New Geography

Category: Small Cities

  • Time to Reinvent College Towns?

    By Joel Kotkin and Mark Schill

    For much of their history college towns have been seen primarily as “pass through” communities servicing a young population that cycles in and out of the community. But more recently, certain college communities have grown into “knowledge-based” hot spots — Raleigh-Durham, Madison, Cambridge and the area around Stanford University — which have been able to not only retain some graduates but attract knowledge workers and investors from the rest of the country.

    But a large proportion of college towns do not seem to be doing so well. For one thing, they often lack the historically high levels of aerospace and other technology investment — and simply the scale — that characterize the most successful university communities. Simply put, there are not enough large-scale high-tech opportunities to seed and sustain significant growth in most college towns.

    This does not mean there are not great opportunities for college communities to evolve in the next century. Many more possess the potential to become legitimate centers of technology, innovation, risk capital and cultural efflorescence. The key, we believe, is tapping the energies of the baby boomer generation. The baby boom generation far outnumbers its successor, Generation X, by roughly 76 million to 41 million. Due largely to boomers, by 2030 nearly one of five Americans will be over 65.

    The ultimate locations chosen by those whom demographer Bill Frey calls “downshifting boomers” will be critical in terms of new residential and commercial development. This will be particularly true for college towns once the current “echo” generation — currently 15 to 25 — grows into adulthood and leaves college for other destinations.

    To understand the opportunity, we have to see the real situation of boomers. Despite the hype about a massive “back to the city” movement by aging boomers, this is a very small phenomenon, restricted largely to a small, usually highly affluent sub-set. Generally speaking, the further over the age of 35, the greater the chance an individual has of living in the suburbs or exurbs. Far more seniors, in fact, migrate from city to suburb than the other way around. It appears that a handful of relatively wealthy older suburbanites do establish residences in some inner-city locations, but overall the prime destination for those who move is the suburbs.

    Recent research by Gary Engelhardt found that if central city dwelling boomers without kids moved, only 35 percent would remain in a central city region. Of those moving from a suburban home, just more than 11 percent decided to move into the central city.

    The most critical factor is the boomers’ tendency to “age in place,” at least until they become too old to care for themselves. Roughly three-quarters of retirees in the first block of boomers, according to Sandi Rosenbloom, a professor of urban planning and gerontology at the University of Arizona, appear to be sticking pretty close to the suburbs, where the vast majority reside. Those who do migrate, her studies suggests, tend to head farther out into the suburban periphery, not back towards the old downtown. Most continue to use single-occu¬pancy vehicles; few rely on public transit.

    The reasons vary, Rosenbloom suggests, and include job commitments or the desire, as they age, to live close to and spend more time with children or grandchildren. Perhaps most importantly, the majority of boomers have spent most of their lives in sub-urban settings. They are, for the most part, not acculturated to the density, congestion and noise of inner city life.

    Yet if they are not heading en masse to the inner city, Rosenbloom and other experts see a significant proportion heading to smaller towns. Many of the areas with the fastest growth in senior populations are already on the outward fringes of the metropolitan areas, but also in some of the more remote areas of country, including parts of the Rocky Mountains, the Sierra Nevada, and even Alaska. Indeed by 2030 Montana and Wyoming are expected to have among the highest percentage of seniors in the country.

    Compared to most metropolitan areas smaller towns — including college communities in places like the Great Plains, the South and interior California — have remained remarkably affordable, and should continue to be so. Many baby-boomers may eventually consider an “equity migration” from the coasts. These households can enjoy a significant capital gain, and achieve a large reduction in debt, while still engaging in economic activities made possible by the Internet. [see Figure 2]

    As a rule, small town residents pay less of their income for housing than those in metropolitan areas, even though their incomes tend to be less. In 2003, even before the peak of the current housing boom, roughly 15 percent of all metropolitan households spent over half their income on housing while only 10 percent of those in non-metro areas suffered this same level of burden.

    Quality of life considerations also could play a critical role in attracting newcomers to college towns, both in terms of cultural institutions and providing walk-able communities. College towns can also offer “continuing education” opportunities for an economically active population, many of whom plan to remain engaged in the economy well into their 60s and 70s. They can become a source of useful expertise as well as capital for those recent graduates who seek to start or expand local companies.

    Colleges could maximize their real estate and financial position if they can bring in boomers as full or part-time residents. This is true not only in metropolitan areas but in broad parts of the country including the rural south, Midwest and places like Pennsylvania. Many boomers do not view retirement as a permanent vacation but as a place to start a “second life.” In many case they are turning to nontraditional and less expensive retirement spots.

    Successful college towns will connect with both the well educated, increasingly well connected younger workers already in town and the downshifting experienced professionals looking to balance livability with more urban amenities. Combined with well-educated boomers, this could create a powerful labor and knowledge base.


    Done correctly, in accordance with a sound economic strategy, many college communities could find a new way to prosper and thrive in the years until 2020 during which the number of potential students is likely to drop. It may also provide some protection against other forces that threaten college growth, notably the increase in on-line classes, private colleges with numerous satellite locations and the growing problems with student debt.

    Given these factors, college towns need to be reinvented in order to thrive in emerging environment. Most importantly, they must learn to take advantage of emerging demographic trends, particularly by taking advantage of the energies of an increasingly vital aging population.

    Joel Kotin is Executive Editor of NewGeography.com. Mark Schill is Managing Editor and a community strategy consultant with Praxis Strategy Group.

  • Minnesota’s Iron Range Colleges Attracting Business

    Being a college president for thirteen years convinced me of the importance of addressing the interdependence between a campus and its town. Inspired by my third presidency, I saw the need to brand a strategy needed to revitalize community.

    We gathered 90 stakeholder partners for a full day meeting at Ironworld, a discovery center for the region to preserve its rich heritage and history. The local residents focused efforts on a place-based institution with the capacity to serve as a catalyst for pulling up the towns across Northeast Minnesota. That was in November, 2000.

