Thursday, October 31st, 2013
The nearly empty Intercounty Connector in Maryland. Coming soon to a bridge near you in Louisville or Portland? Source: Bethesda Magazine
I’ve recently reported on a couple of mega-bridge mega-boondoggles in progress in Louisville and Portland. But if you want to see a preview of how this might play out in real life when and if they are built, an example of this is in progress in the Maryland suburbs of Washington, DC with the Intercounty Connector.
Betheseda Magazine has the gory details in their September-October issue. And while this is a highway, not a bridge, there are an eerie number of similarities between this and the bridge projects in Louisville and Portland. The fate of the Intercounty Connector should be giving DOT officials in Oregon, Indiana, and Kentucky nightmares. Here’s what Bethesda Magazine had to say:
Driven on the Intercounty Connector lately? No? You’re not alone. Many haven’t. The 18.8-mile highway—the first stretch of which opened two and a half years ago after great hype and amid great controversy—is the road less traveled. Traffic counts are well below early projections, and revenue from tolls—needed to pay off the bonds that were sold to build the road—is far less than originally anticipated….The story of the ICC is a bit like the invasion of Iraq, a march to war in which the highway hawks—developers, development lawyers and contractors—held sway while critics were ridiculed as knee-jerk tree huggers and opponents of economic growth….The ICC is the Pac-Man of roads, critics charge, eating up all the transportation dollars in sight, now and for years to come.
Some troubling elements of this project that are similar to aspects of the Louisville and Portland examples:
- Been desired for decades? Check. “first conceived 50 years ago”
- Stunning cost increases? Check. “The initial estimated cost of $1 billion has ballooned to $2.4 billion—or as much as $4 billion if you include interest payments.”
- Tolls as an afterthought? Check. “Tolls were barely discussed. And hypothetical figures buried in a 2004 state consultant’s report marked ‘confidential’ are lower than tolls currently being charged.”
- Use of GARVEE bonds (a way to spend tomorrow’s federal transportation grants today) for financing (I’m looking at you, Kentucky)? Check. “The largest chunk, $750 million, comes from so-called GARVEE bonds.”
- Amazingly declining traffic projections? Check. “The Maryland Transportation Authority issued a press release asserting that ICC usage was ‘consistent with our projections,’ with 35,000 vehicles daily using the westernmost segment and 26,000 the eastern segment. Unmentioned was that the numbers were consistent with 2009 projections, which were significantly lower than earlier forecasts.”
- Two sets of books, er, traffic projections? Check. “The state developed two sets of projections, both higher than actual usage so far. The higher numbers were in official documents presented to the public, bolstering the case for the highway and implying greater environmental impact with higher volumes. More conservative numbers were used for the bond rating agencies.”
- Massive funds diverted from more worthy projects? Check. “To pay for other road improvements the state cannot afford—thanks largely, critics say, to the ICC—the Maryland General Assembly this year pumped $880 million more into the depleted Transportation Trust Fund by increasing the gasoline tax for the first time in 21 years.”
What happened? Traffic is far short of projections. Tolls are falling massively short of projections: “The total revenue in the fiscal year that ended June 30, 2012: $19.73 million—a third of the low-end projection of a decade ago.” Yikes! That’s a little bit more than an “Oops” to say the least. The state is being forced to bail out the bonds with regular transport funds: “$180 million is coming out of the state’s Transportation Trust Fund to pay bondholders.” Holy Financial Disaster, Batman!
Adding to these woes, people who drive the road without a transponder (likely many of them from out of state), aren’t paying up: “34.2 percent of drivers using the ICC without an E-ZPass transponder weren’t paying the bills they later received in the mail.” Presumably the rental car companies and such included in this will eventually fork over what they owe, but it looks like this thing is going to generate significant bad debt expense.
And let me put this one in a separate paragraph so you don’t miss it: building the Intercounty Connector caused the state to have to raise the gas tax. I repeat from the article: “increasing the gasoline tax.”
The Washington area is famous for extreme traffic congestion. It’s growing rapidly in population. It’s also the most affluent major metro area in the United States. Yet amazingly, people still aren’t willing to pay to use this thing. Admittedly, the tolls will be lower (though still not cheap), but I wonder how many people in much lower congestion and lower income Portland and Louisville will be similarly unwilling to pay?
