Strong Towns Releases Vulnerable Cities Report

The Cents of Place, since its inception in 2007, has addressed issues of public finance on levels ranging from specific projects to macro-level economic and policy issues. On the latter, I have been immersed since January in two efforts. In the first, I am managing the Brookings Metropolitan Business Plan initiative for partners assembled in the Minneapolis Saint Paul region; I introduced this project here in January, and will be posting draft business plan content for your review and comment within the next few weeks.

In the second, I co-founded Strong Towns, an entrepreneurial nonprofit organization calling for big change in American land use, last fall with Chuck Marohn and Ben Oleson of the Community Growth Institute. We’ve been producing research, building relationships and growing networks on Facebook and Twitter over the last six months. Our message – that current land use patterns are financially unsustainable and are eroding our ability to invest in our people and places – has been attracting attention of late. See us on the newswire at Planetizen and at the Switchboard at NRDC blog, and join us in developing these ideas by following us at Facebook and Twitter.

MN-most-vulnerable  Today, we have released a report titled “Minnesota’s Most Vulnerable Cities,” which addresses the following question: If federal and state aids disappeared tomorrow, and citizens wished to maintain existing services, how large a property tax increase would be required? How sensitive are our cities to the risk (and very likely eventuality) that state and federal aids fall?

View the report here. Make comments, throw darts, suggest solutions – help us develop tools to build Strong Towns.

@Strib Forum: Minnesota State Budget Stress Impacts Redevelopment


I continue to post regularly at the Star Tribune as a member of the Your Voices forum. My most recent post relates to the current state budget problems in Minnesota, where the Legislature and Governor continue to disagree about an appropriate fiscal response to recession and to the structural imbalance in the budget existing before the economic downturn.

Multi-billion dollar deficits don't come with easy fixes; plans relying exclusively on service cuts or tax increases are similarly painful to implement. This biennium, the Governor is using an executive power known as unallotment at an unprecedented level, to reduce spending unilaterally. From property taxes to transportation infrastructure, this approach is sure to impact those of us involved in redevelopment and placemaking.

Already, forecasts have been presented suggesting that this deficit is not a product of recession alone, but another iteration of a chronic budget imbalance. Jay Keidrowski, former finance commissioner, and nonpartisan Minnesota Senate Research analysis indicates the budget deficit for the next biennium (2011-12) to be in the $4.5 – $4.9 billion range.

Donjek Project: Minneapolis Downtown Open Space Initiative

The year's twilight is a good time to add a postscript to a previous item I wrote, at that time introducing work undertaken to help the City of Minneapolis evaluate the prospect of converting downtown land area to open space. Since that post in fall, 2007, Donjek has been engaged on projects in a similar vein in Little Rock, Arkansas and I have written a number of short commentary pieces on that project and issues surrounding parks.

The City of Minneapolis' Department of Community Planning and Economic Development (CPED) recently posted the full report of the multi-disciplinary team to its website and the document is available by chapter or as a whole here. There is never a "perfect time" to convert land from taxable to tax-exempt use (history suggests the same), and property and sales tax revenues are at a premium across the country today for core public purposes. Still, what is also evident is that other things equal, urban land stands only to become more valuable in the coming decades thanks to transportation logistics, energy policy and climate change. In economists' terms, the opportunity cost of failing to procure open space for downtown dwellers now stands to grow significantly in the future.

Photo: Courtesy of jpnuwat/Flickr.

Value Capture Finance: Seeing is Believing

One of the trends I've observed here over the last year, is that multiple factors are prompting more consideration of value capture finance – the mechanics of "capturing" development values and benefits to pay for elements of the development itself.  Among the drivers are:
  • Diminishing public willingness to support funding for services traditionally considered to be core public functions; 
  • Increasing gathering of data and readiness of access to this data; and
  • Improving ability to use this data to measure property value, patterns of how people use places, and the economic health of small or large areas (just to cite a few examples) using geographic information systems (GIS).
Value capture finance, in summary, is a method of using future financial or economic benefits precipitated by a development, to repay part or all of the debt incurred to create the development in the first place.  A typical example is tax increment finance (TIF), authorized in forty-eight U.S. states, which allows increased tax revenues (property and/or sales) generated by redevelopment to be channeled to the project’s debt service or other uses.  A less typical example, not currently contemplated in Minnesota law, is the financing of public fixed-rail infrastructure through commercial districts, using neighboring properties’ increased tax revenues caused by enhanced access to LRT or streetcar service. 

