Reason Saves Cleveland

How to Create Real Urban Redevelopment

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Cleveland made an important commitment to banishing the moniker "the Mistake on the Lake" in the 1980s and 19990s. Sound fiscal management under then Mayors George Voinovich and Michael White kept Cleveland from falling too far off the cliff. The city invested hundreds of millions of dollars into its downtown Gateway Entertainment District, building a professional basketball arena, a new stadium for the Indians baseball team, and a new stadium on the shores of Lake Erie for the Cleveland Browns.

The city also boosted its commercial appeal as it encouraged the construction of two major office towers and complexes: the 57-floor Key Tower (1990) and the 31-floor One Cleveland Center & Galleria (1992). The Flats Entertainment District seemed to resuscitate downtown night life—for a while—and the city received a comforting psychological boost when it won the bidding to locate the Rock and Roll Hall of Fame (after pledging some $65 million in public subsidies). A new investment in light rail along the waterfront linking the football stadium, the Flats, and downtown was expected to dramatically boost livability.

These efforts to turn the "mistake on the lake" into a "comeback city" were too little, too late, and way too far off the mark to bring the city back in the 21st century.

[Article continues below video, "Encourage Bottom-Up Redevelopment: Reason Saves Cleveland With Drew Carey, Episode 5]

Cleveland, like all-too-many other American cities, will continue to fall even further behind unless it begins to take a more realistic and pragmatic view of its place in metropolitan America and the global economy. Cleveland is no longer the flagship of its regional economy. Rather, it is a competitor, and needs to put policies in place that recognize this competitive relationship, and not simply in relation to Pittsburgh or Akron. Indeed, it is a competitor on a global scale, attempting to draw investment not just from its own suburbs but from locations such as Singapore, Shanghai or Toulouse, France.

The nature of this competition has changed significantly over the past four decades. The city and regional economy are driven by service industries that are much more fickle and nimble than the industrial companies of the mid-20th century. While the world-renowned medical center the Cleveland Clinic boasts a large concentration of employees—37,000 at last count—health care workers can be moved relatively easily, and commercial office buildings are easier to construct (and abandon) that steel foundries, oil refineries, and automobile assembly plants.

Thus, revitalizing Cleveland will require a multi-faceted approach that attempts to harness the creative and entrepreneurial talent of the broadest base possible. This involves nurturing the entrepreneurial talent of existing residents and businesses as well as creating a general business climate capable of attracting and sustaining new businesses and residents. In many cases, the reforms are simply a matter of getting out of the way. The city, for example, limits entrepreneurship in the taxi business by requiring cabs participate in an "association" of at least 25 cabs, or create a company with a fleet of at least 25 cabs. These rules make it practically impossible for someone to start up a small cab company and build equity in a small business. As a result, entry into the Cleveland cab market has been severely limited for decades.

Urban policymakers need to think in terms of emulating Hong Kong, a city with virtually no natural resources that nevertheless grew to be an economic powerhouse in Asia. Hong Kong accomplished this feat by becoming an entrepreneurial haven for business and investment, adopting transparent tax policies, and keeping government spending to a minimum and focused on providing tangible and recognizable benefits to its residents and businesses.

In the U.S., urban policymakers should anchor their redevelopment efforts in the following core principles:

Protect life and property. Perhaps the most basic function of government is to ensure the personal safety of its residents and businesses. This function includes making certain residents are physically safe from actual and the threat of crime. This principle also implies that residents are safe in their homes and businesses and not subject to arbitrary seizure of confiscation, whether through robbery or the capricious use of eminent domain to subsidize politically favored projects.

Minimize the economic burden of the public sector. Bloated government puts a city at a competitive disadvantage compared to its neighboring cities as well as its global competitors. Cities should adopt procedures such as competitive bidding that ensures services are provided with the highest value and at the lowest cost. Typically, a well-crafted managed competition process can net savings between 20 percent and 40 percent over tradition in-house provision of services.

Make government spending transparent and accountable. Former Mayor Michael White initiated the "citizen's budget" in an attempt to ensure everyday residents and businesses could both monitor government performance as well as track spending. This transparency is critical in an increasingly competitive environment.

Pay attention to core infrastructure. Potholes count. A road network that links key destinations and maximizes mobility is crucial to ensure people and goods flow effectively at least cost. Well-functioning sewer and water systems are essential to support existing businesses as well as support future growth. To the extent possible, public services should be shifted to self-supporting user fees so that direct benefits can be tied to revenues raised. Public-private partnerships (PPPs) should be explored as a way to both boost quality as well as reduce costs through management and technological efficiencies. User fees and PPPs create transparency and accountability while providing a sustainable revenue stream for funding, expanding, and enhancing core infrastructure and services.

Sam Staley, Ph.D., is director of urban growth and land-use policy at Reason Foundation.