Adding to the financial disaster is some fallout that I wasn’t necessarily thinking about, but is obvious in retrospect. Namely, recriminations and finger pointing about who is to blame for this fiasco. What’s that song by Shaggy again? It’s not just about the cost either. The highway has not spawned the type of development that was projected when it opened. Whose fault is that, you might ask? Well according to Doug Duncan, one of the politicians who pushed this debacle, it’s the local government. He claims that they have created an “anti-business climate.”
So head’s up to local leaders everywhere. If the DOT and its allies cram a mega-boondoggle road or bridge down your throats, it’s your fault if it doesn’t produce the economic benefits they projected. Better buckle up. Because apparently being a boondoggler means you never have to say you’re sorry.
I’m sure traffic levels will eventually improve and that there will be more development in the future. But this thing is clearly no where near what was promised by its backers. Sadly, Maryland motorists and taxpayers will be paying the price for years to come. Let that be a warning to would-be boondogglers everywhere. The hangover from overspending can be long and painful indeed.
Update: A commenter requested a map of the highway, so here it is via Wikipedia:
Also nice to see Business Insider pick up the story. The public needs to know how much risk their wallets are exposed to on these things.
Wednesday, February 6th, 2013
As a companion to my City Journal piece Hail, Columbia! that documents the stunning rise of Washington, DC to the point where it appears to be becoming nothing less than the new Second City of America, you can listen to the podcast below in which I discuss the piece with City Journal managing editor Ben Plotinsky. If the podcast player doesn’t appear for you, click here for the raw MP3.
Tuesday, February 5th, 2013
My latest article from the Winter edition of City Journal is now available online. Called “Hail, Columbia!,” it makes the argument that Washington, DC is not just an economic boomtown, but is emerging as nothing less than America’s new Second City. This is for three key reasons:
1. Washington has developed a unique prosperity in the modern economy that goes well beyond its traditional recession-proof nature. Cities like Dallas boast “horizontal” success in adding people and jobs. Places like San Francisco boast of “vertical” success in raising per capita GDP and income. But Washington alone among big cities combines the stunning wealth and productivity of a New York with the volumetric growth of a Houston. It is a city simply without peer in America.
2. The scale of Washington now enables it to play with the big boys. In 2000, Chicago’s economy was about 50% bigger than Washington’s. Now it is only 25% bigger. Washington has more people with graduate degrees than Chicago and is on the verge of passing Los Angeles. At current growth rates, the combined Washington-Baltimore region will pass the 10 million population threshold in about 15 years to join the ranks of the world’s megacities.
3. Washington’s wealth extraction model has evolved from simply profiting from federal spending to a form of economic hegemony based on the regulatory superstate. The region may actually take a blow in the near term from fiscal retrenchment at the federal level, but the increasingly intrusive, fine grained control of the federal government over every aspect of American life ensures that the country will continue to pay tribute to Washington no matter what, and means you basically have to play in Washington to make it as an industry in America today.
There’s a lot more in there too, including the stunning transformation of the District of Columbia itself and the totally unexpected emergence of Washington as a global city. Please read the whole thing for yourself. It’s exciting or depressing depending on your point of view.
Monday, December 10th, 2012
If You Don’t Understand Urban Political Theory, You Probably Don’t Understand Land Use by Richard Layman
In academia, there are (at least) two competing theories of local politics.
From sociology comes the “Growth Machine,” which makes the point that despite seeming intra-elite competition, local political and economic elites are for the most part united on a pro-growth agenda focused on intensification of real estate, since local governments are dependent on property taxes (and sales taxes) for the bulk of their revenues.
Harvey Molotch’s paper, City as a Growth Machine: Toward a Political Economy of Place, published in 1976, and later expanded into the book Urban Fortunes: Towards a Political Economy of Place, serves as the foundation for this theory.
