The New Urban Gamble






City Prospects


It has long been a paradox: deteriorating central cities even in growing Metropolitan regions.
In this issue, we begin a series on cities with two articles that question the conventional wisdom on what are
assumed to be the bright and dark sides of the urban landscape: new stadums and casinos conceived as
attractions for new business, and public housing projects widely thought ripe for demolition.

In coming issues: the changing geography, architecture, and politics of the American city.



Are wealthy team owners holding citites hostage by demanding—and often receiving—
huge public subsidies for the construction of posh stadiums whose economic benefits accrue mainly to players and
to the owners themselves? Or as the owners would have it, do the direct and indirect benefits to the surrounding
community of subsidizing a professional sports stadium more than justify its costs?
See "Skyboxed In,"
by Amy D. Burke.

When it comes to abject poverty, few cities rival East St. Louis,
Illinois. Of the approximately 40,000 residents there, 98 percent
of whom are black, roughly half qualify for public assistance.
Forty-four percent of the population lives below the poverty line,
and per capita income is $6,400—the worst in the state.

Four years ago East St. Louis officials
pinned their hopes for urban renewal on a casino riverboat, following
the lead of several other cities along the Mississippi River.
Today that establishment, the Casino Queen, is booming: The boat
takes in some $250 million a year, of which the city claims $6
million in taxes. Every night, Metrolink commuter trains carry
thousands of patrons from the wealthy, predominantly white communities
across the river, depositing them—their pockets stuffed full of
cash—at the casino's entrance. What could be better for a depressed
inner city so starved for capital?

A lot, actually. The passengers on the commuter trains
bypass East St. Louis itself, and it turns out that prosperity
has bypassed the city as well. Both figuratively and literally,
the casino is its own world. A tall security fence with two watchtowers
separates the boat from the city. Guards patrol the perimeter.
The official unemployment rate of 12 percent—also the worst in
the state—hasn't budged since the casino arrived, even though
the national rate has been steadily declining for several years.
And many of the workers from East St. Louis who have managed to
gain employment at the casino move to better neighborhoods when
they earn enough money—which is good for those casino employees
who can escape the inner city, but doesn't do much for the residents
who remain in the area.

A similar fate may await Chattanooga and Detroit,
Miami and Las Vegas, and several other cities that, like East
St. Louis, have spent millions of dollars subsidizing privately
operated entertainment attractions. The nature of the attractions
varies from city to city—some places it's casinos, some places
it's stadiums, some places it's both—but all are designed with
the same basic goal in mind: turning cities into oversized carnivals
that will lure visitors from the suburbs and beyond, thus recapturing
the wealth that began seeping out years ago.

For sure, these glitzy projects can inspire the weary.
Last year no less a symbol of urban despair than Detroit approved
not just a dual stadium complex but three casinos as well—a sign,
local leaders said, that Detroit was finally making a comeback.
Yet cities like Detroit may be in for an unpleasant surprise when
they discover that the carnival city model requires constant and
expensive reinvention just to remain competitive and, thus, economically
viable.Although local governments try to disguise public funding
for these projects as taxes on tourists or special bond measures,
inevitably money spent on these carnival attractions is money
not spent on other, more worthy public investments. The economic
stimulus of carnival city projects is ambiguous at best; when
the construction is finished, inner-city residents could end up
as impoverished as before—too poor to afford the price of admission
to attractions, let alone the price of escape to the suburbs.



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REINVENTING THE ROULETTE WHEEL

In the 1980s, U.S. cities spent about
$750 million on sports arenas. Since 1992, the country has spent
more than $1 billion on arenas, and more than $7 billion is earmarked
for future construction. In Baltimore, $210 million of public
funds built the Orioles a new Camden Yards stadium. In 1990, without
a professional team, St. Petersburg, Florida, boldly built itself
the $138-million ThunderDome, a dowry that for years failed to
attract suitors. And when the White Sox threatened to flee Chicago
for St. Petersburg, Chicago met the team owner's demand: a new
$185-million Comiskey Park across from the old one.

Economists who have studied such programs
say that subsidized stadiums are almost always profitable for
team owners—and almost never for the cities [see "Skyboxed
In
"]. In response to the crescendo of criticism, stadium
project boosters now pull the camera away from a close-up and
move it back—way back—until it captures the pleasing panorama
of consequences of each new arena: a burger joint here, a T-shirt
shop there. Boosters justify stadiums in terms of their power
to catalyze area business, which benefits the city with increased
tax revenue. Without the arenas, boosters say, wealthy suburbanites
might not return to the cities at all.

This sounds plausible, but the logic
doesn't hold up. Private business also demands public subsidy.
In the end, the increased tax revenue is unlikely to recoup the
city's stadium investment and will most likely go to cover the
costs of subsidies for future development gambles that accompany
the stadium. The Texas Rangers' Arlington Ballpark, for example,
has a baseball museum, a Walk of Fame, and a private restaurant—and
now a Six Flags water park is being built next door. Jacobs Field,
in Cleveland, has a museum, a children's play area, and a restaurant
overlooking the diamond. Coors Field, in Denver, has the Sand
Lot Brewery next to its pedestrian plaza and children's play area.

