A Strategic Look at the Indianapolis “Newfields” Controversy

Oldfields at Newfields. Photo credit: C. Bedford Crenshaw

The Indianapolis Museum of Art recently undertook a rebranding where it look the elements of its campus and rebranded them as “Newfields”, which is now the primary brand of the institution. The name IMA has been retained for the museum itself but has been downgraded. The new name is apparently a riff on “Oldfields”, a historic home and 26 acre estate formerly owned by one of the Lilly family, but now part of the museum complex.

The Newfields move in effect repositions the museum as a theme park instead of a cultural institution. I believe you now have to pay admission to even visit the grounds. Programming includes a fancy Christmas light show, a beer garden, etc. And there’s been a significant reduction in the size of the actual museum’s curatorial staff.

Newfields is one of a series of moves by IMA director Charles Venable that have been panned in art world circles. One of the latest critiques kicked off a bit of controversy locally. It was by Kriston Capps in the Atlantic’s CityLab, who labeled the Newfields move “the greatest tragedy in the art world in 2017.” (Capps is also an art critics for the Washington City Paper.)

Every step in the museum’s recent evolution has been a cynical one, reflecting a condescending view of the local Indianapolis viewers and international museum-goers the institution once drew by the hundreds of thousands with its diverse collections. So why not pull out all the stops? Why not make it a Minions Museum? Why not set up banks of theaters for whichever Avengers or Star Wars film is selling? Why not raze the building and put up an enormous trampoline in its place? I wouldn’t put that last one past Venable.

Newfields director Charles Venable responded in the Indianapolis Star. And  Indianapolis alt-weekly Nuvo ended up doing a follow-up interview with Capps about it.

I want to take a different look at this move, looking at it from a community strategic perspective.

Indianapolis is at a small end of major cities, with a regional population of two million. The community is prosperous today, but with the exception of the gigantic Lilly Endowment has less legacy wealth and fewer high net worth individuals than a lot of other places. This means that the city is fiscally constrained in the quantity of non-profit cultural institutions it can support, and in the level at which it can afford to support them. Unlike say Chicago or New York, which can fund many things at high levels across the board, Indianapolis has to pick its battles.

Is the art museum the place where Indianapolis wants to place one of the few big cultural bets it is going to be able to make?

Because it boomed later than many other northern cities, Indianapolis has solid cultural institutions but not elite ones. In Cleveland, for example, both the Cleveland Orchestra and Cleveland Museum of Art are internationally renowned. The Cleveland museum also has a $750 million endowment that gives it a warchest to work with. In a place like Cleveland, which reaps significant global branding benefits from these truly top rank institutions, it makes sense to defend them.

By contrast the IMA was a very solid, respectable museum but not one of the top handful in the United States in an era where superstar economic logic – disproportionate benefits to the very top of the pyramid – reigns. Playing the museum game costs a lot of money, and Indianapolis has less of it than other cities. It’s also pretty clear that the moneyed elite of Indianapolis are not willing to put the wealth they do have into the IMA. The fact that they had to turn to debt rather than relying on a successful capital campaign for their 2005 expansion was already evidence of this.

Esquire magazine used to have a recurring feature called “the indefensible position”, in which they tried to make the case for some unpopular or contrarian type idea. Along with that same theme, I would say that in the absence of say a multi-billionaire willing to be a huge patron of the IMA, downgrading the artistic ambitions and repositioning the institution as a popular entertainment venue with a museum component is rational and defensible from a purely business strategy point of view.

Now, does that appeal to me personally? No. But they’re not doing it for me. Nor are they doing it for Kriston Capps or many of the other critics who don’t live there. In a sense, this move is about saying goodbye to that serious art world crowd and moving in a different direction that is more populist.

Sometimes you just have to make tough decisions. Indianapolis did that with its downtown tennis complex. They had established a professional tennis tournament in 1988 as part of the city’s sports strategy. By the late 2000s the city, faced with a series of 1980s era sports venues like their tennis complex that were aging and in need of expensive updates, and recognizing that their tournament was not one of the elite events on the ATP Tour, made the decision to get out of the tennis business. The tournament ended and complex was demolished. In retrospect it looks like the right move to have made.

