to locate that the community is solvent and resistant to “surprise” tax increases that might occur due to unrecognized financial needs.

10. Municipal financing will become more expensive cancelling certain projects.

Because of government bankruptcy, unfunded state and local government obligations, reduced federal/state/local revenue, non-expendable operating budgets, and increased operating expenses, investors are looking at municipal financing risk a bit differently today and will continue to do so in the future. Where real or perceived investment risk increases so does the price, the amount of interest government must pay. Even purchasing insurance that guarantees payment in case of default gives little comfort to the investor, as leading insurers are being called into question about their ability to fund required payments in case of an economic crisis of substantial proportion.

All in all, this new uncertainty means that cost to borrow funds by states and local governments will be more closely evaluated and cost more.

For the planner and economic developer in 2012, the ability of governments, especially local governments to raise capital for projects will be more difficult and lessen the aggressiveness towards undertaking long-term financed projects.

Last Thoughts

As we closeout 2011, we give thanks – thanks that we made it through. It was a difficult year where many economic changes reshaped the role planners and economic developers play at the federal, state and local government levels.

The “crystal ball” today is no different….cloudy at best!

Again in 2012, the economy and jobs will be subject of every conversation.

Being an election year it will be on every newscast.

Our challenges as planners and economic developers focus on shaping the future.

Our charge today is – What can we do in 2012, with the resources at hand to invest in the future?

This post originally appeared in Chuck Eckenstahler’s Blog on December 4, 2011.

Sunday, January 22nd, 2012

Providence and the Virtues of Scale

After visiting cities and doing some research on them, I like to come back and write a “master narrative” survey of my impressions of a place. I’ve been able to do this fairly successfully – at least natives have viewed my take as basically fair – and pretty easily for Midwest cities.

I’ve spent some time in Providence, Rhode Island recently, a small city reasonably comparable to the ones I focus on in the Midwest, and was hoping to do something similar there. But I’ve found it difficult. New England culture is something I just don’t grok, so unlike with cities in the Midwest, the South, or the West, where I have more basically cultural familiarity, it’s hard for me to get a feel for Providence. So a full take on it will have to wait for another time.

I can relay a few basic facts though. The Providence metro area has 1.6 million people. The entire state of Rhode Island only has about a million. So Providence has the unique feature of having a metro area bigger than its entire home state. But Providence is also unique in that it’s so close to Boston, making the entire metro area almost a suburb of greater Boston in some ways. Providence is actually on the MBTA commuter rail system, with a slightly over one hour ride into South Station. With wi-fi equipped trains, this isn’t a bad commute. This shares tracks with Amtrak’s Northeast corridor, and Providence is served by both Acela and regional trains, giving it key connectivity both to Boston (only 36 minutes away on the Acela if you’re in a hurry) and New York City. (Providence is the 17th busiest Amtrak station).

Being so close to a thriving tier one city and not far from America’s premier metro hasn’t helped Providence that much though. Its population is stagnant. It has been losing jobs. Unemployment has been stubbornly in the double digits. Any visitor to Rhode Island immediately notices how old everything is. I’ve yet to find anyplace that is of the pristine new suburban variety. It looks like not much has been built in quite a while. Various decrepit mill downs like Woonsocket dot the landscape. The state is among America’s worst for pension problems. If the state were bigger, this would certainly loom larger in the national consciousness.

Although Rhode Island/Providence has its struggles, there’s still a lot to like and enjoy about the place. Rhode Island has some extraordinary natural beauty. As the Ocean State, coast line and beaches abound. Towns like Newport remain picturesque if no longer very economically active apart from tourism. The flip side of having a lot of old stuff is the you are clearly aware this is a place with history to it, and a ton of character. There is excellent food to be had. This isn’t just the stereotypical Italian – if there’s one thing that might stick in people’s mind about Providence it’s a reputation for being mobbed up – but includes things that might surprise you like good Indian cuisine. The people in Rhode Island are much friendlier than you’ll encounter in Boston or New York, and probably on par with what a Midwesterner would expect. Also like the Midwest, I was very surprised to find that, despite the postage stamp size of the state, lots of people there are lifelong Rhode Islanders. Traffic is a breeze and the city is very livable. You can enjoy small city living while only being a short train ride away from all that Boston has to offer.

