A Truce in the War Between Cities and Their Suburbs

Dueling tax incentives and bidding wars are so retro. Now economic development is all about regional cooperation.

Cities and suburbs
National Journal
April 29, 2015, 8:21 a.m.

In the 1980s, the city of Den­ver, Col­or­ado, was hardly a mod­el for any type of eco­nom­ic de­vel­op­ment.

After the oil bust, the va­cancy rate in Den­ver’s down­town soared, with the city auc­tion­ing off of­fice space for mere cents per foot, re­mem­bers Tom Clark, chief ex­ec­ut­ive of­ficer of the Metro Den­ver Eco­nom­ic De­vel­op­ment Cor­por­a­tion. Res­id­ents cor­doned them­selves off in the nearby sub­urbs. And the state budget was in such dire cir­cum­stances that the gov­ern­ment stopped fund­ing prom­in­ent cul­tur­al in­sti­tu­tions like the Den­ver Art Mu­seum and Den­ver Botan­ic Gar­dens, write Bruce Katz and Jen­nifer Brad­ley in their book, The Met­ro­pol­it­an Re­volu­tion.

It’s hard to square this por­trait of Den­ver with the city today, which con­sist­ently ranks high on lists of the best places to live and work in the coun­try. How did Den­ver go from an ail­ing city to a vi­brant re­gion­al eco­nomy, con­nec­ted by ro­bust pub­lic trans­port­a­tion, thriv­ing cul­tur­al in­sti­tu­tions, and shared eco­nom­ic val­ues? The city and its sur­round­ing sub­urbs had to de­cide that work­ing to­geth­er was prefer­able to strug­gling sep­ar­ately. After some ini­tial fin­ger-point­ing, loc­al­it­ies joined forces in the mid-1980s to trans­form the Den­ver met­ro­pol­it­an area from a re­source-based eco­nomy that was con­cen­trated on oil to a vi­brant, di­verse one. The res­ult­ing col­lab­or­a­tion has tackled everything from air qual­ity to build­ing a new train sys­tem. “It’s a cul­ture is­sue. It’s the way they do busi­ness there,” says Brad­ley, dir­ect­or of the Cen­ter for Urb­an In­nov­a­tion at the As­pen In­sti­tute.

Den­ver’s turn­around began with a re­gion­al agree­ment, signed in Janu­ary 1987, which laid out the re­gion’s shared eco­nom­ic prin­ciples. The may­ors of Den­ver and sur­round­ing areas still gath­er once a month to meet on eco­nom­ic plans. And, even though the ori­gin­al re­gion­al agree­ment re­mains vol­un­tary, people stick to the core ideas. “It’s an ap­proach to re­gion­al­ism that’s about cre­at­ing a cul­ture in­stead of a leg­al struc­ture,” Clark adds. “People want to be­have at the highest level of eth­ics, provided the guy next door does, too.”

The suc­cess of Den­ver shows the value of cit­ies, sub­urbs, and rur­al areas band­ing to­geth­er to tackle eco­nom­ic de­vel­op­ment. Yet des­pite the be­ne­fits of this mod­el, re­gion­al col­lab­or­a­tion re­mains rare. Far more com­mon is the ex­ample of cit­ies and towns vy­ing to un­der­cut one an­oth­er for the next big eco­nom­ic pro­ject—be it through tax breaks, gov­ern­ment sub­sidies, or changes to zon­ing reg­u­la­tions. “It really is still so hard for people to look bey­ond the one big deal in the pipeline,” Brad­ley says. (Case in point: Kan­sas and Mis­souri are fam­ous for their “eco­nom­ic bor­der war,” where the two states fight over com­pan­ies headquartered in the Kan­sas City area.)

