Friday, August 21st, 2015
So many of the complaints about density seem to revolve around all the supposed negative affects of congestion, as well a general sense of the inhumanity of high density living, which in the popular mind is associated with the proverbial “concrete jungle” and a forest of skycrapers.
I can understand why many people want a house on a big lot. On the other hand, high density living, done right, can be extremely livable, humane, and even uncongested.
When I lived in Chicago I frequently would have people tell me that they couldn’t imagine themselves living in such a big, dense city. They no doubt had impressions of living there shaped by their visit to the Loop and other tourist areas, which are indeed crowded and have attributes of the concrete jungle.
But other than a narrow strip less than half a mile wide along the lakefront, most of Chicago isn’t built like that. Chicago actually has some of the most beautiful, livable streets and neighborhoods in America. Except for a few small areas with so-called WPA streets, its neighborhood streets have full infrastructure with generous sidewalks and parkways full of mature trees. Homeowners often landscape this and their front yard such that it’s like walking through a lavish garden simply to walk down the street. Alleys mean no trash in front and the city has virtually no on-street power lines. It also has full and amazing street lighting on streets and alleys. The building stock is mostly single family homes, 2- and 3-flats, and lowrise apartment buildings. Much of it is like a city in a garden.
My old neighborhood was Lakeview, which has 94,000 people in about 3.2 square miles, or 30,000 people per square mile. Yet its residential streets are quiet, tree-lined, and delightful – a far cry from the concrete jungle. Frankly, they are better than the average street in most Midwest cities.
Today I live on the Upper West Side of Manhattan. This neighborhood is the second most dense in the entire city of New York, with 209,000 people in 1.9 square miles, or 110,000 per square mile – almost four times as dense as Lakeview and 25 times as dense as the city of Portland.
Given this density, you might think it would be a horrific urban nightmare to live in. Yet, it’s incredibly pleasant, bucolic even.
The picture at the top of this post is West 68th St., where I live. It’s a tree lined street of low to mid-rise buildings with mature trees and very little traffic. Contrary to the jackhammers all night long stereotype of New York, it’s very quiet.
Most of the streets in the UWS are similar: tree-lined, quiet, with beautiful low-rise brownstones and such. Here are a couple photos that I believe are both of West 69th.
I should mention that behind these buildings, while there aren’t alleys, there are often interior courtyards between blocks with open space and greenery.
The avenues feature taller buildings, but while there are some skycrapers, there aren’t really that many. Here’s a stretch of Columbus Ave, with typical commercial-residential mixed use buildings. (The average is probably a bit more intense than this shot).
Here’s the intersection of 72nd and Broadway, one of the major intersections in the neighborhood. There are some taller buildings and more intense retail, but a number of those buildings are just stunningly beautiful as well.
West End Ave., one of the major residential avenues, has more mid-rise towers, but mostly beautiful pre-War buildings at around ~12-14 stories, or not much different from Barcelona.
Central Park West is one of America’s premier streets, with similar sized buildings to WEA, many of them truly landmark designs, that overlook Central Park.
Speaking of which, I am a five minute walk from Central Park, ten minutes from the Metropolitan Opera House at Lincoln Center (LC has more arts and culture going on than all but probably five total metro areas in the US), and about 15 minutes to the Hudson River greenway. There are two subway trunk lines passing through the area. Traffic moves very rapidly on the main avenues, which have synchronized lights, and you can often traverse almost the entire length of the UWS on say Columbus without stopping. The streets have very light traffic mostly except a handful of major crosstowns. The grid design makes navigation a snap. Accident rates are low.
Though not everybody is as close to Lincoln Center as I am, all of the UWS has good access to Central Park, subways, and the Hudson River. Other people are closer to other cultural amenities, such as the Natural History Museum.
While not every aspect of the UWS is positive, I feel very grateful to live here. It’s an extremely humane and pleasant place to live, despite the density. In fact, the main knock most people have on the UWS is that it’s so humane it’s boring.
I think the Upper West Side shows the elements you need to make density, even very high densities, work right, namely:
1. The right built form, with a variegated style of low to mid-rise buildings – not high rise – and lots of quiet, tree lined, side streets, with mostly high quality architecture.
2. Infrastructure, notably the subways.
3. Amenities like Central Park, the Hudson River, and Lincoln Center.
4. Well-functioning public services, especially public safety and sanitation.
The last one is of particular note, as the neighborhood was not as nice as it was today with only the first three. John Podhoretz, who grew up in the area in the 1970s, wrote about what it was like before order was restored. The musical West Side Story is actually set in the far south end of the neighborhood. (Lincoln Center, whatever its merits as a cultural district, was built as an urban renewal effort to get rid of the Puerto Ricans in the area). Central Park wasn’t much of an amenity when it wasn’t safe to go into it.
These obviously take wealth to sustain, but not all of it has to come from the neighborhood. Clearly the superior building stock came from neighborhood wealth, but parks, subways, etc. are paid for on a broader basis. Given the vibrant ethnic neighborhoods that exist today in other parts of the city, I’m sure this could have been a successful, safe working class Puerto Rican neighborhood with today’s public services environment. Of course, once safety and services were addressed, the value of the real estate skyrocketed.
There are some high rises in the UWS, particularly to the south, but these are the exception, not the rule. Yet this is still the second most dense neighborhood in the city with a hard to comprehend density of 110,000 per square mile. I can see why it isn’t for everybody, but I think people would agree that a neighborhood built like Paris or Barcelona (and in fact lower rise than those cities in most places) is hardly a concrete nightmare.
Density, done right, can be supremely humane and livable.
