Post War Development of State EDOs
We rely on reminiscences of John McDonald[1] to characterize the opening years of this time period (1950). In 1950 there were only ten cities with major league baseball[2]. The US population was about 151 million. There were over 40 million registered cars but only a handful of “highways”, most of which are today labeled “scenic byways”. Rail still dominated industrial logistics, but trucks had been gaining share since the 1920’s and air travel was becoming commonplace. Only 10% of the population owned TVs. Seven million jobs (about 13% of the then workforce) worked in agriculture, fifty million worked in nonagricultural employment, of which manufacturing was 30% and services of all kinds was 26%). “The Northeastern portion of the nation dominated the production of goods, and most of that production was located inside the cities of the Northeast.” Street cars, subways and by this time, busses (GM primarily) were commonplace. Many suburbs were already thirty to fifty years old.
We, of course, may be incorrect but this period is the first instance we have found of widespread citizen participation and interest in economic development-related activities. Most of these organizations would not be classified as EDOs (some would, of course) but economic development policy-making systems, at least in the larger cities, became more robust, complex, representative and complicated in the period following 1945. If we are correct, this is an important and critical hallmark in the evolution of the profession and may well indicate the arrival of economic development as a significant policy area in the urban public policy system.
It is also very important to note that the composition of these new players varied widely from city to city–it was not just the usual suspects with the same type of interests, urging more or less similar proposals with relatively equal effectiveness across all cities. This lends considerable support to a major finding of this book: that cities differ in their making and the choices of economic development policy. Why these cities differ instead of simply drawing out the usual combinations of folk interested in, or affected by economic development, but instead elicit different cluster of issues, by different folks, in varying intensity and effectiveness is an important support that something deeper, a political culture, affects economic development policy-making and distinguishes among cities and policy jurisdictions in economic development policy-making and implementation.
“Led by Rhode Island in 1842 one state after another adopted provisions which precluded the investment of tax revenues in private enterprise or the lending of the state’s credit for the proscribed purposes”. By 1918 an estimated forty four states had some sort of constitutional restriction regarding contracting of debts or loans by the state. These state constitutional restrictions remain and are frequently referred to as “gifts provisions”.
Later in this chapter, a case study of City of Boston urban renewal will elaborate upon Boston’s inability to secure court ratification of its first commercial urban renewal initiative[3]. In the same case study with the City of Atlanta’s urban renewal program we will comment upon Georgia court rejection and a subsequent state referendum to amend the state constitution. The irony, of course, is that in these instances the gift provision as interpreted and amended by these two states led to two polar opposite policy consequences. These are all examples of a nation-wide phenomenon that is fundamental to the shaping of economic development policy and structure.
The obvious reality that by the early 1960’s the policy and programs of chambers had bifurcated between big city reform progressivism and Third Tier[4]-small town-rural Anti-Federalist micro-economic approach. The chamber bifurcation reflected the larger professional reality which was that the practice of economic development had similarly bifurcated. Instead, as we earlier discovered, economic development in the larger First and Second Tier cities was dominated in the early twentieth century by their Planning Departments and later by the Redevelopment Authorities–not their chambers. If there were individuals who saw themselves as big city economic developers they were likely members of NAHRO and/or APA.
The big city chambers existed all right; they reflected the reform progressive business perspectives and goals and were a part of the big city Progressive coalition As Progressives won elections and created the big city bureaucracies (and planning departments), there is no reason to suspect big city chambers were anything but supportive and a critical part of the coalition which pushed both housing reform, infrastructure modernization, regional planning and urban renewal.
With the post World War II advent of slum clearance and urban renewal, the Quasi EDO Redevelopment Authority (and their private sector governance) became the home base of big city economic development. The Quasi EDO was a real public-private partnership that served as the big city EDO. The Quasi EDO policy focus was urban renewal, infrastructure modernization and housing[5]. The big city chambers, still close partners and political allies to the Quasi EDO, were no longer the primary lead EDO of the big city.
But the question of whether there was a third perspective “out there” should also be asked. By the early 1960’s what was going on in the newly forming first tier suburbs?
A final postscript to this period relates to the effect the events of this era had on the structures of economic development: the EDOs. When we began this period, two structures stood out in the practice of economic development–chambers and Quasi Redevelopment Agencies. Government departments, which we call public agencies (so we escape the multiplicity of offices, divisions, departments, commissions etc.), salient to economic development, were scattered throughout municipal bureaucracies in no particular pattern. In the larger cities, economic development had not yet really been labeled “economic development”. By the early 1970’s, as evidenced by CUED itself, that labeling had become more common and “development” was becoming economic development and was enlarging its scope to include firm-specific assistance programs as well as real estate related development and redevelopment programs. In the larger cities, attraction programs, if they existed at all, were handled by the chambers.
