University of Cincinnati

UNIVERSITY OF CINCINNATI

Date:______

I, ______, hereby submit this work as part of the requirements for the degree of: in:

It is entitled:

This work and its defense approved by:

Chair: ______

ECONOMIC DEVELOPMET POLICIES FOR DOWNTOWN REVITALIZATION: APPROACHES FOR SUCCESS IN THE NEW ECONOMY

A thesis submitted to the

School of Planning of the University of Cincinnati

in partial fulfillment of the requirements for the degree of

MASTER OF COMMUNITY PLANNING

in the Department of Planning of the College of Design, Architecture, Art, Planning

2004 by Michelle R. DiGuilio-Matz

B.A., University of California, San Diego, 1992 B.A. University of Cincinnati, 1997

Committee Chair: Dr. Carla Chifos

Committee Member: Dr. Michael Romanos

Committee Reader: Dr. Judith Jones ABSTRACT

One of the responsibilities of any public sector authority is to explore and implement policies that stimulate economic development within city boundaries. Communities throughout the United States are continuously exploring new ways to encourage economic growth within city limits and often look to the success of other communities as a means to guide them in their quest for economic success. One option that has found resurgence and proven to be economically viable for various communities of all sizes is that of downtown redevelopment/revitalization. But what makes for successful economic development in downtown urban areas and what role do public sector policies play in directing successful resurgence of a community’s downtown?

This thesis first seeks to answer the question, “What are successful economic development policies that (1) go beyond the public sector’s traditional approach to economic development and (2) take into account the major shifts impacting how business is conducted in today’s economy?” The second part of this thesis is an application of the first question to a case study community as a means to determine the potential success or failure of the community’s economic development policies. Ultimately, this creates a resource for planners and local government officials to understand the factors influencing economic success in urban areas and provides strategies for economic development approaches geared to the characteristics of place that are the most attractive to the people and the businesses operating in the new economy.

Through the creation of a framework of successful economic development characteristics, and the review of a case study community – that of Stockton, California – in which to apply such characteristics, economic development approaches can be better understood and utilized by public officials. The research conducted in this thesis offers an option for government officials to improve the chances of achieving success in their economic development policies for downtown revitalization. The resulting framework of successful development approaches provides planners and government officials with a means to leverage economic development policies for maximum economic gains in urban areas.

ACKNOWLEDGMENTS

I would first like to thank the members of my committee for their support and professional guidance throughout this process.

To my Committee Chair, Dr. Carla Chifos, for her ultimate patience and gentle encouragement in ensuring this thesis’ completion. And for being a source of academic inspiration from the first course through the final defense.

To Dr. Michael Romanos for his enthusiasm and leadership in topics of economic development and academic endeavors. And for providing the opportunities to explore intellectual and international experiences.

To my friend, colleague and mentor, Dr. Judith Jones. For believing in me, pushing me to finish and serving as a role model in what can be accomplished with a busy life and family obligations.

To my friends and family, especially my parents, who started me on this journey of higher education, and never doubted my ability to undertake this challenge. Your faith in me and insistence that I finish (even through the maternal uncertainties of actual completion) have served as an unending source of strength.

And to my husband, Lou Matz, whose belief in me far surpassed anything I could envision. Words cannot begin to express the level of support, love, and patience you have given that has allowed me to complete this journey. Without you, Sunbear, I truly would not have had the strength to finish. I love you deeply.

This thesis is dedicated to my son Jared and the future children of our family. May you realize the beauty of intellectual pursuits, both small and large. And may you always find a way to meet the challenges that come your way.

TABLE OF CONTENTS

Table of Contents……………………………………………………………………………... 1 List of Tables...... 5 List of Figures…………………………………………………………………………...……. 6 List of Images ………………………………………………………………………………… 6 Chapter 1 – Introduction...... 8 1.A. Background...... 8 1.B. Problem Statetment ...... 10 1.C. Methodology...... 11 1.D. Conclusion...... 14 Chapter 2 – Literature Review ...... 16 2.A. The New Economy ...... 16 2.A.(1) Concepts of a Technology Based Economy……………………..…….…..16 2.B. Geography in the New Economy………………………………………………..21 2.B.(1) Human Capital and Quality of Life……………………………………….22 2.B.(2) The Argument for the Urban Core………………………………………. 24 2.B.(3) Characteristics of the People in the Urban Core (“New Urbanites”)……….28 2.C. The Creative Class………………………………………………………………32 2.C.(1) Defining the Creative Class………………………………………………33 2.C.(2) The Evolution of the Creative Class and its Place in the Economy………35 2.C.(3) Attracting the Creative Class …………………………………………….39 2.C.(4) Measures of Successful Communities: Indexes…………………………..42 2.C.(4.a) Creativity Index………………………………………………….……42 2.C.(4.b) Cultural Amenities Indexes………………………………………..….44 2.C.(4.c) The Composite Diversity Index…………………………………….…49 2.D. The Entrepreneurial State ……………………………………………………….53 2.D.(1) Supply-Side Policies, Demand-Side Policies and the Entrepreneurial State…..54 2.D.(2) Policy Implications ……………………………………………………….57 2.D.(3) Entrepreneurial Activities: Venture Capitalist …………………………....59 2.D.(4) Anticipating and Creating Markets…………………………………….…60

2.E. Conclusion…………………………………………………………………….....62 Chapter 3 – Stockton, California Data ...... 64 3.A. Stockton’s Historical Background...... 64 3.B. City Government ...... 67 3.C. Stockton Demographics...... 67 3.C.(1) General Statistics …………………………………………………………67 3.C.(2) Ethnic Diversity………………………………………………………..….69 3.C.(3) Age Breakdown …………………………………………………………..69 3.C.(4) Income and Housing Statistics …………………………………………...70 3.D. Economic Profile………………………………………………………………...71 3.D.(1) Work Force ………………………………………………………………..71 3.D.(2) Wage Rates…………………………………………………………….….72 3.D.(3) Economic Incentives……………………………………………………...72 3.E. Higher Education Resources…………………………………………………….73 3.F. Transportation Links…………………………………………………………….74 3.G. Downtown Specific Information………………………………………………..74 3.G.(1) Downtown Demographics……………………………………………..…75 3.G.(1.a) Public Safety……………………………………………………….…76 3.G.(1.b) Downtown Business and Employee Profile…………………………..77 3.G.(1.c) Economic Incentives………………………………………………….77 3.G.(2) Resources Available in the Area …………………………………………78 3.G.(2.a) The Downtown Built Environment…………………………………...78 3.G.(2.b) The Waterfront…………………………………………………….….79 3.G.(2.c) Government Center…………………………………………………...80 3.G.(2.d) Cultural Diversity……………………………………………..…..…..81 3.G.(3) Conclusion…………………….. …………………………………………81

Chapter 4 – Case Study: Stockton Data………………………………………………………83 4.A. The Actors…………………………………………………………………..…..83 4.A.(1) The City of Stockton…………………………………………………...... 84 4.A.(2) Downtown Stockton Alliance……………………………………………..86

4.A.(3) San Joaquin County Partnership……………………………………….….89 4.A.(4) Art Organizations (Stockton Arts Commission & Cultural Heritage Board)……….89 4.A.(5) Other Players: Chamber of Commerce & Council of Governments……....90 4.B. The Documents…………………………………………………………...…..92 4.B.(1) City of Stockton General Plan and Policy Document…………………….92 4.B.(2) Urban Land Institute Report…………………………………………...…93 4.B.(3) Downtown Stockton Strategic Action Plan ……………………………...94 4.B.(4) Waterfront Plan………………………………………………………...…95 4.B.(5) City Council Plan for 2002-2003…………………………………………96 4.C. The Projects………………………………………………………………..…98 4.C.(1) Weber Point Event Center………………………………………………..99 4.C.(2) Stewart/Eberhardt Building…………………………………………… 100 4.C.(3) Gateway Block………………………………………………………….100 4.C.(4) Dean DeCarli Waterfront Square……………………………………….101 4.C.(5) Weber Avenue Streetscape…………………………………………...…101 4.C.(6) Fox Theater…………………………………………………………...…103 4.C.(7) Children's Museum……………………………………………………...103 4.C.(8) Gleason Park Master Development Area……………………………….103 4.C.(9) Brownfields EPA Grant…………………………………………………103 4.C.(10) Multi-Modal Station…………………………………………………….104 4.C.(11) Channel Head Master Development Area………………………………105 4.C.(12) South Shore Master Development Area………………………………...106 4.D. Conclusion…………………………………………………………………..107 Chapter 5 – Analysis………………………………………………………………………...108 5.A. The New Economy………………………………………………………….111 5.B. Geography…………………………………………………………………..114 5.C. Creative Class……………………………………………………………….118 5.D. Entrepreneurial State………………………………………………………..123 5.E. Conclusion………………………………………………………………..…126 Chapter 6 – Recommendations and Conclusions…………………………………………....129

6.A. A Critique of Stockton’s Downtown Economic Development Policies…….130 6.B. Considerations in Restructuring Stockton’s Downtown Economic Development Approach……………………………………………………..132 6.B.(1) Research………………………………………………………………...133 6.B.(2) Planning…………………………………………………………………138 6.B.(3) Implementation………………………………………………………….139 6.C. Means to Developing a Quality of Plan in Stockton’s Downtown………….142 6.C.(1) Leverage the existing urban core resources……………………………..143 6.C.(2) Leverage the existing cultural resources………………………….……..143 6.C.(3) Foster the arts………………………………………………….…….…..144 6.D. Conclusion……………………………………………………………...……146 Bibliography…………………………………………………………………………………149

LIST OF TABLES

Table 2.1 Characteristics of the New Economy...... 19

Table 2.2 Key Elements: The New Economy...... 20

Table 2.3 Key Elements: Geography ...... 31

Table 2.4 The Creative Class Defined ...... 34

Table 2.5 Core Industries of the Creative Economy (market size in billion of US dollars, 1999) 35

Table 2.6 Wages and Salaries for the Classes...... 38

Table 2.7 Ranking Regions in the Creative Economy: The Creativity Index...... 43

Table 2.8 Immigrants and High-Tech Industry...... 45

Table 2.9 The Gay Index and High-Tech Industry ...... 46

Table 2.10 The Bohemian Index and High-Tech Industry ...... 48

Table 2.11 Technology and Diversity...... 50

Table 2.12 Key Elements: The Creative Class ...... 52

Table 2.13 Contrasts between Traditional Supply-Side Policy and Demand-Side...... 56

Table 2.14 Key Elements: The Entrepreneurial State...... 62

Table 2.15 Policy Concepts for Successful Economic Development...... 63

Table 3.1 Stockton’s Population: 1980 - 2010 ...... 68

Table 3.2 Stockton’s Historical Population 1950-2000 ...... 68

Table 3.3 Stockton’s Ethnic Breakdown, 2000...... 69

Table 3.4 City of Stockton Race/Ethnic Breakdown 1980 – 1990 – 2000 ...... 69

Table 3.5 Age Distribution of Stockton Population, 1990...... 70

Table 3.6 Median Income, 1990 ...... 70

Table 3.7 Median Home Value, 1990...... 71

Table 3.8 Stockton’s Major Employers, 2000 ...... 71

Table 5.1 The Application of Economic Development Concepts to the City of Stockton ...... 110

Table 5.2 Stockton in the New Economy ...... 111

Table 5.3 Understandings about Economic Development in the Old and New Economies...... 112

Table 5.4 Stockton’s Geographic Amenities ...... 114

Table 5.5 Stockton and the Creative Class ...... 118

Table 5.6 Stockton as Entrepreneur ...... 123

LIST OF FIGURES

Figure 2.1 Company Location Determinants...... 23

Figure 2.2 The Creative Class and its Core ...... 34

Figure 2.3 The Class Structure, 1990-1999 ...... 36

Figure 2.4 The Class Structure, 1990-1999 ...... 36

Figure 2.5 The Gay Index–High-Tech Connection Increases Over Time...... 46

Figure 3.1 Crime Rates in Downtown Stockton 1994-1997...... 76

LIST OF IMAGES

Image 3.1 Map of California...... 65

Image 3.2 Map of Stockton and San Joaquin County...... 65

Image 4.1 Stockton’s Downtown Redevelopment Projects...... 85

Image 4.2 Downtown Stockton Alliance’s Coverage of Downtown...... 86

Image 4.3 Weber Point Event Center...... 99

Image 4.4 Stewart Eberhart Essential Services Building ...... 100

Image 4.5 The “Signature” Gateway Project into Downtown Stockton ...... 100

Image 4.6 Dean DeCarli Waterfront Square (Weber Plaza)...... 101

Image 4.7 Artist’s Rendering of Weber Ave. Streetscape...... 102

Image 4.8 The Fox Theater...... 102

Image 4.9 Potential Brownfield sites along the Deep Water Channel...... 104

Image 4.10 Artist’s Rendering of the Multi-Modal Station ...... 105

Image 4.11 Artist’s Rendering of the Completed Downtown Cineplex ...... 105

Image 4.12 Artist’s Rendering of South Shore Master Development Area ...... 106

Chapter 1 – Introduction

1.A. BACKGROUND

Similar to many communities throughout the United States, the City of Stockton

California and its public sector have recently turned their attention to the pursuit of downtown economic development through the revitalization of a 100 year old urban core. Stockton and many of California’s Central Valley communities East of the San Francisco Bay Area have found themselves in a unique position of juggling renewed interest in their communities with the desire to capitalize on the opportunities made available with the ever eastward migration of Bay Area people and potential businesses. Planners and government officials are now searching for ways to capture these people and businesses and are reviewing development policies for downtown that will result in economic gains.

With the demographic predictions of population swells in the Central Valley as well as

Stockton’s proximity to some of the most powerful economic engines in the world, it is clear that the City needs to examine what it is doing to position itself to capture a share of future economic growth. In turning their attention to the community’s downtown, Stockton officials have hoped that public financed revitalization efforts will bring the type of economic successes enjoyed by many other cities’ urban revitalization efforts.

This renewed interest in downtowns has allowed Stockton to realize the importance of its urban core as a resource that can serve as an engine of economic growth. To understand whether or not Stockton’s current approach to economic development in its downtown will allow the City to capitalize on the major economic and demographic shifts occurring throughout the region is to first examine the factors influencing economic development

policies in today’s economy. Such factors include the structure of the new economy, the impact of the digital economy on businesses and workers, how communities can use policies to operate within such an environment, the individual resources available to communities, and whether or not a city has successfully recognized and utilized economic development policies available to them. In a time when cities are facing the challenges of establishing economic relevance to businesses that operate in an environment of an increasingly technology driven market, this thesis provides a structure for cities to use non-traditional approaches to economic development as a means to attract the people and improve the places that will determine success in the new economy. Finally, this thesis applies such approaches – or successful economic development characteristics – to a case study community, that of

Stockton, California.

1.B. PROBLEM STATEMENT

One of the responsibilities of any public sector authority is to explore and implement policies that stimulate economic development within city boundaries. Communities throughout the United States are continuously exploring new ways to encourage economic growth within city limits and often look to the success of other communities as a means to guide them in their quest for economic success. One option that has found resurgence and proven to be economically viable for various communities of all sizes is that of downtown redevelopment/revitalization. For the public sector, downtown revitalization can offer the opportunity of renewed interest, investment and attention to an area of the community that harkens back to a time where the built environment, existing resources, and an urban quality of life are valued.

But what makes for successful economic development in downtown urban areas and what role do public sector policies play in directing successful resurgence of a community’s downtown? Can any community with an urban core achieve economic success by revitalizing a center city? What guidelines can a community use to judge the potential success or failure of policies aimed at achieving economic development? What can we learn from those communities that have been economically successful in their redevelopment of their downtowns?

The above issues can be summarized in what planners and public agencies are often in search of, an answer to the question “What are successful economic development approaches for downtown revitalization?” Such a question seeks to compile a standard means through which traditional policy approaches to economic development – such as tax breaks, incentives, and enterprise zones – can be applied for economic gains. The argument of this thesis is that reliance on traditional economic development policies limit the ability of a community to leverage the power of the public sector as well as limits a community’s ability to respond to the dramatic economic, demographic and social shifts occurring in today’s economic market. This argument leads itself to a new approach to downtown economic development. Therefore, this thesis first seeks to answer the question, “What are successful economic development policies that (1) go beyond the public sector’s traditional approach to economic development and (2) take into account the major shifts impacting how business is conducted in today’s economy?” The second part of this thesis is an application of the first question to a case study community as a means to determine the potential success or failure of the community’s economic development policies.

The application of these strategies to a case study community serves as an example of the process that public officials can utilize in downtown revitalization. Ultimately, this thesis creates a resource for planners and local government officials to understand the factors influencing economic success in urban areas and provides strategies for economic development approaches geared to the characteristics of place that are the most attractive to the people and the businesses operating in the new economy.

1.C. METHODOLOGY

In developing a catalogue of the characteristics of successful economic development strategies that can be applied to a case study community, this thesis begins with a review of the new economy to provide a framework for the shifts and trends in which economic development policies must operate. The next step in this process involves the identification of economic development concepts that specifically address policies within the new economy.

The two main sources of information regarding the means through which communities can utilize economic development concepts in the digital age are provided by Joel Kotkin and

Richard Florida. Both authors examine the characteristics of successful communities competing in the new economy and are able to identify the structure of the communities, the means to attract the workers operating in the digital age, and the importance of a strong quality of life/place. This research provides a guide for establishing approaches to economic development in the new economy. The final step undertaken in creating a framework in which to judge successful economic development policies is to examine methods for implementing Kotkin and Florida’s recommendations. Peter Eisinger provides a roadmap for

economic development by suggesting that the state (i.e., the public sector) act in an entrepreneurial manner and approach economic development using a variety of techniques in unique and creative ways.

Once the literature-based concepts for economic development have been established, a case study community is described by collecting data regarding Stockton, California and its downtown revitalization in an effort to test the economic development policy approaches being employed by the public sector. The data collected includes general statistics such as population, income and racial composition, the City’s history, an inventory of its natural resources and amenities, as well as the planning documents, actors involved in redevelopment and projects undertaken in revitalization. A collection of literature-based economic development concepts is then applied to the case study information regarding Stockton’s urban core and its revitalization efforts as a means to determine the likelihood of economic success for the City’s downtown. The final step in this process is to compare the researched data with that of the current activities of revitalization in Downtown Stockton, analyze the results and provide recommendations for Stockton’s future approach to economic development policies.

The physical structure of this thesis begins in Chapter 2 with a literature review that establishes a framework of the concepts that have proven successful in economic development policies. The literature review is divided into four sub-sections. The first section presents the context in which community’s economic development policies will increasingly be operating within. This involves a discussion of the New Economy and the market shifts and trends that impact community’s as they vie for success in a changing economic environment. The second section, taken predominately from the work of Joel

Kotkin, introduces the argument for economic development polices that focus on the places that are attractive to the people who are operating in the new economy. The geography of place as an important factor for economic development is further discussed by Richard

Florida in the third section of chapter two. Florida expands upon the ideas presented by

Kotkin through an examination of the importance of a group of people – the Creative Class – in a digitally based economy and the specific attributes of areas that are attractive to the

Creative Class. Florida’s link between Quality of Place and successful economic development policies provides a unique way to look at and understand how communities can be competitive in the new economy. The means to implement the concepts put forth by

Kotkin and Florida is provided by Peter Eisinger in his argument that the public sector act as entrepreneur. The final section of Chapter 2 presents the concept of a new and unique way to approach economic development – one that is focused on the public sector acting in an entrepreneurial way and approaching policies in a demand-side manner rather than exclusive reliance on traditional supply-side approaches. This shift in focus of how economic development policies can be utilized allows for the implementation of Kotkin and Florida’s ideas, the ability to work within the structure of the new economy, and provides the final piece in establishing a grouping of the characteristics of successful economic development policies.

In order to apply the literature of Kotkin, Florida, Eisinger and others in a localized area, a case study of the City of Stockton’s downtown and its approach to economic development in the area is undertaken. Chapter 3 begins the case study with a presentation of the data regarding the City and its downtown. This includes statistics, historical background, current operating policies, and the issues most impacting the City and downtown. Once this

baseline data was compiled the case study continues in Chapter 4 with a description of the actors, documents and projects specific to Downtown and its redevelopment activities.

Having completed data collection on Downtown Stockton and its economic development strategies, the stage is set to apply literature-based principles to a specific case study. This analysis takes place in Chapter 5 and involves a step by step examination of the literature- based economic development concepts against Stockton’s current economic approaches and activities. The final chapter of this thesis, Chapter 6, presents recommendations on how a community such as Stockton, through its economic development policies, can utilize its downtown as a resource to successfully compete in the new economy.

1.D. CONCLUSION

The research conducted in this thesis establishes a practical approach for government officials to analyze successful downtown economic development approaches that can be applied to the resources, actors and activities of a community’s urban revitalization efforts.

The inventorying of approaches to successful economic development has been developed by examining the factors that play a significant role in the success or failure of economic development policies in downtowns throughout the United States. The research has shown that because the new economy has allowed work to become increasingly mobile and people the ability to work anywhere, the characteristics of location play a critical role in a community’s economic success. Additional research has demonstrated that the type of people operating in economically successful downtowns point to a growing class of workers – that of the Creative Class – which drive economically successful urban cores and that it is a quality of place that is most attractive to such individuals. Finally, research in this thesis presents an

approach to public economic development policies that encourages development of a sense of place that will ultimately determine a community’s economic success in downtown redevelopment. The resulting inventory of successful economic development approaches provides planners and government officials with a means to leverage development policies for economic gains in urban areas.

By applying the literature-based economic development concepts to the case study community of Stockton, California, a comprehensive picture emerges of the mixture of research, analysis and options available to public officials when considering downtown revitalization approaches. Through the creation of a framework of successful economic development characteristics, and the development of a case study in which to apply such characteristics, an in-depth examination of economic development approaches can be better understood and utilized by public officials.