I think the UWS also illustrates the fallacy of too much of today’s urbanist thinking which is all about building tall to increase housing supply. If you can get to 110K density with mid and low rise buildings, skyscrapers just aren’t needed to provide any reasonable amount of density in the United States.
There’s also a lot of talk about supply restrictions. I don’t like historic districts all that much, because I think in practice they are abusive. Much of the UWS is in a historic district. There are any number of stink bomb buildings on the UWS I wouldn’t mind seeing replaced with new development, a few new skyscrapers wouldn’t be a disaster. If the population density even went up, I wouldn’t mind – it might even be good. But at the risk of sounding like a NIMBY, there’s just no way a neighborhood like this should see a massive increase in FAR to enable redevelopment with taller buildings. Turning one of the world’s great neighborhoods into Midtown would be a disaster.
Instead going directly to policies like “let’s just remove DCs height limit,” instead people should be taking a look at very high density neighborhoods like the UWS that function amazingly well and figure out how to adopt the lessons of that to other places.
Monday, July 13th, 2015
My latest piece is online in City Journal and is called “Chicago’s Financial Fire.” It’s a look at the ongoing financial crisis in that city, which has all of a sudden gotten very real thanks to a downgrade of the city’s credit rating to junk by Moody’s. Here’s an excerpt:
While some sort of refinancing may be required, the proposed debt issue contains maneuvers similar to those that helped get Chicago into trouble in the first place—including more scoop and toss deferrals, $75 million for police back pay, $62 million to pay a judgment related to the city’s lakefront parking-garage lease, and $35 million to pay debt on the acquisition of the former Michael Reese Hospital site (an architecturally significant complex Daley acquired and razed for an ill-fated Olympic bid). The debt-issue proposal also includes $170 million in so-called “capitalized interest” for the first two years. That is, Chicago is actually borrowing the money to pay the first two years of interest payments on these bonds. In true Chicago style, the proposal passed the city council on a 45-3 vote. Hey, at least the city is getting out of the swaps business.
Even with no further gimmicks, Emanuel will be six years into his mayoralty before the city can stop borrowing just to pay the interest on its debt. And without accounting for pensions, it will take the full eight years of both his terms to get the city to a balanced budget, where it can pay for the regular debt it has already accumulated.
Click through to read the whole thing.
Rahm donned a sweater during his reelection campaign and told the public he recognized he needed to change his ways, saying that he knows he “can rub people the wrong way.” The title of that ad was “Chicago’s Future.”
I decided to take him up on his new approach. When I was working on this piece, I tried to get some information of the mayor’s press office. I asked them such extremely hard hitting questions as, “Is there a consolidated location where all of the mayor’s most recent financial proposals can be seen in their current form?” I emailed them and got no response. So I followed up with a phone call. I was put on hold for a while then told the person I needed to talk to was away from her desk, but I should email her at a XYZ address. So I did. No response. This is the same pattern all previous inquiries I’ve made have followed, though I believe on occasion I’ve been put through to a voice mail from which I got no callback. Now, it’s not like I try to get stuff from these guys every day, but the message is pretty clear. I gather that this experience is not at all unusual when dealing with Rahm.
Having his press office simply refuse to respond at all to even basic inquiries from (the apparently many) people on his blacklist is naught but pettiness. Rahm takes people who could be friends and does his best to turn them into enemies. No wonder the Sun-Times titled a recent about him, “Rahm’s troubles plentiful, allies scarce.”
Thus it is that Chicago, a city of grand and expansive history and ambition, a city so big it overflows the page, comes to have a mayor with a certain smallness of spirit.
Wednesday, July 1st, 2015
My latest column is available in this month’s issue of Governing magazine. It’s called “Big Aspirations Aren’t Just for Big Cities Anymore.” In it I talk about how smaller cities – which in my view are metro regions between roughly one and three million given my focus on major American cities – have dramatically upgraded their game in the last decade. That’s not to say that they are on the same level as places in San Francisco or New York. Or that they have even closed the gap with those places. Rather that objectively speaking they have raised their game and as a result now have a much greater “addressable market” in terms of upscale residents and business – at the same time those larger places are becoming progressively unaffordable.
Here’s an excerpt:
Back in 1992, as a fresh graduate of Indiana University looking for a job, I met with recruiters for a position in Chicago. They pitched me on the city by telling me that it had this hip, new, uber-cool coffee shop. They were talking about Starbucks. If you were around in the ’90s, you may remember that those magazine “coolest-cities” lists often used the number of Starbucks as a metric. A city that finally got Starbucks thought it had hit the big time.
Today, of course, you can get Starbucks between the gas station and Motel 6 on the interstate. But back then it was a different story. The difference between Chicago and a city like Indianapolis, where I also interviewed, was night and day. Compared to Chicago, moving to Indianapolis would have been like getting sent to Siberia. It was all but impossible to get good coffee or a decent meal in Indy back then. While the city had already made many improvements, it was still pretty bleak.
Click through to read the whole thing.
I can’t find it online, but a few years back Chicago Magazine did a retrospective on their top ten restaurants list from circa 1995. It was pretty hilarious. I don’t remember them all, but Cafe Ba-Ba-Reeba was one of them. How things change.
I think it’s pretty clear that for a whole slew of items, places like Nashville or Columbus now are at a higher level than even Chicago was a couple decades ago. That’s not true of everything, but it’s true for a lot of things.
I believe this change in the competitive landscape is one of the reasons Atlanta took a big hit in the 2000s. Atlanta used to be the only game in town for major corporations in the South. Now places like Nashville, Charlotte, and Raleigh are viable alternatives.
