- [Narrator] Production and distribution of City Club forums on Ideastream are made possible by the generous support of PNC and the United Black Fund of Greater Cleveland Incorporated.

(upbeat music) - Hello and welcome to the City Club of Cleveland where we are devoted to conversations of consequence that help democracy thrive.

I'm Dan Moulthrop, chief executive here and a proud member.

Welcome to 2021, today is January 8th, this is our first Friday forum of the new year.

And we are once again live from the studios of our public media partner, 90.3 WCPN ideastream, big thanks to them.

It has been an unsettling week to be sure.

And while we want to acknowledge the unprecedented destruction at our nation's capitol that all of us witnessed this week, there are many news organizations providing analysis and coverage.

And we will no doubt, take a look at the longer-term implications of all of this in the coming months.

But today we turn our attention to some of the most enduring challenges our nation faces, and has faced for some time, the state of our Legacy Cities.

Many of us noted a piece published by the New York Times last weekend and reported from Cleveland's Slavic Village neighborhood.

The headline was a bit of an attention grabber, "Gunfire and crashing cars: In struggling neighborhoods, 'we're losing our grip,': A year of hardship in parts of Cleveland has left many with a sense that the fabric of their communities was fraying."

The piece received mixed responses locally, you might be able to summarize those responses by simply saying it was an accurate article, but not terribly helpful.

Nonetheless, it pointed to the urgency of the issues and challenges facing Legacy Cities.

Cities like Cleveland, Ohio St. Louis, Missouri, Milwaukee, Wisconsin, Flint, Michigan to name a few.

And these are places plagued by generational poverty, population loss, systemic racism and sluggish economic development over decades.

So, the question before us today is this, what solutions to these challenge might actually start with better land use policy?

After all land is where we live and where we work, where we interact with one another, the land we live on can determine our quality of life.

And this is where the Lincoln Institute of Land Policy focuses its attention.

The Lincoln Institute, whose origin story begins right here in Cleveland in 1946, they research and recommend creative approaches to land as solutions to economic, social and environmental challenges.

Their cities, their Legacy Cities initiative, support civic leaders, policy makers and others working to build more equitable, sustainable and prosperous Legacy Cities.

The Lincoln Institute celebrates its 75th anniversary this year.

And today's the first in a series of programs we're presenting with them.

It's gonna unfold over the coming year looking at the challenges facing Legacy Cities and the solutions we can bring to challenges.

And today we're talking with Lincoln Institute President and CEO, Dr. George McCarthy, he goes by "Mac" McCarthy, as well as Chantel Rush.

She's Managing Director of the American Cities Program for the Kresge Foundation.

Ms.

Rush's work focuses, advances the foundation's efforts to catalyze more effective community and economic development practice that expands opportunities for people with low incomes in American cities.

So together, we're gonna talk about the opportunities for Legacy Cities to prosper and thrive through more inclusive economic development.

If you have questions for our speakers, please text them two (330) 541-5794, that's (330) 541-5794.

Or if you're on Twitter, you can tweet them @TheCityClub.

And we'll work them into the program.

"Mac" McCarthy of the Lincoln Institute For Land Policy, Chantel Rush of the Kresge Foundation, welcome to the City Club of Cleveland.

- [McCarthy] Well, thanks for having us.

- It is great to see you both.

"Mac" McCarthy, I want to start with you.

And just just using the Slavic Village article just kind of a starting place, these issues of poverty, of a fraying social fabric, when you read a story like that, do you see the roots of those problems in land use policy?

- [McCarthy] Well, I see the roots of those problems in a in a variety of policy failures, but certainly land use policy is one of the major culprits.

The need to find ways to more effectively use and manage land, has been kind of vacant and abandoned for long periods of time.

It's been a challenge for cities all over the country, but it's a particularly vaccine challenge for Legacy Cities, where our institutions and systems for finding ways to effectively kind of re-imagine the use of land has been hampered by old institutions.

Where basically, private property laws and old kind of policies like zoning and other land use policies that require a different kind of activity and imagination that we've had to draw on for decades.

But let's be real, it's not just land use policy that's the culprit here, but it's basically the abandonment of cities like Cleveland and many, many others by the state and national governments and their willingness to stand by and watch them go into long-term decline and not really intervene for generations.

What's going on in in Slavic Village, is just now the culmination of decades and decades of whatever ignoring, problems had been mounting and trying to leave it to local governments, or even hyper-local governments like neighborhoods as if they're able to solve the problems that they face.

- There's a point that you make that was really, I think it echoes something that Chris Alvarado said on Twitter.

Chris is the Head of the the economic development, or the community development corporation rather, of Slavic Village.

And he said the same thing, if you don't invest, if the state and federal governments are not providing the assistance, then they're relying on really underfunded organizations like the church that's mentioned in the article.

Chantel Rush, those problems plaguing our neighborhoods here in Cleveland, this is not unique to Cleveland at all.

- [Chantel] No, it's not unique to Cleveland in any way.

And as Mac said, we see this throughout the country in cities, some of which are Legacy Cities, that historically were the heartbeat of American industrialism and other places throughout the country that were once very strong communities where people were living, working, worshiping and now are plagued by situations where it's frankly un-American kind of the conditions in which people are living their day to day.