Chapter 2 – Literature Review

2.A. THE NEW ECONOMY

In an effort to assist government officials in their efforts to target development policies for maximizing economic gains, the context in which the businesses are operating must be understood. This business context can be described as the New Economy – one infused with technology, creativity, digital advancements, and focused on the locational decisions of the individuals operating within its boundaries.

2.A.(1) Concepts of a Technology Based Economy

With the explosion of the digital economy – e-commerce, business to business transactions, the internet, and other forms of high technology – the resulting “New Economy” has allowed work to become increasingly mobile and people to be able to work anywhere. At times this has falsely been interpreted to mean that the character of a community no longer matters – an idea that plays itself out in the vast array of economic development policies such as tax and land enticements to companies to relocate if even only on a temporary basis. When in fact the character of a community is exactly what matters. If technology has allowed, and will continue to allow, business to be conducted in any location, then that which distinguishes one community from another will be increasingly important.

As local officials begin to examine their place in the new economy, many feel that it will be critical for both large and small communities to not only find the technology niche that their community can best fit into but also the best way to attract technology worker to a community. Therefore, cities must realize that what was once an asset in an

industrial/agricultural economy, no longer provides the same benefits when, increasingly, business can be conducted anywhere and people can locate where they choose. As Joel

Kotkin so aptly points out, “The once sharp distinctions between frost belt and sun belt, city and suburb, countryside and metropolis are now increasingly blurry. In the new paradigm, there are both successful and unsuccessful places of every type and distinction. What matters is not so much whether a place is little or big, hot or cold, old or new, but whether it has found or not found a viable niche within the new economic order.1

As Joel Kotkin states in The New Geography, those who dismiss the “high-tech” revolution often do so because they see the collapse of the dot.com industry or assume that there is a general slowing of employment directly linked to the technology field. When in reality, what many of these skeptics are not seeing is that a technology infused economy introduced in a flurry in the late 1990s may have boomed, but it is far from a bust. According to the Milken Institute, “In the past 20 years, the share of the U.S. economy captured by the information industries, which range from media and entertainment to telecommunications and computers, has doubled.”2 In addition, The Economist reported in 1999 that “Electronic business to business [B2B] transactions, estimated at $43 billion in 1998, are expected to grow to over $1.3 trillion by 2003.3 What critics of “high-tech” have brushed over is that the new economy is not solely based on high-tech industries, but on traditional industries that are incorporating high-tech into existing structures of business. The future is not in a resurgence of dot.com but in the ever increasing blending of technology into business and the resulting expansion of economic opportunities.

1 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page16. 2 DeVol, Ross. 1999. America’s High Tech Economy: Growth Development and Risks for Metropolitan Areas. Santa Monica: Milken Institute, page 52. 3 “Work in Progress,” The Economist, July 24, 1999.

What is the New Economy?

The new economy can be defined as not just the increasing emergence of new high-tech industries, but looking at existing industries with a new lens. The new economy can be seen as applying new ways of doing business to a wide range of products, services, and sectors.

Many of the same institutions and businesses that have shaped economic development policies for decades remain, and will remain, but how they operate will drastically change.

According to the Great Valley Center report The Economic Future of the San Joaquin Valley

“Activities in the new economy share some characteristics. The new economy is fast, global, knowledge based, networked, and technology-intensive.” The report goes on to state, “The new California economy is an innovation-based economy. This characterization is true from apparel to agriculture, from timber to telecommunications, from light industrial manufacturing to software.”4 This is further explained in Table 2.1.

In addition to the definitions of “what the new economy is”, there is also the question of “what is happening in existing industries”. Research continues to indicate that there are distinctive trends occurring in the economy. These trends are areas that all cities and their planners will need to not only realize but decide how to address government’s role in the ever changing and evolving economic picture. The broad outlines of economic change that are under way in America today include the following:

• Manufacturing’s share of the national economy continues to decline.

• The largest absolute increases in employment are coming in the service sector.

• The greatest percentage growth is occurring in “high-tech” industries.

4 New Valley Connections. 2000. The Economic Future of the San Joaquin Valley: Growing a Prosperous Economy That Benefits People and Place. A partnership of the Great Valley Center and the Office of Strategic Technology, California Trade and Commerce Agency. January 2000. Modesto, CA: The Great Valley Center, page 3.

Table 2.1 Characteristics of the New Economy

Time is market in the new economy. Companies compete to Fast develop and produce innovative products and services faster than their competition.

New economy companies operate and sell globally and compete Global against foreign competition.

Knowledge The knowledge and know-how of employees are essential to the Based success of new economy companies.

New economy companies specialize in what they do best and develop relationships with partners, suppliers, and subcontractors to Networked do the rest. They tap into information and innovation networks to stay abreast of change.

Companies in the new economy create, adapt, and use technology – Technology simple as well as sophisticated – to improve products and processes Intensive constantly.

Source: The Economic Future of the San Joaquin Valley: Growing a Prosperous Economy That Benefits People and Place, page 3.

• A large percentage of total employment is now in occupations involving the

generation, distribution, and use of information.

• Advances in information technology are transforming certain occupations and rapidly

changing the way business is conducted.5

Ultimately, when discussing economic trends it is clear that the transformation of the national economy will result in the transformation of many individual city economies. “In one view, some cities will capture a central role in the new economy, being the sources of

5 McNulty, Robert, Dorothy R. Jacobson, and R. Leo Pene. 1985. The Economics of Amenity: Community Futures and Quality of Life. A Policy Guide to Urban Economic Development. Washington D.C.: Partners for Livable Places, page 5.

direction for widely dispersed activities. Other cities will have less diversified, more concentrated economies tied more tightly to a single function. And some will retain their affiliation with the industrial economy and continue to be centers of manufacturing.” 6 All indicators are that the first will experience the greatest growth and the greatest stability; the last the least. How change will play out in our particular cities will depend on their specific characteristics and actions taken locally to take maximum advantage of the opportunities offered by changing circumstances.

Summary

The first literature-based concept for approaches to economic development is a recognition and understanding of the technology infused new economy. That is, one of market shifts and trends that create a new playing field to which public policy must respond.

In order for any economic development policy to be successful, the new economy’s impact on how and where business can be conducted must be realized. The elements of the new economy can be summarized in the following table.

Table 2.2 Key Elements: The New Economy

A. KEY CONCEPTS OF THE NEW ECONOMY A Technology Infused Economy A.1 (market shifts and trends in the new economy)

6 Ibid, page 13.

2.B. GEOGRAPHY IN THE NEW ECONOMY

“In a manner not seen since the onset of the industrial revolution, technology is reshaping the landscape of American communities… the rise of the digital economy is repealing the economic and social geography of contemporary America.” – Joel Kotkin, New Geography, page 3.

As discussed in the previous section, the economy is changing. The question now becomes, how will such changes impact individual communities? What role does the changing economy have in how a city plans for economic development? This section will examine the impacts of technology on the fabric of communities themselves. Joel Kotkin, a senior fellow with both the Davenport Institute for Public Policy at Pepperdine University and with the Milken Institute, addresses the role of the deep transformations in the economy in terms of understanding how technology based trends have influenced the geographic fabric of communities. These issues are addressed in his book entitled The New Geography: How the

Digital Revolution is Reshaping the American Landscape.

The argument has been made that in this new economy, what is increasingly of key importance are the people and types of environments that attract the workers who can operate within the digital economy. Kotkin’s arguments regarding the new economy extend to the importance of people and place in the new economy. This section will continue discussing the implications of this shift away from traditional economic attractors for business and towards a new paradigm of people and, ultimately, place as the motivator for economic investment in local communities.

2.B.(1) Human Capital and Quality of Life

There was a time when decisions about where to locate businesses were dependent on questions of access to ports, roads, rails, or raw materials. Now, the decisions of business location are increasingly dependent on the ability to link to information to often scarce human resources. The effects of this technological transition on local communities and its impact on people was envisioned by Daniel Bell in the 1970s when he predicted a new social order in which information supplants energy and conventional manufacturing as the critical source of wealth.7 It’s also worth noting that workers in the information field will not only have a large sector of projected employment opportunities - expected to double between 1994 and 2005 – but they will represent the new middle class of the twenty-first century, earning roughly twice as much as other private-sector workers.8

The more technology allows business to operate without the constants of place and past affiliation, the greater the need for individual places to make themselves more attractive.

Surveys of high-technology firms find that among factors that drove their decision of where to locate, a “quality of life” that would make the area attractive to skilled workers was far more important than any traditional factors such as taxes, regulation, or land cost. 9

The rules governing geography and the making of successful and unsuccessful communities, has significantly changed. Where once businesses were attracted to the competitive advantages of natural resources, ease of access, tax incentives, and the like, they

7 Bell, Daniel. The Coming of Post-Industrial Society: A Venture in Social Forecasting. New York: Basic Books, 1973, page 116. 8 Kotkin, Joel, New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, 2000, from DeVol, 1995. America’s High Tech Economy. Bureau of Labor Statistics, “Occupational Employment to 2005”, Monthly Labor Review, November 1995. 9 O’Mara, Martha. Strategy Location and the Changing Corporation: How Information Age Organizations Make Site Selection Decisions.” Report Real Estate Research Institute, pp 21-28/ “MIT: The Impact of Innovation.” Economics Department, Bank of Boston, reprinted in Greater Philadelphia Regional Review, Fall-Winter, 1997, page 15. Kotkin, Joel. 2000. The New Geography, page 7.

are now increasingly influenced by determinants that have traditionally fallen outside the policies of economic development. While proximity to markets, low business costs, and taxes continue to play a role in company location determinants, by far the more influential factors include quality of life, availability of skilled professionals, skilled labor and access to institutions of higher education. Perhaps the biggest change in the rules governing geography grows from the realization that where information processing companies, related services, and skilled professional choose to locate will increasingly shape the geographic importance of future cities and communities.10

Figure 2.1 Company Location Determinants

Source: Joel Kotkin, PowerPoint presentation at the Great Valley Center Conference, May 2001.

10 DeVole, Ross. America’s High Tech Economy, page 3, 5, 23-28. From Kotkin, Joel. 2000. The New Geography: How the Digital Revolution Is Reshaping the American Landscape. New York: Random House, page 7.

Accordingly, the key to economic success for communities is increasingly in their ability to create a quality of life, the “place”, that is attractive to the “people” that are attractive to businesses. Many businesses are likely to start up or to locate in areas where educated innovators and skilled workers want to live. These workers, in turn, are interested in the sense of place that a community can create. The important factor to be considered is that in order to attract these individuals, a community must offer the amenities and quality of life that such a workforce desires. “As people and advanced industries hunt the globe for locations, they will not necessarily seek out those places that are the biggest, the cheapest, or most well favored by location. Instead they will seek out a new kind of geography, one that appeals to their sense of values and to their hearts, and it is there that the successful communities of the digital age will be found.”11

What planners and city officials are increasingly faced with is the rise of a digital economy that is altering much of the economic and social geography of contemporary

America and replacing it with a focus on the people that work within the information and technology fields. Therefore, while technology and the rise of the information age allows business to be conducted from anywhere, it has simultaneously become heavily reliant upon human capital. This human capital and where it settles, in turn, is what will be a critical element in cities’ policies on economic development.

2.B.(2) The Argument for the Urban Core

Because the new economy increasingly allows work to be conducted anywhere and the importance of location is becoming a critical factor for communities to successfully

11 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 189.

operate in the new economy, it is necessary to examine the ways in which “place” plays a critical factor is a community’s economy. In his book Joel Kotkin examines the geographic impact of the digital economy and how individuals are attracted to this new geographically relevant economy. An important factor in attracting the people that are critical to businesses is in the development of a rich sense of place in a location that is appealing to a specific type of worker. Kotkin establishes classifications for the locales involved in the new economy and discusses the individuals attracted to each of these geographic areas. As a result of his research, Kotkin classifies the areas which appeal to different knowledge based workers into three major categories.

While not the focus of this thesis, it is important to present Kotkin’s first two categories as a backdrop for the third. The first “district” defined by Kotkin encompasses those geographic areas that often come to mind when thinking of the people who work in

“high-tech" fields. These areas have been labeled as Nerdistans” and characterize as “self- contained high-end suburbs that have grown up to service the needs of both the burgeoning high-technology industries and workers.”12 Examples of such communities include Austin,

Texas; Chandler, Arizona; Irvine California; and Raleigh, North Carolina.

On the opposite end of the Nerdistans that are developed around the high-tech community is Kotkin’s second category – that of the “Valhallas”. These are “rural areas, usually with significant urban like amenities and appealing scenery, where knowledge workers can enjoy a pastoral paradise yet remain plugged into the burgeoning information economy”.13 Often described as the small towns where individuals once vacationed and even retired, they are now becoming a location where people can live and work due to the

12 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 9. 13 Ibid, page 11.

connectivity of the digital age. Examples of Valhallas include Jackson Hole, Wyoming and

Park City, Utah.

The third category described in The New Geography is that of the Urban Core. While understood as the central urban area of a community, Kotkin sees these locales shifting in their composition and role within the new economy, which then creates a uniquely new area.

Kotkin argues that the new character of the urban place occurred during the postindustrial age and has increased in the transition to the digital economy. According to Kotkin, this shift has resulted in “the digital economy’s increasing tendency to favor locating at least some of its activity closer to the urban core.” He goes on to state that “Urban areas have particularly benefited from the increasing importance of culture-based content in the evolving new economy. In contrast to the first phase of the high-technology revolution – which focused on manufacturing, engineering, and the industrial application of science – the emerging second phase of the digital economy encompasses a whole host of more subjective skills more suited to the natural advantages of dense urban areas.”14 As a result, downtown urban cores are increasingly attractive to people who are likely to operate in the new economy.

This advantage of the urban core further plays itself out in what Kotkin describes as the two faces of the new information economy. First, the hard side, including such activities as the development and production of fiber optics and chips, which remains very much concentrated in the periphery of cities in areas such as the Nerdistans. Indications are that this will remain in the suburbs and areas attractive to the “Microsoft” types of businesses. But the

“soft side” of the new economy, focused primarily on such fundamental creatively driven fields as media, fashion, advertising, and design, has taken on a decidedly more urban cast.15

14 Ibid, page 16. 15 Ibid, page 16.

For cities, the attraction of the soft side of technology-based industries to the urban environment can be a huge advantage when using its urban core as a focal point for economic development. In determining the economic role of central cities, Kotkin points out that it is in the understanding of the advantages of the urban core that cities will be able to thrive.

“Rather than recovering their place as geographic centers of the entire economy, city centers are readjusting themselves to a more modest but sustainable role based on the same economic and cultural niches that have been performed by the core from the beginnings of civilization.”16

This leads to the realization that the high quality of life provided by urban amenities may be a cause, as well as an effect, of economic vitality. This is a realization that a city’s amenity assets can be utilized in its development strategy. This awareness of the opportunities available to cities for potential economic gain through the management of urban amenities leads Joel Kotkin to state, “It is a unique conjunction between urban culture and the emerging new economic paradigm that the successful cities of the future can be nurtured and developed.” 17 In addition, creating policies that are able to harness the power of attracting new urbanites to the city core could easily constitute the critical fuel for the new urban economy.

With the geographic advantage of the central city being its ability to attract individuals that drive the businesses of the new economy, it is necessary to examine the characteristics of the people attracted to the urban core. Joel Kotkin identifies two groups of individuals, which he terms “New Urbanites”, as distinctive groups that have traditionally been viewed as outside the mainstream of the typical American middle-class family. These New Urbanites –

16 Ibid, page 55. 17 Kotkin, Joel, 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 82.

recent immigrants and childless people – are the ones that cities and their officials will be courting in the new economy when advancing economic development policies in urban cores.

2.B.(3) Characteristics of the People in the Urban Core (“New Urbanites”)

“What has changed, and profoundly, are the rules governing geography, and the making of successful and unsuccessful places. Perhaps the key rule grows from the realization that where information-processing companies, related services, and skilled professional choose to locate will increasingly shape the geographic importance of future cities and communities.” - Joel Kotkin, New Geography page 7

Research surrounding who is attracted to the urban core has found that the emergence of a new set of urbanites is not, for the most part, drawn from the typical American middle- class family, but by two distinct groups that fall largely outside the mainstream.18 One group is recent immigrants. During the recent decades, many a metropolitan area has seen an exodus form its urban core due to an assortment of factors, but this fleeing population has often been replaced with is groups of newcomers from abroad. These newcomers have increasingly restocked the human capital of urban centers and, as Kotkin points out, “the energy of these newcomers has also brought long-distressed sections of inner cities back to economic vitality.”19 Kotkin also discusses the importance of immigrants as often being the artisans and entrepreneurs on the cutting edge that spark the growth of specialized industries

18 Toffler, Alvin. The Third Wave. New York: Morrow, 1980, page 260-63. From Kotkin, Joel, New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, 2000: page17. 19 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page17-18.

as well as their contributions to the community as a whole, “Like earlier immigrant groups, immigrants often alter the urban geography with their economic culture and legacy.”20

The second group of new urbanities consists largely of childless people – singles, aging baby-boomers, childless couples, gays, and empty nesters. This is an increasingly significant portion of the nation’s population. One of the strongest forces in this area is the Y or “baby boom echo” generation. Although baby boomers had fewer children than their parents, the size of their generation was sufficient to create a Y generation that is roughly twice the size of the now twenty-something X generation. Nearly one-third of all baby boomers are single or childless or have one child, the largest such population in modern history.21 This Y generation will reach maturity and pass their parents’ generation in total numbers by 2010, which raises the promise of a new generation of young, single, unattached, and childless professionals who, in the past, have shown a proven proclivity for city living.22

Areas where middle-class and working-class families raised their children have now become hip places for the affluent and childless population. Areas such as Boston’s North

End, Greenwich Village, and Seattle’s Ballard. “The geographic reinvention of the central city – so marked in Manhattan and along Chicago’s lakeshore – rests upon a new, and radically different, demography. The center, even as the traditional middle-class family has continued to decamp from it, is being revived by the in-migration of immigrants, singles, gays, creatives, and other educated, childless younger people. This demographic and

20 Ibid, page 99. 21 Fisher, Christy. 1997. “City Lights Beckon to Business”, American Demographics, October 1997. 22 Woodyard, Chris. “Generation Y: The Young and the Boundless Are Taking Over the Pop Culture”. USA Today, October 6, 1998.) also Page 19

economic restructuring suggests a return to the center’s reliance on a divergent (by some traditional notions deviant) mainstream population.”23

In Kotkin’s analysis of the “childless population” he discusses their role within the city, “In contrast to most middle-class Americans, particularly those with families, these demographic groups tend to hold a far more positive view of city life. For the most part, these area city dwellers by choice. They tend to like the pace and cultural offerings of cities.”24

William Kornbulm found that during the 1990s, New York City lost many middle-class families, but they were largely replaced by younger, better-educated people, many of whom considered the number of cultural institutions as one of the key reasons for settling in the city.25 Kotkin argues that it is these often unattached new urbanites that will constitute the fuel for the new urban economy.

Ultimately, each city contains within itself its own distinctive set of transition possibilities. To this end, one the most important aspect of this distinction between one community and another is increasingly the quality of life and not solely traditional economic incentives. As today’s technology allows work to be distributed anywhere, locational choice will become more elastic. As a result, the growth of a city or region is increasingly dependent upon the decisions of a small group of individuals to locate there. If people, companies, or industries can truly live anywhere, or at least choose from many places, the question of where to locate be comes increasingly dependent on the unique attributes of any given location. 26

23 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 69-70. 24 Ibid, page 19. 25 Kornbulm William. “Why People Move In and Move Out of New York. Louise Harris Associates, study conducted f the Manhattan Institute and the Commonwealth Fund, 1993, page 3. From Kotkin, Joel, New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, 2000: page 19. 26 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 7.

Summary

As the new economy has allowed work to increasingly be conducted with less and less consideration for location, geography has become an important tool for economic development because its unique qualities are what separates one community from the next.

The critical elements from Joel Kotkin’s analysis of the role of geography are represented in

Table 2.3.

Table 2.3 Key Elements: Geography

B. KEY CONCEPTS OF GEOGRAPHY IN THE NEW ECONOMY

Urban Core B.1 (the built environment, high density living, urban amenities, etc.)

New Urbanites - Immigrants B.2 ("recent" arrivals, those attracted to urban living, etc.)

New Urbanites - Childless People B.3 (singles, gays, empty-nesters, aging baby-boomers, etc.)

2.C. THE CREATIVE CLASS

Richard Florida, professor of Regional Economic Development at the Heinz School of

Public Policy and Management at Carnegie Mellon University, in his book The Rise of the

Creative Class and How it’s Transforming Work, Leisure, Community and Everyday Life describes the emergence of a new social class and its vital role in the new technology infused economy. This new group – the Creative Class – “derives its identity from its members’ roles as purveyors of creativity”27 and as an increasingly powerful group in society. He shows that it is the Creative Class of workers who are shaping how and where business is conducted in today’s economy and that it is the role of the Creative Class in the new economy that often determines the economic success of communities of all sizes. “The choices [the Creative

Class] make already have had a huge economic impact, and in the future they will determine how the workplace is organized, what companies will prosper or go bankrupt, and even which cities will thrive or wither.”28

Florida argues that the Creative Class has become the driving force of economic growth, is shaping the geographic structure communities, and determining the winners and losers in the new economy. This section will present Florida’s definition of the Creative

Class, the role of the Creative Class in the economy, the factors that influence the Creative

Class’ locational decisions, and finally, the indexes used to measure a community’s attractiveness to the Creative Class.

27 Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page ix. 28 Creative Class, description taken from the book flap

2.C.(1) Defining the Creative Class

Florida’s definition of the Creative Class is a broad term used in a similar manner as other classifications that are based on economic activity such as the Working Class, Service

Class, and Agriculture. Florida also points out how the social structure of this group has an economic basis with a definition of the Creative Class that “emphasizes the way people organize themselves into social groups and common identities based principally on their economic function. Their social and cultural preferences, consumption and buying habits, and their social identities all flow from this.”29 According to Florida, some 38 million Americans, or 30% of all employed people, belong to this new class. Essentially, the Creative Class is a group of people who add economic value through their creativity and includes knowledge workers, symbolic analysts and professional and technical workers.

