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  • Flannery Burke

  • Back to Basics: The Financial Crisis Requires a Paradigm Shift

    It’s tempting to look at the current financial meltdown – and the proposed bailout – with a Bolshevik mentality. Let’s line up the investment bankers, hedge fund managers up against a wall and spray them with an odorous substance.
    If it were only so easy. Rescuing Wall Street may not solve many problems but letting the investor class implode won’t help many people either.

    What we really need is not a revolution against capitalism, but a paradigm shift within it. We need to move away from fads and quick bucks, and towards productive investment. If we don’t make that shift, the current bubble will simply recreate itself again, perhaps in ill-thought out speculative ventures painted “green” but motivated by the same shortsighted greed.

    Instead let’s stop the whole bubble cycle and get back to basics. That means shifting our investments towards productive activities such as manufacturing and basic infrastructure– and training the critical skilled workers that a ‘real’ economy needs. It means shifting investment priorities by providing incentives for entrepreneurs whose main interest is to build companies, not flip them.

    Over the past decade we have seen a repeated pattern. Americans innovate, start new companies and bring a moribund economy back to life. This takes place primarily in the suburbs and the expanding growth regions. Then the markets heat up and there’s rapid asset inflation. This happened in the late 1990s with dotcom stocks, and more recently in real estate creating a huge wealth effect, particularly in elite cities. Both instances ended with a dispiriting crash.

    Breaking this pattern is an important issue for all of us, but most importantly for our children. America’s robust population growth necessitates rapid long term, and widespread, economic growth. That means moving away from a financially oriented economy to a production oriented one.

    Most Americans cannot sustain themselves trading paper. We also need robust growth in a host of productive industries – energy, fiber, food, manufacturing goods and high-end business services – that can provide decent employment for someone other than Wall Street bankers, well-placed developers and dotcom entrepreneurs.

    For these broader based industries to grow, we need to improve basic infrastructure for moving goods, providing energy and educating skilled workers. American firms in fields from farm equipment and aerospace to textiles still compete with China and India. In an era of high-energy costs, we can drive more of our manufacturing closer to home, if we can provide them with better technological, transportation and human resources.

    Tragically we have ignored both infrastructure and industry. This can be seen from the largest cities to the smallest towns. “One looks back at that map ‘Landscape by Moses,’” writes the noted sociologist Nathan Glazer in looking at the legacy of New York City’s “master builder” Robert Moses, “and if one asked what has been added in the fifty years since Moses lost power, one has to say astonishingly: almost nothing.”

    Indeed, despite the staggering private wealth generated by the stock market and real estate in New York, the city’s public infrastructure has been largely neglected. Its industries are dying and new ones have trouble expanding. There are billions for new stadiums and other elements of Mayor Bloomberg’s “luxury city” but not much for the diverse entrepreneurial firms particularly in the outer boroughs.

    The city controller’s office has estimated that infrastructure spending levels in the late 1990s and early 2000s were barely half of what was required to maintain the city’s streets, main roads, and railways in “a systematic state of good repair.” Subways and rail lines in America’s richest city are frequently shut down after heavy rains due to flooding caused by poor drainage. Brownouts and blackouts, in part caused by underinvestment in energy infrastructure, have become common during summer high-use periods.

    Similarly, California’s once envied water-delivery systems, roadways, airports, and education facilities are in serious disrepair. In the 1960s, infrastructure spending accounted for 20 percent of all state outlays, but as the technocratic perspective took hold in Sacramento, infrastructure spending fell to just three percent of all expenditures, despite the rapid growth of the state’s population.

    Many communities have decided that instead of attending to basic needs, to invest in spectacular new convention centers, sport stadiums, arts and entertainment facilities, hotels, as well as luxury condos. Some have poured money into projects that they think will attract a few big corporate executives with luxury boxes or opera tickets. Others have poured their resources into ways to lure “creative” professionals with edgy museums, jazz clubs and cultural centers.

