What’s Next for American Cities? Infrastructure and Economic Development in a Post-Boom Era

What's Next for American Cities?  Infrastructure and Economic Development

in a Post-Boom Era

A Public Policy conference organized by:

 Claremont Graduate University’s School of Politics and Economics

and the

The Lincoln Institute of Land Policy

Given the current economic and fiscal issues facing America’s cities, this conference brings together some of the leading academics and practitioners in the fields of economic development, city governance, and infrastructure finance to address the question: How can we best invest in infrastructure to help local and regional economies?

Through its public policy program, The School of Politics and Economics at Claremont Graduate University (CGU) has long had an interest in the state of affairs in America’s cities. Through its State and Local Economic Development ‘track,’ public-policy students engage with faculty in ongoing research about the economic and fiscal health of cities. This conference, cosponsored by the Lincoln Institute of Land Policy, is an example of CGU’s ongoing effort to engage both academics and policy-makers in a real-world discussion of pressing issues.


8:30 - 9:00
Morning Snacks


9:00 - 9:30
Opening statements

9:30 - 11:00
Theme 1:  Infrastructure and the economy

  1. The federal stimulus plan and a new fiscal federalism?
    Christopher Hoene (National League of Cities), Michael A. Pagano (University of Illinois), & William R. Barnes (National League of Cities)

  2. A tale of two cities: Los Angeles and San Diego infrastructure strategies and economic development
    Steven P. Erie (UCSD), Vladimir Kogan (UCSD) and Scott MacKenzie (UCSD)

  3. What works for economic development regionally?
    Annette Steinacker (Loyola University -- Chicago)

11:00 - 11:45
Discussion and Q & A  
   Discussants: Karen Mossberger (University of Illinois - Chicago) & David Lyman (City of Bakersfield)

11:45 - 12:45 

1:00 - 2:30
Theme 2:  Infrastructure for Energy and the Environment

  1. Investigation of the ARRA Stimulus on Local Government Energy Innovation and Policy Networks
    Rick Feiock (Florida State University)
    Discussion & Q & A  
  2. Future Interdependencies and Sustainable Politics for Local Governments in Collaborative Environmental Management
    Chris Weible (University of Colorado – Denver)
  3. Looking Ahead to 2010/Beyond Recovery: What to do when the money runs out?
    Darrene Hackler (George Mason University)

2:30 - 3:15 
   Discussants:  Mark Lubell (UC - Davis) & (TBD)

3:00 - 3:15 
Afternoon Break

3:15 - 4:15
Theme 3: Financing Infrastructure projects

  1. The consequences of local infrastructure investment for tax capacity and effort
    Gary Cornia & Larry Walters (Bringham Young University)

  2. Infrastructure and Finance: a look at the revenue side
    Benoy Jacob (Claremont Graduate University)

4:15 - 5:00
   Discussion and Q & A 
   Discussant:  Richard Little (Keston Institute, USC)

5:00 - 5:30

5:30 - 6:30 

Paper titles and descriptions


Theme 1: Infrastructure and the economy (Presenters: Michael Pagano, Chris Hoene, William R. Barnes, Steven P. Erie, Vladimir Kogan, Scott MacKenzie, and Annette Steinacker)

The federal stimulus plan and a new fiscal federalism?

This paper asks: how the ARRP transfers re-shape future constraints on municipal governments. While the impact the current crisis will have on already stressed state and local governments has been readily acknowledged, the impact the ‘solution’ has yet to be discussed.  By explicitly connecting the federal plan to the future of cities, this paper provides a larger context for thinking about the other papers.

