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Friday, January 21st, 2011

Urbanoscope

If the two options are federal aid or shutting down local services, I’m all for federal aid. Yet these states are not intrinsically broke – there is plenty of wealth in California and Illinois and New York – the problem is politics, which are not improved by the prospect of a federal bailout. – Ed Glaeser

Here’s a head’s up that I’m tentatively scheduled to be on WGN-AM in Chicago around 11:05am this Saturday talking about parking meters.

I was on Chicago Public Radio last week talking transportation and the mayoral election. I’ll embed the audio below. If the player doesn’t display for your, click here.

Top Stories

1. NY Times: Portraits from a Job Starved City – A powerful interactive feature with audio statements from people living in Rockford, Illinois.

2. Jason Tinkey: The New Provincials

Freeway Lane Miles

The Texas Transportation Institute just released its 2010 Urban Mobility Report. This data has been recently critiqued by CEOs for Cities and others. But even if you don’t like the way congestion is measured, there’s still a treasure trove of data in here.

Here’s one quick sample: the top ten urban areas for freeway lane miles per capita (per 1,000 population), for metro areas over one million in population

Looks like Kansas City has enough roads to last a lifetime. Cleveland and Ohio in particular look to be in a tough spot, as with a declining population the burden of maintaining all those roads will loom large.

The lowest per capita value? Chicago at 0.35.

What Makes a City Smart?

This video from Time has brief snippets of big city mayors giving their thoughts on smarter cities. (If the video doesn’t display, click here). It includes the mayors of LA, Chicago, and Philadephia.

World and National Roundup

The Observer: 25 Predictions for the Next 25 Years

El País: Bullet train, white elephant – An interesting article out of Madrid (in English) showing how the high speed rail debates are not limited to the US.

The US HSR debate appears to be taking a tilt to the anti-side, not just with Republican governors cancelling projects, but even the likes of the Washington Post editorial page saying Hit the brakes on California’s high-speed rail experiment.

Randy Simes: The Surprising Story of Sustainability in Seoul

NYT: State bankruptcy option is sought, quietly – Uh, oh.

WSJ: Amid Downturn, Sunbelt Gains College Grads

Streetsblog: Cycling up 70% on London’s bike superhighways

Ed Glaeser: Why Green Energy Can’t Power a Job Engine

NY Magazine: Who is the greatest mayor of New York?

AM New York: The Lost Generation: NYC losing young people to cheaper cities

Michael Barone: The Great Lone Star Migration

Greg Meckstroth: The Midwest’s 21st Century ‘Place Proximity’ Asset

Detroit Free Press: Detroit’s profile grows as investors, young professionals return to city

Planetizen: Dreaming Detroit: Decline to Renaissance

John Hilkevitch: Transit is a sleeper issue in race for Chicago mayor

James Warren: Wisconsin Sounds Off, But Misses the Point

James Warren: President Hu’s Visit Proclaims a Rising Chicago

It’s very interesting to contrast these two consecutive columns by Warren, one chiding Wisconsin, the other an unabashed paean to Chicago. The Wisconsin column is an example of the type of journalism we need, pointing out the bigger picture and where the purely local thinking of regional leaders is missing the point. The Chicago column is everything that’s wrong with the Windy City. It is 100% right down the rails of the party line of Chicago and how incredibly wonderful it is, not a cloud in the sky. The 350,000 jobs we lost in the last four years? The fact that Chicago is trailing even US peers on most economic metrics ranging from GDP to personal incomes? Etc., etc. That doesn’t seem to factor in. The throwaway bit at the end about cuts seems more a product of Warren’s center-left PoV, a general indictment of cutting government, than of Chicago. This is why Chicago has been struggling. Because people aren’t asking the tough questions. They’d rather lord it over Wisconsin. Let’s take the log out of our own eye first. I’m glad to see the Tribune starting to step up. Let’s hope that new attitude starts getting spread around a bit more.

I do believe in Chicago’s transformation. I wasn’t here in the 70’s in 80’s so perhaps don’t fully appreciate it as viscerally as Warren, but even since my first arrival in 1992 it has been a massive change. That’s a bona fide, legitimate part of the story. Guys like Kass who are still stuck in 60’s “Machine” thinking are missing the boat on this one. There really is a huge amount to celebrate here. But the transformation is only part of the story, even if a big part. Too many people seem to think it’s the whole story. It’s too bad Warren couldn’t have applied the same magnifying glass he took to Wisconsin to Chicago.

Chicago’s Bus Tracker on Streetfilms

Streetfilms paid a visit to Chicago recently to profile bus tracker. They focus less on the system itself than on a project in Bucktown/Wicker Park to stream bus tracker data to monitors in local shops and such. Pretty cool. (If the video doesn’t display, click here).

Cycling Sucks

A hilarious video on Copenhagenize. (If the video doesn’t display, click here). I believe this was a student project out of the Netherlands.

Copenhagenize the planet!

City of Gold

Here’s an interesting rap video about Detroit. (If the video doesn’t display, click here).

Thanks to Everett Keyser for sending this to me.

Ohio River Bridges Project Is Still a Boondoggle

Indiana and Kentucky have supposedly agreed on a plan to chop $500 million off the cost of the Ohio River Bridges Project in Louisville. Now the project will cost “only” $3.6 billion, or almost $3000 for every single man, woman, and child in the entire metro area – and a heckuva lot more than that once financing costs and user delay cost during two decades of construction are taken into account.

This project seems to be a quest for an answer to the question: How big a boondoggle does a highway project have to be before even the most fiscally conservative of politicians will go for a rethink? It’s amazing that leaders on both sides of the rivers continue to push for this plan that will be little more than a cash drain on the region. And a destructive one, obliterating a number of historic buildings in downtown Louisville and erecting an even more gigantic barrier across the riverfront.

There is a better way: 8664. This project will save a couple billion – and reconnect downtown Louisville with the river to boot. Much better, much much cheaper. What’s not to love? Go forward with the adjustment to move the pedestrian path the Big Four, then take the rest of the steps to make 8664 a reality.

By the way, the Star said this was a “Kentucky delegation” and didn’t mention any Southern Indiana representation. I noted one of the cost saving measures was downscoping the east end bridge. Did Kentucky pull a fast one on Mitch? The east end bridge goes through Louisville’s equivalent of Zionsville and the big money types there – who are hugely influential – have never and will never give up on cancelling that bridge outright or, failing that, reducing it as much as possible. This looks to me like Kentucky maneuvering for position moreso than cost savings. Watch out, Indiana.

Post Script

The Economist had another fun map naming each state after the country that most closely approximates its state GDP.

Sunday, January 16th, 2011

Chicago: The Cost of Clout

The Chicago Tribune has been running a series on the challenges facing the next mayor. One entry was about the Chicago economy. It described the sad reality of how Chicago’s economy is in the tank, and has been underperforming the nation for the last few years. I’ll highlight the part about challenges building an innovation and tech economy in Chicago:

The region also has lagged in innovation, firm creation and growth in productivity and gross metropolitan product over the past decade, according to economic development consultant Robert Weissbourd, president of RW Ventures LLC. Daley’s two long-held dreams of Chicago emerging as a high-tech center and a global business center remain just out of reach… “We haven’t made the real global jump yet, and we have not made the tech jump either, but we are finally poised,” said Paul O’Connor, who for many years ran World Business Chicago, the city’s economic development affiliate. “We are still a major contender, but, yeah, we can blow it.” Or, as [Chicago Fed Economist William] Testa put it, “Given the poor performance of this decade, we need to rethink the challenges for Chicago.”

“If I could wave a magic wand, I would get government to start thinking differently about … what are the levers that we need to push, away from the traditional (tax increment finance district) thinking and away from the traditional thinking of, ‘Let’s just get a big company to move here,’ and toward thinking about how to foster innovation and creativity,” Christie Hefner, former chairman and chief executive of Playboy Enterprises Inc., said at a recent economic forum.

It has been extremely rare to see people with establishment positions ever say a discouraging word about the city. Most honest observers would have to rate Daley highly has a leader, but certainly not perfect. Yet any criticism at all of him (directly or implicitly by that of the city he runs) has been studiously avoided by most. They are terrified of being excommunicated or broken on the wheel if they deviate from the script. To have corporate executives asking tough questions is unusual, and hopefully an example of a forthcoming “Great Thaw” we need to have here in the wake of Daley’s retirement.

Chicago’s inability to build an innovation/tech economy is pretty remarkable if you think about it. Here’s third largest city in the country, one with enormous human capital, tremendous wealth, incredible academic institutions, and above all an ability to execute that far outclasses virtually any city I know. How is it then that Chicago has been unable to execute on this?

Believe it or not, a lot of it goes back to that bane of Chicago politics: Clout. People in Chicago tend to write off clout and political corruption in Chicago with a shrug, as a unique or even amusing local affectation, or just part of the character of purely political life of the city, but one that doesn’t fundamentally change its status as the “City That Works.” But nothing could be further from the truth. Chicago’s culture of clout is a key, perhaps the key, factor holding the city back economically.

Chicago’s Ambition: Clout

In Paul Graham’s essay Cities and Ambition, he writes about the subtle messages cities send about what you should try to achieve, and how that shapes their fortunes:

“Great cities attract ambitious people. You can sense it when you walk around one. In a hundred subtle ways, the city sends you a message: you could do more; you should try harder. The surprising thing is how different these messages can be. New York tells you, above all: you should make more money. There are other messages too, of course. You should be hipper. You should be better looking. But the clearest message is that you should be richer.

What I like about Boston (or rather Cambridge) is that the message there is: you should be smarter. You really should get around to reading all those books you’ve been meaning to. When you ask what message a city sends, you sometimes get surprising answers. As much as they respect brains in Silicon Valley, the message the Valley sends is: you should be more powerful.

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.

Chicago’s ambition, the message it sends is: “You should have more clout.” Does that matter? You bet it does.

What Is Clout?

Clout is a term of art in Chicago that normally refers to the ability to use connections to obtain jobs, contracts, subsidies or other favors from government. But more broadly, we can think of clout as the ability to influence organizational action within the context of a particular power structure.

