Subscribe/Feeds

• Subscribe by Email
• Subscribe in a Reader
• Subscribe to Comments
• Become a Facebook Fan
• Follow on Twitter
• View Photos
• Watch Videos

Search

Tuesday, March 9th, 2010

Carl Wohlt: Learning from Starbucks

In Learning from Las Vegas, authors Robert Venturi, Denise Scott Brown and Steven Izenour challenged the architectural community to re-examine the design of commercial structures along the Las Vegas Strip. They believed that the explicitly symbolic features of “ugly and ordinary” vernacular design along the Strip were every bit as functional and legitimate as the forms created by modernist architects. Learning from popular culture, they suggested, would make high culture elites “more sympathetic to current needs and issues” and promote the creation of “people’s architecture as people want it.”

Can the Midwest’s struggling commercial areas learn from Las Vegas? Perhaps. Almost every town of any size has the ubiquitous strip of auto-oriented franchises and retail boxes. Rather than trying to reduce the visual affects of blatantly commercial signs and structures, perhaps these features should be ramped up and made even more dazzling and playful. Everyone needs a little excitement in their life. If a community’s local version of the Las Vegas Strip can provide some of it, maybe that should be celebrated and not dialed down as most of today’s conventional zoning and design regulating practices attempt to do.

However, for the traditional commercial centers of most Midwestern cities, the drama of the Las Vegas Strip is probably far too over the top. Many have historic features that are integral to the community’s unique culture and identity. Showcasing these elements requires a much more nuanced approach. To enhance marketplace appeal, I believe these places would be much better served by learning not from Las Vegas but from Starbucks.

To understand why, it’s useful to glance at the research from the field of environmental psychology that emerged in 1950s and 1960s, often driven by collaborations between psychologists and architects. Daniel Stokols, who in 1987 coedited two comprehensive volumes entitled Handbook of Environmental Psychology, described the field as “the study of human behavior and well-being in relation to the large-scale sociophysical environment.” Early research focused not only on environmental characteristics but also personality and individual dispositions towards a variety of environmental topics. The visibility of the field has waxed and waned over the years, in part because much of the work has been adopted into mainstream psychology. In some design quarters, interest remains strong, as demonstrated by the work of “evidence based design” advocates.

Most of the research has focused on interior environments. In a 2002 Journal of Business Research article, L. W. Turley and R. E. Milliman wrote that research pertaining to “exterior variables,” including storefronts, marquess, entrances, building architecture, parking and the surrounding area had been extremely limited to date. However, they also noted three studies that found “external variables have an influence on the behavior of retail customers.”

Private sector retailers continue to research how interior store environments affect consumer behaviors, most of which is proprietary and never published. Called “atmospherics,” a term used by Philip Kotler in an influential 1973 Journal of Retailing article, this research has focused on a variety of variables, including sound and music, color, lighting, crowding, store layout, scent, ambient odor and various social factors. Greenland and McGoldrick’s 2004 working paper “Measuring the Atmospheric Impact of Customers” provides an excellent summary of atmospherics research, including a list of completed studies organized into categories based on the five human sensual receptors — visual, aural, tactile, olfactory and taste.

The absence of research on exterior commercial environments should not deter downtown stakeholders from taking advantage of strategies that have proven effective for retailers. I think Starbucks is an especially useful model because they demonstrate in a very compact space how to effectively appeal to every human sense. These positive sensory experiences help customers develop strong emotional connections to the Starbucks brand.

Kevin Roberts, in his wonderful book Lovemarks, underscores the value of making these emotional connections:

Direct, provocative, immediate. Tough to fool. Even tougher to override. The senses speak to the mind in the language of emotions, not words. Emotions alert us to how important the findings of our senses are, not only to our well-being, but indeed to our very survival.

To Roberts, the sensory connection is how “lovemarks” — brands that “inspire loyalty beyond reason” — are created. The lovemarks concept helps to explain why Starbucks remains one of the world’s top brands even though they’ve faced some serious marketplace challenges over the past several years.

Creating a positive sensory experience is not just about brand building. More fundamentally, it’s about the degree to which commercial areas compel visits and, just as importantly, return visits. From the work of environmental psychologists, we know that places motivate one of two basic behavioral responses — people either feel comfortable approaching them or they avoid them. This sounds incredibly simple, but it’s actually quite profound when you think about it because it’s the essence of what development and redevelopment initiatives are really all about. Approach / avoidance behaviors are triggered by emotional responses that are generated by either cognitive processes (“I heard/read this place is safe/dangerous, so I think I feel most comfortable approaching/avoiding it”) or through sensory data acquired directly from the environment (“this place looks good, smells good, tastes good, sounds good and feels good — or it doesn’t — so I will approach/avoid it”).

For commercial district stakeholders, the emotional responses generated through cognitive processes help to underscore the value of creating and managing a brand image and identity that motivates approach behaviors. However, the success of the brand image begins with and is reinforced over time by the emotional responses of visitors who experience the place first hand at a sensory level. This is where the folks at Starbucks really nail it — and, the lessons of Starbucks are remarkably direct and simple to comprehend once you become aware of the individual sensory experiences.

For starters, Starbucks interiors are visually appealing. The color treatments are warm and friendly, which encourage customers to slow down and linger. The lighting is generally subdued and feels very natural. The casual atmosphere is almost the opposite of the high pressure, brightly lit work environments in which many of their customers must toil. As someone with a background in graphic design, I find the consistently high quality of the packaging on display especially impressive. Of course, the aroma of freshly brewing coffee is always appealing, and there are always a number of other tasty products to enjoy. There’s usually good music by top-notch artists playing in the background. The environments are easy to comprehend and navigate regardless of the unique characteristics of the specific store site. The seating is varied and comfortable. And, who among us does not appreciate the availability of free, clean bathrooms? I almost never see an empty Starbucks, and this is golden. In the immortal word of William Whyte, “what attracts other people most, it would appear, is other people.”

If your commercial areas are not creating the strong emotional connections that motivate approach behaviors and brand loyalty, conducting an informal sensory audit is a simple way to better understand your strengths and the issues that might be holding you back. To create Starbucks-like emotional connections, the sensory variables have to be working largely in synch — one or two chronic weaknesses can inhibit the connection.

Years ago, my wife and I were looking for place to have coffee on a beautiful May afternoon in Paris. We found a charming outdoor cafe with a stunning view of the Eiffel Tower and sat down. The coffee was excellent, the chairs were comfortable and the visuals were classically Parisian. However, after about ten minutes, we started to become annoyed by the constant stream of busses that were pulling up to the curb by our table in increasing numbers. It was difficult to carry on a conversation and the exhaust fumes became overwhelming. We hadn’t noticed that our charming little cafe was located at a bus stop. So, the coffee was good, the seating was comfy and the visuals were outstanding. But the noise and exhaust fumes from the buses made the overall experience very unpleasant. A positive emotional connection to the cafe was never established.

A walk around your commercial areas in different seasons and at different times of the day with a focus on the sensory experience can be highly revealing. Is it visually appealing, night and day, all year long? Are the smells pleasant — or, is there at least an absence of obnoxious odors that might drive visitors away? Are there places to dine, grab a snack or have drink with friends? Are the sounds you hear appealing or discomforting? Are your commercial areas easy to access and navigate for both pedestrians and those arriving by vehicle? Are there comfortable places to sit and linger? Are there convenient public bathrooms or places to change a diaper?

