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Wednesday, September 24th, 2014

Neighborhood Poverty Dynamics

Carol Coletta is now with the Knight Foundation, where she’s started up a podcast series called “Knight Cities.”

Her most recent episode is an interview with economist Joe Cortright about a study he did about the evolution of poor neighborhoods in America. This is an important, if depressing, study in which he looked at how poverty changed in city neighborhoods at the census tract level from 1970 to 2000.

I’ll use the cover art embed so you can put the face to the voice. If the embed doesn’t display for you, click over to Soundcloud.

By the way, Cortright also posted a rebuttal to the NYT Magazine piece on Portland.

Tuesday, September 23rd, 2014

Midsize Midwest Cities — Where Do They Go Now? by Pete Saunders

[ Here's another piece of analytical insight from Pete Saunders, who originally posted it over at his site Corner Side Yard - Aaron. ]

There are some things I posted in the early days of this blog that probably enjoyed very little attention and received little followup on my part.  This piece on midsize Midwestern cities definitely fits that bill.  Since I started this blog nearly two years ago, the attention given to the Rust Belt seems to have grown exponentially — Detroit’s bankruptcy, Chicago’s crime, and Pittsburgh’s revitalization have occupied center stage at various times.  Unconventional ideas are emerging on how to turn around major Rust Belt cities, but smaller ones seem to escape inclusion.  So rather than repost my original post without further comment, I’ve decided to revisit and do some followup commentary.

First, the research.  Looking at 2010 U.S. Census data, I found there are 74 cities in the Midwest as I’ve described it with a population between 50,000 and 300,000.  I eliminated primary cities that fit the population threshold but were part of metro areas that had more than one million people (i.e., St. Paul, MN; Cincinnati, OH; Buffalo, NY), leaving me with 71 midsize Midwest cities.  The largest is Toledo, OH (287,208 residents) and the smallest is Elkhart, IN (50,949).  In between are cities that have become the icons of American Heartland – see the table below.


Midsize Midwest Cities 2010 City Population 2010 Metro Area Population
Toledo, OH 287,208 651,429
Lincoln, NE 258,379 302,157
Ft. Wayne, IN 253,691 416,257
Madison, WI 233,209 568,593
Des Moines, IA 203,433 569,633
Akron, OH 199,110 703,200
Aurora, IL 197,899 9,461,105
Grand Rapids, MI 188,040 774,160
Sioux Falls, SD 153,888 228,261
Rockford, IL 152,871 349,431
Joliet, IL 147,433 9,461,105
Kansas City, KS 145,786 2,035,334
Dayton, OH 141,527 841,502
Topeka, KS 127,473 233,870
Cedar Rapids, IA 126,326 257,940
Evansville, IN 117,429 358,676
Independence, MO 116,830 2,035,334
Springfield, IL 116,250 210,170
Peoria, IL 115,007 379,186
Lansing, MI 114,297 464,036
Ann Arbor, MI 113,934 344,791
Elgin, IL 108,188 9,461,105
Rochester, MN 160,769 186,011
Fargo, ND 105,549 208,777
Green Bay, WI 104,057 306,241
Flint, MI 102,434 425,790
Erie, PA 101,786 280,566
South Bend, IN 101,168 319,224
Davenport, IA 99,685 379,690
Kenosha, WI 99,218 9,461,105
Waukegan, IL 89,078 9,461,105
Lawrence, KS 87,643 110,826
Duluth, MN 86,265 279,771
Sioux City, IA 82,684 143,577
Champaign, IL 81,055 231,891
Bloomington, IN 80,405 192,714
Gary, IN 80,294 9,461,105
Racine, WI 78,860 195,408
Appleton, WI 78,086 225,666
St. Joseph, MO 76,780 127,379
Bloomington, IL 76,610 169,572
Decatur, IL 76,122 110,768
Kalamazoo, MI 74,262 326,589
Canton, OH 73,007 404,422
Muncie, IN 70,085 117,671
Waterloo, IA 68,426 167,819
Iowa City, IA 67,862 152,586
Lafayette, IN 67,140 201,789
Youngstown, OH 66,982 565,773
Oshkosh, WI 66,083 166,994
Eau Claire, WI 65,883 161,151
St. Cloud, MN 65,842 189,093
Lorain, OH 64,097 2,077,240
Janesville, WI 62,948 160,331
Hamilton, OH 62,477 2,130,151
Council Bluffs, IA 62,230 865,350
Bismarck, ND 61,272 108,779
Terre Haute, IN 60,785 172,425
Springfield, OH 60,608 138,333
Pontiac, MI 59,515 4,296,250
Ames, IA 58,965 89,542
Dubuque, IA 57,637 93,653
Owensboro, KY 57,265 114,752
Anderson, IN 56,129 131,636
Grand Forks, ND 52,838 98,461
Normal, IL 52,497 169,572
LaCrosse, WI 52,485 133,665
Manhattan, KS 52,281 127,081
Battle Creek, MI 52,347 136,146
Saginaw, MI 51,508 200,169
Elkhart, IN 50,949 197,559


I listed them all in a spreadsheet that included their 2010 city population and their 2010 metro area population, and started to make some early observations.  For example, metro area population is likely a better indicator of the relative “imprint” of a city, rather than primary city population.  Saginaw, MI, with a population of 51,000 but a metro area of 200,000, seems bigger than Muncie, IN, with a city population of 70,000 but a metro area population of just 118,000. And of course, cities that were relatively close to large metro areas (having a population greater than one million) seem to share more characteristics with their bigger neighbors than their smaller ones, economically and socially.

That led me to ask a few questions that could shed some light on other city characteristics:

  • Is the city a county seat or a county’s largest city, yet not the primary city of a metro area?
  • Is the city a part of or adjacent to a large metro area (with a population of more than one million)?
  • Is the city less than 60 miles from a large metro area?
  • Is the city a state capital?
  • Is the city a college town?

