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.

National Journal
Nancy Cook
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Nancy Cook
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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