    These approaches are built around the deluded notion that Americans can thrive simply by being more clever and creative – even more self-fulfilled – than our competitors. China, India, or other low-wage nations won’t be content to concede higher-end economy activity to us. Software design, special efforts, high end legal services, architecture, fashion and even hedge funds all migrate to places where wealth is being created.

    In the coming years, for example, Mumbai, Dubai and Shanghai will employ their enormous wealth – gained in such unfashionable pursuits as writing computer code, drilling oil or making steel – to break into the lucrative businesses formerly dominated by Wall Street, Hollywood or Silicon Valley. You cannot give up productive, wealth-generating enterprises without consequences. Over time this also will hit all but the most elite workers.

    In contrast a policy that focuses both on old fashioned and new, green infrastructure would spur positive impacts on employment across a broad spectrum of activities. We could use new bridges, roads, trains, energy transmission facilities to help resuscitate the Great Plains as well as the beleaguered Great Lakes so they sustainably exploit the natural resources and logistical advantages that made them productive hotbeds in the first place. We can turn our cities, both old and new, into ideal spots for the nurturing of hosts of growing industries by providing adequate skills training, new transportation systems and updated power grids.

    Governments at every level can and should play a critical role in this great project, both in financing physical infrastructure and providing critical skills training. But given the financial realities today, we also need to take advantage of private capital available both here and abroad for such investments.

    So rather than simply rescue Wall Street, or let it hang out to die, let’s figure out how to redirect it. We need to shift incentives away from mindless speculation and the creation of ever more obscure financial instruments. Instead let’s find ways of encouraging investors to make their profits in ways that spur production and widespread wealth creation.

    Joel Kotkin is the executive editor of Newgeography.com.

  • Creating an Authentic Place: Tales from Two Southern California Cities

    What makes a place “authentic”? In places we cherish, we look for something unique and tangible. But personal experience of a place is not merely a product of the landscape and “built environment.” It is also shaped by myths and perceptions.

    As City Manager of two California towns, I’ve grappled with the treacherous crosscurrents of reality and myth, of change and preservation.

    Azusa, California is a working-class suburb where the majority of the population are from the stock of Mexican immigrants over the past century, along with a largely comfortable mixture of the rest of Southern California’s extraordinary diversity. Ten years ago, Mayor Cristina Cruz Madrid memorably described it as “the caboose on the foothill train,” standing in sad contrast to its more affluent middle-class neighbors along the majestic (but often smog-obscured) San Gabriel Mountains. An ambitious effort to shake that image has had mixed results but some very real accomplishments.

    Ventura, California is a beach town with higher aspirations. Its city government promotes it as “California’s New Art City” and aims to be a model of smart growth, environmental sustainability and civic engagement. Ventura’s citizens laid the foundation for this ambitious agenda when more than a thousand of them participated in a citizen-driven “visioning effort” at the beginning of this century. But it remains unclear how deep or widespread the public enthusiasm for these notions truly is.

    Both these towns struggle with distinguishing their actual, imagined and desired identities — and destinies.

    People have lived in Azusa. for six thousand years. Phonetic variations of “Azusavit” were recorded by Spanish padres as the village origin of the native “neophytes” inducted into labor at the nearby Mission San Gabriel. Yet despite this long history, today’s Azusa blends with little distinction from the tract homes, apartments and commercial strips of the thirty other cities that two million San Gabriel Valley suburbanites call home. But it’s making considerable strides in re-anchoring a sense of place.

    The symbolic turning point came in 1995, when voters overwhelmingly rejected a scheme to introduce casino gambling as the panacea to the city’s declining fortunes. Voters installed a new City Council and chose instead to focus on beautifying the sagging Downtown. When the pedestrian-scaled street lamps that were installed were mistakenly painted purple, the Council persevered despite ridicule. Two dozen new businesses made believers out of skeptics. Purple was embraced as the city’s distinctive color.

