Reason Magazine - Staff

How Traffic Jams Are Made In City Hall

sstaley@reason.org (Sam Staley) info@reason.com (Ted Balaker) — Tue, 20 Mar 2007 05:36:00 EDT

If you want to know why so few people use mass transit, meet Sue, a college administrator in Minneapolis. If anyone would use transit, Sue would. She's single, she lives in a condominium, and she can afford any additional out-of-pocket expense. She could use her city's Hiawatha Line, a light rail route newly completed at a cost of $715 million. But she doesn't, although she feels guilty about it. That's because her car gets her where she needs to go. Faster.

According to the U.S. Census Bureau, the typical driver in America's metropolitan areas takes 21 minutes to get from home to work. If you take public transit, the average commute stretches to 36 minutes. That's 71 percent longer. Workers in the New York metropolitan area have the longest commute: There it takes an average of 52 minutes to get to work, even though the New York-New Jersey-Connecticut mass transit systems are among the most extensive in the nation.

Minneapolis-St. Paul is about average. The typical commuter takes 21 minutes to get to work by car or 32 minutes by public transit. Congestion can be pretty bad: The average driver in the Twin Cities spends 43 hours-more than an entire work week-stuck in traffic every year. According to the Texas Transportation Institute at Texas A&M University, that costs Twin Cities drivers almost $1 billion in wasted time and fuel. But mass transit takes even longer, and it isn't as flexible as a car when it comes to picking where and when you'd like to go. Is it any wonder Sue drives to work rather than taking the bus or train?

The U.S. Department of Transportation puts the yearly cost of congestion at $168 billion. But the planning gurus who are supposed to solve our transportation problems are in the grip of transitphilia and autophobia; their beliefs about how cities and transportation work are grounded more in nostalgia than in a realistic view of the world we live in now. The public policies they design and try to enforce make it harder for us to get to work, pick up our kids from school, or go shopping. They are deliberately fostering congestion. In the words of David Solow, head of the Metrolink commuter rail in Southern California, congestion is "actually good" because "it drives people out of their cars."

Keeping Minneapolis Congested

Every major urban area in the country has an official bureaucracy responsible for planning roads, highways, and mass transit. It has to; it's required by federal law.

Minneapolis has one of the more competent planning agencies. The Metropolitan Council-or Met Council, as locals call it-has at least acknowledged the importance of congestion and has tried a few innovative ways to address it. Unfortunately, its solutions will have minimal impact on the problem. It provides an instructive example of how poorly even our better regional planning agencies are addressing one of the most important policy problems they face.

The Met Council has some extraordinary powers. Established by the Minnesota legislature in 1967, it has legal responsibility for managing the Twin Cities' sewers, parks, transportation, aviation, and land use planning. But the primary focus of its huge organizational bureaucracy is transportation. Of its 3,718 employees, 73 percent do transportation-related work, spending three-quarters of the agency's annual budget.

The council says it aims to enhance "transportation choices" and to "improve the ability of Minnesotans to travel safely and efficiently through the region." So far, so good. The council goes even further: "To a growing number of metro area residents, traffic congestion ranks as the No. 1 livability issue. It affects the length of their daily commute, the times of day they choose to make trips, and the amount of time they sit in traffic, even where they choose to live and work."

But is the Met Council really focused on reducing congestion? Its stated goal isn't to solve the problem; it merely calls for "slowing the growth in traffic congestion and improving mobility" (emphasis added). In other words, traffic will continue to get worse, just not as much worse as it would if the council did nothing. The Met Council also has priorities besides congestion: reducing the number of people living in single-family homes, preserving open space, limiting sprawl-and increasing transit use.

During the next 10 years, the Met Council is planning to invest $4.2 billion in the highway system and $1.4 billion in transit facilities. In other words, the region's primary transportation planning agency has decided to spend 25 percent of its budget on mass transit. But transit accounts for just 2.5 percent of all trips in the region, whether they're for pleasure, taking kids to school, going to the supermarket, or commuting to the office. Less than 5 percent of the Minneapolis-St. Paul region's population uses public transit to get to work, and that share is declining: According to U.S. Census statistics, the number of passengers using mass transit increased slightly in absolute terms between 1990 and 2000, but its market share fell by 12 percent.

The Met Council hopes to double bus capacity by 2030 and greatly expand its light rail line and commuter train system. It also intends to boost transit use from 74.9 million passenger trips per year to 150 million by 2030, even though the current trend projects virtually no growth in use and even though transit lost market share from 1990 to 2000, according to the Census Bureau's decennial data. The Met Council expects 574,625 new jobs to be created in the area by 2030. But even though the vast majority of Minneapolis-St. Paul's population travels to work by car, the planners improbably expect per capita road use to decline.

The council does plan to expand the road system. It will add 300 additional lane-miles of freeway, or about 12 lane-miles per year. That works out to about three miles of a two-lane (in each direction) freeway each year. That's well below the expected growth in travel demand.

The net result? Without road improvements, highway congestion is expected to increase from 28 hours annually per traveler in 2001 to 40 hours in 2030. With the improvements, congestion should "moderate" to 37 hours in 2030. Congestion would be 32 percent higher than in 2001, rather than 42 percent higher without the improvements. "Just to keep pace with these [highway] needs," the council's 2030 Regional Development Framework says, "would add $4.7 billion to current plans for the next decade" above the currently planned spending.

For most regional planning agencies, automobility and congestion relief simply are not high on the priority list. Sometimes they aren't on the list at all. Portland, Oregon, distinguished itself among its peers when it made a conscious decision in the mid-1990s to let congestion approach gridlock because it feared that otherwise fewer people would use the transit system. The drive to reduce sprawl creates a conflict of interest, too, since congestion relief makes it easier to commute long distances.

To make "more effective use" of the road system, the Met Council believes it has to get people out of their cars. That's unfortunate, especially since the agency admits congestion is many residents' "No. 1 livability issue." The council is spending 25 percent of its transportation funds on a solution that, at most, might improve the quality of life for 5 percent of the population, and it will do nothing for people like Sue. Even transit users might not be better off, since they will be spending more time commuting than if they used a car. Drivers will definitely be worse off. They will be spending much more time stuck in traffic in 2030 than they did in 2006.

If Minneapolis has one of the best planning agencies, what are the others like?

Fiddling While Atlanta Burns Gas

According to the Texas Transportation Institute, Atlanta is the nation's fourth most traffic-clogged metropolitan area, measured by the amount of time stuck in traffic. Its residents crawl and wind through more than 5,000 congested lane-miles each day. Most of these congested roads are arterials and collectors-local roads that let residents navigate short trips around town or their neighborhood or that take them to major highway interchanges. An analysis by the Atlanta Regional Commission of 75 intersections found that 60 were "deficient"-that is, they performed below engineered standards-during the morning rush hour and 68 were deficient during the afternoon rush. The freeways are even worse off: Almost 60 percent of Atlanta's interstates are congested, twice the incidence for local roads.

The South isn't normally seen as a hotbed of progressive government, but the Atlanta Regional Commission was the nation's first government-supported multi-county planning commission. The Atlanta Chamber of Commerce hatched the idea in 1938, and it became official with an act of the Georgia General Assembly in 1947.

As clogged roads slowly choke Atlanta's economy and its quality of life, traffic reduction should be the commission's No. 1 priority. And the commission appears to take its role seriously. During the next 25 years, it plans to spend $57 billion on transportation projects even if the federal, state, or local governments don't cough up more money. (Presumably the funds would come from tolls or other user fees.) Its plan, however, assumes that vehicle miles traveled per person-a common measure of travel demand-will fall by 5 percent and that average travel time won't change. The plan anticipates "significant improvement in congestion and travel times" along the corridors targeted for investment, saving billions of dollars through improved efficiency and productivity.

The commission has some reason for optimism. Travel demand appears to have fallen in Atlanta from a peak of 35 vehicle miles traveled per person each day in 1998 to 31 vehicle miles in 2002. Total demand has increased-from 109 million vehicle miles traveled in 1998 to 113 million in 2002-but that's because population has grown so much. (The number of people living in the Atlanta area increased by more than 200,000 during the same four years.) Each person is driving slightly less, but since there are so many more people, the roads are getting more use than ever.

Naturally, congestion increased during this period too, reflecting the increase in travel demand without a similar investment in roadway capacity. Travel times to work also increased, according to the U.S. Census Bureau, rising 24 percent during the 1990s to 30 minutes in 2000. The commission reports that this was the largest increase in the nation.

So congestion is increasing, even though demand seems to be moderating. And local policy makers aren't expecting much more help from the federal, state, or local governments.

What's Atlanta's plan? Roadway expansion will get $8 billion. Car pool lanes will get another $5 billion, bringing the total pavement capacity building budget to $13 billion. The commission has slotted another $14 billion for nontransit operations and maintenance. These efforts will add 2,000 additional miles of arterial and collector roads and 300 miles of new freeway lanes. Another $3 billion is slated for improving the management of the road system.

Atlanta also believes that improving traffic signal timing to smooth out traffic flows, using meters on entrance ramps to prevent too many cars from entering the freeway at the same time, and similar measures that "manage" travel demand will reduce delays on local roads by 25 percent and increase freeway speeds by a similar magnitude. If those plans are implemented comprehensively and efficiently, that estimate may be plausible.

Meanwhile, $5 billion will be used to expand public transit, while $15 billion more will go toward maintenance and operations. A program expanding options for bicyclists, walkers, and others not using cars will get $2 billion. All in all, 38 percent of the regional planning budget is devoted to getting people out of their cars and onto buses and trains. Transit ridership, the commission boldly asserts, will increase "72 percent between now and 2030."

That conclusion is hard to swallow. Transit isn't fulfilling its promise in Atlanta now, and the trends in the city's census data aren't much different from what's happening in Minneapolis. Atlanta's regional work force is 2 million. Transit ridership increased to 75,272 workers in 2000 (an 8 percent increase), hardly making a dent in general commute patterns. And despite that modest uptick in absolute numbers, transit's market share fell from 4.7 percent of all commuting trips in 1990 to 3.7 percent in 2000.

