Brookings: Topics - New York State

The Federal Government, States, and Cities — The All of the Above Disaster Response

Amy Liu — Fri, 02 Nov 2012 12:30:00 -0400

Hurricane Sandy struck just before Election Day. The political machine couldn't help itself. Governor Christie "has gone soft" on President Obama. Candidate Mitt Romney wants disaster assistance to be taken "from the federal government and [sent] back to the states," his opponents cry. And the right charges President Obama and the Democrats with using Sandy “to justify a bigger federal government.”

We have hit another political low. As hundreds of families remain displaced from their homes or stranded without power, disaster recovery falls prey to the tired question of who can govern it best. The reality is that rebuilding New York, coastal New Jersey, and all the communities along the unfortunate path of Hurricane Sandy will require the close coordination of federal, state, and local governments, and private sector partners, no matter the political stripes of the leaders involved.

The question is: Has our nation’s response to major disasters improved since Hurricane Katrina, the last time a storm left such a catastrophic mark on the United States?

Hurricane Katrina forced our leaders to confront what was structurally broken about government’s response to large-scale disasters. Simply, the nation didn’t have an adequate system for dealing with them. The Stafford Act provides the core foundation for national emergency disaster relief but is generally ill-equipped to support major catastrophes, including their colossal recovery needs. Yet hurricanes Katrina and Sandy provide a stark reminder that large-scale disasters are happening more frequently. Further, such massive disasters require not just emergency aid to families and the restoration of basic public services. They also trigger the simultaneous need for short- and longer-term resources to rebuild bridges, tunnels, homes, hospitals, neighborhoods, and other key facets of community and economic life. This is complex and costly work, requiring coordination across many actors and across a vast geography of destruction.

After six years learning from the hardworking people of New Orleans and southern Louisiana post-Katrina, and others who dedicate their lives to disaster recovery, let me offer just a few basic tenets of a productive post-disaster response system.

The first is that the federal government matters. This may make small government advocates cringe, but the truth is that Washington is essential to the immediate aftermath of a major disaster. The federal government is the only level of government capable of providing timely and predictable resources and capacity, irrespective of where disaster strikes, when state and local resources are often thin and uneven. The federal government also has the ability to address disasters at scale since most catastrophic impacts span multiple states and municipalities (Sandy impacted 10 states and the District of Columbia). They must set the rules for disaster assistance and make every attempt to provide flexible tools for states and localities. This is because…

All post-disaster recovery is local. Disasters strike large urban centers and small towns. Thus it is ultimately incumbent upon states and localities to prioritize how best to deploy government, private sector, and philanthropic resources in the rebuilding of their communities in ways that reflect local will and vision. State leaders also aim to provide local leaders with a wide range of tools and resources in recovery and to serve as coordinator and broker between jurisdictions, especially in states with many small towns and cities such as New Jersey.

The high number of categorical federal programs for post-disaster recovery demands maximum flexibility to empower state and local decisionmaking. By one count, there are more than 50 post-disaster recovery-related federal programs. This creates enormous headaches for state and local leaders. First, post-disaster recovery is so complex and comprehensive that solutions don’t fit neatly into program pots or silos. Second, local leaders spend tremendous amount of time trying to figure out which program fits their recovery needs and tailoring their response to federal program rules when, in reality, the reverse should be true: federal programs should be bending to local circumstances. Third, there is a steep learning curve with these federal programs, hindering the speed and nimbleness of local and state responses.

So, have things improved since Katrina? Yes. In response to a mandate by the Post-Katrina Emergency Management Reform Act of 2006, FEMA released a new National Response Framework (NRF) to clarify the roles and responsibilities of key agencies and levels of government, and the resources available, for emergency response to all hazards. The Obama administration went further by releasing a parallel National Disaster Recovery Framework to create clear guidance to the recovery-side of the emergency response, a needed first. This framework makes enormous strides in empowering states and localities and making sure federal programs work better for a whole range of catastrophic circumstances.

So, the cautious good news for New York and New Jersey, now declared major disaster areas by the president, is that these states may be benefiting from concerted federal efforts to not repeat the mistakes from the 2005 hurricanes.

But this is just the beginning of a longer rebuilding effort. And next week’s election could change the nature of the federal response. No matter the outcome, our leaders need to set aside politics to ensure that government works together and efficiently for the people and businesses most impacted by Hurricane Sandy.

Authors

Amy Liu

Image Source: © Michelle McLoughlin / Reuters

Delivering the Next Economy in the Buffalo-Niagara Region

Bruce Katz — Wed, 13 Jun 2012 00:00:00 -0400

Thank you, [University of Buffalo president] Satish [Tripathi], for that introduction and for the invitation to speak at UB Partners Day.

As many of you know, Governor Cuomo made an unprecedented $1 billion commitment to Buffalo in his annual State of the State address on January 4, saying: “Buffalo has the workforce, the talent, the resources, and the will to succeed. We believe in Buffalo. And we’ll put our money where our mouth is.”

The governor’s commitment to Buffalo, and last year’s award to Western New York following the regional economic development competition, illustrates new thinking in this state. Economic development, long dictated top down by Albany and its myriad bureaucracies, is now being driven bottom-up by the cities and the metropolitan areas and the regions where the economy actually concentrates and agglomerates.

A clear signal is being sent to the market—consumers, companies, investors—New York state is “open for business” and Buffalo is “back in business.”

Bold investment at this scale necessitates purposeful design and deliberate action.

To this end, Governor Cuomo asked me and my colleagues at Brookings to work with a group of local institutions to assess your market position, identify your distinctive assets and advantages, and consider your investment options in light of the best innovations underway in the U.S. and around the world.

For the past few months, it has been a pleasure to work closely with a remarkable set of partners—the UB Regional Institute and Buffalo-Niagara Enterprise—and the Western New York Regional Council and Empire State Development. I want to particularly thank Howard Zemsky, Laura Fulton, Bob Shipley, and Christina Orsi for their invaluable management, research, and guidance throughout this process.

Over the past three months, our institutions have held dozens of meetings to hear from the experts—the men and women who actually own firms, take risks, finance transactions, train workers and build wealth—in other words, co-produce the economy in this city and metropolis.

This is the first step in a longer process that is intended to yield strategic investments that are likely to have high return, create jobs in the near term, and retool your economy for the long haul.

Today I want to give a status report to the community on progress to date and next steps in the process.

My presentation will be divided into three parts:

First, I want to describe the economic vision and practice we are using to guide this investment and our recommendations. In the aftermath of the Great Recession, the U.S. economy is undergoing a slow, painful transition toward an economy fueled by innovation, powered by low carbon, driven by exports, rich with opportunity and led by cities and metropolitan areas. The shift to the next economy is being matched by a new kind of metropolitan economic development, building on the distinctive assets of disparate places and geared to strengthening an ecosystem as much as engaging in one-off transactions with individual firms.

Second, I want to unveil our initial findings about the state of your economy. After decades of depopulation, deindustrialization, and decentralization, Buffalo faces challenges that are well known and well studied. Yet we have found some remarkable assets “hidden in plain sight,” ranging from advanced research & development at your universities to the disproportionate presence of advanced manufacturing and clean economy firms to your enviable location on the border with America’s largest trading partner to the promising development underway in the downtown and nearby to the historic legacy of world class architecture and landscape.

Bottom line: There is a base to build on here that is special and holds real market potential.

Finally, I want to lay out a series of goals for the “Buffalo Billion” that build on your distinctive assets and advantages and then provide examples of best innovations in the U.S. and abroad that could be tailored and adapted to this community. There is absolutely no reason to reinvent the wheel. Communities similarly situated to Buffalo in the U.S., Europe, and elsewhere have successfully retooled their economies and remade their places to great benefit.

You can, and you will, do the same.

So let me start with the broader context for this effort.

At the most basic level, the U.S. needs more jobs—11.3 million by one estimate—to recover the jobs lost during the downturn and keep pace with population growth and labor market dynamics.

Beyond pure job growth, we need better jobs to grow wages and incomes for lower and middle class workers and reverse the troubling decades-long rise in inequality.

There is no easy fix to achieve these twin goals. But one thing is clear: We will need to purposefully restructure our economy from one focused inward and characterized by excessive consumption and debt to one globally engaged and driven by production and innovation.

Or, as I have said before, we must move to a “next economy” that is fueled by innovation, powered by low carbon, driven by exports, and rich with opportunity. Let’s unpack that a little, so we both understand the broader growth model and the special moment we find ourselves in.

The vision begins with innovation—to spur growth through the interplay of invention, commercialization, manufacturing, and skilled workers.

Over the past two decades, the discussion of innovation in the U.S. narrowed, positioning it as something only conducted in the ivory tower or among exceptional entrepreneurs like Steve Jobs.

We forgot something early generations intuitively understood: the inextricable link and virtuous cycle between innovation and manufacturing.

While only about 9 percent of all U.S. jobs are in manufacturing, about 35 percent of all engineers work in manufacturing.

Although the manufacturing sector comprises only 11 percent of GDP, manufacturers account for 68 percent of the spending on R&D that is performed by companies in the United States and are responsible for 90 percent of all patents in the United States.

Going forward, we will innovate less if we do not produce more. We must make things again.

The discussion of innovation naturally leads to the notion that the next economy should be powered by “low carbon” and advanced energy.

Everything is changing.

The energy we use, the infrastructure we build, the homes we live in and the office and retail buildings we frequent, and the products we buy are all shifting from modes that are outdated to systems that are smarter, faster, more technologically enabled and more environmentally sound.

Our competitors—China, Germany, Brazil—have embraced the clean economy, creating markets, growing jobs, and stimulating investment.

The U.S., on the other hand, treats the clean economy as a political and ideological football, undermining our potential to position the U.S. at the vanguard of the next innovation-led industrial revolution.

An economy that innovates, particularly around clean energy and products, is an economy that can take advantage of rising global demand for quality U.S. products and services.

That is more important than ever. The locus of economic power in the world is shifting.

Together, Brazil, India and China—the BICs—accounted for about a fifth of the global GDP in 2009, surpassing the United States for the first time. By 2015, the BIC share will grow to more than 25 percent.

The top 30 metro performers today are almost exclusively located in Asia and Latin America. The 30 worst metro performers are nearly all located in Europe, the United States and earthquake-ravaged Japan.

This is not a rocket science. The U.S. needs to reorient our economy to take advantage of this new demand. In 2010, exports made up only 13 percent of the GDP of the U.S. compared to 30 percent in China, 29 percent in Canada, and higher levels in India, Japan, and the entire EU.

Finally, the next economy should be opportunity rich, so that working families can earn wages sufficient to attain a middle class life.

Building the next economy is essential here: research shows that firms in export-intense industries, for example, pay workers more and are more likely to provide health and retirement benefits.

Yet building the next economy will require the United States to get real smart, real fast.

Over the next several decades, African Americans and Hispanics will grow from about 25 percent to nearly 40 percent of the working-age population.

Yet the U.S. and this region have sharp racial and ethnic disparities on education. Upgrading the education and skills of the next, more diverse American workforce is a competitive imperative.

This macro growth model is a sharp departure from the one that dominated American thinking pre-recession—one that extolled consumption and excessive financial risk and raised the absurd prospect that the U.S. would somehow become a post industrial economy.

We need to change our mental map. Market dynamics are changing radically.

Labor costs are now rising in China, and concerns persist about the protection of intellectual property.

Energy can be cheaper here, and more reliable.

The tsunami in Japan, the world's main supplier of many high tech components, revealed the fragility of far flung supply chains for many U.S. companies.

And, the best news, manufacturing is coming back, fueling 38 percent of the recovery.

We must innovate again. We must make things again. We must embrace clean and green as an environmental imperative and market proposition. We must embrace the world.

This macro model comes to ground in the major cities and metropolitan areas that shape, determine, and deliver the economy.

The real heart of the American economy consists of 100 metropolitan areas that after decades of growth take up only 12 percent of our land mass, but harbor 2/3 of our population, generate 75 percent of our gross domestic product and, on every single indicator that matters—innovation, human capital, infrastructure—punch above their weight at dizzying levels.

This is the power of concentration and agglomeration: the network effect of firms, universities, institutions fertilizing ideas, sharing workers, extending innovation, enhancing competitiveness, and catalyzing growth.

Bottom line: There is no national American economy. Rather, the U.S. economy is a network of powerful metropolitan economies.

One last contextual piece that we have considered during this process.

Across the nation, in the absence of federal leadership, cities and metros are taking control of their own destinies, becoming deliberate and intentional about their economic growth, moving beyond affecting their form to shaping their function.

A new wave of economic development is taking shape, replacing the broken, low road model of Starbucks, Stadia, and Stealing Business.

It can be found in grand, economy shaping gestures: an Applied Sciences District in NYC, an Infrastructure Bank in Chicago, a metro encompassing transit system in Denver

It can also be discovered in smart structural interventions: creative technology software in Detroit to match interns to companies, a new intermediary in northeast Ohio to help small and medium-sized manufacturing firms retool their factory plants, a new facility in Seattle to test and verify new energy-efficient building technologies.

What unites these disparate efforts are a general set of principles that are relevant for Buffalo in setting priorities for investing the $1 billion.

Intentionality and purpose. After decades of pursuing fanciful illusions (becoming the next Silicon Valley) or engaging in copy cat strategies, metros are deliberately building on their special assets, attributes and advantages using business planning techniques honed in the private sector.

The ecosystem and the enterprise. These efforts do not just focus on the one transaction, attracting the one firm. They focus on building, structures, institutions, and platforms to give firms, dozens of firms, what they need: talent, capital, market intelligence, strategic advice, branding, and marketing.

