Thursday, August 29, 2013

Reversing the Trend: Might Corktown Hold the Key to a Greater Detroit Neighborhood Resurgence?

For anyone with an interest in what it takes to truly stimulate and develop a successful local economy, nowhere could be more interesting than the recently bankrupt City of Detroit. The Center for Priority Based Budgeting is in the business of helping government explore their role in successful economic development, understanding better where public sector investment could influence economic health (and clarifying where the role of government might end).

It’s not an easy issue, and yet it is one of the most important issues of our time. In our work facilitating the identification of community priorities, economic development and job creation are clearly among the very top in every place we've applied the Priority Based Budgeting process. From the City of Edmonton, Alberta (where they espouse the necessity of a “Diverse Economy”) to the Town of Cary, North Carolina (“Economic Vitality and Development”) to Lehigh County, Pennsylvania (“Economic Health”), what we do in government to strengthen the local economy could not be of more critical importance.

With this in mind, the Center for Priority Based Budgeting has once again immersed itself in the trenches of this issue, and gone straight into perhaps the most interesting experiment in economic development we could imagine: the re-birth of a City.

Detroit: From the Front-Lines

Detroit is a sprawling city covering nearly 143 square miles. However, the city has bled citizens over the last several decades, and experienced a 25% drop in population between 2000 and 2010 alone.The City now consists of a population of approximately 715,000, representing a 60% drop in citizens between 1950 and today. Detroit's topography is so large that you can fit the entire cities of Boston, San Francisco and the borough of Manhattan inside Detroit's city limits.

The ongoing decline has left its mark on the city, most notably in severe urban decay and thousands of empty homes, apartment buildings and commercial buildings around the city. Some parts of Detroit are sparsely populated resulting in the city having difficulty providing municipal services. Just recently, Emergency Manager Kevyn Orr is proposing the complete privatization of the city's waste and recycling and is considering the same for the city's parking garages and meters.. The city has sought and considered various solutions such as demolition of abandoned homes and buildings; removal of street lighting from large portions of the city; and encouraging the small population in certain areas to move to more populated locations as there may not be a quick response for city services such as police in depopulated areas.

More than half of the owners of Detroit's 305,000 properties failed to pay their 2011 tax bills, exacerbating the city's financial crisis. According to the Detroit News, 47 percent of the city's taxable parcels are delinquent on their 2011 tax bills, resulting in about $246 million in taxes and fees going uncollected, nearly half of which was due to Detroit. The review also found 77 blocks in Detroit had only one owner who paid taxes in 2011.

Detroit declared bankruptcy in March 2013, and Michigan Governor Rick Snyder appointed Emergency Manager Kevyn Orr to assume stewardship of the City. In July 2013, the City of Detroit filed for Chapter 9 bankruptcy protection.

An Unprecedented Rejuvenation

While Detroit moves forward with the largest municipal bankruptcy in history, at least the downtown city core, led by Midtown, is experiencing a revival. Many developers remain "unfazed" by the city's problems. Developers such as Quicken Loans CEO Dan Gilbert have been aggressively purchasing, developing and promoting commerce at properties in the resurgent core. Midtown Detroit is one of the most "successful" areas of Detroit with a residential occupancy rate of 96%. Numerous developments are currently in various stages of construction, including an 82 million dollar reconstruction of the David Whitney Building in downtown Detroit and the Woodward Garden Block Development in Detroit's midtown area.

Downtown Detroit's population of young professionals is growing and retail is expanding. A number of luxury high rises have been built. The east river development plans include more luxury condominium developments. This dynamic is luring many younger residents to the city's Downtown along with the revitalized Midtown and New Center areas.  

On June 5, 2013, Whole Foods Market opened its first store in the city of Detroit. Eight weeks later the CEO of Whole foods said that the store is exceeding our wildest expectations. On July 25, 2013, Meijer, a midwestern retail chain, opened a 20 million dollar store in the northern part of the city that is part of a new 72 million dollar shopping center named Gateway Marketplace.
Other developments that have recently cleared various hurdles are a new light rail system named the M-1 Rail Line and a new arena centered entertain district involving Michigan billionaire Mike Ilitch.

While the approximately 10 square miles of the city center appears to be experiencing signs
of revitilization, what about the remaining neighborhoods representing the rest of the approximately 130 square miles of the city?

