NewGeography.com blogs

New Chicago Machine Scam In the Works: Eminent Domain Seizure of ‘Underwater’ Mortgages

With property values down 40% since 2006 in Chicago, the Chicago Democrat Machine has a new scam brewing. The Chicago Sun-Times reports:

Should Chicago use its sweeping condemnation powers to help stem the foreclosure epidemic — paving the way for underwater mortgages to be written down and repackaged under terms more affordable to struggling homeowners?

The City Council’s most powerful aldermen believes it’s a concept worth considering, which is why the Finance Committee chaired by Ald. Edward M. Burke (14th) will hold a joint committee hearing on the controversial idea on Tuesday.

If this passes, the potential for corruption will be unlimited in Chicago. Alderman Burke controls Chicago’s tax code. But, the conflicts are even more pronounced. Alderman Burke slates all the judges in Cook County which means a Burke-slated judge will hear the property seizure case. Even that’s not all; Alderman Burke's day job is running a property tax appeals tax firm. Being a client of Alderman Burke’s probably will be a good way to avoid a ‘takings’. Expecting a fair appeal, in court, on the seizure? Alderman Burke’s wife, Anne, is a justice on the Illinois Supreme Court. Expecting help from the Illinois state legislature to clamp down on Alderman Burke’s conflicted lifestyle? Alderman Burke’s brother, Daniel, is Assistant Majority Leader of the Illinois General Assembly.

In conclusion, you can be assured that seizing ‘underwater’ mortgages in Chicago will become a money maker for Alderman Burke. Nothing has left Alderman Burke’s attention in terms of making money off the taxpayers of Chicago. The Chicago Sun-Times has reported that Chicago Public Schools have a history of paying milk money to Alderman Burke. In Chicago, even if you have a checkered past you can still work with Alderman Burke as long as you pay tribute.

A New Brand for Houston

"We've probably spent in excess of $75 million in the past 30 years on image campaigns, and we keep coming back and saying, 'Well, that didn't work.'"

 - Former GHCVB CEO Jordy Tollett in the Houston Business Journal

A list of many of those can be found here, including the old standbys "Bayou City", "Space City", and "Energy Capital of the World" (Wikipedia has more here).  And despite many of my own previous attempts on this blog, inspiration has struck me again, especially after reading this recent article at Salon.com on why every city needs a brand (and more on that here).

A good city brand works on four different levels:

  1. It attracts tourists.
  2. It attracts new residents, especially highly talented and educated ones.
  3. It attracts expanding businesses.
  4. It inspires the citizens and creates a local identity.

But it's very hard to come up with a single brand that does all four.  Even some of the most successful brands don't necessarily hit them all.  Two of the most famous city brands are New York's "I {heart} NY" and Las Vegas' "What happens in Vegas stays in Vegas."  And in Texas we're all familiar with "Keep Austin Weird."  In this case, I think I've stumbled upon something that can work across all four.

Before I reveal it, I need everybody to drop their cynicism shields.  I don't think the most successful city brand in history, "I {heart} NY" could get off the ground today with our snarky cynical culture.  Just like new songs, sometimes ideas need time to grow on you.  So open up your mind, hold back judgment, and let me  reveal some context-setting definitions and the brand first followed by the supporting reasons.

Hospitality 

Noun: The friendly and generous reception and entertainment of guests, visitors, or strangers.

Hospitable 

Adjective: 1) Friendly and welcoming to strangers or guests.  2) (of an environment) Pleasant and favorable for living in.

It started with me thinking of "Houston Hospitality", but then the symmetry jumped out at me it became

Houspitality

What the "Aloha Spirit" is to Hawaii, the "Houspitality Spirit" can be to Houston.

