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Monday, July 21st, 2014

Why Does Louisville Have Better Restaurants Than Indianapolis?

I was briefly back on the homefront earlier this month to check out the now fully opened Big Four Bridge pedestrian path across the Ohio River in Louisville. While there I spent some time in NuLu, a retail and restaurant district centered on Market St. just east of downtown, and had dinner at a French bistro type place called La Coop. This place focuses on what I’d call the basics – it’s not trying to be a super high end kind of place. But I’m not going to lie, the undistinguished frites aside, the meal was spectacular front to back, and my date agreed.

Louisville is known for its many high quality restaurants. I doubt La Coop is tops on many people’s list, nor does it aspire to be. Yet preparing to drive back to Indy I was struck that La Coop is better than any restaurant in Indianapolis. My meal at La Coop was probably better than any one I’d had in Indy since L’Explorateur closed in 2009. And that’s a not uncommon occurrence when dining in Louisville. What’s more, La Coop was bustling by 8pm on a Tuesday night. While tables were certainly available, you can’t assume you can just walk in to a top restaurant there without a reservation, even on a weeknight.

Louisville clearly values fine dining in a way that Indianapolis doesn’t. Metro Indy is larger, better educated, richer, and much less provincial. Given that amenities generally fall along a size-wealth slope, by default you’d think Indy would do better on the restaurant front. But it doesn’t. Why is this?

Louisville clearly punches above its weight on restaurants. Part of this is due to the presence of a major culinary school. But that doesn’t explain the demand side of the equation. What does?

I see this as resulting at least in part from a cultural divide between the Midwest and the South, which seems to fall somewhere between these two cities. I argue the stronger aristocratic heritage of the South creates the conditions in which excellence is encouraged (or at least respected), versus the leveling democratic social state of the Midwest that anathematizes any distinctions between high and low and thus creates a climate in which excellence is disparaged (or distrusted at best).

Tocqueville is of course the best writer on the differences between aristocracy and democracy. Of aristocratic heritage himself, he recognized the overall superiority of the democratic state in uplifting the common man. The average condition in a democratic social state he would note, is higher than that of an aristocracy. He also saw clearly the many flaws of the aristocratic state. Yet he also realized that with the passing of aristocracy, things would be lost, especially in the realm of fine arts and refinement more broadly construed.

Tocqueville (among others) noted that the South was the most aristocratic region of the United States. That doesn’t mean he approved. In fact, he was not a fan of the US South, and wrote of its many manifest flaws, including the injustice of slavery and the many pernicious effects it had on the character of whites as well.

One of traits of aristocracy that seems to remain present in the South is the existence and embrace of an aristocratic class or caste. In many cases this is family based, such that, for example, you could never become fully part of the elite of Charleston as an outsider no matter how much money, talent, or class you have. But carpetbaggers and the nouveau riche are able to assimilate to some degree.

As with a feudal landholding, this aristocratic class exists as part of an integrated system with the lower classes. Thus the lower classes not only recognize the rights of aristocratic class to homage and such, the elites can even be a source of pride to ordinary residents of the community.

In this system, the upper class can cultivate high end tastes without incurring the opprobrium of the community. They are literally a class apart and are expected to depart from the average resident in terms of tastes and manners.

We see this clearly in the case of the so-called “Millionaire’s Row” at the Kentucky Derby. Actually, many Louisville locals never even attend the Kentucky Derby, instead attending the Kentucky Oaks, which is held the day before and is known as the race for the locals. (The Oaks itself attracts over 100,000 attendees). Most of them will certainly never visit the Derby’s more elite precincts. Yet, seeing the presence of celebrities and local elites in their finery on TV doesn’t produce resentment, but rather pride. The conspicuous consumption and lavish traditions of elite Louisville are something the average resident sees as reflecting well on their community as a whole, and hence to some extent even on themselves.

In terms of how this affects restaurants, Louisville’s elite can patronize high quality, high status establishments without shame. There is nothing seen as wrong in the community with them pursuing aristocratic tastes. Again, the high quality of Louisville’s restaurants can be a source of pride even to those who don’t patronize them. There are, of course, class tensions in Louisville such as the East End-South End divide. But class conflict itself implies multiple classes of people.

The situation is totally different in Indianapolis. In Indiana, the idea of an aristocratic type class would be viewed with hostility. There’s a democratic social state norm in which anyone who is viewed as too uppity is seen as having a moral defect. There’s only supposed to be one class of people. This has its virtues, but has debilitating effects as well. Take for example the classic line “He might have book learning but he doesn’t have any common sense.” You literally hear this in Indiana. Admittedly, in my case it may have been true. But the moral system underpinning it clearly explains why education is held in such low regard in the Midwest. It’s not just that education as such is viewed as not worth it; the pursuit of education indicates a type of moral deficiency.

So take a look at the traditions of the Indianapolis 500. Obviously US auto racing has a different culture than horse racing. But it still aligns with the social state. The 500 is a classic everyman’s type event, with a blue collar ethos, in which actual attendance by locals plays a major role. There are some celebrities of course, but celebrity/elite culture plays a very limited role there in contrast to the Kentucky Derby and certainly than international auto racing such as Formula 1. (The biggest personalities at the 500 are those with a particularly local traditional appeal – like Jim Nabors and Florence Henderson – versus contemporary celebrity star power).

This bleeds through into nearly every aspect of the civic culture in the state. I’ve long noted that there’s no culture of connoisseurship in Indianapolis. This is true for pretty much everything. Restaurants are but one example. While much better on average than they used to be, and certainly not bad by any means, Indy’s restaurants don’t measure up to Louisville’s with the notable exception of breakfast places. As the case with the aforementioned L’Exporateur shows, when Indy chefs do decide to put out a world class product, it isn’t patronized because it isn’t valued. It’s not about culinary talent, it’s about the customer base or lack thereof. The chef behind L’Ex opened a pizza place next. It should be no surprise that Indianapolis Monthly once had a cover story dubbing the city “Chain City, USA.”

My understanding is that there is a group of hardcore food and wine folks in Indy, but they do most of their consumption at private dinners and out of their private cellars. Public displays of refinement or luxurious consumption in Indianapolis are simply not acceptable.

This is but one example of how the pursuit of excellence in all varieties is disparaged and subject to active suppression in the state. This is hardly limited to Indiana and is a near universal Midwestern trait from what I’ve seen. Chicago offers the major exception, and I’ll exclude Minnesota as well for now since I don’t fully grok the culture there.

It’s been said pejoratively that “Indiana is the ‘middle finger of the South’ sticking into the Midwest.” And while it’s true that parts of Southern Indiana such as my hometown, being in Louisville’s orbit, have a heavy Southern influence, the state is not Southern in my view. It’s very different culturally and here we have one example. I easily see the same dynamic that exists in Indiana to various degrees in Illinois, Ohio, Wisconsin, and Michigan.