And I think how land use is a part of it certainly, because we have to think about for every American in every city across the country, do they have access to safe quality, affordable housing?

Once they walk out of their front door, is there public space that's usable for kids and people in the neighborhood?

What are the commercial quarters look like?

Do they actually create jobs?

Do they provide opportunities for small-business people?

Those are the questions that are really important for us to answer if we wanna build the kind of country that we all envision for our future.

- Chantel Rush runs the American Cities Program for the Kresge Foundation.

And Chantel, I wonder if you could just describe that program briefly for us.

- [Chantel] Sure.

So, we focus on expanding opportunity for people with low income.

And we look at the ways of doing that through both community and economic development.

And so, we think a lot about in neighborhoods, what are the institutions, whether that's a government, private non-profit, that need to be in place to build stronger neighborhoods.

We try to invest in those institutions.

And we try to think through how we improve quality of life for people, and how people who live in neighborhoods that have historically been disinvested and get to have a say, and get to benefit from the change in their communities.

- And "Mac" McCarthy, I want to ask you to kind of pick up where the Lincoln Institute and its Legacy Cities work kind of overlaps with the work of Kresge Foundation and then also extends it.

- [McCarthy] Sure, so, we work alongside Kresge and with Kresge in a lot of the same places, but we've recently launched this Legacy Cities Initiative which is really focused on building a national network of community and government leaders that can help to work together to create kind of more prosperous futures for these Legacy Cities.

And basically, it's predicated on the idea, that we need to find creative ways to overcome the collective action problem by convening leaders and stakeholders, scholars and others to facilitate the exchange of ideas, launch new research, advanced new policy approaches.

And it has really four simple goals and they're pretty obvious, right?

It's creating strong local economies, building strong human capital support.

So, like workforce development pathways, building healthy green and stable neighborhoods and establishing sustainable, fiscally sustainable healthy local governments.

And so, we focus mostly right now on smaller Legacy Cities, not the iconic Legacy Cities like Cleveland or Detroit, but cities that are really between say 25,000 and 250,000 in population.

And we've now recruited our first class of four cities that are part of that network.

And that's Akron, Ohio, Dearborn, Michigan, Toledo, Ohio, and Trenton, New Jersey.

And each one of those has proposed an initiative that they're gonna use locally to try to really rebuild and revitalize their local economies based on a specific approach to what they're gonna do.

So, for example, in Akron, they're going to support black-owned small businesses to build stronger ties between the businesses in the cities.

Or in Dearborn, they wanna strengthen the relationship between the city and the Arab-American business owners, particularly those in the South side of the city.

And in Toledo, they wanna create a community vision around racial equity and focus on this junction Inglewood neighborhood, where they wanna find a way to kind of revitalize that neighborhood.

And in Trenton, they're really trying to build a new community-led planning effort to rebuild East Trenton.

But the idea of all of this, is that these cities aren't working in a vacuum, they're not working alone, and with our help and the help of other cities, we're gonna help them mobilize kind of policy responses that go beyond the scope of the individual cities, but we'll engage the States, the federal government and really build kind a self-supporting network of problem solvers around the country.

- These four cities and the projects they're engaged in, they sound like they're highly targeted, they're not trying to solve every problem.

- [McCarthy] Well, that's usually kind of one of the biggest problems for those of us living in Legacy Cities because everybody has a vision of a golden past, and then they see they wanna recreate all the elements that were part of the golden past of that city.

And if you do everything at once, you're likely to not to accomplish much at all, right?

And so, we really have to start and build on strength, right?

We build on success, we understand, we try new things, we learn from things, we do additional things.

And we know that this is not, this is a long haul challenge, it's not something you solve overnight.

- Do they have are there specific measurements that the, and metrics either for for both of you, this question, that those cities are looking at, or ought to be looking at?

George Mac, why don't we start with you?

- [McCarthy] Well, sure.

Well obviously the specific human capital issues that everybody is looking at, is unemployment rates, poverty rates and kind of the quality of the delivery of services to those populations.

And then the basic fiscal issues, like whether or not the city is able to marshal the resources they need to make the investments and to deliver the services that will make the cities attractive to new populations.

Because the long-run solution, is to find ways to turn around the population loss that defines all these places.

And once again, this probably comes later, but there are lots of land-use metrics that one would like to look at.

So, for example, the length of time it takes to effectively reuse a vacant abandoned land, the ability to acquire and clear title and then assemble and reuse of vacant land for effective community purposes.

These are the kinds of things that in the end, we know will be the solution for these places.

Because with the right kind of land use, you can actually invest in the right way to make the jobs, to make the opportunities that will improve the quality of life for all the residents.

- Chantel Rush, what I'm thinking about, what Mac just said, the clearing title on land, that's very sort of mundane kind of bureaucratic spade work that needs to be done in order to repurpose land.

When land sits idle, vacant, that's part of that fraying fabric of a community.

- [Chantel] Yes, exactly.

And when you bring up the metrics that are needed, and what people need to look at vacancy, is one of those things.

