Tag: Government Spending

The Austerity Drag

Rob Morris 0 Comment Jobs, National , ,

The U.S. economy added 243,000 jobs in January, far surpassing analysts’ expectations of around 155,000 jobs for the month.  As a result, the unemployment rate also unexpectedly ticked down to 8.3 percent for January.

The private sector added 257,000 jobs in January, while public-sector employment dipped another 14,000.

And that last part is important, because it begins to reveal the truly destructive nature of austerity.

Amid the wrong-headed drive to shrink the size of federal, state, and local governments (government employees make up one-sixth of the workforce), private sector job gains have been partially thwarted by the losses of government jobs.

With the release of the jobs data each month, the ever-insightful Steve Benen – who joined The Maddow Blog this week – republishes his two charts showing job losses and gains for each month since the beginning of the Great Recession.

The first chart shows the overall jobs picture, while the second shows the jobs picture for the private sector alone.  My shameless rip-off adaptation of these charts is below. As with Steve’s charts, the red columns show monthly job losses under George W. Bush, while the blue columns show monthly job totals under Barack Obama:

JobsJanuary2012Total

The second chart shows that the private sector has been adding jobs for each of the past 23 months.

JobsJanuary2012Private

Also worth noting: there are more total private-sector jobs today (110.4 million) than in February 2009 (110.3 million), just days after Barack Obama took office.

But I always wanted to see a chart which showed us what was happening in the public sector.

So I took matters into my own hands.  Here’s my own homemade chart showing jobs totals in the public sector since the beginning of the Great Recession:

JobsJanuary2012GovtCensus

As I plotted the data, I began to understand why Steve might not show the public-sector data each month: The one-time massive hiring bump (and susequent wind-down) surrounding the 2010 Census dwarfed all of the other changes in the chart, obscuring the other month-to-month changes.

As a result, the chart provided little insight into the fundamentals of public-sector jobs.

Fortunately, the Bureau of Labor Statistics published a press package which isolated hiring for the 2010 Census.  This allowed me to disentangle the one-time effects of the Census from the underlying fundamentals of public sector jobs.

The result is this chart showing monthly job totals in the public sector, excluding the volatile Census hiring data:

JobsJanuary2012GovtNoCensus

In many ways, this public sector chart is the inverse of the private sector one.

At the very moment when the private sector began to recover, at the very moment the economy needed to be firing on all cylinders, at the very moment the government should have leveraged negative real interest rates* to invest in jobs and infrastructure, one-sixth of the economy was (and continues to be) stuck in reverse.

And as austerity economics kicked in, the losses in the public-sector have only deepened, creating significant drag on the economic recovery.

Since Barack Obama took office three years ago, the public sector has shed some 603,000 jobs – averaging roughly 17,000 job losses per month.  (Compare that to the 840,000 public-sector jobs added during George W. Bush’s second term – an 18,000 per month clip.)

Without these public-sector job losses over the past three years, the unemployment rate would stand at 7.9% today instead of 8.3%.

While some might celebrate the wholesale destruction of government jobs, I don’t.

Public sector employees are vital to our economy and to my business.  Many of my customers are teachers, first responders, court personnel, and a wide array of other local and federal government employees. Public employees create better roads and safer neighborhoods and smarter students, all of which benefits my business.

The destruction of public sector jobs negatively affects my business and our economy.  As public sector employees lose their jobs, I lose business.  And the wider economy suffers, as well.

Austerity just doesn’t work.

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* A bit of explanation here on “negative real interest rates”: instead of expecting a positive return on government bond investm0ents, investors are now willingly paying to have the federal government hold their money for 5, 7, and 10 years. In essence, investors from around the world will pay us to invest in our jobs and infrastructure – which would, in turn, pay even greater dividends to our economy as we emerge from recession.

The Trouble with Consultants

Rob Morris 6 Comments Local , , , ,

In the wake of the scandal surrounding Angelou Economics and their “recycled” economic development plan for Lexington, there have been a number of calls for developing a more homegrown economic development strategy.

These include Tom Eblen’s thoughts on local knowledge and leadership, John Cirigliano’s project-based approach, and our own ideas about extending the work of the mayoral transition teams.

In response to these calls for a more local economic development approach, I’ve noticed counter-memes emerging.

  • One argument contends that we need consultants to fight insularity and to provide a valuable outside perspective.
  • Another – in a particularly egregious defense of the indefensible – contends that this is what creative professionals do, and shame on those who called out Angelou – they destroyed a civic foundation of teamwork and trust.

I think these arguments are mostly wrong, and that they mostly distract us from taking the reins of our own economic development.

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I’m pretty jaded when it comes to consultants.

I’ve managed a wide range of consultants throughout my career: industrial designers, research agencies, brand consultants, business strategy consultants, operations consultants, and even internet consultants at the height of the dot-com bubble.

I’ve engaged with enough consultants over the past 15 years to notice distinct patterns:

  • Consultants play “follow the leader”.  Every industrial design consultant starts by deconstructing what Apple does.  Business strategy consultants start with Google.  Or GE.  Or Proctor and Gamble.  They consistently take the leader in a category and dangle it in front of the client like red meat.  The implication: “With us, you can make products like Apple.  You can grow like Google.  You can mint money like P&G.  Just hire us and we’ll share that ‘secret sauce’.“
  • Consultants tell clients what they want to hear.  A few consultants throw some early jabs to get a client to sit up and listen – “Here’s why your marketing sucks…”  Ultimately, though, they calibrate their recommendations to what they think the client wants to hear.  What they deliver are bland, unobjectionable, safe ideas which don’t really threaten the status quo.  “You can be wildly successful without discomfort!”
  • Consultants position for the next engagement.  The most successful consultants are always angling for their next big score.  They deliver big, fat, visually-stunning reports loaded with aspirational recommendations which seem reasonable enough, but which neglect any significant detail on how to execute what they recommended.  Because execution is something they would be glad to help you with, for an additional fee.  They promise the ‘secret sauce’, but never actually provide the recipe.
  • Consultants recycle.  Relentlessly.   Once a consultant comes up with a ‘big idea’, they don’t usually isolate it to a single client.  They leverage that idea over and over again, across their business.  They might customize or repackage their big idea for each client, or they might just make it a signature ‘product’ which they patent or trademark.  About eighteen months after we rejected an industrial design, for example, we’d see elements of that design pop up in another client’s products.  Many of the presentations and reports we got from consultants were 70% to 90% ‘boilerplate’ – stuff which could have been used for any of their clients in any industry.