But if that’s the definition, isn’t saying you should have clout the same thing as saying you should have power like Graham said of Silicon Valley? No. Having power, like that held by Mark Zuckerberg or Larry Page and Sergey Brin, is about being autocephalous. It’s about have an independent base of authority or ability to act others are forced to respect. Clout, by contrast is all about petty privileges. Clout can be given, but it can also be taken away. That’s what makes it so corrupting. Tellingly, no one ever talks about Mayor Daley as having clout. That’s because he has real power instead. Having power is like being a king or a duke or a baron. Clout is all about being a courtier.

To see this in action, just contrast Jesse Jackson with Al Sharpton. Both are prominent national civil rights leaders and black ministers. But Jackson rarely goes hard after anyone in Chicago, at least not anymore. Jackson has clout. One son is a congressman. Another somehow managed to acquire ownership of a lucrative beer distributorship. Jackson bought into the system in Chicago.

By contrast, Sharpton wants to be a power player in New York, to be someone to whom even a would-be mayor has to come visit and, as they say, kiss the ring. He’s not interested in being bought off. Sure, he’ll make alliances. But he’ll never give up his independent base of power that makes him someone to be reckoned with. That’s the difference between power and clout.

The Chicago Nexus

John Kass likes to talk about clout in terms of the “the Combine,” or the bi-partisan system in Illinois in which the Democrats and Republicans have often proven less rivals than partners in crime, sometimes literally. But I prefer to think of “the Nexus” – a unitary social structure that pretty much everyone who’s anyone in Chicago is part of, one that goes far beyond the world of politics.

Ramsin Canon had a good illustration of the Nexus in a piece he wrote over at Gapers Block:

With big city economies cratering all around him, the Mayor was able to raise in the neighborhood of $70 million dollars to fund the Olympic Bid. At the same time he was able to get everybody that mattered–everybody–on board behind the push for the Olympics. Nobody, from the largest, most conservative institutions to the most active progressive advocacy group, was willing to step out against him on that issue.

The list of big donors to the Chicago 2016 bid committee is a comprehensive list of powerful Chicago institutions. I mean, it’s exhaustive. Economy be damned, when the Mayor called, they listened. Why? What did those conversations sound like? And do we believe that the Mayor is so powerful–or that their relationship with him is so close–that they must obey him? Or–more likely–is it a mutual back-scratching club with an incentive to protect the status quo? Chicago’s political infrastructure isn’t about the Democratic Party or “the Machine” or special interest groups or labor unions. Those are elements of varying importance. It’s real power lives in the networks that tie that list together.

Replace the man on the Fifth Floor–Bureaucracy Man, the superhero who keeps our alleys clear–and will these networks evaporate? Will they just disappear? How long would it take them to reorganize around the new personalities that moved in there?

All cities have elite networks, but I have never seen a city that has a unitary power nexus to the extent Chicago does. I believe the Nexus resulted from the culture of clout combined with the fact that, with the exception of the interregnum between Daley pere and fils, power has been centralized on the 5th floor of city hall for decades. The Nexus may have come into being around the mayor, but now it has become a feature of civic life, one that practically longs for what Greg Hinz has labeled a “Big Daddy” style leader to sustain the system.

Clout’s Effect on the Culture of Chicago

The emergence of the Nexus is one of the key cultural impacts of clout in Chicago. If clout is only effective within a given power structure, then clearly the clouted want to see their power structure expand. The ultimate dream of the clout seeker is a centralized unitary state like Louis XIV’s France. In Chicago, we’ve come amazingly close to achieving it. It’s not that there’s no conflict, but it is all of the palace intrigue variety, not true conflicts between rival power centers. Without centralized political power and a tradition of clout, the Nexus would never have come into being.

There are many other cultural impacts as well. As Douglas and Wildavsky note in Risk and Culture, “An individual who passes his life exclusively in one or another such social environment internalizes its values and bears its marks on his personality.”

People are bought into and defend the system. They mapped these social environments along the axes of “grid” and “group” – the degree of hierarchy in the system and the degree of group cohesion. The Chicago Nexus is a high-grid, high-group structure, or collective hierarchy, with centralized decision making and a high cost of defection. Even groups that in other cities tend to be more oppositional to government will say something like, “Decisions get made in the mayor’s office here, so we have to play that game” and buy into the system. I’ve lost track of the number of times I’ve heard, “That’s just how it works here.” Of course, this means the basis of their own ability to make things happen then becomes influence – clout – within the Nexus. Thus they defend the system, because if it went away, so would their ability to make things happen because they’ve cultivated no alternative vectors for action. Also, the Council Wars period of the 1980’s still looms large in many leaders’ minds. Chicago remains heavily segregated and racially balkanized, as the recent quest for a single black mayoral candidate illustrates. There’s a lot of worry about what might happen if the current system breaks down.

Conservatism and favoring of the establishment. Following on from that, the system fosters a sort of generalized conservatism, one dominated by a desire for institutional stability. It takes a heavy hitter to get the mayor’s attention or even access to the mayor, which reinforces establishment control, an inherently conservative model. This conservatism is even visible the realm of public design, as I’ve noted in discussion the retro-nostalgia design of the city’s streetlights and other streetscape elements. The evidence of clout-fed conservatism is literally graven in into the very streets of the city.

Parochialism. Though fancying itself a cosmopolitan burg, I don’t see that Chicago is that much less parochial than most other Midwest cities. You see this in a thousand little ways. For example, in the way beloved long time personalities dominate the local airwaves. As the New York Times noted about turmoil at long time ratings leader WGN-AM, “Chicago tends to be unforgiving to newcomers. And with WGN pulling in the second- most radio revenue in the market behind WBBM, its moves are fraught with risk. ‘It was always difficult to bring someone in from out of town,’ said Bob Sirott, a longtime Chicago broadcaster.” (Longevity seems particularly prized here generally, as unless you are fortunately enough to be born to the right family or in the right parish, it takes time to accumulate clout). Or in the focus on local and hyper-local news in the local internet journalism community.

Fear. As a high-group social structure, people are terrified of being kicked out of the club. Hence the unwillingness to cross the party line on almost any issue. As Tocqueville put it: “That which most vividly stirs the human heart is not the quiet possession of something precious, but rather the imperfectly satisfied desire to have it and the continual fear of losing it again.” People are even afraid of collateral damage if others near them cross the line. As Mike Doyle said, “In systems like Chicago’s, people don’t just refrain from rocking the boat, they do their best to keep anyone else from rocking it either.”

Total Rejection of the Other. Anyone who exists outside the structure is a potential threat. Hence they are either co-opted or marginalized. The best illustration of this is the very title of that wonderful book on Chicago politics, We Don’t Want Nobody Nobody Sent. Or as Steve Rhodes said to me:

One of the bartenders at the Beachwood says it took her awhile to figure this city out. In other cities you apply for a job with a resume, talk about your experience, etc. Here they just want to know who you know, who sent you – even at the bartender level….I’m not naive enough to believe this doesn’t happen elsewhere, but nowhere near as it does here, where it’s in the DNA. …Here, merit counts for next to nothing…In New York, everyone wants to know: “What do you do?” In Chicago, everyone wants to know: “Who do you know?”

Why Clout Is Toxic to the Innovation Economy

When you think about these cultural impacts of clout on Chicago, it becomes obvious why the city has failed to build an innovation economy. Innovation is fundamentally about new ideas, new ways of doing things, new players in the game, those from the outside, about merit, about dynamism. Clout is about what happened yesterday, the fruits of long years of efforts, and the same old – sometimes really old – players, about insiders, about connections, about stasis. As Jane Jacobs noted, “Economic development, no matter when or where it occurs, is profoundly subversive of the status quo.” Innovation driven economic development is fundamentally about disrupting the status quo. Clout is all about preserving it. Innovation welcomes the outsider, the clout-fueled Nexus abhors the Other. Innovation and clout are enemies.

Think about the innovation hubs in America. They are all places that welcome the new. Not that it’s easy to make it in them. In fact, these place are often brutally competitive. And of course they have elite networks where the scions of the rich and powerful have a leg up and such. But the new is an important part of what makes them tick. In Silicon Valley, they are always looking for the tomorrow’s HP, Apple, Cisco, Google, Facebook, or Twitter, not just celebrating the past. They know that success today is ephemeral and, as Andy Grove put it, “only the paranoid survive.” DC loves its establishment, but the very nature of the place assures there will always be new players in the game. President Obama comes out of nowhere to gain the White House. But two years later it is the upstart Tea Party’s turn. Possibly because of their entertainment industry clusters, NYC and LA are always on the lookout for the fresh face and the next big thing.

But Chicago? What do you think is going to happen when an ambitious 20-something with a great idea for a new business but no clout shows up in Chicago trying to make it happen and knocks on the door?

I may not be 20 anymore, but at the risk of making this post sound like merely a bit of personal pique, I’ll share a true personal story to illustrate one example of how this plays out in real life in Chicago. In 2009 I received an award from the Chicagoland Chamber of Commerce for innovative thinking on public transit, winning first prize in a global competition they ran to solicit ideas for boosting public transit ridership in Chicago.

I was thinking at the time that I might want to do something more entrepreneurial. I knew that the Chamber ran a sister organization called the Chicagoland Entrepreneurship Center chartered with boosting startups in Chicago. In the wake of my award I decided to check them out and see how they might be able to help me.

There was just one problem: they wouldn’t return my phone calls. I made many attempts to get in touch with them by phone and email, and couldn’t even get them to give me a “No Thanks” or pawn me off on a peon. Now I’m a guy who a) had significant business experience, who b) built up one of America’s top urbanist sites from scratch, an inherently entrepreneurial act, and a successful one, if you think about it, and c) just got an award for innovation from the Chamber itself. Yet they wouldn’t even give me the time of day.

What’s more, the Chamber mothership never showed any interest in engaging with me post-competition either. It was clearly just a PR exercise for them. Now don’t get me wrong, I’m delighted to report it was a very successful one. I got my picture on the front page of the Chicago Tribune above the fold. It exceeded my wildest expectations. I think the folks at the Chamber are nice people and I was extremely pleased with how it went. But clearly from their perspective, that’s where it ended. Actually uncovering innovators or something was not part of the agenda.

From standpoint of the the Chicago system, this experience actually makes perfect sense, as I don’t have clout, nor can I bestow it on anyone. So why burn cycles on me?