Florida further describes the Creative Class as having two distinctive components, that of the Super-Creative Core and the group of creative professionals that surround the Super-

Creative Core. The Super-Creative Core includes scientists, engineers, university professors, poets, novelists, artists, entertainers, actors, designers, writers, editors, cultural figures, think- tank researchers, analyst, and other opinion-makers.30 Regardless of their profession (be it software programmer or filmmaker, engineer or architect), workers in the Super-Creative

Core fully engage in the creative process. Surrounding the Super-Creative Core is a group of

Creative Professionals who work in a wide range of knowledge-intensive industries such as high-tech sectors, financial services, the legal and health care professions, and business management. “These people engage in creative problem solving, drawing on complex bodies

29 Ibid, page 68. 30 Ibid, page 69.

Figure 2.2 The Creative Class and its Core

THE CREATIVE CLASS

Creative Professionals

Super-Creative Core

Table 2.4 The Creative Class Defined

THE CREATIVE CLASS

The Super-Creative Core Creative Professionals

The heart of the Creative Class is the Surrounding the Super Creative Core, the Super-Creative Core which includes people Creative Class also includes a broader in science and engineering, architecture and group of creative professionals in business design, education, arts, music and and finance, law, health care and related entertainment, whose economic function is fields. These people engage in complex to create new ideas, new technology and/or problem solving that involves a great deal new creative content. of independent judgment and requires high levels of education or human capital.

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 8.

of knowledge to solve specific problems.”31 A table definition of the Creative Class and its components is listed in Table 2.4.

2.C.(2) The Evolution of the Creative Class and its Place in the Economy

According to Florida, Business Week was the first to introduce the concept of a “Creative

Economy” in August 2000.32 Since that time, John Howkins has documented its global impact in his 2001 book “The Creative Economy” and while Florida defines the Creative

Economy in terms of occupations, Howkins defines the Creative Economy to include 15

“creative industry sectors” such as software, R&D and design, and creative-content industries like film and music. To underscore the importance of the creative industries, Howkins figures

Table 2.5 Core Industries of the Creative Economy (market size in billion of US dollars, 1999)

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 47.

31 Ibid, page 69. 32 Ibid, page 46.

state that in 1999 the annual revenue of these fifteen creative sectors worldwide was estimated at $2.24 trillion dollars while the United States had 40% of this total at $960 billion dollars as represented in Table 2.533.

In building upon the work of Howkins and others to determine the evolution of the

Creative Class over time, Florida worked with colleagues and graduate students at Carnegie

Mellon, to develop a statistical portrait of the rise of the Creative Class and the changing class structure of the U.S. over the twentieth century. The results of their work can be seen in

Figure 2.3 and Figure 2.4.

Figure 2.3 The Class Structure, 1990-1999 Figure 2.4 The Class Structure, 1990-1999 (percent of work force)

Source: Florida, Richard. 2002. The Rise of the Creative Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 73. and Everyday Life. New York: Basic Books, page 75.

33 Ibid, page 46.

In his analysis of the class structure of the Creative Class, Florida found the following:34

• The Creative Class includes some 38.3 million Americans, roughly 30% of

the entire U.S. Workforce. It has grown from roughly 3 million workers in

1900, an increase of more than tenfold. At the turn of the twentieth

century, the Creative Class made up just 10% of the workforce, where it

hovered until 1950 when it began a slow rise; it held steady around 20% in

the 1970s and 1980s. Since that time, this new class has virtually exploded

increasing from less than 20 million to its current total, reaching 25% of

the working population in 1991 before climbing to 30% by 1999.

• At the heart of the Creative Class is the Super-Creative Core, comprising

15 million workers, or 12% of the workforce. Over the past century, this

segment rose from less than 1 million workers in 1900 to 2.5 million in

1950 before crossing 10 million in 1991. In doing so, it increased its share

of the workforce from 2.5% in 1900 to 5% in 1960, 8% in 1980 and 9% in

1990, before reaching 12% in 1999.

• The traditional Working Class has today 33 million workers, or a quarter of

the U.S. workforce. It consists of people in production operations,

transportation and materials moving, and repair and maintenance and

construction work. The percentage of the workforce in working-class

occupations peaked at 40% in 1920, where it hovered until 1950, before

slipping to 36% in 1970, and then declining sharply over the past two

decades.

34 Ibid, page 74.

• The Service Class includes 55.2 million workers or 43% of the U.S.

workforce, making it the largest group of all. It includes workers in lower-

wage, lower-autonomy service occupations such as health care, food

preparation, personal care, clerical work and other low-end office work.

Alongside the decline of the Working Class, the past century has seen a

tremendous rise in the Service Class from 5 million workers in 1900 to its

current total of more than ten times that amount.

In addition to its strength as a growing class of workers, As Table 2.6 shows, the

Creative Class has considerably more economic power than the Service Class, Working Class or Agriculture. Creative Class members also earn more than those in other classes. In 1999, the average salary for a member of the Creative Class was nearly $50,000 compared to roughly $28,000 for a Working Class member, $22,000 for a Service Class worker and

$18,000 for an Agriculture worker.35

Table 2.6 Wages and Salaries for the Classes

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 77.

35 Ibid, page 76.

2.C.(3) Attracting the Creative Class

In a 2001 Information Week survey of some 20,000 information-technology workers and management nearly 20% of workers reported that geographic location of their workplace

(18.8%) and the amount of time they have to commute (18.8%) are important in determining for whom they work. Both of these factors ranked ahead of the potential for promotion, bonus opportunities, financial stability, company prestige, stock options, on-site childcare, telecommuting and the ability to work from home.36

Similar to the mobility of the new economy workers previously discussed, the

Creative Class is highly mobile and not bound to any particular place. In order to be appealing for these highly mobile workers, Florida encourages cities to develop a unique niche that can have lasting attractiveness to the Creative Class. In addition to this mobility,

Florida has found is that the Creative Class overwhelmingly tends to live in places that offer stimulating, creative environments and will pass over opportunities if they are in cities or regions that are not appealing to them.37 Creative people “don’t just cluster where the jobs are. They cluster in places that are centers of creativity and also where they like to live.”38

Creative Capital

To explain such centers of creativity, Florida has taken the theory of “human capital” put forth by Harvard University economist Edward Glaeser and his collaborators which found considerable empirical evidence that human capital is the central factor in regional growth, and took this theory a step further. That is, Florida asks the question of the human capital theory that if growth occurs in places that have highly educated people, “Why do creative

36 Ibid, page 95-96. 37 Ibid, page 95. 38 Ibid, page 7.

people cluster in certain places, especially in a world where people are highly mobile and can choose to live in some cities over others?” The answer to Florida’s question comes in what one of his colleagues termed the “creative capital theory”. This theory states that “regional economic growth is driven by the location choices of creative people – the holders of creative capital – who prefer places that are diverse, tolerant and open to new ideas.” 39

Florida points out two distinctions between creative capital theory and the human capital theory. First, the creative capital theory identifies a type of human capital, creative people, as being key to economic growth. The second difference is that the creative capital theory identifies the underlying factors that shape the location decisions of these people, instead of merely saying that regions are blessed with certain endowments of people that the human capital theory proposes.40

The underlying factors that shape the location decisions which are so important to Creative Class are described by Florida as “Quality of Place”. He uses this term in contrast to the more traditional concept of Quality of Life and defines Quality of Place as “the unique set of characteristics that define a place and make it attractive.”41 The three dimensions of Quality of Place are (1) What’s there: the combination of the built environment and the natural environment; a proper setting for pursuit of creative lives;

(2) Who’s there: the diverse kinds of people, interacting and providing cues that anyone can plug into and make a life in that community; and (3) What’s going on: the vibrancy of street life, café culture, arts, music and people engaging in outdoor activities – altogether a lot of active, exciting, creative endeavors.42

39 Ibid, page 223. 40 Ibid, page 223. 41 Ibid, page 231. 42 Ibid, page 232.

As a result of his research, Florida identifies the characteristics of Quality of

Place to include the following:

• Lifestyle: things to do such as interesting music venues, neighborhood art galleries,

performance spaces, theaters, and a vibrant, and varied nightlife.

• Social Interaction: a community’s ability to facilitate social interactions in venues life

coffee shops, bookstores and cafes that provide a venue for acquaintance and human

interaction.

• Diversity: people are drawn to places known for diversity of thought and open-

mindedness. Signs of such areas include people of different groups and races, different

ages, different sexual orientations and alternative appearances such as significant body

piercings or tattoos. A diverse community is a sign of a place open to outsiders.

• Authenticity & Uniqueness: historic buildings, established neighborhoods, a unique

music scene or specific cultural attributes as well as the mix of urban grit alongside

renovated buildings, long-time neighborhood characters and yuppies, fashion models

and “bag ladies”.

• Identity: place provides an increasingly important dimension of identity and an

important source of status.

As one of the first to understand these characteristics, urbanist Jane Jacobs pointed out,

“successful places are multidimensional and diverse – they don’t just cater to a single industry or a single demographic group; they are full of stimulation and creativity interplay.”43

43 Jacobs, Jane. 1969. The Economy of Cities. New York: Random House.

2.C.(4) Measures of Successful Communities: Indexes

In researching the various aspects of the Creative Class and the quality of place, Florida has developed a number of statistical analyzes for determining the winners, losers and “also- rans” in the Creative Economy. This section examines the Creativity Index, the Cultural

Amenities Indexes and the Composite Diversity Index, as well as the various methods for their measurement

2.C.(4.a) Creativity Index

The first index developed by Florida is that of the Creativity Index and is a mix of four equally weighted factors: “(1) the Creative Class’ share of the workforce; (2) innovation, measured as patents per capita; (3) high-tech industry, using the Milken Institute’s widely accepted Tech Pole Index (referred to as the High-Tech Index); and (4) diversity, measured by the Gay Index, a reasonable proxy for an area’s openness to different kinds of people and ideas.”44 An example of the Creativity Index can be seen in Table 2.7.

The Creativity Index is a more successful measure of a region’s underlying creative capabilities than the simple measure of the Creative Class in terms of occupations because the

Creativity Index “reflects the joint effects of its concentration and of innovative economic outcomes”, thus it becomes Florida’s baseline indicator of a city’s overall standing in the

Creative Economy.45 Through the use of this measure, Florida finds two major trends. The first is “a new geographic sorting along class lines” with some regions becoming centers of the Creative Class while others are composed of larger shares of Working Class or Service

44 Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 244-255. 45 Ibid, page 245.

Table 2.7 Ranking Regions in the Creative Economy: The Creativity Index (for regions over 1 million people)

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 246-247.

Class people. The second trend is that the centers of the Creative Class are more likely to be “economic winners.”46

2.C.(4.b) Cultural Amenities Indexes

The next Indexes represent the “Cultural Amenity” components of communities that

Florida has found to be of greatest significance to the Creative Class.

Melting Pot Index

Openness to entrepreneurial individuals from around the globe has long been a hallmark of the U.S. Immigrants have also powered a good deal of recent growth in US cities and regions, and a study by the Milken Institute in 2000 identified immigration as one of the two most powerful demographic trends reshaping the nation’s cities and regions.

“Immigrants have fueled the rebound of older established regions like New York and

Chicago, as well as powering growth in younger cities from Atlanta to Phoenix.”47

The Melting Pot Index represents the relationship between immigration, or percent foreign-born, and the presence of high-tech industry and is shown in [table 14.2]. The

Melting Pot Index shows the effect of opened to immigration on regions is mixed. With four of the top ten regions on the Melting Pot Index among the nation’s top ten high-tech regions, the Melting Pot Index is “positively associated with the High Tech Index statistically but immigration is not strongly associated with innovation.

46 Ibid, page 235. 47 Ibid, page 253.

Table 2.8 Immigrants and High-Tech Industry

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 254.

Tolerance: Gay Index

In the late 1990s, Gary Gates, now at the Urban Institute in Washington D.C., used information from the U.S. Census to measure the concentrations of gay people in various regions. As a “sworn Census Investigator” Gates had access to the raw census data, and along with extensive experience in computer programming, was able to analyze data in order to come up with the Gay Index. Working with Gates, Florida was able to use the Gay Index as a measure of diversity because “homosexuality represents the last frontier of diversity in our society, and thus a place that welcomes the gay community welcomes all kinds of people.”48

As Gates has stated, “Gays can be said to be the ‘canaries of the Creative Age’”.49 For these reasons, Florida uses a region’s openness to the gay community as an indicator of the low

48 Bishop, Bill. 200. “Technology and Tolerance: Austin Hallmarks.” Austin American-Statesman, June 25, 2000. 49 Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 256.

entry barriers to human capital that are so important to encouraging creativity and generating high-tech growth. 50 And while the Gay Index doesn’t depend on the prevalence of gays in

high-tech industry, it simply represents a leading indicator of a place that is open and tolerant.

Table 2.9 The Gay Index and High-Tech Industry

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 256.

Figure 2.5 The Gay Index–High-Tech Connection Increases Over Time

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 257.

50 Ibid, page 256.

The Gay Index and High-Tech Industry, Table 2.9, is a very strong predictor of a region’s high-tech industry concentration. Six of the top ten 1990 and five of the top ten 2000

Gay Index regions also rank among the nation’s top ten high-tech regions. According to

Florida, in virtually all of the statistical analysis, the Gay Index did better than any other individual measure of diversity as a predictor of high-tech industry. Gays predict not only the concentration of high-tech industry, they also predict its growth.”51 According to Figure 2.5, the correlation between the Gay Index and the High-Tech Index increases over time and suggests that the benefits of diversity may actually compound.

The Bohemian Index

As a result of an April 2000 story in The Economist entitles “The Geography of Cool” that pointed out that cities which had long been center of culture and fashion had also emerged as leading centers for attracting talented people and generating certain new technology-intensive industries.52 Florida conducted a series of analyses to build on these ideas. The results of Florida’s research, as outlines in his 2000 report Competing in the Age of

Talent, found that “certain types of cultural amenities are better than others for attracting talented people and generating high-tech industries.”53 Florida found that big-ticket attractions were not very effective at attracting talented people and high-tech industries. What was successful in this attraction were the “small things – vibrant street life, readily available

51 Ibid, page 257. 52 “The Geography of Cool.” The Economist, April 15, 2000, page 91. 53 Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 259.

outdoor recreation and a cutting-edge music scene.”54 In order to further prove this point in a statistical manner, Florida worked with his team at Carnegie Mellon to create a new measure called the Bohemian Index.

The Bohemian Index measures the number of writers, designers, musicians, actors and directors, painters and sculptors, photographers and dancers. According to Florida the

Bohemian Index “is an improvement over traditional measures of a region’s cultural amenities because it directly counts the producers of the amenities, using reliable census data.”55

Table 2.10 The Bohemian Index and High-Tech Industry

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 261.

54 Ibid, page 260. 55 Ibid, page 260.

Florida found that the Bohemian Index, as seen in Table 2.10, turns out to be a strong predictor of everything from a region’s high-technology base to its overall population and employment growth. His analysis shows that “a region’s Bohemian concentration in 1990 predicts both its high-tech industry concentration and its employment and population growth between 1990 and 2000.” Further stated, this result provides “strong support for the view that places with a flourishing artistic and cultural environment are the ones that generate creative economic outcomes and overall economic growth.”56

2.C.(4.c) The Composite Diversity Index

As a final test of Florida’s theory that diversity attracts Creative Capital and stimulates high-tech growth, he and Gates combined forces again to develop a broader measure of the various indexes resulting in what they termed the Composite Diversity Index (the CDI). The

CDI combines together the three diversity indexes – the Gay Index, the Melting Pot Index and the Bohemian Index.

Table 2.11 shows the top 10 and bottom 10 of the US’s 49 largest regions and how they fared in the CDI and their corresponding High-Tech Index Rank. The results of the

Composite Diversity Index Ranking again “support the basic notion that diversity and creativity work together to power innovation and economic growth.”57 Florida and his colleagues found that creative people are attracted to, and high-tech industry takes root in, places that score high on their basic indicators of diversity – the Gay, Bohemian and other indexes. It is not because high-tech industries are populated by great numbers of bohemians and gay people, rather, musicians, gay people and members of the Creative Class in general

56 Ibid, page 261. 57 Ibid, page 262.

prefer places that are open and diverse. Low entry barriers are especially important because today places grow not just through higher birth rates, but by their ability to attract people from the outside.”58

Table 2.11 Technology and Diversity

Source: Florida, Richard. 2002. The Rise of the Creative Class and How it’s Transforming Work, Leisure, Community, and Everyday Life. New York: Basic Books, page 261.

To summarize the findings of the various Indexes, Florida and Gates developed a series of models to take into account the independent effects of factors like high-tech industry, talent, diversity and creativity. They broke the 200 metropolitan regions which had complete data available into four groups based on size (ranging from cities with an average population

58 Ibid, page 250.

of 2.2 million to the smallest with average populations of 250,000) they found the following:59

• Population Growth: Diversity and creativity combine to drive population

growth. Neither high-technology industry nor human capital plays the key

role. Rather, the three strongest predictors of population growth between

1990 and 2000 are the Bohemian Index, the Melting Pot Index and the

CDI.

• Employment Growth: Creativity is the key factor powering employment

growth. As with population growth, neither high-tech industry nor talent

appears to play a significant role. The main predictor of employment

growth is the Bohemian Index.

• Large Regions: Creativity and diversity work together to drive both

population growth and employment growth in large cities. The Bohemian

Index and the CDI are the only significant predictors of population and

employment growth in regions with an average population of 2.2. million.

Thus these regions should develop strategies to bolster their openness to

diversity and invest their resources in the development of vibrant local

artistic and cultural communities.

• Small and Medium-Size Regions: Immigration is more important to the

growth of small and medium-size regions. The Melting Pot Index is the

only consistent predictor of these regions’ population growth. Smaller

regions may benefit more from strategies that make them more open and

attractive to immigrants.

59 Ibid, page 263-264.

Summary

Richard Florida’s examination of cities with economically successful downtowns is based on the value and impact of the Creative Class. Florida’s research has determined that it is the Creative Class of workers that are shaping how and where business is conducted in today’s economy and that it is the role of the Creative Class in the new economy that often determines the economic success of communities of all sizes. The key elements of the Creative Class in communities with economically viable downtowns can be seen in Table 2.12.

Table 2.12 Key Elements: The Creative Class

C. KEY CONCEPTS OF THE CREATIVE CLASS IN THE NEW ECONOMY

The Value of the Creative Class C.1 (and their role in the economy) Attracting the Creative Class C.2 (developing a "Quality of Place") Measuring Successful Communities C.3 (indexes and/or other research tools)

2.D. THE ENTREPRENEURIAL STATE

In his book The Rise of the Entrepreneurial State: State and Local Economic

Development Policy in the United States Peter Eisinger undertakes a comprehensive examination of the evolution of state and local economic development policies used in communities of all sizes. Eisinger discusses the historical and current practices of economic development policies such as enterprise zones, business taxes, venture capital programs, export promotion, and plant-closing laws, as well as the advantages and disadvantages each posses for government officials in their attempts to spur economic growth. Ultimately

Eisinger presents arguments detailing the pros and cons of both, what he terms, supply-side versus demand-side economic development policies. As Timothy Bartik explains in his review of Eisinger’s work, “The central purpose of [The Rise of the Entrepreneurial State] is to provide a framework for thinking about state and local economic development policies.” 60

Eisinger categorizes the economic development policies he discusses in his book into two groupings. The first focuses on policies that simply reduce business costs, primarily to attract new branch plants. Eisinger labels these supply-side policies. The second type of policy is one in which the government provides support for new firms, products and markets in a unique way. Eisinger labels this type of policy demand-side because even when these policies reduce costs (for example, state venture-capital programs reduce capital costs), the state or local government is, he claims, seeking to choose the most promising markets for new firms.

While this thesis advocates for the utilization of demand-side policies, it is necessary to examine both policies and their means for implementation in economic development arenas.

60 Bartik, Timothy. 1990. Book Reviews. Journal of Regional Science, vol. 30, no. 1, 1990, page 141-142.

2.D.(1) Supply-Side Policies, Demand-Side Policies and the Entrepreneurial State

When Eisinger discusses economic development policies he refers to “those efforts by government to encourage new business investment in particular locales in the hopes of directly creating or retaining jobs, setting into motion the secondary employment multiplier, and enhancing and diversifying the tax base.”61

The premise of supply-side policies is that an area provides incentives to attract businesses through the use of traditional economic policies such as tax breaks, enterprise zones, and other incentives aimed at seducing businesses to one location over another. The thought being that once costs are lowered enough, businesses will naturally be attracted to the locales with the lowest costs of production. Unfortunately, when exclusively using supply- side policies, the resulting trend is for businesses to locate in a community only as long as there isn’t a better deal around the corner. With community after community implementing the same cost-lowering supply-side policies, as well as the increasing low-cost competition from international locales, communities are not able to retain businesses long enough to see economic gains resulting from their policies.

An alternative to the failure of supply-side policies is in the use of policies aimed at having government play the unaccustomed role of entrepreneur. Through the use of demand- side economic development policies the role of public agencies shifts from simply offering incentives and allowing business to make locational decisions, to one that actively creates opportunities for new capital investments. Demand-side economic development policies shift the focus of attracting business through universally similar incentives (such as tax breaks, and enterprise zones) to one that creates a niche market to attack businesses. “Supply-side

61 Eisinger, Peter. 1988. The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. Madison, WI: The University of Wisconsin Press, page 4.

policies bring government into the investment process after an opportunity has been identified by an investor or firm…demand-side intervention often occurs at an earlier stage of the investment process, at a point at which government discovers or creates an opportunity or assesses and ranks existing opportunities as a way of focusing investors’ resources.”62 Some of the differences between the traditional supply-side approach to development and the demand-oriented entrepreneurial approach are summarized as “The Contrasts between

Traditional Supply-Side Policy and Demand-Side Entrepreneurial Policy” in Table 2.13.63

Essentially, demand-side policies focus on creating new markets by building on an existing economic base and making an area attractive by shouldering many of the investment risks traditionally assumed by the private sector. This is what Eisinger terms the

Entrepreneurial State. The idea of the public serving as an entrepreneur is one that is becoming more common but still not clearly differentiated from private entrepreneurs. In distinguishing between a private entrepreneur and a public entrepreneur, Eisinger explains that “the latter seeks to identify market opportunities not for its own exclusive gain but on behalf of private actors whose pursuit of those opportunities may serve public ends. In its role of partner the state has become a risk-taker, a path-finder to new markets, the midwife to joint public-private efforts to develop and test untried technology.”64 Using the idea of public agencies as entrepreneurs Eisinger explores how this new role allows government to create opportunities for economic development that have not previously been utilized.

