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.
Tuesday, December 9th, 2014
[ This week a post from Bill Sander and Bill Testa from the Chicago Fed’s Midwest Economy site, looking at the various trends affecting the city of Chicago – Aaron. ]
The fortunes of the city of Chicago have become clouded in recent years as concerns over its weakening finances and heavy debt obligations have grown. The tally for the unfunded public employee debt obligations of Chicago’s overlapping units of local governments (including those for public schools, parks, and county services) is now approaching $30 billion. Moreover, the city government has been criticized for its practices of funding current public services with proceeds from the issuance of long-term debt and the long-term leases of public assets (such as its parking meter system). However, faith in Chicago’s ability to address its debts has not fallen so far as that in Detroit’s, chiefly because the Windy City’s economic trends display more vibrancy.
Population change is a prominent indicator of the health of an urban economy because it reflects a city’s ability to hold on to its residents (as opposed to losing them to the suburbs or other locales). Over the past few decades, similar to other central cities, Chicago has experienced an erosion in its population share of the broader metropolitan statistical area (MSA); in contrast, the surrounding suburbs have seen their share climb. According to the U.S. Census, Chicago held 38% of the MSA’s population in 1980, with this share falling to 35% by 1990; in the subsequent 20 years, Chicago’s population share of the MSA decreased another 3 percentage points per decade, reaching 29% by 2010 (see table below). During the 1980–2010 period, Chicago lost a total of over 300,000 residents. At the same time, suburban Chicago gained close to 2 million in population. Since 2010, the city of Chicago’s population and population share of the MSA have strengthened somewhat, though the (off-Census year) estimates are probably not as reliable.
While population trends can be telling for a city’s prospects, they can also belie changes in its residents’ wealth and income. Despite the city of Chicago’s population loss over the past few decades, its economic trends have been generally more encouraging. Household income is an important indicator of Chicago’s fortunes relative to those of its suburbs. In 1990, median household income in the city was just 67% of the median household income in suburban Chicago. By 2010, this income ratio had climbed to 73% (see table below). Decomposing household income statistics by (self-reported) racial/ethnic group reveals that this trend was pervasive for the three largest groups: non-Hispanic white, black, and Hispanic. The ratio of city median income to suburban median income among white households experienced the greatest change; it rose from 77% in 1990 to 98% (near parity) in 2010.
These robust trends are echoed by Chicago’s rising share of adults aged 25 and older who have attained at least a bachelor’s degree. In 1990, among adults aged 25 and older, 19% of those residing in the city had attained a four-year college degree versus 28% of those residing in the suburbs (see table below). By 2010, Chicagoans in this age demographic had almost reached the same share in this regard as their suburban counterparts (33% for city residents versus 35% for suburban residents). The non-Hispanic whites again experienced the greatest change among the three largest racial/ethnic groups. In 1990, 29% of the white city population aged 25 and older had a four-year college degree—the same percentage as the white suburban population in this age demographic; however, by 2010, 55% of such white city dwellers had a bachelor’s degree, while 39% of their white suburbanite counterparts did. Between 1990 and 2010, the city’s black population also made substantial gains in education, as evidenced by the share of black adults aged 25 and older with a bachelor’s degree having risen from 11% to 17%.
By “drilling down” through the data to examine specific neighborhoods, we can see how geographically concentrated the city’s gains in college-educated adults aged 25 and older have been. These gains have been highly concentrated in Chicago’s central business district (“the Loop”) and the surrounding areas, as well as the neighborhoods west of Chicago’s northern lakeshore. As shown in the table below, dramatic gains in the college-educated population were seen in the Loop and the neighborhoods just south, west, and north of it. For example, the Near South Side saw an increase in the share of adults with a four-year college degree climb from 9% in 1980 to 68% in 2010. No less dramatic were such gains in Chicago’s neighborhoods west of its northern lakeshore: The shares of the college-educated population there typically doubled or tripled between 1980 and 2010 (in the case of the North Center neighborhood, this share increased sixfold—from 11% in 1980 to 66% in 2010).
As one might expect, many college-educated Chicago residents work in proximity to their residence. Of those living in the Central Area and Mid-North Lakefront, an estimated 57% work in the Central Area of Chicago and 79% work somewhere in the city. Of those who do work in the Central Area, an estimated 19% travel to work by driving alone (as opposed to walking, public transit, bike, and carpooling); this percentage is much smaller than the nearly 70% of metropolitan Chicago workers who travel to work by driving alone. The trends highlighted thus far point to the fact that the city of Chicago draws and retains many jobs. By one count, the city of Chicago’s Central Area is the domicile of over half a million jobs. As seen below, job counts in the Central Area have remained fairly constant over the past 13 years, even while job levels in the remainder of the city and in the remainder of Cook County have been falling.