At a sensory level, all places have strengths and weaknesses. As mentioned, other factors such as individual personalities and personal preference also influence emotions. For example, some people will never find your downtown appealing no matter how much your strive to please. One person’s child pleasing splash fountain is another person’s highly irritating noise machine. But without a critical mass of largely positive sensory experiences, a la Starbucks, your chances of motivating “approach” behaviors and brand loyalty are greatly diminished.

For commercial area stakeholders seeking inspiration for ways to attract more customers, inspire them to stay longer, spend more money and compel them to return again and again, a visit to the closest Starbucks is a good place to start.

Carl Wohlt is the founder and principal of wohltgroup, a placebranding consultancy. He can be reached at cwohlt@gmail.com.

Sunday, March 7th, 2010

Downsides of Consolidation #2 – Cost Increases, Dilution of Urban Interests, Deferred Problems

This is the second and last installment in my mini-series on the downsides of city-county consolidation, or “big box” vs. “small box” government. Part one covers neighborhood redevelopment challenges. For those of you who didn’t read that, I’m not opposed to city-county consolidations at all, and generally think they’ve been positives in places that have pursued them. I am merely examining some of the trade-offs that come with that choice. Like any form of government, this one too has its challenges.

Cost Increases

Proponents of government mergers and consolidations typically tout efficiencies and economies of scale that make a consolidated government less costly to operate than separate governments. While I think there may be areas where this is true, it’s easy to find scenarios where the opposite is the case.

One reason mergers make costs go up is because it is almost certain that wages and benefits for the employees in the various districts will be harmonized to the high water mark. For example, fire departments were not part of the original Indianapolis-Marion County merger, but the city has been pursuing additional mergers in this area lately. The merger of the Indianapolis Fire Department with the Perry Township Fire Department is is an interesting case study. 120 Perry Township fire fighters are getting $2,000-$3,000 raises to bring them up to IFD levels. This is actually increasing the cost of providing fire service by $600,000 a year. This is real cash money out the door. There may be valid reasons for merging these departments, but saving money isn’t one of them.

I can’t name a single government merger where salaries weren’t harmonized to the high water mark. There probably are examples, and I’d be interested to hear them, but this is likely the exception more than the rule.

The second reason mergers increase cost is Brook’s Law. Originally coined for the software industry as “adding more manpower to a late software project only makes it later”, this draws attention to the downside of larger teams and bureaucracies. While always an over-simplification, and not directly applicable outside of projects, it is still an interesting insight that productivity goes up linearly with bodies unless you substitute capital for labor, while organizational complexity increases at an increasing rate over time. For something like fire fighting, where there are fewer benefits to raw scale, the overhead itself eventually imposes costs with few benefits in return. For example, the Indianapolis Fire Department already has hazmat teams, dive teams, high rise capabilities, etc. It’s not like combining with Perry Township will enable them to do something they couldn’t do before. IFD already had minimum efficient scale. There would appear to be no opportunity to substitute fixed for variable costs. There are likely some purchasing benefits and the like, but those could have been gotten without merger. On the other hand, this will clearly create a more complex bureaucracy.

In short, I believe mergers, particularly those of general purpose governments or highly visible agencies, typically increase costs.

Dilution of Urban Interests

This is the core of the argument laid out by Savitch and Vogel that I discussed previously. Basically, merger dilutes the voice and clout of the urban core. Among the implications:

• Dilution of minority voting power. (I should note that in places like Europe, expanding the local government box beyond the core might actually bring in more minorities. But their entire systems are different).
• Limiting the power of grass roots or outsider candidates and strengthening the establishment. It should be noted, however, that in Indianapolis complete outsider Greg Ballard was elected mayor in the last election, so clearly this is not entirely the case.
• One size fits all solutions. It is the nature of government to promote uniform rules. Combining an urban core with more suburban areas may result in rules appropriate to neither, or even tilted in favor of the suburbs, such as by adoption of suburban style zoning, which is the case in Indianapolis.
• Shifting of spending to the periphery. Outlying areas, particularly if it is still a developing county, may result in a shift of spending towards infrastructure hungry suburbs. For example, the major parks initiative in Louisville-Jefferson County is a huge ring of new parks in outer Jefferson County called “City of Parks”.
• Limited income redistribution. While not technically a requirement for merger, separate “urban services districts” that cover the old city are designed to firewall off the former suburbanites from contributing towards central city services are common features. I’ve even seen this in smaller scale mergers, such as the merger of the town of Zionsville, Indiana with two surrounding townships.
• Parasitization of the urban tax base. The central city tax base is forced to support region-wide amenities on its own “inside the firewall” tax base, while region-wide revenues to go build suburban infrastructure. Tax increment financing is a typical vehicle for this.

Carol Coletta called regionalism “identity theft for cities.” As a type of regionalism solution, city-county mergers suffer from this. I think that’s a good way to sum it up. Actually, Brookings style regionalism might be better than merger in a way. An approach like the Minneapolis-St. Paul regional tax sharing solution actually allows revenues to flow to places where they are needed, without the firewalls of urban services districts typically created during mergers.

Problem Deferral

The other challenge of city-county mergers is that they basically kick the can down the road in terms of the problems facing the urban core and inner suburbs. For example, the Louisville-Jefferson County merger “solved” the problem of the suburbanization of jobs (and hence the tax base in a state where local income taxes are a key revenue source). But it didn’t solve anything for the long term. This works today because Louisville has not experienced significant development in its collar counties, outside of a small area of southern Indiana that is itself more or less an “inner city” type of place. When Jefferson County itself fills up, and all the new office parks are being built in Oldham or Shelby County, it will be right back where it started. Unless local leaders use the time between now and when that happens to built a long term sustainable product in the urban core and suburban areas of Jefferson County, this won’t really have accomplished much. No one should be breathing a sigh of relief just because a merger passed. Urban success is not just about lines on the map, it’s about the product.

Friday, March 5th, 2010

Replay: Small Cities Should Have Fareless Transit

[ When this post originally ran, one of the principal objections was that homeless people would just hang out on transit. First, I think that is a pretty pathetic basis for making a major public policy decision. Second, I think there are many ways to prevent buses and trains from turning into rolling homeless shelters besides making everyone else pay a fare. ]

Following on from my transit award, I thought I’d turn from Chicago to smaller cities and look at ways they can design better transit systems. I think one of the best ways to do this is to simply build fareless systems.

Why have a fare in the first place? It is odd that we pay per use on transit. We don’t pay to check books out of a library. We don’t pay to visit most city parks. We don’t pay when the police or fire department come to our house for a legitimate emergency. Most non-utility municipal services are provided for free to users and funded by taxes. So why is transit different? I suspect it is rooted in the origins of public transit systems when they were private, for-profit companies. But they aren’t that today so why adopt those legacy practices?

It seems to me that there are two basic reasons you would charge for a government service. One is to recover the costs associated with it from users. Two is to ration usage.

For the first, think of something like getting a building permit. The city can charge a fee for this that more or less covers the cost of administering the permitting and inspection process. And only the people who are building something need to pay. Sounds like a fair system, as it were. Toll roads also fall into this camp. Of course, the question immediately proceeds to, if you can recover the full cost from users, why is the government providing the service in the first place instead of the market? A good question that should be seriously considered.

As for the second, one can again think of toll roads and using variable pricing as a way to reduce traffic congestion. There are several practical examples of this in actual operation around the world.