62 Ibid, page 228. 63 Eisinger, Peter. 1988. The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. Madison, WI: The University of Wisconsin Press, page 12. 64 Ibid, page 9.

Table 2.13 Contrasts between Traditional Supply-Side Policy and Demand-Side Entrepreneurial Policy

Source: Eisinger, Peter. 1988. The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. Madison, WI: The University of Wisconsin Press, page 12

It is worth noting that demand-side entrepreneurial activities have not replaced supply- side policies, but rather demand-side policies are a powerful economic development approach that often utilize traditional incentives in an entrepreneurial way. Lowering taxes, providing enterprise zone incentives and other supply-side policies can be used in entrepreneurially, which in turn leads them to be demand-side policies, when they specifically target an opportunity or market not being cultivated on its own.

2.D.(2) Policy Implications

According to Eisinger, one of the first things that public agencies need to understand about demand-side policies is that they often occur at an early stage of the investment process.

Demand-side intervention should take place “at a point at which government discovers or creates an opportunity or assess and rank existing opportunities as a way of focusing investors’ resources.” Eisinger goes on to explain, “Demand-side policies are designed to permit or encourage private investors to capitalize upon certain opportunities judged to be likely to produce significant benefits in the public’s economic interests.”65

As Eisinger points out, the entrepreneurial aspect of the demand-side approach is a response to the belief that actors in the private sector do not always perceive opportunities or may be hesitant to pursue those for which there is no immediately apparent, easily accessible market. “The idea behind the demand-side policies of the entrepreneurial state is to discover or point out such opportunities and to assist investors to capitalize on them.”66 For the public sector, this idea of implementing economic development policies based on demand concepts requires governments to play an unaccustomed entrepreneurial role – a role normally reserved for private individuals and institutions. The key to success for cities when acting in an entrepreneurial role is to understand the following:

(a) Demand-side economic development policies often include the use of traditional

policies in unique and targeted ways. When the state acts as an entrepreneur,

economic development policies are undertaken to remedy the inability of the

private sector to generate enough capital or provide the skills or knowledge

65 Ibid, page 228. 66 Ibid, page 229.

necessary to exploit a market and “often resemble supply-side devices such as

capital subsidies, tax credits, land write-downs, and so on. What makes them

different in the hands of the entrepreneurial state, however is that they are targeted

to selected firms or sectors positioned to respond to market opportunities identified

or legitimated by the state.”67

(b) The trends and shifts in markets and the factors that influence business decisions.

When targeting specific businesses or sectors, public agents must understand the

trends and shifts in the markets that will dictate where a community should extend

its efforts. According to Eisinger, this understanding extends to (a) the shifts in the

distribution of people and jobs across the landscape (the factors that influence

people’s locational choices), and (b) the deep transformations in the nature of the

American economy (described as the New Economy in this thesis)

markets are targeted and policies are in place, public agents must understand that

their role is simply to act as a catalyst for or until the private sector can establish a

role as the entrepreneur. “In the demand-based framework the entrepreneurial state

is concerned less with putting together the best possible deal to induce a firm to

invest than it is to work out a way for someone in the private sector to produce a

better, more competitive commodity or service.”68 The state’s role is simply to get

this process started.

67 Ibid, page 234. 68 Ibid, page 230.

2.D.(3) Entrepreneurial Activities: Venture Capitalist

When acting as an entrepreneur in implementing demand-side policies, one of the roles local governments play is that of venture capitalist. Once the state identifies the focus of the economic development needs of a community, the resources that are put to this end results in the state acting as venture capitalist. As Eisinger explains, “To augment the supply of capital is in general to approach the problem of development from the supply side. But to do so in a selective way only for firms that promise to serve or create expanding markets is to pursue an entrepreneurial course in which demand-side considerations govern strategy. In certain states the logical extension of this claim of reasoning is for the state itself to become a venture capitalist.”69 This is reinforced with the position that, as entrepreneur, the state often focuses its resources on high-risk, long-term markets that are justified by the potential job growth of such enterprises. “Where traditional financing programs tended overwhelmingly to back standard manufacturing firms, the venture programs target companies that offer unique products, a distinctive market advantage, and high growth.”70

By selectively targeting public resources to the development of markets that are unique and in line with the shifts in the economy, the state takes an active role in determining the businesses and industries that locate in their community. This allows local government to take the lead in creating markets (by making communities “in demand”) as opposed to the traditional route of hoping to attract business by simply lowering production costs. The demand-side, entrepreneurial approach puts the power back into the hands of the state, albeit with risks and rewards not associated with traditional supply-side economic development policies.

69 Ibid, page 234. 70 Ibid, page 264.

2.D.(4) Anticipating and Creating Markets

In addition to undertaking an entrepreneurial approach to economic development and acting as a venture capitalist, local governments must also anticipate and create markets as a part of demand-side policies. In other words, the state must understand the ebbs and flows of the market economy while at the same time anticipate the ways in which local communities operate in such markets. By understanding the markets, government officials will be able to approach economic development using demand-side policies because they will be able to target specific industries operating in the new economy that will best suite their area. This can even be undertaken in a truly entrepreneurial way when the state makes predictions about what will be successful in the economic forecast. “More striking, perhaps, than the state’s efforts to help private firms respond to expanding demands for leading-edge goods and processes already on the market, however, is the possibility that states can help to stimulate demand for goods and processes not yet at a commercial stage or not yet even conceived.”71

This approach to economic development is dependent on the state’s knowledge of markets, industry trends, available stock in the community, and demographic shifts in order to prioritize and target the use of public funds. As Eisinger points out, “By targeting particular disciplines, industries, or research areas for special policy attention, the entrepreneurial state seeks to establish a priority ranking among activities likely to lead to business formation or new products.” More specifically, this is done in order to achieve the largest economic gain for the community because certain industries or potential industries are “perceived as

71 Ibid, page 267.

ascendant – or in the parlance of industrial policy, as ‘winners’ – because they are more likely to produce economic development benefits for the state.”72

Government officials that undertake this selective targeting of public resources will be in a position to actually create new markets if they have an accurate inventory of their locale’s strengths and weakness, are conversant in the shifts and trends in the economy, and posses a clear vision of areas to be targeted in the community. The state can then step-in – using economic development policies in a demand-side approach – to direct growth in market niches that are likely to succeed and likely to be adopted by the private sector because of their potential for economic gains.

Ultimately, the demand-side method to economic development and the various options in this approach – including the state acting as venture capitalists and the creation of new markets – is a means of changing how government has viewed economic development and its role in such policies. What is increasingly becoming clear is that local officials must find new ways to approach economic development because exclusive reliance on the traditional supply-side approach is causing community after community to miss opportunities for economic growth. While many government officials continue to seek short term economic gains through the supply-side approach, those operating in the demand-side approach have often done so with the knowledge that such activity is an investment in the future, and more likely sustainable, economic gains. As Eisinger reasons, such entrepreneurial campaigns by the state “represent a policy of investment for the distant future.”73 Acting as an entrepreneur represents an effort by the state to “lay a foundation for

72 Ibid, page 268. 73 Ibid, page 287.

an economic order now only in its formative stages and still dimly perceived.”74 But, nonetheless, one that will likely be successful if the state effectively prepares itself and selectively pursues demand-side economic development policies.

Summary

Peter Eisinger provides a means to apply the concepts of Joel Kotkin and

Richard Florida into policies that can be implemented by the public sector. Using the idea of public agencies as entrepreneur, Eisinger describes how this new role allows government to create opportunities for economic development that have not previously been utilized. Table 2.14 summarizes the key elements of Eisinger’s entrepreneurial state approach.

Table 2.14 Key Elements: The Entrepreneurial State

D. KEY CONCEPTS OF THE ENTREPRENEURIAL STATE IN THE NEW ECONOMY

D.1 Demand-Side Approach (using traditional policies in unique and targeted ways)

D.2 Market Shifts and Trends (understanding influences in business decisions)

D.3 Acting as an Entrepreneur (venture capitalist activities)

D.4 Anticipating and Creating Markets (targeting specific industries operating in the new economy)

2.E. CONCLUSION

The results of the research based literature review for determining the characteristics and concepts for successful downtown economic development approaches can be seen in Table

74 Ibid, page 288.

2.15. Having examined the literature and combining the summaries of each author’s concepts for successful economic development, below is a synthesis of factors to incorporate when planning for economic development in downtowns as well as the framework that will be used to measure Stockton’s potential for economic success in its downtown revitalization efforts.

Table 2.15 Policy Concepts for Successful Economic Development

A. THE NEW ECONOMY

A Technology Based Economy A.1 (market shifts and trends in the new economy)

B. GEOGRAPHY IN THE NEW ECONOMY

Urban Core B.1 (the built environment, high density living, urban amenities, etc.)

New Urbanites - Immigrants B.2 ("recent" arrivals, those attracted to urban living, etc.)

New Urbanites - Childless People B.3 (singles, gays, empty-nesters, aging baby-boomers, etc.)

C. THE CREATIVE CLASS IN THE NEW ECONOMY

The Value of the Creative Class C.1 (the role of the Creative Class in the economy)

Attracting the Creative Class C.2 (developing a "Quality of Place")

Measuring Successful Communities C.3 (indexes and/or other research tools)

D. THE ENTREPRENEURIAL STATE IN THE NEW ECONOMY

D.1 Demand-Side Approach (using traditional policies in unique and targeted ways)

D.2 Market Shifts and Trends (understanding influences in business decisions)

D.3 Acting as an Entrepreneur (venture capitalist activities)

D.4 Anticipating and Creating Markets (targeting specific industries operating in the new economy)

Chapter 3 – Stockton, California Data

The previous chapters have examined the literature supporting the creation of demand side economic development policies, particularly in the context of changing demographics and within the new economy. This chapter turns its attention to the application of these principles in a community. Stockton, California – a community set in the traditionally agricultural-based region of California’s Central Valley – will be examined for its past, current and potential economic development policies, specifically within the context of its resource rich downtown.

In order to apply such literature-based concepts to a case study community such as

Stockton, it is necessary to present a statistical overview of the City and its downtown. This section begins with an examination of the demographics, economic activities, and attributes of

Stockton as a whole and concludes by examining these same issues within the context of the

City’s downtown.

3.A. STOCKTON’S HISTORICAL BACKGROUND

Stockton is located at the head of a navigable channel of delta waterways connecting the city to the San Francisco Bay and allowing Stockton to serve as a major shipping point for many of the agricultural and manufactured products of Northern California. Settled in 1847 by German immigrant Charles Weber who acquired over 49,000 acres of land through a

Mexican land grant, Stockton quickly grew with the discovery of California gold in 1848. San

Joaquin County granted incorporation of the City of Stockton on July 23, 1850 with the first city election being held eight days later.

Image 3.1 Map of Stockton in Image 3.2 Map of California San Joaquin County

CALIFORNIA STOCKTON AND SAN JOAQUIN COUNTY

STOCKTON

Source: San Joaquin Council of Governments web page, image retrieved 2002.

Source: City of Stockton web page, image retrieved 2002.

As an outpost supplying provisions to miners and a center for ships and barges serving the mines, it became the fourth-largest city in the state within eight years of its founding. By the

1870s, as the Gold Rush was waning, Stockton’s economy shifted to agriculture, taking advantage of the fertile land of the San Joaquin Valley. Agriculture eventually spawned

related industries such as flour mills, shipyards, and implement-making factories, and the city became a major shipping port for the California grain trade.

In the 1920s and 1930s, educational and cultural entities such as the University of the

Pacific, Pioneer Museum, and Haggin Museum opened in Stockton. In 1933, the port of

Stockton became this county’s first inland seaport, serving the rich agricultural areas nearby.

During WWII, the city’s economy was given a boost as the shipbuilding industry accelerated.

The rich peat soil and a temperate climate combined to make the area around Stockton, as well as much of the San Joaquin Valley, one of the richest agricultural and dairy regions in

California. Throughout Stockton’s 150 year history, almost every major fruit, nut and field crop has been gown. Current major crops include asparagus, cherries, tomatoes, walnuts, almonds, plus many other smaller production orchards, row and feed crops.

As the historic building stock attests, Stockton in its prime was the retail office and commercial hub of the area, with a cultural center boasting theaters, an auditorium, and an active nightlife. Today, Stockton remains one of the few cities in the Central Valley to have a built urban core and true central business district. In addition to its rich building stock,

Stockton has been culturally and ethnically diverse since its beginning as a muddy-street gold- rush camp. The melting pot that has typified much of California started for Stockton when gold seekers from Asia, Africa, Australia, Europe, the Pacific Islands, Mexico, and Canada all converged on the city. Stockton’s diversity has expanded in recent decades with the continued influx of Southeast Asians (particularly Lao, Cambodian, and Hmong) and the continued growth of the Hispanic population.

3.B. CITY GOVERNMENT

The City of Stockton is a charter city with a City Council / City Manager form of government. The City has 15 departments including the Economic Development Department, and the Housing and Redevelopment Department, and the Community Development/Permit

Center. Within the Housing and Redevelopment Division is located the Redevelopment

Division that is responsible for the revitalization projects in Downtown. The mayor and representatives from the six council-member districts are chosen by citywide election. The

City Council appoints the City Attorney, City Auditor, City Clerk, and City Manager.

Currently, the City employs approximately 1,683 people. Stockton also serves as the county seat of San Joaquin County. An award highly toted by the city is that of its All-American

City designation in 1999 by the National Civic League. Stockton received the award for the work done to create new jobs, reduced crime, improving the Delta’s environment, and its initial revitalization efforts in the downtown area.

3.C. STOCKTON DEMOGRAPHICS

3.C.(1) General Statistics

Stockton is currently the major urban area within San Joaquin County. The City covers approximately 56.5 square miles in the most northern County of the San Joaquin Valley.

Stockton sits at an average elevation of 15 feet and ranks 12th in size of California cities.

As Table 3.1 shows, over the last ten years, the total population for the City grew at an average annual rate of 3.3% from 149,779 in 1980 to 243,771 in 2000. Stockton’s

population is expected to grow approximately 2.0% per year to 2010. 75 Table 3.2 presents a

fifty year historical census of Stockton’s population growth and percent change during that

time frame. While the city continues to maintain its roots as a “small” Central Valley

agriculture-base industrial port, the past fifty years has seen Stockton more than triple in size

with a current population of almost a quarter million people.

Table 3.1 Stockton’s Population: 1980 - 2010

1980 1990 1998* 2000** 2010 Stockton 149,779 210,943 241,800 243,771 302,900

San Joaquin 347,340 480,628 545,249 554,438 727,279

*California Department of Finance estimate. **Census 2000 data

Table 3.2 Stockton’s Historical Population 1950-2000

HISTORICAL CENSUS

% YEAR POP. CHANGE CHANGE 1950 70,853 16,139 +23%

1960 86,321 15,468 +18%

1970 107,644 21,323 +20%

1980 149,779 42,135 +28% 1990 210,943 61,164 +29%

2000 243,771 32,828 +13%

Source: *U.S. Census 2000 and **California Dept. Of Finance, Demographic Research Unit, 2000

75 Information provided by the City of Stockton “Demographic Information Population & Workforce Data” web page http://www.ci.stockton.ca.us

3.C.(2) Ethnic Diversity

Stockton is a city with no ethnic majority as indicated by the 1990 census in Table 3.3.

Today, the City continues to see a decline in the white population and a growing Hispanic and

Asian population as displayed during the past twenty years in Table 3.4.

Table 3.3 Stockton’s Ethnic Breakdown, 2000

Ethnicity Percentage

White 43.6%

Hispanic 25.0%

Asian 21.4%

Black 9.1%

Native 0.7% American

Other 0.2%

Source: US Census, 2000

Table 3.4 City of Stockton Race/Ethnic Breakdown 1980 – 1990 – 2000

RACE/ETHNIC 1980 % 1990 % 2000 % White 85,470 57.1 92,029 43.6 78,539 32 Black 15,022 10.0 19,118 9.1 26,359 11 Hispanic 33,050 22.1 52,653 25.0 79,217 33 Asian 13,631 9.1 45,239 9.1 47,093 19 Am. Indian 2,606 1.7 1,463 0.7 1,337 0.5 Other 441 0.2 496 0.2 Pacific Islander 810 0.3 Two or more Races 9,920 4 Total 149,779 100% 210,943 100% 243,771 100% Source: U.S. Census Bureau, 2000

3.C.(3) Age Breakdown

The 1990 age distribution of Stockton’s population finds that the average age is just under

30 years (29.4) according to Table 3.5. This average age is slightly lower than that for San

Joaquin County or the State of California. This also implies that Stockton has a strong population of youth that will allow the City to continue its future oriented focus towards improved development opportunities.

Table 3.5 Age Distribution of Stockton Population, 1990

Age Population Percentage

1 - 18 years 70,214 33%

19 - 39 years 71,568 34%

39 - 65 years 47,054 23%

65+ years 22,107 10%

Source: US Census, 1990

3.C.(4) Income and Housing Statistics

Table 3.6 presents Stockton’s median income in 1990 as being just over $30,000 compared to $34,701 for the County. The City’s median home value in 1990 was $106,700 with the County over $120,000 (Table 3.7). Stockton’s median home value is expected to show an increase in these values as a result of the increased demand for housing in the late

1990s and early 2000s.

Table 3.6 Median Income, 1990

FAMILY HOUSEHOLD N. STOCKTON $38,273 $33,762 S. STOCKTON $25,685 $22,044 METRO $31,080 $27,450 STOCKTON $30,315 $26,876 COUNTY $34,701 $30,635 Source: U.S. Census Bureau, 1990

Table 3.7 Median Home Value, 1990

N. STOCKTON S. STOCKTON METRO STOCKTON COUNTY $131,760 $84,901 $107,903 $106,700 $120,500 Source: U.S. Census Bureau, 1990

3.D. ECONOMIC PROFILE

3.D.(1) Work Force

Stockton currently makes up 44% of the total population of the County and 41.2% of the available labor force. For March 2001, the civilian labor force in San Joaquin County was

260,600. As of March 2001, the unemployment rate for San Joaquin County stood at 9.4%.

The major employers in Stockton can be seen in Table 3.8. Although there are over 12,000 businesses licensed with the City, Stockton has historically been an agriculturally based economy.

Table 3.8 Stockton’s Major Employers, 2000

Company Name Industry Employees St. Joseph's Health Care Health Care 4,600 Pacific Gas & Electric Utility 1,100 Dameron Hospital Health Care 1,017 University of the Pacific Education 900 Port Stockton Food Dist. Distribution 830

Kaiser Permanente Health Care 760 California Cedar Products Wood Products 750 Kleinfelder Environmental Eng. 721 Diamond Walnut Food Processing 500 Holt Brothers Catepillar Dealer 400 Inshape Health Clubs Health Club Chain 400

Source: The Business Journal 2000 Book of Lists

3.D.(2) Wage Rates

The various wage rates and associated positions that are commonly found in Stockton and

San Joaquin County can be found in Table 3.. The information is based on the San Joaquin

County Occupational Outlook Report 1990-2000 non-union wage rates.

3.D.(3) Economic Incentives

Stockton also has access to traditional economic incentives for businesses through the designation of the “Stockton/San Joaquin Enterprise Zone”. Stockton’s Downtown falls within the Enterprise Zone and the incentives available in this zone include the following:76

Table 3.9 Stockton Wage Rates, 1990-2000

Job Hourly Rate

Billing, Cost & Rate Clerk (1998 Study) $6.50 - 16.00

Computer Programmer (1998 Study) $8.50 - 28.75

Data Entry Keyers (1998 Study) $6.25 - 14.75

Electrical Assemblers (1995 Study) $6.25 - 17.00

Electrician (1998 Study) $6.25 - 22.00

Food Batchmakers (1996 Study) $6.25 - 10.50

Freight, Stock & Material Handlers (1996 Study) $6.25 - 10.00

General Office Clerks (1998 Study) $6.25 - 12.00

Machine Feeders & Offbearers (1995 Study) $6.25 - 12.00

Machinery Maintenance Mechanic (1998 Study) $7.00 - 23.50

Machinist (1999 Study) $7.00 - 19.00

Receptionists & Information Clerks (1998 Study) $6.25 - 15.00

Secretary (1997 Study) $6.25 - 18.75

Stock Clerks, Stockroom - Warehouse (1998 Study) $6.25 - 14.50

Welder & Cutter (1998 Study) $7.00 - 20.00 Source: San Joaquin County Occupational Outlook Report 1999-00 non-union wage rates, represents range from entry level and new to firm, to 3+ years experience with same company. Please note that federal minimum wage increased to $6.25 on January 1, 2001.

76 As provided by the City of Stockton’s Economic Development Department’s literature on the Stockton/San Joaquin Enterprise Zone.

3.D.(3) Economic Incentives (cont.)

- Employee Recruitment & Training Assistance: Recruitment and Pre-screening

Services; Specialized Training Programs; Pre-Trained/Job Ready Employees; and

Vouchering.

- Local Incentives: Fast Track Permitting & Reduced Fees; Economic Review

Committee & Development Coordinator; Utility Tax Rebate for Large Employers;

Infrastructure & Environmental Impact Report Assistance; Foreign Trade Zone;

and Recycling Market Development Zone.

