Why Do Cities Want Their Own Cryptocurrencies?

Coming soon to Slovenia: a brand new city that runs completely on cryptocurrency.

If all goes according to plan, BTC City will rise from the ashes of a former commercial shopping district in the country’s capital of Lubjana, offering wallet-less shoppers and wide-eyed tech enthusiasts a chance to engage in a more modern brand of conspicuous consumption. Every store in the 1.5 million-square-foot plot will stop accepting cash and start accepting crypto.

It’s a big deal for the small, former Soviet country. But it’s small potatoes compared to some other municipal efforts to wade into the world of digital financial systems. BTC City’s aim is to get people to use the dozens of digital currencies that already exist. Elsewhere, cities are vying to create new ones from scratch.

The list of cities experimenting with cryptocurrencies is diverse, and so are their goals. Dubai launched emCash in 2017 to flex its high-tech prowess as a “smart city.” Berkeley, California, is exploring a city-branded cryptocurrency effort to fund municipal bonds, making up for inadequate outside investment. Cities in Venezuela are bartering with Petros in a desperate—and questionable—attempt to raise funds amid the country’s economic crisis. And Seoul’s mayor has floated the idea of creating S-coins to fund social welfare programs for the sake of efficiency and advancing technology.

What’s less clear, though, is how exactly a city-specific cryptocurrency would work—and what cryptocurrencies can do for a city that cash can’t.

Why go crypto?

The first thing to understand is that there’s a major distinction between government-backed cryptocurrency and the more well-known financial instruments like Bitcoin or Ripple. Those virtual currencies are essentially “built by air, and backed by air,” said Sheila Warren, project head of blockchain and distributed ledger technologies at the World Economic Forum. In other words, their value is determined by the complicated coding it takes to mine them, in the case of Bitcoin, and how much people are willing to pay for them.

When a city launches its own cryptocurrency, however, the digital tokens are likely backed by some sort of city asset. Most local cryptocurrencies aren’t trying to disrupt money. They’re just opening up more (and more efficient) avenues for citizens to invest in their cities and buy goods. In turn, they aim to create more ways for cities to fund projects they previously couldn’t afford.

Berkeley’s cryptocurrency, for example, is meant to offer citizens an easier way to buy municipal bonds, which could help the city build affordable housing, rebuild transit systems, and support social services.

It’s still in its proposal and development stages, but if implemented, it would be “like a non-profit, special-purpose vehicle, meant to fund social good,” Berkeley Vice Mayor Ben Bartlett told CityLab in February. Instead of selling bonds to underwriters, who resell them to brokers and institutions at mounting prices, the government would sell bonds directly to citizens, who would essentially crowdfund each one. It’s a cheaper and easier system than traditional municipal bonds, and less volatile than traditional cryptocurrencies: The tokens would be digitized and blockchain-based, but they’d act as a security, not as a speculation tool.

“This proposal is an important step in taking power from Wall Street and giving it back to the people,” Bartlett said in a press release in April.

A cheaper way in

It’s that spirit of accessibility that many crypto-advocates highlight. “If you tokenize these bonds, then it’s possible for the average person to make a small investment,” said Campbell Harvey, a finance professor who teaches cryptocurrency at Duke University. An actual bond may be issued at thousands, even millions, of dollars, which is out of reach for most of the community—and the process of buying one is cumbersome.

By switching to a tokenized system, a college student who cares about poverty in the city can buy $20 worth, knowing his contribution is going toward, say, an affordable housing project. He can then use his tokens on other city goods, like transit rides or groceries, or he can hold on to them as an investment.

“So he’s able to enter the game with the amount of disposable cash he’s got,” Harvey said. “It essentially brings people that wouldn’t usually be investors into the market.”

Warren sees this as just the next logical step in the future of city financing. “At some point in history we had to invent municipal bonds, and now we’re just taking it to the next level,” she said. What cities like Berkeley are doing is taking a well-known system that people are comfortable with and securitizing it, or backing the bond with a new kind of currency.

After Bartlett formally proposed developing a “blockchain-based micro-bond” at an April city council meeting, five out of nine city council members expressed support, which means Bartlett is moving forward with designing an implementation plan. Other hypotheticals have been floated, too. Prosperous cities could back their currencies with property values, as Fouad Khan, an associate editor at Springer Nature, imagines in his vision of an “NYCToken.” Each digital token could be worth the market value of 1 square centimeter of New York real estate. At a current cost per square foot of around $1,500, that’s about $1.60 per token. “If it’s valuable to live in the city, then the currency would be valuable,” said Khan, who has previously been a consultant for the World Bank.

After all, the primary investors in a city-based cryptocurrency should be the citizens who want to buy into their city, Khan said. “Every time the price of currency goes up, not only are they getting more services, but they’re also getting a better living experience for themselves,” he said.

Dubai’s emCash is a different animal altogether, more akin to Slovenia’s BTC mall than Berkeley’s crypto-funded social investment plan. The city’s goal is to transition into a cashless society, giving residents the ability to buy goods with emCash just as easily as they’d use cash or, say, ApplePay. Trading one kind of money for another may seem superfluous, but if the ultimate goal is to become completely “smart,” Warren said, hosting even the smallest transactions on a city-backed blockchain brings the city one step closer.

What could go wrong?

There are unique drawbacks to each city’s methods of leaning away from traditional money. In developing a cryptocurrency that acts as an investment vehicle, cities are creating the potential for another bubble, experts say. “You’re going to have trillions and trillions of dollars coming in that are, maybe in the short term, great for [your city],” Khan said. “But at the same time, that’s a lot of money coming in that’s being diverted from other places.” As Bitcoin investors (and armchair speculators) have seen, cryptocurrencies can be extremely volatile. Once the novelty and excitement has worn off, investors could engage in a digital run on the bank, or there might just be fewer interested ones down the line.

There’s always the possibility for panics, Warren said. But traditional financial institutions have safeguards to keep that from happening, and future crypto-cities others could implement similar ones to make their currencies less risky.