Collaborate to compete. What also unites these efforts is collaboration across sectors, disciplines, jurisdictions, artificial political borders, and, yes, even political parties. As Colorado Governor John Hickenlooper likes to say “collaboration is the new competition.” Neighboring cities and metros, long divided by petty differences, now realize they need to come together to engage forcibly in the global market, with and against cities and metros five or ten times their size.

With this context in mind, I’d like to now turn to the second part of my presentation and discuss our findings on Buffalo’s general economic and social performance, and particular assets and advantages.

The initial findings here will not be a surprise to anyone in this room.

Frankly, the last 30 years have been a brutal period for the Buffalo region. In areas of unemployment, population, and GDP growth, Buffalo’s economy has lagged well behind the growth rates for the United States as a whole.

That’s a general top line observation. The most important insight has been the radical decline in the traded sectors of the Buffalo economy.

Between 1980 and 2010, Buffalo’s traded sector contracted by 30 percent, while its non-traded sector grew by 32 percent.

We all know the difference between the traded and non-traded sectors of the economy.

The tradable sector consists of goods and services that are produced in one area and consumed in another, including manufactured products, business and technical services, and energy sources.

By contrast, the non-tradable sector consists of goods and services that must be produced and consumed within the same local or regional economy, including sectors like retail, health care, government, construction, hotels, and restaurants.

The traded sectors build wealth and demands innovation. The non-traded sectors recycle income.

In 1980, Buffalo’s traded sector accounted for 37.2 percent of the metro’s total jobs, but, by 2010, traded sector jobs comprised only 23.8 percent of jobs in the Buffalo-Niagara Falls metropolitan area.

Additionally, Buffalo has experienced significant sprawl even while its population has only slightly grown. Between 1950 and 2000, the Buffalo metro’s population grew by only 4.2 percent, but the developed land area has grown by an astounding 209 percent.

It is frankly difficult to understand and impossible to defend sprawl without growth. You are dissipating your energies, increasing your fiscal costs, and failing to realize the tangible benefits of density. How a place grows physically affects how you grow economically.

Buffalo’s lagging economic growth has been accompanied by poor social outcomes. In the last decade, Buffalo’s poverty rate has grown faster than the U.S., and its median household income is lower than the U.S. average.

The poverty and employment disparities are even greater when you look at them by race. In a span of 40 years, the employment rate among African-American males in Buffalo fell by 23.6 percentage points, leaving Buffalo with the second worst employment rate among African American males in large metro areas in 2010.

Despite these market challenges, the Buffalo-Niagara Falls region has real opportunities in the next economy which have not been fully leveraged.

Buffalo’s economy is rebounding from the Great Recession, and has had the third best overall performance in the recession and recovery among the top 100 metros in the country, which is measured on performance of indicators such as employment, GDP growth, and housing foreclosures.

Buffalo’s economic productivity growth between 2000 and 2011 was higher than the U.S., and its unemployment rate remains better than the overall unemployment rate for the United States.

In terms of innovation, Buffalo has particular traction around research and development and production.

SUNY Buffalo is a research and development powerhouse, receiving $348 million in public R&D in 2009 — trailing Cleveland, but much higher than other peer metros like Syracuse and Worcester. The majority of UB’s R&D expenditures are in life sciences, while engineering comprises another 17.3 percent.

In manufacturing itself, the region has 1,300 firms with 50,000 workers with concentration in several advanced industry clusters.

So Buffalo is an innovation hub. But what we heard time and time again, is that the region does not commercialize the ideas you generate nor scale the innovation through entrepreneurial start-ups, perhaps due to capital deficiencies, perhaps due to the lack of managerial talent.

On low carbon, Buffalo performs well, 16^th among the top 100 metros on its carbon footprint. In 2005, the average resident in metropolitan Buffalo emitted less carbon from highway transportation and residential energy than the top 100 and U.S. averages. And your per capita footprint has decreased while the average per capita footprint of the 100 largest metro areas and of the nation has increased.

You also have the potential to be a clean economy hub, given concentration of jobs, intensity of jobs and presence in sectors like waste-to-energy, hydropower, and geothermal.

So Buffalo is low carbon on key indicators. But you haven’t leveraged your position particularly well and your green occupations are not as value add as they could be.

On exports, Greater Buffalo also punches above its weight, ranking 46^th out of the top 100 metros by exporting $6.4 billion worth of goods and services in 2010.

Buffalo’s largest export industries are also its largest clusters. In 2010, Buffalos top 5 export sectors were: chemicals, machinery, business services, financial services, and royalties.

Buffalo’s trade with Canada is critical, given its close proximity. In 2010, Buffalo’s exports to Canada accounted for 17.4 percent of its total exports, greater than the shares for upstate peers like Rochester, Albany, and Syracuse.

In fact, you can see Canada from Buffalo! And what you are seeing is the Golden Horseshoe, North America’s fastest growing global metropolis.

Like many metro areas in the U.S., however, you lack a full operational and integrated strategic partnership with your most significant trading partner, underperforming other border communities, leaving billions off the table.

Finally, on opportunity, the Buffalo region benefits from a small but relatively high skilled set of immigrants. Buffalo fares significantly better than the top 100 metro average, but trails peers like Worcester, Syracuse, and Cleveland.

The Buffalo region also has a high—and relatively fast-growing—share of mid skilled workers.

But don’t get complacent. In 10 years, one-fifth of Buffalo’s industrial workforce will retire. At the same time, UB and other colleges and universities in the area graduate 411 production workers and 854 engineers each year, many of whom leave the area on the notion that there are “no jobs.”

It’s time to align skills with jobs.

Finally, the place itself.

Your city has many critical physical assets for economic growth—including along the waterfront, the Central Business District, the Larkin District, the Buffalo-Niagara Medical Campus, Buffalo State, Canisius College, Erie Community College, the Buffalo-Niagara Airport, and, of course, the University of Buffalo.

And you have a legacy of historic buildings, industrial corridors and world renowned architecture and urban amenities that other communities would die for: Frank Lloyd Wright’s Martin House, the Olmsted parks, the H.H. Richardson Complex, the Buffalo Belt Line, iconic industrial facilities, and, of course, the Niagara Falls.

And, last but not least, you have SPoT, literally my favorite community friendly coffee house in the United States.

Given these very real assets, I’d like to identify a series of possible goals for the Buffalo Billion and beyond that build a next economy and then show the cutting edge of practice from elsewhere in NY, the U.S., and abroad that might be brought to bear here.

Let’s start with innovation, the historic catalyst for economic growth and productivity.

The goal here is not hard to articulate: Buffalo should accelerate innovation, commercialization and production in advanced industry sectors of the economy.

We have named your assets.

You continue to have a manufacturing presence and an enviable location for production.

You are innovating on networked health technology in some very interesting ways.

You have ample research in life sciences, though that research has not been a full platform for firm creation and job growth.

You have a Buffalo Niagara Medical Campus, which, if fully realized, could transform not only the health and life sciences cluster but the adjoining neighborhoods as well.

As the Buffalo Billion process goes forward, capturing the full potential of each of these innovation opportunities—for firms, for workers, for the city—needs to be fully explored.

For now, it is worth examining the best practices in advanced manufacturing and innovation districts.

On manufacturing, you don’t need to look far.

SUNY Albany’s Nanotech Complex is a prime example of next generation, public-private support for advanced manufacturing.

In the last 15 years, this complex has grown into a $14 billion, 800,000 square foot nanotechnology research and development center. In the past decade, New York State has provided nearly $1 billion in financial support, and has partnered with over 300 corporations. It provides strategic support through technology acceleration, business incubation, and pilot prototyping for on-site corporate partners, which include IBM, Intel, GlobalFoundaries, and Samsung.

Today, there are more than 2,600 semiconductor-related research and development jobs on the site, and the emerging nanotech cluster in the Albany region played a role in attracting a recent $4.6 billion investment in a research facility from GlobalFoundaries in nearby Saratoga.

The Nanotech Complex reveals how technological innovation can be boosted in the private sector through smart public sector supply of shared infrastructure and equipment.

On low carbon, Buffalo has an unmatched proximity to one of the world’s greatest sources of clean, cheap hydro power.

This enables you, almost alone among U.S. metros, to have a distinctive goal: to be a global hub of innovative clean economy firms.

One of the best examples of a sustainable, low carbon metropolis in the world is Copenhagen, Denmark. The metropolis is 1.1 million in size by the way, exactly the scale of Buffalo.

Copenhagen is a beacon of sustainable development. An incredible 36 percent of all commuting trips to work or school are made by bike, and another 32 percent of city residents either walk or utilize the region’s highly-efficient public transportation network of buses and trains.

This spatial efficiency has obvious fiscal and health effects. Yet the big effect from sustainable development may be indirect and global. Copenhagen’s clean sector has been a critical contributor to the region’s economy in the past decade, with green exports outpacing all other sectors by growing at an astounding 77 percent.

Now the metropolis plans to go further, planning to become a carbon-neutral city by 2025. This is a market proposition as much as an environmental imperative. The city estimates that an additional investment of $453 million in U.S. dollars would leverage another $3.4 billion in private resources, and create 35,000 new jobs by 2025.

In some respects, your position on exports mimics your position on low carbon. Location, location, location. Buffalo’s proximity to our nation’s largest trading partner is an asset that has barely been tapped.

Our goal: Buffalo exploits its unique, bi-national position.

So how to accomplish this?

A best practice in the area of establishing global linkages is the ChinaSF initiative in San Francisco. Launched in 2008, ChinaSF’s goal is to support increased business exchange between China and the Bay Area for the region’s largest sectors, through providing services to Chinese companies seeking to establish offices in SF, helping Bay Area companies looking to expand overseas, and matching up overseas organizations to reduce transaction costs.

Thus far, ChinaSF has established three offices that offer bilingual services, and it has successfully recruited 15 Chinese firms to establish new offices in the Bay Area.

Our analysis also places Buffalo’s opportunity challenges and opportunities in sharp relief.

Our goal: match supply of skills with demands of industry.

There are models to replicate and emulate for training and retaining the next generation industrial workforce.

A great model for educating students with skills to compete for jobs in the next economy is the Austin Polytechnical Academy on Chicago’s West Side. Founded in 2007 by the Chicago Manufacturing Renaissance Council, the school’s student body is 98 percent African American, and a supermajority of entering students have 3^rd grade reading levels and 5^th grade math levels. Austin’s curriculum focuses on careers in all aspects of the manufacturing industry, from skilled production and engineering to management and company ownership, plus related sectors such as intellectual property law.

The school has partnered with 65 local firms, who provide students with mentoring, field trips, and internship and job opportunities.

The school boasts a $100,000 state of the art manufacturing technology center, a high-tech facility for both students and adults, and it is the only Illinois high school that has received an accreditation from the National Institute for Metalworking Skills.

A best practice on tackling Buffalo’s talent retention challenge is an initiative called “Intern in Michigan.” Created in 2007, this program connects students and employers through an online matching system that forges connections based on specific job requirements, individual interests, and the skills of the candidates.

Since its inception, 60,548 matches and introductions have been made, more than 850 Michigan employers have registered for the system, and more than 10,500 students from nearly 500 schools, colleges, and universities worldwide are registered on Intern in Michigan.

Last goal: To reshape an economy you need to remake place and fully link physical and economic transformation.

It is obvious that realizing the full potential of the Buffalo Niagara Medical Campus is a major opportunity for the city and metropolis.

One highly relevant best practice for Buffalo is the East Baltimore redevelopment underway around the Johns Hopkins University Medical Center.

In 2002, Johns Hopkins University, the City of Baltimore, the State of Maryland, and other key partners devised a $1.8 billion plan to redevelop 88 acres of East Baltimore just north of the Johns Hopkins Hospital to include new retail, office and housing space, as well as a biotechnology park that would be linked to commercialization of research coming out of Johns Hopkins Hospital.

When finished, the area will have 1,500 to 2,000 new housing units, as well as an additional 1.7 million square feet of commercial, laboratory and retail space.

Conclusion

Let me conclude with these thoughts.

One billion dollars is a lot of money, and it should be invested with care and discipline, through a process that is evidence-driven, performance-measured, and transparent.

If you do this well, you will, in the near term, leverage private sector investment and create jobs.

But this is not just about the immediate; this is about the long-term.

Ideally, the investments today will set a platform for long-term growth; it will be the gift that keeps on giving.

Ideally, the strategies you identify will not just draw down the Buffalo Billion, but drive billions more in public and private sector investments.

So invest for now, but in a way that transforms, leverages, and accelerates the next.

So invest for now, but in a way that enables you to be a 21^st century version of yourself.

I am very, very bullish on Buffalo.

Authors

Bruce Katz

Publication: UB Partners Day, University of Buffalo

Image Source: © Brian Snyder / Reuters

This Week in Economic Numbers: State and Local Edition

Tracy Gordon — Tue, 29 May 2012 11:56:00 -0400

This week will bring a cornucopia of new data, an econo-nerd's dream. Unfortunately for some of us nerds, there won't be any releases on state and local government finances. (The Census Bureau generally has to wait for all states to report and, as you can imagine, some states are laggards.)

However, there will still be a lot in this week's numbers for those who follow state and local government finances, pay into state and local coffers, or consume predominantly state and local public services like education, roads, and health care. Here are a few trends worth watching:

First, Tuesday's March S&P/Case Shiller house price indexes will be important for states whose fortunes are tied to real estate, especially in the West and Southwest. Macroeconomic forecasters are predicting home prices will decline slightly compared to one year ago but continue to increase month-to-month, suggesting that perhaps the market has hit bottom.

