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Denver, Colorado's political economy

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Title:
Denver, Colorado's political economy sacrificing small business for a global market, the tragedy of the creative class
Creator:
Schellberg, Laura Johanna
Publication Date:
Language:
English
Physical Description:
iii, 107 leaves : ; 28 cm

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Subjects / Keywords:
Small business -- Government policy -- Colorado -- Denver ( lcsh )
Creative ability -- Economic aspects ( lcsh )
Economic policy -- Denver (Colo.) ( lcsh )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Bibliography:
Includes bibliographical references (leaves 99-107).
General Note:
Department of Political Science
Statement of Responsibility:
by Laura Johanna Schellberg.

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Source Institution:
|University of Colorado Denver
Holding Location:
|Auraria Library
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All applicable rights reserved by the source institution and holding location.
Resource Identifier:
515968442 ( OCLC )
ocn515968442
Classification:
LD1193.L64 2009m S33 ( lcc )

Full Text
DENVER, COLORADOS POLITICAL ECONOMY:
SACRIFICING SMALL BUSINESS FOR A GLOBAL MARKET,
THE TRAGEDY OF THE CREATIVE CLASS.
Laura Johanna Schellberg
B.A., University of Colorado Denver, 2007
A thesis submitted to the
University of Colorado Denver
in partial fulfillment
of the requirements for the degree of
Master of Arts
Political Science
2009


This thesis for the Master of Arts
degree by
Laura Johanna Schellberg
has been approved
by
Tony Robinson
Date


Schellberg, Laura Johanna (M.A., Political Science)
Denver Political Economy: Sacrificing Small Business for a Global Market
Thesis directed by Associate Professor Anthony R. Robinson
ABSTRACT
Because of the structural constraints pushing Denver, Colorado to compete in the
global market, Denver officials are pressed to sacrifice small business hopes on the
altar of globalization. This paper will discuss the tragedy of the creative class -
which is the tendency of urban growth regimes to sacrifice creative class desires for
local business development and eclectic neighborhoods to the interests of global
capital investment and profiteering and examine how this tragedy is reflected in
many local economic development agendas. This discussion will be supported with a
case study of Denver tax increment financing (TIF) projects and other economic
development tools. This thesis will conclude by discussing alternatives to global
economic development agendas through community action, and by presenting an
example of a localist challenge to globally oriented economic development as seen in
a current TIF project in Denver. Through an analysis of the triumph of global over
local interests in Denver, this study highlights the consequences of the future of
Denvers political economy if the development strategies of Denver officials do not
change. Considering the historically central role of small businesses in Denvers


economy, this thesis demonstrates that todays official economic development
strategy must be reexamined if Denver is to leverage historical strengths to achieve
long-term economic success.
This abstract accurately represents the content of the candidates thesis. I recommend
its publication.
Signed
Tony R. Robinson


TABLE OF CONTENTS
CHAPTER
ONE: INTRODUCTION..............................................1
Methods....................................................3
Outline of Chapters........................................5
TWO: TRAGEDY OF THE CREATIVE CLASS............................11
Denver, Colorado Joins the Fight for the Global Creative
Class.....................................................11
The Global Creative Class.................................15
The Commodification of Cool...............................20
The Creative Class Invites Global Investment: Sacrificing the
Local.....................................................23
Case Studies of the Tragedy of the Creative Class.........25
THREE: THE TRAGEDY OF THE CREATIVE CLASS COMES TO
DENVER, COLORADO................................................29
The Importance of the Creative Class in the New Economy.29
Mayor Hickenloopers Desire for the Creative Class........30
DNMJ, a Glimmer of Small Business Support in a Sea of Global
Market Sharks.............................................34
i


SBDC, Further Fragmentation of Small Business Support...37
FOUR: THE TRAGEDY OF THE CREATIVE CLASS AND DENVERS
ROLE IN THE GLOBAL MARKETPLACE.................................40
The Neo-Liberal Approach in Denvers Political Economy:
Appointing the Global....................................40
Mayor Hickenloopers Push for a Globally Competitive Denver
Economy..................................................45
The Denver OED and Globalized Gentrification............53
The Denver Metro Chamber of Commerce: Outsourcing Small
Business Development to Attract the Global..............62
C3, Inviting Global Hubs to Denver.......................63
FIVE: CASE STUDIES OF DENVERS POLITICAL ECONOMY................68
Local versus Non-Local Businesses: Who Benefits from Tax Increment
Financing (TIF) Projects..................................68
TIF Mechanism of Economic Development.....................68
TIF and the Local Business Advantage......................71
Stapleton: Global Realities of Local Economic Development.74
A Grim Future for Denver..................................81
CHAPTER SIX: ALTERNATIVES TO THE TRADEGY OF THE
CREATIVE CLASS..................................................84
ii


The Localist Challenge to Economic Development: Staying True to
the Local..............................................84
Manhattanization: the Loss of Democratic Power and Land
Control................................................87
Community Action, Reclaiming the Local.................89
The Campaign for Responsible Development, Community Action in
Denver.................................................92
Conclusions............................................94
APPENDIX: BLUEBIRD BEAT NEIGHBORHOOD................................98
BIBLIOGRAPHY........................................................99
iii


CHAPTER ONE: INTRODUCTION
Small business is the lifeblood of Denver, Colorados economy. Research
from the U.S. Small Business Administrations (SBA) Office of Advocacy
demonstrates that 52% of Colorados new jobs (non-farm) are generated by small
businesses, and furthermore, They bring dynamic ideas, innovative services, and
new products to the marketplace (SBA, 2007, pg. 1). Entrepreneur magazine in
2006 listed the Denver-Boulder-Greeley area as the 19th most Hot Metropolitan Area
for Entrepreneurship. The U.S. Bureau of Economic Analysis recently ranked
Denver-Aurora second in largest area population of self-employed incomes (2006). It
seems Denver and the surrounding metro areas are overflowing with bountiful small
business power.
It is arguable, however, that Denvers small business economy is not as
flourishing as one might expect. Travel to some of Denvers most recent locations of
economic development, such as the Morrison Road area of southwest Denver or the
Welton Street Corridor of Five Points, and small, vacant, undeveloped or
underdeveloped lots sit waiting for small businesses to set out their shingles. At the
same time, other areas of booming recent economic development, such as Cherry
Creek North or the Stapleton Quebec Square, are home to large franchise merchants
like Crate and Barrel, Edward Jones, Sears, Whole Foods, and even Wal-Mart.
1


Denver Mayor John Hickenlooper has purportedly advocated for small businesses
since his landslide election in 2003, however these recent economic developments do
not reflect this vision. The explanation for this dichotomous result is multi-faceted
and complex, but the root of the explanation involves global interests triumphing over
local business development.
This thesis will examine Denvers political economy, focusing on the extent to
which small businesses are being sacrificed in a global market. Because of the
structural constraints pushing Denver to compete in the global market in order to
attract the creative class1, Denver officials are pressed to sacrifice small business
hopes on the altar of the globalization. This is an ironic result, since the creative class
is argued to value local authenticity and small businesses, not big boxes and
formulaic disneyfied2 downtowns (Florida, 2004). Though much of Richard
Floridas theory is incoherent, in that it fails to recognize class divisions within the
creative class (for example, divisions between low-income inner-city artists and
affluent global investors), I will engage scholars like Sharon Zukin, Neil Smith, and
Jamie Peck in clarifying the reality of important differences (both economic and
1 The creative class are a group of global workers, termed by Richard Florida, an
American urban studies theorist at the University of Toronto, characterized by the
need for creativity in their employment.
2 Disneyfied means an area has been transformed and is now orderly and well-
mannered, individual desire has been placed under corporate control, comparable to
the atmosphere of a Disney park. (Zukin, pg. ix, 1995).
2


cultural) that divide different segments of Floridas creative class. This paper will
discuss the tragedy of the creative class the creative class desires local business
development and eclectic, urban neighborhoods, but these urban aspects are often
sacrificed by city leaders in the interests of attracting this very creative class. Urban
pro-growth elites have come to believe that a city can only attract the creative class
by attracting global capital investment and rapid business growth, but these very
developments often undermine the kind of authentic city the creative class is said to
value. This tragedy of the creative class is reflected in many local economic
development agendas. This discussion will be supported with a case study of Denver
tax increment financing (TIF) projects and other aspects of Denver economic
development. This thesis will conclude by discussing alternatives to global economic
development agendas through community action, and by presenting an example of a
localist challenge to globally oriented economic development as seen in a current TIF
project in Denver.
This thesis argues that Denvers political economy faces serious problems if
current development approaches do not change. Denvers economy is and has been
historically based on small business: 52% of new jobs in Colorado come from small
business, according to SBA reports. Considering this unique and critical feature of
Denvers economy, I will demonstrate why the official economic development
3


strategy must be reexamined if Denver is to leverage historic strengths into long-term
economic success.
Methods
This paper is a rumination on urban development theory supported by the
case study method.3 The urban politics case study method is a descriptive and
explanatory method which develops theory or identifies patterns in urban politics
through an intensive study of a single city (or even a single neighborhood in a city).
This method is used to make generalizations drawn from a single case that relate to
contemporary research drawn from other cities or from broader studies (Yin, 2009).
The case study method, argues Yin, is of particular value in community studies such
as an examination of a citys political economy, because community studies examine
issues on a collective, not individual, level (2009). In addition, Yin asserts the case
study method is best employed when an empirical inquiry is examined in a
contemporary set of events... over which the investigator has little or no control
(2009, pg. 13) such as an investigation of contemporary urban business
3 This paper offers a contribution to the study of regional economic development by
virtue of being a comparable, case study. This paper provides a starting point in
providing more in-depth, unbiased analyses of economic development strategies
utilized by officials. Many recent analyses of Denver economic development
strategies have been conducted with funding from players with skin in the game.
The Front Range Economic Strategy Center (FRESC) funded Robinson and Nevitt
and Cloud and Rolls research was funded by the Denver Housing Authority (DHA).
The analysis in this thesis, however, exists without financial support from such
agencies, and does not advocate for any organization, approach, or official.
4


development strategies. Finally, a case study is well suited to examining a real-life,
in-depth phenomenon that is best understood only be understanding the local
context. In the case of this thesis, the context facing Denver is the global
competition between cities for economic growth, based partly on Richard Floridas
theory of the creative class. I am examining Denvers political economy and the
effect competition within the globalized marketplace has had on Denvers local,
small business climate, and therefore, the case study method being able to describe
and explain a phenomenon in its contextual conditions is my method of analysis.
For purposes of understanding Denvers current political economy, I have
drawn on many years of reporting by the Denver Business Journal. While the Denver
Business Journal is the leading local paper covering economic development issues,
organizations like FRESC (formerly the Front Range Economic Strategy Center), the
Denver Urban Renewal Authority (DURA), and the Denver Office of Economic
Development (OED) have also issued progress reports and produced quantitative
analyses of many other areas of Denvers political economy, including workforce
development, affordable housing, and tax increment financing (TIF) projects. Many
of these reports and analyses will be used in this thesis. I have also employed a select
body of scholarship in urban development theory. Sharon Zukin, Robyne Turner,
Neil Smith, and Jamie Peck, a well known group of radical urban theorists with a
5


critical perspective on urban globalization and elitist growth regimes, are some of the
leading theorists I rely on to frame the similar critical conclusions of this thesis.
Outline of Chapters
In Chapter Two I will discuss the tragedy of the creative class. Influential
thinker Richard Florida (2004) argues that the creative class, a group of 38 million
working Americans (30% of the labor force) who allegedly are the driving force in
todays economy, desires indigenous, creative, and eclectic neighborhoods to fuel
their continued professional creativity. However, as many scholars of urban
development theory argue, the flaw in Floridas theory of the creative class involves
what Florida calls the super creative core a group of high powered, highly
financed individuals that tends to attract global capital investment and urban
development patterns that ultimately undermine the values of other members of the
creative class (less affluent urban artists, teachers and the like) who create and enjoy
eclectic neighborhoods. Urban development scholars such as Sharon Zukin, Neil
Smith, and Jamie Peck, unpack Floridas creative class theory and show the reality
that the creative class is not a single, unified group with similar values. Through
their analyses of disneyfied downtowns and an associated process of redeveloping
poor, urban neighborhoods in response to global capital investment demands (a
process Zukin callsManhattanization), these scholars show that in fact there is great
conflict between Floridas lower-order creatives (who have less income and who
6


enjoy living in urban neighborhoods with a bit of grit and local charm) and Floridas
super-creative core individuals, who tend to plan and finance the wholesale
reconstruction and gentrification of these neighborhoods. Jamie Peck, specifically,
exposes the municipal adherence to the creative class theory as ideological cover for
officials who like to voice support of urban eclecticism and small business, while in
reality financially and politically supporting those who favor urban gentrification,
financed byglobal capital circuits. Almost instinctively, as soon as the
educated/artistic/bohemian creative class discovers an undone or even blighted
community in a city and moves in to invest in cheap housing and local authenticity,
global investors and large, global chains subsequently exploit this newly chic
neighborhood. The global investors finance a wave of new developments in these
previously degraded neighborhoods developments sure to feature such things as
franchise businesses and Big Boxes, Virgin Records, and trophy downtown stadiums.
It all ends up producing an environment counter to the supposed desire of the creative
class for local authenticity. This is what I call the tragedy of the creative class, which
I will examine in detail in chapter two.
In Chapter Three, I present how the tragedy of the creative class is reflected in
local economic development agendas. Though the creative class and many municipal
officials such as Denver Mayor John Hickenlooper, the Denver Neighborhood
Marketplace Incentive (DNMI), and the Small Business Development Center (SBDC)
7


- publicly express support for eclectic, small, and locally owned business districts,
these official hopes for a strong locally-based, small business economy are often
sacrificed on the altar of the global marketplace. Large, global chains reap the
benefits of local economic development strategies, as chapter three will demonstrate.
In Chapter Four, I will examine Denvers economic development strategies in
detail. This chapter will reveal Denvers globally-centered development approach,
by discussing the strategies of Mayor Hickenloopers Office, the Denver Office of
Economic Development, the Denver Metro Chamber of Commerce, and the Colorado
Competitive Council (C3). In this chapter, I also provide local examples and case
studies of the tragedy of the creative class through an examination of the Denver
Pavilions (a downtown mall project), and the Denver Housing Authoritys (DHA)
role in catalyzing gentrification of a low-income neighborhood, (Five Points) that was
targeted for economic revitalization.
In Chapter Five, I present a single case in Denver where small, locally owned
businesses have been sacrificed by municipal officials push to compete in the global
marketplace. This single example involves tax increment financing (TIF), a strategy
of economic development where taxpayers subsidize economic development in the
short-term, and focuses on developments in Denvers very largest TIF projects: the
Stapleton urban renewal project. I will specifically examine developments at
Stapletons Quebec Square area, the very first retail center to open at Stapleton.
8


