Douglas McGray: All Publications, Events and Press

Pop Up Magazine: Magazines Live! | 7x7

Erin Drankoski — Mon, 02 Nov 2009 11:05:00 -0500

San Francisco writer Douglas McGray (an Irvine fellow at the New American Foundation), a contributor of social-policy narratives for The New Yorker and the acclaimed public-radio show, This American Life, is Pop-Up's editor in chief. "Branching out into radio opened my eyes to all the ways a story can be told," says McGray, 34. Despite what he calls the "awkward phase" that journalism is currently suffering, the Maine native claims that Pop-Up Magazine is not a reaction to a floundering print-media industry.

California’s Food Banks Go Locavore

Erin Drankoski — Sun, 11 Oct 2009 03:37:00 -0400

Once a month a tractor-trailer rolls up to the Family Early Learning Center, a one-room preschool in East San Jose, Calif., that doubles as a food pantry for poor families with young kids. On a bright Friday in August, a dozen or so women from the neighborhood gathered for the truck's arrival. Volunteers as well as customers, they had come to help unload the monthly delivery of groceries from the local food bank.

CA EVENT: Pop-Up Magazine 2

Elizabeth Wu — Tue, 01 Sep 2009 12:44:00 -0400

A New America Event
09/25/2009 - 7:00pm

"Heavy with bold-faced names... fast, loose, often funny, and wholly unpredictable." San Francisco Chronicle

Senator Benjamin Cardin on the Crisis in Journalism

Communications — Wed, 13 May 2009 05:24:00 -0400

Washington, DC – Senator Benjamin Cardin (D-MD) delivered the keynote address this morning at a New America Foundation/Washington Monthly event on the future of journalism and his sponsoring of the Newspaper Revitalization Act. Senator Cardin stressed that he in no way supports a "government bailout" of newspapers, and that his bill—which permits papers to convert themselves to tax-exempt, 501c3 organizations—would not significantly affect federal tax revenues. "Newspapers only pay taxes if they're making a profit," he noted.

The Instigator

Cecille Isidro — Sun, 10 May 2009 10:13:00 -0400

Steve Barr stood in the breezeway at Alain Leroy Locke High School, at the edge of the Watts neighborhood of Los Angeles, on a February morning. He's more than six feet tall, with white-gray hair that's perpetually unkempt, and the bulk of an ex-jock. Beside him was Ramon Cortines--neat, in a trim suit--the Los Angeles Unified School District's new superintendent. Cortines had to be thinking about last May, when, as a senior deputy superintendent, he had visited under very different circumstances. That was when a tangle between two rival cliques near an outdoor vending machine turned into a fight that spread to every corner of the schoolyard. Police sent more than a dozen squad cars and surged across the campus in riot gear, as teachers grabbed kids on the margins and whisked them into locked classrooms.

Pop-Up: a Magazine, a Party, Both or Neither? | San Francisco Chronicle

Cecille Isidro — Fri, 24 Apr 2009 20:11:00 -0400

As conceived by writer and New America Foundation fellow Douglas McGray (billed as editor in chief), Curiosity Shoppe owners Derek Fagerstrom and Lauren Smith (creative directors), designer Maili Holiman (design director) and New Yorker contributor ...

CA EVENT: Pop-Up Magazine

Elizabeth Wu — Wed, 22 Apr 2009 20:00:00 -0400

A New America Event
04/22/2009 - 7:00pm

If you have questions, e-mail Douglas McGray at mcgray@newamerica.net.

Pop-Up Magazine | Dwell

Cecille Isidro — Fri, 17 Apr 2009 12:55:00 -0400

While many publications have drawn in their paper tentacles and forged ahead with digital versions, Douglas McGray has a project that takes magazines in an entirely different direction.

CA EVENT: An Evening with Craig Newmark (San Francisco)

Elizabeth Wu — Tue, 24 Mar 2009 15:00:00 -0400

A New America Event
03/24/2009 - 7:30pm

craigslist.org may be the only site where you can get anything you need for life cheap, or even for free. The free community classifieds service, launched as an email listserv for San Franciscans in 1995, helps over 50 million monthly users find homes, jobs, cars, stuff, spouses, friends and flings. The site's simple design and old age (in Internet company years) hasn't kept it from being at the pulse of online life. craigslist is one of the top internet websites registering over 13 billion page views per… more

iGov

Cecille Isidro — Wed, 07 Jan 2009 12:29:00 -0500

Barack Obama has said we need a "Google for government." It's a nice line, but what does it mean? Federal agencies have been online since the mid-'90s. Obama's first crack at a Google-for-government law led to USAspending.gov, a budget tracker that looked like everything else the feds had put up on the Web--until I saw one geek-speak phrase on the home page, so small I almost missed it: API Documentation. To understand its significance, let me tell you how I got subway schedules on my iPhone.

Photoshop Detective

Cecille Isidro — Fri, 26 Dec 2008 09:58:00 -0500

Too Small to Fail

Communications — Thu, 20 Nov 2008 13:45:00 -0500

A New America Event
11/20/2008 - 12:15pm

With the big guns in the financial services industry in turmoil, it’s a good time to ask hard questions about the nature of our finance system. Does bigger always mean better? Or does small-scale "relationship" banking, in which individual savers and borrowers are members of the same community, help to make a better banking sector? Community banks and credit unions were regarded until recently as vestigial players in a new world of global consumer finance. But today they aren’t merely… more

Douglas McGray with Crosscurrents - KALW News | 'The Flipside of Check Cashing'

Cecille Isidro — Mon, 17 Nov 2008 13:04:00 -0500

Low income families often end up going to check cashing outlets rather than banks. For the last 5 years or so, check cashers and payday loan companies have played the role of villain in news stories. They were the bad guys for charging ridiculously high interest rates and for ripping off the poor. But in a recent story in the New York Times Magazine check cashing tycoon Tom Nix appeared in the role of hero rather than villain. Douglas McGray, a fellow at the New America Foundation wrote the story and KALW's Nathanael Johnson asked him how a check casher could be one of the good guys. LINK to audio

Check Cashers, Redeemed

adminn — Sun, 09 Nov 2008 12:09:00 -0500

The lobby of the Nix Check Cashing outlet on South Figueroa and West Imperial, in the Watts neighborhood of south Los Angeles, was bright and loose. Twenty or so people, black and Latino, dressed in jeans and T-shirts or sport jerseys or work uniforms, stood in a line that snaked back from a long row of bulletproof cashiers' windows all the way to the front door. The room was loud, in a friendly way; everyone seemed to be talking with everyone else. Every once in a while, all together, the line would erupt into raucous laughter.

"Next customer," said a cashier, Joseph, a young black guy with a sweet, quiet manner. He wore black sneakers, black Dickies and a white polo shirt with a Nix logo -- a retail uniform.

The customer at the window next to Joseph's looked over her shoulder. "Sister!" she yelled. "Next in line!"

It didn't feel like a bank.

Twenty or thirty years ago, traditional financial institutions fled neighborhoods like Watts, and guys like Tom Nix, co-founder of the biggest chain of check cashers and payday lenders in Southern California, rushed into the vacuum. They built a whole new financial subculture, which now includes regional giants like Nix, national brands like Ace Cash Express, Advance America and Check 'n Go and thousands of local chains and anonymous corner stores -- more outlets, in total, than all the McDonald's restaurants in the United States plus all the Starbucks coffee shops. Inside, it's like banking turned upside down. Poor customers are commodities, deposits are irrelevant, bad credit makes for a good loan candidate and recessions can be boom times. Add up all those small transactions and throw in businesses like pawnshops and auto-title lenders, and you've got a big industry -- $100 billion annually and growing. Nix alone pulled in $28 million in fees last year.

"Next customer," Joseph said. A guy slid his paycheck and a Nix ID card under the window. Joseph stamped the check, placed it under a gunmetal contraption called a photoscope, next to the ID card, and pulled a lever, thunk, which snapped a picture of the man, his ID and his check on a single negative. Then he counted out 20s. "Do you want to pay any bills today?" Joseph asked. "You get five free money orders with that."

There are two big problems with businesses like Nix Check Cashing. One is that the fees are high. Most cashers pocket between 2 and 4 percent of each check's value, which a recent Brookings Institution study calculated could add up to $40,000 in fees over a customer's working life. And their version of credit, a two- or four-week cash advance against a postdated check, known as a payday loan, is even pricier -- about 30 times the annualized interest rate of a typical credit card.