History will be the judge of whether the Newfields move was a good one or not. Will it ultimately succeed in changing the financial structure of the museum and find resonance with the public? Or will it alienate the cultural elite, hurt the city’s image, and become a barrier to recruitment? Only time will tell.

But bringing in Venable to cut back the museum’s ambition level and take it in a different, and in a sense innovative, direction is not a per se ridiculous decision. I’ve long argued that cities need to be willing to chart their own path and not just dance to the tune other places demand – particularly when those other places (like Capps’ DC) are very different.  That’s what’s happening here, for good or ill.

Where the museum and its board do deserve criticism is for their frequent changes in strategic direction. First they borrow $100 million for an architecturally subpar building expansion. Then they bring in a new director to try to raise their ambition level. Then they bring in a guy to reduce it. Will they stay the course with this one? History would suggest not to bet on it.

But as for the Newfields move itself, it is plausible strategic response to the city’s situation in terms of the institutional assets they had, the level of community wealth, the willingness of community leaders to invest that wealth in the museum, and the tastes of the broad cultural middle in the city.

from Aaron M. Renn
http://www.urbanophile.com/2018/02/09/a-strategic-look-at-the-indianapolis-newfields-controversy/

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New York’s Tech Sector Gobbling Up Real Estate

Photo by Dmitry Avdeev, CC BY-SA 3.0

Google, which already owns a gigantic building in Manhattan, is buying Chelsea Market for $2.4 billion. The NYT article about this gives some insight into the very strong growth of the tech sector in NYC.

Chelsea Market sits directly across Ninth Avenue from the company’s headquarters at 111 Eighth Avenue, which is larger than the Empire State Building and covers the entire block between 15th and 16th Streets.

But it is only the latest example of an internet behemoth, and even smaller tech companies, expanding rapidly in New York City.

Amazon, Facebook, Salesforce, a cloud computing company, and Spotify, a music streaming service, are all enlarging their footprints here by hundreds of thousands of square feet. Employment at technology firms has grown three times faster in New York City than in the rest of the private sector, adding more than 50,000 jobs since the end of the recession in 2010, according to a report by the state comptroller.

At the end of 2017, tech firms accounted for 29.3 million, or 8 percent, of the 398 million square feet of office space in New York City, according to CBRE, a real estate company. In a snapshot of recent tech-sector activity, those companies have leased or renewed leases for 21 million square feet of office space in the last 10 years alone. If telecom companies are included, that number jumps to 26.8 million. Nine years ago, tech firms had only 17.6 million square feet of office space, or 5 percent of the office market.

I took a few related things away from this. First, New York tech sector is large and growing, and is at a fundamentally different scale than most of the cities hoping to be big tech hubs. I believe Google already employs 6,000 in New York. Facebook employs 5,000. Amazon announced they were hiring 2,000 more just as the HQ2 bidding got underway. So in effect, NYC is already getting a piece of that action. Per the article, the city of New York has 291,000 tech jobs vs. 347,000 in Silicon Valley. That’s a decent comparison on a total jobs basis, though obviously the lion’s share of the value is getting captured in the Valley.

It also illustrates that New York’s tech environment is heavily driven by major, established players, many of them Silicon Valley based, that see NYC as a place they can recruit gobs of high end talent. What I don’t see in New York is a lot of huge, indigenous startups growing to be platform players. There are a lot of new media companies in New York. And there are some companies based here like Etsy and Kickstarter.  But the impression I get is that the explosion in employment is coming out of major established firms more so than startups. New York is an obvious place for marketing, finance and other business functions. But it’s also very easy to get engineering talent to want to live here.