    “True North,” in navigational terms, is a precise measurement used to calculate one’s direction. In this part of the world, “True North” came to symbolize a drive to unleash the potential of unique and resourceful college towns for what has been a hard-hit region. The goal was to use colleges as a catalyst to help local communities become viable places to live, learn, work and grow. Through a structured process of guided intervention, colleges and their communities learned how to change. I guess you could call it the first steps of reinventing college towns.

    We believed we had a society and lifestyle worth sustaining in the northland of America. Small to medium-sized towns represent the very foundation of society. These towns are the primary source of many aspects of our religious beliefs, traditional notions of family and property, and work ethic. These communities also afford an environment where we can enjoy the great outdoors, those things we love doing, whether it’s bicycling, hiking, skating, or just meeting with other people. These are things we believe are important to a good quality of life.

    Healthy communities require a strong economy, dependable healthcare, and basic infrastructure, including service and faith-based organizations. But demographic changes, usually driven by the economy, can overpower the healthy pillars of a community. That’s what happened on Minnesota’s Iron Range, mostly because of its reliance on a natural resource-based economy under increasing global pressure. We identified three existing industries critical to the future of the region: taconite mining and processing to make steel; timber; and tourism. In the face of challenges to these industries, people became very resilient; people were able, again and again, to respond to changes in the economy. This can also create a kind of lassitude, thinking the economy will eventually come back on its own. That’s why higher education, government, and the private sector needed to come together to guide a process for change.

    There was no better part of my job than getting our college faculty, staff, and students engaged with the town in ways that changed the traditional pattern of interaction. Each college town created a TechNorth Prep Center on its main street – for high-skill technology education and business development. We developed an ongoing alignment strategy to bring problem solvers, leaders and resource managers together in order to facilitate economic growth.

    All economies evolve and change. That’s why we didn’t sugarcoat those challenges that were frankly overwhelming, like an aging population, migration of young people and families out of the area, mines closing, and high unemployment rates. But we also knew our communities had many assets — including a strong tradition of public education .Our schools had to be more than temporary homes for students as they went off elsewhere We needed to create an environment and opportunities to keep at least some of them close to home.

    Today there are $6 billion dollars of private investments in development throughout the region. Once hard-hit communities are preparing for housing expansions, public infrastructure improvements, and increased population, including a migration of “downshifting“ Boomers. The area is building off of its unique assets, like natural beauty and quality of life, while utilizing its higher education institutions as catalysts for this change. Each college towns is reinventing itself to attract wealth to the community.

    So, if you’re still wondering why a college president is concerned with investments, economic growth, community development and jobs, it’s because of the saying, “As communities go, so go their colleges, and vice versa.” No one has or should have a greater stake in the future of their town than those of us who live in it and love it. Geography, history, economics, and politics combine to create an environment where strong community ties can help people to work together.

    The critical components of a healthy community are ultimately about the individual. Minnesota’s Iron Range is a remarkable place: stunningly beautiful and resource rich geography; diverse immigrant history; often turbulent economics; and “boot strapping iron range” politics. But now thanks to True North and the on-going process of reinventing college towns across the region we are gathering the resources to help prepare our communities for new opportunities.

  • Milken’s List of Top-performing Cities Heavy with Small Metro Areas

    The Milken Institute just released its report about the country’s top-performing cities. The list is heavy with the names of small and mid-size cities and also has a good deal in common with Inc.’s Best Cities list which came out a few months prior. The list of the top ten with last year’s ranking is below:

    1. Provo-Orem, Utah (8)
    2. Raleigh-Cary, North Carolina (10)
    3. Salt Lake City, Utah (18)
    4. Austin-Round Rock, Texas (20)
    5. Huntsville, Alabama (16)
    6. Wilmington, North Carolina (2)
    7. McAllen-Edinburg-Mission, Texas (7)
    8. Tacoma, Washington (50)
    9. Olympia, Washington (37 in the 2007 ranking of small metros)
    10. Charleston-North Charleston, South Carolina (12)

    Newgeography has run several articles about the advantages of small cities. “Why Small Cities Rock” and “Sprawl Beyond Sprawl: America Moves to Smaller Metropolitan Areas” are two of them. For an entire list click on the “Small Cities” tab on the home page.

  • America is More Small Town than We Think

    America has become an overwhelmingly metropolitan nation. According to the 2000 census, more than 80 percent of the nation’s population resided in one of the 350 combined metropolitan statistical areas. It is not surprising, therefore, that “small town” America may be considered as becoming a burdensome anachronism.

    Nothing could be further from the truth. America is more “small town” than we often think, particularly in how we govern ourselves. In 2000, slightly more than one-half of the nation’s population lived in jurisdictions — cities, towns, boroughs, villages and townships — with fewer than 25,000 people or in rural areas. Planners and geographers might see regions as mega-units, but in fact, they are usually composed of many small towns and a far smaller number of larger cities. Indeed, among the metropolitan areas with more than one million residents in 2000, the average sized city, town, borough, village or township had a population of little more than 20,000.

    Although local government consolidation and regional governance is all the rage in policy circles, most Americans seem content with a diverse, even fractured governmental structure. According to the 2002 U.S. Census of Governments, there were more than 34,000 local general-purpose governments with less than 25,000 residents and 31,000 local general-purpose governments with less than 10,000 residents (accounting, with rural areas, for 38 percent of the nation’s 2000 population). With so many “small towns,” the average local jurisdiction population in the United States is 6,200.

    Even in big metropolitan areas, citizens are often governed by small local institutions. People in Brecksville, Ohio (population 13,000), may tell their friends from far away that they live in Cleveland and residents of Woodway, Wash. (population 1,000), may claim to live in Seattle. But in reality their local governments are located not in the great City Hall downtown but in a usually quite modest nearby building.