Not every consultant follows these patterns, but enough do that these behaviors are fairly predictable.  If consultants are so predictable, why do so many people work with them?  There are a couple of unfortunate reasons.

First, consultants can provide a kind of political cover for difficult decisions: “I’m not recommending layoffs, the consultant is…”  Their ‘independence’ and ‘objectivity’ make the consultants’ recommendations seem to carry more weight than when those same recommendations come from the people who hired them.

Second, and often related, is that consultants help us look busy when we’re tackling a difficult problem.  They signal to others that we’re taking action: “Our consultant is looking into that.”  In these cases, the appearance of action seems more important than the production of results.

Consultants can, indeed, provide a valuable outside perspective.  Often, they’ve seen a lot of diverse examples of smart stuff that others are doing, and they bring those best practices to their clients.

But consulting engagements perform best when consultants augment and enrich the client’s work – when the clients have already done their homework; They fail when the client abdicates their work to the consultant.

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MadLibs2 Given my jaded perspective on consultants, I wasn’t too surprised when Ben Self exposed the Madlibs-style, fill-in-the-blank consulting work done by Angelou Economics in their “Advance Lexington” strategy for economic development.

Angelou fit a lot of the consultant patterns.

  • They recycled reports they had created for other cities.
  • They played “follow the leader”, holding out their work in successful cities like Austin and Boulder with the implicit promise that Lexington could be like them.
  • They also told their clients what they wanted to hear – recommending a much more prominent role for report sponsor Commerce Lexington (which is partly subsidized by Lexington taxpayers) in Lexington’s economic development.  That gives Commerce Lexington “cover” when it requests increased public funding; After all, it isn’t Commerce Lexington’s idea…

The problem for Lexington is that we attempted to have the consultant do our work for us without doing our own homework first. We can’t expect to get great economic results when we outsource our economic development strategy to others.

We had folks whose job it was to produce such a strategy.  They just didn’t.  They abdicated their responsibility to a consultant.  And that’s not acceptable.

The important question: Why didn’t Lexington already have a strategy for economic development before we engaged Angelou?

Beyond Angelou

Rob Morris 2 Comments Local , , , , , ,

In December, I was honored when Lexington Mayor-elect Jim Gray asked me to join one of his economic development transition teams.  In preparation for our first meeting, we were given a packet which described the state of economic development in Lexington.

As I reviewed those materials, I noticed several references to “the” strategic plan for Lexington’s economic development; Yet that strategic plan wasn’t part of our materials.  I scanned the city government website for the strategic plan, and came up empty.

At our first meeting, I mentioned that we needed to get our hands on that strategic plan.

But Lexington didn’t actually have a strategic plan for economic development.  Despite having a Mayor’s Office of Economic Development and a staff of economic development folks at Commerce Lexington, we hadn’t developed a comprehensive approach to Lexington’s development.

Instead, the city and Commerce Lexington co-sponsored a $150,000 engagement with Angelou Economics, an Austin-based economic development consultancy.  The final Angelou deliverable would include an economic development strategy for Lexington.

I was stunned.  Not only did we not have a coherent economic development strategy, but we had seemingly outsourced the formulation of that strategy to an out-of-town consultant!

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Angelou released a draft of Lexington’s economic development strategy last week.  In the process, they unleashed a torrent of criticism after Ben Self showed that Angelou essentially recycled reports they had provided to other cities, often copying entire paragraphs and even pages.

The recommendations that Angelou makes aren’t bad.  They recommend creating a better support network for entrepreneurs.  They recommend setting up a minority business accelerator.  They recommend setting up a comprehensive marketing plan for Lexington to help recruit new businesses.

The trouble with Angelou’s report (as might be expected after Ben’s analysis) is that “Lexington” is missing.  Much of what makes Lexington special and unique – our history, our geography, and our culture – is largely absent from the Angelou strategy.

There’s no significant mention of downtown.  Of the Distillery District.  Of our neighborhoods.  Of our unique individuals and personalities.  Of our history.  There’s only a passing mention of our horse farms and our rural landscape.  There’s no mention of the World Equestrian Games.

As a result, Angelou fails to identify what gives Lexington a competitive advantage in the global competition for businesses, jobs, and talent.  So while the recommendations aren’t bad, they just ring hollow.  They are bland and generic.  They don’t feel special to Lexington.

When Angelou recommends focusing on “Clean Technology”, for instance, that sounds like a good idea.  But what gives Lexington any special advantage over any other city in pursuing clean tech (Especially when every other city is pursing such a “hot” industry)?

These kinds of questions arise with most of the Angelou recommendations. What would a marketing plan for Lexington look like?  What would it build upon?  What – specifically – would give Lexington the ability to create a best-in-class workforce?

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We have the beginnings of a very solid economic development plan.  It just didn’t come from Angelou.  It came out of the two economic development transition teams that Mayor Gray appointed.  (You can download PDFs of the two “Economic Opportunity” reports from the mayor’s transition website.)

The two teams – made up of leaders from across the city – developed recommendations for how the mayor should approach economic development in Lexington.

And the transition teams recommended many of the same actions that Angelou did.  The difference?  The ideas contained in these reports are far more actionable than the ones we received from Angelou.  They are far more interesting.  They are far more relevant.  They are far more tailored to Lexington’s specific challenges and opportunities.

Like Angelou, the transition teams recommended enhancing support for entrepreneurs.  But the transition teams went further, and offered much more specific examples.  These included: Having the mayor visit 5 entrepreneurial events each year (along with a list of suggested events); Having the mayor organize an annual innovation conference, along with specific suggestions on structure and format; and, having the mayor’s office produce “The Lexington Entrepreneur’s Guide” online and in print.

The transition teams’ suggestions for a marketing plan for Lexington included specific, actionable ideas on who to include and how to approach marketing our city.  We could get testimonials from Jess Jackson (of Kendall Jackson Wineries) or Elizabeth Arden (Note the Streetsweeper’s comment below), who happen to own horse farms here.  The transition reports recommended building databases of local resources which could be called upon when recruiting new businesses to Lexington.

