Canadian cities are back on the public agenda. Prime Minister Paul Martin has declared that there is ”œno question that the path to Canada’s future runs through municipal governments large and small, urban and rural.” This article takes stock of the recent explosion of interest in Canada’s cities, exploring the fac- tors driving the new urban agenda and the strategies need- ed to build healthy vibrant cities. Observing that Canada has become an urban policy laggard in the last decade or so, we consider possible lessons for moving ahead from recent developments in the European Union and the United States. In the 1990s, both of these jurisdictions experimented with novel forms of multi-level governance to tackle increasingly complex and localized public policy challenges.

The attention now being paid to cities is somewhat surprising. The burst of ”œtechno-enthusiasm” that initially accompanied globalization and the information revolution led many observers to predict the demise of cities as factors of production dispersed across the landscape freed from the con- straints of geography. But researchers now track a convergence of three flows " people, commerce, and policy " positioning cities as the strategic places in the global age. In Canada, near- ly 80 percent of the population lives in cities, with fully 51 per- cent concentrated in the four largest city regions. The structure of the economy has shifted dramatically, with agri- culture, natural resource exploitation, and secondary manu- facturing all giving ground to urban-centered, service-based activity. And for nearly two decades, upper level governments have passed down responsibility to municipal authorities for significant aspects of the country’s phys- ical infrastructure and social services.

It follows that cities have the poten- tial to be engines of national economic prosperity. With their population densi- ty, thick labour markets, and organiza- tional synergies, they represent the natural home for clusters of innovative firms dependent on intensive, personal- ized networking. Economic geographers have found that cities most open to diverse ideas and people become the creative hubs of the global economy.

Yet, there is another perspective on why place matters more today. Poverty researchers track an increasing spatial concentration of major social problems within our larger cities, and a growing income polarization within urban labour markets. For people stuck on the wrong side of the digital divide in the knowledge economy, the cluster dynam- ic is different. Negative ”œneighbourhood effects” spawn not new ideas or connec- tions but multiply the constraints on progress, as barriers in one aspect of life become linked to others in a decaying community infrastructure.

The common message from these separate research streams on the prob- lems and potential of local places is clear enough. The diversity of the city will not drive innovation if those who are different or poor find themselves increasingly marginalized. Only those cities that become places of innovation and inclusion will rise to the top in the global age.

It would seem that Canada’s cities should be well positioned for success, with their longstanding reputation for livability and high ranking in interna- tional surveys of urban quality of life. Many bring together creative people from all walks of life and backgrounds in a dynamic mix of recreational amenities, employment opportunities, and cultural experiences. Yet, a recent OECD study described Canada’s ”œdisjointed approach” to urban policy, and a lag- ging national engagement with the problems of cities. Moreover, the rising tide of Canadian urban research demon- strates not just that cities are strategic sites in the global economy, but equally warns that our cities in their infrastruc- ture and governance are showing seri- ous signs of strain, even decay.

In fact, the dimensions of Canada’s looming ”œurban crisis” can be cap- tured through the analytic distinction drawn by Harvey Lithwick more than 30 years ago between ”œproblems in the cities” and ”œproblems of the cities.” The problems in Canada’s cities origi- nate in complex dynamics beyond the locality that rapidly acquire their most pronounced expression in urban set- tings: poverty, homelessness, pollu- tion, crime and so forth. In turn, the problems of Canada’s cities are rooted in a growing mismatch between municipal responsibilities and the pol- icy resources available to act " or even the opportunity to contribute ideas to the actions of upper level gov- ernments " on the problems growing in their midst.

The implications of this imbalance are far-reaching. Spatially concentrat- ed problems are not simply complex, they are wicked. Characterized by criti- cal information gaps about what pre- cisely is required to help and by large co-ordination failures in terms of channelling the appropriate resources to the right target, city problems are resistant to traditional monosectoral interventions designed from above by insulated, distant bureaucracies. Instead, they demand place sensitive, holistic approaches, That is, strategies built from the ”œground or street up,” on the basis of local knowledge, and delivered through networked relations crossing program silos, even jurisdic- tional turfs.

