North Carolina

Superstorm Sandy & The Beachfront Bailout

Matthew Stevenson — Tue, 30 Oct 2012 21:47:19 -0400

Deadline reporters, especially in weather broadcasts from the surf line, have been wailing about “this enormous storm” or “the unfolding tragedy.” What they might also say is that hurricanes are a munificent windfall for newspapers, television stations, the federal government, construction unions, and politicians seeking reelection. In addition to classifying storms from one to five on the Saffir-Simpson scale, going forward it might also be possible to grade hurricanes as profit centers, or by the surge levels that they generate in reelection campaigns.

By all (usually breathless) accounts, Hurricane Sandy delivered a wide band of damage and destruction to areas stretching from North Carolina to Maine. Along with a death toll now approaching 50, a 13 foot storm surge in New York harbor inundated parts of lower Manhattan and Brooklyn, and millions of residents around New York, New Jersey, Maryland, and Pennsylvania lost power in their homes. The aftermath, unlike the legacy of Hurricane Katrina, however, is that the waters which flooded Manhattan's streets, tunnels and subways are receding with ebb tides, although the damage from surging waves and fallen trees is widespread, especially across New Jersey.

Although the storm will have cost the Mid-Atlantic region some $45 billion in cleanup costs, not to mention the loss of work days for many, even this perfect storm not seen in “a millennium” did not rack up the apocalypse that was predicted as Sandy “barreled” up the coast on its “rendezvous with destiny” in Atlantic City. From the teeth of the storm in New Jersey, my sister reported only an epic loss of cable and Internet.

The reasons storms rarely appear as they are cast on television is because, instead of acts of nature with a lot of wind and rain, hurricanes are now best understood as political spectacles, somewhere between nominating conventions and state lotteries.

Take the federalization of the disaster business. Previously storm damage and the costs of clean up were the responsibilities of states and municipalities, who in the first place made the decisions to allow homeowners to build houses and businesses on barrier islands, sand dunes, and low-lying waterfront property.

For much of the twentieth century, insurance companies refused to write flood or hurricane policies for stilted houses perched precariously on Cape Hatteras or wherever, which angered wealthy political donors, who equate their life successes with owning beachfront property.

Enter the federal government into the realm of disaster indemnification, when Congress passed the National Flood Insurance Program in 1968, to mandate that vulnerable home owners in potential flood zones purchase adequate insurance that private companies were refusing to cover. Think of it as Obamacare for beachfront homes.

Although the legislation was designed to cover the undue risks of shore properties, it also gave the political parties a mechanism that would allow (for all those waterfront contributors) a building boom on hurricane-exposed barrier islands.

At a time when global warming has increased the intensity and frequency of major storms and hurricanes (which are nature’s teapots blowing off steam), we are living with the fallout of an earlier era, when the federal government doubled down by writing insurance for beachfront condos from Maine to Texas.

After the 2000 recount election came the transformation of Florida into a swing state in presidential elections, insuring that claim adjusters would reach hurricane damage zones as fast as FEMA’s first responders. Before the 2004 election arrived, four more hurricanes had passed over Florida. In their wake came billions in federal aid relief, just to insure that neither awnings nor chads would be floating in the wind.

As powerful as hurricanes may be, they are no match for the construction lobbies, something I learned in the 1980s when writing about the National Hurricane Center in Coral Gables, Florida.

The then-director, Neil Frank, a man of ebullience and integrity, showed me a slide show on the back of his office door, explaining that it was folly to allow construction on Gulf and Atlantic barrier islands. That was thirty years ago, and since then cities of flimsy beachside construction have risen along the dunes.

What I admired about Frank was his passion for hurricane preparedness. He had walked the beaches of Biloxi, Mississippi in 1969, after Hurricane Camille, and measured that surge at 25 feet—something he then extrapolated to other beaches around the United States, including Atlantic City. But in urging a ban on beachfront buildings, he was shouting into an ill wind.

Not only was the federal government complicit in allowing places like Myrtle Beach to become housing projects (the poet Robert Watson called it “white Harlem by the sea”), it also assumed that its job performance could be measured by the number of blankets and water bottles that reached those crazy enough to “ride out” a major storm in their seaside mobile homes.

No doubt this is the Katrina Effect in American politics: The truism that if a big storm hits, the best place for the president probably isn’t dockside in San Diego, playing Otis Redding tunes on a guitar. Nevertheless, it means that the federal government (not exactly a profit center these days) is on the hook for the rescues, the clean up, and the insurance claims.