Then there’s the security concern. Cities that want to launch their own cryptocurrency will need have a better grasp on blockchain and cybersecurity—which, as CityLab has reported before, isn’t often the case. “If it’s not secure, then it’s going to be hacked,” said Harvey. “There’s a lot of variables here in terms of how [cities] set up their blockchain, but essentially think of somebody going in and stealing the tokens, creating transactions for residents who don’t know their tokens are being taken, and then dumped.” Berkeley’s city council, for example, is teaming up with UC Berkeley’s Blockchain Lab, as well as an online municipal finance group, to develop their plan.

Of course, all this effort is moot if cities can’t get their residents to trust cryptocurrencies. Harvey thinks that shouldn’t be difficult, given how quickly interest has grown. Colleges are now teaching blockchain—Harvey’s own class jumped from a few dozen students to more than 200 over the last four years. And cryptocurrency has come a long way since its early days. “These cryptos have a different reputation now, and people are very open to the blockchain idea,” he said. “There’s a lot of hype, and a lot of positive PR.”

Warren is more skeptical, arguing that there’s still a good amount of anxiety around cryptocurrency, making it a double-edged sword. “There is quite likely a class of person who would go forward with it because they’re attracted to the idea that it is innovative,” she said.

Certain cities are more adept to experiment, and better-suited to support their own financial markets. New York and California, for example, are brimming with tech geeks and hedge fund managers who are savvy (and wealthy) enough to invest. Likewise, their cities are trustworthy (and prosperous) enough to be good bets. But a growing economic polarization along geographic lines means effective local currencies could simply end up helping rich cities get richer, leaving their smaller counterparts behind.

And even within cities, the new investment model could unwittingly exacerbate inequality: in the process of funding projects that help disenfranchised communities like the homeless, cities create wealth for the wealthy.

“At this point I tend to be in favor of any solution that’s going to alleviate the plight of the most vulnerable,” Warren said. “But I do think over time we have to think about what it means if we’re really creating and adding to stratification of society through the processes we’re using to alleviate those issues.”

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P3s Can Be Bad for Racial Equity — But They Don’t Have to Be

Searching for the words “P3” and “equity” online will yield many results, but most won’t discuss fairness or social justice. In the P3 context, equity usually means financial equity, as in the direct capital investment made by private companies in long-term concession arrangements. In these transactions, social and racial equity is often an afterthought, at best.

Yet P3 advocates would say that the private sector is only responding to the performance goals established by the public sector in these agreements.

In other words, if the public sector wants to see performance on social equity, it has the power to demand it in a public-private partnership – just like it can mandate safe and environmentally responsible construction techniques.

The challenge is coming up with performance-based measures that can hold up under legal challenge and that consider long-term impact on low-income individuals and people of color.

When P3s are structured to favor larger multistate – or even multinational – contractors, they can put smaller local businesses at a disadvantage. And that can make it harder for minority-owned firms to compete.

P3 arrangements can even have certain dynamics that can lead to greater inequity than publicly managed projects. Here are four potential problems governments might encounter—and four solutions.

Problem 1: The Bad Side of Bundling

Sometimes P3s involve bundling smaller projects into a large procurement that will draw greater competition from out of state. This kind of bundling can have lots of advantages for governments. By putting multiple small and similar projects together, as with the Missouri Safe and Sound Program, for example, or the Pennsylvania Rapid Bridge replacement project, governments can reduce costs with economies of scale, significantly accelerate completion and attract more bidders, including those with international and specialized technical expertise.

But economies of scale that attract out-of-state bidders can sometimes mean cutting down profits for the small contractors. A state or local government that saves some money by finding the lowest bidder won’t get as much economic development if most of the profits accrue to non-local firms.

Solution: Divide and Conquer

Governments can address this by dividing the procurement appropriately. The economies of scale from a large project may accrue from certain parts of that project – such as savings on technology purchases, or on large-scale construction equipment.

It’s absolutely possible for governments to maintain those economies of scale while dividing up other parts of a project.

Prior to a P3, procurement staff can review all of the work associated with a large project and determine if some of it is less likely to generate economies of scale or other advantages if included in a P3 arrangement. Procurement staff may be able to procure that part of the work separately in a bid intended for smaller contractors.

In some cases, bundling many projects and beginning them all at once can also have the downside of temporarily increasing construction inflation, which may offset some or all of the benefits of economies of scale. To avoid this, procurement staff can work to “rightsize” the projects and timing based on the pipeline of projects anticipated by the agency, as well as other area agencies and private companies. With better notice of the pipeline, and greater predictability, contractors can be more prepared for work, and agencies can avoid paying for an inflationary spiral they created.

Problem 2: The Subcontractor Shuffle

Small firms often partner with larger contractors from out of state or even out of the country to win these kinds of larger bids. But in some cases, after winning bids, the larger “prime” contractor changes the terms of the deal, requiring subcontractors to cut prices for the subcontracted work after it was won or be replaced.

That puts those smaller local firms at a distinct disadvantage.

Solution: Teaming Rules

Predatory behavior by prime contractors can be avoided by requiring prime contractors to get permission before changing subs or the division of the work. Many, but not all, state and local governments require successful bidders to do this, as well as pay subcontractors promptly.

Problem 3: Accelerated Construction Requires Accelerated Capital

Some governments turn to P3s for their expanded financial capacity, allowing more work to be completed in a shorter time frame, and with greater speed and certainty.
Yet for local contractors, a steady stream of annual work may be preferable to a “feast or famine” pattern, when a lot of work is available in a short period and then nothing until the government again has funds to undertake a large project.

When governments bundle projects and get aggressive about timeframes for completion, everything needs to scale up. Small businesses may be less able to double their workforce in a short period or assemble the capital needed to do the work on an accelerated basis. Surety bond mandates (which require contractors to get a performance bond, often for the full amount of the work) can also be a barrier for small contractors. In some states, P3 projects can involve lower or no surety bonds, because of the other performance-related aspects of the contract are thought to provide sufficient protection without the bond.

