Who Are America’s Progressive Developers?

Miami, FL

1. I delved into finance this week for Forbes, writing articles about how Chicago’s junk-bond rating is already causing higher borrowing costs; and about how Dodd-Frank, 5 years after passage, is killing community banks.

2. Starting in a few weeks, and continuing for as long as I’m on the road, I will occasionally add to a new Market Urbanism series called “America’s Progressive Developers.” This will profile different developers who have either built, or are planning to build, interesting projects that enliven their city. The articles will include interviews, renderings, photos and perhaps video tours of each project, so that MU readers can get an inside look at the urban construction process.

One purpose of this series is to help change the negative perception towards developers. As readers know, anti-development sentiment within U.S. cities has for decades created numerous problems, including high housing prices, poor job growth, and environmental harm. These are problems that even liberal urban activists, who have driven the sentiment, are starting to recognize. For example, Gabriel Metcalf—president of the San Francisco-based planning think tank SPUR—wrote a CityLab essay yesterday about how NIMBYism has pushed out the city’s poor. But this does not mean that attitudes towards developers themselves have changed. Many are still seen as greedy and imposing, and their buildings as monuments to crass consumerism, by the very residents who benefit from proximity to such buildings.

It was not always this way; many large-scale developers were once seen as visionary city builders. For example, Coral Gables, the Miami suburb where I’ve stayed, is a master-planned community that was built in the 1920s by real estate mogul George Merrick. Its downtown became a tasteful mixed-use neighborhood that turned him into a local celebrity, and now one outside area has been named after him. Other developers during this period in America were lauded for building advanced skyscrapers, mansions, shopping centers and civic spaces. Many developers still build such things, but are nonetheless vilified because of the altered public sentiment, which is often rooted in class and racial conflict. This is something that I would like to change, by documenting how America’s developers have helped cities.

So what do I mean by developers who are “progressive”? This is a word that has become loaded, but I will use it to describe those who are forward-thinking, innovative, and whose work demonstrates an appreciation for cities. In this respect, almost anyone who develops in a city is somewhat progressive, by creating jobs and improving lots. But my column aims to profile those who are taking the extra step. This could include developers whose structures are architecturally interesting, integrate well with public space, emphasize historic preservation, present a new consumer option, or have advanced environmental technology. I could also cover projects that have had an outsized impact in revitalizing neighborhoods, even including large corporate ones. And I am not above profiling suburban developers, if they are doing something interesting. All of these development types can play important roles in any metro area.

Along with hopefully changing the perception about developers, I am also doing this series simply because I like meeting city builders. There have been countless times when, like other urbanists, I have walked through a city, seen an interesting project, and wondered—“how did this get here?” I aim to answer this by having the developers behind such projects explain how they did market research, attained financing, overcame political hurdles, and ultimately got something built.

This series will be interconnected with my cross-country trip, so I’ll seek out these progressive developers in every place I visit. If you are following my travels, and know of someone I should meet, drop me a line!

Philadelphia Has A Poor Land Use Record–Why Expand It?

1. My Forbes article this week is about Mamey, a delicious tropical fruit that is popular in Miami but unknown around the U.S.

2. This week I requested interviews with the executives of Philadelphia’s Redevelopment Authority and its Housing Authority—Brian Abernathy and Kelvin Jeremiah. I said that I was writing an article about both agencies’ recent eminent domain zeal. In case you’re unfamiliar, I’m referencing the PHA’s mass overhaul of the Sharswood neighborhood, and the PRA’s multiple recent attempted takings, all plans that have been documented on this site (here and here). Neither agency has responded—which means I’ll try again Monday. But in preparation, I’ve been reading literature about the land management history of Philadelphia’s government. Here are links:

a. It would be hard to understand Philly’s history without knowing of Edmund Bacon, the city’s chief planner for two decades. He was described by architectural critic Paul Goldberger as a more tasteful Robert Moses, mixing “the bulldoze-and-rebuild philosophy of urban renewal with the tentative beginnings of the historic preservation movement.” But in these articles, you’ll notice that he followed many of the past and present follies of the planning profession–by advocating for height limits; out-of-date transportation modes; and large, ugly, white elephant projects. Most telling were his attempts to lure the World’s Fair, a decade after it had proven disastrous in New York City.

