November 20, 2001

Cities Online: Urban Development and the Internet

Cities Online

The Internet is injecting new energy into many U.S. cities as public, private, and nonprofit institutions realize that a powerful new communications tool can transform the traditional roles of government and business.  In social terms, this promises a closer, more interactive relationship between a community and its citizens. To a city’s business community, it offers the dream of a local or regional economy transformed, Silicon Valley-style, by high-tech success.

This report examines how institutions in five cities are adapting to the Internet. Its main focus is on economic and community development organizations in those cities that have sought to use the Internet to improve performance or broadly benefit the community.  The cities studied are Austin, Texas; Cleveland, Ohio; Nashville, Tennessee; Portland, Oregon, and Washington, D.C.

In exploring how institutions in these cities are using the Internet, this research asks whether the Internet is serving as a catalyst to change the “rules of the game” that shape social capital—the informal norms and customs that grease the wheels of urban life.  It also looks at how communities themselves may shape the Internet by developing Internet content to serve their needs in specific ways.  And by comparing what is happening in all five cities, the report makes recommendations on best practices for cities seeking to take advantage of the Internet.


The Internet as a catalyst


In searching for ways to exploit the Internet, a common theme in all five cities is to develop physical places where social networks can be nurtured.  In those places, community members establish relationships that the Internet can subsequently strengthen. This applies just as much to entrepreneurs networking in hopes of finding venture capital in Austin as it does to Internet neophytes attending computer boot camps in low-income neighborhoods Cleveland.

In the economic development community, the recognition that the New Economy rewards entrepreneurship has led to a fundamental change in economic development strategies in the cities studied.  Whereas economic development officials used to spend much of their time “smokestack shopping,” or trying to lure companies from outside the region, more and more they use a social network strategy to encourage entrepreneurs.  This usually means establishing networks of entrepreneurs to exchange ideas and look for business contacts.  It also includes “angel finance networks,” that is, groups of wealthy individuals in a community who are willing to provide start-up capital for entrepreneurs.  Each of the cities studied has employed a social networking strategy of some sort to foster entrepreneurship.

Among community activists, the social network strategy consciously uses the Internet to change how people interact with community development organizations.  That is, community organizations are using Internet access as a way to draw new people in the doors.  This approach has been especially prominent in Cleveland, where activists have successfully lobbied city government to provide funds to expand community Internet access.  In some cases, Internet access is seen as an end in itself, which means the organization provides access and the minimum training necessary to allow people to surf the Web and send email.  In others, the goal is job training that will expand people’s economic opportunities and, in the cases of Portland, Austin, and Washington, alleviate regional worker shortages in the technology sector.  Whatever the motivation, an outcome of these initiatives is additional social interaction among residents of neighborhoods.


Content Development: The Effect on the Internet


In several cities, the catalytic effect of the Internet has also resulted in the development of Internet content to serve community needs.  In other words, people have developed Web-based portals for home-based businesses or nonprofits to improve service delivery.

In terms of neighborhood and community content, this report profiles a case in Portland in which a community listserv helped shape and deliver a message to the city that stopped a development plan.  In another instance in Portland, a community nonprofit prompted the development of a Web site for artisans to sell their work, thus expanding the size of their market beyond their neighborhood and region.  Content development for nonprofits has been a prominent theme in the cities studied.  Nonprofit organizations devoted to providing affordable housing in Cleveland and Portland are using the Web to connect providers of housing to clients, as well as using the Web to more efficiently schedule maintenance of units.  Austin and Nashville are using public funds to enable nonprofits to develop Web content.

Content development in the business sector is difficult to pin down, since a measure of that would be the ease of starting an Internet-based business.  The flow of information on how to start a business, the existence of supporting services in the area, and, of course, the availability of capital are all ingredients for starting a dot-com business.  In the present environment, however, little capital is available to start or even sustain dot-coms.  Nonetheless, several cities are embarking on strategies to provide physical locations for businesses that want to develop Internet content.  Portland is refurbishing an office building to provide space for multimedia entrepreneurs and other electronic-content businesses.  Washington, D.C., Nashville, and Austin, in different ways, are encouraging the development of downtown districts inviting enough to serve as a hotbed of New Economy creativity.  Much of this is tied to the notion that “amenities”—the things that make a city a desirable place to live—drive economic growth; the specific growth objectives generally encourage businesses that rely on the Internet.

Best Practices, Best Cities

In adapting to the Internet, it is no surprise that different cities—and different parts of cities—move at varying rates.  Austin, which is one of America’s most wired cities and a center of high-tech innovation, is ahead of Nashville in most ways.  Cleveland, by contrast, though it is not known as a center of Internet innovation, is surprisingly advanced in using the Internet for community purposes.  Taking into account performance across different dimensions, economic, social, and governmental, here is a summary of what cities are doing best in exploiting the Internet.

