Friday, December 18, 2009

The Electric Car City

Was just reading the Urbanophile's article on Detroit over at Newgeography. It's a thorough analysis of both the city and The Brookings Institute's recent "Plan for Detroit" project. I particularly liked where he pointed out the absurdity of a rail transit system for Detroit as recommended by some analysts. With neither high population density, nor high job density, the core urban area is about as good a candidate for light rail as downtown Menominee.

There are tons of opinions on Detroit, but what's irritating is that I see a lot of advantages there many cities would kill for, but the state is too inept to really take advantage of them. But don't tell me the city's urban decay has anything to do with Coleman Young or Kwame Kilpatrick. Here in DC, we saw rising home values and the beginning of massive gentrification while we had a mayor who smoked crack.

In terms of economic development, Michigan is already bending over for the battery industry, and will do the same for anyone kind enough to put them on any kind of short list. They gave Boston-based A123 Systems $100 million of tax credits for a new plant just outside Detroit, even though the company would never have gotten a quarter as much from Massachusetts. Plus, as the battery supplier for Chrysler's EV, wasn't like A123 needed a reminder to consider Michigan.

In terms of getting businesses to come to Southeastern Michigan without having to pay them $100 million, Detroit and Michigan must stop with the watered-down marketing gibberish that has plagued the state's econ dev efforts during the Granholm years. Detroit should market itself as "the electric car city". The message is believable and would set it apart from the hundreds of counties and cities buying stock photos of lab coat technicians staring at test tubes, and all going on about the same green tech, biotech, "knowledge workers" nonsense.

Electric cars are already a large industry, with excellent growth prospects. Moreover, they pull in the supply chain of energy storage companies, a sector which VCs have fallen head-over-heels in love with.

Blue Springs, Mississippi, where the U.S. Prius factory will be, could copy "the electric car city" slogan, except it's not a city. I know, if Detroit sticks to saying one thing then they run the risk of not diversifying their economy. But saying they do everything hasn't really worked too well. Additionally, every city has a health care industry because it has people who get sick, has a utility industry because it has people who use electricity, not to mention about five different adjectives to place in front of the word "tech".

Detroit has the chance to do something powerful and distinctive. Let's hope it doesn't trade it in for more lab coat guys, pictures of test tubes, or embarrassing campaigns to sell itself as a "cool city".

Monday, December 14, 2009

Attracting "Knowledge" Workers is a Bad Strategy

One of the most prominent trends among cities over the last 15 years has been the push to recruit educated workers by promoting lifestyle benefits. And it only grew stronger in 2002 when Richard Florida came out with his book “The Rise of the Creative Class”. Often spending taxpayer dollars to do so, cities have been falling all over themselves to attract "knowledge" workers. How successful have they been?

Boring Industries vs. Exciting People

One challenge of promoting educated labor to educated management is that no employer ever asks for workers with skills in “knowledge”, rather they need electrical engineers, mechanical engineers, industrial robotics specialists, etc.. Yet many cities don't have much technical understanding themselves, and get panicky about falling behind in a rapidly emerging area. And somehow they think loft apartments near coffee shops, with the obligatory four letter neighborhood name – NoDo, LoDo, SoMa – will make them popular with top employers by showcasing their ability to entertain the bright people firms want to hire. But these image makeovers are like a girl in high school changing her makeup routine hoping to impress the popular kids.

Hopefully we've already seen the worst after Michigan's horribly embarrassing and ineffective "Cool Cities" campaign. But the fundamental issue persists – economic development must be distinctive, and all the cities with successful records of attracting skilled workers established themselves as centers for a particular industry before they tried to market their live music scenes, artists lofts, or started renaming neighborhoods. In successful economic development stories, from Seattle to San Jose to Texas, “cool” industries all existed before there was any attempt to attract “cool” people, and before 55 year old economic development executives started saying “cool” in business meetings.

Specifically, the problem with marketing yourself to “knowledge workers” is that every city needs web developers, LAN managers, and basic IT staff. Software developers will always be demanded by non-technology companies investing in IT, so these people are present in your city regardless of which types of companies you recruit, or how many clubs you have downtown. As I pointed out last week, Boston, the leading medical science region in the country, currently has four times as many openings for people with SQL skills than it does for those with biotech expertise.

Make Sure You Can Touch the Product Before Giving the Company a Tax Break

More important than the typical mix of web designers and software developers available in every city are hardware skills, which are far less common. Hardware industries are far more clustered, and require specialized abilities in design and equipment operation, not just Java or C++ skills you can get in any city.

Hardware also forces a target company's suppliers to do business in a region, and not everything can be shipped. Toyota's Tundra plant in San Antonio has 18 suppliers on-site. One reason why San Antonio has fared better than other regions in the recession is manufacturing workers, not knowledge workers.

The ability to rope in a supply chain is another major benefit of hardware, which you don't get with software, biotech, or any “knowledge” industry based purely on people. Moreover, as time passes, most hardware industries diverge into multiple industries, and the remaining suppliers need to stay put because they depend on local talent. Within the semiconductor industry, for example, very few new companies are building their own fabs, or manufacturing plants. But even fabless chip companies, who design chips but don't manufacture them, are mostly based in Silicon Valley, Orange County, and Austin, where there were already predecessor companies. These regions got a new industry simply though evolution, not active recruitment. But in software, there is no manufacturing to outsource, or supply chain that can be broken apart.


Silicon Valley also got the solar design industry simply out of the fact that most solar panels use the same materials as semiconductors. Similarly, unexpected benefits from byproducts can only spring up when there is some kind of raw material being put to use. Corning, NY's expertise with glass led to new product areas like fiber optics, composite materials that are going to new aircraft like the 787, and to materials for wind turbine rotors.

