Monday, March 31, 2008

UWM a good fit for downtown?

A new advocacy group, UWM Downtown, has been formed to encourage the University of Wisconsin - Milwaukee to expand its proposed engineering campus in downtown Milwaukee instead of the university's favored suburban location on County grounds in neighboring Wauwatosa. The story was covered in last Wednesday's Milwaukee Journal Sentinel.

Downtown advocates cite student convenience, plenty of vacant commercial space to absorb spin-off companies, the development of a possible engineering cluster with Marquette and MSOE, and the idea that an "urban campus" would be more environmentally sustainable. UWM leadership proposes the Tosa option in large measure because of the potential research synergies that could be achieved with the nearby Medical College, Froedtert Hospital and GE Healthcare.

Both sides agree that university expansion equals economic expansion. However, new research from the W.E. Upjohn Institute for Employment Research is a bit less sanguine. The research does conclude that "if the costs of inducing an expansion in higher education or medical services is sufficiently low, an economic development strategy that targets these industrial sectors may offer net benefits." In other words, keep an eye on costs because the economic benefits of university development are real but the margins are tight.

The cost of developing the Tosa site vs. a site in downtown Milwaukee is a crucial factor that has yet to receive much scrutiny. The UWM Downtown group suggests that the following sites be considered for the new engineering campus:

  • The Brewery near Marquette and I-43 – 750,000 SF of potential space.
  • MacArthur Square in front of the County Courthouse – 750,000-1,000,000 SF of space could be made available.
  • Park East – 14 acres west of the river and 12 acres east of the river to be developed.
  • Haymarket area just north of the Park East corridor– 45 acres of vacant land or deteriorated/obsolete buildings for development.
  • Schlitz Park on the river just north of downtown – Approximately 200,000 SF of space available.
  • Central Business District – 2,200,000 SF of vacant space available.
Costing out specific redevelopment options is a critical next step in UWM Downtown's pursuit of an urban engineering campus. After all, urban redevelopment is notoriously difficult to do on the cheap, as land assembly, land clean-up and demolition costs eat into project returns and complicated deals. The burden of proof will be on UWM Downtown and its backers to prove otherwise.

This is not to say that the development of the Tosa site will be any less costly. UWM Downtown cites potential resident opposition to university expansion, tricky site development issues, infrastructure needs and access issues. On the issue of access, do we need to consider the potential cost of additional transit infrastructure (express buses, bus rapid transit, light rail) to efficiently move students between the east side and Wauwatosa?

The Tosa site does have one distinct advantage: it's already off the tax rolls. To the extent that university expansion downtown would happen on tax-rolled land is an importatnt issue for the City of Milwaukee to consider if it were to welcome any downtown university expansion. As Mayor Barrett himself points out, approximately one-third of the city's tax base is currently tax-exempt. This has, no doubt, limited the city's ability to raise revenue to pay for needed services. Any cost increases then get shifted on to homeowners and other taxable commercial and manufacturing property.

Researchers have not been shy about studying the relationship between cities and universities ("town and gown"). New research from the Lincoln Land Institute reviews the fiscal impact of large nonprofit landowners on the finances of the City of Pittsburgh - a peer city which also has tax exempt property as one-third of its tax base. Researchers note that "the concentration of tax-exempt properties in the urban core has had a measurable impact on the tax base and overall fiscal capacity of the City of Pittsburgh" and that "any conclusions here must focus on alternative sources of funds for city revenue." Other town and gown research from the non-partisan Pennsylvania Economy League (PEL) - a peer group of the Public Policy Forum - also warns of fiscal strain of educational facilities on their host community.

None of this is to say that the idea of an urban research campus isn't an intriguing idea. However, the suggestion here is that the UWM downtown advocates may need to start making their case based on real cost advantages. Additionally, the possible negative revenue effects of a downtown campus on local government finances (service costs exceeding revenue growth) need to be addressed. Annual cash payments to the City of Milwaukee could be an option but would also simultaneously increase the cost of any proposed downtown project.

With political and financial resources aligned for UWM expansion in Tosa, the new UWM Downtown group faces daunting odds in convincing leadership to change course away from Tosa and instead direct expansion efforts into Milwaukee's downtown core. But more important than the project's political odds, would the expansion of a large tax-exempt institution make financial sense for two of our regions largest institutions: UWM and the City of Milwaukee? Research would suggest that while a downtown research campus could spawn regional economic success, it could also create local fiscal distress.