1) Portland: Of the five cities studied, Portland emerges as the leader because its strengths cut across many dimensions.  Its combination of technological sophistication, economic vitality, commitment to regional planning, and community engagement, and its existing infrastructure of community nonprofits, make it the city most likely to effectively exploit the Internet for economic and social purposes.  Community use of the Internet in Portland extends widely, from neighborhood listservs to community development corporations that are reaching out to low-income people.  The business community’s active network of angel financiers and entrepreneurs, added to the city’s commitment to a new, downtown high-tech center, puts Portland in a good position to compete in the information economy.

2) Austin: Austin has a strong track record of community activism in providing Internet access to low-income areas, and a great deal of technical literacy, wealth and economic vitality.  Local government supports community Internet initiatives, and Austin is at the forefront nationally in exploiting the Internet’s economic and social possibilities.  Unlike Portland, Austin does not have a well-developed network of community-based organizations that could channel Internet initiatives deeply into the community.  For that reason, Austin rates just behind Portland among the cities profiled.

3) Cleveland: Although the city is not known as a hub for high-tech entrepreneurship, Cleveland rates well among the five cities because of innovative coalition building by a group called Digital Vision that encourages Internet access in the low-income community.  Activists’ success in obtaining city funding for community Internet projects is a distinguishing feature, and civic leaders are actively cultivating an entrepreneurial environment for the city.  No dot-com successes have occurred, but city leaders are focusing on business-to-business ecommerce–a sensible long-term strategy to exploit the Web for a city that understands manufacturing.  Cleveland also enjoys an abundance of broadband infrastructure in the downtown area, which makes it attractive to many telecommunications carriers.

4) Washington: The District is a latecomer with promise when it comes to using the Internet for social and development purposes.  A package of incentives to attract high-tech firms downtown and the development of NoMa, a downtown district for creative high-tech people, could spur a tech boom in the District.  But these programs are in their early stages.  At the community level, there are several Internet access initiatives aimed at low-income people, but they would benefit from greater coordination and more support from city government.

5) Nashville: Nashville lags far behind the other cities in projects that provide Internet access to low-income citizens.  The federally funded “Designing a Community Online” project indicates some promise for the future on this front, as does the mayor’s commitment to the use of information technology in city government and outreach to neighborhoods.  But Nashville is late to the table relative to the other cities in this study.  On the economic front, Nashville’s entrepreneurial culture suggests it can effectively exploit the Internet, and several initiatives show that Nashville is aggressively trying to become a player in the New Economy.

Sustaining the Effects of the Internet

With the downturn in the dot-com economy and the constant challenges of maintaining funding for community development projects, sustaining the Internet’s early positive effects will be difficult.  However, lessons from the five cities point to ways in which early success can be built upon:

Encourage bottom-up initiatives: Almost invariably, Internet projects in the five cities started because interested people in the community took the initiative.  This underscores the fact that successful programs tend to be driven by demand rather than pushed by technology. Community-computing programs do not come from the top down.

Encourage catalysts: The bottom-up nature of most of the Internet initiatives has come about because committed individuals in the community have served as catalysts.  Just because these people have taken the initiative does not mean that they and their initiatives do not need nurturing.  Financial support is the most obvious, and probably most useful, form of encouragement, but publicity is another.  The media could do a community service by focusing on how community groups are using the Internet for social purposes

Encourage public funding: The coffers of local governments have played an important role in several cities.  Cleveland and Austin have programs that channel public funds to community technology projects, although it is important to underline that the programs came about only after community technology activists had been running technology programs in the cities for some time.  But as demand in the community for publicly available Internet access and training expands, local government help is needed to meet it.  Additionally, federal funding, in the form of grants from the Technology Opportunities Program of the U.S. Department of Commerce, often is crucial to getting projects off the ground.  There is still considerable demand for community computing programs and great need to wire local governments for better service delivery.  It is appropriate to maintain or expand federal, state, or local programs that provide public funds for community technology.

Encourage “bridging” among groups: In several cities, coalitions have been formed to bring advocates of low-income people into contact with people from the technology sector for community development.  Such initiatives hold significant promise, but the existence of them should not be seen as ends in themselves.  The partners in these coalitions have differing outlooks and goals.  Business leaders may see community-computing programs as a quick way to increase the supply of skilled workers.  Community activists may see the partnerships as part of a long-term strategy to improve people’s lives and foster civic engagement among forgotten members of the community.  Recognizing these differences early is key to making bridging work.

Encourage experimentation: Across the five cities, there are a number of different models for using the Internet for community purposes.  Some are new organizations that provide access and training.  Others are new organizations that partner with existing community groups.  Still others are existing organizations that have integrated the Internet into their missions.  There is no single solution to exploiting the Internet’s potential and community leaders and policymakers should be aware of this.  A willingness to tolerate multiple approaches should also be accompanied by a willingness to tolerate fits and starts in programs, and even failure.  The lessons learned in the process can be as valuable as successful models that are often showcased.