Endless Work on the Great Lakes

Two thoughts as the Urban Waterfronts conference comes to a close here in Portland, OR.

The first is that the waterfront revolution is a global reality and Great Lakes leaders need to get more excited about it. Around the world, from downtown Louisville, KY to Umag, Croatia, cities with lake and river frontage are wiping away waterfront factories and highways and dedicating the space to public parks, luxury condos, and modern businesses. Great Lakes leaders need to recognize the trend and get more actively involved if they intend to maintain a competitive quality of life, attract top talent, and prosper economically.

That leads to the second thought: an entire industry is organizing around waterfront redevelopmment. The firms fishing for business here at the conference offer services ranging from economic analysis and real estate market forecasting to master planning and landscape design; civil, structural, coastal, mechanical, and electrical engineering; hydrological studies; traffic studies; flood management; wetlands restoration; construction project planning and supervision. It's much more than organizing volunteers to cleanup garbage along the water's edge.

The proposed $20 billion Great Lakes restoration initiative, then, is much more than the one-dimensional environmental cleanup program civic leaders claim it is. It's a multi-dimensional public works project that could provide an endless amount of jobs for the underemployed Midwest.

The City that Works

With waterfront redevelopment plodding along at a snail's pace across the Great Lakes Basin, Portland, OR is aggressively pursuing a plan to reclaim the prime riverfront property along the Wilammette River from its industrial past. And the resolute action is paying big dividends.

The revitalization of the South Waterfront District - now underway - is the largest economic development project in Portland's history. More than $2.5 billion of investment is planned for the 140-acre former ship yards site over the course of the next decade. The project includes 2,700 residenital units, a four-acre greenway, a two-acre neighborhood park, and approx. 250,000 sq. ft. of new retail space.

The expansion of the Oregon Health and Science University campus is the project's center of gravity. When completed, university officials estimate the development will support more than 10,000 new jobs. And that doesn't include the hundreds of workers now toiling to build condos, lay streetcar track, and erect an aerial tram that will float over hills, houses, and highway to connect the waterfront with the university's impressive campus up above on Marquam Hill.

All this creativity and investment, and the Great Lakes city has barely revved up the bulldozers.

A Recipe to Attract Talent

The conventional wisdom in the Great Lakes is that young people and talented workers are running away from the region to find jobs that aren't readily available in Michigan, Ohio, and other states wallowing in an economic funk. But they might just be leaving in search of cleaner, hipper, and more convenient places to live.

I met today with Sam Adams, a city commissioner in Portland, OR. Portland continually ranks as a national leader in high-tech business, quality of life, mass transit, attracting young people, and sustainability and I'm in town to better understand how they do it.

In the nation's last recession, Commissioner Adams told me, Portland also lead the way in a less flattering measure, unemployment. Much like Detroit, Cleveland, and other Great Lakes cities today. But Portland residents didn't leave. They stayed to wait out the downturn.

"Portland is one of the top in-migration locations for 18 to 34 year olds in the country," Commissioner Adams said. "But when you meet these people on the plane, the train, the bus, and in the cafes here, a high percentage of them don’t have a job. They come here because they think it's a great place to live."

After two days of interviews with civic leaders here, it's become exceedingly clear that Portland is a people magnet because they're focused intensely on developing three basic pieces of urban infrastructure:

1. Active, interesting, and welcoming streetscapes that make folks feel comfortable walking around town.
2. Parks, public plazas, and waterfronts that draw people in.
3. Streetcars, light rail lines, bike routes, busses, and other transportation options that make the city accessible to a wide range of residents and visitors.

How many Great Lakes cities do you know where those types of amenities abound? Chicago is the first one that comes to mind. Beyond that, they're few and far between.

A Streetcar Named Revival

Just five years ago, Portland, OR was shaped much like the typical Great Lakes city. Polluted industrial property obstructed the waterfront along the Willamette River waterfront, vacant commercial property plagued the central business district, and urban living was a rough, daring choice. But the city built a streetcar system in 2001, and now its teaming with new businesses, residents, and street life.

Since identyfing the the original path of the system in 1997, Portland has added 7,248 new housing units, 4.6 million square feet of office, institutional, and retail space, and leveraged approximately $2.3 billion in spinoff private investment - all within two blocks of the streetcar route. To date, the cost of the system itself - which contines to expand due to increasing popularity - approaches $100 million. That's a helluva return on investment.