b. The paper “Urban Politics and the Vision of a Modern City: Philadelphia and Lancaster after World War II,” gives a more detailed look at Bacon’s vision. He had grown disturbed by the white middle-class exodus from Philly, and wanted pet projects that would draw them back, in defiance of the city’s fiscally-conservative Republican establishment. This vision included saving historic Center City neighborhoods, while severely altering the surrounding black ones:

Rehousing the thousands of families uprooted by renewal—many of them poor African Americans—posed a problem for Philadelphia’s redevelopment authority, as did the white, often violent opposition to any effort by the city to relocate uprooted black families into small public-housing complexes secreted amid white neighborhoods…But, in the glow of the 1950s modernist vision, Philadelphia’s progrowth business, civic, and planning coalition hoped that…high- and low-rise public housing, ideally scattered amid rehabilitating white neighborhoods, would soften the social impact of downtown rebuilding. Alas, as the North Philadelphia riots of August 1964 attested, this did not happen.

Both the PRA and the PHA, founded before Bacon, were instrumental in executing his plans.

c. Here’s a telling of that same history on the PRA website–without, of course, the tales of displacement.

d. Several decades later, the PHA housing where many were steered was found by HUD to be substandard.

e. Such findings–along with extreme corruption and mismanagement–have inspired HUD on two occasions to temporarily take over the PHA: in 1992 and 2011.

f. Before Jeremiah became the PHA executive, the two previous ones had been forced to leave because of improper sexual relations with staffers (Carl Greene and Michael Kelly).

g. The PHA has a habit of building affordable units for well over $300k per head, suggesting that an enormous level of waste is entering the construction process.

h. In 2006, an official with the Penn’s Landing Corporation—working in partnership with the PRA—was sentenced to 30 months in prison for receiving kickbacks during the bidding process for a proposed waterfront project.

i. Another PRA/PHA policy has been to seize abandoned, tax delinquent properties and then auction them off. But because they are slow bureaucracies, they have failed to quickly transfer these properties back onto the private market, while leaving them under-maintained.

j. Perhaps one of the stronger ideas to emerge from this dysfunction was the Philadelphia Land Bank. This was approved in 2014 to consolidate Philly’s 30,000 vacant lots–8,000 of which are government-owned (including by the PRA and PHA)–into a single database. This will mean that developers looking to buy several lots on the same block won’t have to negotiate with multiple agencies, like they do now. Will the Land Bank streamline things, or just become another archaic Philadelphia system? Here’s an article that suggests the latter.

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If there is a common thread behind Philadelphia’s land use approach–from Bacon to today–it is that when faced with capital flight, the answer has been for government agencies to control property instead. This has encouraged policies like mass eminent domain, subsidization of large public-private projects, widespread public housing construction, and seizure of tax delinquent lots. Yet this has hardly produced better outcomes, as the agencies have been mired in waste, bureaucracy, corruption, abuse and mismanagement. It should be noted that in the half-century since Philly expanded its land use footprint, the city has further declined, enjoying a slight population increase only last decade, for the first time since 1950.

These are points that I will bring up to Abernathy and Jeremiah when discussing their agencies’ recent takings. Of my two main questions, the first will be logistical—given that Philadelphia owns 8,000 abandoned lots, why does it need to seize already-functioning private ones? My second will be more general—if Philadelphia has such a porous land use record, what justifies the expanded role now? I’ll look forward to hearing the officials’ answers…assuming they agree to speak.

 

Havana, Cuba–Stagnation Doesn’t Preserve Cities, Nor Does Wealth Destroy Them

[My second in a two-part series on Havana, Cuba. Here’s the first article.]