If you think about my profile and the treatment I got, can you imagine what a 23 year old armed with nothing but a crazy idea would get? A lot of ink has been dedicated to talking about how far Chicago and Illinois have come since they days when Mark Andreesen was actively harassed while trying to commercialize his web browser, then run out of town on a rail. But there is no doubt in my mind that if the next the next Andreesen showed up today, he’d get the exact same treatment. (I’m not familiar enough with Andrew Mason’s history to know how he was treated pre-Groupon, and pre-his association with the likes of big money Eric Lefkofsky. It would make an interesting case study to look at the history there – though he is a possible exception. I don’t know. In any case, his major local profile came after Groupon was already a huge success).

This is what clout in Chicago hath wrought. The culture of the establishment Chicago is simply incompatible with an innovation economy. It’s not just about money or resources. It’s about respect. It’s about what this town respects, and more importantly what it doesn’t. It’s about what Chicago whispers to you about what you should aspire to achieve, what success means in this city, and the subtle – and not so subtle – messages about how you get ahead here.

Until you’ve already made your millions or somehow wormed your way into connections or up through the hierarchy, establishment Chicago has no use for you in its economic plans, no matter what talent, ideas, or ambitions you might harbor. (Ironically, the biggest exception is Daley himself, who was famous for seeking out and rapidly promoting young talent like Ron Huberman and Richard Rodriguez. That’s another example of how he is head and shoulders above your average leader).

By contrast, the local entrepreneurial tech community gets it, is energized, knows where the city is and where it needs to be, and is working hard to make progress with a sense of legitimate optimism backed up by recent good news. Grass roots and “by tech for tech” institutions ranging from Technori, to the Chicago Lean Startup Circle, to the folks at Groupon – which is a huge, inspirational success story, with people who get it and are committed to trying to build up Chicago’s tech scene – are hugely supportive of anyone trying to make a go at it no matter what stage they are in, and providing legitimately useful info and help along the way. Every single person in this group I’ve talked to has been more that willing to do anything to try to help me out, sometimes even more than I’d hoped or asked for – 100% of them. (Yes, this does mean I am starting an internet business myself – watch this space).

I’ve long said Chicago isn’t going to be the next Silicon Valley and should seek only to get its “fair share” of tech. Having said that, as the third largest city in America, a fair share is still pretty big. If Chicago’s going to make it, this collaborative effort by the local tech community is what is going to get it there – not the Nexus.

The Way Forward

Pretty much every report out of officialdom – from Gov. Quinn’s Illinois Economic Recovery Commission Report to CMAP’s Go To 2040 Plan – suggests the public and quasi-public sectors need to do more to boost innovation. But what’s really needed is cultural change in the establishment. Until that happens, I’d suggest that what’s really needed is to take a page from the Getting Real playbook and for them to do less.

Think about it. If Joe Investor shoots you down, you know the odds were probably long in the first place. While you might not come away feeling good about him, you probably don’t feel any worse about Chicago. But if you approach an official or quasi-official organization chartered with promoting “innovation”, “entrepreneurship”, “clusters”, “technology” or whatever in Chicago and they shoot you down, it’s not just them but your city you feel has rejected you. It’s one thing to generate a negative interaction with a private entity, but with an official entities that hurts the very thing they’re trying to promote. If an official or quasi-official organization can’t say Yes, or at least make sure that well over 50% of the people it says No to feel good about the experience, it should be shut down, because it’s doing more harm than good.

What’s more, these organizations and leaders glom on to these hot phrases du jour and, as someone put it, “suck the oxygen out of the room.” They hog the microphone and the real stories and the real discussion that need to happen out there don’t get told in the press because big names are the default easy answer for reporters. Just look at the number of big titled civic folks and such quoted in the Tribune piece, for example. Startup blog Technori has already told me more in two months about things that matter in tech than the Tribune and the Sun-Times combined did all last year. As Mike Madison said of Pittsburgh:

Tech-based economic development is not something that can be conjured in  meetings of mayors and CEOs.   That’s top-down, old-school, clear-the-skies, ACCD thinking.  In fact, I would guess that the more that the Downtown Duquesne Club crew gets in the middle of this process, the more the real entrepreneurs and innovators and risk-capital investors get turned off.

Or as Paul O’Connor put it in that Tribune piece I led off with:

“What we have now, to some extent, is a stodgy Midwest establishment, and underneath them are the kids who moved here, some of them in their 30s now,” he said. “They get it; they know how to do it. … We either give them permission and invite them to the table, which the next mayor should do and which Mayor Daley has begun to do a little bit lately, or we let them do it themselves.”

Blowing Up the Culture of Clout

Clout is so persistent in Chicago not just because of the people who personally benefit from it, but because there’s little perception of the ways the culture of clout affects Chicago outside the political realm. Indeed, to the extent people regard the Chicago Way at all, it’s often positively, because it enabled the city to “get things done.” It’s the same thing that causes Thomas Friedman to have his schoolgirl crush on China.

But unfortunately for Chicago (and likely China too down the road) it doesn’t just matter if you can get things done, it matters what it is you do. And it also matters how you do it and who is involved. Until people understand the linkage between clout and other parts of the city like its economic under-performance, and care enough to change it, the non-political members of the Chicago Nexus are not going to feel the need to change the way things are done here. It’s not that these folks are corrupt by any means. Far from it. I believe they are completely sincere in their desire to better the city. But they don’t perceive the issue at the level that will collectively move them to action, or else feel the status quo is better for their institutional interests.

Changing the culture is mission critical to Chicago realizing its ambitions as a global city and a center of the innovation economy, and a lot of other things too. The notion that you can have a centralized, top-down, clout driven Nexus infusing your civic culture but that somehow you’ll have an innovation driven economic culture – that’s just impossible. The attempt to fix and transform Chicago’s economy with a bunch of behind the scenes maneuvering and initiatives by a few heavy hitters has failed. We need to try a different way. That doesn’t mean Chicago has to become paralyzed with dysfunction of in-fighting or civic anarchy. But there need to be multiple power centers and a receptivity to everything innovation is all about. And it will be a bit messier. I think that’s a good thing. There’s no doubt Chicago is a great city with incredible assets and capabilities. There’s no reason it can’t join the ranks of the innovation elite – if it’s willing to start jettisoning the culture of clout the so hobbles its ambitions and embracing a more dynamic future for the city. What will it be, Chicago?

More on Chicago economic development:
Chicago’s Eroding Competitive Performance (Chicago vs. New York) (October 10, 2010)
Urban Universities Done Right: Chicago’s Loop U (August 29, 2010)
Chicago’s Structural Advantages and Professional Services 2.0 (July 25, 2010)
Chicago and the Epicenter (June 20, 2010)
Corporate Headquarters and the Global City (August 9, 2009 – updated version)
Reconnecting the Hinterland: Metropolitan Linkages (February 11, 2009)
Chicago: A Declaration of Independence (January 17, 2009)

Friday, January 14th, 2011

Replay: A Tale of Two Blizzards

[Since it's winter and snow clearance has been in the news lately, I thought it was a good time to rerun this piece looking at the different expectations people in different cities have for public services, and how regardless of where you fall on that, everybody's feeling the pain right now.]


Photo Credit: flickr/meryddidan

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 article originally appeared in New Geography on February 14, 2009.

Sunday, January 9th, 2011

Failure to Communicate: Accentuate the Positive

Late last spring I posted a piece called Beyond Starbucks Urbanism, which I billed as the first in a mini-series on urbanist communications failures. It’s later than I anticipated, but here’s the second piece.

I recently had the privilege of seeing Jan Gehl, godfather of Copenhagen’s bicycle network and a consultant to New York City and many others, speak. He was beyond awesome, but one thing that really stuck with me was how he got the tone completely right. One of his observations about how they transformed Copenhagen was, “We never talked about taking away things from people. We only talked about what they were going to get.”

This is a lesson too seldom heeded by urbanists, who almost seem to define themselves as much in terms of what they are against as they do what they are for. The anti-car rhetoric immediately comes to mind of course. All these things we want to do are talked about in terms of cars all the time. But what’s that got to do with it? If these are good policies, and have all sorts of good benefits for citizens, why can’t we talk about that? Why don’t we defend these things on their own merits?

Carol Coletta has a great saying that “eat your spinach” marketing doesn’t work. CEOs for Cities has been working for a while now to try to create a new vision of the American Dream, one rooted in a more urban context, something that would do for the city lifestyle what the GM Futurama exhibit did for the suburban, auto-based one. They want to create that positive vision rather than a dour one to inspire people to want to buy. That’s a hugely important initiative, and one that we should all seek to emulate.

Moving Beyond Sustainability

Nothing has done more to hurt the urbanist cause than it getting almost inseparably linked to the notion of “sustainability” and climate change. Sustainability has become almost a shibboleth of the right thinking urbanist. Architects, planners, politicians, journalists and more all try to out do each other with ever more rhetoric about radical transformations and grandiose, even science fictiony visions of the future low-carbon world. These might score points with the inside crowd, but they don’t impress the average member of the public all that much. Quite the opposite in many cases.

Right now in America millions of people are out of work. The Bureau of Labor Statistics has had to invent new categories of long term unemployment to measure it. Ben Bernanke just said it might be five years before employment normalizes. Over 43 million people – one out of every seven in America – are on food stamps. That’s about the same size as the entire country of Spain. State and local governments are broke. Our local social safety nets are getting shredded as they cut back. The federal government is drowning in debt. Millions of people are or soon will be in foreclosure. Many more are underwater on their homes. People are hurting out there.

Against this backdrop, it should come as no surprise that Americans have roundly shown that they ain’t buyin’ it on cap and trade or other measures of sustainability. Apocalyptic but nebulous risks like climate change seldom resonate even in normal times. But especially with everything going on in America right now, it’s just not on the list. We might not like that, but that doesn’t make it any less true. It’s like Julian Simon put it, “No food, one problem. Much food, many problems.” Climate change is the concern of people who aren’t worried about where their next paycheck is coming from, where they are going to go after they lose their house, or how they are going to feed their kids.

Bill Clinton was right: it’s the economy, stupid. Urbanists prattle on about sustainability all the time as if the last few years didn’t even happen. No wonder it’s not working. And because pretty much all urbanist policies have been sold as about sustainability, there’s a linkage in the public’s mind, so that if they don’t believe in climate change or don’t rate it highly in favor of more immediate concerns, that takes urbanism down with it.

The good news is, it doesn’t have to be that way. With better packaging, I believe there is a case for pro-urbanist policies (including those that promote sustainability), one that can work with the times and the trends instead of against them. Some people will never be converted. But I’m convinced there’s a lot more people who would be open to various environmental and urbanist ideas if we talked about their practical benefits rather than how they are good for the planet (even if they are).