    This large number of governments horrifies some organizations and people. Planners, the media and many often well-meaning local activists argue that local governments should be consolidated to eliminate waste and duplication. And so, in recent years there have been strong initiatives to force local government consolidations. Bigger, the argument goes, is usually better and more efficient — and certainly easier to cover if you are a journalist and influence if you are a big business interest.

    Yet the reality is that the claims of greater efficiency rarely confirm the theory. Both
    Pennsylvania and New York recently started initiatives to consolidate their governmental structure. They took to heart the usual mantra that there are thousands of governments in the state and that they must be consolidated to save money. In both states, the efforts were clothed in promises that local government consolidation would improve competitiveness relative to other states.

    However, the proponents never bothered to look at the data.

    We did and the results were stunning. In both states, an equivalent “market basket” of spending was compared. In Pennsylvania, the largest local jurisdictions spent (including a per capita allocation of county expenditures, so that Philadelphia could be included. Social service spending was excluded) 150 percent more per capita than jurisdictions with between 5,000 and 10,000 population. The largest jurisdictions — those over 250,000 people — spent 200 percent more than jurisdictions with under 2,500 residents.

    Moreover, it is not a matter of urban versus rural. In both the Philadelphia and Pittsburgh areas, there are literally hundreds of suburban jurisdictions that spent at less than one-half the per capita rate of the central cities.

    The story was little different in New York. The largest jurisdictions (those over 100,000) spent nearly double per capita as jurisdictions with between 5,000 and 10,000 population (this would have been even greater if it had been possible to include New York City). The big governments spent even more (more than 150 percent) compared to jurisdictions with between 1,000 and 2,500 population. The differences were even greater within metropolitan areas, where smaller jurisdictions were even more efficient relative to the largest jurisdictions.

    Why should this be? Perhaps it’s the old, all too often neglected Jeffersonian principle of downscaling government closer to the people. Elected officials who know more of their constituents are likely to be more responsive to their needs. Too often the principal economies of scale that occur from municipal consolidations are economies of scale for lobbyists and special interests.

    Further, this small town governance structure is not limited to the United States. Metropolitan Paris has approximately 1,300 general-purpose local jurisdictions, more than any U.S. metropolitan area. Milan has more than 600. By comparison, Tokyo-Yokohama, the world’s largest metropolitan area, is a model of government consolidation, with more than 200 general-purpose governments.

    America’s small town government structure engenders a sense of community, even as a part of larger metropolitan areas. They also save a lot of money, principally because democracy tends to work better when government is closer to home. It is not surprising that so many consolidation proposals fail and that when given the chance, voters usually reject consolidation proposals.

    America needs both its small towns and its bigger cities. But make no mistake about it, even much of what we call a “metropolis” functions more effectively as a network of small towns.

    The view of Main Street, Bramwell, West Virginia was photographed by Sandy Sorlien as part of her twenty-year project, The Heart of Town: Main Streets in America.

    New Geography apologizes for having initially published the image without permission or attribution.

    Resources:

    Report for the Pennsylvania State Association of Township Supervisors

    Report for the Association of Towns of the State of New York

    General-purpose governments by metropolitan area (2002)

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • Paper to Paperless: Realigning the Stars

    The paper and pulp industry has been good to Wisconsin, the number one papermaking state in the nation. Wisconsin produces more than 5.3 million tons of paper and over a million tons of paperboard annually. The pulp and paper industry employs more than 35,000 people in the state representing roughly eight percent of all manufacturing jobs in Wisconsin. These are good jobs with good benefits. Papermakers earn over 20 percent more than the manufacturing sector average and over 50 percent more than the average wage in the state.

    The paper and pulp industry has been a major driver of the economy in the Wisconsin Rapids area – located about 100 miles north of Madison – since the 1800s. The Wisconsin River, whose powerful flow and easy access lured fur traders and loggers from as far away as Quebec, runs through the area. It served both as the “highway” for raw product coming and the energy source for mills.

    Through the later part of the 19th and the early 20th century, Wisconsin Rapids and neighboring communities of Stevens Point, Nekoosa and Port Edwards all benefited from this access through increased trade and commercial opportunities, concentrated in lumber operations. These locations became part of a series of paper and pulp mills that remain part of the region’s economic landscape.

    Today, as in many smaller communities, the long-time economic bastion faces major challenges. The paper industry nationally is confronted with reduced demand resulting in plant and machine shutdowns. Globalization plays a factor as foreign competition from other countries such as China, Korea and Malaysia – where production costs are significantly lower and demand for paper is rising – now are seizing larger market share. Consolidation, through mergers and acquisitions by international firms, has played a major role as paper and pulp companies have struggled to gain market share and rationalize assets.

    These challenges and obstacles have become a stark reality in the Wisconsin Rapids area. In June of this year, one of the major paper companies – Domtar – closed the mill in Port Edwards putting 500 people out of work. In virtually any community, the loss of an employer this size would be cause for alarm – and particularly so for a small community far from any large metropolitan area.

    Although still committed to keeping its leading role in the paper industry, the community needs to diversify and grow its economy. One rising star – often the Holy Grail for rural community economic developers – is information technology, specifically software design and support. Wisconsin Rapids is home to Renaissance Learning Systems a leading provider of reading software for K-12 students in the United States and Canada. The company employs over 700 people and its software products are used in approximately 50,000 classrooms across North America.

    This is a success story that we at Praxis Strategy have encountered in other smaller communities, from Fargo, N.D., to Wenatchee, Wash. Small technology companies – far from the light and luster of Silicon Valley – are finding rural locales ideal for nurturing growth and attracting talent. Instead of being a primary driver, in this case the water and land resources of the region serve as critical amenities for workers seeking a “slower paced” and physically attractive place to raise their families and call home.

