Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Friday, January 21, 2011

(Urban) Economic development is multifaceted and complicated

There are many facets to urban economic development--it's not one dimensional, but because it is complicated, and complication doesn't lend itself to politics, doing multifaceted economic development at the local level doesn't usually happen in the way that I think it should be done.

Generally, the profession has a dialectic between focusing on people (education, knowledge development) and industries. Industrial recruitment is usually the big focus, which most often comes with big tax breaks and other incentives, such as how the State of Virginia and Fairfax County bested other local jurisdictions with regard to the recruitment of the headquarters for the Hilton Hotel Corporation ("Hilton Hotels Checking In To Stay in Fairfax County" from the Post) which had decided to relocate to the region because it has become the primary "business cluster" for the industry, as Marriott, Choice, Starwood, and other companies are based in the area. (Similarly, Northrup Grumman is moving to the region to be closer to its major client, the Department of Defense, rather than to be closer to its major manufacturing facilities.)

Focusing on people -- education and workforce development -- takes a long time, plus people don't always stay after so much has been invested in them.

E.g., someone like me got a great education (well, at least I learned how to think for myself, I'm not sure how that's paid off...) at the University of Michigan, and because I was a state resident, the cost of my education was heavily subsidized by state appropriations and donations by then successful Michigan-based businesses like the auto industry, but I left Michigan to try my hand at policy work at the national level, leaving no gain to the Michigan economy (other than people reading the blog and working to implement best practices there).

Workforce development is hard because industries change (how many textile workers are there in the South, or Massachusetts these days, compared to China?), and because globalism is for the most part destroying U.S. manufacturing, as businesses become even larger and able to serve multiple markets from a reduced number of locations, and because the ongoing pressure to minimize labor costs means that plants tend to relocate to lower cost countries.

But manufacturing in the U.S.--automobiles in Detroit; steel in Cleveland and Pittsburgh; goods in Brooklyn, Trenton, Philadelphia, Baltimore, Chicago; ships in New York, Philadelphia, Baltimore, Portland, and Los Angeles; etc.--was for decades the primary source for relatively high wage low knowledge jobs in our nation's cities. ("When Work Disappears: New Implications for Race and Urban Poverty in the Global Economy" by William Julius Wilson.)

The industry that is managing to stay in the U.S. is highly knowledge intensive. Plus, even straight up manufacturing is increasingly capital and knowledge intensive--meaning that a plant typically isn't the source of thousands and thousands of jobs at a plant, but of 50-200 jobs. Unless it is for something like car manufacturing (e.g., the Volkswagen plant in Chattanooga.)

Over the past 50 years, as manufacturing has left cities, and as locally headquartered businesses have been acquired and the headquarters consolidated and relocated to major headquarters cities such as New York City, municipal economic development has refocused more on real estate development and "office jobs." Construction jobs can be a good source of employment for the less educated, unless for a variety of reasons the less educated are also severely disconnected and dis-socialized and therefore unemployable.

Another thread has been the community development movement, which for the most part focused on developing new housing for poor people. While I think this is important, it wasn't enough in and of itself to revivify local economies. See "The Myth of Community Development" by Nicholas Lemann from the January 9, 1994 issue of the New York Times Sunday Magazine. And since I think this hasn't been much of an "economic development" strategy, the fact that this area is Victor Haskins' primary area of expertise is worrisome, if impolitic to say (see "Quick Scan: DMPED Pick Knows Affordable Housing, Wall Street" from the Washington City Paper).

The real estate focus comes from the fact that business-wise, cities are hollowing out. Molotch's "Growth Machine" thesis:

A city and, more generally, any locality, is conceived as the areal expression of the interests of some land-based elite. Such an elite is seen to profit through the increasing intensification of the land use of the area in which its members hold a common interest. An elite competes with other land-based elites in an effort to have growth-inducing resources invested within its own area as opposed to that of another. Governmental authority, at the local and nonlocal levels, is utilized to assist in achieving this growth at the expense of competing localities. Conditions of community life are largely a consequence of the social, economic, and political forces embodied in this growth machine. The relevance of growth to the interests of various social groups is examined in this context, particularly with reference to the issue of unemployment.

is being updated by other scholars who are focusing on how cities are becoming "entertainment machines" (paper) and tourist destinations ("Evaluating Urban Tourism" by Fainstein and Goldstone), and the local housing market is distorted by the presence of an active market of second/third/fourth home buyers (supergentrification concept by Loretta Lees; "A sister city flourishes," from the New Orleans Times-Picayune) and even less of a place where things are made.

Office jobs typically involve higher education and the rote jobs are being shuffled out of city centers to peripheral locations often outside of the city (Jersey City, Hoboken, New Carrollton,e tc.) because of higher rents.

I bring this up because Mayor Gray has chosen his Deputy Mayor of Planning and Economic Development, and Victor Hoskins is to be tasked with refocusing "DMPED" (the Office of the Deputy Mayor for Planning and Economic Development) towards workforce development, rather than the facilitation of real estate development. See Former Md. housing secretary tapped for key D.C. economic development post" from the Washington Post.

I guess I'd say that a well-balanced economic development program for cities includes a focus on more generally making the city attractive and then on implementation. One of my desires some day is to write a journal article on the difference between municipal "economic development" and "building the local economy" because the latter is more focused on building the overall economic ecosystem, while the former is more focused on specific projects. Economic development elements in typical land use master plans aren't as expansive and as nuanced as they need to be. IMO anyway.