Hard products force your city to adapt or die far more than if you rely on the same health care, software, and showcase biotech projects as everyone else. Many Michigan union leaders have been more focused on whining about foreign competition that's lept ahead of them, than they have been at creating future trends themselves. Seattle, which also also sits in a heavily unionized state, is instead focusing on future products, rather than pointing fingers at politicians or foreigners for the passage of time. When Detroit native Bill Boeing decided to make his jets in Seattle, he might have picked up on its futuristic spirit 80 years ago.

New Products are More Important than New People

Whether its cars, chips, or jets, manufacturing opens up tremendous opportunities for future industries, and brings in a supply chain of additional companies you don't get when you become yet another city with a 300 person biotech lab. Hard goods are still the basis of any sound economic development strategy, because they can't be turned into sophisticated products without people. Recruiting new people, but not new products, will only give your employers a me too selection of web developers and software programmers available in any city.

Saturday, December 12, 2009

2.5 Megawatt Wind Turbines are More Important than Global Climate Conferences

While the press is focused on Copenhagen, bureaucrats, and possible carbon treaties, a far more important development for the future of cities is coming out of GE and UT/Clipper - 2.5 megawatt wind turbines.

No carbon deal can be achieved economically without a technology to deliver it, and if forced to depend on wave energy, solar, or fuel cells, there would be no realistic way to produce clean electricity in high volumes, regardless of what liberals or conservatives thought about the issue. But the shift from 1.5 MW wind turbines to 2.5 MW models will further improve the economics of deploying wind, and allow renewables to take additional market share in electricity generation.

GE has just deployed its first 2.5 MW turbines in France, and U.S. installations will begin next year. One of the first major domestic deployments will be the 845MW Caithness Energy project in Oregon, which will cost a total of $2 billion, with $1.4 billion going to the turbines. It will produce enough power to serve about a quarter million homes in Southern California, where So Cal Edison has already agreed to purchase the electricity created at the wind farm. The total capital cost of $2,367 per KW would have been harder to achieve with smaller 1.5 MW turbines, and is well under the $3,000 per KW (and rising) price tag typical for a new coal-fired plant.

While wind runs below its rated capacity more than coal does, it also has extremely low operating costs. The Caithness project will employ just 35 people post-installation, or about one worker for every 8,000 homes served. This also points to why the economic development benefits of wind are mostly for the landowners. Like data centers, wind farms are not going to bring anywhere near enough permanent jobs to anchor any sort of "smart city" econ development campaign.

Unlike semiconductors, wind has gotten cheaper by getting bigger, the rotors on GE 2.5 MW turbines have a diameter about 25% larger than the 1.5 MW models. But part of the ability to create larger onshore wind turbines without relying on 1,000 foot rotors has come from advancements in the power electronics on which these generators depend.

Minneapolis and Buffalo grew over 100 years ago not just because of transportation advantages, but because of the significant hydropower resources near both cities. Similarly, proximity to wind farms gives western and midwestern cities an edge they should be promoting.

Friday, December 11, 2009

Is Austin Light Rail Just an Overcooked Student Bus Service?

Austin just approved $1 million to study a possible light rail line that would run between a redeveloped neighborhood where its old airport sat to its new airport southeast of town. This would be in addition to the planned commuter rail line that was supposed to open this year, and is now planned to launch next March, although they just fired the contractor who was supposed to operate it.

At just 8 million square feet, Austin's CBD accounts for only 20% of the region's office space, and is not much larger than an off-ramp office submarket like Fair Oaks near DC, or Burlington near Boston. Therefore, office workers will not be enough to sustain a light rail line as they would be in a larger city. Moreover, many of the western submarkets that dominate Austin's class A inventory sit on hills that make constructing new tracks cost prohibitive without far greater densities than are likely to exist over the next 30 years.

The light rail line would therefore be a high-end university bus system, allowing UT students access to South Congress and the airport. Its projected cost of $30 million per track mile is relatively low because it will run as a streetcar through much of downtown, and because unlike Seattle, there are no tunnels going into the project. Nonetheless, the cost would likely increase if the project were delayed.

The city is trying to get a rail line referendum on the ballot for November 2010. While the estimated 32,000 riders is probably engineered a bit in order to meet Fed Transit Admin. ridership/dollar projections, this is a unique project because it would be an expensive toy if forced to depend on transporting city residents to their jobs.

Thursday, December 10, 2009

Providence - Another Madison or Boulder?

Desperate to do something about some of the worst unemployment in the country, Rhode Island plans to shell out $250k for a new econ dev director. The lucky recipient of this Hail Mary attempt to juice up the state's economy is Ioanna Morfessis, who in this editorial, claims that developing a technology sector requires public investment in the same industries every other state is chasing after.

Morfessis has been working as a consultant for Phoenix, and before that her last major job was with the Economic Alliance of Greater Baltimore in the early 2000s, where she ensured that region continued its stagnation, in spite of educational and transportation advantages that are the envy of most cities.

Reacting to a Boom Right Before a Bust
Perhaps unable to calculate a stock's P/E ratio, Metro Baltimore's economic leaders, supported by a standard cast of follow-the-herd venture capitalists, placed their bets on turning the route 32 corridor into an optical networking hub because it had two overvalued companies in this sector (Ciena and Corvis). When this destined-to-fail strategy collapsed, the region was forced to play up its proximity to the Capital, and develop a Washington-lite strategy of chasing after defense contracts and promoting Fort Meade. And Baltimore, once the 2nd largest city in the country, now has less commercial office space than Tyson's Corner.

Before Baltimore, Morfessis led Montgomery County, MD's econ dev efforts as it continued to lose its share of DC area jobs to Northern Virginia.