    Renaissance is not alone. Sami Saydjari, president of Cyber Defense Agency, a virtual company that deals with “defending critical cyberspace,” is also headquartered out of Wisconsin Rapids. “(It’s) not Ground Zero,” Saydjari says, describing one competitive advantage the area offers. It is far away from major population centers and areas prone to natural disasters – key for disaster recovery and conducting mission critical defense work.

    It may not have the allure of Silicon Valley or Boston’s 128, but for a growing number of nascent knowledge-based IT companies, rural and small town areas are showing surprising appeal. Since 2000 virtually all the fastest growing regions for information jobs have been found among small towns and cities, ranging from Springfield, Mo., to Grand Forks, N.D. It’s a trend that could reshape more and more of small town and rural America over the coming decades.

    Doug McDonald is a Senior Associate with the Praxis Strategy Group, a development firm specializing in economic development strategies and initiatives for small to medium-sized metropolitan areas and urbanizing rural regions.

  • Rural America could bring boon to Dems

    By Joel Kotkin and Mark Schill

    Perhaps no geography in America is as misunderstood as small towns and rural areas. Home to no more than one in five Americans, these areas barely register with the national media except for occasional reports about the towns’ general decrepitude, cultural backwardness and inexorable decline.

    Yet in reality this part of America is far more diverse, and in many areas infinitely more vital, than the big-city-dominated media suspects. In fact, there are many demographic and economic dynamics that make this part of America far more competitive this year than in the recent past.

    Both parties have acknowledged the importance of this battlefield through their choices for vice presidential nominees. Barack Obama’s running mate, Sen. Joe Biden, is being touted not so much as a Washington foreign policy wonk but as the “scrappy kid from Scranton” — even though he has represented Delaware in the Senate for 35 years. Even more obvious is John McCain’s tapping of Alaska Gov. Sarah Palin, a former small-town mayor from a rustic state without anything close to a major metropolitan area.

    Even though many very small towns — with, say, fewer than 10,000 people — have continued to decline in population, there’s a significant demographic and economic rebound taking place in a host of somewhat larger communities. Places such as Sioux Falls and Fargo in the Dakotas as well as Asheville, N.C.; Wenatchee, Wash.; and Springfield, Mo., have been drawing a steady stream of people and businesses from both big cities and suburbs.

    This dynamic could provide some welcome surprises for Democrats and potential nightmares for Republicans. During the primaries, Obama startled observers with his ability to win over Democratic voters in places like the Dakotas, Montana, Kansas, Nebraska and Indiana. More importantly, according to recent polls, he is running between 10 points and 30 points ahead of John F. Kerry in 2004.

    Where are these new Democratic voters coming from? Most of Obama’s primary wins came in what may be seen as the new heartland, a widely dispersed group of fast-growing smaller towns and cities stretching from the Sierra Nevadas to the Appalachians. He did particularly well in college towns as well as those places where high-tech and cutting-edge manufacturing companies have set up shop over the past decade.

    This demographic and political dynamic has been building for years. In 2004, even Kerry came close to winning places such as Wisconsin Rapids, a small city of 17,500 in the central part of the state. Although the area has lost some high-paying blue-collar jobs in the paper industry, it has also attracted a growing number of sophisticated companies such as software firm Renaissance Learning, which employs more than 750 in the area.

    Some of these workers are originally from the area, but many others bring with them tastes and opinions forged in Silicon Valley, Raleigh-Durham or the Massachusetts tech corridor. Their politics may not be Chicago liberal, but people settling in such emerging “virtual suburbs” tend, like their tech-oriented counterparts, toward a pragmatic, mildly liberal politics.

    Other demographic groups are also changing the political complexion of some of these areas. Hispanics, for example, have been moving in large numbers to rural and manufacturing areas in the Great Plains and rural South which, until recently, were dominated by culturally conservative Anglos.

    At the same time, affluent baby boomers from the coasts and large Midwestern cities — some retired, some working via the Internet — are also flowing into some of these places. Surveys of older Americans find far more would prefer to resettle in small towns than in big cities. Some of the fastest growing towns for seniors include Missoula, Mont.; Eugene, Ore.; Moscow, Idaho; and Charlottesville, Va.

    As a result, these areas have become more cosmopolitan in their outlook. It is no longer unusual, for example, to see Indian, Chinese and other foreign-born professionals — or Asian restaurants or edgy coffeehouses. Fargo, once the very definition of staid, now boasts an excellent boutique hotel, a clothing store catering to metro­sexuals and several pricey restaurants.

    These shifts have not escaped the notice of the Obama campaign, which has put 50 campaign workers and 100 volunteer teams in North Dakota, long considered a lock for Republicans in November. Similar deployments are taking place in other rural states.

    Yet it may still be a stretch to see some of these places voting for a big-city liberal like Obama. It’s one thing to support homegrown populist Democrats such as North Dakota’s Sen. Byron Dorgan or Montana Gov. Brian Schweitzer, who have a fine sense of how to negotiate the sensibilities of their constituents on issues of farm subsidies, guns or gay marriage.

    McCain should hope Obama’s Hyde Park intellectualism and liberalism won’t play well beyond more affluent recent migrants and students. McCain may not win as big as President Bush did in 2000 and 2004, but he could hold on to enough rural and small-town voters to keep these states in the Republican column. McCain’s moderate image may hurt with some evangelical voters, but at least outside of the South, this may keep more moderate, younger and recently arrived voters in the fold.

    Finally, the fact that many small towns are doing relatively well may make voters somewhat less likely to bolt the GOP. Few places in the countryside are suffering anything like a Dust Bowl-level catastrophe, although some now worry about a looming decline in commodity prices. And on some issues, such as fossil fuel development, McCain can appeal to constituents of small towns that have been enjoying an energy-fed boom. Pushing American energy development will work well in these areas, although the Arizona senator’s opposition to ethanol subsidies could hurt in others.

