Should Detroit focus on growth at all?

A recent overview of Detroit’s status raises an interesting question: should Detroit hope for any growth at all? Here is part of the story:

“What everyone wants is new neighbors,” said Khalil Ligon, project manager for the Lower East Side Action Plan (LEAP), a nonprofit focused on some 15 square miles of the city where 55,000 people live. “But where are you going to get them?”

The falling population is one of Detroit’s biggest problems. Detroit Future City, a planning blueprint, assumes just 600,000 residents. Launched by Mayor Dave Bing, the plan aims to revamp the economy and use empty space. The Kresge Foundation, started by the Detroit family behind retail giant Kmart, has promised $150 million toward the project.

“It’s certainly the most realistic plan the city has ever had,” said Margaret Dewar, a University of Michigan planning professor in Ann Arbor…

“We cannot cut our way of this situation,” Bing told Reuters. “We’ve got to talk about growth.”…

Bing’s revival plan will end up in the hands of the emergency manager, should one be appointed. “If the emergency manager buys into the long-term vision of the plan, it has a chance. But if their brief is just to cut costs and services, it doesn’t have a chance,” said Dewar, the University of Michigan professor.

Realistically, it is hard to imagine a major reversal in Detroit’s fortunes soon. The immediate question is whether the city can halt the population loss. However, the idea of growth is an interesting one as we think more broadly about American cities. We have a narrative that says successful cities grow. Cities that lose population, even ones that are not even close to Detroit’s population loss, are in trouble. Perhaps we can’t even have a realistic conversation about Detroit until the population plateaus…though this may not be for a while.

Developer’s son wrong; Naperville residents and leaders made decisions long ago that mean the suburb can’t go back to the 1950s

Naperville is considering a new project, the Water Street Development, but the developer’s son is not happy with the opposition to the project from the Naperville Homeowner’s Confederation. In a recent email, here is how he made his case:

In his email, Bryan Bottarelli said the council has been “politically intimidated by a group of old-economy thinkers who call themselves the Naperville Homeowners Confederation.”

“This group claims to represent all the homeowners associations in Naperville. But in reality, it consists of a handful of older residents who are bored — and who have nothing better to do than to try keeping Naperville the same exact way it’s been since the 1950s,” the younger Bottarelli wrote. “They’re afraid of change — and they’re using fear tactics to red-light this project. And be honest — what they’re doing has been working. They know how to work the local political system to their advantage.

“And, since they have so much extra time on their hands, they’ve committed their days to bombarding city council with emails, letters, and phone calls in complete opposition to this deal.”…

“The confederation is disappointed at the tone of the email by Mr. Bottarelli’s son,” President Bob Buckman said in a written statement. “This is not in keeping with the tradition of respectful public discourse in Naperville that we all value. It is unfortunate that his description of us does not in any way represent the confederation’s members, or our many contributions to civic life in Naperville. Since 2006, the confederation board and its members have carefully studied, dissected, looked for alternatives, met with the developer, submitted a comprehensive report in 2007 and testified at plan commission and now at city council on this proposed development.”

Here is the problem with his argument: regardless of what current residents want, Naperville can’t turn back the clock to the 1950s. Naperville is little like what it was in 1950 and residents have been part of the process in changing Naperville. I know Bottarelli mentioned the 1950s but a number of the changes to Naperville started occurring at the end of this decade so I’ll make a comparison to 1950. Indeed, my research on the topic suggests Naperville, leaders and residents, have made numerous decisions over the decades to pursue growth.

Here is how Naperville was different in 1950:

1. It had a population of 7,013 in 1950. Today, Naperville has around 142,000 residents. This means the population has expanded by a factor of 20.

2. Along with a significantly larger population, Naperville has significantly increased in land size. Today, the city is over 39 square miles and it can take a while in certain traffic conditions to drive from one end to another. The size is large enough that the city added a second city hall-like facility, it now has two commuter railroad stations, and the city has sought ways to create social space and a community feel on the southwest side because it is a distance away from downtown (for example, planning for a commercial node at the northwest corner of Route 59 and 95th Street).