With Providence’s demographic, economic, and fiscal issues, it might be tempting to dismiss the place as simply lacking the scale necessary to compete in the global economy. It doesn’t have the critical mass of amenities or industry to draw the talent it needs to build a truly dynamic 21st century economy, or vice versa. This might be the traditional “spiky world” view in which it seems to be primarily very large, dense cities that have the advantages, save for a few very special places, normally major college towns like Madison, Wisconsin.

If that’s all there is to it, most smaller cities are doomed. Yet I think there’s a flip side to scale, and places like Providence need to be able to exploit it as a source of opportunity. Providence and Rhode Island are big enough to have pretty much everything you need in a big city, and what they don’t have is nearby in Boston.

But they are small enough to have some structural advantages from that as well. First, as a small state and city, it’s easier to turn the ship. As I’ve observed about Detroit and Michigan, part of the challenge for them is that they are big. It’s always harder to turn a large ship than a small one. That’s Rhode Island’s advantage. You could almost literally turn the entire state into a civic laboratory in a way that can’t be done elsewhere.

In a related vein, things that wouldn’t make much of a difference in New York can make a huge difference in Providence. The presence of Brown University and RISD make a palpable difference in a smaller city that they wouldn’t in a much bigger one. Successful civic initiatives can have a bigger impact here.

Also, I’ve already found in Providence the other piece of magic I’ve often noticed in smaller cities, inter-disciplinary cross-pollination. A Rhode Islander tweeted me about something, and I responded by saying I’d be there in a week if he was interested in grabbing a beer and talking cities. This led to cocktails with a guy running a tech incubator, a former senior economic development official in the state, a transit planner, and a couple of art types. I don’t have many conversations like that in Chicago. In Chicago, because the various scenes are large, it’s easy to spend your time hanging out with only other people in your circle. And elites tend to like talking to each other. That’s not to say that disciplines never cross in Chicago, because they do. But my observations from not just Providence, but also Indianapolis and various other small Midwestern cities leads me to believe that this is more the default mode of operation in those cities. A shallower pool means that of necessity, you come into contact with more different types of people than you sometimes would in say Silicon Valley.

Lastly, like various Rust Belt burgs, Providence is a fairly cheap place to live and gives you plenty of space to do your own thing without all the baggage that comes from being in a bigger city. As someone there told me, if you’re looking for a corporate job, Providence is a tough town. If you’re looking to make something happen yourself or do your own thing, Providence is a great town.

Whatever its current struggles, a small state and city like Rhode Island and Providence – it’s even tough for me to distinguish them – have the virtue of small scale to provide some weapons with which to compete. How to position them to exploit that, and their other unique geographic advantages, is their key challenge going forward.

Thursday, January 19th, 2012

Can Detroit Build Its Way Back to Prosperity?

If you look at the typical urban redevelopment efforts in any given city, they are heavy on capital expenditures. I’ve noticed quite a slew of articles on this of late related to Detroit: a light rail line on Woodward, a new bridge to Canada, a new transit station in suburban Troy, rebuilding and expanding I-94, $500 million in new hospital investment downtown.

But is this really the path back to success for a city like Detroit? Harvard economist Ed Glaeser noted in an episode of Smart City Radio, that “the hallmark of a declining city is that it has a lot of infrastructure relative to economic activity…it’s very strange to think that the right response is to build more structures in those places.” Challenged by host Carol Coletta about the need for certain new types of infrastructure or projects to attract educated people, Glaeser didn’t go for it, saying, “For every Bilbao that looks like a success, there are nine failures.” He didn’t say to always say No, but clearly favored low cost solutions like public art over big investments.

Anyone who’s been to Detroit knows that it’s vastly over-infrastructured and that the city and region can’t even afford to even to maintain what they have. Why then is so much of the civic effort put into new capex projects will only add new stuff that also can’t be maintained? Is this really the best use of funds? Keep in mind, the debt of the city alone is $20 billion. Even with private funds, there’s only so much money to go around.

