Sunday, November 23rd, 2014

Las Vegas: The Once and Future Downtown Project

[ To my email subscribers: I’m about to start cutover type activities to my new mailing list system. So if you get some accidental test messages in there, my apologies. I’ll be in touch further as this moves along – Aaron. ]

There’s been a lot in the news lately about the troubles plaguing Tony Hsieh’s Downtown Project in Las Vegas. The latest is a longish report in the Guardian, which notes:

Yet by late September of this year, the press – especially the technology press – had begun asking some serious questions, as the Downtown Project suddenly laid off 30 people – 10% of the total it then directly employed. Alongside portentous headlines announcing this “bloodletting” appeared claims that Hsieh had “stepped down” from his position of leadership of the project. A damning open letter from the Downtown Project’s former “director of imagination”, David Gould, called the operation from which he had just resigned “a collage of decadence, greed and missing leadership … There were heroes among us,” he added, “and it is for them that my soul weeps.”

Technology web site Re/code also ran a seven part series on the Downtown Project, some of it unflattering, including a part focused on a spate of suicides there, and other on about a prominent failed startup.

I made the obligatory pilgrimage to the Downtown Project in 2013 and wrote up my observations in a three part series, of which you can read part one, part two and part three.

I noted at the time the audacity of one project trying to completely transform a place like downtown Las Vegas:

Las Vegas has the single most savagely bleak downtown of any major city I’ve ever visited. The Downtown Project is almost literally starting at zero. There are practically no assets. So anything that the Downtown Project accomplishes needs to be seen against that backdrop. Most of these other cities have been at the downtown redevelopment game for 30+ years, have massive architectural and institutional assets, and have already been the recipients of untold billions in investment, much of it public money.

I also mentioned that the accolades the project had received in the press were disproportionate to the actual accomplishments to date:

Honestly, it’s a bit infuriating as a guy who lived in Indy, Louisville, and Providence to see a place where so little has happened garner such massive press and accolades when most other regions the size of Vegas have done more while getting far less attention.

Indeed, it’s hard to think of a single downtown redevelopment effort that received as much glowing coverage as the Downtown Project. Not even Dan Gilbert’s Detroit efforts received such fawning attention. This is an accomplishment I’m not sure most people fully appreciate. Tony Hsieh was very savvy in using his status as a tier one entrepreneurial superstar, along with a bank of free “crash pad” apartments for visitors, to create buzz and publicity. Other cities should definitely stand up and take notice.

However, the very success of the project on the PR front primed it for inevitable blowback when problems arose. As the Guardian piece notes, “The story fairly demands an apocalyptic ending.” The higher a star soars in the celebrity firmament, the more knives get drawn when anything disturbs the pristine image. The Guardian reporter also said, based on a very recent trip, that reports of the project’s demise are premature.

So the Downtown Project has run into turbulence? Film at 11. Startups are hard, risky, trouble fraught endeavors. Tony went through multiple meat grinders in the past, and if you’ve read his book it’s by no means certain that Zappos would even survive. There were many times it could have gone under. Clearly the man has a massive appetite for risk, and the Downtown Project was certainly a risky and ambitious undertaking.

The initial puffery was overblown. Time will tell if the blowback is as well. Success was always going to be difficult. I noted last year that the project was going against the grain of the DNA of Vegas as a city, was very reliant on “best practices” type solutions vs. the innovative cultural approach of Zappos, and that “curating” a city was inherently dubious. Yet I admire the ambition and believe they’ve done a lot of things right.

I doubt that the project will ever realize the full, audacious vision that was laid out at the beginning. The commitment of Zappos to its downtown HQ probably prevents a complete flameout. But it may turn out that Tony was unwise to have so heavily promoted the project up front. That has more or less ensured that anything less than perfection will be judged as a failure. He set the bar so high, it is almost impossible to clear. Had there been more modest ambitions, then probably even incremental progress against the backdrop of the disaster zone that was downtown Las Vegas would have been seen as a win. But perhaps in one example of how the Downtown Project did match perfectly with the Vegas DNA, Tony Hsieh elected to pile all his chips on Red 14.

Full Disclosure: I had previous financial relationships with Downtown Project related entities and stayed for free in one of their crash pads during my stay.