More People Staring at Test Tubes

The genius behind some of Maryland's past failures still has to get approved by the Rhode Island state senate. The current RI econ dev website features the same indistinguishable blather about alt energy and workforce development as everyone else's, and comes with the obligatory pictures of test tubes.

Morfessis' strategy of having government invest millions for a few thousand jobs in overhyped technology sectors makes little sense for a state whose largest city has already made large and worthy investments in urban planning. For all the me too nonsense Morfessis would likely have the state invest in, Rhode Island has done little to promote the fact that it has one of the most densely populated mid-size cities in the country.

Michigan Had the Right Idea, Providence Had the Right Implementation

While some states have been misguided in their attempts to recruit educated labor , there is no denying the importance of attracting young workers by promoting your lifestyle benefits. And no city in Michigan, Ohio or any other high unemployment state can begin to come close to matching Providence in this regard.

At 3,700 per square mile, Providence has a higher household density than Seattle, Denver, Portland, or any other "hot" city for young people. At 9,400 per square mile, its population density is higher than Washington's. And not only does it have an Ivy League school, it's got one of the top art schools in the country, and as I've pointed out, creativity is far more important for sustainable economic development than innovation. On top of all this, it's got a commuter rail link to Boston and an NFL team 20 miles away.

Why Don't We Ever Hear About Providence?

Providence could have more lifestyle advantages for a young worker than than any 100,000-250,000 city in the country. And being in the smallest state in the country, its commutable from just about anywhere in Rhode Island. But instead of highlighting clear and obvious advantages of its largest city and capital, the state is desperately bringing in a brand name director with a questionable track record.

Providence should be in the same discussion with Madison and Boulder as a top mid-size city for young professionals. But instead of promoting this city's incredible advantages, the state has caught the alt energy - biotech flu making its way through econ development professionals. And it has the unemployment rate to show for it.

Wednesday, December 9, 2009

You Shouldn't Call Your City Innovative

Hard to find a city that doesn't call itself innovative. Economic development authority presidents seem to be paid based on the number of times they can say the word. And their claims are probably right, most cities have a number of innovative companies, which means these places are not setting themselves apart from their competitors in any meaningful way.

Innovation in and of itself is fairly common in any scientific industry. New drugs, new chemicals, and new semiconductors are brought to market every week. Creativity, on the other hand, is remarkably scarce. New business methods, new distribution ideas, new companies that make you think "how did they get that idea?" come around far less frequently than new product launches. For example, 45nm semiconductors with more transistors than previous gen 65nm ones, and 10% less total power consumption are innovative. But developing the light bulb, the graphic user interface, or starting the first major company to sell products on the Internet were all creative.

Some cities are great at innovation, but weak on creativity, while others are the reverse. Boston, for example, is probably the most innovative city on the east coast. It continues to produce new kinds of new medical devices, drugs, and data storage products. While useful, these aren't necessarily creative, they're mostly developed as extensions of existing technologies.

Seattle, on the other hand, is remarkably creative, but isn't any more innovative than most coastal cities. Its advances in distributing consumer goods, from Starbucks to Costco to Amazon, required more than taking an existing product and making it faster, cheaper, or more efficient. But it has done remarkably little in the computer hardware industry. Even its leading network equipment company, F5 Networks, has a strategy of wrapping commodity hardware around proprietary software, which itself was a creative business idea, but not particularly innovative. Microsoft too has been very creative on the business side, but hard to find anyone who thinks its products are all that innovative.

Creativity is worth far more than innovation. Innovative tech companies come and go, but of all the major Seattle brands mentioned above, how many have gone under? F5 competes against much larger companies like Cisco and Juniper, yet not only has it survived the last decade banging heads against bigger vendors, its got higher profit margins. Its gross margins of 79% last quarter were 14 points higher than Cisco's.

If Seattle, or King County, were to go out and market itself as innovative, it would be making a huge mistake, because there's at least 10 to 12 regions that can prove similar or greater claims. But on creativity, it's got few peers.

Tuesday, December 8, 2009

Where the Biotech Jobs Are

The image of a lab technician staring at a test tube has become economic development porn. The first time you see one of these pictures it's interesting, but after awhile they all start to look the same. Nonetheless, from Michigan to Mississippi, states, counties, and cities are falling all over themselves to attract companies who make their employees wear safety goggles. But unlike failed attempts to win Internet companies from Silicon Valley in 1999, current efforts to recruit biotech companies aren't linked to fads or an overheated stock market, and are likely to continue for years. But is it really worth it?

The current craze to recruit companies in the sophisticated science sector has led to at least 10 states being in the top 5 for biotech jobs, if you believe all you hear about the industry. It's kind of like how there are 15 cities in the country with the most bars & restaurants per capita, at least according to people I used to visit when I was in college.

The reason economic development propaganda has outdone simple mathematics is that econ dev officials like to choose from any one of a number of metrics that put them in the best light, so we often hear about VC dollars raised, PhDs per capita, patents filed by local companies, but none of these has proven to correlate closely with commercial success. As we learned in the late 90s, raising money from a follow-the-herd venture capitalist is quite different than earning revenue from a paying customer.

The best measure of economic development is not an academic degree or a me too investment in a hot industry, but economic activity. And the best way to measure that is jobs. For example, here in the DC area, we have more satellite jobs than metro San Francisco, NY, and Boston combined, according to We're the leader in this industry that shuns publicity and doesn't attract much VC, mostly because government's its #1 client. But that doesn't mean it's "multipler effect" is any lower, in spite of its limited ability to generate test tube photo ops. I've also heard that we're #1 in biotech due to Montgomery County's "science hubs", although I've never met anyone who drives to a "hub" everyday for work.

