2016 CA Summit - California Cities: Engines of Growth

Panelists & Context

• Panelists: Hon. Gray Davis (former CA Governor), Daryl Steinberg (Mayor-elect of Sacramento), Ashley Swearengen (Mayor of Fresno), Stephen Engblom (CEO, AECOM), and Miguel Santana (CEO, LA County).
• Urbanization Trend: Global urban population has shifted from 3% two centuries ago to over 50% today, projected to reach 75% by 2050.
• Shift in Power: Political power is devolving from federal and state levels to cities, which are becoming the primary engines of innovation and economic growth.
• Partisanship: Cities are increasingly less partisan, requiring leaders to prioritize functional outcomes (e.g., transit, waste management) over political maneuvering.

Economic & Infrastructure Challenges

• Fiscal Constraints: Cities face the urgent requirement to maintain balanced budgets annually without deferring major infrastructure or social costs to future generations.
• Federal Retreat: The federal government has increasingly become an obstacle rather than an assistance source, forcing cities to independently manage homelessness, housing affordability, and infrastructure decay.
• Infrastructure Gap: A widening gap exists between urban infrastructure needs and funding, necessitating a shift from "building" to "maintaining" assets over their full lifespan.
• Pension Pressions: Discretionary funding for new infrastructure is being consumed by existing liabilities, specifically pension and salary obligations, leaving little for capital improvement.

Leadership & Strategy

• Diverse Leadership: Successful cities require leadership that reflects sector and demographic diversity; there is no longer room for the "one trick pony" economy or homogenous governance.
• Strategic Focus: Civic leaders must prioritize a "top three" agenda, accepting that governing effectively requires explicitly deciding what not to do to avoid spreading resources too thin.
• Civic Mobilization: Grand plans require mobilized citizenry; successful projects (e.g., Pershing Square design) rely on bottom-up community engagement rather than top-down mandates.
• Public-Private Partnerships (P3s): The future of infrastructure funding lies in P3s where private entities are compensated based on performance savings rather than upfront construction fees.
  • Example: Santa Clara County saved $100M by partnering with a private firm to reduce homelessness costs via data-driven interventions, paying the firm a percentage of savings.
  • Example: NYC privatized wastewater operations with payment tied to a percentage of verified savings.
• Role Definition: Government should focus on long-term stewardship and creating the "container" for the ecosystem, while private sector and foundations handle specific operations and creative execution.

Case Studies & Specific Initiatives

• High-Speed Rail (Fresno):
  • Fresno successfully lobbied to keep the station in downtown rather than the I-5 corridor, prioritizing urban revitalization over land cost savings.
  • The city pre-zoned and rezoned entire areas for transit-oriented development and implemented "buy-right" permitting to accelerate private investment.
  • Property owners displaced by the rail project were assisted in relocating and expanding their businesses, turning potential conflict into economic opportunity.
  • High-speed rail is projected to reduce travel time between Fresno and SF/LA to under 45 minutes by 2040, fundamentally altering commerce in the Central Valley.
• Downtown Los Angeles Revitalization:
  • Led by public-private cooperation (e.g., Eli Broad, Phil Anschutz, Mayor Garcetti), downtown LA transformed from a "ghost town" to a thriving hub with new residential units, culture, and commerce.
  • The region aims to build 100,000 residential units, with progress currently more than halfway complete.
• Mission Bay (Bay Area):
  • Transformed from an abandoned railroad/golf course into a hub for biotech and scientific research, generating $700M in annual economic activity from startups.
  • Government role was limited to providing revenue bonds and initial infrastructure to catalyze private sector clustering.
• Pershing Square (LA):
  • A $70M design project aims to transform a downtown park into a world-class public space, demonstrating the need for cross-sector alignment to execute large civic projects.

Technology & Data Analytics

• Predictive Analytics: Los Angeles County used data to identify welfare fraud, shifting from a $10M annual home visitation program to a targeted approach that cut costs by 50% while increasing fraud detection rates from 1% to 90%.
• Homelessness Modeling: Predictive analytics allow cities to evaluate success by controlling the growth rate of the homeless population, rather than just counting current reductions.
• Cost Tracking: Data analysis reveals the hidden costs of homelessness (jail, clinics, shelters), enabling targeted interventions that reduce overall system costs and allow for service expansion.

Forward-Looking Statements

• Resilience: The focus is shifting from the "urban age" to the "resilient city age," requiring holistic planning for environmental, economic, and equity challenges.
• Global Competition: Cities are competing as regional clusters against other mega-urban regions worldwide, with national boundaries becoming less relevant in this dynamic.
• Innovation Integration: Tech companies are expected to "grow up" and participate more in public policy, while government agencies must become more nimble to foster innovation.
• Inland Investment: There is a critical need to bring venture capital and risk capital to inland California cities (like Fresno) which currently lack the natural gravity of the Bay Area or LA.
• Anchor Projects: Large master plans (e.g., LA River) require specific "anchor projects" to catalyze execution and secure private investment, rather than relying on the grand vision alone.