Thursday, November 20th, 2014

Lessons On Spending Responsibly

My latest column is now available in the November issue of Governing magazine. It’s called “Lessons from Kokomo on How to Spend Responsibly” and takes another look, obviously, at Kokomo. But my focus here is the intersection of fiscal responsibility and investment. I highlight not just Kokomo, where getting a handle on the budget enabled investment, but also Los Angeles, where losing control of it has resulted in serious infrastructure problems. Here’s an excerpt:

Kokomo can spend money on these items because it took care of fiscal business. Not all debt is bad, but in this case, by mostly resisting the urge to borrow, Kokomo will retain the ability to invest well into the future by not encumbering future cash flow. As a small industrial city, Kokomo still has challenges to be sure, but it appears to be on the right track.

Other cities are in different stages of this process. Consider Los Angeles, which is also making national news, this time for its crumbling infrastructure. The New York Times reported that it faces more than $8 billion in needed repairs just to bring its worst roads, sidewalks and water lines up to par.

Why can’t Los Angeles afford to invest in infrastructure? Because it allowed its budget to get out of control. Some blame this on the city’s fear of raising taxes, but L.A. is hardly a low-tax haven. Instead, as a report issued earlier by City Administrative Officer Miguel Santana notes, while revenues are anticipated to grow 4.4 percent — faster than national GDP — expenditures have been growing at an even faster rate.

Read the whole thing.

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Topics: Public Policy, Sustainability
Cities: Kokomo (Indiana), Los Angeles

Wednesday, November 19th, 2014

Football States

The NYT’s Upshot program features a lot of data visualizations and infographics. Here’s one they recently wrote about based on Facebook “Likes” of college football. This isn’t a map of specific teams like (though they link to one of those if you click through). Rather, it’s just overall interest in college football.

Why put this up? Because once again it shows how state borders matter. There are cultural items, commonalities, etc. that follow state boundary lines even when there isn’t an obvious reason for them to in the larger frame. Though we live in a global era of metro-centric economies, geographies like states still exert power not just legally, but also culturally.

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Wednesday, November 19th, 2014

Covering Corruption

I’ve written a few pieces on corruption lately. I’ll continue in that theme with this 30 minute video, part of series called “Straight Up” from Brooklyn Independent Media, about how journalists should think about covering corruption. As important topic as obviously the media plays a huge role in breaking corruption stories. If the video doesn’t display, click over to Vimeo. h/t City Limits

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Cities: New York

Sunday, November 16th, 2014

The Ideology Driven Privatization Backlash

A couple of incidents recently highlight how many communities have taken a sharply negative turn when it comes to privatization. A look at the cases in question however, shows that the objections to it appear to be as much ideological as performance based.

In Indiana, a group of seven counties through which the Indiana Toll Road passes want to buy it themselves from the bankrupt operator and its bankers.

The Indiana Toll Road lease was an unambiguous win for the state of Indiana. Was it perfect? Of course not. But those seeking to portray it as a bad decision always have to cite some peripheral defect. They can’t talk about core matters like the roadway condition, which is in better shape than ever and now with electronic toll collection, nor its operations, which are solid. Nor have I ever seen a critical financial analysis that was remotely credible. (One study in an academic journal that got a lot of airplay used ridiculous discount rates in their analysis, including literally 0% in one of their primary scenarios. This is what they are reduced to in trying to undermine the deal’s logic).

The bid by these counties seems motivated more hostility than logic. La Porte County Commissioner David Decker says, “The nonprofit would not be beholden to shareholders who siphon all the money off. We want to put money back into the road.”

Let’s analyze this a bit. The road is bankrupt, so the shareholders aren’t “siphoning” anything off at this point. I suspect that Cintra and Macquarie (the original lessees) protected themselves well in this deal, however. I’m not crying for them. But the concessionaire did go belly up.

Then there’s the idea of putting the money back into the road. Where were these counties when the state was running the road and letting it deteriorate so badly? There were some truly decrepit stretches of highway, especially in Lake County. Where were all these counties back then? If the public sector is so much more responsive and attentive to public needs, why didn’t the state ever fix this when it owned it? Why didn’t the state ever install electronic toll collection? I started telling INDOT they should install this as far back as the O’Bannon administration, but nothing ever happened. It wasn’t until the privatization deal that money did indeed start getting invested back into improving the road.

