April 19, 2004

Dallas at the tipping point: A road map for renewal

By Victoria Loe Hicks, The Dallas Morning News

"Dallas does not see itself as a city in crisis. ... But the data indicate that Dallas is a city in crisis."

That conclusion by the consulting firm Booz Allen Hamilton rests on a far-reaching statistical comparison of Dallas and 14 other large U.S. cities.

The study, commissioned by The Dallas Morning News, used dozens of measures -- from life expectancy to library visits -- to produce a comprehensive, clear-eyed picture of each city's performance.

Dallas is not in the top tier. Among the 14 peer cities, only three have worse violent crime rates, only four have lower student SAT scores, and none saw less economic expansion in the 1990s.

Wrapping together those three measures -- identified by Dallas residents as their top concerns -- Dallas ranks No. 12 among the 15 cities. Only Rust Belt cities Philadelphia, Baltimore and Detroit perform worse.

Moreover, the numbers suggest that Dallas -- lulled by past successes, cushioned by North Texas' robust growth, blinded by a lack of self-examination and hobbled by the legacy of racism and neglect -- is at a tipping point, where wrong moves could precipitate a protracted slide.

Crime and troubled schools send families scurrying for the suburbs; employers follow; the tax base and the city budget shrink; city services decline; the drift to the 'burbs accelerates ...

... And Dallas' peril is all the greater, the consultants warned, because a superficial appearance of good health masks its symptoms. The city's malady is much like a "silent" heart attack, which goes undetected until it's too late for treatment.

Faced with Booz Allen's diagnosis, city leaders fell back on their habitual remedies.

Mayor Laura Miller said the report would send her into "despair" -- were it not for her certainty that a few big-fix projects, starting with the Trinity River, will affect a dramatic cure.

"The Trinity and downtown and Fair Park, that's the triumvirate that's going to get us there," she said. "I think a lot of ills will be solved by those three things happening. We're going to have international excitement about the city."

Economists hired by the city were less sanguine. They estimated that, 10 years after completion, the city's $246 million investment in the Trinity River project would generate real estate, sales and tourism taxes equal to about one-half of 1 percent of the city's current budget.

Booz Allen's findings prompted other city leaders to lash out at The Dallas Morning News.

"All you can do is find fault," said City Council member Bill Blaydes. "There are tremendous positive things happening in Dallas, Texas, today.

"I think that is a piece of junk," Mr. Blaydes said, pointing to the report.

Assistant City Manager Ryan Evans, who oversees economic development, flatly refused to look at numbers indicating that retail activity is shifting to the suburbs. He thrust the offending statistics back across the table without glancing at them. He later apologized.

A common theme in the city's response: Dallas was at a tipping point between decline and renewal not long ago but has since rebounded.

"I could assemble all those numbers and get my own doggone numbers and come up saying that we're doing OK. I think we've already turned," said City Manager Ted Benavides.

Ms. Miller's predecessor, Ron Kirk, said Booz Allen's work will only complicate the leaders' job, which is to sell the city -- if necessary, by drawing attention away from its defects just as a home seller does in dealing with potential buyers.

"You put vanilla on the light bulb," he said.

Boosterism helped build Dallas and many of its peers, but in 2004, Booz Allen's findings suggest, the unexamined city is not worth living in.

"This is a critical time in Dallas history," said Dr. Robert Fairbanks, who teaches Dallas history at the University of Texas at Arlington. "My perception of Dallas is that it was very successful in one mode of operation that no longer makes sense."

"We don't measure things," said Dr. Donald Hicks, a political economist at the University of Texas at Dallas. "We don't study ourselves."

The city can't afford to ignore the facts, he said. "No city is guaranteed a future."

The Booz Allen report is not about blame.

It is not about the past or the present. It is about the future -- how the city's leaders, inside and outside of City Hall -- can help residents create a city that does work, that fulfills their individual and collective aspirations.

"This decline is neither inevitable nor irreversible," the consultants wrote. A strong dose of basic management principles plus an infusion of political courage "can alter the trajectory and break the cycle."

But to get there, Dallas must start from where it is. And that means recognizing where it is.

