November 21, 2001

Cities Online: Urban Growth and the Internet

SELECTED KEY FINDINGS ON FIVE CITIES

PORTLAND, OREGON

Real changes in communities are evident in Portland as a result of a wide range of community Internet projects, some of them long-established. Portland”s Neighborhood Pride Team, initially founded to revitalize a community in southeast Portland, has grown from one computer in 1995 to a skills center with 20 computers and two full-time instructors that handled more than 1,200 students in 2000. A listserv that began as a way to keep southwest Portland citizens informed about a development proposal has turned into a model forum for allowing activists to talk through technical and environmental issues surrounding neighborhood growth. And on the economic development front, Portland has made a significant government commitment to providing a place for businesses that sell Internet content or rely on the Internet for distribution.

Main Lesson: A technologically sophisticated city, in combination with strong commitment from city government, interested citizens, and an existing infrastructure of community development organizations, has taken identifiable steps to use the Internet to enhance economic and community development. In the wider community, the existence of many community development organizations makes the soil for community Internet initiatives that much more fertile.

Two initiatives stand out at the community level:

  • The Neighborhood Pride Team provides Internet access and training to a neighborhood in southeast Portland that features many female-headed households. This has injected new life into the area, as a number of women have started home-based businesses using the Web. Computer and Internet training has improved the level of human capital as people have gained new job skills. The personal interaction at the Neighborhood Pride Team site has increased the stock of social capital in this part of Portland.
  • Portland Area Housing Clearinghouse: This initiative of the Bureau of Housing will greatly improve social service delivery through a Web portal that allows social workers electronic access to services across agencies. Thus, a client who comes to the Housing Bureau who also needs legal services will be quickly referred. The database will tell the client what documents are needed to qualify; the objective is to reduce the bureaucratic run-around for clients, who often spend enormous amounts of time going to different agencies for service.

    In the economic development arena:

  • The Creative Services Initiative: the city-supported development to provide space for the growing multimedia industry in Portland. By placing the development adjacent to downtown, city officials hope to mitigate sprawl while being part of Portland”s “hip” environment that is seen as crucial to high-tech economic development.
  • Promoting entrepreneurship: the Oregon Entrepreneurs Association and the Portland Angel Finance Network provide forums to nurture start-ups and connect them with scarce venture financing. This social networking strategy for homegrown development is designed to make Portland a more inviting place for Internet and multimedia start-ups.

    Internet Connectivity: Portland”s Internet penetration rate is slightly above average, reflecting its above-average high-tech sector and population growth rate, both of which are important determinants of Internet connectivity.

    AUSTIN,TEXAS

    Like Portland, Austin is a center for high-tech industry and a large number of dot-com start-ups, both of which have created considerable wealth in the city. Along with a core of city activists and an engaged city government, this has resulted in a flurry of initiatives to maintain Austin”s status as a technology hub. Examples include plans for a “digital downtown” that promises to attract multimedia developers, lessening the pressure for urban sprawl. In the wider community, entrepreneurs are encouraging technology literacy for low-income people through the Austin Idea Network, and city government has started several initiatives of its own. Additionally, community activists have begun projects that have attracted government aid from all levels, federal, state, and local. But Austin has been hurt by the downturn in the dot-com economy.

    Main Lesson: Good intentions and resources are not always enough. In spite of Austin”s many assets, the dot-com shakeout has taken the wind out of some initiatives, such as the Idea Network. Austin also lacks a well-developed infrastructure of community development organizations, making it more difficult to implement community access initiatives. Austin”s dearth of community development organization sets it off from Portland in this respect.

    At the community level:

  • Austin FreeNet (AFN): one of the nation”s most established community networks, it has been providing access to low-income residents since 1994 and increasingly helps non-profits get online.
  • Austin Learning Academy: a family learning center, the ALA integrates the Internet into after-school programs for kids and serves as a place for kids and parents to go online together. Like the AFN, demand for ALA”s services is very high, suggesting that even in one of the country”s most wired cities, community Internet programs contribute to social capital formation in Austin”s low-income sections.
  • Government programs
  • Capital Area Training Foundation: workforce training in computers and Internet at 3 area high schools; $200,000 grant from the City of Austin.
  • Grants for Technology Opportunities (GTOPs): a new $100,000 program to provide small grants for community non-profits that have Internet projects that serve their mission or clients.