Delinking Conservation from Sustainability

Back in the early 1980’s my father ran a freon packaging plant. They took in bulk freon in rail cars and put it into smaller cylinders for the marketplace. When he came in, a lot of excess freon from the packaging process was simply blown off into the atmosphere. Now my dad’s not exactly a staunch environmentalist, nor was the ozone hole even on the radar then. But he calculated how much money they were losing from wasting all that product, and decided to install recapture equipment to eliminate that blow-off. It didn’t require any environmental consciousness. Eliminating waste was simply good business.

Similarly at my old company, we talked about sustainability a lot. But what we talked about a lot more was cutting costs. Reducing our office space footprint, encouraging telecommuting, going paperless where possible and defaulting to double-sided printing, installing high end “telepresence” video conferencing reduce executive travel, etc, etc, etc. all reduced the firm’s environmental footprint a lot. But they also saved beaucoup dollars for the shareholders.

In an era of belt tightening, why not play up the money saving angle of conservation? After all, wasting all this stuff we do all the time costs a lot money – money many of us don’t have. There’s a real business case to be made here.

If I were mayor of a city, I’d be targeting my green message not at the sustainability-urbanist axis, but the taxpayers, making sure they know how much money I’m saving them. That’s the kind of green that resonates with them right now.

New York’s Positive Livability Message

When it comes to transportation policy and urban livability, New York City is setting the bar from a policy and taking action perspective. But they’re also doing it from communications one. I’ll show here again this great video on New York’s quality of life agenda. (If the video doesn’t display, click here).

Mayor Bloomberg, Janette Sadik-Khan and others don’t bury their environmental goals in the sand. She says the goal is to make New York “the greatest, greenest city in the world” and they do talk about taking space away from cars.

But the clear focus is the positive benefits to New Yorkers. Not only is the imagery great, so are the talking points, stressing quality of life – “We really try to focus on things that improve the quality of our lives today.” (Bloomberg) – safety (traffic fatalities down 20% since PlaNYC released, pedestrian safety improved by 60% in Times Square since closing Broadway), better services (reduced bus boarding times, faster bus speeds), the benefits to business – “Our agenda is to unclog our streets so commerce doesn’t get stifled” (Bloomberg), and the fact that businesses are pleased (sales are up) now that Times Square has been reconfigured – and the inclusive nature of the improvements – “It’s not just for the spandexed and the brave. It’s for moms, dads, kids, everyone.” (bike planner).

A recent article on Sadik-Khan in the Guardian reinforces the messaging:

Congestion – sclerotic city arteries clogged with traffic – is economically inefficient, ergo making mass transit work serves the city’s economy. Since 96% of Wall Street’s workforce goes to the office by subway, bus, boat, bike or on foot, keeping the city moving and making it prosperous are of a piece…. “The goal has been moving as many people as possible as quickly as possible – and safely,” she says. “Re-engineering streets is about re-imagining streetscapes, but it’s also about making streets safer.” … “What we’ve found is that we’ve not only achieved a 50% reduction in cyclist injuries where we have these lanes, but a 40% cut in all injuries because of the pedestrian refuge islands,” she says.

More Good Marketing Messages

New York isn’t alone in spreading the good news about practical benefits of these policies. If you ever get to hear Washington, DC planning chief Harriet Tregoning talk, she’s a fountain of evidence about how that city’s approach has paid off. For example, even during the recession, DC sales tax collections have been going up. Now obviously as the nation’s capital, there’s always unique dynamics there, but that blows me away.

She’s also been working hard to marshal statistics to help make business even better. For example, a lot of national retailers rely on traffic counts to decide where to locate stores. But in the city, there may be huge numbers of people passing by on foot or in buses that aren’t getting picked up by that measure. So they are working diligently to find ways to gather data to give a more accurate picture of demand to retailers. That’s the intersection of urbanism and business.

There are also sorts of fiscal benefits that can be talked up. As I like to say, “less lanes is less money.” Why spend money on more concrete for cars than you actually need by over-designing for peak of the peak and such?

I was also stunned to read in Streetsblog that all New York’s current bicycle initiatives combined only cost $8.8 million – and only $2 million of that came from the city’s budget. As bike commuting has doubled since 2006, albeit on a low base, it’s tough to imagine any investment that could be more cost efficient or have a higher ROI than that.

Let’s face it, most municipalities and states are broke right now. So looking at low cost, fast to implement, high impact changes like NYC’s public plaza program and pedestrian/bike improvements are clearly the way to go. We can’t afford anything else. In the short term especially, the pedestrian and bicycle need to be at the core of the transport policy for any city that hopes to have a fiscal future.

There’s a lot more where this came from. I think this is the type of thing that needs to inform our arguments to a much great extent going forward. As Jarrett Walker said over at Human Transit, let’s not talk about “coercion”. Let’s stop talking about what we want people to give up, and about how we have to do this or that to “save the planet.” Instead, let’s talk about why it’s just plain a good idea to do anyway. Let’s defend our policy prescriptions on their own merits – because I’m convinced they can stand on their own two feet.

More Goodness from Munich

I’ll leave you with another video. Copenhagenize pointed me at this video out of Munich, talking about marketing bicycling to help build the bicycle culture in that city. They want to produce something that inspires an emotional connection, that gets people to experience the “joy of cycling.” Marketing isn’t all just about dry facts and figures, though that’s what I stressed in this post. This short piece talks about how Munich developed their sales approach. (If the video doesn’t display, click here).

Friday, January 7th, 2011

Urbanoscope

I am a transplant to Louisville, and I must admit that the culture here has been difficult to adapt to, although I still try. There are many things I like about this city, but in terms of jobs, ambition, and looking toward the future, I have to say, these results are not surprising. I don’t get the impression, on the whole, that Louisville wants to move ahead. Every city has its faults. Clannish immaturity is Louisville’s. I hope that Louisville can retain its character while simultaneously opening up. It may not be possible. Young, educated workers do not want to recreate the 1970s in their work environment. I’m sorry if that’s harsh, but it’s the truth. – User “cccc2222″ commenting on Courier-Journal story about Louisville’s failure to achieve its economic ambitions

I’m going to be on Chicago Public Radio’s 848 Monday at 9am talking transportation as part of their “Mayor Monday” series. They might even be taking listener calls, so check it out if you’re in Chicago.

Also, I’ll be participating in a panel discussion on quality of place and product at an event on Building Prosperity in the Greater Akron Region on January 18th, sponsored by Greater Ohio and the Greater Akron Chamber of Commerce. There will be a lot of great speakers including Carol Coletta of CEOs for Cities, Julia Taylor of the Greater Milwaukee Committee, and Paul Grogan, president of the Boston Foundation, along with many state and local leaders. If you’re in the region and want more information, click here.

How’s this for an offer? The Center for Neighborhood Technology in Chicago is looking for people to host house party gatherings to discuss issues about the next mayoral race. If you’ve got a group who would be interested, let them know and they’ll supply staff and resources. If you support CNT and their policy recommendations, they’ll actually do the work in educating your friends on them.

The National Film Board of Canada created an interactive site called Out My Window showing panoramic views from residential high rises and such with 13 families living in them in various cities around the world.

Top Stories

1. Ben Schmitt: Broken windows in the Motor City: A Detroit exit journal. A reporter talks about giving up on his plan to stake a claim in Detroit’s revival, and moving to Pittsburgh. This is a really tough story. “Those people who helped me that night, as we waited more than two hours for the cops to arrive, illustrate the fight inside many residents desperate to turn Detroit around. For a while I believed in that fight. I purchased a home in one of the city’s stable neighborhoods nine years earlier because it felt real. I scoffed at other colleagues and editors who drove to work on the freeways and never spent a minute in the city they covered. But when I heard my daughters’ screams that evening, I knew I was gone. No more compromises.”

2. Gov. Ed Rendell: The NFL Thinks We’re a Nation of Wussies – Not urban related per se, but I liked this piece. – “To call off this game because of snow is further evidence of the ‘wussification’ of America. We seem to have lost our boldness, our courage, our sense of adventure and that frontier spirit that made this country the greatest nation in the world. A little snow, a potential traffic tie-up, a long trip home caused us to cancel a football game? Will Bunch, a writer for the Philadelphia Daily News, said that if football were played in China, 60,000 Chinese would have walked through the snow to the stadium doing advanced calculus as they did so. He’s probably right, and it’s no secret why the Chinese are dominating on the world stage.”

3. Ed Glaeser: America’s Revival Begins in Its Cities

4. Demography Matters pointed me at a very interesting blog called Spike Japan that talks about a side of Japan we rarely see, a side falling into Rust Belt ruin – “It may come as a shock to almost all of you living outside of Japan, and to some of you living in the center of its big cities, that as we approach the summer of 2009, swathes of the country are in ruins. It came as a shock to me, too, I have to confess, having lived for almost all of the last decade in the bubble of central Tokyo and only venturing outside occasionally to get to the airport, nearby beaches, and old friends in the mountains.”

The Pruitt-Igoe Myth

The trailer for a forthcoming documentary about the infamous Pruitt-Igoe public housing project in St. Louis, which was designed by starchitect Minoru Yamasaki – architect of the World Trade Center – and demolished in 1972. The trailer looks very interesting, so I’ll look forward to seeing the whole thing. (If the video doesn’t display, click here).

World and National Roundup

Miller-McCune: A road less traveled – Have we reached “peak travel” in the industrialized world?

Human Transit: Do roads pay for themselves? – Jarrett Walker looks at a recent study on the matter by the liberal non-profit US PIRG.

Daily Mail: Eco-light bulb cost to triple as ban on old style bulbs kicks in – well surprise, surprise.

Jim Russell: The End of Migration

The Atlantic: Dire States – more bad news about state finances

Alex Marshall: Distinctiveness: A Big Secret to Cities’ Success

Tim Campbell: Cities on the Prowl

Ed Glaeser: Behind the population shift – He credits it to housing regulation.

Business Insider: The 11 State Pension Funds That Will Run Out of Money – No surprise Illinois is #1, but Indiana is #3, and it also scores poorly in many other pension rankings though the pension situation does not even seem to be on the radar in the state. Odd.