That this is a cultural value is most clearly seen in the exceptions that prove the rule, like Columbus, Indiana. Columbus is by far the most successful small industrial city in the state, and home to a world-renowned collection of modern architecture among other distinctives. In a major essay on that city, I noted that “in Columbus, excellence is not a byword.” This was perhaps imposed externally by local business magnate J. Irwin Miller, but appears to have been stamped to some degree on the character of the community. As local business owner Tony Moravec put it, “We do things first class here.” Whether the value will be retained or dissipate now that Miller is dead remains to be seen, but it’s still there for now.

But in a state replete with struggling communities, has anyplace ever looked to imitate Columbus? Has it been held up as a model? No. Why not? It’s because Indiana as a whole rejects the values that made Columbus successful. J. Irwin Miller famously said that “a mediocrity is expensive.” True, but that misses the point re:Indiana. Mediocrity isn’t an economic value in the state. It’s a moral value. People aren’t choosing mediocrity in the mistaken belief that it’s cheap. They think aspiring to better is a character defect. That sacralization of average is why many of its communities are willing to martyr themselves in its honor. And if a place tries to aspire to better, don’t worry. The General Assembly will soon be introducing legislation to make sure that doesn’t spread.

This produces an enormous cultural headwind that is an impediment to even the cultural elite in their attempts to create high quality things, from good architecture to good restaurants. The attempts are compromised both via the internalization of this value, and external forces expressing it. As Paul Graham put it:

How much does it matter what message a city sends? Empirically, the answer seems to be: a lot. You might think that if you had enough strength of mind to do great things, you’d be able to transcend your environment. Where you live should make at most a couple percent difference. But if you look at the historical evidence, it seems to matter more than that.

The restaurants of Indianapolis are well beyond mediocre, but they have clearly been affected by this characteristic of the social state in which they are operating.

One exception to this rule about the pursuit of excellence is in sports, and it’s a telling one. Hoosiers and Midwesterners want to see their teams win, but they want to see them win the right way and with the right kind of people that reflect the character of the state’s residents. In the South they just want wins and they don’t care how they get them.

Do you think anybody in Kentucky cares about the Calipari Way as long as UK is racking up wins and championships? Is it any surprise that it’s North Carolina where athletes get A’s in fake classes? Nobody cares in the South as long the wins come and behavior doesn’t get so bad it brings national publicity.

By contrast, Big Ten schools by and large expect their players to get an education and graduate, to demonstrate good character, and there’s a lifelong commitment and bond between coaches, fans, and players. When IU tried to import a UK style into its program with the Kelvin Sampson hire, the fanbase rejected it almost immediately. (By the way, I’ll never consider Penn State a Big Ten school, and Pennsylvania is not the Midwest). It’s similar in the way that the brawl era Pacers saw their fan support vaporize.

In Indiana particularly, from Milan High School to Steve Alford’s Indiana Hoosiers, the self-effacing, fundamentally sound, clean cut, small town type of player and team had big success. (Oscar Robertson was a player in the same mold. Though he never got his due at the time thanks to racism, he shows that even black Indiana players exhibited the same character traits). This perhaps convinced Hoosiers that their preferred style of doing things would bring success as well.

Unfortunately that hasn’t played out much recently, either in sports or economically. This produces cognitive dissonance and a sense of bitterness about a world that seems to have gone wrong. As I wrote re:Columbus and about how that city’s embrace of excellence paid economic rewards in a world where cheap places to do business are a dime a dozen:

It isn’t just something that affects architecture….This is a place with high standards for itself. This pays huge dividends in the economic development sphere. In a competitive world, only firms that deliver excellence can survive the brutal global competition. Which workers are more likely to produce excellent products, ones that demand excellence in their own communities, or ones who disparage it? How can any investor believe that residents who tolerate a run down, mediocre community for their own family to live in will suddenly start taking pride in the products coming off their employers’ production lines? It makes no sense at all.

I’m not sure the Midwest understands this lesson, or would take heed of it if it did. Rather there is, I detect, a martyrdom complex. People in the Midwest believe they are entitled to success the way they used to enjoy it because they live the right way. But if they don’t get it, at least their communities can die with their values intact. If this is in fact the case, it’s impossible to gainsay the decision. It’s even admirable in a sense. I myself would never adopt the values of UK basketball no matter how many championships it would bring. But then again I’m a Hoosier so of course I feel that way.

In any case, as Richard Longworth put it in his book about the failures of the Midwest in the age of globalization, “The first task is to tell the truth.” Simply stating the obvious truth that Louisville has better restaurants than Indy may generate blowback. But the larger and more painful truth is that Indiana and the Midwest have embraced mediocrity as a value in a way that hobbles the pursuit of excellence there, and has terrible economic and other consequences that go far beyond restaurants. Unless and until that truth is faced and things change, which may require something like an influx of outsiders not wedded to the status quo, the enormous potential of this region and its people will continue to be squandered.

Wednesday, April 16th, 2014

How State DOT Math Works

Here’s a small gem for you. Remember that $260 million tunnel under the trees in Louisville? It’s part of the boondoggle Ohio River Bridges project. Would you believe the price went up by almost $80 million at the same time Indiana claimed it “saved” $209 million on it through design changes? Of course you would.

In 2010, the state DOTs were saying that the tunnel would cost $260 million. (See “The $260 Million Home.”) Keep in mind, this is back when the project scope called for a six lane freeway in the East End and when the entire project was supposed to cost $4.1 billion. The East End approach that included the tunnel was estimated at $753 million.

Then in 2012 the two states revised the project to reduce the number of lanes in the East End bridge to four among other changes. This reduced the total project scope to $2.6 billion. The Kentucky approach (including the tunnel) was estimated at $795 million (over $100,000 per foot, incidentally), which was actually an increase. Even if we assign 100% of the cost increase in the approach to the tunnel, which would make it $302 million. Keep in mind that media reports continued to describe the tunnel as being in the $255-260 million range.

Yesterday the Courier Journal reported that the actual tunnel was cost $338 million – that’s a $78 million increase over 2010 and a $36 million increase over our max burn scenario in 2012.

Yet the Indiana Department of Transportation is claiming that they saved $209 million on the tunnel. From the C-J article: “Design changes for the tunnels earlier this year cut about $209 million from the initial $547 million estimate made before bids were submitted. The tunnels have been shortened 200 feet, to a total of 1,800 feet. The number of initial lanes to be constructed was reduced in 2012 to a total of four with eight-foot shoulders on both sides, allowing for expansion to the original six lanes if eventually needed.”

I googled “drumanard tunnel 547″ and got 19 hits. There was nothing I could find prior to January 2014 (after the bid was let) with an estimate of $547 million listed for the tunnel cost in this or other searches. Dittos for the $209 million savings. The two figures appear to have come into existence at the exact same time.

Or did INDOT actually know all along this tunnel would be $547 million, but kept the info from the public? Even at the original price, they were under huge pressure about building it because it was so self-evidently ludicrous. For example, the lede in a 2012 investigative story in the Indianapolis Star was “All that stands between Indiana taxpayers and $200 million in savings is 11 acres of woods in Kentucky.” This was not long after the bridges project manager was claiming it would cost money to remove the tunnel. According to the News and Tribune, “[Bridges Project Manager] Sacksteder said removing the tunnel is not an option and would actually cost the project too much time and money.” Can you imagine them actually getting away with building the tunnel if they admitted to the public it was going to cost over half a billion dollars?

