Who Rules America?  By G. William Domhoff, University of California at Santa Cruz

Power in America

Private Cash Sets Agenda for Urban Infrastructure

by Louis Uchitelle

New York Times, January 6, 2008

NEW HAVEN — Conceived as a freeway, the Route 34 Connector still promises to whisk motorists across New Haven as they exit Interstate 95. But in less than a mile, the three broad lanes abruptly end, forcing traffic onto side roads that skirt the unbuilt right-of-way — a wasteland of elongated asphalt parking lots and scrub grass.

Mayor John DeStefano Jr. calls the aborted project a tragic example of public infrastructure gone awry. He has drawn up detailed plans to rip up the highway and parking lots and restore the neighborhood of homes and stores that once existed. But lacking money, the mayor's project only inches forward.

A few streets away, there is no such obstacle. On either side of New Haven's highway to nowhere, city streets throb with construction activity. A different kind of infrastructure spending — unrelated to roads or rapid transit, airports or levees — is under way.

Yale University is rebuilding itself — drawing on its huge, rapidly growing endowment and on multimillion-dollar gifts, mainly from alumni — to renovate 54 buildings and construct 16 new ones. Not since the 1930s has Yale undertaken so ambitious an expansion.

The message in this outburst of activity, here and in other places across the country, is that private spending, supported handsomely by a growing number of very wealthy families, is gaining ground on traditional public investment. In the case of New Haven, once the recipient of more federal dollars per person for urban renewal than any other city, private investment now far surpasses public outlays.

"For us," the mayor said, "infrastructure spending has come to mean growing the university. Yale has the money, and what they get from us is the approval to grow."

But for all the wealth going into private philanthropy, its reach is limited. Richard C. Levin, Yale's president, is not committing money to the mayor's reconstruction plan or to other items on Mr. DeStefano's wish list, like high-speed rail service to Manhattan or lengthening the runway at Tweed New Haven Regional Airport so more airlines will fly here.

Philanthropic spending adds mainly to the nation's stock of hospitals, libraries, museums, parks, university buildings, theaters and concert halls. Public infrastructure — highways, bridges, rail systems, water works, public schools, port facilities, sewers, airports, energy grids, tunnels, dams and levees — depends mostly on tax dollars. It is hugely expensive and the money available, while still substantial, has shrunk as a share of the national economy.

The American Society of Civil Engineers estimates that government should be spending $320 billion a year over the next five years — double the current outlay — just to bring up to par what already exists.

A few decades ago, after the Depression and World War II, the nation rapidly added infrastructure and "maintenance was a less pressing issue," Casey Dinges, a society spokesman, said. The entire interstate highway system, for example, was built in just 35 years.

But now 14 years are likely to pass before a widening of just one bridge in that system, spanning the Quinnipiac River here on I-95, is completed. The traffic-congested bridge is to become six lanes in each direction, from the present three.

Nearly six years into the expansion, the approaches are gradually being widened, but the bridge itself is untouched. The first pilings have yet to be sunk to support the additional lanes. The state transportation department, which is handling the $2 billion project, blames the slow flow of money, mainly from the federal government. That flow has averaged less than $45 million a year, according to Albert A. Martin, the department's deputy commissioner.

"If we had had the $2 billion in hand right from the start, that would have reduced the construction time by half, to seven years," Mr. Martin said. "The problem is, we don't have the dollars readily available. That is one of the big differences between us and Yale."

Yale's Expansive Makeover

Yale's reconstruction proceeds at warp speed. Scaffolding and gauzelike scrim, to protect pedestrians from falling debris, cover buildings on nearly every block of the urban campus. The emphasis is on those devoted to science and medicine, to enhance Yale's stature in these fields. But every other department is a beneficiary, too, and all of the 12 residential colleges are being renovated. To keep this work going year-round, Yale built a four-story brick dorm, almost large enough to fill a city block, as temporary student housing.

The 90-year-old football stadium, the Yale Bowl, got a share of the largesse. A mansionlike field house is soon to be built alongside it, which, among other things, will allow the opposing teams to spend halftime in greater comfort. For years they have rested in roped-off exit tunnels beneath the stands; the locker rooms are too far away.

"The field house is a luxury item in a way," Laura A. Cruickshank, an architect employed by Yale as university planner, acknowledged. "But when you have a stadium that is so old and iconic, you have to do things differently. And how much of a luxury is it when you have players who play the way they do and you have to tape them up at halftime in the tunnels?"

Propelled by the construction on campus, Yale has become a big owner of commercial real estate in the surrounding downtown, engaging in a form of urban renewal not unlike what Mayor DeStefano wants for Route 34. But while the mayor has to extract state and federal subsidies, Yale goes forward with its own money.

