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Tuesday, April 22nd, 2014

Want to Empower Cities? Reform Binding Arbitration by Stephen Eide

[ Many urbanists such as myself have argued cities should be given more power. Today Steve Eide, who runs the Manhattan Institute's Public Sector, Inc. site devoted to local government finance, talks about one such element of empowerment: eliminating unfunded mandates in the form of binding arbitration rules - Aaron. ]

Local governments dominated domestic policymaking in 19th century America. In general, government was quite small, but most of the services that were provided, such as public education and road-building, were the responsibility of city and town officials.

The Brookings Institution and the political theorist Benjamin Barber have recently advocated for a return to something like the 19th century arrangement. They believe that, at a time when DC and many statehouses seem so corrupt, petty and ineffectual, if we want better policymaking, we should want it to be more locally-directed.

The American people on the whole seem sympathetic: According to a poll published in April, 63% of the American public has a “favorable” opinion of local government, putting it almost 40 percentage points ahead of the federal government (28% “favorable”).

To empower cities and expand their policymaking role, they must first be liberated them from harmful mandates. That should mean binding arbitration reform. Recent events in Scranton, PA and Boston, MA make clear what a nuisance this policy is.

Many blue states grant public safety unions the right to seek an independent arbitration process when negotiations with management hit an impasse. Officially, as the unions are apt to emphasize, this process must exist in order to prevent police or fire from going on strike.

But as the Empire Center pointed out in an analysis of binding arbitration in New York, strikes by public employee unions are illegal anyway and even unions without access to binding arbitration almost never strike.

Binding arbitration laws increase unions’ leverage because the settlements are consistently pro-labor. As Boston mayor Tom Menino put it, “Public safety unions have no reason to negotiate with us in good faith and settle contracts voluntarily because arbitrators have proven that they will always give them more.” Late Detroit Mayor Coleman Young said: ”Slowly, inexorably, compulsory arbitration destroys sensible fiscal management.”

Arbitrators base their settlements on what unions have received in past contracts, or what other unions in nearby communities have received, much more than what a city can afford. The Empire Center found that from 1974-2012, for unions outside of New York City, unions with access to binding arbitration saw their salaries increase almost three times faster than unions without it.

Scranton, PA’s internationally-notorious labor woes began in October 2011, when the PA Supreme Court ruled that the city honor the terms of an arbitrator’s $17 million award to public safety unions, a substantial sum for a community of 76,000 with a $100 million operating budget. The following summer, struggling to find a way to pay for the settlement, Scranton’s mayor reduced all employees’ salaries to minimum wage.

The city eventually secured a bank loan to keep it temporarily afloat, but fiscal chaos reemerged last week when a judge demanded the city come up with the now $21 million+ still owed to the unions, threatening even to allow unions to seize city assets if other revenues can’t be found.

Scranton is poor and broke, having been in Pennsylvania’s Act 47 program for distressed cities for over two decades. Last summer, the city’s parking authority defaulted on bond payments. Scranton demonstrates the insanity of allowing arbitrators to award settlements based exclusively on their definition of what’s fair while giving, at most, token consideration to what’s affordable.

Boston’s experience with binding arbitration demonstrates how flagrantly undemocratic the process is. Last week, a Boston arbitrator awarded the Boston Police Patrolmen’s Association a 25% raise over six years, a value of $80 million.

The patrolmen’s award follows an even more outrageous 21.5%, five-year raise to the Boston firefighters union forced on the city in 2010 by the arbitration process. The origins of that $100 million plus increase lay in the Boston Firefighter Union’s resistance to random drug testing. Since drug testing affects conditions of employment, the firefighters demanded a pay boost to agree to it. Anything less would have been leaving money on the table.

AAA-rated, and in possession of $68 million in collective bargaining reserves, Boston, unlike Scranton, will be able to pay for the police settlement, if at great inconvenience. The larger question for Boston is, can one imagine a less democratic process to shape fiscal policy? In this extremely liberal, pro-labor city, everyone seems to be against this settlement-the City Council Speaker, the mayor (“unreal“), both mayoral candidates, and both newspapers-and yet it or something close to it will likely go into effect.

Binding arbitration is supposed to be “binding” in the sense that the parties must accept the settlement, but it’s really cities that wind up being bound. Wages, normally thought of as operational expenses, turn into legacy costs. Unions drag out negotiations for years, as the old contract with its guaranteed pay bumps stays in effect, and once employers settle up, it’s to pay employees for work they performed years ago.

Legally, cities will always be the creations of state government, never “nation states” of their own, and we’ll probably never see a full return to 19th century conditions. But small victories matter. Urbanists genuinely interested in giving cities’ more autonomy should target for reform those mandates now held in special contempt by local officials. This could be done either by revoking public safety unions’ right to pursue binding arbitration, or imposing, as New Jersey did, a firm cap on awards to ensure their affordability.

This post originally appeared in Public Sector, Inc. on October 2, 2013.

Monday, April 21st, 2014

The Urbanophile Interview: Cincinnati Mayor John Cranley

I was able to sit down this month with new Cincinnati Mayor John Cranley to spend an hour on such topics as Cincinnati’s incredible historic assets, its history of social conservatism, streetcars and bike lanes, the repopulation of the urban core, and more.

If the audio player below doesn’t display, click here for the MP3 file.

Mayor John Cranely. Image via Wikipedia.

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

By far the most provocative thing the mayor talked about to me was his direct challenge to the idea of metropolitan government. Cincinnati hasn’t annexed territory since 1925, leaving it as a smallish, hemmed in city that is only 14% of a very fragmented region. Meanwhile cities like Indianapolis and Nashville had city-county consolidation, Columbus annexed, etc. He thinks that in a new urban era, this model of government is running out of gas and the pendulum is going to swing back the other way:

There’s a real cultural shift and renewed pride in Cincinnati. More specifically though, there are some unique advantages that we have. Think of it this way: if you took our Downtown and Uptown and the corporate base, let’s say it’s 70% of all of our major jobs and income taxpayers. If you take the same exact area and map it in Columbus, they’re going to have 70% of their companies Nationwide, et cetera, all within the same geographic area. The difference is that they have to spread that money among all of Franklin County. We have to provide for 300,000 people. And very quality 19th century historic neighborhoods that already have a sense of place and culture. And we get the benefit of, on a per capita basis, being able to invest way more in these urban neighborhoods than any of our peers because we didn’t annex.

Now, historically, the attitude of urbanists had been, like myself, the we’ve got to have metro government. In essence, the attitude has been, “We poor city.” We need you guys have to play Robin Hood for us. I think the shift is already underway. Now, we have more work to do but the shift is already underway that we’re going to be a better choice for the dollar value because of our historic infrastructure, our density, our diverse economies of scale. The home owner to apartment mix which looks bad at a distance but, candidly, makes it more dense in which it makes labor pools a lot easier to transport inside the city.

What we haven’t done, in my opinion, is be insistent enough on value for the dollar, because we’re spreading our dollar over a much smaller population than cities of size. So why isn’t the quality of customer service of all services of city government superior? You still get complaints today of people who say, “I live in a nice suburb and my snow is picked up immediately and it’s cleaner and my roads paved faster and less litter. Coming to a city, I can immediately tell it’s a city.” There’s no excuse for that. And I believe that we can provide a better customer service because we have more money over less people than our competitors do. Which if you think about the fact that we lost population to cities this way, people kept moving one suburb out — and I think most of us agree we’re going to repopulate from the inside out — we have more resources to invest in economic growth policies than our competitors do, and we intend to use that advantage to become the most exciting urban city in the country.