Thursday, March 27, 2008

Property value growth slows but still healthy in 2007

Property values in southeastern Wisconsin counties grew 6% last year, a relatively healthy rate but the slowest since at least 2004, and for some counties, the past decade. Also, proximity to northern Illinois looks to be a key factor in fueling strong growth.

The slowdown in property value growth is not unexpected given the national downturn in property values and the explosive growth rates of recent years. Of significance, however, is that the region grew slower than the state for the first year since 2002. Overall growth in Wisconsin was 6.2%. From 2005‐2006, the region grew 10.7%; the state grew 9.6%.

The downturn in property values, however, could have impacts on public policy in the region. Property tax caps could become more restrictive as the rate of growth in values and new construction declines. This may challenge municipal and county governments and school districts at a time when budgets are stressed by increased fuel costs and increased demand for social services.

Both Walworth and Kenosha counties — the two counties in the region bordering northern Illinois — had the highest property value growth rates in 2006‐2007 among the seven counties of southeastern Wisconsin. Walworth saw its overall tax base grow 10.5% during that period, while Kenosha was next highest at 7.2%. In residential property value growth, the same scenario was true: Walworth topped the list at 12.6%; Kenosha came in second at 7.7%. During the last decade, Walworth and Kenosha counties have had the greatest overall property value growth in the region.

Milwaukee and Waukesha counties had the slowest overall growth rates in the region, 5.5% and 5.1% respectively. Milwaukee County saw a particularly steep decline in residential property value growth, falling from 11.5% (2005‐2006) to 5.0% (2006‐2007).

Note: The above was taken from the Forum's most recent property values report, the first in a series of two that the Public Policy Forum releases every year. Look for the Forum’s accompanying analysis of property tax rates to be released and posted to the Website later this spring.

Wednesday, March 26, 2008

At least the Park East isn't a tunnel...

...according to a recent article in the Boston Globe.

When Milwaukee tore down the Park East Freeway in 2002, it was the first city to remove a downtown freeway overpass for purposes of what was then called urban revitalization.

Yes, San Francisco had replaced the Embarcadero freeway with surface development a decade earlier, but not as a result of planning--an earthquake had done the demolition. Portland had torn up its Harbor Drive highway in 1974 to create a waterfront park and Boston was in the midst of the Big Dig in 2002. But Milwaukee was unique in purposefully removing and not replacing a key piece of highway infrastructure; and for doing so for the sake of economic development, not green space.

Now other cities like Seattle and Toronto are looking at our experience as they debate removing their aging downtown freeways. When economic development is the purpose, should the surface streets be improved to accommodate the traffic or should the overpass be replaced by a tunnel?

Boston's over-budget, over-deadline “Big Dig” project has caused cities to shy away from similar tunnel plans, while our own Park East experiment is being touted as a planning success. That may be premature, however. The Globe article failed to mention that there is not yet a fully developed Park East business district to affect traffic. After McKinley Boulevard is carrying the volume of traffic for which it was designed may be a better time for other cities to judge whether surface streets or a tunnel is the best way to go in such situations.

Tuesday, March 25, 2008

Putting the private in public-private partnership

One of the questions greater public investment in early childhood education raises is whether government should play a role in the lives of most children under school age. Even for those who believe school readiness is an appropriate effort for government to fund, there is the question of how to finance that investment.

The City of Boston has grappled with these questions. In 2006 Mayor Menino asked a group of early childhood researchers and practitioners: In light of
...the stark reality that half of the test score gap at twelfth grade is attributable to gaps that exist at first grade, ...recommend steps that would yield the greatest impact on preventing and closing academic achievement gaps among children before school entry.
The resulting recommendations laid the groundwork for a new public-private partnership unveiled last week aimed at "universal school readiness" and termed Thrive in Five.

Of the $3.25 million committed to the effort, the city put up $750,000 and was joined by the United Way with $1.3 million. In addition, Children's Hospital Boston; Partners HealthCare and its founding hospitals, Brigham and Women’s and Mass. General Hospital; and the Nellie Mae Education Foundation will contribute another $1.2 million over the next three years.

