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Hard up for a depressing, Rust Belt story? Come to Youngstown, Ohio, where the steel mills packed up and left years ago, taking much of their population and quality of life with them. At least, that’s the theme national media has clutched onto ever since Bruce Springsteen acknowledged its sad reality with his morose ballad, “Youngstown.” But rumors of redevelopment and pockets of young professionals determined to rebuild this once great steel empire reached me up in Cleveland. As a Rust Belt junkie myself, I had to check it out.

“A dangerous shithole,” is how David Jason, a former Youngstown area resident, described the city. “Wish I could say something nicer.” To be fair, he had been car jacked there. Twice. The freakin’ Dalai Lama himself would struggle to look back fondly on a city after a couple of brushes with death. And it’s not just David. Crime and poverty are tremendous problems in Youngstown. The steel industry was the city’s golden goose. Without it, the city has struggled to find itself and adapt to the new economy. But before I continue this 20/20, gloom and doom exposé, there was a time when Youngstown was booming. And there’s no better place for a glimpse at its once prosperous hour than The Museum of Labor and Industry located downtown in the Youngstown Historical Center.

My Aunt Barb, a fellow Northeast Ohioan who will travel to just about anywhere with me, drove us straight to the museum after a quick breakfast in Cleveland. We were both legitimately excited to take a walk through steel history. But first we were greeted with the harsh realities of the steel mills of today, an appropriate mix with the day’s cold temperatures and gray skies. Shortly after passing the “Welcome to Youngstown” sign on I-680, we were surrounded by ruins of the city’s former economic powerhouses. There were a plethora of dilapidated buildings that make the Coliseum look in business.

Shortly after our haunting ride around the mills of yore, we made it to the museum. Sadly, locked doors met us and a taped sign that read, “CLOSED.” I had the hours right, but apparently missed the bit about being closed the week between Christmas and New Years. Crap.

Barb went to warm up in the car while I wandered around for a bit, snapping a few photos of what looked to be downtown Youngstown down the hill. I also stumbled upon an Ohio Historical Marker statue recognizing the Little Steel Strike. It was through their efforts that gave their union recognition and the right to collectively bargain with steel companies.

While I was busy impersonating Ansel Adams, a white van pulled up in front of the museum. Campus security for nearby Youngstown State University, perhaps? Getting cold, I hopped back into the car and we slowly pulled away, stopping briefly to wave down the woman in the van and explain why we were the lone vehicle in the parking lot.

We gave a brief sob story about how we came out from Cleveland to see this museum and were sad to see it closed. Well good thing we stopped, because turns out this lovely lady was waiting for security to let her in and finish a painting project she had been working on as a volunteer. “I’d be happy to let you in,” she said. Score! Labor and industry was a go.

Shortly thereafter, security arrived and let us all in. I quickly began making my way around the museum. Wow, to put it lightly. Granted I’m a nerd for history and particularly Rust Belt lore, but even the most jaded field trip traveler would have to admit the museum was put together beautifully. Relics of the steel industry were positioned perfectly, with actual equipment left in tact to give you a vague sense of what it was like to work in those Hellish conditions.

The displays described life as a worker in the steel mills before and after unionization. They shared stories of racism experienced by black folks who moved up from the South for work and the prejudices immigrants had to deal with on a daily basis from so-called “natives.” Evidently natives weren’t too keen about folks moving in to work thankless jobs for less money. Sound familiar?

It’s odd how a museum can take something so unromantic and romanticize the lifestyle and time period to the point where you wish you could live the life for just one day. When in reality, there’s not a chance in Hell I’d last a day in those mills. And neither would you. Hell, I’d love to send Kim Kardashian and Donald Trump to their reality TV show death down there. Suffice it to say, The Museum of Labor and Industry is must stop for any history and/or Rust Belt buffs.

As we approached the final room, we stopped to chat with Doreen Moore, the incredibly kind painter who made our museum visit possible. We were lucky enough to hear her version of a mid-life crisis – a story worthy of its own documentary or feature article. Surprisingly enough, Doreen hails from Northern California near the Oregon border. She described her corner of the Golden State as a foggy area that never gets colder than 40 or warmer than 70-degrees. Like most Americans, Doreen was stuck in a job that simply wasn’t for her in a state she didn’t feel she belonged in. “I never felt like a Californian,” she told us.

Years before her eventual move from California, Doreen found a program at a small Voc-Tech in St. Clairsville (Belmont Technical College) that offered degrees in Building Preservation/Restoration. After years of being looked down on because she didn’t have a college degree, she decided enough was enough and put her house on the market. It sold it for over $250K in just four hours. Not a bad profit, considering what she paid for it. Within two years, she was ready to move onward and upward and enrolled at Youngstown State University in a city she had never so much as driven by. With cash in hand, she bought her Victorian dream house, spending about as much as you’d spend on a good used car.

Now Doreen finds herself happier than ever, chasing after her masters and “madly, hopelessly” in love with a man who found Youngstown under similar circumstances from Seattle. With the crap Hollywood continues to churn out, her story is one that at least deserves some consideration from the studio bigwigs.

Our next stop was the Lemon Grove Café, a spot I had heard of from Youngstown transplants as the heart of their rebuilding downtown on West Federal Street. They advertise themselves as a “café, art gallery and organization devoted to the economic and cultural Renaissance of Youngstown, OH.” Admirable aspirations, but I honestly expected a tiny café with some basic drink selections and a few pastries to choose from. I was wrong. So wrong, it’s laughable.

This was not just some café that would be lost in a sea of yuppie joints in New York City. This was an establishment like nothing I had seen before in any city I’ve lived in or throughout all of my travels. And anyone was welcomed! Young and old mixed with different ethnicities, giving the place an incredibly welcoming feel. Surrounded by what I imagine was local art, Lemon Grove is the mecca for any creative type or simply anyone who enjoys the fruits of creativity. And the place is open until 2am, seven days a week! They serve breakfast, lunch and dinner throughout the day and are always hosting live musical acts for their late night patrons. Did I mention they also sell booze? Yes. Yes they do. It’s a place you never have to leave. Have breakfast, work on your computer throughout the day, have lunch and dinner, then stay for drinks with friends and rocking out with local tunes. I dare call this place… Heaven. And that’s no hyperbole, my friend.

After leaving the Lemon Grove, I paused to look around Federal Street. No, it’s not currently a street that would rival a thriving big city or a successful small town, like Traverse City. But the pieces are there. Studying the surroundings, I had what I’m going to call A Beautiful Mind moment. It wasn’t difficult to see what this place can become in the foreseeable future, thanks in large part to the success of the Lemon Grove. And they weren’t just voices in my head. Local business owners and investors are working hand-in-hand to make the dream a reality. In fact, the latest addition to downtown will be the partial demolition and restoration of the Liberty-Paramount Theater. Closed in 1976, the building quickly fell into disrepair, but was saved when the property was listed on the National Register of Historic Places in 1984. The restored building will be a music venue with a restaurant and cabaret bar in the basement and two movie theaters in the balcony. Clearly the city is making an effort to save the unique architecture featured in their buildings and restore them for the 21st Century. It’s hard to find a city whose suffered tremendous population losses willing to reinvent their past. My beloved Cleveland has fallen into the trap of demolishing history in favor of something new and shiny (Columbia Building, anyone?). Hats off to the leaders making it happen in Youngstown.

Less than a mile from downtown and over the Mahoning River is Rust Belt Brewing Company. Usually when I travel (okay, not usually), the first thing I do is look for local breweries. This is Youngstown’s.

Rust Belt is a small operation catering to nearby Rust Belt towns, most notably Pittsburgh, although I’ve seen and enjoyed their brew in Cleveland, too. The crew was busy bottling when we popped in and were nice enough to give me generous samples of all their brews before making a final decision on a purchase. While tasting, they explained they’re a young brewery, but continue to see 40% growth on a yearly basis with grand aspirations for the future. But in Youngstown, success comes with frustration.