Sewing the Seeds of Resurgence: Cooley's Catalyze Corktown

The Center for Priority Based Budgeting, (a mission focused organization that provides technical advisory services to local governments, schoold districts, special districts and other non-profit agencies to enable communities to reassess their priorities in order to make sound, long-term funding decisions) recently sat down with Ryan Cooley, owner of O'Connor Realty, to discuss how the Corktown neighborhood is attempting to bring development outside the downtown core and into downtown's neighboring communities.

When you think of areas in Detroit, the two that automatically come to mind are Downtown and Midtown. Corktown is one that is brought up as the City focuses on addressing the needs of its close-in neighborhoods and communities. It is on the edge of Downtown and Mexican town. Its borders are: Interstate 75 to the north, the Lodge freeway to the east (M-10), Bagley and Porter Streets to the south and Rosa Parks Boulevard (12th Street) to the west. Although Rosa Parks Blvd. may have the western border, some still include the Michigan Central Station and other sections still a part of Corktown.

Corktown was first settled in the mid 1800s by Irish farmers who were at the time going through the Potato famine. They moved here and most were from the County Cork, hence the name, “Corktown.” Over half of the residents by 1850 were of Irish descent. Many would serve in the Civil War and as the 20th Century approached, Germans began to move into the area. The district used to be larger, but with the completion of the Lodge freeway and I-75, the district became smaller. Most of Corktown is residential, but the area along Michigan Avenue is mostly commercial.

After finishing high school in Marysville, Michigan, Ryan Cooley, headed to Chicago to attend college. Eight years ago, when most people were moving in the opposite direction, Ryan went against the trend and brought the third generation off-shoot of O’Connor Real Estate to Detroit. Ryan and his wife moved back to Detroit to join his brother Phillip, and other developers, in turning around Detroit’s neighborhoods.

In 1994, when Ryan moved to Chicago to attend DePaul Business School, Chicago’s State Street, resembled Woodward Avenue as it is today. There were predominantly vacant lots and storefronts. However, where it was once only fifty percent occupied, today there are no vacancies. In 2001, when Ryan moved to Wicker Park, a Chicago neighborhood northwest of the Loop, he couldn’t get a cab to take him there, even though condos were selling for $350,000. As young people moved into the neighborhood, and the handful of bars and restaurants grew to more than ten restaurants and twenty bars, the vacant land disappeared. Ryan is striving to accomplish the same transformation for Detroit.

He stated that the opportunities and low cost of entry that exist in Detroit could never have occurred in Chicago. Ryan and his brother Phil briefly considered opening a restaurant in Chicago, but it was too cost prohibitive. While Phil returned to Detroit, he realized the opportunities that existed in Detroit and met partners that would eventually become the Slow's ownership group. This, along with Ryan's desire for a more community focused lifestyle, brought Ryan and his family to Detroit.

The area that is on the rise is the commercial area along Michigan Avenue from roughly 6th to 14th Street. There are already many businesses along the strip that have been there for awhile and are thriving such as: PJ’s Lager House, Nemo’s Bar, the Corktown Tavern, and the Detroit Athletic Company.

There are buildings in Corktown that have been sitting vacant for a long time, but now are finding new life. Slows BBQ, opened in 2005 and co-owned by Ryan Cooley, has since won many awards, ranking as one of the top BBQ joints in Michigan. It sits right across the street from the Abandoned Michigan Central Station (MCS) and the block that it sits on has helped the buildings take new life.

Ryan credited the City's efficient permitting process as Slow's was being developed. The permitting process took only two months and allowed for an expedited construction schedule. However, Cooley also identified the zoning process as a significant hindrance to this and other developments. Cooley states, "The permitting process isn't really the issue, but the zoning is a bit of a mess." And he continues to struggle with zoning in an effort to expand parking at the ever-popular Slow's restaurant and block.

The building that currently houses Slows BBQ was too small as so much business was coming through, that it moved next door, taking over a former Real Estate Agency Building. O’Conner Real Estate moved two doors down next to Astro Coffee and LJ’s Lounge. 

One building on the same block is a former Pawn Shop, next to The Sugar House, that has been empty awhile, but is looking at redevelopment and a new use. The former pawn shop was purchased by several partners, including Ryan Cooley.