Does transit fit this model? No, especially in smaller cities. It is true that only a segment of the community rides transit and so it might seem logical to make them pay for it. But by itself this seems insufficient to justify it. There are lots of services that are not consumed by everyone, but nevertheless are paid for by everyone. As someone who doesn’t have kids but has a rather large property tax bill, schools immediately come to mind. This argument has seldom held water by itself.

Can we recover the cost of transit from riders? Not even close. Large city systems like the Chicago CTA can recover a significant percentage from fares, but nothing close to the cost of operations. The CTA’s farebox recovery is about 50%. And that’s just for the operating budget. It does not include, due to the vagaries of government accounting (not the CTA’s fault), depreciation, which is a huge expense in a capital intensive business like transit.

The Indianapolis IndyGo system recovers less than 20% of its operating costs from fares. IndyGo charges $2 per ride to collect $10 million a year in user fees (i.e., taxes), largely from the poorest segment of the community. But this is only a fraction of the $55 million operating budget. There are already $45 million in taxes going into IndyGo, just for operations. Despite the illusion of fares, the Indianapolis bus system is almost entirely tax supported today.

Again, if you look at a large city like Chicago you can find overcrowded routes where pricing can help regulate congestion. But in smaller cities, this is usually the least of concerns. The real problem is trying to figure out how to convince discretionary riders to use the system.

Add it up, and just generally transit in smaller cities seems like a bad fit for fares based solely on the inability to recover a meaningful percentage of the cost and the lack of any over-crowding problems.

On the other side, there are big benefits to going fareless.

1. Reduced capital expenses. No fares == no fare collection equipment. You don’t need to kit out buses with fareboxes, rail stations with turnstiles or ticketing equipment, etc.

2. Reduced operating expenses. Collecting fares means you need an entire cash management apparatus. Handling money requires care, proper processes, accounting, security, etc. Get rid of all that and you are saving money. Plus, you don’t have to worry about enforcement. Even on POP systems you’ve got the labor of people auditing tickets. Why bother? And you don’t need to pay repair technicians to service this equipment because it will never break down because it doesn’t exist. That also means no spare parts, which can mean less storage requirements, etc. And with less personnel you probably need a smaller office. The list of savings goes on and on.

3. Improved operations. How long does it take for everybody to board at a bus stop as one person after another swipes a pass or fumbles for change? No fare collection means boarding is quicker. You can even board through every door, not just the front. This means less time spent idling, lower fuel consumption, and faster journey times (a big point in getting people into transit).

4. Better ROI. You are building a transit system so that people will ride it. Fares discourage ridership, especially off peak, non-commute trips. That ain’t good. A transit system is a more or less fixed cost network like an airline. Every seat that goes empty goes to waste. We’re paying to run the buses or trains whether or not anyone is on them. The marginal cost of an additional passenger, up until the point where capacity is maxed, is very low. So why not make sure those seats don’t expire worthless?

5. Marketing. It’s a lot easier to sell something that costs nothing. And any city that did this would get major kudos.

The federal rules around transit are beyond byzantine, so I don’t know if this would be legal or not. If not, we need to change the law. But regardless, here’s my thought process. With so little federal New Start funds available, most cities that want to build say a new rail line or BRT system or significantly beefed up city bus network are going to be paying for most of the capex out of their own pocket anyway. This often means a referrendum to approve a tax. If you’re asking for hundreds of millions if not billions in tax dollars to build something, why not also ask for the taxes to run it? Frankly, it’s unfair to ask someone to vote for a tax to build something if the money to operate isn’t going to be in the bank. That’s why our transit systems seem to be in a state of perpetual funding crisis. If you are going to build something, you need to build the opex and long term maintenance into the deal up front. It strikes me that asking for a whole lot of money plus a bit more for operations isn’t that must different from just plain asking for a whole lot of money. And you are doing your citizens a service long term by avoiding the downstream crises. And if you have to pay for the whole thing yourself anyway, you can probably avoid many of the rules that might get in your way.

For America’s smaller cities looking to implement significantly improved transit systems, fareless is definitely the way go.

This post original ran on April 1, 2009.

Thursday, March 4th, 2010

The 10% Solution

My latest post is online at New Geography. It is called “The 10% Solution for Urban Growth“. My thesis is that for cities below the top tier (tier one’s are already seeing a major urban influx because of their high quality product and economic changes), the best policy is to seek to capture about 10% of net new regional growth for the urban core. If we can get more, great, but let’s start with that base goal and develop a strategy to get there.

This might seem particularly unambitious, but it would actually be totally transformative:

Cincinnati provides another example. It is a metro growing a bit less than the national average, but still adding people at a rate of about 150,000 per decade. The city of Cincinnati declined from a peak of 503,998 in 1950 to 333,336 today, a loss of 170,000 people. Again, if the city captured 100% of just regional growth, in little more than a decade it would be back to a record high population. That’s not realistic of course, but 10% of that total, or 15,000 people, would still make a tremendous impact on the city. Like Indianapolis, there’s already some sign of an inflection point, as the city population began growing again in the 2000’s.

Can this 10% solution really happen? The answer is a resounding Yes, because it is already happening in Atlanta. Its reputation as a sprawlburg overshadows the fact that it is experiencing one of America’s most impressive urban core booms. The city of Atlanta has added almost 120,000 new residents since 2000, an increase of 28%. This is a mere 10.5% of the metro area’s growth during that time – but it has totally changed the city. Atlanta lost over 100,000 people from its 1970 peak, but is now at an all time high.

I know many people would love to see a more aggressive return to the city, and even view it as an imperative for environmental or other reasons. But just because it is desirable, doesn’t mean it is going to happen. The numbers just don’t add up for it, which you can read about in my piece.

Also, excessive rhetoric about the need for mass re-urbanization is actually counterproductive outside of those few cities where people are already primed to accept it. James Howard Kunstler comes to mind. Don’t get me wrong. I own some of his stuff and enjoy reading it. He’s a great writer and I enjoy a good screed as much as anyone from time to time. But he obviously has nothing but contempt for the suburbs and the people who live in them. Given that in most places in America, suburbanites are in the majority, and we need their votes for the Congressional and state action we have to have to reinvigorate our cities, I don’t think picking a fight is advisable. This sort of over the top writing or advocacy for change only scares people and lends itself to caricature as urban advocates wanting to force people back into overcrowded tenements and such, when I’m not aware that’s actually the case.

Again, if we can get more than 10%, great. I’m all for it. But I’d rather set a modest, realistically achievable target that we can hold ourselves and our leaders accountable for reaching than a pie in the sky vision of growth that isn’t likely outside of places like New York City. And in practice today, few cities are getting anywhere near 10% of regional growth in the urban core.

Obviously this only works if your region is growing. If you are stagnant or shrinking, you’ve got a bigger challenge on your hands. There the imperative is to restart the regional economic and demographic engine. Hopefully the core can play a role in doing that.

Tuesday, March 2nd, 2010

Featured Site: Branding for Cities

As someone who is interested in civic branding, I wanted to highlight a relatively new blog called Branding for Cities, which is put out by one of the brains behind City Mayors. I’ve already found some very interesting information via this site. One of the things I like about it is that, being based in London, it brings a global perspective to the table. This is too often missing from US urbanist discussions. Particularly in civic branding, I think European cities are ahead of American ones, so that global perspective is especially helpful here. I’ll share some interesting highlights I’ve found to give you a flavor for what’s there.

