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Report - June 2013

Innovation and the City

New York’s next mayor will need to address a number of critical challenges facing the city. This report spotlights 15 innovative policies from cities across the U.S. and around the globe that could serve as a model.

by Neil Kleiman, Adam Forman, Jae Ko, David Giles and Jonathan Bowles




Tags: economic growth | economic opportunity | workforce development | human capital | tech | low income | youth | small business | transportation | immigrants | entrepreneurship | housing

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With Washington trapped in budget battles and partisan gridlock, cities have emerged as the best source of government innovation.

Nowhere is this more visible than in New York City.

Since taking office in 2002, Mayor Bloomberg has introduced a steady stream of innovative policies, from a competition to recruit a new applied sciences campus and a far-reaching sustainability plan, to micro-apartments and a first-in-the-nation Office of Financial Empowerment. Some reforms have been more successful than others, and some more widely embraced by New Yorkers, but these policy innovations have undeniably reshaped city government, improving service delivery and sparking economic growth.

Yet for all of Mayor Bloomberg’s achievements, many problems will remain when he exits City Hall at the end of the year. To successfully address these challenges, the next mayor will have to be as ambitious, experimental and innovative as his or her predecessor.

And just as Mayor Bloomberg drew inspiration from cities around the world, the next mayor needn’t reinvent the wheel. As we detail in this report, cities across the country and around the globe—from Chicago and Denver to Seattle and London—have pioneered a number of innovative government initiatives. The best of these reforms have clear potential for replication in New York.

Over the last six months, researchers at the Center for an Urban Future and NYU Wagner interviewed nearly 200 policy experts in cities across the country and around the globe, looking for game-changing reforms that have proven effective in other cities, that are scalable in New York and that the next mayor could implement. This report, “Innovation and the City,” presents 15 of the most promising reforms—from San Francisco’s bold plan to establish a $50 college savings account for every kindergartener in public school, to Boston’s pioneering approach to remaking the 311 system for today’s smartphone age and London’s ambitious experiment with crowdfunding for public infrastructure projects.

Mayoral transitions present a unique opportunity to develop new and innovative policy ideas. As Mayor Bloomberg has noted, a mayor must have the courage to fail in order to see what works. Yet once in office, this failure is less tolerated. Politicians are expected to get it right the first time, right out of the gate.

This effort—which we have referred to as the Mayoral Policy Lab—aims to invigorate the cycle of innovation and experimentation. Providing a new twist on the election cycle debate, we offer the New York City mayoral candidates a menu of practical policy ideas drawn from the most inspired policies in the most vibrant cities around the country and the world. If cities are our “laboratories of innovation,” our research provides rigorous policy “experiments,” offering novel, proven and scalable reforms that can improve, and possibly transform, the city.

This policy lab has been rooted in a unique partnership: the Center for an Urban Future, one of New York’s leading think tanks, paired with NYU Wagner, a public service graduate school known for blending theory and practice. The entire effort has been supported by Citi, whose work through Citi Community Development and the Citi for Cities initiative is focused on fostering urban innovation throughout the world.

More than a casual scan, we developed a rigorous and unique vetting process. In fact, we know of no other attempts to systematically curate innovative reforms and customize them for a new City administration. Our research methodology operated much like a funnel: broadly identifying new ideas at first, systematically winnowing them down, and then carefully tailoring the final slate of reforms to New York’s needs and character. The process is more precisely captured below.

In the first phase, we cast a wide net, interviewing roughly 200 policy experts from outside of New York. This included current and former mayors and chiefs of staff in cities around the world, as well as leading thinkers from philanthropic foundations, policy institutes, corporations, labor unions and advocacy groups. We also reviewed hundreds of articles, policy briefs and books reporting on noteworthy innovations.

The result was a first cut of 120 policies meriting a closer look. To gauge their feasibility in New York, we assessed these ideas with policy experts from around the five boroughs, many of whom are veterans of city government. As anticipated, we found the vast majority of our initial ideas either unworkable in New York or already being implemented by the Bloomberg administration. This left us with 20 promising reforms that both complemented and could be brought to scale in New York’s unique policy terrain.

In our final phase, we selected a group of 40 leaders from the city’s business, philanthropic and nonprofit sectors. At two expert roundtables held in late March 2013 at NYU Wagner, this brain trust provided input on our ideas, outlining how to improve some and recommending others be eliminated entirely. 

