The Brookings Institution Metropolitan Policy Program Bruce Katz, Director A Transformative Agenda for U.S. Cities Wingspread Conference February 10, 2005
A New Transformative Agenda for U.S. Cities I II III IV There are profound demographic, market, and social forces affecting the United States These forces dramatically improve the competitive prospects of cities Despite these promising trends, cities have yet to realize their true economic potential Local, state, and federal policies shaping cities are mixed V A Transformative Agenda for U.S. Cities
I There are profound demographic, market, and social forces affecting the United States
Major demographic change is taking place in the U.S. Population Growth Immigration 35 30 25 Millions of persons 33 mil. 34.7% 20 15 10 5 - Aging 24 mil. 23 mil. 22 mil. 1960-1970 1970-1980 1980-1990 1990-2000 Share of Population in Age Groups Net Immigration Natural Increase Internal Migration 65.3% Components of population change, 1990-2000 Male 85+ 1970 Female Male 85+ 2020 Female <5 6% 4% 2% - 2% 4% 6% <5 6% 4% 2% - 2% 4% 6% New Sunbelt Melting Pot Heartland
At the same time, the country is going through a period of unprecedented economic transformation Globalization 1,420 1,220 1,020 Knowledge industries 35% 30% 25% 20% 15% 10% 5% 0% 820 620 420 220 20 Exports of Goods Exports of Services Imports of Goods Imports of Services 1990 1992 1994 1996 1998 2000 Share of Real Investment Share of Real GDP Bil. Constant 2000 Dollars 1990 1992 1994 1996 1998 2000 Share of Real Investment and GDP in New Economy Industries Deindustrialization 35% 30% 25% 20% 15% 10% Rapid innovation 20 18 16 14 12 10 8 6 4 2 0 5% 0% 22% 18 1970 2000 11% Manufacturing From R&D to Market (Months) 15 U.S. Employment Shares 19% 32% Services 13 1998 2003 2006
In the 1990s, steady growth and prudent fiscal policy kept interest rates low, fueling development GDP Growth 5% 4% 3% 2% 1% 0% -1% 1.9% 1990-0.2% 1991 Interest Rates 4.5% 4.5% 4.0% 4.2% 3.7% 3.7% 3.3% 2.7% 2.5% 1992 1993 1994 1995 1996 1997 1998 1999 2000 16% 3-Month Treasury Bills 14% 12% 10% 8% 6% 4% 2% 0% 1980 1984 1988 1992 1996 2000 0.8% 2001 Budget Surplus $300 $200 $100 $0 -$100 -$200 -$300 -$400 Development $1,000 $750 $500 $250 Budget Surplus or Deficit (Bil. Current $) 1990 1994 1998 2002 Construction Put in Place (Bil. Current $) 1993 1995 1997 1999 2001 2003
Social change drove (and was a response to) demographic and economic change Delayed marriage Declining segregation Percent of All U.S. Tracts 28 27 26 25 24 23 22 21 20 80% 60% 40% 20% 0% Men Women 1900 1920 1940 1960 1980 2000 62% 23% 1960 2000 18% <1% 1-10% Median Age at Marriage African-American Share of Population in U.S. Census Tracks 45% Smaller families 100% 80% 60% 40% 20% 0% 1976 2002 Births Ever to Women Age 40-44 18% 17% 10% 10% 80% Dispersed social networks 65% No children 1 child 2+ Children Local ties now make up only 2-5 percent of an average North American s social network Wellman (1996)
II These forces dramatically improve the competitive prospects of cities
The dense physical layout of cities gives them a competitive and fiscal advantage Density contributes to innovation by attracting young educated workers Aerial Image of dense city here Average labor productivity increases with employment density Dense labor markets and high clustering of jobs lead to knowledge spillovers, both within and across industries Compact development is more costefficient
