The Big Hinge
Not only was each city different in its own way, but the reader can see that UR served several gods (purposes or goals). UR ranked high on municipal policy agendas during this era. The future of the old order, the hegemony, seemed in question. In this highly intense policy environment, UR became linked with the viability of policy systems—i.e. elites and voters were willing to toss out old bums and bring in new ones. In the Sunbelt the goals/strategy purposes behind UR was less a counter to destabilizing decentralization than a coming out of a new urban and regional competitive hierarchy—and it too was linked to change in policy systems. UR was driven by population migration, by middle class “moving up” and inter-regional generational migration. Both led to explosive growth that did not respect jurisdictional boundaries.
UR included a community development approach as well as the more well-known CBD business-led growth coalition. Cities did not have to choose one or the other; most blended the two approaches. Although CBD captured the headlines, neighborhood/housing based UR also was fairly common. Generally, the two approaches involved different actors and certainly sought different goals. During this era, there is a subtle struggle between housing, neighborhood-focused urban renewal and CBD, industrial parks, and “eds and meds”-focused UR. A constant was the bureaucratic nature of the strategy that required specialized expertise, a sophisticated planning, legal and project management professional corps that approached change from the top-down. Neighborhoods, for example, may or may not have been involved in the “planning” but UR was never their strategy of choice. CBD and “eds and meds” UR, however, was quite the reverse.
In the course of its implementation, new EDOs, tools, and programs will emerge. Indeed, by the end of the Age, a second economic development professional association will be born—and a number of new community development associations will dot our professional landscape. Whatever else it may be, UR is a professional “hinge” that closes one door and opens another. UR was the midwife for the birth of contemporary economic and community development. This notion of professional hinge is an important underlying theme (and rationale) behind this chapter. To best understand our contemporary ED/CD a background as to how each wing congealed and evolved is critical. UR connects the pre-contemporary ED/CD to our present-day contemporary approaches. UR may be the Scarlet Letter no one (ED or CD) wishes to be held accountable for, but historically there is no denying their shared parentage.
Finally, as has been mentioned, UR displays a distinctive regional dimension. BIG City UR is where the strategy originated, as a response to Big City dynamics, threats and policy actors. Big Cities drove the Washington connection until the 1960’s. Western cities took advantage of UR to build modern CBDs congruent with their image of their high status arrival in the competitive urban hierarchy. Over time (in the Seventies) western UR confronted a rising neighborhood movement that wanted its share of the ED/CD pie, but that is a story left for another day and chapter. The South was more complex. Predictably race played a large role—in a very surprising way—but southern cities did share with the West a need to conduct a “City Beautiful” UR to modernize their downtowns. Some cities, Pacific coast and Atlanta overlapped somewhat with Big Cities, but Texas cities in particular predictably put CBD UR on steroids to build downtowns that fit their Texas ambitions. To lend some clarity, each region will be treated in its section. For each region several cities are briefly discussed to offer flavor, examples and observations.
Won’t you play in my sandbox?
The rise of community development coincided with the implosion of hegemonic Big Cities and the early onslaught of a new immigration wave—affecting the rising Sunbelt the most. In this section the history focuses on the collapse of the northern Big Cities. Whether housing/slum clearance, highways or urban renewal ever stood a change of combating suburbanization is unlikely at best. By the mid-1960s the question was moot. The sixties extinguished whatever hope that urban renewal would eliminate slums and blight and “stanch the flow of white, middle-class families to the suburbs” (Beauregard, 1993, p. 165). A sustained Great Migration, a massive suburban exodus and multi-year riots brought existing Big City policy systems to their knees. The Brown decision and bussing were frosting on a “cake left out in the rain.” The media, being the media, trumpeted the extremes, and the Big City Policy World went into a deep and bitter funk—railing against suburbs and the South. The seventies proved to be the nadir of Big City central city ED. Big City policy systems had a “hard landing”—as much “psychological” as demographic, economic and fiscal. Big Cities lost faith in themselves.
The Facts: So help me God
Simply put, Big Cities stopped growing between 1960 and 1990.[i] Between 1950 and 1970 St. Louis lost 27 percent of its central city population; Pittsburgh, Boston and Buffalo lost 20 percent; Detroit and Cleveland 18 percent. Only Indianapolis (+74 percent), Columbus (+44 percent) and Kansas City (+11 percent had grown—through annexing suburbs. In the latter three cities manufacturing employment grew 20 percent, 67 percent and 51 percent respectively. Big City suburbs, however, exploded.
