Cities, Growth and Amazon

I've been spending time the last couple years in downtown Nashville, where the most common street sign is either the first or the second one below. 

It's nearly impossible to walk or drive two blocks in any direction without having to maneuver around at least one of these. 

Nashville is booming, thanks to its three big industries:  county/pop music, healthcare and state government.  The Economist reported last year that 81 people were moving into the metropolitan area each day; others say the number is higher.  Home prices are increasing, and so is construction of apartment buildings and townhouses and, farther out, single-family homes.  

In addition, the city is playing a huge game of infrastructure catchup.  Its population, 174,000 in 1950, has blossomed into an MSA (metropolitan statistical area) population of 1.8 million as of last year.  Traffic is pretty bad, and while there is talk of a five-spoke light-rail system, there is no plan to fund such a thing, whose buildout would take perhaps 20 years.

This of course is the sort of problem cities would love to have.

Where Tower Cranes Are

One rough measure of the health of a city is the number of tower cranes employed on major construction projects in its area.  Recently the Nashville Business Journal crowed about the number of tower cranes here -- 28 -- and ran this national map. Only New York, Chicago, Los Angeles and Seattle had more tower cranes.  If you've read about rents in those areas, you won't be surprised.

Actually, the map is now inaccurate.  One tower crane that had been working just down from our Nashville building was dismantled last month.  The process took a week and closed all traffic on the entire block.  Next month, the new 45-story tower of apartments and condos will open.

Where Tower Cranes Are Not

The US population is shifting.  Some cities like Nashville are attracting new residents.  Other cities have been shedding population for decades.  

Here are a few of those population losers.

--Detroit.  Its population crested at almost 1.85 million in the 1950 US Census and then dropped more than 60 percent by 2010.  Since then, another 50,000 people have left, leaving 672,000 people to maintain a built infrastructure designed for many more. 

--St. Louis.  Its 1950 population was more than 850,000 but is now below 320,000.  As is the case in other cities, residents seem to have relocated to surrounding suburbs.  

--Memphis. For most of its history, Memphis had twice as many residents as Nashville.  Its metro area population now trails Nashville's by 500,000, and the trend seems to be continuing. 

-- Cincinnati -- 300,000 residents in 2010, down from more than 500,000 in 1950.

    

-- Cleveland -- 400,000 residents in 2010, down from 900,000 in 1950.

I could go on about Buffalo and Akron and other cities, but you get the point.

Amazon

Recently Seattle-based Amazon has announced plans to build a second, equal-sized headquarters facility somewhere else in the country.  Every city and town in the Midwest and East craves this business, and for good reason:  Amazon estimates it will need 50,000 employees to staff the new facility, with an average compensation level of $100,000 a year.  

Cities and states are being invited to submit proposals next month, which sounds similar to a professional sports team hinting that it might move its franchise to a city in exchange for a locally financed arena.  We'll see if that analogy holds up. 

Nashville, a go-getter kind of town, naturally wants the Amazon headquarters.  When civic leaders talk of bidding for the project, they fret that the Tennessee legislature's failure to enact a suitably progressive transgender bathroom bill could hurt the city's chances.

More to the point, I would think, is the fact that Nashville is crowded already.  Home prices are expensive relative to local incomes, and traffic, especially for commuters, is very congested and getting worse.

Many commenters have offered free advice to Amazon about where to locate its new operation.  CNN, for instance, suggested these eight cities:  Atlanta, Pittsburgh, Toronto, Dallas, Austin, Boston, San Jose and Washington, D.C.

The selling points for these places, CNN argued, were good schools and large populations of high earners.  In effect, the recommendation was to choose a city that already is winning and to make it even richer.  

(There are people who like Amazon because it has lowered vegetable prices at its recently acquired Whole Foods stores and because its workers are paid well.  