Clearly, as things wear out, you need to repair and modernize them simply to serve the needs of local residents. The new terminals at Detroit’s airport fall into this category. Perhaps a road reconstruction would as well. So I’m not sure that a blanket “don’t build” is the right answer.

But I don’t sense that Detroit is thinking this way or coming to grips with the surplus infrastructure situation, excepting perhaps with abandoned housing. Rebuilding I-94 and improving interchange geometrics might be a good idea, but adding lanes strikes me as dubious. Detroit is probably over freewayed as it is, and with the city and regional population shrinking, I’m not sure building more roads is the answer.

Also, the focus on capital intensive transit like rail systems seems a bit crazy. Detroit is a highly decentralized metro area with greatly dispersed origins and destinations – exactly the type of place poorly served by rail. I’m not saying there’s anything intrinsically wrong with a rail line, but is that your best bang for the buck, and more importantly the best place to focus precious civic time and attention? Particularly when the city bus system is a shambles? Beyond which, Detroit’s strategies around things like rail and medical center investment are totally conventional wisdom, and don’t speak to the true character and needs of the city. Even if you get some people to sip lattes by the light rail on Woodward like they do in Portland, this isn’t going to change the civic trajectory.

The one thing that does strike me as strategic is the bridge crossing to Canada, as Detroit is the major trade gateway to Canada. But even this seems as much motivated, on both sides, by bad blood between local officials and Matty Moroun (owner of the existing bridge). And I’ve also heard that the real problem isn’t bridge congestion, but rather customs delays. A new bridge wouldn’t do anything about that.

I guess I’m a skeptic on Detroit trying to build its way back to prosperity. Particularly with the debt levels and the trouble the private sector has sustaining even existing amenities like the Detroit Symphony Orchestra. That’s especially true when it comes to “me too” strategies like light rail. I’m got getting a sense that much of this is in the service of anything that is uniquely Detroit or is rooted in the challenges of a shrinking city. Rather, it seems predicated on a “comeback” vision for Detroit seeking to recreate some semblance of former glory on the back of major capital investments. Has this worked anywhere?

However, the alternatives aren’t always that obvious. A lot of stuff really is run down and needs repair, replacement, or retirement. How to actually get rid of fixed assets is a tough challenge for a city. And new things do come along that can be important.

So I’m wondering what you think. How much should stagnant or declining cities focus on major capital investments? What types of investments, if any, should they make? What strategies would you suggest as a complement or alternate?

More Detroit
Detroit as Urban Laboratory and New American Frontier
The Other Side of Detroit
The Power of Brand Detroit
The Urbanophile Plan for Detroit
Yes, There Are Grocery Stores in Detroit

Wednesday, January 18th, 2012

Silicon Valley vs. Silicon Alley, Economic Security, Guadalajara

I have a few miscellaneous items for you today. First I’ll highlight this brief piece from Chicago reporter Tracy Swartz, who rode all 139 Chicago bus routes end to end.

Next, an interactive infographic on Silicon Valley (California) vs. Silicon Alley (New York). I clipped it slightly to fit my blog template, so to get a full sized version, or if it doesn’t display for you, click on over to the University of North Carolina site where it came from.

Economic Security Report Card

The Urban Institute also put out an interactive map that let’s you explore economic security in US metros. They’ve got various factors that go into this, and while you can’t add your own, you can adjust the weightings on theirs to create your own overall score. This one won’t fit on my page, so you’ll have to click on over to check it out. Here’s a static screen shot for you, however.

Via RecreActiva – Guadalajara’s Ciclovia

Streetfilms did a nice short piece on the the Ciclovia program in Guadalajara, Mexico’s second city. (If the video doesn’t display, click here).

Tuesday, January 17th, 2012

Vancouver: An Olympic Urbanist Preview by Jarrett Walker

Most of you probably know by now that I’m a huge fan of Jarrett Walker and his blog Human Transit. He’s a professional transit planner who is doing the best, independent minded writing on transit for a general audience of anyone I know.

