New Geography

Author: Aaron M. Renn

  • Small Regions Rising

    In the last 25 years there has been a huge change in the level of competitiveness of smaller urban areas – by which I mean the small end of the major urban scale, or metro areas of about one to three million people – that has put them in the game for people in residents in way they never were before.

    I recently gave the morning keynote at the Mayor’s Development Roundtable in Oklahoma City and talked a bit about this phenomenon, as well as how these generally younger and sprawling areas ought to be thinking about their future.

    If the video doesn’t display for you, click over to watch on You Tube (my segment starts at 4:36).


    Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile, where this piece first appeared.

  • Suburban Migration In Baltimore

    One unique aspect of Baltimore is that it is a so-called “independent city” that is not part of any county. Because of this, migration data from the IRS allows us to look specifically at the city of Baltimore. So I wanted to take a quick look at migration between Baltimore and its suburbs.

    As you might expect, there’s been a net outflow of people from the city for quite some time. From 1990 to 2011 (the most recent year the IRS has released), Baltimore lost almost 151,000 people on a net basis to its suburbs. Here’s the chart:



    You see here that Baltimore had an accelerating net loss of people, but then showed a steep drop in net loss through the 2000s. This is consistent with county level migration I’ve seen in other regions.

    When people leave, they take their money with them. Baltimore’s cumulative net loss of annual income to its own suburbs from departing residents is about $2.75 billion from 1992 to 2011. (Income data isn’t available for 90-91 and 91-92 movers). That’s annual income, so this loss in effect recurs every single year. That’s a lot of money. Here’s the chart on adjusted gross income loss (in thousands of dollars):



    What was a small post-recession bump in the people numbers is a more sizable one in the money figures.

    Since we can, let’s also look at the individual flows of people leaving and people coming in. Here are people moving from Baltimore to the suburbs:



    And here are people moving from the suburbs to the city of Balitmore – and yes, lots of people do that:



    Here we see that the decline in Baltimore’s net loss was driven both by a decline in the number of people leaving and by an increase in the number of people coming in. This is similar to what I’ve seen in other similar places. The uptick in the recession is due to a drop off in the number of in movers.

    There are some pretty dramatic movements in the early 90s, which were an interesting time in urban America to put it mildly. I’m not familiar with the specifics of Baltimore in that era. Some other regions I looked at – including St. Louis, which is also an independent city – show higher early 90’s migration, but nothing like the swing in Baltimore.

    We will have to see what happens in post-2011 years. The IRS is delayed in issuing data, and has been trying to kill off this data program entirely, so who knows when more data will be available. 2012 data should in theory be out right about now, but we are some years away at best from finding out what impact this year’s riots might have had.

    I should caveat this data by noting that it is based on tax returns that can be matched from year to year, so there are some movers who aren’t captured. As you can see, this is a pretty large data set, however.

    Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile, where this piece first appeared.

  • More Privatization Pain For the Public in North Carolina

    Privatization done right can be a great boon. Done poorly, it can harm the public for decades. We see another example of the latter ongoing in North Carolina (h/t @mihirpshah). The Charlotte Observer reports:

    The N.C. Department of Transportation’s contract with a private developer to build toll lanes on Interstate 77 includes a controversial noncompete clause that could hinder plans to build new free lanes on the highway for 50 years.

    The clause has long been part of the proposed contract. But it was changed in late 2013 or early 2014 to also include two new free lanes around Lake Norman – an important $431 million project supported by local transportation planners.

    Some area officials were surprised that under the contract with I-77 Mobility Partners, the developer would likely collect damages if the state added two new general-purpose lanes from Exit 28 to Exit 36 at the lake.

    Many of these long term privatization contracts are loaded with “submarine” clauses like non-competes that lurk underwater ready to rise up torpedo the public without warning. Did the people of North Carolina know that they were signing away their right to make public policy for the next 50 years when they did this deal?

    What raises serious a red flag is that the clause that incorporated the I-77 added lanes project was added late in the game, which suggests that the current impact were not an accident:

    Bill Coxe, a transportation planner with Huntersville, said he doesn’t know who lobbied for the revision. The new language wasn’t part of the draft contract from 2013, but it was added before the final deal was signed in June. “We saw that late in the game,” he said. “We aren’t sure who modified that.”
    …
    Mooresville’s representative on an advisory committee that helps make transportation recommendations said she didn’t know about the change to the contract with the developer. Neither did Andrew Grant, a Cornelius assistant town manager who helps shape regional transportation policy.

    So many of these deals have less to do with bringing in private capital to finance infrastructure improvements than they do contractually creating a decades long stream of monopoly rents for the contractor.

    Chicago got burned when an arbitrator ruled it owed $58 million to the group that leased the city’s lakefront parking garages. The city had promised it would not allow anyone else to build a garage open to the public to compete with the lessee. But it did anyway and they had to pay damages.

    Contra the claim in the article that these clauses are necessary to attract investment, simply look around and see that businesses take huge investment risks every single day in markets with no barriers to entry for competitors. You don’t see Walgreens going to city governments and telling them they won’t open a store unless the city promises not to approve a CVS within a two mile radius, for example. We often see retail competitors right across the street from each other

    But why invest in the actual marketplace when you can sign a sweetheart deal that grants you a five decade monopoly?

    In this case, it appears to be free lanes and toll lanes side by side on the same facility. So there’s some justification for some sort of agreement on the state’s plans for the free lanes. But given that the free lane expansion was already on the books and supported by transportation planners, to have the project de facto killed through a clause slipped into a private contract in a way that does not appear to have been vetted by the public is dubious. If the residents of the area had known the free lane project they were banking on would be basically taken off the table for 50 years, it might have created protests that could potentially derail the contract. So by simply adding a non-compete clause, the state and contractor could do the same thing without stirring up the public until it was too late. It’s all the more reason why there needs to be much, much more scrutiny on the terms of these deals.

    Aaron M. Renn is a senior fellow at theManhattan Instituteand a Contributing Editor atCity Journal. He writes at The Urbanophile, where this piece first appeared.

    Interstate 77 map by Nick Nolte (Own work) [Public domain], via Wikimedia Commons

  • In NYC, Throwing Good Infrastructure Money After Bad

    Ten billion dollars — for a bus station. And if other projects are any guide, this price tag for a Port Authority Bus Terminal replacement is only going up from there.

    That’s after we’ve committed: $4.2 billion at the PATH World Trade Center station; $1.4 billion for the Fulton St. subway station; $11 billion for the East Side Access project; $4.5 billion for just two miles of the Second Ave. Subway, and $2.3 billion for a single station extension of the 7-train.