You see, Youngstown, like most cities in Ohio, has been pulverized by suburban sprawl. With that suburban sprawl comes a more often than not irrational fear of the city. So much so, Rust Belt’s brew crew laments the cold reception nearby suburbs have given their humble operation. They simply refuse to come out and work with them, hiding behind their preconceptions of the city from the comfort of their big-box home. There’s no doubt Youngstown has its problems with crime and poverty. I don’t think I met anyone who has tried to hide that. But refusing to work with the urban core that made the suburbs successful in the first place is pretty damn criminal if you ask me. It’s heartless at the very least and a problem all Rust Belt cities are faced with. I can’t tell you how many times I personally have been told, “Hope you don’t get shot” for living in downtown Cleveland, an arguably safer area statistically than many suburbs. Hell, someone told me they hope I don’t get shot when I said I was going to Youngstown. The sooner Youngstown’s suburbs wise up and work with the city, the better for all parties involved.

After a nice conversation and tasty samples that left me with a bit of a buzz, I ordered a growler of the Rusted River Irish Red Ale. But I honestly couldn’t have gone wrong with any of the beers. Great stuff all around. I then went outside to take in the view of the Mahoning River, accidently scaring the crap out of a flock of ducks in the process. It’s a sight I’m sure Rust Belt’s brewers wish they could show suburban leaders as they talk distributing their beer. I guarantee it’s a view they wouldn’t expect to see in the heart of the city. Don’t get me wrong, it’s not the Alps or anything, but it’s a peaceful sight in its own right.

We then hopped back into the car, onto Mahoning Ave. and on our way out of town. On the way out, we swung through Idora neighborhood along Mill Creek Park – a sprawling beauty many say rivals some of the nation’s national parks. But driving through Idora, it was clear how much the neighborhoods were struggling. Abandoned, dilapidated homes were as prevalent as foreclosure signs. A few gems stuck out, though, along the park which is how Barb remembered the area from when she went to Idora Park as a kid for family get-togethers.

Our last neighborhood was on the north side, where it was clear old homes were demolished with new properties rising in their ashes. Every little bit helps, but it’s the work being done downtown and with Rust Belt Brewing that proves most inspiring, giving hope to the locals both young and old who have stuck their flag in the ground, dedicating their lives to the economic and cultural Renaissance of Youngstown.

The optimist in me can see a day where Youngstown becomes a cheap, small-city alternative to Cleveland and Pittsburgh much like how Akron has rebuilt its downtown and some nearby neighborhoods as destinations for young professionals. Slowly but surely, the pieces are coming together. Who knows; perhaps one day the Boss will write a follow up song noting the cultural Renaissance of Youngstown, where the people have left the fiery furnaces of Hell and are doing Heaven’s work well.

The Brookings Institution just released a gigantic report called “The State of Metropolitan America.” This is a hugely ambitious and important study. Brookings examined changes in the characteristics of the top 100 metro areas in the United States from 2000-2008 across a wide range of domains with all sorts of interesting findings. The report is so overwhelming that I don’t think anyone can claim to have fully digested it yet. So my own comments should be seen as preliminary. Congrats to Brookings for this undertaking.

Increasing Urban Diversity

Among Brookings key findings is something I’ve been stressing for some time, namely how different metro areas are. This diversity only seems to be increasing over times. As they put it:

In some ways, large metropolitan areas actually became more different from each other in the 2000s.
…
The 100 largest metro areas span a wide range of social, demographic, and economic experience. Across the nine subject areas of this report, enormous differences separate the metropolitan areas with the highest and lowest rankings in 2008.

We’ll come back to the policy implications of this.

New Urban Typologies

Among the big splash items in the report – and clearly one Brookings is stressing – is their new typology of American metros. Before I describe that, it’s worth backing up to see the way cities were often grouped together in the past, namely regionally. Brookings did a report back in 2006 called “The Vital Center” which talked about the critical importance of the Great Lakes region. Here’s a graphic showing that study’s geographic construct:

It’s a clearly regional construct. It’s also obvious it is that this report was written by someone from Michigan.

Here’s how Brookings looks at cities today. Pay particular attention the classifications of cities in the Great Lakes area.

Note the many variations of urban areas within the Great Lakes. Before discussing the Brookings typology in detail, it’s worth looking at what they said about this particular matter:

The notion of a unified ‘Rust Belt’ stretching across large portions of the Northeast and Midwest overlooks the important factors that distinguish populations in Rochester, Cleveland, Indianapolis, and Chicago from one another.

Amen. Brookings is silent on what this report means for their previous construct, but it is notable that they used the term “Rust Belt” not “Great Lakes”. This particular excerpt makes it sound like they have decided to go in a very different direction.

Brookings characterizes metros into seven types based on three characteristics: population growth, educational attainment, and diversity. Their list is:

• Next Frontier – Scoring high on all three categories, these are the ones Brookings say are the most demographically advantaged. It includes places like Seattle, Denver, and the Texas Triangle, and are mostly in the West.
• New Heartland – Similar to Next Frontier but less diverse, including Portland, Columbus, and Charlotte.
• Diverse Giant – Slow growing, but educated and diverse regions, mostly made up of America’s Tier One cities like New York and Chicago.
• Border Growth – Areas mostly along the Mexican border with strong growth from immigrants, but low educational attainment
• Mid-Sized Magnets – Similar to border growth, but apparently growing from domestic migration, since they are less diverse.
• Skilled Anchor – Cities like Cincinnati and Pittsburgh that are educated, but growing slowly and without much diversity.
• Industrial Core – Classic Rust Belt type cities ranging from Cleveland to Birmingham with low growth, low educational attainment, and low diversity.

Like all classification schemes, this one has its questionable cases, but I think it broadly captures some important differences between cities. It also makes the very important point that cities ought to be viewed by their attributes as much as by their location. Birmingham and Memphis may be in the South, but they are every bit as much Rust Belt cities as their Midwest brethren.

Now as it turns out, most of these classifications are geographically clustered. Only Diverse Giant and New Heartland are really a national phenomenon. Still, the Midwest area does have a diversity of places.

I was particularly struck by how Brookings Midwest classifications matched almost exactly my classification from a year ago into Global Cities, Successful Cities, Stable Cities, and Struggling Cities. Here’s the cross mapping:

As you can see, we only disagree on two cities. And if I must say so myself, I think my classification is more accurate for those two. Unlike Brookings, I used a single variable – population growth – with thresholds for bucketing. But I did cheat by putting Chicago in its own category arbitrarily. So Brookings has me there. Chicago’s population growth would have put it as “Stable” in my schema.

The only difference between Skilled Anchor and Diverse Giant is diversity. But I don’t think that’s what really separates a Chicago or New York from St. Louis or Milwaukee. The real difference is their economic structure. The Diverse Giant group is actually mostly so-called “global cities.” They’ve got a skilled core of very high value services that is going well surrounded by a large zone that is at best hanging in there. Other than perhaps in Miami, the diversity angle seems to be a legacy of their status as port of entry more than anything. If we looked at this economically, you’d probably boot Honolulu (an outlier in any US scheme), and add Boston. But of course, as I said, any classification done by metrics generates border cases.

Local Policy Implications

Let’s turn to the policy implications of this, first on the local side. Does this mean that the idea of traditional regional policy is dead? Jim Russell seems to think so. I’m not so sure.

I think there’s a difference between typologies of cities and how you integrate economically. Places in the New Heartland class, for example, might have much to learn from each other, might benchmark against each other, etc., but it doesn’t necessarily go beyond that. And while cities in a region may be very different, that doesn’t mean they can’t collaborate or economically integrate. Indeed, being different helps there through better enabling specialization.

I’m basically skeptical of the mega-regional concept, but can appreciate the virtues of both approaches. For example, Longworth’s pan-Midwest cooperation approach could be very useful in areas like creating a high speed rail network or promoting better collaboration between Big Ten universities. And it seems reasonable that regional relationships with Chicago would make a lot of sense. But Russell is right that so long as the world sees the Midwest region as a region, as the “Rust Belt”, it cripples these places. The world needs to understand that Columbus isn’t Toledo. Right now only Chicago, because of its longstanding huge size and history as having an independent standing in the world, can punch through the scarlet letter that is the Rust Belt label. Columbus can’t do that easily. In a sense, to start recovering, we have to blow up the idea – externally at least – that everyplace in the Midwest shares the same meta-narrative. We also have to recognize, as Russell stresses, that economic networks are now global in nature, and there are all sorts of diverse circuits in which cities can participate.

