Tag Archives: Indianapolis

Home Advantage

I’m not ready to move on from the subject of yesterday’s post, which was triggered by the efforts of numerous cities to lure Amazon’s second headquarters.

Let me just share two additional observations, one from a recent study reported in Governing, and one emerging from a recent argument in Indianapolis’ City-County Council.

The Governing article shared a study done by the Urban Institute.

In choosing New York and D.C., Amazon opted for two cities that have led the economic expansion since the end of the last recession in 2009, far outpacing the rest of the nation in job growth. The decision drew the ire of politicians at the state and federal levels, along with others who had called on the tech giant to place its second headquarters in a city where it could play a more transformative role in the economy.

Yet a new study from the Urban Institute suggests that landing such a large corporation isn’t actually the best way to build a local economy and spur job growth.

If give-aways massive enough to “steal” large employers–to lure them from City A to City B (in what certainly seems to be a national zero-sum game) isn’t a sound growth strategy, what is?

Instead, the report says, cities should focus on growing existing local firms, not trying to lure out-of-town companies and poaching firms from other cities. “Most job expansion and contractions come from birth and deaths of homegrown businesses or expansion or contractions of existing home-based businesses,” says Megan Randall, a research analyst with the Urban-Brookings Tax Policy Center and a co-author of the report.

According to Randall, when so-called “marquee companies” locate in a new city, they tend to displace existing businesses, especially mom-and-pop stores. Supporting and expanding homegrown enterprises has been a more successful strategy for adding job growth.

Worse, giving up tax revenues to lure a new company puts a strain on local services, particularly schools.

As New York University business professor Scott Galloway put it in an email to Barron’s on Tuesday, the tax incentives from New York amount to “an elegant transfer of funds from municipal school/fire/police districts to Amazon shareholders.”

Cutting into services and school budgets makes the local workforce less attractive in the long run, and the location less alluring, the Urban Institute report notes….

Cities would be better served, according to Randall and other economic policy analysts, by improving schools and public services, and focusing on nurturing their existing network of businesses.

When a city offers tax giveaways to lure a company, the government goes into the negotiation with a marked disadvantage because of what economists call “information asymmetry.” The city doesn’t have all the information about what the company is looking for. In some cases, a company may choose a city it would have moved to anyway, pocketing the tax incentives even though they weren’t a deciding factor.

“Firms are in a advantageous position,” Randall says. “They know cities want to attract jobs and create opportunities for their residents. They know they are in the position to leverage a public benefit from what they have to offer.”

What the article calls “negotiation” is more often–and more accurately–described as extortion. And that brings me to a recent dispute in Indianapolis’ City-County Council.

Corteva is a company formed last year, as part of Dow Chemical’s mega-merger with DuPont. Delaware-based Corteva—which includes the local operations of Dow AgroSciences—is set to be spun off as a public company in June 2019, and it employs about 1,400 workers in Indianapolis.

The City-County Council approved 30 million dollars to “incentivize” the company to maintain operations in Indianapolis.  Most Councilors weren’t happy about it.

The incentive deal authorizes the issuance of $30 million in economic development revenue notes to Corteva from the city of Indianapolis, which would be paid back with about $5 million annually in tax increment financing funds that the city had been passing through to government units such as schools, libraries, parks, police and fire protection. Those entities would no longer receive those funds while the notes are being paid off.

The council voted 18-7 to approve the deal. Democrats Zach Adamson and Stephen Clay voted against the plan as did Republicans Jeff Coats, Danielle Coulter, Janice McHenry, Jefferson Shreve and John Wesseler.

Even council members voting yes weren’t happy.

“It’s not the best deal; I’m not excited about it,” said Democrat Jared Evans. But he said the long-term benefit of keeping the jobs in the community outweighed the short-term harm to the taxing units.

Zach Adamson characterized the incentives as “nothing short of extortion;” he was exactly right. Far too much of what passes for “economic development” is better described as bribery and/or blackmail. “What will you pay us to come?” and “What will you pay us to stay?”

These deals steal money that would otherwise be used to improve the local quality of life. And as the Urban Institute study reaffirmed, the quality of life–good schools, good parks, convenient transportation, effective public safety, etc.–is what really drives job growth and economic development.

When you rob Peter to pay Paul, you just make both of them poorer.

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Penny Wise, Pound Foolish: Zillionth Example

Today I’m delivering a brief Treatise on Government (apologies to John Locke…)in the form of a case study.