Solution: Manage the Money – and the Workflow

New tools, such as mobilization funds, may assist with this, and contracts can be written to require prime contractors to assist their subs in mobilization. Governments can also balance the tradeoffs between bundling work to attract out-of-state contractors and keeping a steady flow of work, so that local sources are readily available when needed.

Problem 4: Lack of Local Contacts

Non-local firms may not have the contacts to facilitate recruiting a diverse workforce and subcontractor pool. International firms may not be familiar with the complexities of hiring goals and equal employment practices in the U.S., which may delay or hinder companies reaching those goals. As infrastructure agencies increase community outreach and engagement, non-local firms may not be as able to “hit the ground running” and quickly identify groups that should be engaged.

Solution: Make Local Engagement and Equity Part of the Process

In Prince George’s County, Md., an innovative public-private partnership is engaging local, small and minority county businesses and residents and providing environmental and economic benefit for the community. In 2014, the county was under a consent decree to meet its EPA-mandated MS4 water quality permit requirements, but lacked a strategy to retrofit 15,000 acres of impervious surfaces (nearly 5 percent of its land area) to stormwater management features in time for regulatory deadlines.

The county chose to use a 30-year, Community-Based Public-Private Partnership (CBP3) to design, build, operate, and maintain 4,000 impervious acres with an additional 30-year maintenance program. The CBP3, known as the Clean Water Partnership, is led by Corvias, a company committed to using local, small and minority-owned businesses for 35 percent of the work, and to having local residents perform the work. To accomplish this, the CBP3 created a contractor development program and Mentor Protégée Program to support small businesses and local residents. As of March 2018 the Clean Water Partnership has met or exceeded the socio-economic and local utilization performance goals for small, local and minority businesses at 87 percent vs. a requirement of 40 percent and has also positioned the county as both a national and regional leader in P3s and Stormwater Management. The Clean Water Partnership has reduced the total development costs of stormwater retrofits in the county by over 30 percent.

Like any other procurement method, public-private partnerships can be a helpful tool to deliver on public sector goals – including economic and social justice. Private equity capital can help build social equity – as long as the public sector makes sure to address it throughout the process.

This piece was originally published on Governing.com.

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Government, Civic And Business Leaders Launch “Racial Equity Here” Commitment To Dismantle Structural Racism In America

Recognizing the need to collectively tackle growing racial disparities, organizations from the public, private and philanthropic sectors today announced the Racial Equity Here commitment to dismantle structural racism in America. These leading institutions invite others to join them in taking clear steps to prioritize racial equity in their work.

Racial Equity Here is a collaboration led jointly by Living Cities, a philanthropic collaborative focused on racial and economic justice, and the Government Alliance on Race and Equity (GARE), a joint project of Race Forward and the Haas Institute for a Fair and Inclusive Society. GARE is a national network of local governments working to achieve racial equity and advance opportunities for all.

“In recent years, racial inequity in America’s cities, businesses and even coffee shops has made national headlines, but that attention has yet to result in lasting systemic change,” said Ben Hecht, President and CEO of Living Cities. “No single organization can move the needle on racial equity on its own. Racial Equity Here is building a critical mass of partners across industries and sectors that together can create dramatically better outcomes for people of color in America.”

Organizations making this commitment believe that racial disparities in America are too widespread for any one city, sector, organization or program to tackle alone. While individual efforts like training can be impactful, Racial Equity Here aims to fight structural racism by transforming policies, practices and norms within our institutions and organizations at a national scale.

“The profound outcome gaps we see today between people of color and white people aren’t accidental — they were intentionally created. To achieve a stronger and truly multiracial, inclusive democracy, organizations from every sector must now partner to proactively advance racial equity. Through Racial Equity Here: Commit to Action, we are distilling years of research and practice into clear, easily accessible tools that organizations can start using today,” remarked Glenn Harris, president of Race Forward.

To date, over 190 groups have committed to create more equitable communities and workplaces by learning about structural racism, using racial equity tools to guide action that closes gaps and improves outcomes for all, and partnering across sectors to align efforts and accelerate results.

This growing movement has been accelerated through the Racial Equity Here initiative, launched by Living Cities and GARE in 2016, which helped five cities transform their municipal operations to better address racial disparities. Through this initiative, Albuquerque, Austin, Grand Rapids, Louisville and Philadelphia are changing how they do business. They have established racial equity visions and action plans; are training staff on government’s responsibility to create racial equity; are using data and racial equity tools to guide policy, program and budget decisions; and are forming cross-sector teams as part of their broader commitment to improve outcomes for all residents.

“Racial Equity Here is about changing the structures and systems that create and perpetuate racial inequity,” said john a. powell, Director of the Haas Institute for a Fair and Inclusive Society and Professor of Law, UC Berkeley. “We are committed to expanding the “we” in we the people, building bridges across sectors and states to amplify and accelerate our multiracial movement for belonging and racial justice.“

Key outcomes, policies and initiatives stemming from Racial Equity Here include:

Albuquerque no longer asks about criminal convictions on its initial application for employment. It also has modified the W-9 form to give preference to local, minority owned, and women owned companies who bid for city work.

Austin’s Office of Equity is collaborating with the Neighborhood Housing and Community Development Department and the Public Health Department to revamp procurement practices and increase the accessibility of city funds to organizations doing meaningful work to address inequity.

Grand Rapids recently hired its most inclusive police recruit class ever and convened a series of listening sessions to strengthen community and police relations. Mayor Rosalynn Bliss and city commissioners also earmarked $1 million annually for the next five years to strengthen community and police relations.
Louisville is revising its process for selling vacant or abandoned properties to make it easier for local residents of color to acquire the properties, with the goal of revitalizing neighborhoods.

Philadelphia evaluated disparities in city response times to its 311 complaints about housing quality and recommended policy updates to better support fair delivery and quality of service to all communities. The city also launched the Department of Public Health’s “Get Healthy Philly Summer Youth Tobacco Survey Program” to help tackle racial health disparities related to tobacco usage among youth of color.