Federal Policy Implications

As a DC think tank, Brookings obviously stresses federal policy. In this case, they promote a bifurcated view: a federal policy that deals with common themes and issue, and state and local policy that deals with the different and granular issues.

National policy makers have the unique obligation to address aspects of the five new realities that affect all metropolitan areas, or are simply beyond metropolitan area’s own capacity to tackle. As this report demonstrates, however, different challenges assume varying levels of prominence in different types of metropolitan areas. Leaders at the state, regional, and local levels must now more than ever understand and respond purposefully to the demographic, social, and economic changes most affecting their places.
….
National policy will be necessary, but not sufficient, for addressing the wide range of challenges facing metropolitan areas. Indeed, the increasingly distinct profiles of major metro areas along the key dimensions outlined in this report demand that their own agendas – at the state, regional, and local levels – confront the issues most pressing to their own futures.

The Brookings five new realities are Growth and Outward Expansion, Population Diversification, Aging of the Population, Uneven Higher Educational Attainment, and Income Polarization.

I recently wrote a piece on a federal policy for cities in which I said that federal policy itself must address the increasingly unique needs of metros. I’m not sure that we can just keep the common elements at the national level punt the distinct items to the state and local level. Generally I’m a fan of devolution. However, in this case what we are really talking about is devolving de facto to the states. And as we’ve seen repeatedly, state governments are to varying degrees implicitly or explicitly hostile to cities. There are almost no effective or empowered regional entities in America and municipalities are often hamstrung by state laws that limit their ability to deal with their own problems. In a choice between federal vs. state government, I’m usually a state and local kind of guy, but when it comes to metro policy, I’d probably have to say the feds are more likely to get it right, alas.

Beyond that, the new geography Brookings highlights goes a long way towards explaining why we’re gridlocked on so much policy at the national level and why we’ve got to grasp the nettle of urban/sub-national diversity at the federal level. The problem isn’t just one of partisan gridlock, it is that these different metros and their states really do live in different worlds and as a result have very different policy points of view. Back in the Eisenhower era, pretty much everybody – even big city mayors – wanted freeways. That created policy consensus. Today, there are not only philosophical disagreements, there are also legitimate differences of character and need between these metro areas. I don’t think we’ve fully grasped the implications of this. Along with things like income polarization, what’s happening is that the American commonwealth is tearing apart. Our fortunes are no longer as linked as they once were. A rising tide won’t necessarily lift all boats, and what’s good for thee is not necessarily good for me.

This only promises to get worse over time. One of the incredible stats in this report is that less than 25% of children under 18 in Los Angeles are white. In a generation or so Los Angeles will be a Latin American city in character. This will add an ethnic dimension to the problem. One doesn’t have to scream “racism” to see this. Just look at ultra-politically correct Europe, where national-ethnic undertones are a big part of the debate over the bailout of Greece. The US is becoming like the EU in a way few people talk about, in that it is culturally separating. That’s one reason a federal bailout of California is unlikely outside of some executive fiat. And it is only going to get worse.

I won’t pretend I’ve got the answers, but bigtime thinking needs to go into how we find a framework to deal with this increasing diversity – and I’m not just talking about ethnic diversity. That’s one of the keys to breaking the gridlock on things like transport policy. Yes there are partisan differences, but it is more than just that.

Perhaps some of the answers are buried in our antebellum history, when there was much more state and regional than national allegiance. I don’t know. Perhaps the dominance of slavery as an issue in that era makes it less useful. Or maybe we can learn from the EU itself, though that model has been heavily criticized as undemocratic and it isn’t working too well at present. In any case, I do believe we need a federal policy around cities that addresses areas where there is divergence, and I believe we’ve got to find policy frameworks to make it actionable.

Lest I overstate the case on Brookings policy split, I should note that they did also write, “National policy responses must recognize the diverse starting points of metropolitan areas and, where necessary, ensure that interventions are tailored to those differing on-the-ground realities.” I would love to see them do a lot more research and thinking along those lines.

Highlights of the Report

I would like to highlight a few of the interesting facts that come out of the report. Again, this doesn’t even scratch the surface.

I wrote previously about how immigrants are revitalizing inner suburban areas, even in the Heartland. This report provides more evidence of that. Indianapolis was the #6 city in the entire US for both increase in Hispanic population and increase in Asian population. Columbus was #9 on both metrics. Now that’s on a low base to be sure, but there are tons of other places with low bases that didn’t see this growth. Cleveland, for example, ranked 95 out of 100 in its change in percentage of foreign born population and the percentage of foreign born residents in the city itself actually went down. This also demonstrates that some heartland cities aren’t just seeing the nearly ubiquitous Mexican immigration, but immigration from many different places.

It gets even better. Pittsburgh and Indianapolis both increased their college degree attainment by a robust 5.3 percentage points. That made them the #3 and #4 metros in the entire country for growth in the degreed. Just for the record, that’s called “brain gain.”

Another interesting metric was the change in under 18 population. This to me is a huge measure of demographic health. Those children are your city’s future. If you don’t have them, you’re having a going out of business sale. Alas, many Rust Belt cities experienced large declines in children.

That’s serious. Some have claimed that the Pittsburgh demographics are skewed by a high elderly population. Perhaps that’s true, but the decline in children shows that Pittsburgh is far from demographically healthy. Again, there is quite the regional contrast. Some regional cities had the opposite situation. Indy’s child count grew by 12% compared with a national average of only 2.5%. Interestingly, Chicago became the only Midwest city to become “majority minority” in its population under age 18. Here’s a broader national view of the percentage of households who are families with children:

Reversing the Great Migration, blacks continued to move to the South. Atlanta added 445,578 blacks, reinforcing its position as the capital of black America. The next nearest competitors were Dallas and Houston who both added in the 100,000’s. That shows the overwhelming locational preference for Atlanta, which passed Chicago to have the nation’s second largest black population after New York City.

Lastly, Minneapolis-St. Paul was #7 in America in the worsening of income inequality. Holy Scandinavian scandal, Batman!

There are tons more interesting facts where these came from. You’d be well served to read the report for yourself, and look at the fact sheets on your city available for download from the Brookings website.

This post originally ran on May 16, 2010.

Indy is hosting the Super Bowl on Sunday, something that is locally seen as a sort of crowning achievement of the 40 year sports journey. As part of that, the Indianapolis Star and public TV station WFYI produced an hour long documentary on the journey called “Naptown to Super City.” I think it’s a must watch for anyone who is trying to figure out to revitalize their own downtown. An hour isn’t short, but given the billions of dollars cities pour into this, I think it’s worth doing some homework. It tells the story of how Indy went from a deserted downtown where local Jaycees were licensed to take their shotguns and kill pigeons to one where the Super Bowl is being hosted today.

I’ll talk more about the Indy strategy in a bit, but first the show. If you are in Google Reader this won’t display for you, so click here to watch.

One thing this brought home for me is the true magnitude of the change. Perhaps I’m being a bit uncharitable, but Indianapolis almost literally started with nothing. It was never a major, important American city. It had no brand in the market. And it had a downtown that was all but dead. Everything they have today was built almost from scratch.

Why do I think the Indy sports strategy was such a good one? Two reason: it was a good strategic area to go after, and it was backed up with very intelligent execution.