The feedback from these convenings resulted in a final list of 15 policies, all of which are laid out in detail in this report. It is a wide-ranging collection of reforms road-tested and retrofitted for New York. Some ideas are grand in scale: a citywide evaluation system for all nonprofits in London, and the introduction of digital badging to provide alternative credentials for non-academic skills acquisition. Others are simply good management tools, providing a platform for continued innovation. The Denver Peak Academy, for instance, provides innovation training to line-level agency staff, and the Chicago Loan Fund supports extended agency collaboration to stimulate efficiency and cost-savings.

The innovations are not listed in a particular order, as we believe each will appeal to different needs the city will face. Collectively, these ideas provide a roadmap for the next mayor, addressing key challenges and helping to ensure that New York remains effective and efficient in a period of declining federal support.

But New York is not the only city that can benefit from this inventory of innovation. Los Angeles and Minneapolis will be electing new mayors, and municipal leaders everywhere are facing significant challenges. We hope these ideas will inspire innovation throughout the country, in 2014 and beyond.

Idea 1: Updating 311   |   Boston & Chicago
Idea 2: Kindergarten to College Savings   |   San Francisco
Idea 3: Innovation Loan Fund   |   Chicago
Idea 4: Peak Academy   |   Denver
Idea 5: Project Oracle   |   London
Idea 6: Spacehive   |   London
Idea 7: Zero Waste   |   San Francisco
Idea 8: Digital Badging   |   Philadelphia, Providence & CHicago
Idea 9: Budget Savings Commission   |   Chicago
Idea 10: Open Data   |   Seattle & San Francisco
Idea 11: City ID Prepaid MasterCard   |   Oakland
Idea 12: Accessory Dwelling Units & Basement Conversions   |   Seattle & Santa Cruz
Idea 13: Prize-linked Savings   |   Michigan
Idea 14: Immigrant Export Initiative   |   Los Angeles & Chicago
Idea 15: Commuter Tax Benefit   |   San Francisco
Expert Participants


 

IDEA 1: UPDATING 311
Boston & Chicago   •  A More Responsive, Transparent & Participatory 311

INNOVATION IN A NUTSHELL
311 services in several cities are leveraging open source data and the capabilities of mobile computing to better serve residents and increase accountability among government agencies.

KEY COMPONENTS

  • Open source data available for independent developers to create innovative software programs
  • Real-time updates on the status of requests
  • Mobile apps that allow government workers to both access and close out cases while remaining in the field

BENEFITS

  • Enables residents to view the status and location of service requests in real-time
  • Encourages private tech-sector innovation
  • Improves government agencies’ response times

Though the Bloomberg administration built one of the first and highest performing 311 systems, the platform for the smartphone era is being created outside of New York.

Boston, Chicago, San Francisco and Washington, DC are distinguished by the quantity and quality of their 311 open data. By adopting a standardized Application Programming Interface (API) protocol, they have granted programmers access to an interactive data set, allowing them to not only read the data but also submit queries and new information. This enhances the functionality of their software and increases interoperability so that apps developed for one of those cities can be easily adapted to another.

When cities farm out innovation to private developers, they save money and stimulate business development in the civic-tech sector. Chicago’s “Service Tracker,” for instance, was developed by programmers from Code for America. It allows residents to monitor the status of their service requests at every stage of the process—from inspection, to inter-departmental hand-offs, to completion—and receive email updates along the way.

In Boston, the Department of Innovation and Technology and the Office of Urban Mechanics work with innovators from inside and outside of government, helping them incubate and scale their ideas. Citizens Connect, Boston’s version of 311, has been a primary beneficiary. Its Twitter account uploads all open service requests to its feed and posts updates when cases are closed. Its smartphone app—the first in the country and still the most emulated—allows users to read recent submissions, look at accompanying pictures and even view their location on a map. The “City Worker” app allows government employees to access service requests while they are in the field and officially close out cases without ever returning to the office. Service requests are directly routed to the nearest work crew from the responsible department, automatically and efficiently assigning responsibility.

In New York, a heavily curated 311 Twitter account serves mainly as a resource for parking regulations rather than for information on service requests. The City’s smartphone app does not allow users to see others submissions, either on a map or as a running tally of recent requests.