Recently some cities have asked team
owners to increase the ante, insisting that stadium projects be
true public-private partnerships. In Detroit, for example, taxpayer
money accounts for just 50 percent of the stadiums' construction
cost, much less than the national average of 80 to 100 percent.
To help fund the $505-million dual-stadium complex, voters approved
a 1 percent tax on hotels and a 2 percent tax on car rentals,
which should generate $5.5 million a year to support $80 million
in bonds. The state is chipping in with $55 million of Indian-casino
revenue, the city's Downtown Development Authority with $85 million,
and the two team owners will raise the final $285 million.

Still, while the public investment
is less, the threat of team defection remains, as Oakland, Los
Angeles, Baltimore, and St. Louis know all too well. Since the
Lions left Detroit once already, increased public subsidy—better
leasing deals, for instance—may be needed in the future just to
keep the team in the city. Now and then, sympathetic experts suggest
reducing taxes on team owners to prevent rival cities from luring
teams away with public subsidy. But giving team owners even more
money becomes a never-ending game: A decade ago South Florida,
known for its lax tax requirements, hurriedly built an arena to
lure hockey and basketball teams. The teams came but found the
otherwise plush arena wanting because it didn't have enough luxury
skyboxes. Now each team is getting a new, publicly financed arena
of its own, and local officials are debating whether to turn the
"old" Miami Arena into a giant flea market—even as they
pay off millions in leftover construction debt.

On
the surface, casinos might seem like a better gamble. If nothing
else, they seem to guarantee a boost in tax revenue: When Gary,
Indiana, imposed a 5 percent tax on its two casino riverboats,
it generated $5.9 million in state revenues in just the first
four months—and 5 percent of all casino winnings go direct to
the city of Gary. Revenue from the Casino Queen in East St. Louis
helped pay for an improved police force in the area. Community
gifts are another benefit. Don Barden, owner of the Majestic Star
riverboat in Gary, gave cash donations to the city for police
cars and to the schools for computers and scholarships. In Detroit,
Barden donated $100,000 to the Museum of African-American History,
in an apparent effort to rouse community support for his bid for
a license.

But with gambling comes crime and corruption.
Casino owners and government officials often have trouble avoiding
the slip from the virtue of gift-giving to the vice of graft-grabbing.
According to newspaper reports, when casinos came to New Orleans,
city council members accepted Hawaiian trips from a casino contractor;
other city officials hid gifts in a not-for-profit organization;
a casino operator paid $250,000 to a law firm with ties to the
mayor; and a construction manager, hired by the city to monitor
its interests, was paid $580,000 a year for three years by the
casino.

To its credit, Detroit, which will
be the largest urban area with casinos, is opting for strong ethics
rules to guard against corruption. To ensure that the casinos
take the city seriously, Detroit is also insisting on several
mandates on the casino licensees: They must attach a 1,000-room
hotel, take a Vegas partner, and spend at least $800 million on
the project.

But all of this begs another question:
How many more casinos can regional economies actually support?
Casino owners are expected to continue their expansion through
the year 2000, but with Americans' gambling losses quadrupling
since 1986, many analysts doubt the industry can sustain its growth.
Toward the end of last year, the stock of Trump Hotel and Casino
Resorts fell two-thirds while the stocks of riverboat-gambling
companies fell by half. The Stratosphere, a $550-million casino
tower, failed miserably at a poor location in Vegas. Only the
major gambling outfits are doing well; MGM Grand Incorporated
tripled its profits in the first half of last year. The little
guys, meanwhile, are sinking into debt, or cashing out.

Part of the problem is market saturation,
which the carnival city model is likely to exacerbate. To manage
the downsides of casinos—more crime, reduced spending power of
residents, restaurants squeezed out by cheap or free casino eats—a
city must be prepared to launch a public-relations campaign to
bring in tourists. Casinos, if left to prey only on locals, will
infect and cripple the host city. Thus, the casino riverboat in
Council Bluffs, Iowa, targets tourists from Omaha, Nebraska. Las
Vegas draws a large southern-California crowd. Not surprisingly,
the competition has become fierce: When casinos in Gary, Indiana,
opened, the revenues at casinos in nearby Joliet, Illinois, dropped
32 percent. Detroit's casinos are designed, in part, to recapture
the money of its hometown gamblers who cross the Detroit River
to drop millions at the casinos in Windsor, Ontario.