The second problem is that cashing your paycheck, instead of depositing it, encourages you to spend all your money rather than saving whatever is left over at the end of the month. (Down the counter, a pair of young black women in tight, bright tops looked around a bit nervously as a cashier counted out thousands in small bills. "It's tax-refund time," the cashier told me as the women walked out.)

But it's also true that traditional banks are far from blameless, especially where low-income customers are concerned, and check cashers and payday lenders do get some important things right. "If they're properly regulated and scrutinized, there's nothing wrong with check cashing as a concept and there's nothing wrong with payday loans as a concept," Robert L. Gnaizda, general counsel for the Greenlining Institute, a California nonprofit focused on financial services and civil rights, told me. "And there's nothing automatically good about free checking accounts if you have multiple fees whenever you make the most minor mistake."

Today's financial crisis has many origins. But here's one cause that is often overlooked: Traditional bankers badly misread the market for financial services in low-to-moderate-income communities. "Banks have been approaching these customers purely from a short-term-gain perspective, and they've missed opportunities," Matt Fellowes, director of the Pew Safe Banking Opportunities Project, told me. Banks declined to offer small, simple lines of credit to poor and blue-collar customers, leaving them to payday lenders, while they pushed high-limit, high-interest credit cards on everyone and acquired hundreds of billions in subprime debt. They undervalued the hundreds of billions a year in modest paychecks that pass through a place like Nix and ended up short on cash. Now that the economy has turned ugly, these poor and blue-collar customers are the hardest-squeezed. Payday loans are up, Nix told me when I spoke to him recently, and check-cashing revenue is down.

Legislators around the country have identified savings as a way to shore up low-income communities and expand the middle class. There are a few significant bills before Congress, and more at the state level, that would help poor and working-class families save money -- like increasing the amount welfare recipients are allowed to sock away before the system cuts off their benefits. But some 28 million Americans still go without a bank account, including more than 20 percent of Latino and African-American households, and more than 50 million have no credit score, which means no access to mainstream credit. These are the people in line at Nix.

A number of city and state governments have announced moratoriums on new check-cashing stores or set a ceiling on their fees. Fifteen states, including New York, have either outlawed payday lending or capped interest rates low enough to make it a money loser. And in 2006, Congress effectively banned payday loans to military personnel anywhere in the country. At the same time, lawmakers have tried to nudge banks toward low-income customers. By the end of the year, in the biggest effort yet, Gov. Arnold Schwarzeneggerof California plans to announce the rollout of an initiative called Bank on California -- a concept piloted in 2006 in San Francisco, where the mayor's office persuaded banks to relax their standards, and in some cases their fees, for new account holders in exchange for a free marketing push from the city in poor neighborhoods. Officials from several other states, interested in copying the idea, will visit California for the kickoff, and more than three dozen cities, including Seattle, Los Angeles and Savannah, Ga., are already drawing up their own versions.

But while regulation has curbed some of the worst excesses of the alternative financial-services industry and made mainstream banking more accessible, there remains a big gap between those worlds. As C. K. Prahalad, the economist and author of "The Fortune at the Bottom of the Pyramid," told me, "We don't think enough about how to migrate from one to the other in a sensible way." Check cashers and payday lenders want to keep their customers, and banks tend to be ambivalent about luring them away or unsure how to do it.

Tom Nix's life, and his work, is the story of how we got here, to a separate and mostly unequal financial industry for the poor. But it may also be the story of a new way out. Last fall, Nix sold his entire chain for $45 million to one of the country's largest credit unions, Kinecta, which turned around and gave him an unlikely assignment: Put a credit-union window in every Nix store and help Kinecta take mainstream banking services to some of L.A.'s poorest neighborhoods -- by thinking less like a bank and more like a check casher.

"They're absolutely blazing a new path," says Jennifer Tescher, director of the Center for Financial Services Innovation, a nonprofit research group affiliated with Chicago's Shore Bank. "They bought the chain wholesale and then kept Tom Nix as an executive, which in many ways is very smart." A few banks and credit unions have tried retail check-cashing start-ups, or arm's-length partnerships with existing check cashers, but they've come at the industry as outsiders. Bankers were always in charge. Or they operated on a comparatively small scale. Nix Check Cashing carries a million customers in its database.

"I've always wanted to vilify check cashers," says Elwood Hopkins, a consultant working with the L.A. mayor's office on the city's version of a Bank on California scheme. "And this is in no way a defense of the fees. But I think financial institutions have a lot to learn from them."

Tom Nix is tall and trim with short gray hair, narrow-set eyes and faintly ruddy skin. He has a 40-foot boat he likes to sail off Catalina Island, and the sticker on the bumper of his new Lexus says that that's what he'd rather be doing. He wears a conservative suit, a banker's suit, even for ambling around Compton and Watts, which he does like a small-town mayor, greeting everyone who passes by. "How you doing?" he said, nodding, as we passed a young black guy in a baggy Sixers jersey that hung down to his knees. Nix is white; most of his customers are not.

Nix got into check cashing by accident. His dad, Tom Nix Sr., managed a fleet of drivers who delivered bread door to door, the way the milkman delivered milk. By the 1960s, delivery was a dying business, but at the warehouse in south L.A. where Nix's drivers loaded their trucks, locals, mostly poor, mostly black, would come around to buy day-old bread. So Nix's father started selling groceries out of the warehouse.

Nix took me to see the old store. Now it's called Pancho Grande. A mural of the Virgin Mary, in bright hues, stands taller than the door. The neighborhood, once almost entirely black, is now mostly Latino, Nix explained, a shift that happened across south L.A. as immigrants came up from Mexico and black families left for the inland suburbs. When the Nix store was here, mom-and-pop grocery stores and liquor places usually cashed checks free. But between bad checks and bounced checks, shopkeepers in the neighborhood lost money, even though they would turn away people who looked risky -- whatever risky looked like to them. So in the early 1970s, Nix Jr., who had become his father's partner, made a photo ID for their customers and ordered his first photoscope, then an arcane new security tool. Soon Nix was cashing checks for anyone who walked in, doing it fast and cutting the family's losses. "People lined up down these stairs," he said, pointing to the store's office at the back. "All the way down the center aisle and out to the sidewalk."

For most of the 20th century, banking was a protected business. If you wanted to open a new bank, you had to go before a board of regulators and prove you wouldn't provide competition that would threaten an existing bank in the neighborhood. In exchange for a captive market, banks had to abide by strict rules. But in the mid 1970s, regulators started to allow more competition. Banks had to pay closer attention to their profits and their losses. Suddenly, Nix's local bank began charging him a fee to deposit checks into his commercial account. Nix realized he either had to stop cashing checks for people or start charging them for the service.

"We charged a dime at first," Nix recalled. "People got mad, they left, but in a couple months, business returned. Then we charged 35 cents. Same thing happened. Then we started to charge 1 percent. We began to realize this might be a business."

In 1978, Nix leased an old gas station in Watts and built it into what looked like a tiny, stripped-down bank. He called it Nix Check Cashing. A year later, he was cashing a million dollars in checks each week. Then in 1980, Congress began to deregulate the banking industry. Branches sprouted in rich neighborhoods, where they battled one another for the wealthiest depositors, and they shut down in poor and working-class neighborhoods. Where they remained, they introduced new fees for customers who kept little in their accounts for the bank to invest. Around the country, the check-cashing business boomed. Nix opened new stores as fast as he could raise capital. Any place the banks neglected, that was the real estate he wanted. By the end of the 1980s, Nix had grown big enough to get name-checked by the Beastie Boys: "I'm charming and dashing/I'm rental-car bashing/Phony-paper passing/At Nix Check Cashing."

"That's name recognition!" Nix told me with a smile.

Times have changed, somewhat. Today more than 90 percent of check cashers and payday lenders sit within a mile of a bank, according to a recent Brookings Institution report. It's no longer primarily geography, in other words, that is keeping banks and poor customers apart. "Banks aren't shying away from low- and moderate-income neighborhoods," says Fellowes, the report's author. But, he added, "they're not going after the opportunity in an informed-enough manner to be very successful."

The first thing you notice when you walk in the door at Nix is a list of products, services and prices, a bit like a fast-food menu. Some of the prices are quite high, but the charges are neither confusing nor deceptive. "They're going to charge you $13, is that O.K.?" a cashier -- young, Latina, long blond hair, long pink nails -- asked as a bulky, middle-aged guy handed over a stack of cash to send via Moneygram.