Havana, Cuba

Before taking my trip to Havana, one thing that I was curious about was how a half-century of Communism had affected the built fabric. While there are obvious disadvantages to economic stagnation, I figured that it would have at least created a charming-looking city. There are, after all, a handful of U.S. cities, and numerous European ones, that have resisted growth, modernization, and the automobile, only to remain quaint and historic. But it didn’t take even a 10-minute cab ride from the airport to realize that my assumption about Havana had been naïve—even if it is still held by many of the city’s blissfully uncurious tourists.

In fact, very little about Havana has been “preserved.”  Instead, everything in the city is merely old, and because little gets produced, nothing is replaced. This applies to the automobiles, furniture, hand tools, manufacturing equipment—and most certainly the buildings. Collectively, this stagnation has destroyed the look of the city, with a physical blight that stretches nearly every block from downtown to the outer slums.

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If I could define in one statement what Havana looks like, after four days of extensively biking and walking through, I’d call it the Latin American Detroit. It was a once-great city that declined because of bad policies, and its pervasive ruination serves as a constant reminder of this. The houses themselves, while large and ornate, are almost uniformly inadequate by U.S. standards. If they have not crumbled to the ground altogether, many are caving in. The foundations are crooked, full of holes, and marred by broken windows and doors. Because of Havana’s European roots, stucco is a common material, but on most buildings is falling off, or in some cases has disappeared. Almost every building has dirt and grime, while some are covered in it.

And this is for Havana’s nice parts. Once I began biking out of the central neighborhoods and into the slums, I found that symbols of past wealth disappeared altogether, and were replaced with what in the U.S. would be considered shacks. These structures were usually patched up with knotted wood, metal scraps, and thatching. One gentlemen who lived in the poor neighborhood of Cerro, and who I spoke with at length, described his area as akin to a Brazilian favela—which I found believable. The two pictures I took below were from his front porch, and mirrored the aesthetic of such areas.

So what is it like to live and work in these buildings? As one might expect, the outside decay permeates to the inside. The best access I got was through a 24-year-old working-class woman named Indira. I met Indira on my first night in Havana when stopping to ask directions, and after noticing that she spoke good English, took her to dinner. We became friends, and she invited me into her downtown apartment, where she lived with her mother and father-in-law. The apartment was roughly 150 square feet—far smaller than a typical New York City micro-unit. Because it had a high ceiling, the family had built a horizontal wooden floorboard halfway up the wall that served as the second floor, and built a makeshift staircase leading up. This upstairs “room” was for the mother and father-in-law, while Indira lived in the main room below, sleeping crammed against the kitchen.

Even in such a small space, there were numerous malfunctions. There was no hot water, either for cooking or showering. In fact, the shower did not even work, meaning that the family instead took scrub baths. Because the toilet didn’t flush, they had to pour water into it each time after use to accelerate the draining. The built-in wooden floorboard was clearly sagging under the weight of the upstairs furniture, raising concerns that it would one day collapse. As for the actual roof—it had been crumbling for years, and was fixed recently by a neighborhood handyman. To pay for the work, the family had to spend over a year saving up $150.

 

The main story of Indira's apartment.

The main story of Indira’s apartment.

 

The second story, upheld by a wood board

The second story, upheld by a wooden board

 

Public Infrastructure

Just as peoples’ private houses were crumbling, so too was the public infrastructure—again, much like Detroit. The public spaces, while well-used, were typically full of trash, overgrown weeds, and broken objects. Many parks, for example, were defined more by concrete than grassland. Streets, if they were even completely paved, were filled with potholes and had such poor drainage that, after it rained, they would gather huge puddles.

A water-less pool

A water-less pool

 

I wasn’t able in my short time there to analyze the underground infrastructure. But if it is like everything else in Havana, I would assume that it, too, is crumbling. For example, contrary to what tourist brochures say, Havana’s tap water is considered undrinkable by locals, and I was routinely offered bottled water to avoid catching chlorida.

Indeed, the substandard nature of Havana’s built entities were so common that after awhile I stopped noticing. For example, when I attended a rainy futbol match at a renowned Havana stadium, I sat underneath a roof that leaked constantly, getting soaked alongside other fans. Can anyone imagine this being tolerated at a U.S. arena? When I used bathrooms even in nice establishments, I would find that there often weren’t toilet seats, door locks, or (you guessed it) toilet paper. Schoolyards had swimming pools without water and basketball hoops without rims. And on it went.