The Brand-Territory Matrix

One highlight is a framework for relating commercial brands with territorial brands called the Brand-Territory Matrix. It was developed by Gildo Seisdedos of IE Business School and Cristina Mateo, a member of the Madrid City Council.

The general idea is that the brands of products draw on the brand of their place of origin to create part of their own image. Think Hermès , Barneys New York, or Ikea. In return, the products themselves then strengthen the place brand. This reciprocal benefit between commercial and territorial branding has developed organically, and has disproportionately benefited only a few places. However, there is opportunity for cities to look to more consciously encourage this process as part of a place branding strategy.

Here’s a very informative ten minute video where Seisdedos explains his framework. For anyone with an interest in place branding, I strongly encourage watching it. (If the video doesn’t display, click here).

As someone with a background in management consulting, I’m a sucker for 2×2 matrices. Since not everyone will watch a video, I took the liberty of turning their framework into a framework diagram for you. This is part of my continuing effort to provide useful frameworks and techniques cities can apply themselves.

There are two axes, the market scope of the commercial brand (wide or narrow) and the emphasis on the place of origin (low or high). This produces the four brand quadrants of Emerging brands, Ambassador brands, Impostor brands, and Aristocratic brands.

Ambassador brands are those like Ikea that are both broad in scope, but also make high use of place. You know it is a Swedish company through and through. Emerging brands are broad in scope, but downplay their origin. Seisdedos uses Spanish clothing chain Zara as an example. Aristocratic brands are often then most powerfully associated with place. Barneys New York, for example. And as an example of an Impostor brand, Seisdedos uses Victorio & Lucchino, a clothing line that sounds Italian, but is actually from Seville.

For cities, you can catalog your commercial brands and map them on this matrix. Then look at where there are opportunities to mutually enhance commercial and territorial brands through linkages or other mechanisms. For example, how could emerging brands potentially be encouraged to be more ambassadorial? Can aristocratic brands be leveraged for tourism benefits? If your city has lots of Impostor brands, what is that telling you?

Actually, I think Impostor is the weakest of the four, since not all low-low brands are faking who they are. I think of Endangered Species Chocolates in Indianapolis, which isn’t trying to fool anyone about its origins, but doesn’t highlight them either.

Whatever you think of this framework, the exercise of examining the relationship between your city and the commercial brands that call it home is a useful exercise.

Philippe Mihailovich

In part of a series on luxury branding, Philippe Mihailovich extends this theme of the linkage of place brand and commercial brand.

Not long after meeting someone for the first time, you may expect to be asked, “where are you from?” based on your name, your accent or your look. The same will be asked (even if just in thought) of your brand, especially if it is different. We may be interested to know the brand’s place of origin, nationality, neighbourhood, everything. Here’s where heritage kicks in, even for new brands. If a watch brand is from Switzerland, that helps. If the car is from Germany, that helps. Luxury branding cannot be separated from place branding. They work by adding brand value to each other.

Places now compete in the same way as companies do and the emerging nations now realise the need to start developing their own luxury brands instead of importing them. Clearly cities, regions and nations can benefit from encouraging the development of local luxury brands. Paris is no stranger to this. The city positions itself as “Paris, Capitale de la Creation”. It’s a branding operation that brings together 20 professional fashion and home decoration exhibitions annually and helps the city to compete with all others and it works. We believe Paris to be the capital of creation just as we believe the best sparkling wine comes from Champagne and that the best watches are Swiss.

And

Hermès without Paris, could be misperceived as being Greek. Hermès and even L’Oreal, by adding Paris to their brand names, have effectively co-branded themselves with all Parisian associations thereby enabling their brands to stretch into almost any French category that Paris is known for….Reputation of a place can make or break a luxury brand just as it can affect the employment chances of an individual. The “Made in China” brand is a case in point. After concerns over pet food, toothpaste, seafood and defective tires, China had to cope with exploding mobile phone batteries and poisonous baby food. Ironically in the 18th Century the French were importing the finest luxury goods from China. It takes a long time to establish a good reputation for a brand and a very short time to destroy it. “Made in China” now reads like a consumer warning. Bad news always travels faster than good.

Read the whole things for yourself.

Aesthetic Failure in Brisbane

It’s not all Europe and it’s not all good news either, as this opinion piece illustrates.

One of the great frustrations of growing up and living in Brisbane is watching the city get uglier. Granted, we have, in the past few decades, grown from parochial cow town to “Australia’s new world city”, whatever that might mean. But did we have to lose so much of what made the place unique?…..just when you think you’ve seen the nadir of ugliness, something new comes along to set a new benchmark for practical plainness…..Hale says ugly outcomes are a symptom of, among other things, poor leadership from politicians “who fail to encourage better design”. As he said, “no self-respecting European politician would be seen cutting the ribbon on an ugly pile of concrete”. For years our self-promoting politicians have been far more interested in looking good by cutting the ribbon than making sure whatever it is they are opening itself looks good.

This is just a sample of what you’ll find at Branding Info for Cities. So if civic branding is your game, check it out.

Sunday, February 28th, 2010

Downsides of Consolidation #1: Neighborhood Redevelopment

This is the first in a short series of posts on the downsides of city-county consolidation. Actually, it might better be described as a discussion of some of the pros and cons of “big box” vs. “small box” municipal government. It is similar to business. It seems like every large business is either doing one of two things: centralizing or decentralizing. There’s a sort of cycle of reincarnation about this. Every model has its flaws, and people tend to gravitate towards the other side of the spectrum from time to time when the problems of the current mode manifest themselves in a particularly severe form. As a prologue to this, you might want to read my previous examination of city-county consolidation post, if you haven’t already.

I haven’t read all the academic literature on city-county consolidations, so won’t make any strong claims about the benefits its promoters have touted. But I will make two observations. One, I’m not aware of any city that has gone through a city-county consolidation that has become a civic failure, or which has a severely under-performing region. Most of the ones I’m familiar with seem to be doing ok or better. Two, if you look at the Midwest region, the metros that are doing well almost all feature a core city that either underwent a consolidation or has managed to maintain its ability to annex new territory. Minneapolis-St. Paul is an exception, but it has regional revenue sharing. (Landlocked and unconsolidated Chicago has a thriving core, but the regional numbers are lagging). So my gut tells me that big box solutions at a minimum don’t hurt and probably have some benefit to a region.

But they do come with downsides, and one of them is that it can make neighborhood redevelopment more difficult. The root of the problem is that with a single city covering a large area, there is only one mayor, one city council, etc. These have a large area to concern themselves with and cannot physically devote significant time and attention to each neighborhood. They inevitably spend most of their time dealing with the biggest and most visible challenges, which often means downtown development issues.

Redevelopment in Indianapolis

Indianapolis is a good example of this principle in action. It underwent a city-county consolidation in 1970. Four smaller municipalities were excluded from merger and so are known as “excluded cities”. So we get here both consolidated neighborhoods and some unconsolidated ones we can compare.

Since 1970, downtown Indianapolis has experienced a major resurgence. And Indy has emerged as what is in many ways the strongest performing Midwest metro area. I happen to believe its consolidation was instrumental in setting the stage for that. Many of its urban neighborhood have seen challenges, however. This includes many reasonably upscale areas, and I’d like to highlight two of them.