During the dotcom collapse, New York’s Silicon Alley 1.0 got mostly wiped out. It will be interesting to see what happens to this much larger, corporate driven ecosystem the next time there’s a downturn in tech.

from Aaron M. Renn
http://www.urbanophile.com/2018/02/08/new-yorks-tech-sector-gobbling-up-real-estate/

The Big Fee

Image Credit: Flickr/Lanacar – CC BY 2.0

The Wall Street Journal has an interesting article on the rise of fees as a mechanism of government cash raising in lieu of raising taxes.

Scranton, Pa. is turning to an unlikely source for fiscal strength: garbage.

The distressed city in northeastern Pennsylvania began charging residents a $300 annual fee in 2014 to collect their trash, up from $178. That 68% increase has since raised millions for Scranton, one of the many steps being taken to restore the former coal-mining hub to solid financial footing after decades of decline.

Cash-strapped American cities are increasingly asking their residents to pay higher amounts for mundane services as they struggle to pay for mounting pension obligations, cover costly infrastructure improvements and replace revenue depleted by the last recession. Bills are rising for everything from parking tickets and 911 calls to sewer service and trash pickup.

One small Midwestern town, Danville, Ill., is raising its fees for a specific purpose: to chip away at more than $100 million in liabilities owed to police and fire department retirees. The city of about 30,000 first attached a $2 a month “public safety pension fee” to residents’ sewer bills in 2014 and in December pushed that charge to $22.25 for those in single-family homes.

The article notes that cities are doing this in part because of limitations on their ability to raise taxes. It’s very clear that financial distress can send cities towards things like fees and fines for revenue, and that at times this has become abusive (particularly the use of fines).

However, I see this as also driven by market trends. I’ve noticed that there’s been a move away from headline pricing and towards fees by companies as well. Think about the airlines, for example. They figured out that consumers often simply pick the lowest fare. So their ability to raise fares is very limited. But they can create an array of add-on fees, like checked baggage fees or decent seat fees, to raise revenues in other ways. It seems to me that various add-on fees are much more common than they used to be. (Banks make a killing off of them).

American consumer seem to be heavily fixated on headline pricing. In the government context this would mean something like property tax rates. Raise property taxes and you have a revolt on your hands. Plus your next election opponent will attack you for raising taxes. But perhaps there will be less chirping if the same revenue is raised via increases in fees.

In short, I see another part of this as a response to consumer behavior, because it’s similar to what we are seeing corporations do.

from Aaron M. Renn
http://www.urbanophile.com/2018/02/08/the-big-fee/

The Brewery Boom

A reader sent me a link to a BLS study on employment in the beer brewing business. While beer brewing is not a major industry in America, employment in the sector has been going up as the number of microbreweries explodes.

According to the report:

In 2006, there were only 20 states that had employment data for the brewery industry that met BLS publication standards. Among those 20 states, Colorado had the most brewery jobs (3,497), followed by California (3,022). By 2016, employment data for the brewery industry were available for 48 states and the District of Columbia. California had the most brewery jobs in 2016, (8,113), followed by Colorado (5,173). Indiana had the fastest brewery employment growth over the past decade, with 54 times the number of jobs in 2016 (1,038) than in 2006 (19). Illinois and Idaho had the second and third highest employment growth in breweries, both states having more than 10 times the number of jobs in 2016 than they had in 2006.

The number of brewery establishments in the United States exceeded 500 for the first time in 2010. In 2016, there were 2,843 breweries, more than 7 times the number in 2001. The largest 12-month percentage increases in the number of breweries occurred in 2013 (38.4 percent) and 2014 (38.5 percent).

Click through to read the entire short report.

 

 

 

from Aaron M. Renn
http://www.urbanophile.com/2018/02/07/the-brewery-boom/

The Strange Case of Civic Identity in Northeast Ohio

I was recently in Akron presenting a forthcoming paper of mine. One of the interesting things about the Northeast Ohio constellation of cities is that there’s a very weak sense of regional identity. In almost any other context, Cleveland and Akron would be considered some type of twin city ecosystem.