    Development of new homes sought to attract middle-class homebuyers. Public schools adopted a “no excuses” determination to boost test scores. A rash commitment to plant 2,000 new trees in the year 2000 ended up adding over 3,500 new trees. The seeds of those efforts have flowered in a renewed spirit of citizen volunteerism. Neighborhood improvement zones were launched to “improve all of Azusa, one neighborhood at a time.” An ambitious new General Plan proclaimed “a 21st Century vision for Azusa” as “the Gateway to the American Dreams.” More than a million square feet of office/warehouse/light industrial “flex space” was added, a residential development slated for 1250 homes broke ground and the long-neglected Downtown began to show new signs of life.

    But change is never painless. To some, new development seems to violate the city’s “unique natural, historic and cultural heritage.” There is considerable concern that new structures might be undermining the cherished small town character.

    This has led to a continuing political struggle. Is the new development creating “a distinct identity and sense of place” or altering the community’s existing character beyond recognition? This reflects a deep ambivalence of local residents about change. So much of current development is simply generic “product” that even the value of new investment (and more permanent benefits of expanded jobs, housing and tax base) may seem like a poor trade-off against the loss of the familiar.

    Ventura

    That question is even more clearly drawn in the coastal town of Ventura. The community is officially known as “San Buenaventura,” the name that Father Serra, the legendary founder of the California missions chose to honor Saint Bonaventure, an Italian, but the name also evokes the spirit of a city of good luck. That good fortune seemed to run out, however, with the end of Ventura’s oil boom in the sixties. The city’s historic core declined, even as farmers and ranchers turned to raising largely undistinguished tract homes on the city’s outskirts. After the 101 interstate sliced through, Ventura began a long, slow fade – especially compared to Santa Barbara, its neighbor just 22 miles up the coast which styles itself “the American Riviera.” .

    Like Azusa, Ventura in the last few years has gotten back on track. The once seedy and largely deserted core came back to life – largely thanks to the grit of individual entrepreneurs. The City did back construction of a theater and parking structure, which helped accelerate an indigenous restaurant and retail revival. Then came the “Seize the Future” visioning effort that thrust forward new leadership determined to make Ventura a “national model” for “smart growth,” “livable communities” and “civic engagement.”

    But the push for new investment and “new urbanist” development has run into the same predictable “not in my backyard” response seen in Azusa and many other communities. (link to Kiefer and Bradford NIMBY pieces). There’s much talk about preserving the “soul” of the community. This includes a shifting and even contradictory mix of protecting the town’s laid-back beach town attitude along with its largely unspoiled hillside and ocean views, its stock of old buildings and its quirky landmarks.

    Nothing is more symbolic of this than the debate over the fate of the “Top Hat Burger Place.” The 450 square foot Downtown hamburger stand stood in the way of an aggressive developer’s plans for three-story condos over boutiques. Sentimentalists and preservationists banded together with anti-elitists to insist the stand stay or be relocated at the developer’s expense. Others welcomed the demise of what they saw as an eyesore reminiscent of Downtown’s hardscrabble past and rolled their eyes about claims that the plywood structure qualified as an historic landmark.

    On a split vote, the City Council approved a compromise that donated a slice of a city-owned parking lot nearby as the relocation site for the Top Hat. Given the current real estate recession, it was no surprise when the development project tanked, leaving the apparently ‘recession-proof’ hamburger stand in its current location.

    Now, American Apparel is opening the first retail chain outlet in Downtown. Could this be the harbinger of Ventura’s transformation into another trendy “lifestyle center” of national chains?
    Such concerns are not new. More than a century before Wal-Mart steamrollered old-fashioned downtowns across America, Woolworth’s, Sears and Penney’s created the foundation for a consumer society dominated by giant chains.

    Can places like Azusa and Ventura maintain a special identity amidst the gale force winds of the global economy? Some extreme advocates favor opting out and resisting every change in the landscape even in dilapidated neighborhoods. The other extreme pushes for undermining local neighborhood and district character to benefit out-of-scale real estate “projects” replicating some generic formula, be it “mixed-use town center” or “townhome village.”