Density has made cities multicultural centers of creativity, commerce, and culture Centers of Tolerance & Creativity Milken Gay Bohemian Metropolitan Area Tech-Pole Index Index San Francisco 1 1 8 Boston 2 8 9 Seattle 3 6 1 Washington, DC 4 2 6 Dallas 5 19 15 Los Angeles 6 7 2 Chicago 7 15 20 Atlanta 8 4 13 Phoenix 9 22 24 New York 10 14 3 Centers of Commerce Centers of Immigration 45% 40% 35% 30% 43% Hispanic Centers of Culture Percent change in population, 1990-2000 100 largest cities 38% Asian Ports Airports Other Transportation Networks Financial and other business services Universities Museums Theaters Restaurants
The new positioning of cities has driven an urban resurgence in the United States Population Growth 14% 10% 50 largest cities, 1970-2000 Revitalized Downtowns 40% 30% 20% City Downtown Percent change in population, 1990-2000 6% 2% -2% Increase in Jobs Millions of Jobs 32 31 30 29 28 27 26 25 24 6.3% 9.8% -1.6% 1970s 1980s 1990s 26.6 mil. Jobs located in 114 large cities, 1992 & 2001 31.2 mil. 1992 2001 10% 0% -10% -20% Atlanta Baltimore Cleveland Philadelphia Declining Poverty 20% 18% 19% 16% 17% 14% 1990 2002
Cities, in particular, have gained a strong footing in the New Economy Innovation Economic Base 50 Largest Cities, Share of New U.S. Firms & Jobs, 1996-97 Economic Activity in Old and New Economy Sectors, 114 Cities and their Suburbs, 2000 100% 26% 90% 80% 70% 40% 54% 24% 25% 60% 50% 40% 22% 23% 30% 20% 60% 46% 10% 20% New Firms New Jobs 0% City Economic Base Suburb Economic Base New Economy Old Economy
III Despite these promising trends, cities have yet to realize their true economic potential
The historic legacies of racial and class segregation persist Concentrated poverty Non Metropolitan Suburbs Central City 900k 1 mil. Population of high-poverty neighborhoods by location, 2000 6 mil. Racial disparities 40% 38% 37% 30% 20% 10% Percent Age 25 and over with Bachelors Degrees (100 Largest Cities), 2000 14% 10% 0 1 2 3 4 5 6 Popoulation (in millions) Failing schools Percent at "Basic" Levell 80% 70% 60% 50% 40% 30% 20% 10% 0% 25% 67% Reading High-Poverty Suburban 33% Math 67% Educational achievement rates, fourth grade students 0% Asian White Black Latino Parasitic economies Research shows low income households pay hundreds more each year for: financial services insurance utilities appliances food
These problems fuel uneven growth everywhere; in some regions, they continue to cripple central cities Population decentralization Weak central cities 50% 40% 30% 20% 10% 0% 6% 44% City Suburbs 4% 16% 19% 37% 9% 18% Atlanta Chicago Denver Top 100 Employment decentralization Population change, 1990-2000 0% -2% -4% -6% -8% -10% -12% -14% -16% -15% -13% -12% Population change, 1990-2003 -11% -7% -16% 60% 40% 65% Share of jobs within 3-, 10-, and greater- than-10-mile radius of center, 1996-18% St. Louis Baltimore Cincinnati Pittsburgh Detroit Philadelphia 20% 22% 35% 0% Within 3 miles Within 10 miles Beyond 10 miles
IV Local, state, and federal policies shaping cities are mixed
At every level, urban policy is beginning to get some things right Local State Federal School reform/governance Community policing Vacant land Government reinvention Innovative financing Brownfields Fix it first transit Workforce/higher education Growth management Investment in medical research EITC/CHIP Childcare HOPE VI CRA GSE Goals/ Homeownership Investment in medical research ISTEA/TEA-21
Cities often make the wrong bets (e.g. convention centers) Number of Cities 60 50 40 30 20 Planned or in construction Built since 2000 22 22 34 Attendance (Millions) 6 5.5 5 4.5 4 3.5 3 Tradeshow Week 200 Events 10 19 2.5 0 New Centers Expanded Centers 2 1990 1992 1994 1996 1998 2000 2002 2004 Source: Heywood Sanders. Space Available: The Realities of Convention Centers as Economic Development Strategies, Brookings. January 2005.
