How to Create Real Urban Redevelopment


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.