Imagine that wave of development washing down mainstreet of Pick-A-City in the Great Lakes, USA. It's entirely possible. Dayton and Columbus, OH; Kenosha, Madison, and Milwaukee, WI; Minneapolis, MN; St. Louis, MO; Champaign-Urbana and Chicago, IL; and Grand Rapids, MI all are pursuing or evaluating a major public investment in a streetcar system. A day spent in Portland raises the question: what are they waiting for?

Capital Ideas. Capitol Action?

While Congress turns its back on one $20 billion plan to help modernize the sputtering Great Lakes economy, Michigan Representative Mike Rogers intends to introduce a second, entirely separate $20 billion proposal to, well, help modernize the sputtering Great Lakes economy.

Rep. Rogers this week will present a plan to provide auto manufacturers with as much as $20 billion in federal loans to innovate, develop, and commercialize the next generation of sustainable transportation technologies for the nation and the world, according to a recent report written by Ken Thomas and published in the Detroit Free Press.

The national commitment could help speed the transformation of the Great Lakes region - the epicenter of global automotive design and engineering - from a lagging, rust-ridden rhinoceros into a forward-thinking, knowledge-driven, galloping gazelle ready to compete in the worldwide economy.

So could a separate $20 billion proposal introduced earlier this year to launch a full scale rehabilitation of the Great Lakes ecosystem. The plan seeks a federal investment to catalyze urban waterfront redevelopment and establish more inviting places to live and do business; modernize ancient sewers to keep beaches clean; and rid rivers and harbors of toxic contamination that depress adjacent property values. The public works project could also spur the development of the lucrative water tech industry.

Yet Congress has yet to give it a serious look. We'll see how Rep. Roger's plan is received in D.C.

Dirt Digging is Done

The death of the Silver Spade - a 14 million pound mining shovel with a boom 14 stories tall and a scoop that could carry 300,000 pounds of dirt in one load - is a timely reminder of the ingenious and industrious heritage of the people of the Great Lakes. The machine - one of only a few dozen ever made - was built in Milwaukee and operated on an Ohio strip mine until it died after 41 years of hard labor, according to a report in yesterday's Milwaukee Sentinel Journal.

But like the heavy layoffs of manufacturing workers, factory closings, outsourcing, and other distressing trends affecting the region, the death of the Super Stripper is yet another sign that the intense resource extracting industries that drove prosperity in the 20th century - timber, gas, etc - will not be the key to economic success in the modern era. Innovation, creativity, and talent drive job and economic growth today, just as it did 100 years ago. The people of the Great Lakes just need to rediscover the spirit and can-do attitude that built modern marvels like the Silver Spade.

Credit to the Associated Press for the mind-bending photo.

Success in Sheboygan, WI

The City of Sheboygan, WI is a card carrying member of the waterfront revolution. The South Pier of the Sheboygan Harbor for decades was cluttered with piles of coal, salt, fertilizer, and other industrial materials. The 40-acre parcel was inaccessible and impassable to residents and visitors - a barrier not only to beautiful Lake Michigan but also the city's hope to prosper.

So city officials bought the property in 2001. And in short order, public and private operators invested approximately $80 million in the cleanup and redevelopment of the pier. The reclamation plan is putting underutilized properties back on the tax rolls, establishing new businesses, and generating jobs. Now developers are interested in neighboring real estate such as the old Reiss Coal Company Building pictured above. Construction workers are busy transforming the historic building into luxury lofts and apartments beside the Sheboygan River.

"This is the biggest success story on the shores of Lake Michigan," said Sheboygan Mayor Juan Perez at a community forum today.

What's next? Residents and local leaders are organizing to clean up the chemical contamination in the harbor. The project could add as much as $108 million to local real estate values, according to researchers at the University of Illinois.

Higher Earning

Michigan's household income likely is not as far below the national average as recent media reports suggest, according to a letter written by State Demographer Kenneth Darga and published in the Detroit News. The paper recently reported that Michigan's median household income fell below the national average for the first time since the data dudes started tracking the numbers. The paper also reported that Illinois, Indiana, and Ohio fell in national rankings.

One reason why is the region's underdeveloped human capital. After working in the factory for a century, the Great Lakes worker is dramatically under-educated. And that affects earning power and wages. It's the highly educated workers experiencing income gains in the knowledge economy. But, accoding to a 2003 US Census Bureau study, about 26 percent of the population in the midwest aged 25 and older have achieved a Bachelor's degree or higher.

Clearly, making investments that speed the development of new skills and talent for the Great Lakes worker is an immediate priority if the region intends to compete in 21st century economy.

Toronto's Waterfront Revolution Gaining or Losing Energy?

With plans to revitalize Toronto's waterfront slow to gain traction, Christopher Hume writes in today's Toronto Star about the benefits and lessons learned from Stockholm's push to redevelop its once industrialized harbor.