At this point I’d have to say it looks like either 1) INDOT created a ludicrously inflated estimate for the tunnel right before construction that was used for the purpose of generating bogus claims of savings, or 2) They were suppressing knowledge that the tunnel was vastly more expensive than they were telling the public. Take your pick.

In any case, only in the world of state DOT land can costs that escalate from $260 million on a six lane road to $338 million on a downscoped four lane road translate into a “savings” of $209 million.

PS: INDOT has been crowing that they saved $228 million during their contracting for the East End bridge. The tunnel was $209 million of that. So 92% of their claimed total savings are bogus right there – costs actually went up. What are the chances the other $20 million are bogus too? I know where I’d place my bet. I noted over six months ago that the amount of money flowing into this project – including increased taxpayer subsidies – indicated that costs were going up, not down. This is just more confirmation. That’s why INDOT has been frantically trying to land the plane by cutting scope and looking for “value engineering” like radically changing the architectural design of the East End bridge. That’s what project managers should be doing, actually. But let’s at least be honest about what’s going on.

Sunday, April 13th, 2014

On the Riverfront

Thursday I took a look at my “Cincinnati conundrum,” namely how it’s possible for a city that has the greatest collection of civic assets of any city its size in America to underperform demographically and economically. In that piece I called out the sprawl angle. But today I want to take a different look at it by panning back the lens to see Cincinnati as simply one example of the river city.

There are four major cities laid out on an east-west corridor along the Ohio River: Pittsburgh, Cincinnati, Louisville, and St. Louis (which is not on the Ohio River, but close enough. I’ll leave Memphis and New Orleans out of it for now). All of these are richly endowed with civic assets like Cincinnati is, having far more than their fair share of great things, yet they’ve all been stagnant to slow growing for decades.

This suggests a broader challenge: if urbanity and quality of life are so determinant of economic success, why aren’t these places juggernauts? It’s not that they are failures by any means, but they are long term under-performers.


Over the Rhine, Cincinnati – one example of the spectacular urban assets of these cities

I don’t pretend to have all the answers, but since these cities share many characteristics, I wanted to show what they have in common. Doubtless some of these common threads play a role.

These cities came of age earlier than railroad based cities like Chicago. These are some of the earliest major cities in the region, and they owe their prominence to the era when the river was the major form of transport. They’ve all had a heavy German Catholic influence, hence the legacy of breweries and the importance of private Catholic high schools in these areas even today. They have bridge-oriented transportation traffic patterns and bottlenecks. They’ve got interesting geography with hills and trees and some similar climate patterns.

I find it particularly interesting that they have similar political geographies, despite being in four different states. Three of them are multi-state metros, obviously, because the rivers are state borders. But beyond that they all have hyper-fragmented systems of lots of tiny cities and villages that are fiercely independent. Here’s a map of all the municipalities in St. Louis County, for example:


Image via ArchCityHomes

All of these cities ceased annexing early and got hemmed in. St. Louis famously detached itself from the county completely to become an independent city. Only Louisville with its recently city-county merger grew out of this. But Louisville’s Jefferson County still features numerous sixth class cities and such that were excluded from merger, some of which are only a couple blocks in size. Hamilton County, Ohio and Allegheny County, Pennsylvania are similar.

Inside the cities themselves, there are also many well defined, distinct neighborhoods. These are usually small in size compared to what are called neighborhoods in cities like Chicago. Also, there can be deep divisions between the different sides of town. These are very divided cities. Cincinnati has the East Side-West Side divide. Louisville has the East End, the South End, and the West End. And which one you are from is a huge cultural marker. The North and South Sides of Indianapolis are very different and have some sniping back and forth, yet I don’t see the same visceral suspicion across the sides of town compared to say how Louisville’s South End (mostly working class white) sees the East End (the favored quarter). That helps explain why it took Louisville 40 years to build new Ohio River bridges, and why Cincinnati had to overcome unbelievable obstacles to build a streetcar.

These cities are also provincial and insular in their character. As a transplant to Louisville put it, “Louisville is parochial in all the best and worst ways.” These are cities with rich, unique architectural traditions, and with tremendously distinct local cultures compared to other cities in their region such as Indianapolis or Columbus, which have been largely Genericaized. So Cincinnati has its chili. St. Louis has its pizza. Pittsburgh even has its own yinzer dialect. In at least three of the four of these cities – I don’t know about Pittsburgh – the first question you get asked is “Where did you go to high school?” which tells you almost everything you need to know about them.

While provincialism is almost inherently negative as a term, this has big upsides for these cities too. They have an incredible sense of place and uniqueness. The brick houses of St. Louis are unlike anything else, for example. Again, the feel of these places is very notable in contrast to neighbors like Columbus and Indy, which give off a Sprawlville, USA vibe.


Trailer for film Brick: By Chance and Fortune. If the video doesn’t display for you, click here. Please ignore the unfortunate preview image.

This provincialism comes with two associated character traits. One is a degree of solipsism. Solipsism is the philosophical proposition that nothing can be known to exist outside the self. It’s different from egotism. Egotism says you’re better than everybody. Solipsism says there isn’t anybody else. Obviously we’re talking degrees here, not absolutes. But this is key I think to the retention of those local traditions and local character.

I’ll give an example that illustrate this. Cincinnati arts consultant Margy Waller made a comment to me a few years ago that really stuck with me. She said that when people leave Cincinnati and come back, the stuff they did and learned while they were away might as well not have happened. She left and worked for several years in Washington, including in the Clinton White House. I’m not sure exactly what she did there, but if you’re working in the White House, by definition you’re operating at a bigtime level. But that’s barely mentioned in Cincinnati. Few people ever ask how her DC network or experience can inform or support the city.

Similarly Randy Simes is an instructive case. A graduate of the University of Cincinnati planning school, he got a job with a tier one engineering firm in Atlanta. But he also started and ran the blog Urban Cincy, which is a relentlessly positive advocate for the city and maybe its most effective marketing voice to the global urbanist world (the Guardian listed it as among the best urban web sites on the planet). Eager to come back to Cincinnati, he looked for a job there. But he couldn’t find one. Here’s a guy with 1) legitimate professional credentials 2) a top tier firm pedigree 3) the city’s most effective urban advocate 4) non-controversial, positive, and aligned with the political structure of the city and 5) he’s 24-25 years old and so it’s easy to hire him – you don’t need an executive director position or something. Yet no interest. Shortly thereafter he was head hunted by America’s biggest engineering firm to move to Chicago and then was sent on an expat assignment to Korea where he’ll be working on, among other things, one of the world’s most prominent urban developments (one that Cincinnati actually flew people in from Korea to present to them about). Jim Russell had a very similar experience with Pittsburgh.

