Single Use is Better for Revitalization than Mixed Use

The AIA, Congress for New Urbanism, industry circle jerk consensus these days is that the best way to bring back a fading urban or suburban area is with some TIF financed mixed-use development that rips the roof of the enclosed shopping center, and places condos and offices nearby. The idea is to create an instant city, as long you consider a place filled with mall cops, teenage skateboarders, and Panera/Starbucks/Quizno's chains a city. Yet Rome was not built in a day, and Reston Town Center looks like it was built to last ten minutes.

Fair Oaks Mall Parking Lot or Reston Town Center?
What mixed-use really creates is a "mix" of activities that can be found in many shopping center parking lots, right down to the mall cops harassing the skateboarders. Single use, on the other hand, allows a place to have a specific purpose, without being forced into some bad, Duany Plater-Zyberk plan to hype a development and win another AIA award. Single use also allows financing to come locally, from friends, community banks, or credit unions, not a distant bondholder or BofA loan officer.

In the DC area, we have a number of expanding pedestrian areas that have grown over the last 15 years due to single use developments. Two that stand out are Logan Circle, and Falls Church, Virginia, an incorporated city that sits about 7 miles from the White House.

I Wanted to Title this Section "Step By Step", but was reminded of that Horrible Early 90s Sitcom
Logan Circle and the adjacent 14th Street corridor used to be hooker heaven. I worked not to far away from there 15 years ago, and while the rowhouses looked like they had potential, the neighborhood was completely bombed out, and was very sketchy at night. Today it's a yuppie paradise with restored townhouses, ethnic restaurants, and rapidly rising real estate values. The picture on the top right corner of this blog is a photo of one of those rowhouses, taken with my very technically advanced iPhone camera.

Logan's redevelopment did not occur based on any grand architectural vision, but a one-by-one improvement in each store and home. It's got retail and homes near each other like many places do, but has little office space, so it's not "mixed-use" like the outdoor mall/condo/office developments that the Congress for New Urbanism typically fawns over.

Logan did get a big boost when a Whole Foods opened up in 2000, but it has not had much of the big bang development New Urbanists typically push along transit stops. And it's not "transit-oriented", because in spite of its urban location, it's a good 15 minute walk to the nearest Metro stop.

Outside of the Whole Foods and a Caribou Coffee, most of Logan's retail/restaurants are locally-owned. It's renewal, now 15 years old, is still a work in progress, but is sustainable and real. But you don't hear much about it because it wasn't redeveloped as part of a grand city plan, or designed by a publicity-seeking architect.

Single Use Success
Much like Logan Circle, Falls Church is in the midst of a decades-long, property-by-property revitalization. It has benefited from rising rents in neighboring Arlington, which has sent the local merchants to its single-use retail properties, and has a locally-owned coffee shop, ice cream store, and bars that are becoming regional favorites, and have created pedestrian traffic on its real, not manufactured, main street. In between these spots are a few ugly strip malls, but slowly these are being redeveloped or improved, but by a mix of architects, not for a mix of uses. Virtually all of the redevelopment in Falls Church has centered on one use - retail. Like Logan Circle, it sits between major office submarkets, but is not one in its own right. And while it might have looked a little worn out in the mid-90s, Falls Church never had crackwhores parading up and down its streets like Logan Circle did.

Unlike Falls Church, Reston Town Center, 15 miles away, has been hyped in architecture and urban planning books, and is filled with chains and cheesy bars. Financed with distant capital, RTC followed the New Urbanist big bang theory, and is an attempt to create a mixed-use city where a field existed not too long ago. Its "sidewalks" are actually the developers' private property, where walkie-talkie carrying mall cops will scold you if you try to take pictures, in between their attempts to keep fake ID-less teeny boppers from crowding the entrance to Pizzeria Uno.

Reston Town Center is as walkable as any shopping mall, though it has really impressed academic architects, the kind who often rail against capitalist profits, because it has a couple of 15 and 20 story office buildings on site. While some minivan moms think it's neat to get an ice cream outdoors, instead of at the food court, locals increasingly realize it's a weak substitute for a real town.