This is how life is in Havana. And I soon realized, given this, how buffoonish it would have been to go around looking for examples of “historic preservation.” Such preservation is an aesthetic notion from the First World, driven by those who are willing to pay more to retrofit attractive old housing. But in a city of extreme poverty, preservation is the pragmatic steps people take to prevent their roofs from caving in.

a public park...

and a public waterfront

So How Does Havana Compare To…San Francisco?

Have you ever read an article that was so hilariously wrong that you wanted to pick your laptop up and chuck it across the room? This was my reaction to one article I read several days after returning from Havana, with the city’s horrific conditions still on my mind. On June 8, MarketWatch.com published an article by columnist Therese Poletti called “New Tech Money Is Destroying The Streets Of San Francisco.” Poletti explained that a flood of wealthy executives were moving into San Francisco, buying old homes, and altering the interiors.

It is now hard to find a Victorian home for sale that has not been gutted, its architectural details stripped and tossed. And owners or developers — looking to sell at a premium in the frenzied real estate market to “techies with cash” — hope to appeal to the tastes (or lack thereof) of current buyers, by turning once-charming homes with detailed woodwork, built-ins and art glass, into clones of Apple’s minimalist retail stores.

This trend has been developing for several years, but it seems far more prevalent today, with construction sites sprouting across the Bay Area and especially in San Francisco. And in addition to the remodeling frenzy, older buildings appear to be disappearing at a scary pace.

Before even addressing Poletti’s point, let me just set the record straight: San Francisco is not being “destroyed.” I can testify from having lived there in 2012, and visiting several times more, that the city is an architectural gem that has largely stayed in character since being rebuilt after the 1906 earthquake. Much of the city—including almost the entire northeast portion—is an oasis of historic Italianate, Queen Anne, Craftsman, and Art Deco construction. These buildings roll along the hills flanked by clean, well-paved streets, and small, impeccably-landscaped yards. From a purely aesthetic standpoint, San Francisco surpasses any other major U.S. city, and perhaps any European one.

The reason for this is two-fold. San Francisco has expansive historic preservation laws that make it difficult or illegal to alter thousands of structures. Compelling arguments have been made that the city takes this preservationist impulse too far, to the detriment of adding new housing supply–although such laws help maintain its unique character. But the other factor—to which Poletti seems oblivious—is that the city has a large professional class with the financial wherewithal to maintain these homes.

I would argue that this second factor, more than the first, has preserved San Francisco. You could put a historic overlay designation across Detroit, and it wouldn’t change much. The Motor City suffers from decay because it has undergone six decades of depopulation, and this has left no one around to preserve its own large historic stock. But the Bay Area has been flooded with capital during this period, and this has strengthened its culture of preservation. Maintaining a historic home, after all, can be an expensive endeavor that requires ripping out floorboards, replacing pipes, and other structural changes. It is usually done by educated, well-off households who have either the money to fund repairs, or the time to dedicate sweat equity. Perhaps not every family preserves their homes precisely to Poletti’s specifications, and I don’t blame them, since it is difficult to live in a floor plan that was laid out a century ago. But she should not miss the broader point, which is that San Francisco has remained as it is because of the demographics it attracts.

Instead, she claims that these groups are “destroying” the city. She is thus spouting the same myth that is advanced about historic preservation by urban progressives, who seem to think that wealth and gentrification works against preservation. But a fair-minded look at U.S. cities demonstrates the opposite. If one looks at America’s most notable historic neighborhoods–the Back Bay in Boston; Capitol Hill in DC; the French Quarter in New Orleans; much of northern San Francisco; much of Manhattan and northern Brooklyn; downtown Savannah; and downtown Charleston–a unifying feature is that they have great residential wealth. Meanwhile, there are numerous cities—Baltimore, Philadelphia, Detroit, St. Louis, Cleveland—that have a similar number of historic structures. But many of them sit hollowed-out because of decline.