Fifty years ago, when interstates were first constructed, two were built through an Indianapolis downtown that had been largely abandoned for the suburbs–a downtown dramatically different from today’s vibrant city center. The routing decisions made at that time divided neighborhoods, exacerbated public safety problems, and delayed the ensuing commercial and residential redevelopment of our downtown.

Fifty years later, those interstates and their bridges are deteriorated and require repair. The Indiana Department of Transportation (INDOT) has proposed to make those repairs, and in the process to further widen the interstate lanes and bridges and buttress them with enormous, dystopian concrete walls.

Thanks to the need for extensive and costly repairs, Indianapolis has a once-in-a-lifetime opportunity to dramatically improve a thoroughly dysfunctional system. A thoughtful revamping could improve traffic flow and restore community connectivity and walkability; it could also spur economic development that would significantly add to the city’s tax base. (Nothing to sneeze at, given our fiscal constraints.)

It is rare that a city gets an opportunity like this. Whatever decisions are made now will be in place for at least fifty to sixty years, so you would think that careful planning would be undertaken, to ensure that any project fixes current problems and is consistent with the city’s quality of life and transportation goals.

Thus far, however, both INDOT and the Mayor’s office have seemed disinterested in engaging in such a planning process, or considering anything other than a routine, “off the shelf” (and very expensive) repair and lane widening project that will simply lock the current problems into place.

In response to that disinterest, a group of planners, architects, landscape architects and residents who have made significant investments in the city center have come together to propose two potential alternatives to the currently proposed approach, and are urging INDOT to analyze and consider those alternatives.

Both alternatives would free up considerable acreage for commercial development that would add to the city’s tax base, while the plan currently being considered would substantially reduce the assessed value of a large number of properties, as well as the desirability of significant portions of downtown’s residential and historic neighborhoods. The alternatives would also mitigate noise and air pollution, which are a problem currently and which would be worsened by the addition of lanes.

When the current interstate routes were chosen, Indianapolis had no historic districts; today, those interstates disrupt five such districts. In our city, as elsewhere,  historic district designations have generated an enormous amount of investment. Property values have continued to rise due to the attractiveness, walkability and residential character of those districts.

We would be crazy not to protect these municipal assets.

Fifty years ago, mistakes were made. Indianapolis has a rare opportunity to correct those mistakes. It remains to be seen whether our city and state governments are willing to listen to the hundreds of residents and businesses that will be affected by the decisions being made–whether they will be responsive both to their citizens and to the data, and flexible enough to adjust a business-as-usual approach when the data indicates it will exacerbate those initial mistakes.

Why is this my “case study”?

I post a lot about national policies on this blog, and obviously, I think those policies are important. But decisions like those in my case study are where the rubber meets the road, as the saying goes. Everyday decisions, made by government agency employees and implemented by elected officials–Mayors and Governors–are enormously consequential for our day-to-day lives.

Providing disruptive and/or dysfunctional infrastructure, starving public schools of resources, failing to provide adequate public safety and other public services–all these things diminish our property values and degrade our quality of life. They’re important.

Hell, they’re critical.

Ultimately, that’s what governing is all about. It’s not glamorous.  It’s not about pomp and circumstance. It’s about the day-to-day grunt work necessary to provide a federal, state or local socio- political infrastructure that enhances the lives of citizens. I know Donald Trump doesn’t understand that, but most of the rest of us do.

Whether our state and local elected leadership recognizes the importance of these issues is an open question. When we know the answer, I’ll share it.


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John Sweezy, R.I.P.

Last Tuesday, I got a text from an old friend telling me that John Sweezy had died.

The name John Sweezy won’t be a familiar one to most of the people reading this blog, but for many years, John headed the Republican Party in Marion County, Indianapolis, Indiana. John served as the Republican County Chair for twenty-eight years, and during those years, the local GOP dominated Indianapolis’ political life. Much of that political success was a result of his meticulous attention to grass-roots organization: making sure that each precinct had a committee-person who polled their neighborhoods and used the information to turn out the vote on election day.

Politicians today could learn an important lesson from that grass-roots emphasis, because those regular Republican victories under John’s management were despite the fact that registered Democrats outnumbered registered Republicans 3 to 2. (John used to say he was so grateful that “Democrats don’t vote.”)

But there was another, important reason so many people (even friends of mine who were Democrats) voted Republican. John consistently threw party support to competent, sensible candidates–people who understood municipal governance and wanted to do it well. He had nothing good to say about the then-emerging Christian Taliban, and he welcomed women and minority volunteers and candidates.

