is regionalism dead?

G R E AT E R P H I L A D E L P H I A R E G I O N A L

REVIEWIssues and Ideas for Greater Philadelphia’s Leaders

Winter 2003–2004

Is Regionalism Dead?

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TO REGIONAL REVIEW WINTER 2003–2004

INTRODUCTION

David B. ThornburghExecutive DirectorPennsylvania Economy League

Is there any topic that’s been the subject of more civic “beer talk” than “regionalism”? Probably not. Time travel back into the1960’s, or even the 1920’s, for that matter, and you’ll find endless reports, conferences, op-ed pieces, speeches, articles, flyers,and forums all focused on the issue. What’s the question ? — some variation on how the 350-odd local governments in thisregion, and three states, could work together in pursuit of lower-cost public services and more sensible public policies.

And what’s happened as a result of all that beer swilling? Precious little, it appears. A few major structural changes (the RegionalPlanning Commission and SEPTA created in the 1960’s), a few isolated agreements to share a snow plow or two betweenmunicipality A and municipality B, a few notable civic successes (the Greater Phialdelphia Tourism Marketing Corporation).Why so little progress? It’s hard, is why. This is a region, as the author David Rusk notes, that’s divided into little boxes, andeach one of those little boxes has its own traditions, leadership, and local interests, and doesn’t really want to change (except togo back in time). Lacking many major companies or powerful “bridging” institutions, regional efforts have many shoals onwhich to founder.

And yet, regional efforts are like the (truly awful) 1959 cult classic The Brain that Wouldn’t Die. Translated: they make toomuch sense not to continue to pursue. This is a regional economy, with a regional labor market, a regional housing market, anda regional transportation network, that does compete with other regions for jobs and investment and talent. We all lead regionallives — live one place, work another, shop another, eat another. Thinking and acting like a region is not really even a choice.Either we find ways to get our regional act together, or all of the wonderful communities in this region share (continue?) in aslow painful death spiral.

So this issue of the Review is dedicated to keeping the flame lit, looking for ideas and practices, here and elsewhere, that contin-ue to move us toward a more regional future. First up are two pieces that highlight interesting new ways of practicing regional thinking and doing. A new book, Civic Revolutionaries: Igniting the Passion for Change in America’s Communities, explores how the American tradition of experimenting with new ways of bringing about positive change dating back to our Founding Fathers is still quite relevant in 21st century Greater Philadelphia. In “The Practice of Stewardship,” the Alliance for RegionalStewardship describes how metropolitan areas can continue the tradition of positive change.

Next up is an interesting historical tour of the Boston region and its economy that points out that reinvention and renewal are the hallmarks of healthy regions. Change happens — it’s got to happen — and that’s a good lesson for the Philadelphiaregion. Then the short, short Reader’s Digest version of the Philadelphia Tax Reform Commission recommendations that manysuggest holds a key to this region’s economic renewal. Finally, we head to Chicago, where, in the classic spirit of the City of BigShoulders, a group called Chicago Metropolis 2020 has outlined a powerful high impact blueprint for the region and its future.

Remember in Monty Python and the Holy Grail, when the village undertaker’s making the rounds calling out for people to“bring out your dead?” And how in the midst of it one of the corpses comes back to life, protesting that he’s not dead yet, that he’s feeling much better? Well, there’s regionalism for you. It’s not dead yet. Maybe it’s actually feeling much better.

Sincerely,

Table of

ContentsON POINT

Civic Revolutionaries, Igniting the Passion for Change in America’s Communities

Douglas Henton, John Melville, and Kim Walesh, Collaborative Economics

Regional leaders are holding up a tradition as old as the nation itself. This excerpt from a new book explores how today’s leaders are bringing about positive change.

The Practice of Stewardship, Developing Leadership for Regional Action

The Alliance for Regional Stewardship

Developing a regional identity and regional action isn’t easy. But this article helps outline how it can be done.

Mother of Reinvention: How Boston’s Economy Has Bounced Back from Decline, Time and Again

Edward L. Glaeser, Harvard University

Ed Glaeser shows that Boston’s recent good fortune is owed to more than luck. Boston has been reinventing itself since the Mayflower.

The Road to Tax Reform

Philadelphia Tax Reform Commission

The results of Philadelphia’s Tax Reform Commission are in. This executive summary explains the recommendations of the Commission’s long hard look at the city’s tax issues.

The Metropolis Plan: Choices for the Chicago Region

Chicago Metropolis 2020

Long at the forefront of regional collaboration, the latest long-term vision for the Chicago metropolitan area has a lot to offer.

GREATER PH ILADELPH IA REG IONAL REV IEW WINTER 2003–2004

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GREATER PHILADELPHIA REGIONAL REVIEW WINTER 2003–2004

ON POINT

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My Own PrivatePublic School

Roosevelt High School in Seattle has an ambition: It wants to raise $5 million for its endowment. Not bad for a private school. Just one thing, though:Roosevelt isn’t private, it's a public high school.Think that’s odd? Ballard High, also a public schoolin Seattle, has raised $1 million in donations in thepast five years, financing everything from artwork in the halls to a Biotech Academy. What’s going onhere? It’s big-time fund-raising, common among private schools, arriving at many of the country'spublic schools. Welcome as the money may be, itraises two knotty problems. The first is what to doabout schools that, because they serve poorer areas,simply can’t raise as much from parents. The secondproblem is parents getting too involved in adminis-tration and instruction. That’s a particular dangerwhen donations are used to pay teacher salaries, says the PTA president at one high school. At herschool, parents donated $100,000 to help pay fortwo teachers who otherwise would have been let go. One result: “You get into the issue of parents buying teachers, and parents wanting to make moredemands with staffing issues, and which parents getto choose which level of math is taught,” she says.

www.civic-strategies.com

Where’s the Parade?When the Florida Marlins won the World Series in2003, the team was presented with an interestingproblem: Where do you hold a victory parade if there’s no clearly defined regional downtown?Solution: The Marlins held three parades in different parts of the city. Milwaukee Mayor JohnNorquist believes the problem of where to holdparades in a centerless region is a depressing symp-tom of post-urban America. This is not as rare asyou might think. The 2002 World Series winners,the Anaheim Angels, had the same problem. Whenyou play for a suburban region, where can you gather enough people to make a decent parade?

“Otis White’s Urban Notebook,” Governing, December 2003. www.governing.com

Grassroots Work for Smart Growth inEaston Gets Results

Heartened by her e-mail success in mobilizing victorious neighborhood opposition againstNorthampton County’s plan to raze some Easton,Pennsylvania houses for a prison expansion in 2002,five-year city resident, young mother Tanya Allison-Kewley, moved to make a difference for the future.She urged changes in city zoning ordinances andbuilding codes, and augmented hearing-notificationmessages to about 100 mostly downtown recipientswith her New Urbanists of Easton electronicnewsletter that promotes smart growth. “We can’texpect everything to be perfectly historically cor-rect,” she tells Allentown Morning Call writer TracyJordan. “We need to be a modern, forward-movingcity, but we need to do it in a way that doesn’t meanknocking everything down and starting fromscratch.”

Morning Call, 12/29/2003 as posted on www.smartgrowth.org

A Rorschach Test for Cities

This is like one of those ink-blot tests that psychia-trists give; your answer will tell a lot about you.When a perfectly good small house is torn down in your city so a big new house can be built in itsplace, do you say, “This is great, a sign that ourtown is attracting the right kinds of people.” Or do you mutter, “It’s a shame that we’re pricing outordinary people. We should be building affordablehousing.” Well, in the Chicago suburb of HighlandPark, you can now say both things because of a cityordinance adopted a year ago that charges builders$10,000 when they tear down one single-familyhouse to build another. The money goes into anaffordable housing fund. So far, the fund has raised$300,000, which has been matched with county,state and charitable grants to fund its first project:Six townhouses that will sell for $135,000 to$200,000.


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Think Globally, E-Mail Locally

The great thing about the Internet is that it’s global,right? After all, that’s why they call it the worldwide web. Maybe, but one of the Internet’s greatestimpacts may turn out to be a local one: bringingtogether people who live a few miles or even a fewblocks apart. For a glimpse of that future, take alook at the suburban Los Angeles development ofLadera Ranch in Orange County. So far, 3,800 ofthe 8,100 homes planned for Ladera Ranch havebeen built in an upscale, new urbanist style (narrowstreets, front porches, environmentally friendlydesign, etc.). But the development’s most strikingfeature is the one you can’t see: its intranet, a kindof private Internet system connecting nearly all thehomes. Using it, residents post 1,800 messages amonth, asking for plumber referrals, alerting neigh-bors to lost pets, complaining about trash pickup— and, importantly, inquiring about mutual inter-ests. Academics who’ve studied Ladera Ranch’sintranet say its power lies in its ability to quicklyreach out and organize people who might neverhave found one another. As one professor pointsout, e-mails tend to be more local than you might

imagine: The average worker sends more messagesto people inside his company than outside andmost of those that leave the building stay within the city. “The result of this ‘global technology,’ ” he adds, “may actually mean there’s a return ofplace and local community.”