Tuesday, May 26th, 2015
Last week I linked to an article by Kris Hartley about a Chicago model for global cities. I wasn’t planning to analyze it, but Greg Hinz over at Crain’s did a short writeup, so I decided to share a few thoughts.
Where I’d disagree with Hartley is that I don’t think Chicago is in fact pursuing industry dominance. What’s I’d say is that it’s acting like it already has it. That’s part of the roots of its financial challenges as Chicago’s spending big without the economic base to support it.
Where I agree with Hartley is that industry dominance is only one aspect of global cities. Another crucial part is what economic and other networks a city participates in. I think this network based view is pretty aligned with Sassen too. The idea in Hartley’s piece is that Chicago should identify and cultivate the global networks in which it competes, and build a model based on that. I think Hartley offers a pretty pretty positive take on the city, saying that Chicago doesn’t need to dominate an industry to thrive. In any event, I agree that Chicago should built its own model since it is a different kind of city. Less Big Spend, more networks.
On another topic, Ted Nesi from Providence’s WPRI-TV wrote a two-part online series on the badly botched ridership estimates for the commuter rail extension to Wickford Jct. The first part covers the ridership gap (and how project champion Sen. Jack Reed is still defending this white elephant). The second part is about the high and going losses that will need to be subsidized in perpetuity to keep this thing going. Not only did Rhode Island build an expensive line to a sprawly/ruralish area, it also built a huge parking garage that will cost a ton of money to operate.
Back in 2013 I wrote a piece at Greater City Providence challenging the philosophy of expanding rail to far flung areas where there is no market, and instead said that the state should focus on improving connectivity from Providence and the urbanized north of the state to Boston.
Friday, April 10th, 2015
Awareness of Chicago’s massive financial hole seems to dawned on the public fairly recently. Crain’s did a story on the debt 2010. The Tribune did a big series on Chicago’s recently. There’s been a ton of national analysis of it. But a hole this big didn’t get dug overnight. Were there any events or signs along the way that could have tipped off Chicagoans that something was fundamentally awry?
I believe there was.
Years back I remember reading an article talking about a Taubman mall that was going to open without a Gap in it. Google pulled up this one from 2001, so this may be it. At the time, Gap was a juggernaut. They could basically dictate terms to mall owners, so important was a Gap to any mall’s success. Here’s what the linked article has to say:
The two largest mall developers–Simon Property Group Inc. and General Growth Properties Inc.–have already capitulated to some of the retailer’s [Gap’s] demands…Taubman could have more to lose by not having Gap stores in its malls than Gap would lose by not being there, said Steven Greenberg, head of Greenberg Group, a real estate consultant to retailers. “It is extremely difficult to have a successful retail center today without a Gap,” he said.
The article is illuminating and I recommend reading the whole thing. Because as it turns out, this event was really signalling that the end was nigh for Gap. The retailer ended up going into a tailspin from which it never recovered its position. Had a shrewd investor seeing how this lease dispute played out shorted Gap, he would have made a mint.
I believe a similar signalling event occurred in Chicago on the night of March 30, 2003. That was the night that Mayor Daley sent in the bulldozers to dig big X’s into the runway at Meig’s Field airport, to make happen its closure via fait accompli when he could not get it through the political process.
While some were outraged at the time, few appreciated the significance of the event. It was a big signal that something had gone seriously wrong with Daley and Chicago. While some dubious tactics such as using long term bonds to pay for litigation settlements began a bit earlier, 2003 is where the wheels started to come off the city. It just took another 5-7 years before people realized it.
Kristi Culpepper recently posted an eye-opening look at Chicago’s disturbing finances. (Don’t let the fact that this is on Tumblr deceive you – she’s legit). She notes that: “There has been a structural gap in Chicago’s Corporate Fund budget since at least 2003.”
For pensions, Chicago had underfunding by 2003 but wasn’t in a terrible position in terms of making its annual required contribution. But the contribution gap soared after that year 2003, creating a crisis. Here’s a chart out of a Nuveen report showing this.
In retrospect, Daley’s bulldozing of Meig’s Field was telling us (in line with the Cockroach Theory) that something was up. Had the media and public started connecting the dots back then, things might have been different. Unfortunately, Daley had just been re-elected to his fourth term, so the city would have had to wait another four years to change course. But if residents had done so in 2007, some of the terrible decisions like the parking meter lease could have potentially been avoided and maybe things would have been different.
It can be hard to tell which events are signal and which are noise, but when disaster strikes, it can be useful to go back and take a look at what might have been missed. In retrospect, Meig’s Field was a sign that Daley had lost his mojo and there were troubled waters ahead for the city.
Thursday, April 9th, 2015
As you know by now, Rahm Emanuel won his re-election bid. I’ve got an article up with some thoughts over at City Journal called “Rahm’s Reprieve” that looks beyond the importance of the mayor to Chicago’s condition and future, and suggests the community’s broader leadership, not just Rahm, need to change their ways. Here’s an excerpt:
And yet, the focus on Emanuel, in keeping with Chicago’s “great man” political tradition, obscures the role of other players in the current mess. Chicago’s vaunted business community has fallen in line with Emanuel, rarely if ever challenging him. It was equally supine before Daley, even as he signed bad union deals, foolishly pursued the Olympics, and racked up huge debts. What were the Commercial Club and the rest of the city’s business elite doing while this was going on? Feting Daley, the same way they now sing Emanuel’s praises.
Click through to read the whole thing.
Thursday, February 26th, 2015
Rahm Emanuel is heading to a runoff in his bid for re-election as Chicago mayor. I discuss the matter in my latest piece over at City Journal. In short, while Emanuel has done himself no favor with his “Rahmses” style and unapologetic catering to the upscale Chicago, much of the dissatisfaction with him comes from a denial that the bill for past decisions is finally coming due.