UNLIKE MR. KIRK, DEL BORGSDORF deals in figures, not flavorings.

"Numbers are very important," said Mr. Borgsdorf, the city manager of San Jose, Calif.

When The News began this investigation, it polled Dallas residents about what issues matter most to them. Three topped the list: crime, education and economic growth.

Booz Allen gathered statistics measuring each city's performance in those areas. The News combined the results into the Quality of Life Index, weighting each item according to its importance to poll respondents.

San Jose was No. 1 on crime, No. 1 on schools, No. 1 on economic growth and -- naturally -- No. 1 overall.

San Jose faces two urgent challenges. The first is an economy rocked by the dot-com bust. In late 2001, the city hired a top-drawer economic planner from the private sector to spearhead a fine-toothed analysis of its economy. The city is already implementing the resulting strategy, just as Dallas embarks on the analytical phase.

San Jose's second weakness is housing prices; a two-bedroom bungalow will fetch $600,000. Even so, the city is desirable enough and wages high enough that home ownership -- a good barometer of a community's stability -- runs 20 percentage points ahead of Dallas'.

It doesn't have to be this way.

Dallas is a city with "tremendous natural advantages," Booz Allen noted: its location, climate, river and huge urban forest. Within its borders are thousands of undeveloped acres -- room for its population and its economy to grow.
The city boasts a strong transportation network of highways, rail lines and one of the world's great airports. Dallas' infrastructure -- streets, water mains and the like -- isn't decrepit, like some of its older peers'.

It doesn't cost a lot to live here. The city's economy is diverse, which should make it resilient. The people of Dallas are ambitious and entrepreneurial.

The city's population is growing, instead of shrinking like its Northeastern and Midwestern peers. The 1990s brought a tremendous surge of Latino immigrants, who -- if they follow the trajectory of earlier immigrant groups -- will create prosperity as they seek it.

"We still are a good community and a good city," said former Dallas City Manager George Schrader.

But in many ways Dallas comes up short. Why? Because short is as short does. That is one of the underlying lessons of Booz Allen's analysis.

Dallas is shortsighted, devoting little thought and fewer resources to planning for its future.

It is short with a dollar, pinching pennies rather than investing systematically to build more livable neighborhoods and stimulate its economy.

It is short on trust: People don't trust City Hall, and City Hall doesn't trust people.
It is short on "civic capital" -- energized, politically engaged residents and effective mechanisms for collective problem-solving.

It is short on leaders who seem able to grasp and tackle these fundamental shortcomings -- even at the risk of failure.

One thing it's long on is confusion. Booz Allen found that, under the city charter, almost no one has a well-defined job, authority to do that job and accountability for getting the job done.

"I don't know who leads the city," said Andres Ruzo, former chairman of the Greater Dallas Hispanic Chamber of Commerce.

Even naturally strong leaders must operate within a culture that values making nice over making progress.

"There's a great fear of deliberation and conflict, but democracy depends on conflict," said Dr. Royce Hanson, who taught political economy at UT-Dallas for 11 years and last year published a book about the city's government.

Henry Cisneros, a former San Antonio mayor and federal housing secretary, whose company is building hundreds of homes in the southern sector, said Dallas will rise by falling.

"Dallas used to pose as the Athens of the Southwest," he said. "But it wasn't real. Whole sections of the city were left out. Now, Dallas is confronting real American issues."


The city's economy, once a mighty engine, has stalled.

Booz Allen calculated the gross city product of Dallas and its peers, using methods devised by the federal Bureau of Economic Analysis and the Federal Reserve Bank. By that fundamental measure of wealth, Dallas was No. 2 in per capita GCP as recently as 2000, second only to San Francisco, and well ahead of all the others.
But weakness lurked beneath its apparent strength. During the 1990s, the most prosperous period in U.S. history, Dallas' economy barely grew.

Its suburbs continued to bolt ahead, their vibrancy masking the problems inside the city limits. Some of Dallas' peers also made astonishing gains.