The first is an area centered around 71st and Binford Blvd on the northeast side. It was an established suburban area annexed under consolidation that started experiencing problems recently, notably with decay in its commercial developments, a common concern in aging suburbs. The population was also aging and not being renewed. This prompted a local woman to found a new neighborhood group called Binford Redevelopment and Growth (BRAG) to try to change the situation. BRAG wants more urban, mixed use development anchored by a transit stop on a future rail line, infrastructure upgrades to add basics like sidewalks that are missing in the area, and help redeveloping the commercial districts. They’ve had some successes, notably attracting investment in local strip centers, with a new Starbucks, CVS, and Kroger. But there has been little city investment.

The other is Midtown, an area encompassing the historically most desirable urban neighborhoods in the city. It includes the Meridian St. mansion district, Butler University, and Broad Ripple, the city’s main bar district. This area is loaded with gorgeous 1920’s era architecture and many independent shops and restaurants. But this area too started to experience problems, with vacant houses, some struggling commercial nodes, increasing crime, a property tax spike, and deteriorating infrastructure.

A group of neighbors here also formed a group called HARMONI designed to change this. They are also promoting neighborhood infrastructure investment, more urban development, etc. As part of this they purchased copies of Suburban Nation and distributed it to all regional elected officials. They even secured pledges of private funding for some infrastructure improvements. However, there has been little city investment in Midtown either.

But turn to the excluded cities and see a different pattern. Lawrence, the largest, inherited part of a closed military base. They created a commission to repurpose this into a new town center area. This included a multi-million dollar extension of 56th St, which involved building a bridge over a double-tracked rail line. That project also featured high quality streetscape treatments along its length. Former officers quarters on the base were renovated, and many other townhomes and other residences built. And there has been significant new commercial development as well, such that this area appears as nice and thriving as any edge suburb in the region.

As the name suggests, Speedway is the home of the Indianapolis Motor Speedway. It is also an older industrial suburb, with gridiron streets and its own Main St. The town really never leveraged the track outside of race days. The Main St. had businesses but was struggling, and the town was at best stagnant. However, the town council has taken on a major redevelopment program that will involve a major street reconfiguration and significant commercial oriented development designed to turn Speedway into a year round tourist destination and hub of motorsports themed businesses. It’s a $500 million plan, and while not much has happened yet, the town is getting ready to issue bonds to finance millions of dollars in road improvements.

A third of the four excluded cities, Beech Grove, is also improving its town center, and has already spent millions rebuilding its main gateway street, Emerson Ave.

So three of the four Indianapolis excluded cities have active town center renewal programs, while the two annexed neighborhoods, even though more upscale than the excluded cities in many ways, have seen little tangible city investment. Why is that?

The excluded cities have their own city governments. So they have elected officials whose sole focus is their own community. They’ve also got the legal powers, such a the ability to create their own tax increment financing districts, that let them control their own destiny without regards to a higher authority.

The annexed areas, by contrast, only have neighborhood groups. These groups have no power to do anything except lobby the main Indianapolis city government. This city government has to cover a huge area and is besieged with many groups wanting things. The mayor has an incredibly limited ability to deal with individual neighborhood issues. For example, he does a monthly “Mayor’s Night Out” in which he visits each township in turn, a different one each month, to answer citizen questions along with his senior staff. But there are nine townships, each one of which would rank among Indiana’s largest cities by itself. And that doesn’t even get to the neighborhood level.

It should come as no surprise that progress is slow. For example, there’s a proposal in the Midtown area at 49th and College Ave. called (interestingly) “The Uptown”. This would replace an old gas station, another vacant commercial structure, and a few single family homes with a three story, multi-use building featuring 75 apartments and storefront retail. It is exactly what the neighborhood needs. It’s a rare example of approved upzoning for density in Indianapolis. And from an urban design standpoint it is the best designed structure Indianapolis has seen in the modern era. Here’s the present view of the site:

The project needs tax assistance to ever get built, but it is looking like it won’t as the project has been on hold for well over a year. If the Uptown were in one of the excluded cities or in an actual suburb, it is almost inconceivable that it wouldn’t get built. The local government would find a way to make it happen. But Indianapolis has higher priorities. For example, a major civic focus is a project on the near East Side in conjunction with hosting the Superbowl. That’s the sort of major event that consumes management time and attention in a large city.

This is not to criticize the mayor. In fact, people from both BRAG and HARMONI have told me the city is very willing to engage with them and that the mayor has been supportive. The problem is structural. No mayor could physically deal with the demand. It’s inherent in the very nature of a large, big box government. It seems likely to occur in any consolidated government or very large city without sub-city level authorities with real powers.

It was before my time, but reportedly Bill Hudnut, a previous mayor, saw this problem and wanted to create more neighborhood level structures in a system he called Minigov (versus “Unigov”, as the consolidated government is known). But that never happened.

Midtown vs. Bexley

Another interesting comparison is the Midtown area of Indianapolis with the suburb of Bexley in Columbus, Ohio. Bexley is more or less exactly the same as Midtown with the exception that it is a separate municipality, though one that is completely surrounded by the city of Columbus. American Dirt ran very interesting profile of Bexley you might want to check out.

Bexley remains a thriving city, especially in contrast with the surrounding areas of Columbus. Its streets largely have up to date infrastructure, including full sidewalks, which Columbus often doesn’t. It has maintained thriving commercial districts, and has had more intense urban infill as well, as this picture will attest:

Why the difference vs. Midtown Indianapolis? Well, the fact that Bexley gets to have its own city school district while Midtown is part of the stigmatized Indianapolis Public Schools no doubt has something to do with it. This keeps land prices high, which preserves a largely affluent and exclusive resident base. This has pros and cons. Of course it means the city can be kept nicer. But it also denies the experience of that to those who can’t buy in. And the overall regional tax base misses out on one of its most affluent areas. This is the problem of all upscale suburbs. Midtown, Indianapolis, whatever its faults, has many well-off homeowners who pay significant money towards the broader community, including the city schools. And it is a much more mixed income area.

Bexley also has its own municipal authority, while Midtown does not, with the implications discussed above.

But another thing occurs to me. Because Midtown is part of a much larger city, it suffers from the problem of a diffusion of responsibility. That is, it can assume the rest of the city will carry the load in some respects. This manifests itself in a strong anti-development NIMBY contingent that is opposed to urbanization. Any proposed development of any kind is greeted by wailing and teeth-gnashing by opponents, who’ve been known to do things like pull their kids out of school to serve as props at mid-day zoning hearings where commissioners are told neighborhood kids will literally die if new apartments are approved.

I don’t know what the sentiment is in Bexley, but they’ve certainly implemented more actual urbanization than Midtown. I suspect one reason is that Bexley knows it has only its own tax base to rely on. If its residents want to keep quality schools, they can either approve more commercial and intense development, or watch their residential property taxes go up significantly over time. That focuses the mind wonderfully.

So I also hypothesize that in addition to making redevelopment more difficult for reasons of the structure of government, big box government also inculcates an anti-development mindset to a greater degree than small box government.

The Chicago Ward System

So how do you deal with this? Chicago is a big box government that has solved the governance problem with a ward system. There are 50 city council members, who more or less are the gods of their ward as a result of a system called aldermanic privilege. This is where the alderman basically agree they will let each other do whatever they want as long as it is in their own ward. Various city agencies also more or less defer to the alderman on almost any decision to do anything. This results in a system where the mayor deals with the big issues of the city and major developments, while the aldermen deal with neighborhood issues.