    Towns need to find something better than a tense balance between these two extremes. First of all they need to put a distinctive stamp on new development so that it remains scaled to the local character. This is the struggle many cities – including Azusa and Ventura – must undertake if they want both to preserve “a distinct identity and sense of place” in the era of the global economy while remaining vital and economically diverse. They do not have the option of becoming a hermetically sealed stasis town like Carmel, where tourists come to experience an historic theme park of a town. Instead, like most real places, they must face difficult choices about what to retain and preserve – and what to improve and replace. Perhaps the best standard to follow may be to discern what feels like “home” to residents. Ironically, that premium is likely to also attract visitors and commerce that may ultimately threaten that very distinctiveness. But that is a problem that most struggling communities would look forward to grappling with.

    Rick Cole is the City Manager in Ventura, California, where he has championed smart growth strategies and revitalization of the historic downtown. He previously spent six years as the City Manager of Azusa, where he was credited by the San Gabriel Valley Tribune with helping make it “the most improved city in the San Gabriel Valley.” He earlier served as mayor of Pasadena and has been called “one of Southern California’s most visionary planning thinkers by the LA Times.” He was honored by Governing Magazine as one of their “2006 Public Officials of the Year.”

  • The Generosity of Spirit in Houston

    Many of you might know I am a bit of a Houston fan. It’s not that they don’t have zoning — I am neutral on that issue — but because they have heart. I was privileged to see Houstonians open themselves to 250,000 or more mostly poor and minority evacuees from Louisiana after Katrina. It was an inspiring effort and very ecumenical, led largely by evangelical Christians but including Jews, Muslims, Catholics and anyone else who gave down.

    Now, after Ike, they are taking care of their own, as we can see from a message from Elliot Gershenson to Jeff Mosley (listed at the bottom) at the Greater Houston partnership.

    A lot of cities may be prettier or have better weather than Houston, but in terms of helping neighbors, no big city is better. As Davis Henderson, CEO of the Greater Houston Chapter of the American Red Cross, told me after Katrina, “Who else would have adopted another city like we adopted New Orleans?” Henderson previously oversaw Red Cross operations in Tampa and Chicago. ”In Houston,” he adds, “a neighbor is a neighbor — not a competitor.”

    Urban greatness has many facets, but if I was to pick one, the kind of generosity of spirit Houston has showed would be at the top of my list.

    Here’s the full letter:

    Like so many non-profits, IM has been out of power but still kept going, serving the community. It’s hard to believe that it is possible to serve so many seniors and refugees without computer power and phone service, but somehow we have done so. Just as so many other first-responder organizations like the Red Cross, Salvation Army and government agencies like the City of Houston, Harris County and FEMA have stepped up. We’ll likely hear stories about failed efforts, but the true heart and guts of our city needs to be recognized. There are so many stories of bravery, dedication and pure visionary action that are worthy of telling.

    There’s the story of dozens of churches and other faith groups who have been housing evacuees from Galveston and other places in their gyms and sanctuaries – providing food, shelter and clothing. Much of these expenses will be borne by them. Certainly the time and talent of their core volunteers and staff is being diverted from other programs – all because the people of Houston are heroes.

    There’s the story about crime – not the one we would expect – but how low the crime statistics have been.

    People in Houston have learned how to drive! Somehow, with all those lights out, people have slowed down and let the other guy take a turn.

    I keep hearing that people connected with their neighbors, many for the first time. And now as the electricity is coming back on and the garage openers begin working again, it feels like we’re losing something very special.

    I learned about one church’s senior pastor who received a phone call from someone he didn’t know living back east. The caller said they could not find their elderly parents and were desperate to find out if they were ok. So this pastor got in his car late that night, with a load of food, water and ice and drove across town to find the parents. He drove up to the house and knocked on the door. They were fine, but without electricity or phone, so he called their kids on his cell phone and said “here, someone wants to talk to you.” After the call the parents said they didn’t need anything but across the street there was someone who really looked like he did. So the pastor gave all of his food, water and ice to the neighbor. The next day he came back with more food and water only to find that the neighbor had distributed what he received the night before to his neighbors. The church volunteers returned each day until the electricity came back.