And it's challenging, because as Mac says, there's a million metrics or measurements you could be looking at in any community, you could be looking at small business starts, workforce development, real estate development, education, health human services provision, but you have to start somewhere.

And what we find, is that if you target in on one problem or initiative, and you try to apply collaborative approaches to problem solving to that problem, that builds a muscle that a community can then take and actually transfer and apply to other problems down the road.

- Chantel Rush runs the American Cities Program for the Kresge Foundation.

George "Mac" McCarthy is President and CEO of the Lincoln Institute for Land Policy.

If you have questions for either of them about Legacy Cities, about solutions, about how land use and land use policy factors into the future of cities and solutions to the challenges we face, you can text those questions to (330) 541-5794, that's (330) 541-5794.

If you're on Twitter, you can tweet it @TheCityClub and we will work it into the program.

Chantel Rush, there's a mayoral race that very much in its early phase right now here in the City of Cleveland.

But related to that too, cities all over the country are sort of beginning to think about how they come out of this pandemic, and what they do differently, and what they should be planning for.

But I wanna ask you the really specific question about the Cleveland mayor's race, what do you think ought to be on the agenda for the mayoral candidates in Cleveland?

And I asked that of you thinking, what is actually working in other cities that mayoral candidates here ought to be thinking about?

- [Chantel] Yeah, so, at the Kresge Foundation, we are a private philanthropic foundation, we primarily invest their grants and social investments, and we invest in cities throughout the country about 213.

And what we're seeing today, is that mayors have really important choices to make in terms of how they direct capital, and how they allocate the city government's resources.

In some cities and communities, mayors are still choosing to land just public subsidy and just public dollars equally throughout cities and every neighborhood trying to tackle every problem at once.

What we're seeing in some Legacy Cities that's starting to work in places like Detroit, is the idea that you can actually blend private philanthropic capital with public subsidy, and try to apply that in strategic and targeted ways to transform neighborhoods.

Example of that, is actually in Detroit right now with the Mayor Strategic Neighborhood Fund.

Mayor Duggan has raised $172 million for the Strategic Neighborhood Fund in philanthropic capital and public subsidy.

And it is currently being targeted at 10 neighborhoods throughout the city of Detroit.

They're taking on challenges like street scapes, walkability, local business, affordable housing.

So, this idea of, now, let's just take money and give everybody $2, let's actually think about how we can make more capital available, and then do it and apply it in a targeted way to communities to try to really transform, create better quality of life, and then take what's learned from those communities to more communities in the city over time.

- This public-private partnership is not a new idea, in Cleveland, it's part of the story in Cleveland, right?

With the mayoral tenure of George Voinovich in particular.

"Mac" McCarthy, what do you think ought to be on the agenda for the mayoral candidates?

- So, one thing that I think really needs to be examined, is the kind of the quality of the public systems for kind of getting the work done.

And back in the days when I was on the Detroit beat for the Ford foundation, one of the things that we were really distressed to see, was the length of time it took to really process simple things like certificates of occupancy, or building permits, or even to chase down code violations.

And we did a kind of a system analysis and we looked and it was astounding to see that once somebody had completed the process of reassembling like a commercial space to be a restaurant, it was taking them 110 days to get her certificate of occupancy to go back into business.

And that was just completely unacceptable.

And so, with Kresge, we actually invested in placing process people into the local government to figure out what was wrong with that process and why it was taking so long.

And they were able to chase down the series of places where like a COO was waiting for a signature of somebody like the Fire Marshall.

And then find process improvements that could actually streamline the local government processes to make it possible for people to actually get things done without dying of frustration just waiting for the city to move.

The other thing is on the land use side, really finding innovative ways to begin to use all the land that's in the dominion of the Cuyahoga County Land Bank and repurpose it to assemble large tracks of land to be able to re-imagine its use and make the kinds of investments that will attract new businesses, will be available for higher quality housing for some of the substandard housing you could replace.

And part of that's being done.

So, for example, I was told that in central, they're talking about creating a community land trust with land that they're able to get donated by the the land bank.

And the community land trust is a source of permanently affordable housing that is managed on behalf of and by the community, right?

So, that's a really good kind of long-term solution.

And those kinds of home-bread solutions are things that would be very useful for our mayor to think about.

And the last thing, and this is something else which is a legacy from Detroit, we were really distressed during the days before Detroit went into bankruptcy to see that routinely, Detroit was leaving up to $100,000,000 a year of public subsidy, a formula money from the federal government on the table, because they didn't have the civic capacity to use it.

And what we tried to break down the problem like what was going on, we realized that it was the devolution even within the local government have responsibility for managing relations with state and national governments on grant money.

And they just couldn't comply.

And they were getting dinged so many times for compliance problems that they had stopped asking for some of that money, we're talking about community development block grants, other kind of fiscal transfers that are based on population size, not on competition, right?

And in Detroit with the investment once again, of Kresge and the (indistinct) Foundation, we built a centralized grants management office that help the city to manage all grants centrally, and then make sure that they didn't run into any compliance problems.

And within four years, they were using all their available funds.

Which was really important because $100,000,00 is big for a city like Detroit that had at the time, about $1,000,000,000 annual budget, right?