According to Boston's mayor's office, Thrive in Five was developed after a year-long public and private collaboration led by the City of Boston and United Way. A 65-member School Readiness Action Planning Team was appointed by the mayor and co-chaired by the CEO of Boston's Children’s Hospital and the president of Wheelock College. Another team of 35 parents from across the city provided feedback to the larger planning team. An additional 300 Boston leaders and residents were brought into the planning process through focus groups and community meetings.

The effort is not aimed at increasing the number of children served in government-provided child care or pre-Kindergarten. It does seem to be a true public-private collaboration bringing together private early childhood education providers, hospitals, and social service agencies with public schools and libraries.

Progress will be tracked annually by measuring improvement in things such as the number of nationally accredited early childhood education programs in Boston; the percentage of new parents who are offered a newborn visit; the percentage of parents who report accessing child development information and resources; the number of children ages birth to five screened for and receiving services for developmental delays, behavior issues and environmental risk factors; and the circulation rate of picture books in the Boston Public Library system across all neighborhoods.

Unlike many other state and cities which have decided to focus only on a public schooling model for early learning, Boston's initiative focuses on the private resources already available in the city's hospitals, day cares, and non-profit service agencies. By leveraging city funds with private resources, the initiative aims to impact more children sooner and more cost-effectively than with public financing alone.

Thursday, March 20, 2008

NAFTA bashing does not jibe with Milwaukee's high-tech reality

NAFTA bashing is the new blood sport on the presidential campaign trail. As both major democratic candidates were quick to discover in the Wisconsin and Ohio primaries, their populist message of blaming the upper Midwest's economic woes on free-trade deals certainly made for catchy sound bites.

But, is NAFTA really to blame for the Midwest's slow job and income growth?

And, are things really that bad? To the contrary, some suggest that it could be (gasp!) the Rust-Belt which could lead us out of our country's recession based on the strength of its manufacturing exports. This week, the Federal Reserve Bank of Chicago threw additional cold water on the fiery NAFTA rhetoric. The Chicago Fed highlighted new data from the International Trade Administration which reported that the four-county Milwaukee region exported $6.8 billion worth of goods in 2006, up 14% from 2005. Fed contributor Bill Testa concluded that "the outlook for Midwest exports remains strong."

A double digit growth in exports is a good thing for Milwaukee. Well, actually, it's a very good thing for Milwaukee. The 14% increase in exported goods is a critical economic indicator that should intrigue those with even a passing interest in economic development policy. After all, sustainable economic development can only be realized if you sell more "stuff" outside of your region so as to bring new dollars into your region. Without new money coming in, your region's "secondary" economy (housing, retail, etc.) will slowly starve.

Thankfully, we are not starving in Milwaukee. In fact, with the weakening dollar and explosive growth in developing countries, the stars are aligned for continued manufacturing export growth in our region. Perhaps this is one reason why the Milwaukee region was recently highlighted in a Chicago Tribune article as one of only 4 US regions (in a survey of 25 large metro areas) where housing prices didn't fall in 2007. This could be an example of our region's foreign export growth propping up local housing demand. After all, Milwaukee's exports made up 37.3% of all the exports out of Wisconsin - this despite the region only comprising 27% of the state's population. In the midst of such export strength, it may be no wonder that Milwaukee is experiencing relative price stability in a treacherous housing market.

To the extent that NAFTA has accelerated Milwaukee's investment into the research and development of new "high-end" manufactured products, the trade deal may deserve a bit of praise. Milwaukee 7 representative Jim Paetsch recently stated, "Some places believe that manufacturing is dead or dying. We don't." The quote was pulled from an article at which highlighted new research that showed how Milwaukee's manufacturing base was acting as an important platform for high-tech innovation and patent generation. Perhaps this means that southeastern Wisconsin has finally figured out that competing on cost for low-end of manufacturing jobs is a fruitless "race to the bottom."

But while we pat ourselves on the back, let's not forget that NAFTA has contributed to the upheaval of thousands of households in Milwaukee which were, for decades, firmly rooted in family-supporting, high-wage manufacturing jobs. Many of these low-end production jobs have left Milwaukee for China, Mexico and other countries that are pulling in massive amounts of foreign capital investment based solely on their lower cost structure. With these jobs gone, the workers that remain need an effective and seamless workforce development system which trains capable workers for high-end manufacturing and service jobs in our region. This is going to take money - a cooperative effort with public, corporate and foundation financial support.