- State Assistance: Hiring Credit; Sales and Use Tax Credit; Business Expense

Deduction; Net Operating Loss Carryover and Net Interest Deduction for Lenders;

Manufacturer’s Investment Credit (MIC); and Enterprise Zone Apportionment.

3.E. HIGHER EDUCTION RESOURCES

The City of Stockton has a wide array of educational resources that could serve to benefit the City in its efforts to assess potential links between higher education and economic development opportunities. The following are among the higher education resources available to the City:

• University of the Pacific in Stockton

• San Joaquin Delta College, Stockton

• California State University Stanisluas – Stockton campus

• Humphrey’s College, Stockton

• National University, Stockton

3.F. TRANSPORTATION LINKS

Stockton also has a wide variety of transportation resources within its boundaries. The following transportation links all fall within easy access to downtown.

• Highways/Freeways: Interstate-5 (I-5), Highway 99, and Highway 4 converge around

the downtown area with multiple off-ramps directly connecting downtown.

• Rail: Amtrack, Union Pacific, and Burlington Northern Santa Fe Railway stop in

Stockton with rail lines that run just south of downtown.

• ACE Train: the Altamont Commuter Express is a passenger rail service across the

Altamont linking Stockton with the East Bay Silicon Valley.

• Stockton Metropolitan Airport: freight and limited passenger flights use the airport at

the Southern edge of Stockton.

• Port of Stockton and the Deep Water Channel: a 600-acre inland seaport that serves as

an industrial transportation port for cargo vessels.

• Delta Waterways: a multitude of recreational activities are available on the deltas that

are accessible from areas within and outside of the city.

3.G. DOWNTOWN SPECIFIC INFORMATION

While the previous section provided background on the City of Stockton as a whole, in order to successfully apply the principles of demand-side economic development policies a limited area of Stockton was chosen to focus upon. Stockton’s downtown has the natural resources, built environment, historical background, and centrality necessary to apply

previously discussed policies toward optimal economic development. The following section highlights the demographics of Stockton’s Downtown as well as presents an inventory of the multiple resources available to the Downtown district.

Image 3.2 A view of Downtown Stockton looking east over the deep water channel and Highway 4 to the right.

Source: City of Stockton web page, retrieved 2002.

3.G.(1) Downtown Demographics

Currently, Downtown Stockton is home to a culturally diverse community of almost

20,000 people in the central core as demonstrated in Table 3.10. The high percentage of

Asian & Pacific Islanders reflects the once vibrant Chinatown that was bisected by the

Crosstown (4) Freeway. The average age of the population in an around Downtown is approximately 33 years while the number of households in the central core just over 6,000 and increasing to over 77,000 within 5 miles of the central city.

Table 3.10 Downtown Stockton Demographics, 2002

Central 3 Mile 5 Mile Core Radius Radius Population 18,310 137,036 230,919 Population by Race White (including Hispanic) 45% 50% 56% Black 9% 10% 9% Asian & Pacific Island 32% 28% 26% Other Races 14% 11% 9%

Hispanic Origin 35% 35% 30%

Population by Age Avg. Age 33 32 33

Households Number of household 6,538 44,247 77,743 Source: Downtown Stockton Alliance, 2002.

3.G.(1.a) Public Safety

Downtown’s public safety is an ever important concern for those in Stockton as well as those who know Stockton from its past association with high levels of crime. Crime in Downtown Stockton has decreased almost 35% in since 1994,77 which is almost twice that of the rest of the city (18% decrease for the city as a whole during the same period). See below.

Figure 3.1 Crime Rates in Downtown Stockton 1994-1997

Source: Downtown Stockton Alliance web page, retrieved 2000.

77 Downtown Stockton Alliance, 2002.

3.G.(1.b) Downtown Business and Employee Profile

Below is a profile of the number of businesses and total number of employees in

Downtown Stockton. As reported by the Downtown Business Improvement District, the largest employers in the Downtown include the following:

– County of San Joaquin – Union Safe Deposit Bank

– Stockton Unified School District – Bank of Stockton

– City of Stockton – The Record Newspaper

Stockton’s Downtown has over 1,300 businesses and 18,000 employees that operate within the city’s central core and another 11,000 businesses and 160,000 employees within 5 miles of the central core (Table 3.11). While Stockton’s downtown has not served as a desirable housing market for many years, it still remains a central business and employment hub for much of the City and the County.

Table 3.11 Total Businesses and Employees in Downtown – 2002 Central 3 Mile 5 Mile

Core Radius Radius Total Businesses 1,310 3,900 7,041 Number of Employees 18,704 55,800 103,143 Source: Downtown Stockton Alliance web page, retrieved 2002

3.G.(1.c) Economic Incentives

Through the Downtown Business Improvement District organization – the Downtown

Stockton Alliance – additional economic incentives are available for downtown businesses.

The designation of Stockton’s Downtown as both an Enterprise Zone and a Redevelopment

Area offer the following incentives to attractive new and expanding businesses:

- Building Permit Fee reduction by 50%

- Economic Review Committee

- Emergency Grant Program to alleviate code violations

- Employee Recruitment Assistance and Training

- Façade Improvement Loan

- Façade Improvement Grant

- Hiring Credits

- Public Facility Fee Zone

- Reduced Sewer Hook-up Fees

- Small Business Administration Loans

3.G.(2) Resources Available in the Area

Stockton’s downtown has much to build upon and its wide array of assets give the district the qualities and traits that can be leveraged for the successful revitalization of an urban area.

An inventory of Stockton’s assets includes the following:

3.G.(2.a) The Downtown Built Environment. Other than Sacramento, (California’s

capital), Stockton is the only city in the Central Valley that has a historic Central

Business District (CBD). Currently it is underutilized and faces many of the traditional

issues of old, abandoned downtowns. The historic architecture of many of the buildings

in Downtown create a unique environment in the area and provide a strong sense of

character to the urban core. Downtown still enjoys a walkable, pedestrian-scale street

grid system throughout much of the urban core. Downtown also has a network of parks

and other public open spaces at it disposal and many well-established, though currently

economically disadvantaged, neighborhoods in close proximity to the central business

district.

Images 3.3 and 3.4: Examples of Downtown Stockton Buildings

Image 3.3 Image 3.4

Source: City of Stockton web page, image retrieved 2002. Source: City of Stockton web page, image retrieved 2002.

3.G.(2.b) The Waterfront. Stockton is home to a three mile long channel that connects

Stockton to the San Joaquin River and the San Francisco Bay. Form the days of the

Gold Rush, the channel has connected Stockton to other centers of economic activity and

has been a stimulant to Stockton’s commercial development. Despite its location in the

heart of the City, the waterfront area has experienced decay and disinvestment over the

past several decades. While these issues persist, the waterfront offers vast stretches of

undeveloped land and prime waterways connected to residential areas (north side) and

retail/businesses (south side) abutting Downtown.

Image 3.5 Stockton’s Deep Water Channel and Events Center

Source: City of Stockton web page, image retrieved 2002.

3.G.(2.c) Government Center. Downtown Stockton benefits from the presence of

numerous government agencies, offices, and other civic uses. County government

offices occupy over 800,000 square feet of office space in the Downtown area. City and

State government services and 22 separate courtroom facilities are also located

Downtown.

Image 3.6 Stockton’s City Hall – an example of the government offices located in Downtown

Source: City of Stockton web page, image retrieved 2002.

3.G.(2.d) Culturally Diverse Community. Stockton is rich in ethnic diversity. As stated

in the demographic profile of the community, Stockton is a city with no ethnic majority.

Additionally, Stockton, as much of the Central Valley and California, is projected to

experience an increase in many ethnic populations. For Stockton, this increase is

projected to occur most dramatically within Hispanic and Asian populations.

Historically Stockton has experienced a crippling lack of investment, attention, and interest to Downtown and the waterfront, but the City now finds itself with the opportunity to re-examine its urban areas. Attention has recently begun to shift towards the potential of

Downtown and a revitalization effort. Ultimately, the variety of the natural and built environment as well as its cultural diversity give Stockton the potential to capitalize on a uniquely “urban experience”.

3.G.(3) Conclusion

In conclusion, Stockton’s Downtown has valuable resources that are an asset in the

New Economy and can be utilized by government officials. A summary of the area’s significant resources are as follows:

1. The Built Environment: an historic urban core and a collection of rich

building stock in the central city.

2. The Waterfront: the deep water channel, Port of Stockton, and the delta

waterways that abut downtown

3. Culturally Diverse: historically a cultural melting pot as well as the current

stock of cultural diversity

4. Access to Transportation: convergence of multiple highways in the

downtown area, ACE trains, Amtrack trains, and delta waterways.

5. Seat of Local & County Government: downtown hosts a variety of public

offices/agencies including the City of Stockton, the County of San Joaquin, the

San Joaquin Council of Governments (COG), the Greater Stockton Chamber of

Commerce, and the Downtown Stockton Alliance.

6. Reduction in Crime: while crime rates have decreased in downtown Stockton,

there still remains a higher-than-average level of crime

Additional resources that can be utilized in economic development policies for

Downtown Stockton include:

1. Higher Education: with the University of the Pacific, the University of

California, Stanislaus at Stockton, Delta College, and various professional

colleges in the area, Downtown can leverage these resources for

redevelopment purposes.

2. Eastward Migration from Bay Area: downtown Stockton is in the path of

eastward migration from the Bay Area and could capture a share of those in

search of living and business opportunities in an urban core.

3. Investment by Public Officials: local city officials have turned their attention

to revitalizing downtown and have been willing to invest public resources

towards the goal of economic development.

Chapter 4 – Case Study: Stockton Data

This chapter defines the parameters of the case study community by examining the factors in Stockton that play a role in shaping the economic development of the city’s Downtown.

The first section presents an overview of the organizations and agencies that are key actors in the redevelopment of downtown as well as the strengths and weaknesses of these organizations’ efforts. The second section examines the various reports, documents, and political guidelines that address Downtown Stockton. The last section profiles the project based approach the City has undertaken in its attempt to revitalize Stockton’s Downtown.

This chapter provides the overview of the actors, documents, and projects influencing

Downtown economic development and the cities approach to revitalization.

4.A. THE ACTORS

In this first section, the organizations and agencies having the most significant involvement in Stockton’s Downtown are presented. A summary of the “actors” that will be examined is listed below.

Agencies / Organizations:

(1) The City of Stockton

(1a) Redevelopment Division (Department of Housing and Redevelopment)

(1b) Economic Development Department

(2) Downtown Stockton Alliance – Business Improvement District (BID)

(3) San Joaquin County Partnership

(4) Art Organizations – the Stockton Arts Commission and the Cultural Heritage Board

(5) Other Players: Chamber of Commerce and Council of Government

4.A.(1) The City of Stockton

Redevelopment Division (Department of Housing and Redevelopment)

The Redevelopment Division, through the direction of the Stockton Redevelopment

Agency works in partnership with the community to revitalize Stockton’s designated

Redevelopment Areas, including Downtown. The City’s Redevelopment Agency was formed in 1955 with the City Councilmembers serving as the government board of the Agency. The

City’s Redevelopment Division states its mission as the following: “Through the redevelopment process, designated projects areas receive focused attention and financial investment to reverse deteriorating trends, create jobs, revitalize the business climate, rehabilitate and add to the housing stock, and gain active participation and investment by citizens.”78

The Redevelopment Agency is supported through the state law that allows redevelopment agencies to obtain funding through tax increment financing. Once the city approves a

Redevelopment Plan for a certain area, if the total property tax value within the boundaries of the area increases over time, the increase over the base property tax value is the tax increment.

The funds raised through tax increments returns to the Redevelopment Agency to fund projects within the designated Redevelopment Plan area.

The Downtown area was a project area originally conceived and approved by the

Redevelopment Agency as a commercial development project in 1961. The project area has been amended 3 times over the years, with the most recent expansion occurring in 1991.

78 City of Stockton Redevelopment Agency web page. Last accessed January 24, 2002.

Much of the recent work in this area has focused on Stockton’s Waterfront and the head of the

Stockton Channel.

Image 4.1 Stockton’s Downtown Redevelopment Projects

Source: City of Stockton web page, image retrieved 2002.

Economic Development Department

According to the City’s literature, the Economic Development Department is “committed to providing companies with a pro-business climate” as well as offering programs aimed at

business attraction, expansion, and retention. This is achieved through the use of the following policies:

- Enterprise Zone incentives,

- Loans and grants,

- Fee deferrals,

- Façade improvements, and

- Links to business resources in the community.

4.A.(2) Downtown Stockton Alliance – Business Improvement District (BID)

The Downtown Stockton Alliance is an active organization in the City’s urban core of the.

The Alliance is a non-profit, property based improvement district responsible for promoting, developing and maintaining downtown Stockton that was created in 1998. The business improvement district (BID) footprint spans more than 80-blocks of the city’s central core.

Image 4.2 Downtown Stockton Alliance’s coverage of Downtown

Zone 3 Zone 1 Zone 2

Source: Downtown Stockton Alliance web page, image retrieved 2002.

Downtown Stockton’s Products and Services: Zone 1: Hospitality Guides, Maintenance, Marketing & Promotion, & Public Policy Zone 2: Maintenance, Marketing & Promotion, Public Policy Zone 3: Marketing & Promotion, Public Policy

Funded by assessment on downtown property, the Alliance has five primary roles as stated in their literature:

(a) Maintenance: The Alliance coordinates a 65-block maintenance program, which

consists of daily litter abatement, steam cleaning and pressure washing for

downtown's alleys and sidewalks.

(b) Hospitality and Security: Uniformed guides wear bright green and gold and

roam a 26-block core of the central business district an average of 12 hours a

day, five days per week. In addition, they have flexible schedules to

accommodate special needs and events in the downtown area. Guides are trained

on downtown amenities including its history, points of interest and special

events. They are equipped with communication devices and work closely with

local law enforcement.

program to attract new downtown investment. The Alliance’s role in economic

development includes recruiting businesses, retaining existing businesses,

undertaking market research and preparing marketing materials for new business.

In addition, the Alliance works closely with commercial brokers to promote

available commercial real estate and with the City of Stockton to package and

promote economic development incentives for locating in downtown.

(d) Marketing, Promotions and Special Events: Through the use of collaborative

retail promotions, district-wide advertising, special events and media relations,

the Alliance is trying to increase the destination appeal of downtown Stockton.

(e) Public Policy: As the collective voice for downtown business and property

owners, the Alliance sees itself as the champion of downtown public policy. The

Alliance continues to work on issues such as parking, economic development

incentives, zoning, signage and litter mitigation

As the Alliance successfully renewed its 5-year BID designation in 2002, it has been an organization that has worked to accomplish successes in an area that has traditionally been very hard to serve. Downtown business owners have been known to be reluctant participants in redevelopment efforts because of past experiences with empty promises from both public and private agencies. For the Alliance, one of its major accomplishments has been to make inroads in attaining the support of an increasing segment of Downtown businesses.

Ultimately, the Alliance is still a fledging organization that is focused on (1) providing services to local businesses and (2) proving that the Alliance is an organization that should be supported because its success in offering those services. At this stage in its development, the

Alliance is still concentrating on achieving quick successes for both political reasons (to ensure support from the city), as well as the need to prove the Alliance’s worth to its constituents base (the local businesses in the B.I.D.). Currently the key of the Downtown

Stockton Alliance’s survival is its success in offering services to local businesses, but the

Alliance is not in a strong position to be a direct player in developing an overall economic development strategy for Downtown that involves planning for business attraction outside

Stockton’s borders.

4.A.(3) San Joaquin County Partnership

Another player in the economic development scene is the San Joaquin Partnership. The

Partnership is a not-for-profit economic development corporation serving all parts of San

Joaquin County. The purpose of this organization is to form a public/private partnership to assist business and industry in locating to San Joaquin County. The types of services available to the clients of the Partnership include Comprehensive site and facility searches, site location and utility cost analysis, labor availability and wage information, labor surveys, screening, training and recruitment, supplier and vendor product surveys, project permit expediting, Enterprise Zone Analysis, and more. Some of the members in the Partnership include AT&T, A.G. Spanos Companies, Bank of America, Califia Development Group,

Duraflame, Food 4 Less, General Mills, Grupe Company, Kaiser Permanente, Mondavi

Woodbrige Winery, Pacific Gas & Electric, Tracy Press, Wells Fargo Bank, and many others.

While the San Joaquin Partnership provides assistance to companies within the County and serves as a resource for potential employers, the Partnership is widely know as not being favorably inclined to Stockton’s Downtown. At the very least, the Partnership has not been known to promote or be interested in the potential in Downtown Stockton. At the worst, some have even argued that the Partnership is an organization that actually discourages invest in the Downtown.

4.A.(4) Art Organizations – the Stockton Arts Commission & the Cultural Heritage

Board

In September of 1976, the City Council adopted an ordinance to creating the Stockton

Arts Commission. Later the San Joaquin County Arts Commission was developed in order to

qualify Stockton for state arts funds designated only for countywide agencies. Currently the

Arts Commission is considered a “mini-department” within the City and operates under the

City’s financial support though only in a very limited fashion.

Another arts related agency involved in issues in the Downtown is that of the Cultural

Heritage Board, which is comprised of nine volunteers appointed to advise the Planning

Commission and the City Council about cultural and historical resources. The Cultural

Heritage Board is responsible for the preservation of the historic fabric in the Magnolia

Historic District (an area adjoining downtown), the Doctor’s Row Historic District, and various other individual Landmark buildings throughout Stockton. There is also historic site designation for Stockton’s Chinatown, located along Washington Street within the heart of

Downtown, which the Cultural Heritage Board oversees.

4.A.(5) Other Players: Chamber of Commerce & Council of Governments (COG)

The Greater Stockton Chamber of Commerce is an organization involved in the overall economic development scene, but one that has played a minimal role in Stockton’s

Downtown. The Greater Stockton Chamber of Commerce has been providing business development services to Stockton and San Joaquin County since 1901, and whose mission is

“to aggressively develop and promote an economically vibrant business community.”79

Examples of the business development programs offered by the Chamber include the following:

79 Greater Stockton Chamber of Commerce information material provided on January 26, 2002. (web site: www.stocktonchamber.org

- Stockton Chamber Apprenticeship Program (SCAP): the placement of welfare

recipients into the workforce.

- Business Retention & Expansion Efforts: identifies retention and expansion

projects and coordinates the delivery of services of the Chamber.

- Targeted Retail & Commercial Recruitment: assists incoming businesses with

relocation and site selection.

- Small Business Council/Chamber Business Incubator: services to the smallest of

businesses including incubators and educational courses.

Similar to the focus of other economically associated agencies and organizations operating in Stockton, the focus of the Chamber of Commerce is primarily to serve the businesses in the local community. Of course this is an important role for the Chamber and one that benefits the community as a whole, particularly in light of increasing research that has shown the importance of small businesses as a prime engine in the economic vitality of any successful community.

Another organization worth mentioning briefly in this section is that of the San

Joaquin Council of Governments (COG). While the Council of Government is an organization intended to actively pursue collective opportunities for the region, COGs are only as strong as the communities in a County allow them be. Currently, the San Joaquin

COG has not proven itself to be a force in the political or economic scene and all indications point to a continuation of this status in the future. For now, the San Joaquin COG will continue to serve as a periphery entity operating on projects such as transportation project, commuting issues, and unmet transit needs.

4.B. THE DOCUMENTS

This second section examines the documents that address issues of revitalization in

Downtown, the resources available to the area, and the City’s overall approach to economic development policies. A summary of the documents that will be examined in this section is listed below.

The Documents:

(1) City of Stockton General Plan and Policy Document

(2) Urban Land Institute Report

(3) Downtown Stockton Strategic Action Plan

(4) Waterfront Plan

(5) City Council Plan for 2001-2002

4.B.(1) City of Stockton General Plan and Policy Document

The City Planning Commission was established in 1929 and developed its first general plan in July of 1932 with final adoption in 1934. The Plan has been revised in 1957, 1970 and again in 1978. The most current version of the General Plan was adopted in 1990 and the

Policy Document was amended in November of 1998. In terms of information relevant to

Economic Development Policies in the City, the General Plan has very little to offer. Section

V entitled “Economic / Employment” is a general overview of economic conditions within

Stockton including employment, unemployment, household income, and taxable sales data, but does not address policies toward achieving economic development.80

80 The City of Stockton. 1990. City of Stockton General Plan. Background Report. Stockton, CA. Last adopted January 22, 1990

Stockton’s General Plan Policy Document follows a similar pattern in its description of policies related to the administration of the City’s economic development activities. In the

Policy Document, there is no section dealing with economic issues or development policies.

The most applicable section would be the two sentence paragraph in section IV-1 under

Redevelopment that reads: “Where the private sector alone in unable or unwilling to assemble land and invest the necessary capital for revitalizing blighted areas, redevelopment is a means of focusing resources. Most redevelopment relies upon tax increment financing as their primary source of financing projects.”81

4.B.(2) Urban Land Institute Report

The Urban Land Institute’s Advisory Services Panel completed a report for revitalization of Downtown and the Waterfront in June of 1997. The format for these Advisory Panel

Services involved a five-day “conference’ with members from the ULI and the community involving tours of sites, meetings with representatives of the area, interviews with key people in the community, the formulation of recommendations, and finally discussions about the findings before conclusions were made by the panel.