First, five reasons this was a good strategic goal to pursue:

1. It just fits the character of the city. Hoosiers love sports. The Indianapolis 500 and high school basketball were long established. It’s something they could behind in a way that they would never have gotten behind being the “vegetarian capital of the world” or something like there. It was authentic to the city. If you watch the video, you’ll note how locals embraced the events that were held that. That goes a long way towards explaining the success of the strategy. You have to be authentic to a place in your development efforts.
2. It was a whitespace opportunity where Indy could get first mover advantage. Today every city thinks they can make money off sports, but Indy really pioneered the notion that you could use sports as an economic development tool. There were a lot of firsts along the path, and that’s one reason Indy was able to take out a leadership position. Just as one example, Indy was first to do the “build it and they will come” model of building a stadium before having a team. As a result, they were able to grab the Colts, and do it in an era when you didn’t have to mortgage your whole city to make a team relocation happen.
3. Being America’s top city for sports events was a realistically achievable goal. I know this because the city achieved it. This is in great contrast to the umpteen cities who all claim they’ll be the “best cycling city in America” or some such.
4. There were huge collateral benefits to sports beyond the direct economic impact of the events and the jobs they support. They bring people to the city to show it off to people who might not otherwise come. They enliven downtown and create events that locals might actually want to attend. They also have been an amazing brand opportunity. Just think of the Colts. How many times a week during football season does the word “Indianapolis” get said on TV? Probably hundreds if not thousands. Imagine if the city had to pay advertising dollars for that exposure? Yes, sports is expensive, but I think it could be justified just as cost-efficient marketing alone. Think about how much companies pay just to put their name on the stadium. How much more is it worth to put your city’s name on the team or the event? Think about how much advertisers will be paying for a 30 second commercial in the Super Bowl? What’s it worth for all those mentions of your city during the Super Bowl again?
5. It was an initiative that had the possibility of being truly transformative for the city. Again, I know this is true because it was.

I’m not going to claim these were actually the thoughts going through people’s minds as the sports strategy developed or that it was this calculated. But all of these things were implicitly true all along, and I think clearly the people pushing sports must have gotten it on that at some level. So sports meets the first test of a great strategy in that it set out after a good strategic goal.

It was also something where there was a level of execution detail that far exceeded what most cities do. In business, it’s one thing to have an idea. It’s another thing to execute on it and achieve market leadership. It’s still another to generate sustainable competitive advantage that keeps you there over the long haul. Indianapolis has managed to do all of these with sports. I’ll highlight eight examples of how it did this:

1. It invested in world class facilities. A lot of these have remained top rated even long after they opened, like Conseco Fieldhouse, which is still ranked every year as the best arena in the United States.
2. Two, it laid out an entire district downtown around events hosting, with everything you need in close proximity – venues, the convention center, hotels, shopping, and entertainment. This is something that’s already been widely commented on by Super Bowl visitors who are amazed you don’t have to get shuttled around all over the place and that you can actually walk directly from the media hotel to the hotels where the teams are staying.
3. Three, because of this Indy is able to effectively “saturation rebrand” downtown for an event and otherwise cater to events in a way that few other cities can or will. In effect, the city has converted its downtown into a giant sound stage. Take a look at the pictures of the city. The whole downtown as been rebranded after the Super Bowl, including, for example, plastering a huge Lombardi Trophy images on the side of the city’s premier hotel. You can debate the value of this to the city, but there’s no denying its value to the NFL. How many cities are willing to do this to the extent Indianapolis is?
4. Indy created the Indiana Sports Corp. as the first ever non-profit management company for events. Today, everybody has adopted that model.
5. The city cultivated a large, experienced volunteer base for putting on events that is much more powerful than what others cities have.
6. Indy has been willing to take calculated risks in support of the strategy. Building the Hoosier Dome with no team to play in it – big risk.
7. It not only went after the events, it went after the sanctioning bodies that determined where the events would be held. The most important is of course the NCAA, but there are others too. This has resulted in Indy having a “cluster” of these organizations and direct access to the people making decisions that pays incalculable dividends. This is one area where the “face to face” discussions that occur in Indy gives the city a big leg up. It’s not just better for selling, it gives Indy critical advanced intelligence about how these organizations are conceiving of their future events needs.
8. Last but certainly not least, this has been a sustained, 35 year commitment. It wasn’t a party politics thing. It was a single project thing. It wasn’t a flash in the pan idea. It was something that has been relentlessly pursued over the long haul.

Add all this up and it is easy to see why still today, three or four decades after it first started and after pretty much every city decided to go after these types of events, Indianapolis is still the best place in America to host a sports event.

I hope this gives you a flavor why the Indy sports strategy was so good and so successful. It’s certainly something that’s not without its failures and downsides. The fact that sports has consumed disproportionate civic resources is one of them, and one highlighted by the documentary. But on the whole, most people seem very happy with the results.

Something the video highlights at the end is one essential attribute for success that you can’t plan for or make happen – luck. They ask questions like, what if the “Save the Pacers” telethon had failed back in the 70’s? What if the seats in the Hoosier Dome had been the originally planned variegated colors instead of the Colts blue and white colors when Bob Irsay walked in to check it out? There were many critical turning points where without a lucky break, who knows if the future of downtown Indy might have been radically different in some way. It should give us some humility about the limits of our ability to simply will things into being. On the other hand, it reminds us that if you aren’t in the game, if you aren’t swinging the bat, you don’t have any chance at all of hitting that home run. You have to play if you want to win.

There are two masters who have done this with real estate, one on the East Coast and one on the West Coast, and they have both been at this with single properties for more than 20 years. One is Dan Biederman of the Bryant Park Corporation, who has made that Midtown Manhattan space one of the world’s most densely used parks. The other is Ron Sher, who has turned the Crossroads Mall in Bellevue, Washington into the kind of active public people place that suburban communities lust after.

Before looking at their work, however, consider the term “property management”, which practically speaking means “property maintenance”: the oversight of building systems, cleaning, security, landscaping and utilities. “Asset management”, on the other hand, is largely a financial function, overseeing fixed expenses like insurance and property taxes, lease negotiation, investor reporting and the occasional repositioning or disposition. Real estate is one of the few industries where many owners farm out marketing, to brokers, many of whom have only an episodic relationship with a property. That’s why these two men are so interesting – they have given special attention to the public space which usually gets only swept or blown. In doing so, however, they have created notable value around them.

Out in Bellevue, Washington, one of Joel Garreau’s “Edge Cities” on the east side of Seattle, the Crossroads shopping center went up at the intersection of two arterials in the first wave of growth in the 1960s. This was before a new freeway, Highway 520, would reach eastwards to a town that was virtually unknown then, Redmond. Crossroads was an enclosed shopping center, but with just 40 acres it was definitely a “junior regional”. When enclosed malls reached their zenith of construction in the 1980s, most would be twice that size.

That’s why, by the late 1980’s, Crossroads was like the flotsam on the beach left after the wave of growth had gone by. The new store chains had followed the freeways out to the new shopping centers. Apartment houses nearby had deteriorated, and gangs showed up in the mall.

When Ron Sher and his partners bought the mall in 1988, one developer had already tried to turn it around and failed. It is surprising, in fact, that Crossroads was not torn down, for this was a period when developers replaced many of the older junior regionals with serpentine power centers that ranged big box stores along one another facing a single parking lot. Lacking freeway exposure, however, this was not an option, so in many ways the centers own failure saved it. Fortunately the price was very low, so carry costs were much less of an issue than in most acquisitions.

Sher and his partners did make some large initial capital improvements, such as lopping off one end to build a new grocery store that connected with the rest of the mall, but his main emphasis was on fixing the basics of the center. Had Sher simply re-tenanted the shopping center, however, he might have failed, but he also began to program the shopping center for activity not just in the stores but in the malls themselves.

Every larger shopping center has its car shows and seasonal choirs, but Sher built a stage at the center of the mall and hired inexpensive bands on Friday night to play and draw in movie-goers an hour or so before show times. Near the entrance to the grocery store he installed a giant chess set now attracts some of the top players in the region. Just inside the main entrance, in the mall itself, he set a magazine seller up in business, and added a Starbucks and Half Price Books store that is an island of reading. On a typical morning there are about two dozen people sitting and drinking coffee there, an hour or two before the main mall stores open.

One of the most important things Sher did was to take back the marketing of the tenant spaces, by setting up his own brokerage house. This gave him early and first-hand knowledge which chain stores were in the market, so he could catch them before they signed with better-located but slower acting centers.

It was also about this time that Microsoft moved its headquarters to a freeway site about a mile north. Few people outside the area know how much Microsoft has done to diversity the region with highly skilled tech workers from other countries. Fully one-third of the people in the area now speak a language other than English in the home. Many of these new workers were young people sharing an apartment or a house.

