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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.

Sunday, September 14th, 2014

The New Donut

Former Indianapolis Mayor Bill Hudnut used to like to say that “you can’t be a suburb of nowhere.” This is the oft-repeated notion has been a rallying cry for investments to revitalize downtowns in America for three decades or so now. The idea being that you can’t have a smoking hole in your region where your downtown is supposed to be. This created a mental based on a donut. You can’t let downtown become an empty hole. For reason that will become apparent soon, I call this model “the old donut”:

Filling in the hole became every city’s mission. Pretty much any city or metro region of any size has pumped literally billions of dollars into its downtown in an attempt to revitalize them. This took many forms ranging from stadiums to convention centers to hotels to parking garages to streetcars to museums and more. It’s popular today to subsidize mixed use development with a heavy residential component.

These efforts have paid off to a certain degree. Most big city downtowns have done very well as entertainment and visitor districts, eds and meds centers, etc. More recently we’ve seen an influx of residents, even in places where the overall city or even region has struggled or declined. Cleveland added about 4,000 net new downtown residents in the 2000s. St. Louis added 3,000. With most cities in some stage of an apartment building spree consisting of a few thousand units, these numbers should only improve.

Key weaknesses remain in private sector employment (declining in most places) and retail (not enough high income residents yet). And other than the tier one types of cities like Chicago, few places seem to have reached a sustainable market rate development level yet – pretty much everything is getting public assistance. Yet its pretty evident that most larger downtowns have made huge strides and are experiencing overall reasonable health.

In short, the donut hole has been filled in. Where does that leave us? I’d argue with a paradigm I call “the new donut”:

In this model, the old donut is inverted. What used to be the ring of health – the outer areas of the city and the inner suburban regions – are now struggling. Whereas the downtown is in pretty good shape, and the newer suburban areas are booming. (You might add in a fourth outer ring with troubles – these were the exurbs where very low-end housing proliferated because development standards were very low).

You see this in the population figures. Wendell Cox cranked the numbers and found that major metro areas gained 206,000 residents in the two mile radius from the center, but lost 272,000 residents from the 2-5 mile ring. Growth picked up strongly beyond that arc. This is the new donut area, though the start and end of it vary by metro and some have thicker rings of challenge than others.

We’ve got three decades of experience in downtown revitalization, but much less in dealing with this newer challenge zone. I’ve said that suburban revitalization may prove to be the big 21st century “urban” challenge. This is where it is happening in many cases. These areas have an inferior housing stock (often small post-war worker cottages or ranches), sometimes poor basic infrastructure, and are sometimes independent municipalities that, like Ferguson, MO, are often overlooked unless something really bad happens. Unlike the major downtown, they are often “out of sight, out of mind” for most regional movers and shakers.

What’s more, while downtown provides a concentrated location for massive public investment, this more spread out area is too big to fix by throwing money at it. And how many stadiums and convention centers does a region need in any event?

This is where we need to be doing a lot of thinking about how to bring these places back, look at what’s being done, etc. And also, given the inequality in the country, to try to think about ideas that don’t involve gentrification. One project that appears to be in this kind of zone, for example, is Atlanta’s Beltline project, though there’s a gentrifying aspect to this one. Regions that figure this one out will be at a big advantage going forward.

Friday, September 12th, 2014

If Cities Want to Succeed, They Need to Focus on What Makes Them Distinct

My latest column is out in the September 2014 edition of Governing Magazine. It’s called “If Cities Want to Succeed, They Need to Focus on What Makes Them Distinct” and long time readers will find the themes consistent with what I’ve long argued. Here’s an excerpt:

Bike lanes are great. But bike lanes are the civic equivalent of what might be called “best practices” in the corporate world. They are things every well-functioning city is now expected to have. They don’t, however, generate differential value or make a city any more competitive in the market. Just as you can’t build a successful company on simply a collection of best practices, it’s hard to build a successful city just on these things. You need them, but they aren’t enough. They are the new urban ante — just table stakes.

If we think of the places that have the greatest resonance in the public mind, it’s generally those places that are unique. People visit New Orleans or Las Vegas because no other place is like New Orleans or Las Vegas. There’s no place on earth like New York or San Francisco. If there’s nothing unique about your town, then your town is just a commodity. And we know that commodities compete on one factor: price. Being a commodity player leads to weak marketplace leverage. That’s why firms are always trying to differentiate themselves in a marketplace.

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.

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

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.

