Tag Archives: growth machines

Available electricity helping to make the Chicago region a desirable place for data centers

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As data centers emerge in the Chicago suburbs and the Chicago region, here are some reasons why these are attractive locations:

Photo by Miguel u00c1. Padriu00f1u00e1n on Pexels.com

Illinois’ attractiveness for data centers stems from economic incentives, an already improved power infrastructure and its being a net exporter of electricity, he said.

Furthermore, the use of clean-energy sources, including nuclear power plants and solar, is a draw for public companies with an environmental awareness that lead the data center industry, Sitar added.

This reminds me of the book Urban Fortunes where sociologists John Logan and Harvey Molotch discuss some of the actors involved in and benefiting from growth machines. They include utilities. Growth means more potential customers. In this particular case, data centers need a lot of electricity. ComEd, the primary electricity provider in the Chicago area, can make that happen:

A number of factors contribute to the suitability of a property like the former Sears campus in Hoffman Estates for the development of data centers, but access to an extraordinary amount of electricity is one that’s a make-or-break element.

And while the developer and municipality must rely on ComEd for that side of the project, the electric company’s expertise doesn’t make such a task easy or routine.

The article suggests a new data center will require its own substation.

Of course, one could ask about the impact of using all of that electricity. At the same time, the utility likely has a big customer who will be there for a while.

Amazon wanted a really big tax break with HQ2

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When Amazon went on a search for a second headquarters, it was motivated in part by looking for a big tax break:

When Elon Musk secured $1.3 billion from Nevada in 2014 to open a gigantic battery plant, Jeff Bezos noticed. In meetings, the Amazon.com Inc. chief expressed envy for how Musk had pitted five Western states against one another in a bidding war for thousands of manufacturing jobs; he wondered why Amazon was okay with accepting comparatively trifling incentives. It was a theme Bezos returned to often, according to four people privy to his thinking. Then in 2017, an Amazon executive sent around a congratulatory email lauding his team for landing $40 million in government incentives to build a $1.5 billion air hub near Cincinnati. The paltry sum irked Bezos, the people say, and made him even more determined to try something new.

And so, when Amazon launched a bakeoff for a second headquarters in September 2017, the company made plain that it was looking for government handouts in exchange for a pledge to invest $5 billion and hire 50,000 people. The splashy reality-television-style contest generated breathless media coverage, attracted fawning bids from 238 cities across North America and ended with Amazon deciding to split the so-called HQ2 between New York and Virginia. Then progressive politicians attacked the $3 billion in incentives offered by New York, and Bezos pulled out. Amazon was widely ridiculed for its failure to court New York politicians. To understand why that happened, Bloomberg interviewed 12 people familiar with Amazon’s effort. Their story, outlined here for the first time, depicts a team that became the victim of its own hubris. Bezos’s frustration with what he deemed meager government largess prompted executives to scrap lessons learned through the years in favor of an unapologetic appeal for tax breaks and other incentives.

This news came just as we finished introducing the concept of growth machines in my urban sociology class. In this theory, coalitions of political and business leaders drive development decisions with profits and growth in mind. In this particular case, Amazon looked to cut a deal with the city that was willing to give them the most. If Amazon chose their city, political and business leaders could claim they won because of all the new jobs plus the prestige of an Amazon headquarters while Amazon would profit from massive tax breaks. As I noted then, let the race to the bottom begin.

The biggest problem with all of this is not that there is competition between locations for headquarters and business activity. This has gone on for a long time and for a variety of organizations; read about the bids to land the United Nations headquarters. The issue is that the large tax breaks mean that some of the benefits of a business moving to a community are offset by tax breaks. And who benefits more in the end? The corporate leaders, not the community as a whole.

I can imagine a television game show format with all of this: a corporation says they want to expand and help a community or region along the way. Bidders/communities bring their pitch to the show, showcasing the best of their community (and the money). The corporation narrows it down and in the end names the one winner. Everyone else loses out (outside of making a public pitch regarding the best aspects of their community). It could be very entertaining.