The transition teams also offered suggestions on how to better utilize downtown, our horse farms, and the Distillery District.  They offered specific ideas on building upon our health and educational systems.

And unlike Angelou, the recommendations contained in the transition team reports are much more tailored to Lexington, and – as a result – the recommendations are much more actionable.  They form the foundations of a real economic development plan for our city.

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Somehow, about 25 volunteers – in the span of a few meetings across a few weeks – leveraged their knowledge and experience to produce some innovative ways for Lexington to pursue economic development.  And the final product is more valuable than the report the consultant provided.  And it didn’t cost $150,000.

There are a lot of great ideas in these transition team reports.  That said, those ideas don’t yet form a cohesive economic development plan.  That work remains to be done.

Given how productive the transition teams were in such a short time, why not let leaders from throughout the community develop the strategy for Lexington’s economic development?  Why not let them recommend the structure, the direction, and the financing of Lexington’s economic development efforts?

All it took to create these transition reports was leadership from our mayor.  Likewise, our mayor should initiate the process of building an economic development strategy for Lexington, created by us.

We should use the Angelou fiasco not only to penalize Angelou for doing poor consulting work, but also to learn how to do our own economic development better.

To-Do List for Lexington: 4. Embrace Openness

Rob Morris 6 Comments Local , , , , , , ,

(Part of the To-Do List for Lexington series.  Click here for an overview and links to the rest of the series.)

In January 2008, we were in early discussions to buy Lowell’s.  Since Lowell’s focused only on Toyota brands, I had a simple question: How many Toyotas, Lexuses, and Scions are in Lexington?

It seemed like a fairly straightforward question, and since the county and state kept vehicle registration records, it seemed like the answer should be easy to find – especially since Indiana freely published precisely the kind of data I needed, but not for Kentucky counties.

After trying internet searches and coming up empty, I contacted the Fayette County Clerk’s office, who referred me to the state Department of Transportation.  After a few more phone calls, I learned that I’d need to file a request under the Open Records Act, specifying the exact data that I would need.  I later found that I’d also have to pay $225 to get the data.

It all seemed so needlessly bureaucratic: It was public information, after all – so why wasn’t it more public?

What followed was 13 months of a couple dozen intermittent phone calls, a similar number of emails, maddening unresponsiveness, and inane forms (including a mandatory contract which required that I wouldn’t use anyone’s personal data, even though the data I requested contained no personal information – it was just counts of vehicles by county).

Finally, this past February, I got the report I needed.  Well, sort of.  It was in a file and format which was nearly useless.  And, we got it a full 7 months after we bought the business, so much of the urgency to get the data had dissipated.  Still, we eventually wrangled it into something we thought was interesting and informative, and published the results in early April as the Bluegrass Vehicle Report 2009.

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Bureaucracies often have a maddening, self-perpetuating logic wherein
the only purpose of the bureaucracy appears to be to maintain the
bureaucracy.  Laden with rules and restrictions, such organizations often turn their focus inward and forget their true purpose.  And rather than engaging with and serving their constituencies, they tend to serve the bureaucracy’s interests.

In the process, bureaucracies become tangled, closed, unmovable beasts which are hostile to the very people they are bound to serve.

Our vehicle data experience is, unfortunately, all-too-typical.  But it doesn’t have to be…

Lexington suffers from a bureaucratically-driven lack of openness (as does Kentucky at large).  And that lack of openness hinders our city’s economic, social, and political progress.

Lexington needs to embrace openness.

There are (at least) two ways in which we can create a more open city:

  1. By creating more open information and information systems
  2. By adopting more open approaches to how our city serves its citizens

Open Information
Portland, Oregon recently approved an economic development strategy which
directed the city to open its information to the public in a
structured, standardized format.  Portland is just one of the latest in
a fast-growing list of progressive communities who are opening their data to
their citizens.

MommapsPortland followed in the footsteps of San Francisco which – through DataSF.org – has created a clearinghouse of over 100 sets of up-to-date government data.  That data includes geographic information, crime statistics, transportation data, and measures of performance for key city departments.

By standardizing this data and making it easy to download, San Francisco has enabled software developers to create rich new applications.  In just a few months, this move toward openness has spawned several mobile applications dedicated to anything from getting around the city to spotting neighborhood crime trends to finding places to take the kids.  It has even created a showcase of these applications, encouraging both users and developers to make use of the open data.

Indiana – for many years – has offered incredibly rich datasets on a wide variety of the state’s data on Indiana University’s StatsIndiana site.

By sharing this data – even when it is uncomfortable (like the crime
data) – these places are enabling citizens to understand their communities better.  If the crime data highlights problems, so much the better – at
least citizens know what they are dealing with, and the community can
begin to address problems with knowledge and insight.

In short, these places are making their communities more livable, while simultaneously encouraging local entrepreneurs to leverage the data to create new applications and new businesses.

These places follow a few simple rules to create useful clearinghouses of data:

  • Data should be standardized into a structured, machine-readable format so that it may be easily imported into databases and spreadsheets for use with other applications.
  • Data should be updated regularly.  If possible, it should tap into data sources in real time.
  • It should cover the widest possible array of government information – statistics, contracts, spending, performance, etc.  (Don’t try to predict or direct what information will be needed – let citizens decide on their own.)

In addition, most of the places adopting open data standards are also standardizing on lower-cost open source software.  By adopting open source platforms like Linux (operating systems), Apache (web servers), MySQL (databases), and Ruby (software development), the cities are able to move away from expensive proprietary systems from Microsoft, Oracle, and PeopleSoft, while simultaneously tapping into a rich community of developers, applications, and support.

Lexington can and should learn from these cities.

From an economic development standpoint, this kind of open
information is crucial to business growth.  In Lowell’s case, vehicle
registration information would have been valuable for developing better, more informed business plans and strategies.  Such information is crucial to local businesses as
they evaluate market opportunities in our city.  It would be equally critical for businesses
who wish to locate in Lexington from the outside.