Ideally, Quebec Square was designed to attract the creative class, with large parcels
of land designated for public space and planned in the new urbanist tradition of
walkable, locally owned retail shops. However, soon after this design was presented,
the realities of global capital and investment reared their head, and the small business-
friendly, retail residences of Quebec Square became a vision of the past.
Chapter Six concludes my analysis by presenting the localist challenge to
economic development strategies and by offering an alternative development strategy.
This chapter presents unique case studies of downtown developments using TIF
projects in Phoenix, San Diego, Jacksonville, and Orlando; these cases resemble the
battle for political and economic control currently under way in many cities torn
between preserving local businesses and competing globally. This chapter also
provides a call for a new kind of urban development strategy for a better Denver
future. The conclusion of this thesis presents one of Denvers current TIF projects,
the Cherokee-Gates Rubber Factory development. In this case, we see the possibility
of victories in local community struggles for small businesses, fair wages, and local
involvement in large development projects, but we also witness the competing
resistance from municipal officials and the realities of global capital markets which
can undermine local victories. Though the local Denver community won important
community benefits to be built into Denvers showcase Gates urban renewal project,
The Gates project, as a result of the current global economic recession, is currently
9


not under construction. The thesis concludes with this case study to demonstrate the
powerful way in which global realities structure Denvers political economy, even in
cases when the local community ostensibly wins victories to reshape the globally
dominant urban growth paradigm.
10


CHAPTER TWO: THE TRAGEDY OF THE CREATIVE CLASS
Denver, Colorado Joins the Fight for the Global Creative Class
Part of what has driven cities aggressive pursuit of various development
approaches is the ever-intensifying challenge of globalization. Traditionally, Denver
- the focus of this thesis competed mostly with other regional cities, such as
Cheyenne, Wyoming, for development capital (Leonard and Noel, 1990). Because
Denver is the largest city in the regions most populated state, and home to the
Colorado capital, industry demand has typically been higher for Denver (as compared
to other regional cities), and the city also has greater access to world-class
resources such as the Denver International Airport (DIA). However, what has altered
the competitive environment in recent years is the growing influence of globalization
on cities.
Denver is now in competition with other worldly, creative cities, including
Paris, London, and Mumbai. To attract serious new development in this global
environment, Denver must showcase itself as a world-class city on the same level as
these other cities, must showcase itself as conveniently located to resources and
attractive geography, and prove itself to be a secure site for many years of economic
success. As Jamie Peck warns, It follows that no one, and nowhere, is safe from this
new competitive threat. Even powerful economies can fall prey to new forms of
11


creative competition (2007). Peck adds that the challenge of global competitiveness
often forces municipal governments to invest in creative supply side economics
which has led businesses, developers, and investors to demand city governments to
offer a host of tax exemptions and outright subsidies to attract out of region
businesses to the area.
As Denver seeks success on this global level, city leaders have become
increasingly enamored of strategies to attract an allegedly rootless and
internationalized creative class of affluent professionals individuals (and associated
businesses) who are intensely connected to international trends and global capital
circuits, and far less likely to arise out of the local business community. William
Robinson and Jerry Harris highlight this point in their article, Towards a Global
Ruling Class? Globalization and the Transnational Capitalist Class (TCC), where
they argue that the TCC are the owners and controllers of worldwide production as
they manage global circuits of capital (2000). These individuals are comprised of
investors, bankers, financial wizards, and lawyers: what Florida (2004) calls the super
creative core members of the emerging creative class. Contemporary business
scholars, such as John Scott, demonstrate how this global capitalist class of elites has
come to control the means of production and investment patterns across the world
(2005). Jamie Peck also recognized this global ruling class in his critique of Richard
12


Florida (who popularized the creative class philosophy) when he criticized Floridas
creative class as purveyors of the new global order (2005, pg. 765).
These scholars, along with Sharon Zukin and Neil Smith, argue that Floridas
creative class, which Florida himself sometimes divides into the super creative core
and the regular creative class, is actually two conflicting groups, representing
distinctly different interests. The super creative core or TCC (Robinson and Harris,
2000), are in control of global capital circuits and profit from global urban
gentrification and big-box store or large chain store developments. The lower level
creative class, which Florida separates from the super creative core later in his work,
are the local artists, bohemiams, and creators of electic urban neighborhoods, and
these lower-level creatives are the focus of Floridas entire prescriptive theory about
how the creatives value local authenticity and neighborhood diversity. However, as
Smith and Peck rightfully note, these two classes have fundamentally
oppposedinterests,- the super creative cores interests revolve around plugging in and
out of global capital circuits and the lower-level creative classs interests lying in
preserving local flavor, authenticity, and small business districts. The conflicting
nature of these two classes sets the stage for Zukins Manhattanization process
whereby lower-level artists and bohemians in a gentrifying neighborhood become
displaced by the rising rents and disneyfied landscapes that the super-creative core
bring with them in communities that they target for transformation. Neil Smiths
13


analysis of how rent gaps are exploited on the urban frontier is another version of
Zukins Manhattanization theory. Once the artistic, small business-friendly creative
class moves into a neighborhood and civilizes it and makes it hip, Smith argues, the
super creative core (TCC) soon become interested in exploiting rent gaps in the
suddenly hot area and global capital follows instinctively, flowing into developments
that are globally recognizable and highly profitable.
Regardless of the way in which some scholars criticize the global creative
class specifically the super creative core as being destructive to local traditions
and purveyors of a pro-corporate, anti-democratic new global order, city officials
across the world have been caught up in Richard Floridas celebration of the creative
class as a force for urban salvation. Denver officials and specifically Mayor
Hickenlooper, as will be later demonstrated have been particularly enamored of
Richard Floridas strategy of creative class development with the single goal of
attracting this rootless and affluent class. The role for government, in this context, is
to invest in the creative supply side (Peck, 2007).
Because the people who make up this supply side are famously global,
scanning the world for the friendliest locales for their unique talents and tastes, any
government seeking to invest in the creative supply side soon finds itself competing
for global talent, global investors, and businesses with global reach. As Denver has
become caught up in the urban war for the global creative class, and because Denver
14


is no longer in a simple economic competition with local areas like Colorado Springs,
Grand Junction, and Fort Collins (all located in Colorado) as it was prior to the
effects of globalization Denvers recent economic development strategies have been
built around luring the global creative class. Denvers development strategies
perfectly match the findings of economic development scholars who theorize that
modem cities facing todays global challenges must showcase themselves as world-
class locations that offer a distinct music culture, a diverse citizenry, and new kinds
of social institutions and policies (The Flight of the Creative Class, 2007, pg. 241).
Richard Florida is one of the most famous of public policy scholars who have made a
living offering a prescription that cities must attract the global creative class to spur
regional economic development.
The Global Creative Class
Since claiming the title of national and international bestseller, Florida has
used his scholarly popularity to hold various speaking events and take on whole cities
as clients; Esquire magazine named him among their Best and Brightest. His
books on the creative class attempt to persuade readers and municipal officials that
individuals are not drawn to employment opportunities by salary or company identity,
as they were suspected to be in the past. Todays workers are drawn to the lifestyle of
varying cities, from across the globe. Whether it is the live music scene of Austin,
Texas, the rugged, outdoor sports-friendly Denver, Colorado, or the creative
15


newness that is buzzing in Berlin, this new workforce is a creative group, attracted
to local quality of life and surveying the globe to find it. Floridas top seller, The Rise
of the Creative Class, has been called a users manual for discussing the significance
and importance of building a creative class magnet for economic development
(2002)4.
Floridas theories directly challenge the notion that geography is dead5 (The
Rise of the Creative Class, 2002, pg. 6), as he believes local quality of life is key to
leveraging economic development. Florida believes that the globalized worker wants
to live in an area where friends can be made easily, and individuals can live a quasi-
anonymous life. Florida argues that at least 30% of working people (the creative
class) in the United States (38 million individuals) are highly mobile creative
classers, devoting themselves to art, writing, and other creative work with a high
degree of formal education and locational freedom. They earn around $50,000 per
year (and up) and want to live in creative centers like London, Boston, Berlin,
Washington, D.C., Shanghai, San Francisco, Melbourne, and Austin.
4 This citation is from the 2002 edition of the book in a prelude to the text called,
Praise for The Rise of the Creative Class.
5 Because of the influences of globalization, some development scholars such as
Kevin Kelly (New Rules for the New Economy: 10 Radical Strategies for the
Connected World) hypothesize that location is no longer a determining factor in
employment decisions, since the forces of globalization reach across the globe.
16


The term creative class comes from the type of work these individuals do for a
living. Florida cites scientists, engineers, university professors, poets and novelists,
artists, entertainers, actors, designers and architects, as well as the thought leadership
of modern society: nonfiction writers, editors, cultural figures, think-tank researchers,
analysts, and other opinion-makers as members of this class that he alleges creates
new forms and ideas as a way of life (The Rise of the Creative Class, 2002, pg. 6).
His research suggests municipal officials should attract this demographic instead of
attempting to lure large firms, a technique of the past, to spur economic development.
Florida says one way municipal officials can fail at building creative class
communities is to bring in large chains, or to package the experiences of the street in
a carefully controlled Disneyfied way such as in carefully groomed and totally
predictable tourist bubble (Judd, 1999) sites like San Franciscos Ghiradelli Square
or Denvers outdoor Pavilions mall. The creative class turns away from chain
restaurants, bars, sports venues, and nightclubs. They prefer more authentic,
indigenous, or organic venues that offer a wide range of options and where they can
have a hand in creating the options (The Rise of the Creative Class, 2002, pg. 187).
Furthermore, Florida argues the creative class desires a community where they can
quickly plug in and out of such creative options, and this quasi-anonymous, flexible
community is a key aspect that the creative class desires when choosing where to live.
The creative class seeks out a community with a high creative capital and they
17


search the globe for locations with unpredictability and authentic local flavor to keep
their creative juices flowing.
It is essential in this discussion to understand that this creative class is argued
by Florida to be rootless. They like to plug-in-and-play in a variety of world locales,
and desire creative, local, but world-class, amenities even while members of this
class are unattached to any particular place. Venture capitalist Sam Long is a good
example of the type of rootless talent that cities are fighting to attract in the creative
economy.
Long is a venture capitalist who moved from Cleveland, Ohio to Seattle
Washington, taking his investment capital with him. Long is a business savvy, risk
taking investor in software firms who was seeking out the best creative city for his
talents Long is argued by many to be part of a new, brain-driven, winner-take-all
pattern in urban growth (Harden, 2003). The Washington Post feature article on the
Sam Longs of the world also cites Austin, Atlanta, Boston, Denver, Minneapolis, San
Diego, San Francisco, Washington, and Raleigh and Durham, N.C as cities that are
winning the cannibalistic competition for young talent like Sam Long, while non-
creative cities like Cleveland and Detroit are left behind.
Richard Florida has recently argued that this brain-drain competition, like
the capitalist class itself, is no longer a domestic one (Gertner, 2004). Like the
movements of global capital and business investment, the creative class is highly
18


mobile in their search for creative destinations. [A] new global order will not pit
Boston against Austin for jobs, but Boston against Dublin (Gertner, 2004, pg. 92).
Cities are responding to this international competition for individuals like Sam Long
with a common set of economic development strategies. Broadly, [the competition]
is about how local urban spaces can be reimagined, rejuvenated and re-purposed
within a competitive global framework argued Jinna Tay in her article Creative
Cities (Crewe and Beaverstock 1998; Abbas 2000)6.
Florida points at mega-cities like those on the East Coast, such as Washington,
D.C., Boston, or New York City, in addition to San Francisco Bay Area, Seattle, and
Austin, and even smaller cities such as Boulder, Colorado and Santa Fe, New
Mexico, as cities that are experiencing the most significant regional economic growth
in this new economy7. The significance of this economic growth, according to
Florida, lies in their ability to offer the quality of life the creative class looks for in a
world-class city.
The creative class and their alleged attraction to indigenously creative, undone
cities is not an original idea that only Florida pioneered. Sharon Zukin argues in her
books Loft Living (1982) and The Cultures of Cities (1995) that artists have been
6 Tays quote and article can be found in Creative Industries, edited by John Hartley,
pg. 220, 2005).
7 In Gertners 2004 article in Money, Florida said he believed the U.S. remains the
leading country in attracting the creative class, hence my focus on U.S. cities.
19


moving into the type of communities Florida describes and creating hip
neighborhoods for many decades. The difference between the approaches of these
two scholars is that while Florida celebrates the creative class as a group that values
and protects traditions of local authenticity, that seeks a small business climate and
that values the unpredictability of diverse and even gritty street scenes, Zukin is far
less sanguine about the creatives as agents of local salvation. In fact, the thrust of
Zukins work is to show how many return to the city artists and bohemians are
indeed creative individuals with eclectic urban sensitivities but whenever these
people begin to show up and settle in previously degraded urban neighborhoods (i.e.,
slums), they are almost always a sign of troubling globalized gentrification patterns to
come. The innovation within Zukins theory is to show how this previously
localized, bohemian class of creative individuals (with undeniable creative
contributions to cities, such as the innovation of core-city loft living) have been
commodified and seized by global capital circuits.
The Commodification of Cool
In Loft Living (1982), Zukin discusses the residential conversion or
Manhattanization8 of New York Citys out-of-service manufacturing buildings. A
8 Term coined by author, Neil Smith. Manhattanization reflects the pressures to
develop inner-city areas in response to global investment demands and leads to what
Smith calls, the creation of a bourgeois playground (Gentrification of the City,
1986, pg. 32).
20


combination of low rents and squatting9 enabled artists to move into areas that are
now referred to as SoHo (New York City), LoDo (Denver), or SoMa (San Francisco).
These areas were initially taken over by local creatives, bohemians, and artists (who
began to rent their cheap storefronts and live in their vast warehouse lofts), made
cool, hip, or civilized, and then were commodified by global investors or more
affluent creatives who could take advantage of or pay the higher rents that soon swept
through the gentrifying area Zukin called this process the seductive influence of
the arts on urban redevelopment (1995, pg. viii). Zukin argues in The Culture of
Cities that this process created commodified cultural capital, a Disney landscape
across cities10, and a cycle of global capital capturing creative class interests and
turning them into commodified cool. This disneyfied model of economic
development can be called the tragedy of the creative class.
For city managers seeking economic development strategies, Disney World provides a
consensual, competitive strategy. Take a common thread of belief, a passion that people
share... and develop it into a visual image. Market this image as the citys symbol. Pick
an area of the city that reflects the image; a shimmering waterfront water front
commercial complex to symbolize the new, a stately Beaux Arts train station to
symbolize renewal, a street of small-scale, red-brick shops to symbolize historical
memory. Then put the area under private management (Zukin, 1995, pg. 54).
9 Term used when individuals take over an area for residential purposes where rent is
not paid due to the abandonment of the area.
10 A Disney landscape is a symbolic economy. Imagine Disney as the emblem of the
service economy, a flagship of a certain kind of economic growth orderly, well-
mannered, placing individual desire under corporate control (The Culture of Cities,
pg. ix, 1995).
21