According to indeed, there are over 800 biotech openings within 25 miles of Fenway Park, but fewer than 300 within 25 miles of the White House. The numbers don't change if you center your search on Bethesda's Medical Center metro stop. MIT and the Boston medical industry have done far more to create biotech jobs than Johns Hopkins and NIH, in spite of the latter being a leader in research grants. University of Washington has also been a leader in winning research grants, but there are only around 100 biotech jobs within 25 miles of the South Lake Union biotech center Microsoft co-founder Paul Allen has been developing in Seattle.

There are over 800 biotech jobs within 25 miles of Genentech's South San Francisco headquarters, but fewer than 200 near Amgen's Thousand Oaks HQ near Los Angeles. San Diego actually beats out LA for biotech jobs, although all the PhDs at UCSD and Scripps aren't enough to put that region in the same league as Boston or the I-78 pharma corridor in New Jersey. Once you get outside these coastal areas, the numbers fall off substantially, with many of the available jobs limited to sales & BD.

But even in Boston, just 2% of all indeed listings contain the keyword "biotech", fewer than the number mentioning C++ or Java, and nearly four times less than the number asking for SQL skills. But in spite of these figures, don't expect a disheveled programmer to replace the lab coat guy on your state's economic development website.

Sunday, December 6, 2009

Global Warming is about Economics, not Scientists

In a recent editorial, George Will dismissed global warming as academic nonsense.

There is some truth to what he says regarding tactics of those trying to scare everyone about global temperature increases. Particularly the forced "consensus" and the constantly shifting story. But there is little debate, even among Republicans, that SOx and NOx (sulfur dioxide and nitrogen oxide) emissions are harmful to your health. Sort of like how few people will argue that smoking won't harm your lungs. Clean coal technology and the natural gas building spree of the 90s have helped reduce the levels of these harmful pollutants in the atmosphere over the last 20 years. Moreover, the consensus that these gases are bad for the air has not changed over time, they were known to be harmful in the 80s, just as they are today. But the same is not true about global warming.

In the 70s, there was a panic about global cooling, with the conventional academic wisdom claiming that pollutants were blocking the sun's rays. In 20 short years, the academics did a 180 and started warning about global warming. After mixed data and steady temperatures for 10 years, the story was changed yet again to the fuzzy catch all "climate change".

So I don't have any argument with Will regarding the tactics used by global warming/climate change zealots. Nonetheless concerns about climate are still resonating with many people, even when the story been inconsistent and relied heavily on forceful opinions and outrageous claims. I think the global warming/climate change/call it something else in 2015 issue will stick around for awhile, but not because of European bureaucrats or in-your-face liberals. Rather, the economics of alternative energy are improving, which is giving more companies an incentive to invest in new electricity production technologies, regardless of whether the scientific data that justifies them is pure or complete junk.

Like many Republicans, Will has mocked the limited contribution wind energy makes toward U.S. electrical generation. This year, it will produce about 1.3% the roughly 4 trillion kilowatt hours fed into the grid. Not much, that's true. Except four years ago it was just .3%. Wind is growing rapidly, not because of liberal do gooders, but because the costs to deploy it have dropped, and its capital construction cost per kilowatt is lower than clean coal's.

Clean coal, whether you think it's really clean or not, is an expensive technology comprised of advanced materials and chemicals. It is helping to push the construction cost of new coal plant up to about $2,700 per kilowatt. Wind, due to larger turbines and longer manufacturing runs, is down to about $2,000 per kilowatt, about a third of what it cost 20 years ago. And while its drawbacks (intermittent power, dead birds, obstructing the view of Martha's Vineyard from the Kennedy compound) are well-known, it's cheap enough (although still subsidized by a production tax credit) to account for nearly a third of all new electrical power generation in the U.S.

Wind accounts for about 20 times the U.S. electrical output as solar. Solar is about 2.5 times more expensive, and as a DC power source, is not an ideal technology for a centralized power plant. Some Silicon Valley startups have claimed they could get solar down to $1 per watt through the use of thin film materials, but in practice their products have hovered at $4-$5 per watt due to very high manufacturing overhead and labor costs. Wind, an AC source like hydro, coal, and nat gas, is better-suited for larger power stations, although the lack of wind in some parts of the country, most notably the Southeast, limit the locations where it can be reasonably deployed.

As I wrote a few months ago, access to a scarce renewable energy source (a midwestern waterfall) led to Minneapolis overtaking St. Paul as Minnesota's economic center in the late 19th century. But wind turbines are no longer a scarce technology, and require very little labor post-installation, so there is not another Minneapolis about to sprout up because of them. However, their importance will grow over time as they are deployed further, which in turn will give more corporations and consumers a greater interest in the technology, which will help keep climate change in the news, regardless of what it's called in 10 years.

Tuesday, November 10, 2009

Labor Costs, Not Peak Oil, Will Halt Suburban Growth

One of the favorite lines of the urban planning whiners is that peak oil will doom suburbia. As if once the oil dries up, it will take American innovation with it, and no one will come up with a way to sustain the economy with electricity or any other energy form. While this reasoning is based on false hope, not actual data, the idea behind it - that suburbs will hit a wall - actually has something going for it.

Suburbs in most regions are stretching out to their limits now, and the factor constraining them is not oil, energy, or liberal academics who think every road should have a bike lane, but the cost of the labor to construct to new roads and rails. Ever notice how any public works project, whether a highway or light rail line, always seems to go up in cost the longer it's debated? The main reason for this is labor costs continue to go up faster than inflation, even in a recession.

Ten years ago, the Dulles Rail project had a price tag of $2 billion. Now that the line's finally under construction, the cost has soared past $5 billion, and required that it be built in two separate phases. This does not include the cost of new railcars, and the price of steel and bulldozing equipment hasn't gone up that dramatically. But the price of skilled engineering labor to design and supervise construction has. For a list of contractors working on the project, most of whom are subcontracted to Bechtel, check out Dulles Transit Partners .

