efforts are a mix of conserving, maintaining and nurturing its strengths on one hand while introducing new, creative and exciting activities on the other.”45 Caliguiri’s staff optimistically pointed out that, while manufacturing work had disappeared, jobs in health, education, and professional and service sectors had increased, which they thought heralded the emergence of “a more diversified and, therefore, healthier” local economy.46 Faced with difficult decisions about how to save a declining city, Caliguiri and his Planning Department chose to pursue a postindustrial redevelopment strategy without much apparent hand-wringing over its potential impact on low-income and working-class residents.
Caliguiri wanted to redevelop the city in a way that would make it more compatible with the perceived needs of young, white-collar workers. Renaissance II reflected the first Renaissance’s focus on downtown construction and improvement projects, but Caliguiri expanded the range of activities to include neighborhood stabilization, economic development, and large-scale projects well outside of the central business district.47 His ambitious agenda for a second Renaissance benefitted from the Home Rule Charter Pittsburgh’s voters had approved in 1974. The charter secured for the city government the authority to carry out any function not expressly precluded by Pennsylvania state law or the U.S. or state constitutions. In this system of local government organization, the mayor was both executive and administrator, while the city council served a legislative function. The mayor independently appointed (and removed) the heads of city departments and members of public authorities and commissions, while the city council created commissions, passed resolutions, and established city ordinances. Under Home Rule, the mayor had veto power over city council decisions, rather than the other way around. Except in cases where Pittsburgh accepted state and federal funds, city officials were free of oversight from other levels of government and not compelled by anything other than political pressure to cooperate with the county government. The Planning Department’s land use and economic development decisions were largely autonomous. With few constraints on how he used public funds, Caliguiri issued a six-year, $323 million capital budget for Renaissance II four months after taking office, which he called a “blueprint” for Pittsburgh’s revival.48
Caliguiri’s Renaissance II budget affirmed his commitment to working through what he described as a “city-citizen partnership.” When Caliguiri restored the relationship between city agencies and the corporate sector, he incorporated new members into Pittsburgh’s public-private partnership. “We believe that the City and the private sector are partners,” his office noted. “The City will do its share by providing direct services and projects. But you will have to do your share as well. You, the residents and the businessman, will have to make commitments and investments in your homes, your communities and your businesses.”49 The “civic” partners included neighborhood groups (primarily community development corporations, or CDCs); the University of Pittsburgh and Carnegie Mellon University; and local foundations, especially those of the Mellon, Scaife, Heinz, and Hillman families; and the state government.50
Pittsburgh’s reconstituted partnership reflected the institutional arrangements of the growth partnerships that took shape in North American and Western European cities between New York City’s 1975 near-bankruptcy and the end of the century. New York’s powerbrokers sprang to action when President Gerald Ford told New York City to “Drop Dead,” as the New York Daily News famously rendered Ford’s message to Mayor Abe Beame and Governor Hugh Carey that the federal government would not bail out the insolvent city. New York, like most other major U.S. cities, had worked through a redevelopment partnership to facilitate urban renewal projects in the 1950s and 1960s. New York’s partnership differed substantially from those in other cities which undertook large-scale urban renewal programs. In most places, renewal activities were directed by civic organizations modeled after the Allegheny Conference, such as the Greater Milwaukee Committee, the Chicago Central Area Committee, the Greater Baltimore Committee, Central Atlanta Progress, the Cleveland Development Foundation, and St. Louis’s Civic Progress. Instead, New York’s “master builder,” Robert Moses, remade the urban landscape through a series of public authorities. When Manhattan’s business elites decided in 1975 to work with the city and state government to solve urban problems, their focus was on the city’s looming bankruptcy rather than physical redevelopment through urban renewal.51 They set out to create a different set of institutions through which to confront a different set of circumstances.
After Ford rejected Beame and Carey’s bid for federal aid, Carey turned to the city’s corporate leaders for advice. The city’s bankers had long warned that Beame needed to cut spending and balance the budget if he hoped to keep New York City credit-worthy. In spring 1975, banks refused to issue new bonds to cover Beame’s budget shortfalls, and Carey loaned the city money to remain solvent; by June, New York City could not honor nearly $8 million in maturing securities. Carey asked investment banker Felix Rohatyn, managing director of Lazard Frères, to head an advisory committee composed of financiers, CEOs, and realtors to determine a course of action. Instead of creating a civic organization to work with city and state officials, the committee advised Carey to create a state-chartered independent corporation through which bankers could oversee the bailout. As a result, Carey created the Municipal Assistance Corporation for the City of New York (MAC) in June and appointed Rohatyn as chair of the nine-member board. MAC gained authority through the state legislature to issue bonds and use the money to restore the city to solvency. To support MAC’s activities, the state legislature converted New York City’s sales and stock transfer taxes into state taxes and used them to secure MAC bonds, mandated that the city balance its budget in three years, and established an Emergency Financial Control Board to monitor the city’s finances and ensure that MAC’s directives were met. If Rohatyn and his board thought that city officials were making poor budgeting decisions, MAC could suspend loans to the city and hold back tax revenue. Carey and Rohatyn’s efforts were not enough to resolve New York’s fiscal crisis; it took more than $2 billion in short-term federal loans and an agreement from public sector unions to buy $2.5 billion in city bonds to stabilize the city’s finances.52
The financial details of New York’s bailout were only part of the story. With MAC, Carey transferred unprecedented control over public finances to private actors, some of whom were the same bankers who refused to extend additional credit to the city. In exchange for bond financing, Rohatyn and MAC demanded that New York City implement austerity measures as part of “best-practice” budgeting. These included tax hikes, wage freezes at levels below inflation, public-sector layoffs, cuts to public services, higher subway fares and, for the first time, tuition at City College. The social costs were immense: day-care centers and firehouses closed down. Six thousand teachers were laid off. Public sector unions lost power as their memberships declined; the same unions found themselves in the uncomfortable position of becoming creditors to their employer, which made strikes a difficult prospect.53 Compared to many other U.S. cities, in the 1950s and 1960s New York had been a social-democratic stronghold, with an expansive welfare state, strong unions, and a liberal political culture.54 MAC’s austerity measures tore apart the city’s social safety net, increased income inequality, and undermined organized labor. These were not, as Rohatyn claimed, unavoidable consequences of MAC’s efforts to forestall a bankruptcy that would have been worse for working- and middle-class families.55 Instead, New York’s corporate elites seized leadership in a moment of crisis and pushed through a series of neoliberal reforms to reduce the size and power of what they had for decades considered a bloated welfare state.56 Their activities marked the emergence of the growth partnerships that would proliferate in North Atlantic cities in coming decades, which had more flexible arrangements between their public and private members than did redevelopment partnerships rooted in federal urban renewal legislation.
The growth partnership that managed New York City’s bail-out represented what Timothy Weaver has called “neoliberalism by design”—an example of political and business elites using state power to implement a neoliberal political project—but not all such partnerships reflected the discernible influence of neoliberal ideology. Cities like Pittsburgh and Hamilton (in Weaver’s taxonomy) instead turned to “neoliberalism by default.”