Washington metro led the pack with 93 percent suburban growth; Minneapolis and Columbus (80 percent); Kansas City (54 percent), Milwaukee (51 percent) and Detroit (49 percent) followed. Boston and Pittsburgh’s suburban growth were more muted (21 and 19 percent). Pittsburgh, however, (-23 percent) and Buffalo (-18 percent) lost manufacturing employment—the earliest non-textile victims of the yet unnamed manufacturing decline. NYC (-9 percent), Philadelphia, Boston, Detroit and Cleveland (-2 percent) also lost manufacturing jobs. Overall, surprisingly in these years the 17 hegemonic Big Cities grew manufacturing employment by 18 percent.
At least part of the reason this all seemed so confusing at the time was that regional change was not yet understood, deindustrialization still unnamed, and even Big City growth and decline seemed somewhat uneven. Suburban decentralization of manufacturing made the waters even murkier. It was hindsight that produced today’s experts.[ii]
It didn’t get much better between 1970 and 1990. St. Louis lost another 37 percent, Detroit and Cleveland 32 percent, Buffalo 29 percent population. Only Columbus, of the 17 hegemonic Big Cities, increased (17 percent). Overall, in these two decades, hegemonic Big Cities lost over 17 percent of their central city population. For most, even metro (suburban) growth was muted compared to national averages. Big City metro growth was an anemic 5.6 percent. Leaving aside DC (32 percent), Minneapolis-St. Paul was highest (25 percent) and Columbus, KC, Baltimore and Indianapolis followed in line. But, Buffalo (-12 percent), Pittsburgh (-11 percent) and Cleveland (-9 percent) metro areas lost population. Even NYC’s metro area lost more than 3 percent. While many academics were wailing about the power of central city business/real estate growth machines, the Big City central city was in a vicious population decline that lasted for 40 years.
All this was bad enough, but simply put, hegemonic Big City central cities lost much of their middle class. Home ownership rates plummeted in central cities and skyrocketed in the suburbs,[iii] and median family income did not keep pace with national averages—in some cities (1970 to 1990) it actually, and amazingly, declined for the metro area: Buffalo (-6 percent), Cleveland (-3 percent) and Detroit (-1.5 percent). Pittsburgh grew only 2 percent for the 20-year period. The Great Lakes chronic city syndrome had arrived on the ED scene.
Myrdal’s Vicious Circle: Race and Functions
McDonald described the 1970–1989 central city urban crisis as “the vicious circle in urban America“. His vicious circle asserted that “once a central city or part of a central city starts downhill, the negative social and economic features of that downhill slide reinforce each other. The start of the downhill slide can be caused by a variety of external forces, including industrialization, building an expressway leading to suburbanization of both jobs and people …. These forces act on the central city [as a whole], but typically the worst outcomes are confined to particular portions of the central city”. (McDonald, 2008, p. 222) Long-term decline, perhaps surprisingly to current readers, became most apparent after the 1980 census—prompting many to think of the Eighties as “bottom”. Collapse, however, was clearly revealed in the 1970 Census. Detroit, Cleveland, Buffalo, Milwaukee, Chicago, Minneapolis and St Louis (descending order) declined most. (McDonald, 2008, pp. 224-5, 243, Tables 13-1 &2).
Whatever the problem identified during this period, it took on a racial dimension. A Fortune editorial wrote in 1968 “the Negro Problem represents a crisis within a crisis, a specific and acute syndrome in a body already ill from more general disorders” (Ways, 1968, p. 133). Race was the bottom line and race redefined slum into ghetto—making mainstream Chamber/UR economic development less relevant than place-based community development. Hidden from sight is the total rejection of the previous Age of UR physical paradigm. The paradigm gave way to social action/concerns and other policy areas: welfare, crime, education, and racial discrimination. The ghetto “served as the symbolic reference [to urban decline and] to the many social ills … associated with social disorganization” (Beauregard, 1993, pp. 172-3). If ghetto separatism/ anti-colonialism infused community development, it also prompted a shift of political power to Blacks, i.e. major policy system change marked by the rise of black mayors/city councilors. In short, most postwar Big City municipal policy systems came tumbling down.
“New guys”, white mavericks or non-charismatic technicians often replaced them (Rizzo or Beame for example). A few mayors stand out (White in Boston), but Big City instability decapitated the old political establishment. Big City economic developers were on their own, making do as best they could with weaker mayors (Lipsky, 1980). City councils became more diverse and black mayors were elected. The first (1967) black mayor, Carl Stokes of Cleveland was followed by Gary Indiana’s Richard Hatcher, Detroit’s Coleman Young (1973), Bradley (Los Angeles, 1973), and Walter Washington (Washington DC, 1975). In the Eighties Atlanta’s Maynard Jackson (1981), Chicago’s Harold Washington (1983), Clarence Byrnes in Baltimore (1987) and NYC’s David Dinkins (1990) were elected. Significant central city policy systems change resulted after the Great Society, urban riots, and urban crisis aftermath.
