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Finding a New Path for ClevelandEd MorrisonEconomic Policy AdvisorPurdue Center for Regional Development
The Cleveland comeback has stalled. Once hailed as a shining exampleof rebirth in our industrial heartland, Cleveland now sits rudderless anddrifting backward.Between 2000 and 2007, Cleveland suffered one of the largestproportional population losses in the country. The city shrank by 8%.Per capita income growth in Cleveland also lags behind cities likeCincinnati, Milwaukee, and Pittsburgh. Since the early 1990s, the incomegrowth gap between Cleveland and these other cities has widened.Lagging incomes creates another problem. As a regional economydeteriorates, the pressure for social services goes up. It’s not surprising,therefore, that — with income growth lagging — local tax rates in Clevelandare among the highest in the country.Political corruption also takes a toll. Cleveland sits in the middle of Cuyahoga County. Several months ago, federal law enforcement officialslaunched a sweeping probe of political corruption in the county.The future doesn’t look much brighter. Cuyahoga County is oftendescribed as the epicenter of the foreclosure crisis in the country. Countingfrom 2000, Cuyahoga County has the highest per capita foreclosure rate inthe country.Overnight, foreclosures decimate neighborhoods that have taken yearsto rebuild. In the Cleveland neighborhood of Kinsman, half of the mortgageproperties are in foreclosure. In other neighborhoods foreclosure rates rangefrom 25% to 30%. Not surprisingly, Cleveland’s foreclosures areconcentrated in the lowest income neighborhoods, the places hardest to
 
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rebuild.Within these neighborhoods, vandals strip empty houses of appliances,windows, pipes, and fixtures. It takes about 72 hours for a house to bestripped after becomes vacant (all of which makes scrap metal recycling abooming business in Cleveland). Stripping the pipes renders the property atotal loss.Meanwhile, the Cleveland Municipal School District, like many largeurban districts, is making only glacial improvements. According to a recentreport by America’s Promise, Cleveland ranks 48th of 50 large school districtsin high school graduation rates. Fewer than six in ten of Cleveland’s 9thgraders will complete high school. Cleveland’s dropout factories includeCollinwood High School and East Tech High School, where only four in ten9th graders graduate.Many older industrial cities face the same set of challenges, but fewcities started three decades ago with the same promise of regeneration. Withthe collapse of the steel industry in the late 1960s, Cleveland started on aspiral downward. It did not help that 40 years ago the Cuyahoga River alsocaught on fire. Cleveland jokes became a staple of late-night television. Thecity hit bottom when it filed for bankruptcy in 1978.Cleveland turned the page with the election of George Voinovich asmayor in 1980. Voinovich, a tough minded Republican, challenged thebusiness, labor and civic leadership of the city to transform Cleveland.The business community responded. A core of corporate CEO’sorganized Cleveland Tomorrow, modeled on the Allegheny Conference inPittsburgh. Cleveland Tomorrow then drove a focused agenda of urbantransformation. By 1989, Fortune magazine applauded the city’s newtrajectory in an article, “How Business Bosses Saved a Sick City”.The partnership between the city and the business community began toshift in 1990 with the election of a new mayor, Michael White. While thebusiness community worked with White to complete projects plannedduring the Voinovich administration, like a new baseball stadium andbasketball arena, the relationship between the mayor and the businesscommunity gradually deteriorated.
 
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In 1995, the business community still supported White sufficiently topush for mayoral control of the city school system. But this step representedthe last big collaboration. By the time White began his third term in 1997,the Voinovich momentum pushing public-private partnerships hadevaporated.At the same time, dramatic changes were taking place in Cleveland’scorporate landscape. By the late 1990s, the city had lost five Fortune 500headquarters. Manufacturing, the backbone of the region’s economy, shrankdramatically. Importantly, as the influence of manufacturing declined, realestate developers emerged as important forces within Cleveland’s businesscircle.Entering the 2001 recession, Cleveland was clearly in trouble. Thelocal paper, the Cleveland Plain Dealer proclaimed that Cleveland and theregion was facing a “quiet crisis”. The editors started pushing for a masterplan for economic development to follow up on the momentum of theVoinovich years.As one editor noted: “Our population is static, and has been for the pastdecade. Our recent college graduates are seeking opportunity elsewhere.Old industries are dying, and the climate for growing new ones isn't thebest….Greater Cleveland must get serious about creating and backing amaster plan for economic development or face economic extinction.”The business leadership responded by consolidating different businessorganizations — Cleveland Tomorrow (leading CEOs), the Greater ClevelandGrowth Association (a chamber of commerce), the Cleveland Roundtable (agroup focused on diversity issues), and the Council of Smaller Enterprises (asmall business organization) — into the Greater Cleveland Partnership.The Partnership focused its economic development agenda on buildinga convention center, the last Voinovich era project to be built. Cleveland hasbeen studying a new convention center for at least a decade, but — forreasons we will explore — the city’s leaders have never been able to delivera deal.The Partnership also re-organized a set of affiliate economicdevelopment organizations for better control and (hopefully) impact. These
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