Defining “blight” still matters for urban redevelopment

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The term “blight” might conjure up the urban renewal of the post-World War II era where the application of the term to poorer and non-white areas could lead to redevelopment. Yet, the term is alive and well: funding for the proposed Lincoln Yards project in Chicago is tied to the concept.

But the clock also was ticking for another reason. If Emanuel and Sterling Bay had waited much longer, the development no longer would have qualified for its record-high taxpayer subsidy, a Tribune analysis has found.

To get the money, the area had to meet at least five state standards to be considered “blighted.” The city could then designate it as a tax increment financing district. At the time of the vote, the area met the bare minimum.

Less than six weeks later, new property assessments were completed. The rising values of the Lincoln Yards land meant the TIF district no longer met one of the five standards, according to the Tribune analysis of the values of hundreds of parcels…

The Tribune’s finding comes as community groups are asking a judge to reverse the City Council’s decision. They say the area is not blighted and would be redeveloped without the taxpayer assistance, given that it’s centered on the Chicago River just west of Lincoln Park.

According to an Illinois government website, “blight” is not the only word used to describe land that might be eligible for TIF districts:

Funds may be used for costs associated with the development or redevelopment of property within the TIF, allowing blighted, declining and underperforming areas to again become viable, and allowing these areas to compete with vacant land at the edge of urban areas.

Not surprisingly, this is about money: how much public money would the developers get as they went about the project? As the article notes, such use of public money is contentious. In this particular project in Chicago, the location and size of the property is particularly valuable. Does a developer need much public money when there is so much that could be made on the project? Or, thinking in terms of opportunity costs, could such public monies be used to spur development in locations that are initially less attractive to developers?

More broadly, this gets at foundational questions about development in general. Who ultimately benefits from development: local residents, the city/municipality, and/or the developer? The growth machines model suggests development benefits local business leaders working with officials and other leaders who benefit from growth (and the status and revenues that come with that). Local residents could see some improvements through new development but the developers and business leaders are the ones who truly profit financially.

(See an earlier post regarding the term blight and its application to Foxconn’s development in Wisconsin.)

Chicago architects as political lobbyists

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The tension between the art and business sides of architecture is evident in a new report from the Chicago Tribune:

A virtual who’s who of Chicago architects has given tens of thousands of dollars to City Council members who hold near-total power to determine whether their projects get built, a Tribune investigation has found. Architects even have hosted fundraisers for aldermen…

The bulk of the money flows to City Council members in Chicago’s fast-growing wards. The architects and their developer clients have reason to stay on good terms with aldermen, who hold the power to advance a project, send it back to the drawing board or kill it.

From the start of the current building boom in 2010 through mid-November of this year, those with an occupation listed as “architect” have given more than $180,000 to aldermen, their ward organizations, and other city politicians, including Mayor Rahm Emanuel, Illinois campaign finance records show.

The architects’ firms have donated even more, bringing the total haul for politicians to well over $350,000.

One sociological study of the field of architecture, Larson’s 1994 book Behind the Postmodern Facade: Architectural Change in Late Twentieth-Century America, discusses how architects found themselves in the postwar era needing business, therefore designing a lot of buildings with little aesthetic beauty or input, yet wanting to privilege the artistic and aesthetic side of the discipline.

This also echoes research on urban growth machines which tend to emphasize the role of business leaders and politicians in stimulating and carrying out urban development for the sake of profits. This report suggests architects are part of this game too; by donating money and hosting events, they can help ensure they see profit from new development projects (as opposed to other firms participating or projects not getting off the ground.

Does the knowledge that architects are part of the power games that help determine the physical and social structures of a city sully their work? Or, does it shed light on how cities actually come to pass where even those supposedly devoted to beauty and the experience of a structure participate in lobbying?

Suburban efforts outside Atlanta to secede and form a new community; about race and income or business development?