The concern here is that Canada’s national policy machinery and intergovernmental system remains ill-adapted to chang- ing policy realities and spatial flows. While governments at all levels are active in cities, there is little evidence of a coherent agenda, systematic co-ordina- tion, or even appreciation of importance of place quality to good outcomes. Municipalities still struggle with a centuries-old subordination to provincial governments. Federal and provincial governments make unilater- al fiscal cuts, program withdrawals, and institutional restructurings with little regard for the fall-out in different cities and communities.

Not surprisingly, city representatives have now mounted a forceful national campaign for new recogni- tion, respect, and resources. But the issues in this political debate go deeper than simply retooling municipalities, important though that is. In an era of wicked policy problems, the opportu- nity for progress on a host of urgent national problems is greatest in the cities, as is the possibility for effective co-ordination among all the relevant actors. A new urban policy architecture is needed for a better alignment of aspatial policies (generally available to all individuals everywhere if they meet the criteria) and spatially focused interventions (specifically targeted at deteriorating places). Much now depends on whether politicians and public servants from all three orders of government can find ways to work more effectively together.

A revamped policy architecture needs to begin with what the City of Toronto’s Chief Administrative Officer, Shirley Hoy, recently described as the strengthening of the ”œintergovernmen- tal interface.” There are five specific spheres of interaction that require greater dialogue and co-ordination: policy formulation, based on the reality that the different orders of government in the interconnected and mobile world are almost always stakeholders in each other’s decisions; budget development, given the importance of long term planning, more predictable revenue streams, and respect for the single tax- payer; service delivery, helping ensure that all government interventions regardless of ”œownership” respond to multi-faceted citizen and community needs in a timely, cost effective manner; public administration, allowing profes- sional staff at each level of government to better appreciate the pressures on, and perspectives of, their counterparts working elsewhere; and finally, political relations, where leaders need to cultivate a problem-solving ethos valuing trust and common understanding across each of the four previous domains.

Improving these interfaces means thinking anew about the state and federalism. Bold claims about the state’s ”œhollowing out” must be quali- fied. Such arguments remain locked in a zero-sum view of power relations wherein different levels of government ”œwin” or ”œlose” authority at each other’s expense while the inexorable trend is a weakening of the state in the face of global forces. What’s needed is another perspective more attuned to the possibilities for such shifting rela- tions to enhance the federation’s over- all capacity to respond to policy problems that are increasingly defined by their complex interdependence and spatially concentrated expression. New thinking is needed that respects provincial constitutional responsibili- ty for municipal governments while also fully recognizing that metropoli- tan policy issues, from the environ- ment and housing to employment and immigration, transcend the jurisdic- tional compartments

Along these lines, the debate could now be reframed more pragmat- ically to consider the ”œcomparative advantage” of each level of govern- ment in solving urgent problems in the cities. On the front lines, munici- palities are best able to ”œconvene the community” " engaging citizens and stakeholders in dialogue and action for local priorities. They can also ensure that land use planning and communi- ty services build more inclusive and compact cities. To this end, they may partner with other local organizations " school boards, band councils, social service agencies, business or non-prof- it networks " on joint projects. For their part, provincial and federal gov- ernments are both far better equipped than municipalities to flow the neces- sary resources to the local partners who know best how and where to invest in physical and social infrastruc- tures. Upper level governments also can facilitate inter-regional sharing of problem-solving experiences by spon- soring the scaling-up of community demonstration projects and transfer- ring lessons from one city to another. The point is to equip local communi- ties to revitalize themselves on terms of their own choosing in accordance with democratic mandates, while also ensuring that the ”œnew localism” does not breed greater dis- parity between places. Neither centralized command-and-con- trol regulation nor open-ended devolution will do the job. And one-size-fits all approaches must give way to an ”œurban policy lens” attuned to the diverse needs and capacities of places, from the big city regions to the smaller remote centres.