Almost 2 million jobs will be added to the regional economy during the next 30 years. If Atlanta achieves its transit ridership goal, 129,467 people will be using mass transit in 2030. And even then, transit's commute share would fall. Put another way, Atlanta is investing almost 40 percent of its transportation budget on less than 4 percent of the market, and the latter number is shrinking.

This might be a worthy investment if the main beneficiaries were people too poor to afford cars or otherwise restricted from getting around. But the commission wants to compete with the automobile-to get working-class and middle-income commuters out of their cars and onto buses and trains.

Even our more skeptical analysis of the city's transit trends might be overly optimistic. According to the U.S. Department of Transportation's National Transit Database, Atlanta's bus transit system logged 235 million passenger miles in 2003. That's down from 273 million miles reported in 2000. Atlanta's subway system reported 487 million passenger miles in 2003, down from 504 million reported in 2000. So transit use is falling even in absolute terms. For transit to turn around and increase market share would be unprecedented.

Atlanta's policy makers can still shift course. Traffic in the city has become so bad that in 2004 Gov. Sonny Perdue convened a task force that called for making congestion reduction the top priority for regional transportation planners. The Atlanta Regional Commission, along with the Georgia Department of Transportation and other agencies, recently agreed to set specific targets for reducing congestion in absolute terms, as measured by travel delay in peak periods, by 2030. Local officials appear receptive, but have not yet revealed how and to what extent they will follow the recommendations.

We'll see if the follow-through lives up to the promises. If it does, we can only hope the rest of the country's urban planners are paying attention. The myths that have held Atlanta back are hardly unique to that city.

City House, Country House

In 2005 the Urban Transportation Monitor, a biweekly industry newsletter, surveyed more than 600 transportation professionals to find out their thoughts on traffic congestion. About 19 percent responded. Of those, 45 percent thought the profession was "doing all it can do" to stop congestion. Half thought congestion was the result of too many people using their cars, and 45 percent attributed it primarily to the desire to live in low-density suburbs.

The preferred solutions were predictable: 51 percent thought mass transit should be improved or expanded, and 50 percent thought the government should manage demand better by getting people to telecommute or carpool. Only 29 percent believed increased highway capacity could be a cost-effective way to reduce congestion significantly. (The survey did not ask whether new capacity should be provided if it were privately funded.)

Many believed the problem is simply too many cars. Fifty-one percent said one of "the main reasons for the high level of congestion in many metropolitan areas" is the desire "of many to use cars for all their trips." Indeed, of the 11 options offered by the survey, that was the biggest vote getter. For traffic engineers, planners, and other transportation professionals, the solution to traffic jam is to keep us from using our automobiles.

The planning profession clings tenaciously to its foundational myths. Even as overwhelming evidence to the contrary piles up, planners keep claiming that cars are inefficient and socially destructive; that expanding road capacity isn't practical; and, most fundamentally, that the government can determine how we choose to travel by planning where and how we live.

That last assumption is the logical conclusion of a rather sophisticated (if largely incorrect) way of looking at human behavior. It's rooted in a common-sense observation: How we live influences how we travel. If we live on a farm, we are going to travel by car. Buses simply don't go out to farms to pick people up and take them into town for work or to buy groceries. Trains don't either. A neighbor might, but she would probably be driving a car and doing this as a service because you don't have a car. School buses are the exception that proves the rule. They pick up a large number of kids, but only because they're being delivered to one destination, the school building.

The flip side is the experience of the Manhattanite. If someone lives in the densest neighborhood of an American city, cars are costly, frustrating, and inefficient. Most Manhattan residents can get to their destination far more efficiently using the subway, taking a bus, or walking. Because parking is so costly, they also can get around fairly efficiently using taxis.

So people in dense urban areas have more choices, and personal automobiles are inefficient ways to get around town. Congestion, in fact, leads people to use alternative modes of transportation. Many regional planners, like those in Atlanta, conclude that the way a region develops dictates how people are likely to travel and what transportation strategies are most feasible. And the way to influence development patterns, they believe, is to carefully plan where and how much to invest in the transportation system. But proximity to work is only one of many factors people consider when finding a home; other criteria, such as price, neighborhood safety, and proximity to good schools, are often deemed more important than living close to the office.

Of course, Atlanta is not Manhattan. In fact, it's virtually the opposite. At 1,783 people per square mile, Atlanta is the poster child for low-density residential development. The New York metropolitan area is three times as dense, with 5,309 people per square mile. Manhattan's density is even higher: more than 50,000 people per square mile.

According to the Atlanta commission, "Land use is an important determinant of how people choose to travel. No other variable impacts [mobility] to a greater extent. The Regional Development Plan policies help shape future growth and protect existing stable areas by encouraging appropriate land use, transportation, and environmental decisions."

To say this is an exaggeration would be charitable. While land use can influence travel behavior in small and crude ways, to claim that it is the biggest factor distorts the mainstream research on the subject. A 2004 study sponsored by the Federal Transit Administration (FTA) cautioned against the tendency to "overemphasize vertically mixed uses such as ground-floor retail and upper-level residential." In particular, it noted that "outside of dense urban locations, building mixed-use products in today's marketplace can be a complex and risky proposition; few believe that being near a train station fundamentally changes this market reality."

This isn't to say that these developments can't generate more transit riders. The FTA study found that those living near rail stations were five to six times more likely to commute using transit than other residents. While those seem like dramatic effects, the majority of commuters near transit stations (often two-thirds or more) still use cars to get to work. Moreover, many of the people living in these transit areas were transit users already. They just moved so they could be closer to transit.

Put differently, if 5 percent of a region commutes using transit-about the national average-then 25 or 30 percent of those living in a transit-oriented development will commute using transit. This is consistent with case studies of transit use in San Francisco and Chicago. (Incidentally, those results invariably come from studies of predominantly heavy rail commuter systems, such as subways. Light rail and buses are more fashionable in planning circles these days, but they're also slower and carry fewer riders.)

To get such high use rates, densities have to be very high. The traditional American home with a private yard doesn't fit this model. The typical new house in the United States is built on about one-fifth of an acre. A study in San Francisco found that doubling densities from 10 units per acre to 20 units per acre would increase transit's commute share from 20 percent to 24 percent.

In short, even cramming four times more people into the typical U.S. subdivision of 4-5 units per acre would produce only a modest uptick in transit use. And it isn't an uptick for the region. It's an uptick for the neighborhood-those living within a quarter mile of a transit stop. There is virtually no effect beyond the immediate vicinity of the transit stop, regardless of density.

At these densities, Americans would literally have to give up any hope of having a decent-sized yard and most would have to live in townhouses. The land use pattern would have to fundamentally change, resembling the landscape more common in the carless 19th century than in the highly mobile and adaptable 21st century.

Forget, at least for the moment, whether the government should effect such a sweeping change. It almost certainly can't. In a forthcoming report, Adrian Moore of the Reason Foundation (the nonprofit organization that publishes this magazine) and Randal O'Toole of the Thoreau Institute examine data from the National Personal Transportation Survey and find that doubling an urban area's density would, at most, reduce the total number of car trips by 10 percent to 20 percent. No U.S. urban area has managed to double its density or to reduce car travel by such magnitudes.

Real Solutions

Believe it or not, there are ways to reduce traffic congestion, even if most politicians and planners haven't been eager to adopt them. Here are five potent suggestions, ideally done not alone but in conjunction with one another:

Creative construction. Expanding capacity doesn't always mean adding lanes to congested roads, although that's often a good idea as well. In densely populated Southern California, portions of the highway network are elevated well above the ground, including the Harbor Transitway approaching downtown Los Angeles. In Texas, San Antonio and Austin have double-decker freeways as well. In 2006 Tampa opened its cross-town expressway, an elevated road built in the median of an existing four-lane highway.

If going up is a problem, you can also go down. Australia has done an effective job of using tunnels to connect highways while preserving neighborhoods, an excellent alternative to destroying businesses and homes.

Smarter management. Building new capacity can get you only so far. The Federal Highway Administration estimates that half of all congestion could be eliminated simply through better management of the existing road network. Among other approaches, this could mean metering freeway ramps, turning two-way streets into one-way streets, and improving traffic light coordination. According to the Institute of Transportation Engineers, better-coordinated lights can reduce stops by as much as 40 percent, thereby cutting gas consumption, emissions, and travel times.

Market pricing for roads. One especially fruitful idea is high-occupancy toll (HOT) lanes, which allow drivers who put the highest priority on quick commutes to pay a premium for uncongested lanes. These have been built in Denver, Houston, and-yes-Minneapolis, among other cities. In Atlanta several private companies have submitted plans to build new HOT lanes on their own dime. During rush hour, the congestion difference between the special lanes and the regular lanes can be the difference between going 15 miles per hour and doing 65.

Areas with lots of car pool lanes could convert those to HOT lanes, add some connectors, and create a congestion-free HOT network. Transit boosters, take note: It would be easy to tweak the arrangement to guarantee bus riders a speedy trip too.

Market pricing for parking. On 99 percent of our trips we park for free, thanks largely to the minimum parking requirements embedded in our zoning codes. Eliminating those requirements would allow market forces to reflect the true cost of parking. Instead of adhering to arbitrary regulations that often order more spaces than necessary, developers would have greater flexibility to build only the number of spaces that is needed. Workplaces would be more likely to adopt parking cash-out programs, which give employees who do not drive to work a share of the money that otherwise would have gone toward parking costs. Employees would be more likely to work from home.

Market pricing for parking would reduce traffic too. If drivers had to pay the full cost of parking, they might be less inclined to take certain trips, thus putting a dent in congestion. More important, when parking is scarce but free (or underpriced), drivers have an incentive to keep the spots as long as possible. When it is scarce but costs money, drivers are less likely to dally. One additional result: Other drivers have less need to circle around and around, hoping eventually to spot an empty space.

Traditional parking meters can be notoriously inconvenient, but they aren't the only way to pay for parking. Aspen, Colorado, uses a variety of new technologies, including personal in-vehicle meters. The town determines its parking rates by zones; prices are highest in the city center and drop the further you are from the core. Motorists simply park, type in the number of their parking zone, turn on the meter, and hang it from the rearview meter. A timer deducts the prepaid amount until the driver returns. No one has to hunt for loose change.