    Having grown numb to multi-billion price tags for building almost anything, New Yorkers might not know just how messed up all this is. In any other American city, even just one of these fiascoes might well have sunk the entire town.

    Read the entire piece at the New York Daily News.

    Photo by Metropolitan Transportation Authority of the State of New York (East Side Access: January 13, 2014) [CC BY 2.0], via Wikimedia Commons

  • Minneapolis-St. Paul: Capital of the New North?

    There’s been a lot of discussion in Minneapolis-St. Paul about whether they should try to dissociate themselves from the Midwest by rebranding themselves as the Capital of the North.

    This immediately raises three questions:

    1. Is “The North” really a distinct region?
    2. Are the Twin Cities the capital of it?
    3. Is branding the Twin Cities as “the Capital of the North” a good idea and likely to succeed?

    What Is “The North”?

    Is the North a distinct region from the Midwest? While popular maps of the nine (or eleven) nations of North American don’t include a cohesive North region, there are some reasons that suggest so. The areas of northern Wisconsin, the Upper Peninsula of Michigan, the Dakotas, etc. were more sparsely populated than the rest of the Midwest. They also had a different economic structure.

    This map highlights the area whose economy was driven by heavy industry and manufacturing.  Most of the North was outside of this zone. The economy of that area was more dependent on natural resources (mining, such as copper in Michigan’s Upper Peninsula), farming, and grain processing.  Fracking for oil in North Dakota is a continuation of this resource based economic heritage.

    The area is also demographically distinct. It was more heavily settled from northern Europe, notably Scandinavia, versus the Eastern European influence felt elsewhere. The Great Migration of blacks to the industrial north also had much less of an effect on this area, which was historically very white, and still is less diverse than the rest of the country.

    Climatically, the North, as the name implies, is the coldest region of the continental United States.

    So there are some attributes of this region that do set it apart from the rest of the Midwest.

    Are the Twin Cities that Capital of the North?

    Where the capital idea doesn’t hold up is in looking at contemporary migration.  The map below shades in blue any county that had people move to or from Minneapolis’ Hennepin County between 2001 and 2011, using IRS tax return data:

    Outside of Minnesota itself, the only place in the North of which the Twin Cities are the capital from a migration perspective is part of Wisconsin.

    Are there other areas where the Twin Cities look more like a capital? One of them would be sports fandom.  Here’s a map of football team spheres of influence based on the number of Facebook “likes.”

    Here the Minnesota Vikings get no love in Wisconsin, which is owned by the Packers.  But the Vikings do have strong followings in much of Iowa and the Dakotas, which fits well to a concept of the North.

    The area encompassed by the North is for the most part sparsely populated, with the Twin Cities being the only major urban area (more than a million people) for quite a distance.  The closest other city of that size is Milwaukee, about 300 miles away.  Minneapolis-St. Paul is about as far away from Chicago as Kansas City.  This by itself creates a sort of capital effect, as there is a pretty large swath of territory which logically looks to the Twin Cities for big city amenities and attributes. Pro sports would definitely fall into this category. So perhaps there is some level of “capital” attribute here.

    Should the Twin Cities Brand Themselves As the Capital of the North?

    If there is conceivably a North and the Twin Cities can potentially claim be or push to develop itself as the capital of this region, is that the best way to brand itself?

    There are two basic approaches cities are pursuing today. One is the regional capital approach of a Barcelona. (It would perhaps like to see itself as a national capital).  The other is the global city approach of Chicago in which the city seeks to brand itself as a stand alone entity directly in the marketplace while actively divorcing itself from the region.

    The global city model seems more popular at present. In Chicago’s case it’s easy to understand why; the Midwestern Rust Belt has struggled so why hitch yourself to that wagon?  This has had some good success and Chicago’s brand image is strong. The challenge for Chicago is that its wagon is economically hitched to the Midwest whether it wants it to be or not, at least to some extent. Chicago is the business services, tourism, etc. capital of the Midwest. The struggles of that region explain a chunk of that city’s now well-publicized travails.  Chicago’s fiscal weakness, inequality, etc. problems would likely be less if it were in the middle of a booming region.

    So if the Twin Cities are functionally a capital, this regional relationship will assert itself organically, however it seeks to brand itself.

    Where the branding idea falls flat is in two areas.  First, unlike Catalonia, the North isn’t an area with any sort of existing public resonance. Thus the Twin Cities would have to create a brand not just for itself – where they already feel they have weaker marketplace awareness – but also for the North itself, which is presently non-existent. This just makes things harder.

    The second is the cultural disconnect between the Twin Cities and the rest of the North. Yes, one can look to Madison, Wisconsin (which probably more connected to Chicago in any case) as sympatico. But the rest of the North seems quite different. Don’t forget, there are a lot of Republican voters in Minnesota. The state had a very conservative Republican governor in Tim Pawlenty until recently.  Can the Twin Cities embrace them?  Natural resources has always played a key role in the North – 3M is Minnesota Mining and Manufacturing, don’t forget. Can the Twin Cities embrace the North Dakota fracking boom as its own?

    Color me skeptical.  Given our politically polarized environment, the time does not seem ripe for a city to actively embrace its hinterland, and the politics and economic activity it contains. That’s not to say it shouldn’t.  America needs more bridge building than ever, not just politically, but between large urban and small urban and rural areas. But I don’t think it likely a region that prides itself on progressivism (e.g., environmentalism) and is already concerned about its standing in elite circles is ready to take that step.

    Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile.

    “Minneapolis on Mississippi River” by Jdkoenig – Own work. Licensed under Public Domain via Wikimedia Commons.

  • The Emerging New Aspirational Suburb

    Urban form in American cities is in a constant state of evolution. Until recent years, American suburbia was often built without an appreciation for future evolution. This has left many older suburbs in a deteriorated state, and has accelerated claims of a more generalized suburban decline.

    The Indianapolis suburb of Carmel represents a response to this historic pattern. While responding to today’s market demands with a new aspiration level designed to make it nationally competitive, it’s also trying to position itself for success tomorrow and over the longer term.

    This is a critical issue for many suburbs. Like big cities before them, many older suburbs have now aged, and no longer necessarily meet the requirements of the marketplace.  

    There are many reasons for this.  The early, usually small-scale Cape Cod-style housing common to many 50s vintage suburbs is not what today’s market is demanding. It’s the same for older enclosed malls – today “lifestyle centers” and other formats are preferred – many of which are now vacant, their grim remains featured on web sites such as DeadMalls.com. Many suburban areas were also built out with “infrastructure light” without upgraded streets, sidewalks, etc. leaving a big backlog of infrastructure need.