The relationship of prophets and home towns has been known for some time, so I don’t want to pretend this is a totally unique case. But I can’t help but compare Randy’s case to blogger/advocate Richey Piiparinen in Cleveland, for whom an entire research center was created at Cleveland State (admittedly, he was already local at the time). I just don’t think Randy’s accomplishments outside Cincinnati resonated.

And secondly, these places do sometimes cross over into a sort of hauteur. I think because these were all very large, important cities in their earlier days and because they had so much amazing stuff, it bred a sort of aristocratic mindset perhaps. Having lived in both Louisville and Indianapolis, I clearly see the difference. In Indianapolis cool people will happily tell you how awesome they think St. Louis, Cincinnati or Louisville are. They’ll make visits to say the 21C Hotel or Forecastle Festival in Louisville and write and say great things about it and even how they wish Indy had some of those things.

But people from Louisville would rather bite their tongues out than say nice things about Indianapolis. If forced to, they will, but they do it in the most grudging way. I’ll never forget a travel guide for Louisville called the “Insiders Guide to Louisville” (I believe different than the one currently being sold under that name). In the intro they were bragging about Louisville’s totally legitimate food scene, but they had to throw in a gratuitous insult by saying something along the lines of, “Every city has good restaurants these days – even Indianapolis, we hear – but Louisville’s restaurants are truly special.” When Indianapolis Monthly did its “Chain City, USA” cover on Indy’s restaurants, I had to send it to my friends in Louisville since I knew they’d eat it up gleefully. (If you watched the St. Louis brick film trailer, you’ll also notice someone in it throwing a similar gratuitous dart at the Illinois brick used in Chicago).

Hot off the presses is this travel piece on Indianapolis written by someone in Louisville. As a travel piece, by is going to be positive by the very nature of the genre, but note the way the writer frames up the trip:

I bristle whenever I hear about flyover country – my home of Louisville is smack in the heart of what east and west coasters think is just the space they have to cross to get from one good part of the country to another – so I should be a little more open minded. But maybe because of my fondness for my hometown, it turns out I’ve been harboring a bit of the same snobbery that those fliers do – toward a northern neighbor.

My friend Kristian was bragging to me about Indy’s tech scene one day. I’d just gotten back from Cincinnati where I’d gotten to see their tech scene showcased, tour the Brandery accelerator, etc. So I said, “What about Cincinnati? Looks like they are rocking and rolling.” Kristian was like, “Oh yeah, they’re awesome. I was just down there and they totally get it, there’s some great stuff going on.” Then he made a comment that I think summed it up: “You know what though? They’re in love with their own story.”

That sums it up. These cities are in love with their own stories. That perhaps also explains a bit of it. With so many amazing assets it’s easy to be complacent. It reminds me of the famous quote from the triumphant (and boosterish) Chicago Democrat as Chicago started to pull away from St. Louis as the commercial capital of the Midwest: “St. Louis businessmen wore their pantaloons out sitting and waiting for trade to come to them while Chicago’s wore their shoes out running after it.”

If you’re too in love with your own story, you’re not going to work as hard as you should to take that story to the next level. After all, the story of these cities isn’t finished yet. But there’s a new generation in these places that aren’t wedded to the old ways. They love the story, but have some chapters of their own they want to write. As urban assets they have come back into fashion in the market, it will be interesting to see how they evolve. As the press for Pittsburgh shows, for example, there’s already plenty of signs of an inflection point. And in a region where places tend to flagellate themselves, having some cities with a bit of honest to goodness civic hauteur can actually be a refreshing change.

Thursday, March 27th, 2014

The Urbanophile Interview: Louisville Mayor Greg Fischer

I recently sat down to talk for about half an hour with Louisville, Kentucky Mayor Greg Fischer. We had a wide ranging discussion that ventured from branding to globalization, regionalism, talent attraction, legacy, and more. If the audio player below doesn’t display, click here for the MP3 file.

Mayor Greg Fischer. Image via Wikipedia.

Here are some edited highlights of our discussion. For those who prefer reading to listening, a complete transcript is available.

On an economic development partnership between Louisville and Lexington, Kentucky’s second largest city:

[Globaization] is central to who we are as a city. We have a very high export ratio here. We out export, we punch above our weight if you will, as a city. My background is one as an international business guy and we’ve spent a lot of time growing a broader regional economy. The city of Lexington and Louisville have a joint economic development plan that we did with the Brookings Institution called BEAM, Bluegrass Economic Advancement Movement. And a central thrust of that is growing exports throughout the region. We have people that go out and help businesses understand that’s the way of the future.

As a business guy, I’ve been more of a small, medium sized business person, 500 employees and below, so frequently I would compete with large, multinational corporations. When you start your career, you’re like, “My gosh, how can I compete against this firm that’s got manufacturing plants or offices all over the world and 10,000 employees?” What you find is as a small company, you have a lot of advantages that the big company doesn’t have. You’re closer to the customer. You’re nimbler. You can speak for the company.

So when you take a look at the challenges of a state like Kentucky, we’re not one of the biggest states. We’re certainly not one of the smallest, either. So what we’ve got to do is be excellent at partnering with each other internal to the state so that we can use that as a competitive advantage when we compete with other countries or other states for economic development. Louisville and Lexington combined metro region, including Southern Indiana, is about two and a half million people or so, more scale than just us at 1.3 million and certainly, more scale than just Lexington.

On regional cooperation with Southern Indiana:

When people move to Southern Indiana, they identify as moving to the Louisville area, typically. Our restaurants over here, our housing options over here are complementary to what’s in Southern Indiana so if a company is going to say, “Okay. I’m going to be in Southern Indiana or I’m going be in Missouri,” I want them in Southern Indiana.

Southern Indiana’s got some advantages that we don’t have. We don’t have that much open land left in Jefferson County. River Ridge, which is just opening across the river, is going to be helped by these bridges going in right now, these megaprojects, the Ohio River Bridges Project. It will be where a lot of these businesses are going to locate. I’d rather they locate there again than in some other state. So we win as a region because people live regionally. We’re happy to cooperate and brainstorm with Southern Indiana.

On how Louisville’s relationship with the state of Kentucky is evolving:

Evolving is the right term. Louisville produces about $2.4 billion a year of taxes and we get back $1.2 billion. Kentucky has been cited as the fourth most centrally controlled economy in the country in terms of states. In other words, sending taxes to our capital and redistributing them throughout the state. So it’s a challenge for us. I’m working right now to get the state constitution changed so that all cities and counties have the right to levy a local option sales tax where their citizens have the right to vote on specific capital projects, paid for in a specific way with that temporary sales tax sunsetting. Part of that is so local cities, whether it’s Louisville or Pikeville or anywhere in the state, could have more specific control over their built environment. So, that’s one way to address it.

Long term, we need some type of overall state tax reform. But in any state, you’re going to have an economic engine like we are here in Kentucky that contributes more to the balance of the state than what it is they generate. Our rural legislators are very good at teamwork, if you will, and our metropolitan legislators are not so good at teamwork. So they can be our own worst enemy in terms of directing more funds back to where they were originally generated – in this case, Louisville.