Then there’s the counties’ proposed financial structure. The private company paid $3.9 billion and went broke. These counties think that they can pay $3.7-4.1 billion for it, and make a profit of $38-50 million per year even after they – get this – pay a private company to operate the road anyway. How is that supposed to work? Yes, they can issue tax exempt bonds at a lower interest rate. But they want to limit repayment only to the toll road revenues, so that will limit their rate savings. Also, they won’t be able to take advantage of the huge tax write-offs from depreciation and such that the private company had available. I’d have to see the details on this, but it’s quite a financial claim they are making. They are basically saying that they can buy the road back from the bankers and run it at a profit of $50M higher than the bankers could. (Remember, any profits the banks might actually make would surely factor into their sale price). That seems a bit dubious. If it’s really true, every county in American ought to think about turning themselves into a private equity fund to invest in infrastructure assets.

Then there was an article in the Guardian talking about Hamburg voters approving a measure to buy back their electric and gas utilities that were privatized a few years back, or reclaim them when the contracts end.

Again, let’s ask what the problem is. Has the private operator breached its covenants? Have they provided poor service? Have the prices been at issue? No, no, and no. The article talks about pricing as a factor in some “remunicipalizations” of utility service, but not here. Instead what we see is that the real driver is political:

In Hamburg, activists launched the Unser Hamburg, Unser Netz (Our Hamburg, Our Networks) campaign in 2010 after noticing that the city’s existing contracts with Vattenfall and E.On were set to expire. The campaign brought out a wide range of supporters: environmental groups said buying back the grids would give Hamburg more control over its energy systems, and make it possible to really drive the city’s Energiewende transition away from coal and nuclear power and towards renewable energy.
….
The motorways running in and out of Hamburg are lined with giant windmills, slowly churning the air, constant reminders of the country’s ambitious green goals. Shifting the city’s energy transition into higher gear was one of the key promises of remunicipalisation.

The referendum ballot proposed not only to take back the city’s energy grids, but to institute as a binding target “a socially just, democratically controlled and climate-friendly energy supply from renewable sources”.

It seems pretty obvious that the drive to buy back the utility was driven by greens, who hope to use political control to implement their preferred energy generation schemes. In short, it’s about ideology. The article quotes a professor saying that privatization itself is promoted for ideological reasons, but here we see de-privatization happening in the same way. A touch of the increasingly anti-infrastructure bias of the German electorate comes through as another ideological factor.

Lest you say “it’s about climate change, not ideology,” the policy response to climate change very much falls within the political and ideological sphere. The German greens are, as the article notes, anti-nuclear. The Green Party driven, legally mandated decommissioning of Germany’s zero emissions nuclear infrastructure is a big reason why the country is still constructing coal plants in the first place. That doesn’t seem very green to me.

I’ve not hesitated to rake bad privatization deals like the various parking meter leases over the coals as bad public policy. But in these cases we see moves to cancel privatization deals coming from a root of ideological bias, not the public interest.

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Topics: Public Policy, Transportation

Friday, November 14th, 2014

Chicago’s Corporate Culture

Here’s another episode of Carol Coletta’s Knight Cities podcast. This is an interview with Chicago Community Trust President Terry Mazany with interesting thoughts on Chicago’s culture. My commentary is below the audio player. If the audio doesn’t display for you, click over to Soundcloud.

The bulk of the show is taken up with a discussion of a community dinners event the CCT (Chicago’s community foundation) put on to celebrate their 99th anniversary. This may or may not be of interest to you. But the beginning is Mazany’s take on Chicago’s culture.

I’ve always struggled a bit with the classic consulting SWOT framework (Strengths, Weaknesses, Opportunities, Threats). That’s because I have trouble classifying things. So often to me internal factors can be strengths or weaknesses depending on the context. For example, the same personal qualities that are our strengths are generally also weaknesses in other ways.

So it is with culture. Chicago has a very powerful civic culture. I won’t claim to have it fully defined. But like everyplace it has its own way of doing business. As Mazany notes, this culture involves a very powerful and engaged corporate sector, including at the CEO level. This is something I’ve noted has long disappeared in so many other cities.