    Across the country many of these older districts have fallen into decay and become increasingly poor, taking on many of the characteristics of the inner city. As the Brookings Institution noted  over a decade ago, they “are experiencing some signs of distress—aging infrastructure, deteriorating schools and commercial corridors, and inadequate housing stock.”1 Today, the public is more aware of the trend, and events in Ferguson, MO recently gave a wakeup call to newer and still-thriving suburbs that they too may be troubled at some point.

    Like other American cities, Indianapolis has many of these older, struggling suburban areas. In its case, many of them are within the core city limits due to a 1970 city-county merger. As regional growth continues to expand outside the central urban county, newer generation suburbs have a chance to learn from the struggles of many of their predecessors.

    Carmel – pronounced like the Biblical Carmel – is the first suburb directly north of the city of Indianapolis. It is an upscale residential and business suburb similar to many others around the country such as Dublin, OH; Naperville, IL; and the Cool Springs, TN area.  Its 2013 population of 83,573 made it the 5th largest municipality in the state. While not monolithically wealthy, its 2013 median household income of $100,358 is the 14th highest in the United States among communities of 65,000 people or more.2 It’s a preferred area for the estate homes of wealthy Indianapolis area residents, such as Indianapolis Colts owner Jim Irsay. But it’s not just a bedroom suburb; real estate brokerage Cassidy Turley reports that the Carmel submarket has over six million square feet of office space.3

    Being located in the center of the favored quarter of the Indianapolis region, Carmel grew as an upscale area. This gives it a leg up in long term sustainability out of the gate.  

    Yet Carmel has not relied just on its wealth to insure against decline. Rather, it has embarked on a transformation program now nearly 20 years old from which three major themes emerge:

    1. Responding to current market forces to build a “state of the art” community that is competitive globally, not just within the Indianapolis region.

    2. Building a full spectrum of amenities and infrastructure to create a “complete city” with a high quality of life and intrinsic appeal that is a) not based solely on newness or low costs, and b) which has broad demographic appeal.

    3. Attempting to create unique cultural and regional attractions  to turn Carmel into a destination in its own right, as much city as suburb.

    The primary driver of this transformation has been Mayor Jim Brainard, a Republican currently in his fifth term.  Carmel long had top performing schools – it’s the top rated district in the state   – houses with generous yards, low taxes, and other standard attractors of suburbia. Previous administrations had put in place key policies such as reserving the Meridian St. corridor for high end office space and banning billboards. But Brainard brought numerous changes in Carmel during his tenure including:

    Annexation. Carmel has undertaken a series of annexations – nearly 20,000 acres since 2001 alone.4 With over 47 square miles of territory, Carmel has now largely achieved its desired geographic scale.

    Parks. Carmel’s park acreage increased from 50 to 1000 acres and it has spent heavily on building out its parks. This includes building a $55 million Central Park, which includes a showplace community and fitness facility called the Monon Center.5 And the popular Monon Trail, a rail-trail through the length of the city that extended a previous project built by the City of Indianapolis.


    Monon Trail at Main St.

    Road Infrastructure. Carmel has invested heavily in upgrading the legacy network of county roads that it overgrew. This includes an aggressive deployment of modern roundabouts. Carmel now has over 80 of these, more than any community in the United States.6 It has upgraded miles of collector roads to urban standards with enclosed drainage, curbs, extra-wide travel lanes, landscaped medians, eight foot multi-use side paths on both sides of the street protected by a landscaped buffer zone, and decorative street signs and other detailing.

    Roundabout at Main St. and Illinois St. in the fall


    An upgraded segment of River Rd. in early winter

    Two major state highways passed through the town, Meridian St. (US 31) and Keystone Ave. (SR 431). These were designed as rural style divided surface highways as is common in Indiana. Carmel convinced the state to relinquish Keystone Ave. to the city and give it $90 million for upgrades and future maintenance. Carmel converted this into a mostly free flowing parkway by spending $108 million to replace stoplight intersections with roundabout interchanges. These not only dramatically improved traffic flow, the bridges over the busy highway provided a high quality, safe connection – especially for pedestrians and bicyclists – connecting eastern and central Carmel, which had previously been separated by this “great wall” of a road. The state is currently performing a similar freeway upgrade on Meridian St., the principal office corridor.


    Roundabout interchange at 126th St. and Keystone Parkway.

    Water and Sewer Upgrades. Part of Carmel previously received water from the Indianapolis water utility. The City of Indianapolis had privatized this utility but sought to repurchase it. Carmel intervened in the process to pressure Indianapolis into selling it the water lines inside Carmel. Carmel has since undertaken significant infrastructure upgrades such as new wells and pumping stations. During a recent summer drought, Carmel, unlike Indianapolis, did not put in place a mandatory restriction on lawn watering.7

    New Urbanism. Beyond core infrastructure, Carmel under Brainard has sought to change its style of development to embrace some of the more positive aspects of New Urbanism such as creating more urban nodes and walkability.

    Unlike some traditional railroad suburbs or county seats, the historic center of Carmel was very tiny, and its Main Street populated mostly with one story buildings and empty lots. This was the first focus area, and started with fixing the physical infrastructure.  

    The city rebranded the area as the “Arts and Design District” and utilized Tax Increment Financing to promote multi-story, mixed use development. The result is a mostly occupied and often well-patronized Main Street district. The surrounding historic residential blocks have seen significant redevelopment activity as well.


    Main St. at western fountain and gateway arch entryway to rebranded “Arts and Design Distrct.”

    Beyond the historic downtown, Carmel has also implemented multiple New Urbanist style zoning overlays, including on Old Meridian St. and Range Line Rd. (the city’s original suburban commercial strip). These promote mixed use development, buildings that front the street, and multi-story structures. Infrastructure improvements and TIF have been used in these areas as well. There’s also a major New Urbanist type subdivision in western Carmel called the Village of West Clay.

    Strip mall and traditional suburban development along Range Line Rd.


    New Urbanist style development along Range Line Rd.


    New Urbanist development and street improvements under construction on Old Meridian St.

    The historic downtown was deemed too small to function effectively as the downtown of a city the size of Carmel today. The city thus decided to create a new downtown area called City Center. The location for this is an area south of the historic downtown area in an older suburban industrial zone that had fallen into a blight pattern. Much of it was vacant and what’s now the principal City Center development was built on the site of a failed strip mall. TIF was aggressively used here as well to redevelop the area.