At this juncture, Canada’s urban policy communities need to think comparatively about future directions. Particularly relevant are recent experi- ences in the United States and the European Union. In both jurisdictions, the 1990s was a decade of notable urban policy innovation, combining fresh ideas with policy action. Notwithstanding evident variation in structures and cultures (for example, the EU and the NAFTA represent very different models of supra-national governance, and the American federal government has long had more direct relations with cities than its Canadian counterpart), there are instructive les- sons. With the latecomer’s advantage, Canadian urban policy communities can now learn from recent European and American forays into place-based, multi-level governance.

Developments in the 1970s and 1980s set the stage for the concerted round of area based multi-level policy partnerships that flowered across the EU in the 1990s. In 1975, the European Regional Development Funds were launched to encourage balanced growth across member states. Following the 1986 Single Market ini- tiative, these funds were greatly expanded, administratively decentral- ized, and refocused on urban commu- nities. Taking stock, close observers of Europeanization such as Gary Marks described in the 1990s a new network- based political system transforming hierarchical government with more interactive governance. Interlocking spheres of influence replaced watertight compartments, and the role of sub- national representatives in EU decision making was expanded. While the form and intensity of these trends clearly varied across different national settings, researchers have identified some gener- al dynamics. Four are seen as most rele- vant to the project of designing area-based, multi-level governance.

First, EU integration has been framed by two key principles, cohesion and subsidiarity. The cohe- sion principle has helped channel resources to the most distressed locali- ties in the EU, including both declin- ing sections within big cities and smaller cities in the periphery, and it has encouraged integration of eco- nomic innovation and social inclusion goals so as to stretch traditional under- standings of urban regeneration beyond ”œbricks and mortar” physical infrastructure. The principle of sub- sidiarity states that public activity should be led by the territorial level of government closest to the problems and the people. In the EU, this princi- ple has informed efforts to provide appropriate transfer of resources to make local responsibility viable. To prevent downloading, the EU has evolved representative institutions (the Committee of Regions, the International Union of Local Authorities) to secure local input into EU planning for a host of spatially tar- geted programs for regions, cities, and neighbourhoods (among many others: the Urban Pilot Programme, URBAN Community Initiative, LEADER).

Second, these EU programs man- date various forms of partnership between national and sub-national authorities. In most cases, local applicants need to find at least 50 percent of the funds for projects from other sources, a design fea- ture almost always engaging national governments. The supra-national programs become effective catalysts for joint planning and action as national governments decide specific projects with EU offi- cials and then negotiate implementation with local officials. In some cases, they have extended existing national efforts " for example Dublin’s anti-poverty initiatives that built on Ireland’s national-level social partner- ships " or they have enabled national governments to meet new challenges, such as technology upgrading strate- gies for cluster formation in peripheral places like North Jutland, Denmark. The fact that many of these programs have operated over a relatively long time frame provides a stable context for local and national partnerships.

Third, the EU has made extensive use of pilot projects, testing out new approaches on a limited scale. The resultant policy learning has deepened knowledge about the collaborative process in communities, generating lessons about design of partnership structures and the role of institutional intermediaries in connecting policy resources from different sectors and levels. Here, the EU process has con- tributed to the mainstreaming of inno- vations that enhance the overall effectiveness and legitimacy of public policy, and also to surer judgements about the viability and durability of local funding coalitions. It has also enabled European Commission administrators to learn through ongoing feedback from the field on how to fine-tune EU programming for maximum impact.

Fourth, the EU has evolved an elaborate network for transnational policy knowledge transfer. Practical lessons are shared across cities and levels of government. These networks generate stronger understandings of significant policy dynamics including the refine- ment of community indicators and cross-jurisdictional benchmarking, and the focusing of an ”œurban lens” that takes account of the consequences for different cities of all public policies.