In this atmosphere yet another issue appeared in Policy World publications: the issue of central city “purpose”—so-called “functions” traditionally associated with Big City metropolitan hegemony that were now lost. It started with Norton Long’s “the City as Reservation” (with inmates and keepers, “economically dependent on intergovernmental transfer payments“). For Long, the only “function” retained by the “new” central city was to serve as a sort of Indian reservation “for the poor, the deviant, the unwanted, and for those who make a business or career managing them” (Long, 1971, p. 32).
Long was followed by scholar George Sternlieb who pinpointed the problem: “the crisis of the city is not a crisis of race. Rather, the crisis of the city is a crisis of function. The major problem … of our cities is simply their lack of economic value … what is left to the city that it does better than someplace else”. The only function left, he observed, was housing Long’s unfortunates. The central city had become a “sandbox” for them to play and leave the rest of us alone (Sternlieb, 1971). True to course, these articles were found in urban textbooks for decades to follow. In 1976 central cities were likened to a “cemetery” (urban death). (Baer, 1976, pp. 18-9) Accordingly, planners, economic developers, academics and Think Tanks considered adopting “planned shrinkage”, “mothballing” or abandoning parts of cities until attractive to business investment. This strategy entailed a deliberate cutting back of public services in the most deteriorated city areas and encouragement of the population to leave.
At a Brookings Institution 1977 Round Table, Sternlieb, head of Rutgers Center for Urban Policy Research suggested founding a federal urban development bank: “[We should view] the city very much the way we viewed the development of a bomb shelter or fallout shelter program….The question then, of public policy, is what is the least cost approach that is politically feasible to preserve an infrastructure so that if, and when there is a public recognition, desire, and necessity to reutilize them, there is something left to reutilize[iv].. In this 1970’s environment “land parcels cleared in renewal areas [will] remain vacant for long periods of time. Society can be viewed as ‘banking this land for potential future use whenever changed local conditions stimulate increased demand there’”. Downs suggested a “modified form of triage …This strategy means there would be no large expenditures for upgrading efforts in most parts of much deteriorated areas…. Eventually after the much deteriorated areas are almost totally vacant, they may be redeveloped with wholly different uses” (Downs, 1976).
The importance of “functions” to contemporary economic development should not be understated. The concept of functions started economic development down the long trail that, when combined with deindustrialization, led to job creation as the primary criterion, if not “goal” of mainstream economic development. To future community developers lay the task of revitalizing the ghetto, facilitating control by residents over their fate. CUED, holding an optimistic perspective advocated government assumption of chamber business assistance programs, including generalized strategies of retention and attraction, relying on public lending, tax-exempt financing, tax abatement and industrial parks—coupled with “reformed” physical redevelopment targeting waterfronts, “eds and meds”, and mixed used downtown redevelopment. One can see in CETA and JTPA a workforce approach that stressed continued and enhanced shared decision-making with business leadership in training and skills upgrading—along with youth training compatible with community development objectives. Also in the period, one can see movement toward place- based, i.e. destination tourism gathering steam (Faneuil Hall).
The issue of functions, however important, is an elusive topic. Where the list of functions originated is unknown—this author never got a copy. Apparently known only to urban intelligentsia, there is such a list, and the Big City had served many key (and lesser) functions that upheld the “correct” metropolitan order (monocentric). To this day, these “functions” remain fundamental to the “legacy city” paradigm. In any case, in these years the questions of what should be done with central city functions? Were they lost forever? Could they be recaptured? Could new functions be found? These questions were/are important. Turned inside out they can, and will, serve as strategy goals for future central city economic developers.
The Fiscal Crisis
Central cities were broken fiscally as well as psychologically. The causes of fiscal stress are rather obvious: declining/stagnant tax base, residential abandonment, CBD retail/commercial decline (sales tax), and higher expenditures to house the nation’s poor. Revenues were flat or falling. The national economy suffered from record-breaking inflation and increasing energy costs. CPI in 1970 was 3%; rising to 11% annually. Central city payrolls increased for a variety of good, and not so good reasons. Police departments expanded to cope with rising crime, gang and murder rates. Unions especially militant during the decade, increased wages and personnel. Productivity dipped. Only three central cities (Buffalo, Cleveland, and Pittsburgh) reduced payrolls during this period. (Teaford, 1990, pp. 221-23). Taxes went up–to the delight of all. Budgets cut where possible. Sale of municipal assets was common. Regionalization of expenditures through authorities/service districts (sewage, libraries, parks, transportation, zoos, museums, and power plants) commonplace. Annual deficits were masked with one time revenues— and short-term debt. And still that wasn’t enough. St Louis ran an illegal deficit for three of four years (1971-1974). Philadelphia (1975) ran a half-billion dollar deficit. Penn Central Railroad went bankrupt, gutting Buffalo’s property base.
