Friday, September 14, 2018

High-flyers, Icarus and why rich men won't save cities

Hollywood, politics and capitalism all were run by rich white men for too long. While the former two have added some diversity, big business is still firmly in the same hands. The high-flying icons of America's tech economy are all white men. Their names are Bill Gates, Mark Zuckerberg, Jeff Bezos, Elon Musk, Michael Bloomberg and more locally, Kevin Plank.
Jeff Bezos in DC: 1500 pairs of ears waiting for wisdom (Wong/Getty image)

In a time when  government abdicates more and more of its responsibilities and emasculates itself not through gender equity but through de-funding itself via popular tax cuts, the role of those industry icons moves into focus. As "impact investors" or "social entrepreneurs" they become even more powerful by playing outside the traditional lanes.

In the age of cities with more than half of the global population living in metro areas with mayors seen as the ones who can save the world from national leaders running amok, cities have become also the arena for the very rich to try their social skills. How much of that is happening in Baltimore?

The spectacle of Amazon's Jeff Bezos playing cities with his HQ2 game is an obscene example for traditional industry power play. But Bezos' offering up $2 billion to address homelessness is much harder to gauge. How much he attracts public attention was on display when King Amazon came to Washington this week. Almost as big a deal as a visit from the Pope. 1,400 business leaders packed ballrooms at the Washington Hilton to hear what the richest man on earth would have to say. The BBJ writes "There were enough ambassadors to hash out a global trade deal with dignitaries from Australia, the United Kingdom, Greece, South Africa, Panama, Indonesia, Azerbaijan, Singapore and many more" and that "there were enough developers and real estate captains to fund and build a second nation's capital alongside the first one".  DC's Mayor Bowser said "We are eager for any announcements he might have.” Well, he didn't have an encyclica, nor any announcements regarding HQ2.

Bloomberg in Baltimore with Goldman Sachs graduates (Photo: BBJ)
A smaller affair was Michael Bloomberg's visit to Baltimore earlier this summer. The wealthy man has shown the world how to run a city as mayor, but he also has a lot of resources. No doubt, Baltimore could be glad if the city would be run nearly as smoothly as New York. With 12 times as many residents, New York City has a lower number of murders than charm city. Bloomberg is strongly tied to Baltimore through his alma mater, Johns Hopkins and has selected Baltimore as one of his Bloomberg cities. Baltimore is  receiving technical and monetary assistance through the Bloomberg Philanthropies. In September Bloomberg announced the recipients of a $43 million Arts, Innovation and Management program. 49 arts organizations received money, the bulk in Denver, the others here. Baltimore is the recipient of a $5 million Bloomberg Innovation Grant. The philanthropy has also sent Innovation Teams here to assist with running a more efficient government and a better police department. The team tried to help with the selection of a leader for the then vacant position of DOT Director, however, Mayor Pugh eventually selected her own find.

In August Bloomberg toured a bit of the City and had breakfast with graduates of a Goldman Sachs business program at the SoBo Cafe in Federal Hill. He told the BBJ nice things about our Mayor: "she is doing everything she can to improve [Baltimore]" he reportedly said and that Pugh "got guts".
With the police department in disarray and without a permanent Commissioner and now the highly successful health department  also with out a leader, the question of picking the right appointments is again before the Mayor, this time with even bigger urgency.
Bloomberg and Mayor Pugh (SUN photo)

Baltimore knows already that Bezos won't kiss the frog with selecting it for his $5 billion HQ2, and has to make do with the crums falling off Amazon's huge distribution centers in City and County. Baltimore is also a recipient of significant funds from George Soros through the Open Society Institute. The City still also puts big hopes into one of its own business leaders, Kevin Plank, and his envisioned new HQ as part of an entire new-town planned for the Port Covington former coal transfer railyard.

Like Tesla's Elon Musk, or Uber's first CEO, Plank seemed to be on a trajectory of never ending success. But as with Musk, or the former Uber CEO, public darlings can easily encounter strong public headwinds.  Icarus comes to mind, the mythical Greek high flyer who got too close to the sun and crashed when his melting wax-tied feather wings didn't carry him any longer. While Musk's  hyperloop tunnels are praised as the next big thing by Maryland Secretary Rahn as the latest transportation innovation, Plank has stopped to say much about Port Covington where Hyperloop would likely end. Plank is busy placating his shareholders who are upset about sinking ticker prices.
"Chapter 1" rendering (source: Weller Development)

Sagamore Development is now Weller Development (although the delineation isn't entirely clear if one studies those two websites) and it isn't clear either, whether Plank is still personally vested in either of those endeavors, or whether today money just comes from Goldman Sachs.

Nothing is known about when work on the planned Under Armour Headquarter would begin, originally scheduled to begin in 2017. There has been no further mention of the planned light rail extension into the property. Funding for it had been rejected by the federal government last year and one would have expected another run this year.

Weller must have felt that the guessing game became a liability, so he gathered the media this week to announce "Chapter 1" of Port Covington, a sizable 3 million square feet of development (Larger than the full build-out of HarborPoint) to get underway in 2019 with opening dates planned for 2020 or 2021. Chapter 1 sounds similar to Chapter 11, even if the message is the opposite. However,the announcement didn't provide names of any developers or tenants. Adjusting for the fact that the Baltimore SUN facility in the middle of Port Covington seems to not go anywhere anytime soon, Chapter 1 does not replace the SUN printing facility with the tallest skyscrapers as in the original plan but works with the SUN in place.

When the Port Covington project was initially proposed, Sagamore had stressed that they would not develop the new town themselves but look for developers to buy development-ready parcels. The Chapter 1 concepts went to the City's design review this week, more specifically, the infrastructure portion and streetscape design was reviewed. Weller Development will tap into the large tax increment financing (TIF) package to pay for infrastructure in Chapter 1, but the specifics for that are also still being negotiated with BDC.  The price for the TIF is a historically large community benefits agreement. Those funds will flow to the "SB 7" community only at the rate as the TIF will be used.
Chapter 1 area (Weller Development)

Whether rich Seattle, San Francisco or poor Baltimore, cities should not rely on the big money guys as their saviors. Too fast, too risky is the world of big business, too volatile public opinion.  While it is laudable, necessary and welcome that rich men consider social impact, invest in legacy cities, especially if they are their home community, Mayors should not roll over or defer their responsibility to the corporate giants and philanthropists. Instead they need hedge against changing trade winds, against dangerous dependencies and against the believe that there can be the one savior who can turn things around.

History has already amply proven the risks of economic mono-cultures (ever heard of Bethlehem, the steel town or of Mo-town?), but present time represents even higher risks thanks to hyper accelerated business cycles.

True recovery of the deeply wounded legacy cities, still reeling from decades of de-industrialization and a history of institutional racism, can only come from being positioned in a truly diverse and inclusive manner. A solution cannot be imposed by whatever rich guy savior may be out there, the impetus for change, growth and innovation must come from within. This insight doesn't make corporate investment unwelcome, it doesn't condemn private-public partnerships, it doesn't turn social entrepreneurs into the bad guys, it just recognizes the reality, that a resilient, sustainable and just urban future requires the social foundations of a community to be made up by a sound social infrastructure. In that sense, not having HQ2 and a maybe slower development of Port Covington provides an opportunity and not a curse.

Klaus Philipsen, FAIA

See also the latest article on my sister blog:

With so many vacant houses, why is there still a housing crisis?

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