    The City Center development is only partially complete. A veterans memorial and other civic spaces are complete, as are several small office buildings, apartments, and a large mixed use complex. The anchor is a publicly funded $175 million concert hall called the Palladium and an associated theater complex with three stages.8 While these are complete, significant development remains to complete the City Center vision. The city also wants to redevelop the area between City Center and the old downtown, which they now label Midtown, but very little has been done to date.


    Interior street of City Center development.

    The goal of all this development is not the full urbanization of Carmel; this city does not aspire to be dense metropolis, or even Indianapolis. It’s rather about creating more town center type districts with the walkable feel that’s increasingly in favor, but without compromising the fundamental suburban character of the city. It’s also designed to create a city with options. Having a diversity of development styles within the city is part of a strategy of appealing to a more diverse demographic base, including singles and retirees, not just the stereotypical younger family with kids. Traffic flow has been improved, but short trips are now easier to undertake by foot or bicycle, not just by car.

    Retro Architecture. Carmel has de facto mandated traditional architectural styles. There’s no one consistent style. Major buildings have been done in Georgian, Second Empire, and Neoclassical type designs. But modernism has been rejected, further differentiating suburban Carmel from urban areas that frequently elect for starchitecture that is unapologetically “of the now.”

    The city has also attempted to prevent large corporations from building their standard architectural templates. Brick is effectively mandated, even for big box retailers like Lowes. Retailers like CVS and Kentucky Fried Chicken were forced to build second stories on their structures to locate in certain areas. Another Carmel CVS has an art deco façade.

    The city wants high quality aesthetics and a unique sense of place. They also want “timeless” design, though like much New Urbanism architecture it can sometimes come across as pastiche.

    Arts and Culture. As part of the attempt to appeal to more arts minded middle aged consumers, as well as members of the  so-called “Creative Class,” Carmel has heavily invested in the arts. The City Center performing arts center was paid for almost entirely with public funds (TIF), an investment in the arts dwarfing even that of Indianapolis. The city has also paid for an extensive public art program, mostly statues by Seward Johnson. And it makes operating grants to local arts organizations such as the Carmel Symphony Orchestra.


    Interior of the Palladium concert hall. Photo by Zach Dobson.

    Seward Johnson is not a favorite of urban sophisticates. His statutes illustrate the type of play it safe art generally featured by Carmel. More sophisticated or cutting edge fare is not as prevalent. And there have even been some complaints by a limited number of citizens about items such as the classical nudes featured on the door handles of the Evan Lurie Gallery.

    Brainard is thinking about the long term when Carmel is no longer the shiny new thing. As he put it, “Because we are designing a new city that will be in place for hundreds of years, the responsibility of doing it right falls to this generation…Carmel is a young city – we are still building our parks, trails, roads and sanitary sewer and water systems that will be here for centuries.”9

    He’s also keenly aware of global economic competition and the fact that Indiana lacks the type of geographic and weather amenities of other places. He frequently uses slides to illustrate this point. In one talk he said, “Now this picture, guess what, that’s not Carmel; but this picture is the picture of some of our competition. Mountains – that’s San Diego of course, mountains, beautiful weather, you know I think they have sunshine what, 362 days out of the 365…. What we’ve tried to do is to design a city that can compete with the most beautiful places on earth. We’ve tried to do it through the built environment because we don’t have the natural amenities.”10  While the claims to want to equal the most beautiful places in the world may be grandiose, the key is that mayor believes Carmel’s undistinguished natural setting and climate requires a focus on creating aesthetics through the built environment.

    What have the results been to date?  Economically and demographically, the city has performed well. It has managed to create an environment that is proving competitive for business opportunities that might have previously bypassed Indiana. For example, American Specialty Health relocated its headquarters to Carmel from San Diego, with the CEO of the company personally making the move from La Jolla to Carmel.11 Geico also recently expanded. Numerous other corporations are either based in Carmel or have major white collar facilities there. The income levels are very strong, as noted above.

    The city’s demographics have also expanded to become much more diverse. The minority population grew 295% between 2000 and 2010, adding 9,630 people and growing minority population share from 8.7% to 16.3%.12 12% of the city’s households speak a language other than English at home.13 Many of these are highly skilled Chinese and Indian immigrants working for companies like pharmaceutical giant Lilly. Even black professionals are increasingly moving to Carmel, with the black population growing 324% in the 2000s and black population share doubling to 3%.14 Carmel is not a polyglot city today, but it’s far more diverse than in the past.

    Carmel has also attracted both national press and national awards. Money magazine ranked Carmel as the #1 best small city to live in 201215, and it’s scored highly in other surveys as well. Drew Klacik of the Indiana University Public Policy Institute notes that in an echo of the transformation of the city of Indianapolis since the 1970s, “Carmel has transformed itself from a desirable community within Indiana to a desirable and competitive community nationally.”16

    However, it’s hard to argue that Carmel’s results materially outperform peer cities in other regions. Places like Dublin, OH and Cool Springs, TN have significantly more office space, for example. Many of those places are, however, implementing policies similar to those in Carmel . Most Carmel New Urbanist development continues to require TIF subsidies and is not yet sustainable at market rates. The city has obtained better financial terms in some recent deals, however.  And despite major public investment and construction in the central city, many central area census tracts lost population during the 2000s.

    The changes have also attracted significant criticism and opposition in some quarters.  While the public remains largely positive on the results, there have been many critiques of the way they were done, some of them legitimate.  A number of the projects had significant cost overruns. The mayor originally said that the Keystone project could be completed for the $90 million the state gave it. The actual cost was nearly $20 million higher.17 The Palladium was originally sold as an $80 million facility, but ended up costing $175 million. The city also said it planned to pay for ongoing operations by raising a $40 million endowment, but was unable to raise the funds, leaving it on the hook for $2 million in annual operating costs. These are not small misses.

    Critics also pointed to state figures showing Carmel with nearly $900 million in total debt.18 While it is a wealthy community that can afford the payments, in a conservative state like Indiana, a suburb accumulating nearly a billion dollars in debt raises eyebrows. Carmel’s tax rates remain among the lowest the state, however.

