Cool-Kid Indicators: A Guide to Successful Investing for Cincinnati's Future

This afternoon I went to City Hall to testify in front of the Transportation Committee about whether or not Cincinnati should study a second phase of the streetcar in order to get it up the hill to the hospitals and universities.  Pro-streetcar, anti-streetcar, everybody in the room agreed on one thing:   we cannot afford to waste taxpayer dollars and every project should be carefully monitored.

During her comments, Yvette Simpson reminded us of Council’s role as “stewards” of public funds. I shifted the emphasis somewhat when it was my turn to talk.  “You said, you are stewards.  But you’re really investors,” I told the members of the committee.

Every single vote on big, expensive projects that we will have to live with for generations is an assumption about what life in Cincinnati is going to look like 10, 20, or 30 years from now.  Which is really hard to do.  How does anybody predict a world that is changing as quickly as ours?  But guessing wrong cripples cities for decades.

During a recent discussion with a high-ranking city administrator about the number of city-financed parking garages we have been building, he assured me, “People say garages are goldmines.”

I used to earn my living as an investment adviser and the word “goldmine” always signaled imminent disaster.  Tulip bulbs or tech stocks, didn’t matter.  Whenever the crowd decides you can’t loose, ugly times are just around the bend.

Bad investors assume life won’t change.  If revenue from parking garages has always covered the outstanding debt service on the bonds we issue to build them, it always will.  If one casino made money, a dozen more will always do the same. If retail succeeded on Fourth St. before, the right stores will make it happen again.

City Council Members: please don’t bet our future on studies paid-for by the developers who make money building these projects.   When you invest for the next thirty-years (and especially when you borrow the money to do it) don’t get us stuck in some Baby-Boomer version of the Cincinnati Dream.  Figure out what the Cool Kids want.  Here’s where I see the biggest changes between parents and their grown children these days:.

1.  Cool Kids do not buy as much stuff as their parents did.  When they do shop, they often prefer to do it on-line instead of at the mall.

2.  Cool Kids want to live in the city. where they can walk to restaurants and craft breweries, meet their friends, and eat out a lot of their meals. They wait longer to get married and start families.

3.  Cool Kids ride bikes, drive fewer miles, own fewer cars, take Uber and Lyft and can’t wait until self-driving vehicles become the norm by 2035.

4.  Cool Kids care about the environment.

5.  Cool Kids don’t expect to work for the same big company for their entire careers.  They don’t like office towers or corporate campuses.  They’re risk takers and success is equated with owning their own business.  We have already seen the peak of the big corporation as the primary driver of the American economy.

6.  Cool Kids like to DIY: they repair their own bikes, rehab houses, and knit.

7.  Cool Kids are policy wonks with great confidence in their ability to research complex subjects on the internet and use technology to communicate information. They do not passively absorb anything.  They have their own ideas. When they do eventually get involved in local government in a big way, it will be on a far grander scale than checking off a box on a ballot once a year.  Be forewarned.  Cool Kids are going to reinvent how we do government.

oh, yeah – and

8.  Cool kids like streetcars.  While “responsible” taxpayers wring their hands about the folly of that “trolley” – the problems that can wreck havoc on this city are the ones that nobody sees yet. What we should probably worry about are all those parking garages we’ve built with Tax-Increment-Financing money we borrowed for 30 years, sure it was a goldmine and there was no such thing as too much parking.

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15 thoughts on “Cool-Kid Indicators: A Guide to Successful Investing for Cincinnati's Future

  1. throughthecatchfence

    You are falling into the same trap that you accuse developers of espousing. Hoisted on your own petard. You are banking the future assuming that your so called cool kids are going to continue to do what they are doing now and that the next gen of cool kids are going to do and want the same as their predecessors. As always Cincinnati is behind the curve. At one point it had to buy an entire railroad to survive because the city fathers believed that steam boats were the future of commerce. The street car system is a massive financial boondoggle that will loose tens of millions of dollars before it goes on the scrap heap with the steamboats and the subway.

    Reply
    1. thebillshark

      Uh, buying the railroad was one of the smartest decisions we ever made. Pays out something like 20 million annually. Should have bought more “to survive.” The steamboats did wonders for our economy and were our original reason for being, just because they didn’t remain the most important transit mode for all time doesn’t mean they were a mistake. And I’ve witnessed first hand how the portland streetcar helped give birth to an entire district filled with beautiful new buildings and tax paying residents. PS the streetcar will become an instant Cincinnati icon.