The same could be said when comparing Havana with Poletti’s San Francisco. Both cities have similar architecture and planning, but their differing economic histories have led to opposite preservationist destinies. Wealthy and growing San Francisco is a city where thousands of structures remain in superb shape, and where people grieve over minor alterations. Havana’s system has produced a crumbling city where the desire for preservation gets lost in a sea of basic needs. If Poletti really wants to see a “destroyed” city, she should visit the latter.

a public housing complex from the outside...

a public housing complex from the outside…

 

and from the inside.

and from the inside.

 

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Urban Renewal in Philadelphia

A vacant building in Sharswood

The Philadelphia Housing Authority will seize  nearly 1,300 properties for a major urban renewal project in the city’s Sharswood neighborhood. The plan includes the demolition of two of the neighborhood’s three high-rise public housing buildings — the Blumberg towers — that will be replaced with a large mixed-income development. The new buildings will increase the neighborhood population tenfold with the majority of the new units to be affordable housing.

The majority of the 1,300 lots slated for eminent domain are currently vacant. At a City Council hearing on Tuesday, Philadelphia Housing Authority CEO Kelvin Jeremiah testified that the redevelopment plan furthers the agency’s efforts to replace high-rise housing projects with lower-density units. However, PHA’s plan misses the forest for the trees. The benefits  of demolishing the two towers are immediately undone by creating an entire neighborhood of public housing, effectively increasing the concentration of poverty in Sharswood.

Adam Lang has lived in Sharswood for 10 years, and he posted about the plan in the Market Urbanism Facebook group. Adam has raised concerns that the PHA does not have an accurate number of how many of the 1,300 properties in the redevelopment territory are currently occupied. Adam’s primary residence is not under threat of eminent domain, however he owns four lots that are. He uses two lots adjacent to his home as his yard. The other two are a shell and a vacant lot. He purchased them, ironically, from the city with the plan to turn them into rentals.

Adam’s concern about the inaccuracy of PHA’s vacancy statistics stem from the method that PHA employees used to create their estimate: driving by homes to see if they look occupied or not. Adam’s own property was on the list of vacants, and he said that he’s aware of other properties in the neighborhood that PHA identified as vacant but are actually lived in. Nichole Tillman, Executive Vice President of Communications for PHA disagreed:

PHA entered into an interagency agreement with the Philadelphia Redevelopment Authority (PRA) in March 2014 to perform eminent domain services on behalf of PHA. They are very skilled in these matters.

 

[…]

 

The overwhelming majority of parcels are vacant land or structures.  The PRA projects that approximately 70 structures, or 6% are occupied, and the occupants include homeowners, renters, and businesses.

Sharswood is adjacent to the neighborhood of Brewerytown, a rapidly gentrifying area. Sharswood, however, retains many blighted properties and as of 2008 its median income was about 20-percent lower than Brewerytown’s. Adam posits that Sharswood’s prevalence of abandoned properties relative to Brewerytown is driven by the presence of run-down PHA properties and their attendant crime and poverty. “Sharswood hasn’t gentrified so much because of PHA and other subsidized housing, much of it blighted,” he said. The PHA’s redevelopment plan, if realized, will result in a large population increase in the neighborhood, with 83-percent of the new housing designated as affordable units, according the Jeremiah’s testimony.

Adam supports the PHA plan to demolish the high-rise housing projects. Based on his experience visiting residents of the towers, he said, “it’s amazing that the government would house human beings in there.” However, he’s also against the drastic increase in public-housing in the neighborhood that would further concentrate low-income housing in Sharswood. “It will look like it’s done a lot of good,” he said “because new buildings always look better, but the issue will be over time because PHA has an atrocious maintenance record.”

Tillman countered:

In recent years, PHA has demonstrated a proven track record of success in developing and maintaining, low density, cost effective, and energy efficient units that are consistent with the respective neighborhoods.  PHA has a large and effective maintenance program. Challenges that face PHA in regards to maintenance are largely due to funding and considerable large aging housing stock.