This landscape dominated by global consumption desires and controlled by
private developers (Zukin, 1998) is characteristic of what Robyne S. Turner calls
The Politics of Design and Development in the Postmodern City11 (2002). Turner
argues downtowns and city spaces are increasingly privatized by municipal strategies
of economic development that prioritize predictability and street sterility and
cleanliness over any kind of encounter with the unknown. Furthermore, this strategy
reflects a loss of public authority to private corporate power (Turner, 2002). Turners
study hypothesizes that local politics, when it comes to economic development,
increasingly are reflecting the interests of the developer those who seek the
commodification of cool and neglect the needs and desires of the local community.
So whereas Florida claims that communities that meet the desires of the
creative class needs will have to be authentic with lots of local grit and flavor -
what he terms indigenous street level culture many other scholars, such as Turner,
have shown that todays economically dominant creative class, the super creative
core, in fact has inspired urban development strategies resulting in endless, globally
replicable disneyfied tourist bubbles and related downtown malls and retail centers
that look increasingly similar from city to city, with each boasting the same Virgin
Records, Hard Rock Cafes, pedestrian promenades, and internet cafes. Turner
11 Title of Turners 2002 article in the Journal of Urban Affairs.
22


believes this style of development can lead to cookie-cutter cities,12 which leads her
to question Floridas claim that modern development is all about supporting
indigenous street culture and local authenticity.
The truth, concludes Turner, is that downtown Denver, for example, has come
to look, feel, and taste the same as downtown Orlando, San Diego, or Phoenix13, and
all in an attempt to lure in the same globalized creative class. While these types of
trendy commercial activities attract tourists, they also change the nature of city life
and culture (Turner, 2002, pg. 543) by commodifying the city in accordance with the
tastes of international consumers and investors. Perhaps the outcome of
development would be different if downtown planning was not an insulated, elitist
activity, offers Turner (2002, pg. 536). In the end, this development strategy does
not produce the unique and localized array of cities that Florida speaks of. The
creative class, the basis of the new knowledge-based economy (Saiz and Clarke,
2007), is reputed to be attracted to diverse, unique, creative, small, locally run
businesses, but in fact they introduce a powerful conflict between local versus global
development strategies.
The Creative Class Invites Global Investment: Sacrificing the Local
12 Term used by Jamie Peck (2007).
13 Each a location of Turners 2002 case studies.
23


This local versus global conflict is what urban studies scholar Jamie Peck
rightly criticizes Florida for Floridas theories ultimately provide inspiration for city
leaders to develop their city in favor of a globalized creative class, which inevitably
panders to the super creative core, sacrificing local communities, historic ethnic
neighborhoods, and small business charm to a placeless, big-box driven, endlessly
replicable world-class cities with little room for local flavor. Floridas creative
class city, as much as it celebrates small business friendly iconography and verbally
steers municipal officials away from the corporate, bog-box model of economic
development, does not create a development strategy off the map from the current,
globally driven, urban development patterns.
The reality is that city leaders from San Diego to Baltimore, from Toronto to
Albuquerque, are embracing creativity strategies not as alternatives to extant market-,
consumption- and property-led development strategies, but as low-cost, feel- good
complements to them. Creativity plans do not disrupt these established approaches to
urban entrepreneurial ism and consumption-oriented place promotion, they extend them
(Peck, 2005, pg. 761).
Municipal officials (as will be demonstrated shortly through Denver Mayor
John Hickenloopers support for the creative class philosophy of economic
development) appear to desire the creative classs influence on local neighborhoods
and their support for local small businesses. However, the tragedy as Peck has
chastised cities for is the Disney style of economic development that cities
eventually adopt to attract the creative class. It is the perversion of the assumed
desires of the creative class, through urban strategies of economic development,
24


which is the tragedy of the creative class. Cycles of global capital investment in
creative class neighborhoods and cities, bring in large, global chains and corporations,
and the super creative core, an affluent class of globe-trotting creatives, and drive out
the indigenous residents and creative bohemians who first shaped run down urban
neighborhoods and made them attractive to outside interests. In the end, all that was
once bohemian cool becomes commodified.
Global investors are flocking to creative cities, and this very idea is what
Zukin was arguing in The Culture of Cities the seductive influence of the arts on
urban redevelopment (1995, pg. viii). As Jamie Peck argues, creativity is the new
black (Peck, 2007, pg. 1). This is exactly the trend that many municipal officials
have bought into with their adulations of Floridas creative class theory, but in the
end, their urban development plans do little more than subsidize the new globalized,
neo-liberal landscape.
Case Studies of the Tragedy of the Creative Class
Sharon Zukins scholarly work built an awareness of urban redevelopment
approaches that exploit the profit opportunities opened up by the creative return to the
city even before globalization existed as a buzzword. In Loft Living (1982), she
discussed how the low-income artist loft market came to dominate desirable New
York City real estate, only to ultimately become converted into a wildly profitable,
stratospherically priced real estate market for global professionals. But the entry of
25


professional developers into the market demanded a [change]. Loft living had to be
institutionalized. The larger investment and consequently larger risk that these
developers took mandated that the city administration make a concurrent commitment
to this sort of development (Zukin, 1982, pg. 11). The change the developers wanted
from city officials was a commitment to outing the previous low-income artistic
residents of the future lofts of New York City individuals who did not have a legal
claim on the property and a public commitment to subsidies for developers to attract
the middle-class incomes back to the urban center (now made cool by the civilizing
forces of the artists and bohemians) in order to spur greater urban economic activity
in the city.
Although Zukin wrote this book before the forces of globalization truly
affected urban economic development, her observations of what was happening in the
New York City loft market perfectly captured the tragedy of the creative class. This
very transition of the core-city loft market from low-income artists and bohemians to
upper income professionals and investors is in fact the central theme of the Broadway
runaway hit, Rent, suggesting that Zukins theory was on to something broadly felt
among the public at large. Political, economic, and residential control of core city
areas was once dominated by artists and bohemian (what Florida calls low-level
creatives). This group made the area cool, hip, and civilized (attractive to capital
investment), and in the end, control over property and development in the area was
26


transferred from the old residents, to municipal officials and the private developers
serving the interests of the super creative core and global investors (what Florida calls
the super-creative core of the creative class). Today New York lofts range in price
from $700,000 to several million14, meaning that modem day artists and bohemians
are unable to afford the locations that their creativity originally improved. However,
these lofts, with their proximity to creative centers of Manhattan and luxury, state-of-
the-art amenities, are exactly what Floridas globally affluent core-creative capitalist
class desire.
Zukins book provides an excellent case study demonstrating the tragedy of
the creative class. However, the tragedy is not limited to Manhattan or SoHo; Zukin
has also documented the tragedy occurring in Battery Park City, New York, Beacon
Hill, Boston, Harborplace in Baltimore, Maryland, in the Docklands in London
(1991), and the same process continues to occur in many more locations from
Shanghai15 to Santa Fe, New Mexico.
In Denver the developments in LoDo, the historic lower downtown area
previously characterized as a rat-infested slum, but now a vibrant place teeming
with new restaurants, hotels, housing and office buildings (Moore, October 2008), is
141 researched CitiHabitats, a website of price listing for lofts in the Manhattan area,
the setting of Zukins study.
15 In Tays work Creative Cities cited previous, she recounts an analysis by Ackbar
Abbas where he documents the fight between cosmopolitanism and localism in
Shanghai for a new global identity.
27


another location on the list of areas where the tragedy of the creative class has played
out. However, the tragedy does not end with megadevelopments in urban centers,
says Neil Smith. Just as remarkable, however, is the extent to which global capital
has percolated into much more modest neighborhood developments (2006, pg. 202).
As I will discuss in the following chapters, Denvers economic development officials
are expanding the global capital investment strategy of attracting the creative class to
reach into previously remote non-core city neighborhoods. No longer is this
economic development strategy limited to LoDo, the urban center of Denver, but
officials seek to replicate the approach in smaller, modest16 Denver neighborhoods,
and they have created individual municipal organizations (such as the DNMI17) with
this development task.
16 See Smith quote above.
17 Denver Neighborhood Marketplace Incentive.
28


CHAPTER THREE: THE TRAGEDY OF THE CREATIVE CLASS COMES TO
DENVER, COLORADO
The Importance of the Creative Class in the New Economy"
Richard Florida argues that economic development strategies that do not
appeal to the creative class are fruitless, since they fly in the face of todays
economic realities {The Rise of the Creative Class, 2002, pg. 12). Denver Mayor
John Hickenlooper took Floridas warning so seriously that he distributed copies of
Floridas book to his senior staff at the start of his administration (Peck, 2005).
Florida argues that the creative class has transformed, and continues to transform, the
global economy and society, and this shift will affect cities future economic progress
and development strategies. Floridas entire recommendation to municipal officials
and those concerned with economic development is to market to the creative class, as
they are the new economy. In his recommendations, Florida is clear that
marketing to this creative class should involve a celebration of local street-level
culture and urban diversity.
They like indigenous street-level culture a teeming blend of cafes, sidewalk musicians,
and small galleries and bistros, where its hard to draw the line between participant and
observer, or between creativity and creators (The Rise of the Creative Class, 2002, pg.
166).
What they look for in communities are abundant high-quality amenities and experiences,
openness to diversity of all kinds, and above all else the opportunity to validate their
identities as creative people (The Rise of the Creative Class, 2002, pg. 218).
29


Florida insists that the worlds economy (and the smaller economies of the
world) are moving from the older model of corporate-centered systems, defined by
large firms, to a more creative, people-driven economy dominated by smaller and
more indigenous and authentic local businesses. However as Florida points out,
the way Denver responds to the transition could drastically alter its creative image,
which is why cities must become powerfully focused on the global competition for
the creatives.
The rise of this creative economy radically alters the ways that cities and regions
establish and maintain competitive advantage.
In the creative economy, regional advantage comes to places that can quickly
mobilize the talent, resources, and capabilities required...
For these reasons, the nexus of competitive advantage shifts to those regions that can
generate, retain, and attract the best talent (Cities and the Creative Class, 2005, pg.
49-50).
Mayor Hickenlooper 's Desire for the Creative Class
Denver Mayor John Hickenlooper, before taking office in 2003, was a real
estate developer and owner of several Colorado restaurants, including a popular
Denver microbrewery in the heart of Denvers once-degraded, but increasingly chic,
LoDo neighborhood. With the combination of Hickenloopers past as a small
businessman and the historic small business nature of Colorados economy and 18
18 Because of Denvers geographic isolation, it has historically been an economy
dominated by locally owned businesses (Noel and Leonard, 1990). The U.S. Small
Business Administration shows that 52% of Colorados new jobs (non-farm) are
generated by small businesses (SBA, 2007). It is an open question whether a large
30


considering that Hickenlooper made his fortune as an innovator in the heart of
Denvers creative urban neighborhood of LoDo, Floridas creative class theory and
support for small businesses was a natural fit for Hickenloopers approach to
economic development. Hickenlooper came into office, in fact, celebrating the
creative class desires the kind of unique, creative, indigenous environments that small
businesses create. As one creative class interviewee of Richard Florida put it, they
want a place thats not done, which was a spirit well represented by Hickenloopers
free-wheeling success in redeveloping LoDo and even winning the Mayors office as
a dark-horse candidate, entering and winning the race from out of the blue.
Hickenlooper understood the local flavor that the creative class desires while
developing his administrations economic development strategy. At the start of his
first term as mayor, Hickenlooper gave an interview with the Denver Business
Journal regarding his economic goals. He spoke about his plan to develop over 100
neighborhoods in Denver in five years in favor of the creative class.
Most of our new economy will come out of what Florida calls the creative class... all
these people that if they werent geeks in high school, they were on the fringe of the
popular social circles and want to be in communities where theres a lot of arts going on,
where theres real diversity in the population. All that [culture] breeds economic
success said Hickenlooper (Johansen, May 2003).
business growth strategy can replicate this record of small business job generation
(and some local studies such as Robinson Nevitt TIF II suggest it can not).
31


Hickenlooper sold Denver to young professionals as a growing, world-class city -
one complete with five-star dining and innovative residential condos and studio-style
downtown apartments only an hour away from some of the best skiing, whitewater
rafting, and mountain biking in the world. The Denver Business Journal, in an article
titled, How Hickenlooper Plans to Sell Denver, quoted the mayor as saying, We
want to look at Denver from every angle and degree and find the elements that make
it unique, the attributes that will help us sell it (McPherson, July 2003).
Hickenlooper began his term as mayor by devoting his economic efforts to
aggressively combining work force development with economic development...
And [supporting] access to capital for small businesses what they call microcapital
(Johansen, May 2003). Hickenlooper also took his administrations sales pitch on the
road to California, where he promised to be Denvers loudest cheerleader in
relocating business to Denver (Proctor, June 2003). He began to voice his objective
to make Denver more business-friendly and attract new business from outside the
community.
Hickenloopers cheerleading was noticed both globally and locally. In 2005,
Hickenlooper was globally ranked by an independent, London-based group called
World Mayor as the worlds ninth best mayor (.Denver Business Journal, December
2006), he was named one of the top 5 big-city mayors in the U.S. by Time magazine,
and he was one of eight Public Officials of the Year in 2005 (Denver Business
32