Even the payday loans are transparent. "Your max is $150, so make it out for $172.50," the cashier Joseph told a stocky black woman in a baseball cap, standing at the counter with an open checkbook. (Unlike check-cashing customers, payday borrowers are by necessity bank customers -- they have to write a postdated check to get a loan.) The woman was paying a lot -- $22.50 to borrow $150 for just two weeks. But there were no surprises, no hidden fees.

Compare that with what a lot of banks do. Bank of America took heat earlier this year for more than doubling the interest rate on some credit-card accounts, even if the cardholder pays every bill on time. Banks, meanwhile, have nearly quadrupled their fee income in the last decade, according to the F.D.I.C., while credit-card late charges and over-limit charges have nearly tripled. Fees imposed on customers for temporarily overdrawing their accounts -- by accident or on purpose -- have been particularly lucrative; banks made $25.3 billion in 2006 on overdraft-related fees, up 48 percent in two years, according to the Center for Responsible Lending. On the Web site of Strunk and Associates, a big seller of overdraft programs, bank and credit-union executives offer glowing testimonials. "Strunk's program has exceeded expectations," one writes. "We have generated a 100 percent increase in overdraft revenue."

Some customers choose Nix over a bank because it is cheaper than paying overdraft fees. For others, it's convenient. Some go to Nix because check cashing is what they know. Others go because they live in communities where nobody takes a check or a card, not even the landlord, and cash machines are scarce. Still others go because they always seem to have a Final Notice in the bill stack, and they can't wait a week or longer for a paycheck to clear -- that includes a lot of people with a bank account somewhere.

But there are less-obvious factors too. Nix hires from the neighborhood and pays well enough that cashiers stick around. Word spreads, and in Watts or Highland Park or Pacoima, that reputation often carries more weight than some bank ad on a bus stop. "It's social marketing 101," says Hopkins, the consultant.

I frequently saw cashiers address customers by name and ask about family or friends in common. One customer asked if the manager could come over, then broke the news that her husband had passed away. "What happened?" the manager gasped. Then, shaking her head: "He always came in with his pennies." And Nix dresses up branches less formally than banks do -- no suits, no office furniture, no carpeting -- so a construction worker can show up straight from his shift, in dirty clothes, and, Nix says, not feel out of place.

Nix's cashiers also try to never say no. Take photo identification. A lot of customers don't have a driver's license. Nix stores have accepted high-school yearbooks. They've been known to cash a McDonald's paycheck if someone comes in wearing a McDonald's uniform. They even have a phone in the lobby, so a cashier can call a customer's job site and then patch the customer in, listen to him talk to his supervisor and decide if they sound like a legitimate boss and employee. Nix says he loses as much as 5 percent of his check-cashing revenue on bad checks, but it's worth it, he says, to be known as a place that says yes.

I met Oscar Enriquez leaving the Nix branch in Highland Park, a working-class area near Pasadena. He was skinny and just shy of middle age, with a quick grin and tattoos down his sunburned forearms. Enriquez worked in the neighborhood as a street cleaner; he picks up trash and scrubs graffiti. The job paid about $425 a week, he told me, a good chunk of which he wired to his wife, who has been living in Mississippi and taking care of her ailing mother. He told me he tries to avoid debt whenever he can. "If I don't have money, I wait until the next payday," he said firmly. "That's it." But he pays a fee to cash his paychecks. Then he pays even more to send a Moneygram to his wife. There's a bank, just down the street, that could do those things free. I asked him why he didn't take his business there.

"Oh, man, I won't work with them no more," Enriquez explained. "They're not truthful."

Two years ago, Enriquez opened his first bank account. "I said I wanted to start a savings account," he said. He thought the account was free, until he got his first statement. "They were charging me for checks!" he said, still upset about it. "I didn't want checks. They're always charging you fees. For a while, I didn't use the bank at all, they charged like $100 in fees." Even studying his monthly statements, he couldn't always figure out why they charged what they charged. Nix is almost certainly more expensive, but it's also more predictable and transparent, and that was a big deal to Enriquez.

Marlo Lopez had no broad gripe with banks, but his experience was similar. He moved to the United States from Peru a couple of years ago (with a visa) and got a job as a mechanic at a food-processing plant. Lopez opened his first bank account last summer. A couple of months later, out for dinner, he overdrew his account by 18 cents and got hit with a $35 penalty. It was his fault, he said; he thought he had more in the account than he did. Still, losing that money all at once unsettled him. He kept the account but returned to cashing his checks at Nix.

In the spring of 2007, Nix was working hard to unload his business. He had actually been trying to sell his chain to a bank for more than a decade, and now he was running out of time. He was about to turn 60, and he thought he owed his family (and his investors) an exit. Nix wanted to sell high to a responsible bank, retire well and be a hero, the guy who took real banking to L.A.'s poorest neighborhoods. But the most likely buyer was another check-cashing chain. Nix was prepared to do the deal, but it was not how he dreamed of going out.

Then Kinecta Federal Credit Union called with its offer. "We were trying to understand why check cashers have been successful in underserved areas where banks haven't," Kinecta's president and C.E.O., Simone Lagomarsino, told me. What they concluded was that most banks simply didn't know low-income neighborhoods or understand them. "We go in with this cookie-cutter approach: This is our branch, this is our way we do business," she says.

As Nix and Lagomarsino negotiated the sale, he encouraged her to make it easier for his customers to open a bank account. At most banks, if you've bounced too many checks, you're banned for five to seven years. Lagomarsino agreed to reduce that limbo period to one year. Next she realized she would need to deal with the most controversial part of Nix's business, the payday loans. At first, she told me, "I assumed we wouldn't do them." Nix actually felt the same way, once. In the late 1980s, when a few check cashers started to accept postdated personal checks and advance cash for a fee, Nix thought it was a sleazy scheme. He thought so even after California legalized the practice in 1997. "I didn't want to be a loan shark," he told me. "But the reality is, customers wanted it."

He told Lagomarsino why. A bounced check, a fee to reconnect a utility, a late-payment fee on your credit card, or an underground loan, any of those things can cost more than a payday loan. And then there are overdraft charges. "Banks, credit unions, we've been doing payday loans, we just call it something different," Lagomarsino says. "When it starts to get used like a payday loan, it's worse."

The payday borrowers I met at Nix were a complex group. There was Johnny Bravo, an ex-marine, now a harried delivery driver. ("I'm not even supposed to be here," he said, rushing back to his truck with a fold of bills.) He told me he gets a payday loan every other Friday, pretty much without fail. Sometimes he needs it for bills. Sometimes it's for gas -- he owns a big, thirsty S.U.V. But mostly he described the loan as cash to enjoy his weekend.

"How much do you think you spend a year on payday loans?" I asked.

"Well, finance is about 45 dollars; add that up . . . ," he said, and paused. "Comes out to a pretty good chunk of change," he admitted. "But I don't think of it that way."

Bravo is exactly the kind of case consumer advocates bring up when they call for a ban on payday loans. But for better or worse, the guy loves Nix. "They treat me with respect, they're really nice," he said. He's especially fond of the manager, Beatriz. She grew up in the neighborhood and has worked at Nix for almost 20 years now.

Then there was Carlos Garcia. He got out of the military, got some credit cards and got in trouble. It took him a few years to pay off his debt. Now he's careful, but money is still tight. He usually works two full-time jobs, and he earns enough for himself. He has a couple of brothers, though, who have been out of work, and he has his mother to help look after. That takes him to Nix a few times a year for a loan. But he's strategic. "I get it because I want to make a payment on time," he said. He does the math, he told me, and borrows only when the fee for a small loan will cost less than the penalty for a late car payment or an overdraft charge.

As different as they are when it comes to money, Garcia and Bravo agreed on one thing: "I don't use credit cards," Bravo said. "I don't want to get into debt." That may sound crazy coming from a guy who spends more than $1,000 a year to borrow a thin stack of 20s over and over, but he had a point. It may be hard, some months, to pay off a $255 payday loan. But credit cards can get you into more serious trouble; credit-card debt can add up fast and linger for years.

Kinecta's executives decided to keep the payday loan and change the terms. Starting with three stores in the spring, and eventually across the entire chain, Nix is increasing the maximum loan from $255 to $400. They are dropping the fee from 18 percent ($45 for a two-week $255 loan) to 15 percent ($60 for a two-week $400 loan). And they will rebate a third more ($20, in the case of a $400 loan) into a savings account, after six months, if you pay your loans back and don't bounce any checks. People get payday loans because they have no savings, Lagomarsino explained. After six months, heavy payday borrowers will accumulate a small balance. Enough, she and Nix say they hope, to convince them they can afford to save more. Later, they say, they intend to drop fees further for borrowers who always pay back on time.