I’ve just completed some analysis for the Midtown Community Works partnership pursuing this line of inquiry:  If state law could be amended to allow for a "transit TIF" district, for example, what kind of value could be captured in future years?  How much capital could be raised by borrowing against these future tax receipts?  What planning and equity issues demand consideration in exploring such an approach?  

This concept may strike some readers as marginal to the planning and public finance worlds.  I don’t agree.  The three forces described above are at the root of analysis commissioned by the Minnesota Legislature earlier this year, and continuing economic impact analysis of the state’s first LRT line, the Hiawatha.  Identifying what value is created by transit infrastructure is a critical step in leveraging this value for investment in a regional system, and made more feasible by improvements in GIS technology. 

And regardless of whether the infrastructure is constructed by a private, public or public/private entity, the end outcome – investment in places that work for people – represents an increasingly important competitive advantage for regions in the U.S. and abroad.

The Urban Engine, or Trading Places Part 1


Welcome to the first in a short series of three posts inspired by three very different places.  I’ve spent today immersed in national and global issues thanks to the Federal Policy Forum hosted by the International Economic Development Council here in Washington, D.C. The second and third posts, as you’ll see, will address local development issues in a mid-size and small community.

Between the articles I read on the airplane, the content of the sessions and accessory conversations with other participants, I have notes on papers small and large hanging from folders and pockets and briefcase.  It’s all related to a notion I sketched out in a post about regional differentiation a few months ago, but I’d like to summarize a new line of inquiry related to the conference.

Bank of America CEO Ken Lewis and Pennsylvania Governor Edward Rendell have led an effort described in the publication of Retooling for Growth: Building a 21st Century Economy in America’s Older Industrial Areas (see a summary of the book here).  The content is unabashedly “metrocentric” in light of the following metrics outlined in a session today.  The nation’s largest one hundred metro areas:

• Use 12% of American land area;

• House and employ 65% of our population;

• Are home to 74% of college graduates;

• Generate 78% of patents; and

• Create 75% of gross domestic product.

In the words of Paul Brophy, a consultant who hatched the project, the metro areas are engines for economic, social, scientific and cultural development despite the increasingly conspicuous absence of a significant federal role or resources.  In particular, he says, to move the U.S. forward it is critical to harness and foster entrepreneurship, human capital, infrastructure and what he termed “quality of places” in our urban centers.  A few thoughts on the prospective form of such infrastructure and placemaking improvements:

• Establishment of a National Infrastructure Bank to provide coordinated, significant, long-term dollars for urban infrastructure reinvestment, with accountability measures in place for both the local and federal partners involved.

• Perhaps as part of or independent from the infrastructure bank, aggressively fund urban transportation networks, including transit.  Spendy, yes.  Essential to be competitive, definitely.  This month’s Urban Land magazine reports that the City of London’s Crossrail project will extend subterranean Underground lines at a cost of $30 billion.  The business community, in a testament to the project’s competitive potential, will fund much of the investment.

• Adoption of local, state and federal policy that recognizes the missed opportunity that vacant and polluted urban land represents, and enables its reuse as developed property or open space such as parks.

• Perhaps most germane to the Cents of Place forum, standardization of the development process and fundamental property tax reform is also in order.  In Minneapolis and St. Paul, Minnesota – contiguous and mutually dependent municipalities – zoning codes and the development process continue to remain estranged.  And, as documented by a property tax report I authored last year, the current property tax system stifles the concentration of tax base upon which the health of our urban areas (and the states that rely on them) will rise or fall.

• Adoption of at least a regional, and at best a statewide approach to subsidies that seek to attract businesses location.  This idea is hardly new:  See the Economic War Between the States report published by the Minneapolis Federal Reserve in 1994.

• Focus on retaining the talented people who arrive in your region from Bangalore or Missoula or Moscow, to pursue educational experience.  See the integrated approach Philadelphia has taken to housing, employing and engaging students before they graduate and leave.

Resolving these underlying finance and policy issues is a priority that simply can’t wait.

Still with me?  Then, dear reader, indulge yourself and browse over one other publication I encountered today:  The 2007 State New Economy Index compiled by the Kauffman Foundation.

Photo:  Musely, Flickr