Journal, October 2005). Hickenlooper and his affiliated organizations started pitching
Denver as an economic success story to international media, running economic
development policy like a public relations campaign. The BBC, Fox News, and The
New York Times all ran stories on the successes of Denver economic development
strategy (Harden, August 2008). The stories focused on the perseverance of
Colorados economy with Denver as its hub of economic activity compared to the
national economy and the successes of the renewable energy market in Denver.
Colorados economy became intriguing for many media gurus; the purple state lies
in between the deserts of Nevada and the manufacturing centers of the Midwest, yet
the states economy is more stable, diverse, and strong than its neighbors (Harden,
August 2008). Recently, Denvers green rush19 economy has grabbed national
attention after the city legalized medical marijuana and experienced the subsequent
influx of marijuana dispensaries.
However despite the history and successes of these small and innovative
businesses (which ostensibly are just what the creative class is looking for),
Hickenlooper ultimately shifted his focus away from Floridas creative class strategy.
After his landslide victory (86%) for reelection in 2007, Mayor Hickenlooper added a
voter-approved position of Denver CFO to his cabinet, and voiced a commitment to
19 Term comes from Huffington Post, Denver, article, Can Pot Save Denvers
Papers?
33


running the city less like a public agency and more like the private sector (Denver
Business Journal, 2007). Hickenlooper increasingly began to focus on attracting
corporate hubs to Denver and let other municipal officials20 worry about the small
business objectives. He created the Denver Neighborhood Marketplace Incentive
(DNMI), a subset of the Denver Office of Economic Development (OED), designed
to create small businesses, and foster creative class communities where economic
development is lagging but the fact is that the DNMI does not have the institutional
power nor capital to compete with what has become an increasingly global
development agenda of Denvers governing elite.
DNMI, a Glimmer of Small Business Support in a Sea of Global Market Sharks
Denvers Office of Economic Development (OED) speaks favorably about
supporting local businesses, while also arguing that Denver does not have enough
corporate headquarters, and that both residential and retail development projects must
be able to attract global investors. The OED, tom over these goals, outsourced small
business support and development to the DNMI, launched in the fall of 2008. The
goals of the DNMI are three-fold: to strengthen neighborhood business districts,
20 From the Mayors Office stemmed the Office of Economic Development (OED), a
municipal organization that aims at managing Denver economic growth. The OED
lends to developers that focus on bringing in multiple anchor businesses (large,
global chains) into TIF projects. The OED has also created the Denver Neighborhood
Marketplace Incentive (DNMI) to work with small businesses in the communities of
Denver. The funding and support that is available from DNMI is considerably less
than the support available from the OED.
34


strengthen communities by providing locally needed retail, services, and jobs to
enhance Denvers sales tax base, and foster a cooperative, interdepartmental city
strategy to create stronger neighborhoods. The DNMIs goal is to enhance
community economic growth and prevent boom-bust development by keeping small
businesses thriving, contributing to the tax base, and supporting sustainable business
development. In justifying the DNMI strategy, the OED noted that:
Small Businesses Neighborhood business districts play a vital role in Denvers
economy, sense of community, and quality of life. More than 50 percent of the
citys general fund comes from retail sales tax from small businesses usually located
outside what many consider the citys center. Each business district can become its
own destination, its own attraction for community growth and continued success.
This initiative is designed to support each community so each area can be self
sufficient and adequately prepared to thrive (OED, 2004).
The Bluebird Beat, one of the DNMIs first brainchildren, seems to have
developed into the vision of the self-supporting, thriving small business hub outside
of downtown, and the local residents of the Bluebird Beat are hopeful that this
business district, predominantly devoid of large, global chains, will remain true to the
original vision The Bluebird Beat, a commercial district on Colfax Avenue
between Colorado Boulevard and York Street (see Appendix), offers locally owned
retail (the Fabric Lab and a vintage clothing store), local dining and entertainment 21
211 am a former resident and business owner of the Bluebird Beat. Furthermore, for
two years as a board member of the Regional Economic Development Incentive
(REDI), I organized with Bluebird Beat business owners and residents to discuss the
sustainability of the small business atmosphere of the area, which is where this
research originates.
35


options (Goosetown Tavern, Petes Greek Cafe, the Rock Bar, Hooked on Colfax, the
Bluebird Theatre), art galleries (Neapolitan and ISM Galleries), and other small
businesses. The addition of the Pinnacles, a 27 and 22-floor residential complex, and
annual festivals like Jazz in the Park, seem to offer a unique combination for locally-
based economic development in Denver, especially as compared to other flagship
Denver retail development projects like the downtown Pavilions which mostly
features large chain retail shops (discussed later in this Chapter).
The DNMI seeks to apply the model of the Bluebird Beat to their annual
selection of two to five neighborhood districts ready for similar development -
currently the targeted neighborhoods are: Five Points, Lincoln Park, Sun Valley, and
Clayton. These areas are all core-city Denver communities, and all are lower-income
communities with a plethora of small businesses. As the Denver Business Journal
reports, Each district will compile market dynamics and physical characteristics
unique to its neighborhood. They will outline positive change for streetscape
improvements, technical issues within the neighborhoods, and small business
lending (May 2008).
In its small business approach, the DNMI advocates economic communities
that can withstand the destabilizing forces of an economy if it were to grow too
rapidly, or rely too heavily on large/global business investment as often happens
following large redevelopment projects and associated rapid gentrification (also
36


discussed later in this Chapter). While the DNMI is not the top municipal
organization for Denvers business development (the OED is), it is still attempting to
expand small business districts The successes of this organization are presently
limited to the Bluebird Beat, and compared to the successes of large, global chain
stores subsidized by Denvers largest economic development agencies in places like
the Denver Pavilions, Broadway Square Marketplace (at Broadway and 1-25) or
Stapletons Quebec Square, they are even more limited. What is clear about the
DNMI is that the OED seems to have outsourced small business development to an
organization with less power, less funding and less personnel, and thus cannot hope to
compete for results with the OED, or other larger Denver redevelopment agencies
such as the Denver Urban Renewal Authority (to be discussed later). However in
Denver, the OED is not the only organization that employs this strategy of asserting a
public face that is supportive of small business development while actually exploring
global markets and non-local economic development options.
SBDC, Further Fragmentation of Small Business Support
Just as the OED has outsourced its small business development agenda to the
DNMI in order to focus on attracting global business hubs (as will be demonstrated in 22
22 DNMI has been and is currently working to develop small businesses in the
Morrison Road neighborhood of Denver. At this development at the time of this
writing, almost half of the available retail spaces are vacant, and the remaining are
civic or medical and do not generate large sums of income for the area, as compared
to the Bluebird Beat.
37


the next section), the Denver Metro Chamber of Commerce (which supports a large
business/global development approach, like the OED) delegates its focus on small
business to a smaller, less resourceful organization. Publicly, the Denver Metro
Chamber argues that the real foundation of Colorados economy, providing 97% of
Colorados employment, is small business23. To address the concerns of this sector of
the economy, the Denver Metro Chamber has outsourced their support for small
business to their affiliate, the Denver Metro Small Business Development Center
(SBDC), whose mission is advocating for small business development education.
The SBDCs main task is to provide free one-on-one business consulting
services and seminars to small business owners in the Denver metro area. Some of
their services include small, woman-owned and disadvantaged business certification,
marketing strategy and research, financial analysis, and exit and succession planning.
What the SBDC offers is a crash course in Business 101 for small business owners,
an essential service, but no direct funding. There are no million-dollar loans for real
estate purchases and business development funded by tax dollars available through
SBDC, however, as there are for Seedco Financial, one of the large, global chains
assisting Denver officials to transform urban neighborhoods. Denver small
businesses are provided educational services but little funding.
The lack of resources distributed to small business development in Denver is
23 Gathered from the Denver Metro Chamber of Commerce website.
38


stark in comparison to the millions of dollars given by larger economic development
agencies (e.g., the Denver Urban Renewal Authority) to developers who shun small
businesses in order to attract global chains to their new developments. The truth of
Denvers small business economy is that it is not well supported by official economic
development agencies, and is ultimately being sacrificed in order for the city to attract
global hubs and compete in international markets. The tragedy of the creative class is
not only that artists and creators of creative, indigenous communities are squeezed
out by global capital circuits (as discussed in Chapter Two), but the tragedy is
deepened when small businesses and the supporting infrastructure are sacrificed in
order for city officials to offer resources (tax breaks, tax financed developments, for
example) to large, global chains and corporations.
39


CHAPTER FOUR: THE TRAGEDY OF THE CREATIVE CLASS AND
DENVERS ROLE IN THE GLOBAL MARKETPLACE
The Neo-liberal Approach in Denvers Political Economy: Appointing the Global
Neo-liberalism can best be characterized by a set of economic policy goals
developed mostly from the Chicago School of Economics in the middle of the 20th
century by Milton Friedman. Urban neo-liberalism scholarship, presented by Neil
Brenner and Nik Theodore, discusses how city officials have developed new
strategies to make development pay through dependency on increased property
taxes and a greater interest in urban real estate (2002). William Cross expanded on
this material in his review of Brenner and Theodores book, Restructuring in North
America and Western Europe, saying that the end result of urban neo-liberalism is
privatization of municipal governments.
In essence, neoliberal policy is speculation fostered by public funding... [And]
gentrification has evolved as a competitive urban strategy within the global economy.
Urban real estate development is now a central dimension of urban economic expansion.
The basic goal of such policy shifts is competitive redevelopment, to the end of
reestablishing cities in the global economy (Cross, 2002).
Since Hickenloopers administration took office, Denvers political economy
has increasingly reflected a neo-liberal landscape. The most visible change has been
the privatization of municipal economic approaches and development agendas.
Robyne S. Turner argues that this change in the public-private relationship (more
power transition to the private sector in public functions, such as economic activity) is
40


increasingly evident across the U.S.
There is an increasing privatization of public spaces and uses, including the more
subtle effect of private branding... Public streets encourage local shopping, but the
retail has changed from local to corporate brand-names stores recognized by the
tourists. These changes do not necessarily limit access or decrease democratic
control, but they do contribute to a privately controlled environment where rules are
privately constructed and enforced (Turner, 2002, pg. 535-36).
This thesis previously detailed Hickenloopers past as a small businessman
and his seeming proclivity to encourage and support small business growth in Denver
- his desire for the locally oriented creative class. However, Hickenlooper is also a
notorious champion of attracting large, corporate hubs to Denver as an economic
development strategy. Hickenloopers strategy, through his two-terms as mayor,
seem to be ideologically based on the local business, creative class strategy but in
practice is centered on attracting new out of region businesses to relocate in Denver.
To better understand how Hickenloopers business attracting agenda matches
the economic development approach of other cities in this neo-liberal urban
development agenda, the work of Martin Saiz and Susan Clarke, two University of
Colorado scholars of regional economic development, will prove useful. Saiz and
Clarke recognized when they published their data at the beginning of the 21st century
that the economies of the world were changing to more knowledge-based systems of
production (as opposed to manufacturing-based or service-based).
Many states are targeting growth processes, regions, and economic sectors, rather
than individual firms; they do so by participating in public-private partnerships,
establishing new venture capital funds and foreign trade offices, offering seed money
41


for new ventures, encouraging collaboration and networking among clusters of firms,
creating high-tech research centers at public universities, and other innovative
strategies (2007, pg. 419).
Saiz and Clarke, have identified three strategies of economic development
employed by cities in this new economy of knowledge-based workers (the creative
class). However, they conclude there is little agreement that such economic
development programs work inciting a political dilemma. Though consensus on the
efficiency of place-based economic development strategies is still under debate (Saiz
and Clarke, 2007, pg. 419), states continue to act as economic policy activists by
relying on three distinct styles of attracting business: the infrastructure development
approach, the locational incentive approach, and the entrepreneurial economic
development policy approach.
The infrastructure development approach takes the if-you-build-it-they-will-
invest view. This approach argues that improving technological and physical
aspects of an economy will determine how future growth and development will be
attracted. As applied to Denver, an infrastructure development approach might be
represented in a focus on the aerospace industry, concentrating on large commercial
fleets in Stapleton and smaller, commercial and individual aerospace training and
construction in Englewood, or on constructing a new convention center. One of
Denvers starkest examples of this approach is the redevelopment of downtown
Denver a wholly publicly financed new half of a billion dollar convention center
42


and half of a billion dollar convention center hotel.
Tax incentives and other profit maximizing strategies, rather than covering
infrastructure costs, are the centerpieces of the locational incentive approach.
Business will invest where land, labor, capital, energy, and transportation costs are
low and where tax incentives and breaks are plentiful. Mayor John Hickenlooper
represented this strategy in discussing how he plans on attracting big businesses to
Denver. Were going to focus on having we wont call them enterprise zones -
but job opportunity business zones where we can concentrate state tax credits and
federal tax credits and our own local tax credits (Denver Business Journal, May
2003).
The third approach, the entrepreneurial economic development policy style,
requires public officials to be the salespeople for their location by advertising local
wealth-generating possibilities to big business; this approach is the most similar to
Richard Floridas creative class philosophy. Businesses often demand seed money,
access to rapidly growing industries such as energy and tourism, tax exemptions or
lower taxation rates, and little to no government intervention or interference in
business development. The assumption is that public officials must be willing to
make a locational move attractive for big businesses to be willing to make a move to
Denver, and they must market their cooperativeness aggressively. Mayor
Hickenlooper championed this strategy in an eco-devo trip with former governor
43


Bill Owens in June 2003 that helped Denver by generating national media attention.
Hickenlooper promised to be Denvers loudest cheerleader in an attempt to
persuade California business to relocate to Denver because of the low-startup, low-
investment opportunities his office could offer.
Saiz and Clarkes data described the state of Colorado to be most prone to the
locational incentive approach, as measured by a locational incentive development
index of 1.90 (compared to a 0.10 index for infrastructure approach and an index of
0.60 in the entrepreneurial approach)24 (2007, pg. 436). Denver in fact employs a
combination of approaches focusing primarily on the entrepreneurial (creative
class) and locational model.
My objective in clarifying regional economic development approaches via
Saiz and Clarke is to demonstrate that municipal officials often employ a combination
of strategies in their approaches to economic development. However, all of these
approaches are driven by a focus on attracting outside investors and new businesses
to a city. Whether by building new infrastructure, or delivering subsidies, or taking
cheerleading trips to other locales, city leaders see their role at attracting new
development and outside investors to the city rather than mostly supporting and
24 Indexes were created by coding the 3,730 program descriptions from the 1983,
1986, 1991, 1994, and 1998 editions of the Directory of Incentives for Business
Investment and Development in the United States. Index scores are the ratio of
attributes to programs for each state for the infrastructure, locational, and
entrepreneurial incentive approaches.
44


building the local business base. In a world, dominated by global investors and
massive franchise business chains, this focus on luring new investment to a city
inevitably drives officials to cater to the interests of outside forces, while giving the
local business community short shrift. Certainly that kind of pattern has played out in
Denvers development agenda.
Mayor Hickenlooper 's Push for a Globally Competitive Denver Economy
Mayor Hickenlooper has utilized the entrepreneurial marketing model to
attract the creative class to Denver, celebrating businesses like ESPN Zone,
DishNetwork, and Centura Health as providing vast opportunities for young, creative
professionals seeking big entertainment facilities and professional work opportunities.
He has also utilized low-tax locational development strategies by vowing to bring
enterprise zones25 to Denver with local, state, and federal tax credits. Through such
strategies, Hickenlooper demonstrates a belief that supporting large development
projects to lure the creative class, rather than developing a community social support
network for current working residents and small business development
concentrations, is the path to economic success and security.
25 The term enterprise zone originates from the United Kingdom and the United
States economic development strategy. Enterprise zones are locations targeted for
economic expansion. In areas such as Hong Kong or Singapore, enterprise zones are
characterized by tax credits or breaks and hiring incentives for global corporations.
In the U.S., enterprise zones are characterized by global chains and big box
retailers.
45