The Chicago system has maintained many strong neighborhoods in the city, but it has its downsides. Aldermen have virtually unlimited authority in their wards, making it a sort of elected dictatorship. So it should come as no surprise that corruption has been rampant. In excess of 40 alderman have gone to jail for corruption in the last three decades, an astonishing rate. This also makes things like planning difficult, and creates a climate of great political uncertainty around development.

The Chicago system is a de facto one, not based on a city charter or anything like that. It would be interesting to see how it developed. But it does show that you don’t necessarily need constitutional change to effect small box government inside of a big one.

Jane Jacobs and District Governance

Jane Jacobs saw this problem of big box government very clearly and dedicated an entire chapter of The Death and Life of Great American Cities to it. (Chapter 21, Governing and Planning Districts). This is not one of the chapters that generally gets a lot of attention these days, and that’s a shame. She says:

The historical changes relevant in this case are not only an immense increase in the size of great cities, but also the immensely increased responsibilities….which have been taken on by the governments of great municipalities. New York is not unique in failing to match such profound changes in circumstances with appropriate functional changes in administrative and planning structure.

I can’t do this chapter justice here, but it is a must read. Her basic solution is that all city agencies – police, fire, planning, parks, etc) would be organized around districts (neighborhood groupings), with contiguous borders, with service delivery coordinated between them and with the input of the neighborhood. Chicago’s ward system is similar to this, with the notable exception of having a district dictator. That might be a cautionary tale about what this sort of thing can turn into.

Implication for Small Box Cities

To me this implies that cities which retain a relatively small and governable core along with a plethora of unconsolidated suburbs might be in an advantageous position from a redevelopment perspective. Cincinnati, St. Louis, and Pittsburgh come to mind. Their many separate towns in the core county have the independent power they need to take matters into their own hands if they so desire. And the core city itself should be small enough to enable more fine grained governance from city hall.

On the downside, it seems almost inevitable that many of these unconsolidated suburbs will turn into complete failed cities, often left ignored and forgotten. There are plenty of beyond dysfunctional suburbs in Chicago just like this. I presume it is similar in places like Pittsburgh. I think it is notable that consolidated cities like Indianapolis and Nashville don’t have any truly failed suburbs. Another benefit of the big box city.

Summing it Up

I think the lesson here is that there are always, always trade offs to be made in governance. The trick is to understand the trade-offs you are making and take steps to try to mitigate the inherent problems with the model your city and region operate in.

Based on this and the previous post, we might say at high level that for big box government, the pros are stronger civic consensus and cohesion, generally stronger regional and downtown growth, a fairer tax base, and a general lack of totally failed central cities and suburbs. The cons are a weaker city neighborhoods, redevelopment challenges outside of downtown, weaker urban identity, and lower quality development.

For small box government is is basically the inverse of this. The pros are a strong central city & urban identity, higher quality development, more redevelopment opportunities. The downsides are civic fragmentation and lack of consensus, the potential for a failed central city, some failed suburbs, and possibly weaker downtown growth.

Friday, February 26th, 2010

Midwest Miscellany

Top Stories

1. The Atlantic: How a New Jobless Era Will Transform America.

2. New York Observer: The Man Who Closed Times Square to Traffic – A great profile of Mark Gorton, who is the backer of Streetsblog.

3. Richard Longworth: Who Cares? and The Ax Falls on Academia. Two more great reads from Longworth. You should be reading this blog.

4. Kansas City Star: Reorganization of school district would involve closing half of buildings. Kansas City schools enrollment has dropped from 75,000 to 17,000. This is a story probably relevant to many urban school districts.

State Pension Woes

One trillion dollars. That’s the cumulative gap in state pension funding according to a new study from the Pew Center on the States. It is scary stuff.

Here are the unfunded liabilities they have for Midwest states:

• Illinois – $54.4B
• Ohio – $19.5B
• Kentucky – $12.3B
• Michigan – $11.5B
• Minnesota – $10.7B
• Indiana – $9.8B
• Missouri – $9.0B
• Iowa – $2.7B
• Wisconsin – $0

Obviously this is total, not per capita, so caveat emptor.

Best Airports

JD Power just released their 2010 list of top airports for customer experience. When it opened, I called the new Indianapolis International Airport terminal the best airport in the United States. Apparently the public agreed with me, since it received the top score of any airport and also earned top honors in the small airport category.

Here’s a picture I took during a preview tour. The skylight in the background is over a Great Hall like civic plaza and is the same diameter as the dome at the West Baden Springs hotel.

This is arguably the most environmentally friendly airport terminal in the world as well.

The Midwest got a clean sweep in these ratings as Detroit took top honors the large airport category and Kansas city in the medium category. Congrats to the winners.

For those who are interested, I published a seven part in depth review of the Indianapolis airport terminal that was excerpted by the airport authority chairman at the dedication ceremony. It has over 50 photos covering every aspect of the terminal.

• Part One: Exterior
• Part Two: Interior
• Part Three: Finishes and Furnishings
• Part Four: Signage
• Part Five: Artwork
• Part Six: Miscellaneous, or Rethinking the Airport as Public Space
• Part Seven: Conclusion

World and National Roundup

NYT: Cities prepare for life with the electric car

Seed: Urban Resilience

TNR/Brookings: Amazon’s Kindle: A Symbol of American Decline?

John Austin: Enhancing Venture Capital to Drive Innovation.

BBC: Did immigration transform Britain by accident? (h/t Jim Russell)

NYT: China sees growth engine in a web of fast trains.

So many bikes, so little space in the Netherlands. (h/t @gosner)

Human Transit: An independent inquiry on transit in Sydney.

The Winter Olympics have prompted a spike in urbanists writing on Vancouver. Human Transit has an Olympic transit preview and NRDC’s Kaid Benfield talks about the medal worthy Olympic village.

New York is planning to keep Broadway in Times Square and Herald Square permanently closed to traffic. Coverage is available from Streetsblog and from New York Magazine (h/t @OtisWhite) and from the New York Times.

Joe Cortright: ‘Keep Portland Weird’ makes sense as a jobs strategy.

Houston mayor considers fareless transit. As I’ve said, for smaller transit operations, fareless transit is an excellent idea.

Transport Politic: Nashville considers light rail but the city’s unfit for it.

WSJ: A profile of architect Shigeru Ban

NYT: A contrarian’s lament in a blitz of gentrification.

More Midwest

This is probably the topic of its own post at some point, but the Brookings Institution just released a report on restoring prosperity in Ohio that I wanted to make sure people saw (h/t RustWire).

WSJ: Great Lakes States face tough choices in carp battle

Chicago
Subrban sprawl, meet suburban tall (Blair Kamin @ Tribune)

Cincinnati
Planning commission approves new bicycle parking requirements (Soapbox) – all new garages must include bike parking.

