Through the eighties: reversing decline

 

If the critical theme of Chapter 16 was the rise, then consolidation, of the federal government in economic development, then the critical theme in Chapter 18 is Fed’s economic development pullback and the gradual redefinition of its role in the Contemporary Era. Chapter 17’s dominant theme was the collapse of the northern Big City hegemony and the consequent rise in the many wings of contemporary community development; then the overriding theme in Chapter 18 is the stabilization of Big Cities under charismatic mayor leadership that fabricated a hybrid predominantly mainstream ED strategy supplemented by a CD-led focus on revitalizing troubled neighborhoods. In the incremental formation of Contemporary ED, new sub-municipal EDOs carried critically important ED strategies to targeted and distressed areas. Finally, Chapter 18 concludes by describing the new polycentric metropolitan area and the emergence of the Contemporary Era metropolitan competitive hierarchy.

This chapter’s tale begins in the seventies and carries into the late eighties. In this chapter, the feds regroup. Carter and Congress combatted an intensifying manufacturing decline and rise of the Sunbelt. At the end of the decade, however, Carter and the Policy World failed to formulate a long-term urban role for the federal government. Instead, Reagan cut back and “reformed” it dramatically; but a surprising number of new ED programs were approved, and a surprising number survived (albeit modified). The workforce system, HUD, SBA and EDA survived preserving a more limited federal role in vital ED/CD strategies. A balanced, limited, focused, and somewhat predictable federal role was being forged, and that role would remain reasonably constant in our Contemporary Era.

Former Big City governments also survived Great Society tumult and disruption. To newly elected charismatic mayors was left responsibility to revitalize Big Cities, imploded ghettos and declining jurisdictional economic bases. These “messiah” mayors, did a surprisingly good job over this decade and the former hegemonic cities stabilized. Economic development played a major role in this comeback. A variety of strategies/programs repurposed the central city, accommodated the rising service sector, restoring a measure of hope, and combatted manufacturing job losses. These strategies required new EDOs; EDOs that extended municipal ED into waterfronts, commercial areas, and distressed neighborhoods—and CBDs as well.

Municipal governments developed strategies to revitalize neighborhoods, and chambers adopted CBDs during the eighties. Cities cleaned up urban renewal and gave it a new focus/rationale—and a new name for good measure. Community development evolved during the eighties. More on its own, a CD “philanthropic foundation” wing recommitted itself, but deindustrialization wreaked horrible effects on ghettos and low-income neighborhoods. A “Third Ghetto” emerged—from which entry into employment and societal assimilation was a difficult mission indeed. The decade proved to be a much harsher environment for CD than its seventies’ golden years.

Suburbs, like the Eveready Bunny, just kept on hopping. Former Big Cities no longer exercised primacy over the autonomous, “going their own way” suburbs. Suburbs moved into an era characterized as “post-suburbia,” walking a narrow line between a small village self-image, that provided both growth and urban amenities. Suburbs lost whatever homogeneity they might have had in the past as they diversified. Suburbs, not exactly old, were not as spry as they once were. Many of the forces that troubled Big Cities were now theirs to enjoy. Still, as in its old “suburb” days, the dominant attribute of post-suburbia was incredible jurisdictional variation. Polycentric former Big City post-suburbia, while not liked by many, provided a durable context upon which North and Midwest metro areas could rebuild.

 

THE FEDS REGROUP: But Not Very Well

The Carter Years

The Carter economic backdrop included inflation (stagflation) triggered by 1973 and 1979 oil/energy crises that led to a 21.5 percent prime rate in 1980. By then the Second War between the States was moving to “off-Broadway”, and deindustrialization was called “reindustrialization.” FIRE sectors and technology were the new gazelles. Before Carter was elected, a Democratic Congress overturned Ford’s CETA veto, extending the Nixonian workforce block grant, embracing the spirit of Nixonian Thermidor.

Democrats held super-majorities in both branches after 1976—with fewer southerners in committee chairs, and Boston’s Tip O’Neil as Speaker (1977). Carter’s election meant Democrats controlled three branches of the federal government; they would not do so again until 1993. Carter, however, did not overturn Nixon’s Thermidor; no new block grants, but the old ones were constantly tweaked, formulas readjusted, sections added. Between 1975 and 1980, 92 new categorical programs were created, bringing the total to a record 534 (Conlan, 1998, p. 94).

CDBG

In 1977 the Departments of Education and Energy were approved. Extension of the CDBG (1977) tilted block grant formulas from the Sunbelt to northeastern/midwestern central cities. New sections attacked redlining, and CRA Title 9 provided some muscle to activists interested in reversing disinvestment in central city neighborhoods. In 1978 Carter proposed neighborhood-level initiatives, including an Urban Volunteer Corps, a Community Development Credit Union, several crime prevention programs and a HUD Neighborhood Self-Development Program. They were not approved.

