Cities Lead: Recipes for Local Success

Urban scholar and commentator Neal Peirce released his book Citistates (How Urban America Can Prosper in a Competitive World) all the way back in 1993. The themes concerning successful and globally competitive cities and regions were compelling then and his findings have been borne out by authors including Michael Porter (The Competitive Advantage of the Inner City), Rosabeth Moss Kanter (World Class: Thriving Locally in the Global Economy) and Thomas Friedman (Pick your book: Lexus and the Olive Tree, The Word is Flat, or Hot, Flat and Crowded).

The City-State, or as my former colleague William Barnes referred to it – the metropolitan centered economic region – is the smallest and most essential unit of economic prosperity. As such, all the cities and counties within the larger and interdependent urban-suburban region are connected – or so they should be.

It is with a focus on the strengths and advantages of cities as the dynamic engines of action, innovation and economic prosperity that National Journal author Michael Hirsh offers an updated vision in the August 31, 2013 edition of the magazine.

To read much of contemporary news media, one would be surprised to discover that many cities are in fact thriving places. Important news about a new freight rail bridge linking the United States and Canada between Windsor and Detroit is overshadowed by Detroit’s bankruptcy filing, for example. The local advancement of light rail, street cars and bike sharing in countless cities is drowned out by the hiccups experienced in New York City’s bike share roll-out.

It’s not all perfect in city halls of course. But it’s encouraging to see that while Congress fiddles and federal programs burn, it is city and county leaders who are taking the hard steps to solve problems, find new resources, form new collaborations and get the necessary tasks done.

The keys to success for cities are not hard to comprehend. NLC’s research on resilient regions, looking at places in Michigan and Arizona for example, point to some specific action steps that align with Mr. Hirsh’s summary in the National Journal.

NLC’s findings about the centrality of economic regions points to some very specific techniques and tools that may in fact be winnowed down to three indispensable principles for thriving cities:

  1. Establish an inclusive and creative process of community engagement to assess problems, identify solutions and implement a unified response that holds consistently over time (which in some cases may require decades);
  2. Develop and nurture credible, dynamic and aggressive leadership on the part of local and regional elected or appointed officials and build the capacity of the government departments or agencies to synchronize with that leadership; and
  3. Foster partnerships across city departments, across political boundaries and between the public, private and nonprofit stakeholders in the region.

As Mr. Hirsh points out, “all these factors can breed a critical survival trait for successful cities and their metro areas: resilience.”

Detroit and DETROPIA

The words come at you harshly and powerfully. Decay. Ruin. Emptiness. America’s Pompeii.

These words accompany images of Detroit from photographers Andrew Moore and Camilo Jose Vergara. The photos have been part of two exhibitions at the National Building Museum in Washington, Detroit Disassembled and Detroit Is No Dry Bones.

Using a large-format presentation, Moore presents images of some of the most iconic structures in Detroit. Viewers come face to face with the downtown United Artists Theatre, Michigan Central Station, The Guardian Building, Ford’s River Rouge Complex and the East Grand Boulevard Methodist Church. All are in various stages of disintegration. At the Cooper Elementary School on the city’s East Side, prairie grass is overtaking the isolated structure.

Vergara has been documenting the urban environment in Detroit for over twenty-five years. He chronicles storefronts on Mack Avenue from 1993 to 2012. Other photos highlight the former Packard auto plant and the graffiti that covers so many of the city’s structures. Critics have called his images Ruin Porn but Vergara expects that those viewing his images “will come to appreciate how the city continues to survive and reinvent itself.”

It’s hard to find hope or redeeming grace in Moore’s work but Vergara seems more interested in perseverance, reclamation and the audacity of the human spirit. His work seeks to offer some focus on those who never left the city and those new residents who see a certain authentic beauty in what is vanishing.

The documentary film DETROPIA by Heidi Ewing and Rachel Grady also tackles the paradox of demise and rejuvenation. This award-wining film (Sundance, Naples, SilverDocs), seeks to make the complex challenges of globalization, race relations, urban decay and the disconnections between citizens and government more approachable. Moreover, the film, through the stories of residents, adds the elements of humanity and commitment to place that the Moore and Vergara photographs do not provide.

The National League of Cities will give its members a sneak peak at DETROPIA before the film’s release on public television later this year. City and town leaders attending the Congressional City Conference in Washington will be given a special viewing and an opportunity to discuss the film on Monday, March 11.