Hickenloopers past Director for City Economic Development, John Huggins,
echoed this belief in his comments concerning the redevelopment of the Denver
Cherokee-Gates Rubber Factory in center of downtown Denver. As I will discuss
further in Chapter Six, community organizations (a group called Campaign for
Responsible Development, a self-described coalition of labor unions and community
leaders) had mobilized around this project to demand that small businesses would
have a place in the development, and that a living wage ($9.30 an hour) and benefits
(healthcare, retirement benefits, and improvements in the surrounding neighborhoods)
be included in the Gates TIF project a project subsidized with $100 million in
Denver tax dollars. Denvers Economic Development director Huggins noted that
any such demands would deter investors and result in no development at all and
barren fields.
[Huggins] said mandating set wages in one part of the city would create an
economic development island that would deter businesses from investing there and
possibly shut out lower-skilled or new workers who need entry-level jobs. No HF
project in the city has ever had a set wage requirement tied to it, [Huggins] said
(Crummy, 2005).
Similarly, in a statement made before his administration took office,
Hickenlooper addressed Robyne S. Turners concept of mayors not having the
luxury to think abstractly about the desire to embed small-scale community benefit
goals into economic development plans (2002, pg. 543).
If [the project] really takes off and more than pays off the bonds, then well take the
excess revenue and dedicate it or a portion of it towards affordable housing or doing
46


some of these things the unions are demanding. But if its a project thats barely
going to struggle through and the TIF makes it a barely profitable enterprise, by
putting additional demands [for social benefit] the project wont get done (Johansen,
2003).
The current economic development strategy for Denver, as demonstrated in
such statements, is to attract big business through publicly subsidized massive urban
renewal projects without any guarantees of small business or local community
benefits and to assess social and community costs later.
What is significant about this approach to economic development is that it
does not focus on building the type of community-building Florida says the creative
class wants. This absence is ironic since Hickenlooper presented Floridas The Rise of
the Creative Class as Denvers economic development bible. By prioritizing the
subsidizing of large, luxurious condos and world-class trophy projects, like the
construction of the Denver Pavilions outdoor mall in downtown instead of
committing funds to Denvers more prosaic community needs like updating the
historic entertainment district on failing parts of Santa Fe Drive in Denver to
encourage growth in the underdeveloped areas on that street26 Hickenlooper has
26 Consider the situation of the under-developed Santa Fe Drive in Denver. Santa Fe
is located just south of downtown. There are over 40 emerging art galleries and
several restaurants concentrated in an area approximately five city blocks by 3 city
blocks. The remainder of this long stretch of road leading into downtown in cluttered
with abandoned businesses or under-developed lots. The street is ripe for economic
development, but only a portion has been developed by artistic entrepreneurs. A local
development strategy would involve Hickenlooper using TIF funds or other economic
47


elected to buy into a strategy that is far more focused on large-scale developments,
similar to developments across the nation, rather than supporting small, community-
based business developments that have been historically successful in Denvers
economy.
Developments like the downtown Pavilions, in fact, well demonstrate that
Denver ultimately has only a facade of official support for a strong, small business
community, covering a reality of support for national business chains and global
investors. The Pavilions is a flagship project of the Denver Urban Renewal
Authority, supported with nearly $100 million in public tax dollars and located at the
heart of Denvers 16th street pedestrian mall the retail heart of the city. Though this
project is a vital force in the downtown retail market, and though it is funded with
public tax dollars, Denvers small business community struggles to find any room in
the development. Pictured below is a chart that demonstrates the local business to
large chain business makeup in the Pavilions mall in 2005.
Local Businesses vs. National Chains at Signature TIF Retail Projects (2005)
Denver Pavilions
# of Stores % of Stores Sq. Ft. % Total Occupied Space
development resources to develop the stretch of the street that leads to downtown
with locally scaled arts and culture businesses (in accordance with its current theme),
instead of subsidizing expensive, luxurious lofts downtown and building massive
tourist hotels like the Hyatt in downtown Denver with half a billion in public money.
Though local neighborhood groups like the La Alama Lincoln Park Planning Group
have long pushed for city support in developing just these sort of locally scaled
Mercados along Santa Fe Drive, no serious city support has been forthcoming
(Jackson, December 2006).
48



Local Businesses 7 16 36,609 11
National Chains 34 79 304,438 89
(Robinson and Nevitt, TIF II, 2005).
Clearly, local businesses are squeezed out the prime retail square footage of
the subsidized Pavilions project. In addition, other subsidized TIF projects that
Hickenloopers administration and the city council has approved involve large chunks
of revenue (in fact, TIF funds are the very largest form of public development
subsidies in Denver), which are generally made available to an exclusive group of
international capital investment and developer groups NOT to local Denver
businesses. For example, the TIF-subsidized Pavilions project subsidized the national
Denton entertainment group to build the outdoor mall, the TIF subsidies to develop
Denvers Pearl and 20th street apartment and condo complex went to the international
real estate developer Post Properites, and Denvers very largest TIF subsidy (at $300
million) went to the international property developer, Forest City.
The table below demonstrates the projects that have been approved for TIF
funding in Denver up until 2006. The table demonstrates the large amount of capital
that is up for grabs a huge chunk of public subsidy money that local businesses are
being squeezed out of (highlighted rows are TIFs that are specifically discussed in
this thesis).
TIF-Subsidized Projects in Denver____________________________________________
Project Total TIF Subsidy TIF as a % of Duration of TIF
49


Development Investment Investment
Bear Valley Shopping Center $18,500,000 $2,000,000 10.81% 1995
University Hills Mall $35,400,000 $2,000,000 5.65% 2001
Holtze/Magnolia Hotel $19,500,000 $1,950,000 10.00% 2014
REI Store $32,000,000 $6,274,000 19.61% 2014
Larimer Square $5,763,000 $1,430,000 24.81% 2015
Rio Grande $6,400,000 $1,500,000 23.44% 2015
Denver Dry Goods Bldg. $48,239,000 $8,595,000 17.82% 2017
Broadway Marketplace $44,000,000 $16,740,000 38.05% 2017
Six Flags / Elitchs $95,000,000 $10,925,000 11.50% 2017
Adam's Mark Hotel $135,000,000 $33,000,000 24.44% 2017
Mercantile Square $20,450,000 $4,00,000 19.56% 2017
Denver Pavilions $99,000,000 $31,460,000 31.78% 2017
Guarantee Bank Lofts $10,900,000 $963,000 8.83% 2017
Boston Lofts $23,400,000 $944,500 4.04% 2018
Lowry $1300,000,000 $35,000,000 2.69% 2020
St. Luke's $138,000,000 $9,000,000 6.52% 2021
California St. Parking Garage $5,800,000 $2,100,000 36.21% 2022
Clyburn Village $7,000,000 $200,000 2.86% 2022
38th and York $14,000,000 $3,600,000 25.71% 2022
Pepsi Center $160,000,000 $36,000,000 22.50% 2022
Highlands Garden Village $75,000,000 $4,700,000 6.27% 2023
The Point $12,200,000 $737,000 6.04% 2025
Stapleton $3,400,000,000 $294,000,000 8.65% 2025
City Park South $200,000,000 $8,000,000 4.00% 2028
Total Investment: Total TIF Subsidy: Average TIF Investment Share: 15.53%
$5,905,552,000 $515,118,500 Total TIF Investment Share: 8.72%
(Robinson and IS evitt, TIF II, 2005).
50


Mayor Hickenlooper, being a small businessman himself27, would be expected
to have strong support for the local, small business community of Denver. However,
his desire to attract the creative class by bringing large corporations and hubs to
Denver through enticing TIF projects reflects a lack of consideration for the small
business community of Denver. Hickenlooper has professed his belief in attracting
the creative class, but believes that this group can only be lured through attracting the
types of world-class businesses than can provide many jobs28. Despite
Hickenloopers support for Richard Florida and the creative class philosophy, the
Mayor employs economic development strategies that Florida specifically warns
against. Florida argues that by seducing large, corporate businesses and hubs, you
do not get to help create your experience or modulate the intensity; its thrust upon
you {The Rise of the Creative Class, 2002, pg. 232). Unfortunately, city leaders do
not understand this need to foster dynamic, incomplete urban environments; rather,
they remain enamored of scoring the blockbuster deal to bring cookie-cutter malls,
office complexes, and other such developments to their area.
When they are not trying to lure firms, many cities around the country seek to emulate
the Silicon Valley model of high-tech economic development. City after city has tried to
turn itself into a clone of the Valley by creating R&D parks, office complexes,
technology incubators and the like...
This is essentially betting the future on an economic development model from the past.
Though successful in its day, this model misunderstands the changing role of creativity in
27 Hickenlooper was the very successful owner of Denvers Wynkoop Brewery.
28 A Class Act (2003). Denver Westward. Accessed in August 2009 at
http://www.westword.com/2003-06-19/news/a-class-actyl.
51


spurring innovation and economic growth (The Rise of the Creative Class, 2002, pg.
284).
Mayor Hickenlooper is one of those local officials enamored of the
California clone strategy. In June of 2003, days after meeting Richard Florida and
discussing his advocacy of The Rise of the Creative Class for Denver29, Hickenlooper
traveled to California to meet with companies who might be interested in relocating
to Denver (Proctor, June 2003). Hickenlooper also looked for companies to move to
Aurora and Thornton (outlying suburbs of Denver) to spur economic interest in the
arts and entertainment districts in downtown Denver as a product of new employees
increased leisure time and income. The strategic flaw, however, lies in
Hickenloopers desire to attract the creative class, but his unwillingness to support the
kind of localist infrastructure Florida says the creative class desires. Regardless of his
creative class bromides, what Hickenlooper has done is create an economic
development infrastructure that funds, manages, and carries out a globally-oriented
development strategy, rather than focusing on local creativity.
This privileging of global over local development priorities in Denver can be
seen by an examination of the strategies of several of Denvers key economic
development agencies that extend from Hickenloopers administration: the Denver
Office of Economic Development (OED), the Metro Chamber of Commerce, and the
29 See reference 6.
52


Colorado Competitive Council (C3). An examination of the powers and strategies of
these various economic development agencies will show that the desire to attract the
creative class to Denver has evolved into a conflicting strategy of economic
development where large, global chains are given economic advantage to develop a
hegemony over local, small businesses.
The Denver Office of Economic Development and Globalized Gentrification
The Denver Office of Economic Development (OED) has four objectives as a
municipal organization. The first is to provide the resources for job creation in
Denver, in an attempt to meet Hickenloopers strategic goals of creating 25,000 new
jobs in Denver. The second objective is to develop businesses in Denver. In its own
words, OEDs goal is to attract new companies, grow existing companies, and help
start-up companies in the Denver area. The OEDs third objective is to provide what
they call a full range of housing options which works hand in hand with the fourth
objective, to redevelop neighborhoods to remove blight. In Denver, and elsewhere,
the word blight soon can be expected to lead to gentrification, a relatively recent
phenomenon in Denver and other cities that have flipped neighborhoods from inner
city slum to metropolitan over night, as the translocal real estate investment class
seizes on hot opportunities to make a killing in eclectic neighborhoods that are
increasingly attractive to the urban creative class.
Though it can be argued that the type of inner city gentrification supported by
53


the OED is simply a sign of local homeowners rediscovering the charm of degraded
inner city communities like Denvers Five Points neighborhood, in fact urban renewal
and gentrification processes, facilitated by the Denver Urban Renewal Authority
(DURA) and the OED, can be seen as the result of global development pressures -
not local innovations. As Neil Smith articulates the process of gentrification, which
initially emerged as a sporadic, quaint, and local anomaly in the housing markets of
some command-center cities, is now thoroughly generalized as an urban strategy that
takes over from liberal urban policy (2002, pg. 427).
Sharon Zukin, author of Loft Living discussed in Chapter Two, wrote about
these development pressures in 1982 when the loft market in New York was
booming. Zukin was a pioneer in discussing what scholars such as Neil Smith now
call Manhattanization or what Denverites might better understand as the LoDo-
ization of downtown Denver. Manhattanization reflects the pressures to develop
inner-city areas in response to global investment demands and leads to what Smith
calls, the creation of a bourgeois playground (Smith, 1986, pg. 32). What is unique
about Zukins analysis of the 1980s New York loft market is the exchange between
municipal officials and developers. If municipal officials agreed to provide subsidies
in the form of tax advantages and zoning dispensations and the developers
alleviated the threat of capital flight from inner city areas, an agreement could be
made that allowed the developers to plan in order to maximize profits (Zukin, 1982,
54


pg. 149). However, the gentrification of New York (and Denver) was not a local
phenomenon, but rather was an effort to lure global capital and international real
estate investment trusts. Editors Rowland Atkinson and Gary Bridge elaborate on
this concept in the introduction to their book, Gentrification in a Global Context: the
New Urban Colonialism.
At the crest of this wave of urban redevelopment and colonization ride the gentrifiers
who appear as the emissaries of global capital flows...
Gentrification appears as a facet of the global forces acting on rapidly urbanizing
cities. Gentrification has moved very much from being a process in which analysis
has often been couched within city and neighborhood contexts to one in which global
tendril connections can be found between many cities and neighborhoods... This has
led to a cascade effect down an international and regional set of urban hierarchies in
which the saturation of investment motives in gentrified cities like New York or
London have pushed toward neighborhood changes in new regional nodes (Atkinson
and Bridge, 2005, pg. 8, 16).
The fact is that large, global investors are driving gentrification in both the
housing market, as Atkinson and Bridge demonstrate, and the downtown retail market
(which are increasingly mixed together through new urbanist mixed use design
principles). These investors are far more attracted to developments with a proven
global track record rather than local anomalies. Global chains (like Virgin Records)
and housing projects marketed to a translocal creative class elite (such as Denvers
European styled Beauvallon condominiums provide greater financial (investment) 30
30 The Beauvallon was Denvers largest mixed use facility when constructed in 2003.
It features 65,000 of retail space, office space, luxury residential condos, and a roof-
top open-space park, modeled after French architecture, and with million-dollar
55


security to the developer than localized projects, and this is precisely what Zukin was
observing in Manhattan. Corporate demand for downtown space amplifies a new
view of streamlined city. In this view, revalorization is made possible by changing
the city as a whole to a higher use, notably by converting it into financial capital
(Zukin, 1982, pg. 175).
In some instances, plans for indigenous business or locally marketed
residential neighborhoods fall through the cracks because of these global pressures on
municipal economic development strategies. Take Denvers Five Points
neighborhood, for example. Five Points is located just a couple of miles from
Denvers downtown center and is home to many Section 8 and HUD housing
developments. Five Points is also the home to Denvers historic black community
and once housed the nations largest concentration of black-owned mom and pop
businesses in the country.
However, Five Points is changing due to the kind of economic housing
revitalization development supported by the OED and it is not at all clear that the
traditional nature of the community will be preserved. The Five Points neighborhood
is undergoing rapid, widespread, and diverse redevelopment. There are redeveloped
residences available for purchase for $200,000 (1 bedroom condo) and residences
condos marketed to professional athletes, world-renowned architects running in the
same circles as Daniel Libeskind, retired empty-nesters and the like (Rab, 2009).
56