Sunday, July 27th, 2014

The Citizen Perspective on Smart Cities

One of the more highly touted concepts in the urbanism world is the idea of “smart cities.” Wikipedia says of the smart city: “A city can be defined as ‘smart’ when investments in human and social capital and traditional (transport) and modern (ICT) communication infrastructure fuel sustainable economic development and a high quality of life, with a wise management of natural resources, through participatory action and engagement.” The basic idea is “better urban living through technology”.

That smart cities has captured a huge amount of media and mindshare is unsurprising, given our technophilic society and the sums of money being spent by major corporations to promote it. But the smart city has proven to be elusive in practice and slow to materialize. What is it a city is actually supposed to do to become smart? And why haven’t we seen more of it?

As I said, smart city tech vendors have been making a major marketing push and so they are a fixture sponsors of conferences. Last month at New Cities, I saw several tech firms present their ideas on the topic, and it helped me understand more about why smart cities has proven elusive.

It’s already been observed that the citizen perspective is all too often missing in the smart city discussion. But listening to the providers in the space, it became clearer why. Namely because all of them are B2B companies who sell to the corporate C-suite and its public sector equivalent. They do not have a consumer heritage and thus they don’t have a lot of experience or heritage in end user applications, hence by default don’t see the city from the citizen perspective.

Think about a company like Cisco. Cisco sells most of the gear that makes the internet run. The people who buy their stuff expect it to work, all the time. They have to have carrier grade five 9’s reliability. These systems have to have the so-called traits of reliability, availability, and serviceability. They also have to be efficient and predictable in their operations. The idea is sort of like the Maytag repairman mentality. It just has to work.

This produces an operating model that would be, from the standpoint of a person, stifling or even dehumanizing. So it shouldn’t be any surprise the public and politicians by and large haven’t jumped in with both feet.

I want to stress that there’s actually huge value potential in this B2B, carrier grade type model. Not just Cisco’s business customers but all of us absolutely expect our phone to work and our internet to be up. All. The. Time. Comedians like Louis CK have skits mocking our entitled, unrealistic expectations about our technology (“I hate Verzion!”) The minute our home internet goes down, what do we do? Pick up our phones and start Tweeting about how much we hate AT&T/Comcast/Cox/etc. One reason we are so annoyed by them is that outages are so rare. Thank folks like Cisco for that.

Similarly, a Bombardier rep was talking at New Cities about his firm’s desire to sell managed services, not just trains, into the public transit market. If they were able to make trains run as reliably as phones work, there would be huge public benefit there.

So I don’t want to downplay the importance of that kind of stuff. In everything from water to 911 emergency dispatch, we need a whole lot of stuff in our cities to just work and work reliably. This necessitates the type of approach to gear and its implementation and management that comes from the B2B, sell to the CIO or operations manager mentality. It’s mission critical to public safety and quality of life.

On the other hand, that’s not the only type of application there is. Unfortunately, the smart city dialog has been dominated by it, with the exception of the open data movement, which I don’t generally see labeled as falling under the smart cities domain.

One thing I might suggest that these major vendors explore in trying to better capture the public imagination and drive uptake is to create a connection to the citizen by getting into some consumer businesses. Now this would be problematic strategically I know. Investors would probably hate it. But at least something small scale might be interesting. There’s probably a lot that could be learned.

Google is a B2B and B2C company, but one predominantly focused on software. They’ve been diversifying into hardware however, both by creating their own products like Google Glasses, and buying smart thermostat maker Nest. The latter I find particularly intriguing as these are in a sense a type of smart city application, but focused on the person in the city instead of back end infrastructure. Google is trying to learn the hardware space to be sure they don’t end up outflanked in the “internet of things.” (They are also getting into the infrastructure business as well though things like Google Fiber).

Potentially something like buying a Nest type vendor could be something these major smart city companies could do to put their toes in the water of the consumer space. Obviously any deal has to make sense from an investor perspective, but the idea here is that this is almost an R&D operation to create a pipeline of knowledge about the citizens of the city and what they value and how they live and create their lives. That then informs the smart city vision beyond efficiency and RAS, notably the “participatory action and engagement,” which is something you definitely don’t want on your router configuration.

This raises an interesting competitive question: will the majority of the profits in say the application of smart city ideas to energy efficiency go to someone like the smart meter vendor or to someone like Google/Nest? If I were the vendors in the space conventionally labeled smart cities, I’d be working hard to make sure the answer to that question was “me”. In the meantime, building relationships to citizens/consumers can help to shape the smart city idea into something with more marketplace uptake and public resonance.