In sum, using a mix of principles, pro- grams, and networks, the EU in the 1990s developed multi-level governance to implement more place sensitive poli- cies and programs. The potential of local places to integrate policy thought and action was recognized even as the sys- tem of authority and representation became more diffuse.

In contrast to Europe, the United States is rarely seen as a relevant urban policy model, and for good reason. Postwar American urban policy has long been criticized for accelerating concentrated poverty, sprawling devel- opment, and wasteful competition among localities. In his now classic 1987 treatise The Truly Disadvantaged, William J.Wilson mapped the racial and class dimensions of America’s bur- geoning urban underclass.

But the 1990s are now thought by many to have opened a somewhat dif- ferent chapter in America’s approach to cities. Galvanized at the decade’s outset by the crisis of the Los Angeles riots and the prospect of domestic policy renewal surrounding the Clinton election victory, American urban poli- cy experts produced a flood of new policy-oriented research on urban problems, community renewal, and collaborative governance. In turn, President Clinton appointed knowl- edgeable urban leaders such as Henry Cisneros and Donna Shalala to key Cabinet posts. They looked to rebuild the policy capacity of the department of Housing and Urban Development (HUD) as the focal point for a new cities agenda, and between 1993 and 2000, a quite ambitious federal urban policy was pursued.

Controversy persists over the nature and impact of the Clinton urban engagement. Using 2000 census data, Paul Jargowsky has documented what he calls ”œstunning progress” in the 1990s in reducing spatially con- centrated poverty, particularly among African Americans, and in growing home ownership and minority owned businesses in inner cities. Some explain the gains as a byproduct of the national economic boom, while oth- ers, such as the Brooking Institution’s urban policy director, Bruce Katz, cites the ”œthe triumph of smart federal poli- cies.” Regardless, there are now a num- ber of lessons to consider from the American experience.

First, the Clinton approach recog- nized, after decades of contradictory federal interventions in cities, that it was necessary to try to co-ordinate aspatial general policies and spatially targeted measures. Administration officials pro- claimed that neither in isolation was suf- ficient: strategies for renewing urban infrastructure required appropriate back- ing by social policy if people were to enter the economic mainstream. Thus, a host of new targeted measures, most prominently the Empowerment Zones/Enterprise Communities pro- grams and Community Reinvestment regulations, were flanked by increases to the Earned Income Tax Credit, the mini- mum wage, and a more ”œcommunity friendly” national transportation policy. In the latter case, large federal invest- ments in metropolitan transit infrastructure were paralleled by a novel ”œreversing commuting” program help- ing poor residents of ghetto neighbour- hoods get access to suburban jobs through improved transportation. More broadly, the Livable Communities framework unveiled in the Administra- tion’s final year in office aimed to sup- port many states and cities with their regional ”œsmart growth” strategies.

Second, the urban policy activism of the 1990s contributed to the consoli- dation of a robust community-based development paradigm that joined actors at different scales in a common discourse. In brief, this paradigm marked a conceptual and practical break with the legacy of the 1960s Great Soci- ety programs, which were criticized var- iously for their top-down control, professional dominance, confrontation- al tactics, and focus on the deficiencies of individuals and problems of commu- nities. Influenced by the ideas of Amarta Sen, John Kretzmann and John McKnight, the new paradigm empha- sized building the assets of individuals and the capacities of communities. Under the rubric of Comprehensive Community Initiatives, once divergent streams of community activists (most prominently, Community Develop- ment Corporations, Industrial Area Foundations, and neighbourhood asso- ciations) came together in cities behind multi-sectoral projects. Priorities crystal- lized around making connections between social, economic and environ- mental concerns, and also between the inner city poor and regionally dispersed business interests. New alliances emerged in many places ranging from Baltimore’s BUILD, which focused on living wage laws and brownfield renew- al, to Silicon Valley’s Joint Venture Sili- con Valley, which sought to make technology clusters more socially sus- tainable. The local networks recognized that extra-local assets were also critical and that political outreach to higher governments was necessary for both economic innovation through cluster building and social inclusion through community building.

