The Public Wealth of Cities
Editor’s Note: In spring of 2018, the JEA board and Mayor Lenny Curry’s administration raised the question of selling JEA, arguably the city’s most valuable asset. We asked retired UNF professor Elizabeth Furdell to review The Public Wealth of Cities by Dag Detter and Stefan Folster, a study about municipal assets.
Two Swedish experts in public finance detail their solutions for cities hoping to amass capital needed for infrastructure and other improvements, calling for greater transparency, accountability, and creativity under more professional guidance. The wide funding crises in many cities undercuts democracy and even decreases life expectancies, but some communities have become engines for growth. How do these “smart” cities prosper while others stagnate?
The authors suggest that even poor cities sit on a gold mine of assets including real estate, municipal firms, and commercial ventures. Successful cities have adapted to deindustrialization and have focused on asset management instead of ownership questions. The size of a city is not the most important factor, as what they call “turbo” cities have made canny investments that make daily operations cheaper and more effective while “treadmill” cities founder in debt, pension liabilities, and skyrocketing taxes. The authors include both commercial and economic assets; commercial assets encompass such commodities as water, energy, waste and transportation, as well as real estate.
Social assets should figure into the balance sheet, too, and include the social environment, schools, and civic engagement; human assets are also part of a community’s wealth and should be measured in terms of high quality education, entrepreneurial spirit, and good city administration.
Cities fail because their assets have gone to waste. Detter and Folster cite New Orleans as an example of a community that spent too little on flood protection. Berlin and its failure to build a new airport has left it under potential, while Hamburg has soared into prosperity. The failure of stumbling cities is due to inadequate development of the right assets, causing a decline in middle incomes and deteriorating health, neighborhoods, and infrastructure. Examples of turnaround cities include Seattle, Pittsburgh, and Vasteras in Sweden.
Cities hoping to improve need public fiscal reports that are transparent and reliable about the sources of any vulnerabilities and risks.
The authors strongly argue for the creation of Urban Wealth Funds, incorporating a holding company separated from political interference, such as have been established in Singapore, Hong Kong, Hamburg, and Stockholm.
An Urban Wealth Fund must be transparent, with clear objectives, and be politically independent.
Detter and Folster close their tome with chapters on the value of social investments and the ways human assets might be boosted. They emphasize the importance of lifelong learning and the needs of employers for a knowledgeable workforce.
To achieve the goal of reinventing city democracy, they call for the training of city administrators in asset-based governance and for the elimination of corruption, political stagnation, the balkanization of neighborhoods, clientism, and the murky ownership of assets. For those who wish more specific information, the last 30% of the book is composed of source notes and bibliography.