That would be good news for the housing sector. However, research from Federal Reserve Board economists Byron Lutz, Raven Molloy, and Hui Shan suggests that any boon to state and local revenues would be minor. They calculate the housing bust per se generated only a $22 billion drop in taxes over three years, equivalent to roughly 3 percent of annual state and local revenues excluding federal funds.

Meanwhile, the latest Census data suggest that state taxes are growing, but at a pace that is slower than usual. More worrisome, the pace appears to be moderating. In recent weeks, California, New York, New Jersey, Pennsylvania, and Rhode Island have all reported taxes coming in below projections. Also, local property taxes are likely to remain in the doldrums for some time. They tend to respond to house price changes with a delay and thus just started showing the effects of the housing bust in late 2010. Property taxes recently turned positive again, but these gains are anemic by historical standards and likely caused by rate hikes in some jurisdictions rather than improving property values.

Next up this week are Bureau of Economic Analysis revisions to first quarter GDP. Macroeconomists will be attuned to how the revisions compare to advance estimates and what this portends for the recovery. They might also take note of whether these governments are detracting from growth - as they have done by an average of 0.2 percentage points in each quarter since 2008 - or contributing to it as usual. State and local watchers will be more focused on state and local spending, which unlike previous downturns, has declined in real per capita terms and not yet recovered.

That leads us to the biggest number to watch this week - Friday's jobs report. State and local employment is already down by 665,000 jobs or about 3.5 percent from its pre-recession peak. Recent trends suggest that cuts may be abating, but this total masks differences across subsectors - state education has been adding jobs while losses continue in all other subsectors, especially at the local level.

Ongoing state and local job losses also distinguish this recession from previous downturns in the modern era. This may be in keeping with the depths of this Great Recession. However, it's hard to imagine state and local residents aren't feeling the pinch of higher property tax burdens or lower services. To take one example, Governor Jerry Brown has proposed closing California's $16 billion budget gap by converting state employees to a four day work week and closing state parks. From a macro perspective, the fiscal tightening may be over. But that doesn't mean state and local governments aren't still a real drag.

Authors

Tracy Gordon

Publication: Real Clear Markets

Image Source: © Daniel Shanken / Reuters

Going Global: Central New York Export Plan

Amy Liu — Wed, 04 Apr 2012 00:00:00 -0400

Editor's Note: At the CenterState Corporation for Economic Opportunity's Annual Meeting on April 4, 2012, Amy Liu applauded CenterState CEO Presideent Rob Simpson and his team (along with their public and private sector partners) on their central New York export plan. During this meeting, Liu delivered the following remarks.

I want to applaud Rob Simpson and his team at CenterState CEO and all of their public and private sector partners for today’s release of the CenterState New York Export Plan. These leaders have worked closely together, with great resolve, over the last nine months to develop this one-of-a-kind initiative.

And we at Brookings are pleased to have been partners and advisors to this region. This region is one of four metro areas in the country piloting some of the nation’s first metro export plans. And this region is doing so while driving forward on a broader business plan for growth, of which exports will be an integral part. Throughout all this, we at Brookings remain impressed with the leadership, civic cohesion, capacity, and optimistic commitment of this community. These are key ingredients to make any plan more than a plan but a true community-wide initiative with tangible results.

But let me also be clear, this new export plan reflects precisely where this region needs to go if it is to excel in the new global economic order.

Times have changed. The U.S. economy is undergoing a major economic restructuring, and regions like central New York must adapt to the new realities.

The Great Recession was not the same as its predecessors. The job loss this time was steeper, the impact deeper, and the recovery slower because this was a structural recession.

The core, structural problem: Nearly all of the incremental job growth over the last two decades came from non-tradable sectors, such as retail, real estate, and government. This was the eye-popping stat issued by Nobel economist Michael Spence. In short, we stopped innovating and producing jobs in value-added industries that create wealth and make our American marketplace distinct from our competitors.

The other big structural shift: Economic growth is increasingly taking place outside the United States.

In 2010, the combined global GDP of the BIC nations surpassed that of the U.S. for the first time, making up one-fifth of the world economy. That shift is expected to accelerate in the coming years while the U.S. share of global GDP is forecasted to stay the same.

The rise of the BICs is also in part a reflection of the rise of global metros. Rapid industrialization has been matched by rapid urbanization. More than half of the world’s population now lives in cities, and that share is expected to grow to 60% in 2030 and 70% by 2050.

With rapid urbanization comes the rise of the global middle class which is driving the growth of consumption. OECD predicts that, despite the recession, consumption is expected to rise from $21 trillion today to $31 trillion by 2020, mostly due to the growth in Asia and Latin America.

We view these trends as less a threat but a market opportunity.

Against this back drop, let me tell you what the data is telling us. The winners in the next economy will be those who strengthen global assets and tap new sources of aggregate demand.

The leaders in the next economy will innovate in manufacturing. While manufacturing has contracted as a share of the overall economy, it is becoming leaner and more advanced. Due to global demand and innovation, manufacturing jobs are recovering faster than the economy as a whole, at 2.3 percent in the third quarter of last year compared to 1.4 percent nationally. The manufacturing sector has added 400,000 jobs in the last two years.

Leaders will also innovate in services. In fact, services, such as business consulting, education, architecture and planning, are the fastest growing segment of our export economy, and the U.S. has a trade surplus in services.

Within the services sector, expenditures of foreign students in U.S. colleges is growing steadily. We now have more than 720,000 international students studying in the United States, led by those from China, India and Korea. That sector represents $21.2 billion in U.S. service exports.

Leaders in the next economy will also invent and deploy clean economy goods and services.

Rapid urbanization worldwide has pushed up the global demand for environmentally friendly goods and services, such as energy efficient appliances and building technologies, smart grid, sustainable land use planning and infrastructure, and organic foods.

Hence, U.S. clean economy products generated $54 billion in exports, two times more value per job than the typical U.S. export.

Finally, the regions that prosper will be those that take advantage of global demand. The post-recession reality has made that more urgent.

According to our recent Global MetroMonitor, 90 percent of the fastest growing markets among the 200 largest world cities were located outside of the U.S., western Europe, and earthquake-ravaged Japan.

In fact, there are more than 20 markets around the globe that did not experience this last recession or have already fully recovered – Shanghai, Shenzhen, Mumbai in Asia…..Istanbul in Europe….Santiago and Buenos Aires in Latin America.

Bottom line: If we are to grow, our firms must look outside of the U.S. and tap emerging markets and global consumption as a source of growth here at home.

Finally, going global pays off for small and mid-sized firms. Those who exported saw their revenues grow, by 37 percent, through 2009, compared to just 7 percent among non-exporters.

Selling globally simply makes good business sense.

CenterState New York’s export plan acts on many of these opportunities, growing our key tradeable sectors by linking them to global markets.

Central New York is just one of four metro areas in the U.S. that will be spearheading a metro export plan in the coming months.

Your leadership in this space will likely spawn copycatting among state, city and regional leaders who are eager to better orient their economies for export growth. Further, the federal trade-related agencies, like Ex-Im Bank and the Department of Commerce, represented by Wanda and Bruce today, SBA, are committed to better align their federal activities with metro ambitions.

Why do we even need an explicit metro export strategy?

Because we are still a nation of underexporters. Just 1 percent of U.S. firms sell a product or service outside the U.S., which pales in comparison to our competitors.

Surveys and interviews with companies in central New York reinforce what’s true nationally—they are afraid to export. They are comfortable sticking to what they know, which is the U.S. market and they believe that is sufficient. Many are not aware of the benefits of global trade or the wide array of state and federal programs available to help them break into world markets. Meanwhile, for those who are enlightened, there is a dizzying number of export services and providers which can be a frustrating experience for firms.

Thus a metro export initiative can overcome these barriers and furthers state and federal efforts.

You will hear more about the plan details in the afternoon panel discussion. But a metro export plan plays a unique niche in proactively reaching out to target companies, help them become export-ready, and help more companies integrate international sales into their long-term business plan. This role is critical if our nation is to expand the number of quality exporters.

But the metro export plan’s value is greater than that and we will discuss more this afternoon.

Finally, while Central New York is an underexporter, there are positive assets that can be leveraged to boost exports and grow jobs in the Central New York.

To start, Greater Syracuse has a small $3.3 billion export economy, ranking you 72nd among all metros.

That export activity directly supports more than 12,700 jobs in the region, and supports another 23,000 indirect jobs in the supply chain. Not bad, but for every $1 billion in new export volume, the region adds approximately 3,500 direct jobs.

One of the best and unique assets here to boost exports is through the service economy, such as business services, tourism, and ways eds and meds can draw dollars from outside the U.S.

And service exports grew rapidly here, by 60 percent in the last 7 years, compared to just 20 percent in manufactured goods.

Further, the region attracts approx 3,300 international students to Syracuse University and other higher ed institutions, a good foundation for fueling your service economy.

And, not shown here, is that the Syracuse metro area has the 11th highest concentration of clean economy jobs in the country, so your niche in HVAC and building technologies, and air and water purification technologies, could be a solid global product.

So, given these assets, this region’s goal to double exports over the next five years with this new plan is achievable.

In closing, I want to urge all of you to support and be part of this important initiative. A more globally connected, globally aware Central New York is a more competitive, prosperous region for all.

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Authors

Amy Liu

Publication: CenterState CEO Annual Meeting

Preparing Buffalo For the Next American Economy

Bruce Katz — Wed, 14 Mar 2012 00:00:00 -0400

Editor's Note: During an event in Buffalo, New York, Bruce Katz delivered remarks on how the metropolitan area can increase its competitiveness and move toward a new economic model. Audio from the event is available at wbfo.org.

Introduction

It is a great pleasure and privilege to be back in Buffalo, one of America’s, and the world’s, most distinctive cities and metropolitan areas.

Today, I will lay out a vision for how the U.S. moves forward in the aftermath of the Great Recession, led by the cities and metropolitan areas that drive the national economy.

At the most basic level, the U.S. needs more jobs to recover the jobs lost during the downturn and keep pace with population growth and labor market dynamics. Beyond pure job growth, we need better jobs to grow wages and incomes for American workers and reverse the troubling decades-long rise in inequality.

There is no easy fix to achieve these twin goals. Our economy must be purposefully restructured from one focused inward and characterized by excessive consumption and debt to one globally engaged and driven by production and innovation.

Here is my proposition.

First, we must move to a “next economy,” one that is driven by exports and global engagement, powered by low carbon and advanced energy, fueled by innovation (both ideas and manufacturing) and rich with opportunity. This is a vision where we export more and waste less, innovate in what matters, produce and deploy more of what we invent, and ensure that the economy actually works for working families.

Second, the next economy will largely be metropolitan, in form and function. Our major metros already generate more than three quarters of our gross domestic product. Despite nostalgia over small town America, it is metropolitan America that drives our national economy and determines our national prosperity.

As our nation’s 50th largest metropolis, Buffalo is a charter member of the elite club of metropolitan engines. You are a special economy with an enviable trading location, rich natural and architectural history, and distinctive competitive assets, attributes and advantages. Where others see deficits, I see possibilities, particularly as the broader U.S. economy restructures and retools.

Finally, it is time to build the next economy by unleashing the entrepreneurial energies and dynamism of America’s metropolitan regions. In an ideal world, the federal government would set a strong platform for metro growth: embracing trade, pricing carbon, investing in advanced R&D, transforming infrastructure and overhauling immigration. But the United States circa 2012 is not an ideal world. Ideologues rule our airwaves. Washington is fundamentally broken.

So we must build the next economy the hard way through a pragmatic caucus of public, business and nonprofit leaders who spur economic recovery and renewal from the ground up despite political odds and fiscal obstacles. That is happening … in city after city, metro after metro and state after state where pragmatic leaders are collaborating to compete and following a new economic playbook to spur productive, sustainable and inclusive growth.

I fundamentally believe that Buffalo and New York state can lead this innovative wave. Governor Cuomo is charting a new course for economic growth in this state. And regions like Buffalo and Western New York are responding with imaginative strategies. The governor’s $1 billion challenge is exactly the kind of inspirational, gutsy, and transformative intervention you need at this point to leverage private sector innovation and capital and spur smart and strategic growth.

So let me begin by offering a vision for the next American economy.

And let’s begin with exports and our need to fully engage the world.

Visualize an economy where more firms in more sectors trade more goods and services seamlessly with the world, particularly with nations that are rapidly urbanizing and industrializing.

Why exports?

Because we have crossed an economic Rubicon.

Together, Brazil, India, and China … the BICs … are expected to account for about one fifth of the global GDP in 2010, surpassing the United States for the first time. By 2015, the BIC share will grow to more than 25 percent. The rise of the BICs reflects the rise of metros. For the first time in recorded history, more than half of the world’s population lives in cities and metropolitan areas. By 2030, the metro share will surpass 60 percent. Rising nations and their rapidly growing metros now power the world economy and drive global demand.

The locus of economic power in the world is shifting. The top 30 metro performers today are almost exclusively located in Asia and Latin America. The 30 worst metro performers are nearly all located in Europe, the United States and earthquake-ravaged Japan.

The U.S. needs to reorient our economy to take advantage of this new demand. In 2010, exports made up only 13 percent of the GDP of the U.S. compared to 30 percent in China, 30 percent in Canada, 30 percent in Mexico, and higher levels in India, Japan, and the entire EU. The movement of freight in the United States is compromised, undermined by transport networks that are clogged and congested and an infrastructure that is third class. And, culturally, Americans don’t get out much. Only 28 percent of our population has a passport.

