7 Days, 7 Topics: A Round-Up of Topics from this Past Week

Florence's new brand.

To say it was a busy week would be something of an understatement. The Crimean and general Ukrainian situation escalated. The hunt for an airplane lost in a Bermuda Triangle-style continued in the south Indian Ocean. Duke lost to Mercer. Not exactly light stuff for anybody, unless you're a Mercer fan. Anyway, this whole volley of events prompted a number of articles and opinions worth bringing forward and discussing in the context of public administration. Below are seven articles from this past worth passing around and discussing:

1. Sunday: Too Soon for Answers in Harlem (by Nicole Gelinas for City Journal): An overview of things that could have caused this month's explosion in Harlem, which killed eight people, injured several more and leveled a few buildings. Gelinas points out that it may not have been Con Edison's (the transmission utility) fault due to any number of other problems. Fair enough, but her argument is then expanded to say that the failure of a gas main cannot be compared to the general infrastructure problem facing America as Con Ed is a private utility with underground infrastructure. That argument misses the fact that private regulated utilities function almost identically to public utilities (indeed, under an enterprise fund, it's not as if funding can legally be diverted from water mains to teacher salaries as Gelinas mentions) and the 127-year-old cast iron main located near the explosion is far beyond its service life. America has a real infrastructure problem regardless of who is tasked with maintaining any given piece of infrastructure and casting doubts on it does no one any favors.

2. Monday: Determining the Markup on Municipal Bonds (by the New York Times' Carl Richards): A brief overview of a side of the market we (at least I) rarely think about - those folks who are buying municipal bonds and the power of brokers in those sales. If you've got a few in your portfolio, it may also save you future problems with markups.

3. Tuesday: Walmart Goes Urban and Smaller in Washington DC (by Edward McMahon for Urban Land Magazine): Walmart's finally found its way into major cities - in this case, Washington DC - and its taking on the look of the landscape by compressing its space and adopting urban facades. It's an interesting change of heart for the retail giant, but really, it also proves the adage "Necessity is the mother of invention." Strong demand for lower cost merchandise coupled with high population density probably softened Walmart's strategy in approaching the question of its urban locations with favorable results for those communities. Sadly, I don't expect to see this in the suburbs.

4. Wednesday: How the Crimean Conflict Could Impact Your Finances (by Richard Barrington for Forbes): Russia's invasion and subsequent annexation of Crimea is the kind of event which foreign policy experts could write a new War & Peace about, but aside from some general basic humanitarian concerns, there is little other immediate impact at the local level - unless you think about how global trade issues trickle down. Barrington illustrates the possible impacts of this whole situation on your wallet simply and efficiently. Of course, tax revenue is yet another step removed from the level Barrington is at, but the correlation between general economic conditions (and, in particular, individual consumer sentiment on the economy) and tax revenue is clear and obvious. If this situation simmers at its current level or escalates, we may begin seeing the consequences anywhere from three months to a year down the road in tax receipts.

5. Thursday: The Great Debate: City Manager vs. Assistant City Manager (by Julie Underwood, writing on the ELGL Website): A nice overview for emerging professionals on the merits of both seeking the City Manager role and the benefits of being a career Assistant or Department Head. This was not something they openly discussed in my grad school (though subject specialist adjunct professors would sometimes touch upon it), but the longer I've been a professional, the more I recognize the merit of staying an Assistant. Grad students and recent new professionals should definitely give this food for thought a read.

6. Friday: What is CNN Going To Do If We Never Find This Plane? (by Esquire's Ben Collins): An absolute great look at how the media's need for ratings (and sales by extension) promotes sensationalized news without substance. What's that got to do with us in public administration? Well, first and foremost, it creates problems with our relationship with the media. Investigative or sensational coverage is nothing new, but as it grows, it'll make those reporters we were once comfortable with become our enemies and that defeats the whole purpose of media relations. Second, it creates problems with the public. While the traditional media is not the mainstay it once was, it still holds more sway than most of our public information efforts, and negative coverage hurts both the public's generalized view of government and their specific view of our individual organizations. This is something we should be concerned about and asking ourselves what are we going to do in light of the fact that the media may give us prolonged negative attention that we are not necessarily prepared to manage.

