Smart Cities Need Smarter Politicians

In the current United States economy, you cannot solve 21st-century municipal budget challenges with 20th-century taxing solutions, let alone medieval “pay for safe passage” solutions like the Sheriff-of-Nottingham used to dole out.

In September 2019, I spoke about this concept at the Illinois Municipal League Conference. In the presentation, I pointed out that Illinois municipalities need to break away from the centuries-old, overused Sheriff-of-Nottingham approach to grabbing taxes and shaking down everyone passing through for some type of fine, fee, or tribute for the government tax coffers. These “pay for passage” taxes are medieval. Why do they overuse them?

As the Sheriff of Nottingham, you are killing the economy!

At this point, most people will go out of their way to avoid a speed trap, a red-light camera, or an overly-taxed area to shop in, especially when the surrounding regions have sales taxes which are half of the “Nottingham” region.

Chicago is a great example. Over 10% sales tax versus 5% in nearby Wisconsin and Indiana. Plus, add on the recent $.19 per gallon additional State of Illinois gas tax and you have a Perfect Storm for re-routing customers and their purchases (think tax revenues) to someone else.

I heard the current Mayor of Chicago wants to increase fees and taxes in order to cover a large budget shortfall. It is not the answer to the problem.

Chicago’s surrounding suburbs within Cook County can also be considered as “Sheriff-of-Nottingham” municipalities. Extra fees taxed onto businesses along with Real Estate Transfer Fees provide revenues but also create a very negative environment.

In neighboring Oak Park, more taxes and fees are being contemplated.

Besides the 10% sales tax in Oak Park, a Real Estate Transfer tax (or Fee) at a rate of 8/10ths of one percent is charged to anyone who is selling their house. So a house selling for $400,000 needs to pay the city $3,200 for the “Transfer Fee.” A house selling for $1,000,000 would need to pay the city $8,000 for the Transfer Fee. Otherwise, the owner cannot close on the real estate transaction.

“Every time you turn around or pass through, you are taxed, fined or presented with Fees to move forward.”

Illinois is contemplating adding on a state-wide Real Estate Transfer Fee. Again, in order to gain some revenues by taxing everything. And then, some politicians wonder why people are moving out of Illinois? They need to start looking at technology to create new revenue streams and not medieval taxes and fees.

Regional Economic Development and Connectivity: Capturing the Lost Customer

Next year, 2020 is poised to deliver some real results in connectivity for cities and regions. All this hyping, which has been going on for the last several years, about “Smart Cities” and the “Internet of Things” (IoT) is beginning to materialize and actually demonstrate improvements in value to the economy and society. We are beyond buzzwords and need to see some real results in both local, as well as the overall Illinois economy. Can you deliver in 2020? Can anyone in Illinois?

Here are some cutting-edge ideas which no one else has proposed in their municipal strategies or implemented in their economic development projects to provide a broader positive impact on regional economic development as well as its measurement (and oversight) through new layers of connectivity and intelligent infrastructure.

Regional Sustainability: It’s all about Connectivity

Let me suggest an approach I discuss in my book, LOCATION LOCATION CONNECTIVITY, which provides a “Virtual Resort Effect” incorporating cross-marketing of other venues to keep people within the perimeter of the primary venue and its associated local venues. This “electronic umbrella of coverage” (smartphone demographics, metrics and analytics utilized to “capture the lost customer”) will steer customers deeper into the surrounding venues increasing sales, sales tax revenues, and sustaining more long-term economic viability for the region (not just the primary venue (i.e. a convention center, stadium, casino)).

The complex and its underlying connectivity layers I define as the intelligent retail/entertainment/convention center complex (IREC) must become an integral part of every Main Street in America.

The acceptance and assimilation of profit-enabling wireless technologies (like WiFi/DAS (Distributed Antennae Systems)) in the workplace and in next-generation real estate (Smart Cities) is accelerating to a pace where the importance of “location, location, location” in real estate has been surpassed by “location, location, connectivity” (including hotel and casino operations).

This concept is the cutting-edge of electronic cross-marketing providing an unparalleled approach to “capturing the lost customer” and maximizing the economic viability of the municipality and the surrounding area.

I compared these 21st-century approaches for regional sustainability to the realities of what is mainly being operated in most municipalities today. The Sheriff-of-Nottingham may be the “go-to strategy” of most municipalities across the country, but it is now the kiss of death if you want to survive and thrive in the 21st century.

Capturing the Lost Customer

Let’s say Milwaukee has an event that brings 5,000 people into the city for a day. It could be a concert, a convention, or some other event. Right now, there is no way to “capture the lost customer.” Who is the lost customer? The 5,000 who come to the city for one venue and then leave without stopping anywhere else.

Just think if you could “capture” a reasonable percentage of that 5,000 potential customers by cross-marketing to them and re-directing them to a restaurant, a bar, some stores, or a combination of other venues? How much more revenue would all those venues receive? How many of them could become or continue being viable? How many could continue to employ local people (or even hire more?). I am not talking about some high percentage like 70%-80%. Let’s look at a reasonable percentage.

20% of 5,000 people is 1,000 people. If you could even deliver that once a week, it would impact everyone’s bottom line from the venue owner, to the employees who depend on tips or commissions and to the city itself in added tax revenues (from gas taxes to sales taxes). That could mean the difference of economic viability to economic stagnation and decline.

Today, most cities and towns are losing those customers and will lose more into the future. With today’s struggle for more tax revenues to pay for operational budgets as well as soaring underfunded pensions, municipalities and their leaderships need to understand this concept and implement it.

This is also the foundation for Smart Cities: new innovative ways to achieve and maintain regional sustainability through the implementation of an intelligent infrastructure as new ways to manage expenses and create additional revenue streams.

Getting this Concept and Initiative into More Areas

Building out 5G networks and all their related antennae and equipment is not the total answer to solving this Sheriff-of-Nottingham dilemma. The answer to sustaining future regional viability on Main Street America is the ability to see how these electronic cross-marketing applications can further develop a region into a viable community which is not relying on one venue to pull them out of a long recession. Or, a constant barrage of fines, fees and penalties for the privilege of driving through Nottingham as a way to cover budget shortfalls.

A continuous downward spiral of economic and infrastructure neglect that many regions have fallen into, needs a comprehensive plan which includes elements of applied technology and 5G connectivity, along with innovative cross-marketing insights to reverse the vortex of decline.

Smart cities need to be run by smarter politicians.