Can we get back into the export game? The answer is decidedly “yes.”

We still manufacture a range of advanced goods that the rest of the world wants including air craft, space craft, electrical machinery, precision surgical instruments, and high quality pharmaceutical products. And we already have a trade surplus in services — $153 billion in 2010 — and are poised for a quantum leap in the export of high-value services. America’s potential for exports is hidden in plain sight. President Obama’s challenge to double exports in five years is exactly the kind of ambitious, far reaching goal we need at this moment.

Low carbon is the second hallmark of the next U.S. economy. Let’s imagine a world where America is the vanguard of the clean, green revolution.

Everything … is about to change.

The energy we use will migrate from an almost exclusive focus on carbon based fuels to a more sustainable mix. The infrastructure we build will shift from outmoded transport and energy to systems that are smarter, faster, and technologically enabled. The products we buy will move from high carbon gas guzzlers to an eclectic basket of green, sustainable goods. And the homes we live in and the office and retail buildings we frequent will be more sustainable in design, more efficient in their use of water and energy, and better arrayed so that people can spend less, walk more and live a higher quality of life.

Our competitors — China, Germany, Brazil — have embraced the green economy, creating markets, growing jobs and stimulating investment.

Can the U.S. even play in the low carbon revolution?

Our research shows that we already have a strong base of 2.7 million clean economy jobs, in sectors ranging from renewable energy to pollution reduction. The clean economy is a critical driver of innovation, manufacturing and exports, so it is time for us to fully engage the shift to low carbon … and embrace a market transformation as profound as the information revolution.

So this leads naturally to a discussion of innovation. The U.S. must be the world’s Innovation Nation, a hot house of invention and the platform for advanced production.

I believe that we are on the cusp of an historic era of technological progress which will dramatically change how people live, companies operate, communities function. We already see this in the consumer realm. Think electric vehicles. Smart homes. Remote monitoring of health.

Yet the hottest wave in technology today goes beyond the individual consumer to the collective — the “smart city.”

Global companies, having wired people throughout the world, are now on a mission to connect cities, within and without, through the integrated application of advanced technologies like wireless sensors and processors, mobile and video telecommunications, and geographic information systems. With China and other rising nations urbanizing at a frenetic pace, the potential market for the design, production, application and integration of smart technologies is vast; $1.2 trillion by one estimate over the next decade.

Can the U.S. seize the future and realize its potential as an Innovation Nation?

We now place just 45th out of 93 countries in the share that science and engineering degrees make up of bachelor’s degrees. Going forward, we will innovate less if we do not fully embrace science and technology. The U.S. lags on the conversion of innovation into home grown production. We have gone from running a trade surplus in advanced technology products to running a trade deficit over the past decade.

Going forward, we will innovate less if we do not produce more. We must make things again.

It is time to rediscover our innovation mojo: in our vocational and tech schools, in our research labs, on our factory floors, in the trade-able goods and service sectors that drive wealth creation and sustainable growth.

Finally, the next economy has the potential to be opportunity rich.

Research shows that firms in manufacturing, innovative and export-intense industries pay workers more and are more likely to provide health and retirement benefits. The United States can build a next economy if we get real smart … real fast. Over the next several decades, African Americans and Hispanics will grow from about 25 percent to nearly 40 percent of the working-age population.

Yet the rates of educational attainment are lowest among these fast-growing groups. In 2009, only 18 percent of Hispanics and 25 percent of African Americans had completed an associate’s degree or higher, contrasting sharply with the rates for whites and Asians. In the decades ahead, upgrading the education and skills of our diverse workforce is no longer just a matter of social equity. It is fundamentally an issue of national competitiveness and national security.

So here is my second proposition: the next economy will be largely metropolitan, in form and function.

This is true abroad, as I mentioned before, but it is also true here in the United States. The top 100 metros form the real real heart of the American economy — taking up only 12 percent of our land mass, but harboring 2/3 of our population and generating 75 percent … 75 percent … of our gross domestic product. These metropolitan areas form a new economic geography that seamlessly envelops cities and suburbs, exurbs and rural towns. And they pack a powerful punch.

Chicagoland is home to 67 percent of the population of Illinois, but contributes 78 percent of that state’s GDP. Greater Seattle houses only 51 percent of residents in the state of Washington, but generates 69 percent of its economic output. And metro areas generate the majority of GDP in 47 of the 50 states, including such “rural” states as Nebraska, Iowa, Kansas, and Arkansas.

Bottom line: There is no national American economy. Rather, the U.S. economy is a network of powerful metropolitan economies. And metropolitan economies are powerful precisely because they bring together networks of large firms, small enterprises, skilled labor, advanced research institutions, schools and colleges, business associations, and, yes, government.

The top 100 metros, in the aggregate, drive state and national exports. In 2010, they produced an estimated 65 percent of U.S. exports, including 63 percent of manufactured goods exports, and 75 percent of services that are sold abroad. The top 100 metros dominate exports for another good reason. They are our logistical hubs, concentrating the movement of people and goods by air, rail, and sea.

Beyond exports, the top 100 metros also dominate critical sectors of the low carbon economy, concentrating 78 percent of the jobs in solar energy, 80 percent in wind energy, and 83 percent of the jobs in energy research, engineering, and consulting services. They also harbor 90 percent of the jobs in green architecture, design, and construction since making buildings energy efficient will primarily be a metropolitan act, given where most people live and businesses locate.

On innovation more broadly, our metropolitan areas are the nation’s knowledge centers. The top 100 metros house 74 percent of those with a bachelor’s degree and 75 percent of those with a graduate degree, they produce 78 percent of all patents, receive 82 percent of NIH and NSF research funding and provide 94 percent of the venture capital that turns research ideas into production.

So how does Buffalo perform in this more innovative, productive, and export-oriented economy? You have special assets here … assets that frankly were ignored in the prior housing led, consumption obsessed pre Recession economy.

This two county metro area — Erie and Niagara counties — is home to 1.1 million people, 5.9 percent of New York state’s population. Your metro contains 6.2 percent of all jobs in the state (including 6.1 percent of all science and engineering jobs) and exports 7.1 percent of the state total. Your metro’s unemployment rate (7.9 percent) is lower than the rates for the state of New York (8.2 percent) and the country (8.3 percent).

You perform well on many next economy indicators. On exports, you are the 46th largest exporter among the top 100 metro areas by volume ($4.6 billion in 2010) and rank 44th best on export-intensity — the share that exports comprise of GMP — at 9.9 percent. Three sectors — chemical products, machinery and business services — account for over 40 percent of your exports. Your strategic position on the U.S./Canada border is a location that most metros would kill for … and you already have strong trading ties with a diverse set of nations like Mexico, China and Japan.

On low carbon, you punch above your weight when compared to the top 100 metros. Despite being the 50th largest metro, you are the 37th largest clean economy jobs center in the United States – with 14,500 clean jobs in 2010. Your top sectors are waste-to energy, hydropower, geothermal, fuel cells, and renewable energy. On intensity clean jobs — the share that clean jobs comprise of total metro employment — you also perform better than the U.S. and the top 100 metro average with 2.7 percent of your total jobs in the clean economy — compared to 2.0 percent for the U.S. and 1.9 percent for the top 100 metros.

On innovation, you have a strong, distinctive legacy in manufacturing. Despite the downturn in manufacturing jobs over the last decade, you still have 46,000 manufacturing jobs — about 8.4 percent of the metro’s total employment. Mark my words … manufacturing and advanced industry will have a renaissance in this country due to rising wages in China, cheap, reliable energy in the U.S. and the desire for global companies to have more control over their supply chains.

Finally, on opportunity, you perform much better than the U.S. as a whole on skilled-immigrant composition. Thirty-six percent of your immigrants are high-skilled — defined as those with a bachelor’s degree of higher — compared to 30 percent for the U.S. You also have a smaller share of low-skilled immigrants (22 percent) — those with less than a high school diploma — than the U.S. (28 percent). The University of Buffalo is a talent magnet … with 5,000 international students studying there every year.

I do not want to minimize the challenges you have … on racial and ethnic disparities in education, on municipal fragmentation and fiscal stress, on sprawl and decentralization.

The final challenge is related to the other two and needs special attention.

From 1950 to 2000, your urbanized area nearly tripled, from 123 square miles to 367 square miles, while the Buffalo-Niagara metro population grew by only 7 percent. As people have spread out, so have jobs. As of 2006, more jobs in the Buffalo-Niagara metro were located beyond 10 miles from the downtown (29.5 percent) than within 3 miles of the central business district (19.5 percent)

How a place grows physically affects how you grow economically. It is frankly difficult to understand and impossible to defend sprawl without growth. You are dissipating your energies, increasing your fiscal costs and failing to realize the tangible benefits of density.

That leads to my final proposition: To build the next economy, the U.S. must unleash the entrepreneurial energies and dynamism of our metropolitan engines.

This is a unique, disruptive economic moment, where recognizing your special assets and strengths — and acting on them — is the central challenge facing cities and metros, here and abroad. Here is what I contend metropolitan America and metropolitan Buffalo must do to spur economic recovery and renewal.

First, metros must innovate locally to engineer the shift from an economy characterized by debt and consumption, to one that is productive and sustainable.

The prior consumption led economy minimized the differences between metros. A Wal-Mart outside Buffalo is the same as a Wal-Mart outside Boston. Same design. Same footprint. Same goods.

A housing subdivision outside of Denver is the same as one outside Detroit.

Mesmerized by consumption mania and the erroneous notion of cookie cutter economies, communities followed a uniform “Starbucks and Stadia” recipe, irrespective of market condition and location.

The next economy, by contrast, accentuates what is unique about different metros. What Buffalo exports is different from what Boston sells to the world. And what makes Denver a special global metropolis is different from what drives Detroit. The next economy rewards metros that intentionally build from their special assets and strengthen their strengths.

The prior economy also lacked any fiscal discipline. Cities and suburbs competed to literally move businesses a few miles across artificial political borders. The next economy, by contrast, rewards cities and suburbs — and even nearby metropolitan areas with complimentary economic assets — that collaborate to compete rather than compete against each other.

To do this, we at Brookings have set out to adapt the discipline of private sector business planning to the task of revitalizing and restructuring metropolitan economies in what we call “metropolitan business plans.”

Over the past several years we have worked closely with metros across the country, starting with leadership teams from Northeast Ohio, Minneapolis/St.Paul and Greater Seattle.

These teams worked collaboratively to flesh out a detailed initiative for economic progress, tailored to the special assets and challenges of these disparate places:

Retooling manufacturing firms and retraining industrial workers in Northeast Ohio;

Spurring entrepreneurial activity and commercialization of innovation in the Twin Cities;

Becoming the global hub of building energy efficiency technologies in Greater Seattle.

We recently concluded a special business planning exercise with World Business Chicago, done at the behest of Mayor Rahm Emanuel of Chicago. There, the city has already committed to stand up and capitalize a special infrastructure bank for the city.

Business planning, of course, cannot be confined to economic development because economy shaping requires a new form of place making. One of the central tenets of the business plan model is to help metropolitan areas improve their “spatial efficiency,” a fancy way of saying that places need to engage in smart growth that curbs sprawl and promotes reinvestment.

These business plans are low cost but high impact. They are primed to attract public and private investment, produce jobs in the near term and retool economies for the long haul.

The Western New York Regional Economic Development Strategic Plan is a great start towards designing and implementing a best in class business growing strategy for the city and metropolis. You have demonstrated not only a clear sense of the innovative firms, clusters, and institutions that drive growth … but also the critical role that quality place making plays in productive economy shaping.

The governor’s $1 billion challenge raises the stakes and asks your city and metropolis to identify a targeted set of investments and interventions that will put Buffalo back on track towards economic growth. This should only be done with objective evidence … with clear metrics of performance … and with strong knowledge of what other similarly situated, older industrial metros like Sheffield, Torino, and Bilbao have done to change their economic trajectory.

We at Brookings are pleased to help you identify the investments and interventions that truly matter … and would have transformative impact for decades to come.

Our second act naturally follows from the first: metros should advocate nationally to enlist the help and support of state and federal governments.

In most states of the country, this is a hypothetical question. In New York state, however, Governor Cuomo is taking action both to set a strong platform for metropolitan growth and to align state resources to metropolitan priorities.

On platform setting, New York State is once again “open for business.” The state’s actions to manage its budget are sending strong signals to the market that New York state can be a serious, reliable partner. In addition, the state’s commitment to renewable portfolio standards and sustained investments in clean energy, infrastructure, innovation and higher education also shows a keen understanding of the importance of targeted public resources in leveraging private sector growth.

On metro alignment, New York state has done more than any state to incentivize bottom-up economy-shaping. Last year, the state challenged 10 regional councils – public private partnerships of corporate, civic, university, labor, environmental and local governmental leaders – to craft economic development plans for their regions. The New York competition flipped traditional economic development on its head, rewarding strategies rather than transactions and local investment priorities rather than state solutions dictated by inflexible bureaucracies and fragmented programs.

Western New York was a one of the four winners in the Regional Council competition … rightly so, given your new spirit of collaboration, the strong leadership of Howard Zemsky and Satish Tripathi, and a clear sense of what makes your city, metropolis and region economically special and significant.