Once Kinecta finishes rolling out its new payday loans, Lagomarsino has promised to open Nix's books to outside researchers and publish data on its profits and losses. In the meantime, Kinecta will be under enormous scrutiny. "Some people said, ‘Why does it have to be so visible?' " Lagomarsino told me, and laughed. "One or two branches wouldn't make a difference. This is the beauty of buying Nix. They were the largest alternative financial-services company in Southern California. If they change their fee structure, everyone has to change."

At the Nix Check Cashing in Highland Park, one of Kinecta's first credit-union windows opened at the end of April. It's a tiny branch, squeezed into a strip mall, a few storefronts down from a slummier-looking check casher and across the parking lot from an Advance America branch. By the door, a hand-drawn whiteboard advertised free checking and savings accounts. Inside, customers had to pass through a gantlet of Kinecta signs ("free," "we're all about convenience") to reach the check-cashing windows. Then, whenever someone slipped a check across the counter (or bought a bus pass, or mobile-phone minutes, or a prepaid debit card), Nix tellers asked if they'd like to open a free savings or checking account with a $5 deposit.

I expected mostly brushoffs. But people had questions. Lots of them, actually. (What's a credit union? Are there fees? What's the minimum balance? Can I deposit my checks at Nix for free?) Often people started in with the questions as soon as they got to the window, before the cashiers got around to a sales pitch. That doesn't mean they all signed up. Most of them didn't. But several did, and very few rejected the idea outright.

When I visited Nix in his new office at Kinecta, he seemed optimistic about the new business. "I've been trying to do this banking thing for more than 15 years," he said. "If we do it, the rest of the industry copies us." But, he said, "it has to be a viable business model."

Nix's definition of "viable" means some public criticism is bound to follow him to Kinecta. Even after knocking more than 30 percent off the fees, Nix's payday loans are still expensive, and Nix says he hopes to issue more of them, not fewer, because Nix stores will be cheaper than the competition. The fees are still astronomical, and more troubling, right now the average borrower at Nix takes out seven loans a year -- with fees than can equal an annualized interest rate of 312 percent. "Any form of credit can be abused," Nix said when I asked him about the problem of repeat customers. "There's the guy who gets five credit cards. For some reason, it's O.K. when it's a mainstream product. There's a double standard."

It's going to take a lot of $20 rebates from Nix before someone with a payday-loan problem would accumulate any real savings. I asked Nix if he would consider advertising to these customers, straight out, that payday loans are bad for them. What about check-cashing customers who, out of habit, resist the idea of signing up for a bank account that would save them money?

"The last thing I want to tell someone who's been my customer for 20 years is, ‘You've been a fool for 20 years, you never should have been coming in,' " Nix said, with a sudden edge in his voice. "I want to create choice."

Selling to the poor is a tricky business. Poor people pay more for just about everything, from fresh groceries to banking; Prahalad, the economist, calls it the "poverty penalty." They pay more for all kinds of reasons, but maybe most of all because mainstream firms decline to compete for their business. Nix has served customers that traditional financial institutions neglected, but he has also profited from that neglect. Whether he profited too much, charging poor communities what the market would bear -- that's a moral question as much as an economic one. And there's no simple answer.

Not everyone is ready to trust Nix's motives just yet, or to embrace him as a champion of the poor, especially consumer advocates who have spent years lobbying to cap check-cashing and payday-loan rates and remember when Nix charged even more than he does today. "It behooves predatory companies like Nix to be seen positively by their communities," says Roberto Barragan, president of the Valley Economic Development Center and a critic of Nix from way back. "But at the end of the day, it's not about the financial well-being of his customers."

For now, most banks remain reluctant to fight with check cashers and payday lenders for low-income customers; they don't believe there's enough in it for them. Just a few years ago, though, wire-transfer companies like Western Union were the only option for immigrants who wanted to send money abroad. Banks thought it was a sketchy business. The transfer companies charged about the same as a payday loan, $15 to send $100 to Latin America. But then a few banks decided to compete with them, even accepting foreign ID cards. And then banks started to compete with one another. And pretty soon, just about every bank wired money overseas. Businesses like Western Union had to slash their fees by nearly two-thirds.

"These communities spend about $11 billion a year on ghettoized financial services, about the same as what Wall Street spends on mergers-and-acquisitions fees," says John Hope Bryant, founder of the nonprofit Operation Hope. "We're not talking about small change. But there's no competition for these dollars." That's the idea behind plans like Bank on California: to convince banks that marketing themselves to poor customers isn't just a charitable act; it's a benefit to the bottom line.

Nix says he hopes his model will do the same thing. "We're going to be a tough competitor," he told me. "We're going to get a lot of business, and that's going to force the rest of the industry to take a look at their prices, to be able to compete." It's not how you expect a banker to the poor to talk. But he might be onto something.

Prisoner of the Heart

adminn — Sat, 27 Sep 2008 07:53:00 -0400

Twenty-one years ago, Daisy Benson brought a gun to an argument. She says she didn’t mean to shoot, and that may be true, but you bring a gun to an argument, a lot can go wrong. Daisy was convicted of murder, given 15 to life, and sent away to prison, hundreds of miles from home, a small, poor town in Northern California. Seven years later, her family saved up enough to visit. That’s when her daughter Robbin -- at the time, she was in her 20s -- hatched a plan that sounded so crazy, when Daisy first told me about it, I thought, this can't be true. But then I tracked Robbin down. And they both remember it starting exactly the same way...

Listen to the radio segment using the player above, or download it as an MP3 file at the bottom of this page.

A Uniquely American DREAM

Cecille Isidro — Wed, 19 Sep 2007 12:48:00 -0400

Thoughtful people will disagree about immigration policy -- how many foreigners to let in, for what purpose, and what to do about the 12 million illegal immigrants already in this country. That’s why sweeping immigration reform has failed again and again. This fall, Congress should think smaller, and figure out what it can agree on, before another year passes with no progress. It might start by considering young people like Lucia.

When Lucia’s parents dropped her off at a new elementary school in Los Angeles more than 15 years ago, she didn’t speak a word of English. And she didn’t really know why she was in the United States. Before the family left Mexico, Lucia’s parents said they were all going to Disneyland. Then they arrived here and stayed.

But Lucia was a smart kid, and when she figured out that she’d be here for a while, she tried to make the best of it. She stopped speaking Spanish. By seventh grade, she made it from remedial English classes to the gifted-and-talented program. She joined the California Cadet Corps, a kind of junior ROTC. She was voted queen of her high school prom and named valedictorian of her graduating class. She had a plan. She wanted to enlist in the Marines, go to college and apply to work for the CIA -- she liked spy movies.

In her senior year, Lucia’s parents sat her down. They told her they had come to the United States illegally all those years ago. That meant she was an illegal immigrant too, ineligible for military service, in-state tuition, public financial aid, even most scholarships.

Lucia was stunned. She thought she was a normal American teenager, thought she belonged here. The Latino kids at school actually called her gringa -- white girl -- for her light skin and the way she talked and studied. What was she supposed to do? Leave her home, move to Mexico, be an immigrant all over again? Give up on school, work as a cleaning lady or a nanny and live a life in hiding?

She felt sick, panicked. But she wasn’t the type to give up. So she signed up for community college, working three jobs to pay for her classes. When California passed a law in 2001 extending in-state tuition to kids who had attended a California high school for more than three years, regardless of their citizenship status, she transferred to UCLA.

She graduated two years ago. But she couldn’t apply for a paying, professional job and start returning America’s investment in her. So she lived with her parents and volunteered as an unpaid intern at a local nonprofit. And she waited.

Illegal immigration is a complicated problem. Lucia’s parents broke the law to come here. Eventually Congress is going to have to decide what to do about them and millions of others like them. But Americans don’t punish children for the sins of their parents, and in this case, we share some responsibility. We have spent the last 20 years mostly ignoring our broken immigration system. While we dithered and delayed, kids were growing up.

At UCLA, I’ve met undocumented students who were brought to the United States as infants, and others who arrived so long ago that English is the only language they speak without an accent. It makes no sense to deport these kids now -- and realistically, we won’t, not more than a handful. It makes just as little sense to keep them here in illegal, unskilled jobs.