    The president of my synagogue bought Sabbath dinner for 1,250 families who he thought might need a kosher meal. In the end a number of synagogues and the Jewish Federation of Greater Houston backed him up so that he did not need to take this financial burden on his own. Only about 500 families came forward to receive these meals, so in the end he and my synagogue donated enough food to the Houston Food Bank and the Jewish Community Center to feed 700 families and seniors.

    I could go on – but I think you already know what I am talking about. You’ve likely witnessed this yourself and have been amazed by the grace that has been shown by Houston and all of our leadership.

    On that note (about leadership), please let me make a special appeal. Normally this would have been the Tuesday Memo when I showcase the annual United Way campaign which just began. IM is proud to be a significant recipient of United Way funding and we use these funds to serve well over 1,000,000 meals to seniors each year, to make the resettlement of hundreds of refugees the best we know how, and to support our Ready Houston! disaster preparedness and response activities (which has been in full swing these past two weeks).

    My focus always is on the community building elements of the campaign. I have been quoted as saying that if someone gave Houston $1 billion dollars NOT to run an annual campaign, if I were the United Way Board Chair I would turn it down. Not because I am foolish, but because I believe, as important as the money raised is, it is equal䁥

  • The Smart Growth Bailout?

    One way to see the federal rescue of the home mortgage market is to call it “the smart growth bailout.” True, the proximate cause lay with profligate lending practices. The flood of mortgage money covered the entire country, irrespective of state, regional or local land use regulations. That’s where the similarity stopped.

    During this decade there has been an unprecedented divergence of housing prices among U.S. metropolitan areas. Generally, the difference has been associated with strong land use regulations. Where restrictions are greater, house prices rose strongly relative to incomes. Where more traditional regulation remained, house prices also rose, but only modestly.

    This is illustrated by the change in the Median Multiple (median house price divided by median household income). In the more regulated metropolitan markets, it rose from 3.5 to 6.0, a 70 percent increase. In the more traditionally regulated markets, the Median Multiple rose from 2.7 to 3.0, remaining within historic norms.

    Economics teaches that scarcity or rationing leads to higher prices. Smart growth policies ration land for development through the use of urban growth boundaries and prohibitions or restrictions on building on vacant land. In such an environment, higher house prices can be expected.

    “The affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land,” said Donald Brash, governor of the Reserve Bank of New Zealand (the national central bank) for nearly 15 years.

    America has become two nations with respect to housing costs and housing cost increases. Princeton economist and New York Times columnist Paul Krugman put his finger on the cause of the difference more than three years ago. Others have made similar findings, such as Edward Glaeser at Harvard, Theo Eicher at the University of Washington and Kate Barker of the Bank of England. House prices have exploded in highly regulated markets, while they have changed little where traditional land use regulations still apply.

    The predictable economic effects have occurred with a vengeance in more regulated (smart growth) metropolitan markets. From 2000 to 2007, the median house price rose an average of $174,000 in the more regulated metropolitan markets with more than 1,000,000 population. In the less regulated markets, the average increase was $12,500.

    The easy money was available everywhere in the nation increasing the demand for housing in most markets. But in most of the nation, housing price increases were modest, as planning systems allowed new housing to be provided at historically competitive prices. For example, in Atlanta, Dallas-Fort Worth and Houston, the three fastest growing metropolitan areas in the high-income world with more than 5,000,000 population, housing prices changed little in relation to household incomes. Furthermore, from 2000 to 2007, 2,550,000 million people (domestic migrants) left the more restrictive metropolitan markets for elsewhere in the country. That pretty well dismisses the idea that demand was the primary cause of the price escalation.