And that exercise led to some interesting conclusions.  Using those questions I was able to identify seven different categories of midsize Midwest cities, and the categories provide a glimpse into each city’s economic history and strengths:

  1.  Captured Satellite City: A once independent midsize city that has been pulled into the “orbit” of a larger metro area. There are eleven in this category.
  1.  Emerging Satellite City: An independent midsize city that is in the process of or on the verge of being pulled into the orbit of a larger metro area.  There are six in this group.
  1. State Capital and College Town:  A city fortunate enough to be a government center and the home of a major university.  There are just three in this category.
  1. Emerging Satellite City and College Town: A combination of points 2 and 3, they retain some measure of independence from larger metros, and benefit from having large schools.  There are only two in this group.
  1. State Capital: Self-explanatory.  There are four here.
  1. College Town: I’m defining a college town as one with a school with an enrollment greater than about 15,000 students, making the school large enough to have a significant impact on the local economy (in case you’re wondering why Notre Dame and South Bend, for example, aren’t included).  There are ten in this group.
  1.  Independent Midsize City: Ah yes, the largest group, with 35 in this category.  Too far from major metros to bask in their glory, and no state capital or university to build from.

Here’s how the cities stack up in a table:


Midsize Midwest City Categories Cities By Category
Captured Satellite City Aurora, IL; Joliet, IL; Kansas City, KS; Independence, MO; Elgin, IL; Kenosha, WI; Waukegan, IL; Gary, IN; Lorain, OH; Hamilton, OH; Pontiac, MI
Emerging Satellite City Akron, OH; Dayton, OH; Flint, MI; Racine, WI; Springfield, OH; Anderson, IN
State Capital AND College Town Lincoln, NE, Madison, WI; Lansing, MI
Emerging Satellite City AND College Town Ann Arbor, MI; Bloomington, IN
State Capital Des Moines, IA; Topeka, KS; Springfield, IL; Bismarck, ND
College Town Lawrence, KS; Champaign, IL; Bloomington, IL; Kalamazoo, MI; Muncie, IN; Iowa City, IA; Lafayette, IN; Ames, IA, Normal, IL; Manhattan, KS
Independent Midsize City Toledo, OH; Ft. Wayne, IN; Grand Rapids, MI; Sioux Falls, SD; Rockford, IL; Cedar Rapids, IA; Evansville, IN; Peoria, IL; Rochester, MN; Fargo, ND; Green Bay, WI; Erie, PA; South Bend, IN; Davenport, IA; Duluth, MN; Sioux City, IA; Appleton, WI; St. Joseph, MO; Decatur, IL; Canton, OH; Waterloo, IA; Youngstown, OH; Oshkosh, WI; Eau Claire, WI; St. Cloud, MN; Janesville, WI; Council Bluffs, IA; Terre Haute, IN; Dubuque, IA; Owensboro, KY; Grand Forks, ND; La Crosse, WI; Battle Creek, MI; Saginaw, MI; Elkhart, IN


So what do the categories suggest about each midsize city’s present and future economic prospects?

Captured Satellite City: These cities have economic fortunes that are closely tied to the economic fortunes of the much larger metro area surrounding it.  Some cities seem to recognize this and have planned accordingly; others still have memories of their earlier independence and have struggled in the face of industrial restructuring.  Perhaps their future is better served by becoming low-cost urban options in otherwise suburban areas.

Emerging Satellite City: These are cities that sit on the periphery of major metro areas, and have yet to fully benefit from being “pulled” into the larger orbit.  They, too, have memories of earlier independence, and may struggle with adjusting to a more dependent future.

State Capital and College Town: With only three in this category, Madison leads the way in terms of economic strength, with Lincoln not far behind.  Lansing, despite having the capital and college attributes, has historically relied on its industrial legacy as well, possibly diluting the government and education benefits.  If it can tap those strengths maybe it can duplicate the others’ success.

Emerging Satellite City and College Town: Ann Arbor and Bloomington are truly unique in that they are the flagship universities in their respective states and are in close proximity to each state’s largest city.  Ann Arbor seems to figure more prominently in metro Detroit’s future; Bloomington remains relatively disconnected from metro Indy.  My guess is that when these cities are fully brought into the larger metro’s orbit, they — and the entire metro — will greatly benefit.

State Capital: As long as the four cities here remain state capitals, they have a reason d’etre and economic catalyst that will support them.  They will continue to have strengths that will elude other similarly-sized cities.

College Town: In many respects the college towns are similar to the state capitals, with an existing reason d’etre and economic catalyst.  The difficulty, perhaps, lies in strengthening and reinforcing the college’s links to the rest of the city and metro.

Independent Midsize City: Here, I believe, are the midsize Midwest cities whose future is most tenuous.  When people wonder about the future of smaller post-industrial cities, these are generally the ones we think of.  What can Youngstown, OH do to forestall its decline?  What strengths does Decatur, IL have that can serve as a foundation for revitalization?  What lies ahead for Terre Haute, IN?  Wtih respect to the other midsize Midwest cities, which have more clear futures (whether or not they choose to accept them), I’ll start exploring what might happen with the independent, midsize, post-industrial Midwest city.

This post originally appeared in Corner Side Yard on November 9, 2013.

Monday, September 22nd, 2014

Diverging Fortunes

This weekend’s New York Times Magazine had a story on Portland that featured Yours Truly. I recapitulated a few observations I’ve had over the years, including that it’s truly remarkable how a small city like Portland has captured so many people’s imagination, and also that “people move to Portland to move to Portland.”

A Portland writer named Steve Duin appears to have had an aneurysm over the piece and, among other things, criticized my statement about why people move to Portland, saying:

She quotes Aaron Renn, an urban-affairs analyst, who insists that while Los Angeles attracts starlets and New York the financiers, “People move to Portland to move to Portland,” as if the city is a space between Pacific Avenue and Park Place on the Monopoly board, not a vibrant, creative, accessible and accommodating urban scene.

Which only proves that he completely missed the point. All I’m saying is what he’s saying in different words, namely that people move to Portland for its lifestyle and amenities. This is exactly what every Portland booster claims, namely that what they’ve created is attractional. I’m simply pointing out the obvious: people move to Portland primarily for lifestyle and leisure, not career or economic reasons. People move to Portland because they want to live there.

Portland’s economy has actually picked up of late. Its unemployment fell below the national average in 2013 after having been above it for 14 straight years. But I want to highlight a disconnect between a couple measures of economic performance.