All these engineering costs hit a highway project just as harshly as a transit build, and are limiting the amount of new transport capacity that can be built, which is in turn limiting how far out of the city masses of four-home-per-acre subdivisions can be built.

In addition to labor costs going up, there's no mass production in railcars like there is with passenger automobiles. For all the environmentalists concerned about "sustainability", there is nothing sustainable about an operation that has a capital budget equal to its annual revenue. Yet this is exactly the situation DC's Metro faces, and as a result will always need some kind of subsidy from government agencies - state, Fed, and local - to remain solvent. By comparison, telecom companies that spent just a third of their revenue on capital projects ten years ago are mostly bankrupt. So Metro is basically three times past what any private business could sustain.

In addition to railcars, much of Metro's capital budget goes to maintenance, which is largely skilled labor needed to repair tracks, the system's massive electrical network, and building maintenance within the stations. While there all kinds of grand plans to take the thing to far flung reaches of the DC area, the financial burden to do so would be enormous, and I will bet anyone the Dulles extension will be the final major build for the system.

With the same labor costs impacting roads and rails equally, it's getting harder and harder to provide major transport capacity to outer suburbs. As a result, many metro areas are going to start hitting growth limits dictated not by energy, terrain, or water, but simple economics. Liberal academics can moan all they want about lack of new transit, their conservative counterparts can argue as loudly as they'd like for new roads. But in the end neither will get their way.

Wednesday, October 14, 2009

Where's James Kunstler?

Many people who follow urban planning make a habit of whining and moaning. They break into tears on news of every new subdivision, every new highway, and every new low MPG car model. So why no party for the Dulles Tax District?

Last week, a group of commercial property owners near Dulles Airport agreed to tax themselves in order to help fund construction of a Metro extension. This is in addition to the tolls motorists will be paying down the road which will fund nearly half the line. The first phase is already under construction, and about a third of its funding is coming from the Fed Transit Administration, money which is not available for phase 2, which will take the line to the airport and two stops beyond.

But isn't this James Kunstler and the urban planning whiners dream? Heavy rail funded by taxes on business and driver tolls? They should be rejoicing considering the groans they let out over everything else that gets built in this country.

But not surprisingly - the trains good/cars bad crowd is not making much of this, and will keep complaining about people who don't want to hear their neighbors arguing above the ceiling.

Wednesday, July 15, 2009

Why Local Banking is More Effective than Political Whining

It's always fun, and sometimes funny, to bust on atrocious real estate developments. But moaning and writing letters to local planning & zoning doesn't usually change things. Ultimately, in a capitalist economy, pols and planners must respond to the owners of capital. The real estate developer whose building will house 800 new jobs and create a few hundred more during construction is going to get greater weight than some random, angry letter.

Political activism can be very effective, but usually works best when the project is going to be owned by the public. Jane Jacobs helped kill the Lower Manhattan Expressway, but there was little she could do about the megablock, boxy office buildings that were popping up in NY at the time.

If we want to impact privately-owned developments positively, working through the political system simply won't be that effective. A developer employing hundreds of people is going to get his call returned faster than you will. A better way to impact our neighborhoods is to put ourselves in the position developers do, and use our personal financial capital to influence our communities. And one of the most effective ways to do this is to open accounts at community banks and other local institutions.

The Federal Reserve requires that banks hold 10% of deposits in excess of $44 million in vault cash or in accounts with the Fed. The other 90% gets loaned out. This means if you keep a balance of $5,000 at a bank, they can loan $45,000 into your area. So if you bank locally, you're now creating that amount of capital for your community. Moreover, many commercial loans made by local banks are often for amounts between $100,000 and $500,000, much of which goes to locally-owned retail. So a $45,000 contribution can finance nearly half of a new store. And if you don't like what the bank is financing, the customer service reps there will listen to you, because they don't want their sources of capital running back to BofA.

Another aspect of local banking that's important is the resumes of the loan officers. Check these out. I took a look at some of these for some banks here in the DC area and saw a lot of Maryland and George Mason grads, which was remarkable for a transient region. They are also the sort of people who can evaluate a project based on their personal knowledge and experience with a neighborhood, and don't need to follow guidelines set by a distant executive who might know the demographics of a neighborhood, but not its unique characteristics.

I often here people complain that there's not enough character in their neighborhood or city. Well, it's not that hard to help create some unique qualities in your town, as long as you don't think you'll get there by trying to influence elected officials.

Tuesday, July 14, 2009

New Orleans Looking to Knock Down Part of I-10

Not looking good these days for elevated highways. Boston put its underground, Seattle is considering not replacing the Alaskan Way viaduct as it reaches the end of its useful life, and few people want San Francisco's Embarcadero Highway back. Now New Orleans is considering demolition of its 50 year old Claiborne Expressway.

Typical concerns about traffic are being raised, but the Infrastructurist has a good article on how tearing down elevateds can actually improve traffic flow.

Monday, July 13, 2009

New Urbanism - Worse than Strip Malls

Outside of Chuck E. Cheese, few things are as vomit-inducing in the suburbs as "New Urbanist" developments. They're built by well-known architects and praised by James Kunstler-type critics and academics, none of whom ever have to shop or live there.

Rather than holding award ceremonies, the American Institute of Architects should actually visit the areas around these New Suburban outdoor malls. In the DC area, we have the heavily-praised Reston Town Center. It's got apartments and offices and is not enclosed, so it makes distant academics happy because people can live close to their jobs and walk outside. Yet in this "Town Center", there is a multiplex showing chick flicks, car chase movies, and standard mass market Hollywood crap, as well as a Panera Bread, a Starbucks, and some chain restaurants. Its nightlife begins with guys going to the chain restaurant bars to talk about their jobs, which is followed up by fake ID-less teeny boppers congregating around the entrances to these bars, all under the watchful eye of some mall cops.