available for over a million dollars (2 bedroom condos)31, and most of these
developments are still in construction. By taking a random sample of 20 sale prices
for homes in Five Points (see footnote 32), the average price for a condo in Five
Points is $472,126.
Meanwhile, in a neighborhood with a similar historical and ethnic makeup,
Skyland, two miles from Five Points, the average home sells for $224,935 (2007
figures). This price is 37.8% higher than the average sale price in 2002. Again, this
area of Denver is rapidly gentrifying, and it is not at all clear whether these
neighborhoods will keep their urban, indigenous, cultural flare. As Robin Kniech,
program director for FRESC (formerly the Front Range Economic Strategy Center)
said, What we don't know how to do is maintain the balance so a neighborhood
doesn't go from low income to mixed income to (exclusively) high (Thomas, 2007).
One of Five Points most controversial and expensive developments, the HUD Hope
VI project one that displaced 250 low-income families in 2000 (Jacobs) has
brought many issues of gentrification into question.
University of Denvers Dr. William Cloud recently conducted a study of
redevelopment efforts on the Park Avenue, Hope VI project, a study funded by the
Denver Housing Authority (DHA) who also managed the grant used to pay for this
311 used a real estate neighborhood search engine with the search criteria of Five
Points neighborhood.
57


redevelopment project. Though Clouds findings show increased property values and
home buying activities and decreased crime rates, the associated results of the project
are a massive relocation of Denvers urban, low-income (typically non-white)
residents who used to live the Park Avenue housing project known as East Village
that was tom down to make way for the new development.
According to Clouds report the federal government has become increasingly
aware of a moral panic about concentrated urban poverty, and subsequently has
started focusing on de-concentrating poor, urban neighborhoods in the last few
decades. This moral panic is arguably related to the increasing interest by global
investors and businesses in the inner city. As Robin Kniech of FRESC explains,
Private business often disinvests in strictly low-income areas because of real or
perceived lack of purchasing power (Thomas, 2007). Both federal and local
governments have become aware that global businesses will not want to call poor,
urban neighborhoods home, no matter how big the tax incentive and thus there is a
need to displace traditional low income populations and business uses if new global
investors are to be attracted to the city. Improvements to the neighborhoods [of
Denver] have been seen by getting rid of the poor people and bringing in upscale
folks, explained John Parvensky from the Colorado Coalition for the Homeless
(Jacobs). In the downtown development area 300,000 lower-income housing units
58


have been destroyed, and this number is rising, matching the speed of the rapid
gentrification of the area (Jacobs).
The eradication of Denvers urban poor to make way for modem affluent
professionals (creative classers), is not limited to Five Points.
This city has strategic plans to penetrate and transform lower-income, funky
communities. They did that in LoDo. They penetrated it; they transformed it. They
tried to do it in Highlands; theyre doing it in Highlands. Theyre pushing it into
Curtis Park trying to gentrify and transform Curtis Park32. There is a lot of money
to be made... if we can just clean it up and bring in the big capital, lots of money to
be made. But the existing community there must be destroyed. They call it creative
destruction. You destroy it in the name of creating something better, said Dr. Tony
Robinson, University of Colorado Denver (Jacobs).
The tragedy of the creative class is evident when global forces and capital
interests penetrate a creative city. Ultimately, the growth of the creative class in
previously degraded neighborhoods like Denvers Five Points attracts global capital
investment, which points to the creative class as harbingers of global gentrification,
not saviors of localism. Furthermore, this process leads local officials and
organizations like the OED to surrender themselves to global developments. For an
example of the tragedy of the creative class and how local communities suffer when
global investment demands lead to neighborhood change, consider the fate of low-
income residents who were removed from their housing due to the redevelopment of
the blighted Five Points neighborhood that Clouds report focuses on.
Many of these residents were given housing vouchers or relocation packages.
32 Curtis Park is part of the Five Points neighborhood district.
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A portion of Clouds report attempts to track the relocation of these residents. Some
former residents of Five Points have moved further away from the city due to low-
income housing availability and are now forced to travel further distances to work;
others have used their vouchers to stay at a motel until they could find more suitable
housing; and some, admits Cloud, fell through the cracks.33 While many old
residents have disappeared, Clouds report is explicit in saying that 85% of the new
residents and homeowners think the neighborhood is now excellent or good.34
This conflict over relocation, redevelopment, or gentrification introduces the
fourth objective of the OED, neighborhood redevelopment, and fully demonstrates
the global versus local conflict currently playing out in Denver and other cities. The
new developments on West Park Avenue in the Five Points neighborhood are now
home to creative class professionals. An apartment locating service, Hubbuzz, allows
potential residents to select characteristics of the perfect apartment in the West Park
Avenue neighborhood. The form allows users to select characteristics such as
urban, bustling, open space, diverse, trendy, eclectic, hometown vibe,
and walkable. All of these characteristics appeal to the creative class.
However, there are two conflicts of interest at work here. First, the
33 Cloud, conference paper panel presentation at Hawaii International Conference on
Social Science, June 2009.
34 Report currently under review by The Journal of Housing Debate, and page
numbers are unavailable for citation.
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indigenous residents of West Park Avenue in Five Points, the individuals that provide
the diverse environment desired by the creative class, have increasingly been moved
to the outskirts of the city in continuing efforts to put a world-class city image on
Denvers previously low-income, ethnically diverse areas35.
The second conflict is that eclectic, diverse, open space communities are not
the type of redevelopments that are occurring in Denver through developments such
as Park Avenue West. Rather Denver, through its municipal development
organizations, is acceding to the expectations of global investors and creating sterile,
crowded, look-a-like communities that exist similarly in so many other cities across
the world (Turner, 2002). Examining flagship new developments in the area, such as
the redeveloped East Village public housing project (now known as the Park Avenue
Lofts development), show them to be designed with exactly the same new urbanist
design principles adopted by inner-city gentrification-architects the world over.
In other words, there is little that is creative about these new developments
meant to serve the creative class. Dennis Judd documents the failings of public
officials in preserving local culture by bulldozing neighborhoods to make room for
cookie-cutter developments (1999, pg. 227). According to DHA intergovernmental
35 The East Village destruction left 250 low-income families without housing, and the
creative class developments of downtown Denver destroyed 300,000 low-income
units. Clouds report says that many of these residents have been forced to move
outside of the city proper to find Section 8 and HUD housing options.
61


affairs officer, Stella Madrid, all the units [in the Hope VI Project] are built to
market-rate standards, so that the units are indistinguishable from one another
(Aguilar, 2004).
The creative class, as much as they desire authentic, indigenous
neighborhoods and areas of continuing diversity and creativity, are not the saviors of
the local Florida promotes them as. They are the unintentional harbingers of global
capital investment, and the predictors of the displacement of small business
communities and residential gentrification. As further evidence of this pattern, I will
briefly discuss two more Denver municipal organizations that support what has
become the tragedy of the creative class.
The Denver Metro Chamber of Commerce: Outsourcing Small Business Development
to Attract the Global
The Denver Metro Chamber of Commerce agrees with Hickenlooper that
attracting the creative class and big business is the path to economic prosperity for
Denver. The Denver Metro Chamber prides itself on being legislative advocates for
Denver businesses. The Chambers website boasts that their top priorities are to
support key metro (large) businesses, like Centura Health, Wells Fargo Bank, Xcel
Energy, and Rocky Mountain Health Plans. The Chamber is also active within the
Colorado legislature to rid the city of taxation laws that would dissuade large
companies from locating in Denver. For example, The Denver Business Journal
62