Political scientists offer the theory of the “Urban Regime,” which came to the fore in 1989, with the publication of Regime Politics: Governing Atlanta, 1946-1988 by Clarence Stone (until recently he was a professor at the University of Maryland). A good synthesis of the work is in the paper “The Evolution of Urban Regime Theory: The Challenge of Conceptualization by Mossberger and Stoker (2001).
I don’t think these theories are competing so much as different sides of the same coin. “Growth Machine” theory is best for explaining the motivation and focus of “the land-based elite,” and “urban regime” theory explains in detail how the land-based elite operates and functions.
In the paper, “Now What? The continuing evolution of Urban Regime analysis,” Stone writes:
An urban regime can be preliminarily defined as the informal arrangements through which a locality is governed (Stone 1989). Because governance is about sustained efforts, it is important to think in agenda terms rather than about stand-alone issues. By agenda I mean the set of challenges which policy makers accord priority. A concern with agendas takes us away from focusing on short-term controversies and instead directs attention to continuing efforts and the level of weight they carry in the political life of a community. Rather than treating issues as if they are disconnected, a governance perspective calls for considering how any given issue fits into a flow of decisions and actions. This approach enlarges the scope of what is being analyzed, looking at the forest not a particular tree here or there. [emphasis added, in this paragraph and below] …
By looking closely at the policy role of business leaders and how their position in the civic structure of a community enabled that role, he identified connections between Atlanta’s governing coalition and the resources it brought to bear, and on to the scheme of cooperation that made this informal system work. In his own way, Hunter had identified the key elements in an urban regime – governing coalition, agenda, resources, and mode of cooperation. These elements could be brought into the next debate about analyzing local politics, a debate about structural determinism.
On the other hand, Urban Fortunes is particularly good on various elements of the land use intensification agenda, from Downtown revitalization to sports stadiums and arenas, conference centers, and in particular, the role of local media–fully dependent of the success of the local region for its own success, being dependent on advertising revenues generated primarily from sales to local businesses–in cementing this agenda.
If someone has keen observational and interpretative skills and delves into the academic literature, you can see how this works. Of course, good writing on the local Growth Machine always helps. In DC, the classic book that illustrates these theories, but was written by journalists likely unfamiliar with either, is Dream City: Race, Power and the Decline of Washington, DC, which covers the first two administrations of former Mayor, Marion Barry, and chapter 4, on land use and development, in particular.
Not only does the media not report the back story, they’re part of it
One fault of journalism is that it is published every day and isn’t focused on explanation of systems so much as it is reporting the facts of the latest events and exploits and ribbon cuttings.
In any case, the real story is the Growth Machine/Urban Regime and how it operates.
So articles about local corruption tend to miss the point because they look at is as one-off behavior for the most part (cf. Chicago and Illinois generally, Tammany Hall history, Robert Caro’s book The Power Broker on Robert Moses, and the Starz network tv show, “The Boss”).
It’s all about sustained efforts, operating over multi-decade time frames, and intimate interconnections between political and economic elites. Although just like regime change in foreign countries (e.g., Libya, Tunisia, China, Egypt, Syria) there are winners and losers (e.g., “D.C. won’t renew Chartered Health Plan contract” from the Post) when the leaders change, and a new crew comes in, even though the general “mode of cooperation” functions identically, just some of the positions have been moved around.
Left: sign up sheet at the Walmart booth at the H Street Festival in September.
I think that’s why Walmart continues to do community organizing with regard to their entry into DC as their biggest supporters have left or are leaving the stage–Councilmember Harry Thomas Jr. is in jail, Council Chairman Kwame Brown has resigned, and Mayor Gray is under a cloud due to campaign finance violations and isn’t likely to run again, even if no charges are filed against him–and they want to maintain their presence and visibility, even though for the most part, zoning regulations allow their entry without significant public involvement.
The blog entry “The Missouri History Museum, Freeman Bosley, Jr. and the Broken Nature of Civic Leadership” from the NextSTL (St. Louis) blog discusses a series of articles in the St. Louis Post-Dispatch on overly intimate financial dealings between local nonprofits and business and political leaders in need of various bailouts. It’s got outrage, but misses the deeper point.