The current pawn shop, soon to be Gold Cash Gold was purchased on a land contract and thus has had time for construction to get organized. Ryan adds, "The permitting process is complete, but financing has been tricky. Here things don't appraise very well, and market appraisals kill a lot of deals." Assuming the appraisal comes in as necessary, the financing will be complete and Corktown could have a new restaurant open by the summer of 2014.

The plan is to turn the former pawn shop into a restaurant with rental units located above. It has not been said yet what type of restaurant it will be. In the meanwhile, above the addition to Slows BBQ, Megan McEwen, Ryan's wife, has launched a new Bed and Breakfast called Honor + Folly. The ongoing development of the "Slows block" continues.

These are just a few of the renovations currently going on in the Corktown area. And while new businesses sprouting up along this strip of Michigan Avenue is impressive, the neighborhood still has a glut of abandoned homes, crumbling commercial buildings, spotty city services and challenges with community safety.

To address these issues, Cooley at one time sat on the board of the Greater Corktown Development Corporation, a 501(c)(3) with a mission to inspire development in the greater Corktown area, but due to a shortage of funds the community organization ceased operations in 2010. Cooley, undeterred, added that "Corktown has been and is about entrepreneurship."

There is more demand for multi-family and commercial space than availability. Both commercial and rental vacancy rates are nearly at 0%. Cooley states, "The disconnect is that property appraisals are just coming back. Until we get to prices of about $125 sq ft, there is no incentive for new housing construction and with appraisals consistently coming in below the asking price houses for the most part must be purchased with cash."

Shedding Light on A Role For Local Government?

Lending is a challenge in the city. There are no significant city, county or state programs that make lending easier and potentially reduce the amount of abandoned buildings. One state program that did exist, the Historic Preservation Tax Credit, was eliminated but federal tax credit programs do exist (but are challenging to obtain). The Brownfield Tax Credit, another state tax credit program, was also eliminated. 

What can the city and state do in partnership with developers to address the abandoned building issues? Cooley suggests, "It would be nice to see programs, perhaps with non-profit companies, that assist with grants for roof and window repairs that would keep the property and owner stable." An existing popular program, the Live Downtown incentive, allows for up to $20k of forgivable grants to buyers/renters who move downtown (provided you are employed by a handful of private companies that support the program). This program has led to a downtown rental occupancy rate of nearly 98%. A similar downtown incentive model launched in Philadelphia helped Midtown Inc. buy-off on this project and allows for a long-term investment in spending to remain in the downtown core.

Cooley also suggested the City might be able to do more to eliminate or reduce city income tax that is uncompetitive with other surrounding communities. "Income tax and insurance are a challenge. I pay $1500-$2k per year for car insurance and home insurance is $2500/year. When your car is worth $20k and you pay $2k/year to insure it, it can quickly become unaffordable." Cooley suggested that "some type of insurance pool" may assist residents with obtaining affordable insurance rates and thus keep Detroit as attractive a location to live as possible.

"Detroit doesn't function like other cities. There is no leadership or community consensus on how the City invests in other neighborhoods other than downtown Detroit." "I get the sense now that what is happening in Corktown can potentially be a model for the city" The Detroit City Future Plan indicates this direction. Although Cooley didn't participate in the community conversation (as a realtor/developer he felt it would be a conflict), "in theory the plan makes a ton of sense." "How you implement it I don't see how that is possible. If some portions of it get accomplished that would be great. How it all ends up turning out I'll be fascinated to see."

Is Detroit governable given its population decline and serious infrastructure needs? Cooley states, "Infrastructure is a serious issue. At our Eastern Market development, we found out the main city sewer system collapsed and it existed of wooden barrels from the 1800's. If this infrastructure exists in a close-in neighborhood like Eastern Market, what exists farther out is scary to think about. Utilities, among other City services (police/fire) need to addressed. It would also be nice to have our streets and sidewalks plowed."