I’m pleased to report that Jarrett has distilled some of his wisdom into a new book called, conveniently enough, Human Transit. I highly recommend this for a clear exposition of the various issues involved in transit development. Jarrett isn’t pushing a position, he’s helping to educate communities so they can make their own decisions about what’s right for them.

If you’d like, you can read the introduction online free. Check out also the table of contents and check out the dates on his book tour.

In the meantime, here’s a piece Jarrett wrote on his blog in advance of the Winter Olympics in Vancouver back in 2010. I hope you enjoy it. Aaron.


Over the next two weeks, we'll see a lot of Vancouver, one of the most remarkable achievements in 20th Century urbanism. If you're going to promote transit anywhere, especially in North America or Australasia, it's an important city to know about. 

What's special about Vancouver?  It's a new dense city, in North America. 

Vancouver is the closest North America has come to building a substantial high-density city — not just employment but residential — pretty much from scratch, entirely since World War II.  I noted in an earlier post that low-car North American cities are usually old cities, because they rely on a development pattern that just didn't happen after the advent of the car.   In 1945 Vancouver was nothing much: a hard-working port for natural resource exports, with just a few buildings even ten stories high.

But look at it now.

DSCN2055 Towers composed

Such sudden eruptions of residential density are common enough in Asia, but North American cities rarely allow them on such a scale.  There are many explanations for how Vancouver did it, but at its core Vancouver had a fortunate confluence of the three essentials:

  • Natural constraints that limited sprawl even in the pro-sprawl late 20th century.
  • Economic energy, especially in the boom years of the 1990s and early 2000s.
  • Planning and civic leadership.

Depending on your point of view, you can treat any of these terms as dominant.  Planners and civic leaders like to think it was their work that made the difference.  Economists can point to the huge influx of investment made possible by the city's unique positioning.  Geographers can emphasize how easy it is to avoid sprawl when you have so little buildable land.  I think they're all right.

Van zoom out The natural constraints jump out at you on the map.  Like many East Asian megacities, greater Vancouver has very little space.  It's hemmed in by waterways to the west, the US border to the south, and a massive wall of mountains immediately to the north.  Greater Vancouver can only sprawl eastward, into the narrow Fraser Valley, but this valley is also British Columbia's best agricultural land. 

The conflict between sprawl and agriculture, of course, was the impetus of Oregon's famous 1972 land use laws.  But flat land around Portland is still fairly abundant compared to the tiny ledge where Vancouver lies.  This may be part of why Portland never built to Vancouver densities, nor achieved Vancouver's intensity of transit and low levels of car dependence.

(Significantly, too, Vancouver has no urban freeways, just a disconnected network linking some of its suburbs.  Traffic in Vancouver is, in my experience, exactly as bad as it is in Los Angeles.  Neither city ever achieves true "gridlock," because at a certain level of congestion people just stop driving.  In a dense city, there will always be exactly as much congestion as you make room for.  If you want less congestion than that, you want congestion pricing, and I expect Vancouver will get there soon.)

Natural constraints also drove economic energy because Vancouver's site is so unique.  As Canada's only Pacific city, Vancouver is the natural focus of Canada's interactions with Asia, as well as the only peer for the West Coast cities of the US.  All that uniqueness can be intimidating. Although its crossroads location and soaring skyline suggest a big city, Greater Vancouver is only 2.1 million people.  Visitors expecting a major city are sometimes surprised that the cultural institutions are not what you'd expect in Toronto or Sydney or Los Angeles, and have to be reminded that Vancouver isn't a big city — just a very dense city in a unique and spectacular place.  

Eng bay bch There's also the uniqueness of its climate.  Along with parts of adjacent Vancouver Island, Vancouver forms what we might call the Canadian Riviera: the only part of Canada that spends most of winter above the freezing mark.  Vancouver is thus the focal point for all the tropical longings of a frigid nation, a dynamic expressed not just in the absurdly abundant planting of the one palm tree hardy enough to grow there (the furry Chinese WIndmill Palm, Trachycarpus fortunei) but also in styles of beach-front architecture and design that recall Miami or LA.

