Change is in the air and we've got the numbers to prove it on Smart City.
At a time when tax revenues are declining and city budgets are strained, our first guest has a modest proposal that could produce big dividends for cities. Joe Cortright is an economist for Impresa Consulting in Portland, Ore., and his latest work shows how profitable it can be for a city to be greener, smarter, and with fewer people living in poverty. The full report for CEOs for Cities is available here.
Want to find out what's happening in your neighborhood? Adrian Holovaty knows. He's the creator of Everyblock.com, a website that provides hyper-local news tailored to your street address. We'll give the site a test run and see what's happening on our block.
Smart City is a syndicated, weekly hour-long public radio talk show that takes an in-depth look at urban life: the people, places, ideas and trends that affect us all. Host Carol Coletta, president and CEO of CEOs for Cities, talks with national and international public policy experts, economists, business leaders, artists, developers, planners and others on the pulse of city life for a penetrating discussion on urban issues.
Smart City is broadcast at 6 a.m. Saturday and Sundays on WKNO-FM, but it is also webcast and podcast so you can listen to it anytime you like. For the webcast, times for the broadcast in other cities and to sign up for the podcast, visit our website.
Showing posts with label City Dividends. Show all posts
Showing posts with label City Dividends. Show all posts
Friday, May 29, 2009
Wednesday, April 08, 2009
$1 Billion Economic Strategy And No Tax Freeze
Normally, for a billion dollar economic opportunity, Memphis will do just about anything.
For a lot less, we gave The Pyramid to Sidney Shlenker on little more than a promise and a few architectural rendering. That house of cards collapsed in bankruptcy with $16 million in debts.
A few years earlier, we believed that we could actually build a first-class arena for $39 million, complete with “balloons at the grand opening,” according to John Tigrett. The final price tag for The Pyramid was $62 million.
Broken Plays
We chased NFL teams until it was said that we had the highest threshold for civic embarrassment in the U.S., and to prove it true, we gave the future Nashville Titans squatters’ rights at our stadium for a dismal year of football.
We ran up almost $2 billion in county debt because we were told that sprawl was economic growth. A report was deep-sixed by county government because it showed that it took 20 years for a housing development to generate enough taxes to offset the costs of the new roads and schools it required.
We accepted as fact incredulous economic impact studies, including one saying the Grizzlies’ economic impact would be $1 billion and one from Agricenter International claiming more than $524 million.
The State Leader In The Wrong Category
We approved more tax freezes in 10 years than all other metro counties of Tennessee combined, waiving more than $60 million in property taxes, on the assertion by the Chamber of Commerce that they were indicators of success rather than the failure to create a city more competitive in an economy shifting from brawn to brain.
The tax freeze program was so out of control that it was criticized by everyone from pro-business Forbes magazine to college researchers, and most of all by city and county governments’ own consultants, who called for its overhaul in a 97-page report in December, 2005.
Now, only 18 months after changes were finally made to tighten up the runaway program, economic development officials are lobbying hard to open up the tax freeze spigot again. And yet, they’ve been unwilling to assure local government that they will not continue to suggest that more low-wage, low-skill jobs are economic progress, although many warehouses given tax freezes that paid so little that their employees were also eligible for food stamps.
Proceed With Caution
While some of the new rules for tax freezes have proven to be unenforceable and need to be refined (and both city and county legislative bodies have now approved some amendments), the imperative to reform the old tax freeze program remains unchanged. While economic development officials complain about too much government oversight, it seems that when you go to the bank to get money, you should be prepared to play by its rules.
City and county officials are willing to consider softening up the rules on tax freezes for the Greater Memphis Chamber, but someone needs to present a 12-step program to end our community’s addiction on them. As one elected official put it, the Chamber would be better received if it submitted a plan that shows how Memphis can transition to the knowledge economy rather than depending on the low-wage, low-skill jobs that enrich real estate developers more than real Memphis workers.
In addition, one City Councilman said the Chamber should help end Memphis’ overreliance on tax freezes by describing what a more effective toolbox of incentives would look like and by developing a campaign led by Tennessee Chambers to get it approved by the Legislature.
The Proverbial Low-Hanging Fruit
Meanwhile, the $1 billion economic opportunity stares them in the face. It is the impact from a one percent increase in college attainment, according to CEOs for Cities’ “City Dividends” report. It said that if the Memphis region can move the needle from just 23.7% to 24.7% for people over 25 years of age with a college degree, it could create economic activity commensurate to the highly-coveted automobile manufacturing plants chased by every city in America.
In other words, all it takes is for 8,002 more people in the Memphis metro to get college diplomas. To put that into perspective, there’s 130,000 people in Shelby County alone who attended college but didn’t graduate.
Surely, it is in the city’s self-interest to adopt a short-term strategy aimed at getting as many of them back into college and creating a bridge that leads from community college to university graduation. After all, each percentage point increase in college attainment is associated with $763 increase in per capita income for the entire metro area.