    And even in rural places worst hit by the economy — such as traditional, manufacturing-dominated small towns in Indiana, Ohio, the Carolinas and Pennsylvania — Obama has yet to prove himself. In almost all these places, Hillary Rodham Clinton triumphed easily in the primary, usurping the grass-roots populist message. Obama has yet to show that knack.

    Rural and small-town areas have fewer very poor constituents and a greater concentration of middle-income voters than cities, and far fewer wealthy households than cities or suburbs. These mostly white, working-class voters — heavily concentrated in states like Wyoming, West Virginia, the Dakotas, Montana, Maine, Idaho and Kentucky — could be the key to winning the micropolitan and small-town electorate. And these places could prove a critical battleground.

    There are two regions where these voters might matter most. One is the sparsely populated Great Plains states that once represented a solid block of Republican strength. Obama not only has the chance to steal some electoral votes but also could divert McCain’s resources in more traditional battleground states.

    The other is a series of traditional battleground states: Ohio, Missouri and Indiana. If Obama can gain some of the traction Clinton achieved in these states’ small towns and cities, McCain’s chances fade to almost nil.

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of newgeography.com. Mark Schill is an Associate at Praxis Strategy Group in Grand Forks, N.D., and the site’s managing editor.

    Other articles in the Three Geographies Series:
    The Three Geographies
    Urban America: The New Solid South

  • Heartland Infrastructure Investment Key to the Nation’s Growth

    By Delore Zimmerman and Matthew Leiphon

    Infrastructure investment in America is poised to jump to the front of the policy agenda over the next few years. With the election of the next President, new priorities and objectives are sure to be set on several key issues, including national infrastructure investment. Some of this will be addressed in a major new Congressional transportation funding that will include a major push for all kinds of infrastructure.

    Infrastructure is one of the fundamental building blocks of economic opportunity, something increasingly recognized by pundits as well as political leaders in both parties. At NewGeography.com we hope to expand the discussion about infrastructure policy by examining its role in our communities, and exploring innovative new funding options for its provision.

    We have already looked at the history of infrastructure investment by focusing on the accomplishments of the New Deal. In the next few weeks we will examine current and future trends in infrastructure investment, both here and around the globe, and the fundamental role that infrastructure plays in promoting economic growth and driving innovation.

    Unlike earlier periods of infrastructure expansion, which were often uniformly national or regional in scope, today’s infrastructure needs related to economic development are often closely tied to the specific circumstances, resources, capabilities, and aspirations of the local economy. And, because federal resources alone will most certainly be unable to meet skyrocketing needs, local and private resources be mobilized to the greatest extent possible.

    One major initiative we are developing deals with the role of infrastructure in America’s Heartland, an often-overlooked, perhaps insufficiently understood part of our country’s economic landscape. Today’s Heartland is made up of thousands of rural small towns and hundreds of second and third tier cities scattered across America. They have deep roots in agriculture, forestry, mining or fishing but many have made a steady and successful diversification transition to an economy that now includes strong, globally competitive manufacturing, energy or service industries.

    Heartland communities outside the major metropolitan areas possess many underutilized assets. These include relatively low housing costs and a good business climate, quality schools, a reasonably educated and productive workforce, and available land and other resources for expansion.

    More recently the resurgence of the Heartland can be traced to strong performance in traditional pillars of small town and rural economies ‐‐ food and energy. But as history shows, resource-based markets are often subject to the whims of global cycles that can rise and fall with little warning. The Financial Times recently noted the biggest drop in commodity prices in over 25 years, although from record highs. But the drop does point to the volatility of these markets and the risk of over-reliance on high prices in crops and livestock to keep the Heartland economies robust and growing.

    To avoid a return to what may be seen as the “commodity trap”, there needs to be a commitment to infrastructure that could help grow other sectors of the economy as well as best leverage the commodity-based economy. This includes standard infrastructure such as highways, airports, harbors, utility distribution systems, railways, water and sewer systems, and communications networks. New facilities to distribute energy resources to the rest of the country—including pipelines to supply the water necessary to propel both energy production and manufacturing—will also be needed.

    But we also see the need to pay attention to specialized infrastructure such as university and lab facilities, technology and training centers, multi-modal shipping facilities, and research parks. These infrasystems – integrated fusions of facilities, technology and advanced socio-technical capabilities – have emerged as key drivers of innovation and the locus of future higher-value industries and higher-paying jobs.

    Federal resources will probably not be available meet these needs, as a 2006 GAO concluded For that reason, here and elsewhere around the world, cash-strapped governments are viewing private investment as an increasingly important piece of the infrastructure investment puzzle. Concurrently, banks, pension funds and other private investors are considering infrastructure as a new, long-term asset class that offers a combination of hard assets and visible long-term earning streams.

    This confluence of circumstances has given rise to a new set of private infrastructure funds that have attracted billions of dollars and Euros from individual and institutional investors alike, beyond traditional equity investment, public utility bond issues and into outright privatization of assets.

    The key question is will the new private infrastructure investment vehicles will find their way to the Heartland or remain concentrated in the large metro areas like their venture capital counterparts. Communities and second and third tier cities are, after all, often financially stressed because of a limited tax base, the high costs associated with size and scale, and difficulties adjusting expediently to population growth or decline.

    A possible solution lies in creating a Heartland Infrastructure Investment Bank. This institution would focus solely on infrasystem investments that would create higher-value opportunities in science and technology, manufacturing, energy and advanced services in smaller commuters. The Bank is to serve as a lead or secondary lender on projects of economic significance in the American Heartland and is intended to leverage considerable co-investment from the private and public sectors.

    We first developed the concept of a development bank while working on a project for the Washington, DC-based New America Foundation. Now we are looking for practical advice from potential investors, communities and policy makers. Please help us build a better future for the American heartland.