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Voters yesterday in unincorporated suburbia outside Atlanta voted on a proposal to create a new suburb:

The proposal to form a new city, up for a vote on Tuesday, has roiled Henry County, raising tense debate about racial and economic disparity and voting rights. Once a sleepy rural, predominantly white region, the county has seen an influx of minorities and a solidification of black political power as its population has exploded in recent years. In 1980, whites made up more than 80% of Henry County’s population, but now they have dwindled to less than 50%…

If Eagle’s Landing manages to wrestle away the southern portion of Stockbridge — a section that includes its most affluent residential pockets as well as its main commercial corridor that brings in nearly $5 million of the city’s $9 million annual revenue — Ford has warned the city would be forced to impose a new property tax on remaining residents…

Backers of Eagle’s Landing counter that their aim is nothing more than to lure new fine dining and retail to a freshly coined community with a median household income of about $128,000 — more than double that of Stockbridge. Imagine, they tell their neighbors, a Whole Foods or a Trader Joe’s, a California Pizza Kitchen or a Capital Grille…

For more than a decade, rich, white pockets of metro Atlanta have led a national movement to form new cities out of unincorporated land in an effort, they say, for greater control, more efficient government and lower taxes. But this could be the first time a new city would take an existing city’s land without all the residents of the existing city having a vote.

Perhaps both arguments could be true: there is a race and class component to the proposal for a new suburb and backers of the change are interested in unique business opportunities that might come to a wealthier suburb. This reminds of the argument Freund makes in Colored Property. By the late 1960s, conservatives realized they could no longer object to non-white residents in or near their communities based on race. They instead switched over to economic arguments to justify ongoing residential segregation: people with fewer resources simply could not access nicer communities.

The matter about annexation law in Georgia is strange. The annexation of suburbs to big cities was fairly common in the late 1800s in the Northeast and Midwest as suburbs saw advantages in joining the big city. But, as cities changed, suburbs in those regions became less interested in being annexed. Laws usually reflect this: people being annexed or affected by annexations generally have to agree to the changes.

Even if race was truly not a factor (and it certainly sounds suspicious here), it also sounds like some growth machine activity is taking place. Local officials and businesses (developers?) see possible profits at stake in a suburban area with little wealth thus far. They get the state legislature to make some special regulations. Who exactly will profit here? How much of the money will come back to the (new) community?

When considering redevelopment projects, balancing concerns of neighbors and “market demand”

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A recent meeting in Naperville about redevelopment plans for 5th Avenue involved interested parties with two different perspectives. These two views are extremely common in debates about development and redevelopment. The Daily Herald encapsulates the issue in two sentences toward the end of the article:

Resident Sandee Whited said she thinks Ryan Companies is “ignoring what we want” in terms of building height.

McDonald said the company is listening to residents’ wishes but balancing them with market demand.

When opposing redevelopment, the argument of neighbors often revolves around this idea: the new structure or land use is out of tune with the surrounding properties. People bought single-family homes because they liked the residential character (single-family homes, lots, quieter, safer, etc.). Multi-family housing or a larger structure disrupts this character. In this Naperville case, concerns about the larger structure include changes to traffic and light.

When promoting redevelopment, developers and local leaders will argue – not always explicitly – that growth is good. Here, it is phrased in terms of “market demand.” In other words, there are possible businesses and residents who would be willing to pay good money to be located in the structure. Naperville is a desirable place to locate: certain businesses could generate a lot of money with a location near the train station and downtown while residents would enjoy the high quality of life, the status of the community, and the access to the train station. The new development will generate profits for the developers and perhaps more tax revenues and an increased status for the city.

Balancing these two perspectives is not easy. At times, neighbors might be able to rally the whole community with the implied threat that a single development could change what is possible in the community and more single-family homes will be under threat. This claim is a little harder to make in Naperville given its downtown and size but the city does have relatively few tall structures near single-family homes. The developers and the city may be able to convince the community that this redevelopment project is a good asset for everyone, even if a few neighbors are inconvenienced.

 

Assessing the Water Street development in Naperville

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Several Naperville political and business leaders talked yesterday of the impact of the now open Water Street development:

There were lengthy delays, caused by the recession and by repeated rounds of changes to the plans. First there were condos, then a Holiday Inn, and finally developers proposed what actually got built: a 158-room Hotel Indigo that incorporates elements of Naperville’s history into its design.