3. Basically none of the post-World War II subdivisions had been built by 1950. Harold Moser, the local developer who was responsible for a large percentage of the subsequent growth, was just getting started. The homeowner’s associations Battarelli is disparaging didn’t even exist in 1950.

4. Naperville’s downtown is quite different today. There is a renowned Riverwalk. There is a municipal center and Naper Settlement. The downtown has a number of national retail stores. There are plenty of restaurants and bars. There is a new performing arts center (in conjunction with North Central College) along with a carillon tower. In short, the downtown is a suburban entertainment hub. Even if the Water Street development gets turned down, it is not because Naperville hasn’t wanted to have a successful and vibrant downtown.

5. I-88, the highway that runs alongside the north side of Naperville, hadn’t even been built yet in 1950. It opened in the late 1950s and the first major facility, Bell Laboratories, was built near to the Naperville Road interchange in the mid-1960s. The moving of this facility near town helped kicked off Naperville’s rise as a white-collar job center which also helped fuel some of the other changes.

6. The Naperville of 1950 was not known for being one of the best places to live (Money in the mid 2000s), having a top 10 library, or the other accolades Naperville has accumulated in the last ten years or so. In 1950, the community had a small liberal arts college, a swimming pool converted from a quarry, the Kroehler furniture plant, and was known as the community that was once the county seat of DuPage County before Wheaton took the honor in the 1860s.

In other words, the Naperville of 1950 bears little resemblance to the Naperville of today. The cow is already long gone out of the barn on this one. Over the years, Naperville has consistently chosen to annex land, approve development, and grow even as it tries to retain its small-town charm. So if this particular project doesn’t succeed, this doesn’t mean Naperville residents or leaders want to live in the Naperville of 1950: even with some heated discussions over the decades about how much Naperville should grow and whether the new changes would irrevocably change the character of the community, Naperville has consistently pursued growth and change.

Rahm Emanuel: Chicago the model for pro-growth policies

Chicago Mayor Rahm Emanuel had an op-ed in the Washington Post on Friday where he explained how his city could show America the way toward growth:

While infrastructure improvements have been neglected on a federal level for decades, Chicago is making one of the nation’s largest coordinated investments, putting 30,000 residents to work over the next three years improving our roads, rails and runways; repairing our aged water system; and increasing access to gigabit-speed broadband. We are paying for these critical improvements through a combination of reforms, efficiencies and direct user fees, as well as creating the nation’s first city-level public-private infrastructure bank. Democrats should champion these kinds of innovative financing tools at a national level.

If we want to build a future in which the middle class can succeed, we must continue the push for reform that the president began with Race to the Top, bringing responsibility and accountability to our teachers and principals.

Chicago has adopted its own Race to the Top for early childhood education, allowing public schools, Head Start, charters and parochial schools to compete for dollars by improving the quality of their pre-kindergarten programs. In addition, this year Chicago Public Schools put into effect a 30 percent increase in class time, which means that when today’s kindergartners graduate high school, they will have benefited from 2½ more years’ worth of education.

In partnership with leading private-sector companies, we reengineered our six community colleges to focus each on skills training for jobs in one of Chicago’s six key growth fields. Democrats can be the party that closes the nation’s skills gap by making our community colleges a vital link between people looking for jobs and companies looking for skilled workers.

The strength of these investments is proven in the number of people we’re putting back to work: Chicago is first in the nation in terms of increase in employed residents, and for several months we have led the nation in year-over-year employment increases. We added 42,500 residents to the workforce in the past year alone — 8,000 more than the next highest U.S. city…

If Democrats develop innovative policies that help Americans compete in a global economy, we will outperform Republicans on Election Day. It’s that simple.

I’ve made this argument before (see here): Rahm Emanuel is more of a pro-business Democrat. As he notes in this article, he is in the mold of Bill Clinton who was willing to do what it takes to add jobs and fuel growth (illustrated by his recent push for digital billboards on city property alongside busy highways). And thus far, Emanuel has been able to push through his agenda in Chicago.

