Part One: Findings -- Revitalization, Renewal, and Remaining Metropolitan Challenges

Thanks to a booming national economy, most cities are experiencing a strong fiscal and economic recovery. However, too many central cities are still left behind and continue to face the challenges of population decline, loss of middle-class families, slow job growth, income inequality, and poverty.

The Strong Economy Helps Cities To Recover

For the first time in history, the majority of central city households are homeowners. In 1998, the central city homeownership rate topped 50 percent. A total of 69.6 million families owned their own homes -- more than at any time in American history. Since President Clinton took office in 1993, 7.8 million more families own their homes.¹ For the first quarter of 1999, 50.3 percent of urban residents owned their own homes, compared with 48.9 percent in 1993.

Two-thirds of central cities increased in population from 1980 to 1996. Between 1980 and 1996, two-thirds of the country's 539 central cities enjoyed population growth, although population is still growing far faster in suburbs than in central cities.

Overall, population is still growing far faster in suburbs than in central cities, but the gap is narrowing. From 1970 to 1980, more than 95% of total metropolitan growth nationwide occurred in suburbs. Since 1980, the suburban share of metropolitan growth has been 77%.

Cities across the country are demonstrating new vitality and showing marked improvement in fiscal conditions, service delivery, and quality-of-life indicators. Central cities have shown particularly strong improvements in public safety.

Too Many Cities Left Behind

Serious population losses continue to plague about one in five central cities. A total of 116 central cities lost 5 percent or more of their residents from 1980 to 1996, and 57 cities -- more than 1 in 10 -- lost 10 percent or more of their population. Most of those cities losing population are small or mid-sized.

Unemployment remains unacceptably high in about one in six central cities. High unemployment -- 50 percent or more above the national rate -- affects 17 percent of central cities. Ninety-five central cities and the District of Columbia had jobless rates of 6.75 percent or higher in 1998, compared to an average rate of 4.5 percent for the Nation last year; 64 had rates of 7.9 percent or more (75 percent above the national rate), and 37 had rates of 9 percent or more (100 percent above). Even in cities with low overall unemployment, pockets of high joblessness occur.

Stubborn poverty persists in one-third of our central cities. Poverty rates of 20 percent or higher can be found in 170 central cities, most of which are small or mid-sized, in 34 States and the District of Columbia. In 30 cities, the poverty rate is estimated to be 30 percent or higher. These high poverty rates tend to reflect structural barriers to participation in the changing economy, such as a large skills gap in the workforce and severely blighted parts of the city that have trouble attracting investment -- even when market potential exists.

Poor urban residents continue to face an affordable housing crisis and related problems of poverty. As documented in HUD's March 1999 publication, Waiting in Vain: An Update on America's Rental Housing Crisis, affordable housing shortages are worsening, in part because the strong job economy is pushing up rents faster than wages for millions of Americans. Moreover, households in poverty tend to be geographically concentrated in urban areas, a problem that especially affects the minority poor.

Some older suburbs are experiencing problems once associated with urban areas -- job loss, population decline, crime, and disinvestment. Simultaneously, many suburbs, including newer ones, are straining under sprawling growth that creates traffic congestion, overcrowded schools, loss of open spaces, other sprawl-related problems, and a lack of affordable housing.

Some Older Suburbs Are Beginning To Experience Problems

Suburban jurisdictions -- like central cities -- are considered to be suffering from distress if their population declined by 5 percent or more between 1980 and 1996 and if their 1995 estimated poverty rate exceeded 20 percent. Nearly 400 suburban jurisdictions in 24 States meet these criteria for distress. While many are small communities, 77 had populations over 5,000. As in central cities, disinvestment is creating blighted areas and sapping these communities of their economic vitality.

Simultaneously, Many Suburbs Are Straining Under Sprawling Growth

The costs associated with sprawl are mounting, so curtailing sprawl could save substantial sums of money over the coming decades. A research team at Rutgers University that carefully studied the costs of sprawl concluded that pursuing strategies to facilitate growth in developed communities would generate savings by decreasing the consumption of developable land and by increasing land available for recreation.² By growing smarter, communities could reduce traffic congestion and the Nation could save billions of dollars in spending for roads, sewers, water, and other vital infrastructure. Costs associated with sprawl include:

• Poverty concentration and job mismatches. The outmigration of middle- and upper-income Americans has left behind concentrations of poor people and has sapped once-thriving areas of their economic vitality. Rapid development outside of central cities has created a mismatch between where many potential workers live and where jobs are located. This leads to high joblessness in some pockets while jobs go unfilled in other parts of the same otherwise healthy metro areas.