Authors: Michael Pagano (University of Illinois- Chicago) & Chris Hoene (National League of Cities)

A tale of two cities: Los Angeles and San Diego infrastructure strategies and economic development

This paper is a comparative study of Los Angeles and San Diego, the nation’s second and eighth largest cities.  What have been the infrastructure strategies of California’s two largest cities, how have governance and financing arrangements shaped infrastructure provision, and what difference have these made for economic development?  We focus on (a) trade infrastructure (ports, airports, and rail and highway trade corridors), vital to urban fortunes in a global economy; and (b) water supply reliability, of critical importance in the semi-arid Southwest.  What is the catalytic role of trade infrastructure in globalizing urban economies?  How does water reliability shape economic development, such as in business location and investment decisions?    This paper examines the role of governance and finance in shaping infrastructure provision, and considers how infrastructure affects economic development such as the character and rate of urban growth and globalization.  It concludes with a consideration of the federal stimulus package and likely impacts on Los Angeles and San Diego.

Authors: Steven P. Erie (UCSD), Vladimir Kogan (UCSD) and Scott MacKenzie (UCSD)


What works for economic development regionally?

This paper considers the role of two competing theories of local business development as it occurs at the metropolitan, or regional, level.  On the one hand, infrastructure may still be important, but not just to move physical goods as in the manufacturing era.  New forms are necessary to move people (airports, rail) and to move ideas (broadband/IT).   Infrastructure provides connectivity within and across metropolitan areas, enabling the development of networks linking individuals and organizations critical to innovation and economic growth. 


On the other hand, human capital will continue to be critical to development, but it is likely that only more limited types of skills will matter and the mobility of these workers may decrease.  Even before the economic downturn, changes in the knowledge worker economy were being seen.  Information Era jobs that could be routinized were susceptible to being offshored where they could be performed more cheaply and, with the time differences across countries, nearly around the clock.   Work that involved highly innovative construction of ideas, not simply manipulation of data, appeared to be the growth sectors for the future.  During boom times, workers can be selective and chose a location first, a job second.  During extended downturns, those dynamics are likely to change.  This suggests that investments in quality of life factors and amenities will have less impact on attracting and retaining theses workers than in the past. 

Author: Annette Steinacker (Loyola University – Chicago)


Theme 2: Infrastructure for Energy and the Environment Financing Infrastructure projects (Presenters: Rick Feiock, Chris Weible, Darrene Hackler) 

Future Interdependencies and Sustainable Politics for Local Governments in Collaborative Environmental Management

As cities and counties plan for future growth, necessary infrastructure development will cross local government boundaries, making coordination of policy decisions by individual units of government more important than ever.  This paper focuses on those issues illustrated by intergovernmental cooperation around environmental management of water supplies.   

All cities and counties lie within one or more watersheds that, in turn, shape how local governments develop their economies, maintain adequate water supply and quality, control flood threats, discharge effluents, and provide recreation opportunities.  By spanning fragmented government jurisdictions, watershed management is beyond the control of any single city or county.  Thus, watershed decision making requires interdependent participation of actors from all levels of government, multiple government agencies, and non-government actors in watershed partnerships.  This paper investigates the role of city and county governments in watershed partnerships with a particular emphasis on the beliefs and network positions of local government officials. 

Author: Chris Weible (University of Colorado – Denver)


Investigation of the ARRA Stimulus on Local Government Energy Innovation and Policy Networks

A substantial share of ARRA funding, including engineering and technology support is directed to specific and applied local problems such as implementation of renewable energy and alternative fuels, energy conservation,  new transportation technologies, and expansion of smart grid energy transmission systems.   Targeting these investments to local governments makes the linkages between local governments and energy and technology firms, non-profit organizations and research universities critical to success.   Will this strategy facilitate the partnerships and collaborative relationships to develop, promote and implement new energy technologies?  Will it facilitate or impede innovation and the diffusion of new technologies? What is the nature of information transmission and diffusion of information and technological innovations among a system of local governments?  

This paper explores how self-organizing behavior among local governments, universities, and private organizations and how these emergent institutions shape the production and diffusion of technical innovations.   This work will produce important insights into the role of local governments in technology development, implementation and diffusion. The economic impact of the stimulus depends not just on the creation of jobs in the short term but also the production of knowledge and technology to stimulate additional job growth and spin off industry.