On the local food scene:

It’s been an interesting way to see how the rural parts of the state and the metropolitan areas really appreciate the partnership that we have with our local food movement. Like many places around the country but particularly here, when you go into restaurants, you’ll see the origin of the food in terms of the farmers that they came from. We were the first city in the world that we know of to do a demand analysis for local food, how much local food do people want to consume here. We did that deliberately to help our partners in the rural areas of the state, the farmers, so that they can understand that they’ve got a big, growing market in the biggest city in Kentucky.

When we did this survey, no matter what somebody’s socio-economic background was, everybody supported local food. They said, a), it’s healthier and b), we want to help local businesses. So, it kind of busted this myth that local food, farmers markets, all this was just yuppie kind of thing. Everybody appreciates good local food.

On why a 2014 college grad would choose Louisville over other cities such as Cincinnati or Nashville:

One, you want to take a look at the culture of the city. Are you going to be able to fit in? Are you going to be able to make a difference? You know, not every city is perfect for every student. So, is there a connection? Do you like our art scene? Do you like our local food scene here? What about the innovation we’re doing with the makerspace, for instance? Because I think we’re among the best in the country in that regard.

Take a look at the economic development clusters that are important to a city. In our case, are you into lifelong wellness and aging care, or food and beverage, or logistics and e-commerce, or business services, advanced manufacturing? Where is that fit for you? I can guarantee if you’re going to live here, you’re going to have a good quality of life and enjoy yourself, but are you going to be able to be employed in a meaningful way?

Any city that says they’re everything for everybody is being disingenuous. It’s just like a company. When you look at the city, find a place whose values mirror yours and whose opportunities mirror your interests at the same time. Make sure it’s got a beautiful, natural environment like we have here that’s full of nice people, and then you’ll have a good place to live – and it would be nice if it was Louisville.

There’s a lot more where this came from so listen to the whole thing or read the complete transcript.

Some may be wondering about the Ohio River Bridges Project. There were no restrictions on what topics I could ask about, and I haven’t changed my opinion on it. But I felt the discussion time would be productively spent elsewhere so did not ask about it.

Wednesday, October 23rd, 2013

Louisville in Motion

This week’s timelapse is a special one for me. As many of you know, I grew up in Southern Indiana near Louisville, so I’m delighted to be able to feature this time lapse of that city by Eric Stemem. It’s only two weeks old, but I’m using executive privilege to bump it to the front of the queue. It isn’t quite as cool as say many of the videos of Paris I’ve posted. But for a small city, this is very well done. The only major things that seem to be missing are the actual horses running at Churchill Downs and Thunder Over Louisville. Both could be timing or permissions issues. I particularly like that he actually includes a bit of decay in there. Full screen viewing recommended. If the video doesn’t display for you, click here.

There are too many folks to thank here for me to list them all. Let’s just say my inbox blew up with this thing this week.

Thursday, September 26th, 2013

If You Don’t Care What the Public Thinks, Why Waste Its Time Asking?

During the lengthy planning process for the Ohio River Bridges Project nearly Louisville, the bi-state study group surveyed the public on preferred bridge designs. This was a high profile endeavor that was prominently covered in the papers and such. The public even got to vote on what designs they liked. It was quite a spirited debate, but at the end of a lengthy design selection process (I’m told it lasted three years), this design by Boston architect Miguel Rosales was chosen for the East End bridge:

To give you a feel for the process and how important it was for the community, Louisville Magazine did a review just of the selected designs before they were built. Here are some key excerpts:

We now have the designs for two new bridges accompanied by a chorus of anxious proclamations by civic leaders declaring an end to the debate.

[ The Downtown and East End bridge designs] also reflect tremendous outreach to the community on the part of the Kentucky and Indiana Ohio River Bridges Project (ORBP), which sponsored numerous public meetings and surveys. Both bridge designs deserve serious consideration, as they will affect the city’s relationship to the river and the city’s sense of identity for decades to come, and both have strengths and weaknesses to be debated.

Of the two, the East End bridge is the more simply and elegantly designed. Officials with the ORBP said that the public voiced a strong desire for the bridge to be as “visually transparent” as possible, both for those on the span looking out over the river and the landscape and for those on land looking at the river.

“I believe this design was felt to be the best overall choice for this pristine rural context,” says Daniel Carrier, project manager for the East End bridge. “The public wanted a design that wouldn’t obstruct the landscape.” This sensitivity reflects widespread concern about the impact on the river corridor, especially in the sparsely developed East End, which includes a valuable nature habitat, unspoiled view corridors and historic properties.

You already know what’s coming. When the Indiana Department of Transportation, which is responsible for the East End bridge construction, awarded the contract to build it, they unceremoniously dumped the previously selected design in favor of this:

This design change was simply presented to the public as a fait accompli without any public input or consultation. The only consultation appears to have been between INDOT and its contractor.

Not everyone was pleased. From the News Tribune (a Southern Indiana newspaper):

The change, for some nearby residents, was not met with adoration. “I’m disappointed, truthfully,” said Welby Edwards, a Quarry Bluff resident. “The other bridge was absolutely fabulous.”

“It’s just a beautiful structure,” he said of the [original] median-tower design. “It was wide open. It just had elegance to it. It was not going to be an eyesore. They solved a lot of problems by putting a beautiful bridge in there. It wouldn’t have been utilitarian, it was going to be something worth looking at. [Now] it’s a bridge that’s not going to be anything you’re going to brag about.”

Beyond the aesthetic, Edwards questioned why a design change was made now.

“I don’t understand how you have one bridge for six years and change it at the last minute?” he asked. “That’s what they sold us, that’s what they should build,” he said of the original design.

Edwards wasn’t the only one that preferred the design chosen by the state. “Aesthetically, I think I like the previous one better,” said Utica Town Board President Hank Dorman. However, he said he believes the span that will likely be constructed by WVB will be a very attractive bridge. Doorman, too, questioned the changes being made to the project plan at this point.

INDOT justified the switch by saying that a) they’d signed away the design rights to their contractor and b) the new design is cheaper to build and maintain.

Let’s not go overboard. The new design isn’t the end of the world. While it’s certainly not a signature structure, it’s quite serviceable in my opinion. And the original one itself wasn’t the Golden Gate Bridge.

Let’s also take INDOT’s statements at face value and accept that the new design is cheaper than the old one (though their claim that they saved $220 million appears to be bogus). Saving money is a perfectly legitimate reason to make design changes. I think we can all relate to making personal decisions to change approaches on home projects or whatever to save money. And as I guy who worked for a consulting company (not in the transportation space) I can tell you that a contractor suggesting money saving changes is definitely something you want. I may well have made the same decision if I’d been in charge of it.

But even with the noblest of intentions, the sequence of events is incredibly troubling – and sadly all too common. During the planning phases – when, incidentally, public input is legally mandated and in which transport agencies are trying to secure support for project approval – very nice designs are chosen, only to mysteriously disappear via “value engineering” when some nameless, faceless member of the green eyeshade brigade gets ahold of it – generally right before construction, when it’s too late for anyone to effectively object. If lowest cost was always going to be the selected option, why go through the process of a design selection?