Go 1 mile from the "Town Center" and you come to a K-Mart strip mall with a large surface parking lot, the kind you usually see in the "before" picture in an urban planning book. If you want something to eat in this place, you can choose from Indian, Afghan, Central American, and something other than the tasteless grilled chicken sandwiches available throughout Reston Town Center. Moreover, these K-Mart center dives are locally owned, and their menus are inspired by the owners' lives in their native countries, not by a marketing department in a corporate office park.

While the academic-urban planner-critic circle jerk can't stop hyping Seaside, Reston, Kentlands, and other generic nonsense, a sidewalk or an apartment over a store is not enough to make a place worth visiting twice. Meanwhile, not much is written about where locally-owned shops and restaurants actually are, because the AIA is not going to start handing out awards to a K-Mart anchored strip mall with an ocean of parking spots.

Whole thing is unsettling to New Suburbanists, because they can't cover their development costs or obtain financing if they lease to mom and pop's Moroccan restaurant, and those places thrive in many car friendly developments. Chain restaurant paradises like Reston are not even "victims of their own success" in a Jane Jacobs way, becoming too expensive because they're popular, rather they're just a re-configuration of the same suburban junk that's been around forever, down to the mall cops.

If you look at where you get both local merchants and local pedestrians, you almost always have local capital. Adams Morgan, the Marina, Fremont, Society Hill, the Pearl District, Uptown Minneapolis, Wrigleyville, Newbury Street, etc. do not owe their existence to one big bank loan, but a series of owners obtaining financing in small increments over a period of time. Moreover, they're not "mixed-use". Not many office towers in these places, yet they have a lot more going on at night than many of the skyscraper neighborhoods in their downtowns.

Parts of San Francisco, Seattle, New York, and DC are proving that there are minivan drivers willing to come out to dinner in neighborhoods where they're likely to run across a few, or more, homeless people. But none of these places have been replicated in the suburbs because of light rail, bike lanes, or new office/retail developments. You need local citizens to change neighborhoods, not distant academics.

Thursday, July 9, 2009

Nine Days to Seattle Light Rail

Seattle light rail opens in 9 days, with an initial line connecting downtown to Tukwila. An additional extension to Sea-Tac airport is scheduled to open in December, ahead of the 2010 winter Olympics just to the north in BC.

Great that Seattle's finally getting a train, but it's already created Queen Anne, Ballard, West Seattle, Capitol Hill, U-District, and Fremont - all lively, walkable neighborhoods filled with local merchants - without any type of rail transit. Moreover, these places are authentic, not the P.F. Changs and Whole Foods-filled "Transit Oriented Developments" that have popped up here in the DC area as well as in Portland.

Seattle will become more convenient as its light rail line gets built out, but I doubt it will get any more interesting as a city.

Sunday, March 22, 2009

Wind Power City

Up until 1870, St. Paul looked like it would be the largest city in Minnesota, which had become a state right before the Civil War. As the region began exporting timber and grain, St. Paul was poised to become another St. Louis or Cincinnati, a regional center located near a waterway intersection.

During the 1870s, Minneapolis boomed, growing from 13,000 to 46,000, right past its neighbor to the east. While St. Paul had the proximity to the Minnesota/Mississippi intersection, Minneapolis had St. Anthony Falls, the largest waterfall on the Mississippi.

Because the Midwest is fairly flat, no other major city in the region is built on a fall line. Minneapolis' unique access to water power made it an 1870s boomtown, during a time when every other high growth city - Chicago, Pittsburgh, and Cleveland - was benefiting from access to rail lines.

The first hydroelectric plant in the world was built in 1870 in England, and the first such plant for electricity in the U.S. was built in Grand Rapids in the 1880s. With no large scale production of turbines, hydropower was extremely expensive, and Minneapolis' ability to produce such power for industrial use at a much lower cost than any other large city overwhelmed transport costs that otherwise would have sent everyone to St. Paul to exchange goods.

Once companies like GE were formed, and more R&D was put into turbine technology, the cost of producing hydropower dropped dramatically, and the milling business that established Minneapolis shifted to towns further east, most notably Buffalo, that were closer to consumer markets, because transport costs began to account for a higher share of total production and shipment.

Wind power today is a lot like hydro 140 years ago, a natural resource with a declining cost. While often lumped together with solar in feel good news stories about alt energy, wind's capital costs are under $2,000 per kilowatt, compared to over $4,000 for solar. As a result, it has grown from just three tenths of 1 percent of U.S. electricity generation four years ago to about 1.2 percent now.

One of the biggest users of industrial wind is Google, which recently built a massive data center in The Dalles, Oregon, which is to wind generation what Minneapolis was to hydropower in the 1870s. Accessing that wind at low prices overrode typical data center connection costs that put most facilities near major Internet POPs in large metro areas.

But The Dalles is in no position to become any kind of regional hub, because Google hired just 200 people to work there, while spending $600 million to build its facilities there. This is the reverse of the late 19th century, where projects like the Pillsbury Power Canal and Tower Mill were built in Minneapolis at capital costs of less than a million dollars, while requiring thousands of workers to operate the mills that took advantage of the nearby hydro power. 21st century employee productivity simply won't allow a renewable energy center like The Dalles to become another Minneapolis.

Saturday, March 14, 2009

More End of Suburbia Hype

It's sad that urban analysis so often gets caught up with utopian nonsense. And few people who actually think about these things consider the suburbs any kind of utopia. But as much as I hate the chain restaurants, lawn mowing, and lack of pedestrians, the suburbs are not going away.