Privatization. We're much more likely to adopt ideas like the above when roads are built and managed by companies responding to market incentives, not by government officials responding to planning fads and political clout. Private companies can create and operate highways using toll revenues as a funding source. The government can also convert existing roads to privately managed systems to allow improvements and expansions of the existing network.

For a spectacularly successful example, consider the 407 Electronic Tollway outside Toronto. This innovative road isn't fully private, but it was built by a private company (the Canadian Highways International Corporation) and is now managed by another private company (407 International) that bought a 99-year lease from the government of Ontario. Yet another company, Hughes Electronics, equipped it with an electronic toll-collecting system that eliminates toll booths and the congestion they can cause.

Baby, You Can Drive Your Car

There is a fundamental disconnect between transportation planners and the typical American commuter. Most travelers believe the car is a good thing, a source of freedom and mobility. Giving up the flexibility of the private automobile reduces our quality of life; it's a step back, not a step forward. That's the main reason the use of mass transit is declining in the U.S., despite the billions of dollars poured annually into such systems.

Yet transportation planners believe public transit and sharing rides with strangers increases the typical American's quality of life. It doesn't, and our behavior reflects this. That's why the vast majority of us choose not to use public transit.

Back in Minneapolis, Sue may hop aboard the Hiawatha Line from time to time. But when even well-off, condo-dwelling rail fans like her continue to rely on their cars, the currently dominant school of transportation policy seems destined to create many more traffic jams than transit users.

Sam Staley (sam.staley@reason.org) is director of urban growth and land use policy at the Reason Foundation. Ted Balaker (ted.balaker@reason.org) is the Jacobs Fellow at the Reason Foundation. They are the authors of The Road More Traveled (Rowman & Littlefield), from which this article is adapted.

The Rise and Fall of Indian Socialism

sstaley@reason.org (Sam Staley) — Tue, 06 Jun 2006 00:00:00 EDT

India became the poster child for post–World War II socialism in the Third World. Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries, were effectively nationalized in the mid-1950s as the Indian government seized the commanding heights of the economy.

Other industries were subjected to such onerous regulation that innovation came to a near standstill. The Industries Act of 1951 required all businesses to get a license from the government before they could launch, expand, or change their products. One of India's leading indigenous firms made 119 proposals to the government to start new businesses or expand existing ones, only to find them rejected by the bureaucracy.

The government imposed import tariffs to discourage international trade, and domestic businesses were prevented from opening foreign offices in a doomed attempt to build up domestic industries. Foreign investment was subject to stifling restrictions.

But the planners failed. Manufacturing never took off, and the economy meandered; India lagged behind all its trade-embracing contemporaries. Between 1950 and 1973, Japan's economy grew 10 times faster than India's. South Korea's economy grew five times faster. India's economy crawled along at 2 percent per year between 1973 and 1987, while China's growth lept to 8 percent and began matching rates for Hong Kong, Taiwan, and other Asian tigers. Even as that reality became clear as early as the late 1960s and early 1970s, India's policy makers refused to give up on economic planning. Experts and elected officials settled for what they called the "Hindu Rate of Growth," which, according to official figures, was sluggish at about 3 to 4 percent per year. That would be respectable for a developed country like the United States or Germany, since they start from a higher economic base. But for a country like India, it's abysmal.

Attitudes finally began to change in the 1980s, as India's persistent budget deficits forced austerity measures in the middle of the decade. A foreign exchange crisis in 1991 precipitated major shifts in public policy thinking. The government brought spending in line with revenues and moved away from fixed exchange rates, allowing the Indian currency to reflect world prices. (Fixing exchange rates at a government-determined price tended to overvalue the rupee on world markets, discouraging foreign investment.) The government began to open the door to foreign investment while Indian companies were allowed to borrow in foreign capital markets and invest abroad. Inflation was brought under control.

The new policies fostered a booming information technology industry, which grew to billion-dollar status in the mid-1990s and exceeded $6 billion in revenues by 2001. The technology sector didn't suffer from as many burdensome regulations as, say, steel and airlines. Nor did its success hinge on traditional utilities and basic infrastructure, depending more on new technology such as satellites. A 2004 World Bank report notes that "Services, the least regulated sector in the economy continue to be the strongest performer, while manufacturing, the most regulated sector, is the weakest."

At first, Indians were simply subcontractors to more sophisticated multinational companies. Then Indian companies began to generate new technologies on their own as they tapped into the global marketplace. The software used to power Palm Pilots, for example, was developed by an Indian firm, not outsourced to technicians or programmers. Today 1,600 tech companies, including the billion-dollar multinationals Infosys and Wipro, export products and services from India's high-tech capital, Bangalore. U.S. companies with major Indian investments include Google, Yahoo, Microsoft, and Oracle. While I.T. exports led the industry's early growth, future growth is expected to be based on the expansion of the domestic economy.

With a billion people, India is bound to become a major consumer powerhouse. It may even outcompete China. "Culturally, India is much more attuned to free market ideas," says Barun Mitra, managing trustee of the New Delhi–based Liberty Institute. "India's social and institutional fabric is much more resilient than China's. The nationalized component of the Indian economy is relatively small. India's share of the workforce in any kind of public sector is barely 6 percent of the total workforce of 420 million."

Furthermore, India's regulatory apparatus was crafted from a kinder, gentler form of socialism. For one thing, more than 90 percent of its workforce is in the informal sector, largely untouched by the regulations perpetuated by the federal government in Delhi and the state and regional governments. Furthermore, India is a liberal democracy, bounded by a constitution and a broad-based cultural tolerance for different lifestyles and points of view. Those same factors—grassroots respect for trade, constitutional governance, and cultural tolerance of diversity—have contributed to the rise of another industry symbolic of a progressive, dynamic economy: film and entertainment. "Bollywood's" movie output rivals that of Hollywood and Hong Kong.

That's not to say there's no intolerance: A bloody war followed India's independence and partition in 1947, and serious tensions have persisted along religious, ethnic, class, and caste lines. But despite a population that is overwhelmingly Hindu, India's current president is a Muslim, and its current prime minister is a Sikh. Thirty thousand people died in the state of Punjab between 1980 and 1995 primarily because of conflict between Hindus and Sikhs. Yet Punjab is now peaceful, and is one of India's richest states.

"It is worth pointing out that there are 150 million Indians who profess the Muslim faith," Mitra observes. "Yet there is not one Indian Muslim who has been found to be involved with any of the international jihadi or terrorist groups. And I believe this is because of the sense of political participation that the Indian democratic process allows."

The key to further progress will be leveraging the country's comparative economic advantage in information technology and services. "India has many of the key ingredients for making this transition," notes a 2005 report from the World Bank Finance and Private Sector Development Unit. "It has a critical mass of skilled, English-speaking knowledge workers, especially in the sciences. It has a well-functioning democracy. Its domestic market is one of the world's largest. It has a large and impressive Diaspora, creating valuable knowledge linkages and networks."

As robust as India's growth is, it probably could do much better. It will take a continued commitment to open trade to achieve higher growth rates, and it's still unknown whether India has the political commitment to stay the course.

Healthy City Living

sstaley@reason.org (Sam Staley) — Tue, 06 Jun 2006 00:00:00 EDT

Urban Sprawl and Public Health: Designing, Planning, and Building for Healthy Communities, by Howard Frumkin, Lawrence Frank, and Richard Jackson, Washington, D.C.: Island Press, 338 pages, $30

During the summer, we often pack up our kids for a little sun and fun at the local pool, nestled in our low-density, sprawling suburb in the Midwest. My kids eat a balanced diet, are physically fit, and are certainly not overweight. The pool is one of our tactics for moderating their time in front of video games and the television. It also ensures that they get a little exercise.

Each year we're surprised to find that other parents don't see things the same way, at least to judge by their children's girth. As our kids frolic, we sit amazed that other parents let their overweight children walk up to the snack bar to consume ice cream, hot dogs, and other high-calorie snacks. We know American kids face an obesity problem—we see it every summer in the jiggling rolls of sunburned fat at our local pool.

So I welcome any book that wants to inform the public about ways to keep us and our children fit. That's what the authors of Urban Sprawl and Public Health seem to promise. Unfortunately, the book doesn't deliver, partly because authors Howard Frumkin, Lawrence Frank, and Richard Jackson can't solve the problems we see every summer.

They are, to be sure, well qualified to write this book. They are among the most prolific researchers on the subject of land use and public health, and they have strong credentials: Frumkin chairs Emory's Department of Environmental and Occupational Health, Frank holds an endowed chair in transportation planning at the University of British Columbia, and Jackson is an officer in California's Department of Health Services. And their book's basic premise is plausible: Choices about where and how people live have potentially significant implications for their health. Living on top of a toxic waste dump, to pick an obvious example, probably increases the odds of getting cancer.

The large lots with segregated residential and commercial land uses perpetuated by standard zoning codes and planning procedures work against good health, Frumkin and his colleagues argue. Low-density suburbs, they say, encourage automobile use and discourage walking, contributing to sedentary lifestyles while disrupting healthy fitness habits and spewing more pollutants into the air. Unfortunately, the evidence they provide isn't nearly as convincing as they claim, and they miss an opportunity to discuss how everyday habits such as dipping into a bag of potato chips after work (or school) or plopping down in front of the TV contribute to the health problems that concern them.

The opening chapters provide useful, objective overviews of how recent North American land use patterns have evolved. We started out on farms and the frontier, but rapid productivity gains and the industrial revolution crammed people into dense, congested cities. This migration created its own problems: poor sanitation, epidemics, stifling air quality, overcrowding. The lure of the countryside prompted the wealthy and then the middle class to move jobs and homes out.

Land has always been romanticized in American culture and literature, the authors point out. Cities were dirty, crowded, and unhealthy; the push into the suburbs was a natural response to the worst aspects of city life.

Outward expansion was encouraged by revolutionary changes in transportation, first the trolley car and then the automobile. The introduction of low-cost construction methods made new housing cheap, and abundant land outside the city center made housing more affordable in low-density areas. Suburbs were in some ways inevitable destinations for the North American working class and a growing middle class.

Things changed dramatically after World War II. The interstate highway program, the authors claim, subsidized automobile use and travel, making suburban areas more accessible. Federal financing made mass-production suburbs like Levittown possible, and zoning and planning effectively locked in place low-density lifestyles that segregated residential and commercial uses. The effect, they suggest, was the destruction of the urban neighborhood.

