Monday, April 9th, 2012

Replay: “James Drain” Hits Cleveland

The ten story of mural of LeBron James is coming down in Cleveland. This one hurts. James wasn’t just the latest embodiment of Cleveland’s hopes, he was a local kid who, unlike so many, had stayed home in Northeast Ohio. His joining of the Cleveland exodus at a time of severe economic distress prompted Cavaliers owner Dan Gilbert to pen a now infamous open letter to fans:

As you now know, our former hero, who grew up in the very region that he deserted this evening, is no longer a Cleveland Cavalier…..The good news is that the ownership team and the rest of the hard-working, loyal, and driven staff over here at your hometown Cavaliers have not betrayed you nor NEVER will betray you….This shocking act of disloyalty from our home grown “chosen one” sends the exact opposite lesson of what we would want our children to learn. And “who” we would want them to grow-up to become….

Forty years of frustration boiled over in that letter. Gilbert is from Detroit, but perhaps that’s why he too shares these feelings so viscerally.

Cleveland’s “Big Thing Theory”

In a sense though, Cleveland’s disappointment was inevitable. LeBron James was never going to turn around the city. No one person or one thing can. Unfortunately, Cleveland has continually pinned its hopes on a never-ending cycle of “next big things” to reverse decline. This will never work. As local economic development guru Ed Morrison put it, “Overwhelmingly, the strategy is now driven by individual projects….This leads to the ‘Big Thing Theory’ of economic development: Prosperity results from building one more big thing.”

These have all failed, now even “King James”. The trend lines haven’t changed, even where the individual projects have done well. But often even that hasn’t happened. For example, the Flats, a once-thriving entertainment district in an old warehouse district, now resembles, as one local comedian put it, a “Scooby Doo ghost town.”

Combating “James Drain”

James’ departure also fits the narrative of generalized anxiety around “brain drain” and cities losing their best and brightest of each generation. As lots of people really have left Cleveland, this is understandable. But the real story is much more complex. A look at IRS tax return data shows that in reality Cleveland doesn’t have especially high out-migration. Its metro out-migration rate* in 2008 was 28.02. Miami’s was 40.34 and for even the boomtown of Atlanta it was 38.95. Not only is Cleveland not losing an especially high number of people, you can actually argue it is losing too few. A big part of the problem in Cleveland’s economy is that too many people are stuck there.

Conversely, a real migration problem is that too few people are moving in. As local attorney Richard Herman noted, “New York City and Chicago, like most major cities, see significant out-migration of their existing residents each year. What is atypical is that Cleveland does not enjoy the energy of new people moving in.” The Cleveland metro in-migration rate was only 22.19. Miami’s was 30.36 and Atlanta’s a robust 51.91.

Cities need new blood. Cleveland isn’t getting it. Its circulatory system is shut down. Cleveland needs more natives to leave and more newcomers to arrive. Both sides win. Those Cleveland departees will move on to be part of the new energy other cities so desperately need. James is going to get to live the high life he wants in South Beach, but somebody else will be fired up to get the opportunity to play in Cleveland.

Selling Cleveland

But that begs the question, what’s going to get more people to move to Cleveland? The fact is, James wasn’t getting the job done, and never would. Nor will amenities like the Cleveland Orchestra or the Rock and Roll Hall of Fame Museum.

The mistake Cleveland and other Rust Belt cities make is that they are too worried about the likes of LeBron James moving to Miami. For people with the means and the desire to choose a place like South Beach, Cleveland simply can’t compete. And let’s not forget, James snubbed Chicago, New York, and Los Angeles too.

Rather than trying to take on the Chicagos, Miamis, and New Yorks of this world at their strongest points, Cleveland would be far better served ceding that market and fighting where it can best compete. Believe it or not, not everyone wants to live in a huge global city. There are plenty of people who might choose to live in Cleveland, if the city focused on the basic blocking and tackling of city services, quality of life, and business climate instead of splashy grands projets. As Anthony Bourdain said this week:

I think that troubled cities often tragically misinterpret what’s coolest about themselves. They scramble for cure-alls, something that will “attract business”, always one convention center, one pedestrian mall or restaurant district away from revival. They miss their biggest, best and probably most marketable asset: their unique and slightly off-center character….Cleveland is one of my favorite cities. I don’t arrive there with a smile on my face every time because of the Cleveland Philharmonic.

In short, Cleveland needs less South Beach, less Chicago Loop, and more American Splendor. Ultimately, my bet is Cleveland will end up missing Harvey Pekar a lot more than it will any multi-millionaire sports star.

Shooting the Messenger

Who is going to get that message out about Cleveland? After that sendoff, it sure won’t be LeBron James. That’s a shame. As Jim Russell has richly illustrated, people make migration – and investment – decisions based on knowledge, not just information. Nobody picks a city to live in by entering reams to statistics into a sixteen tab spreadsheet. They’re more likely to move to be near family, friends, or places they know. That knowledge comes from first hand experience – and trusted recommendations.

Until the switch flips on Cleveland’s brand, it needs to be out earning that trust of prospective residents. The people who’ve left aren’t Judases, they’re your field sales force – or at least they should be. James could have been a missionary “Witness” for Cleveland in a foreign land. Instead, Cleveland blew an enormous opportunity, and left itself with little more than soured memories and a partially demolished mural as an ephemeral reminder of yet another failed Next Big Thing.