For further perspectives on smart cities, see my previous post with my thoughts after I moderated a technology panel at Barcelona’s Smart City World Expo in 2012. Also, Adam Greenfield took a very negative view of the idea in his eBook that gives a different perspective on the issue.

Tuesday, July 22nd, 2014

Incrementally Transforming Kokomo Without Debt by Eric McAfee

[ Kokomo, Indiana is a small industrial city about an hour north of Indianapolis. It is one of the rare ones whose industry remains largely intact, with two large auto-related plants. This makes them different from the type of community that really has deindustrialized. Yet they fret that those who earn decent incomes in their town too often decide to live in the Indianapolis suburbs. Hence a program to upgrade quality of life in the city. It should be noted that while they've managed to do this without incurring debt, Kokomo arguably benefited more than any city in America outside Detroit from the massive federal auto bailout. Their civic improvements have in a sense been financed by a unique external windfall unavailable to others. Nevertheless, lots of places have received windfalls and spent them poorly. Cities may not be able to control our circumstances, good and bad, but they at least have some control over how they respond to them. This piece from American Dirt takes a look at Kokomo's response. Keep in mind it ran in 2012 and there are likely some anachronisms by now - Aaron. ]

Across the country—but particularly in the heavily industrialized Northeast and Midwest—smaller cities have confronted the grim realities of the unflattering “Rust Belt” moniker, and all of its associated characteristics, with varying degrees of success. With an aging work force, difficulty in retaining college graduates, and a frequently decaying building stock, the challenges they face are formidable. Cites from between 30,000 and 80,000 inhabitants typically boomed due to the exponential growth of a single industry, and, in many cases, the bulwark of that industry left the municipality nearly a half century ago, for a location (possibly international) where the cost of doing business is much cheaper. Essentially, everything the smaller Rust Belt cities had to offer is completely tradable in a globalized market; the resources that provided the town’s life blood are either depleted or are simply to expensive to cultivate further.

Reinvention is the only condition likely to save many of these cities from persistent economic contraction, but, with an overabundance of retirees and older workers, these towns lack the collective civic will that could be expected in larger communities with more diversified economies. An absence of young people intensifies (and, to a certain extent, justifies) the low level of civic investment in one’s own community; after all, if a resident is six months from retirement, how likely is it that he or she would support public investments intended to improve quality of life for twenty or thirty years into the future? For that matter, how likely will a population of retirees remain engaged to encourage or challenge major private sector investments as well?

By no means am I intending to denigrate needs and ambitions of the senior population; I’m merely observing that a stagnant Rust Belt city with this demographic profile will demonstrate vastly different priorities from a city rife with young families. While every Rust Belt city large and small must avoid obsolescence that results from the spoils of globalization, the smaller cities—which have tended to be dominated in the past by a single thriving industry—are less likely to claim alternative sectors and labor pools if their primary manufacturing lifeblood fails. A dying city of 80,000 may not exert the same impact within a region (particularly in the densely populated Midwest and Northeast) that a city of 500,000 would, but it is far more of black eye for the state than a town of 2,000 that has lost its raison d’être. This conclusion is obvious.  Many of these small cities must reordering of their economies comprehensively; while the state, the county, or private foundations may offer some outside help, the constituents of these cities themselves are typically the best equipped to understand how their city should evolve. Unfortunately, many of these communities aren’t yet even aware of the need for this reinvention, let alone which avenue to pursue in order to achieve it.

It is with no small amount of reassurance that I can assert that Kokomo, Indiana is not one of these latter cities.

No Rust Belt complacency on display here in the City of Firsts. Though as recently as 2008 it was on Forbes’ list of America’s Fastest Dying Towns, a recent visit shows much more evidence than I’ve seen of some comparably sized cities in the region that the civic culture is neither resting on its laurels nor wringing its hands about how much better things used to be. In fact, one of the Indianapolis Star’s leading editorialists, Erika Smith, recently visited the city, and, after receiving a tour from the Mayor, was pleasantly surprised by how proactive it has been in implementing precisely the type of quality-of-life initiatives largely perceived as necessary to help a historically blue-collar city stave off a brain drain or descend into irrelevancy.