And, most important, having more complete, more open information would help Lexington make better, more informed decisions and have smarter conversations about our future.  For example, we could have better evaluated the closure of South Limestone:

  • How much traffic would be diverted to other streets?
  • How much congestion would that cause?
  • What are the environmental impacts of the increased congestion?
  • How much commuter time would be lost?
  • What are the costs to downtown businesses in lost customers, lost productivity, and lost services?
  • What are the tax implications of those business and commuter losses?
  • How did the bid process actually work?
  • What did the bid documents say regarding daily work schedule, incentives, and overall timeframe?

Some of these questions may have been answered inside the Lexington-Fayette County Urban Government (LFUCG), but those answers didn’t enter into the public discussions in a meaningful way.  If this data and these processes had been more open and transparent, the decisions made around the South Limestone project may have been very different.

Open Approaches
One of our most frequent critiques of LFUCG is the way in which it serves (or fails to serve) the interests of Lexington’s citizens and economy.

Nowhere is this more apparent than in the structure, timing, and conduct of LFUCG’s Urban County Council meetings, which seem designed to suppress thoughtful public discourse.

The council holds a bewildering array of meetings with a variety of purposes, but two of the most important meetings are held on Tuesdays at 3 PM or on alternate Thursdays at 7 PM. Depending on the agenda, citizen input comes either at the very beginning or very end of the meeting.  Each citizen is limited to three minutes to speak to council.  In fact, both citizens and council members are placed on a visible countdown clock to limit their discussion times.

This format poses a number of problems:

  • Participation.  Because of the timing of meetings, our ability to participate is restrained.  Most citizens have work or family obligations at 3 PM on a Tuesday.
  • Beat the Clock.  Generally, the three-minute limit and the countdown clock stifle thoughtful civic discussion on complex and nuanced issues like CentrePointe, underground utilities, or South Limestone.  This is especially the case under the iron hand of Mayor Newberry, who – whatever his other
    qualities as an executive – is a ruthlessly efficient timekeeper.
  • Timing.  Putting citizen commentary at the beginning or end of meetings divorces it from the council’s discussion of those topics, which comes in the middle of the meeting.  Thus, citizen input is placed at the margins of the discussion instead of in the midst of it.
  • Abuse.  The time limits, when coupled with parliamentary maneuvers, allow some council members to squelch the discussion when it goes in directions they don’t like.  One council member is so adept at using this technique – on citizens and on fellow council members alike – that it should be named “the Myers” in his honor.

Such scheduling and time-allotment rules are relics of the last century: They seem more at home in the 1950’s or 1850’s than in 2009.  And they are leftovers of a bureaucracy which has lost its way – squelching civic discussion rather than contributing to it.  Worse, it shows disrespect and disdain for the very citizens those rules are supposed to serve.

LFUCG should adopt more open – and more modern – approaches to debating issues and to gathering citizen input.

[Note: What follows is excerpted from an old post which we feel framed the issue best.  Sorry to self-plagiarize.]

In an age of websites, blogs, Twitter, and Facebook, every business has had to engage in conversations with customers on the customers’ terms.  The ubiquity of the internet means that these tools are available to nearly everyone, nearly everywhere.  The latency of the internet means that the conversations don’t have to happen at the same time – they can build over time.  The internet’s ubiquity and latency forms the foundation of a new and better town hall.

Why should we all have to cram into a room at the same time?  Why should we have to play ‘beat the clock’ when talking about issues which are complex and nuanced?  Why should we have to forgo pressing business or personal matters to attend a meeting which is designed to be convenient for our representatives?

The internet provides the perfect public forum for every citizen to express his or her public policy views, ideas, and thinking.  Even better, our ideas can build on one another as we tinker with and improve the ideas of our neighbors.  Plus, conducting civic conversations on the internet can happen around the clock.  Citizens can participate in the public discussion when and where it is convenient for them, not for the elected representatives who serve them.  Isn’t that the way it should be?

Further, every single representative should publish their conversations, thinking, dilemmas, trade-offs, beliefs and positions (and the transactions between them and other interested parties – like developers or investors or campaign contributors).  These records should be posted online for all citizens to see, comment on, debate, and improve.

The council members’ emails are listed on the city’s website, as are the mayor’s newsletters.  But these are old, closed, one-way forms of communication.  They aren’t vibrant community
discussions.

So, do I want to see tweets that the mayor’s advisor is picking up eggs?  Or a Facebook entry featuring the halloween costumes of the councilwoman’s children?  Not particularly.  But we
deserve to see real-time updates of their thinking on critical community issues.  We should know why they have changed their minds at the last minute.  They should tell us who they talked with and what they said.  After all, they are public officials.  We should see into a transparent civic machine which serves all of us.

What is clear is that a 19th-century civic apparatus has hamstrung our 21st-century community. The ancient contraption allows far too many secrets to hide within.  Whether our representatives and our governments use blogs, Twitter, Facebook, or some other platform matters far less than whether they start participating in open conversations with the people they serve.

The technology already exists.  Millions of people already use it. Thousands of your constituents use it every day.  It’s easy.  It’s free.  And it will make Lexington better.  What are you waiting for?

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Lexington needs to adopt open, transparent, and up-to-date approaches to serving its citizens.  Lexington should also provide open information about the city so that we all can make smarter, more informed decisions.

Our lack of openness impedes our commerce.  It impedes our democracy.  It impedes our path to a better Lexington.

Let’s change that.

Next: 5. Leverage Intellectual Capital

LowellsSquare

To-Do List for Lexington: 2. Stop seeking saviors. Start making them.

Rob Morris 6 Comments Local , , , , ,

(Part of the To-Do List for Lexington series.  Click here for an overview and links to the rest of the series.)

Last July, Florida Tile announced that it was relocating its
headquarters to Lexington from Lakeland, Florida.  Kentucky’s state
government made a $3.7 million capital investment to bring 25 new Florida Tile jobs to
Lexington.  Florida Tile estimates that the number of jobs may grow to as many as 51 in 10 years.  In October, Lexington’s Urban County Council dropped the occupational license tax for Florida Tile to 1.25% from the normal 2.25% – a benefit of up to $1.3 million over the next 10 years.

How will 25 (or 51) new jobs pay back the millions of public dollars invested in bringing Florida Tile to Lexington?  It is doubtful that they will.  And that points out significant problems with Lexington’s economic development strategy.

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In our last post (Get Real), we talked about the destructive effects of Lexington’s booster mentality, which couples a self-deceiving optimism with a compulsive need to look good to others.  Boosters often pursue expensive, highly-visible, ego-driven civic projects with the promise of vague future rewards.