Waterfront rehab in Stockholm, planning for which began in 1990, already has attracted 7,500 new residents, according to Hume's report. City leaders project 25,000 new residents and 10,000 new workers by 2015.

So what does Toronto need to do join the waterfront revolution? Bury the highway and railroad tracks in subterranean tunnels and reconnect the central city to the waterfront; streamline governance; and establish financial incentives to attract developers, according to the article.

Unfortunately, efforts to rescue the waterfront from its industrial past suffered a setback with the news that a gas-fired power plant will be constructed on the shore of Lake Ontario, a highly questionable use for such rare and valuable land.

Same Song Across Lake Erie

Two days after the release of an economic study suggesting that water pollution saps some $140 million from the real estate market along the Buffalo River, the New York Times published an article chronicling the numerous efforts underway to revive life along the waterfront in New York's second largest city, stem the population loss, and reverse the economic decline on the north end of Lake Erie.

"It's important to the public's confidence that we can demonstrate that we can get something done on the water," said Buffalo Mayor Byron Brown.

On the south end of Lake Erie, the Detroit Free Press published a news story saying that Congress appears unlikely to fund in 2006 a $20 billion plan to rehabilitate sewers, wetlands, and waterfronts across the Great Lakes region. The public works project could dramatically speed up waterfront revitalization efforts in cities like Buffalo. It would also spur innovation, generate jobs, enhance property values, and stregthen the overall competitiveness of the second most influential economic region in the United States.

"All Americans have someting to gain or lose in this," said Andy Buchsbaum, director of the National Wildlife Federation's Great Lakes office. "The Great Lakes can either be a drag or a boon to the national economy."

Listen All You New Yorkers

Normally, real estate gets more expensive the closer you get to the waterfront. But not in Buffalo, NY. Toxic contamination in the Buffalo River depresses property values in adjacent residential areas by as much as $140 million, according to a study released today by a group of local officials, economists, and scientists.

"If you had a home worth $100,000 two-tenths of a mile from the river, and you moved it one-tenth of a mile closer to the river, it would lose $10,000 in value. There's a hug effect from being really close to the river," said Dr. John Braden, the economist from the University of Illinois who led the study, which is based on homeowner surveys, a review of real estate sales, and GIS mapping.

The report also found that, given a clean river, prospective homebuyers would be willing to pay 15 percent more for homes in the area if pollution was cleaned up. That translates into an additional $543 million in assessed value for the properties adjacent to the river. Dr. Braden also suggested cleaning up the Buffalo River would unleash a wave of new economic development in the city.

"We measured just a very small part of what might follow cleaning up the Buffalo River," Dr. Braden said, noting that the report did not account for the far-reaching benefits related to human health, improved fishing, and increased recreational opportunities.

"It seems clear that [the polluted river] is depressing property values, especially near the river and to its south," Dr. Braden said. "It appears that reversing this 'quality of the river' effect could have appreciable affects on property values and hence on the tax base in the area. And it appears that, with a clean river, residents believe that properties could be appreciably more valuable than the conditions in the current marketplace. It looks like there's considerable upside for property owners in the vicinity of river and perhaps more broadly in the Buffalo area."

Local officials agreed.

"These academic results support what we already know," said Buffalo Mayor Byron Brown. "In every instance, a clear outcome of this activity will be improved property values," Mayor Brown added.

A related report released in 2003 confirmed similiar economic benefits related to cleaning up Waukegan Harbor in northern Illinois. And Dr. Braden et. al. will release a report on the economic value of cleaning up the Sheboygan River in WI next week.

Still, the Bush Adminstration continues to reject the call for increased federal funding to accelerate a major Great Lakes cleanup program. And the vast majority of state and federal leaders across the region continue to view Great Lakes restoration as a one-dimensional environmental issue. Not as a multi-dimensional public works project that will have far-reaching affects for the region's - and the nation's - economic competitiveness, natural bounty, and quality of life.

Envisioning a New Buffalo

The ongoing effort to reclaim the waterfront for something cool in Buffalo - rather than scrub brush and highways - continues to be hampared by sorry governance, according to Donn Esmonde's latest column in the Buffalo News. But Dr. John Braden is coming to town tomorrow. The University of Illinois scholar will announce the results of a two-year study on the economic benefit of cleaning up the Buffalo River. A similiar report conducted by Dr. Braden in Waukegan, IL found that restoring the degraded harbor there could lead to hundred of millions of dollars in gains for local property values.