New Geography: Washington opens the virtual office door

City Roundups

Next American City: Interview with NYC Parks Commissioner Adrian Benepe

LA Times: In a region that imports water, much goes to waste – A discussion of how rain that does fall in LA is basically just channeled off into the ocean instead of captured and reused.

Richard Longworth: A New Year for the Midwest

NYT: Chicago to redevelop US Steel site on lakefront

Chicago Tribune: Chicago’s transportation infrastructure weakening.

Chicago Tribune: Will Chicago think big after Daley?

Chicago Reporter: Loopholes – Despite the huge investment in TIF money, central Chicago actually lost jobs.

Megan Cottrell: Did public housing destroy Chicago’s black voter base? – I’m convinced there’s a Pulitzer for the person who tracks down where the former residents of Chicago’s demolished public housing projects went. A have a friend who is a cop in Gary who says there has been a big influx of ex-CHA residents there. Dittos a friend in Danville, Illinois. And I’ve heard similar reports out of Iowa. It immediately raises the question, was demolition of the projects less about helping the people who lived there than about a deliberate deracination program?

Indy Star: New projects could boost city’s entertainment districts – Quotes Yours Truly plus Kevin Kastner of Urban Indy.

Indianapolis Business Journal: Indianapolis startup scene gains momentum

Cleveland Plain Dealer: In hard times, Cleveland blacks’ views about immigrants shifting

NYT: Trying to overcome the stubborn blight of vacancies in Youngstown

Audrey Russo: Immigration and In-Migration in Pittsburgh

Pittsblog: The New Pittsburgh

Detroit Free Press: Risky best cost Detroit pension funds $480 million and Where the Detroit pension funds went wrong

NYT: In Michigan, Hamtramck pleads for a bankruptcy option

Welcome to Cleveburgh

Chris Briem had a great op-ed piece in the Post-Gazette this week touting a super-regional “Cleveburgh” corridor running from Pittsburgh to Cleveland. If a true mega-regional concept is ever really going to take off, the first step is probably this sort of cross-metro collaboration between neighbors. Here’s Briem’s Cleveburgh map:

Will the Boondoggles Never Cease?

UrbanCincy reports that in it’s latest five year construction plan, the Ohio Department of Transportation, an agency that doesn’t have enough funds to maintain the roads it has in a state in the middle of an acute economic and fiscal crisis, has allocated $809M to extend I-74 through Hamilton County.

Huh? I can’t believe anyone would put this high on a needs list, if indeed it is needed at all. I certainly don’t think so. Hamilton County actually has fewer people today than it did in 1970s, the region is growing more slowly than the national average, and it may already have more miles of six-eight lane freeway than any peer city in America.

Here’s a great chance for new Gov. Kasich to show his conservative bona fides. He cancelled the less expensive 3C rail project as something that state couldn’t afford. (I was also not a fan of that project). Here’s another one he can kill.

I’m a big believer in building infrastructure, and yes, even in building more roads where appropriate. But even among nominally fiscal conservative governors, it’s tough to find any highway boondoggle big enough that they are willing to cancel it. Here’s a perfect opportunity for Kasich to distinguish himself and step up to the plate.

Chicago Lakefront Trail

I think Copenhagen’s bike infrastructure is great, but it’s always great to get nice videos that come from other places too. Here’s one that Joe Peterangelo put together of the Chicago lakefront trail. (If the video doesn’t display, click here).

Post Script

Here’s another amazing early film, this done in 1897 by Thomas Edison of the intersection of State and Madison in Chicago. Hat tip How to Be a Retronaut. (If the video doesn’t display, click here).

Friday, December 24th, 2010

Urbanoscope

Hard as it is to imagine amid the wreckage of the stimulus, American history is replete with examples of how government can actually do good things. The public support for canals, railway lines, the New Deal engineering and construction projects, the Interstate Highway, and space programs all greatly benefited the country’s economy. They underpinned first American leadership in the industrial age, and then in the information economy. In recent decades, public investment in basic infrastructure construction and maintenance has declined, even in the face of considerable population growth. – Joel Kotkin

The Census Bureau recently released not only the first 2010 Census results, but the results of its five year American Community Survey, which provides post-2000 demographic information at the census tract level for the first time. There’s a ton of fascinating detail in here, and a wonderful way to explore it is through the mapping system at the New York Times. It’s definitely worth checking out.

Apparently I wasn’t off my rocker when I suggested US rail capital costs are too high. Over at Human Transit, someone linked to Danish study (in English) that shows US capital costs/km running well ahead of Europe.

Top Stories

1. Richard Longworth: Cities on Their Own – “Both federal and state governments, including Midwestern state governments, are in deep deficit. Partly as a backlash against these deficits, voters handed power to congresspeople, governors and legislators pledged to cut those deficits. This means two things: (1) the money isn’t there, even if governments were inclined to spend it, and (2) they aren’t inclined to spend it. Government funding to cities won’t come to a halt, by any means, but it’s going to be cut back severely. Cities that had looked to Washington or state capitals to maintain or increase funding for schools, infrastructure, economic development and jobs are going to have to look somewhere else — mostly to their own resources.”

2. Portland Oregonian: Knocking the Lake Oswego Streetcar Off Its Rails – An interesting piece about how the federal regulatory process is sending costs through the roof and killing our country’s ability to invest. “If you paid a reasonably bright engineer $75 an hour and gave her 3,000 hours to work through traffic patterns, noise issues, job creation and design options, the tab would be $225,000. The draft EIS cost 19 times that amount, and no one even blinks. ‘It does seem like a lot of money,’ said Bridget Wieghart, a project manager at Metro, ‘but it’s fairly typical for this kind of process.’ Obletz breaks it down for us: $470,000 for the conceptual engineering, which TriMet couldn’t handle on its own; $440,000 for the traffic analysis, performed by David Evans and Associates; $1.37 million for additional consulting fees and the writing assignment; another $1 million for Metro’s input; $150,000 for ‘public outreach’ … And, yes, that $330,000 to Shiels Obletz Johnsen, which bills at a rate between $60 and $200 an hour. Once upon a time, the streetcar was low tech, low overhead, low design and construction costs, and worth celebrating. ‘A beautiful, streamlined process,’ Obletz says. Then the feds showed up. And the train wreck began. ”

3. 60 Minutes: State Budgets: The Day of Reckoning – “And nowhere has the reckoning been as bad as it is in Illinois, a state that spends twice much as it collects in taxes and is unable to pay its bills.”

4. WSJ: Town embraces the ugly truth: it’s a dump – “Nicolas Buissart leads an ‘Urban Safari’ that includes climbing a slag heap, exploring never-used metro stations, walking down streets reputed to be the ugliest in this country, and visiting the house where the painter Magritte’s mother lived—before she drowned herself in the canal. If this sounds like fun, hop into his van, which has no seats.”

A Physicist Solves the City?

The NYT Magazine article from last Sunday about a physicist who claims to have solved the city by reducing it to “a few exquisitely simple equations.” has been getting tons of airplay in the urbanist world.

I can’t figure out why. The article is IMO poorly written and despite its length, it doesn’t actually tell us much at all about what these equations are or what they say. We only learn three things about this:

1. Cities get more cost efficient as they grow larger
2. People are more productive in bigger cities. (“cities are valuable because they facilitate human interactions”)
3. Social pathologies of various types increase at a greater than proportional with city size.

None of these says much new. The first one is a straightforward application of scale economics. If you’ve got fixed costs and variable costs, your unit cost declines as volume increases. That’s why high volume manufacturers have a lower unit cost than small ones. The productivity can easily be taken both from Adam Smith’s division of labor principle – larger cities enable greater specialization and division of labor – and the reduction of transaction costs – both properties of cities that have long been known. As for crime and the big city? Puhleeze. So where’s the beef in this article?

Presumably urbanists get excited because West mentions Jane Jacobs and seems to endorse density and urban form. But a careful reading shows that the article itself never asserts West is claiming anything about density or urbanity in his equations, only city size. He also doesn’t explain why cities like Detroit stop growing while new ones like Atlanta spring up and many other things a casual observer can note about cities. Detroit didn’t suffer from any exhaustion of resources other than customers willing to buy its cars at a profitable price, for example.

Possibly his actual work contains more than this, but this weak article certainly doesn’t bring it to life. In short, I can’t figure out what all the excitement is about.

Innovative Roadway Design

The Reason Foundation published a paper called Innovative Roadway Design that has some suggestions even traditional urbanists might be interested in (not that they’ll like the whole thing, mind you):

People don’t like the look or feel of many of our big highways…This study argues that in too many American cities, despite much planning, we are planning highways poorly…Many of our highways have gotten too big, not because anyone wanted them to be that way, but because widening an existing highway was the simplest thing to do at each point—the line of least political resistance.

World and National Roundup

The Globe and Mail: A Tale of Two Torontos

NYT: Using waste, Swedish city shrinks its fossil fuel use

Forbes: Why can’t we do big things anymore?

Virginia Postrel: The Allure of Techno-Glamour

TNR/Brookings: Jobs jump off a cliff in the nation’s metro areas

Mashable: 5 ways cities are using social media to reverse the economic downturn

CS Monitor: Segregation hits 100 year lows in most American metros

NYT: Census data shows immigrants making paths to suburbia, not cities

WSJ: Downtowns get a fresh lease

NYT: High Line’s second phase differs from its first

WSJ: NJ Governor knew tunnel deal required repayment – Yes, Gov. Christie is now trying to welch on a contract he signed requiring New Jersey to repay the feds for federal funds already expended on the tunnel project he cancelled.

Michael Diamond: Is there a future for manufacturing in New Jersey?

Metropolis: Austin, Now What?

New Geography: Commissioner Leonard Steps Up Portland’s War on Fun

NYT: Michigan’s decade of tarnish seen in Census report

Blair Kamin/Chicago Tribune: Dubious design moves of 2010

MinnPost: Can a metro area so sharply divided by income, race, and geography continue to thrive on the national stage?

The Dream of the 90’s Is Alive in Portland

Randal O’Toole’s blog pointed me at this hilarious video, which appears to have come from the Independent Film Channel cable network, called “The Dream of the 90’s Is Alive in Portland.” (If the video doesn’t display, click here).

Bicycle Parking in Copenhagen

Here’s another great video out of Copenhagen, this one about bike parking in that city. (If the video doesn’t display, click here).