    Delore Zimmerman is President of Praxis Strategy Group and publisher of NewGeography.com Matthew Leiphon is a Research Analysis at Praxis Strategy Group

  • Sprawl Beyond Sprawl: America Moves to Smaller Metropolitan Areas

    For those interested in demographics or economic trends, domestic migration — people moving from one county to another in the United States — offers a critical window to the future. Domestic migration, which excludes international migration and the natural increase of births in excess of deaths, tells us much about how people are voting — with their feet. Domestic migrants are also important because they generally arrive at their new residences with more resources than the average immigrant or newborn.

    For decades, for example, people have been moving from the state of New York to just about everywhere else. In fact, since 2000, New York has bled more domestic migrants per capita than Louisiana after the devastation of Hurricane Katrina. While 7.8 percent of the Empire State’s 2000 population was packing, the nation’s worst disaster (natural and man-made) drove only 7.5 percent of Louisiana’s population away.

    But New York’s story is an old one. The big surprise is how smaller sized metropolitan areas are now attracting a large share of movers. For generations Americans have crowded into ever larger metropolitan areas — including suburbs and exurbs — but more recently they have been heading to smaller regions. You could call it “sprawl beyond sprawl.”

    Overall, between 2000 and 2007, U.S. Bureau of the Census data indicates that the metropolitan areas with more than 1,000,000 population in 2000 have lost two million domestic migrants, or 1.3 percent of their population. In contrast, smaller metropolitan areas — those with populations between 50,000 to 1,000,000 — gained 2.2 million domestic migrants, or 2.2 percent of their population. Smaller areas (under 50,000, including rural areas) also gained, attracting 700,000 domestic migrants, or 1.6 percent of their population.

    But the real the growth is concentrated not in small towns but among the metropolitan areas between 100,000 and 500,000 population. Overall, these medium sized metropolitan areas added 1.6 million domestic migrants — a very healthy 7.6 percent of their population.

    Among the nearly 500 metropolitan areas in this category, 120 have added more five percent or more to their population through domestic migration. Seven metropolitan areas have added more than 25 percent to their population through domestic migration, including Palm Coast, FL, The Villages, FL, St. George, UT, Cape Coral, FL, Bend, OR, Ocala, FL and Prescott, AZ.

    Some of these patterns may change in the short run. For example, nearly one-third of the national increase in smaller regions has been in 16 Florida metropolitan areas, which have added 700,000 domestic migrants. These areas, with only one-quarter of the Florida’s 2000 population, accounted for almost 55 percent of the state’s domestic migration gain. The latest year’s domestic migration data indicates a declining rate of increase in Florida, probably due to its over priced housing and newly higher insurance costs.

    On the other side, expect more from North Carolina, which enjoys a relatively strong economy and stable housing prices. Over the past seven years, North Carolina’s medium sized metropolitan areas gained the second largest number of domestic migrants, at 150,000. These eight areas accounted for 15 percent of the state’s population in 2000, yet captured 30 percent of the domestic migration gain.

    Idaho placed third, gaining 107,000 domestic migrants, as people continued moving from coastal states inland. There’s no reason to expect this trend to slow significantly. Other states rounding out the top ten were South Carolina, Arizona, Washington, Colorado, Pennsylvania, Arkansas and Alabama.

    Pennsylvania and Arkansas are the big surprises. Pennsylvania is the big domestic migration success story of the 2000s. The state has lost only 44,000 domestic migrants at the same time that its neighbors have lost more than 2,000,000. Pennsylvania’s mid-sized metropolitan areas have gained 65,000 domestic migrants, many of whom were fleeing the over-heated housing markets in the adjacent New York City and Washington-Baltimore areas. Arkansas reflects, at least partially, the Wal-Mart effect, with more than 50,000 domestic migrants moving to Fayetteville, which includes Bentonville and the headquarters of the world’s largest retailer.

    The same trend towards smaller metropolitan areas can be seen in other states. In Utah, the medium sized metropolitan areas (Provo and St. George) have accounted for more than 160 percent of the state’s net domestic migration. In Oregon, nearly one-half of the domestic migration has been in five medium sized metropolitan areas with less than 15 percent of the state’s population in 2000. In Missouri, more than 125 percent of the domestic migration has been to three medium sized metropolitan areas, with the largest gain in Springfield.

    The same pattern can be seen even in highly urbanized states. Maryland is losing domestic migrants overall, but the exurban metropolitan areas of Hagerstown, Salisbury and Lexington park managed to add more than 50,000. Another exurban success has been Colorado, where four metropolitan areas with 16 percent of the 2000 population accounted for more than 60 percent of the states domestic migration, led by Fort Collins and Greeley.

    Finally, it is notable that Sioux Falls, SD and Bismarck, ND are among the medium sized metropolitan areas that are attracting so many domestic migrants. It is obvious that things are changing when more people are moving to Bismarck or Sioux Falls than to San Francisco, Los Angeles, Boston or Washington.

    What does all this say? Clearly, the shape of America’s demography has been shifting, with a strong movement toward smaller metropolitan areas. Generally, these areas are newer, with little in the way of a traditional urban core. Many are wholly suburban. Indeed, the decentralization of the United States appears to be accelerating — from moving to the suburbs of large metropolitan areas to moving away from large metropolitan areas altogether.

    There are good reasons for this to be so, from overly costly housing, to overly stressful traffic congestion to telecommunications advances. Some argue that high gas prices and the mortgage melt-down will now reverse this trend. Although the housing slowdown likely will slow out-migration down, it is unlikely to reverse the longer-term pattern. And as for high gas prices, the 1970s energy crisis did not result in a ‘back to the city’ movement, but actually quite the opposite. And in the 1970s, we did not have the Internet, which now allows people in smaller communities access to information once limited to those living in large metropolitan areas.