Naperville Mayor Steve Chirico thanked the residents who supported public officials as they took “tough votes” in support of the hotel, shops and riverfront improvements…

Investors Peter Foyo and Dominic Imburgia, for whom the new plaza and fountain are named, told the crowd they were honored to put their money toward a project that created jobs in their hometown and beautified a public place for a bustling future…

Pradel said by the looks of it, he’d never guess the new Water Street District was in Naperville. Not the Naperville where he grew up, seeing the strip of land south of the waterway remain relatively underused for decades upon decades.

It is quite a sizable project along the Riverwalk in downtown Naperville; it is hard to miss. And I wouldn’t expect many local leaders to say bad things about a just completed project. However, here are some questions I would ask about the development moving forward:

  1. Is it a portent of things to come in downtown Naperville and elsewhere in the community? Naperville has very little open land remaining so for population and business growth, redevelopment is key. But, redevelopments can take a myriad of forms, including new larger structures. Is Naperville ready for more structures of this size?
  2. Who benefits the most from this new development? It would be worth keeping track of the jobs and taxes generated by this new development. In the long run, are the developers or the city residents benefiting? (Of course, both could benefit but the construction of a larger structure came at the expense of other options. And growth machines – collections of local politicians and business leaders – tend to do things that are in their financial self-interests.)
  3. How many residents will use the new structure and visit the business establishments? The construction of a downtown hotel is an interesting move, suggesting that there may be an interest for visitors to stay downtown rather than at the numerous other hotels in the community (particularly along the business corridor along Diehl Road and I-88). In other words, is this for the use of residents or others?

See earlier posts about Water Street in Naperville here and here.

On the failure of the High Line

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Even as cities around the world attempt to emulate New York City’s High Line (earlier posts here and here), the creator discusses why he thinks the original failed:

But by one critical metric, it is not. Locals aren’t the ones overloading the park, nor are locals all benefiting from its economic windfall. The High Line is bookended by two large public housing projects; nearly one third of residents in its neighborhood, Chelsea, are people of color. Yet anyone who’s ever strolled among the High Line’s native plants and cold-brew vendors knows its foot traffic is, as a recent City University of New York study found, “overwhelmingly white.” And most visitors are tourists, not locals.

“We were from the community. We wanted to do it for the neighborhood,” says Hammond, who is now the executive director of Friends of the High Line, the nonprofit that funds, maintains, programs, and built the space (New York City owns it, and the parks department helps manage it). “Ultimately, we failed.”…

“Instead of asking what the design should look like, I wish we’d asked, ‘What can we do for you?’” says Hammond. “Because people have bigger problems than design.”

His organization finally did launch a series of “listening sessions” with public housing tenants in 2011. What people really needed were jobs, Hammond says, and a more affordable cost of living. Residents also said they staying away from the High Line for three main reasons: They didn’t feel it was built for them; they didn’t see people who looked like them using it; and they didn’t like the park’s mulch-heavy programming.

While it is easy to link such conversations to gentrification, I think this gets at a deeper issue regarding development in urban areas: who ultimately benefits? The short answer is that it is not typically the lower-income resident. Urban sociologists have made this point for decades; for example, the concept of growth machines suggests development decisions are typically made by political and business leaders who are looking to profit. In other words, developments are judged by how much money can be made (whether through the sale of property or buildings as well as through increased tax revenues) rather than by how many members of the local population experience a better quality of life. Or, see the the sociological study Crisis Cities that shows how money to redevelop lower Manhattan after 9/11 or New Orleans after Hurricane Katrina generally went to wealthier actors and made life difficult for the average resident.

Fear the growth machine in Flagstaff

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One concerned citizen of Flagstaff, Arizona warns of the actions of a local growth machine:

Even though I bought into Flagstaff a scant nine years ago, the town that I bought into is no more. It was a town of vision and limited growth, of respect for nature and dark skies, with a government that deferred to public over narrow corporate interests.

Today it resembles nothing so much as urban sociologist Harvey Molotch’s famed “City as a Growth Machine.”