Meanwhile, compensation levels per job have continued to climb in Chicago’s Central Area, reflecting a work force with greater skills and education. Annual compensation per worker on the payroll in Chicago’s Central Area exceeds that of the overall MSA by 50%.
Many of the trends shown here bode well for the city of Chicago, despite the fiscal challenges it currently faces. To be sure, many large central cities in the Midwest, including Detroit, are experiencing strong growth of both jobs and households centered around their central areas and downtowns. In this, the central Chicago area enjoys a strong start. ________________________________________
 This is not to say that all parts of the city have been on the economic upswing. Several Chicago neighborhoods have seen severe deterioration in wealth and income, as well as in living conditions, as evidenced by increasing incidences of homelessness and crime in certain areas in the past few decades; see, e.g., http://danielkayhertz.com/2013/08/05/weve-talked-about-homicide-in-chicago-at-least-one-million-times-but-i-dont-think-this-has-come-up/. (Return to text)
 This statement covers 113,000 workers living in these areas as of the year 2000. Estimates were pulled from www.rtams.org and are based on the Census Transportation Planning Package (CTPP), “which is a special tabulation of the decennial U.S. Census for transportation planners” and “contains detailed tabulations on the characteristics of workers at their place of residence (‘part 1’), at their place of work (‘part 2’), and on work trip flows between home and work (‘part 3’)” (see www.rtams.org/rtams/ctppHome.jsp). Workers who work at home are excluded. See also http://definingdowntown.org/wp-content/uploads/docs/Defining_DowntownReport.pdf; this report ranks Chicago second among major U.S. cities in terms of the percentage of residents living within one mile of downtown who work downtown (figure 3 in the report), and ranks Chicago first in terms of population growth in the downtown area over the period 2000–10 (figure 4 in the report). (Return to text)
This post originally appeared in Chicago Fed Midwest Economy on December 3, 2014.
Tuesday, November 25th, 2014
[ This week is the Thanksgiving holiday in the US, so I’ll be away and enjoying it for the rest of the week. As a holiday long read for you, I’m posting this very important piece about the three generations of black mayors in America and how the timing of the election of the first black mayor affected the trajectory of those cities, with implications even today. Pete is the best writer on urbanism and race that I know and you can read his writings about this and more on his site Corner Side Yard – Aaron. ]
The Monument to Joe Louis, commonly known as “The Fist”, in downtown Detroit. For more than thirty years, the sculpture has been a controversial symbol of black power in Detroit. Source: Pete Saunders
A select group of cities elected black mayors during the brief and tumultuous Black Power Era, seeking to implement an activist social justice platform. These cities – notably Cleveland, Gary, Newark and Detroit among large cities — became stigmatized in a way that few have been able to recover from. A negative narrative was developed about most of them that stuck, despite considerable efforts to dispel them. Cities that elected “first black mayors” after the Black Power Era, during a period of relative calm, were able to adapt as the political skill set grew in the African-American community. However, the Black Power Era’s near-toxic combination of heightened white racism, black disenfranchisement and disillusionment – and ill-prepared black political leadership – accelerated the downfall of these select cities.
If the cities that elected black mayors during this tumultuous period are ever to move forward, to achieve their potential, they must be released from the purgatory they inhabit.
Just as many people have well-developed thoughts and opinions on the American Civil War but little understanding of the turbulent Reconstruction Era that followed, many are familiar with the 20th Century Civil Rights Movement, yet are far less knowledgeable about the local social and political events that followed it. The Black Power Movement supplanted much of the Civil Rights Movement after the assassination of Dr. Martin Luther King, with an emphasis on turning social activism into political empowerment. Several cities elected their first black mayors during that period. Cleveland was the first with the selection of Carl Stokes as mayor in 1967. Gary, Indiana followed suit the same year with the election of Richard Hatcher, and the federal government appointed Walter Washington to become Washington, DC’s first black mayor as well. Later, Newark (Kenneth Gibson), Dayton (James McGee) and Cincinnati (Ted Berry) followed suit by 1972, and culminated with the elections of Tom Bradley (Los Angeles), Maynard Jackson (Atlanta) and Coleman Young (Detroit) in 1973. A new era of African-American political empowerment had begun.