To our best knowledge there were no (at best very, very few) pure economic development agencies in existence in the large cities. Individuals doing economic development-like activities worked, more than likely, in either the mayor’/city manager’s office or planning departments. By the late 1950 departments (bureaus) of development or even Development Corporations had sprung into existence. The latter were watered down redevelopment agencies and were (1) quasi EDO in governance and legal structure, and (2) also hybrid departmental in the type of activities/programs pursued and their relationship to the mayor (i.e. boards of directors included fewer independent private business and considerably more public officials controllable by the mayor.
The EDO situation was somewhat different in smaller cities, small towns and rural areas. By this time, southern states, in a loose partnership with municipalities, were actively involved in economic development-much more so than their northern and Midwestern counterparts. There was evolving a division of labor between the two levels, but also a reasonably clear sense that the actual siting of a firm was more a local affair than state. We suspect tensions between the two levels were frequent, of self-contained. As to the local EDO landscape, chambers and their equivalents were still very much the heart of the economic development process, but in some states a multiplicity of EDOs, mostly real estate-industrial park management non-profit corporations became evident. Also many chambers spun off the economic development function into a variety of entities similar to “industrial foundations” which appear to be a hybrid public-private structure which probably defies systematic and definitive classification as either private or public. More study, using local materials is needed on this subject.
In light of the serious and very evident tension between larger city administrations and the community action and early model city community controlled agencies, the federal government previous to Nixon and certainly after Nixon’s election, adjusted its funding and requirement to allow greater input, and even some degree of control to mayors and the salient departments. Community Development departments to a large degree evolved from these “reforms” of Model Cities and the demise of OEO War on Poverty. The mayors moved in to assert their control over these housing, neighborhood agencies by formalizing Community Development departments through which ran HUD funding. In many larger communities, where HUD funds were critical, the Community Development department was the paramount bureaucracy and a logical place to situate the new, non real estate economic development function.
Planning departments were as we stated earlier, the wizards behind the urban renewal curtain and, at least through NAHO-NAHRO, kept their fingers into the economic development area. Our sense is that early economic development was not intensely linked to the 1940’s-1960’s planning departments. Planners and Planning departments were focused on zoning and codes, housing and building and their professional training had very little to do with anything associated with firm-specific assistance. Planning departments were more regulatory in mentality and function than distributive.
The complicating factor, however, was that in many cities housing was conducted out of a Planning department. Planning and Housing departments were not unusual. Also some mayor’s used planning departments as their linkage with urban renewal redevelopment agencies. As with the Community Development department it became a matter of convenience, and maybe even philosophic orientation to co-locate the ne w economic development divisions into the Planning Departments. In some instances, new quasi development corporations were created and not infrequently, planning or community development commissioners were entrusted with an oversight function by the mayor. Progressive Economic Development Becomes Redefined: The Planning Department and the CD department (neighborhoods, Model Cities).
Given the turbulent nature of the times, we tend to think of this period as one of structural transition and embryonic ambivalence
First, not all port authorities, leaving aside multi-functionalism, operate their ports similarly. A port authority can operate as a landlord, contracting out the operation of elements of the port to private firms. As such, it will be in a position to exercise important controls over its lessees and ensure their conformity to the public good—but not get involved in the nitty-gritty of day to day operation. Landlord ports can really be described as a public-private partnership in their governance and operation. Landlord port authorities do, however, assume responsibility for the capital infrastructure of the port, especially its financing whose term typically exceeds any lease or contract.
… the landlord port is more or less the standard model in the US. In terms of operation, (it) competes aggressively with neighboring ports to secure market share, market their services like private companies, borrow capital, fund major infrastructure development and manage themselves in a manner resembling private companies …. The port is responsible for facilitating economic development via private enterprise, but (it) also … manages the port in the public interest. Port managers … seek to effect private sector activities that promote community economic development, while at the same time being cognizant of the needs of the public for environmental quality, recreation ….[6]
The NY-NJ Port Authority is a landlord port, as are most American Great Lakes, Western state and municipal ports such as Philadelphia, Miami, Long Beach and Los Angeles, Oakland, San Francisco (and other California ports) and New Orleans . Numerically, most American ports are landlord ports, but not all.
Texas ports and most interestingly, large Atlantic ports most of which are state agencies, often assume day to day operational responsibilities; they are “operating ports”. Massport, Georgia, North and South Carolina, Virginia, South Jersey, Maryland State Port Administration and Wilmington are operating ports as are many Gulf ports such as Port of South Louisiana, Tampa, Port Arthur, Beaumont, Lake Charles, Alabama State Port Authority, Houston, and Corpus Christi. Also, the larger ports of the Pacific Northwest (Portland, Seattle, Tacoma, and Vancouver (WA)) can be classified as limited operating ports.[7] Size does not explain the variation very well at all. History, i.e. time period of incorporation does suggest that older ports tend to be landlord-public private partnerships but the Northern Pacific ports are clear exceptions. Operating ports exhibit signs of geographical clustering—North Pacific, Gulf, and Atlantic seaboard. The Maryland, Virginia, North/South Carolina, and Georgia are a solid phalanx of state port authorities each created in the postwar time period.