So, I don't know whether Cleveland is making full use of all of its available funds from state or national sources, it's probably worth examining.

But once again, building that local capacity is a huge challenge and it's something that needs to be done.

And the public sector capacity is a necessary element to deliver the quality of life and the goods and services that make Cleveland or any other city a desirable location for others to live in, right?

- So, two of those three things are basic, just doing the work of city government a little better.

- [McCarthy] Yes, yeah.

- Yeah.

And the third thing, is really just sort of maximizing the county land bank, which I think most of our listeners are familiar with, but they may not realize that when you talk with other communities about the things that they can do, Cuyahoga County's land bank is one of the examples that you often use - [McCarthy] Cuyahoga County has at the County level, probably to my knowledge, the best land bank in the country.

Detroit has a city-based land bank, it's also pretty good, but Cuyahoga County is one of the oldest, and it's based on one of the most solid kind of land bank authorities that was written at the state level in the country.

It's been a model for places all over the country.

And frankly, it's been able to do, I would really shriek to kind of imagine what Cleveland would look like without the ability of that land bank to get in there and take control of abandoned and vacant property and begin to find ways to effectively manage it.

And now, this is something that can be just put on steroids and accelerated.

And at a time when there's going to be lots of climate refugees looking for places to go, Cleveland looks like an awfully attractive place with lots of fresh water and a pretty good climate, right?

- It's not terrible, it's not terrible.

Some people don't like the winter, but that's because they're wearing the wrong clothes I suspect.

Chantel Rush, the next mayor of Cleveland will face an era of diminished revenues because of the realities around employment and unemployment levels in the city of Cleveland, and income taxes revenues are just dropping.

Should they be thinking about austerity, or should they be thinking about investment?

- [Chantel] Well, absolutely investment.

When a city is undergoing a situation where there is population loss in certain neighborhoods, or in a community as a whole, there's really no choice, but to try to increase quality of life.

Both to try to keep your current residents, but also to attract new ones.

And not just residents and citizens, but businesses, all of the different kinds of institutions that are necessary for a place to thrive.

I think that's one of the counterintuitive parts of city building that cities are really starting to understand.

I do a lot of work in Memphis, Tennessee.

And Memphis is a place that has been losing population over the years.

And rather than kind of step back and try to move into austerity, the city's doing some really daring things like investing in its riverfront, investing in neighborhoods and it's making the city of greater place to live for existing residents, and it's also making the city more attractive for people.

And that's important to increase the tax base and to kind of get the revenues flowing that could actually move the city back into the black.

- So, in other words, you can't cut your way to prosperity.

- [Chantel] Not in my opinion.

And I think one thing that people also miss, is that part of your tool to prosperity is definitely capital.

There's no way around it, it takes money and it takes investment.

But I think sometimes people forget too, that a lot of the things that academics study all the time of it, how you rebuild cities, there's money and there's investment needed, but some of the things that are needed are also kind of cheap.

You find time and time again, the Boston federal reserve did a study looking at what made cities turn around, and what cities did not turn around in new England.

And what they found, was that actually it was about collaboration, it was about cities having a plan, a shared goal, a leadership that actually wanted to go after those plans and after those shared goals.

So, certainly you have to invest, but you also need planning and you need collaboration about how to do that effectively.

Just throwing money at the problem is not gonna solve it, it has to be strategic, it has to be collaborative, it has to follow a plan, it has to involve community members.

And if you can invest and you can do it in that way, it can make a huge difference for a city.

- Chantel Rush is the Managing Director of the American Cities Project, American Cities Initiative, pardon me, at the Kresge Foundation.

And "Mac" McCarthy, as we finish out this first part of our City Club Forum today of the City Club Friday Forum, I wonder if you could just briefly tell the Lincoln Land Institute story, like how an idea born in Cleveland 75 years ago, became what it is today.

- [McCarthy] Sure.

So, it's important to remember that at the turn of the 20th century, Cleveland was the Silicon Valley of its day.

And one of the inventors that was sitting in Cleveland and building kind of the elements of the industrial revolution, was a guy named John C. Lincoln, who was really just a procure inventor who held more than 50 different patents.

And he was building things like high torque, electric motors and powerful electric brakes that made streetcars possible at the turn of the 20th century.

He also was an inventor of electric arc welding machinery that was of course a very big element in building things like the Intercontinental Railroad, right?

But so, John Lincoln, who was a contemporary of Tom Johnson, the mayor of Cleveland at the time, fell into the company of Henry George, who was a progressive barnstorming kind of a progressive, some people call him an economist.

I call him kind of a political economist, who had been running around the country talking about the tragedy of the industrial revolution building such opulent amounts of wealth and the persistence of urban poverty, and trying to address why that was.

And Henry George concluded that it was a land policy problem that we were distributing the benefits of economic growth in the wrong way.

And that idle land owners were getting gigantic windfall.

So, they did nothing to earn while the productive elements of society labor and capitalists were being taxed to actually pay for the society that he proposed that we actually kind of make things fairer by kind of taxing away the unearned increment of a land value appreciation, and use it to eradicate poverty and to fund the public sector.