Corporate profits also need to be plugged back into research and development to ensure new patent and product development. To encourage such investment, there is a need to align local and state government economic development programs with our new economic reality. The Wisconsin Tech Council hits on several such changes to state policy in this 2003 report. The City of Milwaukee is also getting in on the innovation game with their recent investment into the development of a new line of lithium-ion batteries at C&D Technologies in the Riverwest neighborhood.

The 20th century's economic development paradigm was jobs. The 21st century economic development paradigm is innovation. Like it or not, NAFTA has played a role in ushering this new economic reality - which Milwaukee seems to be embracing.

Wednesday, March 19, 2008

Forum Survey Gives Local Context to Emerging National Debate on Race

Say what you will about the tone, content or motivation behind Senator Barack Obama's speech on race relations earlier this week, but it is difficult to refute the positive aspects of having a national dialogue on race.

A little more than a year ago, the Public Policy Forum tried to launch a similar conversation here in Milwaukee. Our race relations survey -- conducted of 1,000 whites, African Americans and Latinos in Southeastern Wisconsin -- was a concerted effort to explore how people of different races in our region perceived themselves and other races, and to quantify just how much of an impact the state of race relations was having on the general health of our community.

Those who have been captivated by the emergence of the race issue in national politics should check out our 2006 report. Among the findings:
  • Younger people in our region felt much more positive about people of other races than older people.

  • 24% felt race relations were growing worse, a stark contrast to the 56% who felt that way in a 1991 Forum survey.

  • Half of the African Americans surveyed felt they had been stopped by police because of their race.

  • Most whites believed racial profiling by police or avoiding non-white neighborhoods to be common sense, while most African Americans believed such actions to constitute prejudice.

Interestingly, when asked what has to happen to improve race relations in our region, a typical response from individuals of all races was that "people need to learn how to discuss race." To the extent that the attention given to Obama and his former pastor has generated such discussion, we are making progress already.

Tuesday, March 11, 2008

A Cheaper, Better Approach to Juvenile Corrections?

Of all the contentious issues that mar the state-county relationship in Wisconsin, perhaps none rankles county leaders more than growing state charges for the cost of housing delinquent youth in state correctional institutions.

Milwaukee County's 2008 Budget includes more than $23 million to pay for kids sentenced to corrections by the courts. The State rate increased from $209 to $259 per day last July, and it will increase again to $268 this July, which means it will cost taxpayers more than $96,000 for each juvenile housed at a state facility for the entire year.

The State contends that the rate charged to counties is a reflection of the cost it incurs in running its three juvenile correctional institutions (two for males and one for females). In a prime example of perverse policy incentives, that rate actually increases more as the population decreases, as certain institutional costs are fixed and must remain relatively constant even with a lower juvenile population to support them. Hence, the reward for counties who collectively send fewer kids is a higher daily rate the following year.

For years, some Milwaukee County legislators and supervisors have argued that the State should cut costs by closing one of its institutions. One state has gone even further, apparently with some success.

Articles by the Pew Research Center and Governing Magazine describe how Missouri decided in the early 1980s to close its two juvenile corrections facilities, and to instead open and administer dozens of smaller residential treatment centers for its delinquent population. The centers provide education, job training and intensive counseling. There are now 32 operating statewide.

While the direct cost of housing and treating delinquent youth in small treatment centers versus large institutions is not necessarily reduced, Missouri cites significant indirect cost savings from lower recidivism (under 8%, as compared to more than 18% in Wisconsin per the Legislative Fiscal Bureau). Other benefits include lower rates of violence and suicides among the delinquent youth population and better education and job training outcomes.

The Missouri experience has been so successful that several other states and counties are considering or implementing similar approaches. While some tough-on-crime elected officials typically raise concerns about coddling juvenile offenders, Missouri's program has been supported by former Governor and U.S. Attorney General John Ashcroft and other conservatives.

