The Public Enterprise System

Of the developers, by the developers,

and for the developers

Illinois Times

January 11, 1980

In Springfield as in every other sizable Illinois city, municipal government had always been a mostly passive partner in the development of local economies. That changed in the decades of my active career. City halls became very active partners indeed. Using novel legal notions concocted for the purpose, they began giving private developers credit, land, and loans. Michael Houston, a banker-turned-pol who served as Springfield’s mayor from 1979 to 1987 and again from 2011 to 2015, was an especially aggressive public entrepreneur. It was not always the kind of building Springfield needed, and no one ever asked what the taxpayers got in return, but it was what was possible, so that’s what Springfield got.

 

When he was running for mayor of the City of Springfield a year ago, Mike Houston liked to tell people that he would be Springfield's "Number One Salesman." Job development is a key to expanding the city's tax base, Houston insisted, as he pledged to bring "a business approach to the conduct of city government.”

 

Well, Mike Houston is one politician who doesn't make idle promises. Most people no doubt took that last statement to mean that he would run city hall in what is usually described as "a businesslike manner," which is the kind of thing every politician used to promise in the days before Chrysler hit the headlines. They didn't know he meant that he would run it for the benefit of business.

 

Houston has been an economic activist since his swearing in, lending the city's good name and sometimes its share of assorted federal largesse to some half-dozen major private developments. For example:

 

—Houston headed a delegation to HUD offices in Washington D.C. and returned with a pledge for more than $1 million in 3-percent loan money to be used to rehabilitate downtown commercial and residential structures.

 

—Houston is asked informally by the Springfield Airport Authority for city money to help buy land for a major expansion of Capital Airport. SAA officials so far have denied it, but it is widely assumed that the purpose of the expansion is to convince Flying Tiger Airlines to locate its Midwest cargo hub in Springfield. Houston is noncommital but reportedly was "very attentive."

 

—Houston and the rest of the city council approved the use of $31 million in bond money for a reduced-rate home mortgage market, to buy houses, and have made clear their intention to expand the program.

 

—Houston headed a cooperative effort with the Springfield convention center board to find a developer for a new hotel to be built on convention center property downtown. Houston wants to fund the project in part through a $3 million Urban Development Action Assistance grant, in part through issuance to the developer of as much as $20 million worth of city-approved low-interest industrial revenue bonds. "I don't think you can have a hotel without industrial revenue bonds and a UDAG grant," the mayor reportedly explained.

 

—Houston's staff negotiated an informal agreement which, if approved, would authorize issuance of an estimated $3.5 million in those same tax-exempt industrial revenue bonds to help finance the conversion of the vacant St. Nicholas Hotel into an apartment/office complex by a large national real estate development firm.

 

In short, Mike Houston has been handing out public money like a bank hands out free toasters. This enthusiastic commitment of public means to further private ends is hardly unique among American mayors, however. As Robert Goodman, who recently wrote a book about the U.S.'s modern regional economic wars, pointed out last month in the New York Times, "The most aggressive risk-takers are not found in corporate board-rooms and executive suites; instead they are in our town halls and city council chambers . . . . These entrepreneurs are elected officials who are taking risks for business with taxpayers' dollars." The effect, Goodman notes disapprovingly, is that by "pursuing each other's industries and jobs, local and state governments have created over 15,000 economic development agencies that invest millions of taxpayers' dollars . . . (so) some of our largest, richest corporations are recipients of a steady infusion of development incentives, tax abatements (and) land subsidies."

 

This practice goes by several names, depending usually on the philosophical bent of the namer. Houston calls it job development. Goodman calls it public entrepreneurship. Others call it corporate welfarism. Of course, this is not such a new phenomenon as Mr. Goodman—who has a book to sell, remember—implies. Springfield itself offers proof. One of the first big job development projects ever undertaken in Springfield got under way in the early 1830s when city fathers campaigned to get the state capital moved to their city from Vandalia in the face of stiff competition from other Illinois cities. (State government is not a business in the usual sense, but Springfield has always regarded it as one, and it was courted as any largish corporate citizen might be courted.) Part of the bargain they struck with the General Assembly was that the city would donate the city square to the state and chip in another cash toward the cost of a new statehouse. (It was not the last time Springfield would pay dearly for the state's presence, as a trip down West Jefferson will confirm.) The pledge was paid by local property owners both directly (through special assessments) and indirectly through payments made by the city and county governments.