We’ll have to see how this plays out, but I think there’s something to this. When places like Indy, Columbus, and Nashville annexed all those suburban areas, they were able to capture that tax base to support the central city. Now though they are saddled supporting miles and miles of aging and decaying suburban type development that may ultimately represent a drain on the resurgent urban core tax base. To the extent that the urban core does come back, places like Cincinnati, from a municipal point of view, will get a bigger lift from it because it gets spread over a smaller area. It’s easier to turn around a small ship than a big one.

We also talked about the geography and architecture of neighborhoods like Mt. Adams, which is like a Midwestern San Francisco. Mayor Cranley likes that analogy:

As I always say, if Chicago is the New York of the Midwest, we’re the San Francisco — in fact, that’s exactly my mind is to say Chicago is the New York of the Midwest. We’re the San Francisco. Because we have the hills, the architecture, the arts, the culture, the big league teams, all the advantages of a major city with the livability of a small town. And everyone has an opportunity to be a big fish if you got that kind of ambition. And it really is. Again, we’ve proven that’s true because we’ve been able to maintain such a concentration of Fortune 500 companies which then, of course, leads to all kinds of spin-off businesses and a huge privately held company, group of businesses, that have really been family traditions that have lasted a hundred years and have really continued to come. As I like to point out, what city our size has an entire company dedicated to Shakespeare? We have a theater that does all Shakespeare. And it has full on season.

I pointed out one important difference vs. San Francisco: Cincinnati’s history of extreme social conservatism. A number of wealthy conservatives like billionaire Carl Lindner and Charles Keating (yes, the Keating Five Charles Keating) poured tons of money into anti-pornography campaigns. Hustler publisher Larry Flynt was convicted as recently as the late 90s of obscenity charges. In 1990 locals tried to ban an exhibition of explicit photographs by Robert Mapplethorpe and even put the museum director on trial for obscenity (he was acquitted). An anti-gay rights amendment was added to the city charter by citizen initiative in the early 90s. There was a race riot in Over the Rhine in 2001.

This is clearly a sore point for the mayor, as he answered at length. He acknowledges the history of these things, but says things have changed radically and wants to be able to get the word out on the new attitude in the city:

I think that’s changed. You take one rather prominent issue with gay rights. In 1993 an anti-gay law was passed in the city charter which was awful, and would stain our reputation for ten years. When I was on council we had a transvestite who was murdered, and even the very conservative chief of police said that this was a hate crime. And I led the effort to add sexual orientation to our hate crime law. And that was sort of — this was 2002, I believe, 2002 or ’03, it might have been 2003. And this had only been ten years since the charter thing had been passed. Remember, the charter thing was passed in the aftermath of Bill Clinton being elected and gays in the military, that first debate. And several cities, including Denver, Colorado, passed virtually identical [language] ran by a right wing group around the country.

Here, we went on a major effort and we progressively, in 2004, in the midst of Bush getting reelected in Hamilton County 54 to 46, got the thing repealed by a substantial margin, which showed a real shift in our culture and our attitudes. And then we immediately passed — reinstated — the human rights ordinance. We immediately reinstated the non-discrimination. We passed benefits for domestic partners and many, many other things. So candidly, and this is why I think it’s so important that you’re here, we need to get the message out. I believe that we have moved many, many miles since then.

In addition, we have been incredibly progressive as it comes to civil rights and to police-community relations. We had, in 2001, a very difficult time with police and the community, the black community in particular. And we voted to invite the Justice Department in the Cincinnati to mediate rather than litigate allegations of police misconduct. And we led to the 2002 collaborative agreement — which I’m proud to say I helped negotiate — which is now held up as a role model for how to improve police community relations around the country. In fact, the judge in New York who struck down the “stop and frisk” law in New York City specifically cited Cincinnati’s collaborative agreement as the right way for the police and the community to work together.

And so I respectfully say that I understand that we have some baggage in terms of what happened in 1993 on gay rights, and we’ve had on the 80’s and 70’s…Larry Flynt… So I’m not denying that there isn’t some reason for that reputation, but it’s no longer fair.

In addition to a Harvard Law degree, Mayor Cranley also has a Masters of Theology from Harvard Divinity School as describes himself as a man of deep faith. I asked him how that informs him in his role as mayor:

I think that all of this has to be done in the context of the common good and building a society that expands opportunity. And I think at the end of our lives we’re fundamentally going to be asked did we make the world a better place for those who didn’t have as many advantages as we had and did we leave it better than we found it. A sense of stewardship. And all that comes, I think, deeply from my faith, schooling and family, values, traditions, et cetera.

And so we spend an enormous amount of time thinking about how are we going to reduce the poverty rate. One of my major planks in my campaign was reducing the poverty by at least 5% over the next four years. We are engaged at every level, re-examining the dollars that are — federal dollars that come in to the city budget that are earmarks for low income individuals and must be spent to the benefit of low income individuals — are we really getting the most bang for the buck out of these dollars?

Right now we have a cohort coming out of the Great Recession of folks who have never had high school or college degree, with kids, who have got very bleak prospects, and that is not surprisingly where those folks live tend to be some of our toughest neighborhoods. If we can, I think, rise to the moral challenge of figuring out how to not write off this entire generation but invest in job training and skill set to get them at least ready to work at low skill, low paying jobs and bring the dignity back of having a breadwinner in the family, the social dividends of that are enormous in terms of turning those neighborhoods around, those families around, the city around.

But in addition, if we can do it on a systematic basis, we can then market Cincinnati as a place for companies who want to locate with a large, ready to work population. Now, obviously, 20-30 years from now I’d love for us to have a higher education rate. I’m not saying it’s good and we just want to leave the education rates where they are, but given what we have today, how do we turn all that into an advantage and, at the same time, tackle the moral issues of poverty?

And while it’s not the same thing — a very sensitive issue, this is not the same thing — but building a more inclusive and welcoming society for immigrants and for African-American, Hispanics is also, I think, part of my faith tradition of — it does come from a history of prejudice that Cincinnati has been part of. And so we do have a moral obligation to tackle those issues but I do think from a political standpoint, it’s better — and true, not just better political argument, which it is, but it’s also true — that it’s better for all of us to have a more inclusive and welcoming city.

Thursday, April 10th, 2014

Building a More Dynamic Cincinnati

This post originally appeared in the Cincinnati Enquirer on April 8, 2014.

Cincinnati arguably has the greatest collection of assets of any city its size in America. So why has the region been stagnant to slow-growing for so many decades?

When you look at the stunning collection of advantages and assets of Cincinnati – its geography; the amazing dense, historic architecture (great contemporary architecture, too); top-notch cultural institutions; a large corporate presence; and so many pieces of local culture and flavor of a type that has been homogenized away in most places – it’s an embarrassment of riches.

Yet since 1970, while the U.S. has grown by nearly 52 percent in population, the Cincinnati region grew by 26 percent, only half as fast. Other than Dayton, the other surrounding metro areas have also grown about twice as fast or more than Cincinnati. Cincinnati has lagged on jobs, too.

How is this? How can Cincinnati have the best stuff, but be a growth laggard?

Part of it is that all the assets in the world don’t help you if you don’t take advantage of them. Most of these are located in Cincinnati’s delightful urban core. But Cincinnati has to some extent abandoned that core in favor of low-grade sprawl.

The city of Cincinnati has lost a big chunk of population, and its regional share dropped from about 40 percent in 1950 to only 14 percent today. By contrast, New York City is still at 45 percent regional population share today. And while it’s a slow-growing region, too, the city of New York is at an all-time high in population and is booming in many ways, such as its tech and real estate industries.

Even Hamilton County has lost population as a whole, dropping by about 120,000 since 1970. By comparison, Indianapolis’s almost identically sized Marion County gained 135,000 during the same period – this in a place with far fewer obvious assets.