         I'm less sanguine.  It's not that Amazon has demolished the traditional bookstore trade, or that it is doing much the same for retail generally, or that it appears set to try to control the grocery business, or that its founder has bought one of the most politically influential newspapers in the country.  My problem is that Amazon, a company based on algorithms, has done all of these.  To me, this looks like a prima facie case for the expansion of the definition of antitrust. But I digress.) 

If I were advising Amazon, I would encourage it to set its new headquarters in a hollowed-out city like one of the ones I described above. 

Here's what's in it for Amazon:

   -- Those cities have infrastructure -- road systems, empty schoolhouses, underused airports, cargo rail tracks and, in many cases, abandoned intracity railroad tracks waiting to be used again for new urban transit development.
       An influx of Amazon employees -- and Americans generally are happy to move for good job opportunities -- would make use of these and would appreciate the opportunity to buy or rent homes in a location where prices have not yet been bid up to unaffordable levels.

  --  Those cities also have largely empty central business districts and abandoned industrial sites ripe for repurposing and available at lower cost than similar sized, less well-located properties in Atlanta or Boston or Washington, D.C.  

  -- Amazon could show itself to be a good corporate citizen by demonstrating how a city of the industrial past can be turned into a successful city of the future.   

        It might also inspire Alphabet (Google) to abandon its plan to build a totally new techie-enabled city and to focus instead on updating an urban area that could be a showcase for a new kind of redevelopment.  

        Maybe even Facebook would decide to adopt a company town (although I personally would prefer not to live there.)  

Conclusion

Our country has cities that are thriving and cities that are not.  It also has big companies with grandiose plans for controlling larger portions of the economy.

In the US, we admire people who change their lives and succeed when the odds are against them.  Maybe it's time to show our struggling cities a similar way to change their destinies.

If big companies like Amazon took an interest in such projects, they would gain broad respect and the country might regain some of its now-tattered can-do spirit.  

I don't see any downside to this idea.

Traffic Planners Crack Down on Pesky Cars

Above is a map of Los Angeles International Airport.  When you drive or are driven to meet a passenger or catch a flight, you enter the airport from the roads on the upper right and travel to the terminal (1- 8 in the outside yellow numbers) used by your particular airline.

Auto traffic always has been heavy at LAX, but now it is worse than ever.  An article this fall  quoted an airport official as saying this:  Peak  traffic in the summer of 2014 was 89,000 cars in one day at the airport. In 2015, the peak day was 95,000 cars. This summer, there were only 12 days when traffic didn’t exceed 95,000. The loop is handling far more traffic every year. 

(For some reason, Uber and Lyft are being blamed for some of this increase, but it doesn't make sense to me.  Before the ride-sharing companies came along, passengers had to get into and out of the airport somehow.  They certainly didn't walk.) 

There is a plan for some kind of "people mover" to get travelers from nearby parking lots to the terminals, which may replace some of the minibuses that troll the airport loop now.  Still, construction of the people mover won't begin until 2018.  

Meanwhile, travelers coming to and leaving the airport are proceeding very, very slowly.  



How LAX Is Managing the Situation

On Tuesday morning, we Ubered to LAX for our flight home.  Traffic was pretty darn slow.  I mentioned this as I checked my bag with a skycap outside the terminal.

"It should go faster," he said, "but the traffic people have been putting cones near the airport exit.  They have cut down the end of the loop by one lane.  The cars and buses get backed up all the way through the airport." 

Great, I thought.  Thanks, traffic planners.

The New Approach to Traffic Management

For many decades, the solution to traffic congestion was to build new roads or add extra lanes to overcrowded roads and highways.

A couple decades ago, planners started griping that the result was unsatisfactory. The general complaint was this:  Every time we build a new road, people just drive on it.

In a sprawling area like Southern California, traffic volume has increased and speeds have decreased every decade since at least the 1970s.  

The region is in the process of building a light rail network connecting many communities.  This certainly will be helpful, but the larger plan will not be completed for another 20 years, assuming (against experience) that the projects are completed on time.