The sad reality of Hurricane Sandy is that, despite all the Weather Channel epithets that it was “the storm of the century,” a lot of it was ordinary. It wasn’t even technically a hurricane when it came ashore near Atlantic City. What made it destructive was its size, and that it arrived late in the hurricane season and, by chance, merged with other Atlantic and Canadian storm systems. Imagine, however, if it had been one of Neil Frank’s dreaded Category 4 storms?

Undoubtedly, President Obama would love to turn Hurricane Sandy into a backdrop for reelection spots that show him compassionate to his fellow Americans in times of need. The problem is that neither Wall Street underwater nor the flooded roulette tables in Atlantic City makes an ideal photo op or headline (“President Vows: We Will Not Let This Stop Us From Gambling!”). And I doubt he wants to campaign as the Claims-Adjustor-in-Chief.

Photo: MTA New York City Transit, Bus on the Move. Morningside Heights, 125th and Broadway, October 28, 2012, as Hurricane Sandy approached New York City.

Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is "Whistle-Stopping America".

Is It Game Over for Atlanta?

Aaron M. Renn — Wed, 19 May 2010 01:48:09 -0400

With growth slowing, a lack of infrastructure investment catching up with it, and rising competition in the neighborhood, the Capital of the New South is looking vulnerable.

Atlanta is arguably the greatest American urban growth story of the 20th century. In 1950, it was a sleepy state capital in a region of about a million people, not much different from Indianapolis or Columbus, Ohio. Today, it's a teeming region of 5.5 million, the 9th largest in America, home to the world's busiest airport, a major subway system, and numerous corporations. Critically, it also has established itself as the country's premier African American hub at a time of black empowerment.

Though famous for its sprawl, Atlanta has also quietly become one of America's top urban success stories. The city of Atlanta has added nearly 120,000 new residents since 2000, a population increase of 28% representing fully 10% of the region's growth during that period. None of America's traditional premier urban centers can make that claim. As a Chicago city-dweller who did multiple consulting stints in Atlanta, I can tell you the city is much better than its reputation in urbanists circles suggests, and it is a place I could happily live.

Yet the Great Recession has exposed some troubling cracks in the foundations of Atlanta's success. Though perhaps it is too early to declare “game over” for Atlanta, converging trends point to a possible plateauing of Atlanta remarkable rise, and the end of its great growth phase.

Growth Is Slowing

As with many other boomtowns, in Atlanta growth itself has been among the biggest industries. Construction particularly played a big role in its economy. The housing crisis cut the legs from under Atlanta's real estate machine. Though prices didn't collapse, new home building did. From 2005 to 2009 Atlanta's number of annual building permits fell by 66,352, the biggest decline of any metro area.

Atlanta grew strongly in the 2000s, with growth of over 1.2 million people, a 29% rise that beat peer cities like Dallas and Houston. But look at the recent past and see a very different dynamic. Domestic in-migration has cratered, only reaching 17,479 last year, or 0.32%. While migration did slow nationally last year due to the economy, Dallas and Houston continued to power ahead. Dallas added 45,241 people (0.72%) and Houston added 49,662 (0.87%). Even Indianapolis added 7,034, but that's 0.42% on a smaller base, meaning Atlanta is actually getting beat on net migration by a Midwest city; its in-migration rate is about on par with Columbus, Ohio, another healthy Midwest metropolis..

The collapse in in-migration should be very worrying to Atlanta’s leadership. No new people, no new housing demand, thus no construction jobs. It should come as no surprise that Atlanta's 10.8% unemployment rate is well ahead of the 9.7% national rate.

The Infrastructure Brick Wall

Last July, Judge Paul Magnuson ruled that Atlanta had been illegally taking water from Lake Lanier, the principal source of the region's water supply. The ruling may not stick but it nevertheless has brought into focus the long term insufficiency of the water supply for Atlanta. Lake Lanier almost ran dry during a recent drought, but has since recovered in the recent wet years. The problem is more political than environmental. Atlanta has not appreciably expanded its water sources in 50 years despite all that growth.

Atlanta has a myriad of infrastructure problems. It suffers some of the highest water and sewer rates in the nation, double those of New York City. And these are only going to get worse as the city embarks on a multi-billion dollar Clean Water Act Compliance program. This is an ominous sign for a city whose attractiveness is in large part due to its low costs. As Councilwoman Clair Muller put it, “I’m not sure being No. 1 in the country for water and sewer rates is a good selling feature for Atlanta.”