7. Saturday: Florence's New Logo: Crowdsourced Design That's Bad for Design (by Steven Heller for The Atlantic Cities): City branding has been hot recently - it seems like everybody is jumping into it. In this case, Florence opted for a riskier albeit cheaper route to creating a brand: crowdsourcing it. Heller argues that the ultimate logo Florence chose is unsatisfactory and partially because the crowdsourcing option cheapens the whole process. I'm not in love with the logo myself, and I agree that crowdsourcing feels like a weak alternative to the careful study and thought being placed on the community, its unique attributes and its dynamics that a designer can bring.

Thoughts? Any other good stories I missed? Share them below.

On Detroit, Emergency Managers and Dillon's Law

This past week, the State of Michigan formally announced that it would be seeking to appoint an emergency financial manager to takeover the City of Detroit, the 18th largest city in the US.  According to the New York Times, Detroit has roughly $14 billion in existing long-term liabilities.  The City has terrible, self-admitted liquidity problems, and all the symptoms of insolvency are present including revenue shortfalls ($326.6 million in FY 11/12 according to the City's CAFR), rapidly downgraded credit ratings and ballooning short-term debt (as a result of the shortfalls). A full history of the City's agreements and activities related to managing its solvency over the last few years is available in the Management Discussion & Analysis portion of its previous CAFR.

So, in short, Detroit is in dire straights.  With all major credit agencies now rating Detroit below investment grade, the City's ability to issue any more debt is significantly compromised.  Their efforts to control costs including 10% wage cuts, freezing of benefits and pay increases and various actions to outsource certain functions and reorganize debt seem to have aided slightly, but they have not been dramatic enough to demonstrate solvency to either the State or the credit agencies.  Therefore, Michigan has proposed invoking its controversial ability to assign an emergency manager to take over the city's operations and unilaterally make decisions to improve the city's finances.  Detroit seems to be somewhat ambivalent toward the whole thing. Much of Detroit's community isn't but is begrudgingly accepting it.

Michigan's authority to assign an emergency manager falls under the broad category of "Dillon's Law," which establishes municipalities as "creatures" of the State.  In simpler terms, it means the State is the boss and municipalities only have the powers given to them.  In some respects, it's a logical arrangement and makes complete sense.  After all, the State is the superior government and has a responsibility to ensure accountability.  In some instances, however, the arrangement leads to unnecessary burdens or extremely unfavorable terms on both parties.  This is, always has been and always will be a delicate balancing act.

In Detroit's case, the emergency manager situation seems somewhat necessary.  The city no longer has the ability to independently get itself out of the situation, and without some sort of guarantee of solvency, default is the only option.  An emergency manager can help prevent that.

However, the Detroit Free Press, amongst others, does make some valid points including the fact that it ignores regional issues and drastically reduces the ability of residents to use their democratic rights.  However, I think Michael Stampfler, the former emergency manager of Pontiac, MI, says it best, ""For a community to actually succeed, the Legislature needs to do more than send someone to work to balance the books and leave as fast as possible."  Balancing the books is a core necessity, and I don't think anybody can dispute that.  The problem though is that in doing so, an emergency manager, whether or not intentionally, sidesteps civil engagement and, perhaps just as gravely, can entirely dismantle an organization without leaving any easy method of putting it back together.  Then, as soon as the books are balanced, they leave without necessarily giving the organization the tools to succeed.  That's simply not sustainable.

So, I don't disagree with the Free Press's points in their editorial today.  I think their calls for transparency and cooperation are excellent, but they have to realize that the manager won't be able to make services better and fix Detroit's problems overnight.  Long-term problems require long-term solutions, and the manager is really phase one of a restructuring that Detroit needs to do together, as a community. Anything else will likely fail.

Simultaneously, the State of Michigan needs to stop such heavy-handed interpretation of Dillon's Law.  While the state is technically correct and certainly has an overriding interest in the success of its urban communities (better communities mean a better Michigan in more ways than one), they need to take the old economist adage, "Who feeds Paris?" to heart.  Just as Paris is fed through an extremely complex series of transaction, Detroit and Michigan become successful through micro and macro transactions and exchanges beyond simple fiscal solvency.  An emergency manager must preserve as well as salvage.  I urge Lansing to reconsider their approach and help cities pull themselves up with the aid of and not the commands of an emergency manager.