Frumkin and his co-authors argue that low-density housing patterns created a new set of public health challenges. In addition to the health problems associated with dense cities, they say, regions now confront sprawl-induced problems with air quality, obesity, traffic deaths, water quality, and mental stress, along with a loss of community (or "social capital") and an inability to address the health issues of specialized groups such as children, the elderly, and the disabled.

The authors provide a service by pulling together the growing body of academic research examining links between land use and human behavior in an accessible and readable way. But their conclusions often do not adequately reflect the richness and complexity of the research. In some cases, the contrary evidence is so obvious that knowledgeable readers will be scratching their heads, wondering why the authors don't address countervailing data.

If urban sprawl destroys air quality, why has air quality improved in every major metropolitan area in the same period that North American cities have sprawled the most? Ozone in the Los Angeles basin, for example, has been cut in half since 1973, according to the South Coast Air Quality Management District. If living in automobile-oriented suburbs increases the risk of personal injuries, why are fatality rates for commuter and light rail transit two times higher than for urban roads and almost three times higher than urban interstate highways? If automobile injuries and fatalities are a significant drawback of suburbs, why aren't the higher risks of property and violent crime significant drawbacks of dense, mixed-use, transit-oriented cities?

If this book were a polemic, Frumkin, Frank, and Jackson could perhaps be excused for ignoring countervailing evidence. But Urban Sprawl and Public Health is supposed to serve as a guide for citizens, planners, architects, landscape architects, and legislators.

The authors do note some of the paradoxes in their research, and they seem genuinely perplexed. On the one hand, they believe communities should be designed for higher densities to encourage walking or bicycling to work. On the other hand, higher densities expose neighborhoods to higher levels of pollution at the street level. Walking and bicycling expose people to that pollution longer, and they breathe polluted air at higher and more intense rates. High densities can reduce pollution only if significant numbers of people opt for slower, less flexible public transit over the mobility and speed of cars. Yet the flexibility and speed of the automobile still trumps transit in most high-density areas. Even in dense, congested, mixed-use London, England, with its extensive public transport system, almost half of all trips are by automobile.

The weakest part of the book is not its summary of the literature. It's the discussion of an area where none of the authors has much professional expertise: urban planning. Achieving their vision of cities—high-density, mixed-use, pedestrian-friendly, mass-transit-dependent neighborhoods—would require the kind of draconian housing, migration, and land use regulations they disavow in their preface. They proclaim: "We do not argue for removing choices; rather, we argue for more choices. It would be foolish to tell anybody where to live." Yet this is exactly what would have to happen to achieve the changes in lifestyle and land use patterns necessary to obtain significant health benefits.

Judging from what people actually buy and what they say in consumer surveys, most families prefer to own their own homes with yards large enough for their kids (or future kids or grandchildren) to play in. The density of a typical U.S. suburb ranges from 2,500 to 3,000 people per square mile. By contrast, professional planners estimate that effective bus transit becomes viable at 10,000 people per square mile. Light rail becomes viable at 14,000 people per square mile.

Any way you slice it, that's a major restructuring of the urban landscape, and it represents a significant move away from the preferred housing of most households. Rather than buying a 1,500-square-foot house on a quarter-acre lot, a lower-middle-income household will be buying a 1,000-square-foot townhouse or duplex. The families that will be limited the most will be lower- and middle-income households and first-time homebuyers. This rejiggering of the urban landscape seems pretty dramatic for the relatively small health benefits it might bring.

At times even the authors recognize the limited impact of the built environment on public health. They write, for example, that moving from the lowest-density metropolitan area to the highest-density metropolitan area in the United States reduces the probability of being obese by just 12 percent. Yet this qualification doesn't stop them from claiming that sprawl is a major factor in America's obesity epidemic, providing further justification for government control over housing and land use.

Frumkin, Frank, and Jackson display a classic analytical fallacy: comparing an ideal construct to the gritty reality of the way people actually behave. Real people don't have the luxury of choosing idyllic settings. Owning a house with a large yard may mean I live too far from the grocery store to walk, but it provides a safe haven for my children to play in with their friends in the immediate neighborhood. I'm not forced to organize a trip to the public park, holding their hands tightly, food and toys strapped to my back, as we cross a busy urban street. I may be more distant from my neighbors, but I'm at less risk of being robbed or assaulted. Suburban cities are much safer than traditionally denser urban cores, reporting victimization and crime rates at one-third to 50 percent lower, according to the FBI's Bureau of Justice Statistics. Victimization by strangers is also lower in the suburbs.

All of which brings us back to my community pool, and to the opportunity this book missed. Frumkin and his colleagues are fundamentally right that different problems emerged with different types of cities at different points in time. Large, dense urban centers faced significant problems, but these problems were solved through technological innovation, advances in health care, the establishment of urban sewer systems, and the economic shift away from heavy industry.

Modern suburbs pose new challenges. Community design may play an important supporting role in improving health, but larger, often unknown forces may exert more powerful influences on human health and behavior. Air quality has improved, notes the American Enterprise Institute's Joel Schwartz, because fleet turnover has removed the cars that pollute the most. High density and mixed uses may raise the likelihood that children will walk to the store or to a neighbor's house, but these effects are likely to be swamped by general trends toward poorer eating habits and more reliance on sedentary entertainment such as video games.

The active, overweight kids at my local community pool don't fit into the public health model of community design advocated by anti-sprawl academics like Frumkin, Frank, and Jackson. They reflect a general reluctance on the part of parents and consumers to understand and respond to the health challenges implicit in lifestyles characterized by more wealth, greater consumer choice, higher mobility, and abundant land. A good book on sprawl and public health would also recognize the centrality of consumer choice and the productive capacity of market economies. That book, alas, has yet to be written.

Steep Streets

info@reason.com (Ted Balaker) sstaley@reason.org (Sam Staley) — Tue, 02 May 2006 00:00:00 EDT

Almost as soon as he dreamed up a pricing scheme to manage the congestion on his city's streets, London Mayor Ken Livingstone began urging others to follow his lead. Charging for access to central London on weekdays has slashed congestion by a third, has quickened travel times, and hasn't stopped Livingstone from winning re-election. Inspired perhaps by that last point, U.S. mayors such as San Francisco's Gavin Newsom have expressed interest in the idea—but the British solution is unlikely to translate well across the pond.

Londoners must pay a whopping $14 a day to enter the "congestion zone," eight square miles in central London during weekdays between 7 a.m. and 6:30 p.m. That's a pretty blunt traffic management tool: It ignores the fact that congestion ebbs and flows during the day, forcing motorists to pay the same amount whether they enter the zone during rush hour or at noon, for five minutes or for five hours.

Congestion pricing isn't a bad idea in itself, especially if it reduces surface congestion and weakens the bureaucratic love affair with expensive rail projects. But there are potential pitfalls, including the possibility of waste. While London officials have made good on their promise to use toll revenue only for transport purposes, American politicians have a habit of steering toll money into nebulous slush funds and turning transport bills into free-for-alls. According to Citizens Against Government Waste, the most recent federal transportation bill is packed with nearly 6,500 pork projects.

Wrecking Property Rights

sstaley@reason.org (Sam Staley) — Sat, 01 Feb 2003 00:00:00 EST

The corner of Country Club Drive and Main Street in Mesa, Arizona, doesn't look like much, but this dusty plot of land is at the center of a growing debate over property rights. Just a stone's throw from downtown, the corner has touched off a potentially precedent-setting legal tug of war whose implications extend far beyond Arizona. The case illustrates dramatically how the effort to redevelop America's cities has transformed eminent domain -- the government's power to seize private property -- from a narrowly construed last resort into a widely, almost routinely used development tool.

On one side of the legal tangle is the City of Mesa, angling every way it can to broaden its discretionary power to seize private property for whatever purpose it pleases. In this case, on land bureaucratically labeled "Site 24," the city wants to give five acres to local businessman Ken Lenhart and his associates.

Lenhart wants to expand his hardware store, and the five acres that make up Site 24 are an ideal location. The expansion, he claims, would boost his sales by $8 million in the first year. But Lenhart didn't want to pay the full market price for the land. He didn't even want to bother negotiating with the property owners.

After buying a few parcels at auction, he asked the city to condemn the rest and "sell" it to him at $4 per square foot. At the time the agreement was made, the full cash value of the properties averaged more than $8 per square foot, according to the Maricopa County tax assessor. The deal could net Lenhart a direct subsidy of at least $150,000 (and probably much more). The City of Mesa has decided that Lenhart's hardware store, a discount TV and electronics shop, and a few other small retailers and offices would be a better use of the property, so it's eager to make the deal.

Randy Bailey doesn't think it's such a great idea. Bailey is the sole proprietor of Bailey's Brake Service, a thriving enterprise that's been located on Site 24 for more than three decades. The family business has been around for more than 40 years, and Bailey has run it for 32. He doesn't even advertise; his customers just know to go to the brake shop at the corner of Country Club and Main.

Apparently, the city doesn't think Bailey's Brake Service contributes enough to the local economy to justify letting him stay. Now Bailey is hoping the courts will stop the city from using its power of eminent domain to improve Lenhart's bottom line. When the case first went to court, Bailey and his attorneys -- Clint Bolick and Tim Keller of the Institute for Justice, a Washington, D.C.-based public interest law firm -- were optimistic. After all, the Arizona Constitution states that "private property shall not be taken for private use." And Mesa's redevelopment director, Greg Marek, has admitted at trial and in official government documents that the city decides which properties to condemn based on whether someone in the private sector wants the land and has a project for it. That concession seemed to be a clear indication that private interests were driving redevelopment policy in Mesa.

Yet Bailey lost the first round, with Maricopa County Superior Court Judge Robert Myers ruling against him on April 30, 2002. (Full disclosure: I provided expert testimony for Bailey at the trial.) Myers stayed his ruling pending Bailey's appeal. At press time Bailey is waiting for a decision by the Arizona Court of Appeals, which heard oral arguments in June. "The three judges were very concerned about the trial court's decision not to apply the constitutional standards," notes Tim Keller, Bailey's attorney. "We hope to get a positive decision."