A bill called the DREAM Act recognizes that fact. Proposed by Utah Republican Sen. Orrin G. Hatch and sponsored by broad, bipartisan coalitions in the House and Senate (including five presidential candidates), the DREAM Act is simple and pragmatic: If a kid like Lucia has grown up in the United States and graduated from high school, she earns conditional citizenship. If she graduates from college or serves in the military, she earns the right to stay. Unlike broad amnesty proposals, which critics say apply mostly to low-wage foreign workers, the DREAM Act offers citizenship only to kids who were brought up in the U.S. and are poised to become taxpaying members of the middle class.

There are immigration problems that demand our full attention: lax border security; human trafficking; fraud; whole economies, like agriculture, built upon a shadow workforce. Spending scarce time and money to try to root out young people like Lucia shouldn’t be anyone’s priority.

The DREAM Act has gotten tangled up in the push for comprehensive immigration reform, tacked onto one complicated bill after another. Each one collapsed over more controversial ideas. Now, for the first time, the bill is expected to see a vote separate from sweeping immigration proposals. It is an easy piece of immigration reform, with a fundamentally American solution: an opportunity for good kids to prove themselves and earn their place here.

Mr. Successful

adminn — Sat, 11 Aug 2007 01:52:00 -0400

Anyone who's ever been to a wedding knows not everybody can stand up in front of a roomful of people and just talk. Anthony Pico discovered by accident, at 15, that he has a gift for doing that. He's 18 now, and he's become so well known as a public speaker on the subject of foster care, which he knows well, he was appointed to a blue ribbon commission aiming to reform the largest foster care system in the country, the one in California, Anthony's home state. In addition, Anthony still speaks to judges and legislators all over the state, and the country, sometimes every week. But it's gotten complicated...

Listen to the radio segment using the player above, or download it as an MP3 file at the bottom of this page.

Related Legislation

There's a new bill in Congress that would make 21 the new 18 for kids in foster care, give them a few extra years of housing and support if they need it. A small number of states, and isolated counties, have tried this on their own. They've found that, while foster care is a deeply flawed system, if kids are still in the system at 18, a few extra years seems to get more of them out of their sticky teenage years and into stable adult lives. Read more about the bill here: http://boxer.senate.gov/news/releases/record.cfm?id=275098

Pop-Up Cities

Cecille Isidro — Tue, 01 May 2007 10:14:00 -0400

Three years ago, Alejandro Gutierrez got a strange and tantalizing message from Hong Kong. Some McKinsey consultants were putting together a business plan for a big client that wanted to build a small city on the outskirts of Shanghai. But the land, at the marshy eastern tip of a massive, mostly undeveloped island at the mouth of the Yangtze River, was a migratory stop for one of the rarest birds in the world -- the black-faced spoonbill, a gangly white creature with a long, flat beak.

McKinsey wanted to know if the developer, the Shanghai Industrial Investment Corporation, could bring businesses to the island without messing up thet bird habitat. The consultants thought Gutierrez's firm could figure it out. Gutierrez, an architect and urban designer for engineering and design giant Arup, didn't know anything about birds. But he was a veteran of several big-city design projects in his native Chile and something of a young star at Arup's London headquarters. The scope of the idea awed him. A whole new city? Were they serious? More important, could Arup get in on it? He quickly caught a flight to Shanghai.

Today Gutierrez and a team of Arup specialists from Europe, North America, and Asia are finalizing a plan for a scratch- built metropolis called Dongtan. Anywhere else in the world, it would have been a thought exercise, done up pretty for a design book or a museum show. But Shanghai's economy is growing three times faster than the US economy did at the height of the dotcom boom. More than 2,000 high-rises have gone up within city limits in the past decade. The city's most famous stretch of skyline, including the jewel-box-like Jin Mao Tower and the purple rocket-shaped Pearl TV Tower, was a rice paddy just 20 years ago. Now some 130 million people live within a two and a half hour drive of downtown. Even the wild ideas get built here.

Dongtan breaks ground later this year on a plot about the size of Manhattan on Chongming Island. The first condos and commercial space will hit the market by 2010, around the time a 12-mile bridge and tunnel combo and subway extension will link the city to Shanghai's new international airport (45 minutes away) and financial district (30 minutes). By 2050, Dongtan will have a half-million residents, more than Miami or Atlanta today.

That may count as a cozy little town in a country of 1.3 billion people. But Dongtan is a dramatic gambit, and not just because a whole city will rise, fully realized, from nothing. With Dongtan, Arup is testing a radical new approach to urban design, one that suggests cities across China and the rest of the developing world can actually get greener as they grow. "Norman Foster, Richard Rogers, SOM, HOK are all doing better or worse design," Gutierrez says, subtly dismissing some of the architecture world's biggest names (inmcluding at least one that angled for the Dongtan job). "But they're not addressing the central problem of this age -- resource efficiency -- and how it relates to cultural, social, and economic development."

Mao Tse-tung believed the natural world was all that stood between Communist China and its industrial future. His country, he said in a 1940 speech, "must use natural science to understand, conquer, and change nature." And conquer it did. Forests were razed, up to 90 percent of the trees in some provinces. The government, in a scheme to accelerate steel production, forced Beijing residents to smelt metal in hundreds of thousands of polluting backyard furnaces. New factories dumped untreated waste into the rivers until they turned a deep, noxious black. When China's economy began to take off in the 1980s, conditions got worse. Foreign firms put their most toxic manufacturing operations in China. Sudden prosperity, and a rush to boomtowns like Shanghai, drove energy demand well beyond what the grid could provide. Today, China opens an average of one new coal-fired power plant per week, the main reason it will pass the US in the next two years as the world's biggest source of CO2 emissions. Since 2001, China has increased its emissions more than every other industrialized country in the world combined.

The plan was never to pollute forever; it was to chase wealth at any cost and clean up later. And that made some sense. Even now, after three decades of rapid economic growth, more than 160 million Chinese still live on less than a dollar a day. The trouble is, environmental degradation has become a drag on China's development. The government revealed last year that environmental damage costs the economy $200 billion a year, a full 10 percent of China's GDP. The cost to public heath and quality of life may be even greater. Overcultivation, overgrazing, and massive timber consumption have turned a quarter of China's land into desert. Over 400 million Chinese drink contaminated water. When still air settles over Shanghai, the sky turns thick and white, the horizon the color of a nicotine stain. The government figures that 300,000 people die prematurely each year from polluted air. When I visited the neighborhood surrounding Shanghai's oldest power plant -- a maze of narrow streets and tiny homes that seem piled one on top of the another -- I caught a breath of warm air from a row of exhaust vents, coughed until my chest burned, and then gagged.

Arup believes good design can do something about this mess. Dongtan's master plan -- hundreds of pages of maps, schematics, and data -- has almost nothing to say about architectural style. Instead, it outlines the world's first green city, every block engineered in response to China's environmental crisis. It's like the source code for an urban operating system. "We're not focused on the form," Gutierrez explains. "We're focused on the performance of the form." He and his team imagine a city powered by local, renewable energy, with superefficient buildings clustered in dense, walkable neighborhoods; a recycling scheme that repurposes 90 percent of all waste; a network of high tech organic farms; and a ban on any vehicle that emits CO2.

From the beginning, the operation has been risky. Foreign architects can quickly lose control of their Chinese projects and lose face when developers decide to cut costs and redesign on the fly. Many glimmering Shanghai towers look like Tokyo on the outside but Moscow on the inside. And China loves its monuments. Dongtan could easily devolve into a Potemkin eco-village, a show-offy display of green technology that fails as a living, working community. "We were dubious, of course, at the beginning as to whether the client was really committed," Gutierrez says. And even if SIIC stayed idealistic, nobody had ever designed and built a green city before. Arup could get it wrong and simply push sprawl into one of the few remaining green spaces around Shanghai. But China is in a position to chart a smarter path, not just for its own exploding cities but for the booming urban hubs around the world -- Dubai, Khartoum, Lagos, Mumbai, Rio de Janeiro -- where populations are set to double in the next 30 years. "We thought Dongtan was a rare chance," Gutierrez says, "to demonstrate that growth could happen a different way."

* * *

When he sees Shanghai for the first time, in May 2004, Gutierrez is wide-eyed with excitement and wide-awake with jet lag. He meets an SIIC delegation downtown, and they drive an hour north, through Shanghai's brutal traffic, to the Yangtze River. There, the group sets off on a ferry for Dongtan.

