Thursday, February 12, 2009

The Economic Crash and the Future of Mt. Lebanon

[Update 2/15: Responding to my Pittsblog post about Floridian economics, my "Return to Pittsburgh" and Pittsburgh Diaspora colleague Jim Russell is bullish on Pittsburgh's future.]

Today I came across a new long article by Richard Florida, the former Pittsburgher and CMU professor who made a name for himself several years ago with a book called "The Rise of the Creative Class." Florida's thesis was that the future belonged to cities that could nuture young "creatives," whose energy and economic metabolism was already evident in newly vibrant urban economies from Seattle to the Research Triangle.

The new article, titled "How the Crash Will Reshape America," appears in The Atlantic Monthly. I've excerpted bits of it over at Pittsblog. It is required reading for everyone with a serious interest in making the best decision for a future Mt. Lebanon High School, as well as a future Mt. Lebanon of any kind. School Directors and Mt. Lebanon Commissioners, this means you.

Florida's points:

The current economic crisis -- which he refers to, probably correctly, as a Crash -- will fundamentally reshape geographic patterns of economic activity, including, but hardly limited to, where and how people live. Translation: There can be no assurance at all that in five or ten years, Mt. Lebanon's population will be the same (more or less) as it is now, or that its demographics will remain the same (even more or less).

The economic and population declines associated with Rust Belt cities (read: Pittsburgh) likely will continue and may, in some contexts, accelerate. Some places (possibly: Pittsburgh) will continue to manage their decline well and even exhibit a degree of civic vibrancy. Urban centers will succeed at the expense of suburbs, especially the farther flung suburbs that have popped up over the last 20 to 30 years (that's good for Lebo!). The urban centers that are the most likely to succeed are those that orient their economies to higher "velocity" sectors (tech, arts, financial services) rather than to manufacturing and agriculture. (There is some good and bad in there for Pittsburgh.)

I've always been skeptical of the details of the Creative Class thesis. My view is that Florida confuses cause and effect. Vibrant economies attract young creatives; young creatives don't make vibrant economies. So don't take this new article as given, especially in all of its details.

But Florida's broader point, and one that is not part of the Creative Class thesis, is that planners, local governments, and private firms alike should not be looking to the future end of the economic crisis with the expectation that once the economy rights itself, things will go back to the way that they were. Things won't go back to the way they were.

Bringing this back to the example right in front of us:

Here in Mt. Lebanon, lots of people who support a major, early reconstruction of the high school do so on the traditionally plausible assumption that in the long run, returning economic prosperity will make the painful near-term investment worthwhile. Lots of people who are skeptical of a major, early reconstruction of the high school are skeptical because they look at the near term budget numbers and cannot fathom how to process the expense until the economic storm clouds clear and things return more or less to normal.

Maybe, however, both groups are working from a flawed assumption. Maybe things never will get back to normal. Maybe the $150mm construction alternative never will pay for itself in home values and community charm, because the town's taxpaying population will decline by 20% (I'm picking numbers out of a hat), the school age population may decline proportionately, and home values will suffer a long-term (what economists would call "secular") decline. Maybe the $10mm "bandaid" solution isn't really a bridge to a better future, but all that the town ever can afford.

This is all speculative, and I don't raise it in order to offer arguments that favor any alternative over any other. But those in charge of spending the taxpayers' money, and the taxpayers themselves, should be thinking critically about the future of the town overall.



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Blogger Matthew said...

I haven't yet spoken out about the high school, but I feel this is as good a time as any. As some background, I have two pre-kindergarten kids. If a new high school is build, then maybe one day they will enjoy it.

However, I am highly doubtful that it should be build at this time.

The linked article gives the rationale. In today's economic downturn, everything is uncertain, including the level of income of the Mt. Lebanon residents, the number of Mt. Lebanon residents, property values, etc. Since the future is much more uncertain than it was a mere 12 months ago, wouldn't it be prudent to wait and see what happens before committing to such a large capital outlay?

To put it another way, if I'm afraid that the economy might cause me to lose my job, is it responsible for me to go out and buy a new house that I can barely afford? Especially, if I’m already in debt for other purchases that I’ve made along the way? I’d say no. If the roof is falling in on my house, I fix it because fixing a roof is going to be cheaper than a new house. Similarly, if my car needs a new engine, it’s cheaper to replace the engine than it is to buy a new car. Both cars will get you to your ultimate destination.

And I think that’s the key. Think of the high school as the car. As others have already expressed, I’m much concerned about what goes on inside the building than the building itself. The whole point is to get to the ultimate destination; well educated high school graduates ready to take on the world. Honestly, they can get the education in a dilapidated building just as well as they can get it in a state of the art building.

I’m a prime example. I graduated from W.A. Berry High School in Hoover, Alabama (a somewhat affluent neighborhood of Birmingham, not unlike Mt. Lebanon). At the time, it was a 35 year old building with students bursting at the seams. Sixteen trailers provided thirty-two additional classrooms to handle the extra capacity. Why was there a capacity problem? Simple. Hoover had no qualms about hiring the best teachers for its school system. Knowing that Hoover had one of the best educational programs in the area, families would move into the city limits specifically so their children could attend high school at Berry. Think about it! People would go out of their way to move to a school district with an excellent education program even knowing that it had a crummy building and trailer classrooms. As more people moved in, revenue increased. Finally, they were able to afford to build a new high school without a significant tax increase. Your take away from this? Build an outstanding program and the rest will take care of itself.