I’ve written many times that Portland has done very well in terms of per capita GDP. In fact, from 2001 to 2013 (the maximum range of data available from the feds), Portland was #1 out of all 52 large metros in the US in its percentage increase in real per capita GDP.

On the other hand, looking at how much of that economic value ends up in people’s pockets tells a different story. From 2001 to 2012 (I don’t think 2013 has been released yet), Portland only ranked 40th out of 52 in its percentage increase on this metric. Portland declined from a per capita income of 104.9% of the US average in 2001 to 98.6% in 2012.

I threw this divergence into a quick chart:

portland-gdp-vs-persinc

It would be interesting to dig into these numbers. I would particularly be interested in seeing where the GDP growth is coming from, as unlike say San Jose, there’s no obvious driver I see.

Update 9/23/14: I did a quick back of the envelop calculation of total GDP growth by industry. Only a few industry totals are available, but the biggest gainer was Manufacturing, up 300%. Education, Health, and Social Assistance were #2, followed by Professional and Business Services. Natural Resources, Retail. Information, and FIRE were at the bottom.

Speaking of San Jose, I see an even more remarkable divergence there. It was #2 in per capita GDP growth over the 2001-2013 time frame. Looking at the overall Bay Area total real GDP, it increased by 30.1% from 2001 to 2013. Keep in mind I’m using the inflation adjusted figured here, so there’s no inflation in that metric. But at the same time the Bay Area lost 2.4% of its jobs.

The Bay Area grew its economy by almost a third while shedding over 75,000 jobs. Pretty remarkable.

Friday, September 19th, 2014

Metro Area Gross Domestic Product

percent-change-per-capita-gdp-2010-2013
Percent change in real per capita GDP, 2010-2013.

The Bureau of Economic Analysis is out with the preliminary numbers for 2013 metro area GDP (see the press release).

Update: Since Real Clear Policy linked this, I’ll add in a spreadsheet with per capita GDP data for all large metros.

We’ve now got enough data that it’s worthwhile to start tracking the trend vs. a 2010 base instead of 2010. With that, here are the top ten large metros by real per capita GDP:


Rank Metro Area 2013
1 San Jose-Sunnyvale-Santa Clara, CA 100,115
2 San Francisco-Oakland-Hayward, CA 78,844
3 Seattle-Tacoma-Bellevue, WA 74,701
4 Boston-Cambridge-Newton, MA-NH 74,643
5 Washington-Arlington-Alexandria, DC-VA-MD-WV 73,461
6 Houston-The Woodlands-Sugar Land, TX 72,258
7 New York-Newark-Jersey City, NY-NJ-PA 69,074
8 Portland-Vancouver-Hillsboro, OR-WA 68,810
9 Hartford-West Hartford-East Hartford, CT 66,870
10 Salt Lake City, UT 62,008

San Jose cracks the $100,000 barrier, though that’s in part to the Bay Area being split into two metros, and the base year for constant dollar calculations getting switched from 2005 to 2009. But still impressive.

This list is similar to what we’ve seen before. But how are things changing? Let’s look at the top ten large metros for percent change in their real per capita GDP from 2010 to 2013:


Rank Metro Area 2010 2013 Pct Change
1 Houston-The Woodlands-Sugar Land, TX 63,816 72,258 13.23%
2 San Jose-Sunnyvale-Santa Clara, CA 89,806 100,115 11.48%
3 Portland-Vancouver-Hillsboro, OR-WA 63,025 68,810 9.18%
4 Columbus, OH 50,370 54,493 8.19%
5 Grand Rapids-Wyoming, MI 41,248 44,482 7.84%
6 Charlotte-Concord-Gastonia, NC-SC 51,819 55,802 7.69%
7 Oklahoma City, OK 45,993 49,441 7.50%
8 Salt Lake City, UT 57,790 62,008 7.30%
9 Nashville-Davidson–Murfreesboro–Franklin, TN 50,464 54,112 7.23%
10 Detroit-Warren-Dearborn, MI 46,314 49,653 7.21%

A full map of this metric is at the top of this post.

Houston’s #1 showing is very impressive. This is a per capita value remember, so they aren’t on top just by virtue of adding lots of people. And they are in the top ten for 2013 per capita, so it’s not like they started on a low base or something.

Portland and San Jose continues their strong showing in this metric (more on these metros to come next week). Two metros in Michigan made the top ten, though some of that I’d speculate must come from the auto industry recovery, meaning it’s cyclical in nature.

I’ll throw in the total real GDP figures as well, but obviously these heavily align to population. Here are the ten biggest metro GDPs in 2013 (amounts in millions of dollars):


Row Geography 2013
1 New York-Newark-Jersey City, NY-NJ-PA 1,377,989
2 Los Angeles-Long Beach-Anaheim, CA 775,967
3 Chicago-Naperville-Elgin, IL-IN-WI 550,793
4 Houston-The Woodlands-Sugar Land, TX 456,177
5 Washington-Arlington-Alexandria, DC-VA-MD-WV 437,085
6 Dallas-Fort Worth-Arlington, TX 413,627
7 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 358,091
8 San Francisco-Oakland-Hayward, CA 356,081
9 Boston-Cambridge-Newton, MA-NH 349,652
10 Atlanta-Sandy Springs-Roswell, GA 288,175

And the top ten in total real GDP growth percentage, 2010-2013.


Rank Metro Area 2010 2013 Pct Change
1 Houston-The Woodlands-Sugar Land, TX 379,595 456,177 20.17%
2 San Jose-Sunnyvale-Santa Clara, CA 165,435 192,184 16.17%
3 Austin-Round Rock, TX 86,546 98,126 13.38%
4 Portland-Vancouver-Hillsboro, OR-WA 140,717 159,266 13.18%
5 Charlotte-Concord-Gastonia, NC-SC 115,229 130,318 13.09%
6 Oklahoma City, OK 57,856 65,246 12.77%
7 Nashville-Davidson–Murfreesboro–Franklin, TN 84,572 95,124 12.48%
8 Dallas-Fort Worth-Arlington, TX 368,015 413,627 12.39%
9 Salt Lake City, UT 63,090 70,719 12.09%
10 San Antonio-New Braunfels, TX 80,101 89,463 11.69%

Richard Florida posted some thoughts on this data over at City Lab. I’m less bothered than he is by Washington, DC’s poor performance, however. Much like Detroit’s cyclical upswing, I think short term turbulence in DC from the sequester and fiscal challenges was to be expected.