The stories in this film have broad applicability beyond Detroit. For public officials, the film can be a catalyst for assessing and addressing the many challenges that face neighborhoods and communities in the post-recession period.

Foreclosure Fatigue Sets In as Housing Market Improves

Imagine my surprise at how quickly the attention paid to mortgage borrowers suffering through foreclosures, short-sales and default notices is quickly abandoned as good news continues to arrive in the form of rising home prices and sales. As with wars, famines, natural disasters and celebrity meltdowns, issue fatigue is finally sweeping the mortgage foreclosure crisis into a neverland of footnotes and asterisks.

It’s fine to celebrate positive housing news. Sales of new single family homes surged 5.7 percent in September to a seasonally adjusted annual rate of 390,000, the highest level in 2 ½ years. September year-over-year increases were 27 percent. Census figures earlier in the month reported a 15 percent increase in new housing starts during September and an 11 percent increase in building permits.

Nearly all the numbers focusing on housing show improvement. But the experience of the 21st Century’s most significant economic recession ought to remind us that numbers are inherently selective. By the time this housing debacle finally ends nearly 5 million Americans will have lost a home and be left with credit so badly damaged they won’t qualify for a mortgage until well after the next Presidential election. And if rules are adopted that demand larger down payments and smaller debt-to-income ratios, the Millennials won’t be buying houses until they reach their 40’s.

Arguably, the “crisis” has abated and it’s hard to focus on housing when confronted with World Series baseball, Dancing with the Stars and a new Tom Hanks-Halle Berry movie. Fatigue is real and if we get tired of floods and wildfires and famine, the plight of the “dislocated homeowner” hardly warrants any greater attention.

But while fatigue may be understandable, the out and out thieving actions by state governments of the funds dedicated to housing from the National Mortgage Settlement is not only intolerable but possibly criminal. In a report from Enterprise Community Partners researchers discovered that nearly half of state governments are bleeding off portions of the funds allocated to help states pay for housing counseling, mortgage mediation, legal aid and other housing programs to instead address shortfalls in state general fund budgets.

Among the worst offenders are Alabama and Georgia, the latter which sent its entire $99 million share of funds to economic development programs. Missouri used its $39 million to prevent higher education cuts. California used $410 million from its share to fill budget holes for its $15 billion deficit which did include some old debt service on affordable housing bonds. The South Carolina legislature, over the veto of Governor Nikki Haley, and sent its $31 million share to business attraction programs and to the general fund.

The mortgage settlement intended that a modest $2.5 billion, out of $25 billion overall, go to help distressed homeowners facing the calamity of losing a home. In the absence of more federal money to stabilize neighborhoods and preserve communities this sum offered a considerable level of assistance. If the well of sympathy as indeed gone dry, the very least that can be expected is that those who have been provided for in the mortgage settlement get what is due to them without any interference by revenue-hungry states.

Why We Should Care about Public Sector Job Loss

Last week the Bureau of Labor Statistics (BLS) released preliminary revised unemployment estimates.  It appears that the economy actually netted 386,000 jobs this year, but only after accounting for a loss of 67,000 government jobs. This recent news compounds figures suggesting that as of August 2012, local government employment in the U.S. had decreased by approximately 650,000 jobs from peak levels in 2008.

So what’s the big deal? Shouldn’t we be satisfied with growth in the private sector and call it a day?   Well, not exactly. The underlying fiscal factors driving government job loss and the implications on the much lamented mid-wage/skills gap should give us all pause.

What’s driving the Loss?

Fiscal conditions at the local level are driving much of the loss in local government employment. According to our recent City Fiscal Conditions survey report, city finance officers report that revenues will decline this year for the 6th year in a row. This, combined with infrastructure costs, employee-related costs for health care, pensions, and wages and cuts in state and federal aid are weighing heavily on local budgets.

In response, cities are making cuts to personnel. When asked about expenditure actions taken in 2012, by a wide margin the most common response was reducing the size of the municipal workforce (48%). Additionally, they are also delaying and canceling infrastructure projects and cutting local services – actions that also have direct employment implications.

Cities are approaching their personnel cuts in a variety of ways. In 2012, the most common cut so far was a hiring freeze (45%). At least one in four cities reduced or froze employee wages (32%) or reduced health care benefits (27%).   Other personnel actions to date have included layoffs (18%), revising union and employee contracts (16%), reducing pension benefits (15%), early retirements (14%), and furloughs (11%).

Many cities used some combination of these types of actions in an effort to reduce personnel costs. Although the percentage of city finance officers reporting these actions in 2012 is, in all categories, lower than in 2011, the combination of these cuts since 2010 has resulted in a significant reduction in the size of local government workforces.