Louisville’s Economic Future

The Courier-Journal did a major series looking back an an ambitious plan to boost the region’s economic fortunes that thus far has failed:

In 1997, a group of local business and civic leaders released a blueprint for Louisville’s economic prosperity in the 21stst century — imagining that by 2010, the area would have a fast-growing population and incomes soaring past the national average. It didn’t happen.

Instead, Louisville’s economy has declined — 24,600 jobs, or about 4 percent of the 13-county Louisville-Southern Indiana total, were lost between 2000 and 2009. That leaves Louisville near the bottom of 16 competing metro areas that vie for jobs, talented workers and investment

It’s a compelling, if gloomy read. Leaders identify, correctly in my view, educational attainment as the key issue, as Louisville’s college degree attainment is very low. One item that wasn’t stressed but I also believe plays a role is that the Louisville metro region is just a bit too small to have the heft it needs to really compete in the league it aspires to.

At the risk of going against everything I’ve said about focusing on attraction vs. retention, I do believe there are probably people Louisville is losing for no good reason. I grew up in Southern Indiana in the Louisville MSA. Out of my high school graduating class of 50, about 8-10 got college degrees. Of them, I live in Chicago, three more live in Indianapolis, and another lives in Kansas City. I believe we were the top five in GPA rank in our class. When I was in Indy, I was amazed at how many people I ran into from my tiny high school that lived there despite growing up right across the river from Louisville. This includes the girl I dated most of my senior year. I attribute this to Southern Indiana high schoolers going to Indiana state schools for tuition reasons, where they are more likely to be recruited by Indy employers than Louisville ones. I think there’s an opportunity for Louisville to pick up more Southern Indiana types coming out of school if it figured out how to better recruit at Indiana state schools. Just a piece of free advice.

Post Script

Kaid Benfield put together a delightful collection of photos of transit systems decorated for Christmas. Here’s a sample:

Thursday, December 23rd, 2010

Taking Chicago Transit from Good to Great, Part Five – Getting It Done

This is the fifth and final installment of my series on taking transit to the next level in Chicago. It has been updated from the original version.

As I write this [in 2009], Chicago has just announced another massive transit revenue shortfall. The CTA’s budget deficit for next year is a projected $300 million – an incredible percentage of the overall budget. The need for change is clearly more urgent than ever. While we probably can’t look to raise revenues in the current economy, a lot of ground work needs to be laid to get to where we need to go.

Who Should Lead the Charge for Change?

The reality is that the CTA and the existing transit agencies are not going to be able to drive this themselves. The CTA is only one of the service boards. And many of the transit projects on its own system aren’t even driven by the agency, but by other organizations like the city DOT. The CTA has its hands full just operating the system. And it doesn’t have the clout to really drive regional change.

So who does? In Chicago, it starts with the mayor. It is critically important to convince the new mayor to make transit a top priority for the city. He has to look at the CTA the same way Mayor Daley looked at Millennium Park or Chicago 2016 or the O’Hare Modernization Plan. If it isn’t important to him, it won’t be important to anyone else either.

Mayor Daley was an incredible mayor for the city in many ways. Whatever you might think of various parts of his personality or ways of running the city, I believe this is a guy that gets up every day and says to himself, “What can we do today to make Chicago a greater city?” That’s a quality of leadership all too rare in American cities.

But Daley just didn’t get it on transit. I mean, I believe he intellectually understood it – he’s reputedly quite the policy wonk – but he doesn’t feel it in his gut. If you’ve ever gotten a chance to see Daley just talk off the cuff about the city, it’s incredible. This is a guy who overflows with passion for Chicago. When he gets started on, say, education, you can tell it’s a topic close to his heart. But I’ve never heard or heard of him talking like that about transit. He doesn’t ride it, unlike Bloomberg who has made a point of regularly taking the subway to work in New York. It’s just not something that emotionally engages him.

That’s not to say it was an invalid choice. A leader is faced with infinite problems to address – budgets, the economy, crime, infrastructure, parks, economic development, taxes, education, transportation, equity, etc. – but only has finite time and resources, even in a city like Chicago. You can’t chose to do everything. Daley chose to focus his efforts elsewhere.

So the immediate critical question is whether the incoming mayor, whoever that is, puts transit on his list of top agenda items. Given that this is a longer term, not instant gratification, it doesn’t seem likely to bubble up frankly.

So who could get the mayor to put this at the top of his agenda? Ultimately, I believe it has to be the leadership of the business community. If you look at major civic change in most cities, including Chicago, the business community has been a big driver. That needs to be the case here as well.

Reputedly it was former Sara Lee CEO John Bryan who sent Daley on his legendary trip to Paris that led to a lot of the beautification efforts in Chicago. It was supposedly Lester Crown who convinced Daley to undertake the ambitious, long term, and expensive O’Hare Modernization Plan.

Similarly, what’s needed is for some current and former CEO’s to go to the new mayor and make the case for him to take on this issue. They have to make it clear that absent major investment in Chicago’s transit system, business investment in the city and especially the Loop will be threatened, and its ability to stay in the top ranks of global cities impaired. Of course, they have to really believe this themselves. I do. That’s not something that can be taken for granted given that most of them probably don’t depend on the CTA. But assuming they do, then they are the ones to do that sales job.

They also need to stay engaged to drive a community effort to make it happen, with the mayor’s full support. This probably involves creating a committee similar to Chicago 2016 – one that has participation from the key stakeholders that would be necessary to move transit forward. The beauty of this issue is that is – or should be – everyone’s issue. It’s difficult to identify a natural constituency who would oppose it. The Loop business community needs it, organized labor should definitely be on board with a big construction program, various advocacy and grass roots organizations want the CTA upgraded, and minority communities want better access to transit and enhanced mobility in their neighborhoods. If there is any one issue that should unite the White, Black, and Latino communities, it should be better transit.

The city coalition should be easy. Of course, the city isn’t the only player. The big problem is likely to be suburban areas and the power structures in Springfield. Clearly, those are areas that need to be tackled, and that’s one of the group’s key to-do’s.

The Program for Change

So what does this committee do? Here is what I see as the workstreams that need to get accomplished. Most of these can and should run in parallel:

  1. Visioning. Create the end state vision of what our city is like with an enhanced transit system. This includes a holistic, phased view of what is to be implemented. The existing plans can be used as input, but I believe we ought to rethink a bit what our system needs to look like. Many of the current proposed expansions, for example, are simply pet projects of various politicians. Again, I won’t give the answer, but simply say that we need to ask the question.
  2. Cost Reduction. Figure out how to drive major reductions in the cost of construction on rail projects.
  3. Governance. Rethinking how we ought to organize and run our transit systems, set investment policies, the city-suburb situation, etc.
  4. Financing and Legislation. Identifying the preferred financing plan and doing the ground work to get the enabling legislation through the state legislature and for maximizing federal funding.
  5. Sales and Marketing Plan. Looking at a short and long term program of making the case to the public and building that demand for the program so that when it is in Springfield and up for a vote in a referendum, there will be clear and overwhelming public support. This is where having that broad coalition is critical.

This creates the plan we need. In parallel, we should start right now, today, dramatically improving the quality of design in our system. And of course we then need to make it happen politically. Once approved, we need a clear focus on execution. I think part of the governance effort ought to look at the best way to organize the new build and capital side of the business vs. the operating side. And I think there should also be ongoing marketing as we deliver on the system to show people how the benefits are actually coming to life.

Doing this won’t be easy. It will probably take some time and cost some money just like Chicago 2016 did – money that won’t be easy to raise in this environment. Probably it would have to involve a mix of public and private funds to really put together a proper and credible plan.

Again, taking Chicago’s transit system to the next level isn’t going to be quick, easy, or cheap, but it is important to be done. Without this investment, it will be a struggle to merely maintain what we have, and a deteriorating transit system could ultimately be a major stumbling block to the city realizing its civic ambitions.

More in This Series

Part 1: Building the Vision
Part 2: Raising the Bar on Design
Part 3: Cost Control and Governance
Part 4: Paying For It

This version of this post originally ran on October 11, 2009.

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Wednesday, December 22nd, 2010

Taking Chicago Transit from Good to Great, Part Four – Paying for It

This is the fourth installment of my series on taking transit to the next level in Chicago. This one has some updates from the original version.

Other installments are:

This piece focuses on the $35 billion question – how to pay for it. Next up: wrapping it up with the strategy for getting it done.

If transit today is underfunded, how can we expect major improvements out of our agencies? The answer is, we can’t. That’s not to say that the CTA can’t and shouldn’t improve. It should, and I’d argue it has in the recent past. But we’re not going to change the game, to go from good to great, without a lot more money. So, where can we get it?

Can We Afford It?

This section is new for this version of the post. The first question perhaps is can we afford it at all. I think transit advocates and urbanists generally need to face reality that starting up a major new program at this time is a non-starter. States and localities are broke, particularly in Illinois. The job market continues to be terrible. And the public is in no mood to spend. Don’t fight the tape, people.

So before we can even think about pulling the trigger on implementing something, we need a clear change in macro-economic fortunes nationally and locally, and we need to both resolve the long term structural issues with the budgets both in Illinois and in the city of Chicago. (To put this in perspective, see “Illinois is Broke” and “Broken Budget Awaits the Next Mayor“). I wouldn’t count on much help from the feds given the recent election and the previous botched stimulus.

Speaking of the stimulus, the reality is that a program to renew Chicago’s transit infrastructure for future generations is not a “shovel-ready” project. There is a lot of planning and organizing work to do to get ready to make the pitch for money to actually do something. That work can proceed now while these other things are resolved. (If they don’t clear up in at least the next 2-3 years, we’ve got bigger problems than transit, anyway).

Also, this notion that somehow if we simply don’t spend any cash, that we’re not spending money and are showing fiscal discipline is a mirage created by the completely bogus practice known as “government accounting.” That fantasyland is a world run on cash only. There’s a reason real businesses don’t use cash accounting. It’s nothing but a gimmick. Yes, cash matters. But just because you aren’t spending cash on something doesn’t mean you aren’t incurring an expense. For example, New Jersey Governor Chris Christie is balancing his budget “without raising taxes” by, among other things, zeroing out the state’s pension contribution. But the pension liability was incurred regardless. It’s only a question of whether you fund it or kick the can down the road. Most governments have elected to kick the can, which is why so many of them are now broke. That’s not fiscal conservatism, it’s budgetary flim-flam.

Chicago is going to pay a price for its transit system, one way or another. There’s no escape from that.