Consider:

  • Dallas and Ft. Worth are 32 miles apart.
  • Seattle and Tacoma are 34 miles about.
  • Cleveland and Akron are 39 miles apart.

Cleveland’s Cuyahoga County and Akron’s Summit County are also physically contiguous. Yet, Cleveland and Akron do not seem to share a strong sense of regional identity, but rather view themselves as independent cities and regions. The same would also be true with Akron and its smaller neighbor Canton. Youngstown is also similar, though less proximate than those other cities.

All of these cities have their own officially designated metropolitan areas. This makes Northeast Ohio regions seem underpowered vs. the rest of the state. Columbus will tell you they are the biggest city (municipality) in the state. Cincinnatians will say they are the largest metro area. But clearly Northeast Ohio is the largest urban region Ohio. If we use the largest measure of an urban trading area, the BEA Economic Area, Northeast Ohio is 4.5 million people. Columbus is at 2.8 million, and Cincinnati barely larger than its MSA population at only 2.4 million.

Still, it’s fair to say that the region hasn’t figured out how to work together. In that sense, the division into separate urban identities and MSAs reflects an underlying reality.

Regionalism is a sort of conventional wisdom best practice. So almost everyone at least gives it lip service. But what does regionalism look like in a region where cities don’t think of themselves as being part of a functional region? Previous attempts to market the area as Cleveland+ apparently didn’t go over well in other cities, though the label still seems to have some currency. You can view the web site here. The economic development marketing group calls themselves TeamNEO, which I suspect is better digested.

I have always advocated that a greater sense of a shared identity and destiny is important for regions and states. However, this also has to take account of reality. These cities think of themselves as distinct places. There’s nothing wrong with that. So the challenge is to develop a regionalism concept that works with instead of against this grain. Historically there doesn’t appear to have been much of anything related to this in Northeast Ohio, so the communities there are having to figure it out today. So it’s to be expected that they will need to evolve and iterate on it vs. other places with more historic regional form.

The important point is that the cultural givens of a particular place or region need to be understood and used as inputs into policy. This applies to all regions, which each have their own unique quirks. This is part of what gives them their unique charm. There can be cases where regional cultural traits need to be changed, but if you’re swimming against the tide on that you need to understand how difficult this undertaking will be.

from Aaron M. Renn
http://www.urbanophile.com/2018/02/06/the-strange-case-of-civic-identity-in-northeast-ohio/

Corporations Starting to Change Their Tune

I mentioned last year a story about how former GE CEO Jeff Immelt not only flew around the world in a private plane, but had an another empty private plane follow him around just in case something happened to his main plane. This was all paid for with shareholder funds at a time in which GE was underperforming.

This is the type of corporate misbehavior that’s been fueling animus against capitalism by the youth. Another example might be the case of Tronc chairman Michael Ferro. Tronc owns the Chicago Tribune, LA Times, etc. Tronc instituted major newsroom cuts at the LA Times, then had the paper sign a $5 million consulting contract with Ferro’s firm. In effect, the LAT appears to have fired reporters in order to cut a huge check to the firm’s chairman.

However, in the last year I’ve noticed a major change in messaging by many large corporations. Apparently stunned by Trump’s presidential win, and wishing to avoid attracting his ire, they are taking great pains to speak loudly about their commitment to doing business in America and benefitting American workers.

For example, in the wake of the tax bill, many corporations like AT&T and Comcast announced they would be using their windfall to pay bonuses, give raises, set a $15 minimum wage for their employees, and/or hire more people. I believe somewhere around 50 major corporations have made these kinds of announcements.

Now, it’s not clear how substantial these are. Wal-Mart announced it was raising its starting wage and giving out some bonuses. It did this the same day it closed 63 Sam’s Club stores. Apple also made a splash with a major announcement that it would be repatriating its overseas cash pile and making many domestic investments. However, other than the repatriation and resulting $38 billion tax bill, it’s not clear how much of this is actually new vs. things they already planned to do. For example, they talk about 20,000 new jobs, but it’s not clear whether this is net hiring or merely gross hiring.