 

This vigorous public entrepreneurship set a pattern from which Springfield has never deviated. Depending on how rigorously one defines the word, "incentive" (not to mention how rigorously one defines the word “legal”) the awarding of streetcar franchises at the turn of the century might be said to have constituted a subsidy by taxpayers of streetcar companies, since franchises often were given away for much less than they were worth. Similarly, a half-century of zoning administration so loose as to be nymphomaniacal has provided incentive enough for businesses. The bill for this has been paid by taxpayers in noise, visual clutter, and eroded property values in otherwise livable neighborhoods.

 

But one needn't reach back so far for examples. In 1977, when, for a few sunshine-filled days it looked as if Springfield might be chosen as the site for the Ford Motor Co.'s new $600 million transmission plant, the city (in cooperation with the local Industrial Development Council) talked of offering $1 million in low-interest bonds and free utility extensions to the plant site. (Ford had a better idea and put the plant in Ohio. As the director of the IDC noted at the time, "Out of a $600 million investment, our $1 million offer was only an indication of our desire to cooperate." )

 

Still, if Houston's brand of public entrepreneurship does not differ in kind from that of his predecessors, it differs in degree; the most hard money Mayor William Telford was willing to commit the city to during the Ford campaign was a lousy $5,000 in expense money for the IDC. So vigorously has Houston shaken the public purse that the traditional private sources of risk capital have been all but supplanted by public ones—much of it from state and federal sources, to be sure, but most of it requiring the endorsement of city hall, thus making the mayor and the rest of the council the dealers in the biggest poker game in town.

 

Is all this wise? Goodman, for example, worries that public entrepreneuring doesn't create jobs so much as it moves them around; it is worth remembering in this connection that the big conventions that will be booked into Springfield if and when it builds its new hotel will be unbooked from some other city. The hotel project is troubling for other reasons too; in order for the project to qualify for the hoped-for UDAG money, city officials reportedly had to include the downtown business district in the east side poverty area. Houston's staff has insisted that the new hotel will create jobs, and thus is a valid way to spend such funds. Perhaps. But such gerrymandering raises questions about whether public entrepreneurs in their zeal don't sometimes steal from the poor to give to the rich.

 

Also, after so many years during which city hall acted as the private sector's partner, it now threatens to become its competitor. Two commissioners have raised public questions about the practice. Streets commissioner Ossie Langfelder, for instance, wondered during a December executive session whether the plan to sell bonds to help the St. Nicholas Hotel conversion did not constitute "sticking our nose in private enterprise, where it doesn't belong. "Langfelder, like his colleague in charge of  public health and safety Pat Ward, has backed such underwritings for housing for the elderly, the poor and the handicapped—each a part of the housing market ill served by private enterprise. But that is where Langfelder, like Ward, draws a line.

 

The St. Nick, Langfelder pointed out, would be an apartment building built on a competitive basis with other developers. "Private enterprise," he told the State Journal-Register, "should grab a hold too.” ●

SITES

OF

INTEREST

John Hallwas

Essential for anyone interested in Illinois history and literature. Hallwas deservedly won the 2018 Lifetime Achievement Award from the Illinois State Historical Society.

Lee Sandlin Author

One of Illinois’s best, and least-known, writers of his generation. Take note in particular of The Distancers and Road to Nowhere.

Chicago Architecture Center

See Home Page/Learn/

Resources for a marvelous building database, architecture dictionary, even a city planning graphic novel. Handsome, useful—every Illinois culture website should be so good.

The Encyclopedia of Chicago

 

The online version of The Encyclopedia of Chicago. Crammed with thousands of topic entries, biographical sketches, maps and images, it is a reference work unmatched in Illinois.

Illinois Great Places

The Illinois chapter of the American Institute of Architects in 2018 selected 200 Great Places in Illinois that illustrate our  shared architectural culture across the entire period of human settlement in Illinois.

McLean County Museum

of History

A nationally accredited, award-winning project of the McLean County Historical Society whose holdings include more than 20,000 objects, more than 15,000 books on local history and genealogy, and boxes and boxes of historical papers and images.

Mr. Lincoln, Route 66, and Other Highlights of Lincoln, Illinois

 

Every Illinois town ought to have a chronicler like D. Leigh Henson, Ph.D. Not only Lincoln and the Mother road—the author’s curiosity ranges from cattle baron John Dean Gillett to novelist William Maxwell. An Illinois State Historical Society "Best Web Site of the Year."