Eventually, metropolitan performance in the new global economic order depends on smart actions by the national government … to open up foreign markets to U.S. goods and services; to fiercely protect the intellectual property rights of American businesses around the world, particularly in China; to design and implement a national freight strategy that modernizes our air, rail, sea and land hubs and corridors so goods can move quickly and efficiently through the nation, with the least environmental impact; to invest in advanced research and development at scale over a sustained period of time, to have a sane and sensible immigration policy … and so forth and so on.

Metros and their states should not be holding their breath however for smart federal action … they should, by contrast, be innovating in such a way that ultimately the federal government will now excuse but to act.

This is the genius of American federalism … innovations today at the state and metro level become federal policy tomorrow.

That leads to the final step: metros must network globally – to create and steward close working relationships with trading partners in both mature economies and rising nations.

Strong connections already exist:

Metros with concentrations in financial services, like New York, are forming tight, interlocking networks with similarly focused metros around the world: London, Frankfurt, Paris, Shanghai, Tokyo, Sydney.

Metros with concentrations in advanced manufacturing, like Detroit, are similarly linking with metros in both developed and rising nations: Monterrey, Sao Paulo, Buenos Aires, Cologne, Johannesburg, Chennai, Chongqing, Hanoi

And port metros like Los Angeles are making key connections with the world’s air, rail and sea hubs: Tianjin, Seoul, Hong Kong, Singapore, Dubai, Hamburg, Rotterdam.

These networks obviously start with firms that do business with each other.

But, over time, they extend to supporting institutions— governments, universities, business associations— that provide support for companies at the leading edge of metropolitan economies.

In Northern California, for example, the Bay Area Council has become a foundation of respected, actionable, up-to-date information about its global connections and networks—focusing on emerging markets like China and India, as well as mature economies like Canada and the United Kingdom.

This platform is supplemented by the activities of private/public organizations like China-SF, which acts as a matchmaker between firms wanting to sell goods and provide services to China, and Chinese investors looking for investment opportunities in the Bay Area.

This is a model to be replicated widely … and a challenge to be overcome.

As Buffalo moves forward with your distinctive economic play, backed and supported by a strong, innovative state … it is imperative that you know what you trade and who you trade with … and then build strong, deep relationships with your trading partners.

Conclusion

Let me conclude with this story.

During the 1890s, Westinghouse and Nikola Tesla designed and built the Niagara Falls hydro electric power plant to provide electricity to the city of Buffalo. Despite skepticism about the feasibility of their plan, their electricity distribution system received financing from the major investors of the day: J.P. Morgan, John Jacob Astor IV, and the Vanderbilts.

In order to transfer electricity across the 25 miles to Buffalo, they constructed giant underground conduits leading to turbines that generated power for the city. The Niagara Falls Power Point became the major hydroelectric power plant in the world, and hydroelectricity from Niagara Falls continues to be a major source of power for the Western New York region to this day.

I tell this story for three reasons.

Buffalo was clean before clean was cool.

Buffalo was innovative before we understood the extent to which innovation drives metro prosperity.

Buffalo’s early success built on your distinctive industry, incomparable natural assets, and prime location.

The latter half of the 20^th century was brutal to Buffalo. But the past does not need to be prologue. The global economic order is shifting. The rules of the game are shifting.

I fundamentally believe that older industrial metropolitan areas like Buffalo have a future if you get focused, plan smart, build on your strengths and execute with discipline and creativity.

You have the local talent. You have the state backing. You have a global network of individuals who feel passionately about your success.

Carpe diem. Good luck.

Authors

Bruce Katz

Publication: Buffalo City Forum

Image Source: © Brian Snyder / Reuters

Web Chat: States and the Economic Recovery

Jennifer Bradley — Wed, 22 Feb 2012 00:00:00 -0500

The nation’s governors are gathering for their annual winter meeting in Washington, and jobs and economy will be the top items on the agenda. Frustrated with Washington’s partisan gridlock and lack of progress on the economy, many governors are now pressing forward with innovative solutions to jumpstart their economies at the state level and lay the foundation for long-term growth.

On February 22, Jennifer Bradley answered your questions on the economic health of the states during a live web chat with POLITICO.

12:30 Vivyan Tran: Welcome everyone, let's get started!

12:30 Jennifer Bradley: State innovation is part of the genius of our federalist system. Health care reform was law in Massachusetts years before the recent passage of federal legislation. During the 1980s, governors from both parties experimented with welfare and healthcare reforms, paving the way for federal advances in the next decade. Throughout the 1950s, public university systems, established by states like California and North Carolina, set the stage for the federal technology investments of the 1960s and 1970s. And before he was president, New York Gov. Franklin D. Roosevelt experimented with interventions that foreshadowed the New Deal.

With Washington mired in gridlock, states have no choice but to innovate. Smart governors are working with partners in metropolitan areas, which concentrate people, jobs, GDP, and innovation potential and are critical for job creation, revenue generation, and economic growth.

12:30 Comment From Tim: What are a few examples of innovation at the state level that have helped local economies get back on their feet again?

12:32 Jennifer Bradley: States like Nevada, Tennessee, and New York are organizing their economic development strategies around the needs of local and metro economies. They are focusing on aligning resources metros need, rather than sticking with the same old state agency stovepipes.

12:32 Comment From Katie: I see that you're with Brookings's Great Lakes Initiative. It seems as though Detroit and the whole region is experiencing a resurgence at the moment. What do you attribute this success to?

12:35 Jennifer Bradley: Manufacturing turns out to be a source of strength in the recovery (and will likely continue to be a source of economic strength, since it's so closely tied to innovation, which is the engine of economic growth). Places that have hung on to their manufacturing, particularly in sectors in which the U.S. as a whole is strong—like autos and transportation, and chemicals—have gained as those sectors have rebounded.

12:35 Comment From Sam: How successful have states in the "rust belt" been in revitalizing their economies following the recession?

12:38 Jennifer Bradley: This is a nice follow up to the previous question. States in the Midwest/Northeast that have done well have done so by really focusing on innovation and linking that to their manufacturing sector. Ohio has done this through its Third Frontier innovation program; Michigan has done this through its 21st Century Jobs fund to some extent. Focusing on exports also has been critical, because the recovery is also export-driven—all those manufactured goods are finding eager purchasers abroad.

12:38 Comment From Tony: Which states are close to fully recovered and which are still lagging behind?

12:40 Jennifer Bradley: The states with the strongest recovery, as of the end of last year, are North Dakota, Michigan, Louisiana, Wyoming, West Virginia, Utah, Indiana, Massachusetts, Alaska, and Oregon.

You see there a mix of natural resources economies, and manufacturing and exports economies (Intel, for example, is a big exporter in the Portland, OR, metro).

12:40 Comment From Beth T: Many politicos see manufacturing as a way for states to emerge from the recession and begin to provide high-paying jobs for their citizens. Given the cheap cost of manufacturing in places like China, is this realistic?

12:43 Jennifer Bradley: My colleagues at Brookings just devoted several hours to this very question at an event this morning! Chinese labor costs are rising, and there are a lot of other factors that make U.S. manufacturing competitive. Job loss in manufacturing is not inevitable. Smart governors understand that manufacturing may not employ as many people as it used it, but it is an important driver of innovation in their states, so they are working to link up university research and manufacturing needs.

12:43 Comment From Abigail: Are there any state programs right now that could and should be scaled up to the federal level?

12:48 Jennifer Bradley: Michigan's governor has proposed a new approach to transportation investments, driven by data—which projects are going to deliver the most bang for the buck, and how do transportation investments support goals beyond just getting from point A to point B (goals like more exports, or supporting logistics hubs)? The federal government could certainly benefit from a more strategic approach to transportation as well.

The larger point though is not necessarily that the Feds should scale-up state interventions willy-nilly, but that they should be taking the same approach, asking "Where are the market failures, and how can we deploy our resources to solve those failures? What needs to be done, and how can we bring a unique solution?"

12:48 Comment From Donna: For a while in the 90s, every state was hoping to have the "next Silicon Valley." What types of industries/sectors are states trying to cultivate today?

12:51 Jennifer Bradley: One promising thing that my colleagues and I see is that states are no longer trying to be "the next" anything—they are trying to be the best versions of themselves and build on strengths that they have. Jed Kolko has done research indicating that 95% of new jobs come from existing firms—that's where smart states are starting, with what they already do well. For some states that's advanced energy, for some it's helping auto supply companies pivot to supplying parts for wind turbines.

12:52 Comment From Fran I: I've heard a lot recently about regional economic development as a tool states are using to support growth. Could you explain a bit more about what these are?

12:55 Jennifer Bradley: It varies from state to state. In New York, for example, Governor Cuomo established 10 regional development councils and asked them to develop strategic plans for their regions. These plans were evaluated by a panel of experts and the top four regions got $100 million in state funding. Colorado's Governor Hickenlooper used a different model. He told each county to create an economic development plan, constructed regional plans from those, and then used that as the state's economic development plan. Tennessee used something called "jobs base camps" to identify key clusters to support.

12:56 Comment From Karen K: How can the federal government encourage states to experiment in these sort of ways?

12:58 Jennifer Bradley: The federal government can listen to the states when they ask for flexibility. For example, governors like Michigan's Gov. Snyder has asked for a different, more flexible approach to spending federal workforce dollars.

Ironically, the federal government is spurring a lot of state innovation right now because it's paralyzed and gridlocked. The states (and metro areas, too) have no choice but to innovate, whether the federal policy environment is conducive to it or not. I certainly don't advocate continued paralysis at the federal level, but it shows that states simply have to get stuff done—they have to balance the budget, they have to respond to unemployment numbers, they have to bridge the gaps.

12:59 Vivyan Tran: Thanks for the questions everyone, see you next week!

Authors

Jennifer Bradley

Image Source: © Max Whittaker / Reuters

How to Keep U.S. Exports (and Jobs) Growing

Amy Liu — Fri, 17 Feb 2012 11:14:00 -0500

U.S. exports, a bright spot in the lethargic economic recovery, have now expanded for 10 straight quarters—two-and-a-half years. Alongside an improving jobs picture, the trend offers further evidence of an economy on the mend.

Yet, as the economy improves and the dollar strengthens, how to keep export momentum going, and the good paying jobs exports create at home, needs to be a long-term focus of American growth and competitiveness goals.

To get there, national efforts to reduce trade barriers or reorganize trade programs, while helpful, are not enough. The United States needs to empower metropolitan areas, the front lines of American business activity, to help more firms become new exporters and lay the foundation for greater global engagement.

Post-recession, the steady surge in U.S. exports can be credited, in part, to the low value of the dollar and the efforts of sophisticated multinational companies specializing in such products as motor vehicles, aircraft, and petroleum. The benefits of these big exporters to their domestic suppliers and local-serving industries cannot be overstated.

Yet, the share of U.S. firms that sell a product or good outside our borders has not budged past 1 percent, despite decades of domestic and overseas services and programs dedicated to helping companies export.

Exporting is simply not in the American DNA.

We need a massive culture shift. While President Obama’s national export challenge has garnered much support and attention, the results remain sobering on the ground. Too many company executives remain unaware of global opportunities, fear to leave the comforts of the domestic market, and do not know what services exist (and who provides them) to help them navigate the export course.

However, several innovating metropolitan areas are stepping up to more aggressively orient their economic ecosystem for global trade. Recently, the greater Portland, Oregon, area released its “ExPort Portland” plan, which leverages the region’s strengths in computer electronics and clean technology services to meet global demand. In the coming weeks, the Los Angeles, Minneapolis-Saint Paul, and the Syracuse/Central New York regions will issue and begin implementing their own plans to boost exports and trade.

These metro export strategies strengthen state and federal export activities in a number of ways.

First, the plans reflect that metro areas are the crucible of exporting. They are our nation’s centers of innovation, producers of tradable goods and services, magnets of talent, and hubs of freight and passenger movement. The 100 largest metro areas produce the majority of exports for the nation, including generating more than three-quarters of all service exports. Los Angeles, Portland, Minneapolis-Saint Paul, and Syracuse respectively rank 1st, 12th, 14th and 72nd among metro areas in export volume. These strategies will measurably increase our nation’s export capacity.

Second, many of these plans involve metro chambers of commerce, port authorities, regional civic groups, or regional economic development agencies that have strong direct relationships with firms. They are well-positioned to proactively reach out to target companies, perhaps within priority industries, and help them become export-ready, thereby building the nation’s pipeline of quality exporters.

Further, few regional economic development officials promote global trade as an expansion strategy for businesses. Engaging them as partners is essential to making exports more the norm than the exception.

Third, leaders in these metro areas are bringing together the vast network of export service providers and champions around a unified goal and strategy for boosting exports. This has the added benefit of ensuring that all players—government, business, financial, civic, university, and nonprofit leaders—are working in concert toward a shared ambition versus all-too-common fragmentation. Firms will also benefit from a coordinated system of services that will give them the confidence that exporting is the right investment.

Finally, exports in these metros represent just the beginning of a more comprehensive game plan for greater global engagement. Metro leaders are aligning strategies in foreign direct investment, manufacturing innovation, freight and transportation modernization, and immigrant outreach so they build a more globally fluent economy.

Only then can American firms truly tap the immense demand arising from emerging markets around the world and innovate and grow at home.

Authors

Amy Liu

In New York City, Growing a Technology Hub

Bruce Katz and Judith Rodin — Tue, 17 Jan 2012 00:00:00 -0500

New York City has long been known as a hub of innovation and opportunity, a place where creativity and sheer force of will can produce achievements previously unimagined. Companies that have changed how we experience the world—from Alexander Graham Bell’s Bell Laboratories to Jay-Z’s Roc-A-Fella Records—all got their start in the city that never sleeps.