Here are some of the key words and phrases people often use when describing Houston and how they fit:

  • Houspitality for visitors and newcomers: welcoming culture to outsiders, friendliness, hospitality (duh), openness to people from all over the world (diversity), amazing restaurants, museums, arts, and other amenities
  • Houspitality for businesses: business-friendly taxes and regulation (including no zoning), culture supportive of  entrepreneurship, open business culture
  • Houspitality for residents: friendliness, openness, affordability, ease of living, high standard of living, social mobility, opportunity, open-minded, charitable (especially after Hurricane Katrina), "big small town"

Some additional supporting reasons:

  • Short and sweet, and people "get it" pretty easily.
  • Fits well with the Texas Medical Center helping people from all over the world (and the word "hospital" is right there).  It also fits well with the airports, port, GHCVB, GHP, and others.
  • It differentiates us from other big cities (ever heard anybody talk about the friendly reputations of NYC, DC, Chicago, SF, or LA? I didn't think so) as well as tourist destination cities (which tend to become jaded towards visitors).
  • UH's Hilton College of Hotel and Restaurant Management uses the motto "We are hospitality", and is one of the top ranked schools in the country for that specialty.
  • Sounds like "vitality", which is another good brand association.
  • I found a cool, somewhat similar concept here, transforming Humanitarian to Houmanitarian.
  • I think more and more people today are hungry for real community, which is harder and harder to find.  Houspitality is a great brand to convey our real sense of community in Houston.

Finally, I'd like to end with some supportive excerpts from Ken Hoffman's recent excellent column on what Forbes got right and wrong about Houston being America's Coolest City.  I think you'll easily see the Houspitality Spirit running through them...

I remember thinking, am I going to have to change? Am I going to have to learn how to write Texan?
I didn't change anything. That's part of what makes Houston cool. You can come here and stay yourself and fit right in.
...
Houston is cool because whoever or whatever you are, you're welcome here. The first two years I lived here, I was burning out the copy machine at Kinko's applying for jobs anywhere else. Now I wouldn't leave here for anything. ...

Where better to get better?
When a congresswoman got her head half blown off, she came to Houston to get better. When Middle East oil sheiks need surgery, they come to Houston. We have the best medical facilities in the world. I didn't think that was cool until I was run over by a lunatic in a van and was taken to the hospital in an ambulance.
I still have no idea what hospital I was taken to. But they fixed me up. That was cool.
...
We're in this together
And please stop talking about Houston's "diversity." The only thing the word "diversity" does is separate people. Sure, we have ethnic neighborhoods; those are good for a city. It helps in picking a restaurant.
I've never seen a city where people blend more gracefully than Houston.
...
Houston is cool
I thought it was pretty cool when Houston welcomed Hurricane Katrina victims to ride out the storm's aftermath here. I spent a couple of days in the Astrodome, handing out supplies and clothes to Katrina refugees. I learned a lot about Houston after Katrina. The experience changed me, too.
...
Being cool is a city that makes you feel like you belong. 

This piece originally appeared at Houston Strategies.

Subjects:

Avoiding Expensive Municipal Mergers

An article in The Wall Street Journal discussed attempts to merge local governments in Michigan. While efforts such as these gain wide support because of the belief that they will save money, there evidence shows the opposite.

Government consolidations may seem to make all of the sense in the world academically. In practice, they cost more. There are no economies of scale in larger governments, except for spending interests. Voters have less influence in larger jurisdictions.

A simple look at the evidence, rather than the theory, indicates this. Our analysis in five states shows it, and the differences are stark. Lower per capita spending and taxation at the local general government level is associated with smaller units of government.

It is not therefore surprising that in Toronto, Hamilton and Ottawa there have been calls to "demerge" cities forcibly merged in the 1990s. In a debate in Toronto last October with a top transit official (a member of the left leaning National Democratic Party), we agreed on at least one thing --- that Toronto's amalgamation had been a mistake.

Nor is it surprising that despite huge electoral barriers erected by the Charest government, a number of municipalities voted to demerge from the forcibly enlarged ville de Montreal in the early 2000s.

For the most part, however, there is no going back. Mergers are forever. So are the higher taxes and higher spending.

My commentary in Canada's National Post  dealt with this issue on the 10th anniversary of the Toronto amalgamation.