Rather than leasing to Burger King, QFC or even Panda Express, Sher leased his food court spaces to locally-owned ethnic operators. Go there at a lunch hour and the place is crammed with hundreds if not thousands of Microsoft workers. Their presence in the area also led to the upgrading of the nearby apartment houses, which, over time, have filled with more and more middle-class families new to this country. Sher targeted their needs with stores like JoAnne Fabrics, Michaels, Reclinerland, Dress Barn and Old Navy. He also catered to everyday needs by signing a branch of the public library, a motor vehicles office and a community policing station. Ann Taylor and Z Gallerie might have brought more prestige, but these tenants brought more everyday traffic.

So did increased programming in the malls. The calendar for a week this January shows about two dozen non commercial events, including musical performances; free tax advice; CPR lessons in Spanish; translation clinics in Hindi, Korean, Chinese and Russian; and knitting and crochet classes. Outside, Sher has met the needs of nearby apartment residents by turning an under-used part of the parking lot into community gardens. Longer term, he plans to create a plaza that will be wrapped with mid-rise housing. It’s the kind of multi-hour gathering place envisioned in town center plans, but rarely realized.

If Crossroads is an example of a profoundly suburban place reborn, Bryant Square is a example of a profoundly urban place reborn. Located at 6th and 42nd Street in midtown Manhattan, right behind the main branch of the public library, it is hard to believe that this place was once known as “Needle Park” because of the number of drug users there.

Biederman is an unusual guy to be known for running a public park, for he has degrees from both Princeton and Harvard, and he seems to know people at the Bloomberg level. But Biederman doesn’t work for Bloomberg or the City of New York. He works for and runs the Bryant Park Corporation, which is a non-profit that contracts with the city to manage the park.

How is a person who is runs a public park able to operate at such high levels? Because he has created such value around him. A study by a major accounting firm found that his turn-around had created hundreds of millions of dollars of value around the park.

The interesting thing about this park turn-around is that it is the reverse of the classic redevelopment play in which governments use their powers of eminent domain to tear down and resell land at a discounted value, and then use the increased property taxes to pay back the financing. Financially, that strategy relies on leveraging just the land value of a place, and even when it works, it usually takes ten or 20 years to realize significant results. Biederman’s strategy was to focus on what wasn’t working, the public places, and to use the improvement there to draw people and value back to buildings that were already in place, leveraging their full value, both land and improvements. Not only was this lower risk, but the return period was much shorter. Today he takes no public money to run the place, operating solely on funds from a local improvement district. Are such improvement districts the wave of the future, in lieu of traditional redevelopment?

A couple of core principles guides his work. One is opening up the park to the gaze of passers-by, a kind of “eyes on the park” strategy that made it safer for everyday people. A second is a focus on programming, to create events and activities that draw people there “6/16/12” or six days a week, 16 hours a day, 12 months a year. A third principle is providing public services at private quality standards. The lobby of the restrooms, for example, has large, real flower arrangements worthy of a Four Seasons hotel. The bathrooms there have made it a nominee for the “America’s Best Restroom” award.

Like Ron Sher, with his Peruvian flute bands, Biederman has not been afraid to buy activity. Biederman paid a New Jersey bocce ball club to change its location and play in his park, for he realized that it would draw on-lookers. He has a seasonal outdoor skating rink that is free, compared to $15 at Rockefeller Center seven blocks north. Biederman knows who his customers are, for he sends people out with clickers at different times of the day to count them, and his goal is to fill in the slack hours with activity, like movies on warm Saturday nights in the summer.

One of the most important things about Bryant Park is that Biederman trusts the public, collectively. The bathrooms are one sign of that. Another is the chairs, which are not bolted down. You can pick them up and move them, but try take one away and people will stop you or call one of the maintenance people in evidence. In fact, like Disneyland, part of the perception of quality in this place is simply seeing those people moving around and working.

What Sher and Biederman have both done is to fine-tune the management of places, in such a way that people feel it is theirs. It is true that private coffee houses are gathering places, but there is a rush and hub-bub that with each whoosh of the cappuccino machine reminds patrons that they are essentially sitting on rented seats. Sher and Biederman have created ease.

Back to the computer analogy: one of the essential questions for the upgrade of Apple’s operating systems is backwards integration: how many old applications should they continue to support, and at what cost to speed and elegance and new features? This is the same question for effectively managing and programming real estate, be that a place to live, work, learn, shop or play. What Sher and Biederman have shown is the value and success that comes from paying attention to real and immediate needs. Get the basics right, and your customers will come along with you and draw new ones as well.

Also by Rod Stevens:
The 31-Flavors of Urban Redevelopment

Rod Stevens is a business development consultant on Bainbridge Island WA, specializing in urban ventures.

Now that I’ve got some experience with the platform and know what it takes to support, I’m re-launching for 2012 with a massive price cut of 88%. Telestrian is now only $49/year (not per month, per year). And you can try it for free for 30 days, no credit card required, no obligation.

They say the first rule of sales is that you have to ask for the business. Well, I’m asking for yours. If you work for an organization where you use Census and economic type data, please give Telestrian a try and buy it today. The cost is de minimis for any organization. And if you want to kit out your whole office or department, I can give you even better pricing. Just ask.

To whet your appetite, I’ll share a little of what the system can do. For more about the type of pain Telestrian was designed to take away, read my white paper. You can also see a list of features and functions.

World’s Easiest Thematic Maps

I love to do thematic maps of data. These are difficult to create without graphic design tools or complex and expensive GIS software. But for any data element in the system, Telestrian lets you create thematic maps for states and MSAs, plus national and state county maps. Map not just the raw data, but also things like percent changes, location quotients, etc. – it’s all built in. This is by far the easiest platform I’ve ever seen for creating basic thematic maps.

Here’s a map of the percentage change in population for US counties between 2000 and 2010 that I made in about 30 seconds.

This is the map that landed me on the front page of Yahoo since I was able to crank out Census analysis with compelling graphics faster than any media outlet in the country.

BTW: This isn’t Flash. It’s a picture file you can right click and save off for your presentation or whatever. And you can make it as big or small as you want with no resolution loss. (SVG is also available for graphic designers to use).

You can also make maps out of your own data by uploading a comma delimited file. (I give you the templates). This lets you map anything pretty easily even if Telestrian doesn’t include the data. For example, it doesn’t have election results, but I downloaded the 2008 presidential election info and uploaded the data to put together this results map:

Place to Place Migration

Telestrian also has place to place migration data from the IRS. You’d have to pay them $500 just to send you the raw files on CD, BTW – in the form of over 3,000 Excel spreadsheets. Telestrian processes this and make it easily queryable. It also takes the county-county data and calculates what is arguably more interesting, MSA-MSA and MSA-state migration. Plus instead of just the in and out migration the IRS gives you, gross and net migration are also available, intra-MSA migration, etc. Overall, there are more than 100 easy to use pieces of data out of this.

Here’s a quick map I did to show you what it can do. This is 2000-2010 migration for Indianapolis metro. Those metros with which Indy has net in-migration are in blue. Those with which it has net out-migration are in red.

Doing analysis like this would almost be mission impossible without this tool. It’s so painful that I only know a handful of even Ph.D. researchers doing metro-metro migration analysis. You rarely see it in regional talent studies, for example, even though a metro area’s talent networks are absolutely crucial in putting together a talent strategy. (If any research or other organizations are interested in getting the raw data behind this in a usable form, I’m happy to sell it to you. Just email me).

Data Mining

Go to your average free data site, and you’ll rapidly discover that you can look up facts or get a grid of numbers, but not much more than that. Want to know what cities grew their GDP the most last year? It’s way harder than it should be. But Telestrian has parameterized queries built in so you can answer basic questions, like, for example, the one I just asked:

Note that I only included metros over one million in this search. Setting a population threshold is one of the built-in parameters you can use. Again, this only takes like 30 seconds to make once you master the tool.

Give Telestrian a Try

This is just a taste of what it provides. There’s other life-savers, like the fact that the Census 2000 data has been re-baselined to current MSA definitions, so you can compare with current day data. And there are many other types of data as well.