Wednesday, September 17th, 2014

The World City

Last week’s episode of the Monocle 24 show the Urbanist was an interesting look at the “world city” or “global city.” They take a bit of a skeptical look, showing how, for example, many residents of Istanbul are at odds with the construction boom designed to turn the city into what one critic dubbed a low-grade Dubai. And also how smaller cities like Lisbon and Wellington, New Zealand are following their own path without trying to aspire to compete as peers with the big boys. They also take on Vancouver, though fail to note its extremely high housing prices (it’s not livable if you can’t live there), and also its gang wars and other issues that belie the kumbaya vision the mayor is pitching. And there’s a conversation with an analyst from the Economist Intelligence Unit who talks about that organization’s ratings. It’s a bit eyebrow raising that Monocle, a publication that has done a lot to promote the whole global city idea and transnational norms, values and amenities to which all cities are called on to aspire to (in addition to publishing its own league table), would be critiquing the global city, but it’s a good listen regardless.

If the audio embed doesn’t display for you, click over to listen on Soundcloud.

Tuesday, September 9th, 2014

Brooklyn Is Getting Poorer by Daniel Hertz

[ Analyst Daniel Hertz found some interesting maps of Brooklyn back in May that tell a different tale about Brooklyn than the one you've probably heard - Aaron. ]

I’m trying to make more of an effort, whenever I write or talk about gentrification, to point out that the real issue is larger: that gentrification is only one aspect of income segregation – specifically, the part where the borders between rich and poor neighborhoods shift – and that the real problem is that we have such sharply defined rich and poor neighborhoods to begin with.

I might also throw in that income segregation used to be much less severe.

Anyway, one problem with our obsession with gentrification as the end-all of urban equity issues is that it discourages us from talking about other important things happening in our cities. In some instances, gentrification has become such a dominating narrative that it has completely erased broader trends that we really ought to be concerned about.

Case in point: Brooklyn is getting poorer.

Does that shock you? Were you under the impression that all of Brooklyn was in the process of becoming one giant pickle boutique? That would be forgivable, given that nearly every article filed from Brooklyn for a decade or so has been about gentrification. But no.

I recently ran across a post from data-crunching blog extraordinaire Xenocrypt, which noted that from 1999 to 2011, median household income in Brooklyn fell from $42,852 to $42,752. That’s not a huge drop, obviously. The national median income fell from $56,000 to $50,000, so Brooklyn is actually catching up, sort of, to the country as a whole. But it still got poorer in absolute terms.

Moreover, if you map (as Xenocrypt did) the borough’s neighborhoods by change in median income, you get a really striking picture:


Credit: Xenocrypt.blogspot.com

…which is that, indeed, a good three-fifths or so of Brooklyn is actually getting poorer. Have you read any articles about that? No, I will wager that you have not. Neither have I. I strongly suspect that is because they don’t exist – at least not in any outlet that might be considered mainstream.

And what about housing prices?

Brooklyn Gentrification Map: Increase, Decrease in Home Values 2004 vs. 2012
Credit: http://www.citylimits.org/

So in large parts of Brooklyn, real estate prices are falling.

I have nothing particularly intelligent to say about this – these maps were news to me – except that it’s maybe the most dramatic example I’ve seen yet of just how limiting our fixation on gentrification is. I mean that both in a sort of journalistic sense, in that we’re being deprived of an accurate sense of what is actually going on in our cities, as well as from an advocate’s perspective: how can we claim to be working for fairer, more equitable, etc., cities, if we’re ignorant of their most basic economic and demographic changes?

This post originally appeared in City Notes on May 3, 2014.

Wednesday, September 3rd, 2014

Chicago Riverwalk Construction

The Architect’s Newspaper recently put up a post with a video from Sasaki Associates showing construction progress on the Chicago Riverwalk. It’s mostly construction shots, but if you want to see more design renderings, check out this HuffPo piece. If the video doesn’t display, click over to Vimeo.

It’s debatable whether spending $100 million on a downtown riverwalk really ought to be a top priority given Chicago’s problems. But spending on major civic statement projects in defiance of circumstances has a long and storied tradition in the urban world, and may in fact be a necessary part of what it means to be a city (or a human being for that matter). Getting it right is a tough challenge with no easy answer, as today’s article in New Geography about Chicago by Roger Weber makes clear.

Turning Around Rhode Island

Channel 10 in Providence recently did a town hall style meeting with various civic leaders from around the state, looking for ideas to reverse the state’s economic malaise. It’s long and probably of specialized interest, but I wanted to include for those following the Ocean State’s travails. If the video doesn’t display, click over to channel 10. h/t Andy Cutler

Friday, August 29th, 2014

Cutting To Invest In Kokomo, Indiana

fairy-tale
A whimsical fairy tale convenience store in Kokomo, Indiana

Bruce Katz at the Brookings Institution likes to talk about a paradigm called “cut to invest.” The idea is to cut spending on operations and lower priority items in order finance investments in higher priority infrastructure or other projects. Nice theory, but who is actually doing it?

One example is Kokomo, Indiana. It’s not the mythical tropical island paradise you may have heard about from the Beach Boys. Instead it’s a small industrial city of around 57,000 people about 45 miles north of Indianapolis. After I posted a piece from Eric McAfee about Kokomo’s intelligent rail trail design, someone from the city reached out and invited me to come for a visit. So that’s what I did this week.

What I discovered is that Kokomo has done a lot more than just build a trail. They’ve deconverted every one way street downtown back to two way, removed every stop light and parking meter in the core of downtown, are building a mixed use downtown parking garage with a new YMCA across the street, inaugurated transit service with a free bus circulator, have a pretty extensive program of pedestrian friendly street treatments like bumpouts, as well as landscaping and beautification, a new baseball stadium under construction, a few apartment developments in the works, and even a more urban feel to its public housing. Like Eric, however, I wasn’t just struck by the projects themselves, but they obvious attention to detail that went into their design. And especially by the fact that they’ve done it almost all by paying cash – no debt – in a city that went through an economic wringer during the recession.

