The urban environment provides the means of existence for billions of humans who inhabit the city streets, flow through its corridors, build its bridges, skyscrapers, and infrastructure. But the city is more than the sum of its buildings and roads.
On a deeper level, a city is a cradle for culture, it’s where people and communities define and come into their sense of place, establishing the ideal of home. A city represents the aspiration of billions of people. And many of those people have migrated to the city looking for opportunity, coming from places that had through resource scarcity, politics, or conflict, run their well of opportunity dry.
So, for these millions of people: refugees, migrants, and expats when a government places between them barriers that wall them off from the opportunities of the city, a place that they may one day call home, a powerful and dangerous game is being played. The consequences of which have the potential to create large rifts that fuel the rise of regionalism, ultimately blurring the lines between partisanship and extremism. It creates a toxic culture of “In and out, normal and weird”, divisions and labels under which coordination and civil discourse seem like impossibilities.
The conversation and political actions about migration have recently taken on renewed meaning under recent executive orders about sanctuary cities.
In total there are 106 sanctuary cities who have all taken on symbolic commitments to open their doors, and community services to the benefit of illegal immigrants. A choice which under the current administration is potentially extremely expensive.
According to a report from Open The Books these cities $28 Billion in Federal funding for basic services such as public safety and police, and education was effectively revoked through recent executive order signed by Donald Trump. Should the cities remain “sanctuary cities” they are choosing to take on large financial uncertainty estimated to come to a cost of over $500 per person in their communities.
The Sanctuary city order and the politics and barriers it represents has become a point of financial rebellion and in addition to municipalities, States are starting to take a stake in the game. California has recently considered becoming an organized non-payer, threatening to withhold federal taxes to push against the policy. Currently for every $1 in taxes that is sent to the federal government CA receives $.75 back in federal aid, making them a net payer. When a state like California steps into the conversation by suggesting that they would be better off without the federal support, our civil society enters into an entirely new conversation that could be used to establish the grounds for financial succession from the Union.
In Europe, such considerations have been incorporated through article 57, which lays the ground rules for a member nation of the UN to leave, but we have no such grounds here in the United States, representing a historic shift in political thinking and regional politics.
The controversy is further fueled by lawsuits claiming the executive order is unlawful as Cities and States look to retain their federal funding. Ironically a Scalia era supreme court case has been cited as the means by which states and municipalities are pushing back against federal control and protecting illegal immigrants from deportation from their communities. The use of the ruling by the Left to claim financial autonomy also represents the application of a traditionally right wing advocacy tactic designed to protect gun rights, religion in schools, and other partisan politics issues.
Regardless of pending legal results, major question remains about the action plans that will be used to support municipal budgets, should a forthcoming ruling not follow in favor of local autonomy. And for cities like Chicago, DC, SD and LA where Federal funding represents as much as 25% of their annual budget how cities plan to fill the financing gap will define the next four years of urban development.
So much so that some cities have established funding websites and started to ask for donations from the public. Are we entering an era of governance in which go fund me campaigns for our local services are the new normal?
If cities are unable to provide new revenues or reduce expenses to compensate for federal funding gaps cities will have to scramble to find funding. Perhaps by taking on new debt, further expanding deficits and lowering their credit worthiness. Consequently, cities may become more beholden to their creditors than to the public, devaluing the opportunities of the city that have attracted so many to their urban core in the first place.
Perhaps there is a silver lining to come from this era of financial insecurity as it draws attention to need for cities to become financially independent in times when political winds can render long-term urban financial planning processes obsolete. After all, financial withholdings based around dispute of immigration policy could create a precedent that can be applied to other issues.
Financial resilience, in the form of main street investment strategies that are designed to identify projects and programs that fit into a portfolio of urban projects that provide liquidity, protect general funds, and provide a market rate of return, will become more attractive to municipal CFOs and City Managers. Those projects have the potential to be sourced from a long list of cost savings opportunities that generate local benefit.
The city of Los Angeles provides one such case study. Having replaced 200,000 halogen street light bulbs with LEDs in 2009 through a Green Bond; unlocking more $8 Million in savings per year. Vital cash the city can use to fund other budget needs. As a result of their success, several local cities are starting to evaluate the opportunities that come from financing capital improvements locally.
Platforms and new brokerage hubs are emerging for the market like Neighborly, which offer the opportunity for local citizens to invest into urban development projects in their community and gain competitive returns. Crowd sourced financing for the projects people care about and will directly benefit from may help fill financial gaps.
However, these examples are nascent in their nature and have yet to be adopted on a large scale. The keys to success are ultimately in the hands of city governments. If these organizations can successfully engage their communities to identify local financing opportunities cities can continue to draw people in bringing with them their cultures, and their ideas. Ensuring a wealth of human capital in an era when financial wealth is stretched thin.