The economic development strategy which springs from such boosterism is one in which a great deal of effort and capital is expended to attract outside commerce to Lexington.  So boosters promote big civic investments (events, buildings, infrastructure projects, or incentives) with the hopes that those projects will entice new companies to invest or locate here.  And the underlying assumption is that the firms we attract to Lexington will – eventually – pay back the investments of effort and capital.

But this kind of economic development strategy has a number of irredeemable flaws:

  • Waste.  Projects like the 2010 World Equestrian Games and CentrePointe are wildly speculative and profoundly inefficient ways to draw new commerce into our city.  And, when one looks at the numbers, it is doubtful that Florida Tile’s incentive package will pay back taxpayers over the next 20 years – if they stick around that long.
  • Loss of Power.  When we try to attract companies from outside
    Lexington, we cede significant negotiating power to the company we are courting.  That
    company can stay where they are, or go to a city other than Lexington.
    We are prone to enter bidding wars with other desperate cities in the
    pursuit of desirable ‘saviors’, and the process becomes a race to the bottom: Who can offer the most lucrative incentives and conditions?
  • Misguided.  These strategies pursue the wrong kinds of firms.  When we resort to incentives to, in essence, bribe companies to come to Lexington, what kinds of companies are we attracting?  Ones which are much more mercenary and which – by definition – have less investment in our community and its future than firms who are already here.  To be clear, every business should be concerned with improving  its bottom line.   But when public dollars are at stake, we must decide how to allocate those dollars based upon public benefit.  And underwriting mercenaries is not the best use of public funds.
  • Hidden Penalties.  The incentives granted to companies like Florida Tile disadvantage already-local firms.  Those local firms not only help pay for the new firms’ incentives through taxes, but they also don’t get the financial subsidies, new facilities, or extended tax advantages that are often granted to newcomers.

This economic development approach – attract outside saviors to drive growth – also ignores a vital question: Where are these firms coming from?

Or, put differently: How is it that such firms even have the capability to expand to a city like Lexington?  How did they grow?  What did their home cities do to foster that growth?  And, most importantly, why isn’t Lexington doing that to grow great businesses at home?

Lexington’s leaders frequently look to similar American cities in the attempt to understand how those cities have grown and how they have built a great quality of life.  If we look at ‘model’ cities like Austin, Madison, Portland, and Pittsburgh, we see a very different economic development model at work.

In fact, these cities suggest that the old booster model has it exactly backwards: Those cities invest in growth at home first, then outsider attraction follows.

Lexington should be asking a lot of questions about those cities:

  • How did they foster key industries at home?  (For instance, how did Austin nurture the development of vibrant economies around semiconductors, computers, and music?)
  • How did those cities redevelop key districts into vibrant contributors to their economic engines? (Think Sixth Street in Austin or The Pearl District in Portland.)
  • What specific approaches did these cities use to leverage their relationships with local universities to drive economic growth?  (Think Carnegie Mellon or University of Wisconsin.)
  • What infrastructural moves did they make to enhance the local economy? (Example: How did Austin Energy help the city save enough energy – even as Austin grew – to avoid building a new power plant?)
  • What did they do to nurture and promote the careers of key locals?  (Think Michael Dell in Austin or Rebecca Ryan in Madison.)

And then Lexington needs to take a hard look inward and think about how those lessons apply here.  For instance:

  • Who are Lexington’s Michael Dells or Rebecca Ryans?  How would we know?
  • What are the best ways to allocate economic development funds to cultivate growth in their businesses?
  • Which districts in Lexington hold the most promise for redevelopment?  What specific lessons can we draw from, say, the Pearl District redevelopment process?
  •  How can we leverage the University of Kentucky and Transylvania University as key resources for economic growth (and not think of them only as educational institutions)?

These cities suggest that Lexington should stop seeking external ‘saviors’, and instead focus on building up our city’s internal competencies and infrastructure.  Then, outsiders might find our city desirable without requiring huge ransoms.

Focusing on internal growth is, in fact, how cities like Austin, Madison, Portland, and Pittsburgh have fueled sustained growth over the past 20 years.  Lexington should follow their example.

Lexington should stop seeking saviors, and start making them instead.

How does that look?  Here are some initial ideas:

  1. Make targeted investments. Instead of, for example, throwing $80 million at the World Equestrian Games in the speculative hope that the investment will draw future commerce from outside the city, make smaller, more targeted investments in growing specific businesses with specific growth measurements and targets (jobs, tax revenues, etc.).
  2. Select target industries, and invest there.  Choosing particular industries will allow Lexington to develop self-reinforcing ecosystems around key technologies or competencies.  Lexington’s mayor has frequently touted the “3 H’s” strategy for Lexington’s economic development: Horses, health care, and high-tech.  These might be valid industries to target, but we’ve allocated precious little development resources toward those goals and seen precious little progress in those areas.
  3. Oversee development with sharp business intellects.  Typically, Lexington’s economic development has been overseen either by developer-driven boosters (Commerce Lexington) or by academics and architects (Downtown Development Authority).  Lexington needs to shift the balance to more entrepreneurial businesspeople who have experience in business growth and who understand which business models work and which don’t.
  4. Prioritize business investment over infrastructure investment.  Projects like streetscapes and buried utility lines, while pretty, will contribute relatively little to Lexington in the way of tangible jobs or revenues.  And attempts to financially justify these projects frequently cross into sheer booster speculation about making better impressions.  Instead, we should focus on cultivating growing businesses and directly creating jobs and revenues with our development funds.
  5. Think “local” first.  Supercharge our investments by prioritizing local businesses before external ones.  More on this in our next post in this series.

Rather than spend hundreds of millions of dollars on hope and
speculation, we need to make smarter, more targeted investments with our public development dollars.  We need to run the business of growing our city like a business.  Anything less is a waste of our time and money.

Next: 3. Local First

LowellsSquare

What presenting to LFUCG is like

Rob Morris 4 Comments Local , , , , , , ,

Prologue
It all started with a testy weekend exchange on Twitter with LFUCG council member Doug Martin.

That Twitter exchange started with me posting multiple sarcastic complaints about traffic and then morphed into a conversation on leadership.