And so, John C. Lincoln liked the idea, and later on, he founded the Lincoln Foundation, which later became the Lincoln Institute of Land Policy, predicated on the idea that he wanted to spread new economic thinking about how we can use things like land policy as a way to address larger societal issues like persistent poverty or other things now that didn't exist at his time, like the climate crisis.

And we've been doing it for 75 years, and we're happy to still have the Lincoln Electric Company which was founded by John C. Lincoln at home in Euclid, Ohio, right?

So, it's right there in Cleveland doing well, it's got a global footprint now, and it's been diversified and successful.

And using an interesting kind of model for sharing the benefits of its own success, with its own employees that for a long time.

So, it's all a good story, Cleveland's our origin, and we love Cleveland.

- Yes, we do.

Your story and those early ideas about from Henry George about the best use or how you deal with idle land, reminds me of the surface parking lot problem that plagues downtown Cleveland, and I'll just leave it there.

(laughing) But we are talking with Mac McCarthy, he CEO and President of the Lincoln Institute of Land Policy.

It's their 75th anniversary.

And this is the first in a series of programs that we're in a year long partnership with with the Lincoln Institute.

Chantel Rush is with us as well, she's the Managing Director of the American Cities Initiative at the Kresge Foundation.

I've got a number of questions have come in already, if you'd like to add yours to the list, we welcome that, Just text it to (330) 541-5794, that's (330) 541-5794.

You can tweet it @TheCityClub and we'll work it into the program.

You're listening to the City Club Friday Forum, by the way, and I'm Dan Moulthrop.

So, let's jump into to the questions.

It's a really brief one for you both, but not unrelated to what I just said about surface parking lots.

The panelist comments on public transit would be appreciated, Chantel Rush, starting with you.

It's a very wide open question.

- [Chantel] Ah, thoughts on public transit, that's a dangerous query.

Public transit is absolutely essential to creating a city where people are connected to jobs and neighborhoods.

It benefits folks who live in a city who don't have cars, who don't have access to cars that benefits people who have a car, but really want to get around in a more environmental and economical way.

It's great for businesses, it allows workers to get around more easily, it allows clients of retailers and customers to get around more easily.

Our position, is that public transit is very necessary and that it's important that there's a public transit system that connects parts of the city that have historically maybe been disinvested in and disconnected to key job corridors and to downtown.

- Mac McCarthy, this is a very technical question that I hope you can explain the verbiage in here before you answer it.

It's about taxation levels, research shows split rate taxation leads to drastically less sprawl, expanding economic opportunity and decreasing financial liabilities.

Why aren't Legacy Cities shifting to split rate, or lane value taxation instead of traditional property taxes?

I have no idea what this refers to.

- [McCarthy] So, this is predicated on the idea that if you tax the value of land at a higher rate than the value of the improvements, the buildings on the land, then you will motivate people to make the best use of the land, right?

And so, the idea is this, that if you leave land idle, and the value of the land goes up, and the cost of leaving idle continues to go up over time, eventually you'll be the motivated to sell the land to someone who's gonna use it, or you're gonna end up paying more and more and more, right?

And so, and the idea, is that you want to motivate people to make the improvements.

And if you tax the improvements at the same rate as you tax the land, then you created kind of a disincentive for folks to actually build nice buildings, or even densify and increase the development on land that's highly productive and in good locations.

So, the idea of the split rate tax, is that you really tax land the land value at a high multiple of the improvements.

And right now, we're actually working with folks in the city of Detroit to look at whether or not a split rate tax would work for Detroit and helped to accelerate the reuse of vacant and abandoned property.

Because the idea that lots of people, and this has certainly happened in Cleveland as well, after the housing crisis of 2009, 2010, lots of people were buying up land on speculation on the internet.

Properties that they're sitting on and possibly paying taxes or not paying taxes on hoping that they'll increase in value and just sitting on them.

And they're just adding blight and other kinds of problems to the neighborhoods.

There's nothing right now that it that is preventing people from just waiting for the cities to recover.

And so, you wanna find a way to accelerate the process through which they kind of move the the land into good use.

And by the way, for people living in Legacy Cities, it's useful to take a quick look at history and understand that in the 1970s, the cities that were really in trouble, weren't Cleveland and Detroit, there were Boston and New York and Seattle and San Francisco, right?

And so, a city in trouble, isn't always a city in trouble.

And one of the cities that has made the best use of kind of a vacant property tax, and now it wasn't really a split rate property tax in the same way, was Washington DC, where if you leave your land vacant and unused, your property tax goes up incrementally over the years up to I think, 5%.

And so, there's a gigantic disincentive in Washington DC to leave land idle.

And if you've been to Washington over the last couple of decades, you notice there's not a lot of idle vacant land in Washington anymore, right?

- Chantel Rush Mac's story there, is specifically about Washington DC, reminds me that property tax abatements have been used as economic development tools throughout Legacy Cities.

And in particular in Cleveland, many of them are about to expire.

They've also been used in other cities to address racial inequities.

And as policy to undo or to respond to the impacts of historic redlining.

And I wonder if you could just talk a little bit more about property taxes as policy.

- [Chantel] Property taxes are like any tax, they hit different people in different groups.