The U.S. Constitution, like Arizona's, attaches an important restriction to the taking of private property: It has to be "for public use." Yet cases like Randy Bailey's are becoming more and more common. Eminent domain is becoming a primary tool for promoting urban development. In the case of Mesa, it's the only tool. That's why attorneys throughout the nation are watching this case.

A Tool of First Resort

Lenhart targeted Bailey's property in 1996, when Wayne Balmer, at that point the city's community development manager, sent a memo to Charles Luster, then the city manager, noting that his department had received several inquiries from private companies to develop land near the downtown area. "Unfortunately," he wrote, "all of these sites are outside our Town Center Redevelopment Area" (emphasis in the original).

Not to worry. Working with other high-level officials, Marek, the redevelopment manager, simply rewrote the rules to accommodate the developers. Once Lenhart decided that Bailey's property was suitable for the expansion of his hardware store, the city redrafted Mesa's redevelopment plan to include the land at Country Club and Main. They designated the property "Site 24" and issued a request for proposals to redevelop the site.

Three development companies submitted plans. One was Redstone Development, owned by Lenhart. Another was Palm Court Investment, owned by Mesa Discount. The third was Watt Commercial Properties, a national operation, which proposed a complete redesign of the property, including 50,000 square feet of new retail and office space. The city decided to consolidate the proposals submitted by Palm Court and Redstone and to reject Watt's bid altogether. It then negotiated a development agreement that included the terms for sale of the property to Lenhart and Mesa Discount once it was acquired by the city. It also agreed to acquire Lenhart's old building and land as part of a land swap.

At the request of Palm Court and Redstone Development, the city proceeded to condemn 21 of the site's 26 parcels, including Randy Bailey's business, representing half the assessed value of the land. Lenhart is asking the city to acquire property worth two-thirds of the assessed value of his share of the development project.

It was a sweet deal for Lenhart. For the hapless property owners living and making their living on Site 24, the taste was decidedly sour. Bailey and his father approached Lenhart to see if the brake service could be incorporated into the development project. No deal: Lenhart dismissed them out of hand, telling them they had to talk to the City of Mesa.

The Baileys had never been approached by Lenhart, the City of Mesa, or any of the other investors about selling their property before or during the process in which the city issued its request for proposals to redevelop the site. To add insult to injury, Lenhart bought a property adjoining Bailey's building and proceeded to board it up. The set of small office spaces has gone unused for years, contributing to the run-down character of the corner. Lenhart, as landlord, was contributing to the blight that the city cited to justify condemning Bailey's property.

Eminent Domain Abuse and the Courts

Eminent domain has a long history, and it isn't likely to go away. After all, it's enshrined in the U.S. Constitution, not to mention the constitutions of all 50 states. What distinguishes the current era is the degree to which local governments are willing to use this power to achieve all manner of public policy goals. Sometimes they succeed, and sometimes they're driven back by public protest or the courts. But they're unquestionably pushing the boundaries.

Jeff Finkle is president of the International Economic Development Council, a trade association representing development and redevelopment organizations and agencies. Not surprisingly, Finkle feels that eminent domain is critical to the revitalization of cities. Few projects in urban areas occur on small, isolated lots, and the costs of negotiating with dozens of property owners are simply too high, he argues. In addition, some property owners refuse to sell or set an unreasonable price, scuttling projects with large benefits for the community.

"Lose eminent domain in urban settings," Finkle says, "and the only land that will be developed is green space on the edge of cities."

That said, Finkle doesn't defend eminent domain's recent form; he recognizes that the power should have limits. Taking private property, he says, "should be the last possible tool. If negotiations fail, if the bully pulpit fails, then you go to a takings case."

In the current climate, many of the traditional constraints on public takings of private property seem to have disappeared. Most redevelopment laws, including Arizona's, explicitly acknowledge that land can be taken even if the beneficiaries will be other private parties. This principle is even articulated in federal law, through the 1954 Supreme Court decision Berman v. Parker, which allowed local governments to condemn land for urban renewal and then transfer title to private parties. Even then, local governments didn't have carte blanche; they had to justify the taking as a way to mitigate "urban blight." But over the years that term has become little more than a name for property a government wants to take. Today redevelopment agencies enjoy more discretion than ever, and eminent domain is becoming their tool of choice:

� In 1993 the Las Vegas Redevelopment Authority condemned Carol Pappas' apartment building as a "blight" so a consortium of eight casinos could demolish it to build a parking garage. No one ever surveyed the block on which Carol's apartment building stood to assess whether it was actually blighted.

� In 1999 the mayor of New Rochelle, New York, decided that a neighborhood housing almost 200 residents and dozens of businesses would be better used for a retail-oriented development anchored by the Swedish furniture giant IKEA. The city offered to condemn 15 acres of land for the company.

� In 2000 the mayor and city council of Pittsburgh tried to condemn an entire downtown neighborhood in the Fifth and Forbes area and transfer title to a Chicago developer who intended to create an upscale shopping mall.

� In 2001 the State of Mississippi condemned some property to accommodate a new Nissan plant. While many of the property owners were willing to sell, one family, the Archies, had deep roots in their home and wanted to stay. The state continued to pursue the condemnation even though officials admitted publicly that Nissan didn't need the Archies' land to build its plant.

Then there's the case of Gateway International Raceway, near St. Louis. Built in 1997, the track hosts several major events, including auto and drag racing, almost weekly. Gateway opened with 50,000 seats, drawing 400,000 race fans into the stands in its first year. Its owners hoped to expand to as many as 100,000 seats, a size large enough to attract a highly coveted Winston Cup NASCAR race date.

To do that, Gateway had to solve a problem: traffic congestion. With 50,000 seats, the raceway couldn't accommodate the traffic generated by throngs of patrons clogging the roads on race day. Moreover, various development projects were quickly eating away at the land available for parking around the raceway. So on February 20, 1998, Gateway asked the Southwestern Illinois Development Authority (SWIDA) to condemn 148.5 acres owned by National City Environmental and the St. Louis Auto Shredding Company and transfer them to Gateway to accommodate new parking.

In this case, the taking was prevented: The Illinois Supreme Court invalidated SWIDA's effort. But the case revealed a system that barely respected property rights at all. Anticipating requests like Gateway's, SWIDA had adopted a "Quick-Take" program. All applicants had to do was fill out a form, pay a fee, add a commission to SWIDA based on the value of the property, and voilà, the redevelopment agency would condemn someone else's land and hand it over. Of course, it wasn't quite that simple -- the St. Clair County board had to approve the transfer -- but the message was clear: "If you need land, we'll get it for you." The Illinois Supreme Court said as much: "It appears SWIDA's true intentions were to act as a default broker of land for Gateway's proposed parking plan." The agency hadn't done a traffic study, or even included the project in an economic development plan.

Arizona Dust Bowl

As for Randy Bailey: Judge Myers ruled in April that Mesa could take his property and hand it to Ken Lenhart simply because the government had decided that a hardware store was a more valuable use than a brake shop. The city's redevelopment plan calls for improving its image and making it more economically and socially attractive. It also calls for putting land to its highest and best use to maximize its retail potential. In 2000 the city estimated that the Country Club and Main deal would generate one-time revenues of more than $95,000 through impact fees and sales taxes, an annual increase in sales tax revenue of $168,000, and increased utilities revenue of $69,000. Alternative ways of achieving the same ends were not even considered.

Although "the Court is sympathetic to Mr. Bailey's position," Myers wrote, the city "properly" used its eminent domain power to take his property. Mesa could effectively close down Bailey's business because it had presented, in court, "some reasonable support in the facts, even though those findings may be reasonably doubtful and fairly debatable." In essence, Myers concluded that the city could take just about anyone's property in town as long as it conducted the right number of public hearings and talked enough about the property in a public forum.

Myers' unwillingness to question Mesa's determination that it was necessary to take Bailey's property is rooted in a 1983 decision by the Arizona Supreme Court, City of Phoenix v. Superior Court, Maricopa County. That ruling separated takings decisions into two components. The first considered "necessity," which the court considered a legislative decision. The second component was "public use," which the court determined was subject to judicial review. The Arizona courts, unfortunately, have typically avoided applying judicial scrutiny to the public use aspects of a project, ruling against cities only if the owners could demonstrate fraud or "arbitrary and capricious conduct." Apparently, Mesa's policy of enabling well-established private businessmen to covet their neighbor's property and use the city's power of eminent domain to seize it is not arbitrary or capricious.

Myers' approach is not unique to Arizona or his courtroom. On the contrary, it's the rule. Property rights do not get the same level of protection as other fundamental liberties, such as free speech, the right to assemble, or the right to an impartial jury. Restrictions on other rights have to meet a "means-ends" test: There has to be a compelling government interest to justify them. "In eminent domain," notes Notre Dame law professor Nicole Garnett, "there is no means-end scrutiny at all. [The courts] don't even bother to check to see if the government is advancing a public use. They wash their hands of it. They don't ask if economic development could be done another way."

Not surprisingly, the entire Arizona bar is watching this case. No "cleaner" case is likely to be found that tests the words of the Arizona Constitution or the Phoenix decision, notes Bailey's attorney Tim Keller. If the city's taking of Bailey's property is upheld on appeal, it will be open season on private property in Arizona.

Turning Tide?

Supporters of eminent domain disagree. "The fact is that in the average community in the typical state, the system is working well," claims the American Planning Association's policy guide to takings. "Property rights advocates are waging a guerrilla war of soundbites, misleading 'spin doctoring' and power politics which characterizes government at every level as evil empires of bad intent."

Finkle, the president of the International Economic Development Council, echoes this sentiment. The Institute for Justice in particular, he argues, has "done a great job of taking the absolute horror cases and publicizing them." For the most part, Finkle and other redevelopment advocates claim, eminent domain is used reasonably and appropriately.

Nevertheless, a few recent court cases may signify a trend toward stricter scrutiny of local government decisions. "Courts are getting involved because they are seeing abuses," says Scott Bullock, an attorney at the Institute for Justice. "A fundamental lesson of history is that power is abused. First it's urban renewal as a part of an effort to redevelop cities. Soon it becomes a way for developers to get land on the cheap and well-connected developers to do projects in their particular area."