Workforce WoesOnly 56 percent of working-age adults inPhiladelphia were employed or looking for work in2000 — the forth lowest percentage among the 100largest cities in the U.S. These low levels of workmay reflect not only a growing distance betweeninner-city Philadelphia residents and job opportuni-ties elsewhere in the region, but also the low educa-tion levels of Philadelphia’s population. Only 18%of Philadelphia adults hold a college degree, one of the lowest levels among large U.S. cities. Indeed,below-average rates of educational attainment cutacross racial and ethnic lines in Philadelphia, affecting whites, blacks and Hispanics.

Philadelphia in Focus: A Profile from Census 2000 The Brookings Center on Urban and Metropolitan Policy

New York, NY

Washington, D.C.

Chicago, IL

Boston, MA

Philadelphia, PA

San Francisco, CA

Baltimore, MD

Detroit, MI

Dallas, TX

San Diego, CA

Pittsburgh, PA

Houston, TX

Phoenix, AZ

80 82 84 86 88 90 92 94 96 98 100

Philadelphia’s Got CultureStrong arts and culture can be a strong competitive advantage in attracting new residents and businesses, as they are a major component of a high quality of life for many people. According to Places Rated Almanac, the Philadelphiaregion has the fifth best arts and cultural offerings among 13 competitor regions.

www.issuesphiladelphia.net

Douglas Henton, John Melville, Kim WaleshCollaborative Economics

Regional leaders, as this article shows, are the latest in a long line of civicrevolutionaries starting with the Founders of this country. This article,excerpted from the authors’ new book, explores how Founders andregional leaders alike are part of an American tradition of experimentingwith new ways of bringing about positive change.

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Civic Revolutionaries IGNITING THE PASSION FOR CHANGE IN AMERICA’S COMMUNITIES

Introduction

Our country’s founding generation grappled with afundamental question: how to balance and reconcilecompeting values in the birth of the first moderndemocracy. Individual and community, freedom andresponsibility — the Founders worked throughthese and other tensions of their time and laid downthe nation’s guiding philosophy in the Declarationof Independence and the Constitution. The task ofevery succeeding generation has been to revisit thesevalues under changing conditions, within the frame-work of the nation’s guiding philosophy, and to tryto reconcile them so that America can move for-ward. This is the continuing American Experiment.

The American Experiment is our most importanttradition and the key to our enduring success as anation. This tradition has endured because succeed-ing generations have stepped forward and madetheir contribution, as we must. We can never rest,because the world keeps changing. But is in ourpower to see that the American Experiment pro-gresses rather than regresses on our watch. It is our responsibility to be stewards of the AmericanExperiment. As was true for generations before us,our duty is to answer the call to stewardship in ourtime.

Today civic revolutionaries across the nation areanswering the call to stewardship, igniting the pas-sion for change in America’s communities. They arerevolutionaries in the sense that they are willing toexperiment with new approaches to complex com-munity problems. Although their methods differand the pace of change varies from place to place,the essential motivation of civic revolutionaries is

the same: a long-term commitment to fundamentalchange that improves the well-being of people andtheir communities.

Following in the footsteps of generations before,people of great ability and imagination are todaystepping forward as leaders in a grassroots move-ment to transform how our nation solves its mostpressing problems. In communities across America,leaders from business, government, education, andcommunity are struggling to move forward on criti-cal economic and social issues — how to succeedin a volatile economy, how to prepare people for anew world of work, how to safeguard environmentalassets, how to create a sense of community in a pluralistic society.

Although important work is taking place on criticalissues nationally, we believe that the most interestingand powerful civic innovation is happening from the bottom up — in communities and regionsacross America. Although most of these civic revolu-tionaries are not household names and probablynever will be, their determination to change theircommunities makes them part of a great Americantradition of experimentation and fundamental optimism about the future.

The New Civic Revolutionaries:Regional Stewards

We believe that a grassroots civic movement is currently under way in this country at the regionallevel. Civic revolutionaries, acting as regional stew-ards, are experimenting with new ways of addressingcritical, complex issues that cut across multiple

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political jurisdictions and constituencies — trans-portation, housing, economic competitiveness,social equity, disaster preparedness. This is a prag-matic approach to problem solving born of necessityfrom multiple forces, including devolution of feder-al and state programs, global competition, decen-tralization from central cities, fiscal limitations,increased diversity and demands for participation.

This new reality poses difficult challenges for civicleadership and for the institutions of governmentand processes of governance. The need for regionalapproaches and cohesiveness stands in sharp con-trast to governmental fragmentation and parochialgovernance. The result is the emergence of networksof regional stewards who influence regional direc-tion through ad hoc approaches, rather than new,formal government structures. These leaders workpragmatically across traditional boundaries of geography and sector to deliver results.

The work of civic revolutionaries acting as regionalstewards has only just begun. We are in a transition-al phase, working to develop new patterns of collab-oration and partnership, experimenting with newways of doing business.

Igniting the Passion for Change

We believe that there are three major roles that civicrevolutionaries play to ignite the passion for changeand navigate the process of experimentation in theircommunities. Civic revolutionaries discover, thenthey decide, and then they drive change.

Discover: Building a Compelling Case for ChangeCivic revolutionaries build a convincing case forchange in their communities — accumulating information, ideas, and allies in the process. Theydiagnose the challenges facing their communities,the tensions between competing values that must be addressed in new ways. They creatively describe,reframe, measure, and connect issues and root caus-es. They try to understand what is working, what isnot working, and what might work. They seek outthe experiences of other communities, to expand the view of what’s possible and to find other civicrevolutionaries who might be able to help themframe problems or develop solutions. At the sametime, they seek out and discover allies in their communities, individuals that can help make thecase and become part of the coalition for change.All of this preparation helps them discover or redis-cover problems, possibilities, and people and in theprocess builds the case for experimentation.

The Founders themselves went through a period ofdiscovery by being active at the local and state levelbefore moving onto the national stage, finding alliesin other parts of the country, connecting with oneanother in committees of correspondence, and drawingliberally from the literature and experience of othercountries when they seemed to fit the aspirationsand needs of the fledgling republic. Through theseefforts, they built the case for change. They wentthrough a particularly intensive search as they recog-nized the limits of the Articles of Confederation andcreated the Constitution. The Articles created anational government that had neither the resourcesnor the authority to govern the new nation of threemillion people spread along the eastern seaboard,and an alternative had to be found.

Like the Founders, today’s civic revolutionariesbroaden their horizons through the discoveryprocess, but they also stay focused on the applica-tions of what they have learned with the allies theyhave found. Making the case is not an academicexercise, but one that marshals information,resources, and people to take action.

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Decide: Making Critical Choices in ExperimentationCivic revolutionaries use what they learn from thediscovery process to make decisions. They makechoices from among the many actions they couldtake to tackle their challenges. Though they mayconsult with those in other communities and tapinto national sources of research and ideas to consid-er options for action, they sort through differentideas and decide on how best to apply what theyhave learned. They decide about focus, scope, andpriority in designing experiments in communitychange — immediate actions connected to an overall vision (or story) of change that will provideopportunities for continuous feedback and adaptation.

The Founders themselves engaged in focused decision-making sessions to agree to the Declarationof Independence and the Constitution, after muchexperience with experimentation at the state leveland the Articles of Confederation, individualFounders came together to sort through specificideas and create an overall framework for action,essentially agreeing on a set of operating principlesfor governing the republic. Just as important, theyintroduced a system of renewal that would allowfuture generations to make adaptations.

Like the Founders, today’s civic revolutionaries donot find answers to all the problems but set out anew approach based on guiding principles that canbe put into practice immediately, with tangible andvisible results. Above all, they do not shrink fromthe responsibility and risk of making decisions andmoving forward with much-needed experimenta-tion.

Drive: Mobilizing Allies for ChangeCivic revolutionaries are relentless in their drive forchange. Although they are thoughtful and reflectivein preparation and in decision making about whatto do, they neither succumb to “paralysis by analy-sis” nor engage in an endless search for the perfectsolution. They embody the spirit of experimentation— they reflect, decide, act, then reflect on initialresults, make more decisions, pursue new actions,and start the process again. They drive a realistic,opportunistic, and adaptable experimentationprocess.

Even with their preparation and decisiveness, theFounders were ultimately drivers of change. Afteragreeing to the Constitution, they engaged in acampaign to put it into practice, working to ensurethat each state would vote to ratify the document.