Throughout the day on Friday, I saw a series of ‘tweets’ on how bogged down Lexington’s traffic had become.  As new street closures on West Main Street and Old Frankfort Pike were added to the long-term closure on South Limestone, traffic in many parts of the city came to a standstill. This was exacerbated by a multi-vehicle wreck on Versailles Road Friday night. Essentially, the entire west and south side of Lexington was impassable.

I then made my sarcastic assessment of the chaotic state of our streets.

Without going into details, CM Martin objected to my flippant tone, and urged me to complain less and lead more.  It was a point that he reiterated as other folks jumped into the conversation throughout the weekend.  I pulled back from the discussion – stewing a little that CM Martin felt I wasn’t leading already.

I should clarify that Doug Martin is one of my favorite council members.  He’s engaged and approachable – by far the most active Twitterer in LFUCG – and he genuinely wants more citizen participation and a better city.  Although he and I frequently disagree on specific tactics that we should use as we approach the important issues in Lexington, I feel that we’re on the same team.

But as the weekend progressed I couldn’t get over how he seemed to think I wasn’t a leader.

::

Preparation
As I stewed about the conversation with CM Martin, I was simultaneously stewing about the state of our city’s traffic.

I have written a few times about the streetscape project and the resulting impacts to downtown.   Most recently, I wrote about the “true costs” of the South Limestone project – lost customers, lost productivity, lost services – and estimated the total loss of business to be between $84 and $92 million, far in excess of the approximately $17 million being spent on construction.

Meanwhile, there seemed to be no sense of urgency at LFUCG about accelerating the project.

On Monday, I learned that the next LFUCG work session included a “Downtown Streetscape Update” on the agenda.  I decided that I would make a presentation on my findings – and perhaps demonstrate some “leadership”.

Trouble is, I had never even been to council chambers, let alone participated in a meeting.  I asked my informal network of friends on Twitter, email, and South Limestone what I needed to do to make a presentation at the beginning of the session.

And the responses I got were great, but a bit intimidating.  I only had about 24 hours to get my act together.

Citizens are only allowed 3 minutes to comment on issues on the agenda.  But other citizens can donate their time.  I figured that I had at least 10 minutes worth of material, which would mean that I needed 3 (or more) other folks to donate their time to me.  Everyone has to sign in before the 3 PM meeting starts.  Getting 3 other people to come to council chambers at 3 PM on a Tuesday is a daunting task.

At the same time as I was searching for supporters, I was also trying to throw together a presentation.  I am a presentation perfectionist – I like to have every slide “just so”, and I want to know precisely what I’m going to say with each slide.  (I’m the same way with writing, by the way.)  Normally, crafting a presentation that I am happy and comfortable with takes a week or more.

But I had one day.  Time to buckle down.

By early Tuesday, I had only one other person committed to showing up, giving me a grand total of 6 minutes.  I was beginning to think I’d have to miss this opportunity to present to council.  As I was preparing the presentation, I was also mentally noting the parts I’d have to slash if I didn’t have enough supporters donating their time.

But as my network kicked in on Tuesday afternoon, I saw that I’d have at least 12 minutes.

With that, I “locked in” the content of my presentation, and downloaded a few different versions of it to a thumb drive.  I didn’t know which version of PowerPoint to bring (PP 2003 is the best bet).  I also didn’t know if I’d have control of the ‘clicker’ to transition between slides (it turns out that I did).

::

Presentation
I showed up to city hall at about 2:45 PM, hoping to see my “supporters”.  I checked in at the front desk by giving them my driver’s license and getting a visitor’s badge (a sticker, really).  Then, one by one, I started to see the other folks who were donating their time to my presentation.  There were 4 others, which should have given me 15 minutes – more than enough time for what I had to say.

I gave my thumb drive to the LFUCG’s technical coordinator, and had a moment of panic – the thumb drive had an “autorun” file on it which the LFUCG computers saw as malware.  I was starting to look like I couldn’t even load up the presentation.  After a reboot, we were able to transfer it, and the coordinator showed me the way to navigate through my presentation while up at the podium.

Mayor Newberry started the work session at 3 PM (sharp!), and public comment (for items that are on the agenda) is usually the first item.  But Tuesday was also the day that council recognized Lexington’s Junior Fire Chief, and so council made time for that first.

Then, it was time for public comment.  Mayor Newberry called my name and, as I approached the podium, he mentioned that I had 12 minutes.  My mind scrambled a bit, as I tried to figure out where the other 3 minutes went.  Did someone not sign up?  Did they do so incorrectly?  Since I didn’t know, and since I designed the presentation for about 10 minutes, I decided to go ahead without making a big scene.

I was atypically nervous as I approached the podium.  I’m normally a pretty confident public speaker, but I was shaking.  What was that all about?

I’ve been suffering from a cold for the past few weeks, and the constant coughing has meant that I haven’t been sleeping well.  On top of that, I didn’t feel fully prepared – I didn’t have every detail down pat.  Then, there was minute-gate.  And, finally, when my presentation showed on screen, it jumped ahead a couple of slides.

Streetscapes

View more documents from Rob Morris.

Then, I started talking.  My voice wavered a bit.  As I got a couple of slides in, I started to feel my normal presentation rhythm.  I usually flip through 6 to 10 slides per minute, and I was starting to get into the flow of the presentation.  And, yet, I was still shaking…

For the most part, the presentation flowed as I planned.  For the most part.  The least well-thought-out section (the one where I shared my Twitter conversation with CM Martin) was where I temporarily lost track.  I struggled for what seemed like an eternity, and then finally got control of the presentation again.

In the process of bungling that one section, I fear I may have given the unfortunate impression that CM Martin was some sort of “bad guy” in the South Limestone closure.  He most certainly isn’t.  (Sorry, Doug.)

As I approached the end of my presentation, Mayor Newberry interrupted me.  “You have 30 seconds.”  I felt like asking if I got more time because of his interruption.  But I knew that I had only 9 more rapid-fire slides, and I knew what I was going to say, so I charged ahead, wrapping up the presentation before he could interrupt again.

GTV3 Video of Presentation (My presentation starts to 6m 30s).

::

Post Mortem
As I sat down, a few of those around me quietly praised the presentation.  Mayor Newberry called the next speaker – who was actually one of my “supporters”.  So I could have had 15 minutes after all.