And while there is much to learn from peer cities, New York also faces unique challenges. An astounding 22 percent of the city’s population has limited English proficiency, yet only 3 percent of 311 calls are handled in foreign languages. With service distribution and worker deployment both reactively and proactively informed by 311 data, low call volumes from this group can lead to systematic exclusion.

A 311 system that leverages the full power of the Internet and mobile computing would build on the old system to further increase the effectiveness of government services and inform decision making among agencies. 311 data and analytics have already allowed city agencies to proactively and efficiently deploy a wide variety of services and programs targetting noise abatement, disease control and pothole repair efforts, among many others. As the 311 API ecosystem matures, programmers envision apps that allow for more meaningful forms of citizen engagement, enabling residents to collaborate with one another and city agencies when planning streetscapes, parks and other neighborhood amenities.


 

IDEA 2: KINDERGARTEN TO COLLEGE SAVINGS
San Francisco   •  Fostering a College-Going Culture & Allaying Rising Tuition Costs

INNOVATION IN A NUTSHELL
The City of San Francisco is funding the country’s first universal college savings account program for all of its public school kindergartners. The initiative will foster a college-going culture and alleviate rising tuition costs.

KEY COMPONENTS

  • A public-private partnership with Citi, which manages the accounts, and local community partners, which raise money to match city funds
  • Seed money from the City for all new kindergarten students and twice as much for those who qualify for free and reduced lunch
  • City and private contributions are retracted if students do not use them for college-related expenses before the age of 25, but can, of course, keep anything they added to the account along the way

BENEFITS

  • Incentivizes kids to go to college
  • Provides funding for ever-rising tuition costs
  • Exposes under-banked families to mainstream banking system

In San Francisco, the “Kindergarten to College” program (K2C) is helping school kids attend college without accruing massive debt. Funded through a public-private partnership, the program kick-starts college funding for all public school students. It is the first of its kind in the nation.

Launched in 2010 and fully scaled in 2012, the City allocated $190,000 from general funds to support the program, which now has about 8,000 accounts, with 4,700 new accounts each year. Every city public school kindergartner receives a “seed” deposit of $50 dollars into their account to start. Low-income students who qualify for free and reduced lunches receive an additional $50 dollars. To incentivize families to contribute to the account, K2C offers private sector matches. A pool of funds raised by community partners EARN and The San Francisco Foundation is used to match family deposits dollar-for-dollar up to $100. An additional $100 will be added for those who enroll in monthly automatic deposits. In total, low-income families who enroll in the program and make monthly automatic deposits of at least $100 will receive as much as $300 in return.  

At a time when four-year college degrees have become the standard requirement for almost any well-paying job, K2C could provide a critical leg up for struggling families in New York. Individuals with a four-year degree can expect to earn twice as much as those without one, but rising tuition costs are putting those degrees out of reach for low- and middle-income families. Between 2008 and 2011, the average net cost of attending college increased by 4.6 percent, while the national student loan debt increased to nearly $1 trillion. In New York, where 72 percent of school children receive free and reduced lunches, many kids aren’t even considering college, let alone saving for it.

As Anee Barr, the K2C program manager, notes, the program also benefits underbanked parents by creating a bridge into the financial mainstream. In New York, where more than 800,000 residents have no bank account, this could prove as valuable as incentivizing college.

While acknowledging the benefits of K2C, one senior New York City official expressed concern about the cost of the program. He worried that scaling it to a city with over 1.1 million public school students would prove prohibitively expensive. Cathie Mahon, a former city official and current CEO of the National Federation of Community Development Credit Unions, however, thinks the expense could be overcome if agencies are savvy about pooling matching funds. The program is almost tailor-made for private sector matches, and if any city is well positioned to take advantage of financial industry resources, it’s New York. According to Mahon, several federal funding streams could also be tapped.

The City could use federal dollars from the Assets for Independence Funding and Gear Up programs targeting middle school and high school students. Introducing matching funds at different stages in a child’s educational career, rather than providing all the money up front as San Francisco does, would provide an incentive to stay in school. Federal dollars could fund students from financially strapped families while private sector matching covers the rest. Or, instead of universal matching, the initial bank deposits could go exclusively to students who qualify for free lunches.

However the program is structured, the benefits are clear: improving college affordability and assisting the under-banked.