Although we recognize and celebrate their contribu-tion in our time, the Founders faced an uphill battlein their time. Supporters of the Constitution wouldnot have won a Gallup poll.

Key to the effort to drive adoption of the Constitu-tion was a series of essays (essentially op-ed pieces)in a New York newspaper, the Independent Journal.We now know these essays collectively as TheFederalist Papers. They made the case to a waryAmerican people that a new structure of governancewas necessary and that the Articles of Confederationwere inadequate to the demands of the day. Theyarticulated how the new Constitution addressed the problems that the country faced and how itaddressed the major concerns of opponents and thenumerous competing interest groups in our alreadydiverse nation. The essays were reprinted in othernewspapers and circulated as pamphlets and werearguably one of the key drivers for adoption of theConstitution by the states. Only with these effortsdid the Constitution transform from a thoughtfulsynthesis of governing principles into the blueprintfor action to launch a new nation.

Once the ratification process was completed, theFounders participated in the implementation of thenew governing model. They quickly added the firstten amendments, collectively known as the Bill ofRights, and over the next few years through experi-mentation, fine-tuned the content and applicationof the document through legislative changes andjudicial review. The Constitution was never aboutgetting it perfect the first time around. Even in theirtime, the Founders tinkered with their creation tomake it a practical, workable blueprint for action.

Following in the footsteps of the Founders and later the civic revolutionaries of the nineteenth andtwentieth centuries, we must recognize the time hascome for this generation of Americans to take itsplace as stewards of the American Experiment.

Douglas Henton, John Melville, and Kim Walesh are princi-pals in Collaborative Economics, a firm that forges linkagebetween local governments, businesses, and nonprofits topromote successful communities. This article is excerptedfrom the introduction of their new book published byJossey Bass, Civic Revolutionaries: Igniting the Passion forChange in America’s Communities (2004) and is printedhere with their permission. For more information, visitwww.coecon.com.

Alliance for Regional Stewardship

We hear a lot about regionalism, but how does an area actually go about creating a regional identitycomplete with regional leadership, regional initiatives, and regional institutions? Is it possible for us toall pull together in the same direction? The Alliance for Regional Stewardship studied 25 regions andcame up with some answers.

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The Practice of Stewardship DEVELOPING LEADERSHIP FOR REGIONAL ACTION

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Figure 1: Regional Action Builds Stewardship Capacity

GAP between current reality and desired future

Introduction

As regional challenges become more complex, theneed to develop regional leaders is an increasinglypressing concern. But how does a region developbroad leadership when current developments —devolution of authority, globalization of companies,mobile and disconnected populations — threaten tocreate an “anonymity of leadership”?

This article describes how a new type of leader —regional stewards — is creating opportunities forregions. Many communities can identify at least sev-eral individuals who provide this type of leadershipfor their region. These people act on a sense ofresponsibility for the long-term future of theirregion and are effective agents of change.

Regional stewardship is different from traditionalleadership that focuses on organizations. Leadingsuccessfully in a single organization or sector is notsufficient for regional stewardship. Today’s regionalchallenges require a new level of problem-solvingcapability and the ability to work across political,sectoral, and institutional boundaries.

Regional stewardship is both an individual trait anda regional capacity. Discussions about regional stew-ardship often focus on individuals who are “leading”the region. But we also see that some regions contin-ually demonstrate the capacity to innovate and out-perform others, even as individual leaders come andgo. They seem to have the ability to sustain changeover time. This capacity goes beyond individuals —

it lives in the collective spirit and practices of theregion’s people and organizations, in its culture andconnections. Thus a key finding of this article is thatregional stewardship has both personal and institu-tional dimensions.

This article shares the success strategies that regionshave used to build both individual and institutionalcapacity for regional stewardship.

Common Stages of Regional Change

Though many models and approaches exist, regionsthat have succeeded at building leadership capacityalso seem to excel at leading regional change. Thechange process shares some common stages, even asthe nature and amount of time spent in each stage,as well as the sequencing of them, varies.

We use the change process in Figure 1 as a frame-work for understanding how innovative regions haverecruited, mobilized, and supported leaders, therebycreating a fertile training ground for the develop-ment of regional stewards and regional stewardshipcapacity. Usually, as the diagram indicates, the cata-lyst for regional action is a widening gap betweencurrent conditions and the region’s desired future.The current reality can be deteriorating, or a com-munity’s aspirations for its future may be changing.As shown, the change process can follow differentpaths, but there are four main stages of regionalaction.

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Initiation In the initiation stage, a core group of leaders laysthe groundwork for collaborative action by identify-ing the regional opportunity and committing toaction. The initiation stage typically includes somecommon elements.

• Recognize — a core group of leaders recognizes a gap between the region’s current reality anddesired future and that change is required.

• Explore — the leaders explore their commoninterests and possibilities and how they mightlearn and work together.

• Commit — they commit personally to work for civic change and to take a risk.

• Design — they design what should happen next,including what specifically they will do and howthey will mobilize others.

MobilizationThe key challenge of the mobilization stage is toengage the broader public in discussion about theregion’s future and build commitment to act. The mobilization stage typically includes some common elements:

• Frame — frame critical issues and opportunities,focusing attention on what needs to be done and why.

• Communicate — communicate key informationand messages widely, to stimulate learning and discussion among opinion leaders and residents.

• Inspire — rally and motivate others to join theregional cause.

• Recruit — recruit a broader set of people to takepart in what happens next, connecting diverse networks in often nontraditional ways.

Collaborative ActionThis stage is about creating platforms for people towork together on the business of regional change.It is about moving from recruiting people to sup-porting their work, from discussing to doing. Thecollaborative action stage, when successful, typicallyresults in some common elements:

• Tangible results — evidence indicates that collaborative action can effectively address common problems.

• New relationships — new networks are created as boundary-crossing relationships developbetween participants.

• Changed mindsets — a new way of thinking creatively about regional problem solving emerges.

Sustaining ChangeThe key challenge is to keep stakeholders at thetable, broaden and deepen leadership, and renew the mission. To help sustain the change process,regions start to address the following key challenges:

• Develop more leaders — institutionalize the of regional leaders.

• Create and renew institutions — create and renewregional civic institutions and institutionalalliances as individuals and issues change.

• Scale the change — work toward systemic changeby increasing and institutionalizing successful initiatives.

• Reignite the process — refocus and regroup aroundnew challenges and opportunities as they emergeover time.

As a region moves through each of these stages, leaders surface, become engaged, and develop. Over time, regional collaboration becomes commonpractice because people recognize that it is effective.Individual leadership translates into a regional stew-ardship capacity as a critical mass of people cometogether to influence others and change the waythey approach regional opportunities and problems.


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Tools for Regional Change and Fostering Regional Stewardship

The remainder of this article describes what regionshave learned at each stage of the regional changeprocess by describing the challenges and tools usedby regional leaders at each stage of the process.

Getting Started — Initiation StageMany regions report that getting started is the hard-est part of regional change. Often, it is difficult tofigure out who should come together in the firstplace and the compelling reason why. Leaders mustovercome their community’s natural cultural barriers— protecting the status quo, a lack of urgency, anunwillingness to take risks — in order to initiatechange.

Regions that make progress through this stage pointto a precipitating event that ultimately coalesced acore group of leaders to commit to act regionally.The precipitating event transformed how the leaderssaw their region and their role in it; it helped claritythe gap between their region’s current reality and thedesired or possible future. It ignited their passion.The precipitating event can be, but does not have to be, a crisis. In fact, regions that have experienceda crisis report that, though the crisis spurs initialaction, it is the opportunity that leadership formsthroughout the crisis that galvanizes commitmentand action over the long term.

The following tools and techniques have helped laythe groundwork for identifying potential leaders andinitiating regional change after a precipitating eventhas occurred:

Convene Leaders. Bringing an informal workinggroup of “early adopters” together can be a way tokick-start the process. Typically, these people see acompelling issue that requires regional attention oran opportunity that they must seize immediately.Sometimes the early adopters are established com-munity leaders; other times, new leaders with freshperspectives emerge. The convener is usually a neu-tral party who has credibility and influence in thecommunity. Whether an organization or an individ-ual, the convener must create a safe public space fordialogue.

Learn from Other Regions. Trips to other regionsand interactions with their leaders can provide animportant catalyst for conversation about a region’saspirations and possibilities. Participants report thatthese visits allow them to build relationships witheach other and facilitate further collaborative

action. These site visits can also play to competitiveinstincts. Interaction with leaders in other placesprovides an opportunity to hear how others in acommunity talk about what they did and why theydid it. In a variation on this process, conveners canbring outsiders into a region to bring knowledge of what leading regions are doing nationally. Bothoptions can inspire and motivate leaders to takeaction.