That design process was ultimately nothing more than a dog and pony show, if not an outright bait and switch. If any private individual or company had done that, they’d have the Attorney General (if not the county prosecutor) breathing down their necks. But this is the government we’re talking about. If INDOT really did save a lot of money on this, perhaps they should be using it pay compensation to everyone who participated in the design process for wasting their time (the value of which, by the way, DOTs know quite well, since they use it to calculate the cost of traffic delays). What’s that they say? You’ve got to dance with the one that brung ya. That certainly didn’t happen here.

We actually do want to make tradeoffs between cost and design. But the public needs to have its part in that debate. Whatever the case, clearly this type of process where you spend years consulting with the public only to pitch the result in the garbage can overnight is not appropriate. The ability to have public input throughout, from planning through to construction needs to be designed in to the process. Otherwise you’re just wasting everybody’s time.

Thursday, September 19th, 2013

Louisville Bridges Project Proceeds From Tragedy to Farce

I’ve written a lot about the $2.6 billion boondoggle project to build two new bridges across the Ohio River in Louisville (see here, here, here, here, here, here, and here). A new East End river crossing is without a doubt necessary and adds regional value, but the rest of the project is basically bad news.

But no matter how crazy this project is, it always manages to find ways to show that it’s even more wacky than I thought. The latest installment comes from the so-called “investment grade toll study” that was conducted in order to set toll rates and issue bonds.

New Bridges Plus Existing Downtown Bridge to Carry Less Traffic Than Existing Downtown Bridge Today

The entire premise of building this mega-boondoggle instead of a simple East End bridge has been congestion. That is, the existing bridges are over capacity. For example, we’ve been solemnly told that the I-65 Kennedy Bridge has a capacity of only 105,000 vehicles per day but carries 122,000 today and will carry much more than that in the future. So to deal with that a new parallel span is being built that will give I-65 about six lanes each direction at the river, plus a new I-265 bridge is being built with four lanes (two each direction).

After building this, how many cars do you think these bridges will be carrying in 2030 (the latest year for which the study provides a breakdown)? Would you believe less than the existing Kennedy Bridge carried in 2007? Crazy as that sounds, it’s true.


Source: Louisville-Southern Indiana Ohio River Bridges Traffic & Revenue Study, Table 6.4, Page 87 (page 107 in PDF) and Table ES-2, Page ii (Page 6 in PDF)

Come again?!?!?

This value is significantly less than the 155,000 projected traffic in 2030 from the “Do Nothing” scenario in the Environmental Impact Statement (SDEIS, Table 2.2). Now that the region is doing $2.6 billion worth of something, traffic will actually be less than in 2007.

Incidentally, the forecasted traffic on the Downtown + East End bridges in 2030 is now much less than in the Supplemental Environmental Impact Statement used to get the project approved, 132,000 now vs. 157,000 then. More on that in a moment.

Doubled in Capacity Downtown Bridge Will Never Carry As Much Traffic As Existing Bridge Today

But wait, there’s more. Let’s zoom in on the downtown bridge. The toll study doesn’t report the breakdown of traffic by bridge post-2030. But if we assume the split as of 2030 remains constant, and use their total toll collection figures and leakage factors, we can estimate traffic by bridge until 2054.

Traffic on the downtown bridge will never again reach what is currently being carried on the existing Kennedy Bridge.


Source: Louisville-Southern Indiana Ohio River Bridges Traffic & Revenue Study, Table 6.4, Page 87 (page 107 in PDF); Table ES-2, Page ii (Page 6 in PDF); Table 6.7, Page 91 (page 111 in PDF); and Table 5.17, Page 79 (page 99 in PDF)

Not only will this massive new twin bridge never carry what just the old bridge does today, it doesn’t even exceed the design capacity until 2050 and never exceeds it by more than a modest amount, which is actually common on roads that function well and need no improvement.

In short, no new downtown bridge needed to be built at all. So Indiana and Kentucky are flushing $1.3 billion down the drain.

The declines in projected traffic vs. the studies that got the project approved even caught the attention of the Courier-Journal, normally an unrelenting cheerleader for the project. The C-J noted:

The report also predicts fewer drivers than previously thought for the area’s five Ohio River bridges. An estimated 285,000 vehicles would cross by 2030, down from predictions of 310,400 made two years ago and a prediction of 362,900 made a decade ago. Currently, about 224,000 vehicles cross the river each day.

Louisville resident Tyler Allen said of this, “When it comes time to issue bonds, all of a sudden everybody gets all serious.” But an alternate explanation could be that since the project is already under construction, it doesn’t matter what the numbers say anymore. As Oxford researcher Bent Flyvbjerg has documented, major projects are consistently mis-estimated in a manner favorable to proceeding with them, which raises troubling questions. Flyvbjerg refers to the effect this produces as “survival of the unfittest.”

The Bridges Project Has a Far Greater Tax Contribution Than Advertised

The new bridges will be tolled to help pay for the project. It was always known that the tolls would not be sufficient to pay off the costs of the bridges – which right there tells you that from a market perspective, the project was dubious – but a recent document reveals that the taxpayer contribution will be far higher than previously advertised.

A copy of a revised agreement between Indiana and Kentucky shows that about $1.5 billion in taxpayer funds will go to this bridge, $723 million from Indiana, and $756 million from Kentucky. Given that we’ve been old the entire project is “only” $2.6 billion, this implies over half the funds will come from taxes, not tolls.

As always, it’s difficult to make full sense of the murky details of this project, but the Indiana contributions would make it appear that yet again the public has been mislead on the project. For example, just last year Indiana publicly said it was committing $432 million in traditional funds to the project. Indiana also has been publicly bragging that its agreement with the contractor (which included a revised and cheaper bridge design I’ll cover in a future post) saved $225 million.

You would think that if Indiana saved $225 million its tax contribution would go down. But if you thought that you thought wrong. The revised agreement with Kentucky says that at a minimum “INDOT has committed $570 million in federal and state conventional funds through 2018.” Also, while the source of these funds is unclear, “INDOT has committed an additional $108 million” for 2019 and 2020, and is creating a $45 million “Relief Events Allowance Account.” So here’s what the reality adds up to:


Source: Bridges Project Press Release, March 5, 2012 and Development Agreement Addendum #2, Section 6, September 11, 2013.

Incidentally, when you add the Indiana tax contributions plus the bonds issued on behalf of the developer, it’s clear the price of Indiana’s bridge has actually gone up, not down.

Tolling to Congest Sherman Minton Bridge

Part of the marketing on the project has been that only the new I-265 and I-65 bridges would be tolled. The existing Sherman Minton I-64 bridge and 2nd Street (US 31 aka George Rogers Clark Memorial) Bridge would remain free.

Unsurprisingly, the toll study predicts significant diversion of traffic to those bridges to avoid tolls that will range from $1-$12. The 2nd St. Bridge has four narrow lanes and deposits traffic onto 2nd and Main St. in downtown Louisville. It carries 24,100 cars today but is predicted to carry 32,000 in 2030. This is actually a surprisingly low diversion rate to me, given that traffic can easily jump off and on I-65 to use this bridge.