States set rules of the development game that continue to favor suburban development Major state spending programs have skewed funding to greenfields State tax systems are biased against cities In many states, local zoning ordinances do not conform to local or regional plans Picture of greenfield Barriers to brownfield development hinder their productive reuse Greater government fragmentation correlates with more sprawl Many state constitutions prevent government from using gasoline tax on transit
Federal policies are at best anemic; at their worst, they also favor suburban development Anemic policies Federal work benefits fail to support eligible working families more than 20 states have waiting lists for child care programs - several states have stopped accepting applications from eligible families In contrast, Britain devoted an extra 1 percent of GDP to reducing child poverty - $100 billion U.S. a year in added spending Blair s program reduced child poverty from 23% in 1997 to 13% in 2001 The increase is more than our final child poverty budget, $60-76 billion Biased policies Subsidized housing policies reinforce concentrated poverty Homeownership tax expenditures favor suburban buyers Environmental regulation pushes growth outward Despite improvements, transportation funding is still geared toward highway building
V A Transformative Agenda for U.S. Cities
In the 21 st century, cities will have an opportunity to redefine their role in metropolitan America Physical Economic Social Walkable and well defined mixed-use neighborhoods Transportation infrastructure tailored to the modern city Renowned recreational amenities and institutions State-of-the art schools Clean and healthy urban ecosystems Concentration of regional business activity An innovative highly skilled workforce Strength in sectors with a competitive advantage Dynamic arts and culture sector reflecting urban diversity Efficient government services Strong middle-class families Quality neighborhoods of choice Common and inclusive civic identity A commitment to serving and developing residents with greater needs
To recap: Cities have real assets that are highly valued by the New Economy Underutilized Waterfronts Downtowns Human Capital Universities Active Neighborhoods Infrastructure
While recent trends are positive, legacies from the past are preventing cities from fully leveraging these assets Positive Trends Population growth Immigration Aging population Investors looking to tap underserved urban markets Certain positive state and federal programs Historical Legacies Concentrated poverty Substandard housing Aging and outdated infrastructure Fiscal disparities Ossified bureaucracies Fragmented governance Racial and class separation
Increasingly cities are recognizing and leveraging these assets by carrying out transformative efforts Landscape Transformative Effort Physical Reclaiming the Waterfront Channeling Land Use with Transit Developing Green Infrastructure Economic Modernizing the CBD Reforming Governance Supporting Innovation Social Creating Neighborhoods of Choice Growing a Middle class Reducing Disparities
Physical Reclaiming the Waterfront Underutilizing the asset: In the past, cities used zoning and infrastructure placement to cut neighborhoods and residents off from the waterfront Leveraging the asset: Cities recognize the passive and active recreational value of waterfronts, as well as their attractiveness to developers interested in generating new mixed-use urban environments
Physical Reclaiming the Waterfront The Milwaukee Freeway Demolition The Milwaukee Freeway Demolition Removal of a little-used spur of the never-completed Park East Freeway began in 2002 to reclaim 11 blocks of downtown land Renewal project will add commercial and residential development of mixed types, taking advantage of the unique features downtown (e.g. the river, entertainment venues, etc.) Before After
Physical Channeling Land Use with Transit Underutilizing the asset: In the past, cities built transit to service existing residential development Leveraging the asset: Cities realize that transit can generate value by promoting denser, more efficient growth patterns
Physical Channeling Land Use with Transit The Milwaukee Freeway Demolition Transit oriented development in Arlington County, VA The Vision In 1972, sector plans were created around each metro station to establish land use and development guidelines and ensure a mix of commercial residential and office uses The Outcome The Rosslyn-Ballston corridor now contains 18,000 housing units and 14 million square feet of office space 73,000 jobs are located within a third of a mile of the corridor