Short-term debt was the real problem. Two or three year notes must be refinanced. In an inflationary period, each refinancing with higher interest rates cost more. New York was left in deep fiscal distress by Lindsey; 1970 short term debt was 20% of total revenue–when he left office in 1974 it was 25%. NYC accounted for about one-quarter of the nation’s outstanding short term state/local indebtedness. Boston, Cleveland, Baltimore, St. Louis and Philadelphia were deeply in hock also. State legislatures reluctantly crawled into this out-of-control spending machine. By 1976 two-thirds of Baltimore’s budget originated from intergovernmental (state and federal) transfer payments–so did Buffalo. New York City got 50% of its revenue from inter-government transfers, Cincinnati, Pittsburgh, Boston, Detroit and Minneapolis 40% or higher.
The fiscal crisis made central cities wards of state and federal governments. Buffalo’s Mayor Stanley Makowski bemoaned “We are creatures of the state–its children, if you will. If we cannot turn to our parent, where can we turn? (Teaford, 1990, pp. 224-6) The delicate balance of power between Big Cities and state legislatures seemed upset—arguably permanently altered. Running a reservation and sandbox is expensive. Fiscal capacity, the lack of it to be precise, redefined Big City fiscal stability into a central city economic development objective. On top of recapturing lost “functions”, central city ED was entrusted with the task of “paying the central city’s bills”. The scramble to pay bills yielded at least one interesting innovation.
Tax-sharing may be a partial answer to metropolitan tax incentive competition—and the Twin Cities in 1971 approved a path-breaking commercial/industrial tax-based sharing legislation, the Metropolitan Redistribution (Fiscal Disparities) Act. An important element of the so-called “Minnesota Miracle” the act became effective in 1975 after being upheld by the courts. The Act required all communities in a seven-county area to share 40% of the incremental growth of industrial/commercial taxes. The proceeds determined and allocated by formula (based on fiscal capacity) to social services. Developed from a 1969 Citizen League Report partly prompted by a bitter annexation battle to annex a high-tax yielding power plant between Bloomington and another suburb (Orfield & Wallace, 2007). Since passage, it has worked well and has been periodically updated to reflect new issues and concerns.
Whose Default Was It? Drop Dead Big Cities!
The 1975 NYC financial collapse elevated central city debt into a national crisis. With deficits of $ 1.5 billion, and $5.3 billion in refinanced short term notes, the city was on the brink of default. Previously stop gap remedies and one-time fixes kept the city afloat, but by June banks flat out refused to refinance the short term debt. NYC, in technical default, was shut out of the credit markets. The state legislature responded by creating the Municipal Assistance Corporation (Big Mac) which hired Felix Rohatyn to restructure city debt and impose operating efficiencies. The Emergency Financial Control Board, controlled by state appointees, assumed more direct control over City Hall administration. Substantial layoffs, increased public transportation fares, wage freezes, and an end to City University free tuition were recommended. (Teaford, 1990, p. 227). November, 1975, the city secured congressional approval for up to $2.3 billion in short term loans. President Ford said No! The headline read “Ford to New York City: Drop Dead“. The evolving federal position regarding “municipal bailouts” couldn’t be clearer! For the next four years New York City remained closed out of money markets and was a ward of the state.
Cleveland was next up. With the indubitable Dennis Kucinich newly elected and pledging no new taxes, Cleveland did its version of the short-term debt polka, suspension of bond ratings, trying to sell its Municipal Light Commission–and then refusing to do so. Finally, Cleveland defaulted outright in December 1977, “the first major municipality to do so since the Great Depression” Fiscal instability “spread like an epidemic through the nation’s central cities” In this environment, what is a good central city economic developer to do?
The first thing was to stop building expressways, highways, and freeways. Public spending, union negotiations, and tax increases resulted in brutal political contests with citizens, small business, unions and residents–and the city/mayor lost most of them. CBD and commercial/manufacturing/office redevelopment projects, the meat and potatoes of redevelopment came under attack for nearly a decade. Worse, it was at this point the full attack on UR hit its highest level; it was painfully obvious many projects were not working. Many urban renewal agencies changed their name to community development. (Teaford, 1990, pp. 230-6) The real purpose of economic development in these years was helping to “pay the bills”—the rest just rhetoric.
[i].<em>Statistics are census, Statistical Abstract and HUD State of the Cities as reported in McDonald (2008, Chaps 4 and 10).
[ii].<em>A notable exception was Simon Kuznets, “Economic Growth and Income Inequality,” American Economic Review, vol. 45, no. 1 (1955) and his Toward a Theory of Economic Growth (New York: Norton, 1968).
[iii].<em>See McDonald (2008, p. 86, Table 6.1).
[iv] Brookings Institution, Round Table Discussion on Urban Development Banking, March 21, 1977, Transcript, Washington DC.
Ron W. Coan 