Taking a long historical view, it’s clear that the people who became first African-American mayors beginning in the late ‘60s and continuing through today held different views, developed different paths to victory and methods of governance, and had differing perceptions of their skills among their constituents. Mayors elected through about 1975 were often activists straight from the Civil Rights Movement, and were looking for ways to turn the movement into actual political power. The group of black mayors that followed them, from about 1975 to 1990 or so, had more distance between them and the Civil Rights Movement and were less concerned about implementing movement politics; they were more concerned about developing the kind of coalition that could get them elected and help them win legislative victories once in office. The third group of “first black mayors”, coming after about 1990 and continuing through today generally came to terms with a different demographic landscape in most major American cities. Whereas first black mayors elected twenty years prior could dependably rely on a supermajority of black votes in their favor – and an equally large supermajority of white votes against them – the most recent group works in a more nuanced and less racially charged environment. Younger white residents without the racial grievances of their parents or grandparents were returning to cities, and Hispanics were rapidly increasing in numbers. Anyone who would attempt to become a “first black mayor” in that environment would have to develop an appeal that goes beyond racial boundaries.
And yes, the decade that followed Dr. Martin Luther King’s assassination was as tumultuous as they come for America’s largest cities. That period, well remembered by those who lived it as a time of particularly strong urban and social tensions, coincided with the downward slide in momentum of the Civil Rights Movement and the subsequent rise of the Black Power Movement. Older adults likely remember the period well: urban riots, fights over school busing, Affirmative Action battles, efforts to eliminate long-entrenched policies like blockbusting and redlining. Skyrocketing crime, heated debates on the inequity of public services, and the development of a new, rapidly expanding land called “suburbia” that was looking very appealing to a growing number of city residents. Nearly all large cities developed scars during that period. The question is whether they healed, and healed well.
“It’s Our Time”
Detroit Mayor Coleman Young. Source: Detroit News
Coleman Young, elected as Detroit’s first black mayor in 1973, in many ways epitomizes the first group of black political leadership that emerged following the Civil Rights Movement. One might call them the Black Power set. Born in 1918, Young was part of a generation of African-Americans who stood tantalizingly closer to economic prosperity and social equality than any previous generation, yet were reminded that they could never achieve it. After serving as a bombardier and navigator for the U.S. Army Air Forces during World War II, Young returned from his service disillusioned by the segregation he and his fellow troops suffered. He went on to become a labor leader with the UAW and later built a political base as a state representative and state senator in the Michigan Legislature, representing Detroit’s East Side.
Young became a vocal critic of local leadership after the 1967 riots, and targeted the heavy-handed efforts of Detroit police to reduce crime. Young announced he was running for mayor in 1973 in large part to work to disband the Detroit Police Department’s STRESS (Stop the Robberies, Enjoy Safe Streets) unit. The unit was often mentioned as the initiator of police brutality complaints, and was allegedly responsible for as many as 22 deaths of black residents over a 2 ½ year period. Young ran against John Nichols, the city’s police commissioner and staunch supporter of the troubled unit.
Young won a narrow victory over Nichols in 1973 in a race that was almost entirely split along racial lines in the nearly 50/50 city. In his inaugural address, Young famously told “all those pushers, (to) all rip-off artists, (to) all muggers: It’s time to leave Detroit; hit Eight Mile Road! And I don’t give a damn if they are black or white, or if they wear Superfly suits or blue uniforms with silver badges. Hit the road.” Young maintained that his message was that criminals were not welcome in Detroit; the quote has often been interpreted by white former Detroit residents as a throwing down of the gauntlet, urging whites to leave the city for the suburbs. Young went on to win four more terms in office. He balanced budgets yet struggled to maintain services in a city with a rapidly declining tax base. He remains one of the most controversial leaders in Detroit history.
Conversely, Cleveland’s Carl Stokes and Newark’s Kenneth Gibson may not have provoked similar passions in their respective cities, but they did not fare much better. Stokes obtained his law degree in 1956, served three terms in the Ohio Legislature and narrowly lost a bid for mayor in 1965. His eventual win in 1967 garnered him plenty of national attention as he became the first African-American mayor of one of the nation’s ten largest cities. He was successful enough to pursue and win a second two-year term in 1969, but his tenure in office was characterized by constant feuds with the Cleveland City Council and the Police Department. Stokes left office at the end of his second term. After studying civil engineering in college, Gibson worked for nearly two decades as a structural engineer with the New Jersey Highway Department, the Newark Housing Authority and the City of Newark. He pursued the mayor’s office as a reformer wishing to restore honor to the office following the corruption scandals of incumbent Hugh Addonizio. Gibson won in 1970 but perhaps his attachment to people like Newark poet and playwright Amiri Baraka, who challenged Gibson to push the city’s corporate interests to take a more active and responsible role in the community, served as a lightning rod to the city’s remaining middle class element. Gibson was elected to four terms, but Newark’s slide continued unabated.