What’s the Impact?

In addition to the typical negative impacts of unemployment on the economy, such as decreased consumer spending, unemployment in the public sector has particular consequences for the quality of anticipated economic recovery and the role of government in delivering critical services.

According to the National Employment Law Project (NELP), steep cuts in state and local government employment have hit mid- and higher-wage occupations the hardest, with low wage jobs dominating recovery. The loss of government employment means that in order to find work, many with higher skills are filling low wage jobs, taking pay cuts, and crowding others out of the job market.

Additionally, the majority of the state and local jobs impacted are those that have direct implications for local service delivery. Teachers and public safety have been the hardest hit, according to the Current Population Survey. And the NLC survey finds that this year, 21% of cities are decreasing human services spending, and 25% made spending decreases in “other” services such as public works, libraries, parks and recreation programs.

Will these jobs come back?

Struggling housing markets, slow consumer spending and high levels of national unemployment will continued to drive declines in city revenues, forcing difficult cuts to the public workforce. Research indicates that we shouldn’t expect to see recovery to state and local employment before 2017.

A silver lining, however, comes as a majority of city finance officers report that their cities are better able to meet financial needs in 2012 than in 2011. Although promising, this is likely the effect of local governments coming to terms with the (clichéd) “new normal.” Cities are adjusting, they are sharing costs for services, engaging citizens to reevaluate core service needs, forging new relationships with the private sector for service delivery, and overall improving fiscal management.

It is with hope that the new BLS jobs figures, released October 5, will show improvements in the public sector.  This would be a much welcomed break in a long, difficult road for local governments, their employees and their communities; but even glimmers of recovery must be viewed cautiously.  Any further disruption in national recovery could impede this anticipated improvement at the local level.

Go Tell the Spartans

Lansing, Michigan – The Spartans of old were the lightly armed, highly determined warriors that defended the pass at Thermopylae in 480 B.C. against a vastly superior force of Persians, bent on the complete destruction of Greece. The modern Spartans are the lightly armed and highly determined municipal officials who battle to prevent Michigan from being overrun by economic collapse, commercial oblivion and social chaos.

You may chuckle at the comparison, but it is this vision that sprang to mind during a day-long forum last week with 30 state and local elected officials and professional staff in Michigan. I came face to face with the resilience of leaders who are bent on rebuilding the economic prosperity of their communities and that of their neighbors.

These are not starry-eyed Pollyannas. Rather, they are clear-headed realists who have gotten very good a calculating and managing risk and confronting and solving problems.

There is innovation here in good measure. Born of necessity and practicality, the use of shared service agreements between cities are commonplace, albeit still challenging. At a time when “place making” and “livability principles” are often ideas for philosophical discussions elsewhere, Michigan cities are defining place for their own needs and creating a framework that can support economic recovery statewide.

Complaints are minimal but when they come forth they are focused and reasoned. For example, the leaders want CDBG rules that are flexible enough to allow targeted funding to neighborhoods which can be transitioned to PERMANENT stability rather than spent in those places that will need an annual infusion of grant funds and which are unlikely to ever stabilize.

Ideas abound. Michigan is a state rich in water resources. According to the Organisation for Economic Co-operation and Development (OECD), half the world’s population will be living under severe water stress by 2030, making water perhaps the planet’s most valuable resource. Michigan, it seems, will be ready for that eventuality.

Cautious optimism seems to be the general sentiment. Leaders are experimenting and city workers are taking ownership of streamlined procedures. There are tasks still to be done but there is a confidence that is reinforced by steady progress.

I can’t help thinking that governing the country would be a lot more effective if Members of Congress could approach their work with the same objective and practical views as do the local officials with whom I spoke in Michigan.

Rebranding Infrastructure

What might Hill & Knowlton, Fleishman-Hillard or Edelman Public Relations do if they were given the marketing campaign for INFRASTRUCTURE? It’s a terrible word in desperate need of rebranding.  What self-respecting PR firm would not jump at the chance to persuade Americans to spend their hard earned dollars on infrastructure instead of tablets or timeshares?

Although not really hard to spell and broadly understood in its scope, the word is boring and lacks the spice needed to capture the limited attention span of the overstimulated minds of 21st century humans, not to mention Members of Congress.