So the planners have hit on another tactic:  Make the existing road structure more crowded than ever.  Force drivers to make different decisions.

Major LA arterials like Wilshire Boulevard are being retrofitted with fewer lanes and also taller, more densely populated apartment, condo and business towers.  

The idea appears to be to force people to walk, bicycle, carpool or travel by bus.  Maybe it will work, but housing on the Wilshire corridor is pretty darn expensive, and it's hard to envision its denizens standing at bus stops and transferring buses several times to get to business meetings or doctors' appointments.  We'll see. 

Meanwhile, if I knew of a company that manufactured traffic cones, I'd buy stock in it.

Southern California NIMBYs

Permission to build this soon could require a citywide vote.

Santa Monica is a pleasant city of 90,000 residents, plus an uncounted number of homeless people.

As regular readers know, I am fond of the place.  I lived there some years ago and now have a condo there, where I spend part of each year.

Santa Monica's planners have done some impressive things in the years since I first took up residence.

     --They opened up a formerly enclosed mall and matched it with an underused walking street called the Promenade, which now attracts locals and visitors from all over the world for shopping, dining and films.

     --They bought a 15-acre downtown parcel from Rand Corp., developed nine acres with a blend of condos and affordable housing and turned the rest into a popular new park.

     --They participated in the construction of a light-rail line that runs from downtown Los Angeles to a stop in the middle of the city and a terminus at the Santa Monica pier, allowing local residents to visit downtown, and even commute to work there, without having to get into their cars.

     --They encouraged the development of three- and four-story apartment and condominium complexes near major arteries and the light-rail stops.

Light rail and greater housing density are in keeping with a broader Los Angeles initiative to build downtown high-rises and more tall buildings along major traffic corridors like Wilshire Blvd.  The effort addresses the decades-old critiques of the city -- that it is too spread out and that its residents are too dependent on cars for their basic transportation needs.

Change is difficult for people, of course, and it always encounters resistance.  And, because it is California, there is an initiative on Tuesday's ballot to head off change in Santa Monica.


Measure LV

You've heard about California's initiative process.  It allows interested groups to collect signatures and put their ideas up for public votes on city, county or state ballots.  (A friend who lives in Northern California told me last week that she had spent hours studying various ballot measures in order to cast an informed vote next Tuesday.)

The relevant issue in Santa Monica next week is new construction.

At the moment, most city buildings are residential and no taller than 36 feet, or two stories.  Getting permission for anything taller, even in commercial areas where zoning allows for such, already requires serious zoning commission and city council reviews.

But the new initiative, Measure LV, would go much further.

This idea behind the measure is to "empower" local residents in the planning process.  If passed, any development of more than two stories -- commercial, residential, public -- would require a public vote to move forward.

    --If a developer wanted to put up a three-story apartment building behind a three-story office building, that would require a public vote.

     --If the local community college, which has grown larger over the years, wanted to add a three-story classroom building, that would have to be approved by city voters.

     --If an earthquake undermined the older buildings downtown and they needed replacement, there would be dozens of decisions referred for public approval.

Everyone from the League of Women Voters to the newspapers to the local fire department has come out against LV.  Even the Sierra Club has challenged its premise that it will limit traffic increases.

It is pretty easy to see what will happen if this measure is passed.  Real estate developers wanting to build in the city will have to factor in extra time, maybe a year or more, and extra costs to lobby the citizenry for any new construction.  Unless they can generate enough extra revenue to cover those expenses, they will decline to build.

The measure's sponsors already have convinced the city to move slow on new housing development by removing the housing portion of the multi-use conversion of an abandoned business and by limiting the height of apartment and condo developments along the light rail line.

(There's an amusing exception to the Measure LV requirement -- it would not apply to construction of 100 percent affordable housing projects.   No one in his or her right mind would site all-affordable housing projects in a place with land as expensive as that in Santa Monica;  there still are areas, including several not many miles away, where land is much cheaper.  Bang for the buck, and all that.)