Cleveland
The Cleveland Model (The Nation)

Detroit
Survey finds one third of Detroit lots vacant (Free Press)
Blueprint America: Moving Detroit Forward (Rebuilding Place in the Urban Space) – Richard Layman takes a skeptical view on transit by itself renewing Detroit’s fortunes.
Robert Bobb’s biggest challenge: Create a new Detroit Public Schools (Free Press)
Detroit auto suppliers branch out to other industries (NYT)
Budget woes put big road projects in jeopardy (Free Press)

Indianapolis
Infrastructure is key to a successful City Market (A Place of Sense)
Clarian, IU plan $100M neurosciences center (IBJ)
Local convention activity warming up during winter months (IBJ)

Kansas City
Switch in federal policy could help plans for rail in KC (KC Star)

Louisville
750 Humana workers in Louisville to lose jobs (C-J)
Abramson releases details of public art plan (Business First)
When Louisville, NE trumps Louisville, KY (Broken Sidewalk)

Post Script

Wind turbine wake effects (via Treehugger)

Thursday, February 25th, 2010

St. Louis: Reconnecting the City to the River

Now that the competition to redesign the Arch grounds in St. Louis is underway, a group of citizens is hoping to use that as an opportunity to make an even bigger change happen, namely demolishing I-70 through downtown St. Louis and replacing it with a boulevard. Their plan is called City to River, and it would do just that, reconnecting downtown St. Louis to the riverfront by eliminating the freeway barrier.

I originally wondered if people would be interested in a story on this. I mean, the idea is great, but this is something that has been done enough times before that it isn’t really trailblazing.

Then I realized that was the story. The fact that so many downtown freeways across America have been demolished (SF, Portland, Milwaukee, Boston) or have an active movement to (such as in Louisville) such that it has almost become commonplace is reason to celebrate. Maybe one day in the future getting rid of these monstrosities will be no more newsworthy than installing yet another bike line. At least we can hope so. And I say that as someone who actually thinks we need to built and widen some roads in a number of places.

Before (aka Now)

All that doesn’t mean this isn’t a project without potentially big impact in St. Louis because it is. Downtown St. Louis features a disappointingly standard issue tangle of elevated and depressed freeways and ramps that cut off its downtown from the riverfront.

This one I particularly love because someone went through the trouble to install historic gas lamp replicas and a decorative sidewalk underneath the freeway. I want to laugh, but this was probably a good faith attempt to humanize an otherwise thoroughly depressing space. That’s much more than most places ever did.

There is a Flickr group with many more where that came from if you are interested.

I have to admit, looking at the pictures, I-70 seems like it uses a pretty compressed ROW, which limits the impact versus some other urban freeways I’ve seen, but there is still no doubt you’ve got a freeway separating downtown from the river. It converts what should be prime real estate into less desirable frontage.

A Possible After

City to River wants to whack the freeway and replace it with an at grade boulevard called Memorial Drive. Here are a couple of renderings.

Looks better to me. The concept is obviously a good one. There are still plenty of questions to be addressed, engineering, money, public involvement, etc. But projects like this ought to be pursued with a “can do” not a “can’t do” attitude. More info is available at the City to River web site.

Related:
The Case for 8664 – an in-depth look at a similar but larger scale proposal in Louisville

Tuesday, February 23rd, 2010

Peter Christensen: Why Transit Used to Be Profitable and Isn’t Now

[ Note: This article was originally written for a computer technology oriented discussion site. ]

It’s a complicated issue, so here’s a little background (I have a Masters in Urban Planning so I’ve read a lot). Streetcar lines (and subways in some places) were profitable businesses, just like railroad lines. But there were a few features that we don’t have today.

First, it was a new mobility technology so it opened up land that was too far away to be developed. There is no such land now in metro areas because highways and have cars make all areas equally accessible.

Second, they were a real estate play as much as a transportation play. Because they opened up new land, the lines tended to go to greenfields where the streetcar companies and their allies owned or could buy land. Take a look at the Brown line in Chicago and watch how it winds – that was a land acquisition issue. This wouldn’t work now because a rail line doesn’t increase the value of land enough since so much is accessible by car.

Third, people rode trains a lot more then than people ride them even now. These trains were extensions off of a very dense, centralized city. Technology and social changes reduced the number of daily rides. For instance, refrigerators meant that women didn’t have to ride into the market every day. Worker benefits (like the 6 or 5 day work week) meant that workers didn’t ride as often. As shopping and employment decentralized, people didn’t have to ride to the city as often. And when people got cars, they had an alternative to the train.

So what can we learn from history and contemporary transit to make transit more valuable today?

First, there must be attractions at both end so the fixed costs in tracks and cars can make money both ways. Early streetcar lines often has amusement parks at the terminus to promote two-way travel. The Las Vegas monorail is a decent modern version of this – there’s something at every stop. Transit lines that end in the suburbs at a big parking lot will be underutilized by definition.

Second, land use matters. All of the streetcars and subways were built before zoning and so the market built what the market could bear by transit, and buildings could be razed and built bigger if demand grew. Housing in transit-rich cities and near light rail in cities with new transit systems is more expensive because zoning restricts how much can be built. In addition to maximum height, massing, and lot utilization, there are also minimum parking limits that mean every house/condo is much more expensive and not affordable to people that would use transit the most. Take a look at the area around the transit stops in Arlington, VA for an example of transit zoning done right – extremely dense development within 1/2 mile of transit stops. It has the lowest car ownership and usage in Northern VA and generates 50% of the county’s property tax in 5% of its land area.

Third is that quality of service matters. Buses in the US suck and are slow because fare collection takes place one at a time while the bus is stopped. Curitiba, Brazil (look it up, it’s the world leader in bus transit) has bus stops where you pay to enter and everyone boards at once. The city has one of the highest rates of car ownership in Brazil and the highest transit utilization in Brazil. On their main bus routes they have 1-3 minute headways so there’s no such thing as looking at a schedule. Other things like priority lanes for buses at stoplights, tech to let the bus hold a green light to make it through, etc help. Bogota, Columbia is the other leading bus tech center and both cities do something like 50x the miles of service per dollar as a subway would have cost to build and operate.

Fourth, if there’s lots of free parking at the destination it’s almost always easier to drive. Point to point means the trip is faster and free parking means it costs less. Places in the states that have the highest transit usage (Boston, New York, Chicago Loop, SF) are places where parking sucks or is expensive. Even LA traffic doesn’t keep people from driving because a) the buses are stuck in it too, and b) it’s free to park when you get there.

Basically, any city that’s building a light rail or subway line and not dramatically increasing the zoning around it is throwing money away. Without the proper land use, there’s not enough population to drive demand, without demand there’s not enough incentive to provide good levels of service, and without good levels of service people will find it faster to drive.

This article was originally posted on Y Combinator’s Hacker News discussion group and also ran on Peter’s blog What’s In Peter’s Head. Reprinted with permission of the author.

Sunday, February 21st, 2010

Eye on the TIGER

Last week the US DOT unveiled the recipients of its TIGER grant program. This was a pool of $1.5 billion in stimulus funds directly awarded by the federal government to innovative projects of any type based on merit.

Looking at the project list, it looks like the DOT did an absolutely first rate job of picking winners. The projects I know personally such as CREATE, the Indianapolis Cultural Trail, and the Madison-Milton Bridge replacement are all critically needed and these awards have me excited.

The grants were heavily weighted to rail and transit projects, with highways getting a comparatively small piece of the pie in comparison to how federal transportation funds are typically allocated. And therein lies the problem as far as future programs of this nature go.

You can’t compare apples and oranges. Trying to compare projects in radically different modes such that you can select winners based on “merit” is inherently difficult. The only real way to do it is based on benefit/cost, NPV, ROI, or some other financial metric. But the DOT is explicitly moving away from these traditional measures, as evidenced by the recent decision to eliminate a financial hurdle rate for new start transit projects.