Sharswood’s redevelopment will be financed with a combination of local money and funds from HUD’s Choice Neighborhoods Implementation Grants. The first Choice Neighborhood grants were awarded in 2011 for city agencies to undertake redevelopment studies. Now HUD is giving much larger implementation grants to cities across the country, including $30 million for redevelopment in North Philadelphia where Sharswood is located. In the first phase of the project, the Inquirer reports that construction will begin on 57 affordable rental units at a cost of $21 million, or nearly $370,000 per unit in construction costs alone.

Jane Jacobs would have called this arrangement “cataclysmic money” because a large influx of cash from the local and federal governments will finance rapid redevelopment. If redevelopment happened from the bottom up, with residents gradually purchasing homes and businesses and fixing them up, the neighborhood would house greater diversity, which, Jacobs argued, was crucial for a healthy neighborhood. The plan will result in many new housing units, all built in quick succession, and many for a specific income level. This is not the diversity that will allow for the neighborhood to age successfully, nor will it facilitate a diversity of uses. This type of cataclysmic public housing development has a long, failed history in the United States.

Tillman said that PHA’s plan are a departure from disastrous slum clearance efforts of the past:

Many of the failures that are chronicled revolve around the federal model of public housing high-rises constructed during the 50’s and 60’s that isolated neighborhoods and residents, making it hard for them to get to work and to receive services, and also make them vulnerable to criminal activity. Post World War Two, there was a housing shortage that affected everybody. High-rises were an efficient way to build modern apartments for families in need, very often on relatively small footprints, but other times over superblocks.

While just about any urban observer would support PHA’s plan to demolish the Blumberg towers, their tabula rasa plan to redevelop the neighborhood from the top down robs the neighborhood of the chance to develop sustainable market-rate affordable housing. Any city-led redevelopment spanning an entire neighborhood and relying on hundreds of millions in federal funding will fail to create the diverse, organic neighborhood that Jacobs espoused.

 

 

 

 

 

 

Has The Urban Planning Profession Declined? (Like Planners Claim)

As readers know, Market Urbanism has for several years had a strong homepage and Twitter presence. And thanks to Adam, it is getting a stronger Facebook one, both on MU’s official Facebook page, and its chat group. If you enjoy reading substantive things, I recommend following both, but especially the chat group, which is available for anyone to join.

Many of its updates feature links from around the web posted by MU readers, informing us about the world’s biggest urban issues, with everything from mainstream news clips, to esoteric working papers and book chapter pdf’s. We would love to have more of you join and begin posting! This doesn’t mean the group is open to trolls; we don’t want to hear your grammatically-tortured vitriol. But we do like potential skeptics who ask questions and start debates, as they have received strong responses in the past.

All that said, here are some of my recent favorite links shared by the group, and let’s raise a Friday night glass for the many more to come.

1. Robert Moses’ 23-page response to The Power Broker. Like the man himself, the letter was angry, rambling, irrational, and condescending, yet had moments of rhetorical flash:

The current fiction is that any overnight ersatz bagel and lox boardwalk merchant, any down to earth commentator or barfly, any busy housewife who gets her expertise from newspapers, television, radio and telephone, is ipso facto endowed to plan in detail a huge metropolitan arterial complex good for a century.

I wonder which “busy housewife” he could have been referring to…

2. Richard Sennett comes from a school of sociological thinking–alongside academics like Saskia Sassen and Mike Davis–who criticize global capitalism and urbanization. But here is his rather balanced review in 1970 of Jane Jacobs’ The Economy Of Cities (you can access the review through a Facebook post via Anthony Ling).

3. This is an old Economist article that aims to define “rule of law.” It cites a study arguing that “a country’s income per head rises by roughly 300% if it improves its governance by one standard deviation,” with the efficiency and reasoning ability of its legal system playing a huge factor.

4. Here’s yet another article, this time from PlacesJournal, claiming that the growth of conservative economic theory in the 1940s, followed by the failures of 1950s urban renewal, led to the death of central planning and rise of “market urbanism” (his usage) in America. “By the ’70s and ’80s,” writes architect Anthony Fontenot, “the discipline of planning had come under such sustained attack that in many design schools the planning programs were jettisoned altogether and relocated — banished — to schools of policy and administration.”