Not every court has been as amenable to eminent domain abuses as Myers'. As we saw, the Illinois Supreme Court invalidated a development authority's attempt to seize private property for a racetrack parking lot. In Las Vegas, Carol Pappas lost her apartment building and livelihood, but the Nevada Supreme Court has been harshly critical of the city's handling of the case, which it is reviewing.

Garnett, the law professor, questions whether such cases really indicate a shift in judicial attitudes. "What might be happening," she notes, "is we are cycling back into the 'too much' use of eminent domain. Now that economic development incentives are everywhere, cities and states are using eminent domain as another incentive. We are seeing an uptick in takings challenges because we are seeing more eminent domain cases, and we are seeing more cases reining in abuses."

"I see a modest increase in the [eminent domain] cases largely because the door to the federal courthouse is slightly ajar, and plaintiffs would like to pry it open," says William Fischel, a Dartmouth economist who has written extensively on the issue. "The Supreme Court clearly does not like most of these cases and is leery of giving plaintiffs a federal forum. They want to keep the cases in the state courts."

There is an important potential downside to curbing eminent domain, Finkle warns. Local governments are pragmatic. They will do what seems practical at the time, and they rarely make decisions in the context of broad policy issues or goals. Without the ability to transfer property seized through eminent domain to private developers, local governments might instead choose to take property and keep it. Rather than assemble land for private redevelopment, Finkle argues, local governments will own shopping centers, office buildings, and factories.

"Communities will just use alternative means for achieving economic development ends," he says.

That may already be happening. In Chester County, Pennsylvania, near Philadelphia, the city of Coatesville, population 11,000, has decided it's going to revitalize itself with a 230-acre recreation center. Plans include two ice rinks, bowling alleys, a go-cart track, rock climbing walls, a 270-room hotel and conference center, an 18-hole golf course, miniature golf, pitch 'n' putt, and a driving range, among other attractions. The city manager, Paul Janssen, thinks the project will attract corporate executives to the former steel town once they see the downtown (which will "soon" be revitalized). The average home in Coatesville is worth $56,000. Local homeowners are resisting the attempts by the city to condemn their land, but their prospects are dim. Dick Saha's farm has been condemned even though it's located outside the city limits. He can't even vote for or against the people who are taking his land.

Beyond the Courts

Despite recent victories, the courts are unlikely to be much help in reining in abuses of eminent domain. The courts "don't feel comfortable saying, 'We know better than the government' on public use," observes Garnett. When they intervene, they usually "pick up procedural aspects of the implementation of the law." This was the case even in Illinois, she notes. The Illinois Supreme Court objected to the government's "offering its services for eminent domain. It wasn't saying that economic development was not a public use."

"The constraint on local governments has seldom been the courts," agrees Fischel. "Local politics and public opinion discourages unprincipled takings because using eminent domain for arguably private purposes is often unpopular."

In fact, many of the recent victories against eminent domain abuse have resulted from nonjudicial remedies. Pittsburgh backed off its plans to oust 125 local businesses through eminent domain after a well-orchestrated protest campaign made the issue too risky politically and the key anchor -- a Nordstrom's department store -- pulled out of the project. (See "Death by Wrecking Ball," June 2000.) Similarly, IKEA backed out of the New Rochelle plan after it found itself facing negative coverage in the local media and public demonstrations (including one outside the Swedish consulate in New York). In Baltimore County, Maryland, condemnation for redevelopment purposes went to the ballot and was rejected by more than two-thirds of voters. The county had planned to condemn 100 properties, including three apartment complexes, and replace them with upscale homes, retail businesses, and restaurants.

The Castle Coalition, a grassroots group founded in early 2002 to help property owners fight eminent domain abuse, aims to organize such popular resistance. Most property owners, after all, don't have access to attorneys, and many tend to assume that local governments are acting in the public interest -- even when their property is being condemned.

Protest, alas, is not always enough. The City of Mesa has suffered a barrage of negative press over the Randy Bailey case. Yet the city government has refused to back down from its position that virtually anyone's property in Mesa can be seized and handed over to his neighbor as long as enough people on the city council vote for it. The City of Coatesville shows little willingness to back down on its taking of the Saha's property and even placed a two-page ad in the local paper supporting its decision and criticizing the Saha's and other property owners' opposition. In the end, it will be up to the judiciary to determine how far eminent domain can go -- and whether property ownership is simply a temporary condition subject to the whims and pleasures of local officials.

Ground Zero in Urban Decline

sstaley@reason.org (Sam Staley) — Thu, 01 Nov 2001 00:00:00 EST

Welcome to ground zero in inner-city decline: the Over-the-Rhine district in Cincinnati, Ohio. This is the neighborhood, settled a couple hundred years ago and named for the predominantly German immigrants who once populated it, that was at the center of America's most recent spasm of social turmoil. In April, after police shot an unarmed black man, hundreds of Cincinnati residents took to the streets to protest entrenched racism and economic inequities. Cincinnati -- once renowned as the Queen City of the Ohio River, once dubbed "Porkopolis" for its dominance in pig processing, once famous as the home of baseball's legendary Big Red Machine -- is now known for civil disorder and a sagging population. The 2000 Census underscores that Cincinnati's glory days were somewhere in the past: During the 1990s, the city lost over 30,000 residents, or about 9 percent of its population.

Any prospects for revival in this Midwestern city were dealt a staggering setback by images of smoldering fires in the streets, angry men hurling bricks through storefront windows, and shop owners holding vigil over their property with shotguns. In less than a week, more than 600 people were arrested for disorderly conduct, vandalism, and assault. Urban decay -- vacant buildings, declining population, few jobs -- provided the tinderbox for the riots that thrust this famously staid city into the national headlines.

If the nation was shocked -- this was a town known for its conservatism, restraint, and bedrock Midwestern values -- so were Cincinnati's city leaders. Prior to the riots, the business community had been cultivating the city's reputation as a bastion of middle-class values and the German work ethic, regardless of the current residents' cultural heritages. The unrest provided a dramatic counterpoint to other recent development efforts. Earlier this year, in a bid to win the 2012 Summer Olympic Games, local activists and leaders put together an 800-page document touting Cincinnati's competitive advantages. In 1996, voters in Hamilton County, of which Cincinnati is a part, approved a sales tax increase to underwrite the construction of two new professional sports stadiums -- a baseball-only stadium for the Reds (the nation's oldest professional baseball team) and a separate football facility for the Bengals. The city and county have also invested substantial public funds in redirecting Fort Washington Way, a freeway providing easy access to downtown from the outer edge of the metropolitan area.

All told, those recent investments in downtown and riverfront improvements have cost Hamilton County residents close to $1 billion, and that's not counting the interest on bonds. The city lists 34 projects on its downtown development plan; if everything on that wish list gets built, the total price tag would be something like $4 billion. And yet Cincinnati has little to show for the effort, other than some white-elephant public works projects and the wreckage -- physical and emotional -- from this spring's riots. "The problems of the city," notes city councilman Phil Heimlich, "are not so much that white and black people don't get along; it's that white and black people don't stick around. I think the most important fact is that the city has lost almost 10 percent of its population over the last 10 years."

Cincinnati is a very specific place: Well-known for its steep hills and riverfront location, it has been built into its landscape in a singular and striking way (Winston Churchill once called it "America's most beautiful inland city"). Yet Cincinnati is also a very generic place in today's America. It's a city smack dab in the middle of a long, slow decline -- not just in population but in prospects for the future. Its story -- a sad one, though not without some measure of hope -- is one that is being played out in urban centers throughout the country. The reasons for Cincinnati's decline and the misguided attempts to reverse it are all too representative of what's happening throughout the U.S. today. For good and ill, what's happening in Cincinnati may well be coming to a city near you. If, in fact, it's not already there.

In 2001, the Fannie Mae Foundation studied three dozen of the nation's largest cities and found that most have been losing population since the 1970s. While some cities gained population during the '90s -- including such long-bleeding cosmopolises as New York and Chicago -- more lost ground: Cincinnati, Cleveland, Milwaukee, Rochester, Syracuse, Toledo, Baltimore, Buffalo, Detroit, Philadelphia, St. Louis, and the District of Columbia, among others, continued long traditions of population decline.

A closer look inside Cincinnati's city limits reveals a more troubling trend: Only three of its 48 neighborhoods added people between 1990 and 2000. One of those neighborhoods -- Queensgate -- only grew because the city built a new jail. Twenty-six neighborhoods lost more than 10 percent of their population. The Over-the-Rhine area saw its population shrink from 9,572 people to 7,638.

A Long Line of Spenders

Cincinnati's recent orgy of high-profile, publicly funded projects is hardly its first. At the turn of the 19th century, public works projects served mainly to line the pockets of political boss George B. Cox's friends, earning Cincinnati the reputation of a corrupt frontier burg. The excesses of corrupt city bosses helped inspire a series of reform groups, including the Taxpayers' League, in 1880. By the early 20th century, the same sort of public works projects were carried out in the name of social welfare -- whether the project in question entailed constructing a 15-mile commuter rail and subway system or taking over the local utilities. Despite its public profligacy, Cincinnati ranked among the nation's largest cities at the turn of the 19th century -- a gateway to the West and a thriving commercial center sustained by the Ohio River and the Miami-Erie canal. The city quickly became a center for industry, hosting the nation's largest concentration of factories making soap, cleaners, shortening, candles, oils, and chemicals. The legacy is symbolically embodied in the twin towers of Procter & Gamble's world headquarters in the heart of the city's downtown. Pork processing and beer brewing rounded out the list of major industries.

The city's German history reaches back nearly two centuries. An ethnic German was elected its first mayor in 1802, and by the 1840s, the city was printing bilingual ordinances. By the mid-19th century, one-fifth of Cincinnati's population spoke German, and Germans are largely credited with the expansion of savings and loans, called "bauvereins," that created a foundation of homeownership among the middle and working classes. Even in the mid-20th century, high-rise apartment buildings were scarce, an architectural legacy that benefits even the poorest neighborhoods, including Over-the-Rhine.