Physical Channeling Land Use with Transit The Milwaukee Freeway Demolition Denver FasTracks will encourage smarter growth patterns $4.7 billion project; financing provided by sales tax (4 cents per $10) TOD around stations designed to accommodate 900,000 anticipated new residents over next 20 years 119 miles of new light rail and commuter rail 18 miles of bus rapid transit service 21,000 new parking spaces at rail and bus stations
Physical Developing Green Infrastructure Underutilizing the asset: In the past, cities paved over or neglected parks and open space Leveraging the asset: Cities are building and designing active programming for parks and other recreational spaces
Physical Developing Green Infrastructure The Milwaukee Freeway Demolition Denver s plan for A City in A Park Continuous green streets streets with adequate sidewalks and tree canopies connecting neighborhood main streets, schools, and recreation centers to parks Citywide and regional trail connectors connecting parks and creating longer walking and cycling routes Green Street Ideal Healthy and accessible waterways extending and increasing open space along city rivers A Plan for the City in A Park
Economic Modernizing the CBD Underutilizing the asset: In the past, cities planned downtowns for concentrations of office space Leveraging the asset: Cities recognize that work/live downtowns support the mix of retail and commercial activities desired by both businesses and urban residents
Economic Modernizing the CBD Albuquerque The Milwaukee is making Freeway long-term Demolition investments in its downtown Historic Downtown Improvement Company Agenda Vision A cooperative partnership led by Arcadia Land Company and the McCune Charitable Foundation. HDIC will make investments that will serve as catalysts for development leading to a vibrant mixed-used downtown Design Bury the box is major design focus, large footprint uses, such as a new 14-screen movie theater and a 180,000 sf parking structure, have been hidden by pedestrian-friendly buildings with ground floor retail and office or residential above A Vision Financing HDIC s committed $200 million in patient equity matched by $8 million in City backed infrastructure improvements; HDIC will repay city with project revenues Mixed-Income HDIC is working to create a mixed-income downtown. Share of profits will go to Downtown Albuquerque Civic Trust, a local nonprofit affordable housing developer Progress
Economic Modernizing the CBD The NJ Performing Arts Center enlivens downtown Newark $187 million investment in downtown Newark Built on 12 acres fronting the Newark River Leverages $60 million in private financing Facility includes a 3,000-seat opera house, a 2,500-seat concert hall, a 1,800-seat music theater, and a 600-seat dance and drama theater Center has spurred ancillary commercial and retail activity
Economic Reforming Governance Underutilizing the asset: In the past, large bureaucracies made cities slow and inefficient Leveraging the asset: Cities are using technology and economies of scale to make transactions smoother and faster
Economic Reforming Governance Fort Wayne is training Six-Sigma black belts to increase efficiency in city government Fire code re-inspections were increased by 23% and the average number of days to a re-inspection was reduced from 51 to 34 days Water main replacement costs were reduced from an average of $61.00 per foot to $50.00 per foot Number of days to receive an Improvement Location Permit was reduced from an average of 51 days to 12 days Missed trash pick-ups were reduced by 50% Responses to pothole complaints were reduced from an average of 21 hours to 3 hours Cost per change order for transportation engineering projects was reduced by 50%
Economic Supporting Innovation Underutilizing the asset: In the past, cities used placeless economic development strategies to attract knowledge economy industries Leveraging the asset: Cities are leveraging the competitive advantages provided by the built environment to compete in the new economy
Economic Supporting Innovation Wireless internet access throughout Philadelphia will maximize the potential of residents, businesses and visitors creating a truly digital city that supports economic development, social development and helps close the digital divide in this knowledge-based world Wireless Philadelphia is a $7-10 million plan to turn the entire city into a wireless internet hotspot by June 2005 Wireless Philadelphia will introduce high-speed internet to areas currently beyond the reach of broadband. Businesses will be able to take advantage of tiered levels of service Philadelphia will work to provide educational opportunities and other city services over the wireless network
