Outcomes-based financing: Possibility and promise in global health


Outcomes-based financing: Possibility and promise in global health



The Goal for Ohio Metros: 43,000 residents

Bruce Katz and
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Jennifer S. Vey

June 29, 2007

We studied 302 cities and found Canton, Cincinnati, Cleveland, Dayton, Mansfield, Springfield, Warren and Youngstown among 65 cities that are underperforming compared to their peers nationwide. Most of these cities – and their metropolitan areas – are struggling to make a successful transition from an economy based on routine manufacturing to one based on more knowledge-oriented activities.

Nothing new, right? Well, not quite.

The new Brookings Institution study, “Restoring Prosperity: The State Role in Revitalizing America’s Older Industrial Cities,” also found that broad demographic and market forces are repositioning the economies of urban areas and revaluing their assets for a wide range of consumers, businesses and cultural institutions. Diversity, authenticity, institutions of knowledge, waterfronts, downtowns and the urban form – “cityness” in a word – matter again to a growing and diverse set of families and firms. Urban densities and the transportation alternatives that come with them are also increasingly being recognized as important antidotes to climate change.

Given these trends, the time is now for state officials and other stakeholders to recognize the inherent value of cities and create new policies to build on their assets and unleash their full potential – in short, to restore the core. They can’t afford not to: To compete in today’s innovative, knowledge-based economy, states and metros need strong and vital cities and older suburbs that create a critical mass of highly educated residents and workers, enterprise, urban amenities and vibrant public space.

Our report is a playbook for revitalizing older industrial communities by fixing the basics (public safety and schools), building on economic and physical assets and creating strong neighborhoods and families.

Here’s one practical idea for Ohio: Strive to attract at least 2 percent of each metropolitan area’s population to live in traditional downtowns.

This is a challenge, no doubt. After World War II, Ohio cities were vibrant urban centers, catalysts of America’s postwar boom and home to innovative industrial giants like Goodrich and Rubbermaid. Today, many of these once-proud cities are caught in a spiral of economic and demographic decline. Cleveland’s core population is less than half of what it was when Harry Truman was president. The decline has in turn created an economic centrifuge, spreading development further away. In the Cleveland metro area, for instance, more than 100,000 acres of rural land were developed for suburban or urban use between 1980 and 2000 – a loss of 31.6 percent of the metro’s total rural land. Comparatively, the 100 largest metro areas averaged a 12.1 percent rural land loss over the same period. Left behind in the urban cores are the vacant homes and industrial sites that serve as stark remnants of what was – and reminders of what could once again be.

Imagine the economic, fiscal and psychological impacts of housing 43,000 residents in downtown Cleveland, 40,000 residents in downtown Cincinnati and 17,000 residents in downtown Dayton – substantial jumps from their current populations. The critical massing of people would attract amenities that lure businesses and jobs for downtown and metro-area residents, shoppers and tourists, and help stem the exodus of young workers. And appealing new housing with street-level cafes and shops would bring life and a virtuous cycle of growth to metropolitan hubs.

So how does Ohio achieve a “2 percent” goal?

First, research has shown that the physical clustering of talented people is critical for economic growth. Targeted fiscal incentives such as homeowners’ and employer-assisted housing tax credits encourage employers to help their workers with down payments. Tax credits also create incentives for home buyers, businesses and developers to locate in, preserve and redevelop historic urban centers. In Cleveland, this targeting would build on an earlier generation of state, regional and local investments. The entertainment bets of the past several decades – Playhouse Square, Jacobs Field, Gund Arena, the Rock & Roll Hall of Fame, just to name a few – are finally poised to pay off, if state and metropolitan policies are aligned to support a new generation of residential, retail and business growth.

A second, complementary way to convert older cities to innovative economies is to locate new college and university campuses in downtown centers. This has already begun in Cleveland with the extension of Cleveland State University’s campus to the Playhouse Square area. Some 50 four- and two-year colleges are located in the eight Ohio cities highlighted by our report and should be encouraged to develop downtown satellite campuses. Higher education institutions are not only major employers but incubators of new, creative businesses and jobs. As low-wage service-sector jobs replace industrial jobs, encouraging the expansion of tech ventures and health care facilities is essential to expanding the number of Ohio residents earning a good living in reborn downtowns.

Finally, transformative investments in infrastructure – waterfront redevelopment, the teardown of obsolete highways, investment in large urban parks – can be critical to downtown success. Cleveland’s Waterfront District Plan, which includes the conversion of the Shoreway into a boulevard, is designed to reconnect city residents to the water, and ultimately “shape the lakefront as the most vital element in the transformation of Cleveland as a place to live, work and play.” The state should help accelerate this effort, while working with other Ohio cities to identify and invest in projects with similar potential catalytic effects.

These are ambitious ideas that will trigger concern and consternation in many quarters. Will they work?

Even a cursory visit to Europe’s older industrial cities – Bilbao, Spain; Torino, Italy; Manchester or Sheffield, England – reveals the market-shaping, investment-generating impact of restoring the core. These cities endured the same economic shocks as American cities. But they responded not by distending their regions with sprawl-inducing subsidies, but by targeting their resources toward the reclamation of industrial land and historic buildings in the center. They prepared their places, in short, for the innovative economy of the future.