Infrastructure lacks a distinctive logo and does not have the memorable tag line that is so priceless to soft drink makers, auto manufacturers and political candidates.  Surely if just one of these modern-day incarnations of Mad Men could take up the challenge to glorify the merits of infrastructure, Americans of all stripes would run right out and adopt a highway, vote in favor of a bond issue to improve water systems or boycott companies that provide poor quality Internet services.

The answer to improving the nation’s dismal level of investment in the foundations of a globally-competitive economy must lie in improving the flash and zeal of the marketing.  After all, billions are spent each year on those plucky advertising executives who, by the turn of a phrase or a tightly-focused camera angle, induce millions of people to flock to one brand or another.

Without an ad campaign, all that’s left to convince people are countless studies by the American Society of Civil Engineers, the Urban Land Institute and the Chamber of Commerce.  Clearly, more research studies make little difference.  Less substance and more style is needed.  What firm did Boeing use to secure the Pentagon contract for the new air refueling tanker?

A good first step is to find a compelling spokesperson will help stir the cause of infrastructure similar to the way Al Gore’s efforts invigorated attention to climate change.  What’s needed is a person of solid reputation with immense knowledge on the subject and a simple, clear message that normal people can understand.  What’s Angelina Jolie doing these days?

State of the Cities in 2011: A New Era of Regional Collaboration

This is the sixth in a seven-part series about mayors’ 2011 State of the City speeches.

Mayor John Monaco of Mesquite, Texas quoted late President Ronald Reagan in his 2011 State of the City speech when he said, “A recession is when your neighbor loses his job…a depression is when you lose yours.”  While neighboring cities’ property tax rates have seen increases of up to 10%, Mesquite’s holds steady.  While neighboring cities are laying off dozens of employees and cutting services, Mesquite is avoiding closures, and even opening a new city hall.  When its success is measured relative to its neighboring cities, Mesquite is sailing along nicely.

A certain degree of local competition is healthy, but Mayor Heather McTeer Hudson of Greenville, Miss., would disagree with both President Reagan and Mayor Monaco.  In her State of the City speech, she called for a new era of regional collaboration.  “Though we come from a background of taking care of ‘my four and no more,’ we must progress to the understanding that a rising tide lifts all ships,” she said.

The issues highlighted in mayors’ 2011 State of the Cities speeches certainly don’t obey jurisdictional boundaries.  Residents cross local and even state boundaries on a daily basis as they travel from home to work, school, shopping and entertainment.  Transportation infrastructure cannot dump passengers out as they leave the city, forcing them to relocate to another system.  Public services cannot leave citizens underserved and unprotected as they cross into a neighboring jurisdiction.  And economic growth in one city most certainly affects growth in neighboring cities.

Cities must work together to serve their citizens, and this ultimately increases their attractiveness and strengthens their economies.  In Columbia, S.C., for example, Mayor Steve Benjamin expects inter-modal regional transportation hubs to serve as centers of activity and provide new outlets for small business development.  And he believes projects that require this type of cross-jurisdictional cooperation result in improved city services and reduced taxpayer burden.

Many mayors agree that local success means success for the region.  In Cleveland, Tenn., growth needs over the next 25 years are being assessed at the county level, and the 4.2% increase in jobs this year was reported across the eastern part of the state.  Mayor Tom Rowland knows that Volkswagen’s decision to locate a new plant in nearby Chattanooga will not compete with Cleveland’s economy.  Rather, he is in full support of this success for its spillover effects in new jobs, revenue and growth in Cleveland and other cities.

Mayors are not only looking across jurisdictional borders, they are reaching across party lines to serve their communities.  Mayors like Ardell Brede of Rochester, Minn., are cooperating with one another through non-partisan regional councils.  Mayor Virg Bernero of Lansing, Mich., who also has joined a Blue Ribbon panel of regional leaders in Michigan, is striving to “…set aside turf and political fiefdoms, to embrace new ideas and new ways of collaborating, and then to take action.”

Cities’ cooperation elicits old fashioned sentiments of small town neighborliness.  When your neighbor succeeds, he invites you to share in his successes.  When your neighbor struggles, you are not immune to his hardship.  Most importantly, cooperation builds strength and fosters innovation.  Cities operate in much the same way.  This new era of regional collaboration borrows from these traditional neighborhood sentiments, yet it primes cities to become part of powerful and successful regions in the future.

Read about this project in more detail in The State of the Cities in 2011 and the most recent installment on city infrastructure on CitiesSpeak.  Don’t forget to check back on March 23rd for the final post in this series, which takes a look at prioritizing public safety in the face of potential budget cuts.