“The City of Philadelphia is committed to advancing racial equity and inclusion across our city. Closing opportunity and achievement gaps is not always a quick, linear process; but rather, an intentional, ongoing effort that requires a focused commitment to change,” said Mayor Jim Kenney. “My administration has implemented various initiatives to ensure that diversity remains a priority throughout City departments, that access to high-quality education is delivered on an equitable basis, and that our economic growth is inclusive of all Philadelphians. The Racial Equity Here commitment is one of many pathways that will help our city move this important work forward.”

Learn more about the Racial Equity Here commitment and join the movement at https://racialequityhere.org/.

About Living Cities
For over 25 years, Living Cities has harnessed the collective power of 18 of the world’s largest foundations and financial institutions to develop and scale new approaches for creating opportunities for low-income people and improving the cities where they live. Its investments, research, networks and convenings catalyze fresh thinking and combine support for innovative, local approaches with real-time sharing of learning to accelerate adoption in more places. Additional information can be found at www.livingcities.org.

About Race Forward
Race Forward: The Center for Racial Justice Innovation united with Center for Social Inclusion in 2017 to become the new Race Forward. Founded in 1981, Race Forward brings systemic analysis and an innovative approach to complex race issues to help people take effective action toward racial equity. Founded in 2002, CSI catalyzes community, government, and other institutions to dismantle structural racial inequity and create equitable outcomes for all.

The new Race Forward is home to the Government Alliance on Race and Equity (GARE), a national network of government working to achieve racial equity and advance opportunities for all. Race Forward publishes the daily news site Colorlines and presents Facing Race, the country’s largest multiracial conference on racial justice.

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Houston Mayor: I Do Not Want the City To Participate in Migrant Child Detention

Houston Mayor Sylvester Turner said he would do everything in his power to avoid his city becoming an “enabler” of a new migrant detention center slotted to open in his city, suggesting state and local permitting mechanisms that could stall its operation.

In remarks Tuesday during which he declared his strong moral opposition to a federal policy of separating migrant children from their parents, Turner said his city has not yet approved several permits necessary for the facility to operate, and urged the facility’s operators to “reconsider” their role in its operation.

“There comes a time when Americans, when Houstonians, when Texans have to say to those higher than ourselves: This is wrong,” he said in a press conference, noting that he has thus far tried to avoid the politics of ruffling people’s feathers. “This is just wrong.”

Between May 5 and June 9, the federal government has reportedly separated 2,342 migrant children from their parents, following the Department of Justice’s “zero tolerance” policy, through which the government seeks to detain and criminally prosecuted all adult migrants crossing the border without papers—including those who are seeking asylum.

Many of the kids separated in this process have been housed at facilities meant to be temporary, until the Department of Health and Human Services (HHS) finds them a sponsor family. In recent weeks, the human impact of that practice has come into vivid relief: stories about how traumatized children tucking under drawings of their family under their pillows; audio recordings of kids wailing for their moms and dads, pleading with officers to call their relatives; reports from these facilities of children sleeping in giant cages some have likened to “dog kennels.”

In Houston, an unused warehouse in east downtown is reportedly going to be used as such a shelter. In what Turner described as irony, he said he intended to seek a lease of the facility, which has previously been used to house people displaced by Hurricane Katrina and the homeless, for a long-term homeless operation. It was intended to be a site for not just housing, but the a delivery of free meals and behavioral health services in a county-city collaboration.

“We thought it would be the best way of reducing the homeless population and bringing them together,” Turner said.

Turner said the city was not informed that the facility was being used to house migrant kids, and only found out about the new tenants once reporters and activists got wind and sounded alarm. Southwest Key Programs, the company contracting with the federal government to operate their other child detention centers in South Texas, would also be in charge of the planned one in Houston. On Tuesday, Mayor Turner met with HHS and Southwest Key representatives to confirm this news—and express his disapproval.

“They did say they will provide compassionate care—and let me just say, I do not question their intent,” Turner said. “But I do not support this facility being used for this purpose.”

Turner pleaded with the building owner and contractor to reconsider. “I do believe that as a result of the conversation we had today that they are taking a second look at which direction they want to proceed,” Turner later added.

And he pointed out the many pending steps in the city’s domain before the facility is cleared for business: the fire department’s inspection, the health department’s food and shelter permit, for example. He also noted that the state has not yet licensed the facility, either—imploring it not to do so.

“I do not want to be an enabler in this process. I do not want the city to participate in this process,” he said. “I don’t want our facilities and property owners to participate in this process.”

Asked if there was any realistic way he could stop the facility from opening, Turner stated again that the fire department has not yet approved the facility, adding that its chief is with him 24/7. “So I don’t plan to get over there right now,” he said, hinting at how he might slow-walk that approval. With regard to the health department’s shelter approval, he said the city wants to be “meticulous” in evaluating the facility, given that it would be used for children.

“I don’t want anyone to criticize me for moving too quickly or in haste because others may have moved in haste on this policy so we’re going to take the necessary time to make sure that we are prudent, that we are efficient, and we take every conceivable step that is in the best interest of the kids in this facility,” he said.

On June 21, mayors around the U.S. plan to descend on Tomatillo, Texas, to protest the federal government’s child separation policy, following a resolution they passed urging the Trump administration Congress to do the same at a recent U.S. Conference of Mayors gathering. In addition, the mayors are putting together a list of steps they can take in their backyards in the coming days, after surveying the situation near the Southern border.

”We are assessing what local tools we have in our toolbox of practical things we can do,” said Mayor Steve Benjamin, of Columbia, South Carolina and president of the Conference. “Is it possible we can set up a tracking system so the children could find out if and when their parents are deported? Can we arrange for on-site counselors and childcare workers? Can we help fund immigration lawyers for parents and children, so they have access to counsel?”

In Houston, an unused warehouse in east downtown is reportedly going to be used as such a shelter.

It remains to be seen how far these policies go, but at least for now, mayors are using some strong words to galvanizing local support.