    References:
    Demographia Metropolitan Population & Migration 2000-2007

    Demographia State Population & Migration: 2000-2007:

  • Skipping the Drive: Fueling the Telecommuting Trend

    The rapid spike in energy prices has led politicians, urban theorists and pundits to pontificate about how Americans will be living and working in new ways. A favorite story line is that Americans will start trading in their suburban homes, move back to the city centers and opt to change everything they have wanted for a half-century — from big backyards to quiet streets to privacy — to live a more carbon-lite urban lifestyle.

    Yet, there has been little talk about what could be the best way for families and individuals to cut energy use: telecommuting. For more than a decade, the number of telecommuters, both full-time and part-time, has been growing rapidly, gaining more market share than any other form of transportation.

    This seems certain to continue with the proliferation of broad-band technology — as well as the effect of high gas prices. By 2006, the expansion of home-based work doubled twice as quickly as in the previous decade, and now is close to nine million, according to the National Highway Travel Survey of the Federal Highway Assn.

    Nationwide, according to the Gartner Group, in 2007 13 million workers telecommuted at least one day a week, a 16 percent leap from 2004. That number was expected to reach 14 million this year. In addition, more than 22 million individuals, according to Forrester Research, now run businesses from home.

    Last year’s skyrocketing energy prices appears to have pushed employers in this direction. A CDW survey of private sector employers this year found that 76 percent now provide technical support for remote workers, up 27 percent from a year earlier. Federal IT support, however, has lagged at roughly 58 percent.

    In some regions, like the San Francisco Bay Area and Los Angeles, as many as one in 10 workers are part-time telecommuters. In the Greater Washington Area, more than 450,000 employees telecommuted at least one day a week in 2007, 42.5 percent more than in 2004, according to a survey by Commuter Connections, a regional network of transportation organizations coordinated by the Metropolitan Washington Council of Governments. The percentage of employees who telework surged to 19 percent from 13 percent during that time period.

    Not surprisingly, home offices, particularly in upscale homes, have become a necessity for many buyers — demanded ahead of security systems. A recent study by Rockbridge Associates suggests that more than one-quarter of the U.S. workforce could eventually participate full- or part-time in this new work pattern.

    The potential energy savings — particularly in terms of vehicle miles traveled — could be enormous. Telecommuters naturally drive less, not only to work but for the numerous stops to and from work. According to the 2005/2006 National Technology Readiness Survey (NTRS), the United States could save about 1.35 billion gallons of fuel if everyone who was able to telecommute did so just 1.6 days per week. That calculation is based on a driving average of 20 miles per day, getting 21 miles per gallon.

    A more recent study by Sun Microsytems, which uses telecommuting extensively, found that, by eliminating commuting half the week, an employee saves 5,400 kilowatt hours — even accounting for home office use. They also can save some $1,700 a year in gasoline and wear and tear.

    Related technologies, like teleconferencing, according to another survey, could save another 200 million tons of jet fuel, if 10 percent of air travel were reduced over the next 10 years. There are other signs of a shift to substitute the web for the road — some college on-line classes report a 50 percent to 100 percent boost in enrollment over last year.

    In comparison, the talk of a huge “surge” in transit riders as a result of rising gas prices, represents a welcome, but relatively minor, trend, since transit still accounts for under 1.5 percent of all travel. The vast majority — perhaps as much as 98 percent —- of the recent reduction in gas consumption came as a result of people simply reducing their driving, not switching to the rails.

    Some of this is structural. Most metropolitan regions are simply not set up for efficient public transit; work patterns are increasingly dispersed as opposed to centralized. As a result, the ranks of telecommuters are greater in every metropolitan area in the country outside of the New York, Chicago, Philadelphia and Boston areas.

    This trend is particularly marked in growing regions in the South and West. In Portland, the mecca for light rail, there are nine telecommuters for every rail commuter. In 2008 Nustats survey, covering Austin, Dallas-Ft. Worth and El Paso telecommuting (at 12 percent) was cited four times as much as using public transit to reduce gas consumption.

    Perhaps even more important, telecommuting and related technologies represent a potential sea change for the future shape of families and communities. Already women are well-represented among telecommuters, in part so they can stay home with their children. In a world with fewer permanent employees and longer hours, telecommuting could help mothers stay in the workplace even while rearing children. A growing number of fathers are also looking to work at home to participate in child-rearing.

    In many ways, this represents a return to patterns that existed before the Industrial Revolution. In pre-industrial societies, members frequently worked at home or walked to work. The Industrial Revolution changed all that, with its need for mass standardization — demanding the efficacy of office and factory. Marx, the ultimate chronicler and prophet of the Industrial age, saw how “agglomeration in one shop” was “necessary” for human progress.

    Writing a century later, Alvin Toffler foresaw how the rise of the “electronic cottage” would return work to the home — where it had been before. As he put it, “social and technological forces are converging to change the locus of work” — back to the home, neighborhood and village. This is part of what Toffler envisioned in his “Third Wave” society, a breaking away from the “behavioral code” of “second wave” industrialism, where work and family were segregated

    These trends will continue as economic relations between business firms become less constrained by proximity. Information inputs can come from any source, and increasingly, any place. Of course, there will be serious constraints to this development. Perhaps, most important, will be the reluctance of managers —both private and public — to allow this dispersed work

    There are also interests, like urban office developers and real estate developers, who might find these trends troubling. Many new urbanists and environmentalists, who one would think would favor this energy-saving trend, tend to ignore or downplay the digital frontier — preferring a return to the dense, transit-dependent patterns common a century ago.

    Even telecommunications firms, which logically should be pushing this shift, seem unable to tailor their products for home-based work, according to a recent Forrester Research study. Morley Winograd, a former AT&T executive, says these companies have persisted in separating their “consumer and business customers.” As a result, they have been slow to abandon what he calls “the obsolete gene” in their corporate DNA, and target the home-based business

    Yet in the future, Winograd, now executive director of the Institute for Communication Technology Management at USC’s Marshall School of Business, says that developers, corporate executives and, presumably, telecommunications companies will be forced to focus more on this growing segment.

