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The Federal Transit Administration (FTA) has intervened in the Honolulu Mayor's race against challenger and former Hawaii Governor Ben Cayetano. Governor Cayetano and Mayor Peter Carlisle are locked in a bitter contest that could determine whether the proposed $5.1 billion rail line is built. Mayor Carlisle is a strong supporter of the rail line. Challenger Cayetano has promised to "pull the plug" on the rail system. Recent polls show that the project's former thin majority support among Honolulu residents has now turned to opposition.

At a 1:30 p.m. press conference yesterday (March 13), Governor Cayetano released e-mails from the FTA indicating concerns about the rail project. According to Cayetano, "Not only it is apparent that FTA officials share some of our concerns, but it's also apparent that they warned the city about pending litigation if certain things were not done."

One of the FTA emails, obtained from the administrative record said “I do not think the FTA should be associated with their lousy practices of public manipulation and we should call them on it.”

Reflecting a surprising ability to "turn on a dime," FTA quickly responded in an apparent attempt to diffuse Governor Cayetano's point. According to KITV, "In response to the press conference, a spokesman for the Honolulu Authority for Rapid Transportation issued the following statement on behalf of the FTA:"

There is no question that this project has overcome early obstacles because of a much improved Federal partnership with the City of Honolulu and State of Hawaii over the last several years. The Federal Transit Administration believes that this project will bring much needed relief from the suffocating congestion on the H-1 Freeway and provide a real transportation alternative for the people of Oahu as gas prices rise.

Curiously, the FTA's statement contradicted its own previous position on the traffic impact of the rail line. In its January 2011 "record of decision" for the project, FTA indicated:  "Many commenters [on the Draft EIS] reiterated their concern that the Project will not relieve highway congestion in Honolulu. FTA agrees..." Further, it is unusual for federal agencies to take part in local election campaigns.

The Honolulu rail project was covered in more detail in a recent newgeography.com commentary, Honolulu's Money Train.

Clarification (March 15). The complete quotation above was not used because it was not necessary to the point, which was FTA agreed that highway congestion would not be relieved by rail in its record of decision, but in its statement on Tuesday appears to have reversed that view. We are unaware of any change in the technical documentation that would have justified such a change.

"FTA agrees." in the article above, has been changed to "FTA agrees..."

I love the Omaha World Herald – I read papers all over the world and this one is the best local paper I’ve seen. The bias is largely limited to the Opinion pages and they do original research on local topics. For national and world news, they have reporters outside the Omaha metro, but they also include the best of the news wire articles. The paper is a readable length, yet it contains enough stories that you know what’s going on but not so many that it’s a repeat of the nightly news from the national broadcast networks. Mostly, I like the way they let the reader connect the dots.

A perfect example appeared on Sunday March 11, 2012 on page 10A in the print edition. Two stories occupy the three columns on the left side of the page. The story occupying the top of the three columns is about IBM’s Watson supercomputer (from Bloomberg news). Watson’s newest consulting client will be Wall Street bank Citigroup, Inc. “the third-largest U.S. lender.” Directly beneath that is a story from the Associated Press (AP) about Main Street abandoning Wall Street – seems that if individual “ordinary” investors do not start giving their money to Wall Street banks again soon, the re-inflated stock market bubble will deflate – bye-bye Dow 15,000.

How do these two stories relate? Well, Citigroup is feeding information to Watson on “sentiment and news not in the usual metrics” like what you post on Facebook or search on Google. Citigroup will use Watson to “analyze customers’ needs” and process that with their client data to figure out how to get you to put your money back where it makes them the most money in fees and commissions.

Watson doesn’t come cheap – according to the Bloomberg News article, banks spent $400 billion last year on “information technology,” helping to generate $107 billion in revenue for IBM. How can banks afford to spend billions of dollars to get consultations with a computer? The answer is in the AP article in the bottom of the same columns: “corporate America has racked up double-digit profit gains” since the official end of the Great Recession in 2009.

These two articles make me a little happy. The first one pleases the economist in me because an American company with a real product is going to thrive by charging Wall Street billions of dollars for something. The second article pleases me because it means that Main Street got the message – don’t eat the hot dogs at the Wall Street party because the fuel for the weenie roast is your future. Let the machines do it.

[NOTE: Omaha.com links are available without registration for up to 2 weeks after publication. Access to the archives requires email registration.]

Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs and the Emmy® Award nominated Bloomberg report Phantom Shares. She appears in four documentaries on the financial crisis, including Stock Shock: the Rise of Sirius XM and Collapse of Wall Street Ethics and the newly released Wall Street Conspiracy. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute. She served as Senior Advisor on United States Agency for International Development capital markets projects in Russia, Romania and Ukraine. Dr. Trimbath teaches graduate and undergraduate finance and economics.

Newgeography.com lost a one of its first columnists, a regular contributor and good friend with the passing of Owen McShane.

Owen McShane (Robert Ivan Owen McShane) was born in 1941 and died on March 6, 2012. His long and successful career in public policy was built on a strong academic foundation. He graduated from the University of Auckland, earning degrees in architecture and urban planning.  He continued on to be awarded a masters degree in city and regional planning at the University of California, Berkeley. There he studied under fabled Aaron Widavsky, chairman of the Political Science Department. His master's thesis dealt with a US federal program intended to reduce unemployment and promote business development in central cities.

He joined the new City Development Division of Auckland City Council after graduating from the University of Auckland. After returning from America, Owen held positions in both the public sector and government. He was a columnist for the National Business Review  and has been published in many magazines and newspapers.