Again, Telestrian is free to try for 30 days, so please give it a shot. Even if you did a trial in the past, just re-register and you’ll be re-enabled for another trial.

At just $49/year, it’s practically free to any organization with a budget. Buying a subscription today is a great way to support the work I do here at the Urbanophile. But more importantly, there’s huge value there that I’m confident is more than worth the price.

Now back to my regularly scheduled blog programming.

If there’s one thing you can count on in state government, it is complaints about federal red tape, unfunded mandates, and general over reach. Witness, for example, the battle royale over the health care law, with many states suing to overturn it. I think in many ways it is totally justifiable for states to be upset that the federal government takes money from their citizens, then just sends parts of it back with string attached.

So when dealing with local governments inside of their states, you would think state level politicians would remember how it feels to be on the receiving end and avoid tangling up their localities with red tape and mandates, instead empowering them by devolving power as much as possible and not meddling.

If you think that, you think wrong.

Another example is happening before our eyes in Indiana. After years of local study and consensus building, metro Indianapolis finally came up with a consensus transit plan called Indy Connect. It is a bus centric system that, while not exactly cheap, is certainly more cost efficient than many cities’ grandiose rail plans.

Unfortunately, Indiana doesn’t allow localities to impose taxes without specific state authorization and has a long tradition of keeping municipalities on a tight leash. Legislators complain when places like Indy keep coming to the well, but the reality is they don’t have the powers they need to do things without specific state approval.

So it is with transit. In order to fund the transit system, a special local tax levy would be required. So the backers of Indy Connect went to the General Assembly to ask, not for any taxes to be imposed, but only for permission to put a referendum on the ballot that would allow locals to decide for themselves whether or not to pay for a transit system. That’s it.

Unfortunately, that was too much for the legislature, which killed the transit bill in committee. This is the same legislature that, by the way, on the very same day passed a bill out of committee allowing “creation science” to be taught in schools. Glad to see they have their priorities straight.

Lest you think this is all evil anti-transit Republicans, the transit measure failed because Democrats voted against it. The Republican committee chair insisted that the transit bill include a “right to work” provision that prohibited mandatory unionization of transit workers. Now, I think right to work is a sideshow myself. And I don’t think that Republicans should have insisted on what is clearly an ancillary matter and one they know would tweak Democrats. I would have removed the provision, especially as I believe it conflicts with federal law anyway. But for Democrats to throw transit under the bus because of it exposes the extent to which at the state level, the Democratic party is a wholly owned subsidiary of the unions. They’d rather have no transit system at all than a non-union transit system. The died in the wool blue urbanist crowd in Indy has expressed some surprise that Democrats opposed it – including, incidentally, Rep. Bill Crawford, who represents an Indianapolis inner city district that would benefit enormously from improved transit – but that’s only because they are naive about how politics works at this level. They should keep that in mind going forward.

In any case, there are still ways to pass the law, such as by inserting it into another bill that then passes. This happens routinely in Indiana and elsewhere. But this recent vote is part of a pattern of dis-empowerment of localities in recent years. Tax caps (which I support, incidentally) were one – but the rules go well beyond that to impose de fact spending caps on local government. The state has stepped up increasing control over school districts and now basically dictates per pupil funding around the state. Other busybody bills include proposals this year to limit the power of redevelopment commissions, strip state universities of their ability to set tuition, and to mandate a return to single class high school basketball. A lawmaker from Cedar Lake, 150 miles away from Indianapolis, wants to eliminate Indy’s at large council seats. If there’s one common theme, it’s that this legislature has been more about taking away the ability of others to make their own decisions rather than doing much positive themselves.

It should come as no surprise that this is showing up in the state’s economy. For example, Gov. Mitch Daniels has said of Indianapolis, “The Indy metro’s our star cylinder in the engine.” Indeed, during the 2000s metro Indy outperformed all peer regions in population and job growth.

But recently it has taken a stumble. Between December 2010 and December 2011, metro Indy lost jobs. It was the only metro with over a million people in the Midwest to lose jobs other than Cleveland. That’s right, even Detroit gained jobs. A recent Brookings Global MetroMonitor report report ranked Indianapolis 183rd out of 200 global metros and dead last in the Midwest. The recent Milken Institute top performing cities index ranked Indianapolis 121 out of 200 large US metros, down from 81 a few years ago. Obviously in the Great Recession there are complex dynamics affecting how cities perform, but I don’t think it’s any accident this stumble has occurred against a backdrop of progressive local dis-empowerment in Indiana.

I appreciate the need for lean government, particularly today. But while the logic of minimalistic government spending as a road to success makes sense in some cases, it clearly doesn’t in central Indianapolis. There we have a city burdened with legacy costs and problems. As a result, central Indianapolis is always going to have higher taxes, more crime, and worse schools than other regional areas. Always, no matter how much it cuts. It cannot make itself competitive by cost cutting alone, as the exodus from Center Township shown in the last Census illustrates. Instead, it has to built a differentiated environment that is not in direct cost competition with suburbs. Obviously it has to keep a keen eye on the bottom line, but it can’t simply rely on cost cutting alone to drive success.

Transit is a big part of trying to do that. There’s no guarantee of success. But given the history, more of same is highly unlikely to work. The heart of the proposal is a quality urban bus system for the central core. This creates a more differentiated environment, better serves the mobility needs of carless residents, and links central city residents with emerging suburban job centers (which is one reason business has been so on board with the plan). It’s also comparatively cost efficient.

Let’s hope the legislature comes to its senses on this one. The idea that what happens to the urban core of Indy doesn’t matter to the state is ludicrous. The fate of Indianapolis and Indiana are bi-directionally linked. There can’t be a successful Indianapolis without a successful Indiana – but also vice versa.

Some have reported that Indianapolis has accounted for something like 80% of the economic growth in the state. Contrary to popular belief, it sends far more to state government than it gets back in taxes. Indianapolis, as the governor noted, is the economic engine of the state. But that engine is sputtering. Given that there’s no precedent for a region to thrive with an urban core that dies, we can expect that if central Indianapolis ultimately fails, it will take the region with it, and with that likely the state. The trajectory of the state economically, especially the central 2/3rd that are in Indy’s economic area, would be quite different indeed even if metro Indy merely regresses to say a Cincinnati level of growth.

Who knows what the state will ultimately do, but the micro-management of localities that occurs all too often not just in Indiana, but across America, is crippling the metro areas that are the economic drivers of our economy.

Indiana’s legislature ought to take a hard look in the mirror and ask why they have to try to act like the city council for the whole state. Given that there’s no federalism at the state-local level, that’s certainly their constitutional right. But if they want to be in that business, they, like the ungrateful servant, deserve every drop of torment the federal government chooses to inflict on them.

The topic of the evening was quality of space and what, if anything, Franklin should do in this area. There had recently been some big disputes over downtown redevelopment projects I believe.

I gave a talk that set the stage for this conversation. In it I make the case for why high quality of place is of importance to a community. I root it in a business case analysis based on globalization and structural changes in the economy, the impact of that on Indiana’s competitive positioning, and a real life example of the potential payoff. I then talk a little bit ways to actually make quality of space happen.

Before the video though, I should mention that I am for hire to speak at your event. For details, arenn@urbanophile.com. As you’ll see from this, I work to create something custom and compelling for your audience, not a canned talk. And I basically treat it as a mini-consulting engagement to drive more value for you.

The video is below, followed by an outline of the talk. I hope you enjoy. (If the video doesn’t display for you, click here).

I. The Case for Quality of Space

A. History of Globalization and Structural Economic Changes: Indiana has gone from competitively advantaged to competitively disadvantaged.

B. The Impact of Economic Change: Indiana has trailed the country in jobs and incomes

C. Implications of the Situation:

1. If nothing changes, expect more of the same poor results. This means real change, not just tweaks.
2. Indiana cannot be competitive purely on a cost basis ever again. Even domestically, there are cheaper locations like Texas, and overseas competitors are much cheaper. Cost control and quality regulations are still very important, but cost cannot be the sole basis of competition.
3. Indiana must compete today at least in part by creating a civic product people want to buy on its own merits, not just because it’s the cheapest thing on the market – because it isn’t.