Black National Political Convention
It’s probably fair to say that the political pinnacle of the Black Power era took place between the elections of Gibson and Young, with the advent of the Black National Political Convention in 1972. Held in Gary, Indiana and hosted by Mayor Richard Hatcher, delegates from the entire spectrum of black leadership convened to establish a black political agenda for urban America. More than 8,000 people attended the three-day convention, with 3,000 selected to be voting delegates. Newly elected black officials attended, along with celebrated black nationalists and revolutionaries. Delegates with more moderate position also attended. However, whites were not invited. No white speakers whose views were sympathetic to the movement; not even white reporters. This exclusion caused groups like the NAACP and the Urban League to skip the event and be critical of the gathering.
Renee Ferguson, a former Chicago local news television reporter and currently the press secretary for U.S. Rep. Bobby Rush (D-IL), attended the convention as a 22-year-old reporter for the Indianapolis News. In an interview with Chicago public radio station WBEZ remarking on the 40th anniversary of the convention in 2012, she spoke about the frenzied nature of the event. “When I got there it was very disorganized, much bigger than anybody had planned for and impossible actually for anybody to see what was happening. The speeches were long and there were a lot of egos and there weren’t many women.”
Ferguson said that the agenda of the convention was framed by a basic question, and was the source of great tension.
“Are black people going to work on the inside with the system, or are they going to have their own and work on the outside? And that was the big argument no matter what else they talked about,” Ferguson said. “That was the underlying intrigue and the most interesting thing for me to document as a young reporter.”
In the end, black nationalists won the day. The prevailing theme of the convention was that African-Americans would seek to create change outside of the system. The agenda included platforms that had support from other liberal factions (elimination of capital punishment, national health insurance), but also included platforms that sought to consolidate political control with the growing number of leaders (community control of schools, busing for school integration). Perhaps the biggest message of the convention, however, was that “White politics had failed Black people”. And a new group of leaders set out to implement that vision.
Chicago Mayor Harold Washington, the day after winning the election in 1983. Source: Illinois Historic Preservation Agency.
Almost immediately after the convening of the convention, a group of rising black political figures who rejected the premise of the Black Power era leaders sought to ascend through coalition building. Rather than work exclusively outside of the system, and alienating those who disagreed with them, this group stressed their ability to work within the existing power and political framework.
As a state representative at the time representing Illinois’ 26th legislative district, Harold Washington would’ve been eligible to serve as a delegate to the Black National Political Convention. Whether he attended is uncertain. But it is clear that he adopted a coalition-building style that served him well as he ascended to the office of Mayor in Chicago.
Born in 1922 and just four years younger than Detroit’s Coleman Young, Harold Washington nevertheless followed a different path to mayor of Chicago. Washington also served in the Army during World War II, building runways for long-range bombers in the North Pacific. Upon his return from service he graduated from Roosevelt College in Chicago in 1949, and from Northwestern University Law School in 1952. Washington immediately became immersed in local Chicago politics after law school, working for 3rd Ward Alderman and former Olympic athlete Ralph Metcalfe. While working with Metcalfe Washington became intimately familiar with Chicago’s brand of Machine politics – a spoils system, patronage, and a personal approach to bringing out the vote on Election Day.
Contrary to Young’s experience in Detroit, African-Americans in Chicago experienced a fair amount of political enfranchisement. In many respects, African-Americans were just one part of the ethnic milieu that made up Chicago’s political landscape, like the Germans, Poles, Italians and Irish. The foundation of Chicago’s political machine was its ability to meet the specific needs of those who could be convinced to depend on them, and convincing as many people to depend on them as they could. The Machine’s success meant that it could not ignore or exclude potential votes, wherever they came from, and that included the African-American community. The Machine’s strength was derived from its network of precinct captains, committeemen and elected officials that would convene regularly to discuss its political platform, slate of candidates vote targets and distribution of benefits. Washington received a sound political education in coalition building through his work in Chicago’s Machine.
Washington was elected into the Illinois House of Representatives in 1965 and to the U.S. Congress in 1980. Over the years, he developed a reputation of independence from the Chicago Democratic Party leadership, often becoming an unreliable member of the Machine’s state legislative contingent. As a State Senator Washington was one of a group of independent black Democrats who partnered with white liberal Democrats and moderate Republicans to push forward the Illinois Human Rights Act of 1980. His ascension to Congress later that year, defeating Machine loyalist Bennett Stewart, further alienated him from the Machine.