Economic Supporting Innovation Richmond partnered with Virginia Commonwealth University to create the Virginia Bio-Technology Research Park 27,000 square feet of state of the art laboratories ideal for biotech start-ups in downtown Richmond More than 50 companies have started in the incubator, including 18 originating from VCU research 16 have graduated from the incubator 3 are now publicly traded creating hundreds of new jobs in the Richmond area
Social Creating Neighborhoods of Choice Underutilizing the asset: In the past, cities concentrated poor families in high-rise public housing in neighborhoods surrounding their downtowns Leveraging the asset: Cities are creating mixed-income communities of choice in neighborhoods in close proximity to central business districts
Social Creating Neighborhoods of Choice In St. Louis, the Vaughn high rises were transformed into a new mixed-income neighborhood of choice Vaughn High Rises in 1995 Four nine-story buildings 656 units Typical of 1950s-era, urban renewal public housing towers Murphy Park Homes Townhouses, garden apartments and singlefamily homes 413 units New Urbanist design and defensible space technique Jefferson Elementary Leverages $5 million in corporate and philanthropic money Technologically advanced educational facilities New principal with wider control over teachers and curriculum
Murphy Park and Jefferson Elementary are enjoying success 80% 60% 40% 20% Share of Jefferson Elementary students reading at grade level, 1999-2002 The median household income rose by 18 percent between 1989 and 1999, compared to four percent regionally 0% 1999 2000 2001 2002 2002 Murphy Park Residents Income distribution, 2003 Income Bracket Percent Under $10,000 31% Unemployment fell by 35 percent from 1989 to 1999, compared to a 3.7 percent city wide increase Private investment in the form of residential and commercial development has since located in the surrounding area $10,000 to $30,000 44% $30,000 to $50,000 16% Above $50,000 10% Source: Richard Baron, James W. Rouse Lecture on the American City, 2003
Social Growing a Middle Class Underutilizing the asset: In the past, cities tried to attract middle class residents to cities Leveraging the asset: Cities are working hard to leverage federal resources with educational and homeownership opportunities to help low-income families build wealth and enter the middle class
Social Growing a Middle Class Chicago is leveraging the value of the Earned Income Credit and helping build a middle class Outreach partnership between Mayor Daley s office, employers, business associations, and community groups Place information on EITC in bill inserts, paychecks, grocery store bags, McDonald s tray liners Chicago-based Center for Law and Human Services coordinates free tax preparation at 20 sites throughout city $16M in EITC claimed at free tax assistance centers in 2001 The Value of the EITC Increased Substantially 35 30 25 20 15 10 5 0 Number of Tax Filers Claiming EITC (Millions) Total Amount of Credit (Billions) 1975 1980 1985 1990 1995 2000 South Shore Bank helps EITC claimants without bank accounts to open savings accounts with their refunds
Social Reducing Disparities Underutilizing the asset: In the past, cities were to quick to accept failing students Leveraging the asset: Cities are putting together ambitious efforts to ensure that all students get a quality education
Social Reducing Disparities Louisville has committed itself to ensuring that all students are reading Louisville Every 1 Reads Initiative $16 million literacy program that calls for all 97,000 Louisville Public School students to be reading at grade level in just 4 years Louisville Public Schools will spend $2 million per year to hire reading specialists, $2.3 million per year to add 23 classrooms to its early increase literacy childhood program, and training for teachers Greater Louisville Inc. will raise $2 million per year, get more adult volunteers for schools, encourage agencies that work with children to emphasize reading, and lobby state legislators on behalf of the schools
The common characteristic is that transformative efforts are large, informed, calculated bets Systemic in effect The primary project focus may be economic, physical or social, but ultimately a project must generate secondary returns on investment across categories Tailored to local market realities Motivated by sound research and reasoning Insulated from unreasonable pressure by business and political interests Cognizant of lessons from the past Appropriate level of public participation Well distributed benefits Sustained & Scrutinized Phasing Intermittent evaluation
How do we make transformative efforts the norm instead of the exception?