Although maybe 8 years ago or so, the Richmond Times-Dispatch did an amazing profile of Richmond’s power structure and power brokers, with a spider map showing the various interconnections. This was a surprise, because the Bryan family, owners of the paper, are a part of that structure.
The Washington Post reports on the various corrupt and ethical failings of local politicians (the latest being “Report: Councilman Graham’s actions contrary to Metro ethics rules” and the editorials “Jim Graham’s breach of duty” and “Jim Graham investigation to test the D.C. Council’s ethics stance” on Councilman Jim Graham’s likely misuse of his dual position as DC City Councilmember and member of the board of the local transit authority and interference in contracts and deals involving parties with business before both) without ever disclosing its role as one of the initial organizers of what Clarence Stone would call the local governing coalition, the Federal City Council.
But this is hardly new. In San Diego, the local newspaper is now owned by a real estate developer. The Los Angeles Times was owned by a key landowning family for decades. DC’s Examiner is owned by the same group that owns Anschutz Entertainment Group, a major player in arenas, concert promotion, and entertainment across the globe. Gaylord Entertainment (the company that owns National Harbor and Grand Ole Opry, and is being acquired by Marriott) grew out of the Oklahoma City Daily Oklahoman newspaper.
Although local alternative papers can be good sources of information on Growth Machine politics. The original Washington City Paper Loose Lips columnist (Ken Cummings) and the City Desk news pieces were legendary for providing deep back story on such issues.
Without knowing the back story, too often you fly blind
I’m not sure that knowing the theories helps advocates transform the system, but it does allow you to understand what’s happening, and how and why, and it gives you some insights into how to shape the system to function better, in part by introducing citizens as a force for civic engagement, action, and ethics, and also by trying to improve the various processes of “the system.”
For example, my writings on community benefits-proffer processes make the point that without clear definition, likely deliberate, the process is designed more to limit the financial impact on developers, and less to monetize some of the economic value created by variances, density bonuses, and other special changes to planning, zoning, and building regulations that would otherwise limit the economic value of projects. See “What community benefits are supposed to be versus what people think they are about.”
Similarly, many advocates don’t understand that government employees aren’t usually independent actors, but are very much constrained by their bosses, who ultimately, are the elected officials.
So it is essential to have checks and balances built into the system, in this case the right planning regulations in place, to provide residents with more control and ability to shape the built environment in their communities, be it having “big box” ordinances, a parks master plan, a robust transportation vision plan, neighborhood and sector planning processes that produce neighborhood and/or sector plans, planning and/or transportation commissions, robust capital improvement planning, etc.–none of which, by the way, are present in DC–although transportation and parks master plans are in the process of being developed.
This post originally appeared in Rebuilding Place in the Urban Space on October 17, 2012.
Thursday, March 29th, 2012
My latest blog post is online over at New Geography. It is called “The Great Reordering of the Urban Hierarchy.” In it, I look at how the relentless expansion of the US federal government and the “spiky world” forces of globalizations are revamping the urban hierarchy of the top tier cities in the United States. While not a definitive view, it seems that New York is going from strength to strength, while Washington, DC emerges as America’s new “Second City.” This has been to the detriment of Los Angeles, Chicago, and Boston. It’s controversial to be sure, but I hope you’ll enjoy it. Comments definitely encouraged on this one.
Update: Richard Florida has more to say on this topic over at The Atlantic Cities..
Thursday, November 10th, 2011
Update: The NYT just ran an interesting story called “In Shift, More People Move In to New York Than Out” that provides further info on this trend using recent Census data.
My latest post is online over at New Geography. It is called “Back to the City?” and examines the question of whether in fact there has been a movement back to the city. Census figures suggest that while many downtowns flourished, albeit often showing large percentage gains on a small base, cities generally underperformed in the 2000s vs. the 1990s.
In this piece I look at intra-metro migration to measure people moving from the city to the suburbs and vice versa. Because data is only available at the county level, I selected four cities where counties offered a good proxy for the urban core: New York, Philadelphia, San Francisco, and Washington, DC.
