Abstract

Over the past few decades poverty in America has become increasingly concentrated in urban areas. Policy makers at all levels of government have made urban issues a top priority in the fight against poverty and have implemented a number of strategies with place-based policies becoming prominent. The Obama administration has continued the trend with a number of new place-based initiatives such as Choice Neighborhoods, Promise Neighborhoods, and Sustainable Communities. With place-based policies playing such a significant role in addressing distressed areas, the book titled Collaborative Governance for Urban Revitalization is both important and timely.
In 1994, six cities 1 received Empowerment Zone (EZ) status and with it never-before-seen levels of federal resources, including wage tax credits and $100 million grants, to revitalize their distressed areas. However, somewhat surprisingly local outcomes across these cities varied substantively despite being similar before the policy intervention. The authors Michael J. Rich and Robert P. Stoker investigate this puzzle and suggest that the quality of local governance is the key factor. They explain that collaborative governance “transcends local government by creating institutions that encourage key local stakeholders (inside and outside government) to make durable commitments to a revitalization agenda.” p.5 The role of collaborative governance in the success of public initiatives to revitalize distressed urban areas is difficult to determine because of the absence of meaningful examples to study. This book, however, provides compelling evidence that local governance, which incorporates the community, is a main determinant in a program’s success by studying the federal EZ initiative.
The book begins by informing the reader of the history of government intervention aimed at alleviating urban blight. The focus on “supply-side” initiatives, such as tax relief and deregulation, came from the Reagan Administration and argued for less grant funding. President Clinton called for “comprehensive” empowerment zones, which expanded the benefits for EZs to include block grant funding as well as a focus on community-based approaches. Next, a broad description of good governance both in the United States and internationally is presented, including the competing neoliberal and collaborative governance perspectives on good governance. A collaborative governance approach complements neoliberal’s market-based policies with a focus on collaboration and community engagement to create local programs that can adjust to the local issues.
Before investigating the importance of collaborative governance in the six cities, the book illustrates the circumstances and challenges of each city before the program by including an in-depth analysis of the demographic and economic characteristics. Additionally, there is analysis of each city’s approach and planning including discussion of specific programs. The detailed explanation of each city’s strategic planning process, drawing of EZ borders, and local uses of EZ funds highlight the different approaches. Some cities, such as Chicago and Detroit, focused on human services and housing, although New York focused on loan funding for local small businesses.
The authors next describe and evaluate the quality of local government by assessing the local capacity, community participation, and program integrity of each city. Local capacity was evaluated by studying three leading indicators: strategies and system leadership, leadership and collaboration, and community development corporation capacity. Not only were there differences in community participation during the planning stages but some cities drastically reduced the community’s role during the implementation stage. This was particularly evident in the variation across the cities in community representation on the governing boards. This helped create important differences in the structures and processes to implement the EZ programs. For instance, Atlanta, Baltimore, and Detroit created “quasi-public, non-profit corporations” that were separate from local government, whereas Chicago and Philadelphia created structures within their local governments. Differences also existed across the cities in the appointment process, scope of authority of the entities, and who oversaw the entity, to name a few.
The second half of the book uses quantitative and qualitative methods to evaluate the trends in the EZ cities, including the role good governance played in the outcomes and the implication of their findings. As the book states, research on the federal EZ program is quite disputed. There has been a large growth in the research dedicated to place-based policies to fight poverty mainly because of the availability of both richly detailed economic and demographic data at small geographic scale and the exact boundaries of the EZs, making it easier to study the outcomes of these areas. Where I believe much of the disagreement lies is because of the lack of agreement in the correct econometric approach, how to adequately account for trends in these areas, and probably most important, what are the correct set of counterfactuals. Variation in data, econometric approach, and counterfactuals have led to a large number of studies that sometimes can find conflicting results with some authors finding positive effects of the policy (Busso, Gregory, & Kline, 2013; Ham, Swenson, Imrohoroglu, & Song, 2009; Krupka & Noonan, 2009) and others finding little to no effect (Hanson, 2009; Hanson & Rohlin, 2011; Oakley & Tsao, 2006). Included in their analysis is a helpful discussion comparing and contrasting the evaluation methods used by relatively recent research papers. This includes illustrating the variation in treatment group and counterfactual areas. Unlike much of the literature that studies the EZ program as a whole, a unique aspect of their analysis is separately studying each EZ city. The authors present a compelling set of evidence that demonstrates that each city’s experience in the EZ program is different for a number of reasons, including each city’s approach to implementing the program. Therefore, their approach to separately study the effect of good governance on each city has merit.