Provide Financial Incentives. States and founda-tions have used financial incentives to encourageleaders to come together in a region and exploretheir mutual interests. This capital helps support the learning and dialogue that needs to take placeamong an initial core group of leaders to understandshared concerns and potential approaches to work-ing together. Though financial incentives can serveas a type of precipitating event, on their own theyare seldom sufficient: a leadership team must trulycoalesce and commit in the initiation stage or theinitiative induced by financial incentive will notprove sustainable.

Lighting a More Public Spark —MobilizationThe key challenge of the mobilization stage is toengage the broader public in a discussion about theregion’s future. Once a core group of leaders com-mits to advance the region, it typically works toattract more visible attention, create some sharedexcitement about the need to work regionally, and recruit others to action. A region that can suc-cessfully mobilize its population toward a commongoal is growing its regional stewardship capacity.

Regions have used the following tools and tech-niques to mobilize broad leadership for a regionalinitiative:

Share Catalytic Publications. Fact-based reportssuch as benchmarking studies, diagnostic reports,and future scenarios frame the region’s current reality and its potential for a better future. If theypresent compelling information or tell a compellingstory about the state of the community or its poten-tial, they can serve as an effective call to action.

Use Media to Communicate the Message. Someregions have found that media can be a valuablepartner in disseminating key messages to the broadpublic. This task can include distributing catalyticpublications as newspaper inserts, influencing edito-rial writings, or developing special television pro-gramming.

Holding Public Events. Public events can stimulatediscussion and inspire others to join the cause. Theregion invites broad participation from communitymembers in forums, symposia, or speaker series.These events can serve as platforms for dramaticrelease of catalytic publications, as well as for powerful testimonials by credible leaders about their personal commitment to regional change.

Recruit Leaders from New Sources. Some regionsmake a special attempt to reach out and mobilizeleaders from nontraditional sources of leadership.These leaders include people from entrepreneurialcompanies and disadvantaged communities, as wellas people of color, women, youth, and seniors.

Doing the Hard Work of Change —Collaborative ActionThe key challenge of the collaborative action stage is to create the appropriate platforms for people towork together for change. It is about moving fromrecruiting people to supporting their work, fromdiscussing to doing.

The hard work of regional change begins with clear purpose. Actors must agree on their roles and responsibilities and begin to take ownership of the process. Some regions start with small wins to demonstrate success and win over skeptics. Theyset measurable goals and demand accountabilitytoward those goals. It is in the collaborative actionstage that leaders often discover true commonground and deepen their commitment to regionalstewardship.

Regions have used the following tools and tech-niques to work in creating collaborative action:

Develop a Regional Strategy. Leaders can bringpeople together to develop a strategy for movingtheir region toward the desired future. Regionalstrategy sometimes follows the creation of a visionor the articulation of shared values and aspirations.Other times, strategy is implemented de facto, aspeople and organizations launch individual initia-tives and then connect the pieces into a coherentstrategy.

Form Action Teams. Collaborative action teamscreate and implement new initiatives to achieve aspecific result. Typically, these teams focus on imple-menting a focused part of a regional strategy. Theyhave a strong orientation toward action and results,and they are often a coalition of organizations work-ing toward the same end.

Create Advocacy Coalitions. Unlikely coalitionscan influence decisions that affect multiple stake-holders in the region. Regional coalitions have beensuccessful at both influencing regional decisions andbringing regional perspective to decisions that takeplace at the neighborhood/organizational level.

Engage in Civic Dialogue. Leaders create opportunities for productive public conversationsabout the issues confronting the region. Typically,this task involves framing issues, sharing individual perspectives, understanding diverse perspectives,learning about facts, and a disciplined process ofevaluating and deciding on options for going for-ward. Bridging differences and building trustingrelationships are important by-products for long-term leadership capacity.

Ensuring Continued Success — Sustaining ChangeThe key challenge for many regions is to sustain the change process and to bring it to scale. Regionalchange is an ongoing, continuous process. In thebeginning, a core group of leaders initiates a newway of working together and of seeing the regionand its future. They mobilize others to join thegroup, and create platforms for people to worktogether to gain new results through new methods.At some point the group celebrates success andstarts to think about how to sustain the change over time.

Another challenge that regions face in trying to sustain change is in integrating newcomers intoregional efforts as the prior generation of leaderssteps back. Leaders who are new to the area have little historic and institutional memory of the successes and challenges of the community.Engaging them requires both and educational component and a mentoring component.

Regions have used the following tools and tech-niques to sustain change and institutionalize theregional stewardship capacity:

Prepare Business and Civic Leaders to BeRegional Stewards. Though practical experience is a powerful teacher, a common concern is that thecurrent preparation of leaders is insufficient to meettoday’s complex regional challenges. For example,leaders who are used to directly controllingresources in organizations can get frustrated bymessy civic change processes to succeed in theregional civic space, leaders need new frameworksand skills, new mentors and best practices. And they may actually need to unlearn some things and change some perspectives.12

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Some regions have begun to sponsor leadership programs to equip business leaders, neighborhoodleaders, and politicians with the collaborative skillsand cross-sector networks to become regional stew-ards. Typically, these programs provide leaders withsome combination of skill development, regionalawareness, team building, and opportunities toreflect on what they have learned from their experiences.

Measure Regional Progress. Communities developindicators to measure how their region is progressingtoward its desired future or how it is doing relativeto other regions. Indicators help leaders and citizensdetermine if their region is moving in the rightdirection. They use indicators as a basis for celebrat-ing success and rallying around deficiency.

Celebrate Success and Capture Lessons. Leadersknow how important it is to recognize and celebratesuccess. As important as it is to celebrate, it is alsoimportant to capture the lessons of why the successoccurred and to share those lessons with other leaders in the region as well as other regions nation-ally. This task is particularly valuable for educatingnew leadership about the region’s past success andchallenges.

Build and Renew Regional Civic Institutions and Alliances. Leaders create new regional civicorganizations and alliances to help institutionalize

new practices. These institutions play a key role in ongoing accountability; civic institutions with a responsible portfolio command more consistentbehavior from people, including elected officials.They give cover for leaders to do things that other-wise might be too risky personally or politically. And they are the strategic scanners and consciencethat prod leaders when they are too passive or tunedout to act.

Going Forward: Preparing Regional Stewards

An important finding of this article is that todayregional stewardship develops primarily in the con-text of action. Working as a team, individual leaderscatalyze regional change. In the process, they buildindividual and institutional leadership capacity tosustain change over time.

Our challenge going forward from here is to takeseriously the need for more regional stewards fromall walks of life and to develop mechanisms to accel-erate the development of leaders who can addressthe challenges facing regions today.

This article is a reprint of a March 2002 monograph of the same title published by the Alliance for RegionalStewardship, and is printed here with their permission. For more information about the Alliance, visit www.regionalstewardship.org.

Edward L. Glaeser, Harvard University

Boston is currently the yardstick from which other regions measure success. Its high level of educational attainment and remarkable turnaround from urban decline make it a beacon to other regions. Is there a secret to the city’s success?

Mother of Reinvention

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HOW BOSTON’S ECONOMY HAS BOUNCED BACK FROM DECLINE, TIME AND AGAIN

What a difference two decades make. In1980, Boston was a city in decline, the hub not ofthe universe but of a middle-income metropolitanarea in a cold-weather state. The city’s populationhad fallen from 758,000 in 1920 to 563,000, andreal estate values had sunk so low that three-quar-ters of its homes were worth less than the bricks-and-mortar cost of constructing them. At thatpoint, Boston seemed to be on its way to joiningRust Belt relics like Rochester, Newark, and Detroiton the dustbin of industrial history.

Boston of today is a high-tech, culture-rich beacon of the future. The city’s population has risen, if only slightly, in each of the decennial US Censuscounts since 1980. The metropolitan area is nowthe eighth richest in the country by per-capitaincome — the richest outside the New York andSan Francisco regions. Housing prices — the surestsign of how badly people want to live someplace —have soared. In the 2000 census, a median housingvalue of $233,000 made Boston the fourth mostexpensive metropolitan area outside New York andSan Francisco (after Boulder, CO; Honolulu; andOrange County, CA).

What took place here in the last decades is wellknown. The region transformed itself from a declining manufacturing center into a burgeoningcapital of the information age. Boston was able toaccomplish this reinvention because of its skill base,not just relative to its Rust Belt peers, but also


compared to the nation as a whole. A region’s skillbase is among the strongest predictors of its growthrate, and today Boston is one of the most educated metropolitan areas of the country.

It is tempting to see the region’s recent reinventionas a product of historical accident, a strong educa-tional tradition fortuitously bumping into a newinformation age that gives education particular economic value. But reinventing itself is a Bostontradition that’s nearly 400 years old. Time andagain, Boston has faced economic crises that seemedto doom the city and its surrounding area to second-tier status, if not worse. Time and again, Boston hasfound new sources of productive growth.