But it's not Miami or LA.  Vancouver's winter is like that of adjacent Seattle, but gloomer and wetter.

DSCF4926 The one Vancouver winter that I've endured included not just 29 consecutive days of rain but also a heavy ceiling of gray cloud that lasted for months.  This photo is of a nice winter day; most days the clouds were much lower.

Summer Olympics in Vancouver would have been a safer bet, because summer is three months of perfect sunny days and endless sensuous evenings.  But Vancouver is lucky.   For just the two weeks that the 2006 Winter Olympics were running in Torino, Vancouver's skies were brilliantly clear and cold, and the same happened just last week.  So I won't be surprised if the world sees a similar miracle in the weeks to come.

But this is a transit blog …

A city as dense as Vancouver needs a lot of transit.  There are at least four interesting transit-related stories that I hope I have time to explore over the next two weeks:

  • DSCN1552 Skytrain is North America's most extensive network of driverless metro technology, and a powerful focal point for highrise development along most of its length.  It's also a huge viaduct, mostly open underneath, and not always pleasant to walk under.  I worked on several projects to improve and redevelop blighted station areas, and I'll talk about some of these.  There's also an interesting debate about whether to build one more Skytrain corridor across the inner city, or try something else, like light rail.
  • Granville Mall downtown is an important shopping and entertainment street that also tries to function as the main "transit mall" for the trolleybus network that covers most of the inner city.  I worked DSCN0895 cropon a plan for the mall in 2006 as well, at the same time as I was working on the more ambitious downtown transit plans of Minneapolis.  The mall has been torn up for the last two years while the new Canada Line subway was built under it.  It's just re-opened, though the buses haven't been put back there yet.  As always with Granville Mall, there are lots of opinions about what should happen next.

  •  The microferries on False Creek are an interesting example of extremely low-cost waterborne transit, probably the lowest unit costs imaginable in the developed world.  They're fun to ride, and the waterway they use is pretty calm for the most part.  I've often wondered why this model didn't catch on more widely in river cities.
  • Finally, Vancouver is also an example of really good transit geography.  If you were trying to design a city that would not just use transit but also use transit resources efficiently, you couldn't do much better than the City of Vancouver.  I'll explore this issue a bit in another post.

I hope you enjoy whatever glimpses of Vancouver you see on television in the next two weeks, if you're not lucky and hardy enough to be there in person.  Like San Francisco and Seattle, its natural setting is so spectacular that even people who live there sometimes stop and stare as though seeing it for the first time.  The uniqueness of the site is one aspect of Vancouver's achievement that not all cities can replicate.

But many cities are in places that are different but equally special.  Just around the Pacific, I think of Seattle, San Diego, Honolulu, Auckland, Brisbane and Sydney as all equally blessed with unique and spectacular sites where people already want to be.   If that specialness is recognized and valued in your culture, then Vancouver outcomes are possible.  All you need is the leadership, the economic activity, and above all the relentless aggressive intention to make it happen.  The result can be a great city, and a remarkably sustainable one.

Jazz fest at yaletown

This post originally appeared in Human Transit on February 12, 2010.

Sunday, January 15th, 2012

Replay: Neighborhood Redevelopment and the Downsides of Consolidation

This post is about the downsides of city-county consolidation. Actually, it might better be described as a discussion of some of the pros and cons of “big box” vs. “small box” municipal government. It is similar to business. It seems like every large business is either doing one of two things: centralizing or decentralizing. There’s a sort of cycle of reincarnation about this. Every model has its flaws, and people tend to gravitate towards the other side of the spectrum from time to time when the problems of the current mode manifest themselves in a particularly severe form. As a prologue to this, you might want to read my previous examination of city-county consolidation post, if you haven’t already.