As you can see from the chart above, there has been a shift in trends in the 2000s, with out-migration falling off late in the decade, while in-migration remained steady or even increased. The most striking trend was in Philadelphia, as shown above. That chart shows the migration values plotted as a index to render them in the same scale. There is still a net out-migration to the suburbs, but the gap has narrowed in these places. Here we see that on the chart with raw numbers:
Obviously with the late decade featuring a steep recession and housing bust, migration has been affected. It remains to be seen what will happen in the future. But these numbers do clearly show improvements for core cities in the underlying migration trends.
Tuesday, August 31st, 2010
[ I've linked to Richard Layman's wonderful Rebuilding Place in the Urban Space blog many times. He writes on a variety of topics in an always insightful way, but I'm particularly impressed with his knowledge of urban commercial district revitalization. I was privileged to get to tour Logan Square with him during one of his visits to Chicago and his knowledge of neighborhoods and small business economics and operations is impressive. He graciously allowed me to share one of his older posts with some of his thoughts on restaurants and neighborhood revitalization, with examples from DC, explaining why super-high end or trendy places aren't an absolute necessity. There's plenty more where this came from on his blog, which I highly recommend you check out as a place to bridge theory with practice - Aaron. ]
All neighborhoods and commercial districts can be categorized as healthy; transitioning, emerging; and distressed (using criteria developed by the DC Office of Planning). And each type probably can be further split into early, middle, and later stages.
Healthy commercial districts are not without issues, but the issues vary. Even a district like Adams-Morgan is probably considered transitioning, as is Barracks Row. In some respects, Richard’s Rules for Restaurant-Based Revitalization apply more to transitioning, emerging, and distressed commercial districts. But that makes sense, since those are the districts most in need of “revitalizing.” (For issues regarding problems engendered by the Late-Night Economy, see this entry, “Restaurants and liquor licenses“, from April.)
My rules are focused on building business from the people who are already present in your retail trade area, people who aren’t patronizing your commercial district, because in their opinion “there’s nothing there.”
It’s our job as revitalizers to make sure that “the there is there.”
Chef-driven restaurants aren’t necessary to drive revitalization, although they are nice to have and can be decent draws–but really how great was La Brasserie at driving the growth of the 300 and 400 blocks of Massachusetts Avenue NE? Downtown is still pretty bleak at night despite the number of high quality restaurants such as Occidental, Red Sage, and others. (7th Street is a different story, see below.)
Revitalization is dependent on restaurants. A complete destination has places to see and things to do, things to buy at interesting places to shop, and places to dine.
Without restaurants, where are people going to be able to go to the restroom? If they can’t go to the restroom, they won’t be able to linger and spend time in your commercial district. Patrons of your commercial district will end up being very purposive–when they visit it is for a specific reason, and they leave when they are finished, without taking the time to explore and patronize other retail and service businesses in your commercial district.
Restaurants that augur revitalization have five characteristics, and these characteristics support high patronage amongst a core group of customers that will frequent the restaurant from 2-5 times/month, at least in the beginning. This level of patronage is necessary to provide the cash flow needed to stabilize the risk involved in opening up in a secondary market. Remember the 80/20 rule?–80% of your business comes from 20% of your customers. Ignore this at your peril.
T. Levette Bagwell/AJC. Willie Broughton and his wife, Ruby, owners of the Green Apple Bar and Grill, show off a fried chicken salad on the one-year anniversary of their opening. Before he retired, Willie Broughton already had determined that he eventually would open a bar at the site.
The rules are:
1. Relatively appealing cuisine that isn’t too specialized; food that is attractive to a large number of people–Italian, Mexican, and “American,” seem to work best. You want at least 100 customers/nite. These days Thai food is moving into this category. Chinese seems to have lost its appeal. Restaurants like Indian, Caribbean, etc. are just a bit too specialized, and therefore don’t get the weekly or at least a couple times/month patronage that such restaurants need especially when they are located in emerging commercial districts.
Think Banana Cafe, La Loma, La Lomita vs. Capitol Hill Tandoor or Phish Tea–the latter two have a cuisine specialized enough that local patrons come maybe once every couple months, so they need to draw on a much larger trade area than restaurants that have a more “approachable” cuisine.