Here’s an excerpt:
The dynamic Emanuel seemed just what the flagging city needed. His dead-fish-mailing, F-bomb-dropping style seemed perfectly in tune with hardboiled Chicago sensibilities. He started fast, unleashing a blizzard of initiatives and announcements that boosted the morale of the city’s establishment. And four years on, Chicago has hit its stride in many ways. In November, Crain’s Chicago Business reported that jobs in the greater downtown area had reached an all-time high. The city has enjoyed a tourist boom, drawing over 50 million visitors last year, and several new hotels are expected to open. Chicago’s downtown tech scene has seen strong growth. Thousands of new apartments are going up in downtown every year.
Chicago is also uniquely burdened among major American cities by its twin deficits. Both the state of Illinois and the city of Chicago are in dire financial condition. Illinois’s unfunded pension liability stands at $111 billion. It owes another $56 billion in unfunded retiree health-care obligations. Chicago itself faces $35 billion in unfunded pension liabilities. The total liability for all local government obligations adds up to as much as $83,000 per household. This flow of red ink can’t be staunched with simple “belt tightening.” One wonders if Emanuel understood the full extent of the financial hole when he sought the mayor’s office.
It’s tempting to pin the blame for Emanuel’s travails on hubris, and he has committed his share of unforced errors. He manages the local media with Washington-style spin control. He’s also shown a lack of regard for the optics of leadership. Daley projected a South Side “neighborhood guy” persona even while cozying up to the Loop business class. By contrast, Emanuel seems unconcerned about coming across as an elitist. His schedule is full of meetings with wealthy donors. Over half of his top donors benefit in some way from city largesse. Emanuel built a fancy selective-admission school named after President Obama on the white and wealthy North Side while closing 50 public schools in the city’s lower-income neighborhoods.
Click through for the whole thing.
Tuesday, January 27th, 2015
[ With the New York portion of the widely touted blizzard turning out to be a bust, I thought I’d dust off this 2009 piece I did for New Geography on cities, blizzards, and what the response to them says about the urban culture – Aaron. ]
January 1979 saw one of the worst blizzards in city history hit Chicago, dumping 20 inches of snow, closing O’Hare airport for 46 hours, and paralyzing traffic in the city for days. Despite the record snowfall, the city’s ineffectual response was widely credited for the defeat of Mayor Michael Bilandic in his re-election bid, leading to Jane Bryne becoming the city’s first female mayor.
In January 1978, a similar blizzard had struck the city of Indianapolis, also burying the city in a record 20 inches of snow. Mayor Bill Hudnut stayed awake nearly two days straight, coordinating the response and frequently updating the city on the snow fighting efforts through numerous media appearances. Nevertheless, the airport closed and it was several days before even major streets were passable. But when it was all over, Hudnut emerged a folk hero and went on to become arguably the most popular mayor in city history, serving four terms before voluntarily stepping aside.
While major snow is much less frequent in Indianapolis than Chicago, and Hudnut’s response certainly bettered Bilandic’s, these twin blizzards illustrate a powerful difference in citizen expectations between these two cities, reflecting two of the broad approaches to urban service provision in America today.
People in Chicago expect and demand high quality public services. Chicago is the “City that Works”, and woe be to the mayor when it doesn’t. That’s why every mayor since Bilandic has treated snow clearance like a military operation, deploying a division of armored snow trucks to assault the elements at the merest hint of a flake, often leaving more salt than snow in their wake. If Chicagoans pay relatively higher taxes than the rest of the country, at least its citizens know that they are getting something for their money, whether it be snow clearance, garbage collection, street lighting, landscaped boulevards, or bike lanes.
In Indianapolis, by contrast, public services are not the main concern. People gripe if snow is not cleared, but are not outraged. No Indianapolis mayor ever lost his job for failing to deliver good services. Rather, taxes have always been the primary issue. Nothing illustrates this better than the most recent mayoral election. Buoyed by an emerging demographic super-majority, a large campaign war chest, and the support of almost every establishment figure of both parties, Mayor Bart Peterson confidently raised city income taxes by 0.65 percentage points shortly on the heels of a major property tax jump. In the fall, however, he lost his re-election bid to political neophyte Greg Ballard, who ran on a taxpayers first platform. Ballard won without significant backing from his own Republican party, supported only by a collection of grass roots activists, bloggers, and his own relentless door-knocking campaign.
The divergent citizen and policy preferences of both cities continue to the present, amply illustrated by this very winter. Mayor Daley, facing a recession-induced budget gap, decided to save money by ordering that residential streets not be cleared by workers clocking overtime. Citizen unhappiness over the state of the streets during December snows led even the widely popular Daley to backtrack on this experiment, reverting to the traditional all out assault for the balance of winter.
In Indianapolis, after 12.5 inches blanketed the city this January, crews took several days to clear its snow routes and, as per its standard operating procedure, did not plow residential streets at all. The local media carried tales of people’s laments, but ultimately the city government knows that the response to the snow will be forgotten soon after it melts. Higher tax bills, by contrast, are long remembered. In an inverse situation to Chicago, people in Indianapolis sleep at night knowing that, if services haven’t been all that great, they at least have more money in their pockets.
While both cities have long seemed happy pursuing their respective courses, storm clouds are gathering over both strategic models of operation.