The ULI’s final report serves as an examination of the development potential, barriers, and strategies for Downtown Stockton and provides direction in what it sees as a vision for downtown, ideas on planning and urban design principals, and key points for the implementation of the report’s findings. The ULI report found that “Given the assets identified and the analysis of the market segments that can be attracted to downtown

Stockton, the panel feels that significant opportunities exists to create and active

81 The City of Stockton. 1990. City of Stockton General Plan. Policy Document. Stockton, CA. Last adopted January 22, 1990 and amended in November of 1998.

downtown.”82 The panel further recommended that in order to develop a safe, comfortable, and well-used downtown, the City must begin with a comprehensive, long-term vision that can be translated into a sequence of smaller, incremental and attainable components. Some of the specific development strategies suggested by the panel include:

– Organize For Development

– Adopt A Vision

– Address Perceptions of Crime and Safety

– Actively Promote Downtown and Downtown Events

– Encourage Commercial Development Downtown

– Develop Entertainment Facilities

– Encourage Market-Rate Housing Downtown

– Balance Housing Types Downtown

– Support Renovation and Infill Housing Near Downtown

– Expedite Marina Redevelopment and Environmental Cleanup

– Redevelop the Landmark Hotel Stockton

4.B.(3) Downtown Stockton Strategic Action Plan

In May of 2001, the Stockton’s City Manager formed a Downtown Action Team

(DAT). The goals of the DAT included the formation of an overall vision for the future of

Downtown Stockton, the creation of a set of key revitalization strategies, and identifying top priority implementation actions on which to focus. The composition of the DAT included

City and County officials, Downtown Stockton Alliance, Greater Stockton Chamber of

82 Urban Land Institute, Advisory Services Panel Report. Downtown Stockton, California: A Strategy for Revitalizing the Central Business District and Waterfront. Washington D.C.: Urban Land Institute, June 1997.

Commerce, and representatives from the development and business community. Ultimately, the direction given by the City was to find a way to implement the goals and priorities of the

City Council regarding Downtown revitalization.

The Downtown Stockton Strategic Action Plan provides implementation steps for the near term and details the action team’s ideas on what needs to be done, how to get there, and who will be responsible for making it happen. According to the report, the Strategic Action

Plan is meant to be a working document and as a tool with built-in flexibility to evolve with the coming years. The goals of the Strategic Action Plan are stated as the following:83

– Build upon existing planning efforts;

– Identify top priorities to achieve desired vision;

– Identify key steps toward successful implementation of priority actions; and

– Establish benchmarks to monitor progress.

The report goes on to detail the assets and challenges facing downtown revitalization and then present the strategy framework for the Action Plan. The primary components of the long-term organizational concept of Downtown include building on the strong government center, encouraging mixed-use office development, creating a central retail and entertainment corridor, and improving Weber Ave. as the primary pedestrian spine.

4.B.(4) Waterfront Plan

On February 6, 1995, the Stockton City Council appointed the Waterfront Revival

Task Force with the goal of updating the vision and strategy for development of the

83 Downtown Action Team. Downtown Stockton Strategic Action Plan. Berkerly: Moore Iacofano Goltsman, Inc. October 2001, page 3.

Waterfront, to define immediate actions that could be taken, and to find ways to facilitate community input.

A 26-person task force of Stockton residents chaired by then Mayor Joan Darrah constituted the Waterfront Revival Task Force. This task force worked together over a nine- month period in 1995 charged with “defining and implementing a set of policies, strategies, and actions to create an environment that invites private sector investment to the

Waterfront.”84 The Task Force’s efforts resulted in an amended long-term vision of the

Waterfront area that focuses on balancing economic and physical conditions.

The Waterfront was divided into 5 sub-areas that were examined individually for their land uses and potential economic benefits from development. The group was also able to develop 3 action plans based on their findings. These action plans included Physical

Improvements, Programmatic Actions, and Waterfront Committee Organizational Actions and were spread over a three phase cycle. Originally intended to be Phase I (1996-1998),

Phase II (1998-2001), and Phase III (beyond 2001)85 the plans have yet to be implemented.

4.B.(5) City Council Plan for 2002-2003

In its bi-annual Goal Setting Session on January 11, 2001, the Stockton City Council met to formulate the objectives for the coming year and to offer direction to City Staff for the operations of the city. At this meeting, the Council established its primary goals and outlines the activities associated with the achievement of each goal. The 5 primary goals as set by the

City Council for 2002-2003 include the following:

84 Waterfront Revival Task Force, City of Stockton. Stockton Waterfront Revival Vision & Action Plan. 1996, page 1. 85 Ibid, page 1.

(a) Prevent and reduce crime including proactive neighborhood-based interventions

and services.

(b) Assume the leadership role in developing social, economic and cultural

opportunities for all, especially youth.

(d) Provide opportunities for economic growth.

(e) Exercise fiscal responsibility while providing needed services.

Of particular relevance for this thesis are Goals (c) and (d). A closer examination of these goals finds the priorities the city has set in achieving these goals:

– Continue to expedite current projects to include pursuing potential projects on

Banner Island. Be flexible and prepared to act quickly.

– Expedite plans to renovate the Fox Theater. Recommend opportunities for

management and operations of the Theater.

– Implement three “City Signature Events” at the Weber Point Events Center. These

events include the 4th of July symphony, “All Stockton Community Block Party’,

and New Year’s “First Night Stockton”.

– Continue with the strategy of developing around the four sides of the Downtown.

Investigate and recommend on resource opportunities to support this strategy.

– Continue to work with the Alliance [Downtown Stockton Alliance] to encourage

improvement of Downtown facades including those buildings that are vacant.

(d) Provide opportunities for economic growth.

– Continue to work with the CSU [California State University] Site Authority and be

prepared to act in a timely manner as opportunities may occur.

– Continue to develop strategies for South Stockton including the implementation of

a Redevelopment Area. These strategies include (1) identifying and retaining a

consultant, defining scope of service, and evaluating and recommending actions

and uses for improving the four-block area on Airport Way that serves as a

gateway to the Airport; and (2) sharing information on the City’s directions in

South Stockton including communicating what has already been completed.

– For future planning, and in consideration of retaining green belts, farmland and in-

fill sites, work with the County in reviewing Stockton’s sphere-of-influence to

identify opportunities for light industrial development.

4.C. THE PROJECTS

The third area worth exploring is the projects that have been or are slated to take place within Stockton’s Downtown boundaries. The majority of these projects have been undertaken by the City within the Housing and Redevelopment Agency and labeled as redevelopment or revitalization projects.

The Projects:

(1) Weber Point Event Center

(2) Stewart/Eberhardt Building (City Essential Services/Parking Facility)

(3) Gateway Block

(4) Dean DeCarli Waterfront Square (Weber Plaza)

(5) Weber Avenue Streetscape Beautification

(6) Fox Theater

(7) Children’s Museum

(8) Gleason Park Master Development Area

(9) Brownfields EPA Grant

(10) Multi-Modal Rail Station

(11) Channel Head Master Development Area

(12) South Shore Master Development Area

4.C.(1) Weber Point Event Center

The Weber Point Event Center, including an amphitheater and an interactive water feature, was completed in June of 2000 along with the seawall on the southern portion of the channel. The 9.7 acre site lends itself to a wide variety of rentals including live concert performances, exhibitions, weddings, and car or craft shows.

Image 4.3 Weber Point Event Center

Source: City of Stockton web page, image retrieved 2002.

4.C.(2) Stewart/Eberhardt Building (City Essential Services/Parking Facility)

The City’s new Stewart/Eberhardt Building was completed in December 2000, with

Police Department, Neighborhood Services, and City'’ Training Center moving to the facility in January 2001. The upper two floors of the building are intended to eventually house 911- emergency personnel, the City MIS Department and Emergency Operations Center. The adjoining parking structure opened for business for approximately 700 vehicles in March, 01.

Image 4.4 Stewart Eberhart Essential City Services Building

Source: City of Stockton web page, image retrieved 2002.

4.C.(3) Gateway Block

The Gateway Block occupies an area that was formerly a dilapidated block, but had prime access to the Downtown from the freeways. This area was transformed into a 60,000 square foot commercial development complete with a McDonald’s fast food restaurant and a

Union 76 mini-mart/gas station in June of 2001. The City views this project as “gateway” entry to Downtown Stockton for those who enter the area from off the Crosstown Freeway.

Image 4.5 The “Signature” Gateway Project into Downtown Stockton

Source: City of Stockton web page, image retrieved 2002. 100

4.C.(4) Dean DeCarli Waterfront Square (Weber Plaza)

The $6 million Dean DeCarli Waterfront Square was completed on June 29, 2001 and provides 70,000 square feet of public plaza complete with step seating, a fountain, trellis structures, and other open space amenities. This area was previously a concrete covered potion above the Stockton Channel that served as a parking lot. A Brownfields success story, the project was a joint effort of several funding sources, including the Redevelopment

Agency, Public Facility Feed, Brownfields Economic Development Initiative (BEDI), Section

108 Loan Funds, and Community Development Block Grant (CDBG) Funds. The square was named in honor of former Mayor and City Councilmember Dean DeCarli.

Image 4.6 Dean DeCarli Waterfront Square (Weber Plaza)

Source: City of Stockton web page, image retrieved 2002.

4.C.(5) Weber Avenue Streetscape Beautification

In cooperation with the San Joaquin Regional Transit District, the City of Stockton applied for and received a $1.9 million Transportation Enhancement Activities (TEA) Grant

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for streetscape improvements along a 10-block portion of Weber Avenue, a major Downtown street connecting the Waterfront and Central Business District. Construction is scheduled to begin in Spring of 2002. Improvements will include: new curb, gutter, sidewalk in select locations; street tree plantings; bulb outs to enhance the pedestrian environment; historic streetlights; art enhanced tree guards and grates; street furniture (benches, trash receptacles); and infrastructure to extend the Weber Point Carillon System.

Image 4.7 Artist’s Rendering of Weber Ave. Streetscape

Source: City of Stockton web page, image retrieved 2002.

4.C.(6) Fox Theater Image 4.8 The Fox Theater

The Redevelopment Agency has leased the Fox Source: City of Stockton web page, image retrieved 2002. Theater since 1995 in an effort to encourage the revitalization of the historic Theatre as well as the overall

Downtown area. Facing the reality that major repairs to the

Theatre could no longer be put off, the Agency acquired the

Fox Theatre in July 2000. A loan from the City approved in

December 2000 will enable the Agency to invest over $2.5

million for major repair and renovation including: roof repair, ADA compliance, and restoration of historic features. The Fox Theatre currently conducts approximately 30 to 40 events per year and draws a crowd to Downtown Stockton.

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4.C.(7) Children’s Museum

The Development Agency owned warehouse near the Stockton’s Downtown

Waterfront, has been leased by the Children’s Museum for the past several years. Private donations, coupled with financing assistance from the Agency, enabled the Museum to recently complete an 11,570 square foot fully landscaped outdoor recreation area including a children’s play area. Donated toy soldiers from the Ad-Art company frontage along Highway

99 are scheduled to be added to the front of the Museum in the spring of 2002.

4.C.(8) Gleason Park Master Development Area

In March 2001, the Redevelopment Agency approved a Disposition and Development

Agreement with Mercy Housing California for the development of three blocks in the Gleason

Park Neighborhood. Phase I of the project calls for the construction of 92 affordable housing units in addition to a community building, laundry facilities and on-site parking. Phase II of the project will include a mix of additional housing units and commercial/retail space.

Acquisition and relocation activities are currently underway and Phase I of the project is scheduled for completion in Fall 2003.

4.C.(9) Brownfields EPA Grant

In 1996, the Redevelopment Agency was awarded a $200,000 grant by the

Environmental Protection Agency (EPA) for a brownfields pilot program to identify potentially contaminated properties around the downtown waterfront. Historic uses included shipbuilding and tank farms along or close to the Stockton Channel. Assessments indicated

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that some of the properties were not contaminated and could be redeveloped, while others required more detailed assessment in order to identify necessary cleanup actions. A comprehensive Risk Management Plan and Environmental Master Plan were also prepared. In

April 2000, EPA awarded the Redevelopment Agency a second $200,000 for a supplemental pilot program that will continue and expand upon the 1996 program. The supplemental program will include additional privately owned waterfront properties to provide a comprehensive overview of contamination issues facing redevelopment in this area. It will also help to facilitate redevelopment those parcels with perceived, but not actual contamination.

Image 4.9 Potential Brownfield sites along the Deep Water Channel

Source: City of Stockton web page, image retrieved 2002.

4.C.(10) Multi-Modal Rail Station

This 13.5 acre project site, located at the east end of Downtown, is envisioned as retail/office development consisting of approximately 120,000 square feet in addition to the

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renovation of the historic Southern Pacific Railroad Depot. It is envisioned that the historic depot will include new transit facilities, creating a complex that will handle Amtrak, local bus routes associated with the Stockton Metropolitan Area Regional Transit District (SMART), the Altamont Commuter Express (ACE) to the Bay Area, and the Greyhound Bus terminal.

Image 4.10 Artist’s Rendering of the Multi-Modal Station

Source: City of Stockton web page, image retrieved 2002.

4.C.(11) Channel Head Master Development Area

The Channel Head Master Development Area was established on a three block area bounded by Miner Avenue, Hunter Street, Weber Avenue and El Dorado Street. The plan that was put forth by Civic Partners, a developer with financial interest in one of the properties, is to build an 17- screen Cineplex and associated retail. The proposal also includes a plan for renovation of the Hotel Stockton with retail on the ground floor and City offices on the upper floors. The goal of the proposed development is to help attract people downtown, particularly evenings and weekends. The development agreement was signed with Civic Partners in May

2000 and a lease was obtained from Krikorian Theaters for operation of the Cineplex this past

November. Design plans are in the works and construction began in the spring of 2002.

Image 4.11 Artist’s Rendering of Completed Downtown Cineplex

Source: City of Stockton web page, image retrieved 2002.

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4.C.(12) South Shore Master Development Areas

The Redevelopment Agency has approved the creation of three Master Development

Areas (MDA's) to facilitate redevelopment of the South Shore of the Stockton Channel. The

Agency has approved Exclusive Negotiating Rights agreements on all three development areas. South Shore MDA #1 includes a proposal for a full service restaurant and 230-room hotel. Artists Conception of Proposed Restaurant Plans for South Shore MDA #2 are still in the advanced design stages with two office towers and 110 live/work condominiums proposed along the waterfront. South Shore MDA #3, also known as the Washington Street Office

Complex, consists of two 4-story office buildings planned for future construction.

Image 4.12 Artist’s Rendering of South Shore Master Development Area

Source: City of Stockton web page, image retrieved 2002.

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4.D. CONCLUSION

This chapter has identified the actors, documents and projects that currently factor into the revitalization of downtown Stockton. While this chapter has identified the three factors that were researched regarding the influences in Downtown Stockton’s redevelopment policies, (the actors, documents and projects), it is worth noting the limits of these areas in the actual analysis. The “Actors” involved in the economic development policies of the downtown area were included as a means to describe the individuals, agencies and organizations that are traditionally and practically involved in redevelopment of Downtown

Stockton. Because there was not an official means to gather data about the actual policy of the actors in regards to the literature-based framework for economic development policies, the assessment of the actors’ role in the analysis was limited. Because the documents and projects can be independently analyzed against the literature-based framework, interpretation of the documents and projects was not as subjective as an analysis of the actors’ intentions.

Therefore, the next chapter’s analysis is based on the existing documents and projects with an occasional reference to the actors when it can be done without interpretation of intentions.

Taken together with the previous chapter’s background on the case study community of

Stockton, this thesis now turns its attention to the application of the literature-based economic development concepts for successful downtown redevelopment as presented in chapter two and analyzes both Stockton’s recognition and utilization of the outlined economic development policies.

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Chapter 5 – Analysis

Based on the previous discussion of the literature-based characteristics of successful economic development in chapter two, as well as the data on Stockton in chapter three, and the approaches to revitalization in Downtown in chapter four, this section analyzes the City’s ability to recognize and implement the various components of successful policy approaches to economic development.

As presented earlier, the framework of literature-based concepts for economic development is taken from the material addressing the new economy, Joel Kotkin’s geographic characteristics of economically successful communities, Richard Florida’s approach to attracting the Creative Class through a quality of place, and Peter Eisinger’s approach to economic development in a non-traditional, entrepreneurial manner. By merging the key elements of the framework with the current demographics of downtown and the revitalization activities involved in the area’s policies, it is possible to examine the City’s likelihood of achieving economic development success within its urban core.

Table 5.1 summarizes the economic development concepts presented in the literature as well as Stockton’s ability to recognize, utilize and implement these concepts. The

“scoring” of Stockton’s use of these concepts is based on an analysis of the material presented in this thesis – the statistics, documents, projects and reports and the policies of government officials and other actors when it can be determined, regarding the community’s approach to downtown economic development. On the following pages, this analysis is explained in detail through a discussion of each of the 4 literature based elements of economic development and Stockton’s achievements in each of these areas.

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Methodology of Analysis

The four categories in the literature-based concepts of successful economic development were applied to the data regarding Stockton’s documents and projects. The analysis of Stockton’s data was registered in the framework as recognized/not-recognized (or existing/non-existing with geography) and implemented/not-implemented (or utilized/not- utilized with geography). The result of applying the economic development concepts to the case study’s geographical qualities, documents, and projects can be seen in Table 5.1.

The four categories of the framework (A., B., C., and D.) reflect the four major areas of the literature reviewed in this thesis and were used as the basis to analyze Stockton’s revitalization of its downtown. Each of the four sections begins with a question intended to reflect the concepts of the literature within the application of the case study community. The result was to answer the question as either yes or no. A key aspect of this analysis is to keep in mind that these questions, and subsequent answers, are for Downtown Stockton only and they exist within the context of the New Economy discussion. An explanation of the analysis that led to the placement of each “X” is discussed in detail in the following sections of this chapter.

In this chapter, Stockton’s revitalization efforts are used to apply the economic development framework against the approaches to revitalization currently taking place in a case study community. It is the intention of this section to show how research-based concepts can be utilized by public officials to achieve successful economic gains in urban development policies. Ultimately, this grouping of successful economic development characteristics provides a means for planners / city officials to critically examine redevelopment approaches that are at the disposal of government agencies as they operate in the New Economy.

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Table 5.1 The Application of Economic Development Concepts to the City of Stockton

Do the policies of Stockton’s Downtown redevelopment A. Yes No reflect the concepts of: A.1 The New Economy: A Recognition and Application of a Technology Infused Economy (understanding market shifts/trends) X

Within the context of the New Economy, do the policies of B. Yes No Stockton’s Downtown redevelopment utilize the concepts of:

B.1 The Urban Core (utilizing the built environment, high density living, urban amenities) X B.2 The New Urbanites - Immigrants (utilizing "recent" arrivals, those attracted to urban living) X B.3 The New Urbanites - Childless People (utilizing those with geographic attraction to the urban core singles, gays, empty-nesters, aging baby-boomers) X

Within the context of the New Economy, do the policies of C. Yes No Stockton’s Downtown redevelopment utilize the concepts of: C.1 The Value of the Creative Class (understanding the value of the Creative Class and their role in the economy) X C.2 Attracting the Creative Class (utilizing policies in an effort to develop a "Quality of Place" attractive to the Creative Class) X C.3 Measuring Successful Communities (using indexes and/or other research tools) X

Within the context of the New Economy, do the policies of D. Yes No Stockton’s Downtown redevelopment utilize the concepts of: D.1 Demand-Side Approach (utilizing traditional economic development policies in unique and targeted ways). X D.2 Market Shifts and Trends (understanding influences in business decisions) X D.3 Acting as an Entrepreneur (undertaking venture capitalist activities) X D.4 Anticipating & Creating Markets (targeting specific industries operating in the new economy) X

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5.A. The New Economy

Table 5.2 Stockton in the New Economy

Do the policies of Stockton’s Downtown redevelopment A. Yes No reflect the concepts of:

A.1 The New Economy: A Recognition and Application of a Technology Infused Economy (understanding market shifts/trends) X

The first analysis involves a discussion of the concepts regarding the New Economy

and Stockton’s ability to recognize these factors as well as their ability to implement them in

their downtown economic development policies. Based on a review of the material put forth

by the City and the projects undertaken, Stockton officials appear to understand that shifts in

the economy are taking place and that they hope to achieve economic success through a

renewed interest in downtown. Unfortunately, these same documents and project indicate that

there is little understanding beyond the simple existence of these shifts that would allow the

City to capitalize on the economic structure of the new economy. Therefore the answer to

question A.1 is that the policies of Stockton’s Downtown redevelopment do not reflect the

concepts of the New Economy.

Examples of the characteristics of the New Economy, for which Stockton’s

Downtown was compared against, include the following:

* Incubators for high technology

* High-tech connectivity in the downtown built environment

* Joint ventures, partnerships, and collaborations (such as with universities)

* Offering Research and Design (R&D) tax credits

* Supporting internet access at public facilities

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* Encouraging “clusters” of like businesses

* Lobbying for downtown (politically and within the business community)

* The undertaking high-tech ventures

* Investing in early education, especially in math, science and technology fields

In addition to the sampling of characteristics of the New Economy as listed above, another way to examine how a case study community views its economic development approaches is the reflection of the old versus new understanding of the economy. Table 5.3 is an example of how to examine a community’s approach to economic development and whether or not the community is recognizing and applying the new economy concepts to development policies.

Table 5.3 Understandings about Economic Development in the Old and New Economies

In the old economy, the understanding was: In the new economy, the understanding is:

Being a cheap place to business was the key. Being a place rich in ideas and talent is the key.

Attracting companies was the key. Attracting educated people is a key.

A high-quality physical environment was a luxury stood Physical and cultural amenities are key to attracting in the way of attracting cost-conscious businesses. knowledge workers.

Regions won because they held a fixed competitive Regions prosper if organizations and individuals have advantage in some resource or skill. the ability to learn and adapt.

Economic development was government-led. Only bold partnerships among business, government, and nonprofit sector can bring about change.

Source: Richard Shatten and Paul Gottlieb, "Aha! Knowledge Economy," Innovation for Regional Advantage, vol. 2 (2000): pp. 4-7.

The implications of Stockton’s peripheral understanding of the new economy and its characteristics can be seen in the City’s inability to implement policies that take advantage of the shifts in the new economy. This can be seen in the City’s attempts to capture businesses

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that are moving eastward due to the high cost – both monetarily and the impacts on workers – of doing business in the Bay Area. These attempts have often used supply-side tactics and have been targeted in areas outside of Stockton’s downtown. Examples of the types of the limited economic development policies undertaken by the City include:

- Billboard advertisements in the Bay Area stating the lower cost of buildings in

Stockton (in areas outside of downtown).

- Advertisements in Bay Area media outlets explaining the incentives

(traditional supply-side incentives) of doing business in Stockton and San

Joaquin County.