“The day that we as Americans sanitize or anesthetize ourselves to behaviors and actions and policies is the day that we are all in trouble. So let’s be very careful that we not say we will leave it to the policymakers to change the policy,” Houston Mayor Turner said.

“We are the policymakers. We are the people.”

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Nothing Is ‘Sexier’ Than Building a Highway Over the Everglades

Miami’s Kendall Parkway extension: another sexy highway. (TransitAlliance)

In Florida, infrastructure and wildlife are frequently paired in name. There’s Alligator Bridge and the Bridge of Lions; a Turtle Parking Lot, an Armadillo Avenue, at least a few Snake Roads.

There’s also the Dolphin Expressway, also known as State Road 836, a 15-mile, six-lane, tolled expressway that runs east to west through Miami-Dade County. Since 2014, local officials have been discussing a 13-mile, $650 million extension of 836 to serve the community of Kendall, a notoriously traffic-jammed part of the county. On Wednesday, commissioners will vote on whether to send the latest proposal for the “ Kendall Parkway” from the Miami-Dade Expressway Authority, which would manage the new road, up to Tallahassee for round one of state approval.

This draft offers two potential routes, both contentious. One is pressed against the county’s urban development boundary, which is designed to prevent further sprawl into the Everglades, the ultra-fragile wetland habitat and critical watershed. Many Kendall residents are supportive of that plan, expecting it to shorten their commutes, but don’t all love the idea of a multi-lane highway so close to their homes. So the MDX came up with a second proposal that sends the new road about a mile further west, outside the urban development boundary—and straight through what’s formally known as Bird Drive Basin, i.e., “the flowing heart of the Everglades’ famed River of Grass,” as the Miami Herald put it.

Smart-growth advocates and environmentalists are displeased with both ideas, which would seem to encourage growth ever closer to the imperiled Everglades. More lanes also won’t solve congestion, as a matter of science. Induced demand, as CityLab readers may know, is a bedrock principle of traffic engineering. Road space and peak-hour congestion have a one-to-one relationship on urban expressways; when one grows, so does the other. “Our traffic problems aren’t going to be solved by adding more highway and, by the way, paving over wetlands that are going to recharge our groundwater,” Celeste De Palma, the director of Everglades policy for Audubon Florida, told the Herald last week. “That just seems crazy.”

Miami-Dade Mayor Carlos Gimenez, an outspoken supporter of the Dolphin Expressway extension, disagrees. When one woman stood up at a public meeting in West Kendall on Monday to point out that induced demand is real, Gimenez reportedly responded, “That’s one of the dumbest things I’ve ever heard.” He has repeatedly fought efforts to expand transit across Miami-Dade County, despite running twice on pro-rail mayoral platforms. The regional Metrorail system is suffering from a shrunken budget, service cuts, and decaying rolling stock. Back in 2002, county voters approved a half-cent sales tax to pay for 88 more miles of track and 635 new buses. But instead of funding transit, that money has essentially turned into a slush fund for road projects, according to Streetsblog.

Meanwhile, Gimenez has become somewhat of an evangelist for autonomous vehicles, arguing that cheap and convenient on-demand rides will make transit a thing of the past. For a moment, it seemed as if Gimenez might get on board with “trackless trains,” (that is, autonomous buses), but it seems that time has passed. On Tuesday, responding to a tweet characterizing his remarks at the West Kendall meeting as an “attack,” Gimenez tweeted, “There has been no ‘attack’ … simply [stating] facts.”

Sexy highway, Miami! (TransitAlliance)

So what is the larger justification for more highway? According to TransitAlliance, a local transit advocacy group, it’s just what’s politically sexy. On Monday, the organization launched an online campaign against the Kendall Parkway plan at www.anothersexyhighway.com. It’s a parody of a dating-site profile, fake-hosted by “MDXXX.” Although you can’t swipe, you can scroll through “cards” that primp up the project’s flaws in tongue-in-cheek language. “While other cities invest in more transit, better transit, and free pre-school (yuck!), our toll money is designed to do one thing and one thing only—generate more toll money, for more sexy highways!” reads one. “Trapping everyone in cars forever means more traffic, and more tolls—it’s a win-win!” There’s even a sexy highway song that plays in the background.

You may remember TransitAlliance from other clever online campaigns in support of Miami-Dade riders. In February, they built a real-time Metrorail “audit” that displays trains that fail to arrive as scheduled. After that, they crafted a suite of data visualizations that showed the county’s “dismantling of the bus system.” Marta Viciedo, the co-director of TransitAlliance, said that there was so much wrong with the Dolphin Expressway extension proposal that it couldn’t be expressed forcefully enough with mere statistics. Her hope is that the somewhat clickbaity campaign will reach outside the usual choir of transit supporters and get more Miamians writing letters and making phone calls to elected officials protesting the extension before this vote (which won’t be a final decision) and potentially the next. “The idea was to do something a little more lighthearted and make fun of something that’s a little ridiculous to be happening in the first place,” she said.

When it comes to wildlife and development in Florida, those shots seem to come easily. The Sunshine State was declared a global biodiversity hotspot in 2016, with more endemic flora and fauna than anywhere on the North American coastal plain. Quite a lot of it endangered. One can suppose it’s an expression of local pride to slap the name of species on so many roads and highways. But what kind of pride names the asphalt after the animal whose habitat is getting paved over? It’s a bit like the highway version of housing developers who name their subdivisions after the natural features they’ve erased. Extended further, the Dolphin Expressway would look more like a trophy.

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Grenfell’s Problem Wasn’t Just Lax Regulation

The Grenfell tragedy in which 71 people died a year ago was a shocking reminder of a worldwide problem: When buildings burn down and lives are lost, the media rehashes well-trodden narratives that shame landlords and the municipal inspections that are supposed to keep them in check. This is usually followed by calls for more safety inspections. But this is the wrong way of addressing the problem: a case of too little, too late.  