 

IDEA 3: INNOVATION LOAN FUND
Chicago   •  Loan Fund Seeds New Ideas at the Agency Level

INNOVATION IN A NUTSHELL
Chicago’s multi-million dollar, revolving loan fund surfaces the most promising new ideas generated within city agencies—ideas intended to pay for themselves within five years through marked improvements in service delivery.

KEY COMPONENTS

  • The City budget office works with a committee of mayoral aides to vet agencies’ loan applications
  • Agencies must prove major savings or revenue increases are in the offing; otherwise, the funds will be sliced from their budget
  • Cross-agency proposals are strongly encouraged and eligible for larger awards

BENEFITS

  • Loans cultivate, support and advance reforms that germinate at the agency level
  • The Mayor’s Loan Committee lets City Hall scope out ideas with potential applicability and impact citywide

There’s often a feeling in government agencies that employees could generate cost savings and innovation if only anyone would listen.

The City of Chicago has responded by creating a modern-day suggestion box.

After Rahm Emanuel became mayor in 2011, he tasked the City’s budget office with developing a $20-million, pooled loan fund to support promising ideas proposed by agencies. There are few parameters for idea submissions, except that the proposal has to pay for itself, substantively improve services, and under no circumstances lead to the hiring of additional staff. Within five years, if the idea doesn’t pay for itself, the sponsoring agency will see the costs carved out of its budget.

The early results of the project are encouraging. In the first budget cycle, a dozen ideas bubbled up, and four received funding. One was a $900,000 loan to the Departments of Public Health, Consumer Protection and Business Affairs to support a new effort to reduce the black market sale of cigarettes. The effort provides cash rewards to citizens reporting illegal tobacco sales and is expected to pay for itself within three years through increased cigarette tax revenue.

About $240,000 has been assigned to the Department of Buildings to ease the city’s notorious inspection delays. The loan will move the agency from a manual process of scheduling inspections to a fully automated system that saves time for the applicant and the Buildings Department. The plan is to expand the new system to meet all of the city government’s inspection scheduling needs.

Managing the City’s new loan application process doesn’t cost the city any money. All projects are tracked by the budget office. To guide the process, the Mayor created a Loan Committee composed of senior aides and advisors, including the City’s chief financial officer, chief of policy, chief operating officer, and the director of the Bloomberg Innovation Delivery Team. The Committee reviews proposals and signals whether they should be advanced. It provides feedback to applicants, approves final submissions and oversees the creation of progress reports. Cross-agency projects, eligible for larger loans, are actively encouraged. And automations or innovations pioneered by one agency have been launched as pilot projects for scaling up across city government (as in the case of the Buildings Department’s new inspection scheduling system).

The Committee also identifies proposals that may not generate enough savings to be eligible for a loan, but are worth pursuing and can be funded through other means.

Taken together, the loan process surfaces agency-level innovations, which then can be interpreted, supported and when warranted, implemented citywide through the work of the Loan Committee.

One issue has cropped up: after the initial wave of applications, the submissions slowed. The City realized that agencies had a lot of potential for innovation, but lacked the bandwidth to generate proposals. To remedy this, the City shifted from requiring full-blown proposals to asking for a one-page initial summary. The summaries are voted thumbs up or down by the Committee, with comments. The streamlined process saves the agency sponsor from investing too much time in an unpromising idea. The mayor has also detailed City Hall staff to assist the agencies in the proposal development process, providing added capacity and critical insight into the Mayor’s priorities. Applications are back up, with a dozen submitted so far this year.

New York City’s approach to funding innovations and cost savings is comparatively informal. Agencies can, and do, approach the Mayor’s Office of Management and Budget (OMB) with proposals, seeking funding.

But there is no loud, continual broadcast of this opportunity, as there is with the Loan Fund, which promotes the loan program four times a year. The Loan Fund also provides an effective vehicle for encouraging cross-agency collaboration. And Chicago has aimed for transparency, issuing press releases and celebrating success. Experts in our roundtable discussions emphasized that this last element is critical, and additional recognition, possibly in the form of an annual award from a respected good government group, would be helpful.

New York is well positioned to chart a similar path, given OMB’s support for cost-saving proposals, continuous oversight and analysis, and a governance structure that includes a surfeit of deputy mayors with cross-agency portfolios. These are the officials who could make up the core of a pathbreaking loan review committee and loan program for the entire city government.

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