I know, because I was one of those women. I had been an active volunteer, working for Dick Lugar and Bill Hudnut, among others, when Hudnut decided to appoint me Corporation Counsel. No woman had previously held that position. John was supportive–in more ways than one. Not only did he approve of Bill’s choice to place a relatively young (33) woman at the head of the city’s legal department, he did something that now, in the wake of serial scandals, seems prescient: in a private conversation, he identified the men I should avoid being alone with! Later, when I ran for Congress, he was incredibly supportive.

I still remember a number of John’s favorite sayings. My own favorite was his mantra–and firm belief– that “Good government is good politics.”

He used to say that every citizen should be required to work for government for two years, and prohibited from staying in government for more than four. It was his way of acknowledging the problems government faces when citizens are ignorant of the operation of their government and the issues involved in managing a city or state–and the sclerosis that sets in when too many people have been in office too long. (John had trained as a mechanical engineer, and had served a stint as Indianapolis’ Director of Public Works, so his attitude was informed by experience.)

Later, when the GOP stopped being the party I had worked for, the party of people like John Sweezy, I became a Democrat, and only rarely saw or spoke to John. It was my loss. (Once, after he read a particularly snarky column I’d written, John called me to say he disagreed with my point, but that he still “appreciated” me. We made vague plans to have lunch “soon,” but somehow that never happened. My fault for letting the minutiae of everyday life interfere with the importance of friendship.) Now he’s gone–and so is the party he served so well.

I miss them both. R.I.P.

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The City And The Constitution

I was asked to speak to participants in the local OASIS program about the interaction of the Constitution with municipal government, and about my experiences during the Hudnut administration. I decided to share it, both as a needed vacation from Trumpism and as a reminder that there used to be decent politicians in both parties…

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When constitutional issues arise, most of us think of the federal government, and especially the Supreme Court. But the Constitution and the Bill of Rights apply to all levels of government, and are enforced by both state and federal courts—it’s what we mean when we talk about “the law of the land.”

There are differences in jurisdiction, of course—we have a federalist system, which means that some areas of the law are left to state and local governments—but those areas have to be consistent with the national Constitution. I am constantly amazed at how many people don’t know anything about federalism—that division of authority between the federal government and state and local governments—or about Separation of Powers or other basic aspects of America’s legal structure.

I really encountered this lack of “civic literacy” when I was at the ACLU. The ACLU defends the Bill of Rights, which is essentially a list of things that government can’t do. The Bill of Rights answers the question: who decides? Who decides what prayer you say, what political beliefs you hold, what books you read? In the United States, citizens get to make those sorts of decisions for ourselves, free of government interference.

Since the Bill of Rights only limits what government can do, the ACLU only sues government. Not only did I discover that a lot of people don’t know that the Bill of Rights only restrains government, I also discovered that a lot of people don’t know what government is.

Originally, the Bill of Rights applied only to the federal government. It wasn’t until passage of the 14th Amendment that states were required to extend the “privileges and immunities” of citizenship to their own residents. After the 14th Amendment was ratified, there was a series of decisions in which the Supreme Court ruled that the Bill of Rights also  limited the authority of state and local government officials.

Evidently, a lot of people haven’t encountered the 14th Amendment: When I was Corporation Counsel, I issued an opinion that the 1st Amendment prohibited the City from doing something—I no longer recall what—and someone wrote an angry letter to the editor that began, “I read the First Amendment, and it says Congress shall make no law…” That’s an excellent example of why just reading the text of the Constitution—especially the text of only one amendment—won’t give you the whole story.

Speaking of stories…I was asked to share some of the highlights—and low points—of my three- year stint as Corporation Counsel (chief lawyer) of the City of Indianapolis, with a focus on how the Constitution and Bill of Rights affect municipal governments.

I was appointed Corporation Counsel by Mayor Bill Hudnut in 1977. To the best of my knowledge, I was the first woman to hold that position in a major metropolitan area, and my first encounter with a constitutional issue was a lesson in both sexism and freedom of the press: Indianapolis still had two newspapers then, and the evening News featured a “Gossip” box on the front page. When my appointment was announced, the Gossip box “item” was something along the lines of: a high-ranking official has appointed his most recent honey to an important position in City Hall. No names, but it wasn’t hard to figure out who they were talking about. (After all, as one newspaper had described me, I was a “divorcee.” We don’t hear that word much these days, fortunately…sounds pretty racy.)