This effort afforded Washington a unique political perspective. He enjoyed strong independent support from his African-American base, largely developed apart from the Machine. He had strong connections with members of Chicago’s “lakefront progressive” community, which had a fairly large contingent in the city’s Hyde Park community, where Washington also lived. It was likely evident to Washington and others that this pairing provided him a wider base than other black elected officials who rose through the ranks and focused solely on serving the needs of their African-American constituents. Furthermore, Washington likely realized that the Hyde Park progressive community’s networks with other progressives, particularly on the North Side, opened up opportunities for offices beyond Congress.
Washington rode the wave of his unique coalition into mayoral politics in 1983. Bolstered by support from his African-American base and reform-minded white progressives, Washington won against Republican Bernard Epton that November. Once elected, however, he was confronted with a solid bloc of 29 aldermen (out of 50) firmly wedded to the “Democratic Organization” structure that had survived for so long in Chicago. The bloc led a four-year period of legislative gridlock in Chicago known as Council Wars – the bloc assumed control of all Council committees, allowing it to set the legislative agenda; the bloc voted down virtually all of the mayor’s appointments; the bloc fought bitterly with Washington’s supporters on budget and appropriations.
Despite the challenges, however, Washington’s coalition held firm. Federal lawsuits led by Washington allies challenged Chicago’s ward redistricting following the 1980 Census. At the time, Chicago’s population included approximately 40 percent white and black residents, and 15 percent with an Hispanic background. However, Washington supporters argued that wards were gerrymandered to maximize the number of white aldermen in the racially polarized city – at the time of Washington’s election as mayor there were 33 white, 16 black and one Hispanic aldermen. Federal courts ruled in favor of Washington’s supporters in 1986, causing a redrawing of seven wards and special elections. Washington supporters won four elections, creating a 25-25 split in the City Council and effectively giving the mayor control of the Council through his ability to cast a deciding vote. Unfortunately, Washington’s control was short-lived. He died of a massive heart attack on November 25, 1987, just months after his defeat of the obstructionist bloc.
Whereas Harold Washington’s political acumen made him a coalition builder, Baltimore mayor Kurt Schmoke’s stellar athletic and academic pedigree, wonky sensibility and personable nature drew coalitions toward him.
Schmoke attended the prestigious Baltimore City College for high school, where he excelled in football and lacrosse. He entered Yale University in 1967, where he played quarterback for the freshman team and developed into an undergraduate student leader. After graduating from Yale with a degree in history in 1971, Schmoke studied as a Rhodes Scholar at Oxford University and graduated from Harvard Law School in 1976.
Schmoke’s first electoral victory was as Baltimore State’s Attorney in 1982. He defeated William Swisher in a surprise landslide, running a race-neutral campaign against the law-and-order, and (according to some) racially insensitive incumbent. Schmoke was technically not Baltimore’s first black mayor; that title goes to Clarence “Du” Burns, who was elevated to mayor after the election of the previous mayor, William Donald Schaefer, as Maryland’s governor. But Schmoke inherited much of Schaefer’s progressive and business establishment, as they saw him as the one who could articulate their agenda in a largely black city. Schmoke challenged Burns in 1987 and won narrowly. Recalling Schmoke’s victory for an article in Baltimore’s City Paper, City Council member Bill Cunningham said it was a “new-day-is-dawning thing.” In the same article, the Rev. Arnold Howard of Enon Baptist Church said, “We were looking for someone to encompass our hopes for the future, someone who would validate our own journey. He went into office with all that on him. He was the new savior. He was the one who would fulfill our dreams.”
In the end, however, despite being twice re-elected, Schmoke’s analytical approach to leadership alienated coalitions who thought they were getting something else. He developed a reputation for establishing bold policy goals that were difficult to build consensus around – improving adult literacy, drug decriminalization – and put in place department heads who brought the same policy wonk approach to their work that he did. The business establishment and African-American community alike thought they were electing a dynamic “mover and shaker” who could energize them as they pushed toward new heights. But Schmoke was perhaps more manager and caretaker than mover. As a result he left office in 1999, deciding not to seek a fourth term, with a frayed coalition: a business community slightly betrayed, and an African-American community slightly disillusioned.