What’s more, unlike its fabulous core, Cincinnati’s sprawl isn’t even that good for the most part. So Cincinnati has chosen to fight its battle where it has few marketplace advantages instead of leveraging its unique and compelling assets.

This has proven a demographically, economically and financially unimpressive strategy. Instead, urban Cincinnati and Hamilton County should align available financial resources to make the most out of the amazing urban environment and assets that exist there.

Meanwhile, the suburbs aren’t going anywhere and will continue to grow, so they should seek to do so on a higher-quality pattern that will be financially sustainable long-term. The problem with sprawl is often less about the environmental impacts than the fact that as they age, older suburbs that weren’t very high-income to begin with become financial albatrosses as they fill up with dead malls, aging and less market-attractive homes, legacy costs and similar issues. And unlike the high-quality classic architecture of the core, they’ve as yet proven less adaptable over the long term.

The wonderful collection of assets Cincinnati has may also have bred complacency. Another name for an asset is “the stuff we did yesterday.” But what are we building for tomorrow? What is our generation’s contribution to the pot?

Cities like Columbus that started out with much less understood in their gut that they needed to go out and create some things. They were hungrier. Cincinnati needs to recover some of that hunger and fire in the belly that motivates other places that are keenly aware of what they lack and are fighting every day to improve.

Cincinnati has also been plagued with deep and counterproductive community divisions. This includes the East Side-West Side split, city vs. suburb, three states, tea partiers vs. liberals, racial divisions, etc. This makes it harder to get things done than it should be because there’s no civic consensus. The streetcar debate makes that very clear.

Cincinnati needs to find a way to heal these wounds and build a durable consensus while leaving room for appropriate debate.

A strategy that works with, not against, the unique qualities and competitive advantages of Cincinnati; a more aggressive, hungry civic attitude; and a way to bridge community divides are three of the things that will help Cincinnati to realize the sustainable growth and prosperity it should have in light of the fantastic place that it is and the incredible assets it has.

Tuesday, March 25th, 2014

A New Urban Revitalization Model For New Times by Pete Saunders

[ Following on from Richey's piece last week, Pete Saunders asks how we can create urban revitalization strategies that connect with minorities - Aaron. ]


Cover of the East Garfield Park Quality of Life Plan, prepared by LISC through the New Communities Program. Source: Garfield Park Community Council

How is it that so many of the recent theories or models on effective urban revitalization absolutely fail to connect with minorities, especially African-Americans?

New Urbanists, Smart Growthers, Creative Class supporters and even advocates of the nascent Rust Belt Chic movement are bumping their heads against a low ceiling, trying to figure out how to achieve escape velocity and gain greater acceptance among the general public. General support from the African-American community seems to elude them all.

Let’s look at a few examples. Recently, the New Urbanist-oriented website Better Cities lamented the lack of support it has attained from minority communities for bike lanes and other measures that support pedestrianism and walkability. In Cincinnati last week, mayor-elect John Cranley defeated former mayor Roxanne Qualls by running on a platform to halt construction of the city’s streetcar project – a project supported by Qualls and that enjoyed the support of many urbanists. However, Cranley, a Democrat backed by many Republicans, enjoyed the support of a significant part of the African-American community. In New York, the election of populist Bill de Blasio as Michael Bloomberg’s successor has caused some consternation among corporate-oriented New Yorkers who may wish to continue New York’s Creative Class-style of revitalization.

All in all, this is causing adherents of the various theories and models to reevaluate their inclusiveness. In reality they need to reevaluate their mission, goals and message. If you look at what each theory has to say, it’s pretty clear where they fall short.

New Urbanists, who broadly support the notion that better design can create better communities, have a message that was crafted with the sprawling post-WWII suburbs in mind, and intended for implementation there. New Urbanists get their guidance from the pre-WWII urban development patterns of many of our nation’s cities, but often have little to say about how those cities should move forward today.

Smart Growth supporters may share the design sentiment of New Urbanists, but their focus is often on revisiting the regulatory environment that creates the cities we have. Similar to New Urbanism, Smart Growthers also get inspiration from pre-WWII cities, but have a message designed to appeal to suburban revitalization.

Creative Class advocates come a little closer to addressing the needs of cities. They broadly support the idea that establishing an environment for innovation and creativity in cities can drive urban revitalization. Perhaps, but that message seems to neglect a huge segment of the population of cities that don’t fit the high-education, professional, tech-oriented label at the heart of the Creative Class.

Finally, the new Rust Belt Chic model is gaining notoriety and followers. Supporters of this model believe that authenticity is key to urban revitalization. Cities, particularly Rust Belt cities, are who they are; they will attract new residents who seek an alternative to homogenous suburbia or Sun Belt by becoming better, and often more ironic, versions of themselves.

You can disagree with my characterization of the various models. They’re overly broad, I admit. What’s also overly broad is the role that African-Americans, and in fact other minorities, play in their formation and implementation. How can we have models supporting urban revitalization without really including all members of the urban landscape?

Let’s be real. The reason New Urbanists, Smart Growthers, Creative Classers and Rust Belt Chic-ers are looking into their appeal to minorities to go to the next level is that the Great Recession has changed everything. Prior to the financial crisis none of these models needed minorities to move forward. Whatever you think about the Occupy movement, it exposed growing income inequality in this country, and forced people who care about cities to consider inequality’s impact. Being on the short side of the haves/have nots divide is something that blacks are quite familiar with.

Touting bike lanes, streetcars, tech-led revitalization and amenity-rich areas has meant little to many blacks because they don’t deal with the structural inequities of our cities. Otherwise, the strategies simply seem like so many relocation efforts, reminiscent of urban renewal efforts from a half-century ago. For too long, the New Urbanism, Smart Growth and Creative Class models (Rust Belt Chic gets a pass for now) have all but neglected cities because they believed their strategies would indirectly improve cities – and they steadfastly avoided facing urban challenges directly. Now that more of suburban and exurban America is as structurally alienated as urban minority America has been, they want to reevaluate their message.

Blacks and other minorities have been looking for an urbanist response to the challenges they face. Our communities are plagued by rising violent crime, even as violent crime continues its steep decline at the national, metro and even city scale. Our communities are not only lacking poor physical connections to metro job centers, but poor social connections as well. The divide between challenged inner-city communities and all other parts of a metro area is reinforced by an inadequate educational system.

All our current urbanist models have been neglecting these challenges.

Addressing these challenges requires a social as well as a physical or economic approach. The best model that I’ve come across that unites these three is the comprehensive community development model, or quality-of-life planning. The model can be viewed as an outgrowth of the community development model that got its start in the late 1970s and early 1980s, and has largely been supported by the philanthropic community. Early community development efforts were geared toward alleviating poverty – providing affordable housing, connecting people to job opportunities, and stabilizing community decline. But the model took a leap more than 10 years ago when the Local Initiative Support Corporation (LISC) launched its New Communities Program in 2003, and expanded it to more than 20 cities nationwide. The model seeks to develop neighborhoods through five strategies:

  • Expanding investment in housing and other real estate
  • Increasing family income and wealth
  • Stimulating economic development
  • Improving access to quality education
  • Supporting healthy environments and lifestyles

The comprehensive community development model has succeeded where implemented, but has largely escaped attention from the general public. Why? It hasn’t exactly gained wide acceptance in political quarters, where politicos feel the spotlight on low-income residents and communities highlights deficiencies in their efforts. CCD is resource-intensive. The model operates in a social realm that few people who focus on physical or economic matters feel comfortable. But I’ve found that the CCD model provides answers to questions that New Urbanists, Smart Growthers and Creative Classers are just now starting to ask themselves.