Instead of simply increasing regulation and inspections, governments must remove the opportunity for exploitative profit by insisting on rent controls, providing subsidies for necessary repair work, and re-upping their role—both in ownership and management—of housing, before we are dealing with dire situations.

In addition, my research shows that if municipalities do not invest in housing, even the best of intentions can perpetuate housing inequality. I learned this after three years of researching housing inspections in Chicago. Consistent with other studies, I saw inspectors’ ire at negligent landlords. One inspector told me that after his 20 years of inspecting deplorable living conditions, he prays for some landlords to go to “landlord hell.”

Inspectors act on their anger by doling out as many building code citations as possible and insisting that landlords fix them. Quantitative analyses of ten years of citation data back this up: Inspectors give out more citations to large rental properties that they think are poorly managed. They do try to penalize bad landlords.

But my research also illuminates the unintended consequences of these well-intended actions: rent hikes. My statistical analysis of over 280,000 building code citations and five years of rental data verifies that every citation and violation that is then fixed is associated with a 5.4 percent rent increase, a number that is consistent when normed across properties of the same age, size, value, and neighborhood.

I went on a housing visit with an inspector who ended up citing a landlord for 35 violations, ranging from sparking electrical outlets to a dangerous porch. If these get fixed, my analysis predicts that the landlord would raise the rent from the current amount of $750 to $926 by next year. If the landlord fixed none, the rent would only increase to $771 (based on the average increase for that part of the city). Landlords raise rents to cover the costs of citations.  

When good intentions have inadvertent effects, these effects are not dispersed evenly. Low-income and minority tenants are both the most likely to live in poor housing conditions (as demonstrated by a wealth of other studies), and thus also most vulnerable to suffering the brunt of the unintended consequences that my research reveals. Introducing proactive rental inspections—aimed at cracking down on bad landlords—risks making this issue much worse.

To be sure, not insisting that landlords fix up properties is also bad for tenants. But my research shows that many people have it wrong about whose side municipal inspectors are on.

While inspectors can be unsympathetic to tenants, if we consistently ascribe poor motives to inspectors, there is little hope of securing their efforts to improve housing. By misconstruing inspectors’ actions, housing organizations and activists cannot accurately capture how inspections work and are unlikely to be able to effect progressive change at the municipal level.  

This is not just about Chicago. Other cities face similar patterns in a dearth of affordable housing, aging housing stock, subpar housing conditions, racial disparities in housing inequality, rising costs of construction, and calls for increased regulations. We can use these lessons learned from Chicago to effect change in other cities too.

Yes, investing in housing will cost money. But new proactive inspections won’t come cheap either. Housing activists could lobby governments to invest in housing instead of calling for increases in its regulation. Additional regulation—even if well-intended—will only perpetuate housing inequality, unless municipalities remove the opportunity for exploitative profit by insisting on rent control and providing subsidies for necessary repair work to existing housing. Governments need to choose investment as an alternative path to increased regulation. Most fundamentally, municipalities must invest in housing. Investment could mean subsidizing repairs, rent controls, or building and managing more state housing.  

Though it may seem easier to increase regulations, we should do the hard work now and figure out which kinds of investments make most sense in various communities. Many cities are debating a proactive rental inspection ordinance, as cities realize current housing inspections are incapable of preventing poor housing and negligent landlords. But this new well-intended legislation is also doomed to perpetuate housing inequality, unless municipalities invest in housing itself. We need to invest now.

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I Survived D.C.’s First ‘Sweat Crawl’

It hurts to laugh, but then, there’s not much to laugh about. It even hurts to writhe in pain, and of that, there is plenty.

In a cruel twist to the lyrics of the Beyoncé song, , explaining Ehrenreich’s argument:

Like workout culture, wellness is a form of conspicuous consumption. It is only the wealthy who have the resources to maintain the illusion of an integral and bounded self, capable of responsible self-care and thus worthy of social status. The same logic says that those who smoke (read: poor), or don’t eat right (poor again), or don’t exercise enough (also poor) have personally failed and somehow deserve their health problems and low life expectancy.

Being mindful of that, I settled into a series of stretches and restorative poses—guided by a slender man with the sensual, somber air of a ballerina. That day, he wore cream-colored nail paint, and a bunch of japa malas around his wrist. I’d taken his class before, and had quite enjoyed it—I’d appreciated his focus on administering a challenging sequence instead of doling out Hindu philosophy. The latter can be a tad awkward if you’re the only Indian person in class. At the end of our 30-minute session, he bid us “namaste,” as is customary in American yoga classes. (In India, “namaste” is something one says to a nosy neighborhood auntie or an elderly visiting relative.)

I responded by silently folding my hands in gratitude.

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CityLab Daily: Why Ford Sees a Future in Detroit’s Old Train Station

Keep up with the most pressing, interesting, and important city stories of the day. Sign up for the CityLab Daily newsletter here.


What We’re Following

Motown classic: In recent years, American automakers have been rebranding as “mobility” companies, pitching a more communal future of transportation… so of course Ford bought a train station. With the acquisition of the Michigan Central Station in downtown Detroit, the company is putting a physical stake in the city’s future.

In four years, the 1913 Beaux-Arts depot that saw its last train depart three decades ago will become the central hub of Ford’s 1.2 million-square foot corporate campus in the neighborhood of Corktown. But the company’s downtown presence isn’t just a perk to attract a younger workforce; it’s also a test ground for autonomous vehicles. CityLab’s Laura Bliss has the story: Ford’s Detroit Investments Are Bigger Than a Train Station.

Andrew Small

More on CityLab

We Can Create Better Jobs—by Fixing the Bad Ones

More than 65 million Americans toil in insecure, low-paying jobs. Instead of hoping they will all find different, and better, jobs, we should upgrade the ones they already have.

Richard Florida

More Than 300,000 U.S. Homes Could Flood Regularly by 2045

A new study finds that at the high end of predicted sea-level rise, many thousands of homes in the U.S. could flood 26 times a year.

Oliver Milman

Mass Incarceration’s Complex Statistics

A new study from the Vera Institute of Justice says that we should look closely at the populations, and relationship, of local jails and state prisons.