The Sherman Minton, however, is predicted to carry 121,000 vehicles. That’s up 55% (42,800) from today’s 78,200. The Sherman Minton has a design capacity of 90,000 cars, so in 2030 the bridge would be 34% over capacity. I think it can probably handle it, honestly, but these figures suggests a very large diversion of vehicles and explain why traffic on I-65 actually shrinks after its capacity is doubled.

Query: If the 122,000 cars on the I-65 bridge designed for 105,000 resulted in this boondoggle, what is likely to be the effect of 121,000 on a bridge designed for 90,000? It doesn’t take a genius to figure out that once the current bridges project is complete, the next step will be a Sherman Minton replacement, driven by traffic and structural “problems.” This will result in another mega-bridge project that will undoubtedly be tolled. Then all it would take is the closure of the Second Street Bridge (which was opened in 1929 and is identical in age and similar in construction to a bridge in Madison that is currently undergoing an emergency replacement) to create a hermetically sealed toll barrier on the river at Louisville.

I should mention that I’m not opposed to tolls. I think they’re the best way to pay for infrastructure today. I also like building new roads and bridges – where they make sense, as in the East End Bridge. But implementing big tolls to pay for boondoggle welfare projects for road builders makes no sense at all.

Miscellaneous Additional Items

I realize this is a project of mostly local concern and the things I’m covering are somewhat esoteric. But this is how we in America keep pouring staggering sums of money into boondoggle highways while neglecting infrastructure (including other, more worthy road projects) that actually make sense.

In addition to the above figures which make it abundantly clear a downtown bridge isn’t needed, there are several other miscellaneous items that popped out of the toll study:

  • 95% of the automobile traffic crossing the bridges is either local or has an origin or destination in Louisville. So it will be locals, not out of towners paying the tolls.
  • About 25% of the trucks on I-65 are through traffic, so there’s a bigger opportunity there, unless those truckers choose an alternate route. But 75% of the trucks will be local, and so there will be a significant cost increase for those firms. One Southern Indiana business-owner suggested his bill would be over $200K per year. It doesn’t take a rocket scientist to figure out that this type of cost in a cost-sensitive business will affect business location decisions.

Louisville is hanging its hat economically on the logistics and distribution industry, were it already benefits from being UPS’s largest air hub. If that’s your economic strategy, why would you want to impose large costs on trucking when none of your regional competitor cities have tolls? Expect Indy, Columbus, Nashville, Cincinnati, and St. Louis to be salivating over this. Also, a quick look at a map shows that for large amounts of through traffic, it’s easy to avoid Louisville. For example, I-65 traffic can divert over I-74 from Indianapolis to Cincinnati, then take I-75 south.

  • The job growth forecast for the region seems inflated. The toll study suggests regional job growth of 0.9% per year (CAGR). But the actual CAGR since 2000 has been -0.13%. Louisville actually has less jobs today than in 2000. Even if you assume the 2000s are an aberration and average with the go-go 90s, you still only get a CAGR of 0.8% over the last 22 years. That might not sound like much but since this is a compound interest formula, the rates matter a lot.
  • Similarly they project population growth of 2.2% per year in Floyd County, IN versus 0.5% actual since 2000. In Clark County, IN they project 1.7% vs. 1.2% actual. No justification is given for this.

These figures suggest to me that traffic could end up being lower than even these already reduced figures. In any events, this remains one of the worst transportation ideas I’ve ever seen, particularly when a far cheaper and better – and for downtown Louisville, transformational – alternative was available and rejected.

More on the Louisville Bridges Project:

Hoosiers to Pay 70% of Local Tolls on Ohio River Bridge Project
Media Finally Wakes Up to Louisville Tunnel Boondoggle
Bridges Project a Financial Fiasco
Hoosiers to Pay Even More With Tolling
A Mini-”Big Dig”
A Better Bridges Plan
The Case for 8864

Thursday, August 2nd, 2012

The Good, the Bad, and the Ugly

A few recent news stories caught my eye that I wanted to highlight.

Transport Tax Crushed at the Polls in Atlanta

The proposed sales tax increase in Atlanta that would have funded a large capital program for transit and highways went down to a bigtime defeat. This was interesting since capital referendums generally seem to do well.

There’s still a lot to process on this. Richard Layman had some thoughts on his blog that are worth a read. A couple things stuck out at me.

First is the unlikely anti-tax coalition of the Tea Party, the Sierra Club, and the NAACP. When I noted how the Tea Party types and the NAACP had joined forces in Cincinnati to oppose a streetcar, I was assured by locals this was not the start of a trend but came from the personalities involved. But here we see it again. I’m not sure if this is the start of a trend or not, but it’s something to watch. I’ve noted for a while now that the populist wings of the left and the right are fed up with the establishments of their respective parties. At some point could there be a left-right populist alliance against the big money interests? I’m not saying that’s the case here, but there are interesting points to ponder.

The second is where this leaves at Atlanta. As I noted in my piece “Is It Game Over for Atlanta?.” this is a troubled region that lost huge amounts of jobs, saw the worst erosion of per capita income of pretty much any big city, and even saw per capita GDP declines. And it’s choked with traffic and other assorted infrastructure ills. Meanwhile, places like Charlotte, Raleigh, and Nashville offer a lot of the Atlanta experience without the same level of problems. Atlanta is no longer the only game in town in the Southeast. Maybe a big infrastructure program isn’t what Atlanta needs, but if not, what’s the plan?

Lastly, with the federal spigot drying up and states broke, urban regions are going to have to find ways to invest in their own highway and transit infrastructure the way they’ve largely invested in their own airports. We see many cities stepping up and voting in infrastructure spending (albeit excessively skewed to transit in my view) while others vote it down. If this keeps going, we’ll get a real life test of where the choice of investment vs. disinvestment gets you.

Google’s Motorola Mobility Unit Moving to Downtown Chicago

In the wake of Google’s acquisition of Motorola Mobility, it is moving the headquarters and 3,000 employees downtown from suburban Libertyville. This is being touted as a huge coup for Chicago’s tech hub ambitions.

From a regional perspective, this is a net nothing. However, it clearly goes to show the ongoing power of the Chicago Loop not just as a tourist and quasi-public sector downtown like so many, but as a bona fide commercial powerhouse. I can’t prove this with data, but it seems to me that Chicago may have the strongest trend of any city in America of corporate relocations from the suburbs to downtown.

This is also a tribute to Rahm Emanuel’s star power. Economic development via Rahm’s Rolodex appears to be working. He started courting Google’s then CEO-Eric Schmidt for major investment in the city some time ago. This goes to show the advantage a city like Chicago has. Very few cities have mayors that can get any CEO in the country on the phone whenever they want. Chicago does.