On my second day on the job, I got a call from the U.S. Justice Department. At the time, the City was being sued for a history of race and gender discrimination in the police and fire departments; we ultimately entered into a consent decree, because Mayor Hudnut recognized that history and wanted to correct it. But the suit had just been filed a few months before the call from the Justice Department lawyer. He asked for Dave Frick, my predecessor, who had become Deputy Mayor. Dave’s Secretary explained that he was no longer Corporation Counsel and asked him if he would like to be transferred to the new Corporation Counsel. He said yes—and I picked up the phone and said “May I help you?” He said, “Yes, I’m holding for the new Corporation Counsel.” This was 1977, and there weren’t many women lawyers then; he clearly thought he was talking to a secretary. After a pause, I said “This is the new Corporation Counsel.” He was suitably embarrassed. (On the other hand, he was really easy to deal with after that.)

Within my first couple of months on the job, I confronted a pretty classic First Amendment Religious Liberty issue. (The First Amendment has two religion clauses: the Establishment Clause and the Free Exercise Clause; together, they mandate governmental neutrality in matters of religion). For many years, the City had erected a Nativity scene on Monument Circle at Christmas. Monument Circle was—and is—publicly owned. Erecting a religious display on government property is a violation of the Establishment Clause; it is an endorsement of religion—in this case, the Christian religion. The jurisprudence was very clear, and when the City was threatened with a lawsuit, I advised Hudnut that we would lose such a suit if it were to be brought.

Unlike so many of today’s politicians, Hudnut did not use the conflict as an excuse to grandstand. He could have made points with people who didn’t understand the Constitution by “defending” the display; instead, he used the incident as an opportunity to educate. We sold the nativity scene to the Episcopal Church across the street and they displayed it, still on the Circle, where it was equally prominent and totally Constitutional.

Mayor Hudnut—who had been a Presbyterian Minister before he was elected—took all kinds of heat for “attacking Christianity.”

I think this incident was the first time I realized that some people want their religious symbols on public property because they want government to endorse their particular beliefs. It didn’t matter to these folks that the nativity scene was still on the Circle, still easily viewed: they wanted the City to send a message that their beliefs were favored, that their religion made them “real Americans,” and that people who hold different beliefs should be considered second-class citizens. That message, of course, is precisely what the Establishment Clause forbids.

One of the things that the City’s legal department does is advise committees of the City-County Council when legal questions arise. I still vividly remember being asked to testify about a proposed ordinance to ban Rock concerts from City parks. A local Reverend had persuaded his City-County Counselor to introduce the ordinance, which as I recall was pretty explicit about the reason, which was to protect Indianapolis’ citizens from immoral lyrics. It wasn’t concerns about traffic or noise or other issues that are entirely appropriate for City government to consider.

This minister had brought a busload of his church members with him to this particular committee meeting, and they sat in the public hearing room waving small American flags. It was surreal.

I testified that the ordinance as written would violate the First Amendment’s Free Speech Clause. Freedom of speech requires government to be what lawyers call “content neutral:” government can restrict the time, place and manner of communications, to a degree, but it can’t pick and choose what messages get exchanged. I explained to the Committee (and the audience) that there were a number of things the City could constitutionally control—traffic, noise, sanitation—but that the Constitution would not allow censorship of certain kinds of music based upon disapproval of the messages being conveyed by the lyrics.

When I completed my testimony and turned to leave, the Pastor rose from his seat and yelled at me, “My bible is more important than your Constitution.” (I thought it was interesting that the bible was his and the Constitution was mine…)

Most of the Constitutional issues I dealt with at the City were (fortunately) a lot less “exciting” than that encounter. For example, during my three years in City Hall, City Legal defended a number of what lawyers call Section 1983 cases. Section 1983 is a provision of federal law that allows people to recover attorney’s fees if they win a lawsuit alleging that someone acting on behalf of City government violated their constitutional rights. It’s a very important safeguard, because many—probably most—people whose rights have been violated can’t afford a lawyer. If lawyers know that they will be paid by the city if they are successful, in other words, if they can prove that the City really did violate their clients’ rights, they are more likely to take meritorious cases—and more likely to decline sure losers.

As I noted previously, Mayor Bill, as we called him, was a minister, and sometimes his minister side pressured his Mayor side. For example, he really wanted to close down bookstores that sold sexually explicit books and magazines, and periodically he would suggest some creative—but constitutionally dubious—ways of doing that. I like to think I kept him constitutionally compliant while I was there, but after I left, the City passed a truly bizarre ordinance that tried to sidestep the Free Speech provisions of the First Amendment by defining “pornography” as sex discrimination.

The District Court, the Seventh Circuit and the Supreme Court all saw through that strategy.

The most depressing thing I learned at the city and in my subsequent positions at ACLU and as a Professor of Law and Policy is how little people know about even the most basic provisions of America’s founding documents, our law and history. Some of you may have seen the story from this year’s 4th of July, when NPR tweeted out the Declaration of Independence, and got hundreds of angry emails from people who thought it was an attack on the President, or “communist propaganda.”