- An economic development focus relying heavily on manufacturing,

warehouses and other labor intensive industries that will not have long-lasting

viability in the global economy.

- A focus on revitalizing downtown in an attempt to attract Stockton families to

downtown instead of using economic development policies to make downtown

attractive to individuals who will operate in the new economy.

So while city officials are attempting to capture a share of the businesses that are heading towards Stockton, they have not been able to capitalize on ways to make the City and its downtown more attractive to the businesses that will be operating in the new economy.

This includes a lack of understanding regarding the importance of quality of life that will attract businesses and workers in the new economy.

In addition to city officials, other actors involved in Stockton’s Downtown appear have a similar lack of recognition of and approach to the new economy. While individual

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agencies such as the Downtown Stockton Alliance and the San Joaquin Partnership have, at

times, been involved with conferences or held meetings to address ways to attract the

businesses moving east, there has not been a focus on the factors that make communities

attractive to business. Again, these actors have shown to be operating in a traditional

framework for economic development that relies primarily on business attraction in the

manufacturing sector. This is in response to a focus on one set of attributes such as the

reliance on manufacturing or heavy industry for areas workers and not understanding that

other attributes such as an urban core, diversity, and proximity to world-class areas would

allow the City to be competitive in the new economy.

5.B. GEOGRAPHY

Table 5.4 Stockton’s Geographic Amenities

Within the context of the New Economy, do the policies of B. Yes No Stockton’s Downtown redevelopment utilize the concepts of:

The next discussion is that of the geographic fabric that Stockton has to work with

within the parameters of the new economy. In examining the inventory of the Stockton’s

downtown resources and the utilization of these resources there appears to be potential that is

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currently underutilized. This section will analyze the characteristics of Stockton’s downtown that can be harnessed by the City when seeking to compete in the digital economy.

The urban core is the first attribute identified by Joel Kotkin as an advantage for communities hoping to operate in the information economy. It is important to remember that such an advantage is not simply the existence of the urban core itself as an attractor to businesses, but rather that the urban core is what is attractive to the people working in the new economy. This distinction made by Kotkin continues with the second and third attribute of successful economic development policies: the importance of New Urbanites as the engines of technology infused businesses.

Currently Stockton possesses valuable resources in its historic urban core, built environment, proximity to the deep-water channel and the deltas, city and county government offices, and the variety of ethnic communities that are a part of the area. Reports such as the

Waterfront Plan and Downtown Stockton Strategic Action Plan and that done by the Urban

Land Institute outline many of the same resources discussed above but they do so without mention of how to utilize these resources within the context of the new economy. While the existence of the urban core and its resources is apparent, the utilization of these resources has been left to the City’s Redevelopment Division (Department of Housing and Redevelopment) and what they have termed “revitalization”. This revitalization has been limited to a project- based approach in which the City finances the construction of a movie theater, sports complex, multi-modal transportation center, essential services building, and the like. While

Stockton possesses these advantages in its urban core, the City has not been able to successfully utilize these resources in making the area attractive to the people who could drive economic development in the area. These projects do have value for the downtown area but

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they are operating in exclusion of a broader understanding of how to best leverage city funds within the urban core and result in score of “no” when asked whether or not the urban core is utilized in the context of the new economy [B.1].

As touched on earlier, a significant part of what is missing in the successful utilization of the urban core is the knowledge of who is attracted to the urban core. Kotkin’s second and third attributes of successful economic development policies focus on the people who are most often attracted to city living. These New Urbanites are often made up of immigrants

(usually recent arrivals) and childless people (Such as singles, gays, empty-nesters, and aging baby-boomers).

Similar to its strength in having an urban core, Stockton also contains a rich a varied ethnic makeup. The downtown central core is strongly represented by Asian and Pacific

Islanders (32%) and Hispanics (35%). Many of these individuals are recent immigrants and have been attracted to Stockton’s downtown due to its long established cultural communities.

The past 30 years has seen growing numbers of Southeast Asians (Lao, Hmong, Cambodian, and Vietnamese) as well as the long standing Filipino and Hispanic communities continue to build upon the cultural strengths of downtown. In addition to the ethnic communities mentioned in the central core, Stockton has an abundant mix of diversity in and around its downtown. This includes Japanese, Italians, Greeks, Chinese, Sikhs, Germans, and

Portuguese as well as Native Americans and African Americans.

With such rich ethnic communities from which to pull it is regrettable that such diversity is not utilized to achieve economic development gains. While recent efforts by local leaders in the Filipino community have resulted in part of downtown being designated as a federally recognized Historic Neighborhood (Historic Little Manila), the projects and

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activities by city officials have not utilized the cultural diversity of the area for economic gain. In fact, controversial past economic development practices have included bi-secting the historic Chinese community with the Crosstown Freeway and current “redevelopment” of the

Gleason Park area (just south of the Crosstown Freeway) by accepting proposals from large developers that includes demolition of the historic cultural buildings in the area. Again, while this attribute exists within Stockton, city officials have not recognized the importance that such a resource can have in developing the downtown nor have they integrated the ethnic diversity of the urban core into its downtown economic development policies. This is especially true when examined in light of the new economy, and therefore there is not the utilization of the immigrant new urbanite in Stockton’s downtown redevelopment [B.2].

The third category described by Kotkin in his criteria for successful economic development is that of childless new urbanites. As Kotkin states, “cities are unlikely ever again to become a new geographic center for middle-class families”86 and instead will be replaced with those who are attracted to the urban core for its features of city living. For

Stockton, the existence and utilization of this group of people is mixed. While Stockton possesses internal demographics and external demographic-shifts similar to other communities for the childless group, it faces two challenges resulting in the City not fully utilizing this community for economic gains.

First, the internal group of Stockton’s childless population has not been a focus for city officials in their downtown redevelopment. Rather the City is focused on attracting families and businesses that are appealing to families with such projects as the movie theater complex, recreational activities at Weber Point, and the Sports Complex. Because of

86 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 57.

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Stockton’s urban qualities and historically rough reputation, the City has found families

reluctant to venture downtown while those that would be interested in urban qualities can not

find the entertainment, activities, or leisure pursuits that appeal to them. Second, because

Stockton lacks an understanding of how the childless population can revitalize an urban core,

and hence the economic revitalization in the area, the City is missing an opportunity to

capture a share of the large numbers of the childless population moving towards Stockton. As

a result of the childless population not being targeted by Stockton in its downtown

redevelopment strategy, the City is missing the opportunity to capture this group and leverage

them for economic development in a specific area. Based on an examination of the

documents and projects involved in downtown economic development, the lack of policies

that would create a climate favorable to the Childless group of people results in a score of not-

utilized in B.3.

5.C. CREATIVE CLASS

Table 5.5 Stockton and the Creative Class

In the analysis of the concepts for successful economic development put forth by

Richard Florida, there are some similar themes to those of Joel Kotkin but with a different

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approach. As described earlier, Kotkin identifies what he has found to be the attributes of communities that have successfully achieved economic gains in the new economy (such as a vibrant urban core, the existence of New Urbanites, and a focus on “quality of life”). While

Florida is in agreement with Kotkin on such attributes, Florida takes this argument a step further by asking why such attributes exist. It is through an understanding of why such attributes exist that a community can develop how to target its policies for the greatest economic gain. Even as Florida works off similar attributes presented by Kotkin he is able to provide a breakdown of the components that define such attributes. This section will examine

Stockton’s success in recognizing and implementing the components of Florida’s economic development concepts within the context of the new economy.

Florida’s first attribute of successful economic development concepts is the understanding by government officials of the Creative Class and its role in the economy. In examining the documents, projects and even actors related to Downtown Stockton there does not appear to be a recognition of the Creative Class, or any other similarly recognized group.

As mentioned previously, many of the activities undertaken in the downtown area are geared towards attracting either families and/or businesses with activities such as the movie theater, a shopping center around the theater, the sports complex, and events at Weber’s Point. These activities are categorized by Stockton as economic development for downtown. What has been missing in the approach to economic development in downtown is the ability to recognize the existence of the Creative Class and how this group is an indication of economic success for communities operating in the new economy. As a result of not understanding the importance of such a group the City has not been able to implement policies that incorporate the Creative Class nor is there an indication that their current projects will lead to the type of

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environment that could indirectly incorporate the Creative Class [a “no” answer to C.1] If

Stockton were to recognize this group and their value within the economy, government officials would then be able to gear their economic development policies towards Florida’s second attribute for successful policies, that of attracting the Creative Class.

Because of the lack of recognition by Stockton of the Creative Class, downtown redevelopment has also been unable to recognize the value of attracting this group by targeting their revitalization polices through the development of a “Quality of Place”. This has resulted in a score of not utilized in C.2. The Quality of Place described by Florida includes (1) the combination of built environment and natural environment (Stockton possesses much of this but is not using it within the context of the new economy), (2) the diverse kinds of people and lifestyle that allows anyone to find a place in the community

(some of which Stockton possesses and, again, is underutilized in the context of the new economy), and (3) the vibrancy of street life, café culture, arts, music, and outdoor activities

(very little in Stockton’s downtown and not a focus in the city’s development approach). It is especially in this third category of Quality of Place where Stockton has been misguided in its revitalization efforts. While many of the previously mentioned projects being undertaken by the City do add value to the urban core they do not go far enough in creating the vibrancy of life that is most attractive to the Creative Class. Instead, while some of the development in downtown is improving the Quality of Place in the area, the majority of Downtown’s assets and ability to attract to the Creative Class are being underutilized. As a result, the City may see some economic gain in the service industry with their revitalization projects but they will likely miss the opportunity to achieve more sustainable and higher economic gains offered in the new economy. The City’s attempt to create a quality of place without a clear

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understanding of who that quality of place should be targeted gives results in the inability to fully capitalize on the opportunities made available through the new economy.

The final economic development characteristic described by Florida is that of the ability of a city to measure their strengths and weaknesses in areas that lead to economically successful communities. This category is a means through which a community can gain the knowledge necessary to make informed and targeted policy decisions to increase their chances to achieve economic success. Ideally a community would use such guides to (a) understand their strengths and weaknesses and (2) to target policies towards leveraging their strengths and improving their weaknesses. While Stockton can’t be expected to use the indexes recently developed by Florida, the City has shown the ability create specifically targeted committees (resulting in the Downtown Strategic Action Plan and the Waterfront

Plan) and bring in outside consultants (the Urban Land Institute) to provide direction in revitalizing downtown. The difficulty arises when examining the recommendations of these reports as well as the City’s implementation of such recommendations. Both the Downtown

Strategic Action Plan and the Waterfront Plan’s recommendations lack the specifics necessary to operate in the changing economic climate, and while the Urban Land Institute’s recommendations provide better direction in the revitalization of downtown, only the project based recommendations appear to have been implemented by Stockton officials. Therefore while the analysis of Stockton’s ability to use measurement concepts in its economic development policies such as the Urban Land Institute’s work appears to be limited in its application, the City has proven that it is willing to invest in such measurement tools. This results in a score of “yes” in its utilization of measurement tools [C.3]. Though it is worth noting that this is a weak “yes” rating because, while such measurement tools have been

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undertaken by the City and other actors, the results of the measurement tools do not appear to be applied to the downtown redevelopment.

Ultimately, the examination of Stockton’s documents, projects and even actors leads to the conclusion that they have not recognized the significant role of the Creative Class within the economy and as such have not incorporated policies to attract this group into their economic development plans for the Downtown area. Instead much of the focus has been on attracting businesses in the service and industrial sectors using traditional incentives such as tax breaks, enterprise zones and business improvement districts, and attracting families with projects such as a multi-screen movie theater, shopping, a sports complex, and signature events. The approach of attracting the people who drive the businesses that fuel the economy is a new and cutting edge approach to economic development. Where cities have traditionally focused their economic development policies on attracting businesses, what Florida and

Kotkin have shown is the necessity to shift the focus to policies that create a “Quality of

Place/Life” that is attractive to the people who operate in the new economy. This shift from traditional economic development policies that directly target businesses to “indirect” policies that create environments in which businesses and their workers seek to operate is an unusual approach for most government officials but one that has proven to be successful in communities throughout the United States. This idea of shifting the way economic development policies are used is an approach in which the state (the public sector) acts in an entrepreneurial manner. Stockton’s ability to recognize and implement policies in an entrepreneurial way is discussed in the next section.

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5.D. ENTREPRENEURIAL STATE

Table 5.6 Stockton as Entrepreneur

The final analysis of the framework presented for successful economic development

policies involves examining Stockton’s ability to operate in an entrepreneurial manner using

the approach presented by Peter Eisinger. While the previous analysis has involved

Stockton’s understanding of the impacts of the new economy, its ability to utilize the

geographical characteristics of communities successfully operating in the new economy, and

its implementation of policies to attract the people driving growth in the new economy, this

section turns its attention to the means through which such policies can be developed. An

examination of Stockton’s ability to understand and implement non-traditional approaches to

economic development shows little evidence of such undertakings.

Based on the current revitalization policies being undertaken in downtown it is clear

that Stockton has relied heavily on traditional approaches to economic development. This has

taken two predominate forms: (1) that of supply-side policies aimed at lowering the cost of

doing business in downtown and (2) project based policies that aim to attract existing

populations to downtown through events and service oriented businesses. The documents,

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literature and revitalization approach used by the City does not make mention of what would be considered demand-side approaches to economic development nor does it show any indication of implementing such policies. Had Stockton used traditional supply-side policies in unique and targeted ways (such as tax breaks for the conversion of building stock into lofts that would be attract living quarters for the childless population) it would be an indication that they understood and could act in an entrepreneurial way. But an analysis of the current situation indicates that the City has not recognized the value of such an approach and has not undertaken polices in such a way. Therefore they rate a “no” in terms of utilizing traditional economic development policies in unique and targeted ways [D.1].

Eisinger’s second economic development concept is that of a state’s understanding of the shifts and trends occurring in the market and the impact that such shifts can have on a community. Although there is not evidence that city officials recognize the demand-side approach to economic development, there is some evidence that they are aware, at some level, of the market shifts and trends occurring in the economy. The activities of the San Joaquin

Partnership and the Downtown Stockton Alliance, the enticements by the City for Bay Area businesses to relocate in Stockton, and the discussions of individual council members indicates that the actors involved in the downtown are aware of shifts in the economy. While there is some hint of the market shifts in Stockton’s economic development policies, the evidence indicates that it is not understood in the context of a demand-side approach and the new economy. Therefore, this second category must be rated as a “no” in terms of its understanding of the influences of business decisions in the new economy [D.2].

Unfortunately, while there is some indication that Stockton actors recognize the market shifts occurring in the new economy, they have not been able to implement entrepreneurial policies

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that would put the city in a competitive position to capture a share of the people and businesses interested in re-locating. Currently there are few signs that the City is attempting to leverage its urban core, diversity, locational amenities, or built environment to respond to the market shifts and trends occurring regionally and within the global economy. Category

D.2’s rating reflects the City’s lack of ability to specifically target policies that take into consideration the shifts and trends in the new economy market.

The third approach to successful economic development suggested by Eisinger is that of the public sector acting as an entrepreneur in ways such as a venture capitalist. In other words, does Stockton have policies that use public resources in a way to “jump-start” non- traditional areas of the economy until they can be taken over by the private sector? An example would be the underwriting of an alternative music scene (appealing to the people working within the digital economy) that, once established, could then be turned over to a private organization to run. Such a concept does not appear in the literature, documents, or activities of those involved in downtown Stockton, yet there is an indication that the City is willing to use public resources in its revitalization effort such as financing much of the development along the waterfront, revitalizing the Hotel Stockton, and buying land for the

Sports Complex trough eminent domain. As a result of these activities, the analysis of

Stockton’s ability to act as an entrepreneur is a “yes” in its rating [D.3]. As before when a rating of “yes” was achieved, this is a weak rating in that, while examples of entrepreneurial activity exists, it is not clear that these endeavors will capitalize on the opportunities for entrepreneurial development in the new economy. It is hoped that the city government will continue to target the use of such public funds in a way to best leverage its urban resources, particularly in light of who would best stimulate the economy in Downtown.

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The final economic development concept of the entrepreneurial approach is for government officials to anticipate and create markets in specifics areas that would stimulate further economic growth. Based on an examination of Stockton’s Downtown revitalization, evidence does not indicate that there is a recognition of the importance of anticipating and creating markets as a means to achieve economic success. Because Stockton has not been able to understand how to harness the elements of the new economy (i.e. a focus on the qualities of the people and places that drive economic growth in areas such as the urban core) they have not been able to respond to the opportunities available in such an environment. In other words, Stockton has not been able to act in an entrepreneurial way of anticipating the opportunities available for economic growth in the digital age nor have they been able to respond by creating new markets that would give the City a competitive economic advantage

[D.4]. Stockton’s continued reliance on service sector businesses and symbolic projects indicates that government officials have not anticipated what the downtown area could offer within the new economy nor have they realized the opportunity of creating markets by targeting those industries that will be operating in a technology infused economy. As such

Stockton finds itself possessing a great deal of potential, with the influence of the new economy bearing down on them, but not able to successfully harness the opportunities for economic development through the use of entrepreneurial approaches and activities.

5.E. Conclusion

This analysis in this chapter was centered on the application of the literature-based framework to the data regarding Stockton and its actions surrounding downtown revitalization. This thesis inventories Stockton’s downtown assets and examines the

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documents and projects, and actors when applicable, which relate to the activities of City officials and uses this information in the analysis of the economic development framework.

The results of the analysis as described in Table 5.1 and throughout this chapter are restricted to the application of the framework to the City of Stockton only. While the framework itself can be used by other planners and government officials in assessing the characteristics of successful economic development approaches, the results in this section speak specifically to

Stockton’s economic development approach to downtown revitalization.

Again, it is worth noting that the usefulness of this chapter’s analysis is in its ability to apply a literature based framework to the current and on-going downtown revitalization activities of a case study community – that of Stockton, California. In the application of the framework to the case study community, the majority of analysis was taken from the review of the documents and projects that reflect the position of Stockton’s downtown redevelopment. The actors were included in the analysis only when the general approach to downtown economic development could be deciphered or when it was applicable to do so.

Because a survey instrument was not included in this thesis, it was not possible to gain a full understanding of each actors’ position in regards to the elements of the literature-based framework for economic development.

The analysis undertaken in this chapter provides a starting point for the review of economic development approaches to the revitalization of an urban core. In order to more fully reflect the potential of a community to leverage its urban core for success in economic development policies, it would be necessary to conduct a wide spectrum of interviews of the actors involved in downtown redevelopment as a means to reduce the inherent interpretive nature of this type of analysis. By incorporating a more extensive depth of data surrounding

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the factors influencing Stockton’s downtown revitalization, this analysis could then have an additional level of accuracy in its recommendations for future economic development approaches.

In moving forward based on the elements of the framework for successful economic development concepts presented in this thesis and the analysis of Stockton’s downtown redevelopment, the final chapter provides recommendations for Stockton’s approach to downtown revitalization. These recommendations are based on the strengths of existing resources and policies as well as the areas that need to be recognized, utilized and implemented in the City’s efforts to achieve its economic potential in the new economy.

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Chapter 6 – Recommendations and Conclusions

“Every city in America has some special resources that it’s not using. If cities were using these resources, they could achieve a potential not now being realized.”87

Stockton’s approach to economic development in Downtown has been presented in earlier chapters as both a reliance on the simple existence of traditional economic incentives

(also known as supply-side policies) such as tax breaks, enterprise zones, and loan programs, as well as recent project-based entrepreneurial activity in the form of “signature projects”.

The critique of the Stockton’s economic development approach to Downtown lies predominately with its recent project-based approach to, what it believes will foster

“revitalization” and economic vitality for Downtown as well as the exclusion of other types of policies. Again, this is not to say that this type of activity isn’t important, but rather to stress the need for the City to move beyond this approach and into a true entrepreneurial role that will allow Stockton to capitalize on the economic and demographic forces in the region.

In order to assist Stockton in undertaking strategic entrepreneurial policies, this section provides suggestions and recommendations for alternative approaches to downtown revitalization. This includes a critique of the City’s current downtown economic development policies, considerations in restructuring Stockton’s downtown policies, and the means through which a quality of place can be developed based on Stockton’s existing resources. The goal for this section is to provide a glimpse into the types of undertakings and activities that must be built upon by city officials if Stockton is to achieve economic success in its downtown.

87 Rouse, James. “Festival Marketplaces: Bringing New Life to the Center City,” Economic Development Commentary 8. Summer, 1984, page 6.

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6.A. A Critique of Stockton’s Downtown Economic Development Policies

To understand Stockton’s approach to economic development and its limitations, a closer look at the City’s economic development methodology must be made. As Joel Kotkin argues in The New Geography: How the Digital Revolution is Reshaping the American

Landscape, “To thrive in the new era of ever widening locational choice, communities must look in to those factors – including those relating to lifestyle and cultural choices – that appeal to a broad range of entrepreneurial companies. Rather than focusing obsessively on large firms or symbolic projects like stadiums, tourist destinations, movie complexes, or simply seeking to cut taxes and provide financial incentives to favored large firms, communities need to emphasize those things that lead individuals and companies to remain in a particular place of their own accord.”88 For Stockton, the exclusive support of activities aimed at stimulating economic development in the Downtown has been just what Kotkin warns against. The City of Stockton has taken the position that “economic development” can be achieved if they undertake symbolic projects or build key amenities that seem to have worked in other communities.

A significant fatal flaw in Stockton’s current view in revitalizing Downtown solely through projects is the idea that “If they (“the City”), build it (“a revitalize Downtown”), they

(“the people and hence the economic stimulation”) will come.” The City is currently under the impression that it can make Downtown a destination point for Stocktonians and that all that is needed is to offer a couple improvement projects such as a movie theater, an events center, a new parking garage, etc. and Stocktonians will flock to downtown. The city also

88 Koktin, Joel, 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 24-25.

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assumes that once these improvement projects are in place and the people flock to them, businesses and services will see the need to serve people, invest in downtown, and hence economic development will occur.