But the biggest infrastructure issue for Atlanta is transportation. Atlanta is famous for its bad traffic and attendant pollution. Its freeways are among the world's widest, but this disguises the extent to which the roadway infrastructure is woefully insufficient. Atlanta has a simple beltway and spoke system similar akin to Indianapolis and Columbus, much smaller cities. Other big cities like Houston, Dallas, Minneapolis, and Detroit have much more elaborate systems. In particular, rather than relying on a single ring road, these cities have webs of freeway with multiple “crosstown” routes.

But Atlanta's greatest road problem lies in the lack of arterial street capacity. Atlanta's suburban arterial network is mostly former winding country roads, many of which have never been upgraded to handle the traffic demands on them. Most upgraded streets are radial routes, not crosstown ones, which forces even more traffic onto the overloaded freeway network.

For those who prefer transit, Atlanta hasn't invested there either. It built the MARTA heavy rail system as an extremely forward looking transportation investment, mostly in the 1970s and early 80s. This was built before Portland's system and is far better than light rail to boot. But there has been almost no expansion of the network. The state of public transport has been largely frozen for some time. Meanwhile, Dallas, Houston, Phoenix, and others have invested billions.

Competition Is Here

Bad traffic congestion and other infrastructure ills didn't matter much when Atlanta was the only game in town. For a long time, anyone who needed a presence in the Southeast found Atlanta the easy default answer. In many cases it was the only real possibility.

That's no longer true. Atlanta is now surrounded by upstart, much faster growing cities such as Charlotte and Raleigh-Durham in North Carolina, Nashville, Tennessee and Charleston, South Carolina – all in many ways now have the ambitions once characteristic of Atlanta.

Atlanta's problem lies in its insufficient differentiation from these other places. Other than the airport, a clear major asset to Atlanta, what do you actually lose by moving to Charlotte or Nashville? Your commute is likely to be less. Except for certain groups – African Americans or gays – the city seems to be losing allure.

These other cities also have the talent to compete for a lot of the business Atlanta used to pick up without working for it. The new head of the Atlanta Regional Commission declared Atlanta's love affair with the edge city high rises all but over. Planners always talk like this, but it is still a startling sentiment to hear in Atlanta, formerly the most boosterish of cities. That's the sound of a city losing its mojo. Meanwhile, Charlotte chamber of commerce chief Bob Morgan says, “To understand Charlotte, you have to understand our ambition. We have a serious chip on our shoulder. We don’t want to be No. 2 to anybody.” That's the way Atlanta used to talk.

Caught in the Middle

Atlanta does seem to realize it's in a different competitive world. It must elevate its game and upgrade its product. Like Chicago and other growth stories before it, as Atlanta got big and rich, it decided it needed to get classier as well. To go for quality, not just quantity. And to embrace a more urban future for its core.

But it might be too little, too late. Atlanta is urbanizing, but despite the huge influx of people into the city, it's not there yet. Atlantic Station got built and attracted lots of press, but numerous other mixed use projects were killed by the poor economy. Ambitious projects like the Beltline park and transit project lack funding.

Atlanta is left as a sort of “quarter way house” caught between its traditional sprawling self and a more upscale urban metropolis. It offers neither the low traffic quality of life of its upstart competition, nor the sophisticated urban living of a Chicago or Boston.

Here too, Dallas and Houston continue to power ahead of Atlanta. Both are seeing significant urban infill and are also making major investments in cultural infrastructure that far outstrip those of Atlanta. For example, Dallas just opened a showplace performing arts complex, with buildings by the likes of Norman Foster and Rem Koolhaas. Houston has emerged as a dynamic multi-cultural city. Both have a long way to go, but are in a much stronger growth position to pull it off.

Atlanta at Maturity

Cities, like companies, go through a life cycle. There's the youthful founding, the explosive growth phase, then maturity and, for some, decline. Chicago and Detroit were two of the huge growth stories of the industrial era, for example. Atlanta, Houston, and Dallas have been three of the boomtowns of the current age. Like other cities before them, that growth will come to an end one day. It is then that we'll see if, like Chicago and New York, they will succeed as mature regions and truly take their place in the pantheon of great American cities, or, like Detroit or to a lesser extent Philadelphia, will decline or stagnate.

Atlanta is far from dead, but it may be facing the beginning of the end of its growth cycle. If so, this will be the true test and measure of the greatness of that city. Will Atlanta make the grade? And how?