Why Detroit?
Cooley weighs in on why he remains committed to Detroit

  • The low barrier to entry into the market was a driving factor. It would cost three times the amount to open Slows in Chicago, twice as much time, and they would have received one-tenth of the press. 
  • Cost of living impacted the decision. Cooley wanted to open a real estate business and his wife wanted to pursue a career as a writer, but they couldn’t leave their jobs and pursue what they wanted to do and continue living where they were living. 
  • The character of Detroit and its unique style give Cooley a sense of pride in living in a community focused neighborhood and a unique city.
  •  Cooley found a sense of community in Corktown that he didn’t experience in Chicago. Corktown neighbors look out for one another and support the local businesses.
  • Most important for Cooley is that he wants to be part of something bigger than himself. He wants to be instrumental in helping make an area where people are excited to live. 
When we in local government approach issues of such magnitude as Economic Development, sometimes we approach the world from the perspective of government. We ask, how will we stimulate the economy? We strategize about the services we'll need to offer in order to create jobs. There's nothing wrong with that. We must ask these questions. It is imperative that we seek to understand our role in the solution. 

But what this experience in Detroit is teaching us is the importance of shifting perspective. Walking a block in the shoes of Ryan Cooley shows us what Economic Development looks like from the ground-up. We are being offered a glimpse of the needs of an entrepreneur, a start-up business, a caring citizen willing and intent on pursuing his business and community goals no matter how or if the City steps in to help. This is incredible! 

If we in local government can better understand the world from the perspective of each of our Ryan Cooley's, perhaps we'll understand better how we can facilitate economic development, how we can assist the efforts of small business owners, and how we can be a partner to affect change, rather than presuming we're responsible to be the sole service provider. What Ryan, and other community-minded entrepreneurs, is teaching us is where local government can effectively fit-in in the re-birth of a City, and it's utterly astounding. 

Our window into this world is just opening. Over the course of the next few days, the CPBB will be continuing it's work interviewing other community leaders in the tech sector, media and local community-minded entrepreneurs in an effort to gain perspective on what else needs to happen, and is happening, to shift a Motor City resurgence into second gear.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

 facebook  twitter  LinkedIn

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

Friday, August 23, 2013

Motor City (Detroit): Through the Lens of the CPBB

At the Center for Priority Based Budgeting (CPBB), we are huge proponents, advocates and supporters of local government and City innovation.  The CPBB is a unique, creative group with the philosophy that Cities must do things differently if they are to survive. In particular, Cities must collaborate with their County, public sector, private sector and non-profit partners to strategically, efficiently and creatively deliver services.

We believe that across the board budget cuts are ineffective. Cities must understand all the services they currently provide citizens, where these services are duplicated by non-profit and/or private sector partners and which entity is providing the most superior and effective service level. Some of the best things taking place in a community are coming about from partnerships, where local government is the leader, the facilitator, and often times a key partner, but not always necessarily the only possible service provider. Where the City isn't providing the most effective service level then they should get out of that line of business and let their partners thrive.

When most folks think of Detroit, they typically think of bankruptcy, thousands of abandoned homes
and structures, a shrinking city and/or a city in an unavoidable spiral of decline and mayhem. At the Center for Priority Based Budgeting, we see a city possibly entering a period of significant redevelopment, economic resurgence and endless opportunities for the city and its public/private partners to improve services. We see a city on the verge of joining the Metropolitan Revolution!

To find out exactly what is happening in Detroit, we'll be on the ground the full week of August 25th through August 31st. We'll be walking neighborhoods, the downtown core (Midtown), interviewing prominent civic leaders, talking to independent business owners, drinking coffee with the new wave of urban pioneers leaving cities like Brooklyn and Portland to relocate to Detroit, and assessing public/private partnerships to better understand what is motivating these opportunities and a possible Detroit resurgence. We'll be posting updates on our blog and live tweeting as we gain a better understanding of just what's happening in Detroit! Be sure to follow the CPBB investigation into one of the most unique and relevant local government issues facing the nation today!

From this....
We're curious about what happens when Dan Gilbert, owner of Quicken Loans, moves his company HQ's from the suburbs to downtown and buys up nearly 20 abandoned downtown skyscrapers (7 million square feet), refurbishes them, and then provides affordable office space for tech start-ups; or when organizations like Michipreneur , Urban Innovation Exchange and Challenge Detroit start luring young, educated and inspired millennials to the City and unleashing them on a thriving tech start-up community; and when housing is very affordable in an attractive downtown core. Could this be part of the Detroit resurgence recipe?

We'll also be talking to Nolan Finley, Editorial Page Editor of the Detroit News. Nolan's extensive city knowledge and journalism experience covering the Motor City should help provide historical context and, perhaps, even a glimpse of the future. We don't know what the future holds for Detroit, but we're going to try and find out.

To this!