Since the onset of the Great Recession Richard Florida has talked about this particular time in history being the Great Reset. I agree. Times have changed, and advocates of the earlier models may not fully understand the depths of the changes. However, I’d encourage people to dig a little deeper – there are people who’ve been addressing these challenges – and developing solutions – for some time.

This post originally appeared in Corner Side Yard on November 11, 2013.

Friday, March 21st, 2014

Detroit Emergency Manager Seeks to Unleash an Infero of Moral Hazard

One of lesser followed aspects of Detroit’s bankruptcy is a lawsuit filed by emergency manager Kevyn Orr to repudiate $1.4 billion in debt by claiming it was illegally issued. This appears to be mostly a negotiating tactic, but if the judge ends up agreeing with this, it will unleash an inferno of municipal moral hazard that will no doubt be exploited by politicians around the country.

Michigan, like many states, limits the amount of indebtedness cities can incur. To top off pensions, former mayor Kwame Kilpatrick borrowed $1.4 billion. To circumvent debt limits, he created special purpose entities to do the borrowing. Orr now claims these were sham entities, and so the debt issue was illegal, so the city is entitled to pocket the $1.4 billion and not pay it back.

Keep in mind that creating special purpose corporations of various types for this sort of purpose is widespread municipally and in the corporate world. Also keep in mind that Kwame Kilpatrick was a crook who’s going to spend the next 28 years in prison for corruption. It’s an interesting claim that an outright criminal who borrows money can claim that because his scheme is crooked he doesn’t have to pay the money back (Both Kilpatrick and Orr were both speaking ex-cathedra as municipal CEO). What kind of logic is this?

If Detroit successfully repudiates this debt, municipal leaders elsewhere would almost have to be idiots not to take advantage of the same trick. Elect a crooked mayor or merely one with few scruples. Borrow an insane amount of money by skating on the edge of the law. Then sue yourself claiming you couldn’t possibly have legally done the deal, so don’t have to pay the money back. Rinse, repeat.

The feds should drop the hammer on this hard on this. I don’t have a lot of sympathy for big banks. On the other hand, when someone takes out the municipal equivalent of a “lair’s loan”, they shouldn’t be allowed to profit from being a crook.

In large municipal bankruptcies, it’s pretty common to claim that the indebtedness is all the fault of those greedy bankers who deceived the poor servants of the public. I believe similar claims were made and generated quite a bit of municipal recovery in Orange County and Jefferson County, Alabama. But look closely and I think where you find a shady banker operating, you’ll often find a shady client as well.

Why do people keep electing crooks like Kilpatrick to office? Well, if it turns out those guys are able to fleece out of town bankers to the tune of $1.4 billion, why wouldn’t you? Looks like he might have cut a pretty savvy deal after all. This sort of behavior shouldn’t be rewarded. You can be sure shady municipal borrowing will only be on the increase if the courts allow the Detroit to play a heads we win, tails you lose game with the banks. Think about that the next time your city engages in legal contortions to dig itself even deeper into debt.

Speaking of Detroit, the free market Manhattan Institute will be doing a one hour live streamed event this Monday the 24th with Michigan Gov. Rick Snyder and Detroit emergency manager Kevyn Orr. It’s at 1pm ET and is called “Detroit: The Next American City of Opportunity.” You can access the event at: http://www.publicsectorinc.org/2014/02/detroit/. If you want to submit questions, tweet them to @ManhattanInst with the hash tag #SaveOurCities.

Tuesday, March 11th, 2014

Does Calling Someplace a Metropolitan Area Make It So? by Chuck Eckenstahler

[ Today Chuck Eckenstahler looks back at the unfulfilled promises of Benton Harbor, MI being declared metropolitan - Aaron. ]

It’s called the “Benton Harbor Rule”, a hard fought change spearheaded by now Congressman Upton and local leaders to obtain metropolitan status in 1980.

Background

Back in the mid-1970′s, Berrien County Michigan, local governments and the Twin Cities Chamber of Commerce (predecessor to Cornerstone Chamber Services) identified the value of being recognized as “being metropolitan rather than rural”.

They identified the immediate opportunity to access as much as $1.8 million (1970’s dollars) of new federal and state funding that could only be obtained by “being metropolitan” for road improvements, bus transit, health and other social services. They estimated the designation would yield a $12-14 million dollar impact to the local economy.

To access these potential funds, they undertook a multi-year effort to change Federal Office of Management and Budget policy prohibiting Berrien County from ever being considered metropolitan.

Successful lobbing changed the rules for the 1980 Census creating, 9 new Metropolitan Areas like Benton Harbor-St. Joseph lacking a central city of 25,000 population in a concentrated urban area having a population of 50,000 or more, in a county having a population of 100,000 or more. This change modified the minimum sized “single city” criteria for determination of a “demographic dominate central city” requirement for federal metropolitan designation purposes.

Economic Development Advantages Identified

In the 1970’s being “metropolitan” meant more than increased state and federal money, according to the supporters. “Metropolitan” meant growth – increasing population and prosperity.

Business seeking to locate understood “metropolitan” to be a better place for new investment – both industry needing workers and retailers needing customers for success.

On the contrary, being a rural area meant the area didn’t quite make the grade for certain businesses especially the rapid growth of emerging fast food franchises and location of regional shopping malls.

The recruitment of these new businesses was a major goal of Chamber of Commerce visionaries who sponsored a nonprofit owned industrial park as a place for new industry to locate and create jobs. Back then there were no regional shopping malls and residents did a lot of their shopping in Kalamazoo, South Bend and Michigan City. It was believed the “metropolitan” designation would contribute to the redevelopment of Benton Harbor and the growth of communities throughout the county”.

Anyway, it just didn’t make sense that the home of several national firms such as, Auto Specialties, Leco Corporation, Tyler Refrigeration, Clark Equipment and Whirlpool would not reside in a growing metropolitan location.

Measuring the Impact of Metropolitan Designation

Today many wonder – was this successful? Did the change in federal policy truly make a difference?

Three decades later one measurement – population growth – can be used to gauge whether the legacy of this effort achieved results.

The adjoining table contains data for 8 of the 9 new MSA’s designated in 1980 due to the “Benton Harbor Rule”. The other has been merged into a consolidated MSA, a newer federal designation describing larger population centers, eliminating decade-to-decade data comparison.

This data reveals population of the Benton Harbor/St. Joseph MSA did not grow to the same extent as other comparative MSA’s created in 1980 – being a population loss of 8.4% compared to a 35.2% growth in population over the past three decades.

Where the average total comparative metropolitan growth rate in each decade ranged between 7-17%, the Benton Harbor St. Joseph MSA lost population twice between 1980 and 1990 and again between 2000 and 2010. The MSA only had marginal 0.7% population growth between 1980 and 1990.

What Happened

Obviously, the legacy of the authors of the Benton Harbor Rule, raises questions – why and what happened to the well intentioned efforts to stimulate growth.

The logical questions based on the data include – Why didn’t the Benton Harbor-St. Joseph MSA achieve similar growth? Shouldn’t the population have grown in a similar fashion as the other MSA’s – at least at the average rate? What social, political and economic impediments arose to limit population growth?

Many credit the demise of the auto industry, the off-shoring of manufacturing jobs and globalization of business as impediment to population growth. Others mention Michigan’s unfavorable business climate as a cause.

There certainly some truth in each statement. However closer to home, the more appropriate question might be – are there local impediments that hampered population growth?

Economic Geography and Realities of “Place”

The following offers a few thoughts on social and political barriers that might cause the lack of population growth:

Geographic Isolationism

The “Friday Night” social identity of Southwestern Michigan where small town high school sports define the community is a barrier to multi-community collaboration and cooperation. It limits the ability of local government and customer trade areas to form and strengthen economic clusters of businesses to maintain economic marketability necessary to sustain small local business that once supplied the small town community shopping experience.