Biotech start-ups, restaurants and stores now occupy Yale-owned buildings. Wanting its new campus in upscale surroundings, the university even employs two people full time to recruit boutique retailers in New York and Boston as tenants on spruced-up streets.

"The mayor was far-sighted enough," said Mr. Levin, who has been Yale's president since 1993, the same year that Mr. DeStefano first won his office, "to recognize that working with us, with our capital, we could actually revive the downtown, which we're doing."

The person in charge of improving the neighborhood around Yale is Bruce Alexander, 64, a former real estate entrepreneur who helped develop the Inner Harbor in Baltimore. Mr. Levin recruited him in 1998 and, during a recent tour of the city, Mr. Alexander pointed out one of his favorite achievements — the purchase of a group of contiguous buildings occupying a square block in the heart of the city.

The owner had gone bankrupt, and to avoid having the buildings auctioned piecemeal, Yale bought them all, at the mayor's request, and filled them with stores and restaurants at street level, and apartments and offices on the upper floors.

"When you own a block of property," Mr. Alexander said, "you can create an identity."

Infrastructure Spending Lags

The shift from public money to private wealth in shaping the nation's cities is evident in national data. Government outlays on physical infrastructure have declined to 2.7 percent of the gross domestic product, from 3.6 percent in the 1960s. Philanthropic giving, in contrast, has jumped to nearly 2.5 percent of G.D.P., from 1.5 percent in 1995 and 2 percent in the '60s.

Most of this money goes into endowments and foundations, or comes in the form of individual gifts, and then is increased through leverage. Of the $3 billion that Yale has spent so far on its vast building program, for example, slightly less than two-thirds came from gifts and from the endowment, which now totals $22.5 billion. The rest was borrowed, Mr. Levin said.

Yale now spends more than $400 million annually on its renaissance, nearly six times its outlays for construction and renovation in the mid-1990s. New Haven, by contrast, budgeted $137 million in the current fiscal year for all its capital projects, including those subsidized by state and federal governments. That is less than twice the amount budgeted in the mid-'90s.

Government investment nationwide has lagged for several reasons, say business leaders, academics and public officials. Tax cuts have helped to hold down overall government spending. So has the view, widespread in recent decades, that public investment is often inept and wasteful. And politics intrudes, with the widely criticized earmark process in Congress cited lately as a prime example of misdirected spending.

"Governments are accountable to the democratic process, which has many, many virtues; I would not trade it for anything else," Mr. Levin said. "But it is not particularly good at focusing resources and driving things efficiently."

Perhaps most important, big businesses no longer put as much clout and attention behind public infrastructure investments. In an earlier era, corporations, many with deep roots in local communities, lobbied government for the railroads, highways and many other facilities they needed to operate successfully. And they served as a crucial fountain of local tax revenue.

But companies are more mobile today. And many of the urban manufacturers most dependent on public infrastructure have moved or gone out of business. The Winchester Repeating Arms Company, once New Haven's largest employer, is among the departed. Yale, which pays some taxes and escapes others that most corporations pay — particularly property taxes — is now the city's biggest employer.

Anthony P. Rescigno, president of the Greater New Haven Chamber of Commerce, is struggling to revive the commitment of his members. He is trying to drum up stronger support among local businesses to lengthen the airport runway to 5,000 feet from the present 4,000 so that commercial airlines will bring in more flights. His members favor the longer runway, but not passionately.

"We had an example of a biotech company in New Haven bringing people here all the time," Mr. Rescigno said. "Because he couldn't bring them here easily by air, he would bring them to New York. The meetings and conferences took place there, not here. He had an option."

Some government-business alliances still carry weight. In the Seattle area, for example, Microsoft has pushed its headquarters city, Redmond, to spend millions to upgrade roads for its expanding campus, along with the millions that the software giant has spent.

Now Microsoft wants the state to replace a 40-year-old, two-lane bridge on a highway that connects Seattle and Redmond. "We joined the city in arguing for the new bridge," said Lou Gellos, a Microsoft spokesman, "and that was instrumental in bringing the issue to the forefront."

But such examples are increasingly rare these days.

"If you had 30 C.E.O.'s saying, 'Damn it, we need new bridges or faster trains,' then that would happen," said Peter R. Orszag, director of the Congressional Budget Office. "The fact of the matter is that public infrastructure spending does not have much momentum behind it at all."

Money Tight, Progress Slow

Mayor DeStefano, 52, an intense man who grew up here, has chosen to spend most of his limited capital budget to renovate New Haven's public school buildings and add three high schools.