The Center for Priority Based Budgeting prides itself on developing and staying ahead of the latest innovative, creative and effective local government trends. Lately these include:
And now we will be hitting the mean streets of Detroit in an effort to understand and identify what this city is doing to recover from bankruptcy and decades of political corruption and inefficient government service delivery. The lessons learned will be interesting, and possibly ground-breaking, as Detroit identifies how to thrive once again in this new Decade of Local Government.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

 facebook  twitter  LinkedIn

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

Can Government Play Moneyball? Priority Based Budgeting Communities Say YES!

"Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely. As former officials in the administrations of Barack Obama (Peter Orszag) and George W. Bush (John Bridgeland), we were flabbergasted by how blindly the federal government spends. In other types of American enterprise, spending decisions are usually quite sophisticated, and are rapidly becoming more so: baseball’s transformation into “moneyball” is one example. But the federal government—where spending decisions are largely based on good intentions, inertia, hunches, partisan politics, and personal relationships—has missed this wave." Can Government Play Moneyball? - John Bridgeland & Peter Orszag

What? "Less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely." How can this be? In an environment of extreme fiscal challenges across the country; unprecedented civic bankruptcies; significant unemployment; a national transportation infrastructure catastrophe; record national debt; a broken national health care system; and a failing education system, how can the Federal government, and state and local government as well, continue to blindly spend without prioritizing outcomes or measuring performance? At the Center for Priority Based Budgeting we are strong supporters of utilizing tax dollars to efficiently achieve community results!

This Decade of Local Government  obligates local governments to "lead the way in developing creative solutions to extraordinary problems. There are a number of reasons to be optimistic about this coming decade of local government." Against this backdrop of Federal and State ineptitude and paralysis, the CPBB never been so optimistic!

According to John Bridgeland, Director of the White House Domestic Policy Council under President George W. Bush, "In every domestic-policy briefing John led in the first term of the Bush administration, the president would ask some version of the following questions: How do we know this program will achieve the results as advertised?" This exact question is what every local government City Manager, County Administrator, Elected Official and other local government senior leader should be asking. More fundamentally, every local government organization should first be asking "What are the clearly defined results this community seeks to achieve?" "How will this program significantly contribute to these results?" "Are there alternative shared-service providers that can administer this program more efficiently and successfully?" And "How can we measure whether the program is meeting the results the community wishes to achieve?" This is how local government's need to operate in the Decade of Local Government, by running local government like a business!

Local governments now have an unprecedented opportunity to define their future! With the power inversion fundamentally realigning the base of authority back to local government's, the opportunity for communities to confidently define their own destiny has never been greater. And as we've seen through multiple examples captured in the Metropolitan Revolution and the CPBB's Decade of Local Government 2.0, examples abound of thriving communities operating in a results-driven environment of creativity, innovation, performance measurement and efficiency. And more importantly, more and more cities, counties, fire districts, school districts, airport authorities, and other various publicly run organizations are stepping to the plate and embracing the undeniable opportunities that the Power Inversion provides by implementing the principles of Fiscal Health and Priority Based Budgeting to independently define their own results-driven futures!

Take Portland, Oregon. In Weird is Good: What Portland's Economy Can Teach Every City in the World, Bruce Katz and Jennifer Bradley write "in his 2010 State of the Union, President Obama issued a challenge to the country: "We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America."

The Portland leadership community rose to the challenge. The metropolis had been hit hard by the Great Recession, shedding 80,000 jobs and seeing unemployment rise to over 11 percent. Led by Portland's then Mayor Sam Adams and the Portland Development Commission, a team of business and civic leaders sorted out how to double the region's exports. They dug deep into the data, deconstructing their economy. From this intense assessment emerged the Greater Portland Export Plan, which outlined several strategies to leverage the region's dual strengths: its leading global position in computers and electronic products manufacturing and its global edge in sustainability. In order to build on the region's strengths in sustainability, the plan has launched a major marketing campaign called "We Build Green Cities" to promote the region's clean tech companies and products as solutions for global clean economy challenges.

The future of the metropolis is "not just us selling each other microbrews," Tom Hughes, President of Metro Council, said. "What you really need is a culture where manufacturers or entrepreneurs begin to include foreign markets as part of their business strategy." Portland companies have primarily looked east to Asia for their markets. But there is also enormous potential and need in our hemisphere. After a trip to Brazil, Mayor Sam Adams established a formal relationship with Sustainable Hub, a São Paulo-based clean tech consulting firm, to help Portland firms crack the Brazilian market and vice versa."