    The way the debt was accumulated has been criticized as well. The Palladium was paid for with TIF funds. Rather than bonds, the Carmel Redevelopment Commission – the authority that manages the TIF program and which was controlled by mayoral appointees – structured the Palladium debt as Certificates of Participation to circumvented the need for city council approval, incurring higher interest rates in the process. The city council later refinanced the debt at a lower rate using a general taxing power guarantee in what some called a bailout. In return for the refinancing, the council obtained more oversight over TIF activity.19

    Though some controversy is inevitable and some criticisms are legitimate, ultimately the change program in Carmel has proven popular with the public and the city is booming, a boom that’s lending an increasingly bitter tone to the longstanding hostility Carmel has enjoyed from the region due to its status as the highest profile “rich suburb” in the region.

    Yet for all the controversy, many regional suburbs are copying some aspects of Carmel’s approach, with roundabouts now a regular feature in area communities and major park programs and New Urbanist style town center developments as well. This includes the massive sports-oriented Grand Park in Westfield and the Nickel Plate District in next door Fishers’ town center.20

    It’s also clear that peer type suburbs around the country are adopting similar strategies, such as Dubin, OH’s Bridge Street Corridor proposal21 or Sugar Land, TX’s $84 million performing arts center.22 Imitation, they say, is the sincerest form of flattery. Carmel represents the leading edge of the emergence of a new type of post-Edge City aspirational suburb. It’s something we may be seeing a lot more of in the future.

    Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile.

    ————————————-

    1 Robert Puentes and Myron Orfield. “Valuing America’s First Suburbs: A Policy Agenda For Older Suburbs in the Midwest,” Brookings Institution, 2002.

    2 U.S. Census Bureau, “American Community Survey 2013 1-yr”, Table B19013.

    3 Cassidy Turley, Indianapolis Office Market Snapshot (Third Quarter 2014), 3.

    4 Ellen Cutter. “Explaining the annexation process,” Greater Fort Wayne Business Weekly, June 12, 2014. Accessed January 8, 2015. http://www.fwbusiness.com/opinions/columnist/businessweekly/article_f42da036-6182-575a-8445-274cd82ca296.html

    5 Matthew VanTryon. “Carmel then and now: World’s Apart,” IndianapolisNewsBeat.com, December 16, 2014. Accessed January 8, 2015. http://blogs.butler.edu/multimedia-journalism/2014/12/16/carmel-worlds/

    6 James Brainard, transcript of speech at 2014 International Making Cities Livable Conference, June 23-27, 2013.

    7 “Why no watering ban in Carmel,” WISH-TV News, July 12, 2012. Accessed January 8, 2015. https://www.youtube.com/watch?v=y51BJYM4Fgc

    8 David Hoppe. “The Palladium’s boffo budget,” Nuvo Newsweekly, June 20, 2011. Accessed on January 8, 2015. http://www.nuvo.net/indianapolis/the-palladiums-boffo-budget/Content?oid=2275080

    9 James Brainard, notes for 2014 State of the City Address.

    10 James Brainard, transcript of speech at 2014 International Making Cities Livable Conference, June 23-27, 2013.

    11 Andrea Muirragui Davis. “Wellness provider beefing up new Carmel office,” Indianapolis Business Journal, October 29, 2014. Accessed on January 8, 2015. http://www.ibj.com/blogs/11-north-of-96th/post/50241-wellness-provider-beefing-up-new-carmel-office?id=11-north-of-96th

    12 U.S. Census Bureau, calculations by author from Census 2000 and Census 2010.

    13 U.S. Census Bureau, “American Community Survey 2013 1-yr”, Table B05007.

    14 U.S. Census Bureau, calculations by author from Census 2000 and Census 2010.

    15 “CNNMoney Ranks Americas Best Places to Live,” Daily Finance, August 20, 2012. Accessed January 8, 2015. http://www.dailyfinance.com/2012/08/20/cnn-money-ranks-americas-20-best-places-to-live/

    16 Drew Klacik, telephone interview with author, December 29, 2014.

    17 “Brainard seeks bonds to finish Keystone,” The Indianapolis Star, October 18, 2009. Accessed January 8, 2015. http://archive.indystar.com/article/20091018/LOCAL/910180409/Brainard-seeks-bond-finish-Keystone

    18 Indiana Department of Local Government Finance. “Local Government Debt Report,” September 21, 2012, 15.

    19 Kathleen McLaughlin. “Brainard seeks deal on maxed-out TIF,” Indianapolis Business Journal, March 31, 2012. Accessed January 8, 2015. http://www.ibj.com/articles/33569-brainard-seeks-deal-on-maxed-out-tif

    20 Cara Anthony. “New look for the Nickel Plate District in Fishers,” The Indianapolis Star, June 28, 2014. Accessed January 16, 2015. http://www.indystar.com/story/news/local/hamilton-county/fishers/2014/06/27/new-look-nickel-plate-district-fishers/11537251/

    21 Brent Warren. “Dublin Moves Ahead With Bridge Street Corridor Plans, Connecting Across River,” Columbus Underground, March 23, 2013. Accessed January 8, 2015. http://www.columbusunderground.com/dublin-moves-ahead-with-bridge-street-corridor-plans-looks-to-connect-across-river-bw1

    22 Rebecca Elliott. “Sugar Land breaks ground on $84 million performing arts center,” Houston Chronicle, December 9, 2014. Accessed January 12, 2015. http://www.houstonchronicle.com/neighborhood/fortbend/news/article/Sugar-Land-breaks-ground-on-84M-performing-arts-5946247.php

  • The Inevitability of Tradeoffs, or Understanding New England’s Sky High Energy Costs

    People advance two main sorts of arguments in favor of things for which they advocate: the moral argument (it’s the right thing to do) and the utilitarian one (it will make us better off). As it happens, in practice most people tend to implicitly suggest there’s a 100% overlap between the two categories. That is, if we do what’s right, it will always make us better off too with no down sides at all.

    But is that true?

    For most of us, our life experience suggests that there are always tradeoffs and there’s no such thing as a free lunch. Urbanists tend to argue in way that suggests this isn’t the case. The types of policies advocated by urbanists tend to be presented not only as right in a certain moral sense, but also ones that make society better off in every way. When things go awry in some respect, as they always seem to do, this is always seen as an avoidable defect in policy implementation, not as a problem inherent to the policy itself. Urbanists aren’t alone in this of course. It affects most of the world. But since I cover the urban beat, I’ll focus on us for a minute.

    Today the New York Times opens a window into the type of trade-offs that are studiously avoided in most writings on the subject of climate change. Called “Even Before Long Winter Begins, Energy Bills Send Shivers in New England,” it talks about how a lack of natural gas pipeline capacity is sending electricity and gas costs through the roof as the temperature turns cold.