I don’t want to belabor this lack of civic literacy, but I do want to share some statistics that should concern all of us. A few years ago, the Oklahoma Council of Public Affairs asked high school seniors in that state some simple questions about government. Let me share a few of those questions and the percentages of students who answered them correctly:

What is the supreme law of the land? 28%

What do we call the first ten amendments to the Constitution? 26%

What are the two parts of the U.S. Congress? 27%

Who wrote the Declaration of Independence? 14%

What are the two major political parties in the United States? 43%

We elect a U.S. senator for how many years? 11%

Who was the first President of the United States? 23%

Only 36 percent of Americans can name the three branches of government. Fewer than half of 12th graders can describe federalism. Only 35% can identify “We the People” as the first three words of the Constitution. Only five percent of high school seniors can identify or explain checks on presidential power.

America is the most diverse country on earth. What we have in common—what makes us Americans—is allegiance to a particular concept of law, a particular approach to self-government. When we don’t know what that approach is, or why our Founders crafted the system we have, we lose what holds us together, what makes us one nation.

To borrow a phrase from the Tweeter-in-Chief: that’s sad.

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A Hoosier Cautionary Tale

First Kansas. Now Indiana. One by one, the pillars of conservative fundamentalism are failing real-world tests.

Under then-Governor Pence, Indiana negotiated a much-ballyhood 35-year “public-private partnership” with the Spanish firm Insolux Corsan to build and maintain a portion of Interstate 69, between Bloomington and Indianapolis. The project has dragged on and on, making trips between Bloomington and Indianapolis slow and treacherous. (I know this from personal experience; faculty of IU routinely make the trip between campuses, and I’ve done my share of cursing while in transit.)

The original contract called for a completion date of October, 2016; that date has been pushed back four times amid media reports suggesting that the state’s private partner was as slow in paying subcontractors as it was in building the highway. Now, it appears the contractor is going bankrupt. The Indianapolis Star reports that the state “intends to take control of the troubled I-69 project from Bloomington to Martinsville as the public-private partnership used to finance and build the highway crumbles.”

It is a GOP article of faith that the private sector is always more efficient and more competent than government, and that contracting out–privatization–saves money. In the uncongenial place called the real world, it seldom works out that way. The collapse–or “crumbling”–of this particular partnership joins a long line of failed privatization schemes, some scandalous and corrupt, many simply ineffective and expensive, that have ended up costing taxpayers more than if government had done the job.

This isn’t to say that contracting out is always a bad idea. As I’ve said repeatedly, the issue isn’t whether to work with the private sector, but when and how. Public officials need to carefully evaluate proposed contracting arrangements: is this something government routinely does, or an unusual task requiring specialized expertise that the agency doesn’t have? If the motive is saving money, how realistic is that? (After all, private entities have to pay taxes, and their bids will reflect that expense.) Does the contracting agency have the expertise needed to properly negotiate the contract and monitor the contractor? Have all the risks been weighed, and due diligence exercised?

Do the officials making the decision recognize that contracting with a third party won’t relieve the government agency of its ultimate responsibility to see that the project is properly completed or the service is properly rendered?

Are there situations where public-private partnerships are both appropriate and competently structured? Of course. The Brookings Institution recently reported on the success of the Copenhagen City and Port Development Corporation in revitalizing Copenhagen’s waterfront. I was particularly struck by this description of that effort:

The approach deploys an innovative institutional vehicle—a publicly owned, privately run corporation—to achieve the high-level management and value appreciation of assets more commonly found in the private sector while retaining development profits for public use.(emphasis mine)

Two elements of this particular partnership stand out: (1) it was formed to execute a lengthy, difficult and highly complex project requiring skills that few municipal governments have in-house; and (2) it distributed risk and reward in a way that ensured taxpayers would benefit financially from the project’s success.

In contrast, virtually every American contract I’ve seen has socialized the risk and privatized the reward; that is, taxpayers have assumed the risks of cost overruns, unanticipated problems and project failures, while the private contractors have reaped the lions’ share of the profits.(Trump’s infrastructure plan–to the extent it exists–would take that formula to new heights. Or lows…)

I69 and the Indianapolis parking meter fiasco are just two of the more recent examples of what happens when privatization is a mantra–a semi-religious belief–rather than one of several strategically deployed tools in the public toolbox.

Personal P.S. Thanks to all of you who posted good wishes for my husband’s surgery. All went well, and he’s home (with a very rakish temporary eye patch).

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