D. But Doesn’t Franklin Already Have High Quality of Space/Place?: Yes. Yet consider:

1. Much of what makes the high quality of a community like Franklin is the people who live there and their shared history. Newcomers can’t judge a community by this yet.
2. Much of what makes our communities physically great was built a long time ago. The question is how we build on that legacy to meet the challenge of the 21st century.

II. The Benefits of Quality of Space: Columbus, Indiana Case Study

A. Why a Case Study of Columbus? It’s nearby for locals to check out themselves, it has a strong and comprehensive commitment to quality of space, and is closer to a typical blue collar community than say a Big Ten college town.

B. Columbus Economic Performance: Outperforms all non-Big Ten college town Indiana peers and also has outperformed the nation as a whole on jobs and income.

C. How Much Did Columbus Pay for Its Quality of Space Plan?

1. Columbus tax expenditures per person are higher than most peers. They did spend money on this. Not free.
2. But Columbus tax rates are among the lowest of its peers.
3. How is this? Columbus has the largest tax base.

D. Two Fallacies of Government

1. Democrat Fallacy: The only thing that determines government revenue is the tax rate.
2. Republican Fallacy: The only thing that determines tax bills is government spending.
3. Both claims are based on short term thinking. Need to evaluate the life cycle implications of policy choices. Columbus spent more but pays less now because they understand total cost of ownership.

III. Bringing Quality of Space to Life

A. Four Planks in a Quality of Space Program

1. First Class Public Buildings: We used to build them this way, so doing it today is following an old tradition, not doing something different.
2. Focus on Value per Dollar: It’s not always about more money. A bit part of it is making sure the money you do spend gets the full value per dollar.
3. Find Low Cost, Fast, High Impact Items
4. Build on Unique Qualities: In Franklin’s case, Franklin College

B. Closing Caveats

1. Quality of space is a long term game. You don’t see immediate results from a trail. Columbus took 60 years to get where it is today. Indy’s downtown sports strategy started 40 years ago, but it is just now getting to host the Superbowl.
2. Make sure that whatever you do is specific to your community. Don’t let somebody else sell you an off the shelf solution that merely copies what others are doing.

Last December I posted 25 Future Trends That Will Impact Economic Development. This was my attempt to identify key trends that would shape the daily concerns of planners and economic developers in 2011.

With the help of my colleague Craig Hullinger, we circulated the “write-up” to a wide audience of active and retired planners, economic development practitioners, city managers and academics.

We got a lot of feedback that began conversations leading to the conclusion that job creation and household wealth would be the major “drivers” of government inspired planning and economic development in 2011.

I believe the wisdom of these folks were correct and as we close out 2011 the need for job growth and increasing household income remain a top priority for the successful future economic revitalization of the global, national and local economies.

Below are my thoughts on the leading trends that will impact planning and economic developers in 2012.

1. Land Use Plans to focus on abandoned land and buildings not “greenfields”.

With the change in consumer spending patterns – reduced disposable income and increased reliance on internet purchases – plus the backlog of vacant home and commercial properties in (or soon will be) subject to foreclosure, there will be a reduce demand for new construction directing planners and economic development attention on reuse of buildings. It’s the same for vacant building sites currently serviced by municipal infrastructure.

The notion of incentivizing new development will be discouraged in favor of planning and economic development strategies that focus on reuse and redeployment of vacant land and buildings.

2. Financial support for planning to be reduced.

Federal and State budget reductions are inevitable. With planning and economic development activities being discretionary “non-mandated” government activities, planning and economic development program support will be targeted for budget reduction, probably to a greater extend than mandated government programs.

Planners and economic developers will be asked to “do more with less” and to seek non-governmental funding support from private contributions, foundations and fees for services provided. The planner and economic developer job description will now include a new component titled “fund raising”.

3. Economic feasibility will be required of all new initiatives.

Since the early 1970’s with Florida’s comprehensive state/local growth management act, planners were expected to include a degree of economic feasibility into the planning process, especially when implementation of plans included reliance upon federal and state funding sources. However, rarely has economic feasibility or benefit/cost analysis been applied consistently and in non-technical easily understood meaningful ways.

With heightened demand for sparse governmental funds, plans and economic development strategies requiring funding commitments, especially those by local governments, will be subject to intense scrutiny and most likely only funded upon sound economic benefit/cost analysis.

The era of planning and economic development strategies that “sound good” but rely upon undocumented funding sources is unacceptable today to citizens and elected officials alike.

Planners and economic developers will be expected to fully justify funding requests by easily communicated economic analyses relying on projected benefits for use of government funds.

4. Job creation “tops” all other concerns.

Gallup pollster Jim Clifton (see The Coming Jobs War) calculates that global unemployment is over 50% and globally there is a 1.8 billion job shortfall. He opines that jobs……jobs……and jobs will be the most important government mission in the future.

He further opines the US must have a 7% GDP growth rate to retain its global presence and decrease US unemployment; almost doubling the most generous US GDP growth rate being discussed in the media today.

For planners and economic developers, this is unhappy news drawing attention to heightened future demand for state and local action to create jobs.

For planners and economic developers, the increased global competition for jobs, pulse a likely anemic US GDP growth rate in 2012 will create intense pressure for programs and action that create new jobs.

5. Service area geographic sizing to become the major planning criteria.

In the Midwest, our local government geographic sizing was created by the Northwest treaties in the late 1800’s when the principal means of communication was a horseback ride to personally speak with someone. With internet and wireless communications today, we almost instantaneously communicate “with anyone – anywhere”. We have the ability to instantaneously bundle-up work assignments and ship them anywhere around the world to be completed and returned.

However, many government services remain modeled on the notion they must be provided on the basis of “a one-day horse ride” from home.

While all states allow governments to share services and even consolidate for greater financial efficiencies, it’s a rare occurrence.

Historic political isolationism based on the loss of political control permeates the inability to explore changes to service area geography that may reduce financial operating costs for services provided.

As governmental revenues become more strained and where taxpayers will not increase government revenue, planners and economic developers will be called upon to engage in municipal service consolidation conversations to exact efficiencies that stabilize or reduce government service costs.

6. Utility maintenance “trumps” new expansions.

While at the state and national level we call for more infrastructure funding for “big project” roads and bridges, back home at the local level most communities maintain underutilized water, sewer, storm drain and subdivision streets built with the notion that new development, most often new residential home owners, would pay user fees and local taxes to operate and maintain the local infrastructure.

In the absence of new construction requiring new utility connections plus the abundance of demolitions of no-longer needed homes and commercial buildings, in some communities the actual number of utility “paying” connections is being reduced or “at best” remaining stable. Most utilities were originally sized to service more users anticipated by 10-20 years of future growth but in actuality, now and maybe for considerable time into the future, will remain underutilized.

The cost of operations and long-term maintenance in almost all cases was based on revenues obtained from anticipated future new connections. With operation and maintenance cost increasing and revenue possibly decreasing, or at best stable, local government budgets in the future will focus on maintenance of the existing infrastructure rather than funding new expansion.

Planners and economic developers will be pressured by budget constraints to seek development projects that increase the number of utility connections allowing the amortization of operation and maintenance cost over a larger number of utility bill payers.

7. Tax payers demanded greater efficiencies to guide new growth.

I think everyone will agree that tax payers are overwhelmingly against tax increases and expect greater efficiencies from government to “hold the line” on cost increases resulting in the need for additional tax revenue.

With this in mind, it will be more difficult to undertake new programs requiring additional tax revenue from tax payers. Likewise, tax abatements or deferral of tax revenues as economic development incentives will also be subject to questioning and higher degree scrutiny.

Planners and economic developers will be discouraged from advocating projects that require forgiveness of tax revenues and encouraged to seek projects that have short-termed positive tax revenue income, especially for local governments that rely upon real estate taxes and/or local captured sales taxes to fund local government operations.

