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Global Urban Innovations: In Conversation with Scholar Bruce Katz

Cities across the world are viewing their assets through a new competitive lens and asking tough questions about what they do well and how they can compete in a global marketplace for talent and industry, scholar Bruce Katz told Federal City Council (FC2) trustees at the Fall Board Meeting.

“The 21st century is a different century than the 20th,” said Katz, the inaugural centennial scholar at Brookings Institution. “It requires different kinds of institutions and a different understanding of public and private… We need to change because we’re operating with institutions that just don’t make sense anymore.”

In a freewheeling discussion with the FC2’s Anthony Williams at the Halcyon House luncheon on Oct. 18, Katz introduced the idea of the innovation district model where cities, anchored by their universities and leading research institutions, collaborate with industries to transform cities into entrepreneurial engines.

Katz said a prominent U.S. model is Pittsburgh. When its steel industry collapsed, jobs and the city’s tax base evaporated. Exasperating its problems, the Pittsburgh region is one of the country’s most fractious, with 130 municipalities and 45 school districts.

The solution? Pittsburgh adopted an innovation district strategy to work across geographic boundaries, leverage its research institutions and bring together leaders in the private sector, government, the nonprofit community and foundations to focus on innovation to grow jobs and rebuild its economy.

The FC2 is looking to replicate the model with its Innovation District Initiative (IDI), incorporating the lessons of Pittsburgh and other cities—notably the importance of regional collaboration and cross-sector partnerships—in an effort to create jobs and build wealth. Trustees David Lawson and Stephen Orr are leading FC2’s IDI effort.

Katz bluntly suggested that the greatest impediment to D.C.’s success in these types of initiatives is complacency. D.C.’s relative prosperity and stability may have hampered its ability to work together on big problems. The region’s response to Metro’s challenges is a good test case.

“The problem for D.C. is that the federal government is both benefactor and detractor. It probably leads to a bit of complacency,” said Katz. “When I go to other places like Pittsburgh, they know that no one has their back. They’re basically future-facing and on their own.”

Katz said another pioneering idea D.C. could replicate is Copenhagen’s successful leveraging of its public commercial assets. Copenhagen, by pooling the value of its commercial public assets into a public company and then employing private managers to oversee the assets, was able to generate billions in investment capital for infrastructure and economic development projects.

“The fact of the matter is the public sector owns a good portion of our cities and has not leveraged that value,” said Katz. “It’s not just about taxes anymore. It’s about smart management and distribution of public assets. We focus a lot on what our cities owe, but we should be looking at what they own.”

By adopting a new model of governance for public assets such as utilities, facilities or real estate, the District could shift oversight of the assets to a public holding company and have them managed by private contractors. Swedish investment banker Dag Detter has promoted the notion, and it’s gaining traction in the United States.