As mentioned in the previous chapters, Stockton has been developing and encouraging many different internally focused revitalization projects, but it is clear that the City has not tapped into the resources of external markets. As a result, important components of the economic development activity available to Stockton – evidence of an understanding of and response to new markets, new capital and the flexibility in entrepreneurial activity – is absent form the City’s policies. Once again, this is not to say that the activities undertaken by the

City of Stockton are not important and will play a key role in the overall sense of place for the downtown. Instead, it is to encourage the city to take its commitment to revitalizing

Downtown to the next, and vital, level by placing itself in the context of the global economy and understanding the demographic shifts impacting Stockton. The City of Stockton has to realize that the activities it undertakes today are not only shaping the type of city it will be in the next 20 years, but, more importantly, what role it will play in the new technology driven economy.

Ultimately, in order for Stockton to more fully achieve its true potential, the City will need to move beyond “cookie-cutter” revitalization projects and set a defined goal of how it sees economic development taking place in terms of solid goals and objectives and based upon the demographic and economic realities discussed in this paper. The City should also realize that what it needs to spur economic development will likely come from external attraction to the Downtown and not solely from internal attraction to the urban core. As a result, the utilization of policies aimed at creating a sense of “place” will be vital for

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economic development success in Downtown. Basically the City of Stockton has only scratched the surface in what it can accomplish in terms of economic development policies.

This thesis has examined the projects, reports, documents, and activities of those involved in

Downtown’s economic development and it is clear that the City has not realized Downtown’s potential for true economic development and instead is focusing on revitalization without understanding where they’re going with such a policy. Therefore, a key link to revitalizing

Downtown must be seen in terms of engaging in economic development policies that create a sense of “place” and attract the “people” who will play a role in e-commerce and technology driven industries. These policies in turn have the potential to spur economic development within Stockton’s downtown.

6.B. Considerations in Restructuring Stockton’s Downtown Economic Development Approach

So where do the previous arguments place Stockton’s planners, elected officials, economic development specialists, and the community in terms of playing an entrepreneurial role in economic development in Downtown? Based on the characteristics of Downtown, the city, and the region, as well as the trends in the new economy and changing demographics,

Stockton is in a position for revitalization of the urban core that will result in economic vitality if it is done in a planned and well coordinated manner. This section presents a brief outline of the actions that can be undertaken by Stockton officials in an effort to (1) leverage the resources of the Downtown in light of powerful economic and demographic influences, and (2) create a strategic plan for policies in Downtown that focus on developing a quality of place that is attractive to the people who will be driving economic success in the digital age.

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Such actions will require the City to move beyond relying solely on traditional supply-side development policies and into demand-side entrepreneurial activities. This can be accomplished in three major phases: research, planning and implantation.

6.B.(1) Research

One of the most important steps the City of Stockton can take in restructuring its economic development policies is in the preparation and research of the very issues that have been presented in this paper as well as any other issues impacting the region, community and

Downtown. The evidence indicates that Stockton’s approach to economic development has been, up until this point, to undertake a redevelopment strategy without a formalized plan or end goal other than “revitalization”. Stockton is clearly operating with policies that do not incorporate the importance of people and place in the new economy that will ultimately play a role in the City’s success or failure in Downtown. In order to counterbalance this approach,

Stockton needs to re-evaluate its Downtown revitalization efforts in terms of a research base.

Once such an effort has been undertaken, it will be clear to elected officials and City staff that a new approach will need to be incorporated within the economic development strategies for

Downtown.

Areas for Stockton to research include data such as economic and demographic trends in the region, state, and globally, as well as taking an inventory of the City’s economic strengths and how they translate into potential e-commerce/technology-base activity. As The

Economics of Amenity states “The cities that succeed will be those that realistically assess the opportunities open to them and make the best possible use of available resources.”89 For

89 McNulty, Robert, Dorothy R. Jacobson and R. Leo Penne. 1995. The Economics of Amenity: A Policy Guide to Urban Economic Development. Washington D.C.: Partners for Livable Places, page 15.

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Stockton, this translates into inventorying its own resources within the context of leveraging such assets to best take advantage of the changes and trends that factor into a community’s economic success. As Peter Eisinger states, “A combination of opportunity and necessity has been critical for the successful entrepreneurial state.”90 If Stockton is to become a successful entrepreneur, then it must be aware of the opportunities bearing down on the City so that it can be in a position to capitalize on those prospects.

Based on the criteria put forth in this paper, research by the City would include an inventory of Stockton’s downtown strengths, weaknesses and areas that need improvement which have been initially identified as the following.

Strengths:

1. Existing urban core.

2. Existing ethnic diversity (cultural communities).

3. Some understanding of the demographic shifts occurring in the region (and possibly

some understanding of the economic shifts).

Weaknesses:

1. Lack of understanding of (a) how the new economy will impact the city, (b) the role of

the Creative Class in the new economy, (c) the importance of a quality of place for the

people who spur economic development, and (4) the use of economic development

policies in an entrepreneurial manner. This has resulted in Stockton’s lack of focus to

create the types of characteristics that will most likely lead to economic success – such

as a vibrant music scene, night life, cultural offerings, and arts.

90 Eisinger, Peter. 1988. The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. Madison, WI: The University of Wisconsin Press, page 235.

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2. Reliance almost solely on symbolic projects such as a sports events center, multi-

screen movie theaters, the Stockton Hotel, transportation center, etc. at the exclusion

of others types of uses for public funds.

3. Misdirection its downtown revitalization by focusing almost solely on attracting

families to downtown (particularly Stockton families) and not understanding the

demographics that are most attracted to urban cores.

Areas to Improve:

1. An understanding of the new economy and how the digital age can impact and

influence Stockton’s economic success.

2. An understanding of the role people and locational choice has become in the new

economy.

3. An understanding that, due to the increased placelessness of work, people are attracted

to the qualities of place in one community over another.

4. Ability to leverage the downtown’s existing resources in an effort to capture the

market shifts as they relate to economic success in urban areas.

5. The creation of a plan for all the elements in a quality of place that can attract the

childless populations that will be most attracted to the urban core.

Stockton’s downtown strengths represent a solid base with which to structure future economic development policies. In terms of research based on the criteria put forth in this paper, an inventory of Stockton’s resources shows that it has an urban core with an abundance of historic buildings, neighborhoods, proximity to the deep water channel, and easy access to the rest of the city. An additional resource for downtown and the city is its rich ethnic

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communities. As Kotkin and Florida have shown in their research, both of these factors play a significant role in defining the characteristics of a community that can succeed in the changing economic environment. As the analysis section has shown, Stockton appears to have an understanding of the demographics shifts and some understanding of the economic shifts occurring in the region, but what the City has not shown is an understanding of how these shifts will impact the community and how the community can harness such changes for its economic gain. Therefore this area is listed as both a strength as well as a weakness which leads to it being an area in need of improvement.

In terms of the weaknesses that this thesis’s research has initially shown, one of the most encompassing is Stockton’s lack of understanding of key factors that have proven to identify a downtown’s economic vitality. These factors include the challenges and opportunities of the new economy, the importance of the Creative Class in the new economy, the role of place in determining communities’ economic competitiveness, and the entrepreneurial means through which such activities can be undertaken. In order for Stockton to leverage its strengths it must have a better understanding of such issues as a means to direct its economic development policies. Currently, not only does it appear that Stockton is operating without a solid base of research that would justify its economic development approach in downtown, but it is lacking an understanding of some of the vitally important factors that should be shaping its policies for downtown. The lack of knowledge of these issues is evident when looking at the types of downtown development – project based – and focus of development – families – being undertaken by the City.

Research has shown that a reliance on the project based approach to economic development has proven to be a downfall for many a community hoping for a revitalized

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downtown. “Attempts to revive cities around such things as casinos, football stadiums, and arenas at best create a kind of Potemkin City that provides a patina of prosperity against a backdrop of persistent and perhaps irreversible decline.” 91 Joel Kotkin goes on to describe these projects as symbolic centers and uses the example of Cleveland’s downtown that

“boasts an impressive array of symbolic centers – the heavily subsidized Gateway project, which includes Jacobs Field and Gundy Arena (home of the NBA’s Cavaliers), the Rock and

Roll Hall of Fames, and several retail-oriented developments – but the results for most

Clevelanders have been negligible. The city’s overall share of regional employment and income has continued to decline, while its portion of households below the poverty line has increased.” 92

In other words, research indicates that an almost exclusive reliance on the type of project based approach being undertaken in Stockton’s downtown will not bring the economic prosperity hoped for by government officials. In addition, not only does Stockton run the risk of spending a large amount of public funds on misguided projects, but more significantly, the

City will have missed the opportunity to direct development to a more sustained type of economic gain. This type of weakness in Stockton economic development approach can also be seen in its efforts to focus on families as the principle stimulant for downtown revitalization. Similar to the issue of a project based approach, a focus on attracting families to downtown is an indication that the City has not done research into the demographics and characteristics that can be leveraged in an urban downtown environment. For Stockton to be successful in its downtown revitalization, it must understand the existing data regarding

91 Kotkin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 63. 92 Ibid, page 63.

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downtown economic development and incorporate those findings into a plan for its future development policies.

6.B.(2) Planning

After both researching and understanding the factors that will influence the direction of the City’s economic future, Stockton will be in a position to identify the niches that can be capitalized upon and plan accordingly. By recognizing the types of niches most attractive to the people (such as the Creative Class) and those that establish a sense of place, the City can begin to identify the quality of life that best suits the Downtown and its economic development goals. By establishing at least an initial research-based niche to work within,

Stockton can focus its economic development policies to maximize its investments. The early identification of where and how Stockton can best take advantage of the opportunities facing the City, will allow those making decisions to plan for and create policies that would support such actions. This planning process connects the results of research with the opportunities made clear in understanding the results of the research.

A key starting point for the planning process would be with a vision based on the knowledge gained from research. The visioning process would determine what type of downtown is envisioned by the City, taking into consideration the research based factors indicating economically successful communities. A visioning process would allow Stockton to apply this information in creating a road map for the City to follow for maximizing future economic development policies. As Robert McNulty states, “Economic development is not magic. The unifying force in a successful local development strategy is a shared vision of a better future for the community. Identify an achievable future that builds on local strengths

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and responds to community liabilities. Use this vision to build consensus for public and private action.”93

By creating a targeted planning process to determine how the City can capitalize on the opportunities it faces with the resources at its disposal will give Stockton a tangible “goal” of what it wants to accomplish in terms of economic development. Based on an examination of the documents, projects and actors involved in downtown revitalization, this is a goal that currently appears to be lacking in the City. In looking at the future of cities and their potential economic viability, the Partners for Livable Places found, “Cities with strong, distinctive identities are more likely than other to negotiate a successful economic transition in the coming years.”94 This is why it is so important that Stockton identify the strongest and most distinctive features of downtown and to whom it wants to targets these features, and utilize these strengths within the planning process to attract the people and create the places operating in the new economy. Ultimately, a research-based visioning and planning process will put Stockton in a position to focus its economic development energies in areas that will have the greatest impact, allowing the City to anticipate and utilize its resources in a strategic fashion.

6.B.(3) Implementation

Once a data-supported, vision-determined plan is in place, Stockton officials would be in a position to implement those activities that will likely reap the greatest economic gains for the downtown area. This will require the application of the previous processes into targeted areas that will give Stockton the competitive advantage over other communities in the County

93 Ibid, page 16. 94 Ibid, page 141.

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and the region. In order to achieve this, Stockton will need to have confidence that it can build its downtown into an economically competitive area based on the research, understanding and market niche identification it has made. The City will also need to utilize the entrepreneurial approach to economic development as discussed by Peter Eisinger. Many of the qualities of place and locational characteristics identified by Kotkin and Florida in economically successful downtowns can be achieved through local governments acting in an entrepreneurial manner. This would require Stockton officials to utilize non-traditional approaches to development policies in areas not typically associated with public economic development.

For Stockton, this would mean a shift from viewing activities and projects as separate from economic development policies. Currently, the City supports projects as a means to engage in non-traditional economic development, but unfortunately Stockton has not yet shown to realize the value of utilizing policies in other entrepreneurial ways. If the City were to understand its target audience and have a plan for reaching its goals, it could direct its policies in a demand-side entrepreneurial manner. An example would be instead of the simple existence of supply-side policies (such as tax breaks, investment loans, etc.), policies put forth by the city could direct development to specific areas (based on research) with specific intended results. A scenario might be the following:

- Based on its research, Stockton decides to capture some of the childless population to

live in downtown. The City goes a step further and decides to build upon its ethnic

diversity and designate residential areas with culturally and historically based themes.

- Next, the City changes zoning in the new residential area to be mixed use – residential

and commercial – in order to accommodate a live/work environment.

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- The City then offers tax breaks and incentive loans for developers to rehab the

designated building stock in the new residentially designated area. The City also

offers incentives for businesses to locate in the lower part of the residential building

that will provide both needed services and work opportunities for the residential

population.

- Opportunities are made available and underwritten by the City to create outdoor

spaces or common-areas where the culturally based themes can flourish. This could

include sponsoring events/activities, providing loans to new start-up companies,

investing in an arts and music scene, developing walking paths and urban green

spaces, and ensuring an adequate supply of safe night-life opportunities.

- This leads to a marketing campaign to draw the childless and other populations that

would be interested in living/working in the cultivated by the City. Having done

adequate research and strategically targeting public resources would likely result in a

vibrant urban residential area that would attract not only people to live and businesses

to operate but also other residents to participate in what can be considered a signature

“sense of place” within downtown.

As this example illustrates, the resources that public officials are currently using in activities such as symbolic projects could be utilized in new and unique ways in the City’s implementation of its research and planning. Instead of viewing economic development policies as those that simply rely on the existence of traditional supply-side approachesa,

Stockton must shift into a new way of operating in regards to its economic development policies for downtown. The biggest shift the City must undertake is in viewing the goal of its

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downtown economic development as creating a quality of place that will allow Stockton to flourish in the future. The creation of a Quality of Place/Quality of Life that is attractive to the people and businesses operating in the new economic will be one of the most critical factors in the City’s attempt to implement successful economic development policies.

6.C. Means to Developing a Quality of Place in Stockton’s Downtown

Having established some of the considerations that must be included in the City’s overall economic development approach, this section presents some of the means to developing a quality of place that has been proven to be important in any downtown revitalization. When creating policies for downtown economic development, it is vital to keep in mind the type of people that determine the quality of place to be developed. The key is to determine what it is about those places that the people find so attractive. Based on the research conducted by

Kotkin and Florida about the characteristics of urban areas that are attractive to people, three main areas have been identified for using economic development policies. In order to create a quality of place that can target the people attracted to a downtown environment, Stockton’s economic development policies should:

1. Leverage the existing urban core resources

2. Leverage the existing cultural resources

3. Foster the arts

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6.C.(1) Leverage the Urban Core

As research has shown, communities have the best possibility of achieving economic success in their downtowns when they target specific projects to the young, childless, empty- nesters, and gays that will be attracted to urban living and who will play an important role in the new economy. By understanding those that are most likely to become a part of the urban experience, Stockton will increase its likelihood of achieving economic success in

Downtown if it devises policies and projects that take into consideration the need to foster an

“urban community” and not just a “family friendly” place.

6.C.(2) Leverage Cultural Resources

One of Stockton’s strengths lies in its vast cultural diversity. As this thesis has examined, this diversity will continue to grow in the coming years with the increase in population expected in this area. Up until this point, the City of Stockton, has not shown an inclination to tap into its cultural diversity and as such is missing an incredible opportunity to leverage this resource for economic development. Creating policies that incorporate cultural elements into strategic economic development goals is a matter of focusing on cultural planning with an eye towards economic outcomes. As defined in The Economics of

Amenities, “cultural planning is an organized public and private effort to generate and coordinate artistic and cultural activities that enrich a community’s quality of life and increase the excitement and enjoyment available there. Ideally it involves integrating the arts, cultural facilities, and events with all aspects of community and economic development and with physical planning and design, tourism, and city promotion.”95

95 McNulty, Robert, Dorothy R. Jacobson and R. Leo Penne. 1995. The Economics of Amenity: A Policy Guide to Urban Economic Development. Washington D.C.: Partners for Livable Places, page 49.

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The use of cultural planning for achieving economic gain is of particular relevance to

Stockton as well as the rest of California. As a recent PPIC report has shown, one in every four Californians is an immigrant, a higher proportion than in any other state in the Country.

The report also found that the leading countries of origin for these California immigrants are

Mexico (3.4 million immigrants), the Philippines (800,0000), El Salvador (400,000), and

Vietnam (400,000).96 This type of diversity is found extensively in Stockton and as such provides vast resources for current and future culturally based economic development policies.

It is important that Stockton officials understand that the City will flourish by playing to the strengths of their ethnic traditions in the development of new arts and design communities as well as in areas such as shops, restaurants, and entertainment. With the growing impact of new ethnic groups on American culture – particularly Latinos, who represent the fastest-growing ethnic group – the styles, culture, and tastes of many communities will only increase in diversity in the years ahead. By understanding this,

Stockton is will be in a position to formulate economic development policies that build upon this cultural base.

6.C.(3) Foster the Arts

When looking at specific ways to enhance a community’s quality of life, one area that is important to consider is that of the arts. Cities that have shown to have economically successful redevelopment programs are often those that focus on cultural and arts-related activities – art museums, theater, ballet, and video production – as a means to lure more and

96 Public Policy Institute of California. 2002. Just the Facts.

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more residents and potential consumers to their central districts.97 For Stockton, this means moving beyond simply a “signature” event offered a couple times a year (such as the

Asparagus Festival, the Fourth of July celebration, and First Night Stockton), but into an active, ongoing arts scene that can bring vitality to the Downtown year-round. As Joel Kotkin observes, signature events, by their nature, make for weekend places and they cannot sustain a constant flow of people. Securing a long-term role for arts as a means to achieve economic development depends on the recognition by city officials, as well as by the citizenry, that the success of the community depends on maintaining and cultivating a place’s unique characteristics through such means as a vibrant arts community.98

A key point to remember with this strategy is that policies geared towards the development of a strong art community aren’t for the sake of the arts, but instead are geared towards the end goal of having the arts serve as an economic stimulator by creating a quality of place that can attract people and businesses. “The true significance of the arts in economic development may not lie so much in the quantifiable direct and indirect effects on the economy as it does in the improvement and attractiveness of the city and center-city. The arts can contribute to changing a city’s image, retaining downtown retail trade, drawing more tourists to the city, creating markets for new business, encouraging new private investment from suburban to city locations. They may also develop community pride and spirit and improve the chances for success of larger downtown development projects such as convention centers.”99

97 Partners for Livable Communities. 2000. The Livable City: Revitalizing Urban Communities. New York: McGraw-Hill, Inc. 98 Koktin, Joel. 2000. New Geography: How the Digital Revolution is Reshaping the American Landscape. New York: Random House, page 160. 99 David Cwi. 1980. The Arts Talk Economics. Washington D.C. National Assembly of Community Arts Agencies, page 12. From McNulty, Robert, Dorothy R. Jacobson and R. Leo Penne. 1995. The Economics of

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Fostering the arts includes not only high culture art such as the symphony, ballet, and art lectures, but more importantly the types of creative art activities that foster a sense of community. As discussed by Richard Florida, this includes a vibrant street life, readily available outdoor recreation, varied nightlife options, and a cutting-edge music scene. A tactic that the City of Stockton could take as an entrepreneur in economic development policies would the merging of points 6.C.(1) through 6.C.(3) into a larger strategic goal. For

Stockton, the application of the above mentioned factors – those that have proven to play a role in successful economic development in other revitalization projects – would be to focus on developing cultural arts in Downtown. This would play to Stockton’s strength as a culturally diverse city, the changing demographics that show a particularly high increase in the Hispanic population, and would give Stockton unique competitive advantage within the region and Central Valley. If the City were to focus on making Stockton known as an arts community with a specialization in cultural and ethnic arts, specifically geared towards those most attracted to the urban experience, the economic benefits could be dramatic.

6.D. Conclusion

There is good news for the City of Stockton in approaching the challenges of shaping its role in the new economy. In its report Rethinking Urban Policy: Urban Development in an

Advances Economy, the Committee on National Urban Policy of the National Academy of

Sciences analyzed the implications of the changing economy for cities and developed a set of

Amenity: A Policy Guide to Urban Economic Development. Washington D.C.: Partners for Livable Places, page 50.

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recommendations for taking full advantage of the opportunities presented by the changed circumstances. The committee wrote:

“As powerful as the forces reshaping the economy are, their results for specific

urban areas are not predetermined. It is impossible to freeze our urban areas in

time, to preserve them as they were, but there is considerable latitude for

transforming them into livable places that perform important functions. While

natural forces still limit economic choices to some extent, the same forces that

have made capital so mobile and have increased the importance of human

resources also make it possible for cities to have greater choice in what kinds

of places they will become.”100

And, although it should not expect to attain the same type of economic growth as cities such as San Francisco, Seattle, Boston, or Denver, there is no doubt that Stockton has many of the resources, capital stock, and location that make it prime to be a player in the region in the coming years.

Ultimately, the data in this thesis has shown that business investment is more likely in places that are attractive to creative, highly skilled workers, managers, and entrepreneurs. In addition, from a local perspective, research has shown that economic development policies must be related to efforts to improve a city’s quality of life in order to capture a share of the creative based new economy. The communities that are succeeding in terms of economic development are the ones that are framing their future in terms of both economic growth as well as qualify of place/quality of life. These same cities are the ones employing their

100 National Research Council, Commission on Behavioral and Social Sciences and Education Committee on National Urban Policy. 1983. Rethinking Urban Policy: Urban Development in an Advances Economy. Washington D.C.: National Academy Press, page 182.

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distinctive characteristics to achieve such objectives. Ultimately, for Stockton to develop a downtown quality of place, will require more than a business-as-usual approach and will depend on the implementation of a strategy geared specifically to enhancing the characteristics appealing to the people who are looking for the urban quality indicative of business operating in the New Economy.

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