Paralysis of Political Geography

In place of economic consideration which should inspire cooperation there is paralysis, the inability to shed “political boundary binders” that maintain the historic political geography that may, in some cases limit the scale of economics necessary for retail business sustainability and the delivery efficient government services.

Cognitive “Place” Realism

Without a doubt, economic markets of Berrien County today are different compared to 1975 when efforts to create a demographic dominate metropolitan central city composed of smaller individual communities was first initiated. Individual mental mapping of the actual area of influence of the Niles and Benton Harbor – St. Joseph shopping areas shows customers pay little attention in which local government the actual shopping is done. This mental cognitive mapping discloses three major retail markets, Benton Harbor – St. Joseph, Niles – connected to South Bend and Harbor Country – connected to Michigan City.

This pattern creates a rather isolated St. Joseph – Benton Harbor metropolitan market area surrounded by two (or three) market areas influenced by more dominate regional competitors having a population approximating 70,000 people with a somewhat lackluster future growth trend.

Ethnic and Cultural Diversity Polarization

Modern metropolitan community development theory has identified “social capital” as a key to economic prosperity in a global market. This is especially important for international businesses who recruit globally for management talent. Academic researchers have documented communities who richly embrace ethnic, cultural, religion and gender differences that increase social interaction among a wide spectrum of people tend to have increased population growth resulting in greater economic prosperity.

Academic research also discloses communities with “less tolerance for differences” lag behind both in community population growth and employment growth by firms serving global markets; leading to the question of adequacy of inclusionary and tolerance tendency of the metropolitan area.

Questionable Externally Communicated Metropolitan Identity

A metropolitan area identity, or its “good name”, is formed in people’s minds by repeated exposure – being the accumulated knowledge they acquire from varied sources (news media, marketing publicity, testimonials, etc.) and their personal experiences resulting in a positive, negative or neutral image. To often this image is one that leaders prefer not to address or address by issuing cheerleader statements or other auditory claims promising a personal experience that cannot be kept. A positive metropolitan identity and image is a message designed to attract attention and then follow with support services that fulfill the expected experiences.

The decision to visit or invest in a “place” is based on faith and trust because “customers” are purchasing an intangible personal asset. The logical question for any metropolitan area is – Do we offer a “good name” identity and image?

“Metropolitan” As a Determinant of Future Growth

Post-recession public policy has reinstated the importance of “metropolitan areas” in Michigan’s economic development policy.

Academics and political leaders extol the virtue of economic advantages of Michigan’s metropolitan areas. They are assembling new legislation and administrative policy to direct public and private investment to Michigan’s “core community” metropolitan areas.

From a public policy perspective this makes logical sense. Young people gravitate to metropolitan areas due to job opportunities metropolitan areas generate, the greatest number of new business formations occur in metropolitan areas, metropolitan areas tend to have higher per household incomes for their residents, and metropolitan areas attract higher value real estate investment that enhance the local government tax base.

A recent Brookings Institution analysis confirms this statement, where their research documents that in 47 of the 50 states, metropolitan areas generate the majority of the states’ gross economic output. They report in 2009, the St. Joseph – Benton Harbor Metropolitan area accounted for $5,620,000,000 (1.5%) of Michigan’s gross economic output (See: Brookings Institution Metropolitan Policy Program – Metropolitan Area and the Next Economy and New Economy State Profiles).

Brookings advocates a “metro-led vision” for the future since they have “distinct assets and market strength to grow quality jobs and provide statewide prosperity”. They also note that metropolitan areas have:

1. In 30 states (including Michigan) the most innovative and educated workers,

3. Generate the majority of internationally exported goods and services, and

4. Host 89% of the working-aged people with post-secondary degrees.

All in all, Michigan’s strategy to define and focus government economic development attention to metropolitan “core communities” areas having greatest economic development impact is a reasonable and prudent “statewide” public policy. Michigan’s future hinges on performance of its metropolitan urban “core communities” hosting innovative firms, educated workers and critical infrastructure.

The Importance of “Geographic Place Identity”

Michigan’s newly forming metropolitan focused economic development public policy direction again draws attention on the importance of “metropolitan” and its impact on future growth of the Niles – Benton Harbor – St. Joseph Metropolitan Statistical Area.

Future community growth success is about understanding residents and, in the case of southwestern Michigan, to a lesser extent, seasonal residents and the occasional visitor. Population growth, especially well-educated workers is paramount to participation in the next wave of U.S. economic growth.

They say history repeats itself and again today – the term “metropolitan” once again communicates a sense of vitality and future prosperity.

In the eyes of the world a “metropolitan geographic brand identifier trumps a rural territorial identifier”.

This post originally appeared in Chuck Eckenstahler’s blog on February 27, 2014.

Sunday, March 2nd, 2014

We Had To Destroy the City In Order To Save It


Ed Glaeser’s plan for more skyscrapers in California?

[You may recall that when I posted Daniel Hertz's take on Chicago's zoning insanity I promised a somewhat different take. Well here it is. Daniel has already posted a reply. Your reasoned thoughts pro and con are of course always welcome - Aaron. ]

As housing prices and rents soar out of control in tightly regulated cities like San Francisco and New York, many people have called for a significant loosening of zoning rules to permit greater densification. Many policies contribute to unaffordable housing, including rent control, historic districts, eminent domain abuse, and building codes, but zoning puts an absolute cap on dwelling units per acre thus is generally part of any solution to the supply problem. What’s more, as recent commentators have started to notice, even many of America’s most dense cities are predominantly zoned for single family homes, calling into question the need to dedicate so much space to a single housing typology.

For example, a web site called Better Institutions posted this map of Seattle, in which all of the yellow districts are zoned exclusively for single family homes:

The poster lets his feelings be known by using scare quotes to denote single family “character” and blaming the zoning for Seattle’s high rents.

And Daniel Hertz posted a similar map of Chicago in which the red is single family homes only and yellow is industrial space unavailable for any residential use:

Some go beyond affordability, saying that we also need to significantly increase densities in central cities in order to reduce greenhouse gas emissions. Harvard professor Ed Glaeser wrote an article advocating this subtitled, “To save the planet, build more skyscrapers—especially in California.” He says, “A better path would be to ease restrictions in the urban cores of San Francisco, San Jose, Los Angeles, and San Diego. More building there would reduce average commute lengths and improve per-capita emissions” and “Similarly, limiting the height or growth of New York City skyscrapers incurs environmental costs. Building more apartments in Gotham will not only make the city more affordable; it will also reduce global warming.” He claims that, “The best thing that we can do for the planet is build more skyscrapers.”

These complaints and the proposed solution of more dense multi-family development may be true in a technical sense, but what would carrying that out mean for people who actually live in our cities?

Some critics may disdain the character of single family districts but few of these pundits ask the question of what eliminating lower-density housing actually means to the survival of the urban middle class. Districts, like the Portage Park example Daniel Hertz gave in Chicago, are some of the last bastions of middle class family life in the city. It’s clear that some densification can be implemented without radically changing the appearance or functioning of the built environment. Allowing 2-flats and coach houses, or even the corner apartment building or townhouse development, wouldn’t ruin Portage Park. There’s no reason such things should not be allowed. But nor would they make a major dent in affordability in places where a tidal wave of global demand is washing over the city such as in San Francisco.

To materially boost the number of units in an era in a manner that moderates prices in a highly desirable place like San Francisco would require massive changes in the built environment of its neighborhoods. This would radically transform the character and nature of the city in question. If San Francisco were really covered in skyscrapers, it would cease to be San Francisco— a city of low-rise buildings framed by hills that would be obscured by high rises. There may well be the same geography on the map labeled as such, but it would be a completely different place. We would have to destroy the city in order to save it.