However, two things might hold back his arguments on the national level:

1. How much do Democrats and other Americans want government  to work closely private firms and corporations? Emanuel is a fan of public-private partnerships but people on both sides may not like this idea much.

2. Critics will charge that Chicago is hardly a model for others to emulate. Crime? Residential segregation? Massive budget issues? Battles with local unions? Underperforming schools?

I imagine some other big-city mayors might argue their cities could provide better models for the whole country. It would be fascinating to see a number of them respond with different visions.

(One last question: how much of this argument is simply boosterism from the mayor of the city’s third largest city?)

A conservative fighting sprawl argues it is a Ponzi scheme

Here is a summary of the arguments against sprawl made by conservative Chuck Marohn:

But, while my concern with sprawling growth patterns was rooted in their effect on the landscape, on the environment, and on severely compromised populations left behind, Chuck is all about the money. As Thoughts on Building Strong Towns makes quite clear, Chuck believes that sprawl is a Ponzi scheme and we the taxpayers are the ones left holding the empty bags.

In fact, the lead chapters of the book are devoted to the Ponzi thesis, whereby municipalities chase outward growth to find new tax revenue that proves insufficient when the infrastructure needs repair; so they chase even more new growth to pay for the previous round, over and over, until the pattern chokes the economic life out of the place. In Chuck’s words:

“The local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange – a near-term cash advantage for a long-term financial obligation – is one element of a Ponzi scheme.

The other is the realization that the revenue collected does not come near to covering the costs of maintaining the infrastructure.  In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance . . .

We’ve done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations – which are not counted on the public balance sheet — are a generation away.”

A few thoughts about this:

1. I’ve seen this in action in suburbs and the problem becomes particularly acute when growth slows or stops or the economy runs into trouble. At these points, the revenue flow based on developer fees plus the new tax revenues from property and sales taxes slows and budgets have to be looked at more closely.

2. Infrastructure is a long-term investment, not a short-term building issue. Lots of communities face this issue: how to generate enough money to substantially fix or replace aging infrastructure? Money needs to be consistently budgeted for these issues because issuing bonds is not always a good answer.

3. I’ve wondered this before: how much of growth is driven by money versus the status that comes with being a growing community? The money from new development is clearly important but there is also prestige associated with moving forward, adding to the population, and continually adding to the tax base. Imagine this line: “a good community is a stagnant/plateaued community.” I don’t think so.

4. More broadly, this is a call for more comprehensive long-term planning in communities. This doesn’t just mean 5, 10, and 20 year projections – communities need to think how the world might change, whether they will have the resources to change course, and how open they will be to pursuing differences courses given the changing world.

Subways are all alike

If you’ve ever traveled to a new city and felt deja vu while riding the subway, a recent academic paper summarized by Wired explains why:

With equations used to study two-dimensional spatial networks, the class of network to which subways belong, the researchers turned stations and lines to a mathematics of nodes and branches. They repeated their analyses with data from each decade of a subway system’s history, and looked for underlying trends.

Patterns emerged: The core-and-branch topology, of course, and patterns more fine-grained. Roughly half the stations in any subway will be found on its outer branches rather than the core. The distance from a city’s center to its farthest terminus station is twice the diameter of the subway system’s core. This happens again and again….Subway systems seem to gravitate towards these ratios organically, through a combination of planning, expedience, circumstance and socioeconomic fluctuation, say the researchers.

What particularly fascinates me is the prevalence of particular ratios within transit systems, suggesting that subways scale in consistent ways as their host cities grow.

Argument: we need to question today’s economic equations that are based on the suburban experiment

Here is an interesting argument regarding the American suburbs: Charles Marohn suggests the economic equations behind suburban development need to be questioned.

I’m struck by how strongly our culture associates growth and prosperity with highway construction and expansion. Tom Friedman, a respected left-of-center columnist with the New York Times, had an entire chapter in his most recent book, That Used to Be Us: How America fell behind in the world it invented and how we can come back, devoted to the concept that “our winning equation” is, in part, to invest in infrastructure and then watch prosperity flourish, just like it did in the 1950’s and 1960’s.