However, despite a burgeoning community of tech entrepreneurs, over 100 academic and research institutions, and more than 626,000 post-secondary students, New York City still lags the Bay Area in tech capacity and research commercialization. Silicon Valley remains the foremost location for dot-com entrepreneurialism and technological innovation—home to tech legends Apple and Google, social media giants Facebook and Twitter, the social philanthropy innovators at Kiva and the design visionaries at IDEO, among many, many others.

The Bloomberg administration wants to change all that. Its Applied Sciences NYC initiative aims to boost tech R&D, spark job growth, foster entrepreneurial endeavors and diversify the area economy by establishing a state-of-the-art applied sciences and engineering campus in the heart of New York City. To support this project, the city has pledged up to $100 million as well as a 99-year lease for nominal rent at one of three city-owned sites— the Goldwater Hospital Campus on Roosevelt Island, the Navy Hospital Campus at the Brooklyn Navy Yard or historic buildings and property on Governors Island. Applicants were to be judged based on proposed support for research commercialization and job creation, academic program strength, plans for community engagement, sustainability of design, and sensitivity to existing neighborhoods and surroundings.

In late December, the city announced its decision to partner with Cornell University and the Technion-Israel Institute of Technology to create the “NYCTech” campus on Roosevelt Island. Phase one of the campus build-out will develop 300,000 square feet by 2017, though the two universities aim to start classes at a temporary site this September. By the project’s culmination in 2043, NYCTech will encompass two million square feet with 280 faculty members and up to 2,500 graduate students. Cornell and Technion also plan to contribute to area K-12 education by training 200 science teachers each year.

Based on current projections, the city expects that the new campus will create up to 20,000 construction jobs; up to 8,000 permanent, well-paying jobs for a broad range of skill levels; 600 new companies; and billions in additional economic activity. For Cornell President David Skorton, the prospect of job creation is especially compelling. "The most exciting thing to me in this election season is that we don’t have to roll over and die for lack of a way to create jobs. This is an example of a public-private governmental partnership: it’s government, it’s private industry and higher education," he says. "I think this could be a model that could be replicated across the country."

Authors

Bruce Katz
Judith Rodin

Publication: The Atlantic Cities

Growing the New York State Economy From the Bottom Up

Bruce Katz — Tue, 13 Dec 2011 11:24:00 -0500

In the absence of federal leadership on the economy, a new wave of innovation in economic development is emerging at the state and regional scale. New York State, under the leadership of Governor Andrew Cuomo, is at the vanguard of this encouraging movement.

For the past four months, 10 regional councils in New York — public-private partnerships of corporate, civic, university, labor, environmental and political leaders — crafted strategic plans for their regions to compete for $200 million in state funding. I participated on a 5-member Strategic Plan Review Committee to provide an independent assessment of each plan according to a series of published and well publicized criteria (located on page 37 of the state’s Resource Guidebook). Last week, the state concluded this intensive competition by selecting four “best in class” plans. Additional resources for particular projects in other regions were also allocated via a consolidated funding application.

The New York Regional Economic Development Council initiative has serious implications for a state that has traditionally had prescriptive, fragmented and rigid economic development policy and practice.

First, the focus on bottom-up economy-shaping honors and respects the profound differences across regional economies:

New York State, like all states, is a political artifice, not a natural market. Its regions form the true economic geography, and each community and its component parts — cities and metropolitan areas, municipalities and towns — have distinctive competitive assets and advantages because of the vagaries of history, location and policy.

As Governor Cuomo said (video starts at 27:30) at last week’s announcement in Albany, “The state can set the stage, but there is no single New York State economy: there’s a Long Island economy, a Western New York economy, a North Country economy. They’re all on the same framework because they’re all within the state’s boundaries, so state policies affect all regions. But the growth is going to come from a regional development strategy.”

The distinctive strengths of disparate regions came through in every Regional Plan.

The North Country, a "best plan” award winner, extolled its position as part of a seamless regional economy with Canada with regular exchange of people, capital, and interlocking supply chains on advanced manufacturing. Garry Douglas, the head of the North Country Chamber of Commerce, went so far as to call Plattsburgh a suburb of Montreal.

Long Island, another “best plan,” embraced its heritage as America's first suburb, blessed by close proximity and transit accessibility to New York City but also burdened by an aging infrastructure, increasing poverty and decades of low density development.

The Southern Tier, ravaged by floods earlier in the year, revealed itself as a center of advanced transport manufacturing and an innovation zone anchored by the global powerhouse of Cornell University.

The unifying theme of "know your distinctive strengths and build on them" is particularly relevant in the aftermath of the recession, as the United States seeks not only to create jobs but to retool and restructure its economy.

The prior consumption-led economy embraced and extended uniformity of form and function. A new housing subdivision in exurban Buffalo looks almost identical to one outside Albany. Shopping malls and centers sport the same restaurant and retail chains. A Wal-Mart is a Wal-Mart is a Wal-Mart, offering the same goods and services no matter the location.

Yet the real, tradable, wealth-producing economy is highly differentiated across regions. Rochester has a different advanced manufacturing and export profile than Long Island. Syracuse has a different innovation ecosystem and entrepreneurial potential than that in Westchester County. And it's the tradable sector that drives the consumption sector, not the other way around.

If America is going to restructure its macro economy for the long haul, it will happen as metro and regional economies build on their own strengths and leverage their distinctive assets and advantages.

Second, a "regions first" strategy provides a vehicle for streamlining legacy state systems and enhancing state impact and leverage.

State governments, like the federal government more broadly, are populated by specialized agencies overseeing dozens of compartmentalized policies and programs. This endemic fragmentation stands in sharp contrast to the integrated, organic, multi-dimensional nature of regional economies. For regions and companies, land and infrastructure, labor and capital are inextricably linked.

The Regional Economic Development Plan process flips the traditional silo-driven, project-obsessed focus of economic development on its head. Local leaders have the responsibility for identifying investment priorities that further the distinctive opportunities of their places and then the states are tasked with getting behind local strategies by cutting across rule bound bureaucracies and indecipherable programs.

The promise of this system is clear: state investments in local economies that, taken together, are catalytic and transformative, rather than merely a random collection of projects and transactions.

Finally, the Regional Economic Development Plans embody the galvanizing force of competitive collaboration.

In most parts of the U.S., economic development is still a zero-sum competition. Suburbs lure businesses with tax breaks from cities; cities do the same with their suburbs. And competition between and among states is legendary.

In a world of fiscal constraints, such internecine warfare is fiscally wasteful. In a rapidly-urbanizing world, where the real competition for US metros and regions is with megacities in countries like China, such internal competition is a recipe for economic suicide.

The Regional Council competition revealed the potential of a new modus operandi. Plan after plan showed the liberating effect of collaboration across jurisdictions, across sectors, across institutions that were either unaware of each other or locked in debilitating conflict.

Collaboration is, in many respects, the essence of regional innovation and competitiveness. As Steven Johnson wrote in his last book "Where Good Ideas Come From," the mash-up of disparate sectors and clusters, institutions and entrepreneurs, creates the potential for breakthrough ideas and synergistic growth.

So what comes next?

First and foremost, the regional plans need to deliver. Success ultimately lies in implementing strategies rather than designing them.

Encouragingly, the criteria for evaluation focused intensely on ability to execute and measure performance, which was a major focus of our deliberation.

Secondly, New York State experiment is not a one shot deal. Governor Cuomo has already announced his intent, publicly encouraged by the state legislative leadership, to seek a second round of funding and hold a second competition.

Replicating this process could drive further innovation: Will the second round expand the universe of programs and resources implicated by Regional Plans, including major economy-shaping infrastructure funds? Will the state set a broader platform for growth for key sectors and issues — advanced manufacturing, export led growth, the commercialization of innovation — that cut across the Plans?

Beyond New York, this innovation is also directly and immediately relevant to other states that are similarly experimenting with bottom-up approaches to shaping the post-recession economy. In Nevada, a new state economic development entity is actively seeking to regionalize state strategy and implementation. In Colorado and Tennessee, Governors John Hickenlooper and Bill Haslam, respectively, have both made bottom-up economic development a central tenet of their growth.

In the final analysis, the New York innovation presents the sharpest challenge to the federal government. Despite some small and promising innovations in cross agency collaboration, the federal government remains a body of balkanized silos and hardened stovepipes. It is a legacy government that largely fails to galvanize the talents and energies of our powerful (and different) states and regional economies.

The New York Regional Economic Development Council process presents a call not only for reinventing government but for remaking federalism.

Authors

Bruce Katz

Is NYC’s Bold Transportation Commissioner a Victim of Her Own Success?

Christopher B. Leinberger — Mon, 07 Mar 2011 13:12:00 -0500

The New York Times’ profile of celebrated and embattled New York City Transportation Commissioner, Janette Sadik-Khan, shows how getting things done in a democracy can be bad for your political future. Sadik-Khan has increased the amount of bike lanes by over 60 percent, removed cars from congested places like Herald and Times squares enabling them to become highly popular pedestrian zones, and cut traffic deaths to the lowest point in over a hundred years due to an intense attention to detail by her and her staff. New York magazine described her as being “equal parts Robert Moses and Jane Jacobs.”

Yet to her critics she is the equivalent of Genghis Khan, yelling insults over the phone to fellow bureaucrats, ignoring the wishes of certain parts of the city, not being deferential enough to city councilors, drawing “them versus us” lines in the sand, and basically having a “I know best style.” In a city that prides itself on being tough, her critics are pitifully crying that she hurts their feelings and she is not “inclusive” enough.

This is no more than the status quo defending its turf, hiding behind a fatuous grade school argument of “she isn’t nice.” Here is a successful person being pilloried in the press for being, well, successful. It certainly brings to mind the “resignation” of the hard-charging and tough former D.C. schools chancellor Michelle Rhee. She stepped on some toes and did not kiss enough rings, but she moved mountains in the worst public school system in the country. That similar criticism is directed at two powerful women may not be a coincidence.

This democracy needs tough “I know best” leaders to tackle the host of problems we face that appear insolvable. Sadik-Khan’s boss, Mayor Bloomberg, and other recent long-serving successful mayors like Mayor Daley and Riley (Charleston), do not govern solely by trying to be popular. They are successful because they know what is best. Many times they have to step on toes, many times breaking those toes, to get things done.

Sadik-Khan is leading the charge for a re-allocation for the most valuable real estate on the planet: the rights-of-way of the city of New York. Those rights-of-way have been the domain of the car drivers since Robert Moses ruled. It was what the market wanted then, and the Jane Jacobs-types of the city who were searching for a human-scaled place were marginalized. Now the market wants more Jane Jacobs and less Robert Moses, claiming a bigger share of the right-of-way. In giving the market what it wants, New York City has been far more economically successful recently than any time in the past two generations.

So, if you have your feelings hurt by a strong female leader you should, as they say in New York, get over it.

Authors

Christopher B. Leinberger

Publication: The Avenue, The New Republic

Andrew Cuomo's Budget and Governance Plans for New York

Jennifer Bradley — Mon, 10 Jan 2011 15:11:00 -0500

State of the state speeches usually have the feel of New Year’s resolutions. This year, say the governors, the state will be richer, smarter, better, happier thanks to new programs, new rules, and new ideas. Of course, this year the pronouncements are more sober and dourer.

But good times or bad, implementation is always the hard part. That’s where the state of the state speech from New York’s newest governor, Andrew Cuomo, looks really interesting. He has made governance reform a priority, and wants to use the fiscal crisis to make it happen.

Local governments are desperate for cash, as their revenue streams are drying up and demands on services are increasing. The state itself doesn’t have the money to make up the shortfall because it’s got a mammoth one of its own. So localities are unusually primed to respond to financial incentives to do what they’ve adamantly resisted before, which is change how they work with their neighbors. And individual New Yorkers, feeling hard-pressed by local tax burdens, are also probably readier to reexamine their commitments to hyper-local government and service provision when those commitments have a clear price tag. Cuomo’s local governance reforms are providing those incentives (which sound familiar):

He calls for ten regional economic development councils that will coordinate state agency investments and demand that local governments show results to get funds. These councils will compete amongst themselves for a $200 million pot of additional state money for job development.
The governor ties property tax relief to local government consolidation or outright dissolution. The state provides additional monies when local governments merge or dissolve (these processes save money in the long run, but they often incur up-front costs) already, but Cuomo would mandate that half of this extra money go to property tax reductions. The state has more than 10,500 local government units--voters may decide it’s not so bad to be part of the township next door if their property tax bill drops.
Cuomo proposes $250 million for school districts that find administrative efficiencies, which are likely to come through several districts sharing services like busing, food service, and maintenance--or maybe even bigger steps like sharing curriculum development staff.

During the fiscal crisis, governments have shown that they will make significant changes in the way they do business for comparatively modest financial incentives. The federal Race to the Top program, which Cuomo referred to as a model, is a great example: Tennessee, New York, Florida, and Ohio had to make significant and controversial changes to charter schools, low-achieving schools, and teacher evaluations, to win Race to the Top grants in the range of $400 million to $700 million--which are just a fraction of these state’s overall education budgets of $3.8 billion to $19.9 billion.

But then there’s the legislature, which has the power to tank some of his most ambitious reorganization plans. For example, Cuomo has proposed that a state commission figure out how to eliminate more than 200 of the state’s 1000-plus state agencies, authorities and commissions. He wants the legislature to pass a law that would give it 30 days to reject the commission’s recommendations (up or down--no tinkering). If the legislature doesn’t act, the commission’s plan goes into effect.