    John York, who owns a small printing business here, nearly fell out of his chair the other day when he opened his electric bill. For October, he had paid $376. For November, with virtually no change in his volume of work and without having turned up the thermostat in his two-room shop, his bill came to $788, a staggering increase of 110 percent. “This is insane,” he said, shaking his head. “We can’t go on like this.”

    For months, utility companies across New England have been warning customers to expect sharp price increases, for which the companies blame the continuing shortage of pipeline capacity to bring natural gas to the region. Now that the higher bills are starting to arrive, many stunned customers are finding the sticker shock much worse than they imagined.

    I’ve written about this before re:Rhode Island, which is among the most expensive states in America for electricity (most of which is generated by gas). But all of New England is high, with Connecticut ranked as having the country’s most expensive electricity. Gas prices spike every winter to levels far above the rest of the country, as the graph below that I found via City Lab shows:



    This would appear to be a simple problem to solve: just build more pipelines. I included on mylist of starter ideas for improving economic competitiveness in the state.

    Unfortunately, planned pipelines haven’t been built due to environmental opposition:

    The region has five pipeline systems now. Seven new projects have been proposed. But several of them — including a major gas pipeline through western Massachusetts and southern New Hampshire, and a transmission line in New Hampshire carrying hydropower from Quebec — have stalled because of ferocious opposition.

    The concerns go beyond fears about blighting the countryside and losing property to eminent domain. Environmentalists say it makes no sense to perpetuate the region’s dependence on fossil fuels while it is trying to mitigate the effects of climate change, and many do not want to support the gas-extraction process known as hydraulic fracturing, or fracking, that has made the cheap gas from Pennsylvania available.
    ….
    A year ago, the governors of the six New England states agreed to pursue a coordinated regional strategy, including more pipelines and at least one major transmission line for hydropower. The plan called for electricity customers in all six states to subsidize the projects, on the theory that they would make up that money in lower utility bills.

    But in August, the Massachusetts Legislature rejected the plan, saying in part that cheap energy would flood the market and thwart attempts to advance wind and solar projects. That halted the whole effort.

    Here we see the clear tradeoff in action. Reducing carbon emissions has a clear human and economic cost. High electricity costs wallop household budgets in a region with many communities that are struggling or even outright impoverished (as recently as last year, for example, a third of the residents of Woonsocket, RI were on food stamps). This particularly harms poor and minority residents. What’s more, it helps contribute to the region’s low ranking as a place to do business and its anemic job creation.

    Given that gas itself is dirt cheap and will be for the foreseeable future thanks to fracking, hurting residents through high electricity prices designed to drive energy transition is clearly a deliberate policy choice.

    Fair enough if you believe reducing carbon requires subordinating other public goals like more money in poor people’s pockets. But how often is this forthrightly stated by advocates? Almost never.

    Instead we’re treated to article after article in various urbanist publications talking about some awesome green project that’s being implemented somewhere, and how other places ought to do the same thing. There’s lots of doom and gloom about the increased potential for future disasters if the policies aren’t followed. But there’s seldom much about the immediate negative consequences that almost certainly will follow if they are.

    I like energy efficiency. I’m glad we have more fuel efficient cars. I’m very glad I don’t own a car anymore. I’m not so excited about light bulb mandates and other “feel bad” policies that don’t materially affect emissions. But there’s definitely a lot we can do on the energy front.

    But I also care about things like poor people’s electricity bills and economic growth. And I’m not willing to make unlimited sacrifices (including imposing sacrifices on other people) in the name of conservation. I can appreciate that others might make different tradeoffs and want more conservation than I do. But at least they ought to be honest about the costs and harm they are imposing on people in the name of their preferred policy matrix.

    Instead there’s disingenuous talk about the “green economy” powering local economies when there’s no such thing as green industry. Or claiming, as many did in response to my article earlier this year, that Rhode Island’s government is actually conservative, so its problems can’t be laid at the foot of excessively progressive policies imported from places with vastly more economic leverage than most of New England. I guess I did not know that killing gas pipelines in the name of promoting renewable energy via high prices was a Tea Party idea.

    Actually, not even the places that do have huge economic leverage are behaving like this. New York City has more economic leverage than just about anybody. But it also, as the chart above shows, has cheaper gas. One reason is that, as City Lab reported, NYC recently just opened a new gas pipeline into the city:

    A really important thing happened last month to New York City and the rest of the mid-Atlantic. This event will change the daily lives of millions of people, especially during the coldest months of winter. And, despite some protesters, it all went down with less fanfare than Jay Z and Beyonce going vegan for a month.

    An $856-million pipeline expansion began ramping up service, allowing more natural gas to get to New York City consumers. The New York-New Jersey expansion project moves more gas the last few miles from Jersey, which is the terminus for much of the Marcellus Shale gas flowing out of Pennsylvania, into Manhattan. The Energy Information Administration called it “one of the biggest… expansions in the Northeast during the past two decades.” It will bring an additional 800 billion British thermal units (BTU) of gas to the area per day.

    Maybe New England wants to out do New York City when it comes to driving a green energy transition. (NYC seems to be focusing more on climate change adaptation, aka “resiliency,” these days). That’s a valid policy choice to make. But it’s one with consequences.

    Unfortunately, the consequences of these policy choices are seldom presented by their advocates. People only discover them when the costs show up in a way that can be tangible traced back to those policies. Maybe in the case of New England and energy costs, people are starting to wake up to the matter, possibly in a way similar to how sky high housing costs in so many cities woke people up to the actual trade-offs being made in housing policy.

    Advocates are there to advocate of course. So perhaps it’s unrealistic to expect advocates of any stripe to give you the full story. But that’s why we should always pay attention to what the critics of particularly policies have to say. That will give us a more complete picture of the tradeoffs any particular policy set will require.

    Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

    Photo: Pawtucket Power Plant

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  • Global City Framework

    Global cities are like that famous quip on obscenity: we know one when we see it. But the definitions of global cities are incredibly varied and there doesn’t seem to be a consensus or well-defined way to think about. I looked at the criteria used in various prominent studies back in 2012 and found them highly divergent. Only the Sassen based one appeared to have a robust definition and theoretical basis, but it’s a pretty narrow definition. While it’s very important and useful, I don’t think it fully captures what the average person or urbanist thinks of on the topic.

    In wrestling with the global city idea while working on the global city study I did some research for, I put together this framework to help organize our thinking.

    Global City Framework

    This framework seeks to capture in a structured manner all the ways people talk about global cities that I’m aware of.

    There are three basic categories of criteria people use in defining global cities: economic function, non-economic function, and size.