I haven’t read all the academic literature on city-county consolidations, so won’t make any strong claims about the benefits its promoters have touted. But I will make two observations. One, I’m not aware of any city that has gone through a city-county consolidation that has become a civic failure, or which has a severely under-performing region. Most of the ones I’m familiar with seem to be doing ok or better. Two, if you look at the Midwest region, the metros that are doing well almost all feature a core city that either underwent a consolidation or has managed to maintain its ability to annex new territory. Minneapolis-St. Paul is an exception, but it has regional revenue sharing. (Landlocked and unconsolidated Chicago has a thriving core, but the regional numbers are lagging). So my gut tells me that big box solutions at a minimum don’t hurt and probably have some benefit to a region.

But they do come with downsides, and one of them is that it can make neighborhood redevelopment more difficult. The root of the problem is that with a single city covering a large area, there is only one mayor, one city council, etc. These have a large area to concern themselves with and cannot physically devote significant time and attention to each neighborhood. They inevitably spend most of their time dealing with the biggest and most visible challenges, which often means downtown development issues.

Redevelopment in Indianapolis

Indianapolis is a good example of this principle in action. It underwent a city-county consolidation in 1970. Four smaller municipalities were excluded from merger and so are known as “excluded cities”. So we get here both consolidated neighborhoods and some unconsolidated ones we can compare.

Since 1970, downtown Indianapolis has experienced a major resurgence. And Indy has emerged as what is in many ways the strongest performing Midwest metro area. I happen to believe its consolidation was instrumental in setting the stage for that. Many of its urban neighborhood have seen challenges, however. This includes many reasonably upscale areas, and I’d like to highlight two of them.

The first is an area centered around 71st and Binford Blvd on the northeast side. It was an established suburban area annexed under consolidation that started experiencing problems recently, notably with decay in its commercial developments, a common concern in aging suburbs. The population was also aging and not being renewed. This prompted a local woman to found a new neighborhood group called Binford Redevelopment and Growth (BRAG) to try to change the situation. BRAG wants more urban, mixed use development anchored by a transit stop on a future rail line, infrastructure upgrades to add basics like sidewalks that are missing in the area, and help redeveloping the commercial districts. They’ve had some successes, notably attracting investment in local strip centers, with a new Starbucks, CVS, and Kroger. But there has been little city investment.

The other is Midtown, an area encompassing the historically most desirable urban neighborhoods in the city. It includes the Meridian St. mansion district, Butler University, and Broad Ripple, the city’s main bar district. This area is loaded with gorgeous 1920’s era architecture and many independent shops and restaurants. But this area too started to experience problems, with vacant houses, some struggling commercial nodes, increasing crime, a property tax spike, and deteriorating infrastructure.

A group of neighbors here also formed a group called HARMONI designed to change this. They are also promoting neighborhood infrastructure investment, more urban development, etc. As part of this they purchased copies of Suburban Nation and distributed it to all regional elected officials. They even secured pledges of private funding for some infrastructure improvements. However, there has been little city investment in Midtown either.

But turn to the excluded cities and see a different pattern. Lawrence, the largest, inherited part of a closed military base. They created a commission to repurpose this into a new town center area. This included a multi-million dollar extension of 56th St, which involved building a bridge over a double-tracked rail line. That project also featured high quality streetscape treatments along its length. Former officers quarters on the base were renovated, and many other townhomes and other residences built. And there has been significant new commercial development as well, such that this area appears as nice and thriving as any edge suburb in the region.

As the name suggests, Speedway is the home of the Indianapolis Motor Speedway. It is also an older industrial suburb, with gridiron streets and its own Main St. The town really never leveraged the track outside of race days. The Main St. had businesses but was struggling, and the town was at best stagnant. However, the town council has taken on a major redevelopment program that will involve a major street reconfiguration and significant commercial oriented development designed to turn Speedway into a year round tourist destination and hub of motorsports themed businesses. It’s a $500 million plan, and while not much has happened yet, the town is getting ready to issue bonds to finance millions of dollars in road improvements.

A third of the four excluded cities, Beech Grove, is also improving its town center, and has already spent millions rebuilding its main gateway street, Emerson Ave.

So three of the four Indianapolis excluded cities have active town center renewal programs, while the two annexed neighborhoods, even though more upscale than the excluded cities in many ways, have seen little tangible city investment. Why is that?