Inside the crowded cabin, a television plays soap operas. Outside, men in baseball jackets and fake leather bombers line the railing and smoke. The water is a milky brown, full of silt from upriver that, about a millennium ago, began to pile up where the river and ocean currents meet -- a sandbar that has grown into a 470-square-mile alluvial island.

The SIIC group drives Gutierrez through the island's biggest port, a short strip of low concrete boxes where locals sell vegetables, sugarcane, and cold drinks. Pedal-powered rickshaws outnumber automobiles, making Shanghai's neon swagger seem far away. They turn onto a narrow, newly paved road to Dongtan, and development disappears. Flat fields of bok choy and swampy rice paddies stretch to the horizon, crisscrossed by long irrigation canals carved out by banished Shanghai intellectuals during the Cultural Revolution. The site is gigantic. And except for the occasional, rickety shed, built for farmworkers who stay in the fields overnight, it's completely empty. Because Gutierrez came here to think about bird habitat, they drive to the marsh at the eastern edge of the island, a huge expanse of tall, golden grass that seems to extend over the horizon into the East China Sea.

Nearly all land in China is owned by the state. But SIIC, the second biggest builder in China, owns Dongtan. In the 1990s, when China's business climate was less liberal than it is today, many Chinese firms ran parallel businesses in Hong Kong, where it was easier to attract foreign capital. SIIC was the Shanghai mun icipal government's Hong Kong operation, a public-private pharmaceutical and real estate company. When most of Asia's economy tanked in the late 1990s -- and Hong Kong had it especially rough -- many of the businesses in that city went under. To replenish SIIC's shrinking assets, Shanghai gave the company a piece of Chongming Island. That land ownership allows SIIC an unusual degree of freedom to think longer-term and do something bold.

Shanghai's bureaucrats let it be known that Chongming Island must stay green, and SIIC agreed. The developer commissioned a series of ecological studies. Then it invited Philip Johnson, the late icon of American architecture, to design a master plan. SIIC showed Johnson's staff the site and briefed them on the environmental constraints. For months, designers flew back and forth to the site, making plans for a leafy, low-density garden suburb built around a huge man-made lake. Finally Johnson's team arrived in Shanghai to present its plan -- and found it was not alone. London-based Atkins and Paris-based Architecture-Studio, both giants in the architecture world, had also created master plans for SIIC. Nobody knew it was going to be a competition. Dinner afterward was awkward, and none of the proposals went anywhere.

Part of the problem was that SIIC wasn't sure yet what it wanted. Its people talked about Dongtan as an eco-city, but they also talked about it as a quaint green suburb or as Shanghai's Hamptons, a place for the city's wealthy to flee for the weekend. They seemed to have good intentions but little direction.

That night of Gutierrez's trip to Chongming Island, Arup's team huddled in their Shanghai hotel rooms, calling colleagues in London and Hong Kong. They had decided to do the bird thing for McKinsey, but they would also shop some bigger ideas directly to SIIC. Dongtan could be the kind of grand project Arup had been looking for.

Founded by engineer Ove Arup in the 1940s, London-based Arup has 86 offices in more than 30 countries and a staff of nearly 9,000, including 1,500 in China. The firm dispatches engineers and architects but also economists, environmental scientists, MBAs, energy experts, transportation gurus, and cultural anthropologists to projects around the globe. Still, its work is often anonymous: When a famous architect designs a dramatic skin for some big building, Arup designs the guts. It engineered the overlapping shells of the Sydney Opera House and figured out how to turn a building inside out when it worked on the Centre Pompidou in Paris.

Gutierrez, though, was part of an ambitious new initiative at Arup, a kind of skunkworks, organized around something the firm called "integrated urbanism." Instead of focusing on something like water or stadiums or waste management, this team would pull expertise from every corner of the firm. If the idea worked, Arup could get in earlier on big planning projects. This way it could help design cities that work better -- not just as grids or transport networks or skylines but as ecosystems engineered from the start to foil gridlock, energy waste, pollution, even economic inequality. Instead of sketching out the look of a future city, Gutierrez would avoid form altogether. He'd focus on coming up with the rules and standards Arup would follow to deliver a city. SIIC was intrigued.

* * *

Later that May, Gutierrez joined a team back at Arup's headquarters near the University of London, across an old stone courtyard from a house where Virginia Woolf and George Bernard Shaw had once lived (at different times). There was Roger Wood, a manager who joined Gutierrez in Shanghai; an environment expert from the Newcastle office; a pair of economists; some urban designers; and of course, the bird guy. They were also about to get a boss: Arup hired Peter Head, a prominent member of the London Sustainable Development Commission and green guru for London's Olympic Construction task force, as the firm's first director of Planning and Integrated Urbanism. He would negotiate a contract to design Dongtan. Gutierrez and the rest of the team had to turn abstract concepts of urbanism into a real city. The team began to gather around a long table and debate. Gutierrez would usually lead the conversation, sketching the group's ideas on copier paper.

Their first decision was big. Dongtan needed more people. Way more. Shanghai's planning bureau figured 50,000 people should live on the site -- they assumed a green island should not be crowded -- and the other international architects had agreed, drafting Dongtan as an American-style suburb with low-rise condos scattered across the plot and lots of lawns and parks in between. "It's all very nice to have little houses in a green field," Gutierrez says. But that would be an environmental disaster. If neighborhoods are spread out, then people need cars to get around. If population is low, then public transportation is a money loser.

But how many more people? Double? Triple? The team found research on energy consumption in cities around the world, plotted on a curve according to population density. Up to about 50 residents per acre, roughly equivalent to Stockholm or Copenhagen, per capita energy use falls fast. People walk and bike more, public transit makes economic sense, and there are ways to make heating and cooling more efficient. But then the curve flattens out. Pack in 120 people per acre, like Singapore, or 300 people, like Hong Kong, and the energy savings are negligible. Dongtan, the team decided, should try to hit that sweet spot around Stockholm.

Next, they had to figure out how high to build. A density rate of 50 people per acre could mean a lot of low buildings, or a handful of skyscrapers, or something in between. Here, the land made the decision for them. Dongtan's soil is squishy. Any building taller than about eight stories would need expensive work at the foundation to keep it upright. To give the place some variety and open up paths for summer wind and natural light, they settled on a range of four to eight stories across the city. Then, using CAD software, they started dropping blocks of buildings on the site and counting heads.

The results were startling. They could bump up Dongtan's population 10 times, to 500,000, and still build on a smaller share of the site than any of the other planners had suggested, leaving 65 percent of the land open for farms, parks, and wildlife habitat. A rough outline of the city, a real eco-city, began to take shape: a reasonably dense urban middle, with smart breaks for green space, all surrounded by farms, parks, and unspoiled wetland. Instead of sprawling out, the city would grow in a line along a public transit corridor.

That was pretty much it for the easy stuff.

Arup had to figure out how to keep Dongtan above water. Chongming Island is flat and barely higher than sea level. The previous planners, thinking defensively, had pulled development back to the middle of the site, imagining Dongtan as an island city with no harbor, no waterfront caf s, no ocean-view condos. Gutierrez thought that was kind of a waste.

"We went back to the site," he recalls, "and, being completely ignorant Westerners, we asked the client, 'Have you seen Venice?'" Gutierrez had been sketching Venice's waterways and floodgates. "They said, very politely, 'Yeah, we know about Venice,'" Gutierrez recalls, smiling sheepishly. "Then they took us to see these fantastic, beautiful water towns in the Yangtze River Delta that are much older. They have decks and terraces and promenades that are very close to the water," Gutierrez says. "In one part of a town, they developed a pond to control water levels, in another they had a wider canal, in another they developed a lake. They had a much more fine-tuned understanding of how to manage water than the Italians did."

Inspired by those ancient Chinese water towns, Gutierrez began drawing canals in one zone, ponds in another, and a big lake in a third. He designed courtyards and lawns to drain away from buildings. And he created flood cells within the city, like chambers in a submarine, so if Dongtan got slammed by a once-in-a-century storm, the seawater would stay in a single cell. At the water's edge, instead of a high levee, he drew a gentle hill that would recede into a wide wetland basin -- a park, bird habitat, and natural storm barrier.

Next, the city needed green power. But the planning process grew complicated. A city is a huge mess of dependent variables. The right recycling facility can turn trash into kilowatts. The right power plant can convert waste energy into heat. The right city map will encourage people to walk to the store instead of drive. "These are things people don't normally plan together," Gutierrez says.

