What Should Cleveland Do For Economic Development?

The City of Cleveland is simply too important to the Northeast Ohio economy to let fall by the wayside, just because we cannot muster the "will" to make it work again.

Clevelanders need a constructive approach to reviving the City's economic base. The path that we are on right now will not take us where we need to go. This article offers a new way to think about the city economic development value proposition we might consider in the future.

A recent Crains Cleveland Business article talked about the speech given by Werner Minshall, co-owner of the Tower at Erieview and Galleria downtown, at a recent City Club forum. He expressed a sentiment some other developers are muttering privately but few will say publicly: "Mayor Jane Campbell isn't doing enough to foster economic development, nor is the local political climate conducive to it." Other developers interviewed for the Crains article quietly expressed the same reservations that Cleveland City Hall is not putting up a sufficient fight for the city's ailing economic base.

This provides a good jumping off point for my views on this issue.

First, I agree that Cleveland City Hall has not been on the aggressive when it comes to economic development, and I think there are several reasons why. For one, the economy has absolutely sucked in the past three years. There have not been many development opportunities for any city anywhere. Why expend a lot of money and effort at a time when the wind is blowing in the other direction? Look at businesses. They have held back on new investments in facilities and other purchases until very recently. In national perspective, economic development efforts have been in a maintenance mode everywhere--not just in Cleveland.

Second, Mayor Campbell was handed an economic development agenda from the business community to support that frankly was not doable, given the prevailing economic and fiscal conditions. The hardest task politically and economically was the proposed new convention center. Duh, $500 million is a lot of money, especially when voters have to embrace the investment at a time when they are feeling considerable personal economic pain. My guess is that City Hall has been on the defensive in significant part because it felt muscled.

Third, economic development in Cleveland has been private sector-driven forever, and it should be. The business community will always know better how to satisfy the needs of business than government. At best, City Hall can provide strategic support to economic development, which is no small thing by the way. The word "partnership" has fallen by the wayside in Cleveland's approach to economic development. A city as socially, culturally, politically and economically divided as Cleveland has to work all the time at "working together." Doing your own thing is in Cleveland's genes. Clevelanders would rather bump heads then dance. Partnerships are based upon common goals, shared approach and trust. Take any one of these elements away and you no longer have a workable partnership.

Fourth, the city's tax base has been shriveling for sometime, and it got even worse in the past three years. The upshot of these public financial troubles is that there is no money to spend on development projects. That again is a national reality for America's cities. Visit the National League of Cities or National Conference of Mayors websites and you will get an ear full on these issues.

Fifth, Cleveland City Hall's link in the regional economic development chain has grown weaker over the past dozen years or so. Former-Mayor Voinovich got with the economic development program and was able to work effectively with the City's business leaders, and as a result things got done. Several important development projects moved forward under former-Mayor White, but City Hall's link to the economic development world became severely strained during White's last term. Enter Jane Campbell, the people-oriented neighborhood developer, and things continued to weaken. Run-ins with Cuyahoga County commissioners did not help.

Sixth, it's going to take a whole lot of public and private sector investment to move Cleveland up on the development competitiveness ladder. The truth is we don't even know how much investment would be needed to spark a real turnaround. My estimate is that the number is probably in the range of $10-$15 billion, and only a portion of which should be spent on downtown megadeals.

What do I suggest as the action plan to get economic development working in Cleveland again?

The key ingredient to success is strategic investment. An investment agenda for the City of Cleveland should be developed that includes these seven core components, which should be approached with the surrounding region in mind: 1) downtown revitalization as a place to work, play and live; 2) manufacturing regeneration and modernization; 3) economic diversification toward a globally competitive mix of both established and emerging industries; 5) strategic community-building with a keen focus on quality of life; 6) new national and global market-building for Cleveland businesses; and 7) human capital development with an eye to converting the City's educational resources (all levels) into a development powerhouse for both established and emerging industries.

We have to figure out where the $10-$15 billion is going to come from. The public and private sectors must work together closely to accomplish that task. I would offer a hint in this regard. Look for the money nationally and globally. Create a 60-40 funding formula where 60 percent of the investment strategy comes from local and state sources and the other 40 percent is raised nationally and globally. Think of the problem as competitive sourcing of financial capital and not fund-raising as we have known it in the past.

Finally, to put this investment strategy into play we must work on next-generation economic partnerships that are based upon trust, common goals and a shared approach. Build teams of "turnaround artists" that can make silk purses out of a sow's ear.

We may stand a fighting chance of turning around Cleveland if we approach the city's future economic development on this scale.