I, too, recently received the Kokomo tour, followed by a meeting with Mayor Greg Goodnight, and I can also recognize some of the city’s most impressive achievements at shaking off the post-industrial malaise that saddled the city with double-digit unemployment rates as recently as a few years ago. Since then, the city has introduced a trolley system at no charge to users; prior to this initiative, the city had had no mass transit for decades. The Mayor pushed successfully to annex 11 square miles in the town’s periphery, therefore elevating the population by about 10,000 people. The Mayor’s team worked to convert all one-way streets in Kokomo’s downtown to two-ways, recognizing that accommodating high-speed automobile traffic in a pedestrian-oriented environment only detracts from the appeal. The team has restriped several miles of urban streets to incorporate bike lanes, and it has converted a segment of an abandoned rail line into a rail-with-trail path, branding it by linking it to the city’s industrial heritage. They have deflected graffiti from several bridges and buildings through an expansive and growing mural project. They have upgraded the riverfront park with an amphitheatre and recreational path. They have introduced several sculptural installations, the most prominent of which is the KokoMantis, a giant praying mantis made entirely of repurposed metal and funded privately. And my personal favorite: with the support of the City, the school superintendent has integrated a prestigious International Baccalaureate (IB) program to the public school system, including an international exchange program for young men from several foreign countries (a girls’ program should arrive in the next year or two) who live in a recently restored historic structure in Kokomo’s walkable downtown, attending demanding courses that bolster their chances of admittance in a coveted American university. Most impressively, the City of Kokomo has achieved all of this without incurring any public debt in the past year.

Obviously the individuals offering me this tour are going to make sure their Cinderella is fully dressed for the ball, and I recognize that not a small amount of the securing of certain infrastructural projects and transportation enhancement grants requires a political savvy that the current civic leadership has in abundance. And I don’t want to rehash Ms. Smith’s article, which more than effectively chronicles this approach at a macro level. In addition, Erika Smith recognizes, as do I, that very few of these initiatives (the IB foreign exchange program notwithstanding) are really particularly earth-shattering. But when most other similarly sized cities in the Midwest seem to be engaged in a race to the bottom, luring new industry through generous tax breaks (often initiated at the state level), Kokomo seems to recognize that a town lacking any amenities outside of low cost of living has to compete with dozens of other cities in Ohio and Michigan and Pennsylvania, and elsewhere in Indiana, that offer the exact same brand. Whether this investment yields a long-term return remains to be seen, but it certainly demonstrates the right gestures necessary to instill civic stewardship in a place whose decades of job loss have seriously scratched its mirror of self-examination.

What ultimately struck me about Kokomo—which Erika Smith only touched upon—was the level of design sophistication evident in some of these civic projects. I need only focus on a single location in the city, in which two particularly laudatory techniques are on display. At the intersection of Markland Avenue and Main Street, just south of downtown, the Industrial Heritage Trail begins its journey southward. Here’s a view as the trail terminates at its junction with those two streets, looking northwestward:

Here is a view in the other direction:

Continuing a bit further in this direction, one encounters this painted wall:

And, pivoting slightly to the left, another mural that is still in progress:

This photo series identifies two amenities that stand out for the astute decision-making that apparently took place during the implementation. The Industrial Heritage Trail clearly operates in a railway corridor, but it is not a rail-trail. Unlike the more common rail-trail conversion, this Kokomo trail did not incorporate the removal of the original rail infrastructure. The Rails to Trails Conservancy would label this approach a rail-with-trail, indicating that the trail shares the railway easement, typically separated by fencing. Rail-trails such as the Monon Trail in metro Indianapolis are still the more common practice. However, a growing number of communities are embracing rail-with-trails, not only because they obviate the need for costly removal of rails, ties, and ballast, but they reserve the rail infrastructure for the possibility that a railroad company may reactivate the line in the future. If the sponsors of Kokomo’s Industrial Heritage Trail had removed the infrastructure, the possibility of ever reintroducing rail along the corridor would be virtually nil. As it stands, the only conceivable disadvantage to rail-with-trails is that, in the event a rail company reintroduces train service, its close proximity to the path may prove hazardous to bicyclists or pedestrians. Otherwise, the decision to retain the railway not only helped to diversify options, it most likely saved a considerable amount of money.

The other smart decision was the site selection for those murals. The ones featured in the photos above are part of a growing mural campaign that the City of Kokomo introduced, and every one that I recall shows real foresight in the locational decisions. What makes them so good? The murals in the photos above front a public right-of-way, minimizing if not completely precluding the chance that later development will conceal them. I blogged a few years ago about an excellent mural in Indianapolis that showed wonderful care and craft in the entire implementation process…except where the conceivers chose to locate it. Not only did they paint on a cheap, cinder-block building that will likely tumble down if market pressures encourage new development in the neighborhood, but the mural also faces a vacant lot which is large enough to host a new structure that would block it completely, no doubt frustrating the community and pitting them against a developer.