Atlanta Resoundingly Rejects Transit Tax

Atlanta area voters said "no" to a proposed $7 billion transportation tax that was promoted as a solution to the metropolitan area's legendary traffic congestion, despite a campaign in which supporters outspent opponents by more than 500 to one.

With 99 percent of the precincts reporting, the Atlanta Journal Constitution reported that the measure lost 63% to 37%. This 26% margin of loss was nearly three times the margin shown in most recent poll by the Journal-Constitution. Proponents had claimed on the weekend that the measure was "dead even" three days before the election.

Proponents spent heavily on the campaign, with reports ranging up to $8.5 million in campaign donations, indicating a cost to contributors of more than $30 per vote. Opponents raised less than $15,000.

The tax issue failed in all 10 counties. The defeats were modest in Fulton County (the core county, which includes most of the city of Atlanta) and DeKalb County (which contains the rest of Atlanta). Huge "no" vote margins were recorded in the largest suburban counties. In Gwinnett County, the no votes prevailed by a margin of 71% to 29%. In adjacent Cobb County, the margin was 69% to 31%.

On election morning, the Atlanta-Journal Constitution featured opposing commentaries by regional planning agency (Atlanta Regional Commission) Chairman Tad Leithead and me. Chairman Leithead stressed the view that the tax would lead to reduced traffic congestion, job creation and economic development. My column stressed the view that the disproportionate spending on transit (53 percent of the money for one percent of the travel market) would not reduce traffic congestion.

China Personal Vehicles Now More than US

China Web quotes the nation's Ministry of Public Security to the effect that China's personal vehicle fleet (automobiles and motorcycles) reached 217 million at the end of June. This would place China ahead of the United States, which had approximately 200 million personal vehicles in 2010 and led the world for perhaps for most, if not all of the last century.

China has 114 million automobiles and 103 million motorcycles, a substantially different mix than in the more affluent United States. The US has 192 million automobiles and 8 million motorcycles.

Motorcycles are particularly useful in China's growing and congested cities and are the logical stepping stone for buyers who are likely to eventually own cars. Many of the motorcycles are "E-Bikes," which use a plug-in battery operated technology. These motorcycles are so fuel efficient that their greenhouse gas (GHG) emissions per passenger kilometer approximate those of a full bus.

In 2011, China also took the lead in freeway mileage, displacing the US. The United States, with its interstate highway system had led the world in freeway mileage for at least one-half century.

Subjects:

Houston's Walled Garden

My friend Neal and I were in a tall building recently looking out over the city, and noted that there is an interesting phenomenon in Houston.  There are now enough tall buildings to almost outline a new zone.  If you go from the Medical Center up to Downtown, west along Allen Parkway/Memorial, south along 610/Post Oak, back east to Greenway Plaza, and then southeast to return to the Medical Center (here's a satellite map of the area - sorry I'm not skilled enough to overlay an outline) there is an almost continuous - well not continuous - but a substantial line of skyscrapers.  And it's pretty green within that zone, as least from an elevated viewpoint.  And we named it "The Walled Garden".  Somewhat similar aesthetically to New York's Central Park or Chicago's Millennium Park, but much larger and, of course, not a public park.  It does, in my stretched definition, contain the key parks of central Houston: Hermann, Discovery Green, Eleanor Tinsley/Buffalo Bayou, and Memorial (my concept, my boundaries ;).  It also contains such key areas as the Galleria, Highland Village, River Oaks, Upper Kirby, Montrose/Neartown, Midtown, the Museum District, Rice University and the Rice Village.

"Inside the Loop" is a very common phrase you'll hear in Houston.  I'd like to think "The Walled Garden" could be a similar such phrase describing a narrower zone where young singles want to live (as evidenced by the explosion in apartment construction within it) vs. more family-oriented areas like West U, Bellaire, The Heights, or the various neighborhoods of the east side.  It could also be used for branding and attracting young talent to Houston, like the way people talk about the Near North Side/Lincoln Park in Chicago or Santa Monica in LA or Manhattan in NYC.  By having a unifying label over the area, it's easier to promote it.  And I think "Houston's Walled Garden" has a pretty appealing ring to it.