A lot, though not all, of this has been pushed by Kokomo Mayor Greg Goodnight, who’s gone from factory worker to politician during his career. He also appears to be an urban planning geek, as the stack of books behind his desk shows.

books

I sat down with the mayor and chatted about how the city pulled off this program of investment. After the jump I’ll visually walk you through a number of the projects. If the audio player doesn’t display for you, click over to Soundcloud.

Now let’s take a look at what’s going on. I mentioned the pedestrian bumpouts. Here’s an example of one:

Pretty much every downtown intersection has a treatment like this, including landscaping. Taking a page from other cities’ playbook, Kokomo has invested in beautification, including not only landscaping of pedestrian bumpouts, but also hanging flower planters we’ll see later. These were actually put into place by Goodnight’s predecessor and were a huge source of controversy at the time, though seem to be well-accepted by now.

Here’s another example on a street heading out of downtown.

bumpouts2

I’m actually of two minds about bumpouts. They do facilitate pedestrian crossings, but also can force bicyclists out of the curb lane into traffic. I’ve generally found them obnoxious when bicycling. The street widths through the bumpouts look ok here, but I didn’t put it to the test. A number of streets have painted bicycle lanes, where this is definitely not a problem.

Eric’s blog post was about the Industrial Heritage Trail. Here’s a shot of that through downtown:

I think this is really attractive. It reminds me of a red brick version of the Indy Cultural Trail. This section actually has a separate sidewalk from the biking trail, but that’s not the norm. Kokomo has really made a point to include some ped-bike protection wherever possible. So the landscape buffer is narrow, but effective and attractive. (It doesn’t use bioswale type green stormwater detention like the Indy Cultural Trail, though). There’s also ample street lighting and street furnishings.

As one nice touch, note the back side of the stop sign. It’s black to match the color of the other items, not just plain galvanized steel. This treatment is done throughout downtown and adds a bit of refinement.

Here’s another shot of a segment a bit south. Note the bespoke bike rack.

There aren’t people in these photos, you might have noticed. I was doing this walking tour on a Tuesday morning, and it wasn’t super-crowded but I did see multiple people out biking and walking on these trails.

On the south side of downtown, the IHT crosses and east-west path called the “Walk of Excellence.” I love the name because reminding Hoosiers that a focus on excellence is an absolute must to survive the brutal global competition. Here’s a shot:

woe3

Again, very attractive. And again, a narrow but nice buffer between the trail and the street, even though the roadway is little more than an alley or driveway. This is very consistently done, in another place even where the trail just passes through a parking lot. That’s what I mean by attention to detail. There’s a stream running to the left of the trail which adds to the pleasant effect of walking along it.

Here’s a street crossing:

woe-intersection

The trail has its own traffic control signs, as well as a street sign near bicycling eye level to tell users what street they are at. In my experience, that’s too rare in trail design. You can also see bumpouts here along with large concrete planters that add beauty and make the crosswalk and street narrowing very visible to drivers.

Here’s another crossing example, showing the different crosswalk shading as well:

woe-intersection3

Here’s a bike route sign, with the city seal on it. That’s another nice touch and one that shows a certain pride of place versus a generic sign.

bike-route-sign

Moving on, here’s a median treatment on a major street. This goes on quite a distance:

median3

Not only is this very nice, including more flowers, decorative street lights, etc, but the metal railings are especially unique. The railings were actually custom fabricated by the high school’s shop class. Not only was this great real world practice for the students, but the city paid for the railings and the students are all ending up with $1,000 scholarships to college out of it. I’m told this was the superintendent’s idea. (Kokomo’s superintendent grew up in Corydon in my county and his wife actually still works part time in Laconia, the tiny town where I grew up!)

Eric mentioned the school district’s International Baccalaureate program. But I don’t believe he mentioned that they also run an exchange student program. IIRC, students from 15 countries attend high school in Kokomo, and a number of them are actually housed in dormitories in downtown Kokomo. This injects life into downtown and creates a more international flavor in the city. I didn’t take pictures, but the school district is also renovating a 1914 vintage auditorium back to its original design that will be very cool (and also paid for without recourse to debt).

Trails and bumpouts have a fairly limited cost, but the city is also doing some bigger ticket items including two recently-constructed fire stations, a million dollar renovation of city hall, a parking garage, and a baseball stadium. Pictures of those in a moment but it’s worth ask how the city was able to pay for them without debt.

The first is that there was no legacy debt. I’m not anti-debt in all cases, but if a mature city like Kokomo is saddled with heavy debt repayments, that’s not good. By not having any legacy debt, the city’s tax base isn’t encumbered by repayments. A good part of our federal deficit these days is simply interest on our gargantuan debt load. That’s a dynamic Kokomo avoided. (The city does have some utility debt, but it’s revenue bond type stuff).

Secondly, the mayor says that he was able to reduce the city’s workforce by close to 20%, going from 521 employees just before he took office to only 415 today. That’s a significant reduction, especially given the fact that during that time the city annexed seven square miles and added 11,000 new residents (though some of them were already receiving some city services). Some of this was achieved through efficiencies. For example, the city went to single side garbage pickup, where all garbage is collected on one side of the street, eliminating the need for trucks to traverse each street twice. The mayor, council members, and department heads have also had a pay freeze during that time, with at least some time in there in which all city employees had their pay frozen during the recession. Keep in mind, the city experienced a severe revenue crunch during the auto bankruptcies, and Chrysler, the town’s largest employer, failed to pay its tax bill. This created an urgent need for cuts.

It’s possible the cuts and freezes have gone too far. I don’t know the full history of what has happened to services. But I speculate that having something like this can potentially act like a forest fire. It allows for longer term, healthier growth, whereas continuous growth in employees and compensation over time leads to serious fiscal problems.

In any case, these reductions freed up cash flow as the city recovered, letting Kokomo allocate a decent chunk of its revenues to capital investment. This is running at about 5% of the overall budget, plus an additional sizable sum (for a city of that size) from an economic development tax. This is an example of the cut to invest strategy in action. Without the cuts and tight budget management, there would be no money to invest. Indeed, some other Indiana community have found themselves asking questions like “what fire station should we close?” as they feel the sting of decline and tax caps.