And so, as we think about advancing equity and advancing equality, we have to think about how those taxes can be collected in a way that's most equitable.

We see examples in cities around the country of property tax abatements that benefit residents, who've lived in a community over periods of time, senior citizens, different economically disadvantaged groups.

And it's one way to ensure that people, it's economically more easy for them to do better and to be able to move forward in a way and be more prosperous.

So, it is just one tool in a lot of toolkits.

And I think the big thing to think about here and the lesson from that just as anytime you're making any policy, it's necessary to think about who's been disadvantaged in the past, and how do we actually make that policy in a way that can benefit groups that have historically not benefited from advantages.

And that's just one example, you can apply that to 1,000,000 different kinds of policies and 1,000,000 different kinds of fees, taxes, levies, and it's just a really consistent muscle that government needs to consistently exercise.

(indistinct) - [McCarthy] So, there's one thing about property tax abatement and getting property tax rates right, and there's another thing about getting the valuation of properties right.

And one of the things that we've seen, and this is showing up empirically in many, many places, there's a racial bias to a property valuation that really really needs to be addressed.

And we need to do a much better job of getting a property values accurately assessed, because the folks that actually take advantage of challenges to their property valuation, tend to be people who have access to other resources like lawyers and people who can make the claims for them.

And very often, the valuation of property is owned by African-Americans haven't even been looked at for decades.

And we've seen it was played out really, really dramatically in the study that I looked at in Washington, DC, but all over the country, we've seen racial bias in property valuation that hasn't really been addressed.

And getting valuations right, is probably as important if not more important, than adjusting the tax rates, because it's the basis of fairness for taxing people according to their real value.

One of the things we learned in Detroit, was if we got the valuations right, Detroit went through a real crisis before the bankruptcy where almost 70% of Detroiters were not paying their property tax.

Because as the the valuation of their property went down, they couldn't afford to pay it, and the rates kept going up.

And the valuations hadn't been reassessed for years and years and years, and the valuations were just horribly inequitably distributed.

And so, the city went through, did revaluation actually reduce property rates and they improve their tax collection markedly in just a three-year period.

- Just by making the whole thing more fair.

- [McCarthy] More fair, right?

- There's a really weird set of incentives there that kind of run against each other when it comes to property valuation, because you sort of, as a homeowner, landowner, or property owner, real estate owner, you want your investment to increase in value.

And yet as a consumer say, or a taxpayer, you wanna reduce your tax exposure by having a lower value to your asset.

So, it's a little bit of a confusing thing.

Chantel, I want to return to the kind of racial equity filter that you mentioned earlier.

And ask, how you would apply that to opportunity zones?

- [Chantel] Oh, that's an interesting and good question.

The opportunity zones are fundamentally a problematic piece of legislation because there's not a lot of transparency on what the investments are and who's making them.

And on top of that, you have a situation where it doesn't matter what the investment is in a community, it still benefits from the tax treatment.

So, you could build something that is not something a community wants, or needs, or something that improves the quality of life in that community, and still get a benefit from that.

So, what people are starting to think about in communities around the country, is how do we incentivize the opportunity zone tax, the credit to be used in a way that actually benefits communities?

And part of that is actually about communities and cities organizing and being clear about what kinds of development that they want in their communities, and using other tools like zoning and subsidy to incentivize that opportunity zones receive good investment as opposed to investment that is detrimental to the community.

And it's hard to do, it's hard to influence, these are large investment firms, funds, reeds other structures that are coming into a community and they're not always plugged in to the to the city and to its constituencies.

And they kind of often lack of out a values bias.

So, the question really is, how communities organize themselves upfront to make it clear what kind of investment they do and don't want that improves equity, and then use other tools to try to incentivize that tool to be used most effectively.

But it's very hard to do.

And the legislation itself doesn't actually favor that kind of organization.

- Mac McCarthy, earlier you talked about the things that cities can do, the sort of delivery of basic services, compliance with grant programs for state and federal grants.

On the other side though, what state and federal policy do you think would be most beneficial to cities that either is being done and should be done more, or isn't being done at all and ought to be done?

- [McCarthy] Well, so, at the state level, it would be really, really useful for state governments to provide easy access to low cost funds, debt in this case, for cities.

And one of the problems with a lot of the Legacy Cities, is that their credit ratings have gotten very bad over time.

Whether you've gone bankrupt, or you've been insolvent, or you're barely solvent, the rating then makes the cost of capital really expensive.

But in places like Massachusetts, they have a thing called an interceptor fund that will allow a city like New Bedford uses, for example, to use the state's credit rating for the issuance of bonds.

So, they can get bonds at the best rate possible.

And then the state guarantees the bonds, and if the city doesn't pay off the bonds, if they do default in the bonds.

then the city interrupts the flow of other state transfers to pay off the bonds on behalf of the lenders.

So, that's one thing on the state level.

Now, on the national level, it's just really high time that we confronted the problem that we have nationally, that we have never had an urban or an industrial policy that is meaningful for this country.

And that's allowed us to stand by and watch not just cities, but whole regions of the country go to see it and act as if the market is the last judge of what a place needs to be and how well a place should do.