This year, the average cost of a two-bedroom rental in Santa Monica is more than $5,000 a month.  But the median cost is $6,500, which suggests many of the less expensive apartments are still occupied by people who first rented in the 1970s, when the city's rent-control law was enacted.  (It was modified years ago to allow vacancy decontrol, but some of the original tenants are still in place.)  Everything new is much more expensive, and the limits on further construction would only increase rents further.

The city of Santa Monic proclaims its commitment to diversity and frets over how many of its renters (70 percent of the population) are "burdened" with rents that amount to more than 30 percent of their income.

If the town's voters approve LV, the situation only will get worse.

The Lonely Pyramid

An early view of the Memphis Pyramid

Memphis, like many post-industrial cities, has faced the challenges of emptied-out inner-city neighborhoods and business districts. 

This happened in a Memphis area called the Pinch, north of downtown and near the Mississippi River. Local lore says the name described the pinched guts of malnourished Irish immigrants who fled the potato famine of the mid 19th century.  The Irish were joined by Jews, Italians, Russians and Greeks.

In the 20th century, many of the immigrants and their children moved farther east, and the small stores and businesses that served them closed or followed along.  A new population, African American and mostly poor, settled in the Pinch.  The formerly busy commercial district never recovered, and Memphis was left with a bald spot that needed more redevelopment than just housing projects.  

This is the story of how city tried to revitalize the area.

The Pyramid

In 1989, ground was broken on what was called the Memphis Pyramid.  The event was celebrated with a great big outdoor party.  City leaders had approved a plan to build a civic icon that would attract tourists and herald the turnaround of forward-looking Memphis.

It is easy to see why the pyramid shape was chosen.  It drew on historic themes, including pyramid-shaped Chickasaw burial mounds and the pyramids of Giza, located near the ancient Egyptian city of Memphis, from which Memphis, Tenn., took its name. 

Earlier that same year, a smaller glass pyramid designed by I.M. Pei had opened in the central courtyard of the Louvre in Paris and was widely hailed as a brilliant contemporary bit of work.

And, too, Memphians may have noticed that the St. Louis Gateway Arch, 300 miles north along the Mississippi River, had become a prominent local symbol recognized well beyond the boundaries of Missouri.

The construction cost of the Pyramid, $65 million, was shared by the city and Shelby County, which sold bonds to be paid off over 30 years by tax revenues generated by the Pyramid and related developments.

Inside the Pyramid was a 20,000-seat arena, perfect for college basketball games and tournaments, as well as other major sports events and big musical concerts.

During the construction period, a Pyramid operator was hired by the city and tasked with developing other projects in the empty commercial area.  He promised to bring in restaurants, museums and various activities.  The Pyramid was to anchor a destination entertainment area that would attract tourists from around the country and perhaps even the world.  

After setting the man to work, the city and county expanded his mandate and asked him to establish additional entertainment venues on nearby Mud Island, not far from Memphis' Mississippi shore.

In 1991, the Pyramid opened in an inauspicious way.  During its debut event, a concert, its bathrooms flooded and the water spread far enough to force the musicians off the stage.

Worse, the promised ancillary developments had not been built.  There was no music museum located under the stadium bleachers.  There was no Hard Rock Cafe.  All there was was the Pyramid surrounded by empty land and parking lots.  

The operator, once named Memphis' Man of the Year, was fired, and his company declared bankruptcy.  People still argue about whether he was a charlatan or whether he had been given an unrealistically ambitious assignment.  

Through the 1990s, the pyramid was used for college basketball games and concerts, but it sat by itself in the middle of an undeveloped area.

Hope was rekindled in 2001 when a National Basketball Association team, the Vancouver Grizzlies, relocated to Memphis and the Pyramid.

Unfortunately, the Pyramid's arena did not meet NBA venue requirements, and so the city sold $250 million in bonds and built the Fed Ex Forum about a half mile away. (Federal Express, which is based in Memphis, paid a generous $92 million for the naming rights.)