Boston’s capacity for phoenix-like rebirth suggestsbasic lessons not only for New England’s largest citybut for cities everywhere. How it has accomplishedthis repeated reinvention also holds within it a cautionary tale for a city desperate not to lose thiseconomic talent.

Boston’s Busts and Booms

Boston faced its first economic near-death experience within 20 years of the landing of theMayflower. The Massachusetts Bay settlers initiallysurvived on supplying goods to religiously orientedmigrants seeking to settle in the New World. By1640, however, the flow of British expatriates driedup, in part because of the political success of like-minded Protestants in England. Midway throughthe 17th century, Boston redefined itself as the center of a trade network that supplied the coloniesof the Caribbean and the American South with foodand basic provisions. This arrangement fueled theregional economy well into the next century.

In the latter half of the 18th century, however,Boston’s population stagnated for 50 years while thecolonies spread inland. New York and Philadelphiahad greater proximity to the rich American hinter-land and became far more important centers forshipping goods into and out of the 13 colonies. This led to a second major reinvention, when thecity capitalized on a remarkable base of seafarers tobecome a center for global shipping and sailing inthe early 19th century. In this economy, Boston’scomparative advantage was not its port but its people, who crewed, captained, and owned ships.

But in 1840, at the height of its maritime suprema-cy, Boston’s third crisis was already brewing. Steamtechnology was quickly improving and making clipper ships obsolete. Steam required both lesshuman capital and different human capital than sailsdid, and as a result, Boston’s maritime workforce lostmuch of its value. Boston, Salem, and New Bedfordall suffered sharp economic dislocations. Salem and

New Bedford never really recovered from the shift.But Boston, as a last product of its sailing suprema-cy, acquired a vast population of Irish immigrants.In what almost seems a freak of fortune, the PotatoFamine coincided with the last decade of Boston’sseafaring dominance. As a result of unusually cheapfares from Liverpool, large numbers of hungry Irishcame to Boston. Had the famine happened 15 yearslater, the Irish would likely have bypassed the cityentirely. Irish immigrants provided the human energy that turned Boston from a maritime city to an industrial city between 1840 and 1890.

This heady period of growth was over by 1920. At that point begins the familiar story of Boston’sslide into regional decline. From 1920 to 1950, thecity’s population remained flat (while the country’spopulation grew by 50 percent) and then began todwindle, bottoming out in 1980. This decline canbe chalked up to at least four separate reasons. First,the climate was cold and harsh, and air conditioningand highway travel made the Sun Belt a much moreattractive option. Second, as in other industrialtowns, Boston’s core manufacturing economy wasdeclining as jobs moved to areas with cheaper laborand less regulation, especially in the South. Third,the automobile itself made Boston’s dense urbanform somewhat obsolete, as growth spread to thesuburbs. Finally, Boston suffered from high taxesand heavy regulation.

Rather than signal Boston’s final descent into economic and demographic oblivion, the long mid-century slide set the stage for Boston’s reinven-tion as the high-tech economic juggernaut it istoday. The current moment of recession hangovernotwithstanding, the Greater Boston area has devel-oped an internal economic skeleton of technologyand know-how that should sustain growth for yearsto come. That is, until the next structural crisisdevelops. When — or before — the crisis hits, itwould serve us well to understand how to reinventthe local economy, as it has been reinvented before.We should look to the factors that facilitated rein-vention throughout Boston’s history.

Lessons from Boston’s Past

1. Innovate or StagnateThe most obvious lesson of Boston’s history is that metropolitan economies develop along quirky,bumpy paths. Staying true to a single model of economic development is almost always a recipe for disaster. At each turning point during its longhistory, Boston has changed primary industries andrevamped itself. For any city to survive as the eco-nomic core of a thriving region, such transforma-tions are inevitable. 15

What is it that makes economic change happen?Every one of Boston’s rebirths has been led by smart,ambitious people who had access to capital and whowanted to stay in or come to Boston despite otheroptions that were available to them. Cities makethemselves smart by educating their own andattracting the highly skilled from elsewhere. Nowand in the future, Boston’s success hinges criticallyon the quality of its schools and on its ability toattract high-skilled residents, even against the toughcompetition of warmer climes. For many other rea-sons, education and attraction are key componentsof Boston’s economic success, but perhaps theirbiggest role is in ensuring a steady supply of entre-preneurs to drive future reinventions.

Government policy also matters, but not in the typical forms of enticement and giveaway, or even in giving the free market free rein. Rather, the key isto have a system of regulation that is relaxed enoughto permit innovation, but active enough to protectinvestors and to preserve Boston as an attractiveplace to live. One sure sign that a policy is a mistakeis if its principal purpose is to preserve and perpetu-ate the past. Economic reinvention inevitablyinvolves dislocation and hardship. It is surely tempt-ing to try to bolster declining industries to ease thepain that accompanies decline. But given the neces-sity of invention, such attempts are urban suicide. IfBoston had taxed the information economy heavily

to keep its dying candy factories afloat, we wouldnot have saved the candy industry, but rather killedthe region’s economic future.

2. Value Diversity and ComplexityReinventing a local economy requires diversity.That’s because reinvention doesn’t mean startingnew industries from scratch, but rather expandingindustries that were always there, but much smaller,and in a position to grow when they prove a morepromising fit for a changing economy. Such eco-nomic diversity enables cities to switch horses whentheir primary industries decline. For instance, therehas always been manufacturing in Boston — beforeit was a manufacturing center, and even now, in thepost-manufacturing age. Similarly, technology, pro-fessional services, and higher education have beenparts of the Boston economy for centuries. They didnot have to be imported, or grown from seed, toenable the switch from manufacturing to these moreproductive sectors over the past 20 years. The broad-er a city’s portfolio of industries, the better it canadapt to shifts in the international economy.

Boston’s advantage in economic diversity — and its corollary, complexity — can be traced back tocolonial days. Virginia’s tobacco trade was simple,hinging on vast plantations. Boats would comedown the river to pay cash for bales of tobacco.

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Since the trade was simple and enormously prof-itable, there was no reason for cities or mercantileinfrastructure to develop. Conversely, Massachusettshad few products that were worth shipping toEngland. To make up for this weakness, the colonialmerchants developed a complex trading system tohandle a variety of commodities, which wereshipped to four separate countries. One third ofBoston’s population was directly involved in theshipping trades. At the time, Virginians were muchricher. But in the long run, the institutions thatdeveloped around the diverse and complex Bostoneconomy were much more conducive to economicgrowth.

3. Attract People, Not CompaniesIncreasingly, urbanists draw a distinction betweenproducer cities and consumer cities. Producer citiesgrow because of the desire of firms to locate in aparticular place where economic returns are higher,while consumer cities thrive because people want tolive there. Over the past 50 years, consumer citieshave enjoyed increasing success, largely at theexpense of producer cities.

Consumer cities are particularly conducive to theprocess of reinvention. If the only reason people live in a particular place is because of its proximityto some productive asset, such as anthracite coalmines or the Merrimack River, then that locale loses its charm if that asset loses its value. Indeed,Pennsylvania coal country is a vast graveyard ofonce-prosperous towns telling stories of past eco-nomic grandeur. But if a place exists because peoplewant to live there, then the people who live therecan respond to the economic downturns by innovat-ing to make their chosen environment productiveonce again, rather than moving.

Today, Boston is a center for the knowledge econo-my in part because people want to live there. Bostonmay not have exactly the same amenities as the BayArea; it certainly doesn’t have the weather. But ifBoston isn’t Palo Alto, it isn’t Detroit either. Itschanging seasons, ready access to Atlantic beaches,and rich history continue to attract residents as wellas visitors. This allure is crucial for the city’s contin-ued economic success. But, the most evident seed ofBoston’s next economic crisis is its high housingcosts, which are starting to price the next generationof reinventors out of the market.

4. Invest in Education and Social CapitalThe fact that Massachusetts settlers saw themselvesas permanent residents led the new colony to createa number of important legal, social, and educationalinstitutions. Perhaps the most remarkable feature ofearly Boston was its focus on education. The BostonLatin School was founded in 1635 and HarvardCollege was founded — with government money,it’s worth noting — the next year. The Calvinistattention to literacy surely mattered, but the morecomplex Massachusetts economy also demandedmore widespread learning than did the tobacco cul-ture of the South. Harvard’s earliest graduates weremen of the cloth, but increasingly a Harvard educa-tion provided valuable background for merchantsand lawyers in a world where knowledge increasedearnings. Education was not a luxury, as it was forSouthern aristocrats; it was a central ingredient inthe evolving economy.

Human capital has been Boston’s strongest assetthroughout its 400-year history. Skills with sailingships enabled the city to reinvent itself as a globalmaritime center in the early 19th century. Yankeetechnology and Irish labor together fueled industri-alization. And today more than ever, Boston’s skillsprovide the impetus for economic success in tech-nology, professional services, and higher education.