Here are a few more photos, then some additional observations. Here’s that parking garage I mentioned. (This was originally debt financed, but the city paid off the bonds early when it decided to borrow for the baseball stadium).

parking-garage

This supposedly has some all day free parking, designed to attract downtown employees. There’s also going to be apartments on the top floor. It looks like there’s no ground floor retail, however, which will create a bit of a dead zone.

Here’s the YMCA construction site across the street. You can see the old Y in the background:

ymca

A painted railroad viaduct on Sycamore St. heading into downtown:

viaduct

An alley treatment:

alley

The baseball stadium under construction:

baseball-stadium

Here’s a picture of an older style public housing building. There’s nothing wrong with it, but it’s done in a traditional duplex style reminiscent of early suburbia.

public-housing-old

Here’s a new development in a more urban form next door:

public-housing-new

I think the fenestration is poor which gives the design a public housing look. Nevertheless, I appreciate that the city is even thinking about the design of public housing downtown as part of its strategy. After all, why shouldn’t public housing residents get to take advantage of high quality urbanism downtown like everyone else?

Overall, I think they’ve done a number of good things, and I especially appreciate the attention to detail that went into them. You clearly get the feel of them walking downtown streets. I would say the commercial and residential development lags the infrastructure, however. That’s to be expected. They do have an Irish Pub, a coffee shop, a few restaurants, and other assorted downtown type of businesses. This will be an area to watch as some of these investments mature.

When I talked to the mayor about this he took the long view, saying that Columbus, Indiana has been at its architecture program for decades, that Indy’s sports strategy is 40 years old, etc. Substantive change takes time. For example, Mayor Goodnight says it isn’t realistic to think that older workers who commute in to Kokomo will uproot themselves out of their established lives in other communities and relocate. But he’s more hopeful that as workers retire and are replaced, he’ll capture the “next generation” labor force.

That’s obviously a more realistic ambition. But will an impatient public buy it? We’ll see. Clearly Goodnight has his critics. More than one of them has dubbed him the “King of Kokomo.” A newspaper article fretted about gentrification (level of realistic concern about that: zero). I didn’t do a deep dive into the other side, so keep that in mind reading this. But the baseball stadium would appear to be the most controversial item as near as I detect.

Regardless of any controversy, when you look at the downward trajectory of most small Indiana industrial cities, the status quo is not viable option. Kokomo deserves a lot credit for trying something different. And regardless of any development payoffs, things like trails and safer and more welcoming streets are already paying a quality of life dividend to the people who live there right now. It’s an improvement anyone can experience today just by walking around.

Historic buildings on Kokomo’s courthouse square. The tenants testify to the industrial heritage of the community.
union-storefronts

Thursday, August 21st, 2014

The Changing Face of the Global City

I want to highlight a couple of recent studies by Joel Kotkin for which I provided some research support. The first is a report on global cities from the Singapore Civil Service College called “Size Is Not the Answer: The Changing Face of the Global City.” As the name implies, it suggests that size is not necessarily correlated with global heft.

There are a lot of different ways of looking at cities. For example, the Economist just released its 2014 Global Liveability Index. But this study tries to focus in on specifically global economic power and influence. Thus it is somewhat like Loughborough University’s well-known survey, but looks at more than just producer services.

In particular, it looks significantly at industrial influence, or being a “necessary city” in the global economy that you just can’t help but deal with. For example, the San Francisco Bay Area often gets short shrift in most global city surveys even though it is the overwhelmingly dominant location of the technology industry, a key enabler of globalization and arguably the most powerful economic force at work today. By contrast, some traditional measures like total GDP that may indicate more domestic rather than global influence were not included.

Maybe the biggest surprise to me was the stability of the top ranks of cities, despite using different criteria from other studies. London and New York easily crushed everyone else. I’d expected that cities I thought of as more “domestic champions” like Tokyo, Paris, and Chicago might not fare as well. As it turns out, while Chicago is a bit lower in this survey, Paris is actually #3 and Tokyo #5. Both cities’ rankings are actually slightly higher than in Loughborough’s survey.

The Problem With Megacities

You also know that I’ve written skeptically of megacities in the developing world in terms of their ability to fulfill the aspirations of their citizens.

The second study I contributed to is called The Problem of Megacities and takes a look at the growth of megacities – a very new phenomenon in human history – and the problems that face them. An excerpt:

The megacity is increasingly a phenomena of countries that are struggling to find their way in the modern world economy. Size used to be more correlated with economic and political success and dominance on a global scale. Today, some of the largest cities are disproportionately poor, and seem likely to remain that way for the foreseeable future. Such problems are often ignored or minimized by those who inhabit what commentator Rajiv Desai has described as “the VIP zone of cities”, where there is “reliable electric power, adequate water supply and any sanitation at all”. Outside the zone, Mr. Desai notes, even much of the middle class have to “endure inhuman conditions” of congested, cratered roads, unreliable energy and undrinkable water.

These conditions reflect the inabil- ity of such megacities to handle rapid growth. Places like Dhaka, which gains as many as 400,000 new migrants from the villages annually, grows mainly in its slum, whose residents move to the megacity not for the bright lights, but to escape hopeless poverty, and even the threat of starvation, in their village.

Sunday, August 17th, 2014

The City As a Decline Machine, or How the Loss of Hometown Banks Paved the Way For Corruption

Today I’m kicking off what’s probably a three part mini-series on corruption. In my view, whatever the structural problems resulting from suburbanization or globalization or whatnot, an overwhelming and under-examined barrier to success in our cities, and especially to reviving the fortunes of the urban cores of post-industrial cities, is corruption.

When we think of corruption we tend to think of a shady character passing an envelope full of cash under the table to a crooked politician in exchange for a a zoning variance or something. But that’s just one form of corruption, and arguably one of the least important. Much more important is systemic corruption, including many practices that are actually legal.

The book Corrupt Cities, which I’ll look at in depth in a future installment, defines corruption this way:

Corruption means the misuse of office for personal gain…Corruption means charging an illicit price for a service or using the power of office to further illicit aims. Corruption can entail acts of omission or commission. It can involve legal activities or illegal ones. It can be internal to the organization (for example, embezzlement) or external to it (for example, extortion). The effects of various kinds of corruption vary widely. Although corrupt acts may sometimes result in net social benefit, corruption usually leads to inefficiency, injustice, and inequity.