    Economic Function

    Some, like Sassen, define global cities by economic function. In her case, just being a financial center isn’t enough. You need to be producing financial services products specifically related to the global economy, not just making mortgages domestically. I list “Financial and Producer Services Center” as a shorthand for this. In all of these definitions, when I say a “center” I’m referring to a center of global or regional (e.g., European or Latin American) significance, not simply a domestic center.

    If I have a contribution to the global city definition genre, it’s my contention that places like the Bay Area (tech) or Paris (fashion and luxury) that are important global or regional epicenters of an important 21st century macroindustry are also global cities in a powerful sense by virtue of that.

    The idea of being a transport hub for goods or services is self-explanatory, though I’ll note that simply being a goods distribution hub (such as a global air freight hub like Memphis) doesn’t necessarily imply a high value, high wage economy.

    Lastly, and perhaps this is one I made some contributions to as well, is the idea of a “safe zone” for investing or parking capital. Much of the world is volatile economically and only has a dubious attachment to the rule of law and property rights. Hence wealthy people in those countries like to stash their cash in places where they consider it safe. Where I would distinguish this from a simple offshore account as in the Caymans is that this investment often includes real estate, and the rich folks in question often establish a personal base there. New York and London as the paradigmatic global cities obviously fall into this category, but I’m more thinking of regional hubs like Dubai, Miami, and Singapore. These places have established themselves as premier business (and in some cases cultural) hubs for their regions.

    Non-Economic Functions

    These are other aspects of a city’s function that I see as not directly economic, though obviously there are economic impacts. Most of these perhaps could be subsumed under being in an industry epicenter, but since global city surveys often call them out separately, I will as well.

    The first item is being an important global political capital like Washington, Moscow or Beijing. Enough said.

    Another important dimension is being a cultural and media center. Los Angeles profoundly affects the world because of its entertainment machine and the media that goes along with it. (By contrast, Mumbai may be a huge film center, but serves largely a domestic and Indian ethnic audience). Obviously the English language cities have a big advantage here in terms of media, though cities like Paris have a powerful cultural role.

    Lastly, being a global tourism center is another dimension. Which places draw foreign visitors? You might want to read Nicole Gelinas’ recent taken on international tourism’s affect on New York. NYC attracts a third of all foreign visitors to the United States.

    Size

    Lastly, many surveys include measures that are purely about size, such as total GDP. The rhetoric about megacities (those with more than 10 million people) shows a fascination with size as well.

    Success and Performance Indicators

    Beyond the categories that define what global cities are, I include a horizontal layer talking about how to think about whether they are successful. I think there’s a big debate that can be had about whether these are performance indicators or selection criteria. Obviously more global city surveys want to pick highly performing cities, so these are part of their evaluation matrix. I myself originally included diversity and educational attainment (talent hub) on the non-economic function list.

    I won’t go through these as they are pretty self-explanatory. I’d be interested to see where you all would put these, and what you’d add to or drop from the list.

    By the way, in that global city survey I worked on, we decided to look purely at economic function, though pulling across media hub and treating that as an industry. We felt that taking this sort of view was a gap in the existing inventory of ratings, and also perhaps the most important way to think about global cities.

    This is a concept in development, so please share your thoughts.

    Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

    Hong Kong photo by BigStockphoto.com

  • Overselling America’s Infrastructure Crisis

    60 Minutes ran a segment recently called “Falling Apart” that was another alarmist take on the state of American infrastructure. I’ll embed here but if it doesn’t display for you, click to CBS News to watch (autoplay link).

    We’ve seen this story before. America’s infrastructure is falling apart and we need to spend many billions on upgrades, but politicians won’t agree because they are too craven.



    There’s some truth to this point of view. The problem is that it’s oversold using the worst examples. It also gives short shrift to the many infrastructure upgrades that we have been making. And it ignores how people and businesses make capital purchase decisions in the real world.

    First, I’m not surprised to see that 60 Minutes spent a lot of time in Pennsylvania. In my experience, Pennsylvania is in a class by itself when it comes to infrastructure. Drive something like I-70 from Washington to the Ohio state line and prepare to be appalled. Pittsburgh legitimately has a massive infrastructure maintenance overhang. Philly too. And much of the infrastructure there was under built to begin with. The Schuylkill Expressway goes down to two lanes each way, for example. Similarly, 60 Minutes is right about some of the obsolete bridges on Amtrak’s Northeast Corridor. They may have easily included other high profile embarrassments like LaGuardia Airport or Penn Station. Or they might have taken a look at state of decay of Rhode Island’s bridges.

    There are clearly some high profile legacy items that need to be addressed. But that neglects the other side of the coin, namely that there’s a ton of major infrastructure that has been upgraded.

    60 Minutes includes some footage of Chicago. Clearly there’s a need for bigtime investment there. But in the last 20 years or so IDOT reconstructed completely many of the major freeways in the area like the Kennedy and Dan Ryan. The Tollway Authority widened virtually the entire system and implemented open road tolling, vastly reducing congestion. Similarly the CTA opened the brand new Orange Line, did major work to renovate the Green and Pink Lines, just did major infrastructure upgrades on the south branch of the Red Line, and expanded capacity on the Ravenswood. They’ve also gone from tokens and cash to electronic fare collection. At least one new commuter rail line was opened (the North Central line). The O’Hare Modernization program is underway with new runways already online and a significant reduction in congestion there. A new terminal was also built and the existing terminals given some refreshes.

    Is there a lot to do in Chicago? Undoubtedly. But let’s give credit for what has already been done.

    It’s the same elsewhere. Nicole Gelinas notes that New York has invested $123 billion in the transit system in the last 30 years. That’s not chump change. The third water tunnel is now online there as well. Indianapolis built an ultra-modern airport terminal complex that’s up to international standards. Many other airports like DTW, SJC, SFO, etc. have built major new terminals or seriously upgraded their acts. There have actually been a lot of investments in port infrastructure to get ready for post-Panamax ships.

    I’m told even Pennsylvania has done a good job of starting to address its infrastructure problems. The Philadelphia airport is actually quite nice these days, for example.

    So we’ve actually done a lot already that 60 Minutes doesn’t give us credit for.

    But what’s more, the presence of infrastructure that’s at or near the end of its useful life isn’t necessarily a bad thing anyway. Would it make sense for every single car on the road to be brand new? Of course not. Most cars ultimately end up getting driven till the wheels fall off. And that makes perfect sense. Why would you junk an asset that still has lots of service life left? We reallocate ownership of a lot of those cars during their lifespan, but we try to get the max out of their useful life.