Teresa Mathew

Water Cremation Could Change the American Way of Death

Some people see “aquamation” as a greener—and gentler—way to treat bodies after death, but only 15 states allow it for human remains.

Emily Atkin

The Story of South Dallas in the Cover Art of Nas’ New Album

A photo of five young black boys holds the story of drugs, racial segregation, and despair in South Dallas.

Brentin Mock

Burden of Roof

You already knew the rent was too damn high, but how long has that been the case? Harvard’s Joint Center for Housing Studies finds in its latest State of the Nation’s Housing report that the gap between rents and renter income has been growing for a long time. The yellow bars on this chart show that the share of households that are burdened by housing costs has doubled since the 1960s—from 23.8 percent then to 47.5 percent in 2016. And the affordability gap is far from making ends meet: Adjusting for inflation, the median rent payment rose 61 percent between 1960 and 2016, while the median renter income grew only 5 percent during the same time.

CityLab context: If rent were affordable, the average household would save $6,200 a year

What We’re Reading

How the Koch brothers are killing public transit projects around the country (New York Times)

Black families were pushed out of Portland. Can this program bring them back? (PBS NewsHour)

U.S. housing market continues to rebound, despite increased inequality (Curbed)

Climate change-related heat waves will be deadly for people who are homeless (Slate)

South Bend’s “Mayor Pete” gets married, takes his husband to a parade (New York Times)

Tell your friends about the CityLab Daily! Forward this newsletter to someone who loves cities and encourage them to subscribe. Send your own comments, feedback, and tips to hello@citylab.com.

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We Can Create Better Jobs—by Fixing the Bad Ones

When politicians and pundits talk about creating better jobs, they typically cite two strategies. The first, emphasized by economic nationalists and populists like President Trump, is to use trade and other policies to bring high-paying manufacturing jobs back to American soil. The second, emphasized by progressives, is to use education to prepare less advantaged workers for higher-paying jobs.

But even if we did both, we would not put a significant dent in the jobs problem. The reality is that high-paying knowledge jobs employ just a third of the workforce, and only 5 or 6 percent of Americans do manufacturing work. Even with the unemployment rate at less than 4 percent, more than 65 million Americans—almost half of the entire workforce—toil in low-paying jobs in fields such as food service, retail, and personal and health services.

The only real solution to America’s jobs problem is to make these currently low-paying and precarious service jobs into better, higher-paying jobs.  

In a new study that I conducted with economists Todd Gabe of the University of Maine and Jaison R. Abel of the Federal Reserve Bank of New York, we examined the year-to-year transitions (e.g., keep the same job, become unemployed, move into a better job) of workers in low-wage jobs. We tracked the employment situation of these workers between 2011 and 2017, the period of the economic recovery.

We also created an index of job quality that accounts for average hourly wages; whether the job provides a standard 40-hour work week; the likelihood of benefits; and the prestige, or social desirability, of the job, as determined by previous academic studies. Using this index, we divided America’s employment landscape into four distinct quartiles, from high-paying, good jobs to low-paying, low-quality jobs.

Our overall findings are disturbing. Just a small fraction of low-wage workers move into occupations that offer a path to higher wages and a better life. America’s low-wage workers are more likely to become unemployed than to move up the economic ladder.

America’s bad jobs—that is, those in the lowest quartile—pay an average wage of $13 per hour. They deviate by an average of seven hours from a 40-hour work week and provide benefits for less than half of those who hold them. (By contrast, the highest quartile of workers has an average wage of $37 per hour and deviates from the average work week by about three hours; 90 percent of the workers in this group have benefits.)

Workers in the lowest quartile are significantly more likely than those in the other quartiles to become unemployed or exit the workforce after one year. They are also much less likely than even those in the second quartile to move up the economic ladder, demonstrating the extent to which low-wage workers are stuck at the bottom of the economic spectrum.

(Florida, Gabe & Abel)

Almost 7 percent (6.7 percent) of America’s low-wage workers become unemployed within a year, which is nearly four times the rate for high-wage workers (1.8 percent). Low-wage workers exit the labor force at a rate of more than 10 percent per year, nearly three times the rate of high-wage workers. And low-wage jobs are the least stable; low-wage workers are the least likely to stay in their jobs and the most likely to switch jobs.

Even more troubling, just 5.2 percent of low-wage workers are able to upgrade to a higher-quality job in a given year. (Of this 5.2 percent, 2.9 percent move into a second-quartile job, 1.7 percent into a third-quartile job, and just 0.6 percent into a high-wage job.) By contrast, 91.3 percent of high-wage workers either remain in their job or get another high-paying job.

Which higher-quality jobs offer workers the best chances for doing better?

As the chart below shows, truck drivers are the big outlier here, as the occupation with the largest share of workers who transitioned into better jobs. Other occupations that provide low-wage workers a good shot at doing better include nursing aide, wholesale and manufacturing sales representative, customer-service rep, secretary, and administrative assistant.

(Florida, Gabe & Abel)

While these job types might help people move up the economic ladder today, not all of them will be a long-term source of economic mobility. Secretaries and administrative assistants, for instance, are steadily being replaced by new software applications. Eventually, truck drivers will likely be replaced by autonomous vehicles. The job types with better long-term prospects are those that involve people skills, including communication, presentation, and organization.

There is a wide range of factors that make it hard for low-wage workers to move up. The chart below focuses on one of the most important, education. Having a four-year college degree or higher is associated with a 7.4 percentage-point increase in the likelihood of finding a better job. That likelihood increases more modestly for those with two-year college degrees or some college. Education is also negatively correlated with becoming unemployed or leaving the labor force.

(Florida, Gabe & Abel)

Age is a significant factor, too. A 20-year increase in age is associated with a 6 percentage-point increase in the likelihood of remaining in the same job over the course of a year. Younger workers might be more willing to experiment with different job types, or might accept a low-wage job with the expectation of moving up the economic ladder later. Older workers are likely more risk-averse, opting for the stability that seniority brings—even in a low-wage job—over the opportunity to find a better job.