Illinois Digital Archives

 

Created in 2000, the IDA is a repository for the digital collections of the Illinois State Library and other Illinois libraries and cultural institutions. The holdings include photographs, slides, and glass negatives, oral histories, newspapers, maps, and documents from manuscripts and letters to postcards,  posters, and videos.

The Illinois State Museum

 

The people's museum is a treasure house of science and the arts. A research institution of national reputation, the museum maintains four facilities across the state. Their collections in anthropology, fine and decorative arts, botany, zoology, geology, and  history are described here. A few museum publications can be obtained here.

Chronicling Illinois

“Chronicling Illinois” showcases some of the collections—mostly some 6,000 photographs—from the Illinois history holdings of the Abraham Lincoln Presidential Library.

Chicagology

I will leave it to the authors of this interesting site to describe it. "Chicagology is a study of Chicago history with a focus on the period prior to the Second World War. The purpose of the site is to document common and not so common stories about the City of Chicago as they are discovered." 

Illinois Labor History Society

The Illinois Labor History Society seeks to encourage the preservation and study of labor history materials of the Illinois region, and to arouse public interest in the profound significance of the past to the present. Offers books reviews, podcasts, research guides, and the like. 

Illinois Migration History 1850-2017

The University of Washington’s America’s Great Migrations Project has compiled migration histories  (mostly from the published and unpublished work by UW Professor of History James Gregory) for several states, including Illinois. The site also includes maps and charts and essays about the Great Migration of African Americans to the north, in which Illinois figured importantly. 

History on the Fox

An interesting resource about the history of one of Illinois’s more interesting places, the Fox Valley of Kendall County. History on the Fox is the work of Roger Matile, an amateur historian of the best sort. Matile’s site is a couple of cuts above the typical buff’s blog. (An entry on the French attempt to cash in on the trade in bison pelts runs more than

2,000 words.)

BOOKS

 OF INTEREST

Southern Illinois University Press 2017

A work of solid history, entertainingly told.

Michael Burlingame,

author of Abraham 

Lincoln: A Life 

One of the ten best books on Illinois history I have read in a decade.

Superior Achievement Award citation, ISHS Awards, 2018

A lively and engaging study . . .  an enthralling narrative.

James Edstrom

The Annals of Iowa

A book that merits the attention of all Illinois historians

as well as local historians generally.

John Hoffman

Journal of Illinois HIstory

A model for the kind of detailed and honest history other states and regions could use.

Harold Henderson 

Midwestern Microhistory

A fine example of a resurgence of Midwest historical scholarship.

Greg Hall

Journal of the Illinois

State Historical Society

Click  here 

to read about

the book 

Click  here 

to buy the book 

Southern Illinois University Press

SIU Press is one of the four major university publishing houses in Illinois. Its catalog offers much of local interest, including biographies of Illinois political figures, the history (human and natural) and folklore of southern Illinois, the Civil War and Lincoln, and quality reprints in the Shawnee Classics series.

University of

Illinois Press

The U of I Press was founded in 1918. A search of the online catalog  (Books/Browse by subject/Illinois) will reveal more than 150 Illinois titles, books on history mostly but also butteflies, nature , painting, poetry and fiction, and more.  Of particular note are its Prairie State Books,  quality new paperback editions of worthy titles about all parts of Illinois, augmented with scholarly introductions.

University of

Chicago Press

The U of C publishing operation is the oldest (1891) and largest university press in Illinois. Its reach is international, but it has not neglected its own neighborhood. Any good Illinois library will include dozens of titles about Chicago and Illinois from Fort Dearborn to

Vivian Maier.

Northern Illinois University Press

The newest (1965) and the smallest of the university presses with an interest in Illinois, Northern Illinois University Press gave us important titles such as the standard one-volume history of the state (Biles' Illinois:
A History of the Land and Its People) and contributions to the history of Chicago, Illinois transportation, and the Civil War. Now an imprint of Cornell University Press.

Reviews and significant mentions by James Krohe Jr. of more than 50 Illinois books, arranged in alphabetical order

by book title. 

Illinois Center for the Book

Run by the Illinois State Library, The Center promotes reading, writing and author programs meant to honor the state's rich literary heritage. An affiliate of the Library of Congress’s Center for the Book, the site offers award competitions, a directory of Illinois authors, literary landmarks, and reading programs.

Contact James Krohe Jr. at CornLatitudes@outlook.com

All material copyright © by James Krohe Jr. unless otherwise indicated