    Demand, in and of itself, does not increase price. But, when higher demand is experienced in an environment of limited supply, price increases occur. Where there were strong land use restrictions, there were strongly escalating house prices. The restrictions drove prices up because land regulations had reduced the supply of developable land, thereby raising the price. The planners may have succeeded in their objection – slowing suburbanization (or if the pejorative term is preferred, “sprawl”) – but they also created a pricing bubble that made things much worse.

    It is estimated that the overall housing stock owned in the third quarter of 2007 was slightly over $20.1 trillion. If the Median Multiple of 2000 had been preserved, the aggregate value today would be approximately $14.8 billion. Of the $5.3 trillion increase in value, it is estimated that $4.5 trillion of this can be attributed to the 25 metropolitan areas with the most severe housing regulations. This means that 86 percent of the increase took place in areas accounting for only 30 percent of the nation’s population. The other 70 percent of the nation had an overall increase in value of less than $800 billion, or 14 percent of the total “bubble.” More than 65 percent of the higher value occurred in ten metropolitan areas – Los Angeles, San Francisco, San Jose, San Diego, Riverside-San Bernardino, New York, Boston, Washington, Miami and Baltimore. These metropolitan areas account for little more than 20 percent of the nation’s population.

    And just as the highly regulated metropolitan areas led the way up, they now are leading the way down. It is estimated that the house value losses in the more regulated metropolitan markets is approaching $1.5 trillion, while the losses in the more traditionally regulated metropolitan markets are estimated at less than $150 billion.

    None of this is to suggest that smart growth has only negative ramifications. To the extent that smart growth removes barriers to the development of higher density housing or less costly housing where it is demand is a good thing. But the land rationing policies proposed under “smart growth” clearly have reaped a very bitter harvest.

    The end of this catastrophe may be in sight (or it may not be). Housing prices, particularly in the inflated markets, have started to fall. This is true not only in the United States but in other highly regulated markets such as the United Kingdom, Australia and New Zealand.

    Yet the bottom line remains: Without smart growth’s land rationing policies, the severe escalation in home prices would never have reached such absurd levels. But the disaster in the highly regulated markets will be with us for years. The smart growth spike in housing prices turned what might have been a normal cyclical downturn into the most disastrous financial collapse since 1929. Now the taxpayers are being asked to bail out the mess that smart growth advocates, no doubt inadvertently, have created.

    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.”

  • Getting Beyond the Quadrangle: Rethinking the Reality of Town and Gown

    In the spring of 2003, I chaired an Urban Land Institute Advisory Services Panel focused on strategies for continuing the revitalization of downtown Birmingham, Ala. As in many cities this was driven by the stock of historic downtown buildings slowly being converted to either new office buildings or loft condominiums, supported by a handful of downtown cultural assets and public spaces. Our tour host proudly invited to the panel’s attention that three of the four buildings anchoring downtown’s “100 percent corner” were the high-rise headquarters of three regional banks.

    No one on the panel was prepared to share with our hosts what many of us were thinking at the time: That these regional banks would inevitably be swallowed up by much larger national banks, their staffs pared down substantially, and most downtown operations relegated to “back-offices” in much less-expensive suburban office park locations well outside the downtown area.

    What was, however, truly remarkable was that a mere eight blocks away from the “100 percent corner,” the real economic engine for the future of Birmingham–the University of Alabama Birmingham (UAB)–seemed all but ignored by the city.

    This stark contrast between perception and reality prompted me to focus on the relationship between urban colleges and universities and their “host” jurisdictions.” Universities need to be seen as the primary source of “knowledge workers”–the smart, creative, and skilled people forming the foundation of successful companies in a region. They need to outgrow their medieval culture of isolation and become better integrated into the cities and towns where they are located.

    The ULI Birmingham panel reflected a tendency I have since noted to find fault with the way the cities handle growth issues regarding urban campuses, imploring Birmingham to “get out of UAB’s way.” Yet it is also very true that colleges and universities often have trouble getting out of their own way. In fact, playing nice with others outside of their own ivy-covered walls is not generally in the DNA of most academic institutions. They tend to be introspective to a fault while believing they are always “the smartest people in the room.”