Why would the legislature give up its power? Cuomo’s likely gamble is that they will have to, with a $10 billion budget gap looming this year, and bigger caps next year and the year after: “You can’t make up these kinds of savings over this long of period of time through a budget cutting or trimming exercise. We are going to have to reinvent government. We are going to have to reorganize the agencies. We are going to redesign our approach because the old way wasn’t working anyway, let's be honest.”

Editor's Note: The text of this blogpost was updated and published as an opinion piece in the Albany Times-Union on January 13, 2011. Read Jennifer Bradley's op-ed, "The Recipe for N.Y.'s Success" »

Authors

Jennifer Bradley

Publication: The Avenue, The New Republic

New York State’s New Green Jobs Program: Linking Financing and Job Training Statewide

Mark Muro and Sarah Rahman — Fri, 10 Jul 2009 00:00:00 -0400

Recently passed legislation in New York State establishes a new statewide program to perform mass-scale building energy efficiency audits and retrofits and build up the supply of skilled workers to meet the expected increase in green job opportunities. Critically, it also authorizes state agencies to create a new framework for financing retrofits, and encourages new groupings of stakeholders—from community groups to utilities—to work together towards successful implementation. The multi-dimensional Green Job Green New York plan channels a relatively small amount of state resources, a much larger amount of private lending capital, and potential federal stimulus dollars into a new statewide revolving loan fund for retrofits and expanded opportunities for green workforce development and job placement.

Green Jobs Green New York is the first multidimensional, mass-scale, statewide building energy efficiency plan for financing and recouping costs from energy efficiency audits and installations in a range of structures. The plan involves improving aspects of the existing state-run home audit program, initiating a new statewide revolving loan fund for retrofits, and introducing new green-focused workforce development across the state. Over the next five years, Green Jobs Green New York aims to retrofit at least 1 million buildings, reduce the energy consumption of participating households by 30−40 percent, save New Yorkers $1 billion annually in energy costs, and create an expected 14,000 new clean energy jobs.

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Authors

The Metropolitan Transportation Authority is Not Alone in its Financial Struggles

Emilia Istrate and Robert Puentes — Fri, 24 Apr 2009 00:00:00 -0400

Even in comfortable times, the service cutbacks and fare increases being proposed by the Metropolitan Transportation Authority would have sparked outrage from New Yorkers. Coming in the depths of the most serious economic crisis since the Great Depression, things seem that much worse.

Not that it's any consolation to frustrated New York transit riders and taxpayers, but you are not alone. Transit agencies like the MTA are reeling nationwide; all are suffering from factors at least some of which they really can't control without some legislative help.

This is not to deny the pain that could occur unless the state comes up with a rescue plan. In its 2009 budget, the agency proposes painful service cutbacks and fare increases to help cover a projected deficit of around $1.5 billion.

No fewer than 51 transit agencies around the country are in the same financial situation. For example, the Massachusetts Bay Transportation Authority that runs Boston's smaller transit system is chewing over major service cuts and fare increases if the state doesn't help cover its $160 million deficit.

The fact that so many transit agencies are struggling may come as a surprise. After all, didn't Washington just pump a lot of money into infrastructure as part of the $787-billion American Recovery and Reinvestment Act? Wasn't public transit a big part of that law?

Yes. The stimulus package provides $8.4 billion to be spent on transit this year. That's a helpful shot in the arm to metropolitan transit agencies that Washington ordinarily relegates to second-class status. And the MTA will receive the largest portion of this money: more than $1 billion. Even by today's standards, that's nothing to sneeze at.

But how much will it really help? Federal rules in effect since 1998 stipulate that this money can be spent only on capital improvement projects and not to finance gaps in day-to-day operating expenses.

Surely there is no transit service without capital - the buses, trains, tracks and other facilities that make the system run. However, operating costs - which are generally about twice as high as capital expenses for the largest transit agencies - cover the salaries of the workers who keep the system running, as well as the debt contracted to pay for capital projects.

So as the federal government aims to put Americans back to work on shovel-ready, temporary construction jobs, transit agencies are looking at the likelihood of laying people off from stable, permanent positions.

Why the disconnect?

The response in Washington is predictably stubborn: Recovery money cannot be used for operating expenses because operating is not a federal role.

You would think that the pressure of this policy would lead to transit agencies that are self-sufficient - where passenger fares pay the full costs of operating the system.

But large metropolitan transit agencies generally "recover" only about one-third of their costs from subway riders and about one-quarter from bus passengers. The MTA has the highest cost-recovery ratio among all subway operators - its fares pay for two-thirds of operating costs.

For large bus systems, the MTA's New York City Transit ranks second only to New Jersey's in terms of the share of operating costs paid for by riders. The Long Island Rail Road is the seventh among the 21 commuter rail systems in the country, recovering from fares close to half of its operating costs.

So what should be done to close the MTA's budget gap?

For one thing, lawmakers in Albany need to recognize that the state contributes a lower proportion of the MTA's budget from its general revenue than other states provide to their transit agencies from general revenue. In New York, about 4 percent of all the MTA operating costs are covered by the state budget; in other states, transit agencies are getting closer to 6 percent.

Raising state general fund support to national levels would be a good place to start helping the MTA.

Another idea is to get Washington to help. Not in doling out more money, but in stepping aside and empowering metropolitan agencies to spend their federal money in ways that best meet their own needs.

Specifically, the federal rules could be changed to allow transit agencies to spend their transit capital stimulus dollars on operating expenses. Certainly, agencies have capital needs as well, but particularly in these stressful economic times they should have the short-term flexibility to use those federal dollars to meet their immediate problems.

Over the long term, some form of federal competitive funding for operating assistance also might provide the right incentive - or reward - to states and localities to commit to funding transit.

Based on their level of commitment, metropolitan agencies, localities and states that legislatively dedicate a stable stream of funds could potentially receive federal operating assistance, perhaps as a matching grant. The federal government would be helping those who help themselves.

The New York metropolitan area cannot afford to have a transit system that is hampered from operating at its fullest and most efficient potential.

An extensive transit network like the MTA provides important transportation alternatives to those who have options and basic mobility for those who don't. It can help mitigate regional air-quality problems by lowering overall automobile emissions and slowing the growth in traffic congestion.

It also can provide economic benefits by creating development opportunities around transit stations and help enhance regional economic competitiveness as an important and attractive metropolitan amenity.

Such a functioning network plays a fundamental role in attracting highly skilled labor and talent, which we know is so important in 21st century metropolitan America.

Authors

Publication: Newsday

Washington Must Retool for a More Focused Role in Buffalo

Robert Puentes — Thu, 28 Feb 2008 00:00:00 -0500

The land of the Erie Canal should be well aware of the link between transportation and economic development. But just as the railroads replaced the canal as an economic juggernaut, in today’s global economy we need national transportation priorities that acknowledge the metropolitan nature of our economy.

Infrastructure matters, because state-of-the-art transportation, telecommunications and energy networks — the connective tissue of New York and the nation — are critical to moving goods, ideas and workers quickly and efficiently and providing a safe, secure and competitive climate for business operations.

But for too long, federal transportation policies have ignored industrial metropolitan areas like Buffalo or have undermined them directly.

Instead of a strategy that focuses on how to strengthen and reinvigorate these places, our federal transportation program is an uneven playing field favoring new construction over old. The upshot is that the focus has been on building bridges to nowhere rather than rehabilitating existing ones.

The Minneapolis bridge collapse was a tragic reminder of a much bigger problem. There is no vision on the federal level for addressing a complex and conflicting set of transportation challenges. As a result, the nation’s transportation policy is adrift.

New York State has huge infrastructure demands, and because of the crisis in transportation finance the state simply cannot afford to simultaneously expand highway and transit capacity, maintain the existing surface transportation system and reconstruct or demolish obsolete infrastructure.

But one thing is for sure, transportation reform is not just about complying with tighter fiscal constraints, it’s about placing infrastructure spending in the service of broader economic and sustainability goals.

A purposeful program would mean that the federal government would take the lead in critical areas where a strong national role is necessary. International ports of entry like Buffalo should be targets of federal attention because of their critical role in goods movement and global trade.

It would also mean empowering these places to reach outside of the Eisenhower- era transportation box and stimulate and encourage innovation.

The federal government should identify those portions of the national highway system that, because of employment and residential decentralization, no longer serve central transportation goals and are capable of being decommissioned or downsized.

In center cities and older suburbs, that land can be leveraged for redevelopment. The Skyway is a perfect target for such a partnership of land owners, developers and nonprofits.

The question is whether federal transportation policy can reinvent itself to adapt to today’s needs.

Robert Puentes is a fellow at the Brookings Institution’s Metropolitan Policy Program.

Authors

Robert Puentes

Publication: The Buffalo News

A Two Percent Solution for Downtown Rochester (NY)

Bruce Katz — Tue, 12 Feb 2008 00:00:00 -0500

Thank you for this invitation. It is an absolute pleasure to be back in Rochester for this important series.

I want to thank Roger Brown for being my teacher and guide before and during this visit. Roger described the exciting things that are underway in the city and downtown and, as importantly, gave me a much needed tour of the beautiful and inspiring and the good, the bad and the ugly. So, I feel a bit grounded - putting images on the faces of the Falls, the Inner Loop, the Midtown Plaza, the Sibley and dozens of smaller landmarks and projects.

Today I want to place the work you do in the context of the broader forces affecting our country.

The United States is going through a period of dynamic, volatile change, comparable in scale and complexity to the latter part of the nineteenth century.

Large demographic forces - population growth, immigration, domestic migration, aging -are changing patterns of consumption and settlement and lifestyle. The prototypical family of the suburban era – a married couple with school age children - is now less than 25 percent of all American households.

Broad market forces - globalization, technological innovation, standardization - are restructuring the U.S. economy, changing what we do, how we do it and where we do it.

As the world’s largest energy consumer and largest emitter of greenhouse gas emissions, the United States already faces hard choices on the environment … and we are estimated to grow by another 120 million people by 2050. By 2030, America is projected to double its built environment of homes, apartment buildings, and commercial, office and retail facilities. The question for the nation is, therefore, not whether we grow but how we grow, where we grow and what we grow.

To compete in this new world, metro areas need to focus intensely on the assets that drive prosperity - innovation, human capital, and infrastructure being the most prominent.

But metros also need to focus on the quality of the places you are building and sustaining - the topic of my talk today.

How You Grow Physically Affects How You Grow Economically.

For the first time in a long time, cities, downtowns, urban places and the urban form matter again as a competitive proposition.

Here is my thesis:

First, broad demographic, economic, fiscal, and cultural forces are increasingly promoting diversity, density, and urbanity and are fueling a visible though uneven and incomplete resurgence of American downtowns and cities.

Second, Rochester’s downtown is beginning to exhibit strong signs of rebirth, but this trend pales in comparison to the relentless decentralization of economic and residential life in the broader metropolis and Western NY and is happening in spite of a host of policies - state and federal - that still tilt the playing field towards greenfield development.

Finally, the full potential of Rochester’s downtown will not be realized until city and metropolitan policies are aligned and New York State fully engages with smart, strategic policies to promote redevelopment and curb sprawl. The time for such alignment could not be better - fueled by your success to date, the changing policies of the Spitzer Administration and the tantalizing prospect that the federal government will get its act together.

I propose that Rochester set your sights high and strive to attract at least 2 percent of your metropolitan areas to live downtown. This goal - which could translate into more than 20,000 people living downtown - would have the “critical mass” necessary to spark a virtuous cycle of growth in the city and metropolis.

I think such a goal is realistic and achievable and an essential complement to the myriad of economic and education activities now being pursued.

So let’s start with the big picture.

As I have said before, there are profound demographic and market forces at play in our economy and society.

I strongly believe that these forces are giving cities and urban places a better shot at attracting and retaining residents and businesses than at any time since the 1950s.

Demographic diversity dramatically expands the universe of families who either seek urban living or are willing to experiment:

Immigrant families who seek tolerant and welcoming communities:
Elderly individuals who seek places with easy access to medical services, shopping and other necessities of daily life;
Middle aged couples whose children have left the nest and are open to new neighborhoods and shorter commutes; and
Young people who are experimenting with urban lifestyles popularized on television shows like Seinfeld, Sex and the City, and Friends.

The restructuring of the American economy also gives cities and urban places a renewed economic function and purpose.

An economy based on knowledge bestows new importance on institutions of knowledge - universities, medical research centers - many of which are located in the heart of central cities and urban communities.

More generally, the shift to an economy based on ideas and innovation changes the value and function of density.

The advanced, technologically sophisticated firms that now drive the American and global economy crave proximity … to thick pools of qualified workers, to specialized legal and financial support that often require face-to-face interaction, to institutions of higher learning, to modern infrastructure, to quality urban places with the amenities that talented workers demand, and to other firms so that innovations can be rapidly shared.

Futurists predicted that technological innovation would free us from place. The opposite has occurred. Cities and metros concentrate the assets that drive prosperity and are the engines of national growth.

Finally, the evidence shows that the urban form is not only competitively wise, but fiscally and environmentally sound.

We have known for decades that compact development is more cost efficient – both because it lowers the cost of delivering essential government services (police, fire, emergency medical) and because it removes the demand for costly new infrastructure.
The fiscal benefits of density matter immensely in this state because of the huge infrastructure demands that you have and the transportation finance crisis that you face. The simple fact is that you simply cannot afford to expand your highway and transit capacity, maintain your surface transportation system, and reconstruct or even demolish other infrastructure that is now obsolete.
As for the environment, dense urban places are “green” in ways that are increasingly understood in the context of climate change. They reduce auto dependence, shorten commutes, promote reuse and offer the economies of scale for retrofitting of homes, commercial and industrial buildings.