Backing down from a high service stance in government is almost impossible. Government spending only ever seems to go one way. Faced with that logic, and the clear expectations of its citizens, Chicago in effect decided to double down. With the much celebrated resurgence of urbanism, Chicago put its chips on a soaring Loop economy driven by an emerging status as one of the top global cities, a real estate boom, and a series of tax and fee increases. It embarked on a civic transformation epitomized by community showplaces like Millennium Park, miles of top quality streetscape improvements, a new terminal at Midway Airport and the start of a multi-billion dollar O’Hare modernization, one of the nation’s best bicycling infrastructures, and perhaps most ambitiously, a bid for the 2016 Olympic Games.
This model is increasingly showing signs of strain, however. Many taxes and fees, including the nation’s highest sales tax at 10.25%, appear to be close to maxed out. The real estate crunch hit hard at Chicago’s transfer tax revenue, another key source of city funds. This, in combination with a weak economy, has hammered the city’s budget, leaving Daley with tough, often unpopular choices to make. The CTA recently raised fares. City parking meter rates will be quadrupling under a privatization plan recently signed, hopefully plugging operating budget holes – something Daley had previously resisted. As with New York City, Chicago may be faced with the cold reality of both service cuts and tax increases.
More importantly, as with the dot-com bubble before it, there are real questions as to whether the financial and real estate driven economy that fueled Chicago’s boom will come back in full force any time soon. In the meantime, the economy and cost of living in the city are squeezing the middle class harder by the day, and despite perhaps America’s biggest condo boom, the city’s population is slowly shrinking. All this leaves Mayor Daley, although still very popular, with perhaps the toughest leadership challenge of his tenure.
Meanwhile Indianapolis faces problems of its own. It too has budget challenges, just as years of deferred investment are finally catching up with the city. Indianapolis has a $900 million unfunded backlog of curb and sidewalk repairs alone. It is the 13th largest municipality in America, but has the 99th largest transit system. And, more troubling, the city now finds itself outflanked by its own suburbs.
At one time Indianapolis could comfortably decide to purchase bronze-level services while other cities paid more for gold. But now its own suburbs are offering silver, and at a lower price point in taxes than the city is selling bronze. Many of its suburbs today not only have better schools and safer streets than the central city, they feature fully professional fire departments, large park acreage, lavishly landscaped parkways exceeding city standards, and even better snow removal. In the recent storm, upscale north suburban Carmel finished plowing its cul-de-sacs before Indianapolis finished its main arteries. When people can pay less and get more just by moving to the collar counties, that’s what they do. Tens of thousands of people have left the merged central city-county in recent years. Only a large influx of the foreign born has kept Indianapolis from losing population.
The current economy is exposing the long term structural weaknesses of both civic strategies. Chicago and Indianapolis show that both higher service and lower service models face big challenges and that neither approach represents a safe harbor in the current economic storm.
This post originally ran on February 14, 2009 at New Geography.
Sunday, January 11th, 2015
[ Contributor Robert Munson sent me the below as his take on how Chicago should reform its transportation governance structure. Comments will be enabled on this post and you can email Robert at firstname.lastname@example.org – Aaron.}
Photo by NASA
Night-time shows Chicagoland’s transportation corridors radiating from its center, but does not reveal their weakness: corridors don’t connect well to one another, adding to congestion and time wastage. Many connection improvements proposed in the region’s 2040 Plan are being failed by our politics. As an attempted remedy, the Chicago Metropolitan Agency for Planning (CMAP) is offering a proposal for a sales tax increase.
But before we try to fix the financials, we first must fix the region’s politics. Illinois’ insolvency and behind-the-scene manipulations make CMAP, a state agency, poorly suited to invest new funds. CMAP suffers under the political confusion created by having two Boards. This article looks at how each represents different levels of government and how both restrain regional progress.
CMAP’s proposal is an opportunity to shape a new, suitable regional funding authority that gives taxpayers better value and serves commuters far more effectively. If this new authority is elected directly, it then will have the legitimacy to achieve these three ingredients of sustainable transportation.
1) Balance taxes and usage fees so households have economical options.
2) Invest with greater return for public goals and private interests. And,
3) Minimize confusion caused by a deteriorated state and institute suitable regional governance.
How Two Heads Are Worse Than One
Chicagoland’s obstacles are captured in a helpful history of our region’s planning, “Beyond Burnham.” This book’s concluding chapter summarizes three strategic problems in Chicagoland’s 20th Century planning. Two problems are manageable today. First, the separation of land use and transportation planning has been merged into CMAP; so most players, at least, know the benefits of tightly integrating the two functions. Second, CMAP has helped stabilize the historic tensions between Chicago and its suburbs.
The third problem blocks progress: the region’s lack of an organized constituency. My analysis concludes there is no constituency because there is no elected regional body. This was intentional by two powers-that-be: chiefly, the state’s Department of Transportation; and suburban mayors. Each has its own Board to govern CMAP. (If this seems confusing, link to CMAP’s org chart and you will see why.)
CMAP formed after a compromise ten years ago to merge two agencies. Each intended to protect its turf. Today that compromise — and the power politics behind it — blocks us from the adequate regional governance required to build economically the next generation of infrastructure.
The ultimately powerful Board is the Policy Committee of the Metropolitan Planning Organization (MPO). Mandated to spend Uncle Sam’s money, the MPO is controlled by the Governor through Illinois’ Department of Transportation, a singularly backwards bureaucracy restraining the nation’s key hub from updating itself. While allowing the region’s planning process to show trappings of democratic participation, the MPO can pull the levers of power… much like the man-behind-the-curtain.