* Tax return exemptions migrating per 1000 overall tax return exemptions in the base year.

This post originally appeared at New Geography on July 14, 2010.

4 Comments
Topics: Talent Attraction
Cities: Cleveland

4 Responses to “Replay: “James Drain” Hits Cleveland”

  1. Mike Kole says:

    Totally agree about Cle and the Next Big Project. Now it’s the Medical Mart, which there was no demand for, and which the city is foolishly footing. Cleveland repeats history, ad nauseum.

    Nothing on taxes, though?

    I left Cleveland 10 years ago, and won’t go back for two reasons this article did not identify: crushing tax burden, and depressing weather. Maybe ‘nobody’ picks a city based on tax data (doubt it- generalities fall flat), but it was hard for me to miss the savings when I went to Indy. 4 percentage point savings on state income taxes, 4 percentage points on municipal income taxes (Parma/Cleveland), 1 percentage point on sales taxes, property taxes 1/4 as heavy as Cuyahoga County. When I tallied it up, I saved one year’s income for the 10 years gone. That’s a no-brainer.

    That depressing grey sky is a real bastard for me. In order for me to want to put up with it, I need to do much better financially, not worse, in order to be lured back. The older generations of family are all there, but get this- I have a car, and I visit about once a month. It’s how often I would visit if I lived in town anyhow. All of my cousins, and all of my closest friends all left Cleveland for better jobs. Not one picked a city for culture. Not one picked a city for weather. Bottom line drove the decision, and jobs go elsewhere because of tax climate.

    Cleveland and Ohio desperately overvalue their governments. I do not believe for a minute that the lesson will be learned in my lifetime, because partisan politics is what it is there, and while it doesn’t work, it sure is clung to with a death grip.

  2. EJ says:

    Mike,

    I have spent a fair amount of time living and working in and around Cleveland, and have never found its taxes to be really all that severe, even compared to other nearby cities within the region (e.g. Pittsburgh, Columbus, Cincinnati, Indianapolis, etc). Maybe I never missed the money out of my pocketbook because the cost of living in CLE and the region in general is still significantly lower than in many other parts of the country, and particularly so versus all of the global or first-tier national cities that Aaron mentions in this article. Call it a trade-off. I also think people in this country just have a long tradition of complaining about taxes, period. Sales and property taxes could be reduced to a mere penny on every dollar, and people would still complain that they are being taxed to death. It’s simply a cultural norm for Americans.

    As for the weather and gray skies, it does get particularly bad during the winter months, though not really so this year. Summers are longer than winters and are becoming longer still. That’s one benefit of global warming I’m sure Clevelanders will gladly embrace. At the same time, other Great Lakes cities like Minneapolis and Toronto seem to take the bad with the good in stride. And then you have Seattle in the Pacific Northwest which actually appears to embrace the gloomier aspects of their climate six months out of the year. Maybe Cleveland just needs an attitude adjustment?

    More on topic, one recent change that I think may really benefit Cleveland and finally shift the focus away from the “next big thing” as strategy: county government reform. Last year on the heels of a major corruption bust, Cuyahoga County elected its first-ever County Council and County Executive, Ed FitzGerald, to replace its commissioner format. FitzGerald recently announced a program designed to encourage collaboration and consolidation of services among Cleveland and its suburbs, hosted through the county. FitzGerald also appears to be interested in promoting additional collaboration efforts at the metro-regional level, including coordinated investment in Cleveland’s urban core, an approach that suggests the long overdue emergence of a more cohesive economic development strategy. Time will tell, of course, but it already suggests movement beyond the old failed and false approach. More info can be found here: http://www.cleveland.com/cuyahoga-county/index.ssf/2012/02/cuyahoga_county_executive_promises_economic_development.html

  3. Domenic plescia says:

    This article is a joke. There is over $7 billion in new construction right now in Cleveland (7 hotels, Cleveland aquarium, Museum expansions, residential, 21 story office tower, Uptown etc etc):

    http://www.city-data.com/forum/cleveland/306380-cleveland-development-discussions-84.html#836

    Downtown Cleveland apartments currently sit at 96% full and University Circle apartments have one bedrooms starting at $1325: http://www.uptowncleveland.com/

  4. Zstar says:

    Rust belt cities seem to be ripe targets for these kind of weak analogies: “An abandoned house is like a losing football team.” I guess these kinds of pieces are inevitable. What annoys me is the morality that often seems to be ascribed to municipalities: Cleveland has chosen; what Buffalo fails to notice; where Chicago succeeds. I find it hard to see cities as anything more than a collection of economic circumstances. People aggregate where there is economic opportunity. Cleveland’s fall can be attributed 99.999% to the fact that it no longer benefits from heavy industry or its position at the head of the Ohio and Erie Canal. This wasn’t a moral decision made by some civic daemon. The “big project” argument also falls flat. All cities have convention centers, sports stadiums, and public transportation. To pretend that Cleveland is the only municipality that spends money on these sorts of assets is disingenuous.

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