With the start of the 1990’s a new type of black political figure began to emerge. Gains made through increased access to education and job opportunities were putting more African-Americans in previously unattainable positions, and allowing them to pursue previously unattainable avenues. Wellington Webb, the first black mayor of Denver, fits this bill.
Webb was born in 1941 in Chicago and arrived in the Mile High City at age 11. In his autobiography, he chronicles a difficult childhood; his mother had a drinking problem and he ended up being raised by his grandmother, and he had academic difficulties at Denver’s Manual High School. But Webb fought through his family problems and personal demons. He attended and graduated from Northeastern Junior College in Colorado in 1960, and obtained his bachelor’s degree from Colorado State College in 1964. He was introduced to politics by his grandmother, who was a Democratic Party district committeewoman in Denver. Webb wanted to become a teacher, but found it difficult to obtain a position in Denver’s public schools, and thought local political involvement in some of the federal “War on Poverty” programs of the late 1960’s might help. He transitioned from working in a potato chip factory to working in city government, and later obtained a master’s degree from the University of Northern Colorado in 1971.
Webb developed a reputation as a numbers-cruncher and policy wonk in city government, and was pulled into politics rather than pushed into it by any sense of bitterness. He was elected to the Colorado House of Representatives in 1972 and represented the Northeast Denver neighborhood he grew up in. In 1977 he was appointed by President Jimmy Carter to serve as regional director of the U.S. Department of Health, Education and Welfare, and in 1981 he was appointed by Colorado Governor Richard Lamm to be executive director of the state Department of Regulatory Agencies. Webb held that position until 1987, when he ran and won in the election to become Denver’s city auditor.
Webb’s political ascendance through the ‘70s and ‘80s certainly put him on a path to consider pursuing citywide and even statewide positions, but it was unclear whether an African-American in a city with a small minority population, in a state with a small minority population, could be competitive. He did not start with a built-in large political base like Young or Washington; nor did he have to ability to strengthen a base through coalition building the way Washington did. His only strategy, should he pursue another office, was to make a trans-racial appeal that would highlight his experience, skills and vision.
Webb entered the campaign in late 1990. Three leading candidates emerged: Webb, Denver District Attorney Norm Early (also African-American), and Republican lawyer Don Bain. Webb carried out his “Sneaker Campaign”, going door-to-door in virtually all of Denver’s neighborhoods while preaching a message of competency. He surprised everyone by forcing a runoff with Early in the May 1991 primary, finishing with 30 percent of all votes to Early’s 40 percent. Webb was able to consolidate the support from other candidates with a law-and-order platform prior to the general election against Early in June 1991. Webb won with 57 percent of the vote.
Sacramento Mayor Kevin Johnson. Source: gbmnews.com
Perhaps a better version of a first black mayor who won with a broad trans-racial appeal would be Kevin Johnson of Sacramento. Johnson was born in Sacramento, where he was a standout student and athlete. He excelled in basketball and baseball, and accepted a scholarship to play basketball at the University of California, Berkeley. From there he went on to a storied college basketball career and a long professional career with the NBA’s Cleveland Cavaliers and Phoenix Suns.
Even during his playing days Johnson maintained strong roots with his native Sacramento. He established the Kevin Johnson Corporation, which focused on real estate development and business acquisitions, and the St. HOPE nonprofit organization as an after-school program in the Oak Park neighborhood he grew up in. After his retirement from basketball in 2000, he broadened St. HOPE to include charter schools and nonprofit development in Sacramento. Today, St. HOPE is a network of four charter schools in Sacramento, and a development company with more than a dozen new construction and renovation projects in Sacramento.
Johnson had intimated his political ambitions for years, but finally announced his run for mayor in 2008. Race was hardly a factor in the race; indeed, Johnson was viewed as a decorated favorite son of California’s capital city. Johnson received numerous endorsements from Sacramento’s business and political establishment, and was the highest vote getter in the nonpartisan election that June. He forced a runoff against two-time incumbent mayor Heather Fargo, and soundly defeated her in November.
Johnson has parlayed his athletic, corporate and nonprofit success well in the government sector. He has been a staunch supporter of charter schools, along with his wife Michelle Rhee, the former chancellor of the Washington, DC Public Schools. He was actively involved in keeping the NBA’s Sacramento Kings basketball team from fleeing the city, orchestrating the team’s sale to a group of local investors. He easily won reelection in 2012, and in April 2014 was elected as president of the U.S. Conference of Mayors.
