The US Delivery Crisis
Below is the Nowak Metro Finance Lab Newsletter shared biweekly by Bruce Katz.
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December 9, 2021
With the signing of the bipartisan infrastructure bill, the playing field now shifts quickly from members of Congress to networks of public, private and civic leaders in communities across the country. Passing laws is one thing. Deploying federal resources in ways that actually drive systemic and transformative change is another.
The hidden story, unreported to date, is that the US faces a major delivery crisis. After years of federal scarcity and unreliability, most communities haven’t planned or prepared for the prospect of abundant investments in economy shaping, energy shifting, climate solving, place making and the like. Most communities, simply put, are not ready for what’s coming.
The US delivery crisis is caused by three separate but related issues.
First, there is a fundamental disconnect between the organization of the federal government and the functioning of real communities. The federal government is the apex of fragmentation, vertically organized in a series of rigidly balkanized bureaucracies, mostly created in the mid-20th century when specialized expertise was deified. The federal government is now about to invest trillions of dollars through this legacy system via hundreds of programs across dozens of agencies. The recently enacted bipartisan infrastructure bill alone provides $110 billion for roads, $39 billion for transit, $25 billion for airports, $17 billion for ports, $65 billion for broadband, $73 billion for the electric grid and on and on and on.
Communities, by contrast, operate horizontally via networks that weave together disparate investments into a whole that is often greater than the sum of the parts. While federal programs focus on singular, technocratic solutions, communities emphasize the connections between different uses, routinely linking different forms of infrastructure with other investments in housing, economic and workforce development, place making and the remediation of former industrial properties. Such multi-dimensional action, in downtowns and innovation districts and along waterfronts and commercial and industrial corridors, has a synergistic effect that catalyzes more growth and generates more value than would occur through siloed investments.
Second, the compartmentalization of federal programs makes the blending of public resources, let alone the leveraging of private and civic capital, inordinately complex. The adaptive reuse of an iconic community anchor, like the Dayton Arcade or the former Studebaker factory in South Bend or the Central Terminal in Buffalo, requires separate but related investments in historic preservation, affordable housing, entrepreneurial start-ups and energy, broadband and transportation infrastructure. Yet funding for each of these investments will flow through separate agencies with different rules to different recipients along different time frames and via different allocation methods (e.g., block grants versus competitions versus tax incentives versus innovative financial products). The end result is a Rubik’s Cube of government programming and investment which requires dozens of different, often conflicting, funding sources in the same transaction.
Finally, the capacity of localities is not sized to the scale of federal funding or the tasks at hand. City and county governments (and many public authorities or quasi-public entities) have been degraded for decades, the long tail effect of President Reagan’s depiction of government as the problem. Many non-profit intermediaries that focus on supporting local entrepreneurs or delivering community housing are similarly understaffed and under-capitalized. This means that most communities do not have the personnel with the capabilities, competencies, bandwidth or muscle memory to plan transformative projects, apply for disparate federal sources, do the capital stacking necessary to make catalytic projects happen and coordinate multiple investments for synergistic effect.
The upshot of all this: history will show that the enactment of federal legislation was infinitely easier than local implementation and execution.
So, what to do?
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Rebuilding America is no longer a question of Presidential leadership and Congressional action. It is now a challenge of national initiative and local delivery. Who will step up to solve our nation’s delivery crisis?