On the other hand, I can’t agree with the schadenfreude some are feeling over the prospect of wind swept parking lots at vacant suburban office complexes. This is really no different than suburbanites who left rejoicing over the city’s ills. Ultimately, Chicagoland is a single economic region. And I hate to break it to you, but while moves like this make huge headlines, the majority of the economic and population growth will continue to be in the suburbs. At some point the burbs may get fed up with Rahm’s poaching, and that would bode ill for the type of regional cooperation that’s critical needed to move the area forward. I think Rahm should think about bringing his era of active recruitment of suburban firms to a close in the reasonably near future.

Why Detroit Deserves to Lose

Yet another saga out of Detroit illustrates why this city and region have fallen so far. The city has been hemorrhaging people and jobs for decades, has likewise been mis-managed for decades, and is flat broke. Basically, the city would go bankrupt without state financial support. Unsurprisingly, when the state gives you money, they put strings on it. This has resulted in a big tussle back and forth over the degree of state control, some of which is legitimate and natural.

But a recent debate over the future of Belle Isle, a Frederick Law Olmsted designed park on an island in the Detroit River that’s owned by the city, has shown the type of attitude that’s held Detroit back so long.

The city is broke and can’t afford the park anymore. The park also needs major repairs. The state said they’d take it over under a long term lease as a state park and make the investment to fix it up. Sounds like a win-win to me.

Apparently not to Detroit’s leadership, which has gone apoplectic. Saying “hands off our island” they are protesting state control over the park. What do they want instead? It’s pretty simple. As someone put it, “state support without state control.” In other words, give us your money and go away.

This is the exact same attitude Detroit has taken on everything. It’s why, for example, the Cobo Center sat in a decrepit state for so long with no action, for example. Detroit wanted suburbanites to pay, but wanted the city to retain control of the asset. We’ve seen where this has gotten Detroit.

Regarding Belle Isle, Mayor Dave Bing said, “I have never in my 46 years in this city seen a governor of the state of Michigan involved in city politics like this one.” Given the state of Detroit today, one can’t help but ask, what took the state so long? It should have intervened long ago.

As always, Detroit’s leaders continue to try to point the blame at outside people and forces instead of taking a cold hard look in the mirror. These guys just aren’t serious.

Louisville Aging Cluster

The New York Times has a piece on Louisville’s efforts to build an economic cluster around care for the aging. I can’t say how successful this is likely to be, but I think it illustrates good thinking. Everybody and their brother is saying their economic future is some variant of life sciences (and high tech, advanced manufacturing and logistics, and green tech). They can’t all win in those general markets. And Louisville in my view really isn’t that well positioned.

So rather than try to make some big generalized push, the idea is to look for a specialized part of the industry where you do have more leading capabilities, and try to focus on that. That’s exactly what Louisville is doing here with aging care. There are supposedly something like 500 local companies doing work related to that. It’s also right down the rails of the demographic changes happening in America and the world. We’ll see how this plays out, but this sort of more specialized thinking is how cities ought to be looking at economic development strategies.

Monday, June 11th, 2012

Media Finally Wakes Up to Louisville Tunnel Boondoggle, But Misses the Bigger Picture

The Indianapolis Star finally did a report this weekend covering the ridiculousness of Indiana taxpayers and motorists paying for a $255 million “tunnel under the trees” in Kentucky as part of the Ohio River bridges project.

Their article is a good one, and reveals that Kentucky officials deliberately listed the property as historic to drive up the cost of the bridge project as a poison pill attempt. Though the headline should better have been phrased as a question: “Why Exactly Is Indiana Paying $255 to Tunnel Under Kentucky’s Trees?” The only answer seems to be because Mitch Daniels wants to.

The idea of Indiana paying for a useless $255 million tunnel in Kentucky is the most easy to grasp ludicrousness in this project, but far from the worst element. It’s too bad the Star did not examine other even more troubling problems, such as:

  • As the Star’s own graphic shows, Indiana is actually spending $737.5 million on roadway in Kentucky. That’s over $100,000 per foot! You could probably literally gold plate the road for that. It’s more expensive than any project anywhere in Indiana. It is more than combined cost of the Indiana side of the river plus the new bridge.
  • The two states managed to take $1.5 billion in cost out of the project – good. But as part of that Indiana’s cost actually went up by $200 million while Kentucky’s went down by $1.7 billion – hello?!?!
  • The Star reports that Indiana and Kentucky will evenly split money from the bridge tolls – news to me – even though Hoosier motorists will pay $5 million more per year than Kentuckians. So not only is Indiana paying more than it’s fair share on a cost basis (including that $737 million in Kentucky) – it’s also shipping a huge chunk of Hoosier money across the river ever year to help Kentucky pay for its part of the project. Hoosiers will pay fully 74% of all local tolls collected on the bridges.

In short, it just doesn’t get much dumber than this.

It’s stunning to me that, to burnish his legacy by getting a bridge project done that had eluded both states for 40 years, Mitch Daniels is willing to throw Hoosier taxpayers and motorists under the bus like this. This is a deal that will live in infamy as Indiana’s worst transportation finance decision since the 1830s epic canal fiasco that bankrupted the state. I cannot think of another governor in modern times who so clearly acted contrary to his own constituents’ financial interests in a transportation project.

Again, I am 100% four square behind building the East End bridge as a key state priority – I just don’t think it’s worst giving away upwards of a billion dollars the state didn’t need to in order to do it.

I’ve written extensively on this project before, so won’t reprise it all here. But you can read much more at:

Indiana’s Bridge Deal Boondoggle:
Part 1: A Financial Fiasco
Part 2: Hoosiers to Pay Even More With Tolling
Part 3: Indiana’s Mini-Big Dig
Part 4: A Better Way

More:
Hoosiers to Pay 74% of Local Tolls in Bridges Project
The Case for 8664

Thursday, April 5th, 2012

Louisville and Lexington Point the Way to Greater Inter-Regional Cooperation

I’ve written before about how Louisville Mayor Greg Fischer saw cooperation with Lexington as a vehicle for making his smallish region more competitive. This has gone beyond talk. As Louisville and Kentucky fought it out on the basketball court, the New York Times was reporting on how the two cities are planning to become economic teammates. Amy Liu of the Brookings Institution also wrote about this initiative.

The first concrete step in this is something called the Bluegrass Economic Advancement Movement. It’s a partnership around advanced manufacturing between the two cities developed in conjunction with Brookings. Here’s a video about it. It’s a big goofy, and the production values clearly need improvement (such as the two minutes of basically dead air at the end of it), but it should illustrate what they are trying to get at. (If the video doesn’t display for you, click here).

I’ve historically been a bit skeptical of the mega-region concept. I could never figure out exactly what it is mega-regions were supposed to accomplish that would provide step change improvements in metro area performance. It’s not exactly clear here either what is going to ultimately happen. However, if you are going to make mega-region type development happen, Louisville and Lexington are pretty well placed to prove out the concept. They are in the same state, they are both too small to plausibly go it alone in the global marketplace, and they are close – only about 80 miles apart. They are just far apart to be separate media markets and spheres of influence, but close enough to make going back and forth a breeze. They also decided to pick just one area to start with, which I think was smart. I’ll be very interested to see what comes out of this. Anyone interested in cross-regional collaboration should keep an eye on what’s happening here.

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