Lastly, the “Mitch Daniels solution” is simply not going to work in Chicago. That is, this is not a city that can become prosperous merely by squeezing spending because it will always be cost disadvantaged versus most of the rest of the country. And the ultra high end services on which it is betting its future depend on quality of services more than minimum costs. Of course we need to manage costs aggressively, but Chicago is also going to have to choose to do some things. The “Do as little as possible” approach simply won’t work here. Transit may not be the right task to take on, but you’ve got to take on something.

Financial Facts

First, let’s start with the fact that the CTA does not control any material funding lever except fares, which are already high. The remainder of the CTA’s money, save for some minor advertising income and the like, comes from a mixture of federal capital aid, and taxes whose rate is set by state law. So any change in the funding situation will require legislative action.

Second, the CTA, Metra, and Pace are required by law to achieve 50% farebox recovery. This might not sound like much, but is much higher than most transit systems. Portland, for example, only has about 20% farebox recovery. While the CTA, as a big city system, might be expected to be higher, 50% is probably still too high. Incidentally, only a tiny handful of transit systems in the entire world that break even or turn a profit.

Third, the CTA is burdened with innumerable unfunded mandates from the state and federal government, including free rides for seniors and other discounts.

Fourth, the CTA is caught in a big pension vice. Its pension system was vastly underfunded, until it borrowed money to top it off – with repayments that comes right off the top out of the operating budget. The Illinois constitution prohibits the impairment of any pension benefit already earned.

A Fixed Cost System vs. Variable Revenues

A transit system is more or less a fixed cost system to operate once you decide on service levels. That is, the CTA decides how much seat capacity to put on the street and rail lines, and the cost to operate it is more or less fixed regardless of how many people actually ride.

However, the CTA’s tax revenues come from two principle sources: sales taxes and real estate transfer taxes. Both of these are highly cyclical. And where we are in the cycle, those revenue streams have declined massively, putting huge holes in transit budgets across America. The fact that the CTA is so dependent on fares is actually a plus right now, since fare revenue is fairly short term stable, at least in contrast to other revenue streams.

If you are going to fund a fixed cost system with variable revenues, you had better have a healthy reserve account for a rainy day. Chicago’s regional transit systems do not, which is why there are repeated “Doomsdays” as revenues decline.

You Have to Pay For It Yourself

So where is the money going to come from to improve and operate Chicago’s transit system? At the end of the day, Chicagoans are going to have to use their own money to do so.

I find it interesting that most local transit advocacy focuses on getting more money from Washington and Springfield. While a Chicago-heavy White House with Democratic control of Congress [update: no longer] might enable something to happen there, I’m not holding my breath.

Consider that there are only a handful of cities with older systems like the CTA that need upgrading. That right there creates a numbers game problem, particularly in the Senate. Likewise, historically Springfield has done little to help. Even the recent $25 billion state capital plan included a comparatively small amount for transit.

Most importantly, other cities around the country are paying for their own transit. In city after see we see transit levies placed on the ballot to raise funds to construct and operate new light rail lines and other systems. Last November, for example, the Seattle area voted to raise its own taxes in order to collect $30 billion over the life of the tax for transit improvements. This is in an area only about a third the size of Chicago.

This also creates problems in Congress. If every other city is voting to raise taxes to invest major local dollars into transit capital, why should Chicago get a pass? Also, this goes right along with the heritage of the Burnham Plan. Chicagoans voted dozens of times to allow bond issues to finance the major public works programs coming out of that plan.

The answer to me is pretty clear. To really change the transit game in Chicago means putting a tax on the ballot for the people to put up or shut up on whether they actually want a better transit system.

Parameters of the Financing

Before getting to the specific measures, I’d like to propose some basic things to use the money for.

First, I’m assuming there is that compelling vision from part one to get people to buy into the system. This probably has a mix of near term and long term items, tangible and conceptual items. That means there is probably a phasing that needs to be figured out. I would suggest that it would be a limited number of phases, with a pretty beefy first phase. If asking citizens to vote on a tax increase, they should get something pretty big and visible out of it. Also, you don’t want to go back to the well too many times. On the other hand, you can’t expect people to buy a pig in a poke either, so it probably can’t be everything in one vote.

With that backdrop, I would suggest the a ballot to raise taxes with the proceeds to be used for:

  • Establishing a CTA operating reserve of $500 million, with parameters to make sure it isn’t rapidly drained and never replenished. Metra and Pace need reserves as well, though potentially we’ve reorganized our governance at this point, remember?
  • Rolling back CTA fares to $2 and eliminating transfer surcharges.
  • Providing additional operating assistance and reducing the required farebox recovery percentage.
  • Funding debt service on a bond for a fairly healthy first phase of work. I would suggest something in the neighborhood of $15-20 billion. Potentially the actual program could be bigger when combined with federal assistance or other revenue sources such as existing TIF’s.

Sources of Funds

Typically, transit bonds are backed by increases in the sales tax. However, given the sale tax dependency of Chicago transit today, and the high Chicago sales tax rate and associated political drama around the Cook County tax, this may not be realistic. Where then could the city look? Here are some ideas:

  1. Land Value Tax. A land value tax is a tax not on dirt, but on a physical site. This does not include any improvements made to the site, such as buildings. This is an attractive form of taxation for a few reasons. Firstly, it doesn’t distort production. If you tax something, you get less of it, but since the surface of the earth is already fixed in extent, this isn’t a problem here. The marginal supply of new sites is zero no matter what. Also, it encourages people to put land to good use. Today, if someone builds a skyscraper downtown, their “reward” is a huge tax bill. But if someone tears down a historic building and puts in a surface lot, his taxes go down. That makes no sense. A LVT discourages land banking and speculation, and encourages people to invest in their property. And, the value of a site is really not a function of what any individual person does. Rather, it is a result of overall community growth and investment. This is in contrast to the value of a building, which is principally a result of what the owner does. Consider the value of the Chicago Loop. Now consider the value of the Chicago Loop without transit. The enormous site values in the Loop were created by transit, so why not capture for transit the value created by it? I can’t do this topic full justice here, but suffice to say there are many reasons why, if you have to have a tax, a land value tax is the best way to go. Its principal downsides are a lack of familiarity and a lack of experience in implementation, which would doubtless result in some bumps.
  2. Congestion Charges/Tolling. This would involve something along the lines of converting the freeways in the city into tollways, using the proceeds to fund road maintenance and operations, and also transit. It could also be used for congestion management purposes. This would require federal rule changes and no doubt much political difficulty. I do not believe a London style congestion charge around the Greater Loop area is feasible or desirable.
  3. Automobile surcharges. This could include items such as additional registration fees or parking taxes.
  4. Income taxes. Illinois income tax rate at 3% is not that high on a comparative basis. It remains to be seen where it will be after the legislature finishes addressing budget deficits, but this is one possible source of funding as well. It seems likely to me the income tax is heading higher, but even at a base of 4-5% it would still be lower than competing jurisdictions like California and New York.

I would suggest that a land value tax and congestion charges are the best approaches, but that the income tax based approach is probably the most straightforward and easiest to implement. I don’t have the time right now to do the math, but it should be fairly straightforward to calculate the supplemental rate needed to raise the types of funds outlined above.

Chicagoans may not go for this, but I do not see any other realistic alternative to raising major funds other than local dollars. Fundamentally, if Portland, Seattle, San Francisco, Dallas, Denver, Charlotte and many more places can do it, I don’t see why a truly world class city like Chicago can’t step up to the plate and do what needs to be done, particularly when the need is evident and when you have that vision in place and the other elements needed to convince the public.

Next up, Getting It Done.

A version of this post originally ran on September 27, 2009.

Thursday, December 16th, 2010

The Silicon Valley Advantage

Lots of cities are trying to build up high tech/internet industry clusters. I think there’s room for a lot of places to significantly boost their employment and business formation here, particularly in focused areas, but the top hubs like Silicon Valley have huge advantages that mean they’ll likely stay on top of the heap for quite some time.

A brief story about a company called Formspring illustrates this. Formspring is a spin-off of an Indianapolis online form vendor called Formstack. (Actually, Formstack was originally called Formspring, but the spinoff business became so big they changed their name). Formspring was one of those crazy social media growth juggernauts that signed up something like 15 million users in only eight months.

Of course, they needed money to keep up with this, and so went looking for investors. In the interview below from July with Formspring CEO Ade Olonoh, the interviewer described this as an “iconic super-angel funding round where every bold faced Silicon Valley name put money into you guys.”

The entire process end to end lasted 12 days. Somehow they got a conversation with Steve Anderson of Baseline Ventures. After a few phone calls over the first week, the Formspring team flew out to Silicon Valley where Steve arranged about 10 meetings over two days with a who’s who of investors, people Olonoh admitted he couldn’t have even listed on a whiteboard before the process started. Shortly thereafter the funding round was closed and Formspring relocated to Silicon Valley. Here is the entire interview, if you are interested. (If the video doesn’t display, click here).

In Silicon Valley they just plain move faster than everywhere else. That’s a huge advantage. And they have a huge reservoir of strategic investors who bring not only dollars to the table, but significant experience and expertise in growing businesses.

Another advantage is talent. In staffing up the business, Formspring was able to hire a couple people who worked on Second Life. Though the competition for developers in Silicon Valley is intense right now, the talent pool is still the world’s most robust for this type of business.

Similarly, talent and access to capital led a couple of University of Chicago entrepreneurs to relocate their enterprise to Silicon Valley. As WBEZ reports in “The One That Got Away.”

They didn’t go with the intention of staying. After all, Lieb and Mintz still had another year of B-School ahead of them. But like lots of good tech companies, the train barreled down the tracks at breakneck speed.

They took part in a summer business incubator program run by Y Combinator. By the end, they got a big, fat $3 million check from the venture-capital firm Sequoia Capital and some Valley angel investors.

But just because they got the money there didn’t mean they had to stay. They could have come back to Chicago. But they didn’t. They opened their headquarters in Mountain View, California, and now have 15 employees there and are “aggressively hiring.”

Lieb says the main reason was because Huibers lived in California already. But there was another reason that speaks to Silicon Valley’s dominance.

“We knew we needed to hire a bunch of people, and being here in the Valley is really where all that technical talent is,” Lieb said in an interview.

And even though they did talk with venture capitalists in Chicago, there aren’t as many of them and they’re more cautious, Lieb says.