To move forward, cities must act with market focus and discipline Engage a new leadership class Generate empirical diagnostics Re-imagine the city Develop an integrated/holistic agenda Identify transformative efforts Execute vision Use information to drive markets and measure success
To move forward, cities must be part of majoritarian coalitions to make structural reforms at the state and federal level Older Suburb Central City Housing Schools Retail Newer Suburb Quality of Life Conservation Congestion Rural Area Farm Preservation
New city-suburban coalitions can address the need for systemic reform Landscape State Policies Physical Fix it First Pennsylvania Brownfield Remediation Ohio Open Space Preservation New Jersey Economic Knowledge Investment California Workforce Reform Wisconsin Targeted Investment Massachusetts Social Make Work Pay New York Regulating Predatory Institutions North Carolina School Reform
The city-federal relationship needs to be reinvented over time Near-term Strategy: Protect community development spending Long-term Strategy: Find ways to leverage larger federal flows
Questions: 1.) Is this argument correct? 2.) Do you buy the notion of transformative efforts? 3.) What will it take to make transformative efforts the normal operating procedure? 4.) How do we ensure more systemic and structural change at the state & federal level? 5.) How do we build the coalitions to get there?
www.brookings.edu/metro
Sources Slide 4- Major demographic change Brookings Metro Program analysis of U.S. Census Bureau Data Slide 5- Economic transformation Globalization and Deindustrialization: Bureau of Economic Analysis Knowledge Industries and Rapid Innovation: Ned Hill. "Innovation and Economic Development." Presentation to the White House Office of Sicence and Technology and the National Governors Association Slide 6- Steady growth GDP Growth: Bureau of Economic Analysis All else: U.S. Census Bureau Slide 7- Social Change Marriage and Families: U.S. Census Bureau Segregation: Edward Glaeser and Jacob Vigdor. "Racial Segregation in the 2000 Census." Brookings, April 2001. Social Networks: Barry Wellman. "Are Personal Communities Local?" Social Networks 18, 3, Sept., 1996: 347-354. Slide 9 - Dense layout A. Ciccone and Robert E. Hall, 1996, Productivity and the Density of Economic Activity, American Economic Review 86: 54-70. G. Carlino and S. Chatterjee, 2001. Aggregate Metropolitan Employment Growth and the Deconcentration of Metropolitan Employment, Journal of Monetary Economics, 48, 549-583. Slide 10 - Cities as Centers Richard Florida and Gary Gates. "Technology and Tolerance." Brookings, June 2001. Slide 11 - Urban Resurgence Brookings Metro Program analysis of data from U.S. Census Bureau and HUD State of the Cities Data System Slide 12 - Cities in the New Economy CEOs for Cities and RW Ventures and Shorebank. "Cities and Economic Prosperity." Spring 2001. Slide 14- Weaknesses Concentrated Poverty: Paul Jargowsky. "Stunning Progress, Hidden Problems: The Dramatic Decline of Concentrated Poverty in the 1990s." Brookings, May 2003. Brookings Metro Program analysis of data from U.S. Census Bureau Failing Schools Parasitic Economies: Matthew Fellowes and Bruce Katz. "Roadblock to the Middle Class: The Higher Prices Charged to Philadelphia's Working Families." Brookings, Forthcoming. Slide 15-Uneven Growth Employment decentralization: E. Glaeser. "Job Sprawl." Brookings, May 2001. All else: U.S. Census Bureau Slide 20-Anemic Policies Center of Law and Social Policy, http://www.clasp.org/publications/cc_myths.pdf Isabel Sawhill. One Percent for the Kids. The Brookings Institution. 2003. Slide 27-Milwaukee Freeway City of Milwaukee Slide 29-Arlington Philip Langdon. New Urban News. September 2003. Slide 27-Denver Parks Denver Regional Transportation District http://www.rtd-denver.com/fastracks/ Slide 32-Denver Parks City of Denver Parks Department http://www.denvergov.org/dephome.asp?depid=1 111 Slide 34-Albuquerque HDIC http://nmdowntown.com/ Slide 35-NJPAC NJPAC http://www.njpac.org/ Slide 37-Fort Wayne City of Fort Wayne http://www.cityoffortwayne.org/6sigma.htm Slide 39-Wirless Philadelphia Wireless Philadelphia Executive Committee http://www.phila.gov/wireless/index.html Slide 40-Virgina Bio-tech http://www.vabiotech.com/ Slide 43-Murphy Park M. Turbov and V. Piper. "HOPE VI and Mixed Financed Redevelopment as a Catalyst for Neighborhood Change." Brookings, Forthcoming. Slide 45-Chicago EITC City of Chicago Slide 47-Louisville Louisville Business Journal