Land­ing that one big deal, after all, is what has con­sumed loc­al eco­nom­ic-de­vel­op­ment of­fi­cials for dec­ades. Every city, sub­urb, and town wants to tout a ma­jor cor­por­ate headquar­ters or new sta­di­um or plant to em­ploy hun­dreds of res­id­ents. In­creas­ingly, this line of think­ing ap­pears out­dated. “People are mov­ing from, ‘Let’s build an in­dus­tri­al park and hope that some­body loc­ates here’ to ‘What are our true com­pet­it­ive ad­vant­ages and as­sets and how do we lever­age them?’” says Mat­thew Chase, ex­ec­ut­ive dir­ect­or of the Na­tion­al As­so­ci­ation of Counties.

In this in­creas­ingly glob­al eco­nomy, cit­ies, sub­urbs, and towns have to worry not just about com­pet­i­tion from an ad­ja­cent city or state, but the com­pet­i­tion from oth­er coun­tries with lower wages. That’s why a hand­ful of places, like Den­ver, have real­ized the be­ne­fits of re­gion­al work. “It’s best to look at what makes sense to make the eco­nomy of the met­ro­pol­it­an re­gion func­tion ef­fect­ively,” says Chris­toph­er Jones, vice pres­id­ent for re­search at the Re­gion­al Plan As­so­ci­ation, an in­de­pend­ent urb­an-re­search and ad­vocacy group fo­cused on the New York, New Jer­sey, and Con­necti­c­ut metro area. “If you’re not do­ing that, you’re just mov­ing pieces across the table—they could just as eas­ily move back in the oth­er dir­ec­tion in­stead of cre­at­ing last­ing value and pro­ductiv­ity.”

That’s why re­gions from Den­ver to New York City and its sur­round­ing sub­urbs to even rur­al com­munit­ies in Iowa, Neb­raska, and Ken­tucky are work­ing to­geth­er. In­stead of just of­fer­ing up the best or highest tax breaks, these loc­als gov­ern­ments, plan­ning of­fi­cials, private-sec­tor busi­ness people, and real-es­tate de­velopers are try­ing to think through what makes each re­gion unique and au­then­t­ic. Then, they build up the loc­al eco­nomy around those at­trib­utes.

In New York, that may mean work­ing to bring more tech com­pan­ies and en­gin­eer­ing fire­power to the city, which, in turn, will help the sur­round­ing areas by cre­at­ing jobs. In a county of 100,000 res­id­ents in Iowa, it means band­ing to­geth­er with neigh­bor­ing rur­al areas to bol­ster loc­al ag­ri­cul­ture. “People are go­ing to push for re­gion­al ap­proaches be­cause the eco­nomy is re­gion­al,” says Amy Liu, co-dir­ect­or of the Brook­ings Met­ro­pol­it­an Policy Pro­gram. “Even if you are a may­or in an urb­an core, your res­id­ents still need to find good-pay­ing jobs wherever they are.” That means trav­el­ing from one’s home to an ad­ja­cent sub­urb, town, or county for work.

Part of the change, of course, has come about be­cause many cit­ies boast much bright­er eco­nom­ic for­tunes than they did throughout the 1970s and 1980s. New York, San Fran­cisco, and Wash­ing­ton, D.C., now of­fer their own in­fra­struc­ture, cul­tur­al at­trac­tions, jobs, and night­life, while sub­urbs across the coun­try have star­ted to en­counter their own share of tra­di­tion­ally urb­an prob­lems, like poverty and va­cant store­fronts. “Cit­ies star­ted to come back, while the sub­urbs are a mixed bag,” Brad­ley says. “Cit­ies stopped look­ing like dead weight.”

Cit­ies may not be as bad off as they once were, yet the col­lab­or­a­tion between the cit­ies and sub­urbs re­mains one of the most chal­len­ging im­ped­i­ments to re­gion­al eco­nom­ic de­vel­op­ment. Just look at the ten­sion in Fer­guson, Mis­souri, which suf­fers from poor eco­nom­ic for­tunes and ra­cial dis­crim­in­a­tion, while oth­er areas of St. Louis prosper. “The city versus the sub­urbs is a dif­fi­cult bar­ri­er to over­come,” Jones says.

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