In the wake of the riots, city leaders created a task force -- Cincinnati Can -- and charged it with developing recommendations to address the simmering problems of urban decline. The effort is strikingly similar to Rebuild LA, the largely ineffective effort to revitalize South Central Los Angeles after its riots in 1992. Whether Cincinnati Can actually does anything to revitalize the city, this much seems certain: It will provide cover for dozens of other projects that elected officials and prominent business leaders have trumpeted in recent years to stimulate the city. For instance, city leaders are pushing hard to expand the money-losing, municipally owned and operated Dr. Albert A. Sabin Convention Center. The proposal would double the size of the current convention center to more than 600,000 square feet.

Citizens for Civic Renewal, a nonprofit local urban reform organization, commissioned "regional government" guru Myron Orfield to do a study of the region. Orfield, an elected representative in the Minnesota state legislature, is best known for Metropolitics, an influential 1997 book published by the Brookings Institution that argued that declining inner suburbs were as much a victim of sprawl as central cities. Orfield's preliminary report, released earlier this year, highlighted growing inequalities among the city, its inner suburbs, and the growing outer suburbs, and called for regional planning to minimize them.

If his past is any prologue, Orfield's final report, to be released later this year, will call for more regional government and revenue-sharing to redistribute income from relatively wealthy neighborhoods (and suburbs) to relatively poor inner-city neighborhoods (and suburbs). A multibillion- dollar light-rail project has also been proposed by the Ohio-Kentucky-Indiana council of governments (OKI), an organization that includes 105 representatives of government, business, social, and civic groups in an eight-county region. Proponents argue that the rail system will do just about everything -- reduce regional congestion, promote economic development, revitalize inner-city neighborhoods, and constrain sprawl.

The Actual Effects

What seems to be missing in the mess of publicly financed projects is any rational -- let alone balanced -- debate on whether such endeavors have any positive effects, much less the pie-in-the-sky results proponents routinely claim. Sports stadiums have emerged as a classic case in point. "Adding professional sports teams and stadiums to a city's economy does not increase aggregate spending for the city," wrote Lake Forest College economist Robert Baade, a leading expert on the subject, in a 1996 study. In fact, according to Baade's research, adding teams "appears to realign leisure spending rather than adding to it and is, therefore, neutral with regard to job creation." Baade's conclusions are based on his analysis of economic growth in 48 cities between 1958 and 1987, some with and others without new professional sports stadiums. Other analysts go even further, arguing that public investment in a sports stadium might reduce economic growth by siphoning money away from other important projects, such as road improvements, or from lowering taxes.

Clemson political scientist David Swindell echoes Baade's concerns. Swindell has studied the general economic and neighborhood impacts of minor and major league professional sports stadiums in places as varied as Indianapolis; Fort Wayne, Indiana; Arlington, Texas; and Cincinnati. He stresses that stadiums and convention centers have a "marginal impact" and "might even be negative"; he has seen "no evidence to support subsidies for private companies" in this way.

"Part of the problem," says one frustrated elected official in Cincinnati who requested anonymity, is that "people in this city look around and ask what [nearby] Indianapolis has done and they want to do that better." There's no question that Indianapolis, just a couple of hours northwest of Cincinnati, has grown in a major way, adding more than 40,000 people to its population between 1990 and 2000. Although Indianapolis is more than four times larger than Cincinnati (362 square miles vs. 78 for Cincinnati), Cincinnatians still compare the cities since their respective metropolitan areas are about the same size: 1.5 million people. Between 1974 and 1992, the period of the most intense investment in its downtown, Indianapolis funneled $2.76 billion into various development projects, most of which were centered on sports.

The civic leaders who cite these cases fail to check the peer-reviewed academic research that shows that Indianapolis' downtown development has largely failed. One of the most extensive studies of Indianapolis comes from Clemson's Swindell, Indiana University political scientists Michael Przybylski and Daniel Mullins, and Mark Rosentraub, author of Major League Losers and director of Indiana University's Center for Urban Policy and the Environment. Published in the Journal of Urban Affairs in 1994, the study found that such investments in Indianapolis increased sports-related employment by 60 percent. But since these jobs accounted for just 0.32 percent of all jobs in the Indianapolis economy, the overall effect on economic development was negligible.

"Indianapolis' focus on its downtown area and sports as a development strategy was associated with a general trend of increased employment and economic growth," conclude the authors. "However, Indianapolis' strategy did not result in more growth than was experienced by other Midwestern communities and did not lead to a concentration of higher paying jobs in the region." In short, Indianapolis' growth was the result of larger regional economic trends and the expansion of existing businesses, including a dramatic increase in Indiana University-Purdue University's employment base from 3,000 full-time faculty and staff to 8,200. Moreover, although the city's raw population grew from 1990 to 2000, its share of the region's population fell from 52.9 percent to 48.8 percent.

And even if public-sector investments did fuel job growth downtown, nearby neighborhoods would still be unlikely to see benefits. Consider Cleveland, the notorious Rust Belt city that pumped millions of public dollars into revitalizing its downtown during the 1980s. The value of commercial properties downtown doubled in value during that decade, but commercial property values outside the downtown fell by 4 percent overall.

Ironically, while local leaders look to other cities for new programs and projects, few look to those cities whose citizens have rejected such measures. Just two hours up I-71 from Cincinnati, voters in Columbus, Ohio, turned down a 1997 measure to publicly finance a new soccer stadium and a new hockey arena. Both facilities were eventually built anyway -- with mostly private money -- and both now house professional sports teams, despite predictions that public funding would be crucial to land the franchises.

Studies by the Pound

Cincinnati's emphasis on large, visible downtown development projects is in part a reflection of the "expert" advice proffered by consultants who have "studied" their "feasibility" and "economic benefits." In the case of the city's convention center, consultants concluded that Cincy needed a bigger (and more expensive) facility to compete with other cities. More recently, OKI released the results of its study from a national consulting firm "quantifying" the benefits of the first leg of the proposed multibillion dollar rail system, a light-rail trolley line extending from Northern Kentucky through the downtown of Cincinnati and up to its northern suburbs.

The studies seem endless at times, and the intent of most is transparent. One, written by Vanderbilt management professor Richard W. Oliver, purported to show the economic benefits of having the NHL Predators in Nashville. It was titled: They Shoot! They Score! NHL Nashville Predators Score Winning Goal for Middle Tennessee! Convention center expansions fit the same mold. "The rhetoric of convention center investment is drawn from 'feasibility studies' often developed by a national accounting or economic research firm," explains Heywood Sanders, a professor of political science at the University of Texas at San Antonio. Sanders has researched convention centers and their economic impacts for almost two decades, reviewing dozens of feasibility studies and writing numerous professional articles and reports, including a highly regarded 1998 article in the policy journal The Public Interest. "These studies lay out an invariably positive market analysis, justifying more local convention space and lending visible, supposedly objective support to political pressures to spend more public money for convention centers."

The studies are little more than marketing tools for chambers of commerce pushing one project or another; despite popular local support, big and small cities across the nation are littered with failed economic development projects, almost all dramatically oversold by their proponents. What's too often missing is the bottom line.

In a study last year written for the Boston-based Pioneer Institute, a market-oriented think tank focusing on Massachusetts policy issues, Sanders documents the shrinking market for conventions, a harsh reality that is rarely acknowledged by gung-ho city big wigs and their consultants. Most forecasts during the 1990s for trade shows and conventions were "unreasonable and unreliable," Sanders writes. Total event counts declined from 1998 to 2001, and average trade-show attendance dropped by more than 24 percent. Large, money-making conventions are gravitating toward a select few locations -- Atlanta, Orlando, Las Vegas, Chicago, and New York. Other traditional destination spots, such as Boston, haven't fared well, with events there slipping from 71 in 1996 to just 63 in 2001. Even large, vibrant, expanding metropolitan areas such as Houston or Dallas don't have what it takes to be competitive in the current convention market.

Along with stadiums and convention centers, consultants tout light-rail transit projects with reports that project fantastic benefits. Untold in these "studies" is the fact that the benefits are the product of computer models and have never been achieved in the real world. For example, in 1978, planners in Portland, Oregon, forecast that by 1990 the city's light-rail ridership would be 42,500. In reality, it was half that. In Sacramento, light-rail ridership was initially projected to be 50,000 on an average weekday. By 1998, average weekday boardings were 28,000 (slightly higher than a revised projection made once local officials had committed to the project). Studies typically highlight the congestion-relief benefits of rail transit, even as transportation planners refuse to argue that these benefits exist. Indeed, in his 1998 survey of rail transit investments built since 1980, Jonathan Richmond of Harvard's Taubman Center for Local Government concluded that none had appreciably reduced congestion in cities.

Nevertheless, OKI is pushing a 117-mile system of seven rail lines criss-crossing Cincinnati. The twin goals: to bring people back into the city and reduce road congestion. A 1998 estimate by OKI pegged the cost of the entire system at $1.8 billion. A single line running from Northern Kentucky through downtown Cincinnati to suburban Blue Ash might cost close to $900 million. And that's a conservative estimate: Large public investments are notorious for coming in over budget. A light-rail system being built in Jersey City, New Jersey, was supposed to cost $1 billion, but costs have exceeded the early estimates with just two-thirds of the track laid.

Real Development

This isn't the first time Cincinnati and Hamilton County have dabbled in rail -- or been taken to the cleaners while doing so. In 1912, reformist mayor Henry Hunt proposed a 15-mile rapid rail transit system; ironically, he thought it would help relieve congestion in the inner city by letting people live farther apart from one another. By 1920, private contractors were digging tunnels in the drained Miami-Erie Canal bed. The project was abandoned in 1927, after the costs ramped up well beyond original estimates and the rampant corruption became public. The entrances to buried subway stations and rail lines are still visible for those who know where to look.

In the 1920s, when the reform-minded Charter Party was voted into office, Cincinnati became the first major city to adopt a comprehensive plan. "In this concept," notes Ohio State University professor Laurence Gerckens, one of the nation's leading authorities on the history of American planning, "legal control of community development is used as a tool for, and is subservient to, the realization of a set of long-range comprehensive community goals." Later, the city developed a freeway (the recently realigned Fort Washington Way) that was explicitly designed to bring people in from the edges of the city and dump them into the downtown.