Compare this to Kokomo’s murals. Here’s one a little further south on the Industrial Heritage Trail:

Again, it fronts the trail itself—not a chance that a developer will try to block it. And here’s another along a bridge underpass for the recently completed trail along the Wildcat Creek:

The original intention of the mural was to repel vandals at spot that previously suffered from it frequently; this approach has proven successful in locations across the country.  But it also sits in a park along a new greenway, so it should remain in perpetuity. Granted, Indianapolis has plenty of murals along retaining walls and buildings that front the aforementioned Monon Trail. Those, too, should survive far into the future. But in recent years, the City of Indianapolis has encouraged countless murals on the side walls of commercial buildings—sites where a blank wall faces a parking lot, where a building once stood. While these bare walls often scream for some ornamentation to help distract from what used to be there (another adjoining building), in many instances the parking lots will likely fall under increasing development pressure in upcoming years. Will the locals thwart development in order to save the mural? This remains to be seen, and I don’t want to base too much of an analysis on speculation. But it’s hard to deny that these public art investments seem less astute than the once I witnessed in Kokomo.

One could argue that Kokomo is merely taking advantage of the fact that it is jumping into the game relatively late; it benefits by learning from the mistakes of others. But decisions that stand the test of time also contribute their fair share to foster civic goodwill. Taxpayers are rarely too forgiving of poorly conceived projects, and several successive blunders, no matter how small they may be, demonstrate poor accountability. Only time will determine the return on investment, but Kokomo certainly has a leg up on many of its competing small cities. My suspicion is, if these projects stimulate the discussion and enthusiasm for proactive leadership that they suggest (Mayor Goodnight was re-elected last year by a landslide), the citizens of Kokomo are only beginning to stoke the fire.

This post originally ran in American Dirt on November 16, 2012.

Thursday, July 17th, 2014

Germany Also Having Big Problems Building Infrastructure

Der Spiegel had an interesting article this week called “Angry Germans: Big Projects Face Growing Resistance.” The article (linked version is English) talks about how it is increasingly difficult to get infrastructure projects built in Germany.

Wherever ambitious construction ventures loom on the horizon in Germany — from the cities to the countryside, from the coastlines in the north to the Black Forest in the south — opponents are taking to the streets…. As the public’s enthusiasm for constant innovation has lessened, so has the appeal of these sorts of projects, and, as a result, they now inevitably come accompanied by picketers. Germany’s graying society, it seems, is so cozy and settled that it resists anything threatening to upset the status quo. In the process, it has lost sight of the bigger picture.

There are a lot of key points in this article that immediately raised parallels to the United States, where infrastructure projects are also under increasing siege. In fact, some of this reminded me of elements of the Tea Party movement. The protestors are uninterested in compromise. They are devoted, full time activists who are unrelentingly opposed to the projects in question:

[Hartmut] Binner’s form of protest has a radical undercurrent: Well-informed, confrontational and devoid of respect for authority, he is typical of the new grassroots activism spreading across Germany.
….
Binner’s entire life revolves around the campaign. He monitors the routes of departing and landing planes. He plays his self-designed noise simulator on market squares. He kicks off his court appearances by singing the Bavarian national anthem. “If you want to be heard as a member of the public, you need to push the envelope,” he shrugs.

These days, he sees grassroots protests, activism and political responsibility from a different perspective. “The typical protesters are gray-haired, know-it-alls and very networked,” [Freiburg Mayor Dieter Salomon] says. “But they’re not remotely interested in consensus-building, political processes and pluralism.”

Grassroots groups have become so livid, intransigent and single-minded that even the most respected politician in the country, Angela Merkel, is feeling their sting. In early May, hundreds of furious residents had gathered in central Ingolstadt to protest against the construction of a power line from Bad Lauchstädt in Sachsen-Anhalt to Meitingen in Bavaria.

This certainly reminds me of the no-compromises view of the Tea Party. Also, a number of early American Tea Party activists were unemployed, and thus able to basically be full time activists. Even the singing of national anthem has echoes of the Tea Party and their tricorn hats. I don’t want to claim there’s a philosophical or other link between the Tea Partiers and Germany, however.