So how then do you decide? One of the evaluation criteria was “enhancing community livability”. But I’m not aware of any objective way to measure that.

Ultimately, the projects had to be chosen using the professional judgment of the team doing the evaluation. It should be no surprise that the list reflects the political priority the Obama administration has put on rail and other matters. If you leave the decision process up to the executive branch, what else can you expect? That’s why America elected President Obama in the first place.

In effect, the TIGER grant program outsourced earmarking of $1.5 billion dollars for specific projects to the executive branch. While I’d argue that Sec. LaHood did a far better job at this than Congress ever has, I can’t imagine that the legislative branch is going to be willing to give up that prerogative again the future. Even this only happened in the harried environment around the passage of the stimulus. Indeed, I already read that there is skepticism about future TIGER grant like programs in Congress. Also, because of the heavy focus on rail and such over highways, Congress is likely to view this as yet another alternative transportation program.

I hope I’m wrong because I like a lot of the results and the generally high quality of projects. But I’m not holding my breath for another round. I’d expect DOT discretionary decision making to retreat to those areas within modes where it has been traditional.

With that, let’s have some fun looking at the projects.

Winners and Losers

Most discussion to date about winners and losers has been based on the total dollar value of the projects awarded. While that’s one way to look at it, our states are radically different in size. I prefer a per capita metric as the best way to look at it. For example, New York City received $83 million for Moynihan Station, one of the largest grants. But New York state is big, and actually received less per capita than the national average.

Based on per capita awards, here are the top twenty winners:

Of course, plenty of states lost too. In particularly, eight states received no money. These were Connecticut, Delaware, Florida, Georgia, Nebraska, New Hampshire, North Dakota, and Utah.

Of course, this is only one way to slice it. Some states might prefer taking a per square mile view, for example.

A full list of states and their awards is below.

The Red and the Blue

Over the last year I’ve read various vague allegations by Republicans about stimulus funds going to pro-President Obama areas or car dealers who donated to Republicans being disproportionately targeted for closure during the GM and Chrysler bankruptcy and other such things. Since hard data was readily available on the TIGER grants, I decided to look at the percentage of grants that went to red states and blue states from the last presidential election.

The TIGER grants were almost perfectly balanced between red state and blue. In fact, red states actually received a slightly higher percentage of the grants. Red states received $5.16 per capita and blue states $4.75 per capita. That’s probably about as close to 50/50 as you can get with this sort of program. Notable red states like Texas ($1.74) were below average, but so were New York ($4.25), California ($3.52), and Connecticut ($0). The administration appears to have been scrupulously fair here.

Urban vs. Rural

I recently wrote about the persistent anti-urban bias in transportation spending. State governments routinely spend disproportionate amounts of transportation funds on rural projects to the detriment of cities.

The TIGER grants showed the almost opposite allocation. Only 16% of funds went to rural areas, while 84% went to metropolitan areas. The Brookings Institution tracks the largest 100 metro areas in the country through their Metropolitan Policy Program and they found a similar result. They found that 70% of TIGER grants went to the top 100 metro areas compared to only 59% of stimulus funds through other programs, which were largely allocated by states. The ability to allocate funds to critical transportation projects in urban areas, often ones of national importance, aligned with return on investment, population, economic activity, and other metrics is a win for the TIGER. It shows perhaps that if more project funding decisions are made at the federal level, we might see the shift we need.

I further classified the TIGER projects as to urban (those within a core city of a metro area), suburban (those located anywhere else inside a metro area), and rural (all other projects).

This is even better news for urban advocates. Over half the money went to core cities.

Donor State Blues

One of the hot topics in federal transportation planning circles is the percentage of federal gas tax revenues that are collected in a state vs. the money sent back in the form of transportation grants. A majority of the states adding up to almost 80% of the population get back less than they contribute, making them so-called “donor” states. Obviously that doesn’t sit well with them. If you look at some of the states that get more than their tax contributions back, some of them are geographically large states with low populations like Montana that intuitively make sense. But there’s a significant pocket of states in the northeast like New York and Pennsylvania that also get more back than they put in (in transportation funding specifically, that is).

Since TIGER grants were awarded on a discretionary basis based on merit, not funding formulas, in theory it should not have followed the traditional donor/donee state allocation – but it did. The pattern of donor and donee states held up in the TIGER awards. States that were donor states in the regular funding formula received $4.60 per capita, while donee states received $5.87 – a 28% edge. If you take the national average as 100%, donor states received on average 94% of that, which is only two percentage points higher than the 92% minimum guarantee under traditional funding formulas.

A La Mode

The DOT had a big focus on multi-modalism in the TIGER program, which makes sorting the dollars by mode difficult. Some folks like Reconnecting America simply classified some spending as “multi-modal”.

I decided to take a cut at assigning each project to what appeared to be its principal mode. This, and the assignment to urban/suburban/rural areas, involved a lot of judgment since the project list I had didn’t give sufficient information to authoritatively sort it. Full data is at the bottom so you can critique or adjust as you desire.

As you can see, transit and rail got more than their usual share, while roads got less.

I am actually somewhat troubled by the freight rail grants. Most of these are going to projects on privately owned railroads. While some projects like short line improvements in West Virginia might deserve some subsidy, other spending is going to the core infrastructure of major Class I railroads. CREATE is one example. Grade separating a UP/BNSF line coming out of the ports in the LA area is another.

These projects do have big benefits to the US economy. But they also have enormous benefits to the rail carriers. These are some of the most critical piece of infrastructure in their systems. Why would these profitable companies not pay to improve them themselves? I believe we have sent a terrible message to these companies that if they simply refuse to fix major freight bottlenecks, eventually the government will pick up the tab for them. We’re creating an incentive for bad behavior.

BNSF is being bought by Warren Buffett’s company. Why should American taxpayers be subsidizing Warren Buffett? Especially when there is so much bona fide public infrastructure needing investment in America, I don’t think these are the kind of grants we should be making going forward. After programs like CREATE wind down, we should draw a clear line under this.

Data and Analysis

A full list of TIGER projects with all of my codings and analysis is available for download in Open Office format or Microsoft Excel format. This should enable you to change my codings if you desire to create your own slices. What’s more, it should be straightforward to extend this to any number of additional coding types, so should make a useful tool for further analysis. It’s certainly possible I made errors, so please mail any corrections to arenn@urbanophile.com.

Other Coverage

The TIGER program received quite a bit of media coverage. Here are what some other folks had to say:

TIGER’s Tale and Lessons for Stimulus Spending (TNR/Brookings)
TIGER Grants: Which States Were the Big Winners? (Infrastructurist)
Rail and Transit Benefit, Highways Lose Out in TIGER Grant Distribution (Transport Politic)
Who Lost Out in the Bid for a Piece of TIGER Stimulus? (Streetsblog)
Rounding Up More TIGER Coverage (Streetsblog)

Older Posts »

About the Urbanophile

Aaron M. Renn is an opinion-leading urban success strategist and writer on a mission to help America’s cities thrive in the 21st century global economy. His particular focus is the oft-overlooked cities of the Midwest.

Full Bio

Contact

• arenn@urbanophile.com
• twitter.com/urbanophile
• facebook.com/arenn
• linkedin.com/in/aaronmrenn

Please email before connecting with me on Facebook or LinkedIn if we don't already know each other.