While it is important to develop new and better approaches to expand education and improve workers’ skills, these alone will be sorely insufficient to solve America’s low-wage-job problem. In the past, manufacturing jobs offered family-supporting wages to the less skilled and less educated—people like my own father, with a seventh-grade education.

Those jobs were not always good jobs. We made them good jobs, through labor laws and unionization, among other things. As my father often reminded me, when he started work during the Great Depression, it took nine family workers to make a living wage. But when he came back from his service in World War II, the very same job in the very same factory enabled him to get married, buy a home, and put my brother and me through college.

It’s not as if service jobs are damned to be low-wage occupations forever. Indeed, as MIT’s Zeynep Ton has shown, they are amenable to the same kinds of upgrading as manufacturing work. Companies that implement what she calls a good jobs strategy, paying workers more and involving them more deeply in their work, are likely to see a combination of higher productivity and better customer service, which leads to higher profits.

An under-appreciated way to solve America’s jobs problem and rebuild the middle class is to turn the millions upon millions of low-wage jobs we actually have into better, higher-paying ones.

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Ford’s Detroit Investments Are Bigger Than a Train Station

In recent years, several of the largest automakers in the U.S. market have rebranded as “mobility” companies. To varying extents, General Motors, Toyota, Ford, Daimler, and BMW have promised shareholders their participation in creating the autonomous, cloud-connected, and he’d like to see the ground floors converted into a public space filled with shopping, dining, and urban bustle. “We really want this to be a hub of life for this part of town,” he told the Times. On the timeline of progress for downtown Detroit’s revitalization, one columnist for the Detroit Free Press called Ford’s announcement “the city’s biggest comeback moment yet” and “a turnaround of miraculous dimensions.”

Though Ford’s electric and autonomous vehicle subsidiary will be based at the Corktown campus, Hackett said that he hopes that employees will move between there and the company’s Dearborn headquarters, which is also slated for an overhaul, as well as its Ann Arbor location, close to the University of Michigan’s self-driving vehicle test grounds. Business teams should not be siloed from one another, Hackett said; he gave the example that a truck engineer working on F-150s in Dearborn might need input from a “smart” software engineer working in downtown Detroit. The funds to expand in Corktown will come from the estimated $1.2 billion already planned for the Dearborn changes.

The move into Detroit aligns Ford with other companies looking downtown for their new and future footprints in order to attract a younger workforce that values a central location. Google, Microsoft, and Facebook have all carved out prominent space in San Francisco and Manhattan, even as they’ve kept their flagships in Silicon Valley. Older companies have also joined the urban migration in the hopes of shedding their images of suburban, nine-to-five stalwarts. General Electric is in the process of relocating to Boston from Fairfield, Connecticut, while Aetna flirted with pulling up stakes in Hartford for a move to New York City. McDonald’s has shifted its headquarters from an Illinois suburb to downtown Chicago.

For a “mobility” company, though, a downtown presence isn’t only a human-resources perk; it’s also a product test ground. Last year, Ford invested $1 billion in Argo AI, an autonomous vehicle LiDAR developer. In January, it purchased Autonomic, a cloud-based digital platform for managing transportation systems, and TransLoc, a startup that builds software for streamlining urban transit. Launched in 2016, Ford’s Smart Mobility segment has also worked closely with city governments around the world to develop products designed to solve local transportation snags directly. Over the past two years, Ford made forays in ride-hailing and bikesharing services in San Francisco and autonomous vehicle testing in neighborhoods in Miami and Ann Arbor. Earlier this month, it launched a “City of Tomorrow” competition in Pittsburgh, where it will draw ideas from locals about how their daily travel experiences could be improved.

“It’s time to bring streets into the sharing economy,” Hackett declared in his keynote address at the Las Vegas tech convention CES earlier this year, where he talked about the company’s various efforts to spread “smart” parking technology and cloud-based transportation systems.

Streets are already shared, of course, since they are public property. And not all communities have welcomed the penetration of connected sensors and “smart,” demand-based mobility offerings from companies like Alphabet, Uber, Microsoft, and other tech heavyweights. Advocates and public officials have reason for concern that the future of automobiles may be a lot like its past with respect to how they’ll shape cities. Just as 20th-century automakers lobbied for the creation of the highway system, which plowed through neighborhoods and divided cities, the industry’s efforts to wring profit from urban streets today may further inflate the influence of private sector on public space.

Will Corktown residents happily invite product testing in their community? Hackett told CityLab that the company plans to work with residents and business owners in the neighborhood to learn about how the company’s present and future offerings could help them. Detroit Mayor Mike Duggan has been supportive, he added. “We want to make this a community-based experience,” Hackett said. “The city is really excited because they get to pioneer in ways that relate to transportation, too.”  

But it also remains to be seen whether Ford’s buzzy cocktail of future-mobility tech adds up to a winning business strategy. During the first quarter of 2018, the company’s “Smart Mobility” arm, which includes its autonomous vehicle projects and city solutions initiatives, reported $102 million in losses during the first quarter of 2018, Forbes reported in April. That segment lost about $300 million for the full business year of 2017, the company said in January. Profits are slumping at the country’s number-two automaker, which has struggled with the rising cost of critical manufacturing materials and internal inefficiencies. In April, Ford announced that it planned to discontinue most passenger cars from its U.S. catalog by 2020 and will focus on new trucks, S.U.V.s, and electric vehicles in order to drive up margins.

That renewed emphasis on F-150s and the like has also raised questions about Ford’s stated commitment to shrinking carbon emissions from the transportation sector, which the company often relates to their “city solutions” projects. So has the company’s appeal to President Trump, alongside other major automakers, to revise federal auto emissions standards. But Hackett insists that it is all of one strategic piece. “The industry has made tremendous progress,” he said. “Electric vehicle technology is coming in faster than we thought and the promise of connectivity is that we can get rid of more traffic and waste.” Now, Detroit will have a major stake in the bet that that holds true.

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