The New Urban Gamble

City Prospects

It has long been a paradox: deteriorating central cities even in growing Metropolitan regions. In this issue, we begin a series on cities with two articles that question the conventional wisdom on what are assumed to be the bright and dark sides of the urban landscape: new stadums and casinos conceived as attractions for new business, and public housing projects widely thought ripe for demolition.
In coming issues: the changing geography, architecture, and politics of the American city.
Are wealthy team owners holding citites hostage by demanding—and often receiving— huge public subsidies for the construction of posh stadiums whose economic benefits accrue mainly to players and to the owners themselves? Or as the owners would have it, do the direct and indirect benefits to the surrounding community of subsidizing a professional sports stadium more than justify its costs?
See "Skyboxed In," by Amy D. Burke.

When it comes to abject poverty, few cities rival East St. Louis, Illinois. Of the approximately 40,000 residents there, 98 percent of whom are black, roughly half qualify for public assistance. Forty-four percent of the population lives below the poverty line, and per capita income is $6,400—the worst in the state.

Four years ago East St. Louis officials pinned their hopes for urban renewal on a casino riverboat, following the lead of several other cities along the Mississippi River. Today that establishment, the Casino Queen, is booming: The boat takes in some $250 million a year, of which the city claims $6 million in taxes. Every night, Metrolink commuter trains carry thousands of patrons from the wealthy, predominantly white communities across the river, depositing them—their pockets stuffed full of cash—at the casino's entrance. What could be better for a depressed inner city so starved for capital?

A lot, actually. The passengers on the commuter trains bypass East St. Louis itself, and it turns out that prosperity has bypassed the city as well. Both figuratively and literally, the casino is its own world. A tall security fence with two watchtowers separates the boat from the city. Guards patrol the perimeter. The official unemployment rate of 12 percent—also the worst in the state—hasn't budged since the casino arrived, even though the national rate has been steadily declining for several years. And many of the workers from East St. Louis who have managed to gain employment at the casino move to better neighborhoods when they earn enough money—which is good for those casino employees who can escape the inner city, but doesn't do much for the residents who remain in the area.

A similar fate may await Chattanooga and Detroit, Miami and Las Vegas, and several other cities that, like East St. Louis, have spent millions of dollars subsidizing privately operated entertainment attractions. The nature of the attractions varies from city to city—some places it's casinos, some places it's stadiums, some places it's both—but all are designed with the same basic goal in mind: turning cities into oversized carnivals that will lure visitors from the suburbs and beyond, thus recapturing the wealth that began seeping out years ago.

For sure, these glitzy projects can inspire the weary. Last year no less a symbol of urban despair than Detroit approved not just a dual stadium complex but three casinos as well—a sign, local leaders said, that Detroit was finally making a comeback. Yet cities like Detroit may be in for an unpleasant surprise when they discover that the carnival city model requires constant and expensive reinvention just to remain competitive and, thus, economically viable.Although local governments try to disguise public funding for these projects as taxes on tourists or special bond measures, inevitably money spent on these carnival attractions is money not spent on other, more worthy public investments. The economic stimulus of carnival city projects is ambiguous at best; when the construction is finished, inner-city residents could end up as impoverished as before—too poor to afford the price of admission to attractions, let alone the price of escape to the suburbs.


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In the 1980s, U.S. cities spent about $750 million on sports arenas. Since 1992, the country has spent more than $1 billion on arenas, and more than $7 billion is earmarked for future construction. In Baltimore, $210 million of public funds built the Orioles a new Camden Yards stadium. In 1990, without a professional team, St. Petersburg, Florida, boldly built itself the $138-million ThunderDome, a dowry that for years failed to attract suitors. And when the White Sox threatened to flee Chicago for St. Petersburg, Chicago met the team owner's demand: a new $185-million Comiskey Park across from the old one.

Economists who have studied such programs say that subsidized stadiums are almost always profitable for team owners—and almost never for the cities [see "Skyboxed In"]. In response to the crescendo of criticism, stadium project boosters now pull the camera away from a close-up and move it back—way back—until it captures the pleasing panorama of consequences of each new arena: a burger joint here, a T-shirt shop there. Boosters justify stadiums in terms of their power to catalyze area business, which benefits the city with increased tax revenue. Without the arenas, boosters say, wealthy suburbanites might not return to the cities at all.

This sounds plausible, but the logic doesn't hold up. Private business also demands public subsidy. In the end, the increased tax revenue is unlikely to recoup the city's stadium investment and will most likely go to cover the costs of subsidies for future development gambles that accompany the stadium. The Texas Rangers' Arlington Ballpark, for example, has a baseball museum, a Walk of Fame, and a private restaurant—and now a Six Flags water park is being built next door. Jacobs Field, in Cleveland, has a museum, a children's play area, and a restaurant overlooking the diamond. Coors Field, in Denver, has the Sand Lot Brewery next to its pedestrian plaza and children's play area.