Now if only they could only fill in the gaps a bit, maybe with a tower somewhere near Ashby and Bissonnet?... ;-)

I'll end with a few small misc items to close out the post:

Finally, I completely agree with the recent op-ed in the Chronicle advocating to keep the Battleship Texas at the San Jacinto battlefield (WSJ story).  They attract far more visitors as a combination than separate.  Trying to get kids to go see an empty battlefield?  Boring.  Oh, there's a real battleship there too.  Cool!

This piece first appeared at Houston Strategies blog.

Transportation for Tomorrow: Driverless Cars

Economist Clifford Winston of the Brookings Institution outlines the surface transportation system of the future in a Wall Street Journal commentary, "Paving the Way for Diverless Cars." Winston notes "a much better technological solution is on the horizon" than high speed rail "as an effective way to reduce highway congestion" as the Obama administration in Washington and the Brown administration in Sacramento contend. Indeed, not even the voluminous planning documentation used to justify high speed rail provides evidence that the 21st century edition of an early 19th century technology can materially reduce traffic congestion.

Already Google has conducted experiments with the automated car that have been so successful that they are now permitted in Nevada. Winston suggests that by automating cars, it will be necessary to separate automobile traffic from truck traffic, which will make it possible to provide additional traffic lanes within the existing road footprint. Non-automated cars and trucks would continue to operate in conventional, wider lanes on the same right-of-way. Another advantage would be that with the automated control, more cars could be accommodated in each lane. The need for highway expansion would be largely displaced by substantially improving capacity by upgrading highways with 21st century technology.

Winston has been a critic of overly expensive urban rail systems and transit subsidies. Driverless cars were also the subject of a Wall Street Journal commentary by Randal O'Toole in 2010.

Will New York’s Economy Strangle Itself With Success?

Big cities have been on a bit of a roll in recent years. But sometimes you can have too much success, as we may be seeing in the case of New York. This week the New York Times reported that finance firms are moving mid-level jobs away from Wall Street to places like Salt Lake City and Charlotte.

There’s a lot going on here. First, a lot this is driven by New York’s success, not its failure. New York is increasingly valuable as a site of high end production. As a result, lower value activities get squeezed out and replaced with higher ones. Despite the exodus of Wall Street jobs, New York City has been booming, and a stat from last year showed that the city was within 60,000 jobs of its all time employment high. This sort of churn is somewhat normal when high value and lower value economic geographies come into contact within the same physical space, as I noted regarding California in “Migration: Geographies in Conflict.”

It might be tempting for city leaders to actually celebrate this, but they shouldn’t. In a city that is desperate for middle class jobs, these are white collar middle class positions that are being lost. New York has stunningly high levels of income inequality – Joel Kotkin has noted it is the same as Namibia’s – and this can’t be making it any better.

Also, is there any precedent for a city being successful and dynamic, over a longer term purely as a production center for ultra-high end activities (with perhaps an associated servant class)? Sure, places like Aspen can do it. Imperial capitals seem to have been able to do something of the sort. Perhaps that’s how New York’s leaders like to see their city, but they are taking an awful risk.

New York is too concentrated in high end activities already, notably the high end of finance, as Ed Glaeser noted in his article “Wall Street Is Not Enough.” This renders it extremely vulnerable to downturns in that sector.

It might seem like exporting finance jobs would be part of that re-balancing, but when they are lower end positions, all you are doing is re-concentrating finance at more elite levels. Because to these types of businesses cost is almost literally no object, they have driven the cost of New York real estate through the roof.

When one industry becomes super-dominant in a neighborhood, Jane Jacobs noted it could lead to a situation she called “the self-destruction of diversity,” where a particular type of user – generally banks – gobble up the land and ultimate sterilize what formerly drew them to the area.