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  1. The principles put forth are sensible, but all too often it is difficult to find leaders who can uphold them (at all levels). I wish we could find some here in North Carolina.

  2. Why does the guy in the picture look like he should have been rapping in the 1980s?

  3. “The principles put forth are sensible, but all too often it is difficult to find leaders who can uphold them (at all levels). I wish we could find some here in North Carolina.”

    I agree. A basic problem here is that democracy doesn’t really work. Most of these ideas are obvious now. You just don’t have that many Hazel Macallion’s in the world.

    1. Democracy clearly doesnt work.

  4. I think there’s still a question of whether mid sized cities have the same place in the current US economy that they did fifty years ago. The biggest cities are still growing, especially if you count suburbs, and smaller cities in picturesque locations are doing fine, but high skilled service sector work gains a lot from being in a metropolis where there are lots of workers with rare skill sets, and lower skilled work like call centers and the like can do fine in small towns, so have no reason to pay city rents. You can have small cities do well if they’ve got something unique that’s stuck in the city, like an excellent university, or beautiful weather or something like that, but there’s nothing in Cleveland that can’t go somewhere else. In the Midwest at least, I don’t know of any midsized cities that are thriving other than places like Madison that have a draw.

    1. Agreed. The only cities worth living in in Michigan, for example, are Ann Arbor and a few picturesque cities along the west coast like Traverse City. The rest is going to hell.

      Pretty much any city that is not along the coast is in for a struggle, in my opinion. Shipping leads to manufacturing, and service jobs naturally follow.

      Cleveland faces a major problem that many cities face – middle-class flight ruined the schools. The city itself is populated by the poor, young people with no kids, or those rich enough to afford private school. Members of the middle-class who would prefer to live in the city can’t, for the sake of their children (unless they did it as a group, which is improbable).

      1. Middle class flight didn’t ruin the the schools. It was schools on the path to ruin which provoked middle class flight.

        What put schools on that path in the first place is something different.

  5. “Hong Kong accomplished this feat by” -being the gateway to China and investing in the largest port facilities in the region. It could also do this because it was a British protectorate with government decisions driven from on high.

    The growth was driven by (very) low cost labor -which the government accommodated and encouraged with government housing programs.

  6. Rather, it is a competitor, and needs to put policies in place that recognize this competitive relationship, and not simply in relation to Pittsburgh or Akron. Indeed, it is a competitor on a global scale, ….

    So instead of pouring money into transit and football stadiums, they should be pouring it into corporate welfare. Problem solved!

  7. Add a fifth “core principle”: Stop giving away money to your friends, buddies and political allies. Tax breaks; building stadiums, convention centers, auditoriums, etc; airports; casinos; none of these things require a city to build them. If any of those are economically sound, private investors and companies will build them. Try open and genuinely competitive bids for city contracts, without anyone in the city administration sharing the “inside track” or competitors’ bids to their friends.

    Good luck! But see if you can find a new name that ryhmes with “Detroit” for Cleveland.

  8. I agree, but here’s another point: Reform the property tax to fall more on land, less — or not at all — on buildings. One thing you don’t often hear about Hong Kong is that its low taxes were possible partly because the government obtained a large fraction of its revenue from land rents. And then there’s Pittsburg, which started taxing land at six times the rate on buildings, back in the 80’s, enjoyed a construction boom, and was declared the most livable city in America, partly because of low housing costs. Then Pittsburg went back to taxing land and buildings at the same rate, around 2000, and went into grave distress. Tax land, and people don’t produce any less land. Tax buildings, or incomes, or business, or sales, and it’s a different story.

  9. How? Simple…get all the Liberal Jews out of Israel and leave only the Orthodoxs behind(they don’t even serve in the military and they voted agaisnt Obama) and give Israel to the Palestinians. You can re-populate the empty cities…I think Rahm and Axelrod are implementing that plan as we ‘speak’. Only Marxist Atheists Israelis can apply!

  10. Local banks should be recapitalized through government loans to encourage growth.

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  12. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets…in order to really get the Books of the Bible, you have to cultivate such a mindset, it’s literally a labyrinth, that’s no joke.

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  23. Everything was fine until the city started running out of money in 2007. Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category. Even more incredible is the fact that the new classification was to be imposed retroactively to 2004 with interest and penalties. No explanation was given for the new classification, or for the city’s decision to ignore its 1994 ruling….

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  31. I’ve been to the new Indians stadium, it looks really nice. At the same time, it’s not exactly something you should build if you’re already in debt. It’s not like anyone besides the people living in Cleveland really cares about them. I know Indianapolis built a new football stadium, but they had a long term goal in mind. New stadium means the superbowl in 2012 will be there. This in turn builds revenue from all the people coming to see the game. The Indians need to hire some long distance movers and head to Virginia or something. The Rock and Roll Hall of Fame was a lucky break, I’ll have to admit. I just don’t see how they can justify all that unnecessary spending

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