The excluded cities have their own city governments. So they have elected officials whose sole focus is their own community. They’ve also got the legal powers, such a the ability to create their own tax increment financing districts, that let them control their own destiny without regards to a higher authority.

The annexed areas, by contrast, only have neighborhood groups. These groups have no power to do anything except lobby the main Indianapolis city government. This city government has to cover a huge area and is besieged with many groups wanting things. The mayor has an incredibly limited ability to deal with individual neighborhood issues. For example, he does a monthly “Mayor’s Night Out” in which he visits each township in turn, a different one each month, to answer citizen questions along with his senior staff. But there are nine townships, each one of which would rank among Indiana’s largest cities by itself. And that doesn’t even get to the neighborhood level.

It should come as no surprise that progress is slow. For example, there’s a proposal in the Midtown area at 49th and College Ave. called (interestingly) “The Uptown”. This would replace an old gas station, another vacant commercial structure, and a few single family homes with a three story, multi-use building featuring 75 apartments and storefront retail. It is exactly what the neighborhood needs. It’s a rare example of approved upzoning for density in Indianapolis. And from an urban design standpoint it is the best designed structure Indianapolis has seen in the modern era. Here’s the present view of the site:

The project needs tax assistance to ever get built, but it is looking like it won’t as the project has been on hold for well over a year. If the Uptown were in one of the excluded cities or in an actual suburb, it is almost inconceivable that it wouldn’t get built. The local government would find a way to make it happen. But Indianapolis has higher priorities. For example, a major civic focus is a project on the near East Side in conjunction with hosting the Superbowl. That’s the sort of major event that consumes management time and attention in a large city.

This is not to criticize the mayor. In fact, people from both BRAG and HARMONI have told me the city is very willing to engage with them and that the mayor has been supportive. The problem is structural. No mayor could physically deal with the demand. It’s inherent in the very nature of a large, big box government. It seems likely to occur in any consolidated government or very large city without sub-city level authorities with real powers.

It was before my time, but reportedly Bill Hudnut, a previous mayor, saw this problem and wanted to create more neighborhood level structures in a system he called Minigov (versus “Unigov”, as the consolidated government is known). But that never happened.

Midtown vs. Bexley

Another interesting comparison is the Midtown area of Indianapolis with the suburb of Bexley in Columbus, Ohio. Bexley is more or less exactly the same as Midtown with the exception that it is a separate municipality, though one that is completely surrounded by the city of Columbus. American Dirt ran very interesting profile of Bexley you might want to check out.

Bexley remains a thriving city, especially in contrast with the surrounding areas of Columbus. Its streets largely have up to date infrastructure, including full sidewalks, which Columbus often doesn’t. It has maintained thriving commercial districts, and has had more intense urban infill as well, as this picture will attest:

Photo courtesy Jung Won Kim.

Why the difference vs. Midtown Indianapolis? Well, the fact that Bexley gets to have its own city school district while Midtown is part of the stigmatized Indianapolis Public Schools no doubt has something to do with it. This keeps land prices high, which preserves a largely affluent and exclusive resident base. This has pros and cons. Of course it means the city can be kept nicer. But it also denies the experience of that to those who can’t buy in. And the overall regional tax base misses out on one of its most affluent areas. This is the problem of all upscale suburbs. Midtown, Indianapolis, whatever its faults, has many well-off homeowners who pay significant money towards the broader community, including the city schools. And it is a much more mixed income area.

Bexley also has its own municipal authority, while Midtown does not, with the implications discussed above.

But another thing occurs to me. Because Midtown is part of a much larger city, it suffers from the problem of a diffusion of responsibility. That is, it can assume the rest of the city will carry the load in some respects. This manifests itself in a strong anti-development NIMBY contingent that is opposed to urbanization. Any proposed development of any kind is greeted by wailing and teeth-gnashing by opponents, who’ve been known to do things like pull their kids out of school to serve as props at mid-day zoning hearings where commissioners are told neighborhood kids will literally die if new apartments are approved.