The latest silly article predicting the end of suburbia comes from Fast Company, a magazine which covers companies that are mostly based in suburbs. The story has the usual quotes from James Kunstler, the NY Times, and others who understand rants better than economics. Interestingly, it makes its point against the suburbs by claiming that 1 in 13 homes in Cleveland, a city, is vacant. While the census data shows an even higher rate, nearly 15% of housing units in Baltimore City and Detroit are vacant. These abandoned buildings have far less to do with subprime mortgages, greedy bankers, or other overcovered news stories, but rather neighborhoods that have been depressed for decades. Few suburbs can match the weeds and burnt out buildings that blanket Baltimore City.

The End of Suburbia crowd has been oscillating between high gas prices and a weak housing market as the reason for why suburbs are doomed. But while they speculate on the implications of more expensive oil, and more expensive credit, the populations of suburban areas continue to grow. Loudoun County, 30 miles west of DC, had 80,000 people, or one seventh the population of the District in 1990. Its grown over threefold in the last 19 years, and now has 280,000 people, or one half the amount of the distant center city. In between sits Fairfax County, with over one million people, or nearly twice as many as the District.

One of the most interesting stats of outer counties is their average household size. Rural Virginia counties like Louisa and Orange have about 2.5 people per home. DC and close-in Arlington County, Virginia both have 2.15. But Loudoun and neighboring Prince William have 2.9 people per household. Combined, these two counties have more people than DC, does anyone think these large households are all going to cram into 2 bedroom condos by Metro stops?

The reason the outer suburbs will survive weak housing markets and oil price hikes is that most of their residents don't drive downtown for work. Only 9% of Prince William citizens work in DC. Three and a half times as many work within the county itself. $5 gas might suck for the people going to DC, but they're a small minority.

Just because we don't want to eat at Applebee's or drive minivans doesn't mean others are going to stop choosing this lifestyle. If we don't like it, we just need to remember what former DC mayor Marion Barry said when he was re-elected in 1994 - Get Over It!

Friday, March 13, 2009

PHX Light Rail Ridership nearly 40% Ahead of Projections

They projected 26,000 per weekday for February, the second month of the line's operation, and got 35,000 . Still just 1,750 per mile, but a good start nonetheless for Phoenix Light Rail.

Wednesday, March 11, 2009

With Dulles Rail, 60% of top 30 U.S. airports will have rail links

In 1976, just one top 30 U.S. airport was connected to a commuter rail or subway line - Logan Airport in Boston. Since then, JFK, Newark, Reagan National, Atlanta, Phoenix, Minneapolis, LAX, SFO, Midway, Philly, O'Hare, BWI, Miami, Fort Lauderdale, and DFW have all been hooked into local rail lines, and the Sea-Tac stop on Seattle's light rail system is scheduled to open later this year. Portland and Oakland also have rail links, but both just miss being in the top 30 for enplanements. Dallas Love is also out of the top 30, and its DART stop should open in 2010.

Yesterday's announcement that the FTA will fund the DC Metro Dulles extension, puts that airport in line for a station sometime between 2015 and 2017. This will represent the 18th top 30 airport with a rail link, or 60% of the total, and assuming Seattle makes its December 2009 forecast, 11 will have opened in the 1990s and 2000s. Reagan National was the only that opened in the 70s, and Atlanta, O'Hare, Philly, and BWI were the only ones that opened in the 80s.

While it looks like the great airport-downtown rail boom is going to slow down now, these 18 airports account for 310 million boardings annually, or about 45% of all passenger enplanements. Of the 12 without rail, Salt Lake City looks the most promising, and Charlotte's new light rail system runs to the SW, not far from the airport. Some, like Denver and Houston, are too far from their urban cores to reach new light rail systems, while others, like Detroit and Orlando, don't have rail lines to connect to. San Diego and LaGuardia are very close to rail lines, but don't have direct links, although the 992 bus at San Diego gets you downtown much faster than most airport rail links. And LaGuardia was intentionally ignored for rail in order to make Newark and JFK more attractive for travelers heading into Manhattan.

The remaining four with no rail link are Tampa, Cincinnati, Honolulu, and Las Vegas. Cincinnati has no rail and a massive, underutilized airport 12 miles away in Kentucky. Tampa and Honolulu debating whether to start light rail, and the cabbies in Las Vegas have prevented the Monorail from stretching another mile south of the MGM Grand to reach the airport. So it is unlikely we'll get past 20 airports by the end of the next decade.

The economics of bringing rail to all these airports has largely been driven by the fact that people fly a lot more. In 1978, when airlines were deregulated and only Boston and Washington National had rail lines, 290 million passengers boarded planes at U.S. airports. That figure has grown steadily since, to 690 million in 2006. Without this more than doubling of enplanements, it would have been much harder to justify the cost of the rail link, and many lines, including the new Dulles and Sea-Tac connections, have been developed with the primary purpose of reaching the airport. Therefore, the environmentally unfriendly transport of air travel has helped create demand for environmentally friendly rail lines. Something to consider when looking at future transit-oriented developments that will sit near subway stops and light rail stations.

Thursday, March 5, 2009

Dulles Rail Gets Construction Approval

I remember hearing in 1999 how there'd be rail to Dulles in 2010. Well, it's still coming, even if it's going to be 6-10 years late. The first phase of the project now has construction approvals and once it gets its $ from Congress next week, Tyson's Corner will turn into a construction zone.

Wednesday, February 18, 2009

Less High-Speed Rail, More Freight Rail

High-speed rail is the technology of the future, always has been, always be. For the last 40 years, many states have had plans for rail lines they'd like to build sometime in the next 5-10 years. The hype about intercity high-speed rail has picked up again lately with the Disneyland-Las Vegas line Harry Reid would like to see built, and the $8 billion in the stimulus bill for High-Speed rail projects.