Of course, this ignores that fact that our investments during the first generation of America’s Suburban Experiment (1950-1975) were higher return investments that generated a lot of positive cash flow. I like to point out that, when we built the 35W bridge here in Minnesota for the first time, it connected far flung areas of the Minneapolis/St. Paul metropolitan region in a way that had not been done before. Following that investment, new commercial real estate was developed, new residential housing went in and the resulting influx of tax receipts made us feel wealthy. When the bridge fell down and had to be rebuilt, we didn’t experience all that new growth, just the costs of construction and delay. Maintenance has an entirely different set of financial metrics than new construction…

Unfortunately, we base this belief on the illusion of wealth that was created in the early years of the Suburban Experiment, where the first life cycle of horizontal expansion had produced growth for our economy and that pesky overhang of maintenance was still a decade or more away. We should know better by now, but there are few in a position to change the system that don’t benefit, at least in the short term, from it being perpetuated…

Now let me drop the bomb I’ve been alluding too: Those “benefits” that we kind of think of as prosperity, wealth or GDP; they really aren’t. There are derived from a set of narrow correlations between time saved and prosperity that we witnessed in the early 1950’s when we built those initial highways. We connected these far flung places — places only served by railroads or poorly constructed roadways prior — and we saw all kinds of economic gains. We then used that knowledge to build equations to justify expansion of the system. Nobody ever questions those equations today (why would they) and nobody stops to consider the diminishing returns of the system.

So there is not actually any money here, just a few seconds of saved time here and there that economists and engineers equate with money when they are trying to justify a project. Do you take home more money, generate more wealth for the economy or spend more of your income when you can arrive at work 45 seconds more quickly? Not me either. These equations are a joke. (If you want to learn more, read our 2010 series on Costs and Benefits.)

An interesting update to an old argument: the suburbs are unsustainable in the long run because they are based on new growth and continuous reinvestment. In the end, there won’t be enough money left to sustain it all, even if we could keep the infrastructure up to date.

Is Marohn really saying that the economic growth of the United States since the 1950s is largely an illusion? I’d like to hear about more of this aspect of the argument…

This reminds me of some of my research on suburban communities that are approaching build-out. In their earlier growth phases, these communities could expect a certain amount of money to flow in from new development and fees. However, once this stopped (and combined with the recent economic crisis), these towns are left scrambling for money. Without a good amount of new development, the budgets aren’t increasing much even as residents continue to push for equal or increased levels of service plus everything is aging (infrastructure, housing stock which makes it less attractive, municipal buildings, etc.). Is this an analogous situation?

Bonus: you even get a financial analysis of a diverging diamond interchange!

Economist Robert Shiller: “we will never in our lifetime see a rebound in these [housing] prices in the suburbs”

Economist Robert Shiller suggests there is a “real chance” we may have a long way to go before the US housing market recovers:

Many young people are choosing to live at home for a longer period of time instead of buying. Moreover, would-be homebuyers are settling into modern apartments and condominiums, further hindering a housing rally. Shiller says the shift toward renting and city living could mean “that we will never in our lifetime see a rebound in these prices in the suburbs.”

A perpetually sluggish housing market, which Shiller believes has become “more and more political,” might push the country in a “Japan-like slump that will go on for years and years.”

I imagine there are a lot of people who hope Shiller is very wrong. If you watch the full video here, Shiller also suggests there is a chance for a rebound. The discussion is based on this data:

Home prices in January were flat compared to the prior month, suggesting stabilization in the market, but home values fell for the fifth-straight month and prices dropped to their lowest levels since 2003, according to the Standard & Poor’s/Case-Shiller Home Price Index. Housing prices declined 3.8 percent on a year-over-year basis. The index measures the value of home prices in 20 U.S. metropolitan cities.

The key prediction here is that suburban housing prices may not rebound for decades. What are the implications of this? I wonder if this means that we may finally witness a suburban growth plateau, meaning that because people will have more difficulty moving in and out of their houses, suburban growth will have to slow. Of course, this may change after a few years as people adjust to their mortgages and either move out of being underwater or pay enough off to make some money when they sell. But there would still be fewer people looking for homes, leading to less demand for new homes.