In 2004, the Grizzlies and the college teams moved to the Forum, and except for occasional concerts and church convocations, the Pyramid was abandoned.  Even as it sat empty, annual maintenance expenses ran to $700,000.

City leaders cast around for new uses for the Pyramid. A local congressman proposed a Mid-South satellite of the Smithsonian Museum.  There was talk of an indoor theme park, of a science center, of other projects.  Nothing proved out.

By 2005, it was revealed that Memphis was in talks to lease the Pyramid to Bass Pro Shops, the operator of oversized stores selling outdoor gear.  Negotiations proceeded in fits and starts for years.

A general outline of terms was reached in 2010.  Bass Pro and the city (the county had dropped out of Pyramid participation) agreed to a 55-year lease, which sounds a little optimistic. How many stores that opened 55 years ago are still operating today?

For its part, the city agreed to fix up the arena interior.  It carted 900 truckloads of bleacher seats and other irrelevant fixtures to the dump.   It corrected mechanical problems and paid for a major seismic upgrade.  It built the tallest free-standing elevator in the country to the top of the Pyramid, 300 feet up, and then added a viewing platform and indoor space for a bar and restaurant.

At the time of the lease signing, the city pledged to spend $30 million on the upgrades, but a local man told me the spending was understood to be $105 million.  It appears that federal grants for improvements to blighted areas may have made up the difference.

For its part, Bass Pro was reported to have spent $113 million to set up its shop.  Some of the money went to rustic-looking indoor displays and company signage on the Pyramid's sides.  More was spent on restaurants and a $300-a-night hotel, also housed inside the Pyramid.

The whole process took years.  At first Bass Pro aimed to open 2013.  Then the date was pushed back to 2014, then late 2014.  Finally the thing opened in May 2015.


The Bass Pro Shop

I never visited the old Pyramid, but I did go to the Bass Pro Shop last month.  It is remarkable for the range of amusements it offers in addition to outdoor gear.  There were families studying tanks of fish (many, many catfish) and juvenile alligators, as well as stuffed bears and deer.  Fathers and children were practicing shooting with replica long guns at a small diorama-type range.  People were standing in lines to take the $10 (round-trip!) elevator ride up to look at the view.

The merchandise included thousands of fishing reels, hundreds of Bass Pro-themed tee shirts, several displays of camouflage-colored Crocs, and paddleboards, scuba gear, fishing boats and off-road vehicles.

The restaurants seemed to be doing a nice business.   I didn't visit the hotel, but Memphians say its rooms are overpriced and mostly empty.

Worth It?

I am not a big outdoorsperson (although I did catch a fish once.)  I picked out a tchotchke for a friend, and stood in line at the cash register as a couple from Australia paid for several groaning shopping bags full of purchases.

So maybe the Pyramid Pro Shop is a destination, just as the Pyramid was intended to be.  Still, its rent, based on sales, apparently was far less than expected in its first year of operation.

As I walked out to find my car in the parking lot, I noticed that most of the land surrounding the Pyramid still was empty.

On one end, the city has put up more affordable housing, likely to replace older housing projects that have been demolished.  On the downtown side, there is a new light-rail station.

There is nothing much between either of these and the Pyramid.

I can imagine the enthusiasm city leaders had when they planned and built the Pyramid.

What they wanted was a lively entertainment neighborhood surrounding the building.

What they ended up with, unfortunately, is a smaller entertainment center totally enclosed within the building itself.

An Icon Repurposed

"(T)his should serve as a cautionary tale for what strange things can happen when political expediency and civic boosterism converge and give birth to promises that outstrip common sense. 
       "It is in such a cauldron that promoters of implausible ideas are treated as saviors of the city by politicians reluctant to conduct basic due diligence for fear of having to abandon the latest magic answer to the problems of Memphis."

smartcitymemphis.blogspot.com

July 19, 2007