Political Will, Bold Leadership Are Necessary Tools for Reinventing Communities

A new ULI report describes a variety of public financing tools for cities seeking to reinvent themselves and attract greater private investment. Reaching for the Future: Creative Financing for Small Communitiesdescribes innovative funding mechanisms like the Neighborhood Improvement Zone, a tax increment financing district the state of Pennsylvania set up in 2009 to stimulate private investment in Allentown, a former steel town that was facing bankruptcy.

The report, however, is not about any one specific financing tool or taxing mechanism, but about the leadership, strategic vision, and political will necessary to create a plan for reinvention and execute it. What differentiates cities that move forward from those that stagnate is not funding, but an “intentional approach to change,” said ULI Senior Resident Fellow Tom Murphy, former mayor of Pittsburgh and coauthor of the report, at the 2016 ULI Spring Meeting panel discussion in April. “There is always money,” he said. “The ideas and the vision of where you want to go are more important.”

The report features six stories of cities reinventing themselves through innovative partnerships with the private and nonprofit sectors. Each suffered losses of heavy industry, population, and private investment through the latter half of the 20th century but have pivoted in the 21st century to attract new industries; build new infrastructure, neighborhoods, and commercial districts; and forge new identities. An essential element of each story was a key leadership challenge to make reinvention possible. Here is a closer look at how these challenges played out in Pittsburgh; Greenville, South Carolina; and Cincinnati, based on a panel discussion at the recent ULI Housing Opportunity Conference in Boston.

Pittsburgh: A Strong Mayor Investing in Tomorrow

By the time Murphy took office in January 1994, he knew that he needed to act quickly to reverse the city’s decline, caused largely by the collapse of the steel industry. The city had been steadily losing population since mid-century, and even the Pittsburgh Pirates—the major league baseball team—was threatening to leave town.

Real estate deals and a powerful redevelopment agency would become Murphy’s main tools to get tax revenue flowing, leverage private investment into dying neighborhoods, and repopulate the city. Because the city had a strong mayor form of government, he was able to consolidate his power, appointing the board that oversaw the Urban Redevelopment Authority (UDA) and himself as head of the housing authority and acting, in some cases, in a unilateral fashion.

“The criticism of me was that ‘it was Murphy’s way or the highway,’ ” he said. “I felt a great sense of urgency in changing Pittsburgh’s trajectory.”

Murphy believed it was imperative that the city start thinking about long-term strategies for rebuilding Pittsburgh rather than getting bogged down in the daily grind of governing. “This was the key leadership moment,” he said. “As mayor, the stuff that is coming at you, it takes all of

your energy to get through the day. If you use all your resources getting through today, it consumes you. For me, that was not going to be good enough. What we could do to get to tomorrow was how I was going to spend my energy and time.”

Preparing for the future meant sacrificing today: in a controversial decision, Murphy slashed the city’s workforce by 150 positions, which freed up $6 million from the operating budget to cover the debt service of a $60 million bond issue. The bond would serve as a revolving loan fund—the “patient capital” required to redevelop neighborhoods that conventional banks steer clear of—for the URA to purchase over 1,000 acres (405 ha) of vacant and underused properties throughout Pittsburgh. While his opponent in his 1998 reelection bid criticized him for laying off police officers, Murphy still won in a landslide.

“We needed money, land control, and sophisticated deal-making capacity in one place,” he said. “We bought the land because we wanted to think about doing projects that would be catalytic. We wanted to avoid a piecemeal, transactional approach, and purchase land strategically in neighborhoods where there was no real estate market.”

One transaction was for a 19-acre (7.7 ha) site—where a Sears building once stood—in East Liberty, a transitional neighborhood that was once home to the third-largest retail district in the state. The goal was to build a project that would attract consumers from the poorer neighborhoods to the east and the affluent neighborhoods to the north and south. The Home Depot opened there in 2000, the first urban location for the home goods retailer.

The Home Depot was the match that lit the fire: Mosites Company, a private developer, convinced Whole Foods to open in East Liberty and financed the project through URA funds and tax credit equity. Mosites continued investing in properties, and in 2007, another developer, Walnut Capital, built Bakery Square, a 380,000-square-foot (35,300 sq m) mixed-use development with Google as the anchor tenant. Over the past 20 years, nearly $1 billion has been invested within East Liberty, most of it from private sources with the URA taking a secondary role over time.

The pivotal decision was setting up the $60 million loan fund, which showed investors that the city was willing to risk capital on neighborhoods with strong potential, Murphy said. “This was key in changing Pittsburgh’s trajectory,” he said. “That was the hard choice we made, [but] we didn’t have the option of doing nothing.”

Greenville: Tearing Down a Bridge to Uncover a Unique Asset

A thriving textile center in the 20th century, Greenville, South Carolina, experienced a major decline in the mid–20th century when major manufacturers moved overseas. But political leaders did not passively stand by as they watched industry leave.

Max Heller, who served as mayor from 1971 to 1979, understood the value of keeping downtown vital, taking the critical step of converting a four-lane highway that served as the city’s main street into a two-lane road with a beautiful, pedestrian-oriented streetscape. Greenville businessmen such as C. Thomas “Tommy” Wyche and Buck Mickel also were

champions of downtown, working with Heller on key projects like the Peace Concert Hall and Heritage Green, and convincing Hyatt to build a hotel downtown.