While many rail advocates think we should build these lines no matter the cost, high-speed rail is not going to become a major form of transport in this country anytime soon because it is so expensive to build and most cities can't provide the ridership for frequent service. A more realistic attempt to build up rail at the expense of highway traffic would be to focus on freight, and get the trucks off the road. Phillip Longman at Washington Monthly has a good idea on how to do this.

Sunday, February 15, 2009

Rail Shuttle to PHX - Ridership Above Projections

One of the most noticeable features of Phoenix's 6 week old light rail system is that it does not stop at the airport. The decision to bypass was made because of the cost of tunneling under existing roadways, and the impossibility of grade intersections with these roads. So instead, there's a shuttle bus from the terminal that takes passengers to the rail line.

Ridership was initially projected at 600 for the rail link, but is coming in about 40% higher, representing nearly 1% of all airport passengers. In 2013, a new automated people mover will replace the current shuttle buses.

Thursday, February 12, 2009

Governor Granholm, 1995 is on the Phone for You

One of the most embarrassing attempts at economic development over the last five years has been Michigan's Cool Cities initiative. The state woke up to the Internet boom about four years after the industry went bust, and decided in 2003 to focus on attracting creative workers, not just industrial companies.

This strategy, adopted by just about every other state in the mid-90s, meant showcasing lifestyle benefits, and referencing the work of every author who had written some "knowledge worker" hype piece in 1995. Needless to say, Flint hasn't become the next Austin, and VCs have yet to start camping out in Grand Rapids.

Just to make sure this silly economic development strategy fails, jittery Lansing Mayor Virg Bernero (seriously he's like Tweak from South Park) is telling anyone who'll listen that we need to re-write all of our trade agreements and stop letting all those foreign imports into this country. I understand that the mayor, who really should switch to decaf, is trying to protect the autoworkers who voted for him and the unions who funded him. Problem is if you're trying to attract new workers and new industries, chances are really good they're going to have customers overseas, and will need those trade agreements to sell products.

Much like the Internet bubble, it's time to put Cool Cities into the history books. Lansing has every right to protect its current workers from foreign competition. It just needs to stop expecting people who sell to foreigners to move there.

Dallas Looking to Vancouver for Urban Design Ideas

Among major metro areas, Dallas has long had one of the cheapest downtowns for parking and office space, a good indication that not much is happening there. The city itself is very spread out, with a population density of 3,600 per square mile, about the same as suburban Fairfax County, VA just outside Washington. But with DART light rail now carrying over 70,000 passengers a day, and expanding to 90 miles over the next four years, Dallas' light rail system will soon rival DC's metro for route mileage.

While office vacancies and rents both remain in the 20s, downtown population has grown in recent years to a modest 5,000 residents. Now with its transit use growing, the city is looking at other regions with large rail systems to understand how to create a more vibrant urban core. One example is how Dallas has turned to Vancouver to learn more about planning for density.

While most academic urban planners are in love with Vancouver's dense center city, just 5% of its metro population lives downtown. However, its SkyTrain rail system now carries nearly 300,000 passengers a day on just 30 miles of track, and it's just 24 years old. The lesson, therefore, from Vancouver is not just about downtown density, but providing transit choices to the vast majority of people who live outside the urban core.

Wednesday, February 11, 2009

Phoenix Light Rail - Is it Worth It?

I was in downtown Phoenix last October, right before the Light Rail launched. It experienced one of its first mishaps Tuesday when a train hit a bus, but the incident was blamed on a bus driver. In this article from the Phoenix New Times, you can see how the city is adjusting to rail transit.

No Airport Express for Seattle Light Rail

This July, Seattle will be rolling out its starter light rail line between downtown and Tukwila, which is just north of Sea-Tac airport. The line is scheduled to reach Sea-Tac in December, and the city is eager to have it operating before the 2010 Winter Olympics, which will be held just to the north in Vancouver.

Capitol Hill Seattle Blog reports that the line will not feature an express ride, and travelers will have to just deal with the 11 stops and a 36 minute ride between the airport and the Westlake Center downtown.

While Sound Transit claims the line can't handle express trains, can't really fault them for not accommodating. The ride from O'Hare to the Loop on CTA's Blue Line takes nearly 50 minutes, and expected ridership on the Seattle line is just 40,000, hardly enough to justify express trains that could run with any reasonable frequency.

Urban Planning and Freedom of Choice

Welcome to Technology and the City.

For far too long, urban planning analysis has been stuck in an either/or world, with many critics claiming we need policies that encourage more transit and fewer suburbs, and others claiming we need to build more highways and subdivisions to accommodate office workers. But I believe both are wrong. The cities and suburbs that exist today are not the result of a few major policy decisions, but millions of small economic decisions made by consumers and businesses.

It might be easy to blame mortgage interest deductions for suburban sprawl, or for car companies killing transit lines in the 30s and 40s. But while it's always easy to blame politicians or businesspeople, the real issue is why the economics of driving solo became so attractive at that time relative to riding public streetcars. If anyone thinks Congress is so enlightened as to understand how these microeconomic forces would alter life for decades, then it's time for a reality check.

Today, many microeconomic forces are working in favor of public transit and multi-unit apartments and condos. None of this has anything to do with policy, rather the policy is a function of changes in underlying costs for energy, communications, and transportation that is allowing this to happen. This is providing Americans with greater freedom of choice regarding whether they want to live in a city, a suburb, or something in between.

Technology and the City will look at these choices, and how changes in not just technology, but the economics of delivering technologies, specifically transportation, communication, and energy, have altered cities in the past, and will continue to do in the future. It will also look at specific projects, including highway construction, housing developments, and transit builds. Ultimately, it will aim to provide depth on the many decisions that lead to changes in the built environment, most of which originate with citizens, not politicians.