There are other black mayors who fit the trans-racial appeal profile, but are not the first black mayors of their respective cities. Kasim Reed of Atlanta, Michael Nutter of Philadelphia, and Cory Booker of Newark each brought impressive academic credentials, strong corporate backgrounds and youthful passion to their positions as mayor, distinguishing them from their predecessors. Reed interned for U.S. Rep. Joseph Kennedy II before earning his juris doctorate from Howard University, and became a partner at a law firm prior to entering politics. Nutter earned a business degree from the Wharton School at the University of Pennsylvania. Booker earned his bachelor’s and masters degrees from Stanford, earned a Rhodes Scholarship to attend the University of Oxford, and earned his juris doctorate from Yale.
Because of their academic and corporate credentials, Reed, Nutter and Booker are as comfortable in corporate boardrooms as they are in churches or community centers. Each has forged partnerships with political opponents, and adopted a pragmatic bipartisan approach to governing cities. Each has focused on effective service delivery rather than empowerment or redistributive policies. Booker’s success as mayor of New Jersey’s largest city propelled him to his current position as New Jersey’s junior U.S. Senator through special election in 2013.
The Power of Perception
Detroit, Cleveland, Newark, Chicago, Denver, Baltimore and Sacramento occupy different positions on the success spectrum of American cities. Of these five Chicago would certainly occupy the highest perch. Chicago clearly is a global city – a world financial center, the home of a dozen Fortune 500 companies and the critical link in the nation’s rail and air transportation network. The Windy City has extensive economic connections throughout the world. Indeed, world-class architecture firms based in Chicago are designing the gleaming skyscrapers sprouting everywhere in China’s large cities. Denver would rest in a position not far behind Chicago. Denver has become the capital of the Great Plains and Mountain West, a mid-continent transportation hub that built its wealth on its access to mineral resources in the Rocky Mountains. Sacramento would likely occupy a position behind Denver. Sacramento’s growth has been more recent than the others, and it still sits in the shadows of much larger California metropolises. But as the capital of our nation’s largest and most influential state, it has heft.
Baltimore, Cleveland and Newark would occupy another place on the spectrum. All are well known for enduring the storm of industrial decline, and in Cleveland’s case, fiscal insolvency. They’re slowly recovering from a nadir reached perhaps a decade or two ago and have made small steps toward improvement. They’ve worked hard to revitalize their cores – Newark has leaned on its financial services sector to turn the tide, while Baltimore and Cleveland have relied on their assets in education, health care services, and biomedical and biotech research. However, all are far from being complete success stories.
Then there is Detroit.
Each city has had African-Americans serve in the city’s highest office. Chicago’s Harold Washington endured tough times as mayor of Chicago, but he built a lasting coalition that allowed him to prevail. Denver’s Wellington Webb learned to adapt in a pluralistic environment and raised the profile of a Western city. Cleveland, Newark and Detroit each elected first black mayors during the turbulent post-Civil Rights era and paid a steep social price for doing so. Cleveland and Newark began their turnaround some years ago; perhaps Detroit’s, with its recent bankruptcy filing, has just begun.
If anyone doubts the impact of electing an African-American mayor during the racially tumultuous late ‘60s-early ‘70s era, examine the general perceptions that formed of the cities during that period and have endured ever since. Newark and Detroit, already tainted by the aftermath of urban riots, were effectively shunned by white residents after the elections of their first black mayors. Cleveland may have been headed down the same path after the election of Carl Stokes in 1967. But Stokes chose not to run for a third two-year term as mayor, leaving a wide open field. Stokes was followed by three consecutive white mayors — Ralph J. Perk, Dennis Kucinich and George Voinovich – before the election of the city’s second black mayor, Michael White, in 1990. Atlanta touted itself as the “City too busy to hate” in the ‘70s, but Maynard Jackson’s 1973 election coincided with rapid white flight out of the city, at the same time that Sun Belt migration from the north was strengthening the suburban base. In Washington, DC, black political empowerment there was often wrapped up in the controversy of federal political representation for the District. Mayors in the District were federally appointed until Walter Washington was elected mayor in 1975.
Perhaps the best way to view perceptions of cities that elected “first black mayors” during the Black Power Era is to examine the fortunes of Detroit and Philadelphia during and after this period. Entering the 1970’s the Motor City and the City of Brotherly Love had similar populations (about 1.5 million people in Detroit, 1.9 million in Philadelphia), with a similar geography (about 140 square miles) and similar demographics (approximately a 60/40 split between whites and blacks). As noted, Coleman Young was elected mayor of Detroit in 1973, narrowly winning against Police Commissioner John Nichols. It was clear that Nichols’ candidacy was an effort by his constituency to restore order to a city during a difficult time. Meanwhile, another police commissioner, Frank Rizzo, assumed power as mayor of Philadelphia in 1971. As mayor Rizzo was regarded as having a strained relationship with the city’s African-American community. Rizzo’s “law-and-order” tactics were viewed positively by his white ethnic base and have been credited by some for keeping Philadelphia from suffering the same fate as other cities. Could the Nichols campaign have been modeled after the successful Rizzo election two years earlier?