Cincinnatians took this approach to heart. Throughout the 20th century, city leaders took on one scheme after another using public money. Urban renewal and federal dollars helped pave over and renovate the Union Terminal railroad station on the West Side of town in the 1970s. Cincinnati also poured millions into the perennially troubled convention center in the 1960s, giant Riverfront Stadium in the 1970s, and the Fountain Square and Fountain Square West developments in the 1980s. The '90s, of course, brought stadiums for the Reds and the Bengals.

It's tempting to blame such projects on the "edifice complex," well-known among elected officials who want to leave their mark on a landscape. But such projects aren't simply the brainchild of elected officials or faceless bureaucrats. The business community consistently provides very visible support. With corporate giants such as Procter & Gamble and Chiquita Banana headquartered downtown, the Cincinnati business community flexes its muscle for public largess, especially in the core city. "Cincinnati is one of the clearest cases of the 'Downtown will save us' approach," says one outside observer still advising local officials. "In any other context, the business community would be talking about the virtues of unfettered free markets. When it comes to protecting 'their' investments in the core city, they are unified in their belief the public sector should pay for it -- anything goes."

Such efforts are not only ineffective and wasteful. They stand in stark contrast to the bottom-up economic development efforts that pop up in neighborhood after neighborhood, often right under the noses of local development officials. One of the most dramatic examples is "Toy Town" near downtown Los Angeles. As city leaders were throwing around millions of dollars in post-riot Los Angeles through the high-profile but ineffective Rebuild LA, Charlie Woo was taking advantage of a market opportunity. Mr. Woo, a Hong Kong-born former graduate student in physics at UCLA, realized the depressed downtown real-estate market allowed him buy or lease old warehouse space for $1 or $2 per square foot. He used those bargain-basement prices to get a foothold in the toy manufacturing and distribution industry. Over the ensuing decade, more and more toy distributors, manufacturers, and retailers took advantage of the accessible and affordable location, building the area into an economic juggernaut employing 5,000 people and generating half a billion dollars in sales annually. City officials were completely unaware of Toy Town until its presence was simply too large to ignore any longer. (See "Movers & Shakers," December 2000.)

So there's always hope for down-on-their-heels urban areas. Indeed, even in Cincinnati, spontaneous economic development is happening right under the noses of local officials despite apparent "neglect" by the well-heeled big-business sector. About 80 technology-focused companies have located along a 10-block stretch of Main Street in Over-the-Rhine, making up what has become known as the "Digital Rhine" (digitalrhine.com). To some extent, the tech district is the product of Main Street Ventures, a private development company that owns five buildings and provides space to 13 businesses.

The Digital Rhine

Created in 1999, Main Street Ventures is a private effort to promote tech companies in the Digital Rhine. It is also a response to a market trend in Cincinnati. Tech businesses were sprouting up all across the region, but a few local leaders thought that concentrating the budding industry in one area would give it the synergies necessary to grow. By attracting similar businesses to the Digital Rhine, investors also felt they could get more attention from venture capitalists, banks, consultants, and technology providers. Main Street Ventures grabbed the attention of some tech-sector heavy hitters: Taft, Stettinius & Hollister, Procter & Gamble, Oracle, Whittman-Hart, Compaq, Microsoft, Broadwing, Lucent, Deloitte & Touche, Fifth Third Bank, and the Greater Cincinnati Chamber of Commerce all provided substantial resources that allowed it to expand its services.

Why is this happening in Over-the-Rhine, one of the poorest neighborhoods in the city? Access to technology is one factor. Cincinnati Bell, the local telephone utility, laid fiber optic cables here and, based on proximity, it was the easiest, least costly access point.

But location isn't the whole story. The district also has a key amenity in abundance: historic architecture, with many buildings dating to the 1840s and 1860s. As urban renewal was bulldozing other parts of the city, the Over-the-Rhine district maintained its architectural integrity. Rents were also affordable, typically half the going rate in other parts of the city. Artists, bars, and restaurants had pioneered a commercial foothold on the first floors of many buildings. Main Street Ventures leased a floor in a building and advertised for resident companies. In 1991, the first two -- Planet-Feedback, an on-line consumer empowerment firm, and ConnectMail, an electronic video messaging company -- moved in.

The spontaneous establishment of a commercial district in a hot new market, however, didn't prompt a flood of public money and support from city council. Which isn't to say that the city council completely neglected the fledgling commercial center. "The city has done a super job with infrastructure improvements," notes George Molinsky, an attorney with Taft, Stettinius & Hollister who is widely credited with spearheading revitalization efforts in the district. The city has invested in new sidewalks, stepped up policing, buried wiring, provided decorative lighting, and created a façade program to spiff up several neglected buildings. "This helped create an environment conducive to additional investment by the private sector," notes Molinsky.

But in terms of public outlays, that's about it. While the Digital Rhine continues to get vocal and productive support from several city council members and local pols, the city has largely taken a hands-off approach, letting the private sector lead the way.

What of the riots? They were, after all, in Over-the-Rhine, though not in the high-tech end of the neighborhood. But Los Angeles has shown that riots do not have to be a death knell for neighborhoods. South Central's population climbed to almost 1 million in the 1990s. Almost 3,000 manufacturers are still located there, employing 80,000 people.

Similarly, the early signs after the Cincinnati riots are positive in the Digital Rhine. No companies left because of the unrest, and several have actually moved in. As long as the city provides the sort of minimal infrastructure it has in the past, there's no reason the Digital Rhine -- and other entrepreneurial zones -- can't flourish.

Yet cities such as Cincinnati make such development more difficult by continuing to focus on white elephants rather than the basic reforms that can help generate a broad economic base. Developers complain that many building inspectors are too narrowly focused on minimizing any risk when they should be letting the market innovate and diversify. Inspectors are focused on the narrowest interpretation of the law, and many rulings are arbitrary. Many developers in Cincinnati think of this as the cost of doing business, but it makes those areas less competitive than their suburban counterparts. Red tape shouldn't be considered simply another cost.

The city requires six complete documents to get a permit, and another week to process the permit once the documents are signed. On top of that, Hamilton County requires up to an additional two weeks. Obtaining a building permit takes only two days in nearby Clarmont County. Warren County, north of Cincinnati, requires one week. Developers expect four to six weeks in the city of Cincinnati. Builders also complain of not being able to find employees to start the permit application process in the city's Department of Public Works. Building standards sometimes double the costs of laying infrastructure on properties. "As a result," notes one large homebuilder, "we have made the decision to substantially limit our building in the city to projects that are financially feasible. Unfortunately, a project in the city rarely qualifies as being financially feasible. It simply isn't worth it for us."

Housing activists have also effectively created a moratorium on new construction in Over-the-Rhine. How? By passing ordinances that require developers to pony up the equivalent of $4 per square foot for low-income housing if they want to tear down an existing house. The unintended consequence is "demolition by neglect" -- property owners let their properties deteriorate to the point where inspectors have to condemn the building, allowing them to circumvent the ordinance, tear down the building, and develop the property.

No Magic Bullets

Still, some key players are trying to improve the overall business climate and move away from the big-spending, big- ticket items that have historically plagued Cincinnati's development strategy. City Council member Pat DeWine pushed through legislation that eliminated entire classes of permits for minor repairs and renovations to homes. A bigger change, however, may come when the city reforms its 38-year-old zoning code. The city did little to overhaul the code before a comprehensive review process began in 2000. The goal, says Steven Kurtz, a planner in the city's land-use management division since 1991, is to create more certainty in the process by simplifying zoning and development review. Kurtz notes that the revised code should reduce the number of zoning districts, streamline the public hearing process, and allow more varied and mixed uses. Planners hope to send a draft ordinance to the planning commission by the end of the year. These are small steps, to be sure, but important ones.

The larger lesson for Cincinnati and other cities is to look beyond a single magic bullet -- the one major project or set of projects that true believers think will pull a city into great times. "I tell folks in Cincinnati the same thing I tell them in other medium-sized cities," says convention center expert Sanders. "You are pursuing a strategy that is essentially imitative; at the same time you're discussing expanding your convention center, so are all other cities."

David Swindell, the Clemson political scientist, reinforces the point. "Many politicians know full well that there are no magic bullets, but getting a new neighborhood grocery store is not front page news, and it takes a lot of work to create a climate so that one will locate in a given area." In the meantime, warns Swindell, politicians chase white elephants in their downtowns. The result is that a "lot of needs go unmet -- streets are slow to be paved. More attention needs to be paid to the neighborhoods because they are important to providing a quality of life that can attract people to the inner city."

The best advice for urban renewal might come from the people actually investing in the Digital Rhine. "Do an exceptional job when it comes to the basic issues that cities are responsible for, such as infrastructure," says Molinsky. "Tax incentives are nice," he continues, but entrepreneurially minded people really want to live and work in neighborhoods that are "clean, safe, affordable, interesting, and eclectic, with valuable amenities."

Whether Cincinnati and other cities can learn this lesson is not clear. But their futures are riding on it.

Room to Grow

sstaley@reason.org (Sam Staley) — Thu, 01 Feb 2001 00:00:00 EST

Transit Troubles

sstaley@reason.org (Sam Staley) — Tue, 01 Dec 1998 00:00:00 EST

A series of management and modernization failures in the nation's seventh largest public transit system has prompted officials in San Francisco to look to the private sector for help. The San Francisco Municipal Railway, or Muni, has a $281 million budget and 3,441 employees. Yet Muni has experienced a number of failures and much bad publicity in recent months, including:

—Delays in service and a forced 15 percent reduction in the city's streetcar fleet after a computerized train control system was introduced last August. The problem is not expected to be fixed until 1999.

—Thirty percent of Muni's diesel buses at the agency's Kirkland facility failed inspection by the California Highway Patrol in June.

—The National Transportation Safety Board criticized Muni's safety record in the wake of a series of accidents earlier this year.

Mayor Willie Brown and the private management firm of Booz Allen & Hamilton are negotiating a proposal to help restructure key parts of Muni's operations, including maintenance, troubleshooting, and parts acquisition.

Booz Allen & Hamilton has presented its plan to the mayor, Muni director Emilio Cruz, and Board of Supervisors President Barbara Kaufman. Only one-third of Muni's revenue comes from its customers (in the form of fares); more than 40 percent comes from the city's general fund and from parking revenues.