I don’t know what the sentiment is in Bexley, but they’ve certainly implemented more actual urbanization than Midtown. I suspect one reason is that Bexley knows it has only its own tax base to rely on. If its residents want to keep quality schools, they can either approve more commercial and intense development, or watch their residential property taxes go up significantly over time. That focuses the mind wonderfully.

So I also hypothesize that in addition to making redevelopment more difficult for reasons of the structure of government, big box government also inculcates an anti-development mindset to a greater degree than small box government.

The Chicago Ward System

So how do you deal with this? Chicago is a big box government that has solved the governance problem with a ward system. There are 50 city council members, who more or less are the gods of their ward as a result of a system called aldermanic privilege. This is where the alderman basically agree they will let each other do whatever they want as long as it is in their own ward. Various city agencies also more or less defer to the alderman on almost any decision to do anything. This results in a system where the mayor deals with the big issues of the city and major developments, while the aldermen deal with neighborhood issues.

The Chicago system has maintained many strong neighborhoods in the city, but it has its downsides. Aldermen have virtually unlimited authority in their wards, making it a sort of elected dictatorship. So it should come as no surprise that corruption has been rampant. In excess of 40 alderman have gone to jail for corruption in the last three decades, an astonishing rate. This also makes things like planning difficult, and creates a climate of great political uncertainty around development that contributes to a terrible business climate for small businesses.

The Chicago system is a de facto one, not based on a city charter or anything like that. It would be interesting to see how it developed. But it does show that you don’t necessarily need constitutional change to effect small box government inside of a big one.

Jane Jacobs and District Governance

Jane Jacobs saw this problem of big box government very clearly and dedicated an entire chapter of The Death and Life of Great American Cities to it. (Chapter 21, Governing and Planning Districts). This is not one of the chapters that generally gets a lot of attention these days, and that’s a shame. She says:

The historical changes relevant in this case are not only an immense increase in the size of great cities, but also the immensely increased responsibilities….which have been taken on by the governments of great municipalities. New York is not unique in failing to match such profound changes in circumstances with appropriate functional changes in administrative and planning structure.

I can’t do this chapter justice here, but it is a must read. Her basic solution is that all city agencies – police, fire, planning, parks, etc) would be organized around districts (neighborhood groupings), with contiguous borders, with service delivery coordinated between them and with the input of the neighborhood. Chicago’s ward system is similar to this, with the notable exception of having a district dictator. That might be a cautionary tale about what this sort of thing can turn into.

Implication for Small Box Cities

To me this implies that cities which retain a relatively small and governable core along with a plethora of unconsolidated suburbs might be in an advantageous position from a redevelopment perspective. Cincinnati, St. Louis, and Pittsburgh come to mind. Their many separate towns in the core county have the independent power they need to take matters into their own hands if they so desire. And the core city itself should be small enough to enable more fine grained governance from city hall.

On the downside, it seems almost inevitable that many of these unconsolidated suburbs will turn into complete failed cities, often left ignored and forgotten. There are plenty of beyond dysfunctional suburbs in Chicago just like this. I presume it is similar in places like Pittsburgh. I think it is notable that consolidated cities like Indianapolis and Nashville don’t have any truly failed suburbs. Another benefit of the big box city.

Summing it Up

I think the lesson here is that there are always, always trade offs to be made in governance. The trick is to understand the trade-offs you are making and take steps to try to mitigate the inherent problems with the model your city and region operate in.

Based on this and the previous post, we might say at high level that for big box government, the pros are stronger civic consensus and cohesion, generally stronger regional and downtown growth, a fairer tax base, and a general lack of totally failed central cities and suburbs. The cons are a weaker city neighborhoods, redevelopment challenges outside of downtown, weaker urban identity, and lower quality development.

For small box government is is basically the inverse of this. The pros are a strong central city & urban identity, higher quality development, more redevelopment opportunities. The downsides are civic fragmentation and lack of consensus, the potential for a failed central city, some failed suburbs, and possibly weaker downtown growth.

This post originally ran on February 28, 2009.

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