In recent years, Owen directed the Centre for Resource Management Studies in New Zealand. The Centre seeks to promote "a heightened awareness and understanding" of the environment and is committed to the "the promotion of scientifically robust, research-based and rational decision-making processes at all levels in matters concerning the environment." Owen was also a regular participant and presenter at the annual American Dream Coalition conferences.

Owen developed an understanding of economics, which assisted him in avoiding the disconnected romanticism that sometimes characterizes architecture and urban planning. Combining economics with architecture and urban planning made his contributions more effective by adding the crucial human element.

From Owen's perspective, rational urban policy was not determined by remote or theoretical visions of the city that he was trained to plan. The success of a city was rather judged by the standard of living experienced by its residents. For example, his How Can Cities with Unaffordable Housing be Ranked Among the Most Livable Cities in the World? (newgeography.com, June 9, 2009) may have been the first to point out that popular indexes of the quality of life in international urban areas routinely ranked the most unaffordable at the top. This kind of analysis led Owen to postulate that " genuine sustainable development" had to work from middle class people and families too" in The Disappearance of the Next Middle Class (newgeography.com, August 24, 2010).  

Owen McShane was an untiring advocate of ordinary people, championing individual aspirations in a world that has increasingly been captured by bureaucratic theories that take little or no account of their preferences or their economic advancement.

Owen will be greatly missed both in New Zealand and far from its shores.

Photo: Courtesy of the Heartland Institute

Veteran Chicago journalist Ben Joravsky explains why Chicago’s better off without the G-8 summit:

One, we're not equipped to handle it. Two, we can't afford it. And, three, it has the potential to give the Republicans great campaign material for the coming election.

President Obama has done Mayor Emanuel a great favor, because there’s no real upside to the summit for Chicago. Banks on La Salle Street were planning to close. Many major corporations located downtown were telling their employees to stay home. The fear of violence from the demonstrators was bound to dampen economic activity. There’s no real need to showcase Chicago, international travelers are well aware of the town.

Some may view as an embarrassment to Emanuel. The Chicago Sun-Times reported to President Obama only gave Emanuel “an hour’s advance notice.”  But Emanuel is the lucky one. Violent demonstrations or not, the G-8 would have put the spotlight on Chicago. Do we want to shine a light on the recent loss of  200,000 people? The high retail sales tax? The bad public schools? The relentless legacy of public corruption?

President Obama helped his former Chief of Staff dodge a major bullet.

“To understand cities, we have to deal outright with combinations or mixtures of uses, not separate uses, as the essential phenomena.”

“Cities need old buildings so badly it is probably impossible for vigorous streets and districts to grow without them.” -Jane Jacobs, The Death and Life of Great American Cities

One of Jane Jacobs's great insights was the importance of diversity and a mixture of uses to urban success.  Cities seem to be natural generators of diversity, but not universally so. Some places are lively and bustling while others remain inert. Jacobs attempted to diagnose this by identifying four key items she believed needed to be in place to actively generate diversity in an urban district:

Some of these, such as block size, would appear to be relatively stable over time. Others respond dynamically, either bringing about or destroying diversity.  In the current “global city” era, we see two countervailing trends here, one tending to support diversity, the other to destroy it.

On the plus side, we’ve seen many formerly monolithic central business districts such as Chicago’s Loop or Downtown Manhattan see additional primary uses come into being. For example, Downtown Manhattan has seen a residential population boom. Chicago’s Loop also has vastly more residents than in years past, as well as the emergence of the so-called “Loop U”, a collection of colleges that collectively have over 60,000 students. Tourism has also taken on a more important role.

Similar trends have appeared in other cities. We see what were once 9-5 office districts or down at the heels industrial zones near the center take on several new primary uses, notably residential, educational, tourism, entertainment, and cultural hub activities.  These new primary uses bring different people, on different schedules, into the districts in question to help fuel a significant increase in liveliness and diversity.  This is exciting news for those of us who love cities.

On the other hand, we’ve also witnessed what may be a longer term threat. Jacobs also noted that diversity tended to destroy itself, particularly as one use becomes dominant and bids up rents to the point where other uses flee.  This results in a single-use office district, restaurant strip, etc.

The rise of the global city has seen outsized returns to those who participate in selected functions such as specialized finance or producer services. This has led to large cost increases in these cities which has displaced non-high end functions. Central cities are increasingly playgrounds for the rich, lacking in the diversity of people and uses that were once there.

From a Jacobsian perspective, one troubling consequence has been the reduction in the supply of older, obsolete buildings with lower economic yield requirements. Large numbers of older buildings, such as Class C office space or warehouses, have been demolished and replaced, or else converted into high end uses such as luxury condos. This is reducing the supply of lower rent buildings, undermining one of the pillars of Jacobs foundations of diversity. She noted how the hot areas tended to move around in cities as uses were displaced. So perhaps it is unsurprising that various districts in Brooklyn, for example, have become hipster and artistic havens while Manhattan has become more uniformly upscale and placid.

Whether or not these global city effects will ultimately lead to a self-undermining success is unknown. But the loss or upscale conversion of older and lower rent buildings in our central cities, while something to celebrate in many respects, should be a long term concern to those who care about truly sustainable urban diversity, especially if taken too far.

This piece originally appeared as a part of the City Builder Book Club's discussion of Jane Jacobs's "The Death and Life of Great American Cities."