    And yet, it may be just as much in their economic interest as that of their surrounding communities for colleges and universities to learn to work cooperatively with their host jurisdictions. At the same time many states are beginning to realize that the relevance of academic endeavors to commercial enterprises has increased exponentially since World War II. Similarly, the business community has embraced the concept of lifelong learning, often providing tuition reimbursement and sabbaticals to employees to encourage them to return to school.

    We already can cite a few academic institutions where we see this synergy wholeheartedly embraced with marked success. Campus Partners, the result of a true collaboration between the city of Columbus, Ohio, and Ohio State University – and the public-private partnerships it has spawned – has resulted in the dramatic transformation of previously underdeveloped and/or distressed neighborhoods on the periphery of the OSU campus into vibrant new campus gateways.

    One area that faces dramatic physical, economic, and sociological distress are the East Baltimore neighborhoods surrounding the educational and research campus of Johns Hopkins University. The East Baltimore Development, Inc. (EBDI), a collaborative effort between the City of Baltimore, Baltimore Development Corporation, the Johns Hopkins Institutions, local foundations, and others are making progress in creating a new economic engine for the city in an 80-acre assemblage of land surrounding the Hopkins medical campus.

    And in West Jackson, Miss., UniDev has been working with Jackson State University (JSU), an historically black university, the JSU Foundation, the city of Jackson, and the State of Mississippi, to acquire and transform approximately 50 acres of distressed and dilapidated housing to create a new gateway between the city and the JSU campus.

    These examples also suggest a need for colleges and universities to emerge from ingrained planning practices, including the 600-year-plus dominance of the campus quadrangle. As iconographic as the campus quad is, its preeminence is being challenged by the university town center, a new physical form that only now is emerging through a confluence of circumstances that could create a new paradigm for the relationship between the “academic village” and the outside world.

    A university town center combines housing with non-residential uses designed to bring the student population, institutional functions, and the surrounding community together for common purposes. lt may complement or even replace the traditional student union building as the locus of campus life. It also can foster closer social, cultural, and, most important, economic ties between the academic institution and the surrounding community, as well as with the local government. The selection and mix of uses of the university town center need to be designed to maximize synergies among the academic and nonacademic populations.

    Ultimately it is critical to open urban college and university campuses to their surrounding communities. In the information age the historic separation of town and gown is not only antiquated but a detriment to both parties.

    More often than not, the challenge in achieving this kind of transformative change within academia is reminiscent of the old joke, “How many psychiatrists does it take to change a light bulb?” Only one but the light bulb must want to change. The same can be said of the majority of our urban colleges and universities.

    Peter Smirniotopoulos, Vice President – Development of UniDev, LLC, is based in the company’s headquarters in Bethesda, Maryland, and works throughout the U.S. He is on the faculty of the Masters in Science in Real Estate program at Johns Hopkins University. The views expressed herein are solely his own.

  • Foundations and Non-Profits Stepping up to Create Playing Fields

    There is no city I am aware of that seems to have the amount of parks and green space it wants. This paucity is particularly glaring when it comes to parks for children and most prevalent in large, dense urban areas. And this is why non-profits like San Francisco’s City Fields Foundation are stepping in to upgrade existing parks because public funds are not available in the quantities demanded by the public.

    On Saturday in San Francisco, the group held a ribbon-cutting for three refurbished soccer fields in the Crocker-Amazon neighborhood. The new fields will add approximately 12,358 hours of playtime on the soccer fields per year.

    In Great Britain, the National Playing Fields Association has been doing this for over 70 years. Just goes to remind you, that when it comes to building any sort of infrastructure, there seems to be a great organizational advantage to having some sort of centralized body.

  • What’s the Biggest Flaw in the Administration Bailout Plan?