8. Federal and State paralysis over local funding freezes local government decision making.

The “we can’t do that now, because we don’t know what’s going to happen” governmental decision making paralysis will continue into 2012. Government funding uncertainty, due to uncertain federal, state budgets, coupled with uncertainty about local real estate and sales tax revenue has already become the mantra of government decision making today.

Many economists forecast several more years of this uncertainty, making the budget making job most difficult for elected officials. This uncertainty already results in postponement and cancellation of projects that in “better times” would contribute to an economic development stimulus to the local economy.

Recognizing that uncertainty will continue into 2012, planners and economic developers will find slim support for projects that require funding beyond approved budgets and greater pressure from elected and appointed officials to seek external project funding sources.

9. Local municipal insolvency and bankruptcy strikes fear deciding long-term funding.

Over the past 3-years there have been 49 municipal bankruptcies, according to the nationally leading municipal bankruptcy law firm of Chapman & Cutler. The most publicized being Jefferson County Alabama’s $3 billion revenue bond sewer fund driven bankruptcy – the largest in history. Media reports predict the potential for other bankruptcies is having a major impact on the $2.9 trillion municipal bond investment market, where 2/3 are revenue bonds – those viewed as “safe investments” by investors because they are “backed” by a utility revenue stream that is likely to continue even in the worst of economic times.

With questions about the future of federal, state and local revenues, today most government officials are a bit leery of committing to long-term projects, especially those that commingle sources of funds from multiple government programs and revenue sources based on new growth.

In 2012, planners and economic developers will be saddled with questions about municipal solvency both in efforts to package financing for necessary municipal infrastructure investments and to assure new businesses desiring to locate that the community is solvent and resistant to “surprise” tax increases that might occur due to unrecognized financial needs.

10. Municipal financing will become more expensive cancelling certain projects.

Because of government bankruptcy, unfunded state and local government obligations, reduced federal/state/local revenue, non-expendable operating budgets, and increased operating expenses, investors are looking at municipal financing risk a bit differently today and will continue to do so in the future. Where real or perceived investment risk increases so does the price, the amount of interest government must pay. Even purchasing insurance that guarantees payment in case of default gives little comfort to the investor, as leading insurers are being called into question about their ability to fund required payments in case of an economic crisis of substantial proportion.

All in all, this new uncertainty means that cost to borrow funds by states and local governments will be more closely evaluated and cost more.

For the planner and economic developer in 2012, the ability of governments, especially local governments to raise capital for projects will be more difficult and lessen the aggressiveness towards undertaking long-term financed projects.

Last Thoughts

As we closeout 2011, we give thanks – thanks that we made it through. It was a difficult year where many economic changes reshaped the role planners and economic developers play at the federal, state and local government levels.

The “crystal ball” today is no different….cloudy at best!

Again in 2012, the economy and jobs will be subject of every conversation.

Being an election year it will be on every newscast.

Our challenges as planners and economic developers focus on shaping the future.

Our charge today is – What can we do in 2012, with the resources at hand to invest in the future?

This post originally appeared in Chuck Eckenstahler’s Blog on December 4, 2011.

I’ve spent some time in Providence, Rhode Island recently, a small city reasonably comparable to the ones I focus on in the Midwest, and was hoping to do something similar there. But I’ve found it difficult. New England culture is something I just don’t grok, so unlike with cities in the Midwest, the South, or the West, where I have more basically cultural familiarity, it’s hard for me to get a feel for Providence. So a full take on it will have to wait for another time.

I can relay a few basic facts though. The Providence metro area has 1.6 million people. The entire state of Rhode Island only has about a million. So Providence has the unique feature of having a metro area bigger than its entire home state. But Providence is also unique in that it’s so close to Boston, making the entire metro area almost a suburb of greater Boston in some ways. Providence is actually on the MBTA commuter rail system, with a slightly over one hour ride into South Station. With wi-fi equipped trains, this isn’t a bad commute. This shares tracks with Amtrak’s Northeast corridor, and Providence is served by both Acela and regional trains, giving it key connectivity both to Boston (only 36 minutes away on the Acela if you’re in a hurry) and New York City. (Providence is the 17th busiest Amtrak station).

Being so close to a thriving tier one city and not far from America’s premier metro hasn’t helped Providence that much though. Its population is stagnant. It has been losing jobs. Unemployment has been stubbornly in the double digits. Any visitor to Rhode Island immediately notices how old everything is. I’ve yet to find anyplace that is of the pristine new suburban variety. It looks like not much has been built in quite a while. Various decrepit mill downs like Woonsocket dot the landscape. The state is among America’s worst for pension problems. If the state were bigger, this would certainly loom larger in the national consciousness.

Although Rhode Island/Providence has its struggles, there’s still a lot to like and enjoy about the place. Rhode Island has some extraordinary natural beauty. As the Ocean State, coast line and beaches abound. Towns like Newport remain picturesque if no longer very economically active apart from tourism. The flip side of having a lot of old stuff is the you are clearly aware this is a place with history to it, and a ton of character. There is excellent food to be had. This isn’t just the stereotypical Italian – if there’s one thing that might stick in people’s mind about Providence it’s a reputation for being mobbed up – but includes things that might surprise you like good Indian cuisine. The people in Rhode Island are much friendlier than you’ll encounter in Boston or New York, and probably on par with what a Midwesterner would expect. Also like the Midwest, I was very surprised to find that, despite the postage stamp size of the state, lots of people there are lifelong Rhode Islanders. Traffic is a breeze and the city is very livable. You can enjoy small city living while only being a short train ride away from all that Boston has to offer.

With Providence’s demographic, economic, and fiscal issues, it might be tempting to dismiss the place as simply lacking the scale necessary to compete in the global economy. It doesn’t have the critical mass of amenities or industry to draw the talent it needs to build a truly dynamic 21st century economy, or vice versa. This might be the traditional “spiky world” view in which it seems to be primarily very large, dense cities that have the advantages, save for a few very special places, normally major college towns like Madison, Wisconsin.

If that’s all there is to it, most smaller cities are doomed. Yet I think there’s a flip side to scale, and places like Providence need to be able to exploit it as a source of opportunity. Providence and Rhode Island are big enough to have pretty much everything you need in a big city, and what they don’t have is nearby in Boston.

But they are small enough to have some structural advantages from that as well. First, as a small state and city, it’s easier to turn the ship. As I’ve observed about Detroit and Michigan, part of the challenge for them is that they are big. It’s always harder to turn a large ship than a small one. That’s Rhode Island’s advantage. You could almost literally turn the entire state into a civic laboratory in a way that can’t be done elsewhere.

In a related vein, things that wouldn’t make much of a difference in New York can make a huge difference in Providence. The presence of Brown University and RISD make a palpable difference in a smaller city that they wouldn’t in a much bigger one. Successful civic initiatives can have a bigger impact here.

Also, I’ve already found in Providence the other piece of magic I’ve often noticed in smaller cities, inter-disciplinary cross-pollination. A Rhode Islander tweeted me about something, and I responded by saying I’d be there in a week if he was interested in grabbing a beer and talking cities. This led to cocktails with a guy running a tech incubator, a former senior economic development official in the state, a transit planner, and a couple of art types. I don’t have many conversations like that in Chicago. In Chicago, because the various scenes are large, it’s easy to spend your time hanging out with only other people in your circle. And elites tend to like talking to each other. That’s not to say that disciplines never cross in Chicago, because they do. But my observations from not just Providence, but also Indianapolis and various other small Midwestern cities leads me to believe that this is more the default mode of operation in those cities. A shallower pool means that of necessity, you come into contact with more different types of people than you sometimes would in say Silicon Valley.

Lastly, like various Rust Belt burgs, Providence is a fairly cheap place to live and gives you plenty of space to do your own thing without all the baggage that comes from being in a bigger city. As someone there told me, if you’re looking for a corporate job, Providence is a tough town. If you’re looking to make something happen yourself or do your own thing, Providence is a great town.

Whatever its current struggles, a small state and city like Rhode Island and Providence – it’s even tough for me to distinguish them – have the virtue of small scale to provide some weapons with which to compete. How to position them to exploit that, and their other unique geographic advantages, is their key challenge going forward.