By the way, the proposed maintenance savings are a false argument. We save thousands of dollars in maintenance savings, but to achieve it we pay a substantial multitude of that savings in added debt service and taxes. In other words, we don’t save money in the long run, we lose it!

Now, if the economy gets better and things are not looking so bleak, I definitely think it’s something that we should consider. But in the meantime, it’s simply irresponsible to commit so much money to a project if you aren’t sure if you can afford it.

February 13, 2009 12:13 AM  
Anonymous David Huston said...

I am worried about how a declining tax base will be able to shoulder the burden caused by a vocal few demaning a new school now, who are not promising to stay in the district for the term of the bonds.

February 13, 2009 9:30 AM  
Blogger Mary Beth said...

This is somewhat off topic, but...

I just flashed back to the architects' presentation when they posited that we can't possibly know the educational needs of students 20+ years from now. Cue spooky music After pressing this scare-tactic point over the course of several scattered slides, it seemed clear that the architects and board felt we could combat this uncertainty with a really expensive building!

This article might provide them additional ammunition.

Mary Beth Sklar

February 13, 2009 5:35 PM  
Blogger Mike Madison said...

It may be off-topic but only slightly, and it's Friday afternoon, so I've got a little silly on. Mary Beth's comment reminds me immediately of the following exchange from Animal House:

D-Day: Hey, quit your blubberin'. When I get through with this baby you won't even recognize it.

Otter: Flounder, you can't spend your whole life worrying about your mistakes! You f***** up - you trusted us! Hey, make the best of it! Maybe we can help.

Flounder: [crying] That's easy for you to say! What am I going to tell Fred?

Otter: I'll tell you what. We'll tell Fred you were doing a great job taking care of his car, but you parked it out back last night and in the morning, it was gone. We report it to the police, your brother's insurance company buys him a new car. D-Day takes care of the wreck.

Flounder: Will that work?

Otter: Hey, it's gotta work better than the truth.

Bluto: [thrusting six-pack into Flounder's hands] My advice to you is to start drinking heavily.

Otter: Better listen to him, Flounder, he's in pre-med.

D-Day: [firing up blow-torch] There you go now, just leave everything to me.

If you're a real skeptic of the School Board these days, then you might translate that exchange with the following substitution:
Otter, Bluto: School directors.
D-Day: the architects.
Flounder: the taxpayers.

If you prefer a more optimistic, happy ending version of the School Board, you might try this equally memorable Animal House exchange, with School Directors and taxpayers equally represented by the Delta House leadership:

D-Day: War's over, man. Wormer dropped the big one.

Bluto: Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!

Otter: Germans?

Boon: Forget it, he's rolling.

Bluto: And it ain't over now. 'Cause when the goin' gets tough...
[thinks hard]
Bluto: the tough get goin'! Who's with me? Let's go!
[runs out, alone; then returns]

Bluto: What the f*** happened to the Delta I used to know? Where's the spirit? Where's the guts, huh? This could be the greatest night of our lives, but you're gonna let it be the worst. "Ooh, we're afraid to go with you Bluto, we might get in trouble." Well just kiss my ass from now on! Not me! I'm not gonna take this. Wormer, he's a dead man! Marmalard, dead! Niedermeyer...
Otter: Dead! Bluto's right. Psychotic, but absolutely right. We gotta take these bastards. Now we could do it with conventional weapons that could take years and cost millions of lives. No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part.

Bluto: We're just the guys to do it.

D-Day: Let's do it.

Bluto: *Let’s do it*!

February 13, 2009 5:48 PM  
Blogger Matt C. Wilson said...

My silly Friday suggestion is: why build a new high school when we already have a 2nd one?

Can't we just kick these folks off our property and move into that building? :)

Or at least raise their property taxes, oh, say $150 million or so?

February 13, 2009 6:39 PM  
Blogger Mary Beth said...

Well, now Matt, your suggestion may be impractical but not necessarily silly. Perhaps we need to think creatively.

We paid some fine minds a lot of money to come up with building solutions that are too expensive and even more expensive. You know there might be other, workable, more affordable solutions, but there's no incentive to find or pursue them when you're feeding at the public trough of funds.

One of my sons wrote to the school board when he was in 10th grade and suggested that we use students as volunteers or as "construction interns" to caulk the HS windows or at least better place the duct tape. In my mind, it was a creative, civic-minded solution. I'm not suggesting that we come together as a community to raise a barn school, but let's not be afraid to step back and give folks time to think creatively, like Fraasch's alternative savings plan or Remely/Silhol's amended construction ideas.

And now I am completely off-topic. Apologies.

Mary Beth Sklar

February 13, 2009 7:44 PM  
Anonymous Anonymous said...

Matt, just think how well your idea fits Rendell's 100 school district Plan. Merge KO into a too-big, overly-expensive Lebo building and KO is gone.

John Ewing

February 14, 2009 12:48 AM  

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