Our city government has been captured by outside interests and a mayor who promotes the well-discredited, but widely accepted, falsehood that growth is good for a city, that it brings jobs, wealth, and cheaper housing. Whereas the opposite is demonstrably true: Job opportunities bring increased population which increases unemployment and housing shortages with yet more growth as the alleged cure.

The falsehood originated in Chicago School of  sociology, but look at Chicago today, or Los Angeles, or even Santa Barbara. Now think of these ugly monstrosities coming to Flagstaff with ugly names like Standard, Core, and Tank. Envision the Weatherford just down the street from a looming modern hotel and ask yourself if it’s still the Weatherford. Finally, ask yourself how mindless urban development solves the hot social problem of the moment, gridlock traffic.

And if he wants to continue the critique offered by Logan and Molotch, he might add: who profits the most from new growth, particularly new development and infrastructure? It tends to be corporate interests who use their influence and capital to make money off the growth that is supposedly good for everyone.

I’m not sure I quite understand what is going on with this chain of events: “Job opportunities bring increased population which increases unemployment and housing shortages with yet more growth as the alleged cure.” More jobs leads to more unemployment?

Ultimately, using this growth machine concept to fight particular political candidates might be very effective in local elections as it highlights the actions of the politically powerful and questions their motives. In other words, people who are suspicious of leaders could find this theory complementary to their existing feelings. If faced with such criticism, officials and leaders would likely fall back to arguments about how growth is generally good (as Logan and Molotch note, this is not really up for debate in American cities) and that their actions benefit a broad range of residents. To counter, opponents should find significant projects that didn’t help many – like sports stadiums or big corporate developments –  and highlight the ongoing day to day issues that were not addressed like affordable housing and increased congestion.

Santa Clara: from small city to Super Bowl host

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How did Santa Clara come to be the home to Super Bowl 50? It involved particular decisions made from the 1970s on by local leaders about zoning and land use:

Newly elected mayor Gary Gillmor and city manager Don Von Raesfeld were determined to keep Santa Clara comprised of specific sections — with residential property assigned a large but non-elastic section.

This meant buying undeveloped land in the north and east parts of the city for business and industrial purposes and building a robust tax base. McClain doesn’t recall much about the vacant land other than a dairy where families bought their milk if it wasn’t delivered.

The city already had three major highways and expressways that funneled into the undeveloped area, where high-tech companies such as Intel, Applied Materials, McAfee and National Semiconductor gradually started and became a large part of what is now Silicon Valley.

Gillmor, 79, cited three factors that helped Santa Clara maintain its preferred blueprint: a strong middle class, a huge industrial base for tax purposes and its own municipal power plant that reduces residents’ electric bills to about half of what is charged in neighboring cities…

A convention center and another large chain hotel were built in 1986, but the city’s fondness for the 49ers surfaced during the height of the team’s dominance.

The 49ers were given a sweetheart deal to move their training facility from Redwood City — 18 miles north of Santa Clara. Then-mayor Eddie Souza enticed then-49ers owner Eddie DeBartolo Jr. with a deal that gave the team 12 acres at $1,000 an acre with a 4 percent annual increase for 55 years, according to the San Francisco Chronicle.

Today, Santa Clara is a wealthy place as a city with over 122,000 residents: the median household income is $93,840, 53.9% of adults over 25 years old have a bachelor’s degree or more education, and Intel, Texas Instruments, and other semiconductor firms have thousands of jobs in the city. But, this sort of growth doesn’t just happen. Decisions made by civic and business leaders – operating as a growth machine trying to boost profits – often help execute a particular vision of growth. As suggested above, it sounds like land in the city was intentionally set aside for business use and the city was able to attract a number of companies. Not everything can be controlled by civic leaders but they can set themselves up to take advantage of particular opportunities.

On the other hand, having a football stadium is not necessarily a win for a city. This is particularly the case if local tax dollars are used for the stadium. The stadium might be a status symbol – note that the San Francisco 49ers now do not play close to San Francisco – but they often bring other issues.