Conclusion

Boston will never be anything other than what it is.It will never have the climate of Los Angeles or thedevelopable land of North Carolina; it will neverhave oil wells or uranium mines. What has alwaysmade Boston dynamic — and does so to this day— is its reinventiveness, its ability to find new ways to fit into an evolving national economy. The economic power of education and culturaldynamism is news to some people, but it’s old newsto Boston. Still, the Bay State’s long tradition andfirst-rate institutions should not lull us into compla-cency. Even as we look to reap further rewards fromthe information-age economy of today, there’s notime like the present for laying the groundwork forBoston’s next rebirth.

Edward L. Glaeser is a professor of economics at HarvardUniversity. This article was first printed in Fall 2003 editionof CommonWealth Magazine, and is printed here withtheir permission. Visit www.massinc.org/commonwealthfor more information.

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The Philadelphia Tax Reform Commission was created to recommend methods to reduce taxes of Philadelphia residents, workers and businesses. On October 15, 2003, the Commission voted14-to-1 for a comprehensive overhaul of the city’s tax structure. Take a look at how theCommission suggests Philadelphia reach that goal.

The Road to Tax ReformTHE PHILADELPHIA TAX REFORM COMMISSION


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The Abridged Final Report of thePhiladelphia Tax Reform Commission

Visit http://www.philadelphiataxreform.org toview the full three-volume report.

The Philadelphia Tax Reform Commission was cre-ated by a vote of nearly 170,000 citizens to “recom-mend methods to reduce the taxes of Philadelphiaresidents, workers, and businesses.” On October15, 2003, the Commission voted 14-to-1 for acomprehensive overhaul of the city’s tax structure.

Although many factors influencing business andresident location decisions remain constant fromcommunity to community within a metropolitanarea, tax levels can vary dramatically. Businessesand residents can move within a region to avoidpaying high local taxes while still enjoying many of the region’s benefits. There is general agreementamong economists that local taxes have an impor-tant impact upon economic growth; taxes have asignificant impact on where individuals live andwork and where businesses locate and invest.Econometric analysis shows that, for this reason,taxes have their strongest impact upon local com-munities.

Because Philadelphia’s tax burden is higher thanthat of competitor jurisdictions, the city has difficulty competing for and retaining residents,businesses, and jobs. Substantial evidence fromeconometric analysis, surveys, and anecdotal evidence indicates that the city’s high tax burdenhas significantly reduced the size of its economy.

In sum, a broad array of evidence points to theconclusion that reducing Philadelphia’s reliance onwage and business taxes could significantly increasethe size of its economy while maintaining a tax revenue stream adequate to finance needed publicservices.

Although the city economy would benefit from amove towards property-based taxes, Philadelphia’sinaccurate and regressive property assessments mustbe improved in order to increase tax system equityand maximize the revenue-generating potential ofthis approach.

Philadelphia’s property assessments miss the indus-try target for accuracy by more than 50 percent.Other older cities with similar housing stocks dosignificantly better. The City’s assessments are also several times worse than comparable cities interms of equity, with lower-priced homes typicallyassessed at higher fractions of their value than higher-priced properties. Households in poorerPhiladelphia neighborhoods, like North and West

Philadelphia, actually face a higher property taxburden relative to property values than those inmore affluent areas such as the Northwest,Northeast, and Center City.

The Commission’s recommendations are firmlygrounded in tax and economic theory. We alsosought input from Philadelphia businesses, community groups, residents, and City agencies to judge whether these ideas resonated with stake-holders. We consider them sound in principle andachievable in practice. Although we believe each ofthese recommendations will improve tax competi-tiveness, equity, stability, neutrality, or simplicity,they will be most effective if implemented as acomprehensive tax reform package.

What Would the Recommendationsof the Tax Reform Commission Do?

• Totally eliminate the Business Privilege Tax(which is levied on both sales and profits of firmsoperating and doing business in the city) over thenext ten years;

• Reform the business tax, while it exists, to beginto level the playing field between companies insideand outside the city and between incorporatedand unincorporated firms, and to help startupfirms manage early operating losses;

• Reduce both the resident and non-resident WageTax to an equal rate of 3.25 percent by 2014 toencourage larger companies to locate here and endthe tax incentive for residents with city jobs toleave;

• Invest at least $1 million in Greater PhiladelphiaUrban Affairs Coalition’s campaign to help returnan estimated $150 million in annual unclaimedfederal and state tax forgiveness credits toPhiladelphia families;

• Phase in land-value taxation so that, at the end of ten years, 50 percent of all Real Estate Tax revenues will be generated from a tax on the valueof land and 50 percent on the value of structures;

• Reassess property values to reflect 100 percent of property value instead of fractional assessmentsthat contribute to unequal tax burdens amongproperty owners;

• Adopt a budget-based Real Estate Tax system thatwould obligate the Mayor and City Council to set real estate rates each year after reviewing assess-ment estimates;

• Create the position of Taxpayer’s Advocate to workwith citizens on assessment appeals, improve thepublic’s understanding of the process, and reviewactions of the Board of Revision of Taxes.

We believe these recommendations are fiscally andsocially responsible because their incremental natureallows the City to gradually adjust its budget. As taxreform improves Philadelphia’s economy, the taxbase will grow; revenues will increase and there will be no long-term negative net fiscal impact.However, while the economy adjusts, a short-termfiscal gap may affect budgeted priorities. TheCommission considered steps to address this criticalproblem. As a result, we are confident that the Citycan “finance” tax reform, and that the proposedpackage is fiscally responsible.

If lowering certain taxes helps the city attract orretain firms and families, a tax reduction will notreduce tax revenues on a dollar-for-dollar basis; thiseffect will grow over time. Accordingly, the City can

maintain a consistent level of essential service delivery without having to generate dollar-for-dollarreplacement revenues. Although there is muchdebate about the magnitude of economic growthresulting from federal tax reform, there is wide-spread agreement among economists that reducinglocal taxes has significant positive effects.

The Commission was prohibited from recommend-ing specific expenditure reductions, municipal government cost savings, or municipal governmentservice reductions in order to offset any potentialrevenue reductions. However, discussion with vari-ous official agencies, examinations of past efficiencygains, and analyses of initiatives in other municipali-ties have convinced us that Philadelphia can achievesignificant cost savings through improved govern-ment efficiency and effectiveness.

The Home Rule Charter directed the Commissionto develop recommendations that will “decrease theoverall tax burden on Philadelphia residents, indi-viduals who work in Philadelphia, and Philadelphiabusinesses.” After analyzing the fiscal and economicimpact of different taxes, the Commission believesthat long-term economic benefits would result simply from changing Philadelphia’s tax mix.Although the Commission is not recommendingany tax increases, it believes that there would besubstantial long-term economic benefits resultingfrom implementation of its tax reform recommen-dations, even if selected taxes were marginallyincreased. If the City cannot alter spending or generate additional revenues to cover short-termbudgetary gaps, the City could — as a last resort —increase certain taxes to finance the proposed pack-age of tax reforms and still generate positive results.

The Commission’s plan is ambitious yet feasible.The recommendations are phased in over a 10-yearperiod, so the City can have time to adjust and theeconomic benefits of tax reduction can be realized.With fiscal discipline and skill in gaining supportand resources from all levels of government, theCity can adopt the reformed tax structure we recommend without reducing the services thatPhiladelphia residents want and need.

The Commission is asking Philadelphia’s citizensand public officials to have the courage and theforesight to recognize what we ourselves have con-cluded after 10 months of intensive discussion andresearch: tax reform is a prerequisite to the sustainedeconomic development that we all hope to achieve.The primary message of this report, and theresearch on which our recommendations are based,is that in the long run everyone wins from taxreform.20


MYTH — Philadelphia can’t afford tax reform.

REALITY — The City of Philadelphia canafford meaningful tax reform; it cannot affordcontinued loss of jobs and residents.

We have consistently shown the ability to find room in the city budget to fund new initiatives. We foundfunding for stadium finance and neighborhoodtransformation. Now we must make tax reform apriority. It may not be easy to reform the city’s taxstructure, but it is a necessary step if the city is toenjoy a bright future. Maintaining the status quo is a recipe for continued long-term decline. In itsreport, Tax Policy, Job Growth & NeighborhoodTransformation, the Central Philadelphia Develop-ment Corporation concluded, “If Philadelphia triesto avoid the daunting challenge of restoring com-petitiveness we will continue to erode the job basethat is the foundation for neighborhood stabilityand municipal services.”

Philadelphia City Controller Jonathan Saideldeclared, “Many wonder if the city can afford taxreform. It is clear we can’t afford not to do it . . . I can firmly assert that the Tax Reform Commis-sion’s proposals are fiscally responsible.” (Councilof the City of Philadelphia Public Hearing beforethe Committee of the Whole, Wednesday, February 25, 2004.)