Not everything lines up with the Tea Party, however. In Germany it seems to be disproportionately retirees who are the most engaged and militant:

Germany’s graying society, it seems, is so cozy and settled that it resists anything threatening to upset the status quo. In the process, it has lost sight of the bigger picture.

Many of the protestors are pensioners with no vested interest in Germany’s future. “It’s striking that the leader of the protests against the Munich runway is a 75-year-old and not someone in the middle of his working life,” [Munich Airport CEO Michael Kerkloh] points out.

Salomon’s nemesis is Gerlinde Schrempp, a determined and argumentative 67-year-old retired teacher with attitude to spare. She’s the leader of the Freiburg Lebenswert movement, which translates roughly to “make Freiburg worth living in. The movement just got elected on to the district council and is first and foremost opposed to any new building in the city.

There’s a stereotype out there of the average Republican voter as an old white guy. But the average Tea Party activist I’ve seen tends to be working age. I look at this one a bit differently. We need to see these types of controversies against the substrate of an aging population. Aging populations are not noted for dynamism, and older people’s self-interest is better served by starving investment for the future in order to save money and avoid uncomfortable change in the present. As a country whose population is projected to decline into the future thanks to this demographic inversion, we are seeing in Germany what’s likely a preview of coming attractions elsewhere around the world.

Indeed, I’m reminded of what one analyst friend of mine in Indiana has said about the property tax caps there. He sees the push to cap property taxes as driven by an aging population in a stagnant state. Old people generally aren’t earning a lot of taxable income nor are they buying huge amounts of stuff, so they are disproportionately less affected by income and sales tax hikes, whereas they often own homes and are hit hard by property taxes. Thus property tax caps serve as another income transfer mechanism from young to old, holding revenue constant. They are in part an artifact of an aging society. Disinvestment in infrastructure can be seen in the same light.

But there’s another part of this that shines a light on yet another group of opponents, namely the intelligentsia.

The term “Wutbürger” (“enraged citizen”) was coined during the Stuttgart 21 fiasco to describe people like Hartmut Binner, and much has been written about them since. They often aren’t the “common man.” According to the Göttingen Institute for Democracy Studies, they tend to be highly educated people with steady incomes and white collar jobs. And while protests movements of the past were often steered by sociologists, today their leaders are more likely to stem from the technical professions, the researchers found.

When we look at opposition to infrastructure in the United States, at least certain types of infrastructure, we see a similar profile of people (though not necessarily technical) behind it. It’s the leftist intelligentsia that oppose the Keystone Pipeline, suburban highway projects, fracking, and many other types of things, often with a militant unwillingness to compromise similar to the Tea Party.

As with Germany, this opposition is enabled by environmental reviews and public participation laws that, while they serve important public purposes, make it easy to delay projects for years through repeated objections and scorched earth litigation. Traditionally environmental lawsuits were associated with the left, but conservatives have started saying, why not us too? Hence litigation against San Francisco’s regional plan. The Hollywood densification plan was recently overturned by lawsuits, and lawsuits have plagued California’s proposed high speed rail line as well.

Whatever the project, it’s sure that somebody on the left and/or the right hates it, and thus will do everything in their power to kill it, which probably means years of delays and untold millions in increased costs.

Also as with the United States, German governments have shot themselves in the foot with a series of financial debacles:

Political and bureaucratic bodies are partly to blame for their own diminished authority. Every major venture seems to entail spiraling costs. Berlin’s new airport was supposed to cost €1.7 billion, a price tag that has shot up to well over €5 billion. Meanwhile, the €187 million earmarked for the Elbphilharmonie concert hall under construction in Hamburg is expected to exceed €865 million by the time the project is completed. Albig is well aware how bad this looks. “People see us as financially incompetent,” he says.

Until politicians can convince the public they have a handle on this, the taxpayer will remain rightly skeptical of many major megaprojects. This is doubly true since it’s very clear, as has been documented by folks like Oxford professor Bent Flyvbjerg, that in many of these cases the politicians were simply lying all along about the real costs.

I’m not sure what all the takeaways are, but there are clearly many forces operating on a global basis to inhibit the development of infrastructure in the West.

Wednesday, July 16th, 2014

Paul Romer: Urbanization as Opportunity

NYU Economist Paul Romer gave a great talk at last month’s New Cities conference in Dallas. Called “Urbanization as Opportunity,” it’s now online and I’ll embed below. The first 2-3 minutes are warm up then it really gets going. Great stuff around crime, public space, etc. If the embed doesn’t display for you, watch on You Tube.

There are large number of additional New Cities videos online should you wish to browse them.

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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