reported in January 2008 that the Chamber successfully convinced the legislature to
repeal sales taxes on new aircraft built in the Denver metro area. Its important
because the existing law makes it difficult, if not impossible, for aircraft
manufacturers to locate in this state, noted Colorado Representative Bemie Buescher
(D-Grand Junction) (Denver Business Journal, January 2008). Shelly Semi, Adam
Aircraft spokeswoman, argued that tax relief like relief from the fly-away tax which
the Denver Metro Chamber helped to eliminate provide incentives for both her
company and her customers.
Colorado Competitive Council (C3), Inviting Global Hubs to Colorado
The Colorado Competitive Council (C3) is a strong and key lobby for
Colorados high profile economic success. C3 provides direct advocacy and lobbying
at the state Capital for like-minded organizations, concentrating on elevating
Colorados economy through a global growth agenda.
C3 also focuses on issues such as ... unreasonable regulation that impact Colorado
businesses. C3 coordinates policy research and development and communicates with
chambers of commerce and existing business associations to focus maximum resources
and efforts on direct advocacy of Colorados economic future.
(http:/'www.coloradocompetes.oruA
C3, chaired by Perry Pearce of ConocoPhillips, encourages the growth of what they
see as Colorados key industries:
agriculture
tourism
aerospace
bioscience
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energy
financial services
information technology/software
air transportation
beverage production
broadcasting and telecommunications
computer storage and peripheral
C3 wants to entice these key development industries to build hubs in
Colorado. These are anchor businesses in state economic development, according to
C3, with many looking to move to Denver, attracted by industry resources. These
industries are the ones being offered the glossy entrepreneurial approach packages as
bait to relocate to Denver (Boeing, for example36). These lured companies often pay
little to nothing in taxes for their first years, a result of the entrepreneurial model and
some of the $35 million in tax credits the Colorado Partnership offers for large private
sector investment businesses (OED, December 2008). When the glossy
entrepreneurial packages expire and these relocated businesses are expected to begin
paying higher local taxes, the pressures of globalization often force Denver officials
to negotiate a new low-tax deal or suffer the consequences of the hub relocating to
new, more attractive location, as Wal-Mart especially has done (Shuman, 2000).
Tax subsidies are supposed to be a form of economic development that strengthen our
long-term economic future... Wal-Mart has perverted this system by manipulating cities
across Colorado and the nation... [but] when the subsidies expire the company either
threatens to close stores in order to get more tax breaks, or it moves on to the next big
36 When Boeing announced it would accept bids for its new global headquarters,
leaving Seattle behind, it stunned city officials. Boeing teetered between Denver,
Dallas, and Chicago as its new home base, after finally selecting Chicago due to its
large international travel capacity.
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subsidy elsewhere, leaving a trail of environmental sprawl, abandoned stores, and lost
local businesses in their wake (FRESC, 2006).
This regional economic development strategy of offering tax breaks, lowering taxes,
and/or renewing subsidies for the largest of enterprises puts cities in a race to the
bottom where social improvements or supporting local business development
strategies are sacrificed to pander to big business.
Denver City Councilman Doug Linkhart sums up the reason for Denvers
promotion of global versus small business. Councilman Linkhart, head of the Global
Denver initiative which serves as a portal for international businesses located in
Denver, a supportive institution for residents who have relocated to Denver from
areas across the globe, and a marketing agency reaching out to potential international
residents of Denver was recently asked if Denver had the potential to become an
international business center. With the state workforce 97% reliant (Denver Metro
Chamber of Commerce) on small business for their living, Linkhart argued, that it
employers will have to start producing globally, not just locally, to survive in
Denvers changing economic market.
For Denver to succeed economically, we have to be a bigger player in the global
economy ... Almost every [Colorado] company I talk to has some global
connection... You cant be an isolated business or an isolated city anymore and
expect to succeed. In the past 30 years, Colorados leaders have had varying
commitments to international trade. But the world is changing so quickly, it
behooves the state to keep up. Its no longer a matter of trying to sell Colorado
goods to other countries. Its just not trade anymore... Its really about trying to be a
stronger player in the integrated, international economy (McGraw, December 2007).
Small businesses can be competitive by adhering to this model of international
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commerce, Linkhart argued. However when a small business economy one
historically focused on serving the residents of a geographically isolated area like
Denver is forced to compete on the international level, it is likely that the
development approach will move away from local or regional economic development
strategies and towards the strategy of pursuing global investors and companies.
As scholars like Smith, Peck, Turner, and Zukin point out, developing in favor
of the creative class tends to beget neo-liberal, consumerist cities that increasingly
sacrifice local development for economically safe and recognizable global chains.
Though Florida argues that the international creative class craves indigenous, diverse
community experiences, the reality seems to be that catering to this international
investor and consumer class has lead to economic development strategies that build
cookie-cutter cities based on global business chains and internationally replicated
retail and residential developments.
The current practice of Denver economic development is conflicted between
Floridas advice that municipal officials should build a city that can attract and cater
to the desire of the global creative class and the reality of realities of global
development and investment. Poised between these two approaches, Denver officials
have elected to employ both simultaneously, devoting more resources to competing in
the global marketplace. In the next chapter, I will demonstrate the outcomes of this
mixed approach on local versus global development strategies, beginning with a
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case study of TIF projects, transitioning to an examination of the institutional power
of large, global chains, and then concluding with a chapter on the localist challenge to
the creative class theory. I will paint a picture of how these conflicted theories of
urban economic development actually look when instituted in a city.
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CHAPTER FIVE: CASE STUDIES OF DENVERS POLITICAL ECONOMY
Local versus Non-Local Businesses: Who Benefits from Tax Increment Financing
(TIF) Projects
Denvers premiere economic development strategy for the last thirty years has
relied on TIF funding. Some of Denvers largest (in size and cost) developments
have been TIF subsidized, including the Denver Pavilions, the REI Flagship store on
the Platte River, the old Gates Rubber Factory at 1-25 and Broadway, the Adams
Mark Hotel, the Lowry Air Force Base, Stapleton, the Broadway Marketplace, and
the Bluebird Beat. Denver is not unique in its strategy to rely on TIF to leverage
economic development. The Denver Business Journal reported on a statewide study
conducted by the Colorado Municipal League in 2003 that found TIF was used in
85% of the urban renewal projects in Colorado. In 1993, a similar study found that
75% of Colorado urban renewal projects used TIF (Johansen, February 2004). A
reliance on TIF projects has increased across the state, and such an urban
development strategy is actually dominant across the entire nation (Turner, 2002). In
this case study, I will briefly explain the dynamics of TIF, discuss how TIF projects
have or have not relied on the local business advantage, and then demonstrate how
TIF projects reveal the local versus global conflict.
Tax Increment Financing (TIF) Mechanism of Economic Development
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When TIF was proposed to Denver taxpayers, the idea was that economic
development would occur in areas with low economic activity or blighted areas,
which it has. Proponents of TIF also packaged the unique financing option as a way
to help the local Denver business community (McEncroe, 1992). However in recent
years, the city officials who support TIF projects have given large, global chains a
much bigger piece of the TIF subsidy pie than small, locally-run. Over the years,
Denver has used TIF to foster important development projects all over the city.
TIF is a tax increment financing mechanism that states are increasingly using
to remove blight areas where economic development lags or has the potential to be
considerably higher. A TIF begins when the Denver Urban Renewal Authority
(DURA) partners with a private developer. After the City of Denver (through the
Office of the Mayor and the City Council) approve a TIF project, DURA can issue a
TIF bond, or the private developer can borrow revenue from bond investors. In either
case the bond investors expect to be paid back with future sales and property tax
receipts from the development that was funded by the bond revenues. Typically, both
the developer in charge of building and leasing out the TIF project, and the investors
who lend money to build the project, are global in their reach. Most TIF project
developers in Denver have holdings and developments across the world, and
municipal TIF bonds are underwritten by national investment houses the national
leader being Stone and Youngberg LLC) and sold on international investment
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markets (Stone and Youngberg, 2009). Such international underwriting houses and
investment funds understand only global business models and expect globally
competitive rates of return. This is why TIF projects are filled with many more large
chains stores than local businesses (see table from Chapter Four below). Global
investors traditionally do not lend money to projects that prefer small business
preservation to global business expansion; local, small businesses simply do not
provide the investment security or rate of return that large, global chains do.
Local Businesses vs. National Chains at Denver Signature TIF Retail Projects
(2005)_____________________________________________________________________________
Denver Pavilions # of Stores % of Stores Sq. Ft. % Total Occupied Space
Local Businesses 7 16 36,609 11
National Chains 34 79 304,438 89
(Robinson and Nevitt, TIF II, 20C )5).
A listing of Denver TIF projects (see TIF Subsidized Projects in Denver table,
Chapter Three) reveals that they tend to be among Denvers largest and most
celebrated of redevelopment projects, all involving a substantial level of public
funding
A perfunctory examination of Denver TIF projects certainly reveals that TIF
is biased towards large businesses and large investors. The table showing the local to
large chain makeup of the Denver Pavilions is not unique to that TIF. For example,
the Broadway Marketplace TIF (a showcase Denver development at 1-25 and
Broadway) reflects an even slimmer representation of local businesses in the table
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below. The Broadway Marketplace TIF is also anchored by a Sams Club and a K-
Mart.
Local Businesses vs. Vational Chains at Signature TIF Retail Projects (2005)
Broadway Marketplace # of Stores % of Stores Sq. Ft. Occupied Space
Local Businesses 1 4% 18,150 5%
National Chains 25 96% 376,246 95%
However while local businesses only makes up 5% of this $44,000,000 TIF,
the most expensive TIF in Denvers history and a TIF that was imagined to become
one of the most local business-friendly developments in Denver today leases only
1% to local business. A TIF project that utilized $300 million in public tax dollars to
lure $3.4 billion in total development investment scrapped the vision of local, small
business development once global capital interests became involved, and is now
home to 99% large business chains. This TIF project, Denvers Stapleton airport
redevelopment project, is Denvers largest urban development project in decades and
the largest urban infill project in America today; the project also perfectly embodies
the local versus global conflict in Denver economic development strategies. Before
examining Stapleton in detail, it is important to review some of the commonly argued
benefits of supporting local businesses versus translocal businesses, as these local
business goals were originally embedded into the Stapleton project, only to be
sacrificed later.
TIF and the Local Business Advantage
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When the Denver officials pitched tax increment financing to taxpayers, they
often proposed it as a mechanism of financing that would help grow local businesses.
For example, in the Greenbook plan that became the official document marketing
the Stapleton renewal project to the public, local business hubs were the centerpiece
of what was lauded as a new urbanist development at Stapleton. However in recent
years, city officials have given large, global chains a much bigger piece of the TIF
subsidy pie than small, locally run businesses. The problem with this development
strategy is not just that Denvers economic history and job market are historically
based in small business, but rather that as a result of developing in favor of large,
global chains, Denver has disrupted the cycle of local, social reproduction, with less
of the revenue generated from TIF projects staying local.
When a customer shops a local retail business, the business generates almost
three times as much local economic impact through secondary spending than large
chain stores this is called the economic multiplier effect. This also means they
generate more local tax revenue, particularly in the context of TIF projects, where on-
site taxes are diverted to pay TIF subsidies and only secondary off-site spending
generates public tax revenue (Robinson and Nevitt, TIF II, 2005, pg. 2).
Robinson and Nevitt showed in their Denver TIF analysis that even locally
operated small franchises contribute considerably less to local tax revenue than
unique local business, which are more integrated into the local economy (2005, pg.
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8). In other words, the Tokyo Joes franchises a Colorado-based corporation -
produce less revenue for Denver tax collectors and generate less external economic
activity than the individually and locally owned Viva Burrito locations on Federal
Boulevard and Parker Road, dollar for dollar. Independent, locally owned and
operated businesses have a much greater multiplier effect on the local economy than
global or local chains. As Robinson and Nevitt explain, for every $100 spent at a
Denver-based business, $40 of additional spending is generated by local business;
whereas for every $100 spent at a big business or large chain store only $15 returns to
the local economy (2005, pg. 9). In other words, local businesses post a 40% local
economic multiplier, whereas non-local chains have only a 15% local multiplier.
Thats a significant home town advantage.
Unfortunately, such economic logic is not embedded in the pattern of projects
currently subsidized by TIF funds in Denver. In their analysis of three major TIF
projects in Denver (Broadway Marketplace, Pavilions, and Stapleton), involving $342
million in public funds, Nevitt and Robinson find that on average only 5.6% percent
of the retail space in TIF projects ends up occupied by local businesses (2005).
Though there is economic logic supporting a small business focus, and though
Denver officials commonly speak of the virtues of small businesses, Denvers largest
economic development subsidies actually go mostly to large, non-local businesses.
Why? An examination of Denvers largest TIF project, the Stapleton project, will
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reveal the globalization pressures that drive Denver officials to sacrifice small
business goals on the alter of global investment demands.
Stapleton: Global Realities Structuring Local Economic Development
Stapleton, with over $3.1 billion in private investment, is Denvers largest
development project (Robinson and Nevitt, 2005). Stapleton is a mixed used
development on the site of the former Stapleton International Airport with 1,116 acres
of parks and open space (Stapleton Parks and Recreation Master Plan, 2002), 1,500
acres reserved for 12,000 residences (40% or more of the Denver's residential
demand), and 13 million square feet of commercial and retail space (Reuters, 2008).
Home prices at this development range from $150,000 to $1 million, and the
development is expected to take 20 years to complete.
Though the Stapleton TIF project was supposed to be built in a way that
supported the local business advantage, officials soon received a reality check from
global developers and local business development goals were soon sacrificed at
Stapleton. The Stapleton Redevelopment Foundation produced a green book
development plan in 1995, before the Stapleton project broke ground37. The green
book plan for Stapleton was for a development that encouraged sustainable lifestyles,
and was built around small and convenient, walkable stores and village squares that
37 The 4,700 acre Stapleton Airport was recommissioned for commercial use in 1995
after the Denver International Airport was planned to replace Stapleton as Denvers
primary airport.
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integrated housing, recreation, and business centers an urban village. The
Development Plan repeatedly claimed that the state, the nation, and the world were
searching for a new way to develop that offered more sustainable, small-business
solutions than the big-box takeovers of the day. The authors of the green book
wanted a development plan that added diversity, local charm, and offered a new
model of community development aspects of a booming creative class city.
The world is desperately searching for better examples of how urban communities
can adapt and renew themselves. Stapleton can address important local needs and
provide an important model. The community planned for the Stapleton site will
provide a real world example of sustainable development of significant scale
(Stapleton Development Plan, 1995, pg. 2-4).
However, the idealistic localists who wrote the Stapleton greenbook also
were aware of the modern realities of a successful urban development. The national
and international context requires attention to the economic realities of a more global
and more competitive marketplace (Stapleton Development Plan, 1995, pg. 1-3), the
authors noted.
There was good reason for such concerns. Though the greenbook of Stapleton
voiced a goal of small village squares filled with mom and pop stores, it soon became
clear that the economic realities of Stapleton were that developers and investors
would not play ball at the site unless there was more security to repay the TIF bond
that was lent to build Stapleton in the first place. The hundreds of millions of dollars
that were lent to build Stapleton (by global bond investors) was to be repaid with
75