I wrote about this in regard to Chicago in a speculative piece called “Chicago: Corporate Headquarters and the Global City” in which I note a flow of corporate headquarters back into global cities, albeit reconstituted executive headquarters only).

This puts the bigger cities in a tough spot. They have to continue to go up the value chain because smaller cities are rapidly eroding their competitive advantage at lower ends. Ultimately we’ll see where this leads but I don’t think it’s healthy in the long term at all. Figuring this out is just one piece of the rebuilding our overall economy for the 21st century that needs to be accomplished.

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. This piece originally appeared at The Urbanophile

The Economist on the Costs of London's Green Belt

The Economist reminds readers of the economics of housing (or for that matter, oil or any other good or service): constraining the supply of a good or service in demand raises its price. In a 14-page feature on London, The Economist decries the high cost of housing in London. And, for good reason, the 8th Annual Demographia International Housing Affordability Survey showed London to have a median multiple (median house price divided by median household income) 6.9 in the fourth quarter of 2011. This figure, which would be more like 3.0 in a normally functioning market, is exceeded by few other major metropolitan areas, though Hong Kong, Vancouver, Sydney are more unaffordable.

The Economist noted that:

... perhaps the biggest constraint on development in London is the Green Belt. Established after the war, it runs (with perforations) all around London, to a depth of up to 50 miles, and bans almost all building on half a million hectares of land around the city.

Not only has this constraint led to higher house prices, but it has resulted in greater urban expansion and imposed greater costs, in time and money on commuters.

... it has pushed it into the greater south-east, thus spoiling the countryside across a bigger area. It has also raised the cost of housing and forced workers to travel farther. Commuting costs in London are now higher than in any other rich-world capital.

One alternative is to relax the Green Belt controls. The Economist points out that allowing development one mile into the Green belt would add one-sixth to the developable area of London. The Economist also notes that "far more than would be needed to make a huge difference to housing availability" and that opening the Green Belt "might not be an environmental disaster."

The Economist calculates that "the average London worker can buy half an average home." Britain would gain if the interests of those with a stake in a poorer middle class and greater poverty were to finally give way to the general welfare.

Portland Mixed-Use Condo Converts to Rentals, Mixed Use Nixed

The Oregonian reports that suburban Hillsboro's first mixed use condominium development is no more. Washington Street Station, was built near the suburb's small but historic downtown (see Note on Hillsboro).

The project was opened in 2009, one block from the Hillsboro Central station on Portland's Max (photo) light rail line. The four floor building, located in a generally low-rise residential area with detached housing, was to have had commercial development on the street floor and owner occupied condominiums on the top three floors. But the market was not there. As 2012 began, none of the 20 units had been sold.

At that point, new owners decided to convert the condominiums to rental units and to convert the first floor commercial space into apartments as well.

Local planning officials indicate no concern about converting the condominium development to rental units, or the loss of the first planned mixed use development in the city. The Oregonian article indicates, however, that a soon to be built development, located just blocks away, will be required to remain mixed use for at least 30 years.

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Note on Hillsboro: Hillsboro is typical for a mid-20th century exurb that has been engulfed by the expansion of a growing urban area. In 1950, the Portland urban area had a population of 500,000 (density 4,500 per square mile or 1,750 per square kilometer ), and Hillsboro was a compact exurb with less than 5,000 population, located outside the urban area. Today, the Portland urban area has approximately 1,850,000 residents (density 3,500 per square mile or 1,350 per square kilometer). Hillsboro, which is inside the urban area has more than 90,000 residents, most of whom are beyond walking distance from downtown and have much more convenient access to the big box stores (including the claimed largest "Costco" in the world), shopping centers and strip malls that do most of the retail business. Hillsboro is also the heart of "Silicon Forest" with its information technology manufacturing (such as Intel). As a result, the jobs-housing balance in Hillsboro now exceeds that of Portland according to 2010 American Community Survey data (1.48 jobs per resident worker in Hillsboro compared to 1.45 in the city of Portland).