There’s no denying that with each one percent improvement in college attainment producing $1 billion in economic growth, the payback is high. And best of all, it doesn’t even require a tax freeze.
This post was previously published as Memphis magazine's City Journal column.
For a lot less, we gave The Pyramid to Sidney Shlenker on little more than a promise and a few architectural rendering. That house of cards collapsed in bankruptcy with $16 million in debts.
A few years earlier, we believed that we could actually build a first-class arena for $39 million, complete with “balloons at the grand opening,” according to John Tigrett. The final price tag for The Pyramid was $62 million.
Broken Plays
We chased NFL teams until it was said that we had the highest threshold for civic embarrassment in the U.S., and to prove it true, we gave the future Nashville Titans squatters’ rights at our stadium for a dismal year of football.
We ran up almost $2 billion in county debt because we were told that sprawl was economic growth. A report was deep-sixed by county government because it showed that it took 20 years for a housing development to generate enough taxes to offset the costs of the new roads and schools it required.
We accepted as fact incredulous economic impact studies, including one saying the Grizzlies’ economic impact would be $1 billion and one from Agricenter International claiming more than $524 million.
The State Leader In The Wrong Category
We approved more tax freezes in 10 years than all other metro counties of Tennessee combined, waiving more than $60 million in property taxes, on the assertion by the Chamber of Commerce that they were indicators of success rather than the failure to create a city more competitive in an economy shifting from brawn to brain.
The tax freeze program was so out of control that it was criticized by everyone from pro-business Forbes magazine to college researchers, and most of all by city and county governments’ own consultants, who called for its overhaul in a 97-page report in December, 2005.
Now, only 18 months after changes were finally made to tighten up the runaway program, economic development officials are lobbying hard to open up the tax freeze spigot again. And yet, they’ve been unwilling to assure local government that they will not continue to suggest that more low-wage, low-skill jobs are economic progress, although many warehouses given tax freezes that paid so little that their employees were also eligible for food stamps.
Proceed With Caution
While some of the new rules for tax freezes have proven to be unenforceable and need to be refined (and both city and county legislative bodies have now approved some amendments), the imperative to reform the old tax freeze program remains unchanged. While economic development officials complain about too much government oversight, it seems that when you go to the bank to get money, you should be prepared to play by its rules.
City and county officials are willing to consider softening up the rules on tax freezes for the Greater Memphis Chamber, but someone needs to present a 12-step program to end our community’s addiction on them. As one elected official put it, the Chamber would be better received if it submitted a plan that shows how Memphis can transition to the knowledge economy rather than depending on the low-wage, low-skill jobs that enrich real estate developers more than real Memphis workers.
In addition, one City Councilman said the Chamber should help end Memphis’ overreliance on tax freezes by describing what a more effective toolbox of incentives would look like and by developing a campaign led by Tennessee Chambers to get it approved by the Legislature.
The Proverbial Low-Hanging Fruit
Meanwhile, the $1 billion economic opportunity stares them in the face. It is the impact from a one percent increase in college attainment, according to CEOs for Cities’ “City Dividends” report. It said that if the Memphis region can move the needle from just 23.7% to 24.7% for people over 25 years of age with a college degree, it could create economic activity commensurate to the highly-coveted automobile manufacturing plants chased by every city in America.
In other words, all it takes is for 8,002 more people in the Memphis metro to get college diplomas. To put that into perspective, there’s 130,000 people in Shelby County alone who attended college but didn’t graduate.
Surely, it is in the city’s self-interest to adopt a short-term strategy aimed at getting as many of them back into college and creating a bridge that leads from community college to university graduation. After all, each percentage point increase in college attainment is associated with $763 increase in per capita income for the entire metro area.
There’s no denying that with each one percent improvement in college attainment producing $1 billion in economic growth, the payback is high. And best of all, it doesn’t even require a tax freeze.
This post was previously published as Memphis magazine's City Journal column.
Monday, February 02, 2009
Small Improvements Can Pay Big Dividends For Memphis
With real estate values in the tank, retail sales plummeting, new construction halted and lay-offs mounting, the budgets of our local governments in the Memphis region are under severe pressure.
It's clear that there won't be money for anything that is not absolutely essential this year. (And even spending on essentials will be questionable.) The federal stimulus package could help in some key areas, but extra money is unlikely to be available to plug the operating budget.
Is there anything we can do to save ourselves? Surprisingly, there is.
There are three actions that collectively we can take that have the potential to pump significantly more money into the local economy. CEOs for Cities, a national network of urban leaders, has calculated that by making small improvements in performance in three key areas, cities can realize big annual financial gains.
According to the latest data, we have 189,645 college graduates over the age of 25 in the Memphis metro area, or 23.7 percent of 800,189 (the total number of 25-year-old and over population). If we could increase that number by just one percentage point to 24.7 percent, or 8,002 additional graduates, it would mean an additional $1 billion annually to our economy.
Call it the Memphis Talent Dividend.