San Jose's per-capita GCP grew at an average annual rate of more than 9 percent. Blue-collar San Antonio averaged 4.5 percent. Dallas? Just 2 percent.
If those disparities were to persist, Dallas would end this decade among a lackluster second tier.

"You've got a city that's been so rich for so long, and the money just showed up," said developer Ross Perot Jr. "City leaders kind of forgot that Dallas became Dallas because it used to take bold, creative risks."

Economists generally regard metro regions as the fundamental economic units, paying scant attention to individual cities. Unfortunately, Dallas cannot tax retail sales or property in Cedar Hill or Frisco.
City Hall is feeling the pinch, both in sales and property taxes.

The city's liabilities outstripped its assets by $193 million in 2003 -- rather like a person who juggles his bills, hoping that all his creditors don't demand full payment at once and counting on future pay raises to help him meet his debt.

Most ominously, the commercial tax base is stagnating as businesses wither or leave the city.

In 1985, commercial real estate accounted for 51 percent of the city's property tax revenue, while residential property contributed 31 percent. In 2003, for the first time, residential property generated more taxes than commercial, accounting for 42 percent.

"There should be a homeowners' revolt in this city," said Robert W. Decherd, who chairs a mayoral committee charged with helping revitalize downtown. "They're getting killed. They're bearing the brunt of this denial."

Mr. Decherd is chairman, president and CEO of Belo Corp., which owns The News.

Booz Allen looks at the numbers and sees the makings of a fiscal crisis: "an eroding tax base" set to collide with "long-term, underfunded liabilities."

OTHER MEASURES OF ECONOMIC slippage abound. In the 1990s, Dallas gained 88,000 jobs. Dallas' suburbs, excluding Tarrant County, gained 429,000.

The unemployment rate consistently runs 25 percent higher in Dallas than in the surrounding suburbs. The city's jobless rate also hovers above the statewide average.
In her inaugural address in June, Ms. Miller bemoaned the fact that Dallas' unemployment rate had risen to 7.5 percent. The mayor was close -- to the rate for the metropolitan region. The city's rate was then above 9 percent.

"The city seems to have a willingness to pride itself on the region's accomplishments," said Dr. Hicks of UTD.
A high-functioning economy demands educated workers, and Dallas is not producing enough of them.

Like all urban school systems, the Dallas Independent School District struggles against enormous challenges. Under Superintendent Mike Moses, the district seems to be recovering from a long bout of self-destructiveness.

But on the whole, DISD schools perform badly in comparison with the urban districts in Dallas' peer cities -- much less in comparison with the schools in most Dallas suburbs.

On the SAT, DISD students scored an average of 850, more than 80 points below the average for the entire peer-city group in 2002. Most of DISD's graduating seniors don't even take the SAT, meaning that many don't intend to go to college.

Dallas ranks well below its more economically dynamic peers in the percentage of adults who have a bachelor's degree or even a high school diploma. Nearly one-third of adults in Dallas did not graduate from high school.

With a few exceptions, such as New York, Boston and Chicago, most American cities don't run their school systems. But some of Dallas' peer cities have been much more creative and aggressive in helping their school districts help students.

When schools are better, there's less reason for families to move to the suburbs. Property values -- and, thus, property-tax receipts -- are higher. Businesses are more likely to put high-wage jobs where they can find skilled workers.

Like weak schools, crime is a corrosive, weakening Dallas' foundation.

Dallas' rates for both violent and property crime decreased slightly from 1997 to 2002. But on average, peer cities achieved four times the reduction in property crime and 14 times the reduction in violent crime.
The violent-crime rate in San Jose, which enjoys the title of "safest big city in America," is one-third of Dallas'. Only Memphis, Baltimore and Detroit are beset by more violent crime than Dallas.

Faced with the numbers, police officials tried to explain them away. More crime is reported in Dallas, they said, because police encourage residents to file reports; in other cities, where it is harder to file a report, many crimes go unreported.

There's a song by Dallasite Michael Gott that has the refrain: "If I'm in denial, I don't want to know." It's hilarious on stage but not so funny if you're talking about crime in your neighborhood.