And regarding systemic corruption, the authors say:

Systematic corruption generates economic costs by distorting incentives, political costs by undermining institutions, and social costs by redistributing wealth and power towards the undeserving. When corruption undermines property rights, the rule of law, and incentives to invest, economic and political development are crippled. Corruption exists in all countries. But corruption tends to be more damaging to poor countries.

And, one might add, poor or struggling cities.

America has been experiencing problems with corruption at all levels of government. I want to focus on the local level, however.

Cities have long been known as hotbeds of corruption and political machines. They were certainly much more corrupt in the past than they are now. However, because the scope and control of government was so much less in those days – for example, there was no zoning in Gilded Age America – the impact was arguably less than now where the impact of government is pervasive. The Progressive Era brought reforms that cleaned up government to a certain extent, but we’ve seen in the contemporary era an uptick in government corruption. This is not necessarily in the form of petty corruption, but rather the corruption of the instrumentality and aims of government itself.

Even in my own lifetime I’ve seen a tremendous increase in corrupt activities. Sure, cities were always “growth machines” and had “urban regimes”. Some level of corruption may even be necessary for political life to function. It’s generally necessary to build coalitions to get things done, and the types of horsetrading that enables this is often distasteful. I don’t want to pretend that we can ever have squeaky clean politics. And of course cronies of the party in power have long benefited from patronage.

But there’s a big difference between logrolling, or even some crony getting his beak wet through a somewhat inflated price tag for something that more or less needed to be done anyway, and the types of things we see today, in which the levers of powers are used in ways that are often obviously manifestly contrary to the public interest.

I won’t fully support it in this post, but my belief is that increasingly the urban power structures have exchanged traditional growth machine policies for a system of extraction in which crooks, cronies, and criminals are enriched under the guise of the “revitalization” of a community in decline. The principal vehicles for this are a) publicly subsidized real estate boondoggles, b) corrupt privatization and professional services contracts, and c) public employee union featherbedding.*

This looting of our cities in the name of revitalization has been made possible by a severing of the historic link between the economic fortunes of a community’s elite and broader community prosperity. I’m going to show today how that link got severed, and why that has led to subsidized real estate boondoggles as the preferred form of civic “revitalization”, by revisiting and updating a post I originally ran in 2009.

Ed Morrison once wrote that “Cleveland’s leadership has no apparent theory of change. Overwhelmingly, the strategy is now driven by individual projects. These projects, pushed by the real estate interests that dominate the board of the Greater Cleveland Partnership, confuse real estate development with economic development. This leads to the ‘Big Thing Theory’ of economic development: Prosperity results from building one more big thing.”

Morrison could have been describing any number of other cities here. Why is it that so many cities have turned to large subsidized real estate projects to attempt to restart growth, , turning away from strategies that previously made them successful?

The answer lies in structural economic changes resulting from the nationalization and globalization of industry. Up until the 1990’s, many businesses, such as retailing, utilities, some manufacturing, and especially banking operated on a regional or local basis. The meant that the civic leadership of a community was heavily dominated by businessmen, again, especially bankers, whose success was dependent on the overall macroeconomic health of the particular city or region they were located in.

For example, up until the 1980s or so, most states severely restricted banking such that every city pretty much had its three major locally owned banks whose CEOs were the major power players in town.

Because these banks were limited to their own region, often only their home county, they could only increase their profits by seeing their hometown grow with more people and businesses, and thus more depositors and borrowers. If the CEOs of those banks decided to loot the city at the expense of overall civic prosperity – or let anyone else get away with so looting it – it would undermine their own businesses. Hence they had an alignment between corporate (and thus personal interest) and the civic interest. They could only prosper to the extent that the community prospered.

It was the same in many industries. The Public Utility Holding Company Act more or less led to every major city having its own electric utility. That utility could only make more money to the extent that more people and businesses moved to town and thus generated new demand for power. The interests of the company and its CEO were aligned with that of the city as a whole. If the city sickened, the company’s business would sicken with it. Many if not most cities also had their own department stores, drugstores and other retail establishments.

This created what Harvey Molotch called a “land based elite” and underpinned a model he called “The City As a Growth Machine.” He saw the “land” in question as physical land and thus also talked to the primacy of real restate development, but I see “land” as much more representing the constrained operating geography of a wide variety of industries that are not necessarily related to land per se. While growth as a strategy has its problems, you can certainly be stuck with worse.

With banking and utility deregulation, we saw large numbers of hometown banks merged out of existence. Industry after industry has been subjected to national or international level roll-ups as changes in the economy and regulatory environment gave increasing returns to scale. So today we have a handful of major national banks like JP Morgan Chase, major utility conglomerates like Duke Energy, and dominant national retailers like Macy’s, Walgreens, Wal-Mart, and Home Depot, often part of a “two towers” type rollup.

Why is it that “real estate interests” dominate in a local economy like Cleveland? Because, to a great extent, they are among the only ones left. Consider the local industries that have not been as subject to roll-ups. Principal among these are real estate development, construction, and law (though we are starting to see rollups in these industries too).

This means the local leadership of a community is now made up of executives in those industries, and they bring a very different world view versus the previous generation. There are two major differences between these types of firms and the previous types of firms that generated community leaders: the nature of the businesses themselves, and the fact that their profits are not dependent on the success of the community.

Consider the difference between a banker and a lawyer. Banks make money on the spread between what they pay for deposits or wholesale funding, and what they charge for loans. This means the CEO of a bank is making money while he plays golf at 3. He’s got a cash register back at the office that never stops ringing.

By contrast, lawyers get paid by the hour for work on specific matters and transactions. The law partner is only making money on the golf course if he is closing a deal. It’s similar between many other “operational” businesses that were previously prominent in communities, and the “transactional” businesses that are now often dominant.

Not only has the drying up of local and regional operating businesses led to a business leadership community unbalanced in favor of transactionally oriented firms, the loss of those local and regional operating businesses robbed many of the transactional companies such as law and architecture firms of their principal local client base. Large national businesses employ national firms for advertising, law, architecture, etc. If they use local firms, it is in a subsidiary role. (Or, if a smaller firm is fortunate enough to land a contract, it is servicing a client on a national, not local basis).