Possibly. Yet it is instructive to view the difference in perceptions of both cities since that time. Philadelphia was certainly hit hard by the decline of the nation’s manufacturing sector. Philly had substantial losses in the shipbuilding, oil refining and food processing industries over the decades, losing thousands of jobs as a result. Yet did Philly endure what was in effect a boycott of the city by white residents? Troubled North and West Philadelphia are well known, but did their troubles define the entire city? I think many people could imagine a real-life “Rocky Balboa” coming from Philadelphia in the ‘70s and ‘80s, but far fewer could imagine a similar character coming from Detroit.
Philadelphia’s national perception took a tumble over the last 40 years, but the city has fought back hard to rebuild itself as a premier city with a strong economic foundation in education, health care and financial services. Detroit, however, continued on a descent no other city endured. High crime rates, racial tensions, dilapidated abandoned buildings in a desolate post-industrial landscape — all defined Detroit then and continue to define it today.
Between 1970 and 2010, Philadelphia’s population dropped by 22 percent, from 1.9 million to 1.5 million. The decline was largely driven by a substantial loss of its non-Hispanic white population over the period, which declined by 56 percent. Over the same period, Detroit’s population dropped by 53 percent, from 1.5 million to just over 700,000. Its decline too was largely driven by a loss of its non-Hispanic white population, which dropped by 93 percent. Ninety-three percent.
Something happened that kept a base or core of white residents in Philadelphia. Something happened in Detroit that led to their virtual disappearance.
Cities that elected their first black mayors during the Black Power Era deeply suffered in national perception because of the gamut of social challenges they had at the time, and found it difficult to stabilize poor economies or for revitalization to gain traction. But they suffered far worse than other cities because they were in effect shunned. They suffered from the greatest increases in crime. They experienced the largest declines in school quality and performance. They witnessed the steepest drops in property values. They had the widest divides between police and community. They had the highest numbers of white middle-class residents departing for the suburbs. Newark was shunned. Gary was shunned. Detroit was shunned. Maybe Cleveland, Los Angeles, or Cincinnati, or Dayton did not suffer the same fate because African-American populations there did not approach parity with whites, who were eventually able to “reclaim” the city’s highest office. In the end, however, select cities paid a price for the election of black mayors during this time, a price not paid by cities that elected black mayors after them, or not at all.
Detroit Mayor Mike Duggan on election night in 2013. Source: wikipedia.org
On January 1, Michael Duggan assumed the difficult and unenviable responsibility of becoming the 75th mayor of Detroit, Michigan. Given the most recent difficult period that Detroit has endured, and the continued difficult times ahead, Mayor Duggan’s inauguration was a subdued affair. There was no inaugural ball or celebration. The new mayor was simply sworn in with a short ceremony in his new 11th floor office in the Coleman A. Young Municipal Center.
The new mayor said he would focus on operations – removing blight, snowplowing streets, repairing lights, making sure buses run safely and on time. The mayor suggested he would move into Manoogian Mansion, the palatial mayoral residence on the Detroit River that was deeded to the city in the 1960’s. As far as the focus on operations goes, he really has little choice in the matter. The State of Michigan-appointed emergency manager Kevyn Orr, brought in with exceptionally broad powers to resolve the city’s financial mess and currently leading the Motor City’s largest-ever municipal bankruptcy, has a lock on policy decisions right now. Mayor Duggan says his focus is to “return the city to elected leadership on October 1,” the day that Orr’s 18-month appointment from the state ends.
And with that, Mike Duggan became the first white mayor of Detroit since 1973, mayor of a city with a population that is 83% African-American. This most recent election, most observers believe, is a venture into the unknown, and is as much an experiment as Detroit’s bankruptcy itself. An era of African-American political leadership has ended in Detroit, but no one is certain of what the next era might be.
Perhaps the bankruptcy, the election of a white mayor and the growing urban pioneer spirit that is visible in parts of the city means that the shunning of Detroit has ended.
This post originally appeared on August 10th, 2014 in
Friday, November 14th, 2014
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.
Sunday, November 9th, 2014
This post originally ran on April 28, 2013.
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.