Civic leader Walt Humann is trying to help revive the Jubilee neighborhood in South Dallas. At a meeting with residents, he asked how many had been the victim of crime in the last six months: 80 percent raised their hands.

You'd think that if things were that bad, someone would have noticed. Yet the mayor and council members were surprised in 2003 to learn that among cities of at least 1 million people, Dallas was on track to record the worst crime rate in the nation -- for the sixth year in a row.

A lack of serious self-examination isn't new here, said Mr. Schrader, the former Dallas city manager. "That's been a historical problem."

For a contrast, look to Phoenix, where the city manager posts the crime rate, along with those of several peer cities, on the city's Web site. Phoenix considers itself to have a serious crime problem -- auto thefts are sky high -- but City Manager Frank Fairbanks lays out the stats for all to see.
"Transparency is a very powerful tool," said former Phoenix Mayor Skip Rimsza.

ransparency allays suspicion, he said, and suspicion destroys governments the way termites destroy houses.

Ben Click, who came from Phoenix to be Dallas' police chief in 1993, experienced the difference in the two cultures firsthand.

In Phoenix, he said, "you were expected to do the right thing. If something went wrong, you were expected to be upfront about it."

In Dallas, he said, "there was an extreme sensitivity to anything that might lead to some kind of publicity or negative news story."

Getting around Dallas is no picnic, either. Residents of the Dallas metro area spend more time stuck in traffic -- an average of 36 hours a year -- than residents of any peer cities except Houston and San Francisco.

Business leaders surveyed in conjunction with Booz Allen's study listed transportation as their biggest concern. Second was poor air quality, which threatens to trigger federal curbs on industrial expansion.

FINALLY, DALLAS PERFORMS POORLY in the place closest to home: home itself.

The most often quoted statistic about Dallas' housing is that the median home-sale price is $138,000 -- an indication that houses are affordable compared with most major cities'.

That's true. But good luck finding a house in that price range.

Only 10 percent of the housing stock in Dallas is suited to middle-income buyers. Booz Allen found that the overwhelming majority of units -- 85 percent -- consists of apartments or houses valued closer to $50,000. They're not likely to appeal to anyone who can afford a nicer home in the suburbs.

Although Dallas accounts for a third of the population in the statistical area that bears its name, less than 10 percent of the region's new single-family homes are constructed within the city limits. The number of apartments built in the city outpaces houses 2-to-1.

Not surprisingly, 57 percent of Dallas households are renters rather than homeowners.

Only San Francisco, where a combination of rent controls and exorbitant real estate values makes renting an attractive alternative, has a lower proportion of homeowners.

It's enough to send Dallasites scurrying for Duncanville or Allen -- which is exactly what happens. Nearly one in five Dallas residents moved to a nearby city from 1995 to 2000. That made Dallas, along with Houston, the biggest losers in terms of migration to the suburbs.

In sum, Booz Allen concluded, Dallas "is rapidly losing its position as the region's economic core; the quality of its workforce is relatively low; and it is increasingly home to a transitional population rather than a community of middle-class families that live and work here."

Any one of those realities, in isolation, would be cause for concern. But one feeds the other, the report noted, setting up "a cascading effect that creates a cycle of decline."

All cities, by their nature, face intractable problems. No city does everything right.
"The issue is: How are we managing to put guardrails on some of these processes?" asked Dr. Hicks.

The good news for Dallas is that cities can erect guardrails, they can affect their own destinies. The peer cities that are thriving today behave in a certain way.

They face reality squarely; they tap into the entire community's brainpower to solve problems; they invest in the things -- including people -- that create wealth, and they earn the trust of their residents, businesses and community leaders.
Those behaviors don't come naturally in Dallas, because of its history.

IN THE POST-WORLD WAR II DECADES, the city's economy was fueled by an extraordinary conjunction of national prosperity, Sun Belt migration, native ambition and cohesive leadership, cemented through the Dallas Citizens Council.

The leaders -- white men who ran banks and other large corporations and, incidentally, City Hall -- were apostles of growth. They had the know-how, and they controlled the resources, private and public, to make it happen.