The poster-child example is the Illiana Expressway. Unjustified by rational criteria, the Illiana’s approval was strong-armed by the MPO and symbolizes the current regime’s failings. The MPO recently reversed CMAP’s other Board that had clearly decided the Illiana should be a privately funded road in the “2040 Plan” that was produced by an open, public process and was published back in 2010. I call this reversal the “Illiana Incident.” The Incident shows signs that interest group machinations got to the Governor and turned this un-needed expense into a regional taxpayer priority.
I served on CMAP’s Citizen Advisory Committee (CAC) from 2008 through 2010. I did not fully understand the MPO’s power. I could not penetrate its opacity. Its “Memo Of Understanding” is cryptic, not showing the ruling hand. I observed two MPO meetings… and got no further feeling. But during 2010, subtle signs indicated road-building constituencies were asserting themselves. When the Illiana was forced back on to taxpayers in 2014, my naiveté vanished. It became clear that the man-behind-the-curtain also had a hammer that shattered illusions of democratic planning.
That hammer must be laid to rest permanently before taxpayers agree to a new tax. The Illiana Incident is a lesson to taxpayers about how new taxes will be wasted. With the highway largely unpopular and hugely ineffective at resolving the region’s transportation needs, reaction to the MPO’s 2014 reversal spread like a media wildfire. Here is a synopsis of editorials. While that website has an anti-sprawl agenda, the media’s complaints echo a brazen affront to our emerging sense of regional sovereignty.
The Illiana Incident also offers a window into how MPO spending decisions perpetuate the monopolies of the 20th Century agencies that sit on the MPO’s Policy Committee. These agencies tend to give short shrift to the innovations proposed by CMAP staff. In the big picture, a narrow-minded MPO lost us the decades when infrastructure was cheaper and makes today’s investment much larger.
Wasting taxes is condemnation enough. But… the MPO’s authority also is not justifiable when you consider that Uncle Sam is retreating from transportation funding relative to when he mandated MPOs to protect his 80% of capital to Illinois’ historical 20% match. But with a broke state, few expect Illinois to make its match.
We see other signs of the MPO’s lack of accountability. Consider the top five priorities listed in the consensus “2040 Plan,” three were road projects and two were rails. As 2015 ends, the three road improvements (plus Chicago interchanges not even listed) will be nearly complete. The two rail projects are mere plans sitting on a shelf without funding. With the region’s passenger rail plan again sacrificed, a balanced plan can only be executed if there is autonomy from the state’s apparatus. Controlled by the man behind-the-curtain, CMAP cannot invest new regional funds to achieve benefits for the greatest number.
So, how legitimate is it for a state DOT-controlled MPO to exercise ‘de facto’ veto power on Chicagoland’s transportation spending? Not very.
To be direct, Illinois uses the MPO and federal power to thwart regional initiative. The MPO looks like a dinosaur perpetuating 20th Century sprawl and cannot direct the next generation of transportation investments. Any new tax money should be protected from the MPO, which would just build more business-as-usual boondoggles like the Illiana.
Without enough autonomy, CMAP will continue to be burdened by its poor parent. Illinois’ de facto insolvency emerged after decades of short-term decisions and recurring corruptions. To understand taxpayer’s likely resistance to CMAP’s proposed new sales tax, let’s see what debt has wrought. Bad state governance saddles each Illinois citizen with a cumulative debt of $21,130. This same opinion piece in “The Wall Street Journal” references also the Cook County Treasurer’s report in which this debt is much larger and close to unbearable for Chicago residents.
While these numbers are not widely known among the electorate, they are clearly felt. Rapidly being shaped is a citizens’ consensus that their state cannot solve problems merely with more money. The proverbial “throwing good money after bad” now eats food from too many families’ tables. Although still largely a public intuition that voices itself in gutter-low approval ratings for legislators and knee-jerk reactions to tax increases, the public’s distrust makes approval of CMAP’s tax unlikely.
Simply put: Illinois has abused the public’s trust and, quite reasonably, they won’t willingly give the state controlled MPO more money.
CMAP’s Second Head Lacks Authority… Intentionally
While the hidden and more powerful Board undermines legitimacy, CMAP’s other Board is visible but minimizes regional coordination. Controlled by suburban mayors, this visible Board does a good job synthesizing the needs of a diverse region. But to protect their turf back in 2005, suburban mayors insisted that CMAP plans were to be “advisory.” While politically necessary a decade ago to merge the region’s dueling agencies, that compromise holds us back from the path we need to travel as a region. The state’s insolvency forces taxpayers to demand results…not advisory plans that gather dust on the shelf. Mayoral restrictions on CMAP are fundamental to how it is not suited to produce the higher level of results required to invest new taxes.
Consider the commonly held planning principle: the closer transit investments are aligned to compact and mixed uses, the higher the ridership and higher return on investment. This alignment increases transit’s operating revenues. Suburban downtowns prosper and property tax revenues increase. Everyone scores.
But because CMAP has only the power of persuasion, its “advisory” plans do not require changes in comprehensive plans as a prerequisite to making a transit investment pay-off sooner. The 2005 scoring area was so large that a municipality still could spend regional money on, say, a new train station without first having a believable plan for compact redevelopment. The scheme with Illinois’ DOT/MPO allows a town merely to wait its turn and it would get its grant for a station or arterial. Protecting this distribution scheme gets played out in the collaborative appointments of County representatives to the MPO and CMAP’s Board.
Too subtle to describe fully in this article, I saw how CMAP’s Board enforced its 2005 deal. Senior staff suggesting tight alignment were forced out. Similarly in early 2011, the CAC that I served on (and also uttered such blasphemies) was replaced by new citizens, hand-picked by CMAP’s Board members.