      Reply
  2. executivedreamer Post author

    There’s such a generation gap on this issue, throughthecatchfence. I used to go to public meetings where Michael Moore would be out trying to explain the benefits of the streetcar. If someone in the audience held up their hand to comment and they had gray hair – they were anti-streetcar. And if someone was wearing those hipster glasses, one of those gorgeous twenty-somethings opened their mouth – well, never once did the answer surprise me. — Pardon my forwardness, but might I ask your age? (this is a joke – don’t get mad)

    Reply
    1. throughthecatchfence

      Generation gap is so 60’s – when I was starting college. Age is NEVER the issue. Dollars is the issue. Street cars were “the future” in the 80’s so smart cities built them. Portland was the ideal everyone wanted to emulate, look at their system now, oops. The Cincinnati Street Car system is a guaranteed financial failure, but we’re finally going to be hipsters (by the way hipster is so 20’naughts). The Cincinnati bus system operates at a loss and it’s bare bones. Any transportation system that has to rely on government subsidy to operate is doomed. Look at the numbers – the street car system barely squeeks by even with the subsidy not to mention that there are zero dollars for repair and replacement of hardware. The system, even if extended uptown, will serve a small percentage of the taxpayers, just like Paul Brown Stadium, but everybody pays for it. The Street Car would be great if it were paid for by the users, unfortunately it would cost about $25 a ride. So I have to pay for something that I will never use or extract any benefit from so developers in OTR (Only the Rich) can reap huge profits and your hipsters can bar hop on the cheap. Call me old but don’t call me stupid. I won’t be paying for this disaster, these cool kids and there children will be.

      Reply
      1. Travis Estell

        “Any transportation system that has to rely on government subsidy to operate is doomed.”

        Every transportation system operates on subsidy. From interstate highways to airports to Metro buses to rail system. Transportation infrastructure is something we invest in because it allows our society to function by allowing people to get around, not because it makes a profit on its own… it never has and never will.

        “The Street Car would be great if it were paid for by the users, unfortunately it would cost about $25 a ride.”

        Funny that this standard is never applied to any other method of transportation except the streetcar.

      2. Zachary Schunn

        Who was building modern streetcars in the 80’s? Portland’s opened in 2001 and to my knowledge that was considered the first modern line.

        You don’t think you’ll be benefitting from the 2000 new jobs GE is bringing here? The billions of dollars in investment in downtown and OTR? Approximately 70% of the city’s tax dollars come from downtown and OTR. The development in the core essentially pays for city services in the neighborhoods. I don’t find it a coincidence that the city just saw a $15 million budget surplus… a surplus going to things like new policemen and firefighters who will serve the whole city.

        I consider myself fairly fiscally conservative. I’m glad I and others who live near the streetcar will be contributing towards the operations cost. I wish the streetcar would be revenue-neutral and didn’t require subsidy. But I wish every transportation project was revenue-neutral, and you know, I can’t for the life of me think of one that is.

  3. throughthecatchfence

    Yep, everything is just rosy in Portland, https://www.portlandoregon.gov/auditor/article/487580. The return on investment over time for the CSR is miserable, like a passbook account! If the streetcar is such a good investment why won’t the people who benefit pay for it. If the developers and the merchants and the residents on who benefit from the line think it’s such a great investment why are they unwilling to fund it. The streetcar is just the latest iteration of the “how do we get windfall profits on the investments we bought for a dime on the dollar and move out the poor.” In the 50’s and 60’s this would have been called “block-busting.” Public transit is necessary and worth the investment but a system that consists of a 2-3 mile loop through gentrified neighborhoods is not public transit. What we need is a system that gets the marginally employed to to low skill job areas and reverse commuting. The streetcar is about OTR (Only the Rich) and developer profits. The tracks are paved with gold.

    Reply
    1. executivedreamer Post author

      I wish you didn’t have to sound so angry and use derogatory names like Only the Rich. But maybe you know more than you can say publicly from your position as a city insider. The rest of us can’t see the details you’ve seen on these deals. Maybe I’d be furious,too. A 3 mile loop is not about transportation. That was a compromise forced by Mr. Kasich. Now let’s let some other folks talk, OK?

      Reply
    2. neilworms

      So your assuming that cities are only for the poor I’m guessing? Having people who aren’t poor move out of the suburbs is a nightmare isn’t it? Crushing your own vision of reality which you hold onto so dear. Times change, get with the times, I’m being harsh but everything happening in OTR is good for all people in Cincinnati – a neighborhood that should be a national treasure is finally getting its due after years and years of poor policy.

      An ideal city has people from all walks of life in it. Over the Rhine already lost most of its poor residents after the riots decimated the neighborhood and there is already plans to keep them in.

      And also the scale of revitalization in Cincy is small and very late. You can predict the future by looking at other cities.

      Reply
  4. thebillshark

    I’m confused. throughthecatchfence seems concerned about the economic and financial health of our city but doesn’t seem to support the relatively modest redevelopment progress we’ve made in OTR. (It really is modest- other cities have booming urban neighborhoods extending blocks and blocks in all directions but what we have is 2 blocks of good restaurants and Washington Park when you get down to it.) Seems like a contradiction to me. If OTR should remain a concentrated pocket of poverty with decaying building stock what should the City’s strategy for growth be? Please keep in mind the City itself does not benefit from greenfield development in West Chester and Mason. Thanks.

    Reply
  5. thesewritingshoes

    I would add that the Cool Kids – and we have raised a few – also want for diversity, inclusivity. They don’t see color. They don’t see gender. They see humans. And they see problems. In their lives they are trying to work out the solutions that many have been blinded to. They don’t name call. They don’t bash. They do!

    Reply
  6. Pingback: Cool Kid Indicators: Thanks, Evan Hennessy, for adding to the list. | cincyopolis

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