They needed something they started calling an "integrated resource model," something to show how each change would ripple across the city plan. So Arup's programmers wrote software that stitched together databases detailing the inputs (say, the cost of photovoltaic panels) and outputs (electricity generated per panel) of any facility, process, product, and human activity on the island. If the team moves an office park a mile, the software can recalculate average walking distances for commuters, figure how many people will drive or take public transit instead of walk, and then add up the ultimate change in energy demand. Maybe more important, the software makes it easy to spot places where one process creates waste that another process could recycle. "Design was very trial-and-error," Gutierrez says. "The only thing we knew was that we wanted to connect things, to create virtuous cycles."

A power scheme started to take shape. Dongtan's plant would burn plant matter to drive a steam turbine and generate electricity. What to burn, though? They could have planted miscanthus, a tall, feathery grass. It sprouts fast and burns clean. But if Arup planted miscanthus fields, it would sacrifice lots of land to a single purpose. Then it struck them: rice husks. China already grows mountains of rice, and farmers just trash the husks. Dongtan could take a useless byproduct and use it to light the city.

Instead of building the plant far away and out of sight, Arup would put it up near the city center, capture waste heat, and pipe it throughout the town. With good insulation and smart design, the plant could heat and cool every building in Dongtan. "We can get something like 80 percent efficiency in our fuel conversion," says Chris Twinn, the Dongtan team's energy chief. "The Prius is probably only 20 percent efficient. The rest is wasted. Why are we satisfied with that?"

Between biomass, a big wind farm, and numerous tiny contributions to the grid -- including photovoltaic panels and small wind turbines -- Arup figured Dongtan could get 60 percent of its energy from renewable sources when the city opened in 2010, and 100 percent within 20 years.

As the plan expanded, so did Gutierrez's team, from about a dozen in May 2004 to more than 100 today. And as they pulled in new experts from around the firm, they saw new virtuous cycles. Arup investigated hollowing out the hills at the edge of the city and installing underground "plant factories" -- stacked trays of organic crops, growing under solar-powered LEDs, that seem to yield as much as six times more produce per acre than conventional farming. Arup would run twin water networks throughout the city: one that supplies drinking water to kitchens and another that supplies treated waste water for toilet flushing and farm irrigation. Trucks delivering goods from across China would park at consolidation warehouses on the edge of the city, then load up shared, zero- emission delivery trucks to reduce traffic and save gas. Waste would be either recycled or gasified for energy, and the captured heat would be converted into more power; no more than 10 percent of the city's trash would be permitted to end up as landfill. To invite in cooling summer breezes, block winter winds, and reduce demand for heat and air-conditioning, they would position trees strategically and persuade the client to twist the city grid slightly off a traditional north-south axis (a feng shui idea that has become an almost inviolable rule of Chinese city planning). Meanwhile, traveling spoonbills would find their marshy grassland undisturbed -- far from the center of town and sheltered from people and industry by a wide buffer of farmland.

Dongtan was looking less like a city, at least the urban resource hogs that exist today, and more like an ecosystem, a closed loop. "It's a green island that shows you can decouple economic development from environmental impact," Gutierrez says.

* * *

In October 2005, armed with a city design and a strategy to build it, Gutierrez, Head, and a handful of specialists returned to Shanghai and presented their plans to SIIC. Dongtan will go up in three phases, each one adding a new, mixed-use neighborhood, complete with condos, offices, and retail space that will all sprout up at once. Gutierrez cleverly designed each neighborhood with two downtowns: one at the center, modest and intimate, within easy walking distance from homes and offices, and one at the edge. The three at the edges will overlap and gradually grow into metropolitan Dongtan. "Our worst-case scenario is that Dongtan starts out as a tourism-based settlement," Gutierrez explains, "but grows over time to include other industries." Best-case scenario: China's huge market for renewable energy and Dongtan's bright-green reputation persuade clean technology firms to set up labs and commercial outposts in the city.

The presentation lasted a couple of hours. When it was over, SIIC's chair spoke. He liked Arup's plan a lot. But he wanted Dongtan to draw every bit of its power from local renewable energy starting the first day. "We had been very proud that we could get 60 percent of our energy from renewables!" Gutierrez says, smiling. "But the client said that's not good enough." Arup was thrilled -- kind of. If anything, the firm expected pressure to simplify Dongtan, not to make it more ambitious.

The answer, the team decided, was building up the green power infrastructure faster and slashing energy demand further. A recent change in China's energy law would allow Dongtan's power company to sell surplus green energy to Shanghai's grid, justifying the expensive new hardware until the new city grew into its supply. Reducing demand was harder. But Arup hit upon a clever solution. Instead of hiding indecipherable energy meters behind buildings, it would put a simple meter in an obvious location like a kitchen or office. Residents could track their own use -- and get regular reminders over SMS and email. Up to a reasonable limit, energy is pretty cheap. Go over and the price spikes.

SIIC approved Arup's master plan last summer: hundreds of pages covering everything from the permissible range of heat transfer through condo walls to the surface area of ponds and canals that must feature native aquatic plants. By the end of the year, builders will begin installing the city's infrastructure, and SIIC will hire architects to start planting buildings in Arup's ecosystem. Arup, meanwhile, is already considering a pair of modest Dongtan sequels -- a small neighborhood outside Shanghai and a town near Beijing -- and is working on several other green communities across China, plus one in St. Petersburg, Russia.

This year, for the first time in history, the majority of the world's population lives in cities. By 2050, two-thirds will call a city home. Most of that urban growth will happen in the developing world. "Tokyo, London, and New York are extremely interesting," says Ricky Burdett, director of the Cities project at the London School of Economics. "But their massive development has already happened -- in London, 150 years ago, in New York, 100 years ago, in Tokyo, 50 years ago." Shanghai represents the forward edge of the planet's next urban explosion.

These new megacities could evolve into sprawling, polluting megaslums. Or they could define a new species of world city. Unlike New York or London, they are blank slates -- less affluent, perhaps, but also free from legacy designs and technologies tailored to the world of the 19th and 20th centuries. That is a huge advantage. It took Boston 20 years and more than $14 billion just to reroute a freeway underground. New York can hardly install a second network of water pipes. Most of Los Angeles is too spread out for fast public transit or combined heat and power plants. And because these cities are so isolated from agricultural land, most of the food that locals eat gets shipped hundreds of miles. "Shanghai today is making 90 percent of the mistakes that American cities made," Burdett argues -- spreading out, building up single-family homes, replacing naturally mixed-use neighborhoods with isolated zones for living, shopping, and working, and connecting it all with car travel. But fixing these problems is still possible.

If Dongtan lives up to expectations, it will serve as a model for cities across China and the rest of the developing world -- cities that, given new tools, might leapfrog the environmental and public health costs that have always come with economic progress, a relationship Gutierrez calls "the nightmare of the 20th century." Even old American and European cities may find bits and pieces of Dongtan that they can use, especially when they redevelop industrial plots or build out at the edges. Arup would like to apply lessons from Dongtan to a pair of new developments in San Francisco and Napa County. Parts of urban Europe are approximately the right density for a combined heat and power system to work. London mayor Ken Livingstone visited Dongtan hoping to get inspiration for a huge zero-emission development about to break ground in East London.

"Shanghai will grow," Gutierrez says. "The question is how it will grow. We can program into its DNA a sustainable growth pattern. We have to make cities, as much as we can, future proof ."

Just One Thing Missing

Cecille Isidro — Sun, 08 Apr 2007 03:48:00 -0400

Martha doesn't like to talk about her future anymore. She'd wanted to go to med school, become an OB-gyn. And she's exactly the kind of kid everyone roots for. She grew up in a poor, mostly immigrant neighborhood in East Los Angeles, where most people didn't graduate from high school, and nobody talked about college. But Martha got into UCLA. She couldn't believe it: UCLA.

She majored in chemistry, threw herself into six-hour lab sessions, ran a volunteer organization on campus. But the fact is, she can't become a doctor. She can't work at all in the United States, not legally anyway. She’s an undocumented immigrant; her mother brought her here from Mexico when she was nine. So now she’s a waitress, earning minimum wage, working off the books, and it may be the best job she can hope to get.

A bill called the Dream Act would offer conditional citizenship to those few kids, like Martha, who grow up in the United States and make it to college, or the military. If they get a degree, or finish their service, they become full citizens. Since it was proposed in 2001, the Dream Act has gathered powerful supporters from both the left and the right. But it keeps getting bogged down in immigration politics.