In fact, Missouri's former head of youth services has now set up his own business to advise other states and counties looking to follow the Missouri model. He says in the Pew article that since he began this venture three years ago, "the phone hasn't stopped ringing." Perhaps corrections officials here in Wisconsin ought to find that phone number, if they haven't already.

Thursday, March 6, 2008

Online access to state inspections of child care providers

If you're worried about your child getting food poisoning from their favorite fast food joint, it's easy enough for citizens of southeastern Wisconsin to visit the web and get information on restaurant inspections.

If your worried about your child's health and safety when at day care, however, you're out of luck.

The results of state child care inspections and investigated complaints are not available online and can only be obtained with a special request, leaving most parents in our region in the dark.

Parents in southwestern Wisconsin have it easier. There, the Wisconsin State Journal annually reviews the child care inspection files for the providers in their region and reports which providers have been fined, and why. This year they have compiled the results from their past ten annual reviews and created an online searchable database. Since that database went live on Feb. 17, it has had more than 12,000 hits.

While a legitimate role of the media is to shed light on the workings of government, citizens should not have to rely on their local paper to provide this type of information. The purpose of government inspections of child care providers is to ensure safety and prevent fraud, to the benefit of children, parents, and taxpayers. Perhaps southwestern Wisconsin's interest in the State Journal's database will result in greater transparency for the entire state.

UPDATE: A Channel 4 News story on lack of access to child care licensing records notes the difficulty parents have in obtaining this information. The reporters were unable to get anyone from the Department of Health and Family Services to comment on the record.

Tuesday, March 4, 2008

State resource management merits average grade

Wisconsin scored a B- in the latest assessment by the Pew Center on the States of state government performance, the same score as in 2005.

While a B- sounds OK, because Pew doesn't grade on a curve, it's actually just average. Of the 50 states, 18 scored B-, 13 scored above that and 19 below. The highest grades were earned by Utah, Virginia, and Washington, which scored A-, and the lowest by New Hampshire, which scored D+.

According to the report,
"States that received the highest grades are making better management a top priority. Washington state holds governor-led public meetings to monitor program results and improvements; Utah has implemented a financial tracking system that provides real-time data for decision-making; and Virginia provides employee rewards linked to improved service delivery and agency goals."
Pew, in cooperation with Governing magazine, evaluated the states on how well they were or weren't advancing in areas such as recruiting and retaining highly qualified employees; using information and technology to measure performance and communicate more effectively with the public; managing fiscal resources from budgeting to procurement; and planning for, maintaining and improving roads, bridges and buildings.

Wisconsin's big weaknesses came in the areas of structural balance in the budget, capital planning, and managing for performance. That our state has the second highest turnover rate for veteran state employees didn't help, either. One bright spot mentioned was Wisconsin's Legislative Audit Bureau, which is credited with going after hot-button issues and with communicating findings to citizens in user-friendly ways, including podcasts and RSS feeds.

The criteria used to awards the grades are as follows, according to Governing:

• The state actively focuses on making future policy and collecting information to support
that policy direction.
• Elected officials, the state budget office and agency personnel have appropriate data
on the relationship between costs and performance and use these data when making
resource-allocation decisions.
• Agency managers have the appropriate information required to make program
management decisions.
• The governor and agency managers have appropriate data that enable them to assess
the actual performance of policies and programs.
• The public has appropriate access to information about the state, the performance
of state programs and state services and is able to provide input to state policy makers.

• The state regularly conducts and updates a thorough analysis of its human-capital needs.
• The state acquires the employees it needs.
• The state retains a skilled workforce.
• The state develops its workforce.
• The state manages its workforce-performance programs effectively.

• The state uses a long-term perspective to make budget decisions.
• The state’s budget process is transparent, easy to follow and inclusive.
• The state’s financial management activities support structural balance
between ongoing revenues and expenditures.
• The state’s procurement activities are conducted efficiently and supported
with effective internal controls.
• The state systematically assesses the effectiveness of its financial operations
and management.

• The state regularly conducts a thorough analysis of its infrastructure needs and has
a transparent process for selecting infrastructure projects.
• The state has an effective process for monitoring infrastructure projects
throughout their design and construction.
• The state maintains its infrastructure according to generally recognized
engineering practices.
• The state comprehensively manages its infrastructure.
• The state creates effective intergovernmental and interstate infrastructure
coordination networks.