Recently some cities have asked team owners to increase the ante, insisting that stadium projects be true public-private partnerships. In Detroit, for example, taxpayer money accounts for just 50 percent of the stadiums' construction cost, much less than the national average of 80 to 100 percent. To help fund the $505-million dual-stadium complex, voters approved a 1 percent tax on hotels and a 2 percent tax on car rentals, which should generate $5.5 million a year to support $80 million in bonds. The state is chipping in with $55 million of Indian-casino revenue, the city's Downtown Development Authority with $85 million, and the two team owners will raise the final $285 million.

Still, while the public investment is less, the threat of team defection remains, as Oakland, Los Angeles, Baltimore, and St. Louis know all too well. Since the Lions left Detroit once already, increased public subsidy—better leasing deals, for instance—may be needed in the future just to keep the team in the city. Now and then, sympathetic experts suggest reducing taxes on team owners to prevent rival cities from luring teams away with public subsidy. But giving team owners even more money becomes a never-ending game: A decade ago South Florida, known for its lax tax requirements, hurriedly built an arena to lure hockey and basketball teams. The teams came but found the otherwise plush arena wanting because it didn't have enough luxury skyboxes. Now each team is getting a new, publicly financed arena of its own, and local officials are debating whether to turn the "old" Miami Arena into a giant flea market—even as they pay off millions in leftover construction debt.

On the surface, casinos might seem like a better gamble. If nothing else, they seem to guarantee a boost in tax revenue: When Gary, Indiana, imposed a 5 percent tax on its two casino riverboats, it generated $5.9 million in state revenues in just the first four months—and 5 percent of all casino winnings go direct to the city of Gary. Revenue from the Casino Queen in East St. Louis helped pay for an improved police force in the area. Community gifts are another benefit. Don Barden, owner of the Majestic Star riverboat in Gary, gave cash donations to the city for police cars and to the schools for computers and scholarships. In Detroit, Barden donated $100,000 to the Museum of African-American History, in an apparent effort to rouse community support for his bid for a license.

But with gambling comes crime and corruption. Casino owners and government officials often have trouble avoiding the slip from the virtue of gift-giving to the vice of graft-grabbing. According to newspaper reports, when casinos came to New Orleans, city council members accepted Hawaiian trips from a casino contractor; other city officials hid gifts in a not-for-profit organization; a casino operator paid $250,000 to a law firm with ties to the mayor; and a construction manager, hired by the city to monitor its interests, was paid $580,000 a year for three years by the casino.

To its credit, Detroit, which will be the largest urban area with casinos, is opting for strong ethics rules to guard against corruption. To ensure that the casinos take the city seriously, Detroit is also insisting on several mandates on the casino licensees: They must attach a 1,000-room hotel, take a Vegas partner, and spend at least $800 million on the project.

But all of this begs another question: How many more casinos can regional economies actually support? Casino owners are expected to continue their expansion through the year 2000, but with Americans' gambling losses quadrupling since 1986, many analysts doubt the industry can sustain its growth. Toward the end of last year, the stock of Trump Hotel and Casino Resorts fell two-thirds while the stocks of riverboat-gambling companies fell by half. The Stratosphere, a $550-million casino tower, failed miserably at a poor location in Vegas. Only the major gambling outfits are doing well; MGM Grand Incorporated tripled its profits in the first half of last year. The little guys, meanwhile, are sinking into debt, or cashing out.

Part of the problem is market saturation, which the carnival city model is likely to exacerbate. To manage the downsides of casinos—more crime, reduced spending power of residents, restaurants squeezed out by cheap or free casino eats—a city must be prepared to launch a public-relations campaign to bring in tourists. Casinos, if left to prey only on locals, will infect and cripple the host city. Thus, the casino riverboat in Council Bluffs, Iowa, targets tourists from Omaha, Nebraska. Las Vegas draws a large southern-California crowd. Not surprisingly, the competition has become fierce: When casinos in Gary, Indiana, opened, the revenues at casinos in nearby Joliet, Illinois, dropped 32 percent. Detroit's casinos are designed, in part, to recapture the money of its hometown gamblers who cross the Detroit River to drop millions at the casinos in Windsor, Ontario.