    In the economic development arena:

  • The Austin Idea Network: an ambitious undertaking driven by the dot-com business community that, among other things, wants to bring computers to teachers and students in public schools. The dot-com decline has interrupted the Idea Network”s momentum, but it represents a very distinctive effort to channel resources from the Internet business community to the less well off.
  • Austin Entrepreneurs” Foundation: another distinctive and ambitious initiative that helps entrepreneurs contribute to the low-income community. Also buffeted by the dot-com meltdown, the Foundation does nonetheless serve as a bridge to the low-income community.
  • The Digital Downtown: an attempt to address growth-driven sprawl by encouraging large companies (e.g., Intel) to locate in the downtown area, where an emerging multimedia industry is clustered. Another victim of the dot-com shakeout (e.g., Intel halted construction on its downtown building), this plan does try to marry New Economy development strategies with broader “livable cities” economic development approaches.

    Internet Connectivity: Austin”s Internet penetration rate is among the highest in the nation, largely due to its highly educated population and large high-tech industry. These are the two most important determinants of Internet penetration.

    CLEVELAND, OHIO

    Cleveland remains a manufacturing city with no real reputation as a center for innovation or Internet activity. Activists in Cleveland have nonetheless made significant strides in shaping local government policy on community Internet access. The Digital Vision coalition”s successful effort to get $3 million for “computer boot camps” from local government distinguishes it from other cities in the study (with the exception of Austin). Economically, Cleveland lacks the sort of entrepreneurial tradition that would help it make fast progress in the New Economy, but an accident of history-it has abundant bandwidth in fiber-optic cables laid along railroad rights-of-way-could give it an advantage in business-to-business electronic commerce.

    Main Lesson: Coalition-building in communities can succeed in procuring public funds for community technology projects.

    At the community level, noteworthy initiatives:

  • The Digital Vision coalition that, as noted, has become a focal point for community activists and government officials search for ways to bring Internet access to low-income people.
  • The Cleveland Housing Network and other non-profits have banded together in the T2K initiative that links housing non-profits in the city. This improves the efficiency of everyday activities, such as scheduling maintenance and determining whether a unit is ready to show to a client, which can be a huge barrier to service delivery.
  • Store front non-profits that provide Internet access. Existing programs at the West Side Community Center and the Westtown Community Center have brought new people into these places to learn how to use the Internet. The city-funded “computer boot camp” program can bring such efforts to other parts of the city.

    In the economic development arena:

  • The Northeast Ohio Software Association (NEOSA) has established a network of software development professionals that, it is hoped, will lay the groundwork for software and other New Economy start-ups. NEOSA is also to be a forum where entrepreneurs and angel financiers can gather.
  • The technology incubator at Lorain County Community College hopes to increase the supply of technically trained workers in the region, while providing a campus-like setting where high-tech start-ups can flourish.
  • Telehotels, as noted, will give the downtown area access to bandwidth that can make Cleveland a more attractive location to companies that rely on the communications infrastructure to deliver New Economy products.

    Internet Connectivity: Cleveland”s Internet penetration is among the lowest in the nation. This reflects the fact that Cleveland is below average with respect to all the important determinants of Internet penetration except age, which is inversely related to penetration. Of all the five cities, Cleveland is lowest in education, high-tech, and population growth, the three most important explanatory variables.

    NASHVILLE, TENNESSEE

    Even with a strong entrepreneurial ethic in the regional economy, the limited availability of venture capital and the dot-com shakeout means that no dot-com in Nashville struck pay dirt-even fleetingly-while other centers of the New Economy were hot. The city is actively promoting a downtown district for young entrepreneurs, but community Internet projects are only beginning to emerge in Nashville, and it lags significantly behind other places in this area.