His goal, he says, is to raise the quality of the education so that families will choose to use the public schools, even moving back from the suburbs. His argument is not unlike Mr. Levin's: Newer buildings, better equipped, make for a better education.

"The high school dropout rate has been cut in half," the mayor said, arguing that the multiyear reconstruction project is showing results. "Eighty-two percent of the kids go on to two- and four-year colleges. That is higher than the state average."

Mayor DeStefano's efforts to rebuild New Haven as a city of middle- and working-class neighborhoods represent a reversal of the large urban renewal projects that once dominated public infrastructure spending. New Haven was at the forefront of that movement. Under an earlier mayor, Richard C. Lee, federal tax dollars poured in for slum clearance, highway construction, big public housing projects, a coliseum and a huge downtown shopping mall.

Most of this is gone now. A community college rises where two department stores stood, and the mall is closed. The 10,000-seat coliseum, a Mecca for wrestling matches and minor-league hockey, was torn down last January.

The Route 34 Connector would have linked I-95, south of the city, to the existing Route 34 in the north. Environmentalists helped to halt the project, objecting in particular to a section of the freeway that would have crossed wetlands. More recently, low-income families living near the right-of-way petitioned the mayor to return the land to streets, stores and homes.

"They want to recreate the neighborhood in which they grew up, or where their parents and grandparents grew up," said Karyn M. Gilvarg, executive director of the New Haven City Plan Department. She estimates the cost of doing so at $150 million, a relatively small sum for Yale, but too expensive for the mayor to proceed quickly.

There are other delays. The mayor would like Metro-North Railroad's New Haven line to offer a high-speed service to Manhattan, cutting the 80-mile run to an hour, from an hour and 40 minutes.

"The largest cluster of hedge fund managers after New York and London is in Fairfield County," the mayor said, arguing that New Haven would get some of that business "if it were a half-hour or an hour closer" by train to Midtown Manhattan.

The state government, which owns the New Haven line, is indeed gradually building up an infrastructure to make faster train service possible. Three hundred new rail cars, built to run at high speeds, will start arriving in 2010.

"We are in the process of repairing bridges and upgrading power lines," Mr. Martin, the transportation official, said. "And we are looking at installing concrete ties as replacements for the wooden ones."

Given the limited pool of federal and state money, however, the project moves at a snail's pace. Under the best-case schedule, high-speed service will not arrive in New Haven for a decade.

"We don't have the big companies pushing the government to get the work done, because they don't need it," Ms. Gilvarg said. "They are all going to China or wherever, and the business sector is smaller in New Haven than it was."

Blurred Lines in New Haven

For New Haven, that leaves Yale.

"There are no corporate citizens left in New Haven except Yale," Mr. Levin, the university president, said. He, too, would like to see the airport runway lengthened and high-speed rail service to New York. But they are not central to what he considers his mission, which is to make Yale pre-eminent among universities, not just in science and the arts, but in the students' daily lives.

Eight of the 12 residential colleges have already been rebuilt, at a cost of at least $40 million each. In appearance, the colleges are the same elegant gray sandstone Gothic structures dating from the early 20th century. The new comforts and efficiencies, though, are evident on closer inspection.

Visiting Trumbull College, next to Sterling Library, Ms. Cruickshank, the university planner, points to the leaded glass windows, which are double paned now, eliminating the unsightly plexiglass that had been screwed to the windows to keep down heating bills.

The bedrooms are still small, but they are organized for the first time in clusters of four or five around a common room, creating a much more social environment. "You cannot walk from one place to another without passing students," said Janet B. Henrich, the master at Trumbull.

Reconfiguring rooms and passageways is costly without being as noticeably expensive as the changes in the basement, which long housed a small theater for student productions, a gallery for their art, a music practice room and a snack bar. But exposed pipes ran along the ceiling, limiting the space.

That was solved by enlarging the basement and encasing the intrusive mechanicals, so that the basement no longer seems like one. The theater in particular benefited. It has 60 cushioned seats, banked steeply over the stage, and equipped with the latest lighting and sound devices.

"I am not sure it makes for better performances," Ms. Henrich said, "but it is probably safer and easier to learn the basics."

As Yale invests, pursuing its goals, Mayor DeStefano falls increasingly into step, blurring the line between public and philanthropic infrastructure spending. Yale has acquired land to build two more residential colleges, and the mayor contributed by closing off and giving portions of two streets to the university.

In return, Yale has agreed to spend $10 million to repair bridges, streets, lights and sidewalks in the neighborhood — in effect, picking up a bill that would strain the city's budget.

"The streets of their campus are the streets of the city," Ms. Gilvarg, the city planner, said. "They are part of the public infrastructure, not private roads."

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