Former Pittsburgh Mayor Opines on LA City’s Lack of Leadership in Planning LA 3.0

What does a guy from Pittsburgh have to say to a bunch of people in Los Angeles? A lot—because what I’ve heard all morning is universal.

Having been with ULI for the last couple of years, I’ve had an opportunity to visit, speak in, and work with more than 100 cities around the world. The same conversations are going on everywhere. We are at a remarkable moment in time.

Let me be candid: While there are some programs, the federal government is sort of out to lunch. It’s paralyzed, and what happens in the election probably won’t make a lot of difference with that.

State government—and I say this as a former state legislator—is largely in the black hole of American politics. Our legislatures are often the most reactive place in America. I’ve seen it in every state. I thought it was just Pennsylvania until I traveled, but it’s everywhere.

That leaves local government—the civic leadership of a community—to decide whether your community is going to succeed in a world where the fundamental rules are beginning to change.

Let me demonstrate this with a metaphor. In the early 1900s, Horatio Nelson Jackson was a doctor from Vermont. He was in San Francisco for a medical convention, out to dinner with a group of doctors, and they were debating the impact on the car on American society. Horatio thought it was going to be a game-changer, and the other doctors thought it was going to be a toy for the rich. There was no infrastructure for it, so it was going to have very little impact.

He bet them all $50 that he could drive across the United States in 90 days. And the very next day, he went out and bought his first car, convinced the auto mechanic Sewald Crocker to go with him, and for whatever reason they bought a dog named Bud. Horatio, Sewald, and Bud were the first people to drive across the United States. It was 1903.

In 1903, there were 8,000 cars in America, 150 miles of paved road, and no highway department in any state. By 1923, there were 10 million cars in America, hundreds of thousands of miles of paved road, and a highway department in every state. Society as we knew it changed completely in those 20 years.

We’re now sitting where Horatio Nelson Jackson was sitting. We’re watching the same thing happen: The fundamental rules that have governed us for the last 50 years since World War II are changing.

In 1903, there were 55,000 harness makers in America. By 1923, there were 2,500. What’s happening with industries right now? The newspaper industry can’t figure out where they fit. We’re watching whole industries get changed due to technology.

Some weeks ago in Pittsburgh, Uber put 100 live driverless cars on the road. People thought that would take 10 years; it’s happening today. What does that mean for real estate? What does that mean for parking requirements? Why do we even have parking requirements?

Demographics are changing the choices we’re making about how we want to live, and that’s having a huge impact on real estate. 25 years ago, there were articles all over the place asking, “Are cities dead?” Now we talk about gentrification as if it were a bad thing.

Everybody in real estate, whether you’re over 50 or not, ought to read AARP Magazine, because it talks a lot about where Baby Boomers want to live. Where we want to live isn’t about big cities or small cities. It’s about walkability, vibrancy, culture, the arts, and recreational opportunities. People my age (I’m 73) are making choices very differently from our parents about where to live.

Even more dramatic are the millennials. At 83 million, they are the largest cohort or demographic bloc in America. They are six times less likely, at 24 years old, to own an automobile than their parents did at that age. When I was 16 or 17 years old, the kind of car my father bought was a big issue in terms of status. Now, 24-year-olds could care less about cars. They care about mobility. Investing in mobility and making it easy for people to move around becomes a very important choice for cities.

In many ways, I think talent is the most important ingredient for a city—and another example of the Horatio Nelson Jackson moment we’re in. Look at how Los Angeles has changed: In 1990, you had twice as many manufacturing jobs as you did technical jobs in the universities and hospitals. By 2015, you had twice as many technical jobs as you do manufacturing jobs. You’ve lost 50 percent of your manufacturing jobs.

In light of that change, what’s the single most competitive advantage you could have? Talent—educating and attracting talent. Talent is what’s driving your economy; talent is what’s driving every economy now. It has always been that people move to where jobs are. For the first time in history, increasingly, we are watching jobs move where people are going. They’re chasing the talent.

What do General Electric, Google, Motorola, Kraft Heinz, Panasonic, and hundreds of other companies have in common? In the last two years, they’ve all moved their headquarters and research from suburban areas into cities. General Electric is moving from a cushy, 74-acre campus in Connecticut into Downtown Boston. Motorola is moving out of a suburban area in Chicago. Whether companies are big or small, to attract talent, they’re going to places that are vibrant and exciting—where young people and talented people want to live. You need to think about how to build that community.

Los Angeles’s investment in Metro is one of the most remarkable examples I’ve seen across America of the kind of investment a city can make in its future. You’ve made the choice to build in the future. But this morning, I heard all about how the rules don’t work very well anymore. This investment means that you need to rewrite the rules.

One thing lacking from the conversations today was the issue of partnerships—how to build effective partnerships, and how they can shape the vision of a community.

I believe in the market. I don’t think anything happens in the city if you don’t understand the market. How the public sector and the private sector engage around market conditions determines whether that community is going to succeed or not. Let me give you some remarkable examples from around the country.

In Minneapolis’s seven-county region, 179 local governments agreed to share the increased property taxes from new development. 40 percent of all new property taxes from new development now go into a common pot that’s shared throughout the community. They make some decisions about where to invest it—maybe in affordable housing for the region. Instead of competing with each other, the region is clearly working together on a regional strategy that doesn’t create winners and losers. Can you imagine that for Los Angeles?