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

Photo by james.rintamaki

Southern Piedmont: Where NASCAR Meets the NASDAQ

Patrick Ottenhoff — Wed, 21 Oct 2009 01:49:16 -0400

When Andrew Jackson roamed the hills of the Carolinas, northern Georgia and eastern Tennessee, it was still frontier, and for generations the southern Piedmont remained economically and culturally isolated. Today, however, Old Hickory might be surprised to learn what this area has become.

Atlanta, a railroad junction with a few thousand souls before the Civil War, is now home to the nation’s busiest airport. It’s also headquarters of several global companies, including UPS, Home Depot and Coca-Cola, which BusinessWeek recently ranked as the most valuable brand worldwide.

Within a couple of hours is Charlotte, the nation’s No. 2 banking hub; Raleigh-Durham, a booming biotech center; and the Piedmont Triad, home to a handful of Fortune 500 companies. Even Upstate South Carolina, still somewhat underdeveloped, has the highest foreign investment per capita in the nation.

The region following I-85 from Raleigh-Durham to the Piedmont Triad to Charlotte to Atlanta is quickly becoming a “megapolis.” To be sure, a lot of this area is still poor, and the region doesn’t have the accumulated wealth of its financial rivals in the Northeast Corridor. Nor is its economy as robust as its southern siblings in the Texas Triangle.

But the southern Piedmont is growing rapidly. Georgia is slated to gain two seats and North Carolina is projected to gain one after congressional reapportionment, and two of the top ten fastest-growing congressional districts are in the Atlanta and Charlotte suburbs. Both states rank in the top five for net domestic migration, and South Carolina is in the top ten.

Companies are drawn by the affordable cost of living, relatively cheap labor markets, and low corporate taxes. North Carolina also has some of the most liberal banking laws in the nation, which explains its flourishing finance industry. But bigger economic and cultural factors are at work.

“Do not underestimate the potency of the elimination of Jim Crow segregation laws,” says Ferrel Guillory of UNC’s Center for the Study of the American South. “Once that millstone was lifted, it liberated the South economically as well as socially. Corporations, which weren’t going to invest in a region of racial division and strife, did so once legal segregation was removed.”

At the same time, modernization was crucial. Interstates opened the region to the rest of the nation, and air conditioning made hot southern summers bearable.

The region’s universities also played an important role. “The Research Triangle, of course, was founded on the idea that big research universities would serve as catalysts, and they did,” says Guillory. “Atlanta, too, has a critical mass of universities that enrich both the public policy and the economic development of the region.”

Atlanta marketed itself as the “city too busy to hate,” but a more accurate description, according to UVA’s Larry Sabato, is that it is the hub of a “megapolis too busy making money to worry about history.”

Consider the case of Hugh McColl. McColl was born in the hills of Upstate South Carolina, not far from where Jackson himself was born. He graduated from UNC-Chapel Hill and later joined North Carolina National Bank, which through a series of aggressive acquisitions became NationsBank.

Under McColl’s leadership, NationsBank later merged with Bank of America. He then took what the Wall Street Journal called “a scrappy Southern outsider” and built it into the nation’s second largest market capitalization.

McColl is the personification of both the old and new southern Piedmont. He had the same competitive, “scrappy” attitude that Jackson and many of the settlers in this region had. “So Hugh McColl does indeed have antecedents,” says Michael Barone.

But McColl also attended one of the best universities in America, and entered into banking at a time when North Carolina was liberalizing its laws and the region was modernizing. Later, he was one of the 49.9% of North Carolinians – a plurality – who voted for Barack Obama for president, a reflection of the new southern Piedmont.

As the region grows, expect it to take on more of an identity similar to McColl. This doesn’t mean that it’ll mirror his politics, but it does mean the region will be a more complex place, both politically and economically. The southern Piedmont will always have its roots in bootleggers racing stock cars through the muddy hills, but these days Charlotte is the kind of city where NASCAR meets the NASDAQ.

Patrick Ottenhoff, a project manager for New Media Strategies and a former staff writer for National Journal Group and The Hotline. Ottenhoff graduated from Kent School and Union College and is a native of McLean, Va. His writings have appeared in National Journal, Politico, and MSNBC.com. His political geography blog is The Electoral Map.