    Indeed, new suburban developments, like Ladera Ranch in Orange County, have incorporated such mixed usage into their floor plans — with separate entrances for business clients. Suburban historian Tom Martinson, believes that the Ladera plan will “be in the history books in 20 years” because it anticipates “an incredible change in the way we live and work.

    Many leading companies also see the potential of full-time and part-time telecommuting. Particularly amenable to this trend are leading technology and business-service firms. At IBM, for example, as much as 40 percent of its workforce operates full-time at home. Other companies, including Siemens, Compaq, Cisco, Merrill Lynch and American Express, have expanded their use of telecommuting, with increased productivity

    As more companies let go of their “command and control” approach to management, this practice seems likely to increase. Certainly the employee demand is there; one-third, according to one survey, would choose this option, even if it meant somewhat less pay. Teleworkers also generally show a higher job satisfaction

    This is also being adopted in some states and cities. Georgia, for example, approved tax credits this year for creating and expanding telework.

    But perhaps the biggest impetus, suggests Winograd, the former telecom executive, is the gradual ascendancy of younger workers. The millennial generation — the subject of his recent book, “Millennial Makeover,” co-written with Mike Hais — “have grown up up with the Internet and stay connected to the world on their laptops or cellphones 24/7” and sees “distinctions between work and life as arbitrary and unnecessary.”

    These younger Americans will likely see no reason to spend an hour in a car, bus or train to get from one computer screen to another. Once adopted by employers, this shift may do more to reduce the carbon imprint than all the current calls for largely unwelcome shifts in the daily lifestyles of many American

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of www.newgeography.com. This article also appears at The Washington Independent.

  • New Deal Investments Created Enduring, Livable Communities

    Growing appeals for more public infrastructure investment make two critical claims: that this would help stimulate the economy in the short run while making our country more productive over the long run. Unlike tax rebates and other short-term stimulus, a major infrastructure investment program can have powerful effects on community life beyond boosting spending at the local Wal-Mart.

    I thought about this recently when I visited my boyhood hometown of Wishek, North Dakota. Wishek is a small, farming town of 1,200 people nestled in the gently rolling hills of the central Dakotas, about 17 miles from the South Dakota border. Its population is made up largely of people who trace their origins to German immigrants from Russia. These people previously were recruited by Catherine the Great to farm the steppes near the Black Sea.

    Seeing a greater opportunity in North America, these Germans started to arrive in 1885 to homestead the Dakotas’ deep sod prairie – a glacial moraine of earth and rock. They were lured by the romantic thrill of developing a “Territorial Empire” that later became the states of North and South Dakota.

    This dream was widely realized by the 1920s but all but dried up and almost blew away during the drought-ridden thirties. That dream would have extinguished if not for the enlightened programs of the New Deal — from soil conservation to loans for farmers to the Works Progress Administration (WPA).

    Growing up in Wishek during the 50s and 60s, you rarely heard about the New Deal. Life was good, pretty much everything you might imagine small town childhood to be in Middle America. The pace of life was easy; everyone knew everyone and almost everything about anyone. The fortunes of the community rose and fell with farm prices, sometimes fluctuating wildly from year to year. Kids roamed freely on foot and in cheaply fueled cars and there were ample opportunities to participate in almost every facet of community life. With a k-12 school population of about 500 to 600, any child or young person who wanted to could play some kind of role in sports, arts and music, or church related activities.

    Unknown to me — and not widely discussed by the 1960s — was how many of the community’s best and most used facilities were constructed by the WPA. During the drought years of the mid-‘30s, the city park was enlarged and developed with a children’s playground, clay-surfaced tennis courts and a light skating rink paid for by WPA. Later a $6,000 bond issue was floated to build a pool that was designed by WPA engineers and is still in use today. Then in 1942 a new auditorium — a truly landmark building for the community — was completed for use by the school district. The auditorium continues to be used today as a civic center for community and family events including Wishek’s premier regional event the annual Sauerkraut Days.

    This investment strategy in community infrastructure was played out across North Dakota. Elwyn B. Robinson, in his classic “History of North Dakota,” recounts the massive investment in North Dakota:

    “In North Dakota the W.P.A. alone, between July 1, 1935 and June 30, 1942, built 20,373 miles of highways and streets, 721 new bridges and railroads, 166 miles of sidewalks, 15,012 culverts, 503 new public buildings, 61 additions to public buildings, 680 outdoor recreation facilities, 809 water wells, 2 irrigation projects, 39 sewage treatment plants and 9 water treatment plants. It reconstructed 1,002 bridges and viaducts, 2,180 public buildings and 1,721 culverts.”

    To be sure, today is not the “dirty” thirties of the Dust Bowl. It is also far different from the serene place of my boyhood in the 50s and 60s. Some of the old infrastructure needs maintenance while other infrastructure needs have changed significantly. A proposed wind farm just south of town, for example, has been delayed because of the lack of electric transmission capacity throughout the region. In addition, like many rural communities the major employment base is now in manufacturing and health services, pointing to the increasing and essential importance of broadband telecommunications, roads and air service that permit link places like Wishek with the national and international economy.

    Yet if we look about us, the legacy of New Deal endures to this day. It provides clear evidence of the impact that infrastructure investment can make on even the smallest of communities. Much of the current discussions about infrastructure investment too often focus on the giant projects and national implications. However, the case for a renewed investment agenda can be made most persuasively by pointing out what such investments have done for local communities — city or small town — in the past. And what they might have failed to become if there had never been a New Deal.

    Delore Zimmerman is CEO of Praxis Strategy Group and Publisher of www.newgeography.com.