And it's not true that every place in the world has suffered in the way we've suffered by allowing that kind of whatever, lack of care for our places, and I'll just give you an example.

With the decline of the auto industry in the 70s and 80s, we saw Detroit go down the tubes, we saw (indistinct) go down the tubes, but we didn't see Bavaria go down the tubes.

And Bavaria, the German government, the industrialists, the trade unions and the local governments, all got together they said, what's it gonna take for us to maintain our elite status in export markets for manufactured goods, not just cars, but lots of manufactured goods coming out of Bavaria?

And what they did was, they the national governments industrial policy, using their ability to influence trade, concessions from labor, the right kinds of concessions from employers, they're able to work together to say, we're gonna do what it takes to keep us thriving and alive.

And BMW has not been struggling for the last 50 years, right?

Like Ford, or Chrysler, or Chevy going into bankruptcy themselves at least a couple of times in that same period.

So, I don't know why it is that we don't kind of just bite the bullet in this country and say, we need to think about what it's gonna take to work together to make sure that areas that are in decline don't continue in decline and make the right investments.

And not allow our own industries to just jump off shore when they find that it's too expensive or too difficult to even maintain their own physical plans and decide it's easier to set up shop in other countries in the world, right?

So, but we've never done that, 'cause we've never been willing to kind of accept the fact that the market itself is not the best arbiter of what goes on for local or local populations or national populations for that matter.

- Another question.

And it's sort of surprising this term hasn't come up, Chantel Rush, but how can gentrification be re-imagined to avoid displacement?

- [Chantel] Well, gentrification means a lot of different things to a lot of people today, it's a really heated term.

I think what we have to think about, is as I think the question asker alludes, is gentrification without displacement.

You can have a community become safer, have more businesses, have richer public spaces, but it matters how that's done.

And one thing that needs to happen, is that it needs to be, people need to think upfront as neighborhoods are changing, about how they're gonna ensure existing residents get to benefit from that change.

It's very hard when you don't own the land, or own the property to dictate how change happens.

But there are ways that city governments can incentivize development that is more affordable.

There are ways that existing land bank properties can be redeveloped in a way that is actually beneficial to existing residents, so that they're offered to existing residents first, and/or that they are required to be affordable, is another option.

I think there's also, people don't pay enough attention to the social component and the power component of change in communities.

So, one piece is keeping, ensuring that people continue to be able to live there, but one piece is, what's the character of the new businesses that are opening up?

What's the character of the new public spaces?

What's the character of the changes that are occurring?

And how is it that people aren't psychologically displaced from their own neighborhoods?

So, they might be able to stay there, but they can't afford to shop at the store, the neighborhood, the corridors don't feel like there's anymore.

And there's a lot of community planning that can be done, so that the businesses that are subsidized, the commercial corridor work that's done, the public space work that's done, is actually things that existing residents first and foremost actually want in neighborhoods.

So, as things change, it's changing in a way that it's on the terms of the residents who live there.

So, you've got to avoid psychological displacement, you've got to ensure that people can continue to live.

And then the last thing I want to touch on, is power.

So, who sits on the neighborhood board?

Who gets to be on the committees that the city is actually creating to government change?

Who's still in power?

Because you can live in a place, and not have access to power and access to decision-making.

So, there's gotta be a lot of really targeted thinking about how to ensure that people who've lived in these communities for a long time, get to remain in power and get to have a say.

- And this reminds me what, the way you're describing it also reminds me of the work of the National Initiative for mixed income communities out of case, Western Reserve University and the Mark Joseph Leads.

And that he often says that so much of it is about the programming, like what you're doing to bring people together to create the community itself, because it's not just buildings it's people.

- [Chantel] Yeah.

- [McCarthy] Oh, go ahead, go ahead (indistinct) - [Chantel] I was just gonna say, there's a great example, I'm actually in Seattle of a community in Chinatown that's come together, and they've said, when change is going to happen, we were in Seattle, it's a wealthy community, change is gonna happen, this neighborhood's gonna gentrify, but we want it to be on our terms.

And so, they've gone through lots of efforts to figure out what would place keeping for the community look like.

And you go there and you can see that everything from the programming to the parks, to even the real estate development that's being done reflects the desires of the long-term residents of that community, and it's a great case to study if your interest in this.

- The Wing Luke Museum in Seattle is part of that.

The founder spoke at the City Club a couple of years ago.

Mac McCarthy, you were jumping in.

- [McCarthy] Yeah, so, I was gonna say there's a couple of tools that are really affective bulwarks against displacement, because gentrification in general it's not a bad, the bad thing if it means rising land values a better quality of services, all that, but one is the community land trust, right?

Because what it does, is it conveys property into community control, and then decisions about what gets done on that land is made by the community.

And that includes commercial investment as well as housing that's made permanently affordable.

And then the other thing is property tax circuit breakers, which are a little bit different in abetments, which are saying that we are gonna make sure that if folks who live in these areas, especially homeowners live in the areas, don't get priced out by the appreciation of their properties, right?

And these circuit breakers can take a couple of forms.

One is that you fix people's property tax rates, and then you accumulate the unpaid property tax rates till they decide to sell a property way down the line, and just carry it as a lien against the property.

