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How South Bend, Indiana Saved $100 Million By Tracking Its Sewers

Back when the Big Three was the Big Four, South Bend, Indiana, was a thriving industrial city. Until it wasn’t. Not wanting to go the way of Detroit, citizens turned to Peter Buttigieg, a 31-year-old McKinseyian, to shake things up. Is there really any surprise that he’s rocking it?

A Midwestern municipal government isn’t the first thing that leaps to mind when you think of innovation, but it ought to be. Cities face more demand than ever to deliver with the same amount of resources. In local government, it’s very clear to your customers—your citizens—whether or not you’re delivering. Either that pothole gets filled in or it doesn’t. The results are very much on display, and that creates a very healthy pressure to innovate.

Businesses always have competitors nipping at their heels. Historically, cities have not viewed themselves as subject to that same type of competition. But that’s wrong. The reality, especially for our modest-sized, middle-American community, is that people can choose. Labor is mobile. Individuals are deciding where they want to work, live, and set up their businesses. Our job is to take certain worries off the table. They shouldn’t have to worry about whether there’s going to be clean, safe drinking water coming out of the faucet. Getting through school, holding down a job, and raising a family? That’s hard enough.

I’m the youngest mayor in America of a city with a population of more than 100,000. Part of the message the community sends when they put a rookie in a job like this is, We want something different. As a consultant at McKinsey, I learned the value of data and the ability to shape that information into an answer. Last year, South Bend became the first city in the world to migrate its sewer system to the cloud, which prevented polluted water from going into the river and saved $100 million in new pipes. It all started with a local startup called EmNet.

Now, we’re looking for ways to enhance people’s relationships with their neighborhoods. When the Studebaker car company left South Bend in the '60s, we gradually lost about a quarter of our population. The consequence of that is, we have a lot of vacant houses that we’ve got to do something about. So I set a target of 1,000 houses in 1,000 days—we’ll save them if we can, and turn them down if we can’t. But we needed something that would galvanize people to help.

That’s why I reached out to Code for America. I thought there was something appealing about the kind of person who would become a Code for America fellow. It’s still counter-cultural to be working on civic issues. They could be doing any number of prestigious and lucrative things, yet they chose this. In January, we partnered with three fellows to create a web app for citizens to find information about properties in the community. What happened to that house at the corner of the block? Can a few neighbors get together and buy it for $8,000? If it’s been torn down, who do we need to call to turn it into a garden? It does no good for me to tell our citizens that we’re transparent, but in order to find something out, you have to show up to our code enforcement department and wade through thousands of pages of files and folders.

At the end of the 11-month program, we want to have a number of apps that will improve people’s lives—even those who never log on to use them. It’s part of an ongoing transformation here. We’ve cleared out this vast tract of land that was covered with decaying factories and turned it into a landing pad, called Ignition Park, for startups coming out of Notre Dame. The first company set up there does data hosting, which symbolizes a bit of geographical luck for us. Because South Bend was built at a nexus of highways and railway lines, we have an abundance of fiber-optic cables going through our city. That, in addition to our cold climate, creates the ideal situation for us to take that old 800,000-sq.-ft. Studebaker factory, which I had always thought we would have to blow up, and bring it back as a data center. That’s what South Bend has always been good at—adapting something into a new and different opportunity. We just need to take it to the next level.

Photo by Daniel Shea

Fast Talk: "I'm From The Government..."

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  • Theodore D. Krostue

    can i get a link to some more information on these property apps?

  • Jesse Davis

    "  Last year, South Bend became the first city in the world to migrate its sewer system to the cloud, which prevented polluted water from going into the river "  This all started several years ago and was started under the past mayors watch. No need to get excited over this one Pete, It's not your baby, you are not the father.

  • Jesse Davis

    If they are talking about the CSO projects this has to be done to meet EPA standards. Not sure I would buy the figures here. If there are these types of savings then why would the mayor have a smaller budget, yet want to raise property tax assessments? If you have this kind of savings then get it back to the people where you stole it from in the first place. And as for the abandon houses maybe the higher property tax rate were a prime factor in the problem. The mayor needs to toot his horn if he wants to run for re-election. Sounds like maybe the mayors big backers have turned their backs on him and he needs a big story to boost himself up. 

  • Tim

    You think he is losing support in the area? That couldn't be farther from the truth. There is no way Pete is still the mayor of South Bend in 4 or 5 years. Not because he's doing a poor job, but because he is going to get snatched up by a bigger city or bigger role in the government. Lets just hope whoever follows him after he revitalizes south bend is capable of continuing his work (a.k.a. Not Derek Dieter)

  • Jesse Davis

    You just follow him to the land of Pete and your life will be great. I for one hope we get a Mayor who is really open door and here for the people instead of for personal gain, and politics. 

  • Dean D'Camera

    Numbers can always be played with to illustrate the point of view you support. What I find to be most impressive is the approach to innovation and the out of the box thinking that are driving results. For those questioning the $100MM if it were $10MM or $20MM only wouldn't the fact that it saved taxpayers resources still be pretty awesome!

  • Baxster Jacobsom, CPA

    $100M in savings in a city of 100,000 is fantastic. 

    In fact, it's so fantastic that I would love to see the math behind his calculation. Fast Company - did you think to follow-up with, "how can you save $1000 in water costs per person in your city, when the average water bill per household is $335?"A McKinsey BA would see right through this :)

  • Troy Cadotte, South Bend!

    Did you really believe that Fast Company would publish an article with "made up" figures?  It clearly stats a savings of $100 million from not having to build new pipes.

  • Steve D Mihaljevic

     What you are seeing in savings is future costs that do not have to be someone who owns property in town.. Our water bill consists of about 50% water usage and 50% sewer usage...HAd we not used this innovative idea... we would have to spend about 100 million to upgrade our system over the next 3 to 4 years...

    that cost was not for one year... but a cost that would have been spread out over three to four years that we do not have to incur.. hence the 100 million number.