    Main lesson: City government is beginning to engage with issues of information policy and community Internet access. Neglect of these policy issues can be costly for cities, and those trying to make up for lost time must reach out to neighborhood groups to succeed. Fortunately, Nashville city government does appear to be doing this.

    In the community arena:

  • The “Designing a Community Online” project-funded by the U.S. Commerce Department”s Technology Opportunities Program (TOP)-represents Nashville”s first community Internet project. The project brings Metro Davidson government and neighborhood groups into partnership to provide Internet access to low-income areas and to put government information online. While promising, programs such as the “Designing a Community Online” initiative were launched much earlier in the other cities studied.

    In the economic development community:

  • The Cummins Station building and technology incubators such as eConception place Nashville in a position comparable to other cities studied: place-based projects that try to nurture Internet start-ups. The dot-com downturn has placed breaks on development momentum, and Nashville”s entrepreneurial tradition seems to be the only thing sustaining New Economy initiatives. For instance, the Chamber of Commerce”s plan to launch an angel finance network stalled as the dot-com shakeout worsened.

    Internet Connectivity: Nashville”s Internet penetration rate is below average, despite the fact that its education level is essentially average. However, Nashville”s high-tech sector and population growth rate are both substantially below average.

    WASHINGTON, D.C.

    The District of Columbia is a latecomer, with several promising initiatives just getting underway. Tax breaks for tech companies locating downtown and in a revitalized urban district may pay off, but in the distant future. The District does have a number of innovative community initiatives designed to bring technology access and workforce skills to low-income people. None of these, however, receive financial support from city government, nor do they appear to be on city government”s radar screen.

    Main Lesson: Playing catch-up-especially with attractive suburban competitors in Maryland and Virginia-is difficult. The plans for tech-based urban economic development seem sound, but the city”s lack of attention to community Internet access is an unfortunate oversight.

    In the community:

  • SeeForever Foundation: combines an educational mission at the Maya Angelou Charter School with Internet-driven outreach to the Shaw community. Students learn Internet and computer skills at school and provide training classes to interested adults in the neighborhood. With assistance from a federal TOP grant, SeeForever”s “backpack laptop” program provides seniors with Internet access and training-with Maya Angelou students doing the outreach and training.
  • ByteBack is a community Internet project that partners with churches and social service non-profits to provide basic Internet skills for adults. ByteBack also gives selected students a chance to gain in-depth computer and Internet training that provides entrée to information technology jobs in the D.C. region.
  • Edgewood Terrace is a housing development for low to middle-income people that provides home-based Internet access to residents and an intranet for the community. Programs onsite include an Internet café for residents and after school programs for kids that use computers and the Internet.

    In the economic development arena:

  • The New Economy Transformation Act provides tax breaks and other incentives to high tech start-ups locating in the District.
  • The North of Massachusetts Avenue (NoMa) will be D.C.”s “hip” urban place that has an artsy feel to it. Coupled with walkable neighborhoods and other amenities, it is hoped that NoMa will attract young, entrepreneurial people to the District.
  • In both cases, potential payoffs are down the line; NoMa, for instance, is slated for an area of D.C. that is presently rundown and will need a Metro station (which is only in the planning stages) for it to be attractive to business.

    Internet Connectivity: Washington has one of the highest Internet penetration rates. The city has a highly educated population and a large proportion of high-tech industry, the two most important determinants of Internet penetration. In addition, Washington has a high median income, which is also a significant explanatory variable.

    This is part one of a report in two parts jointly released by The Pew Internet & American Life Project and the Progress and Freedom Foundation.

    About the Pew Internet & American Life Project. The Project is an independent, nonpartisan research center fully funded by the Pew Charitable Trusts to examine the impact of the Internet on American families, communities, health care, education, political and civic life, and the workplace. The Washington, D.C.-based Project”s grant is administered by the nonprofit Tides Center. Visit the Project at www.pewinternet.org.

    About The Progress & Freedom Foundation. PFF studies the impact of the digital revolution and its implications for public policy. The Washington, D.C.-based Foundation is a 501(c)(3) nonprofit organization.