2. Good food; it doesn’t have to be stunning but it better be good. (Perhaps Mexican restaurants illustrate this point the best.)
3. Good, good plus, or better service; waiting isn’t fun, and neither is dealing with a server that doesn’t help you get what you want with a modicum (ideally none) of problems.
4. Competitively priced; you can’t have drinks at $8 or most of your entrees costing $13-$20. If your prices aren’t competitive and maybe a little less expensive than the market, you won’t get that frequent patronage that is necessary for your success. Pitchers of margaritas or sangria are good, maybe not pitchers of beer, which seem to attract a rowdier more alcohol-centered clientele.
5. Nice interior; it doesn’t have to be stunning or a $300,000 interior renovation, but it can’t be threadbare, and it has to be appealing.
IMO, restaurants in the area like Banana Cafe, La Loma, and La Lomita exemplify these characteristics. Other restaurants and coffee places that are leading the revitalization of their commercial districts include include Tryst and The Diner which have brought life back to Adams-Morgan during the day, Boss Shepherds (now Peppers) on 17th Street NW in Dupont Circle, Dos Gringos in Mt. Pleasant (they have an absolutely killer Vegetarian Chili), and Mocha Hut and Colorado Kitchen in the greater Brightwood area.
Probably the best example in Washington, DC is Jaleo on 7th Street, which anchored the revitalization of the East End of downtown and is as significant, if not more so, than the MCI Center. Jaleo opened in 1993, years before MCI. Somehow, this restaurant is just as trendy as it was when it opened, and most every weekend they go through $100,000 worth of food (wholesale cost). Now there are a dozen top notch restaurants within a couple blocks of Jaleo, some owned by the same company like Cafe Atlantico and Zaytinya, and these restaurants rely very little on events at the MCI Center for driving patronage.
I have worked in hospitality for awhile, and I find that what distinguishes quality operations from those that struggle is a failure to focus on the guest and the guest experience. The restaurant industry is one of the most competitive retail categories but is still a retail category where independent businesses can thrive and the “barriers to entry” are surmountable.
There is a great resource for restauranteurs, a subscription website called Restaurant Owner, with scads of resources. Reading trade magazines at the very least (Restaurant Business, Fresh Cup, Specialty Coffee Retailer, etc.) is a good place to start because as I say “to stay the same is to fall behind, because your competitors are constantly improving and new places are always opening.” If you don’t go anywhere else, or read anything, how do you learn?
“Soda jerk” passing ice cream soda between two soda fountains / staff photo by Alan Fisher New York World Telegram and Sun archives. Library of Congress.
Quality restaurants share some other characteristics:
1. Understanding that you work for the guest, because after all, that’s who pays everybody. (I know a restauranteur desperately trying to build his bar business, but he adamantly believes that “soft rock”–remakes of the Beatles and Supertramp, and the occasional Carpenters song is the music that should be played. Compare that to the jukebox at the soon to reopen Capitol Lounge.)
2. Listening to guests and employees.
3. Taking in and responding to this feedback. If you don’t respond, listening doesn’t matter.
4. Never fool yourself about what quality is. We all know the saying “You can fool some of the people all of the time, but you can’t fool all of the people all of the time.” Well, if you are the proprietor of a small business, you can never afford to fool yourself. If you don’t provide quality and you refuse to accept the truth, whose fault is failure?
5. Focus on what matters. Until you ensure that your production, service, and ordering and inventory systems work and are robust, gloss (such as balloons) is a waste of your time and energy.
6. Developing robust training and production systems. This sets you up for success by reducing the likelihood of error. The Restaurant Owner website is full of downloadable templates, manuals, and worksheets that can be customized. Weak systems put you behind before you even open your doors to today’s customers
7. Having a sound business model. Understand your metrics and dayparts. Have a (business) plan based on reality and develop your business and marketing plan accordingly. It’s possible to (re)build service and production systems if they are flawed. But a business model that can never yield profits is unworkable.
8. Perseverance and continuous process improvement. To repeat: to stay the same is to fall behind, because your competitors are constantly improving and new places are always opening.
This post originally appeared in Rebuilding Place in the Urban Space. Reprinted with permission of the author.