Or you just identify certain populations that you're gonna say, we're going to give you this property tax break based on length of tenure, age, income levels, whatever they are, to make sure that by changing kind of the economics of the community, you don't also change the demographics by definition, right?

- Different kind of question right here.

Healthcare is a key economic driver in greater Cleveland, how can Cleveland's healthcare systems work as partners for economic inclusion and development more effectively?

Any advice?

(laughing) - [McCarthy] Well, Cleveland's healthcare providers have been doing some of this.

Let's not act as if they haven't done anything, but one of the most successful things that we've seen in multiple cities, including places like Chicago and Detroit, are the employer assisted housing programs where you make it possible for your employees to live close to where they work by providing them financial incentives to do so, right?

They live downtown and live Midtown efforts in Detroit, really, I think we they pulled together many millions of dollars that were given to both homeowners and renters to allow them to actually live within walking distance, or biking distance of the hospitals which are large employers and anchored in Midtown Detroit, similarly in other places.

So, that's one thing.

The other thing is obviously to find ways to soften their campuses, to make them kind of more integrated into the local community, so that they're not their own little citadels that are locked off in the community, but are actually there for the community to participate in a joy, right?

So, the open spaces, the broader spaces and they're not surrounded by these as surface parking lots and don't get me started at surface parking lots.

But the idea is that we we wanna find ways to make them more integrated into the community in multiple ways and not just like the Cleveland clinic, a global resource that is kind of then locked away from the rest of the community, right?

- All of this is the largest employer in the state of Ohio.

So, that's generating a huge amount of income tax for the city of Cleveland, Chantel.

- [McCarthy] They're making big investment in university circle and building housing, yeah.

- And if I'm not mistaken, I think all the things that you've talked about, are actually there are programs in there that is all happening in two different degrees in the city of Cleveland, Chantel.

- [Chantel] Yeah, I would just add, hospitals and hospital systems are real estate developers.

They usually own a huge amount of land.

And as is as is the case in Cleveland.

And so, the question is, what filter do they bring to that real estate development?

And how are they approaching that real estate development?

And are they doing some of the things that we've been discussing during this meeting?

One of my colleagues on our health program at the Kresge Foundation also spends a lot of time thinking about the treasuries that hospitals have, and health systems have.

They actually have a fair amount of capital on their balance sheet.

And how are they using that capital to actually invest in better and stronger communities?

One thing that I think also is often overlooked, is what is the health of residents in the city?

And how can community health programs actually support?

It's one of the big ironies, I would say in most of the cities that I work in, that there are these huge hospital systems, huge health systems, and yet you have people in zip codes really nearby that are suffering with huge, huge rates of asthma, diabetes, different issues.

So, the question is, how are those resources being put to use to actually improve the health of nearby residents, which actually benefits the economic outcomes in the health system as well because you don't have people going to the emergency room such and so forth?

So, how are they being better health providers?

How are they being better real estate developers?

How are they using their dollars to do inclusive economic development?

- [McCarthy] So, Dan, one of the things that is important about that, is in a joint initiative of the Kresge Foundation and the Lincoln Institute, is an organization called the Center for Community Investment.

And one of the things that that CCI has learned, is that while hospitals are big landowners and not necessarily very effective developers, and so, they have to be helped to find ways to develop the property by being introduced to effective high quality property developers, they need to be introduced to others, and to be more integrated into kind of the institutional framework of the places that they live.

Because one of the things about these big institutions, is that they spend a long time sometimes at odds with their local government, as opposed to integrate it in.

And so, the idea of accelerating these investments in healthy communities, which is what the one of the initiatives is called, is part of getting these hospitals to work differently with a new set of stakeholders to get to better outcomes, right?

- That is indeed, indeed, correct.

And there is so much more to talk about, but we are out of time.

Which is why I'm so glad that we have a whole year to come back and revisit some of these things.

Chantel Rush is with the Kresge Foundation, George Mac McCarthy is with the Lincoln Institute of Land Policy celebrating their 75th anniversary this year.

Thank you both so much for being a part of our first City Club Friday Forum of 2021.

- [McCarthy] Thanks Dan.

It's great to see you again, Chantel.

- [Chantel] Thank you.

- Thank you also to members and sponsors, donors and others who support our mission to create conversations of consequences that help democracy thrive.

You can find out more about them and join them at cityclub.org/thank you.

Hope you can join us next Friday, January 15th for a conversation on workforce development with three local leaders.

We're actually going to be looking at summer jobs.

If you think back to your first summer job, you will remember just how important it was to shaping you into the worker that you became throughout your career.

Hope you'll join us for that conversation, I'm Dan Moulthrop.

We're going to get through this, I promise.

Stay strong, stay healthy.

Please wash your hands and keep your distance and wear a mask and get that vaccine if you can.

Our forum is now adjourned.

(bell ringing) - [Narrator] For information on upcoming speakers, or for podcasts of the City Club, go to cityclub.org (energetic music) Production and distribution of City Club Forums on ideastream are made possible by the generous support of PNC and the United Black Fund of Greater Cleveland Incorporated.