Regardless, this concern for, at a minimum, the optics of how they are conducting their business is a positive development. To the extent that there’s substance here, that’s great too. Let’s hope abusive management and executive self-enrichment at shareholder expense also start falling off.

Cover photo by Mike Kalasnik from Fort Mill, USA – CC BY-SA 2.0

from Aaron M. Renn
http://www.urbanophile.com/2018/02/05/corporations-starting-to-change-their-tune/

Rising Car Access Sends LA’s Transit Ridership Falling

Photo Credit: Nserrano, CC BY-SA 3.0

Transit ridership is down in a number of markets, but LA’s declines have attracted a lot of attention – and for good reason. LA has invested billions of dollars in rail transit but has failed to grow ridership, which is still below its 1985 levels. And ridership has actually been falling in recent years, even on the existing core rail lines. (New and expanded lines saw some growth).

I don’t see a grand narrative of transit decline at the national level. I think we need to look at local markets to see what’s going on. The Bay Area has seen pretty good performance vs. LA. New York’s ridership is up substantially in the last couple of decades, with recent declines intuitively related to operational reliability problems. It’s probably the same in other legacy cities like DC, whose Metro system has been problem plagued. Chicago’s rail declines have been tagged as resulting from cannibalization of off-peak trips by Uber and Lyft.

What about LA? A new study attributes the transit declines there to sharply higher vehicle access among the transit dependent population.

The study notes that a relatively small number of people and neighborhoods disproportionately fuel transit ridership. The median number of rides in LA is zero. The authors investigate several potential causes of transit decline – falling gas prices, Uber/Lyft, and neighborhood demographic change – but alight on rising access to vehicles as the most likely culprit.

A defining attribute of regular transit riders is their relative lack of private vehicle access. But between 2000 and 2015, households in the SCAG region, and especially lower-income households, dramatically increased their levels of vehicle ownership. Census data show that from 1990 to 2000 the region added 1.8 million people but only 456,000 household vehicles (or 0.25 vehicles per new resident). From 2000 to 2015, the SCAG region added 2.3 million people and 2.1 million household vehicles (or 0.95 vehicles per new resident).

The growth in vehicle access has been especially dramatic among subsets of the population that are among the heaviest users of transit. Between 2000 and 2015, the share of households in the region with no vehicles fell by 30 percent, and the share of households with fewer vehicles than adults fell 14 percent. Among foreign-born residents, zero-vehicle households were down 42 percent, and those with fewer vehicles than adults were down 22 percent. Finally, among foreign-born households from Mexico, the share of households without vehicles declined an astonishing 66 percent, while households with more adults than vehicles dropped 27 percent. Living in a household without a vehicle is perhaps the strongest single predictor of transit use; the decline of these households has powerful implications for transit in Southern California.

Public transportation is unlikely to fare well when Southern California is flooded with additional vehicles, especially when those vehicles are owned disproportionately by transit’s traditional riders. Much of the region’s built environment is designed to accommodate the presence of private vehicles and to punish their absence. Extensive street and freeway networks link free parking spaces at the origin and destination of most trips. Driving is relatively easy, while moving around by means other than driving is not. These circumstances give people strong economic and social incentives to acquire cars, and —once they have cars —to drive more and ride transit less.

The advantages of automobile access, which are particularly large for low-income people with limited mobility, suggest that transit agencies should not respond to falling ridership by trying to win back former riders who now travel by auto. A better approach may be to convince the vast majority of people who rarely or never use transit to begin riding occasionally instead of driving.

Click through to read the entire study.

Note that they don’t completely discount neighborhood change as a factor. They suggest that it needs more study.

What this study suggests to me is that LA’s ridership declines may be more entrenched than those in places like NYC and DC, which I believe could be reversed by improving reliability.

 

from Aaron M. Renn
http://www.urbanophile.com/2018/02/02/rising-vehicle-access-sends-las-transit-ridership-falling/