    The biggest flaw in the Administration bailout package: It could all happen again. The system doesn’t need just fixing, it needs decentralizing. Financial institutions should be big enough to fail—and never any bigger. We need compartmentalization, also known as federalism.
    The current crisis was caused by mega-financial institutions that could gamble their money—and lose it. And they did. But first, they grew to the point where they couldn’t be allowed to fail. That’s why even a staunch free-marketeer such as Larry Kudlow supported the AIG bailout. “A collapse of AIG would have been unfathomable,” he wrote on Saturday. “It is simply too interconnected globally.”

    Well OK, then, AIG was too big. When even free-marketeers want the government to step in, that’s proof that size matters. In a bad way. But the American people cannot let themselves be hostage to the financial megalomania of casino-capitalist empire builders.

    It might, indeed, be the responsible thing to vote for a bailout, but it is irresponsible to allow such a meltdown to happen again. And it will happen again if banks, investment houses, and insurance companies are allowed to grow this big once again. Adding another layer of regulations and record-keeping will make work for more lawyers and more accountants, but if the basic business model survives—gambling with other people’s money, and lots of it—then we will right back into deep doodoo soon enough, except that the dollar totals will have a few more zeroes. Remember Sarbanes-Oxley? What good did that do?

    As my colleagues at the New America Foundation, Sherle Schwenninger and Michael Lind, have argued for years, we need different kinds of banks to do different things. So the Depression-era Glass-Steagall Act—which solved this problem once before—should be restored, so that the bank down the street once again is limited to only accepting deposits from its neighborhood and only making loans to locals. That’s a boring low-margin business, to be sure, but it’s mostly a safe business. Meanwhile, on Wall Street, investment bankers and speculators would be free to speculate, but they wouldn’t be free to speculate with the capital base of Main Street.

    In addition, the states should reclaim their role as laboratories of democracy—and laboratories of the economy. Leaders of each state should figure out how much money they are losing in this deal—that is, how much of that projected $1 trillion they are “contributing.” Or, to put it another way, how much of an income transfer is the state of New York reaping? How much is Manhattan gaining at the expense of all the rest of us?

    Politicians across the 50 states might be tempted to demagogue these wealth-transfer data, but there is the not-so-little concern of avoiding a depression.

    Instead, politicians should say, “I will vote for this bailout, AND I will also insist that we compartmentalize, or federalize, the solution. How? We should establish a state bank, or a regional bank, to keep capital right here in (fill-in-the-blank) state or region.” If South Carolina and North Dakota keep more of their money in the first place, to be invested in local projects, that will be good news for South Carolinians and North Dakotans. And it will be bad news for money-hungry Manhattanites, plotting their next incomprehensible derivate swap; they will be free to gamble their money, and nobody else’s.

    And that would be good news for the rest of us.

    This was originally posted on politico.com.

    James P. Pinkerton worked in the White House under Presidents Ronald Reagan and George H. W. Bush. Since leaving government in 1993, he has been a columnist for Newsday, a contributor to the Fox News Channel, and a regular on Fox’s Newswatch show.

  • Heartland Development Bank – a New Vehicle for Growth

    America, the world’s most advanced continental nation, could be on the verge of a great resurgence, much of it based in regions largely unacknowledged by many pundits, academics and the media. What is needed now is an infrastructure strategy to make it happen.

    So say New Geography contributors Delore Zimmerman and Joel Kotkin in recently released white paper proposing a new method of infrastructure financing for the heartland of America: a Heartland Development Bank.

    In order to capitalize on emerging economic opportunities and to rebuild America’s productive capacity in energy, agriculture and manufacturing enterprises we propose the creation of the Heartland Development Bank. The Bank is envisioned as a $10 to $25 billion source of financing for infrastructure development projects. The Bank would serve as a lead lender on projects of economic significance in the Heartland and leverage considerable co-investment from the private and public sectors.

    Delore and Joel recently led a round table discussion on financing heartland infrastructure. The discussion is available on Youtube, or check out the case laid out in the policy paper.

  • 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.