"It is time we caught on to what every place from Chicago to Chattanooga knows," Donn Esmonde writes. "To develop a waterfront, you need roads, bridges and byways that lead to it. We have $30 million in our pocket for waterfront walkways, parks, roads and bridges. Build them, and people will come. Where people go, developers follow. That is when we get the marinas, office buildings and condos that inflate the city's wallet and turn a barren embarrassment into an asset."

Another 'Ah Ha' Moment

Most Great Lakes politicians and economic development officials who cut their teeth in the resource extractive era of the 20th century think the way to make money off the region's exceptional water supply is to suck it out of the ground, package it in a bottle, and sell it off at $1.50 a pop. That's why Nestle's water company is pumping from the Muskegon River in the heart of Michigan.

But the rise of the knowledge economy - where fresh ideas are the hot commodity - combined with a growing understanding of the growing global demand for clean fresh water is leading visionary thought leaders and entreprenuers to think differently.

"Publicly traded water companies are going to do very well in the years ahead, just based on demand. The key is how you play it, says Mark Zellmer, a financial manager living in New Berlin, WI. The quote comes from a recent and insightful article by Kathleen Gallagher at the Milwaukee Journal Sentinel.

"Needless to say," Zellmer adds, "the market for the water sector is huge. More than $400 billion a year in revenues."

The question for the Great Lakes region is whether it aims to tap that market by exporting bottle after bottle of potable water, or whether it intends to harness the region's entreprenurial potential and innovate the cutting edge companies focused of exporting the latest solutions to the growing global water crisis.

It's not an either/or scenario. There is a spectrum of water-based companies that can help diversify and stregthen the Great Lakes economy. The key is leveling the public policies and investment decisions to recognize the broader industry. Right now bottling is often subsidized while new high-tech startups are generally ignored.

Real Estate Worth More When Clean

Google 'Waukegan Harbor Illinois' and the first result is a Website titled 'Area of Concern.' Click on the link to learn about how the harbor suffers from beach closings, chemical contamination, and severly degraded fish and wildlife habitat. No wonder the generally gorgeous Great Lakes region is perceived as the Rust Belt.

Cleaning up the mess, a project once estimated to cost between $4 and $20 million, could add as much as $200 million in value to owner occupied residential properties in Waukegan and boost property values across Lake County, according to a recent study Dr. John Braden at the University of Illinois. That means average residential property values could increase by $21,000 to $53,000 once the harbor is free of contaminants.

The research is some of the clearest evidence to date confirming that a national investment in Great Lakes restoration is more than a one-dimensional environmental cleanup program. It's a mutli-dimensional investment that will have far reaching benefits for the region's economy, culture, and way of life.

Google 'Waukegan economy' and the third hit is a link to the Website of US Congressman Mark Steven Kirk. "No single project is more important to Waukegan's economy than the restoration of Waukegan Harbor," the congressman says.

A similiar statement could be extended to the entire Great Lakes region.

Dow Chemical Invests in Water

In an effort to boost its competitiveness in the multi-billion dollar global water business, Midland, MI-based Dow Chemical Co. has formed a new unit to "advance the science of desalination, water purification, contaminant removal, and water recycling."

Annual revenues at Dow Water Solutions will be $350 million, the company said in a prepared statement.

“Dow Water Solutions will provide a range of competitive water treatment products that allow our customers to stimulate and capture industry growth, while continuing to improve access to higher quality water supplies that are more affordable and sustainable for communities and industries worldwide,” said Andrew Liveris, Dow chairman and CEO.

Sensing Opportunity

Entreprenuers founded Sensicore with the goal of revolutionizing the water business. The company recently launched a hand held device that tests water quality for 18 different measurements such as pH level, carbon dioxide, and chlorine.

Currently, water managers conduct numerous conventional tests in the chemistry lab - and perhaps even mail samples away for furthering testing - to understand the purity of their supply. But Sensicore's new technology can reduce the necessary testing time from hours to just four minutes. This thing is like Dr. Spock's do-all tri-coder, and can dramatically mondernize the way industrial, public, and private water technicians ensure safe supplies.

The Ann Arbor-based tech firm started in 2000 with four employees. Today, the company employees 44 scientists, marketing experts, and senior staff and plans to expand its regional sales force. It's also raised some $28 million in venture capital from the East and West coast.

"We're going to be $100 million company," said CEO Malcolm Kahn.

"Sensicore is driving an information revolution in water quality monitoring," Mr. Kahn continued. Our lab-on-a-chip technology provides an entire panel of tests that help users better understand both the quality of their water and the health of their water system. It is light years ahead of the 50-year-old wet chemistry testing in use today."

Talent or Taxes?