One person who gets that is Alex Steffan. He’s angry about prices, saying that the “criminal lack of housing is a global scandal.” He’s also honest enough to forthrightly acknowledge that a sufficient scale of new homes to bend the cost curve would fundamentally change many of our cities:

We can build some housing incrementally, without changing the skyline or cityscape, but not anything like enough. To produce enough homes to matter, fast enough, we’re going to have to fundamentally alter parts of our cities. That, of course, demands a local government willing and able to plan and permit such widespread change. It also takes an array of homebuilders doing the actual work, often in more innovative and low-cost ways, like more collaborative housing, manufactured buildings and flexible living spaces. Most of all, it takes broader public insight into how large-scale development can improve our cities.

In other words, it’s a major change in communities that requires selling the public on the idea. He believes that young people will be the agents of change here. This shows perhaps one of the signature affects such changes would have. They would displace families by eliminating their preferred housing typologies in favor of forms more amenable to predominantly younger singles or the childless for whom living in an apartment with no backyard is more likely a relief than an imposition. But it’s hard to imagine cities as places for solving the problem of climate change if they are, like San Francisco, increasingly places devoid of families with children.

Steffan also says affordable housing is a social justice issue. Yet is it really social justice to require everyone to have equal access to San Francisco, population 825,000? I think not. Especially not when America is replete with urban centers whose biggest problems are depopulation and worthless houses that you can’t give away. There are plenty of options of places for people to live; we should look at making our now failing cities more attractive to people who may like the housing and neighborhood, if not for issues such as crime and poor schools. There’s no guarantee in America that you can afford to live in the place you might most want to choose. That’s long been true of suburbanites and city dwellers alike.

Also, the willingness to fundamentally reshape cities is odd in light of the fact that such previous attempts are uniformly viewed in the urbanist community as disasters. The idea of Manhattanizing San Francisco brings to mind nothing so much as Le Corbusier’s Plan Voisin for Paris, in which the historical cityscape is replaced with towers in the park.


Fundamentally altering Paris

Of course no one is actually saying to take it this far, although Glaeser’s vision gets close it. But once we enshrine the rule that a certain threshold of unaffordability means more density and building regardless of neighborhood character, it’s hard to see what the limiting principle would be. Also, high rises or even buildings above 4-5 stories in height usually require expensive construction techniques, and thus are inherently costly.

It’s true, however, that cities are not static entities. Every downtown skyscraper in America is built on a site that was once used for something else. Yet we see this densification overall as a good thing. Had Manhattan been preserved as of its pre-skyscraper era, it’s not clear the city would have benefitted.

Clearly the zoning and building regulations in our cities are often too strict. Yet the disasters of previous generations’ radical change suggests that incrementalism is a better course. By all means allow two-unit houses, corner stores with upper story apartments, etc. into currently all-single family zones. Add areas where high rises are allowed the peripheries of districts currently zoned for such; warehouse districts as well as office buildings that are not well occupied. But don’t bring out the bulldozer wholesale. Additionally, a healthy city should make sure to embrace the entire palette of housing types – including single family homes. There’s more to making cities attractive to middle class families than just cost, and things like the prospect of a backyard for the kids to play in are among them.

And given the relatively few intact and attractive urban cores in America, prices are going to continue to go up. That’s true even with radical new building. As mentioned, San Francisco only has a bit over 800,000 people. Boston and DC have only about 600,000 each. How many people can you plausibly put into these places? Realistically, not all of us who would like to live in San Francisco or lower Manhattan are going to be able to do so. That’s true no matter how many skyscrapers we build.

This post originally appeared at New Geography on February 26, 2014.

Tuesday, February 25th, 2014

Supersize Your Development by James Kennedy

[ Last week Jef Nickerson told us about a proposed strip mall development in inner city Providence. This week James Kennedy of the blog Transport Providence pans back the lens to look at the bigger picture around this kind of development - Aaron. ]

The McDonaldization of Society

McDonald’s is no stranger to the love and hatred of people all over the world. It’s most vocal opponents have faulted it for being the robotic extension of a hyper-efficient assembly line. An important urban planning model is getting more and more attention across the country, and its models show not that auto-centric businesses like McDonalds are hyper-efficient, but the opposite. Even successful sprawl is a sinkhole for huge government subsidies, and results are that municipalities seeking new tax revenue from them may be shooting themselves in the foot.

One of the most prominent critique of McDonald’s is George Ritzer’s “The McDonaldization of Society.” Ritzer’s central thesis is that McDonald’s has perfected what Max Weber called “bureaucratic rationalism” in the use of its resources to such an extreme as to have dehumanized the process of eating.

I talked to Ritzer on the phone and by email, finding some of what he has to say about McDonalds interesting. Overall, though, I am a critic of his perspective. A lot of his examples of creeping McDonaldization don’t seem all that troubling to me. Quoting from his book:

  • “The department store obviously is a more efficient place in which to shop than a series of specialty shops dispersed through the city or suburbs. In addition, the shopping mall increases efficiency by bringing a wide range of department stores under one roof.” Certainly the disappearance of Main Street stores from many small towns and cities is something to be concerned about, and especially in its suburban form the shopping mall has meant lots of low-wage, high-turnover jobs that require huge amounts of wasteful driving and land use to produce endless streams of unremarkable places to shop. But what has to be understood is that Ritzer means to go beyond the big box store as an example of one-stop-shopping and criticize the idea of mixing different types of buying at all. In Providence, where we recently struggled over the addition of a new sprawled-out McDonalds and Family Dollar in Olneyville Square, Ritzer’s critique could not only apply to suburban places, but also to the newly-refurbished Arcade in Downtown, or even to the Winter Farmers’ Market in Pawtucket.
  • “Supermarkets have sought to make shopping more efficient by institutionalizing ten-item limit, no-checks-accepted lines for consumers who might otherwise frequent the convenience stores.” To have a more humanized society, shoppers expecting to pick up just a few items should apparently wait in line with people buying hundreds of dollars of items. As someone who values transit and biking, this example particularly irks me, because the ten-items-or-less line is a good demonstration of exactly the advantages brought with transit or bike lanes. I see this example as a huge stretch.
  • “Shopping also offers many examples of imposing work on the customer. The old-time grocery store, where the clerk retrieved the needed items, has been replaced by the supermarket, where a shopper may put in several hours a week ‘working’ as a grocery clerk, seeking out wanted (and unwanted) items during lengthy treks down seemingly interminable aisles. Having obtained the groceries, the shopper then unloads the food at the checkout counter, and in some cases, even bags the groceries.” Ritzer described the problem with imposing work on the customer as its effect on job creation. I personally can’t wrap my mind around why it would be bad for customers to be able to decide they want to order in a line or collect their own napkins and condiments in return for a lower price.

Certainly there are problems with fast food businesses, but I find Ritzer’s explanation of what those problems are to be lacking. I’m actually a very economically liberal person in many ways, but I also value consumer choice, and I feel like the McDonaldization thesis actually is a perfect combination of nanny-state patronization without any deeper analysis of how working class neighborhoods and businesses are fleeced by welfare-queen corporations.


Urban3 believe cities can increase their economic stability and community benefit by analyzing how architecture, planning and policy impact a community’s revenue base. (Image Credit: Urban3)

It’s Not About Fast Food

There’s another way of looking at McDonalds that sheds more light on its problems. The urban design and economics firm Urban3 in Asheville, N.C., uses math that’s receiving a lot of attention from national media. Urban3 asks, should cities be after any kind of economic growth or should they focus instead on how much growth they can squeeze out of an acre of land? The group produces some astounding visual models of what economic output per acre looks like, and its work has helped cities such as Memphis, Tenn., visualize what the balance between land use and economic growth actually looks like.