While Portland has experienced success in this new power inversion driven metropolitan revolution
environment, note the visionary and autonomous policy decisions that are made and implemented across multiple partner agencies and projected globally. Metro has created a platform where multiple counties, based upon the international Portland brand, strategize and coordinate foreign export strategies to take advantage of the attractiveness of locally manufactured products. The PDC, by deconstructing the PDX and regional economy, identified locally manufactured green tech to promote globally. And then send Portland Mayor to Brazil and other global economic hot-spots to promote the region! This used to be the domain of the US State Department or the US Chamber of Commerce. In the power inversion of economic development, global trade and regional coordination are now firmly daily considerations of cities and counties in the era of the metropolitan revolution.

Priority Based Budgeting communities have a direct mechanism to adapt to a “Power Inversion” environment. Take the City of Boulder, Colorado. Below, you will see their Result Map for creating an “Economically Vital Community.” The City realized that to foster economic growth, they needed relevant criteria against which to evaluate every service they provide. Just look at what they’ve established as the definition of “Economically Vital” – regional and public/private partnering; a focus on entrepreneurs; drive to support creativity and innovation in the economy; and a role for city services that doesn’t necessitate they’re the sole service provider. It’s absolutely no wonder that Boulder ranked #1 recently among communities who are successfully increasing start-up activity.

The Priority Based Budgeting approach to spending is one marked by a relentless pursuit of results, maximizing the value of every dollar spent, and measuring success towards that end. Is this not "Moneyball" by another name? The era of local government innovation, collaboration and daring is now upon us. How will your community embrace the power inversion environment?  At the Center for Priority Based Budgeting, we're ready playing Moneyball! We invite you to join us and so many other local government communities who have embraced the Decade of Local Government!

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

 facebook  twitter  LinkedIn

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

Monday, August 19, 2013

Shared Services: Achieving Local Government Efficiency or Loss of Civic Identity?

In a recent National Public Radio Morning Edition radio piece Communities Debate Whether Sharing Services Saves Money, NPR focused on how the economic downturn has hurt the places where we live – cities, counties, towns – and the ways that communities and citizens are attempting to address their fiscal challenges.

NPR states, “Money-strapped municipalities are increasingly sharing services with neighboring governments. Advocates say consolidating police, fire and other departments protect them from budget cuts. Critics worry about emergency response capabilities and wonder if the savings are really there. Residents complain taxes are too high, then wince when services are cut. Increasingly, leaders are turning to a third option: consolidation of services, or even a merging of neighboring communities. While this can save millions of dollars, some critics say it's still more important to preserve a community's autonomy.”

Service consolidation is undoubtedly on the rise. Local governments primarily share services to improve service quality and save money. Even before the recent recession, Census Bureau data showed intergovernmental spending rose 234 percent from 1992 to 2009. Now, all states have service-sharing laws due to this unsustainable expense growth.
Expenditures rose steadily from $436 billion in 1977 to $1.5 trillion in 2009

When we talk about “shared services” we’re describing a local government’s ability to partner with another entity, public or private, in order to accomplish the same result of the service, while splitting the costs to deliver the service.  Same results, less cost, and less resources required from a community to pay for those results – these are the outcomes of shared services. 

But besides better outcomes, lower costs, and greater efficiency, NPR cites another outcome worth discussing, and that’s “civic identity.” The argument follows that service providers with a vested interest in the outcomes they’re working to deliver have a greater probability of achieving those outcomes. A patrol officer, for example, patrolling the streets of their own neighborhood, might approach the duty with greater care for the safety of their own streets, than somebody from outside the community would. Furthermore, when a local government is in control of how a service is provided, they have more control – control over changes in the service, control over costs, etc.

It’s an interesting argument, but many communities are finding that it’s not an “either / or” discussion; that there is a huge opportunity to achieve ALL outcomes: better results, lower costs, and just as much control (if not improved and increased service delivery). And if these are the outcomes we’re hoping to achieve through shared services (including the outcomes of “civic identity”), then how do we go about finding services worthy of consideration?

In the City of Cincinnati, Ohio, they used their Priority Based Budgeting process to draw attention to shared services opportunities by focusing on programs where the City has identified that there is another service provider (either public or private), and/or the program isn't recovering all of its costs – this was a great place to start!