But when does the game end? In 1992, Chattanooga christened a $45-million aquarium. Attracting one million visitors a year, it spawned other entertainment and retail businesses, like the Creative Discovery Museum and an Imax Theatre, and its renovated riverfront has become a tourist destination. But now tourism has levelled off, and civic leaders are beginning to appreciate the burden of being a tourist town. Inherent in the carnival city model is the need for perpetual upgrading: To keep tourists coming back, the city must constantly reinvent itself. Not only does this cost money—it taxes the imagination.

Las Vegas has been doing just that. To the gamblers who knew Sin City a decade or two ago, the modern Las Vegas is surely unrecognizable. Setting the curve for the rest of the country's would-be carnival cities, Vegas has become a city of mega-complexes and super-casinos. In 1989, casino mogul Steve Wynn opened his Mirage resort and adorned it with a waterfall and volcano, an indoor lagoon, a tropical rain forest, caged white tigers in the Secret Garden of Siegfried & Roy, a dolphin tank, and a 20,000-gallon shark aquarium. Mirage's success inspired other casinos. The MGM Grand Hotel and Casino has a 5,000-room hotel and a 33-acre theme park. The recently opened New York New York Hotel and Casino features a roller coaster that weaves through a Manhattan skyline. One casino hotel under construction is housed in a giant glass pyramid guarded by a sphinx.

Despite the shocking glitz of the architecture of ostentation, the crisis for civic leaders is that when cities build more and more carnival attractions, they start to look alike. The high-speed trains being constructed to link cities like Detroit and Chicago will make travel easier, but the similar offerings will make travel less compelling. The pressure on a city to distinguish itself will drive future development toward Vegas extremes, and those too will be doomed to lose the interest of tourists increasingly inured to the outrageous.



Of course, to bring in tourists—which for many cities means whites not just from out of state but from their own middle-class suburbs—cities are finding that they must address tourist fears, which are partly justified by crime and partly exaggerated by race and class anxieties about minorities and the dangerous poor. Polling more than 600 voters from three counties, the Detroit Free Press found the number one need of potential casino-goers to be safety. Following the casino task force to Vegas, its reporters found some tourists who said they would come to Detroit only if there were attractions in addition to casinos—and others who admitted Detroit's crime-ridden image would keep them away completely.

But this reveals the other basic tension in the carnival city model. Casinos won't spawn urban redevelopment unless they pump money into businesses in surrounding neighborhoods. Yet given the existing fear of crime in these areas, civic leaders and establishments alike will be tempted to appease the prevailing fears with the construction of security gates and watchtowers and the installation of surveillance cameras and armed guards—similar to the scene back in East St. Louis. This leaves us with disappointing images of an urban future: segregated, shameful, and potentially volatile. Opera houses, stadiums, casinos, theme parks—all appear to be commercial paeans to a white culture strategically gated within a black city. What is safe may come to be defined racially—that is, whites with pass cards, blacks without. That perception, too, will likely be strong among the urban community, such that black city residents will feel slighted and shut out from what was supposed to have been their saving grace, rejected by those who had promised to save them.

As cities race to build the next upscale attraction, the best assurances of civic leaders will not be enough to prevent many from being written out of the carnival city story. Initially, even the most fortunate city denizens will be left, at best, to operate a few rides and sweep up after the elephants. Job creation is a systemic problem, not easily solved: Even Detroit's empowerment zone, with $100 million at its disposal, has managed to create only 2,750 jobs for a zone population of more than 100,000, 30 percent of whom are unemployed.

Undaunted but cognizant of some of the obstacles, civic leaders are nevertheless trying to summon community involvement; this is something most city bureaucracies are very bad at, especially when they are busy courting pro sports teams and being wooed by casino operators. In addition to the two public-private coalitions making up its civic sector, Detroit recently created a committee for Community Reinvestment Strategies, intended to coordinate resources and enlist community input. The question is whether current residents will actually get a say in the use of resources. Are they saving themselves, or being saved?

Community participation has always been part of former HUD Secretary Henry Cisneros's pitch for the continued viability of empowerment zones, and in many cities it's working. But citizen responsibility is often a euphemism for citizen obedience. To qualify for Detroit's renewed public housing, for instance, hopeful residents must participate in job training, education, and home-ownership programs. If they don't consent to the majority's imposition of the culture of customer service—that is, if they don't appreciate the courses in hospitality management, slot machine repair, and card dealing now being offered by several community colleges—then they are likely to lose out.

In those places where carnival cities are already a reality, the primary goals of civic leaders—including public, private, and community representatives—should be minimizing the costs of perpetual reinvention and avoiding the descent into economic colonialism. Otherwise the lucky, who have always been lucky, will carouse behind the guarded walls of their personal Disneylands. And the unlucky, for whom the rebirth of cities is ostensibly intended, will be accosted with a demand they cannot meet: "Tickets, please."

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