“”Weak Cities”” Presentation Offers Concrete Strategies for Improving Market Position

Bruce Katz
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University

July 12, 2006

In a recent presentation to the Council on Foundations, Bruce Katz, Director of the Metropolitan Policy Program for the Brookings Institution, examines the nation’s weakest market cities and provides a framework for policy reform. In “Revitalizing Weak Market Cities in the U.S.,” Mr. Katz identifies 59 fiscally stressed cities across the country, and describes their common traits.

MuniNet: As you conducted the research for the Weak Cities presentation, what did you find most striking and/or new in terms of factors affecting these cities?

Katz: We have become increasingly focused on the roles that states play in city and metropolitan growth, particularly in economically struggling parts of the United States.

MuniNet: What are some of these roles?

Katz: Five state roles deserve particular consideration:

First, states set the geography of governance. They decide how many units of general purpose local government there are and then decide whether the boundaries of these local governments are fixed or subject to change through annexation—whether they are, in the words of David Rusk, “little box” or “big box.” They also decide the borders of school districts as well as other special-purpose governments.

Second, states set the powers of local governance. They decide what powers to delegate to municipal governments and establish the parameters for how those responsibilities are exercised. They also decide which level of government wields such powers, be it local municipalities, counties, or even regional entities. For our purposes, the most important delegation involves land use, zoning, and planning powers. The devil here is in the details: some states permit and encourage innovative land use techniques; others stifle it. Some states require that local planning conforms to regional or state visions; others allow localities almost unfettered control.

Third, states establish the fiscal playing field for municipalities and school districts. They decide the form of taxes that municipalities can impose on residents and businesses—property taxes, sales taxes, incomes taxes, fees. They also determine the extent to which the state levels the playing field between rich and poor jurisdictions through general or specific tax sharing efforts.

Fourth, states help design the skeleton of regions through their investments in physical infrastructure, main street, downtown, public parks, and green space. How and where states distribute economic development subsidies (whether to lower-end retail projects in the greenfields or high-value pursuits in established areas) also makes a big difference.

Finally, states help shape the quality of the economic growth that occurs in metropolitan areas, through their investments in K–12 education, higher education, and workforce development. State activity of this sort may also stress higher-wage industries, such as health care, corporate research, or higher-value producer services as opposed to lower-end service jobs.

In almost all states throughout the country, the intersection of these disparate powers and policies create what I call the “rules of the development game”—rules that favor the creation of new communities over the redevelopment of older ones, rules that promote and even subsidize greenfield development rather than brownfield remediation, rules that often consign low wage workers and minorities to the “wrong side of regions.” Given this backdrop, the twin patterns of sprawl and urban abandonment that have defined the development of many Northeastern and Midwestern states since the end of World War II are not accidental or happenstance; they are the logical, almost predetermined, outcomes of state policy.

MuniNet: Your framework for policy reform includes five strategy areas—from “building on economic strengths” to “fixing the basics”…would you identify any of these as the most important, or do they each have equal weight in terms of impact?

Katz: We tend to focus on the need to have integrated, holistic agendas for the recovery of weak market cities, hence why we use the puzzle illustration in our presentations. We note, however, that some strategies might be more appropriate, or more realistic, than others depending on the place.

MuniNet: Do any of these strategies represent new ideas or different ways of thinking?

Katz: I think two things are “new” with regard to our competitive agenda.

First, the focus on holistic thinking is a departure from the specialized approaches that have dominated urban policy in the past.

Second, I think the focus on “transforming the physical landscape” reflects the changing rules of economic prosperity in the United States. We believe that the physical layout and assets of most American cities—mixed-use downtowns, pedestrian-friendly neighborhoods, adjoining rivers and lakes—are uniquely aligned with the preference the innovative economy places on density and amenities. Yet cities face many practical physical challenges in realizing their economic and fiscal potential.

MuniNet: Overall, how can state and federal government help weak market cities?

Katz: States and the federal government could help weak market cities address the physical residue of the prior economy. Many cities were once home to manufacturing industries that have decamped for the suburbs or other nations, leaving behind empty buildings and polluted lots known as brownfields. It is doubtful that many of these properties will be returned to productive use without public investments in environmental remediation and clean up. Despite recent improvements in liability laws, federal investments in brownfields—both on the spending and tax sides of the federal budget—remain anemic. States and the federal government could also reinvest in the preservation or, in some cases, the demolition and relocation of urban infrastructure. The infrastructure in many cities—the roads, bridges, water and sewer lines, subway tunnels, school buildings and the like—is old and needs to be recapitalized. Yet there are many examples of infrastructure—elevated roadways that divide cities from valuable waterfront properties, for example—that have outlived their usefulness and are impeding economic growth.

Some cities, like Milwaukee, have already decommissioned and torn down some of their elevated freeways, to great economic and fiscal affect. States and the federal government could make it easier for cities and their metropolitan areas to choose those infrastructure options that best fit their economic realities and potential.