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Granholm’s Urban Therapy

Cautiously at first, grant program steps toward big investment shift to “Cool Cities.”

May 6, 2004 | By Keith Schneider
and Charlene Crowell
Great Lakes Bulletin News Service

Gary Howe

Governor Granholm’s Cool Cities project is designed to reward cities like Marquette that are working to make their downtowns more attractive and livable.

When first-term Maryland Governor Parris Glendening signed his state’s Smart Growth Act seven years ago, the action marked a singular achievement in the national movement to contain sprawl. The pioneering law redirected much of the state’s budget for roads, schools, public works and buildings, housing, and other new construction away from the countryside and back toward established community centers.

Although it gained little immediate national notice, the legislation eventually earned a reputation as one of the most important public policy accomplishments of the 1990s. It helped Maryland achieve the lowest unemployment rate and one of the highest levels of economic growth of any state in the nation, even as it conserved tens of thousands of acres of farmland and forests and strengthened Baltimore’s economy. Mr. Glendening, by the way, easily won a second term. 

First-term Michigan Governor Jennifer M. Granholm, also a Democrat, is attempting to accomplish much the same thing, albeit under far less favorable circumstances. Her state faces a third year of immense budget deficits as manufacturing jobs flee overseas. The governor also spars with a Republican-dominated Legislature that, in her first 17 months in office, has resisted following Ms. Granholm’s lead. 

Despite such obstacles, Ms. Granholm has galvanized business executives and voters around the idea that Michigan needs “cool cities” to attract the jobs, young professionals, diversity, and innovation that she believes is central to the state’s economic competitiveness. She also succeeded in convincing cities and non-profit economic development groups across Michigan to compete this month for state funding from a small grant program that uncannily echoes much of what Governor Glendening signed into law in 1997. Ms. Granholm calls it the Cool City Pilot Program. National authorities say it is both the biggest step Ms. Granholm has taken in her unfolding and untested economic development strategy, and  potentially the most significant Smart Growth policy breakthrough since Maryland’s quiet revolution.

Striving for Smart Growth Leadership
The grant program, whose first-round application deadline is tomorrow, will help 12 of Michigan’s downtown business districts and neighborhoods compete with the sprawling suburbs for the right mix of housing, jobs, arts, recreation, and retail resources that make them the kind of places that people want to be. It will do so by making modest amounts of taxpayer funds available — no more than $100,000 per grant —for rebuilding streets, adding lighting, expanding parks, improving housing, modernizing sidewalks, building art centers, establishing farmers markets, preserving historic structures, or beautifying store fronts.

“Communities across the state want to create neighborhoods that draw citizens and business in,” said the governor when she formally launched the program last month, “and the state has the resources to help. We’ll now focus those resources where they’ll have the most impact and the best chance of fostering success. We want to create vibrant neighborhoods, catalyze local communities to forge partnering plans, creating energy and vitality by combining the old with the new.” 

Although the three-year program will cost the state no more than $1.2 million in its first year, the idea behind it, which has attracted applications from approximately 150 cities, is a big and entirely new one.

“Michigan is one of a handful of states that is serious about making Smart Growth, and especially reinvestment in cities, central to their economic development,” said Mark Muro, a senior policy analyst at the Brookings Institution’s Center On Urban and Metropolitan Policy in Washington, D.C. “Governor Granholm has built what might be seen as a technical correction into a really deep thought about what needs to drive the state’s economy. She’s putting Michigan into a leadership position just like Maryland was in the 1990s.”

New Uses for Old Tools
The Granholm administration says that, beyond the dozen grants it will soon dispense, it is ready to open to the state’s cities and town centers the billion dollar treasure house of subsidies, grants, low-interest loans, and other economic development tools that were once reserved almost solely for luring factories and employers to Michigan.

Moreover, Governor Granholm is turning loose the state’s economic development staff to act almost like foundation program officers. State experts will counsel the grant winners and put together the economic aid packages that complete much larger redevelopment projects. That is the same role that state specialists have played for years in helping out-of-state business owners settle in Michigan.

The governor’s approach recognizes the political, economic, and demographic constraints facing Michigan:

  • Government is asked to do more with less.
  • Globalism is draining the state’s manufacturing sector.
  • Michigan cannot afford the expensive incentives, subsidies, and other publicly financed inducements to lure businesses to Michigan.
  • The pool of big plants and major employers seeking to locate to Michigan is much smaller than it once was. Many are establishing plants and offices overseas.
  • The state’s depleted cities are a prime reason that Michigan is at the bottom of the pack — 47th out of 50 states — in retaining the talented young adults that are crucial to building the inventive, entrepreneurial economy that Ms. Granholm envisions for the 21st century.
  • Suburban sprawl is expensive to build, produces more congested and polluted communities, and raises municipal costs and local taxes.
  • The state’s racially segregated and economically stressed cities are driving employers away from Michigan.