Obviously things like a corporate orientation have their downsides, as I and others have written about elsewhere. Also obviously Mazany is going to present Chicago’s culture as a positive. Since this is his show, let’s stick with that for today.

I think it’s pretty clear that Chicago’s strong corporate and philanthropic leadership played a key role in preserving Loop as the region’s commercial heart, especially during the nadir of downtowns in the 70s and early 80s. Chicago did lose HQs to the suburbs, but even suburban based CEOs have played a big role in backing downtown Chicago. The corporate sector also has raised a lot of funds for civic projects like Millennium Park. One can certainly complain about the cost overruns and corporate logos, but a lot of private money went into this and many other things. Business leaders, notably Lester Crown, were the big promoters of the O’Hare Modernization Program.

Without a doubt, the corporate culture of Chicago is a big part of what had made the city work. That’s part of why simply copying the projects and techniques of other cities doesn’t necessarily translate to success. It’s the values and culture and other attributes of the city that lies beneath the projects, etc. that are often the real differentiators.

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Topics: Urban Culture
Cities: Chicago

Thursday, November 13th, 2014

Back to Vlasic


Image via OC Mini Market

Earlier this year a trend called “normcore” got a lot of press. Normcore is a fashion idea based on wearing boring, undistinguished clothing such as that from the Gap. Jerry Seinfeld is a normcore fashion icon.

While normcore was at least in part a joke, I think it illustrates why trend chasing by uncool cities will never make them cool. So you live in some place which isn’t on everyone’s list of the coolest cities. You read all about what’s happening in places like Brooklyn with micro-roasters, micro-breweries, cupcake shops, and artisanal pickles, and you’re like wow, my city has all that now, too. We’ve arrived.

No you haven’t. Do you think for a minute that the cool kids are going to let you just catch up and join the club? It doesn’t work that way. By the time you get to where they were, they’ve moved on to something else. You’ll never catch up doing it that way.

The idea of normcore, though probably just ephemera, shows how quickly the script could be flipped on you. Just as you finally master pretentious esoterica, the cool kids suddenly revert back to ordinary.

I wouldn’t be totally surprised to see something like that happen, actually. While I shouldn’t underestimate the ability of creative people to continue playing leapfrog to new levels of local, bespoke, exclusive, etc., at some point that trend will be played out. Then were do you go? Back to the comfort of ordinary.

Just when your Rust Belt burg finally has seven different artisanal pickle purveyors, don’t be surprised when the New York Times does an article talking about how the latest trend in Brooklyn is Vlasic kosher dill spears. (In an era in which Millennials are under huge financial pressure, this, like the sharing economy, would also be conveniently a matter of self-interest). Heck, maybe they already have and I just missed it.

Again, it’s like the way that these industrial towns abandoned their local culture to pursue cool city culture, only to have those cool cities re-appropriate working class culture – Pabst, workwear brands, etc – for themselves. Now these Rust Belt cities are re-importing their own culture back as supplicants. Remember, back in the 90s, the cool cities list used to frequently include the number of Starbucks locations as an indicator. Things change fast.

I like being able to get a good cup of coffee in these industrial towns now. I think it’s great for cities to have nicer stuff. But don’t ever make the mistake of thinking that by itself will change your relative standing in the marketplace.

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Topics: Civic Branding, Urban Culture

Wednesday, November 12th, 2014

7685 Frames of Netherlands

This week’s video is a timelapse of the Netherlands by Pengcheng He. I hope you enjoy. If the video doesn’t display for you, click over to You Tube. h/t Likecool

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Sunday, November 9th, 2014

Replay: Global Cities Don’t Just Take, They Give

This post originally ran on April 28, 2013.

Creativity for the world or for your city gives something back – Charles Landry

I had an interesting conversation about Washington, DC with Richard Layman a few months back. One of his observations, rooted in Charles Landry’s, was that great global cities don’t just take, they give. To the extent that Washington wants to be a truly great city, it needs to contribute things to the world, not just rake in prosperity from it.