As the council transitioned to their business, it wasn’t at all clear that my presentation had any impact.  After I finished, there was no further discussion of South Lime, and no questions for me.

I knew I had some good points, but it wasn’t clear that any of them had connected with the council members.  Then, several minutes after my presentation, CM Diane Lawless came by and told me how well I did.  But Diane is such a nice person that I wasn’t sure her sentiments reflected the council as a whole.

When the “Downtown Streetscape” item finally came up on the agenda, CM Lawless ripped into the way in which the South Lime portion was executed.  And then, an amazing thing happened.  One by one, previously staid council members chimed in with comments about the urgency of accelerating South Limestone.

First, CM Kevin Stinnett made a motion for getting an update on what it takes to speed things along.  Seconded (loudly) by CM Lawless, I then watched as CMs Jay McChord and Julian Beard reiterated their support for the motion.

In the end, the presentation did connect with a large portion of the council, and – next Tuesday – the issue of jump-starting the South Limestone project is back on the docket.

GTV3 Video of Presentation (Council discussion starts at 1h 33m.  Takes a while, but it gets interesting).

Pretty to Gritty: Thoughts on Lexington Streetscapes

Rob Morris 2 Comments Local , , , ,

Last week, Lexington’s Downtown Development Authority held a “Downtown Improvements Public Forum” to share plans for renovating streetscapes along Limestone, Cheapside, Vine, and Main Streets.  (Controversial renovations on South Limestone are already underway.)  More ‘open house’ than ‘forum’, the lead agency for DDA’s plans, Kinzelman Kline Gossman, had ringed the room with posters showing artists’ renderings of what the streetscapes would look like and detailing guidelines for street and sidewalk construction. (Large PDF of the DDA streetscape plan here.)

Walking through the door, there was a telling moment.  There was an artist’s rendering of what South Limestone would look like after the streetscape project was finished.  It was beautiful.  Except that it wasn’t South Limestone.  The lone rendering of a South Limestone streetscape, while pretty, included non-existent buildings and storefronts.

South Limestone Rendering

Throughout my career, I’ve had the opportunity to manage relationships and to interact with numerous creative agencies: design firms, ad agencies, industrial designers, consultants, and the like.  I’ve had many opportunities to witness their creative processes at work.  I’ve also seen the common pitfalls of such creativity.  And Wednesday’s open house struck a familiar chord.

One of the most common pitfalls of creative work is to focus disproportionately on ‘the pretty’.  ‘Pretty’ is creative work in its purest, most idealistic form.  Pretty designs are often, as their name would imply, beautiful and inspiring.  And as long as inspiration is their primary goal, pretty designs can be useful.

But too often, pretty designs are seen as some kind of end point in the creative work.  After producing a a creative product, the agency – or, worse, their clients – see the work as complete.  They frequently choose not to get ‘dirty’ with the unglamorous implementation of the project.  Many design firms see implementation as too mundane, too pedestrian.  In their view, they should focus on the pure ‘art’ of their creativity; it is then up to the engineer, the website coder, or the construction foreman to do the arduous task of making the project match the pretty design.

And that is precisely the problem with pretty designs.

When the pretty design meets schedule constraints or cost constraints or other real-world constraints, it can fall apart.  When the engineer or construction worker runs up against physical realities, the pretty design often gets severely compromised, and becomes something considerably less pretty.

While pretty creativity gets accolades and awards, it usually only accounts for a small fraction (I’d guess 5 to 10%, based on my experience) of the real creative work on a project.  And that real creative work is what I would characterize as ‘gritty’ creativity: the practical, streetwise, action-oriented creativity which actually drives the project forward and finds creative solutions to real-world problems.  The success or failure of complex projects depends in great measure on how much ‘gritty’ creativity is employed within those projects.

The disconnect between pretty and gritty is the most common cause of failure in creative projects.

What I saw at the DDA’s forum was an abundance of stylistic and architectural details.  They had detailed guidelines for how to design intersections and sidewalks.  They had beautiful renderings of what downtown streets could look like after the designs were applied.  They had very pretty designs for the future of our downtown.

But what was missing from the forum was any substantial gritty design work for the actual execution of the project.

In the wake of the uncoordinated and under-publicized closure of South Limestone for streetscape improvements, I – and many others in attendance – expected many more practical, gritty details about how the rest of ‘Phase I’ (Cheapside, Vine, and Main Streets) would be implemented.  Indeed, I had also hoped to find out more about how future phases would affect my business and those of my neighbors on North Limestone.

The disconnect between ideal (“the pretty”) and implementation (“the gritty”) was troubling: Could we be headed for another South Limestone?

In the South Limestone closure, many businesses seemed to have little time to prepare for losing a big chunk of customers for a year or more.  Commuters had little time to adapt to drastically altered traffic patterns.  While the city made some public parking available, that parking was a pedestrian-unfriendly 4 to 5 blocks away from some of the affected businesses.  In short, South Limestone needed some gritty design for the implementation and coordination of the project.

The pretty planning for downtown streetscapes has been underway for years.  But real-world work on Main, Vine, and Cheapside is slated to begin in just 3 to 4 months.  This short timeframe creates added urgency for understanding how the rest of the streetscape project will really work.  And the utter lack of gritty planning details in last week’s meeting makes answers to the following questions even more important.

  • Could all three streets, as with South Limestone, be completely closed?
  • Which sections of which streets will be closed?  For what periods?  What is the planned sequence of closures?
  • When can each business on the affected streets expect their businesses to be interrupted?
  • How long will such business interruptions last?  What will those interruptions look like?  Where will they be most severe?
  • How can we accelerate the project where business interruptions will be most profound?
  • Can we sequence closures around business cycles?  Could retailers be least affected during the holiday shopping season?  Could work near outdoor cafés be completed by spring?
  • How will the city or DDA assist businesses during the closures?  How will such assistance be more effective than what was done for South Limestone?  Targeted ad campaigns?  Special events?  Shuttle services from parking garages?
  • Will drivers need to find alternate routes (as with South Limestone)?
  • What are the likely sources of project delay?  How will those be mitigated?
  • What, precisely, are the future phases?  When are they slated?