The distinction, however, between landlord and operating is significant. In an “operating port” the public authority “manages the day-to-day activities on its terminal by scheduling vessel calls, arranging stevedore services, employing longshore labor and other similar functions”[8]. In landlord ports, these are private sector functions. In terms of operation, there are two different forms of port authority and we suggest that states and sub-state jurisdictions adopt one form over the other on the basis of factors such as time period of incorporation and the predisposition of policy-political decision-makers, and likely different goals or expectations.
If the reader is not yet sufficiently fed up with our incessant nagging about variation, and port authorities—there is still more to come. Port authorities can be state or municipal/county agencies. The Great Lakes tend to be municipal/county port authorities. Older port authorities are municipal (San Francisco excepting). Texas is municipal/county as is Louisiana and Florida (Gulf). The Atlantic seaboard is overwhelmingly state level port authorities. The choice between state and sub-state port authority is yet another variation. That choice made even more complex in that a minority of sub-state port authorities are actually municipally-based, most are special purpose navigation districts (special districts)[9]. The distinctions again matter because the structure of the port authority strongly affects the nature of its governance and its policy and operational autonomy.
The Quasi EDO
The most significant transformation of the physical urban landscape and in so doing crystallize the splitting off from the progressive housing and planning departments the first pure big city economic developers. Redevelopment Agencies were created and empowered (by the passage of state legislation) mostly in the late 1940’s.; Public housing projects and urban renewal projects used essentially identical tools, processes and techniques and were implemented by the same Redevelopment Agency. Eventually many municipalities did separate the two functions, but still to this day there exists many Redevelopment Agencies which do both.
As states approved this legislation, Quasi EDOs were created in virtually every state. Their combination of real estate related powers was certainly distinctive and made them natural, indeed probably essential, instruments of the urban renewal, redevelopment, infrastructures and development economic development strategies. But for the most part this early type of Quasi EDO was municipally driven-controlled EDOs. The extent to which urban renewal played an important part in the economic development life of the state’s jurisdictions, of course, varied considerably. Still, among other things, this meant that the Quasi EDO Redevelopment Agency was now a national phenomenon. There were now three distinct types of EDOs: chambers, public agencies, and now Quasi EDOs.
Georgia is a fine example of a state’s reliance on Quasi EDOs for their economic development efforts. A second key legislation was the 1963 Development Authorities Law which permitted each jurisdiction (city and county) to establish a development authority to issue bonds. In 1981 Georgia further authorized multi jurisdictional development authorities[10]. Quasi EDOs are a core unit of Georgia’s state SSS. This is very typical of most of the fifty states–but not all, of course. Still, over the years, the early Quasi Redevelopment EDO has evolved in several ways–what they are today may or may not be what they were when they were originally created. We shall in the course of our history make further comment regarding the Quasi but the reader should appreciate that the Quasi EDO is the most powerful instrument of economic and physical change, of modernization and removal of obsolescence and the ultimate structure to house a strong and viable private-public partnership program America that had experienced to that point in its history.
[1] The following statistics and much of the commentary of these paragraphs is that of John F. McDonald. The nostalgia and snide comments are probably the Curmudgeon’s.
[2] Believe it or not we will pick up on this theme of stadiums and economic development. In so doing we will insert such teams and their stadia into the factors from which an urban hierarchy is constructed.
[3] The “Back Bay Development Corporation” as Opinion of the Justices, 332 Mass 769, 126 N.E.2nd 795 (1955)
[4] Third Tier and Small Towns are a much neglected component of our federal system. For those seeking a better background in these communities, usually relegated as the “hinterland” or meaningless geographies in a mega city, see David J. Russo, American Towns: An Interpretive History (Chicago, Ivan R. Dee Publisher, 2001);
[5] We suggest a reading of chapters 17 and 18 in Edward C. Banfield and James Q. Wilson, City Politics (New York, Vantage Books, 1963).
[6] James A. Fawcett, Port Governance and Privatization in the United States: Public Ownership and Private Operation, Chapter 10 in Research in Transportation Economics, Volume 17, (2007) p. 217.
[7] Table 10-1, p. 216 in James A. Fawcett, Port Governance and Privatization in the United States: Public Ownership and Private Operation, Chapter 10 in Research in Transportation Economics, Volume 17, (2007) pp. 207-235.
[8] M. Hershman (Ed), Urban Ports and Harbor Management: Responding to Change along U.S. Waterfronts (New York, Taylor and Francis, 1988) p. 339.
[9] Rexford B. Sherman, Director of Research and Information Services, American Association of Port Authorities. See Table III: U.S. Seaport Agency Structures, p. 11.
[10] See Seafarth & Shaw LLP, www.danmcrae.com).
Ron W. Coan 