Joseph Vignola, Executive Director of thePennsylvania Intergovernmental CooperationAuthority — the city’s state-appointed fiscal

oversight board — said, “The strength of theCommission’s report is that it makes consideredattempts to implement these changes while allow-ing for the current projected growth in the City’sFive-Year Plan . . . the Tax Reform Commission’sreport offers a program for responding to futurerevenue shortfalls.” (Council of the City ofPhiladelphia Public Hearing before the Committeeof the Whole, Wednesday, February 25, 2004.)

Philadelphia’s burdensome tax structure drivesemployers and residents from the city, forcing thoseleft behind to shoulder the burden for the cost ofgovernment. Through implementation of incre-mental tax cuts and changes, the city can graduallyadjust the budget and react to changing economicconditions. The Tax Reform Commission wascharged with making fiscally responsible recom-mendations and worked to make sure that its rec-ommendations will not compromise delivery ofcity services. The Commission’s analysis shows thattax reform will create tens of thousands of jobs andhundreds of millions of dollars of investment incommunities across Philadelphia. This growthshould make tax reform “pay for itself.” Any short-term fiscal gaps could be filled through budgetarydiscipline or the addition of new revenue streams.

By enacting the recommendations of the TaxReform Commission to eliminate the BusinessPrivilege Tax, reduce the Wage Tax, and reform theReal Estate Tax, we can create a bright future forPhiladelphia — truly, we can’t afford not to.

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MYTHS AND REALITIES ABOUT TAX REFORM

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MYTH — Tax reform will force the city to cut critical services.

REALITY — Philadelphia can reform its taxstructure without jeopardizing the quality of city services — in fact, we are already reducing taxes and improving services. Foryears now, the city has been slowly reducing its taxes while dramatically expanding servicesto neighborhoods across the city.

In arguing for tax cuts, former Chief of Staff toMayor Rendell David L. Cohen testified beforeCity Council that, “It’s not double-talk. You canstabilize staffing levels and even reduce staffing levels and you can deliver a higher quantity andhigher quality of service to the public of the City of Philadelphia.” (Council of the City ofPhiladelphia Public Hearing before the select committee on Fiscal Stability & IntergovernmentalCooperation, Tuesday, January 31, 1995.)

Supporting the call for tax cuts, then-Council-President-now-Mayor John F. Street declared, “I think that we can have that kind of discussionthat we will be able to get more comfortable withthe idea that services are at a level where we cannow begin to turn the clock back on some of thesetaxes. It almost goes without saying that nothingwould be better for us, assuming the service levelquestions get answered, than to be able to say it’sgoing to cost less to be a resident — either a resident or a business resident of the City andCounty of Philadelphia.” (Council of the City of Philadelphia Public Hearing before the selectcommittee on Fiscal Stability & IntergovernmentalCooperation, Tuesday, January 31, 1995.)

In its report, Tax Policy, Job Growth & Neighbor-hood Transformation, the Central PhiladelphiaDevelopment Corporation concluded, “IfPhiladelphia tries to avoid the daunting challengeof restoring competitiveness we will continue toerode the job base that is the foundation for neigh-borhood stability and municipal services.”

By enacting the recommendations of the TaxReform Commission to eliminate the BusinessPrivilege Tax, reduce the Wage Tax, and reform the Real Estate Tax, we can expand the tax baseand improve service delivery.

MYTH — Tax reform will not help create jobs and stop the city’s population loss.

REALITY — It is possible to pile reports upfrom the ground to the top of William Penn’shat to demonstrate that city taxes chase jobsand residents out of the city; reducing taxeswill help attract and retain jobs.

Tax reform is about jobs. If Philadelphia becomesa less expensive place to operate a business, existingjobs will be saved and new jobs will be created.The Tax Reform Commission estimates that itsrecommendations will create more than 47,000new jobs in Philadelphia by 2010. By increasingjob opportunities in the city, we can encouragepeople to relocate to and remain in neighborhoodsacross the city. Like most localities, Philadelphia’seconomic fortunes generally depend on the healthof the national economy. In the past, however,other places did better than Philadelphia whentimes were good and less bad when times were notso good. According to the City of Philadelphia’sFive-Year Plan, the gap between Philadelphiaemployment growth and U.S. employment growthhas been cut by nearly 60 percent since the citybegan to slowly reduce its burdensome taxes.

Wharton School Professor and member of theMayor's Council of Economic Advisors, Robert P. Inman has demonstrated how damaging taxeshave been for the city. Inman concluded thatPhiladelphia’s high Wage Tax was responsible forthe loss of nearly 100,000 city jobs in recentdecades.

When the city has raised taxes to try to meet growing needs in the past, it chased jobs and residents out of the city. But cutting taxes does not have to threaten city services. In its 2001 Tax Structure Analysis Report, the City Controller’sOffice showed that after the city began to cut itstaxes in 1996, Philadelphia finally experiencedsome job growth and actually increased its tax revenues substantially. It may not be easy to reformthe city’s tax structure, but it is a necessary step ifthe city is to enjoy a bright future. Maintainingthe status quo is simply a recipe for continuedlong-term decline.

By enacting the recommendations of the TaxReform Commission to eliminate the BusinessPrivilege Tax, reduce the Wage Tax, and reform theReal Estate Tax, we can create jobs in Philadelphiaand attract and retain neighbors in communitiesacross Philadelphia.

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MYTH — The best strategy to attract andretain employers is to give targeted tax breaks.

REALITY — Tax reform should not be all for some and none for all. We should not try to pick winners. Instead, we should extend thebenefit of reduced taxes for all residents andemployers.

In recent years, the city has fostered specific eco-nomic activity by directly subsidizing certain firmsor by creating targeted assistance programs for cer-tain businesses. But Philadelphia is a large market-place with thousands of employers and hundreds ofthousands of jobs. Bringing a single firm with 1,000new jobs into the city is just a drop in the bucketwhen compared to the tens of thousands of jobs thatcould be created if all Philadelphia employers addone or two new employees.

Instead of trying to pick winners, the city shouldavoid allegations of favoritism, stay away from theembarrassment of projects that receive governmentassistance and then fail, and steer clear of programsthat reduce taxes for certain taxpayers at the expenseof maintaining high taxes for all remaining taxpay-ers. If targeted tax reform is good for individualemployers, then overall tax reform for all should begood for all residents and employers.

By enacting the recommendations of the TaxReform Commission to eliminate the BusinessPrivilege Tax, reduce the Wage Tax, and reform theReal Estate Tax, we can attract and retain jobs andneighbors and create a sustainable future forPhiladelphia.

MYTH — Tax reform will only help CenterCity and will do nothing for neighborhoods.

REALITY — Tax reform will create jobs and encourage investment in all communitiesacross Philadelphia. Tax reform will benefit all Philadelphians.

When jobs and neighbors leave Philadelphia, cityneighborhoods decline. In its report, Tax Policy, Job Growth & Neighborhood Transformation, theCentral Philadelphia Development Corporationdeclared, "Tax reduction and neighborhood revital-ization are not polar opposites, but rather two sidesof the same coin. Increased business competitivenessis a prerequisite for neighborhood transformation.”

Tax reform will increase property values for cityhomeowners and generate assets that can be used to improve homes and neighborhoods. For mostmiddle-class families, a home is their most signifi-cant investment and their most significant asset.Philadelphia residential property values actually rank below lackluster cities like Newark, NewHaven, and Hartford. Tax reform will substantiallyincrease property value in Philadelphia.

Every year, the city population drops by thousandsof people. This loss leaves neighborhoods across the city diminished and leaves scars of abandonmentacross the city. Tax reform will create job opportuni-ties that will help attract and retain neighbors. TheCentral Philadelphia Development Corporation estimates that 44 percent of Center City officeworkers live in Philadelphia neighborhoods.

By enacting the recommendations of the TaxReform Commission to eliminate the BusinessPrivilege Tax, reduce the Wage Tax, and reform the Real Estate Tax, we can create jobs andgenerate investment in city neighborhoods and spread neighborhood transformationthroughout the city.

Philadelphia Forward is an organization formed to educate about measures to transform Philadelphia intoa vibrant city that is a preferred place to live, work andvisit. Its primary focus is to educate and inform citizensand businesses about tax reform in Philadelphia. Formore information about Philadelphia Forward or tocontribute, please visit www.philadelphiaforward.org.

Philadelphia Forward1700 Market Street, Suite 3130

Philadelphia, PA 19103215.563.3881 (phone)

215.563.1566 (fax)

The Metropolis Plan CHOICES FOR THE CHICAGO REGION

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Chicago Metropolis 2020

The Chicago metropolis is leading the way in developing a regional identity and collaboration. This article describes the blueprintfor the region developed by community leaders and offers lessons to Philadelphia’s metro on how to build a vision for a region.