You’ve heard about the Denver transit system. In 2004, Denver voted to raise taxes on themselves to invest in a 120-mile transit system. If you’ve been to Denver lately, you know that they’ve built a lot of that out. There are 78 stops and lots of transit-oriented development. One of the most remarkable developments is Union Station in Downtown Denver.

It was essentially an abandoned railroad station, with two trains a day and 20 acres of vacant old railroad lands around it. If you go there today, you will see $2 billion worth of development, including 3,500 residential units and 2 million square feet of commercial. It is a remarkable example of how transit drove huge investment.

Watching cities have renaissances all over the country—big cities and little cities—what we are seeing is how they make choices about financing. You’ve made a remarkable choice here in investing in Metro. The question now is how to take advantage of that investment. Denver is probably the best model for LA to look to for how to do that.

Finally, let me talk a little bit about Pittsburgh. Between 1970 and 1990, the steel industry in Pittsburgh collapsed. More than 500,000 people left the region—50,000 a year. We became the second-oldest county in America, and it wasn’t because people were retiring in Pittsburgh; it was because the young people were moving. Our unemployment rate in the mid-80s was 22 percent. In 1985, Pittsburgh was one of the most environmentally degraded and one of the most economically depressed places in America.

Fast-forward to today, and Pittsburgh is ranked in Forbes Magazine and The Economist as the most livable city in America. How did that happen? How did we move, over 25 years, from being such an economically depressed city to one that is very successful? Through really strong partnerships, through investing in vibrancy, and through thinking about how to create a new generation of jobs.

We invested heavily in culture. You take it for granted in LA; we did not. We did not have a remarkable cultural scene. Now we do. We took what were the most industrialized rivers in America and converted them to great parks. I can ride a bike now from Downtown Pittsburgh all the way to Washington D.C. and never go on a road—all along waterfront.

I looked at the LA River when I flew in here. I looked at that concrete ribbon, writhing right through the middle of your city. Come on, LA; do better. I mean, what an opportunity you have there! It could create huge economic value for this community.

Pittsburgh would be a good model. When I was growing up there, the rivers near the railroad tracks and the steel mills were so polluted that my mother would say to me, “Never go to the river. If you go to the river, you’re going to melt.” We had an opportunity to rebuild our rivers. You have that opportunity here now. Take advantage of it.

As I mentioned, we’re a flat-growth city. We lost half of our population. When I was 25 years old, Pittsburgh’s population was 672,000; now it’s 300,000 people. So how do we afford to make investments, or public-private partnerships, in a whole host of things? Because we capture value.

This is where you’ve got to change the rules. You are creating huge value with this Metro investment—particularly around the transit stops. How do you capture and use that increased value to invest in affordable housing or other issues of concern for you?

Here’s another example from Pittsburgh. PNC Bank wanted to build a new operations center, which would create 2,500 jobs, but be way out in the suburbs and inaccessible to a lot of people. We worked with PNC Bank and said, “If you build the center on this old railroad yard, we’ll help underwrite some of the cost of cleaning it up, and we’ll build you a new transit stop and a parking garage.”

How did we build that partnership? How did we provide the public finance? We saw ourselves as public entrepreneurs. We understood that if we wanted to compete and succeed, we would figure out how to finance it. You need to think about how, in a new world, you can change the rules to make things work for you—instead of being stifled by what the rules are. If you don’t do that, you won’t succeed.

There are more pieces to the puzzle. For instance, I didn’t hear this morning about strategy. What I did hear is that Los Angeles is doing a series of individual transactions without a broader strategy for the kind of community you want to have. This community needs a strategy—a vision. You need to know where you want to go.

When I was Mayor of Pittsburgh, developers would come to me and say, “Mayor, I have a great idea for you.” I’d say, “With all due respect, you tell me why it’s a great idea for you, and we’ll decide whether it’s a great idea for us. If our self-interests come together, then we’ll figure out how to be a good partner with you.” That stance assumed that we knew where we wanted to go.

Another component is leadership—bold leadership, not rushing to the lowest common denominator. You do need to listen and to give people a chance to be heard, but at some point, people need to make a decision. You can’t take a lifetime getting things done. That’s a challenge to the leadership you have and the rules you have.

When I fly into LAX, there’s a sign saying, “Welcome to Los Angeles.” Signs like that say things like, “We’re a green city” or, “We’re a world-class city.” You would never think to put on that sign: “We’re a mediocre city.” But you do that by the quality of the planning and the development that you do. How much you focus on the quality of what you build—or if you have really bad, “it’ll-do” kind of architecture—that talks about who you are.

This is why planning departments are so important. You should be the grown-up in the room. Developers, by nature, are coming in with a transaction. They might be building a great building, but somebody needs to think strategically about how that building fits into the whole street and how to solve common issues like parking and the streetscape. Great cities think about that stuff.

We’re sitting today where Horatio Nelson Jackson was sitting in 1903—looking at a world that is about to be redefined. You all know you need to embrace change. But what I heard today was a battle about how we embrace change.

The community has a choice. It is about whether you go along with people who protect the status quo, or whether you want the leaders and the partnerships that are going to reach for the future.

I’ve been to hundreds of community meetings. I know that any time you suggest something new, there are going to be 100 people telling you why you can’t do it: It’s the wrong color, it’s in the wrong place, it's too big, it’s too small, and never is there enough money, if public money is involved.

But they get to define their rules, or you get to reach for the future.

Reach for the future. Good luck.