The firm first noticed the relationship between land use and real value in North Carolina, when staff worked to restore a JC Penney store that had been vacant in Asheville’s downtown for four decades. Made usable again, the property went from being worth $300,000 in 1991 to $11 million in 2012, according to a story about the firm’s work to restore the building, which takes up about a fifth of an acre.

The real insight of Urban3’s logic comes when one contrasts the value of the Walmart just outside of town, valued at almost twice the JC Penney building’s assessment. Emily Badger writes in The Atlantic article:

“Asheville has a Super Walmart about two-and-a-half miles east of downtown. Its tax value is a whopping $20 million. But it sits on 34 acres of land. This means that the Super Walmart yields about $6,500 an acre in property taxes, while that remodeled JCPenney downtown is worth $634,000 in tax revenue per acre. (Add sales tax revenue, and the downtown property is still worth more than six times as much as the Walmart per acre.)”

Urban3 contends that although businesses such as Walmart, which operate in similarly car-centric way to a McDonald’s with a drive-thru, appear to bring far more revenue than other businesses, that when looked at in a broader context are actually very inefficient at producing wealth.

I set out to apply his model to Providence, and found some interesting results.

For example, 235 Thayer St., home to a Chipoltle on the ground floor, carries exactly the kind of fast-food fare that Ritzer derides. Sitting on less than a tenth of an acre, the building is worth $636,100, according to the most recent tax assessment. The Whole Foods Market down the street at 261 Waterman has a small parking lot out front, and is valued at $2,222,300. But taken at a per-acre value, the Chipoltle wins hands down — $7 million an acre to the grocery store’s $1.5 million.

The lesson to draw from this isn’t that grocery stores are a bad investment. Though located in a less-valued neighborhood and worth just a bit more than $400,000, God Is Able African Market, in three-story building at 743 Cranston St., is worth $2 million an acre — half a million more than the Whole Foods. Fertile Underground, at 1577 Westminster St. on the West Side, came in at about $3 million per acre, trouncing a 6-acre Super Stop & Shop on Manton Street, worth more than $6 million, but only $1.1 million per acre.

In Olneyville Square itself, Recycle-A-Bike occupies the bottom floor of a building worth $200,500, but with a land footprint of just one-tenth of an acre, the building is worth 10 times that much on a per-acre basis compared to some other businesses in the area. The nearby Olneyville New York System has a parking lot in back that increases its footprint to a fifth of an acre, making the $272,600 building worth only $1.3 million an acre. The United Way at 50 Valley St. is assessed at nearly $600,000, but with a land footprint of 1.4 acres comes in at $423,000 value per acre.

I asked the city to provide tax information for a number of other businesses, many of which the city was surprisingly unable to locate in its tax records. These included a number of McDonalds restaurants built in suburban styles, a Home Depot which I had intended to contrast with a small neighborhood hardware store, several suburban and urban-style buildings that had Dunkin Donuts—which I figured is the ultimate in low-cost fast food—and a larger Whole Foods grocery store with even more parking which I was interested in contrasting with the smaller footprint one on Waterman Street. There were also several businesses in Olneyville that weren’t located.

Minicozzi emphasizes that it’s not just about how much value is created by an acre of land, but all the many extra costs that low-density development has.

“I think you have to ask yourself, what is the lifecycle cost of the road out front of the business? How much did it take to run sewer service across several acres of land for just one business, instead of connecting it ten feet from the next building over?” he asks. “If you’re in a nice three-story Victorian and someone just plops a gray box next to it, it’s not only about whether you dislike that box. Does that box pay its bills? I think the answer is no.”

Taxes in Providence are based on property values rather than land use, so some of the very small but very efficient businesses we studied pay very high taxes in relationship to the amount of infrastructure they consume.

I spoke with Nina Maxwell and Mike Giroux of Fertile Underground to get a sense of what one high-value-per-acre business pays in taxes. Fertile Underground pays $500 a month in taxes. But the costs to this small business go much further. “We pretty much have a permit for everything. I mean everything. There’s one for selling ice cream, and one for having chairs inside, and yet another for having chairs outside,” Maxwell says. “We had to pay the state a couple thousand dollars to put in bike racks on the sidewalk.”

When the zoning board in Providence approved the development of the McDonalds, alongside a Family Dollar of similarly sprawly style, it put forth the argument that while the businesses weren’t ideal, they were a step forward for a neighborhood with high unemployment. But the pattern of taxation and business-unfriendliness for small startups alongside bad land use and high consumption by sprawl businesses asks questions about whether that small-step-forward approach is exactly backwards. This isn’t helped when many of the officials in charge of directing policy admit to having no understanding of how these things work. Jim Bennett of the city’s economic development office testified at the meeting as follows:

You would think I would be supportive of this project because of the jobs, and there are jobs. I’ve checked it out, they’re accurate. The jobs particularly that are attuned to the minority community where we’re getting crushed.· We have probably the highest minority unemployment in the country; this addresses that issue. That’s not why I’m supporting the project.

You would think I’m supporting it because the property taxes are going to be raised between 5 percent and 10 percent. Several hundred thousand dollars, which could be used for infrastructure, schools. That’s a reason to be supportive of these jobs.

I went by and I got a picture of every building in Olneyville, every one. I looked at them and there’s not one business there that wouldn’t benefit by the increase in traffic. So that’s another reason to support it. However, my reason for being here … is that I do support the councilwoman who works with me at Providence Economic Development Partnership, who helped me get our loan program out of trouble with HUD, who I like to kiddingly call my assistant economic development director, who knows her constituency better than anybody. That’s who I support.

And lastly, and this is very important. Bob Azar, for 13 years he’s been involved with every major project in the city of Providence. The reason why this city is a jewel is because, part and parcel, of Bob and his staff. I have to tell you, I’m the director of economic development. I don’t know the first thing about zoning and planning and all this stuff, nor do I want to, but I’m a business person. I rely on the experts, that’s what I do. A lot of the work that Bob has done for 13 years here is seen around the city.

So Bennett’s points seem to be 1. I don’t know anything about this, but listen to me. 2. Things that expensive and harmful, like highway traffic through a low-car-ownership neighborhood, have only an upside without any counterbalance, and 3. I’m supporting this because my buddy in local government does. Very convincing.

Bennett initially agreed to set up an in-person meeting with me on behalf of ecoRI News to discuss the new development, but the morning of the scheduled meeting his secretary wrote to cancel, citing snow. I offered to do an interview by phone, and sent an e-mail with questions pertaining to the lifecycle costs of things such as Routes 6 and 10, the sewage overflow system that was just installed in Olneyville, the underground water pipes to the site and RIPTA efficiency. Bennett didn’t reply to requests for an e-mail or phone exchange.

At least one Rhode Island city has a different approach. Central Falls, located north of Providence, and itself quite a struggling rust-belt town, but the director of economic development for CF, who is also an Olneyville resident, spoke at the zoning meeting to recommend that the businesses themselves be approved, but only with the zoned urbanism intact. He said that Central Falls had been approached by a Family Dollar for its historic Broad Street and had insisted on no set backs from the sidewalk, and that Family Dollar had complied.

The Central Falls example gives one hope. In a state the size of Rhode Island—a state that also has the highest unemployment in the country, a shrinking population, and lots of unmet road infrastructure obligations around its neck—we should be able to get our heads wrapped around the idea that land is limited and has value that should be protected.

A version of this post originally appeared in a ecoRI on February 21, 2014.