Richard Florida described this in his Atlantic Monthly article on the financial crash:

As the manufacturing industry has shrunk, the local high-end services—finance, law, consulting—that it once supported have diminished as well, absorbed by bigger regional hubs and globally connected cities. In Chicago, for instance, the country’s 50 biggest law firms grew by 2,130 lawyers from 1984 to 2006, according to William Henderson and Arthur Alderson of Indiana University. Throughout the rest of the Midwest, these firms added a total of just 169 attorneys. Jones Day, founded in 1893 and today one of the country’s largest law firms, no longer considers its Cleveland office ‘headquarters’—that’s in Washington, D.C.—but rather its ‘founding office.’

Where then is the source of transactions these firms can turn to in order to sustain their business? The public sector, of course.

I would hypothesize that many local transactionally oriented services companies have seen the public sector take on a greater share of billings than in the past. With the old school bankers and industrialists mostly out of the picture, the leadership in our communities consists increasingly of the political class and a business community dominated by transactional interests.

When you look at the composition of this group, it should come as no surprise that the publicly subsidized real estate development is the preferred civic strategy. Politicians get to cut ribbons. Cranes always look good on the skyline. Local architects, engineers, developers, and construction companies love it. And there is plenty of legal work to go around.

This is not to say these people are necessarily acting nefariously. And nor were old school bankers and industrialists always acting purely altruistically. But there’s a very different world view between people steeped in operational businesses and those in transactionally oriented one.

On the other hand, that’s not to say that they aren’t acting nefariously, either. Which brings us to the second difference. These newly dominant firms and their leaders no longer have fortunes tied to the overall health of the community. Unlike an old-school banker or utility executive, these transactional companies like law firms can exist on a narrow client base. Thus they can continue to thrive if the community is struggling or even impoverished. If the driving force of the business is government, which can extract significant tax revenues during both good times and bad, this can go on indefinitely, so we see that even in bankrupt Detroit the state stepped in to pump $400 million in subsidies into a new hockey arena for a development backed by a local billionaire.

In fact, what we see is that these firms and their hangers on can even profit from community decline. Why is this? Well, when the community is struggling, that means Something Must Be Done. And it just so happens that this group of people has Something in mind – namely shoving taxpayer cash into their pockets so that they can “invest” in “saving” the city. Somewhat perversely, to the extent that a community is thriving and doing well, the justifications for all those subsidies become harder to make. Thus The Powers That Be actually have a stake in civic failure.

Call this the “City As a Decline Machine” model, as our once-proud urban cores have been strip-mined for subsidies by cronies as population and job levels have collapsed in the greater urban core.

This helps explain why, despite the endless talk about “talent, talent, talent” not many places actually do much that suggests they are serious about attracting it. Why might that be? Because, as I’ve noted before, outsiders are the natural constituency for the new and an inherently disruptive force. That’s the last thing cronies want. Instead what they actually want is to use the pretense of talent as a Christmas tree ornament to decorate arguments in favor of their latest subsidized boondoggle.

But regardless of intent, the personal interest and long term community health of the community elite are no longer strongly linked. Which is why where once local business/civic leaders put money into the community – such as when Melvin and Herb Simon bought the failing and money-losing Indiana Pacers back in the 1983 – today they are more likely to be taking it out via these types of projects.

You might object that some cities kept their banks or have other large companies that are still present. Perhaps. But even where the hometown bank or company did not get bought out, it likely escaped that fate by getting big itself and making large numbers of acquisitions or otherwise expanding. This means those institutions are less dependent on the health of the particular local market they happen to be headquartered in than they are overall macroeconomic conditions. While no doubt they want the headquarters town to be successful, they can afford to take a portfolio view of local markets.

It’s similar for many other companies, such as the tech startups every city seems to be focusing on. These are attractive to a great extent because they can thrive in downtowns of cities where the majority of the urban fabric is struggling because they don’t consume much in the way of services, have a live and let live ethos that has historically been disconnected from and indifferent to government (and so won’t upset the cronies’ apple cart), and sell to a national or global marketplace in most cases.

Interestingly, one place where it seems like the structure of local real estate helps the city is New York City. My understanding is that there are still quite a few local power players whose personal fortunes are deeply tied to the value of Manhattan real estate. Certainly local developers sometimes receive eminent domain assists and such, but the volume of activity necessary to support the real estate industry that is still very key to the city’s viability can only come from genuine market demand. When you combine this with the fact that there aren’t good substitutes for New York, this suggests at least a significant segment of its elite will be highly motivated to see it navigate the formidable fiscal and other challenges it faces.

Most other places aren’t so lucky. Once this type of system gets established it is difficult to uproot, and it acts like kryptonite to outside investors who know they will be operating at a severe disadvantage versus the cronies. That’s why out of town bidders have been taking a pass on bidding on the I-195 land in Providence, for example.

Commercial real-estate developer Richard Miller, of The Pegasus Group, visited Rhode Island in 2011 and again this spring; he liked what he saw enough to pick a potential parcel on the western side of the river near Chestnut Street. But in the end, his team chose not to submit a proposal to the Route 195 Redevelopment District Commission, which controls about 40 acres in the heart of the city, 20 of which are available for development … “I don’t want to get snookered in here where all of a sudden they start hitting you up with fees and you put a bid in and you start meeting with politicians, and the more you invest in the town, the more you’re in the game, and I didn’t get the sense that they want you to make a fair return in the town.” … In other cities, such as New York, he says that there “is a very clear policy about new development. And it’s not subject to a political process in order for you to make a project work. Either you abide by the rules and make a buck or you don’t.”

I’m sure you could tell a similar tale in many cities. As someone once told me, “Political risk is the only risk in real estate development, if you know what you are doing.” Many cities today are nothing but political risk for anybody but cronies, which is one why there’s so little market interest in developing there. But don’t worry. Your friendly local campaign donors and insiders will be there to help “prime the pump” – with a little assist from the taxpayer of course.

Pete Saunders once recounted his family’s prescient observation about Detroit that it “would not rebound until all value was extracted out of it.” This is the process we sadly see unfolding in many post-industrial cities.

* If you require evidence just ask how many urban core real estate projects in your city have been done without subsidies to political donors.

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

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