Affecting the world, often for good but unfortunately sometimes for bad, is a unique capability that global cities have because they are the culture shaping hubs of nations and world. When an ordinary city does something, it can have an effect to be sure. But things that happen in the global city are much more likely to launch movements.

For example, Chicago did not invent the idea of doing a public art exhibit out of painted cow statues. I believe they copied it from a town in Switzerland. But when Chicago did it, it inspired other cities in a way that Swiss town did not. In effect, ordinary cities influence the world usually by influencing a global city, which then influences the world. Often it is the global city that gets the credit although the actual idea originated elsewhere. Thus the role of the global city is critical. But we shouldn’t assume that all ideas originate there or that other cities can’t profoundly influence the world.

We might also think of bicycle sharing, which was around in various forms for quite a while. But it was the launch of the massive Paris Vélib’ system in 2007 (which according to Wikipedia was inspired by a system in Lyon) that made bicycle sharing a must have urban item the world over.

Similarly it was the High Line in New York that has every city wanting to convert elevated rail lines into showcase trails. New York is really the city that made protected bike lanes the new standard in the United States as well.

Beyond simple urban amenity type items, global cities can also launch profound cultural and social transformations. A few examples.

The first is from Seattle, a sort of semi-global city. It was in such a depressed state in the 1970s that someone put up a billboard that’s still pretty famous: “Will the last one leaving Seattle please turn out the lights?” Yet in Seattle there was a coffeehouse culture that spawned a movement out of which came Starbucks which literally revolutionized coffee drinking in America and event pioneered the entirely new concept of the “third place.”

A lot of people like to attribute the emergence of Seattle as a player to Microsoft moving there from Albuquerque in the late 1970s. However, I think the coffee example shows that there were interesting things already happening in Seattle long before that. It was a proto-global city waiting for a catalyst.

Another example would be the emergence of rap music out of New York City. Or house music from Chicago.

Or consider the 1963 demolition of Penn Station in New York in 1963. The wanton destruction of this signature structure horrified the city and led to the adoption of its historic preservation ordinance. This was not the birthplace of historic preservation in the United States, but this demolition played a key role in bringing historic preservation to the fore, not just locally but nationally.

Lastly, the Stonewall Riots in 1969 clearly played a signature role in the gay rights movement in America. Many pride parades today are scheduled to fall on the anniversary of the event.

Who knows what might have happened with coffee in America without Seattle. But I think it’s clear that both the historic preservation and gay rights movements would have emerged at some point anyway regardless of what happened in New York. However, the events in New York clearly provided a sort of ignition and acceleration.

How many historic buildings in America were saved because Penn Station was lost? (Think about how many might have been destroyed had the historic preservation movement emerged later).

Think about a state like Iowa where gay marriage is legal. How many people in Iowa 40+ years ago had any idea that an obscure incident in New York City would ultimately transform the social conventions of the rural heartland?

I think this shows the power of the global city. I’m sure that there are things happening underground in New York and elsewhere that right now that we don’t know anything about yet that will ultimately transform our world 10, 20, or 30 years down the road. It’s crazy to think about.

Friday, November 7th, 2014

Changes Coming Soon to the Urbanophile

I wanted to give everyone advance warning that there major changes underway here at Urbanophile HQ. This is going to include some changes in direction for the site itself, and also for the underlying technology it uses.

I’m starting the first piece of the technical changes soon. Right now I use a Google product called Feedburner to send out my blog by email and newsreaders like Feedly. It’s clear Feedburner’s days are numbered, so I’m migrating away from it. Here’s what will change.

1. I’ll be switching to new email software. I hope to make this transparent, but those of you who subscribe by email might have to re-confirm that you still want to subscribe. I will give specific instructions when I pull the trigger.

2. I’m also switching out to another RSS system for newsreaders. Again, I hope to make this transparent, but will send out notifications so you can be sure you don’t miss anything.

3. I’m also retiring my Facebook page. Facebook has become a complete “pay to play” platform in which only a small fraction of those who “Like” my page every see my content unless I’m willing to pay Facebook for the privilege.

In addition to blog content, I’ll have extra exclusive content for email subscribers, so you’ll definitely want to take advantage of that.

Details on changes coming soon, but I wanted to give you a head’s up so you’re on the lookout.

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

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