How to Make Cities “Cool”

New York’s very cool SoHo neighborhood wasn’t the result of any government-sponsored plan, but of the free association of artists and businesses.

In 1962, the New York City planning commission issued a report on what to do with the area of dilapidated warehouses and industrial lofts lying between Greenwich Village and Wall Street. Entitled “The Wastelands of New York City,” the report proposed demolishing the area to make way for the Lower Manhattan Expressway.

Plans for the Lower Manhattan Expressway never came to fruition, and the area of run down lofts and warehouses, once slated for demolition, is now known as SoHo. One of the coolest, hippest places on the planet, SoHo boasts high concentrations of actors, artists, filmmakers and photographers along with renowned art galleries, stylish bars, and trendy restaurants.

In the early 1980’s, the leaders of Flint, Mich. announced plans of their own. They wanted to make downtown Flint into a hip tourist Mecca. Plans called for a new shopping center, a new luxury hotel, and a theme park. After spending over $70 million, that plan today is known simply as the disastrous economic debacle “AutoWorld.”

What was the difference that determined success in the one case, and failure in the other? Gov. Jennifer Granholm should ponder the answer to that question. She has announced the creation of a “cool cities” advisory panel and is calling upon 250 cities in other states to do the same. She hopes that 251 new government commissions will come up with ideas that can revive depressed urban areas.

Why did SoHo succeed where Flint failed? Did New York’s development bureaucrats figure out a better way to accomplish their goal than did Flint’s? No. In fact, SoHo historian Richard Kostelanetz argues that the lack of centralized planning was essential to SoHo’s success. SoHo succeeded because its development flew below the radar screens of control-seeking bureaucrats, politically connected developers, and local zoning bureaucracies. Government planning wasn’t involved at all.

The best thing the bureaucrats can do is to perform the core functions of government well — and otherwise get out of the way. With a maze of bureaucratic white elephant schemes, zoning laws, licenses, regulations, a difficult labor climate and an overall tax burden that is still too high, Michigan is its own worst enemy when it comes to fostering entrepreneurship and attracting the talented and creative.

Our state and its city governments would do better to focus on their more important functions (schools, roads and public safety, for example), which are often carried out in ways that are anything but cool. In Detroit, for example, an opportunity to accept a free gift of $200 million for 15 new charter schools was actually sabotaged in October by politicians and unions more interested in power than in helping kids.

If Gov. Granholm is serious about creating cool cities and attracting entrepreneurs, she could start by relying less on fellow politicians and government commissions and implement the following:

1. Encourage open, competitive bidding for many city services. “Cool” cities like Indianapolis and Phoenix do it all the time while “uncool” cities like Detroit and Flint rely too heavily on bloated bureaucracies and costly union work rules.

2. Cut the red tape and excessive licensing that restrict persons from earning a living without explicit state approval. The state regulates an absurd number of professions, including “ginseng growers” and “minnow salesmen.” Get cities like Detroit to lift their stifling rules against home-based businesses.

3. Push for a state constitutional amendment that would allow tax credits for contributions to either public or private schools. Mackinac Center research indicates that nothing could improve inner-city schools more than choice, competition and accountability.

4. Protect property rights by reforming “eminent domain” laws that allow politicians to seize private property for purposes that often look a lot more “private” than they do “public.”

5. Relax historic preservation laws. Often these laws are so complex and time-consuming, they interfere with renovations and make it harder to preserve historic structures.

6. Keep cutting marginal tax rates. Michigan is still a high-tax state and some of its cities are among the most heavily taxed in the country. There is nothing cool about Detroit’s per-capita tax burden being several times the average for Michigan municipalities.

Of course, the most difficult step of all is the one government would have to take once all of the above steps are accomplished: Leave everything else alone. If the story of SoHo is any indication, the private sector will take care of the rest.

(Lance J. Weislak, a University of Michigan graduate and MBA candidate at the University of Chicago, is an adjunct scholar with the Mackinac Center for Public Policy, and Michael LaFaive is director of fiscal policy at the Mackinac Center, a research and educational institute headquartered in Midland, Mich. More information is available at www.mackinac.org. Permission to reprint in whole or in part is hereby granted, provided the authors and their affiliations are cited.)