Two recessions in ten years, and distant bankers' nuts have gotten tight, so they are more hesitant to build more fake cities with "multiple uses". But the local capital sources financing local shop owners are far more shielded from overall conditions in the credit markets, and putting together $50,000 for a new bar or ice cream shop is far easier than underwriting a $150 million series of TIF bonds. It's also more likely to lead to someplace where you can walk outside to shops and restaurants, without feeling like Goofy is going to reach out and try to shake your hand.

The Vagina Economy

Many economic development incentives are a waste of taxpayer money. They often involve a lot of handouts so one city, county, or state can make the same "leadership in biotech, greentech, whatevertech" claim as 47 other places. And while there are all kinds of clever studies talking about multiplier effects, the fact remains that far more people, even in regions like Boston and the SF Bay Area, work as nurses, teachers, or retail clerks, than as biomedical engineers. And most of the people doing these jobs spend more money on tampons than on jock straps.


Girls Gone Wild
One of the consequences of the rising costs of education and health care is that money is being directed out of the techie-finance economy that existed in the late 90s to professions like teaching, nursing, social work - all of which are needed everywhere, and are done mostly by women.

According to Bureau of Labor Stats and Nat'l Education Association Data, 80% of teachers, 81% of social workers and 94% of nurses are women. Women comprise nearly a third of all doctors, up from 7% in 1970. These professions that involve caring for people continue to grow while banking, computer programming, and other predominantly male professions continue to get squeezed by productivity gains and outsourcing.

3rd Grade Teachers Don't Have to Double their Productivity every Four Years
While states and counties are falling all over themselves to attract new greentech manufacturing plants, greentech manufacturing is heading out of the country to find cheaper labor, while increasing the productivity of the workers remaining in the U.S. Four years ago, First Solar generated about $300,000 in revenue per manufacturing employee, today it produces over $600,000. Hiring is never going to come anywhere close to the increase in product shipments. Yet this hasn't stopped econ development officials from competing against one another for a plant that might employ 200 people if market conditions remain strong, all while the company building it feels a strong pull to head out to a cheap labor market like the Phillipines or Malaysia, where SunPower and First Solar are building new plants.

Teachers, nurses, and social workers don't get outsourced to the Phillipines, nor do they work for companies under intense financial pressure to increase productivity. 30 years ago teachers didn't have 80% fewer kids in the classroom. And even though social workers and nurses can be pressured to handle a lot of cases, they aren't about to get automated out of existence like many manufacturing workers. As a result, their numbers are poised to keep growing, regardless of how technology advances.

By my estimate, at least 30 states think they are in the top 10 for biotech or greentech. But can anyone name a place that's leading innovation in social work practice? nursing? teaching?

The reality is that many jobs of the future will be in fields dominated by women, and they'll provide a lot more stability and growth than a solar manufacturing facility. Moreover, no one has staked the claim as a leader in recruiting these professions, providing plenty of opportunity for one place to be known as the leading region in these personal services professions. Econ dev authorities would also do themselves a favor if they ditched all their traditional stock photos of science workers, and replaced them with MILFs and recent female grads - that would do a lot more to attract men than pictures of lab coat people staring at test tubes.

Pension Reform Needed to Improve Transit Finances

Here in the DC area, our subway, the 2nd most ridden in the country, faces possible service cuts and fare hikes, due to one growing cost - worker pensions. The pension contribution has grown from $50 million to over $100 million annually, or about $10,000 per worker. Meanwhile, in New Jersey, Chris Christie has pointed to NJ Transit's gold plated pension as a prime target for cuts.

We cannot expect to build transit systems for the 21st century if we compensate workers like it's still the 1950s. Defined-benefit pensions are rare in the private sector and add unnecessary cost to running a bus or rail system. If the market requires higher pay for transit employees, boost their base pay, but these pension death spirals have to stop.

Morfessis Won't Go Providence

Well, it looks like Ioanna Morfessis won't take the $250K a year job running the Rhode Island Econ Development Agency after all. Now it's time for the state to reconsider its overall strategy. I generally don't believe in selling lifestyle benefits to promote young workers, but if there's one city with fewer than 300,000 people that should be getting more hype in the "best places for singles" magazine lists, it's Providence.

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".

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.

Byproducts
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.

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.