The people in this metro area currently drive an average of 26.6 miles per day. If we could reduce that by just one mile -- from 26.6 to 25.6 -- it would mean another $232 million that circulates in our local economy rather than leaving our region to pay for foreign oil and cars built in other cities.
That is the Memphis Green Dividend.
The Memphis metropolitan statistical area has more than its fair share of poverty. Today, the portion of our population living below the poverty line is 17.8 percent. Once again, if we can reduce that number by just one percentage point to 16.8 percent, we realize a cost savings of $109 million.
That is the Memphis Opportunity Dividend. And that only counts the savings on family assistance, Medicaid and food stamps.
Add it up.
If we could make these relatively modest adjustments in performance, it is worth an additional $1.3 billion every single year. That is twice the total general operating budget for the city of Memphis for 2009. Plus, it is money that can be spent right here at home.
And as performance improves, that dividend grows.
These gains are not only significant to Memphis. They are also significant to the nation. If each of the top 51 metro areas could make the same gains -- a one percentage point increase in college attainment, one less vehicle mile traveled per day per person, and a one percentage point decrease in poverty -- the nation would realize a $166 billion annual dividend, thanks to its cities.
By making these very small changes in performance, the Memphis MSA and the nation can pump "found" money -- money we very much need right now -- into local economies.
The good news is there are already a number of local initiatives that address these very issues.
Sustainable Shelby is working to execute a comprehensive list of recommendations that will contribute to a reduction in vehicle miles traveled, helping the region to realize its Green Dividend.
There is also an obvious opportunity to capture the Talent Dividend: 22.7 percent of Shelby Countians age 25 and older enter college but don't graduate. If we can graduate simply those who began college but didn't finish, we could nearly double the college attainment rate of the region. One percent, then, seems well within reach.
Given the billion-dollar gains that are just within reach for the region, capturing Memphis' City Dividends seems like an effort definitely worth making.
This was published in The Commercial Appeal as an op-ed column by Carol Coletta, president and CEO of CEOs for Cities, a national network of urban leaders dedicated to building and sustaining the next generation of great American cities. She is also host and producer of Smart City, a nationally syndicated public radio talk show.
It's clear that there won't be money for anything that is not absolutely essential this year. (And even spending on essentials will be questionable.) The federal stimulus package could help in some key areas, but extra money is unlikely to be available to plug the operating budget.
Is there anything we can do to save ourselves? Surprisingly, there is.
There are three actions that collectively we can take that have the potential to pump significantly more money into the local economy. CEOs for Cities, a national network of urban leaders, has calculated that by making small improvements in performance in three key areas, cities can realize big annual financial gains.
According to the latest data, we have 189,645 college graduates over the age of 25 in the Memphis metro area, or 23.7 percent of 800,189 (the total number of 25-year-old and over population). If we could increase that number by just one percentage point to 24.7 percent, or 8,002 additional graduates, it would mean an additional $1 billion annually to our economy.
Call it the Memphis Talent Dividend.
The people in this metro area currently drive an average of 26.6 miles per day. If we could reduce that by just one mile -- from 26.6 to 25.6 -- it would mean another $232 million that circulates in our local economy rather than leaving our region to pay for foreign oil and cars built in other cities.
That is the Memphis Green Dividend.
The Memphis metropolitan statistical area has more than its fair share of poverty. Today, the portion of our population living below the poverty line is 17.8 percent. Once again, if we can reduce that number by just one percentage point to 16.8 percent, we realize a cost savings of $109 million.
That is the Memphis Opportunity Dividend. And that only counts the savings on family assistance, Medicaid and food stamps.
Add it up.
If we could make these relatively modest adjustments in performance, it is worth an additional $1.3 billion every single year. That is twice the total general operating budget for the city of Memphis for 2009. Plus, it is money that can be spent right here at home.
And as performance improves, that dividend grows.
These gains are not only significant to Memphis. They are also significant to the nation. If each of the top 51 metro areas could make the same gains -- a one percentage point increase in college attainment, one less vehicle mile traveled per day per person, and a one percentage point decrease in poverty -- the nation would realize a $166 billion annual dividend, thanks to its cities.
By making these very small changes in performance, the Memphis MSA and the nation can pump "found" money -- money we very much need right now -- into local economies.
The good news is there are already a number of local initiatives that address these very issues.
Sustainable Shelby is working to execute a comprehensive list of recommendations that will contribute to a reduction in vehicle miles traveled, helping the region to realize its Green Dividend.
There is also an obvious opportunity to capture the Talent Dividend: 22.7 percent of Shelby Countians age 25 and older enter college but don't graduate. If we can graduate simply those who began college but didn't finish, we could nearly double the college attainment rate of the region. One percent, then, seems well within reach.
Given the billion-dollar gains that are just within reach for the region, capturing Memphis' City Dividends seems like an effort definitely worth making.
This was published in The Commercial Appeal as an op-ed column by Carol Coletta, president and CEO of CEOs for Cities, a national network of urban leaders dedicated to building and sustaining the next generation of great American cities. She is also host and producer of Smart City, a nationally syndicated public radio talk show.
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