Many nonprofit and local government executives think that federal and foundation grant funding priorities are relatively static, but they’re not—we’ve written about grant waves before, and a massive new grant wave is forming just over the horizon. Unlike sudden funding shifts due to unanticipated disasters such as COVID, or a major hurricane like Katrina, grant waves develop over time as the legislative and executive branches react to emerging challenges. The new and building grant wave is one I’ll call the “Urban Doom Loom Grant Wave.”
The media is filled with Urban Doom Loop stories like “The risk of an urban doom loop for America’s old-line cities: Ailing metropolitan centres need creative solutions from the public and private sectors.” This article gets two major points wrong and one correct:
- First Wrong Point: It’s not just “old-line” cities that are at risk of economic implosion, as this can happen to any city, old-line or new. By old-line, the author refers to “San Francisco, Chicago, New York.” Urban economic woes, either historic or current, can be demonstrated using various metrics, one of which is simple population increase vs. decrease. Chicago’s population, for example, peaked at 3.6M in the 1950 census, declined to 2.7M in 2020 and is down to 2.6M in 2023. A case can be made that San Francisco, which the tech revolution has transformed in recent decades, is more of a “new-line” city than an old-line city. Still, its population peaked at 874K in 2020 and has dropped 17.7% to 715K in 2023. While this simple change metric ignores underlying factors like the incomes and other socioeconomic indicators of who’s moving in and out, it’s one approximation of local economic health—people tend to move toward job opportunities, affordable housing etc. But the median sale price for a San Francisco housing unit is $1.4 million—hardly a sign of doom, although prices are down about 8.5% in 2023 from 2022.Population obviously isn’t a perfect metric. Seattle and Portland, which appear in daily apocalyptic news stories about crime, are both new-line cities. Leaving aside the “if it bleeds it leads” aspect of news coverage, both seem to be facing significant economic and quality of life challenges, which are reflected in modest population change: Seattle’s population has dropped by 1.7% and Portland’s by 2.8% since the 2020 Census. One reason population growth or decline is a fair measure of urban vitality is that a city’s public and private infrastructure (e.g., roads, transit, office/retail buildings, housing stock, etc.) grows as the population grows. Expanded infrastructure is a “spent cost” and public and private infrastructure must be maintained even if the tax base and lease/rent revenues fall. In the short- to medium run, this inevitably means higher taxes and/or lower services, which are strong feedback loops for the Urban Doom Loop phenomenon. Detroit, for example, has lost 50% of its population since 1960, despite endless attempts by the city, state, feds, Big Three car makers, and more recently Rocket Mortgage to reverse this trend.
- Second Wrong Point: The article attributes the current Urban Doom Loop to “the lingering effects of the pandemic.” While lockdowns in cities like LA and NYC disrupted city economic life with work-from-home leaving office buildings empty and few retail shoppers, this is not the only cause of the current Urban Dom Loop cycle. For many Midwestern and Eastern industrial cities, there are been several Urban Doom Loop cycles starting around 1950. This began with the shift of manufacturing first to suburbs, later to the South, and eventually developing countries.Returning WWII GIs took advantage of the GI Bill to buy starter homes in burgeoning suburbs aided by the Interstate system that facilitated commuting. Then, the wave of civil disturbances in 1967 and 1968 accelerated the urban-to-suburban migration, along with well-intentioned but misguided federal urban renewal policies. This might have been better termed “urban removal,” with thousands of commercial buildings and housing units bulldozed in the name of “slum and blight clearance.” The replacements were usually high-rise public housing like the infamous Cabrini Green Housing Project in Chicago and soulless windswept office plazas like the Empire State Plaza in Albany (Jane Jacobs prescient 1961 book, The Death and Life of Great American Cities is still relevant in understanding the implications of poor urban land planning). The planners either didn’t understand or didn’t care that the original residents would never return to the “decent safe and sanitary housing” (HUD lingo) or want to work in isolated office building “islands.”I grew up in the then Jewish immigrant trending African American Near Northside of Minneapolis, which was “blighted” but was actually a well-functioning urban neighborhood with plenty of inexpensive housing, shops, and a street-car line to downtown 10 minutes away. By 1960, the city had begun buying the properties for wholesale clearance, including our house. While my parents could have bought a house in a better part of the Northside, they bought a modest house further west to a working-class first-tier suburb. In his new book, Untenable: The True Story of White Ethnic Flight from America’s Cities, Jack Cashill analyses this urban-to-suburban migration.
- Correct Point: The article argues that “failing metropolitan centres need creative solutions from the public and private sectors.” The resurrection of most downtowns and commercial nodes like Times Square in NYC in the 1980s from decades of decline took a combination of public funds in the form of grants and other subsidies and pioneering developers willing to risk capital. Around 1980, a pioneer developer tackled Times Square. The developer used city tax abatements and a HUD Urban Development Action Grant (UDAG) to renovate the dilapidated Commodore Hotel into the Grant Hyatt Hotel, just ahead of the 1980s economic boom. Cities can’t facilitate this kind of urban metamorphosis without private developers and developers won’t make risky investments without grants and subsidies. Like or it or not, this is how American cities come back from the dead, although it can take years or decades for this process to unfold.
Many American cities, large and small, are in some stage of the current Urban Doom Loop. This is due to a perfect storm including the COVID pandemic and work-from-home policies/lockdowns and an array of sudden and perhaps not well thought out public policy shifts like ending cash bail, reducing police budgets, allowing homeless encampments on streets and in parks, adopting the new Housing First approach to addressing homelessness instead of the traditional treatment first strategy, the flood of fentanyl and other drugs across the porous southern border, the tolerance of shoplifting and other crimes, and so on. Whatever the reasons one ascribes the current Urban Doom Loop to, it’s real. People, no matter how committed they are to urban living (I love big cities and am a fan of New Urbanism planning concepts), will flee unsafe and dirty streets, while businesses that become unprofitable will close or move, leaving vacancies.
In the face of the above, how will government policymakers and foundations respond? A typical response would be an avalanche of new federal, state, local, and foundation grants, not only for redevelopment and adaptive reuse of vacant office and retail buildings into affordable housing, but also for human services. As downtown economies falter, low-income and working-class residents will need more services at the same time as local tax revenues fall. We are currently in the Post-Covid Grant Wave with lots of funding for EVs, carbon reduction, advanced manufacturing, etc., but this won’t last because grant waves never do. We’ve seen this before and the Urban Doom Loop Grant Wave is approaching. Nimble nonprofits and local governments should be poised to take advantage of the new funding likely to emerge as the 2024 election approaches.