future tax receipts from the project itself (as with all TIF projects), and so the
investors naturally expected a secure and profitable set of businesses to occupy the
future Stapleton. For that reason, the original plans for the site to be mostly filled
with small business village squares, eventually became plans for a Wal-Mart super
center known as Quebec Square the very first retail space to open at Stapleton.
Stapleton is paid for by tax receipts of future development the only way to attract
developers is to give them something that will certainly make money. Though city
officials and even the Stapleton Development Corporation didnt want Wal-Mart at
Quebec Square, it was the only way to generate the necessary tax receipts to lure
investors to lend, explained Tom Gleason, former vice president of public relations
for the Stapleton development, (Gleason, 2008). Tom Gleason elaborated on the two
reasons why Quebec Square happened the way it did.
There is a strong need for a regional retail facility in that quadrant of northeast
Denver. Second, there are the revenues produced through the anchors The Home
Depot, Wal-Mart and Sam's Club. They will produce significant tax revenues, which
will then be utilized for tax-increment financing for the infrastructure for the balance
of the project. This will create an important economic engine. (quoted in Lewis,
2001).
Though TIF investors seem to target their lending large and recognizable
business chains, these large chains arguably rob the Denver local economy of
multiplier money that officials led taxpayers to believe would be generated by sites
like Stapleton and that could contribute to addressing Denver social needs. A clear
conflict is evident. Large businesses and anchor tenants provide recognition to
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shoppers and economic security to TIF investors and developers; however, the
abundance of translocal chains does not contribute to the overall development goals
(small business support and tax revenues for community needs) Denver officials
promised taxpayers when they began funding TIF projects with their tax dollars.
A bias toward well-known and reliable revenue-generating businesses may be dictating a
TIF investment strategy that favors projects attractive to large-scale national chains. This
bias reduces the potential public revenue and private economic benefits from utilizing
local businesses. It also promotes potentially damaging competition to local businesses
by proliferating national chains in the Denver economy (Robinson and Nevitt, TIF II,
2005, pg. 3).
To this extent, certain Denver (and state) officials have argued that TIF has
cost taxpayers more than it has benefited them. Joel Judd, Colorado House Finance
Committee Chair, recently wrote a scathing call to taxpayers to contact their
representatives in opposition of TIF projects going corporate. Tax credits are kind
of the default position that many legislators come up with when they talk about
economic development. They are sold as panaceas when all they truly are is
expensive placebos (Judd, 2009). The question to Mayor Hickenlooper and other
Denver officials who sacrifice small business hopes for the large, global chains in
the interests of leveraging super-developments like Stapleton is whether this plan of
development is worthwhile in the long term.
The TIF analysis produced by Robinson and Nevitt suggests that it is not, and
with the current global economic recession, the future of TIF projects even earning
enough to repay translocal bondholders looks even grimmer. The analysis shows that
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of the projected collections from the Denver Pavilions TIF project, for example, only
70% has actually been collected. Some TIF projects have faired even worse: At the
Holtze-The Magnolia Hotel, only 55% of projected has been collected, Larimer
Square is at 65%, Market Square is at 55%, the Rio Grande project is at 17%, and 38th
and York is at 23% (Robinson and Nevitt, 2005, pg. 20). And all these figures were
before the recent economic downturn.
The data suggests that though these projects will produce enough tax revenue
to repay the TIF, Denver officials have falsely predicted they would generate enough
additional tax revenue to support additional long-term development goals of Denver
such as supporting small business development funds or addressing community needs
(e.g., recreation center expansion or workforce development funds).
Robinson and Nevitt, and the experience of Stapletons Quebec Square,
demonstrate why this globally-oriented economic development strategy should not be
relied on as the central development approach in Denver. Chris Nevitt, co-researcher
of the TIF analysis provided throughout this case study and current Denver City
Councilmember, believes that more public accountability should be placed on TIF
developers to fight for local business development. Furthermore, Nevitt has called
for TIF developers to be accountable for quality jobs with health care benefits for
employees, affordable housing where developments create residential space,
responsible, local constructors, and social and physical investments in neighborhoods
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where TIF projects occur. It's public money being invested in a private
development. So the public is an investor. And like any investor, they should expect
a clear and verifiable return on their investment in exactly the way a private investor
does, (Johansen, February 2004).
TIF projects have provided jobs, new housing, improved contaminated areas,
and increased commercial and investment activity in Denver, however, large, global
chains are using TIF to increase their economic footprint at the expense of local
Denver businesses. A bias toward well-known and reliable revenue-generating
businesses may be dictating a TIF investment strategy that favors projects attractive
to large-scale national chains (Robinson and Nevitt, 2005, pg. 3). Nevitt argues that
this aspect of TIF is private development, for private gains, and such businesses
should not receive public funds from TIF without better guarantees for small business
support and other community benefits (such as a living wage at TIF projects). David
Feehan, president of the Washington, D.C.-based International Downtown
Association told the Denver Business Journal in 2004 that private companies have
gotten much more savvy at understanding TIF ...They end up inducing TIFs where
theyre really not needed and it improves the bottom line for the companies
(Johansen, February 2004). This aspect of TIF makes even DURA executive
director, Tracy Huggins nervous. We've aimed to level the playing field and now it's
out of level again, Huggins said (Johansen, February 2004).
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Huggins statement is paramount to understanding problems at the Stapleton
TIF development. At the inception of the Stapleton site, the goal was a sustainable
community, supported by a select number of anchor tenants and populated by small,
locally owned businesses that offered an urban village of walkable retailers, open
space, and employment opportunities. However, Stapleton today is an example of
how local economic development strategies are sacrificed to the realities of the
globalized world. David C. Ranney focuses his book Global Decision, Local
Collisions: Urban Life and New World Order on how tax increment financing has
allowed global investors to gain huge profits.
Tax increment financing creates fiscal-geographical enclaves where development
priorities lack political accountability and whose very existence depends on rising
property values that offer global investors attractive, relatively risk-free profitable
investments (Ranney, 2003, pg. 161).
Wal-Mart, PetsMart, McDonalds, Office Depot, Sams Club and numerous
other chains dominate the Stapleton TIF; and as I have argued previously, developing
in favor of global chains it does not produce the same revenue as locally owned
business generate In this regard, Feehans recognition that large, global chains
have become even wiser to their ability to take advantage of TIFs and other tax
abatement strategies is alarming, as it reflects the growing amount of power translocal
private corporations hold over municipal, state, and even national governments. 38
38 See discussion of economic multiplier effect.
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The use of TIF subsidies to fund Wal-Mart, Sams Club, K-Mart, PetsMart
(etc.), developments, demonstrate that Denver officials are making development
choices in favor of global, translocal investors and developers and sacrificing local,
small business development and according to Richard Florida, these choices will
actually hurt their long-term ability to compete globally for the creative class, the
future of the new economy.
The case study of TIF provides evidence that Denver organizations and
officials have exercised a preference to develop globally rather than locally and
this choice is further evidence of the tragedy of the creative class. The use of TIF
subsidies to fund Wal-Mart, Sams Club, K-Mart, PetsMart (etc.), and other profitable
developments, demonstrate that Denver officials are making development choices in
favor of global, translocal investors and developers and sacrificing local, small
business development but according to Richard Florida, these choices will actually
hurt their long-term ability to compete globally for the creative class, the future of the
new economy. In efforts to attract the creative class and build the sort of thriving
economy they desire, Denver officials have surrendered to the pressures of global
capital circuits and are now building a cookie-cutter city that is the very opposite of
what the creatives are said to desire.
A Grim Future for Denver
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Before concluding my analysis, I offer one thought. If Denvers current
development strategies undermine the local business community and contradict the
ostensible creativity goals of much of the citys population, then where does that
leave the political economy of Denver? If Denvers gentrification agenda and cookie-
cutter TIF approach are not replaced by support for the new, creative economy as
seen in local business developments such as the Colfax Avenue Bluebird Beat39, what
will the future of Denvers regional economic development look like?
My prediction, and my motivation for conducting this research, is that the
future will be filled with growing government revenue problems due to developments
that underperform, a devastation of the historic, small business economy that once
employed almost all employees in Denver, and the creation of a city where lower-
income, working and service class residents are pushed out of their homes to make
way for gentrifying affluent creative class developments, thus devastating authentic
communities like Five Points (ironically, the kinds of communities that the workers
of the new, creative economy are said to desire). My projection is that Denver could
face the same crisis that other competing cities face today, as they have been unable
to become attractive to the increasingly mobile capital investors and creative class
workers.
39 For more on the Bluebird Beat, See Chapter Threes section on DNMl, a Glimmer
of Small Business Support in a Sea of Global Market Sharks.
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Globalization has remade the world through the forces of competitive
advantage, and if Denvers development strategies are not competitive in attracting
these new, creative class workers, then local strategies of economic development will
have to become strategies of economic rescue. The concluding chapter will focus on
an alternative development strategy, considering the dire projections above, and will
generate a call for attention to Denver taxpayers who need to better understand the
detriments of the current development approach in their city.
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CHAPTER SIX: ALTERNATIVES TO THE TRADEGY OF THE
CREATIVE CLASS
With global pressures weighing so heavily on Denver officials, more and
more TIF projects are falling into the big-box retailer model of economic
development. In the previous chapters, I have discussed why developing in favor of
large, global chains or big-box retailers is detrimental for Denvers economy.
Though city officials may be aware of this fact, it does not appear this knowledge is
having an effect on economic development strategies which are mostly geared
towards filling neighborhoods with chains and expensive bourgeoisie playgrounds
lined with condominiums. To begin this chapter on possible alternatives, I will
discuss what I call the localist challenge.
The Localist Challenge to Economic Development: Staying True to the Local
The Bluebird Beat, almost a mile long stretch of Colfax Avenue between
York Street and Colorado Boulevard, is a sterling example of local, autonomous
economic development in Denver. The community of the Bluebird Beat is home to
thousands of residences including remodeled homes from the early 1900s, bungalows,
apartment buildings from the 1950s, and the brand-new, state of the art, Pinnacle
condos and town homes. It is also home to its namesake, the Bluebird Theatre, a hub
of rock, punk rock, indie rock, and metal music. There are also a couple tattoo shops,
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a Starbucks and a few locally owned coffee shops, many locally owned businesses
including liquor stores, computer repair shops, and business marketing firms, a car
dealership, a cupcake boutique, and a plethora of bars and locally owned
restaurants, bordering on one of the cities largest parks in this neighborhood.
However, the Bluebird Beat is now home to development projects that might force it
to start looking, feeling, and tasting like other areas of the city that have been
Manhattanized. This is the challenge facing the residents of the Bluebird Beat.
Blueprint Denver, a plan adopted in 2002 (a supplement to the Denver
Comprehensive Plan 2000) to bring change, stability, multi-modal streets40, and
mixed-use development to 100 Denver neighborhoods in five years, has recently
concentrated its revitalization efforts in the Bluebird Beat. This year a parcel of
commercial area in the Bluebird Beat was demolished to make way for Blueprint
Denvers plan the first residential building designed under this plan for
neighborhood revitalization in Denver. Located at Colfax Avenue and Madison
Street, in the heart of the Bluebird Beat, prices range from $147,000 for a studio to
$500,000 for a three-bedroom, three-bath condo. The Blueprint residence and the
Blueprint plan itself fit perfectly in with what Michael Jacobs describes in his award-
40 Streets that accommodate multiple modes of transportation (public transportation,
pedestrians, bicycles, and private vehicles).
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winning documentary, Colfax Avenue, as using capital investment as the method of
transformation on East Colfax.
Jacobs documentary takes viewers on a social journey down the longest
running commercial street in U.S. history, Colfax. He explores the history of drugs,
crime, and prostitution, and then begins a presentation of material on gentrification
and the cultural transformation that is occurring presently on Colfax and in Denvers
low-income neighborhoods. As Dr. Tony Robinson comments in the film, the plan is
to drive downtown capital LoDo kind of capital down Colfax (Jacobs).
The Bluebird Beat is a very walkable, unique, urban, open space
neighborhood in the heart of the area of Colfax targeted for this wave of capital
investment. Currently, the Bluebird Beat a from-the-ground-up, creative class,
commercial district- succeeds, grows, and is full of local flair. However, since the 27
and 22-story Pinnacle residential development has went up, residents have witnessed
more taxicabs, greater problems with residential on-street parking, and increased
gentrification pressures. The Bluebird Beat, the shining example of local business
eclecticism, is experiencing record real estate values and levels of booming economic
development41. As of this writing, the Bluebird Beat is attempting to remain a small
business friendly, unique, diverse neighborhood; however, the question is how long
411 conducted this research. Housing prices average in the upper $500,000 for
bungalow-style, remodeled homes in the area, much higher than in other areas of the
city.
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will the creatives be able to hold onto their authentic, indigenous, eclectic community
almost devoid of large, global chains as the interests of global investors peak (the
Blueprint and Pinnacle residences). This is the localist challenge.
Though the Bluebird Beat offers a way out of the dilemma that boxed in the
idealists of Stapleton into Quebec Square, how deep and enduring is the tragedy of
the creative class? Will the pressures of global investment force the bohemian
Bluebird Beat to be overrun by large, global chains, big-box retailers, and even more
condos? So far, the area has survived the localist challenge posed by the creative
class style of development, but for how long? How long before the Bluebird Beat
succumbs to the path of LoDo ESPN Zones, Cheesecake Factories, and other tourist-
friendly, recognizable chains? Robyne S. Turners article, The Politics of Design
and Development in the Postmodern Downtown describes an unfortunately likely
future for the Bluebird Beats: a decent into Manhattanization.
Manhattanization: the Loss of Democratic Power and Land Control
As Turner demonstrates, it is common for downtowns to develop with highly
subsidized projects that prioritize large, global chains/big business, private not public
investment, a lack of democratic processes, a lack of consideration for the needs of
local residents and businesses, and a pandering to tourists. Turner hypothesizes that
cities are too often willing to exchange democratic and public access to spaces for
positive economic returns, and this is understandable in a global world. However, she
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says this exchange causes a loss of diversity (in culture and business) and democracy.
... How downtown space is treated by the public sector becomes an important
indicator of local politics (2002, pg. 533).
In accordance with Turners analysis, for three decades, Denvers local policy
towards downtown has been out with the old and local and in with the new and
globally recognizable, evident (for example) in the bulldozing of many Asian
businesses in Alameda Square now being replaced with a Lowes Home
Improvement store42. Though he has become the most outspoken municipal agent for
the creatives, this ironically self-defeating strategy of attracting the creative class did
not start with Hickenlooper. Former Mayor Wellington Webb (1991-2003) a decade
ago sought to bring a higher income class to develop downtown rather than choosing
to support the low to moderate-income neighborhoods already living in downtown.
A common observation of the value of downtown housing is stated by Wellington
Webb, [former] mayor of Denver, I was convinced that if a residential population
could be established downtown, retail would follow. Apparently mayors forget that
populations already live close to the downtown and have needed retail services for
years. The fact that they are low and moderate-income, however, may undoubtedly
contribute to their inability to spark the high-end retail sought by the nations cities.
The inability to service an indigenous low-income population and the desire to
42 Alameda Square business owners (at Zuni and Alameda streets) fought for years to
keep Wal-Mart out of the predominately Asian shopping center. After the City of
Denver declared the center blighted, the community actually won the fight and
defeated Denvers official plan to replace the small Asian stores with a Wal-Mart.
Within two years, however, the city brokered a deal with Lowes Home Improvement
Center to anchor the new development. Alameda Square is currently bulldozed, and
most of the original Asian businesses have been forced to relocate in order to make
way for the redevelopment.
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accommodate high-income populations are indicators that cities feel financial
pressure to make downtown property produce revenues, even if it means financially
subsidizing the development (Turner, 2002, pg. 536).
Denvers reliance on subsiding TIF projects filled with large, global chains, in
hopes of reaping larger returns, reflects this financial pressure to make downtown
property produce revenues, and Turner suggests that the result is that economic
development has become a much more insulated, elitist activity. Denvers economic
development agents have given funding opportunity and tax incentive priority to big
business over small businesses and local residents in increasingly apparent ways, such
that Denver is seeing only a few small businesses leasing space in TIF projects. As
Turner exhibits in her case studies of four Sunbelt cities, in the formation of a 24-
hour, global city, local government and economic development agents intentionally
seek globally recognizable symbols (like Wal-Mart and Lowes) and exclude the
local community. As Turner highlights, a focus on creating a tourist hub and bringing
a new, higher-income class of residents as Hickenlooper has championed is
dominant everywhere, though it signifies a failure of local imagination in approaching
economic development for local community.
Community Action, Reclaiming the Local
Turner believes that a healthier plan of economic development for cities lies in
the local community demanding a public decision making role in redevelopment
policy. There are local activists who similarly argue that Denver should apply
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Turners alternative for local community development by demanding that a
democratic process be adopted and economic resources be shared with local
businesses. For example, Denvers FRESC43 has applied Turners analysis recently in
its community benefits approach to TIF developments. By demanding a seat at the
negotiating table, FRESC has recently begun to ask that subsidized projects include
more local businesses. The organization has some innovative successes in forcing
city development officials to accept such demands on a limited basis on projects like
the Gates urban renewal project at 1-25 and Broadway, where the city has agreed to
ban big box developments (Crummy, 2005).
But is it too late to count on any change from Denver officials and the
developers? Thirty years into the TIF subsidy process is it too late to demand change
in favor of local businesses in Denvers economic development plans? The economic
development strategy employed by Denver officials in this last thirty years has
reflected a lack of respect for local residents gaining control over or even a voice in
public decisions on economic development projects (Turner, 2002). Turner gives fair
warning that developing downtowns with a focus on large, global chains, inevitably
surrenders economic and land control to corporate investors and takes control from
the hands of the local community.
As public space is increasingly controlled by the private sector, we have to question if
43 Formerly Front Range Economic Strategy Center.
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political authority and local decision structures are sufficiently concerned about an
erosion of democracy. At some point the downtown development market becomes more
valuable as symbolic capital than actually producing revenue for the city (Turner, 2002,
pg. 543).
In just this way, it would appear, judging by the sheer percentage of large, global
chains versus small businesses in TIF projects and by the relocation incentives
offered to big business, that the political economy of Denver is moving quickly
towards big business and chains, instead of maintaining its historic local community
flare.
Turner warns local communities that private investors see this lack of a
commitment to local power and social reproduction as an opportunity to gain control
over public authority. In other words, Denvers cultural identity, previously
characterized by small businesses like Wynkoop Brewery and Jazz at Jacks, is being
replaced by large chains, like Rock Bottom Brewery and ESPN Zone. Turner
attributes this transfer of control to a loss in local authority in business, public
space, and democracy.
Public planning is not empowering if it serves only to privatize space and use public
authority for social control of that space... City policy is designed to capture the
familiar as a marketing tool and as a means to improve the productive value of space.
Downtowns are no longer seen as places to satisfy the local interests based on
indigenous custom, history, or culture. Instead, local culture is used as part of the
downtown development strategy to draw external consumers to designated
commercial areas (Turner, 2002, pg. 544-545).
Turner advises the local community (business and residents) to form public
alliances and networks to regain their voice or stop private control from eroding local
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democracy through globally-oriented economic development strategies. She advises
for local communities to find a political and ethical strategy for redevelopment, an
alternative strategy that is inclusive and sustainable for cities.
Denvers almost thirty-year history of TIF developments that exclude local
small businesses for the sake of hypothesized positive economic returns has set
Denver taxpayers back. If the Denver community does not include opportunities for
citizen and local small business in planning a public coalition then Denver
property owners, residents, and local businesses will likely be paying the
consequences in the near future. Despite their best intentions to include citizens,
cities may be sabotaging those effects by accommodating the downtown development
interests (Turner, 2002, pg. 547). However, recently Denver citizens are showing
promise by organizing just such a public coalition against global development
interests.
The Campaign for Responsible Development, Community Action in Denver
The Gates Rubber Factory development (a TIF project) at 1-25 and Broadway
Avenue in central Denver has the potential to exert considerable economic influence
on the city (being over half a billion dollars in value), as well as to serve as an
example for other states that use TIF. Making Connections Denver, a coalition of
neighborhood residents, city agencies, community organizations, and private
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funders44, partnered with the Campaign for Responsible Development, a self-
described coalition of labor unions and community leaders, and developed a
campaign to force the Gates project developer45 to plan for stronger, local
communities (e.g., through high wages) and for more small business inclusion in the
heavily subsidized development. In the face of persistent and widespread public
pressure, and in exchange for the $126 million TIF subsidy, the developer agreed to
the terms brought by the Campaign for Responsible Development (which is itself part
of a national upwelling of similar citizens movements for more locally responsive
urban development known as the community benefits movement). The community
coalition won affordable housing in the area of the TIF, good wages and benefits for
all construction and maintenance jobs, first-source hiring for low-income residents in
the surrounding neighborhoods, and communication about environmental cleanup at
the site. Very importantly for the argument of this thesis, the developer also agreed
that the site would allow no big-box stores like Wal-Mart, and would prioritize local
small business tenants.
The deal is significant for the high level of community engagement in a very complex
economic negotiation, [Making Connections Denver Site Coordinator Susan] Motika
explained. We want to have a community role in helping shape and drive policy in
44 Making Connections Denver is an initiative to improve life for families living in
four lower-income Denver neighborhoods Baker, La Alma/Lincoln Park, Sun
Valley, and Cole.
45 Cherokee Denver, LLC has a Denver office, but is headquartered in Raleigh, North
Carolina.
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