Now all is not doom and gloom here. I don’t think a place like Indianapolis was a great fit for Formspring. It’s a perfect fit for B2B businesses like Exact Target, but a mass-consumer social networking site is not the city’s sweet spot. So I wouldn’t feel too bad about losing the business. Similarly, WBEZ also reported how Groupon has ignited a startup boom in Chicago.

But I think this story shows some important differences in the capabilities and ways of doing business between the Midwest generally and Silicon Valley. (For example, there appears to have been a media blackout in Indy regarding the relocation. I read about it in the New York Times). It shows why the Valley has had such staying power, and why it is so hard to build and sustain an innovative tech cluster like this over time.

Tuesday, December 14th, 2010

Taking Chicago Transit from Good to Great, Part Three – Cost Control and Governance

Continuing my series on taking Chicago’s public transit system to the next level, I wanted to address a few miscellaneous topics before moving on to the matter of how to pay for it. For those of you who did not see them already, click through to read part one on building the vision and part two on raising the bar on design.

Cost Reduction

I mentioned in my previous installment how we need to raise the bar on the design of the system. While some of this would be nearly free, other items, particularly L stations, would appear to legitimately cost a lot more money to do right. How do we reconcile this?

In the spirit of Burnham’s “more study, not more money” quote, I’d like to suggest we need to take a serious look at how to drive step-change reductions in the cost of heavy rail projects. Consider this: the proposed Red Line extension to 130th is 5.3 miles and $879 million – a cost of $163 million per mile – nearly $21,000 per new daily rider. This is for a line with limited ROW needs. And my numbers are very generous, since they are current year, not construction year numbers, and they exclude a $200 million yard reconstruction that is part of the project. Frankly, at those rates, highway investment actually starts to look like an attractive option. IDOT’s Dan Ryan reconstruction, which included adding a lane south from 67th or so to 95th, was about the same the cost as this proposed extension

The proposed Orange Line proposal is even more expensive on a per unit basis. It is $455 million in current year dollars for 2.26 miles – a cost of $197 million per mile. This is for 7,800 new boardings per day, or over $57,000 per boarding (likely around $100,000 per passenger assuming most people make round trips).

I’ve read of estimates up to $4 billion to renovate the North Main embankment. Just that segment would cost more than the Kennedy reconstruction + the Stevenson reconstruction + the Dan Ryan reconstruction + the Kingery reconstruction and widening + the recent resurfacings on the Edens and Calumet Expressways + the Ike bottleneck reconstruction from a while back – all combined.

I’m not saying anyone is making these up or anything, but the numbers themselves just seem way out of line.

Let’s consider some rail transit construction costs from around the world. Seoul, Korea is building a heavy rail route called the New Bundang Line as a public/private partnership. It will cost 1.1809 trillion won ($966 million) for 18.5km (11.5 miles). This is a cost of $84 million per mile – far less than Chicago’s expansions. And the New Bundang line is partially underground, requiring tunneling, and is a fully automated, driverless system with state of the art technology too. Read more here.

Madrid too has a much lower cost approach. Its Metrosur line (admittedly opened in 2003) was euro1.55B ($2.25B) for 40.5km (25 miles), including 29 new stations, six of which permit transfers with commuter rail. This is $90 million per mile, again, far less than Chicago’s proposed expansion even if you inflate the numbers to current dollars. Again, this included extensive tunneling (full on boring, not just cut and cover) in terrain where that was very difficult. See here for more info on the line, or this excerpt from an article titled simply, “Madrid confirms its low cost approach“.

Even the libertarian City Journal praised Madrid’s subway program, albeit as a foil for critiquing New York, saying, “New York might take instruction from an unlikely place: Madrid, Spain, which first opened its subway in 1919. Between 1995 and 2007, the Spanish capital swiftly and cost-effectively upgraded its subway system, building more than 150 new stations over 120 miles at costs far below New York City rates.”

It seems like every time I read about a metro line outside the United States, except in the UK, it is way cheaper than we can do. I don’t think there’s anything unique to Chicago about this. Alon Levy has contrasted the cost of subway construction in New York with the much lower costs in Tokyo, for example. We seem to have a system in the US that significantly inflates the cost of construction vs. the rest of the world. Many of the typical complaints as to why this might be would seem to have no merit. Other countries are heavily unionized and regulated, for example, so don’t blame organized labor. (South Korean unions are famously militant). Spain and Japan are not exactly low cost countries. And basically all new systems world are fully compliant with equivalents to the ADA.

Any dollar we can take out of the cost of these systems is found money. It can either be invested back into quality of design, used for more projects, or returned to the taxpayers and riders.

I would propose that we create some sort of a task force with a mandate to drive significant reductions in the cost of construction – I’m talking a target of 25-50% or greater, no excuses. This would include the CTA and FTA, but also outside experts brought in from overseas and from outside the fairly small circle of US transit consulting firms. US engineering firms need to be included, but frankly outside leadership and new seats at the table are going to be needed to really drive new thinking as these firms actually profit from higher costs. We need to examine every aspect of these systems. What is the minimum we are legally required to build? What requirements are driving excess construction costs versus overseas systems and can we eliminate them? Are there new techniques such as pre-fabrication that could drive large savings? Can we pool purchasing with NYC or elsewhere? Can off the shelf systems be used where possible instead of bespoke (admittedly, maybe difficult in an other legacy system like Chicago)? Can we use more grade level construction and street crossings instead of expensive elevated construction and viaducts? What could we do with public-private partnerships and concession agreement a la Madrid? What about real TransMilenio style BRT as an alternative to heavy rail? There would appear to be all sorts of things that could be investigated as means of materially reducing the cost of the system. Some of them might require legal or regulatory changes, but given the dollars at stake both locally and nationally, it is worth fighting that fight.

Again, we need an aggressive target for cost savings and incentives to drive results. At a minimum, someone should be able to detail why our costs are so much higher than the rest of the world’s as right now there is no prima facie reason evident.

Regional Transit Governance

Chicago has three more or less independent transit service boards: the CTA, Metra, and Pace. The RTA provides financial oversight and is also chartered with coordinating these agencies. It’s been long noted that in fact the three agencies mostly don’t cooperate that much, and there are frequent turf battles, etc.

I think a bit of this is overblown. I don’t subscribe to the idea that a lack of integration between the CTA and Metra is a major barrier to improved transit regionally. Would integrated fares and more coordinated schedules help? Sure, but that’s not the secret sauce to really moving the bar.

However, the various turf battles do lead to challenges on occasion, and the fact that these agencies are so independent in their operations leads to bad “optics” and provides ammo to those who would oppose change in the region. It’s like when the CTA had a bus on Lake St. Regardless of the merits or lack thereof of that route, it was really minor in the grand scheme of things. But it was always something people could point to as an example of misplaced priorities. (“As long as the CTA has a bus running underneath the L, I’ll never take them seriously” and such). It plays into the whole “gotcha” mentality of politics.

So this is something we should probably take a look at while putting together that vision. And there are some legitimate items that need to be addressed. Again, I won’t be prescriptive as to what that more integrated vision is, or how governance would change, just say that it ideally ought to be part of the discussion.

Unfortunately, this is likely to be the most troublesome aspect in many ways. Consider this: the CTA carries 80% of the region’s transit ridership. But the CTA gets far less than 80% of the money. This is true of the RTA tax, the stimulus, the recent capital bill, etc. Someone labeled my winning entry from the Chamber of Commerce competition as “suburb infuriating”. Actually, I’m not anti-Metra. I think they are a fantastic agency and love riding Metra trains. In fact, I budgeted for heavy increases in Metra ridership and significant investment in that system in my winning entry. The but the fact remains that the lion’s share of the region’s transportation ridership is on the CTA. All service boards aren’t created equal.

For their part, Metra also has some legitimate complaints. They’d no doubt say that since they carry passengers over longer distances, passenger-miles, not passenger counts is the best measure. There’s something to that. (Though I’d argue it leads to certain perverse outcomes such as rewarding service to far exurban areas like Elburn. Why are we using precious transit dollars to subsidize non-transit oriented sprawl developments even further from downtown? Why make it easier to live even further from downtown with this subsidy?) Also, Metra provides significant service in the city, but doesn’t receive any of the RTA sales tax in the city. It should come as no surprise to anybody that their service priorities follow the funding. And Metra is arguably the long pole in the tent when it comes to feeling the pain of transit underinvestment. As Metra trains get more crowded and turn into standing room sardine cans, this is going to very negatively affect the perception of the Loop as a business destination. It won’t take that much ridership growth to get there.

So there is a lot to consider here and it will obviously be something difficult to pull of politically, but a challenge that should be tackled along with the rest.

The “Racquet”

Lastly, I received an email followup to part one of this series from someone who had some interesting insights as to offer about why Chicagoans don’t seem to demand better transit. Presented here in an anonymized fashion.

Your discussion of what Chicagoans want or are willing to pay for vis-a-vis world-class mass transit reminds me of a concept I learned in the early ’90s.

The concept is “Racquet”. I learned of it related to organizational behavior but it sounds like the inhabitants of Chicago may have a racquet as well. A racquet is when folks have something they complain about and commiserate about but don’t fix it. Upon delving into the roots of racquets one finds that the folks don’t really want it fixed – the subject of the racquet is a unifying force that if corrected will remove the common complaint and thus the unifying force. The cultural changes that would ensue from the change in practices that “no one wants” are not acceptable to the people (the complainers).

I worked for a rapidly growing company in the early 90’s. We were a company with many cowboys. We (the top 70 leaders in the company) commiserated on any number of things. The CEO hired two consultants to help “transform” the company into a modern, international company with cohesive leadership. They introduced us to the “racquet” theory. In corporate organizational behavior, it is important to break the racquets. It is also difficult. But, I imagine far easier in a company with some semblance of common objectives that it would be in a each-man-for-himself city.

More Chicago

Chicago Transit: From Good to Great
Part 1: Building the Vision
Part 2: Raising the Bar on Design
Part 3: Cost Control and Governance (this post)
Part 4: Paying For It
Part 5: Getting It Done

Other Transportation Related Articles
The Urbanophile Wins Chicagoland Chamber of Commerce Transit Competition
Transportation and the Burnham Plan
Metropolitan Linkages (high speed rail benefits case)
High Speed Rail (implementation)

This post originally ran on September 15, 2009.

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