Third, the local formations were substantially assisted in financial, technical, and personnel terms by a thick layer of national intermediaries such as the Local Initiatives Support Corporation, the National Communi- ty Building Network, and the Aspen Institute. With their funding networks and practical toolkits, these organiza- tions have been credited by some as being pivotal in transforming a frag- mented array of local development entities and efforts into a national- scale movement capable of delivering, in partnership with governments at all levels, comprehensive community renewal in cities.

Fourth, the federal government, primarily through the vehicle of a revi- talized and refocused HUD, deployed a range of strategies and instruments to assist cities. Community development block grants gave localities consider- able latitude in expenditure decisions, but also required inclusive partner- ships, citizen participation, and direct support for capacity building in proj- ect development. The 1998 Trans- portation Equity Act used federal money and regulations to enable met- ropolitan planning organizations to pursue more holistic urban transit approaches sensitive to environmental and social concerns. Also contributing to multi-level collaboration was the 1995 Unfunded Mandates Reform Act, which required federal consultation with state and local governments to limit unilateral downloading. Finally, the federal government took a series of steps to ensure its real estate activities and public facilities in cities maxi- mized the developmental spin-offs for troubled neighbourhoods. A Cabinet- level Community Empowerment Board, headed by the Vice-President was responsible for co-ordinating the nearly 20 federal agencies active on the urban file.

Thus, American public policy in the 1990s featured a significant new urban focus. While not without its problems and limitations, the federal initiatives supplied both a catalyst and a context for many local innovations driven by community alliances with the support of national intermediaries. Whether this legacy survives the differ- ent priorities of the Bush administra- tion is uncertain. Concerns from local and state officials about unfunded fed- eral homeland security mandates and micromanagement of welfare reform suggest a return to a more familiar American urban tradition.

There is a strong rationale for new national policy engagement in Canada’s urban centers. Not only are major public problems now spatially concentrated in cities, but the knowl- edge and networks critical to their res- olution coalesce in local communities. At present the costs of ignoring these problems are piling up at the doorstep of the municipalities. Soon, however, federal and provincial governments will also feel the effects as lost human capital, increased social tensions, and foregone economic opportunity take their toll.

The best way forward is through multi-level governance for place-based strategies. While European and Ameri- can actors moved ahead in the 1990s, Canada is not without its own history here. Tri-level Urban Development Agreements have been implemented to address a variety of problems in several Western Canadian cities. While these agreements have been criticized for their inadequate funding, they have also been praised by the participants for creating a governance process appropriate to the multi-faceted nature of the prob- lems at hand, and finding mechanisms to flow street-level knowledge into poli- cies and programs. Similar features are evident in recent strategic infrastructure programs, and the Sgro Task Force on Urban Issues certainly endorsed collabo- ration. But much more is needed. The inter-governmental Social Union Framework Agreement remains firmly within the ”œtwo-level game.” And the recent SARS outbreak in Toronto under- scored critical gaps in the country’s institutional capacity to connect front line services to extra-local resources. As the Naylor report on the crisis conclud- ed ”œthe single largest impediment to dealing successfully with future public health crises is the lack of a collaborative framework and ethos among different levels of government.”

Given constitutional realities, inter-governmental rivalries, entrenched bureaucratic routines, and Canada’s diverse urban landscape, progress in developing multi-level gov- ernance will take time. New forms of trust and accountability are needed, and these will come only through experimentation, monitoring, and learning. The federal government, with its spending power, budget sur- pluses and national perspective, is the necessary catalyst for collaboration, but the jurisdiction of the provinces must be respected and the voice of the municipalities " and their communi- ties " must also be heard. Steering a course between top-down centraliza- tion and bottom-up decentralization, representatives from each level of gov- ernment discover what works where and why, and how those solutions might be further applied. The result may be a robust national framework for local problem-solving.