• Shortages of affordable housing near jobs. Shortages of affordable housing in growing suburban areas compound job mismatches, as rental increases price poor workers out of growing areas with better job opportunities.

• Public capital and operating costs. Sprawl drives up the cost of roads, bridges, sewers, and other public capital because development is so much less dense and requires the provision of new systems. Road costs in sprawling communities are 25 to 33 percent higher, utility costs 18 to 25 percent higher, and municipal and school district operating costs are 3 to 11 percent higher than in sprawl-free communities.

• Loss of open space, ecologically sensitive land, and environmental quality. This pattern of development encroaches on forests, coastal areas, and fragile natural habitats, consumes 20 to 40 percent more open land, and produces about one-third more water pollution than sprawl-free development. In addition, suburban development patterns cause residents to drive more than residents in central city areas, generating proportionately more air pollution.

• Travel costs. The average suburban household drives approximately 30 percent more annually than its central city counterpart. That is about 3,300 more miles, which translates to an additional $753 per year per household in transportation costs. Suburban residents spend 110 more hours behind the wheel each year than their urban counterparts -- almost 3 full weeks of work.³

• Decline in sense of community. Some observers suggest that leapfrog development patterns, lack of a central community focal point, and reliance on automobiles contribute to the loss of a sense of community. They suggest that people living in sprawling developments gather less often in public places and feel less responsible to one another and to shared surroundings than residents of more dense communities.

There is a strong consensus on the need for joint city/suburb strategies to address sprawl and the structural decline of cities and older suburbs. We now have an historic opportunity for cooperation between cities and counties, urban as well as suburban, to address the challenges facing our metropolitan areas.

The continuing challenges that face central cities, along with emerging problems in suburbs, have brought us to a historic moment of agreement on a common urban-suburban agenda. The interests of city and suburban residents are rapidly converging in support of a better approach to growth. After 40 years of city versus suburbs, the dynamic has changed. Now, cities and suburbs are increasingly cooperating to maintain the health of entire metro areas -- to increase the livability of their communities and maximize their economic competitiveness. Last year, more than a dozen governors from both parties addressed growth issues in their "State-of-the-State" or inaugural addresses. This year, more than 30 governors spoke out on this issue in their annual addresses.

In May 1999, the U.S. Conference of Mayors with the National Association of Counties completed an important survey of leading officials from urban and suburban areas nationwide to identify the challenges facing jurisdictions in both areas and the prospects for addressing those challenges. This survey documents the historic convergence of interests that has brought county, suburban and central city leaders to a recognition of their common interest in promoting the health and vitality of entire metropolitan regions. Indeed, more than 80 percent of the officials surveyed from both suburban and urban agreed with all of the following statements:

• "The competitiveness of our region is directly tied to the economic strength of our urban core."

• "The long-term health and vitality of our region depends on greater cooperation among cities and suburbs."

• "My city's long-term interests are tied to the future of the surrounding region."

• "The problems of cities and suburbs are closely interrelated in our region."

• "There should be more city-suburb and central city-county cooperation."

And almost all of the officials surveyed -- 97 percent of officials in both urban and suburban areas -- agreed that the most important challenges facing their communities are regional challenges, encompassing surrounding communities as well as their own jurisdictions. Perhaps never before have the challenges facing urban and suburban areas coincided so clearly, nor have they been accompanied by so strong a recognition of the two areas' common interests.

Investing in central cities is the key to creating competitive metro economies. America's regional economies can only compete effectively if they are supported by cities healthy at their core. In an era of high mobility, low transportation and information costs, and fierce global competition, a metropolitan region without a healthy urban core finds itself at a competitive disadvantage. In a global economy, firms choose among regions -- and the health of the central city is a key factor in deciding which region is best.

Moreover, in the current, unprecedented economic expansion,
central cities have the resources and untapped markets to extend the boom. A decade ago, Wall Street investors eagerly looked to emerging markets overseas to generate high returns on their capital. Today, America's own central cities are the emerging markets of the 21st century. These new domestic markets and their available labor force are right here, with developable land close to supply lines. Successful urban firms recognize these competitive assets.

However, for the most part, these domestic markets are yet undiscovered territory for many businesses. "The largest pools of untapped investment opportunities and new customers are not beyond our shores," President Clinton declared earlier this year. "They're in our backyard." Investing in the untapped markets of central cities and implementing regional solutions -- at the local level -- to address regional problems are key to creating competitive metro economies and livable communities for the new century.