Winners of Cool City grants will gain access to what the Granholm administration calls an “economic development toolbox” that contains 108 different grants, tax credits, loans, and services from 14 state agencies ranging from the Department of Labor and Economic Growth (DLEG) to the Michigan State Police. Administration officials say that many other cities that apply unsuccessfully will still be welcome to use the toolbox.

By targeting development in established communities, say economic development authorities, Governor Granholm is clearly laying down a clearer line than ever before in her battle against sprawl. Cool Cities marks the first time the state has assembled so much information and technical assistance about state, local, federal, and private funding sources for neighborhood revitalization in one place at one time.

“Communities have a big picture in mind when they engage in a neighborhood revitalization project,” said David Hollister, the director of DLEG, the agency that is administering the Cool City program, in an interview with the Great Lakes Bulletin News Service. “That big picture starts with a myriad of smaller projects: Remodeling store fronts, repaving streets, creating sidewalks and bike paths, and cleaning up riverfronts just for starters. The State of Michigan has access to federal and other dollars to help communities complete the picture.” 

Thinking Bigger
Projects chosen for the grants, which will be awarded in annual competitions through 2006, must also offer a plan for creating and completing large-scale neighborhood or community improvement projects. It is this requirement that makes the governor’s initiative so potentially significant. The pilot program, say state officials and economic development specialists, is clearly intended to open the door for cities and town centers to gain much more substantial state and federal funding for big projects that cost tens of millions of dollars — redeveloping factories as loft housing, reviving whole blocks of empty storefronts, adding miles of new landscaped sidewalks and streets, even funding new mass transit systems.

The money for such projects is available in the billions of dollars in federal and state funds still devoted to constructing more highways, water lines, and parking lots at the suburban edge. For example, the Southeast Michigan Council of Governments, the planning agency in the Detroit region, oversees roughly $600 million in state and federal spending for transportation, much of it directed to suburban highways, say the agency's critics. 

Because of its modest budget, Ms. Granholm’s Cool City Pilot Program attracted little notice from suburban Republicans when it was announced. But if the governor fully intends to make her Cool Cities initiative a substantive economic development strategy, say political experts of both parties, the rules for qualifying for access to the big pools of money for transportation, housing, business development, and revenue sharing must change. And the budget for urban revitalization must grow to billions of dollars annually. Both notions will prompt extraordinary political scrutiny and disagreement.

Warm Reviews
So far the governor’s pilot program is attracting enthusiastic endorsements from many business and government leaders in cities around the state.

Rick Chapla, of The Right Place, Inc., said the new program would produce an application deluge in Lansing. “There are so many good ideas and not always access to capital funds,” Mr. Chapla said. “So people are going to go for it. The real question will be how creative the different neighborhoods can be to leverage the money.”

Planning officials with the City of Grand Rapids agree with the local chamber’s assessment. “This is a creative way for us to implement our vision for the city,” said planner Suzanne Schulz. 

In Manistee, an industrial town trying to transform itself into a coastal haven for young professionals and wealthy retires, the Cool City initiative is a welcome development for that city’s 10-year effort to improve its infrastructure.

“We think the governor’s idea on Cool Cities is one of the best we’ve heard,” said Vanessa Buhs, a local businesswoman who moved from Charlotte to Manistee eight years ago. “The governor’s toolbox will be the impetus for us to move at a faster rate on projects that have been in the rough for some time. As Dylan says, ‘The times are a changing.’ Private developers have already begun mixed-use projects. I think it’s pulling all the entities together at one table for economic development.” 

The Southwest Detroit Business Association, the leading economic development organization in the city’s fastest growing neighborhood, is counting on a Cool City grant to boost a long-term project to beautify the area’s storefronts, sidewalks, and streets.
Creating venues for the future workforce is clearly an economic development tool,” said Governor Granholm, who is expected to announce the winning projects in early June. “Technology, business and jobs will come where that workforce wants to live. Concentrated cool is what we’re looking for.” 

Read an in-depth interview with DLEG Director David Hollister about the Cool City Pilot Program by clicking here.

Keith Schneider, a journalist and editor, is deputy director of the Michigan Land Use Institute. Reach him at keith@mlui.org. Lansing Policy Specialist Charlene Crowell directs the Institute’s transportation and Detroit projects. Reach her at charlene@mlui.org.

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