But
when does the game end? In 1992, Chattanooga christened a $45-million
aquarium. Attracting one million visitors a year, it spawned other
entertainment and retail businesses, like the Creative Discovery
Museum and an Imax Theatre, and its renovated riverfront has become
a tourist destination. But now tourism has levelled off, and civic
leaders are beginning to appreciate the burden of being a tourist
town. Inherent in the carnival city model is the need for perpetual
upgrading: To keep tourists coming back, the city must constantly
reinvent itself. Not only does this cost money—it taxes the imagination.

Las Vegas has been doing just that.
To the gamblers who knew Sin City a decade or two ago, the modern
Las Vegas is surely unrecognizable. Setting the curve for the
rest of the country's would-be carnival cities, Vegas has become
a city of mega-complexes and super-casinos. In 1989, casino mogul
Steve Wynn opened his Mirage resort and adorned it with a waterfall
and volcano, an indoor lagoon, a tropical rain forest, caged white
tigers in the Secret Garden of Siegfried & Roy, a dolphin
tank, and a 20,000-gallon shark aquarium. Mirage's success inspired
other casinos. The MGM Grand Hotel and Casino has a 5,000-room
hotel and a 33-acre theme park. The recently opened New York New
York Hotel and Casino features a roller coaster that weaves through
a Manhattan skyline. One casino hotel under construction is housed
in a giant glass pyramid guarded by a sphinx.

Despite the shocking glitz of the architecture
of ostentation, the crisis for civic leaders is that when cities
build more and more carnival attractions, they start to look alike.
The high-speed trains being constructed to link cities like Detroit
and Chicago will make travel easier, but the similar offerings
will make travel less compelling. The pressure on a city to distinguish
itself will drive future development toward Vegas extremes, and
those too will be doomed to lose the interest of tourists increasingly
inured to the outrageous.


THE CARNIVAL CON

Of course, to bring in tourists—which
for many cities means whites not just from out of state but from
their own middle-class suburbs—cities are finding that they must
address tourist fears, which are partly justified by crime and
partly exaggerated by race and class anxieties about minorities
and the dangerous poor. Polling more than 600 voters from three
counties, the Detroit Free Press found the number one need
of potential casino-goers to be safety. Following the casino task
force to Vegas, its reporters found some tourists who said they
would come to Detroit only if there were attractions in addition
to casinos—and others who admitted Detroit's crime-ridden image
would keep them away completely.

But this reveals the other basic tension
in the carnival city model. Casinos won't spawn urban redevelopment
unless they pump money into businesses in surrounding neighborhoods.
Yet given the existing fear of crime in these areas, civic leaders
and establishments alike will be tempted to appease the prevailing
fears with the construction of security gates and watchtowers
and the installation of surveillance cameras and armed guards—similar
to the scene back in East St. Louis. This leaves us with disappointing
images of an urban future: segregated, shameful, and potentially
volatile. Opera houses, stadiums, casinos, theme parks—all appear
to be commercial paeans to a white culture strategically gated
within a black city. What is safe may come to be defined racially—that
is, whites with pass cards, blacks without. That perception, too,
will likely be strong among the urban community, such that black
city residents will feel slighted and shut out from what was supposed
to have been their saving grace, rejected by those who had promised
to save them.

As cities race to build the next upscale
attraction, the best assurances of civic leaders will not be enough
to prevent many from being written out of the carnival city story.
Initially, even the most fortunate city denizens will be left,
at best, to operate a few rides and sweep up after the elephants.
Job creation is a systemic problem, not easily solved: Even Detroit's
empowerment zone, with $100 million at its disposal, has managed
to create only 2,750 jobs for a zone population of more than 100,000,
30 percent of whom are unemployed.

Undaunted but cognizant of some of
the obstacles, civic leaders are nevertheless trying to summon
community involvement; this is something most city bureaucracies
are very bad at, especially when they are busy courting pro sports
teams and being wooed by casino operators. In addition to the
two public-private coalitions making up its civic sector, Detroit
recently created a committee for Community Reinvestment Strategies,
intended to coordinate resources and enlist community input. The
question is whether current residents will actually get a say
in the use of resources. Are they saving themselves, or being
saved?

Community participation has always
been part of former HUD Secretary Henry Cisneros's pitch for the
continued viability of empowerment zones, and in many cities it's
working. But citizen responsibility is often a euphemism for citizen
obedience. To qualify for Detroit's renewed public housing, for
instance, hopeful residents must participate in job training,
education, and home-ownership programs. If they don't consent
to the majority's imposition of the culture of customer service—that
is, if they don't appreciate the courses in hospitality management,
slot machine repair, and card dealing now being offered by several
community colleges—then they are likely to lose out.

In those places where carnival cities
are already a reality, the primary goals of civic leaders—including
public, private, and community representatives—should be minimizing
the costs of perpetual reinvention and avoiding the descent into
economic colonialism. Otherwise the lucky, who have always been
lucky, will carouse behind the guarded walls of their personal
Disneylands. And the unlucky, for whom the rebirth of cities is
ostensibly intended, will be accosted with a demand they cannot
meet: "Tickets, please."



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