New Mayors Battle Old Perceptions

Despite lower crime rates, new businesses balk at going to cities with corrupt practices.

The Chicago River gave this city its name. Railroads made it prominent. Engineers built its broad avenues, skyscrapers, and elevated trains. Lake Michigan supplied its abundant wind.

Judas apparently handled the politics.

"I, too wish to defend my city from people who keep saying it is crooked," author Nelson Algren once wrote. "In what other city can you be so sure a judge will keep his word for $500?"

It has taken years to enact meaningful political reforms here, and it could take years to fully erase the notion that Chicago's unofficial symbol is a cash-stuffed envelope. An average of one alderman a year has gone to prison in the past two decades.

Yet these are crucial times for American cities, and such perceptions matter. Despite an urban development boom, and the rise of a new generation of progressive mayors, many business leaders still view cities like Chicago as risky investments.

From 1990 to 1993, only 3 out of every 100 new metro-area businesses were located in cities. The rest went to the suburbs, reports the Department of Housing and Urban Development.

Lurking beneath this trend is the notion that cities are more difficult and expensive places to do business. It's a perception fueled by high taxes, shoddy services, and the often Byzantine - or outright corrupt - nature of city licensing, contracting, and zoning procedures.

"There's a global emphasis on efficiency that was not there 20 years ago, says Neal Peirce, an urban consultant. "These days, city governments are not fulfilling the public trust if they're saddled with a fat and inert bureaucracy."

By most standards, cities have made significant progress lately. Urban crime has dropped sharply in recent years and declines in federal spending have forced civic leaders to streamline services and trim bloated payrolls.

Moreover, a fresh crop of mayors, many of whom won reelection this month by wide margins, have formed partnerships with business leaders and community activists that have eliminated much of the rancor that once kept commerce away.

"I find that mayors are more practical," Boston Mayor Thomas Menino said in a recent interview. "They do not have the patronage they had in the past ... and the funnel from Washington is just not there. We are more bottom line."

WHILE some mayors are beginning to manage cities in the style of corporate executives, the indicators of urban financial health have been slow to respond.

Federal figures show that between 1990 and 1993, 87 percent of new entry level jobs in large metropolitan areas were created in suburbs.

And despite widespread praise for reforms enacted by Cleveland Mayor Michael White, for example, that city's share of the region's property-tax base continues to fall faster than its population. Detroit Mayor Dennis Archer has secured major investment commitments from that city's business community, but its share of the metropolitan tax base has dropped nearly 2 percent in the last five years.

The occasional scandal doesn't help.

In Kansas City, a recent FBI probe of the city's port authority uncovered a wide-ranging bribery scheme. Another FBI investigation caught two Miami city commissioners soliciting kickbacks from a company bidding on a city contract. This summer, a New York assemblyman was indicted on charges of receiving payoffs from a social-service group he'd helped to obtain public grants.

Here in Chicago, recent controversies have plunged Mayor Richard M. Daley into the worst crisis of his administration. Last month, an alderman with close ties to the mayor resigned after reports that he accepted a $1.2 million loan from a company with city contracts. It's the latest episode in a long series of cozy dealings that some critics have labeled "pinstripe patronage."

There's no telling what impact scandals like these might have on a city's bottom line, but there's little evidence to suggest that the effects are negligible. In recent years, for instance, firms that rate municipal bonds have begun paying more attention to the structures city governments enact to ensure sound financial management. A good bond rating means the city pays lower interest rates when it borrows money to fund projects.

According to George Leung, managing director of Moody's Investors Service in New York, cities that hire more professional managers and enact more sophisticated methods of revenue forecasting tend to fare better in their analyses.

"Certainly," he says, "credible and sound financial management practices are good for a city's overall credit quality." More important, experts say, the mere appearance of impropriety is often enough to persuade companies to build elsewhere.

For the nation's mayors, outbreaks of corruption often make it more difficult to address larger bureaucratic problems. According to Milwaukee Mayor John Norquist, it's often impossible for mayors to try innovative new programs without opening themselves up to new forms of controversy.

In recent years, for example, Indianapolis Mayor Steven Goldsmith has won national acclaim for his aggressive efforts to cut costs in city government and force municipal departments to compete with the private sector. During his tenure, Mayor Goldsmith has reduced the city's work force by 40 percent and put more than 70 government services out for bid. Nevertheless, the mayor walked into a storm of criticism last year after many of the private consultants and contractors he hired as mayor contributed large sums to his Indiana gubernatorial campaign. Charges of influence peddling helped derail his candidacy.

Although the stakes are high and the road is littered with bad examples, most observers agree that America's mayors have made progress in the battle against corruption, and have already begun to adopt management strategies that add value and reduce cost in city government. The rest, they say, is largely a matter of self-confidence.

"Everybody loves a city," Mayor Norquist says, "but only if it functions properly."

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