As the majority of political hopefuls from Pennsylvania to Minnesota campaign on the idea of slashing taxes to spur the sputtering Great Lakes economy, a leading Michigan think tank says attracting top talent, not lower taxes, is the key to economic prosperity in the 21st century.

In an editorial appearing in yesterday's Detroit News, Lou Glazer, president of the Ann Arbor-based Michigan Future says that states with a higher number of college graduates (Massachusetts and Colorado, for example) tend to have higher per capita incomes than the states with the lowest business taxes (Arkansas and Alabama, for instance).

"Which group of states do we want to be like," Mr Glazer asks. "Those with low business taxes and, by and large, below the national average prosperity or those with high education attainment and high prosperity?"

The leading candidates for governor agree the region must become a magnet for top talent to compete in the global economy. Most also cater to the anti-tax crowd in their speeches and campaign websites.

But the region can't have it both ways. Attracting the talented workers requires a much more substantial and targeted public invest in key amenities like higher education, mass transit, internet access, and environmental quality.

Intersex Fish

Providing further evidence that the world needs well-funded smart people focused exclusively on advancing water treatment technology, researchers in Colorado have confirmed that fish living downstream from wastewater plants in Denver and Boulder are changing sex and experiencing other sexual deformities due to unfiltered toxins present in the 'treated' sewage. The findings are detailed in a report in today's Denver Post.

The problem is that the obsolete technology in today's treatment plants is designed to filter out a limited group of pollutants and bacterias like Typhoid Fever that plagued cities 100 years ago. Not the traces of contraceptives, human growth hormones, and other pharmaceutical substances found circulating in today's water supplies. The problem extends well beyond the western U.S., with similiar studies available for waterbodies in the Great Lakes and the East Coast.

Targeting the development of innovative firms focused on biotech and watertech - and modernizing treatment plants - presents a groundbreaking opportunity for the Great Lakes region to confront this global challenge. It also presents a much needed opportunity for the region to lure high-tech jobs, diversify the economy, and compete more successfully in the knowledge-driven economy of the 21st century.

Hidden Costs

By Mike Thompson, Detroit Free Press

Education: Key to the Future

Ten months after an anonymous donor made possible a program that provides free college tuition to any graduate of Kalamazoo Public Schools, home sales and prices in that southwestern Michigan city have jumped considerably. The average home price has increased 5 percent in the school district in the past 12 months, according to a report by Julie Mack the Kalamazoo Gazette.

Perhaps more importantly, Ms. Mack also reports that developers have announced plans to build some 500 homes in the rebounding urban area. The trend comes as home sales slump throughout the region and gives force to the idea that, given the proper incentives, homebuyers - particularly families - will not hesitate to invest in central cities.

Piling on Michigan

Just when it seemed the news could not possibly get any worse for Michigan, the U.S. Census Bureau reports that the state's median income has, for the first time, dropped below the national average. The agency also found that household earnings - a bit more than $46,000/year - are 12 percent lower than they were seven years ago.

The news, which comes amidst record unemployment, home foreclosures, energy prices, and job loss, compelled the state's leading conservative voices to publish curt editorials about the state's lacking political leadership and sense of urgency. The Detroit News called for a "Marshall Plan" to revive the state's economic crisis. While the Grand Rapids Press urged candidates in the 2006 election to focus on the bold changes "the state must make in tax policy, labor climate, education reform, utility infrastructure, government reorganiztion and regulatory burden."

The two editorials, appearing in print on the same day, are the latest indication of the consensus sweeping the Great Lakes state about the immediate need to retain and attract modern companies, retrain the workforce, and rebuild crumbling cities.

Moving the Motor City

Safe, convenient, and affordable mass transit is still years away for the Detroit metropolitan area. But a growing number of local leaders, led by Roger Penske, now understand that building rapid transit infrastructure is critical to the region's economic competitiveness in the 21st century just as building highways was one key to prosperity in the mid 20th century.

Officials now are considering five separate alternatives to link Detroit and Ann Arbor with busses, light rail, or commuter trains. A recent study found that, depending on the type of service, the project could establish 10 to 31 stations between the two cities.

The Will to Compete

Michigan's Economic Competitiveness and Public Policy, recently published by the W.E. Upjohn Insitute, isn't the first report to say that the Great Lakes state must target public investments to improve higher education and boost quality of life if it intends to remain relevant in the global economy. It's just the latest.

The Ann Arbor-based think tank Michigan Future, Inc published A New Agenda for a New Michigan in June 2006.

And Dr. James Duderstadt, the former president of the University of Michigan, published his thoughts on the matter in an October 2005 report.

What's missing is the political leadership and courage to act for change.