Uncle Sam’s gradual withdrawal from transit and Illinois’ insolvency make aligned spending even more imperative today. Our multi-decade backlog of maintenance and very little money creates urgency. The policy nexus between transportation and land use must be precise if it is to serve households economically. Instead of merely waiting their turn for grants, towns today must compete for new capital.
As one example, new tax funds should be allocated to communities whose viable TOD plans will increase transit revenue and, thereby turnover that capital for the next town’s station down the line. This accelerates the three decade process that transformed Arlington Heights’ mid-Century downtown into a 21st Century model for its neighbors. Today, quicker returns on investments are how Chicagoland will do more with less capital.
If this basic principle isn’t on the table while discussing new taxes for infrastructure, then taxpayers should end the discussion because they will not get maximum results.
To summarize, we should view CMAP’s two Boards as blocking us from overcoming Chicagoland’s two strategic obstacles: Illinois is losing legitimacy to tax for and approve new initiatives; and, CMAP’s plans lack authority to maximize regional return on investment.
Making The Most Of CMAP’s Proposed Sales Tax Increase
Aside from the MPO’s fatal flaw of not acting in the region’s best future interests, I like CMAP. It certainly is an improvement over two non-communicating agencies. CMAP’s staff is competent. It produced a great long-term plan that won top national awards. Everyone I know who worked on it was gratified to help the undertaking. CMAP transformed a historically fractious region by sketching a potential consensus for progress.
Today, CMAP is on trajectory to win the trust of most jurisdictions. In the four years since the “2040 Plan” was approved, CMAP built productive relations with over 100 jurisdictions to help them plan. Maximizing its power to persuade, CMAP has a convincing Executive Director and a beefed-up communications staff. Most municipalities now understand the regional consequences of their land use. Progress.
But despite its good work in a tough spot, CMAP is not suited to the daily job of reinventing the public’s transportation business. With a narrow skill-set and subjected to vetoes by the state’s road-building agency, CMAP should stick to its knitting as the region’s long-term planning agency. Because it is controlled by a drunkard parent, the state of Illinois, CMAP is unfit to invest public capital well, especially in a time of fiscal constraint.
Here’s how to convert our transportation lemons into some semblance of lemonade.
We start by shifting new funds to a new Board. Consider the Twin Cities; driven by similar political parallels. Their MPO also is controlled by the Governor. Taxpayers of this famously “good government” region viewed their MPO as unworthy of making transit deals that used a new sales tax. So in 2008 they created a Counties Transit Improvement Board. It has revitalized the Twin Cities transit by investing to complete three light rail lines, two central stations and a suburban line. Best yet, Minneapolis and St. Paul seem to have learned faster than pre-2008 practices about how transit investments should be leveraged with land uses to promote economic redevelopment.
Chicagoland’s Board must do the same and also innovate big-time. Because we are broke, we need to develop flexible and entrepreneurial organizations that invest public funds so they employ private sector efficiencies that serve everyone. For this, a Board must isolate itself from the state. Otherwise it will have trouble attracting private capital, since no competent company wants an insolvent partner.
So, an independent Taxpayers Regional Investment Board should be created. TRIB will be substantially more effective by including these three innovations.
- TRIB’s directors will be elected. This shapes a broad regional constituency and helps affirm that taxpayers’ money will be well spent. To protect voters from the cynical distortions of state and federal campaigns, candidates should be non-partisan and only small campaign donations from individuals accepted.
- TRIB’s authorities should include usage fees, not just taxes. The sales tax predominance has proven ineffective at reducing bad transportation habits. TRIB will find the right economic mix of transportation investments (carrots) and usage fees (sticks).
- TRIB will be the taxpayers’ and riders’ advocate. Our monopolistic transportation systems block better returns for new investments. TRIB’s job is to advocate policies that level the playing field for all transportation subsidies so multi-modal, market-based options will emerge faster. TRIB also will respond to rider and commuter complaints and synthesize them to develop solutions. TRIB takes responsibility.
However the new Board emerges, Illinois’ irresponsibility toward transit must be solved. To get perspective on transit’s governance problems, read this study comparing six of the nation’s largest metropolitan areas. Its conclusions for Chicagoland start on page 20. The study serves as a good reference to sharpen our solutions.
For the next six months, CMAP’s sales tax proposal is unlikely to get a fair hearing within the frenzy of every special interest protecting its slice of the Illinois budget. CMAP will alter its strategy for the 2016 session. Supporters should consider tactics that give CMAP more autonomy from an increasingly illegitimate and counter-productive MPO. Good luck!
In the meantime, local progress is possible. We first should take very seriously the Cook County proposal to leverage federal loans, much as Los Angeles has for its transit renaissance. Part of the new County President’s ambition to revitalize transit, this carefully-crafted proposal deserves action. If the Cook County Board shirks this duty during the next few months, then this proposal also should go back to the drawing board so it can win taxpayer support. Since Cook County represents over two-thirds of Chicagoland’s transit trips and most the chronic car congestion, a Cook County adaptation of the TRIB concept can serve as a prototype for the seven-county region’s evolution.
But whatever new tax is proposed, it must offer the public this simple deal: any new tax or usage fee will buy discernible improvements in transportation and increase accountability. If we believably make every initiative work towards a new deal that puts taxpayers and transport users as the head of their systems, then Chicagoland’s connections will be made.
Tuesday, December 16th, 2014
[ My fellow Accenture alum Mark Suster is a former startup founder and now a VC based out of Los Angeles. Hence he writes the fantastic tech startup blog Both Sides of the Table that’s a must read if you’re into tech startups. This recent piece particularly caught my eye as it’s relevant to so many cities’ startup scenes. Mark graciously gave me permission to repost it here – Aaron. ]
I was at a dinner recently in Chicago and the table discussion was about building great companies outside of Silicon Valley. Of course this can be done and of course I am a big proponent of the rise of startup centers across the country as the Internet has moved from the “infrastructure phase” to the “application phase” dominated by the three C’s: content, communications and commerce. But the dinner discussion included too much denial for my liking.