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The Metropolis Vision

The Metropolis Plan is a vision for the kind of place our region could be in 2030. It is rooted inthe wisdom of the participants in our CommunityLeaders Workshops. Over a period of four months,we held a series of workshops around the region inwhich we solicited input from many of the peoplewho know and care about the future of our region:mayors, business leaders, members of the clergy,environmental experts, transportation planners, and other community leaders.

We unrolled maps at these workshops and asked the participants the question at the core of how our region will grow and develop: We are expecting1.6 million new residents by 2030; where shouldthey all go?

These leaders made choices that reinforced the prin-ciples developed in the original Chicago Metropolis2020 report: redevelop existing urban centers andabandoned areas; encourage growth in the ChicagoLoop; protect open spaces; provide greater choices inhousing and transportation.

These choices were evaluated and refined using our land use and transportation computer models.Thus, we could test the growth and developmentideas proposed by these community leaders anddetermine how they would affect outcomes that

people in the region care about: traffic congestion,time spent commuting, air quality, transit ridership, economic opportunity. We were able to see a different future.

The Metropolis Plan calls for the following kinds of investments and policy changes:

• Invest in strong “regional cities”— places suchas Elgin, Joliet, and Aurora — that are animportant part of the multi-centered regionthat we have become. Similarly, a strong Chicagodowntown is essential to our region’s future. By developing strong centers in each major area of our region, we can provide a better mix ofhousing, jobs, and services in these areas. In turn, these strong regional cities would provide an urban lifestyle outside of Chicago, create stronglocal transit hubs, and reduce the need for someworkers to travel long distances between work and home. Similarly, The Metropolis Plan calls for reinvesting in neighborhoods that have seendecades of neglect, such as Chicago’s South Sideand the south suburbs. These areas have solidinfrastructure, good access to transportation, andplenty of vacant land. Overall some 40 percent of new households under The Metropolis Planwould live in homes built on redeveloped land or infill — thereby reducing pressure on environ-mentally sensitive areas that might otherwise fallprey to development.

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• Remove distortions to the housing market,such as overly restrictive local zoning ordi-nances, that artificially limit housing choicesfor residents of the region. The Metropolis Planincorporates a broader mix of housing types ineach part of the region, allowing the market torespond better to the demand for moderatelypriced housing near job centers. This would havethree profoundly beneficial effects. First, it wouldprovide opportunities for more residents of theregion to find affordable housing near their jobs.Second, it would help to decrease traffic conges-tion for all residents of the region by decreasingthe number of commuters making long tripsbetween work and home. Third, it would dramat-ically reduce air pollution, which is a function ofhow much time we spend in our cars every day.Indeed, coordinating land use policy and trans-portation investments in a way that allows work-ers to live closer to their jobs is one of the mostsignificant environmental improvements that wecan make.

• Make better use of our existing rail infrastruc-ture. One of the region’s richest resources is ourremarkable rail system, which includes 380 railstations. One of the clear messages from our community workshops was that these rail stationsshould be focal points for future development.They have the potential to be anchors for retailand housing development. They should also bepart of a seamless transit system in which passen-gers can move easily from bus to commuter train

to subway. Under The Metropolis Plan, a third ofall new housing would be built within a half mileof a passenger rail station.

• Invest in transit modernization to make publictransportation — and buses in particular —more attractive. The evidence is clear fromaround the country that building more and biggerhighways alone is not an effective strategy fordealing with traffic congestion. A better strategy isto encourage more use of public transit — andthe best way to encourage more use of publictransit is to make it more convenient and attrac-tive. Among other transit investments, TheMetropolis Plan calls for the development of anew Bus Rapid Transit (BRT) system that wouldconnect our regional cities and serve all six coun-ties in the region. Bus Rapid Transit offers manyof the attractive features of rail transit, such asdedicated lanes to avoid road congestion and sta-tions with raised platforms to allow level boardingand off-bus fare collection. Thus, BRT is morecomfortable and efficient than traditional bus ser-vice but far more cost effective than light rail.

• Help communities build more walkable neigh-borhoods and business districts. One of thenear universal themes to emerge from our work-shops is the desire for communities that are morehospitable to pedestrians and bicyclists. This isnot merely an aesthetic consideration; it is a matter of public health. Some two thirds ofAmericans are now obese or overweight. One


recognized way to improve our health and lifeexpectancy is to walk a mere 20 minutes a day,which would happen naturally if we were to livein more walkable neighborhoods and business districts.

• Reinforce the use of expressways for long trips(for which they were originally intended), theuse of arterial streets for shorter trips, and thesmart design of communities and subdivisionsto promote the flow of traffic. There is a scienceto managing traffic, and all too often we haveignored it. The Metropolis Plan would establish a system of boulevards and parkways to facilitateshorter trips by auto. This kind of arterial gridnaturally diffuses congestion and allows cars tomove more freely at lower speeds, providing

convenient access to the most possible locations.Meanwhile, The Metropolis Plan calls for the useof “value pricing” on the region’s expressways.Under this system, tolls would be highest at hoursof peak travel and lowest during off-peak times,spreading the traffic burden more evenly through-out the day. The plan also call for local “connec-tivity” standards to increase the linkages amongstreets, reduce the reliance on congested arterials,and improve the traffic flow through and withincommunities.

• Restore and protect our region’s prairiereserves, woodlands, and wetlands. One riskassociated with regional growth is the destructionof open space. While the six-county populationgrew by 11 percent between 1990 and 2000, the

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amount of land consumed by residential develop-ment grew by 21 percent. The Metropolis Planwould spare some 300 square miles from develop-ment. As a result, more than two thirds of newhouseholds would be within walking distance of apark or open space. The Metropolis Plan also dra-matically reduces the number of acres of impervi-ous surface, which improves water quality andreduces flooding.

Conclusion

The Metropolis Plan delivers what residents of theChicago region want: protected open space; walka-ble communities; investment in our existing urbanarea; economic opportunity for people for allincome groups, and less of what we don’t want: traffic, congestion, pollution, and sprawl.

We can build a more attractive region — and onethat is productive and economically competitive.When Daniel Burnham prepared his 1909 Plan of

Chicago, he recognized that the region’s vitalitygrew from its attractiveness as a center of commerceand industry. Our economy has evolved since then,but one fundamental challenge hasn’t changed at all: We must be able to move people and goods efficiently.

The Metropolis Plan is not just about buildingmore attractive communities and saving open space;it is about making the next 100 years as good forbusiness in the Chicago region as the last 100 yearshave been. And it is about making sure that everyperson and community in the region has opportuni-ty to share in that prosperity. A region that is betterdesigned for its residents will also have a strongereconomy.

Chicago Metropolis 2020 is a nonprofit organization creat-ed by the Commercial Club of Chicago in 1999 to advocatefor better regional planning and smart investments to pro-mote the region’s long term health. This article is excerpt-ed from a longer report released in 2003 and is printedhere with Chicago Metropolis 2020’s permission. For moreinformation, visit www.chicagometropolis2020.org.

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Carolyn AdamsTemple University

David BarteltTemple University

Eugenie L. Birch University of Pennsylvania

Theodore CroneFederal Reserve Bank of Philadelphia

David EleshTemple University

Hal FichandlerCity of Philadelphia

William FultonChester County Planning Commission

Nancy A. GoldenbergCentral Philadelphia Development Corporation

Maureen GreeneU.S. Bureau of Labor Statistics, Philadelphia

Joseph GyourkoThe Wharton School, University of Pennsylvania

Theodore HershbergUniversity of Pennsylvania

Mark A. HughesUniversity of Pennsylvania

Robert P. InmanThe Wharton School, University of Pennsylvania

Brett H. MandelPhiladelphia Forward

Dale MitchellDelaware Valley Grantmakers

Leo Molinaro Molinaro & Associates

Stephen P. MullinEconsult Corporation

Joel L. NaroffNaroff Economic Advisors, Inc.

Richard SteinKlios, Inc. — High Performance Consulting

Michael M. Stokes Montgomery County Planning Commission

Joseph P. TierneyUniversity of Pennsylvania

Richard VoithEconsult Corporation

Jeremiah White, Jr. Osirus Group

GREATER PHILADELPHIA REGIONAL REVIEW

ADVISORY BOARD

The Greater Philadelphia Regional Review is a product of the Pennsylvania Economy League — Eastern Division. Editor in Chief, David B. Thornburgh; Rebecca Sohmer, Editor; Aileen C. Kain, Production Manager; Valley Press, Inc., Design. Photography and illustrations provided by: Getty Images,Comstock Images, Corbis Images.

The Greater Philadelphia Regional Review is generously underwritten through a grant from the William Penn Foundation.

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