A changing economy and society, in short, revalue the assets of cities:

Physical assets like waterfronts, historic buildings, pedestrian friendly neighborhoods and transit rich corridors;
Economic assets like higher educational institutions and health care facilities (the so-called “eds and meds”), downtown employment centers, and other regionally significant nodes of employment;
Cultural assets ranging from the iconic like museums and sports stadium and theaters to the street level mix of restaurants, art galleries, and daily hum of pedestrians.

The bottom line is this: city downtowns seem uniquely suited for the demands and preferences of a growing part of our population and economy. These places have the physical “bones” - walkable streets, sidewalks, the historic buildings, and other established infrastructure – that can accommodate a range of residential, commercial, retail, governmental, and cultural functions.

And this is not just theory:

Across the United States, city downtowns are experiencing a second life with substantial increases in homes, lofts, condos, apartments, and mixed use complexes.

Analysis by Genie Birch for Brookings shows that the downtown population in a national sample of cities grew by 10 percent during the 1990s, a marked resurgence following 20 years of overall decline.

During the same period, the number of downtown households increased 13 percent, representing an increase, among other things, in the number of smaller households of singles, unrelated individuals living together, and childless married couples.

Those who believe this level of revival is happening only in hot metropolitan markets should look to Europe.

There, former industrial cities like Belfast, Manchester, Bilbao, and Torino are taking battered, beaten urban cores and infusing them with new life and amenities—restored canals, boulevards rather than freeways, revitalized waterfronts, preserved historic buildings, and new, iconic museums.

Restore the Core has become the European answer to deindustrialization … and has catalyzed not only the revitalization of downtowns but the transition to the next economy.

So how is Rochester’s downtown faring?

Well, in recent years, pretty well. Employment concentration remains high with new employers like ESL and PAETEC on the way. Residential population is rising, interesting pockets of urbanity are emerging, and a new state administration is taking notice and adding value.

The sense of momentum is palpable, real, and infectious.

But the broader context remains sobering.

Like many other metropolitan areas in the Northeast and Midwest, the Rochester metro -the 50th largest in the nation - is struggling to transition from an older economy centered on manufacturing toward the new economy of knowledge, innovation, and entrepreneurship.

Despite slow growth, rapid sprawl dominates the metropolitan landscape, hollowing out the city, leaving concentrated areas of poverty and placing enormous fiscal stress on the city.

Between 1990 and 2006, the Rochester metropolis grew by 3.3 percent of its population. The city of Rochester lost about 11.5 percent of its population.

Buffalo’s core population is half what it was when Harry Truman was President; Rochester, Syracuse, and Albany are each a third smaller today than they were in 1950.

With unbalanced growth, residential density—the ratio of population to urbanized land -has declined precipitously in this region. Rochester saw a 14 percent loss of density from 1982 to 1997.

As people go, so do jobs. That is a nice cliché because it is actually true.
The suburbs now dominate employment growth. They are no longer just bedroom communities for workers commuting to traditional downtowns. Rather, they are strong employment centers serving a variety of functions in their regional economies.

The American economy is rapidly becoming an exit-ramp economy with office, commercial, and retail facilities increasingly located along suburban freeways. A new spatial geography of work and opportunity has emerged in metro America. Across the largest 100 metro areas, on average, only 22 percent of people work within three miles of the central business district, while almost 45 percent of all jobs are located more than 10 miles outside the center.

Fortunately for Rochester, employment in the metro remains fairly centralized, given the location of major employers near the central business district. Yet newer employment is shifting outwards. In 2004, almost a third of jobs (32 percent) were located within three miles of the central business district, compared to 20 percent that were more than 10 miles outside the center. But, these numbers are changing quickly. Between 1998 and 2004, your metro lost over 2 percent of jobs within three miles of the central business district, while gaining another 1.1 percent of jobs located more than 10 miles away.

Now here’s the kicker. Despite conventional wisdom to the contrary, these trends of population and employment decentralization are not only driven by market and consumer forces.

Rather they are dramatically influenced by federal and state policies that set what I call the “rules of the development game” – rules that favor the creation of new communities over the redevelopment of older ones and subsidize greenfield development rather than brownfield remediation.

Let me be more specific:

A recent Brookings report in Pennsylvania illustrated how sprawl was embedded and hardwired in an intricate network of state spending, tax, regulatory, and administrative polices.

State governance policies that support incredible localism among hundreds of suburban municipalities, each able to compete favorably with cities and older communities because they can benefit exclusively from job growth without taking responsibility for traffic or worker housing.
State tax policies that leave cities stranded with tax exempt properties and saddled with the costs of maintaining older infrastructure.
State transportation policies that spent only 42 percent of road and bridge spending in older urban communities, where 58 percent of the population lives.
State housing policies that, under the guise of neighborhood renewal, often reinforce the concentration of poverty rather than enhance access to opportunity.
State economic development policies that subsidize new office parks rather than remaking main streets and historic corridors.
State building codes that makes it cheaper to build new rather than renovate older properties.

Does New York State look like Pennsylvania? Absolutely, according to numerous studies conducted over the years by independent, objective researchers.

Let’s just take fragmented governance as a case in point.

The Rochester metro has 78 towns, 5 counties, 40 villages and three cities.

In the past, research focused on demonstrating that increased government costs result from fragmentation. This follows from the simple fact that political fragmentation often leads competing jurisdictions to duplicate infrastructure, staffing and services that could otherwise be provided more cost effectively.

Yet newer research is showing another important implication.

Fragmentation exacerbates sprawl and weakens cities. Research shows that increased fragmentation correlates with decreased shares of office space within central business districts, less centrality, longer commuting times, more edge cities and more sprawl. In this connection, fragmentation not only inhibits coordinated planning to manage growth, but also spawns a sprawl-inducing competition among the states’ multiple jurisdictions for desirable commercial, industrial and residential tax bases.

The confluence of fast sprawl and slow growth leads to weaker cities – right at the very time when cities have a special function to play in the economy.

A host of other policies – tax, transportation, housing, education – all point in the same direction, away from city revival and towards sprawl on the periphery of the metropolis.

Yet I believe that a growing number of states, including New York, are ripe for change:

because they are experiencing the fiscal wastefulness of unbalanced growth patterns;
because they recognize that an economy of ideas, innovation, and creativity thrives in dense, urban areas; and
because they are worried that endless sprawl is endangering the rural landscapes and environmental treasures that define many places.

Let me give you a hopeful lesson from some of our state work.

In Pennsylvania, the confluence of powerful ideas, a progressive Governor (Ed Rendell, the former Mayor of Philadelphia) and a vocal network of advocates is already reforming policies:

The state is embracing “fix it first” policies in transportation – stopping sprawl inducing road projects at the fringe in order to fund infrastructure repair in the metropolitan core.
The state has resuscitated a State Planning Board to bring coherence to the actions of dozens of state agencies.
The state has revitalized an Interagency Land Use Team to better focus the state’s actions and investments.
The governor recommended - and voters approved - a $650 million bond issue -for spending on both environmental protection and urban revitalization, illustrating the potential for common ground between urban, suburban and rural communities.
The executive branch has created Community Action Teams to pull together all state programs and agencies in the service of downtown revitalization.
The Governor is pursuing bold new reforms to prepare the Pennsylvania workforce for a radically different economic era.

My sense is that Governor Spitzer, his team, and the legislature are beginning to follow the Pennsylvania playbook.

The recent announcement of a $1 billion Upstate Revitalization Fund is replete with references to the need for strong, vibrant and living downtowns - indicative of a fundamental shift in philosophy and perspective.

So where do you go from here?

In an increasingly demographic, economic, political and policy environment, how do you achieve the 2 percent solution and truly transform your downtown, city and metropolis?

Five strategies stand out:

Continue to encourage residential development in the downtown and the preservation and adaptive reuse of historic structures;
Make significant transformative investments in reconfiguring the freeway infrastructure - the Inner Loop - surrounding the downtown;
Reclaim your river as the true market shaping and metropolitan defining asset it is;
Encourage your universities to establish a strong presence in the downtown; and
The toughest strategy - restore a spirit of collaboration and comity to city and suburban relations.

Accelerate residential development activity:

You are already on your way towards achieving the first strategy. The challenge is to increase the volume and speed and frequency of redevelopment and revitalization efforts.

Now clearly, additional state resources will help towards not only preparing sites for development but to also deal with the parking and other issues that will naturally emerge from increased activity (and the conversion of surface parking lots to residential and mixed use facilities).

But I also urge you to think of additional ways to deliver the promise of a living downtown.

You should consider whether to create a special, quasi-public development corporation to drive residential development at a quicker pace and under a coherent framework. Such corporations have been used to great effect in other cities, most notably Washington, D.C. and the well known restoration of Pennsylvania Avenue.

You should also consider embracing new private and philanthropic vehicles for investment. There are a number of proven models in other cities where, for example, foundations are providing “patient capital” to make downtown residential deals work, essentially waiting in line for their returns until projects are seasoned and yield returns. Perhaps a special investment vehicle can be created in this city and metropolis to complement public resources and conventional debt financing.

Transformative Infrastructure Investments:

Transformative investments in infrastructure are also a key ingredient for success. New York State and its older industrial cities need to identify the obsolete freeways that hold downtown centers in a choke hold. Transforming eyesore freeways into human scale boulevards, for example, as cities like Providence, Milwaukee, San Francisco and Portland have done, will reconnect downtowns with the surrounding city, free up acres of potentially valuable land for redevelopment and markedly improve the visual landscape.

The Inner Loop surrounding the downtown qualifies for such treatment, as does I-81 in Syracuse and several freeways in Buffalo.

The time to plan for the successor to the Inner Loop starts now. From a practical perspective, the freeway is approaching the end of its useful life and needs substantial repair to keep functioning. But there is another reason to start. In 2009 or 2010, the federal government is likely to enact a major authorization of federal transportation programs. Cities like Rochester need to ensure that reconfiguring older, obsolete freeways like the Inner Loop become part of the discussion.

Reclaiming the Riverfront:

Reclaiming the riverfront falls into a similar category. Your river is one of the most powerful, if hidden, assets in this city and metropolis … but today its power and potential is unrealized.

Our rivers, lakes and waterfronts are as necessary a part of urban infrastructure as highways, transit and rail. As with historic buildings and distinctive landmarks, they key here is to set an ambitious local vision (based on successful waterfront developments in the U.S. and Europe), amass local and state support and capital and work with similarly situated cities and metros, particularly in the North East and Midwest to galvanize a new generation of smart public investment at the federal level, perhaps done in concert with new energy and climate legislation. As with the downtown, there may be promise in creating a special entity with focused responsibility for developing the riverfront.

Expanding Universities Downtown:

A complementary way to convert older downtowns to vibrant and vital centers is to locate new college and university campuses there. This has already begun to great effect in Buffalo, Syracuse, and Schenectady and should be a major focus of Rochester given the current location of your major institutions of higher learning.

Higher education institutions are not only major employers but incubators of new, creative businesses and jobs. And they create a pool for potential downtown residents, through their faculty, students and other employees.

State investments as well as moral suasion may be key here.

Advancing City/Suburban Collaboration:

The final piece—city/suburban collaboration—may the easiest to articulate but the hardest to achieve.

But the concept could not be more timely. At a time of intense global competition and economic restructuring, Rochester’s jurisdictions should be collaborating to compete rather than competing against each other.

And they should be collaborating specifically on restoring the downtown core.

The logic is undeniable.

A 2 percent solution will create a healthy and vital city.

A healthy and vital city is essential to a healthy and prosperous metropolis: higher property values, a growing job and retail base and a community that gives the children of current residents a reason to stay rather than move to places with quality urban cores.

Here too the state is critical.

They can not make the city and suburbs love each other and magically erase decades of division and strife.

But they can insist upon on a level of collaboration in transportation, energy, housing and land use planning and decision making … rewarding those places who behave and punishing those who don’t.

Let me conclude with these thoughts.

I believe we are at an historic inflexion point for our nation, cities and metros.

Large demographic, economic, fiscal and environmental forces are coming together to make cities and downtowns relevant again.

An urban age is dawning around the world and in the United States.

Rochester has all the ingredients necessary to participate fully in this new age and reap the substantial benefits that are accorded a distinctive, innovative and historic community in today’s economy.

My recommendation: seize the moment and build on the incredible assets bequeathed by nature and previous generations.

Rochester is a grand and proud city that has the potential to be truly great again.

Authors

Bruce Katz

Publication: The Brookings Insitution-Reshaping Rochester Series

How Economic Change Happens and Why We Resist It

Andrew Reamer — Thu, 11 Oct 2007 12:00:00 -0400

At a Symposium on Change hosted by the University at Buffalo’s Regional Institute, Andrew Reamer explores the fundamental driver of regional economic change—innovation—and the dynamics of resistance to change. After reviewing innovation’s role in powering U.S. economic growth over the last 50 years, Dr. Reamer discusses the consequences of innovation for the economic fortunes for the Buffalo region, the impact of change on personal and community identity and narrative, and the importance of leadership in the regional reinvention process.

The metro program hosts and participates in a variety of public forums. To view a complete list of these events, please visit the metro program's Research and Commentary page which provides copies of major speeches, PowerPoint presentations, event transcripts, and event summaries.

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Authors

Andrew Reamer