I think startup communities being simple cheerleaders doesn’t help anyone. Those of us outside Silicon Valley need to make an effort to effect change not just wish for it.
At the dinner some of those arguing that Chicago has everything it needs now that it has built: Groupon, Braintree, GrubHub and others and that it has “come along way” and “will never get the full respect it deserves just because it’s not Silicon Valley.” But I think this misses the point. I’m a very big fan of Chicago. I started my career at Andersen Consulting (now Accenture) so I went to Chicago many times a year for nearly 9 years. I then got my MBA at University of Chicago so I secretly pull for local entrepreneurs as long as they don’t make me visit in the Winter any more.
But no community can become complacent with the wins that it has. It’s not the great companies you build, it’s the silent killer of those that should have been build locally and weren’t. It’s the thousands of jobs that weren’t created but you don’t even know it.
Think about Facebook had it stayed in Boston. Could it have become the behemoth that it is today? Who knows. But I’ll bet the Boston community would take 50% of the success of Facebook built locally. And the truth is that successful startups beget more successful local startups, wealthy VPs who go on to build their next startups, etc. Even Mark has acknowledged moving wasn’t the be all, end all in this famous interview:
“If I were starting now, I would have stayed in Boston. [Silicon Valley] is a little short-term focused and that bothers me.”
Boston is still a great tech hub. But wouldn’t it want to be great PLUS have Facebook?
We have similar stories in LA and most people don’t know it. For example, Lookout is a mobile security company that was founded by three talented graduates of USC. They started their company in LA but a couple of years after raising capital from Khosla Ventures in the Bay Area they ended up relocating there. A few years later they announced $150 million in a funding round at $1 billion+ valuation and are ramping up jobs to secure their market-leading position. You could say the team would have gone North anyways. Perhaps – who knows? But I know with local funding and local support that’s certainly less likely.
And consider Snapchat – one of our hometown favorites as they’re based in LA (Venice Beach). Luckily for our community the founders decided they wanted to build their company in LA regardless of not having local funding from LA. That’s our great gain as Snapchat has also raised a lot of money at a monster valuation ($10 billion reported) and has been scooping up talented Stanford engineers and relocating them to LA. Locally we call it “the Snapchat effect.” The VPs of SnapChat will be LA’s great founders 5 years from now.
Silicon Valley is littered with startups where the founders were originally in LA. Klout was an LA company – sold for $200 million to Lithium. As was FarmVille (sold to Zynga) and many, many others.
Local capital matters. Local mentors matter.
That was my original idea behind Launchpad LA. I figured if we couldn’t fund every company locally we should at least embrace them as a community and show that we’re willing to mentor them whether they raise their money in town or not.
So what can a community do?
I often point out the story of when we raised our fourth fund a few years ago. I went to see several LP funds in Boston. At least twice I had conversations that went like this, “Yes. It’s true. Your fund performance has been great. But there’s also several great funds in Boston and while our first priority is to returns we have an equal responsibility to local funds and local jobs.”
LA public pension funds and endowments have historically been the opposite. I think government and community members need to understand that capital formation is an incredibly important part of economic revival. People often say, “Great entrepreneurs will build a community and the capital will follow.” I don’t see much evidence of that. I think it’s a combination of the two. It’s clear capital with no talent ends up having to travel to do deals. But talent with no capital is another word for migration.
And then there is public policy. Historically the City of LA has been hostile to startups. I’m reminded of LegalZoom who was founded in LA but moved it’s headquarters to Glendale and much of its operations to Austin, Texas. While LA was trying to impose archaic taxes on the firm and seemed to care less about its existence since it was a “startup” – the first lady of Texas welcomed them to Austin by picking up the CEO at the airport on his first visit there. It’s no wonder hundreds of jobs migrated. Luckily since then we elected Mayor Eric Garcetti who understands the importance of startups and of technology and venture capital on job creation.
But we still need more funds. No – I’m not worried about the competition. We’ll win our fair share of deals. But when you remember the Snapchat effect you see that I gain even from the deals we didn’t get to do. I’m guessing the future leaders of Lookout will build companies in the Bay Area.
Communities can make a difference. I wrote about the awesome efforts of Cincinnati to stimulate its startup community and the role of Paddy Cosgrave in Dublin, Ireland as well the entire Irish business community, the IDA, etc. who woo businesses to put their headquarters there. I also covered the impact of Brad Feld in Boulder or Fred Wilson in NYC as observed from my keynote on a trip to Seattle, which I felt could have a huge boom if its elder statesmen embraced startups a bit more.
Don’t get me wrong. Chicago has made strides. The Pritzker Family has been very active and the opening of 1871 as an entrepreneurial hub is a great example. But my conversations with countless Chicago entrepreneurs suggests it has similar issues to all non-Silicon Valley centers: not enough venture capital, too few tech angel investors, not enough talent for product management or engineering, not enough local tech powerhouses to drive local biz dev / keiretsu. I think this is true of LA, NY and many other tech communities so I’m not singling out Chicago.
My point is this … cheerleading isn’t enough. We need to help create local venture capital funds who may be national in investment strategy (as we are) but who will do more than their fair share of fundings locally (for us that’s 50%). Fund formation + local mentors + local talent = a shot at creating successes that drive the future job growth of our great cities.
This post originally appeared in Both Sides of the Table on November 15, 2014.