The goal was to repopulate downtown Greenville, but it lacked major residential development, according to Mayor Knox White, first elected in 1995. The city’s residential strategy started out with allowing second-floor residential units above businesses and expanded to several 200- to 300-unit buildings. Since the late 1990s, virtually all the development downtown has been mixed-use, including River Place, a development that combines hotel, office, and residential uses as well as artist studios. Now, roughly 5,000 people call downtown Greenville home, White said.

In addition to strong leadership, cities that want to prosper must have a clear understanding of their competitive advantages and a commitment to design excellence, according to Reaching for the Future. In Greenville, both elements were achieved through Falls Park, an expansive public park in the middle of downtown that features a spectacular 60-foot (18.3 m) waterfall on the Reedy River and a pedestrian bridge that curves toward the falls. Completing this project proved to be a flashpoint since it required the removal of a four-lane vehicular bridge that obscured the waterfall.

“Our overarching theme for downtown was walkability and creating a special place that people wanted to be in,” White said. “We knew we needed to achieve a dramatic change and do something that played to our uniqueness and that was authentically Greenville.”

Historically, the Reedy River had been in the deserted part of town, choked by weeds and hidden by the bridge. The river suffered from years of industrial dumping, but it was not until a local environmental group—the Carolina Foothills Garden Club—proposed cleaning up the river did the idea of removing the bridge to spotlight the waterfall as a focal point even surface.

Greenville residents, however, wondered why the city wanted to tear down a perfectly good bridge. Most were against the campaign to “free the falls,” which became the supporters’ rallying cry. White recalls vocal opposition at public hearings, but the city council approved the removal of the bridge as part of a $13 million master plan for the park.

The city still had to get permission from the state highway commission since the vehicular bridge was a state road. As luck would have it, the director of the commission was active in her local garden club, and supported cleaning up the Reedy River and uncovering its natural beauty. Falls Park has proven to be one of those catalytic projects: roughly 75 percent of investment downtown has occurred since its construction in 2004, according to the ULI report.

“Once Falls Park opened, the controversy was nowhere to be seen,” White said. “We had thousands of people down there. There was a mixture of pride with maybe a touch of embarrassment” for opposing the park.

Cincinnati: The Private Sector Fills a Leadership Vacuum

In 2001, downtown Cincinnati was at a low point. Riots had broken out in Over-the-Rhine, a historic neighborhood once home to the city’s sizable German immigrant community in the early 20th century that is directly adjacent to the city’s central business district (CBD). An unarmed,

19-year-old African American man had been shot, and residents were angry over what they perceived to be excessive force. The violence and blight of Over-the-Rhine was spilling over into the CBD and Fountain Square, Cincinnati’s symbolic center that had become a favorite hangout for drug dealers and vagrants.

While then-Mayor Charlie Luken took important steps to address the looting and violence caused by the riots, he was ultimately not the one who led the charge for cleaning up and encouraging investment in Over-the-Rhine and the CBD. That was left to a group of corporate leaders from Fortune 500 companies—Procter & Gamble, Kroger, and Fifth Third Bank, to name a few—with headquarters in downtown Cincinnati who feared long-term damage to the city’s economic vitality, workforce retention and recruitment efforts, and reputation.

In 2003, the companies formed the Cincinnati Center City Development Corporation (3CDC), a private, real estate development and finance organization whose mission is to strengthen the core assets and connections among Fountain Square, the CBD, and Over-the-Rhine. The 3CDC board wanted to be independent of government, although it did have the Luken administration’s support. The organization neither asked City Hall for funding nor did it appoint a single public official to its board.

Because 3CDC is not a governmental entity, it has been able to purchase and redevelop an astounding number of vacant and blighted properties in Over-the-Rhine in a relatively short amount of time. Since 2003, it has restored 147 properties, including housing and commercial establishments; built 50 new buildings; added over 1,100 units of housing to the area; added more than 150 hotel rooms and 850,000 square feet (79,000 sq m) of commercial space; and revitalized 15 acres (6 ha) of open space, including Fountain Square and Washington Park. Nearly $1 billion in private investment and public funding sources have gone into transforming these areas.

One leadership challenge has been in overcoming suspicions about what 3CDC hoped to achieve. “There was some skepticism about motives and whether the development was going to be equitable and inclusive,” said Steve Leeper, 3CDC’s president and CEO. And while there were some opportunities for the public to provide feedback on aspects of the redevelopment, 3CDC’s land-banking activities of blighted properties in Over-the-Rhine took place largely outside of public view.

“A big challenge was the conflict between the need to execute a vision and having an open and transparent process,” Leeper said. This tension opened 3CDC to the charge that it was gentrifying the neighborhood rather than improving it for residents. “There are facts versus the perception,” he added. “The perception was that there was massive gentrification, but in fact we were buying mostly vacant properties and those that were bad influences on the neighborhood, particularly carryout liquor stores, which proved to be a cancer in the neighborhood.”

Certain projects—the $48 million renovation and expansion of Washington Square Park, the construction of three new homeless facilities with a total of 320 beds, and new affordable housing—have gone a long way toward winning over skeptics. “We needed some success that even our biggest critics could recognize that our plans and efforts have a major civic element,” Leeper said.

Learn more about financing tools and leadership strategies for revitalizing cities in the new ULI report, Reaching for the Future: Creative Finance for Smaller Communities.

This is a discussion of the report filmed at the ULI Spring Meeting in Philadelphia:

Archana Pyati is a writer on ULI’s strategic communications team.