WSJ on (Mostly) Urban Success Stories

by Sandy Ikeda
Sun, 10 Aug 2008 at 1:02 AM

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I'm a little late with this, but last Monday's Wall Street Journal devoted a whole section to success stories of economic redevelopment. You can still read it here.

(Thanks again to Peter Gordon for the pointer.)

There are seven articles describing (so far) successful re-vitalization attempts, in Kalamazoo, Michigan; El Paso, Texas; Kobe, Japan; Wismar, Germany; Omaha, Nebraska; rural Kentucky, and Colorado Springs, Colorado.

Here are some highlights and comments.

• Kalamazoo: "Philanthropists promised at least partial college tuition to graduating seniors who spent their high-school years in the city's public-school system." Some states, such as Arizona, have a similar, state-funded, policy, though it seems to be more effective when targeted locally.

• El Paso: The business group that spearheaded redevelopment "elected not to subject the plan to widespread public scrutiny in the early phases, reasoning that too many opposing viewpoints might stymie the process." Can you say "World Trade Center fiasco"? And if you think this is just a bunch of shortsighted businessmen, at least some of the private investors don't expect to recover their investment, hoping for a broader revitalization in the long term. So it's not just about short-term profit (not that there's anything wrong with that, either.)

• Kobe: Not waiting for the pre-earthquake (in 1995) industries to return, the Kobe authorities, with the help of money and reduced red tape from the central government, "decided to re-create itself — as Japan's premier biomedical center." In the process it's utilizing the expertise of "many small and midsize metal workshops to develop cutting-edge medical equipment." However, "analysts worry that some companies may not be sustainable after the support disappears." I've also read descriptions of Kobe's rapidly remade districts as homogeneous and boring.

• Wismar: This small town in what was formerly East Germany benefited from a 200-mile extension of the autobahn. "And though it cost $2.8 billion to build, even the highway's biggest critics agree that it was necessary." Hmmm… I wonder how big these critics could have been.

• Omaha: "The city of 433,715 has grown outward by gobbling surrounding suburbs and inward by clearing out big, rusting chunks of its downtown and pouring hundreds of millions of dollars into arts and entertainment." This is a kind of "vampire approach" to civic funding — hunt down those fleeing to the suburbs, meld their property into the tax base, and force them to pay for improvements in a downtown they wanted no part of. If New York did this (which would be a kind of "commuter tax" on HGH), its city limits would border Hartford, Philly, and Trenton, but that probably would solve the current financial situation (while creating a host of new problems).

• Rural Kentucky: ConnectKentucky, a nonprofit funded 90% by the state, "helped local governments team up with broadband providers willing to expand in rural areas." One estimate claims the policy created or retained 63,000 jobs, but the results seem nevertheless small and, in any case, hard to measure directly. Also, the report provides no estimate on the cost of this project.

• Colorado Springs: The city fought to retain the headquarters and training campus of the United States Olympic Committee and used some creative financing to get around letting citizens vote on it. "The trick to the proposal was financing… city officials opted to use certificates of participation, a form of long-term lease-purchase financing that doesn't legally qualify as debt."

Finally, there's an interview with Harvard urban economist Edward Glaeser, a frequent contributor to the Sun. In response to a question about the effect of higher gasoline prices he says, "My instinct is that most of the adjustment will occur on the fuel-efficiency front…but I wouldn't join with those who see a major change in what America's about." I also found the following very interesting: "I've never understood the impact of [falling] housing prices on the overall economy…[because] those who haven't bought a house and want to, they've gotten richer." So it's unclear which way the wealth effect will go.

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