The question on the table here is: we know there are other service providers out there providing this service, and we know we are using general government resources to provide these programs (because they aren't 100% self-sufficient). If through PBB, it was demonstrated that a program was very much a high priority, the City still wanted to, at minimum, investigate whether or not they could partner with another organization (public or private) to find efficiency in providing the program. If, on the other hand, PBB demonstrated that the program was less of a priority to the City, then they should seek a shared service provider and turn over the provision of this service to the public or private sector.

At the end of their first year, they’d identified 17 distinct programs that met these criteria, including: Regional Crime Lab, joint procurement, joint use of public safety training facilities , provide human resources services to other jurisdictions (training, civil service testing, etc.) and centralizing printing and stores.

In our story from the City of Fort Collins, CO, about the Rocky Mountain Innosphere (RMI), the
City’s share of funding to support RMI scored well in the PBB process – it was a high priority. However, using the filters of the PBB Model, it was clear that this was a program that others could offer and were offering in the form of business support (in other words, the City need not be the only player in providing this service), that the City wasn’t mandated to do, and was unlikely to pay for itself. Through the lens of PBB, this points precisely in the direction of a partnership. The role of government, even in a high-priority program, is not always to be the direct service provider; it can be a key partner!

And for all of our discussion lately of the Decade of Local Government, the Metro Revolution, and the Power Inversion, aren’t we talking about shared services, consolidation and (from the local government’s perspective, perhaps) “in-sourcing” as well? As the Federal and State government fiscal woes and political paralysis continue, it is up to local government (as a shared service alternative) to take on responsibility for the achievement of outcomes in a community.

Whether it comes through partnerships between multiple public agencies (public-public partnerships), partnerships with the private sector (public-private), consolidation, or even (in the right situation) letting one partner take over a service entirely while ensuring that the right outcome is achieved (alternative service delivery, or in/out-sourcing), there are immense opportunities to tap.

In our work in Priority Based Budgeting, one of the greatest outcomes of the work is the
ability to shed light on where to find opportunities for shared services. What if a program was of the highest priority for your citizens, and you found out you were one of several providers of this service in your community? Perhaps a partnership would be an incredible opportunity to produce efficiency in the provision of that program. On the other hand, what if you found a lower priority program for which there were other service providers? Maybe the best approach there would be to consolidate services or even allow the other service provider to take on the program entirely.

Central to PBB is the idea that all local government organizations can determine the role they're suited to serve best within a community, and amongst all potential service providers within a region - identifying the overlap, the potential for partnerships, consolidated services, and spinning off of services between city, county, school district, non-profit and private sector organizations. The end goal is nothing short of the most efficient use of a community's resources as a whole, to achieve the results of a region – it’s "bang for the buck" for the provision of public services.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

 facebook  twitter  LinkedIn

If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

Friday, August 16, 2013

PBB and the Start-Up Revolution!

It's no surprise to us that, based on a recent report from the Kauffman Foundation (Tech Starts: High Technology Business Formation and Job Creation in the United States), the top three metro areas across the US with the greatest density of high-tech start-ups are also successful Priority Based Budgeting communities. The top three metro areas are Boulder, Colorado, Ft. Collins, Colorado, and Sacramento, California.

The Center for Priority Based Budgeting prides itself on assisting communities with obtaining the absolute maximum from their finite resources, from all of the community's service providers - public and private. When a community's resources are fully aligned to achieve "results," and all the community service providers are seamlessly working together to deliver the most effective, innovative and quality services, communities thrive, grow and become very attractive locations for both citizens and employers. This is what Priority Based Budgeting is all about! Assisting communities in reaching their full potential!

Read more about the top three PBB metro areas across the US with the greatest density of high-tech start-ups:

#1 - Boulder, Colorado- Implemented Priority Based Budgeting (for 3 straight years!). Read more about Boulder's success implementing PBB here.

#2 - Ft. Collins, Colorado- Read about this commity's success here. And find out more about the high-tech hub and service partner Rocky Mountain Innosphere.

#3 - Sacramento, California- An early PBB believer! Read more here.

The Center for Priority Based Budgeting wishes to congratulate these three high-performing communities for their hard work in implementing Priority Based Budgeting. Your efforts have successfully paid off!

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If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.