    It’s similar in our homes. How many of us replace a furnace at the first sign of rust? Yes, sometimes we do a complete upgrade or refresh of a kitchen or bathroom, but most of the time we don’t replace major household systems like furnaces or roofs until they appear to be at a point where paying for repairs when they break appears to be futile in light of the asset age. It makes sense to pay $400 to replace a starter that fails when the car has 125,000 miles. It’s more questionable when the transmission goes out at 175.

    The fact that some issues or incidents with infrastructure can cause temporary closure or disruption is exactly how most personal capital assets work. A part goes out on our car. It needs to be towed and fixed. And it’s out of commission during that period. That’s annoying, disruptive, and costly. But does it mean that we should all go out and buy a brand new car? I don’t think so. And that’s certainly not how people behave in the real world. Obviously you have to build in a margin of safety on items like bridges where a failure would be catastrophic, but the same general principle applies. We shouldn’t wait for them to fail before replacement, but we do and should get the full useful life out of them.

    Why would we expect our government to spend our money on its capital assets in a manner differently from how we spend our money on our own personal possessions? This explains why the public is much more skeptical of spending on infrastructure than the infrastructure lobby would like. It’s to be expected that some percentage of our infrastructure will perpetually be at or near end of life, as that’s the nature of the capital asset life cycle.

    What’s more, when we replace a furnace or car, most of us don’t go out and buy Cadillacs. We buy something that fits the budget. Unfortunately, this mindset doesn’t seem to penetrate the public sector, where a significant amount of infrastructure is gold plated and priced at a level far out of line with international comparisons. The big problem in New York isn’t a lack of investment in transit. It’s the fact that the region has just about the highest transit capital costs in the world. Wonder why Madrid and Calgary have nice train systems? Among other reasons, they were very cost-efficient in their design and construction. Rather than more money, maybe we should first try some reform in our broken system of building stuff that results in lengthy project timelines and out of control costs.

    So there are some things that need to be taken care of and we need to do that. But scaremongering about dangerous bridges isn’t the right answer. And where I see the biggest infrastructure needs are on local streets and bridges, where federal and state dollars are least likely to be applicable. It’s no surprise to me that most of the pothole ridden, bombed out streets we drive on are local city streets, where they are the maintenance responsibility of an entity that lacks the large, dedicated infrastructure revenue streams available to the state and federal governments. But that’s a topic I’ll have to explore in a future post.

    Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

  • Las Vegas: The Once and Future Downtown Project

    There’s been a lot in the news lately about the troubles plaguing Tony Hsieh’s Downtown Project in Las Vegas. The latest is a longish report in the Guardian, which notes:

    Yet by late September of this year, the press – especially the technology press – had begun asking some serious questions, as the Downtown Project suddenly laid off 30 people – 10% of the total it then directly employed. Alongside portentous headlines announcing this “bloodletting” appeared claims that Hsieh had “stepped down” from his position of leadership of the project. A damning open letter from the Downtown Project’s former “director of imagination”, David Gould, called the operation from which he had just resigned “a collage of decadence, greed and missing leadership … There were heroes among us,” he added, “and it is for them that my soul weeps.”

    Technology web site Re/code also ran a seven part series on the Downtown Project, some of it unflattering, including a part focused on a spate of suicides there, and other on about a prominent failed startup.

    I made the obligatory pilgrimage to the Downtown Project in 2013 and wrote up my observations in a three part series, of which you can read part one, part two and part three.

    I noted at the time the audacity of one project trying to completely transform a place like downtown Las Vegas:

    Las Vegas has the single most savagely bleak downtown of any major city I’ve ever visited. The Downtown Project is almost literally starting at zero. There are practically no assets. So anything that the Downtown Project accomplishes needs to be seen against that backdrop. Most of these other cities have been at the downtown redevelopment game for 30+ years, have massive architectural and institutional assets, and have already been the recipients of untold billions in investment, much of it public money.

    I also mentioned that the accolades the project had received in the press were disproportionate to the actual accomplishments to date:

    Honestly, it’s a bit infuriating as a guy who lived in Indy, Louisville, and Providence to see a place where so little has happened garner such massive press and accolades when most other regions the size of Vegas have done more while getting far less attention.

    Indeed, it’s hard to think of a single downtown redevelopment effort that received as much glowing coverage as the Downtown Project. Not even Dan Gilbert’s Detroit efforts received such fawning attention. This is an accomplishment I’m not sure most people fully appreciate. Tony Hsieh was very savvy in using his status as a tier one entrepreneurial superstar, along with a bank of free “crash pad” apartments for visitors, to create buzz and publicity. Other cities should definitely stand up and take notice.

    However, the very success of the project on the PR front primed it for inevitable blowback when problems arose. As the Guardian piece notes, “The story fairly demands an apocalyptic ending.” The higher a star soars in the celebrity firmament, the more knives get drawn when anything disturbs the pristine image. The Guardian reporter also said, based on a very recent trip, that reports of the project’s demise are premature.

    So the Downtown Project has run into turbulence? Film at 11. Startups are hard, risky, trouble fraught endeavors. Tony went through multiple meat grinders in the past, and if you’ve read his book it’s by no means certain that Zappos would even survive. There were many times it could have gone under. Clearly the man has a massive appetite for risk, and the Downtown Project was certainly a risky and ambitious undertaking.

    The initial puffery was overblown. Time will tell if the blowback is as well. Success was always going to be difficult. I noted last year that the project was going against the grain of the DNA of Vegas as a city, was very reliant on “best practices” type solutions vs. the innovative cultural approach of Zappos, and that “curating” a city was inherently dubious. Yet I admire the ambition and believe they’ve done a lot of things right.

    I doubt that the project will ever realize the full, audacious vision that was laid out at the beginning. The commitment of Zappos to its downtown HQ probably prevents a complete flameout. But it may turn out that Tony was unwise to have so heavily promoted the project up front. That has more or less ensured that anything less than perfection will be judged as a failure. He set the bar so high, it is almost impossible to clear. Had there been more modest ambitions, then probably even incremental progress against the backdrop of the disaster zone that was downtown Las Vegas would have been seen as a win. But perhaps in one example of how the Downtown Project did match perfectly with the Vegas DNA, Tony Hsieh elected to pile all his chips on Red 14.

    Full Disclosure: I had previous financial relationships with Downtown Project related entities and stayed for free in one of their crash pads during my stay.

    Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

    Downtown Project photo by Eddie Codel.