Author: Rick Feiock (Florida State University)


Looking Ahead to 2010/Beyond Recovery: What to do when the money runs out?

A long-term strategy for local economic development and job creation vastly differs from the current “shovel ready” focus of the American Recovery and Reinvestment Act (ARRA, referred to below as the recovery act or stimulus plan). This paper seeks to reflect on what needs to occur beyond recovery to insure that long-term spending creates long-term sustainable productivity and economic impacts. The paper will briefly address and explain the impact of the ARRA on state and localities which will lead to a larger discussion of how the Obama Administration’s economic priorities can lead to job creation that is sustainable and provides post-recovery opportunities for stronger local economic growth. The paper will address how states and localities will most likely use these funds, while mapping these actions to long-term priorities and job creation. The paper will utilize examples that blend funding streams from the stimulus plan as well as suggest other forward-looking priorities. The paper will conclude with policy recommendations appropriate to local, state, and federal policymakers to encourage this outcome and might inform later phases of the Obama Administration’s investment in transportation, energy, the possibility of a second stimulus plan.

            Author: Darrene Hackler (George Mason University)


Theme 3: Financing Infrastructure projects (Presenters: Gary Cornia, Larry Walters & Benoy Jacob)


The consequences of local infrastructure investment for tax capacity and effort

For at least the last twenty years, the effect of public expenditures for infrastructure on economic growth has been hotly debated both in the U.S. and throughout the world. We are inclined to agree with Professor Ayogu (2007) who argues that while the exact magnitude and timing of relationships may be hotly (though perhaps not productively) debated, the importance of infrastructure at least in a development setting is not in dispute. Rather, the question we wish to pursue in this paper is the relationship between infrastructure investment and the capacity of a region to pay for that public investment.

Two potential lines of reasoning might justify public investment in infrastructure. First, regions which have a sufficiently strong tax base may choose to enhance their public infrastructure as one way to “improve” public services whether or not such improvements result in economic growth. For example, a community may elect to expand recreation facilities in response to local demand without giving much thought to the economic development implications of such expenditures. In such cases, the investment is already paid for in the sense that the tax base is deemed sufficiently strong and stable to incur the financial obligation.

The second line of thought looks at infrastructure expenditures as investments in the economic vitality of a region. From this perspective, public investments enhance private economic activity. Increased private activity increases demand for land and other private goods and services. As demand drives up land values and local wages, the tax capacity of the region is increased. Arguments for value capture suggest that the public can and should capture part of this increased local wealth to fund the infrastructure investment. For example, a new highway interchange may significantly enhance the value of privately held land adjacent to the new interchange. The higher property taxes paid on that land can be used to offset the cost of the interchange.  But if property taxes are capitalized in the value of property (Anderson 2003), there is a limit to how much infrastructure investment can be supported through additional property taxes before such investments actually reduce values and become a drain on the overall wealth of a community.

This paper employs data on a panel of U.S. Metropolitan Statistical Areas (MSAs) to explore the relationship between public infrastructure investments of various types, how those investments are funded and the resulting impact on MSA property tax capacity. The intent is to determine what proportion of regions invest in infrastructure improvements in response to increased demand and because they have the resources, and what proportion pursue infrastructure investments as part of an economic development strategy. We will also assess the impact of such investments on local property tax capacity and tax effort, and explore how alternative funding mechanisms affect these relationships.

Authors: Gary Cornia & Larry Walters (Bringham Young University)

Infrastructure and Finance: a look at the revenue side

Scholarship on the financing of infrastructure has focused almost exclusively on the expenditure side.  That is, how to finance infrastructure projects?  In contrast this paper asks how does infrastructure impact the public fisc?  By answering this question, this paper addresses an important policy puzzle.  If infrastructure investment has such positive benefits both politically and economically why have American cities and states systematically under-invested in their roads and bridges? 

Author: Benoy Jacob (Claremont Graduate University)

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