The analysis focuses on five key outcomes: the change in number of jobs created, number of people living below the poverty line, number of people unemployed, amount of home mortgage dollars originated for single-family home purchases, and amount of business loan dollars. The first three indicators (jobs, number of poor, and unemployed) are common in the literature, whereas the amount of mortgage and business loans are rather new to the literature. The authors use three different econometric approaches that rely on propensity score matching: estimating the average effect of the treatment on the treated, fixed-effects regression, and effect size. Although each approach has its weaknesses and assumptions, the authors do a good job offering multiple approaches to strengthen their analysis. However, a main difficulty with separately studying each EZ city is the lack of sample size, which is often a reason why many in the literature pool are all EZ cities. Interestingly, after the book makes a strong argument against pooling the EZ cities, one of its approaches (the fixed-effect regression) does just that. Their choices of counterfactual areas are other census tracts within the city that are most similar before the program. This approach has some benefits such as helping to account for city trends, but as I will explain later, there are some serious concerns with this approach.
The important take away from their analysis is that despite being a part of the same program some cities had far different outcomes than others. Specifically, there is strong evidence that Baltimore and Philadelphia substantively improved in a number of outcomes although Atlanta did not. This result helps explain some of the mixed results of the literature that study the program as a whole.
The next few chapters explore the Atlanta and Baltimore EZ experiences from start to finish, demonstrating the importance of good governance in the success of a public initiative. The authors make a compelling argument for the correlation of good governance and the outcomes achieved from the EZ program, with local capacity being the best predictor of success. The book concludes by discussing the implication of their findings and its implications for future attempts at revitalization, which is helpful to policy makers.
This book should be a must read for anyone implementing or researching location-based policies to fight urban distress. The federal EZ program is the largest and most prominent location-based policy to date. This book gives a thoughtful and detailed description of the program and how each of the six original cities approached and implemented their local programs. This book highlights the important role good governance has in the fight against urban blight.
However, without repudiating the merits of this book, there are a number of concerns with the analysis that highlight the difficulty in evaluating location-based polices and the need in the literature for further research. First, determining what would have happened absent the policy in the “treated” areas is difficult and the choice of the counterfactual areas is paramount. Ideally, the counterfactuals are identical in levels and trends to the treated areas before the policy intervention and are not affected by the policy. Hanson and Rohlin (2013) demonstrate that using economically similar areas within the city as the counterfactual, as this book does, biases estimates. This is because results from Hanson and Rohlin (2013) suggest that the EZ program takes new business from these within-city, economically similar areas and incentivizes them to move into EZs. Therefore, these similar areas are actually negatively affected by the program and the effect of the policy can be overstated. This problem causes additional issues for intercity analysis when trying to account for city trends.
A second area of future research is the role that trends play in the revitalization of the distressed area. As Table 3.1 illustrates, Baltimore was improving two decades before although Atlanta was stagnant. How do we best prove that it is good governance or the EZ program in general that caused Baltimore to be successful and not the preexisting trend? Third, I would be remiss to not mention that there is a large literature on the capitalization of tax policies and incentives into property values that would argue that tying tax incentives to land will simply lead to higher land values in the long run. Finally, possibly because of the time lag in writing a book or simply due to working on an important and ever-growing subject, there are a number of new papers, particularly in the field of economics, that are omitted from this book. For a summary of the more recent research, I would point readers to the chapter in the Handbook of Regional and Urban Economics by Neumark and Simpson (2015) titled “Place-based Policies.” Nonetheless, this book is an excellent source of information for location-based revitalization efforts.