David Engwicht is not the first person to make the point that cities were created to facilitate exchange, after all this is a basic tenet of urban economics. But he also makes the point in terms of transportation efficiency, that cities were created to facilitate exchange and to minimize the need to travel.

And as I have pointed out, the city's spatial organization was created during the era of the Walking City, which results in an overall urban form where walking, transit and biking are optimized, and therefore should continue to be strengthened as a continuing source of competitive advantage vis-a-vis ever traffic engorged suburbs ("Washington area tied with Chicago for traffic congestion, study finds" from the Washington Post).

Plus walkability and transitability likely supports the maintenance of relatively high property values and the continued strength of both the commercial and residential property markets in the city (as well as Arlington County, which shares similar characteristics along the Wilson Blvd. corridor in particular).

Making the city attractive and successful economically requires a multifaceted strategy:

People (workforce) development
- high quality education at all levels (K-12, college, and post-graduate)
- workforce training and development
- creative class/knowledge economy development

Mobility (and other) Infrastructure
- prioritizing transit development, intensification, and extension
- placemaking/livability/quality of life/complete streets
- other infrastructure (water, waste removal, etc.)

Hygiene factors (my interpretation of the application of Frederick Herzberg's motivation theories to urban planning)
- functioning municipal government agencies
- public safety

Business/Sector development
- commerce and retail development and attraction
-- individual business development and recruitment, entrepreneurship development
-- development and attraction of industrial sectors (including leveraging the industrial sector development capacity of local universities and research institutions comparable to how the biotechnology sector in Montgomery County developed out of the National Institutes of Health or how military-related businesses locate near the Pentagon and other military installations)

Place development (real estate development and revitalization)
Thematic focus on destination development and management
- arts and culture/history
- entertainment
- tourism development and management
- programming and management entities (Business Improvement Districts, Main Street programs, merchants associations, community development corporations, etc.)
Geographic focus
- Commercial locations (primarily)
-- downtown/central business district
-- submarket commercial districts
-- industrial areas
-- waterfront
- Residential neighborhoods (primarily)

All this is dependent on tax and other revenue generation, sound municipal financing strategies, quality contracting and procurement procedures, etc.

So I have to say that I am somewhat concerned about how Mayor Gray intends to change DMPED's focus. Does it just exchange one unbalanced perspective for another? From the Post article:

The search for a planning and economic development chief may have been complicated because of uncertainty about how the job will change under Gray. He said repeatedly during his mayoral election campaign that he would like to expand the deputy mayor's role beyond management of real estate projects to include workforce development responsibilities.

From "Gray picks Victor Hoskins for economic development" in the Washington Business Journal:

During the campaign for mayor, Gray said his economic development strategy would focus more on workforce development — putting people to work — than classic construction-based economic development. His platform keyed on driving development and jobs east of the Anacostia River.

“Magnificent new office and residential buildings in a few emerging neighborhoods are positive statements of belief in the District’s economy, but the benefits of these developments have not reached our most distressed neighborhoods to provide living wages and economic opportunity," Gray said in his economic development platform.

While I am the first to say that the concept and plan for economic development in the city needs/needed to change, changing the focus to be mostly on workforce development, while extremely important, may be just as limiting as the previously dominant focus on real estate development.

In the thread in the GGW article "Run the Anacostia streetcar on MLK Avenue" I said some pretty strong things about neighborhood revitalization, about how in cities, transit generally is the best public investment there is, that streetcars likely would significantly help rebalance that sub-economy, and that if people don't want it, then the city should walk away despite the evident need, because you have to focus your resources and help people who want to help themselves.

I also wrote about this in the blog entry, "New Years post #7: Anacostia and sustainable economic development and revitalization" which was in response to a Post article, "D.C.'s Ward 8 pins its hopes for economic improvement on Mayor-elect Gray" and quotes within it.

Economic improvement can't just be produced with the waving of a magic wand. And it takes even longer if your primary focus is on "workforce development" because it can take decades to rebuild your workforce's capacity and capabilities, especially if they are extremely underdeveloped at present.

My #1 economic development priority for the City of Washington, DC

FWIW, in terms of mobility infrastructure and infrastructure generally, the #1 economic development priority that I would focus on in terms of the city's long term economic health would be the development and construction of the separated blue line subway, to expand the capacity of high quality transit service serving the central business district--which will run out of capacity in the next decade, and to extend the subway service footprint in the city (adding 6-7 stations, including service to Georgetown and H Street and the Spingarn and RFK Stadium campuses, allowing for more intensive redevelopment in many areas of the city).

That's focused on maintaining the relevance of the central business district in DC as a place to conduct business in the regional commercial landscape, where Downtown DC competes with Arlington County, Fairfax County, Alexandria, Silver Spring, Bethesda, New Carrollton, Prince George's Plaza, and other commercial submarkets within the region.

Without downtown, which generates close to 20% of the city's tax revenues, the rest of the city will languish, because the money won't be there to do other things.

But at the same time, I am not advocating what would be considered a "trickle down" strategy of hoping that ancillary development to downtown development would spread to and assist other parts of the city.

There needs to be a coordinated strategy for each of the subprograms of a complete economic development strategy and plan for the city.
Proposed changes for the WMATA system, 2001 (separated blue line)
Proposed changes for the WMATA system, 2001 (separated blue line). Washington Post graphic.

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