To avoid the chaos that accompanied the South Limestone closure, the DDA and the city must begin mapping out the gritty planning of how this project gets executed.  And simply throwing such vital details to a construction contractor isn’t acceptable.

The streetscape project is certainly a pretty design.  But, if it is to be a successful urban development project – if it is to help us build a better, more vibrant city – then it must get much more gritty as well.

LowellsSquare

Chaos: South Limestone Closure Lawsuit Details

Rob Morris 3 Comments Local , , , ,

When we initiated LexMobs to help businesses on South Limestone on Wednesday, we noted that the closure of the street seemed hasty and poorly-planned.  Well, now we’ve obtained the Fayette Circuit Court filing from a lawsuit intended to stop the work on South Limestone (first reported by Jake at Page One Kentucky).

And that filing reveals just how chaotic the closure process actually was.

Filed by the owners of several businesses and properties lining the route, the lawsuit seeks an immediate injunction to halt the roadwork and to reopen South Limestone to traffic.  It also seeks damages for the interruptions to business operations along the street.  The suit names the Mayor, LFUCG Urban County Council, and ATS Construction (the firm contracted to renovate SoLime) as defendants.

And the filing tells a story of a poorly-communicated, hastily-assembled, highly-inconsistent project with an escalating price tag:

  • Communication.  Initial letters from the LFUCG Public Works Commissioner to the affected businesses invited them to a open house to discuss “a streetscape design” and “utility needs”, but didn’t indicate a complete road closure was immanent. The actual details of the project (and of the changes to the project) were usually disclosed to owners through rumors or media accounts.
  • Timing.  Owners had six days’ notice before the first open house (May 18th), and there was no mention of a road closure.  A second “utility needs” meeting was held on June 3rd, and the full closure of South Limestone was disclosed.  But some owners didn’t learn of the possibility of closing SoLime until the day before; The letter announcing that meeting didn’t mention closing the street.
  • Consistency.  In June 3rd discussions, South Limestone was to be closed from Euclid to High.  After voicing opposition, property owners were told on July 10th that SoLime would initially be closed from Euclid to Maxwell, opening up a full block between Maxwell and High Streets.  On July 21st – the day before the project began – owners learned from media accounts that SoLime was now to be closed all the way to High Street again.  That day, owners met with the Mayor and others from LFUCG to learn that ATS and LFUCG won’t know what they’re dealing with until they dig up the street.
  • Price.  The “Downtown Streetscape Master Plan” proposed improvements to South Limestone costing more than $5.2 million.  The LFUCG council approved the streetscape plan in August 2008.  On July 7th, 2009, the council approved the $13.1 million contract with ATS.  Two weeks later, media accounts put the total at $17 million.

The patterns emerging from this (admittedly one-sided) account of the closure of South Limestone parallels with what we’ve seen recently from LFUCG on urban development projects:

  • Projects languish for years, then are suddenly initiated.
  • Decisionmakers seem to have little sense of the full scope or true impacts of their decisions.
  • The true impacts of the project are only understood, if ever, after it is long underway.
  • Communication with citizens is unclear, intermittent, and/or non-existent.
  • The project changes direction suddenly.
  • It is unclear who is accountable for the success or failure of such projects
  • Because they are so committed to the (frequently noble) idea of the project, decisionmakers accept a series of concessions which cause the project’s price to balloon to multiples of original estimates.

We’ve seen some or all of these elements in numerous recent urban development projects: CentrePointe, Tax Increment Financing (TIF), the Lyric Theatre, the Newtown Pike extension and, now, the South Limestone Streetscape.

What results is chaos.

Business owners on South Limestone had 2 months to prepare to lose customers for 12 months.  Many owners had one day to figure out how to get customers and suppliers to their door.  The cost of the project is 3 times what was initially approved.

And the results of the chaos are easy to predict.  Confused commuters and shoppers stay away from “the mess” downtown.  Downtown businesses die.  And, after fits and starts, Lexington ends up with a beautiful street.  To nowhere.

Chaos is no way to run a business.  And chaos is no way to run the business of our city.

LowellsSquare

LexMobs on South Limestone?

Rob Morris 5 Comments Local , , , ,

The South Limestone streetscape project gets underway this morning.  Using Twitter, Lexington’s Mayor announced that the closure will result in traffic delays of up to 45 minutes.

From a public point of view, the closure seems hastily and poorly planned, although the promised streetscapes look wonderful.  The project stems from a noble goal: to better connect the University of Kentucky campus with downtown Lexington.

But businesses lining South Limestone (SoLime) had little time to adapt to the closure, and I wonder how many can survive being starved of traffic for so long.  When Lexingtonians realize that there is a “mess” surrounding SoLime, they will stay away in droves.  (With a business just off of North Limestone, I’m concerned about the disruptions to our southside Lexington customers making it in to Lowell’s.)

There are a lot of great businesses along SoLime that would be a shame to lose: Sav’s, Pazzo’s, Tolly Ho, Failte, Sqecial Media, and many, many others.  Some (maybe all) of these are Lexington institutions.

How long could they operate without significant customer patronage?  How long could they retain employees?  How long can they make debt / rent payments?  How long can they pay bills?  How long can they survive?

So, here’s a challenge for our readers: Let’s go out of our way to demonstrate that we care about those businesses.

Beginning today, and continuing through the next month, let’s pick one or two businesses to “flash mob” each day.  Let’s get together to show, with our feet and our wallets, that we want those businesses to survive.  Let’s show up.  And eat.  Or buy.  Or drink.  Let’s refuse to let these businesses fail.

If our LexMobs get too big, that’s OK – I’m sure that the plentiful nearby businesses would also love some of our overflow business.

Will this effort be well-organized and well-thought-out in advance?  Not a chance.  Will it be messy?  Yes.  Will it be chaotic?  Absolutely.  Will it be inconvenient?  Certainly.  Will you be too busy to interrupt your day?  Undoubtedly.

But that is precisely the point: to go out of our way to demonstrate we care for these businesses.

So… Let’s LexMob South Limestone.  Look for more details on Twitter with the hashtags #LexMob and #SoLime.  See you there!

Update: The inaugural LexMob will be Wednesday, July 22nd @ Pazzo’s Pizza Pub at 11:30 AM near Euclid on SoLime.  Can’t make it?  We’ll try for other times and places with future LexMobs!

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