Friday, February 21st, 2014

The Great Urban Divide, Michigan Edition

I’ve said many times that it is predominately larger metropolitan regions of 1-1.5 million people or larger that are best positioned to succeed in the global economy. This is in effect the minimum viable scale to compete. These cities have bigger talent pools, thicker labor markets, the right infrastructure (e.g., major airports) and amenities, bigger local markets, more specialized suppliers, and more entrepreneurial ferment. Smaller places that don’t have a unique asset (such as a major university) are going to struggle.

We see that on display again in Michigan, where Battle Creek based Kellogg’s is opening an operations center in Grand Rapids. This will employ 300-600 people, including some transferred from the headquarters. As the company put it:

Kellogg CEO John Bryant told The Grand Rapids Press/MLive they chose Grand Rapids for the new center after looking at nine possible locations around the U.S. as part of a new corporate restructuring initiative dubbed “Project K.”

Bryant said the company chose Grand Rapids because 40 other corporations have created similar service centers in the area, creating a labor pool from which Kellogg hopes to draw.

“We’re very excited about the Grand Rapids location. There’s a good population base for this sort of activity,” Bryant said.

Leaders in Battle Creek are angry about the company choosing to open in nearby Grand Rapids:

“This was a unilateral action by the Kellogg Company,” [former Battle Creek mayor and U.S. congressman Dr. Joe] Schwarz said Monday, “blindside, if you will. And that’s not the way people in Battle Creek, especially those that have been here a long time and worked with Kellogg on so many issues like myself, that simply is not the type of behavior we’ve come to expect from the company.”

At the time, Jim Hettinger was CEO of Battle Creek Unlimited. In a column for the Battle Creek Enquirer, Hettinger expressed his frustration over Kellogg’s announcement, saying the city has continually gone to great lengths to accommodate the company’s needs.

I understand the frustration, but at the end of the day, this is the reality of the modern world we live in. We see similar business decisions every day. Kellogg’s is in Battle Creek for historical reasons. There’s no way the company would ever choose to locate there today. The changing demands of the global marketplace create a need for skills that are easier to find in or lure to a place like Grand Rapids (metro population one million) than Battle Creek (metro population 135,000). That’s reality.

Note here that cost is simply not the issue. Both Grand Rapids and Battle Creek are lower cost locations. It’s clearly about being in a place that has better scale to serve the needs of a business serving upwards of 600 white collar employees.

This divergence understandably fuels resentment and bitterness within states, as I noted in a recent column in Governing magazine. I frequently find that to locals it’s particularly galling when a company does something like this within the state boundaries. Had Kellogg’s opened in Austin, Texas, I strongly suspect Battle Creek wouldn’t be nearly so bitter. I’ve long noted the same thing in Indiana, where smaller towns and cities would far rather see an out of state company buy their local bank or whatever than have an Indianapolis company come in. (Though I’ve also noticed this has changed for the better in the last 20 years). The reality is these jobs could have left the state entirely. Had Grand Rapids not been there, they probably would have.

This is one reason I have pounded the table for more expanded regional thinking by the likes of Grand Rapids. It’s not an easy problem, but if they can’t demonstrate that there’s a win-win in here somewhere for regional metros like Kalamazoo and Battle Creek, resentment will become entrenched. This can be difficult because the answers aren’t obvious and places like Grand Rapids – which itself is of marginal scale and what’s more not on the trade routes in the way a place like Columbus, Ohio is – are pedaling hard to just to make sure they themselves can make it. But longer term I think it’s imperative.

In the meantime, it’s important for state leaders to understand and respond to these realities. If they don’t, they will only drive business out of the state completely, just like effectively Indiana’s entire banking industry got gobbled up with little to show for it.

PS: One exception I’ve noted to this rule: Chicago. I didn’t seem to hear the same anger from Decatur over ADM that we see here. I think in part it’s because they understand Chicago is just a far different place than them. It’s such a unique city that losing a small executive headquarters doesn’t even seem like genuine poaching. Plus the entire leadership of the state is Chicago-centric, and and their top priority is building up global city Chicago.

Tuesday, February 18th, 2014

Providence: The Suburbanization of Olneyville by Jef Nickerson

[ Providence, Rhode Island was spared some of the worst of the urban renewal disasters and has a lot of intact neighborhoods. But there have still been some not entirely positive changes in the urban fabric in others. One such neighborhood is Olneyville. As you can see in this aerial, there's an old mostly intact neighborhood commercial center at the core, though with areas of demolition. The area is also cut off by a freeway.

In the piece below Jef Nickerson discusses a proposal for a strip mall in the area that would further degrade the urban fabric. (It's near the bottom left of the photo above). This is sadly what happens in many struggling areas where a desperate city approves suburban style "redevelopment" that's actually destructive to the only things giving the neighborhood appeal in the first place.

As an aside, I believe this development is across the street from the legendary Olneyville New York System Wieners. Somewhat oddly, the term "New York System" actually means "Rhode Island style." Here's a picture of the classic, complete with cheese fries and coffee milk (like chocolate milk, but made with coffee flavored syrup - another Rhode Island classic).

- Aaron.
]

mcdonalds-rendering
Rendering of proposed McDonald’s and Family Dollar store on Plainfield Street in Olneyville.

After learning of plans for a drive-thru McDonald’s proposed on Plainfield Street in Olneyville, I requested plans for the proposal from the Planning Department.

The developer is seeking master plan approval from the City Plan Commission for the construction of a McDonald’s and Family Dollar store in a separate building on a site which was cleared of existing structures last year.

mcdonalds-plan

Per the CPC agenda, the applicant seeks relief from front yard setbacks (they are requesting to set the building further from the street than allowed) and also for a special use permit for a drive thru for the McDonald’s. The applicant plans for a total of 56 parking spaces on the site (per the plans, 19 parking spaces in two rows between Plainfield Street and the Family Dollar Store). The McDonald’s is situated on a corner lot (Plainfield and Dike) with the drive thru lane wrapping around the building between it and the sidewalk. Pedestrian access to the McDonald’s is proposed to be via two crosswalks across the drive thru lanes and a third crosswalk from the Family Dollar store across the parking lot. Direct off-road pedestrian access to the Family Dollar store is only provided via crosswalks from the McDonald’s or via sidewalks crossing a driveway entrance on the Atwood side of the parcel.

According to ProvPlan, as of the 2000 census (the most recent data available) 59.5% of households in the Olneyville area have automobiles this compares to 52.5% Downcity. With such low car-ownership numbers, the residents of Olneyville are highly dependent on public transit, walking, and bicycles. Buildings separated from these forms of transit by parking lots with drive thru lanes are not the best way to serve this population. Olneyville is a major traffic artery to points west where car ownership rates are much higher (~80% in Hartford and Silver Lake). The residents of Olneyville should not be further burdened with automobile infrastructure catering to people outside their community.

The removal of the buildings at this site has widened a widened a gap in the street-wall along the south-side of Plainfield Street and Olneyville Square which only had small gaps between the Route 6 overpass and the eastern end of the square. For generations Olneyville has fallen victim to the automobile, first the highways, them the retail mindset that set in in the middle of the last century with places like the former Price Rite plaza, the car wash on Westminster, the Burger King with a drive thru and 60 parking spaces, and the gas station across from this site.

The Olneyville community has been working hard to bring street-life back to the square and Olneyville Housing are providing homes for residents who can walk to this area. Allowing auto-centric design at the southwest side of the square will make that area dead to walkability for generations more, just as we’re making progress on reversing prior generations of damage.

This isn’t about the proposed retailers (though I’m sure we could have a long discussion about the food choices we have in lower-income neighborhoods), this is about their physical manifestation in the neighborhood.

This post originally appeared in Greater City Providence on January 15, 2014.

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