This piece aired as part of the April 7, 2007, edition of "This American Life." It is a radio follow-up to "The Invisibles," an award-winning article about the sad, inspiring, surreal lives of undocumented students at UCLA, and the bipartisan push in Congress to accept these kids -- raised as Americans from a young age -- as citizens.

Listen to the radio segment using the player above, or download it as an MP3 file at the bottom of this page.

The Downhill Battle: Global Warming and the Traveler’s World

Cecille Isidro — Thu, 01 Mar 2007 23:38:00 -0500

When the aspen Ski Company launched its environment division -- a kind of green management team, think tank, and consultancy -- it was the first of its kind in the ski industry: an in-house watchdog to prevent the resort from gorging on energy and trampling its fragile ecosystem. Ten years later, the division’s director, Auden Schendler, spends at least as much time thinking about saving Aspen as he does about saving its environment. Both, it turns out, are highly vulnerable to climate change.

"I’m not concerned about all the snow going away in the year 2100," says Schendler’s longtime boss, Pat O’Donnell, who just stepped down as Aspen’s CEO. The real threat is less dramatic, and more immediate. Most American ski resorts pull in as much as a quarter of their earnings during Christmas vacation. And December snow packs and freezes into a thick floor of ice that can sustain man-made flurries when spring comes. But powder, natural or man-made, only piles up nicely when the weather stays between 18 and 24 degrees at night. An increase in temperature means steeper snowmaking costs and a shorter season -- both money-losing prospects for resorts.

Since the 1950’s, temperatures across the American West have climbed an average of 1.4 degrees -- and nearly all scientists believe that warming will continue, and accelerate. "I talked to my head of snowmaking and asked, ‘What happens if I take away a degree and a half?’" O’Donnell recalls. "His answer was, ‘Holy shit.’"

That realization has spread across the U.S. ski industry since the early part of this decade. Dozens of resorts, including Aspen’s Rocky Mountain neighbor, Vail, and Mammoth Mountain in California’s Sierra Nevada (even more vulnerable than the Rockies, according to climate models), have copied Aspen’s example and opened their own environment divisions. Once wary of Aspen’s activism, the National Ski Areas Association has partnered with the Natural Resources Defense Council to lobby Congress on behalf of climate-change legislation, and produced public service announcements for its members. Even some smaller mountains are investing in green projects. Last year, Jiminy Peak, in Massachusetts, built a $3.9 million wind turbine on the mountain, and Sugar Bowl, near Lake Tahoe, became the first resort to offset all of its emissions with green-energy purchases. More than 20 mountains, including Aspen, had followed by the start of this ski season.

To be sure, ski resorts, although resource hogs, barely register as contributors to climate change compared with heavy industry or the world’s half billion cars and trucks. Conservation on the slopes can only accomplish so much. Schendler believes, in fact, that it may be off the mountain where ski companies can do the greatest good. That means lobbying for new legislation; presenting the threat to ski business as an early warning of harmful climate change (one that is easier to grasp than slushy polar caps or migrating butterflies); and turning mountains into labs to experiment with the kinds of green innovations bigger industries could adopt.

"My mandate to Auden was to become an activist," O’Donnell says. "We have to get involved at the state and national level. Otherwise, we’ll be sitting around with a squeaky-clean record, and we’ll say, ‘We did everything.’ And we’ll be bankrupt, because of climate change."

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"Historically, the ski industry was perceived as environmentally benign," says Schendler, who previously worked as an analyst at the Rocky Mountain Institute, an environmentalist think tank. Still, by the 1990’s, skiing and snowboarding had become big business. Resorts cleared forest for expansions and drew more power from the grid every year. When O’Donnell came to Aspen from Patagonia in 1994, he figured the company had an obligation to its natural surroundings. And if the bigger resorts around the Rockies continued their sprawling development, Aspen might flourish as a boutique, back-to-nature alternative.

Aspen’s green experiment started small, in 1997, with a beefed-up recycling program and an employee-run charitable foundation to fund environmental projects. That probably would have been enough to give Aspen’s brand a progressive sheen. But the company soon turned its attention to trickier, costlier issues, like power and water conservation. Aspen tried little things, like building half-pipes in the summer, out of dirt, instead of in the winter, out of a small mountain of man-made snow, saving both power and water. "More and more resorts are adopting that technique," Schendler says. Other projects were more exotic -- for instance, installing a micro power station that captures runoff water and converts it into clean electricity. Since lifts and snowmaking machinery are tough to run more efficiently, short of buying all-new equipment, Aspen has focused on reducing the environmental footprint of its buildings and vehicles, which account for roughly one-third of the resort’s energy use. Today, the mountain spends about $300,000 annually on a range of green initiatives. (Aspen earns back about $60,000 a year in energy savings, but other financial benefits -- significant ones, anyway -- are awfully hard to quantify.)

For all of Aspen’s progress, no change has been easy. (Lisa Isaacs, Schendler’s counterpart at Mammoth Mountain, and one of the top environment directors in the industry, actually developed an ulcer during her first year on the job.) Take the decision to convert much of Aspen’s heavy machinery from gas to cleaner-burning biodiesel, which, as far as Schendler knew, had never seen much use in the cold or at high altitudes. It was a hard sell: "You’re a vehicle mechanic. You grew up on a ranch and you wear Carhartts so greasy they don’t bend. You have a fleet of 20 snowcats that cost a quarter of a million dollars," Schendler says. "I’m a college boy, office guy. I say, ‘Let’s use biodiesel in your snowcats.’" If they break down, the mechanics will be the ones working overtime to fix them. "I’ve got a slide of one of these guys giving me the finger," Schendler says, laughing. Aware of how often his activist colleagues fail to appreciate the demands they make on businesses, Schendler decided to push gently. He joined a team of mechanics building a catapult in their spare time for an annual melon-chucking contest. And eventually, he talked them into converting one snowcat for a biodiesel test. The very day they did it, Schendler says, a neighboring resort, Arapahoe Basin, called with questions about converting their own snowcats. Now all of Aspen’s snowcats run on biodiesel. At first, the greener gas cost an extra $50,000 a year, but a new tax credit covers the difference, and dozens of other mountains have adopted the technology.

A big proponent of transparency, Aspen has opened all of this environmental work to formal scrutiny. The resort asked the U.S. Green Building Council to LEED-certify a new lodge and clubhouse (an expensive, time-consuming process) and Audubon to certify its golf course; it joined the Chicago Climate Exchange, a carbon-trading market, in order to validate its carbon reductions; and it hired auditors to check the resort for ISO 14000 certification, a benchmark of good environmental practice developed by the International Organization for Standardization, in Geneva, Switzerland. Since 1999, Schendler has published a detailed annual report on Aspen’s environmental footprint, including gas, water, and power consumption, which the resort posts prominently on its Web site.

Ultimately, though, Aspen’s activism could mean more for the environment than anything the resort can install or upgrade on its property. "You could eliminate all the emissions in the ski industry, and we could still be out of business by 2100," Schendler says. But a high-profile company like Aspen can have an outsize influence on politics, public opinion, and even other industries.

When Senators John McCain and Joe Lieberman proposed sweeping new regulations on greenhouse gases in 2003, Aspen was the first of more than 70 ski resorts to endorse their bill. Aspen then supported a successful state initiative that requires 10 percent of Colorado’s energy to be renewable by 2015, and lobbied Congress for a federal version. In November, the company debuted a series of pointed ads in sports magazines to try to provoke skiers into political action, and published environmentalist strategies on the resort’s Web site. "We want to get away from the idea that if you drive a Prius and change some lightbulbs, you’re done," Schendler explains. This winter, he convinced Aspen’s leadership to file an amicus brief with the U.S. Supreme Court, supporting a lawsuit that would force the U.S. Environmental Protection Agency to regulate CO2 emissions as a pollutant. Aspen was one of only a few business interests to file with the plaintiffs, a coalition of state and city governments and environmental nonprofits. "To me, that’s the most important thing we’ve ever done as a ski resort," Schendler says.

Aspen still isn’t sure whether, in the short term, any of this is good for business. The company saves money on energy, gets press coverage (ahem), and feels pretty sure that having a social mission is good for hanging onto employees. But some critics still accuse Aspen of pushing an environmental agenda as a way to make more money. Schendler talks a lot like a green radical, but he would be thrilled if those critics were right. "If we protect the climate out of greed, that’s even better," he says, laughing. "Greed works."