"The Citizens Council was very successful in what it set out to do: grow the city of Dallas," said Dr. Fairbanks, the UTA historian.

But that success came with trade-offs. The leaders feared political conflict as a threat to the city's business-friendly image, and they enshrined the ideal of a politically neutral city manager as the antidote to the affliction of politics.

"Dallas kept a lid on politics," said Dr. Harvey Graff, a social historian who taught at UTD for 23 years before moving to UT-San Antonio. "That kind of control no longer works. Being a real city means some rough-and-tumble, a few bloody noses."

Council members insist that, at long last, that is changing.

"This council has finally started talking to one another about anything," Mr. Blaydes said.

However, old ways die hard.

"DALLAS' ROOT PROBLEM IS A political problem, a civic culture that resists change," said Dr. Hanson, author of Civic Culture and Urban Change: Governing Dallas.

Resistance extends from fundamental issues such as changing the City Charter to mundane matters such as twice-a-week garbage pickup.

For years, council members have refused to consider weekly pickups, which would free city resources for other, arguably more pressing needs.

Assistant City Manager Ramon Miguez shook his head at the memory of countless dead-end discussions on the subject.
"Change," he said, forming a cross with his hands, as though to ward off evil. "Change is bad."

Change comes more easily when you play by the numbers -- when analysis rather than assumptions drives public policy.

Recently, the International City/County Management Association lauded Phoenix and several other cities for using performance measures to focus their efforts to become the cities residents want them to be. Two of Dallas' other peer cities also were honored: Austin and San Jose.
Those three cities, which rigorously examine their own performance and benchmark it against other cities', all outscored Dallas by wide margins on The News' Quality of Life Index.

Dallas does not participate in an annual benchmarking study by the association's Center for Performance Management. Booz Allen's analysts sometimes found it easier to get information about Dallas from its peer cities -- which gathered it for their own benchmarking purposes -- than from Dallas.

NOT HAVING A PRECISE IDEA OF where it is, Dallas can hardly draw a meaningful map of where it wants to go. Unlike its peers, it operates without relying on either a comprehensive land use plan or a strategic business plan.

In effect, the people of Dallas are like shareholders in a company with $6.6 billion in assets and a $1.9 billion operating budget that makes decisions ad hoc, based on no overarching corporate strategy. The city levies taxes on residents and businesses and spends their money without analyzing how to maximize the return on their investment.

Leaders in other cities were incredulous to learn that Dallas operates as it does.
"You don't have a general plan for your city? Wow," said Pat Dando, vice mayor of San Jose.

Mr. Benavides, the city manager, drew up a strategic plan after he was hired in 1998, but the council did not formally adopt it and never refers to it. When pressed for a copy, First Assistant City Manager Mary Suhm couldn't immediately lay her hands on one.

Later, Ms. Miller recounted that a council member had produced a copy of the document during a recent meeting. The response from the other council members, including the mayor, was: "What's that?"
"None of us had seen it," she said. "We didn't know what it was. It's ridiculous."

Ms. Miller and council members said they have taken steps toward creating a strategic framework, most notably by setting five consensus goals: economic development, staff accountability; public safety; neighborhoods and the Trinity.

"We actually have thought about a lot of these issues," said council member Gary Griffith. "We have got plans. It's not that we don't know, and it's not that we're not going to do something."

Ms. Miller could not say whether the endpoint will be a formal, written strategy that can serve as a blueprint for the staff and future councils.

"Is it in a booklet somewhere? No. Will it get there? Probably," she said.
In early March, the council was scheduled to hear a staff presentation on how the city might invigorate its economic development efforts. Economic development is, officially, the council's No. 1 priority.

But members spent hour after hour discussing other agenda items -- lavishing protracted debate on the problem of dilapidated fences and the question of whether judges in municipal courts are too intimidating because they wear robes.
At 4:30 p.m., seven hours after the meeting started, members were becoming, by turns, testy and giggly with exhaustion. So Ms. Miller postponed the economic briefing for nearly a month.

"Is this any way to run a city?" an exasperated onlooker demanded of council member Veletta Forsythe Lill.

"No," she said.