Obama’s ROI in North Carolina

Patrick Ottenhoff — Sun, 02 Nov 2008 22:17:52 -0500

North Carolina is the state where NASCAR meets the NASDAQ. The state’s largest city, Charlotte, is the hub of stock car racing but is also the nation’s No. 2 banking center behind New York. These two pillars of cultural and economic conservatism might not appear to present the best backdrop for a Democratic takeaway, but with less than 72 hours to go, Barack Obama is closing in on the checkered flag in North Carolina.

This notable change in voter preference is because North Carolina, perhaps more than any other state, has felt the severe pain of the financial crises. It’s a state where Sun Belt foreclosure problems have been compounded by Wall Street bank crashes, and some of North Carolina’s largest employers and home-grown institutions, like Wachovia, have gone belly-up.

As financial uncertainty grips North Carolina, Obama has made repeated trips there, armed with a steady message aimed at calming the unsteady nerves of the state’s investor class. It’s an investment that has paid dividends for him. As Obama’s national numbers rise as fast as the Dow has fallen, the Illinois senator’s popularity in North Carolina has skyrocketed since the market collapse.

Here’s a rundown of Obama’s ascent in the Tar Heel State vis-à-vis the decline in the market.

In early September, the Dow Jones Industrial Average was perched above 11,000 points and McCain had a comfortable lead in North Carolina. On September 10, for example, he was up by double-digits in the state according to the poll average on Real Clear Politics. The lead story of the day was Obama's reference to "lipstick on pig."
Days later, on September 15, Lehman Brothers filed for bankruptcy and Charlotte-based Bank of America purchased the financial giant Merrill Lynch. The deal was seen as a win for the city of Charlotte but BoA’s stock dropped 16% that day amid jitters. McCain still commanded an 11-point lead in the state, which would be his high-water mark.
Over the course of the next week the market and McCain's lead in North Carolina began to crumble. A Rasmussen survey released on September 18 showed him with only a three-point lead over Obama, and a number of smaller polling outfits over the next couple of days measured the two candidates in a statistical dead heat.
On September 21, Obama visited Charlotte, and in a park only blocks away from the Bank of America Corporate Center and the future NASCAR Hall of Fame, told voters, “Charlotte, I know these are difficult days. But here’s what else I know – I know we can steer ourselves out of this crisis. … It’s a time for resolve and a time for leadership.”
As uncertainty gripped the market and the country, investors began a quiet run on the banks. In the largest bank crash in the nation’s history, Washington Mutual fell on September 25th; by the 26th it was clear that Charlotte’s own Wachovia was also edging closer to collapse. Meanwhile, national polling operations including CNN and Fox News began to pick up a tie in the Tar Heel State.
On Monday, September 29, Wachovia announced that it was filing for Chapter 11 and was in talks with Citigroup. The next day, the Charlotte Observer wrote, "The deal is a dramatic fall for an N.C. institution -- the 2001 combination of Charlotte's First Union and Winston-Salem's Wachovia.”
A couple of weeks later Wachovia was acquired by San Francisco's Wells Fargo. The Charlotte Observer called it a "blow to Charlotte, which is sure to lose jobs and its prestige." And as the financial and emotional pain rippled through the city and North Carolina as a whole, McCain's lead evaporated in the polls.
On October 6, Hugh McColl Jr., the former chairman and CEO of Bank of America, wrote an op/ed for the Charlotte Observer endorsing Obama. He warned of the “economic disarray threatening our community” and suggested that “Obama's economic plans will restore market confidence.”

Over the course of October, Obama led the state in 15 polls while McCain was up in only four. In a state that gave George W. Bush a 14-point victory, Obama is now up by about two.

Meanwhile, the construction continues in downtown Charlotte on the Wachovia Financial Center and the NASCAR Hall of Fame. The two buildings sit only two blocks away, but developers aren't sure who will occupy the Wachovia building and NASCAR powerhouse teams like Petty Enterprises and Dale Earnhardt, Inc. are struggling to find sponsors.

As the banking and racing institutions that have symbolized Charlotte and North Carolina’s rapid growth struggle through turbulence, Obama has been a steady presence in the state. His campaign has held 19 events there since the convention, and as the polls suggest, he’s gained a return on investment there that might even make Charlotte’s top bankers proud.

Patrick Ottenhoff, an analyst for New Media Strategies and a former staff writer for National Journal Group and The Hotline. Ottenhoff graduated from Kent School and Union College and is a native of McLean, Va. His writings have appeared in National Journal, Politico, MSNBC.com and Huffington Post. His political geography blog is The Electoral Map.