UDAG

On the whole, UDAG, a cleaned up, updated, renamed urban renewal, was more Congress’s doing than Carter’s; it gave new life and direction to central city redevelopment (Nathan, 1980). Administered by HUD, it either conflicted with or supplemented EDA’s Title IX, and was considered a public/private partnership to revitalize “distressed cities.” UDAG provided critical funds to besieged mayors coping with central city decline. Only 28 percent of pre-1980 UDAGs (there were 241 by then) went to the Sunbelt: $1.4 billion went to industrial projects; a little less went to office; $300 million went to hotels; and less than $300 million to residential projects—in large central cities (Mollenkopf, 1983, p. 279). UDAG ended in 1986.

The “earmark”

Pork has a long tradition in Congress; but the “earmark” is a special kind of pork that became so commonplace that today earmark and pork are synonymous. Earmark is a specific allocation for a specific project of some description which, by itself, would almost certainly not be approved but, when placed innocently in an unrelated larger bill along with other earmarks, creates a critical mass for which any number of legislators will vote. The earmark is so designed that lobbyists secure annual retainers for delivery of additional earmarks (Kaiser, 2009, pp. 69–81). The first legislative earmarks for Georgetown and Tufts Universities were approved in 1976-77. Over the next several decades they will be used more each year by any number of jurisdictions to achieve all manner of projects, many legitimate economic development initiatives.

White House conference and SBDCs

In 1978 Carter attempted a major reorganization of ED federal agencies/programs. His legislation would have combined EDA, HUD and SBA with a National Development Bank and other programs in commerce and agriculture. It passed both houses but died in conference—testimony to choppy politics. Carter himself repudiated many of its recommendations during the reelection campaign. The National Development Bank, a proposal from Carter’s Urban and Regional Policy Group—intended to make/guarantee loans/grants to depressed urban/rural areas for ED—was not well defined, and less well received by Congress.

National Agenda for the Eighties

Carter’s National Agenda for the Eighties got lost in his reelection campaign. The Agenda attempted to reconcile tensions caused by Sunbelt–Snowbelt conflicts. It recognized the now chronic manufacturing plant closings, downsizings and job losses that had prompted the reindustrialization debate of the seventies. Recommendations included relocation of the unemployed to areas where jobs were more plentiful. More successful was Carter’s 1980 White House Conference on Small Business, which prompted Congress to establish a nationwide system of Small Business Development Centers as clearinghouses for one-on-one small/startup counseling and business plan formulation. Usually linked with a university or college, these SBDCs steadily grew in number/capacity in the following decades. Also the Bayh–Dole reform of patents was approved in 1980.

Foreign Trade Zones

A number of important changes were made to the FTZ, first established in 1934 (anti Smoot-Hawley tariffs) and administered by the Bureau of Customs. FTZ was a demarcated area zone (creating a tax-free “island”) that facilitated import–export activities by foreign and domestic firms. In early practice, FTZs amounted to a little-used tax-free storage of imported goods. In 1970 there were only eight FTZs and three sub-zones in operation. The key obstacle to increased usage was the 1934 Act which discouraged manufacturing within the zone (inverted tariffs). Under pressure from its user-trade association (NAFTZ), the FTZ board in 1980 permitted value-added manufacturing within the zone/sub-zone to be tax free and effectively dismantled the island zone concept. In 1980 approximately 50 zones were in operation; by 1986 there were 150, by 1990 177 and in 2007 approximately 260 zones and 400 sub-zones were in operation.

CERCLA-Superfund brownfields

In 1980 CERCLA-Superfund legislation was approved by Congress. The Comprehensive Environmental Response, Compensation, and Liability Act included the Superfund remediation program, but also authorized funds, regulatory procedures and clean-up/ liability standards appropriate to private and local brownfield remediation. Each state enacted its own “voluntary cleanup program” (VCP). The design of the EPA brownfield initiative (as opposed to superfund) was based on cooperation, consensus and self-interest determined by voluntary agreements funded by grants and tax credits and the explicit acknowledgment of the leading role of state/local officials in cleanup efforts (Hula, 1999). By the end of the 1990s most states had enacted such programs. State variation in brownfield programs was huge, and included: eligibility, whether project was voluntary or compulsory; extent and form of liability release; process for approvals, who issued approvals; third party liability relief; support available to participants; degree of flexibility in clean-up standards; and reopener clauses.

The companies that polluted a site (PRPs) could be treated quite differently from state to state. Some states were so strict the intent seemed more to punish polluters than remediate sites. Other states provided support and incentives to PRPs. Michigan, for instance, empowered/authorized localities to create a “Brownfields Redevelopment Agency” (a quasi-EDO) with key powers, liability relief and access to relevant state programs and support. Others states dragged PRPs to court. The issue was the inherent complexity underlying brownfield remediation: its legal nature; its required compliance with established chemical formulas; and the inability to provide any involved party, including banks and other potential funders, long-term security (“reopeners”)—all rendered brownfield remediation an immensely complicated, fragile and time-consuming affair.