I read this charge about the decline of American city planning frequently from architecture/planning writers. But can anyone please tell me what the hell they are talking about? The fact is that land use regulations–the most essential planning tool– have grown substantially in America in the last century, and even more so in recent decades. Zoning has transformed from merely separating incompatible uses to policing the design, coloration, placement, shape, density and “form” of buildings. Lots that years ago would have been subdivided in suburbia, or built upwards in cities, are now, respectively, preserved. Practically every city of minor significance has a planning department (not to mention an urban development corporation and design review board). Whereas America’s great legacy cities–New York, San Francisco, DC, Chicago, Boston, Philadelphia–adopted their built pattern during the relatively laissez faire industrial era, and thus in a manner that was dense, walkable, and attractive, land use controls often prevent them from furthering these goals today–and prevent newer cities from mirroring the old ones.

I thus can’t agree with Fontenot and similar-thinking architects and planners. Their profession has not declined in the U.S.; it has metastasized, only to inhibit many of the outcomes that they seem to want. Market Urbanism, meanwhile, is still an ideology confined to the internet, and not even close to being practiced today in any major U.S. city.

The benefits of the market in both infrastructure and urbanism

el-on-wabash-2

Alain Bertaud, a senior research scholar at the Urbanization Project, has had a long career in urban planning, and many of his writings have a market urbanist flavor. He is currently working a book called Order Without Design, and last year he published an excerpt from that book called “The Formation of Urban Spatial Structures: Market vs. Design.” In the article he offers a compelling case for letting the market determine building sizes and uses, but he argues that infrastructure provision must be left to the state. I agreed wholeheartedly with the first portion of his paper, but find that his arguments for the market in land use contradict his arguments for the state in infrastructure.

Bertaud eloquently explains the knowledge problem facing urban planners who seek to regulate efficient land use patterns. Because economic growth is such a complex process that’s dynamic over time, he explains that top-down design will fail to keep up with changing land use needs to the detriment of economic growth. He cites Hartford, Connecticut as an example. The city developed a large insurance industry, but as it became profitable for American insurance companies to outsource clerical work abroad, fewer Connecticut residents find employment in the industry. However, in a futile effort to maintain jobs, urban planners have refused to update land use regulations to permit new employment opportunities. Rather than succeeding in keeping historical sources of employment in place, urban planners have prevented economic diversity that can hedge against a downturn in a specific industry.

Bertaud describes price mechanism that allows the market to identify land’s highest value use:

Markets …  recycle obsolete land use quasi-automatically through rising and falling prices. This constant land recycling is usually very positive for the longterm welfare of the urban population. In the short term, changes in  land use and in the spatial concentration of employment are disorienting and alarming for workers and firms alike. Responding to the disruptions caused by land use changes, local governments are often tempted to intervene in order to slow down the rate of change and to prevent the recycling of obsolete land use. However, the long-range effects of maintaining obsolete land use through regulations are disastrous for future employment levels and for the general welfare of urban dwellers.

While Bertaud waxes romantic about the power of the market in allocating land use and supporting economic growth, he makes two primary arguments for why the private sector cannot provide road networks. First, he asserts that private sector is incapable of assembling the necessary rights-of-way to build major thoroughfares.  Second, he makes an externality argument. He says that because roads can improve accessibility and increase land values, it’s “impractical to allocate and to recover its cost from beneficiaries since not only road users but also landowners benefit from better accessibility.”

To the first point, it’s false that the private sector is incapable of constructing a road network beyond local access streets. In fact, several major roads in the United States have been financed, constructed, and maintained by private companies that collected tolls. By constructing these roads in existing easements, these companies didn’t need to resort to eminent domain. Private U.S. companies built turnpikes in an era when road building was much less efficient than it is today, and more importantly tolls had to be collected by humans in tollbooths, rather than electronically, requiring more overhead than a toll system would today. Turnpike companies sought investments from landowners near the road who stood to gain from road construction, demonstrating that mutually beneficial exchange can happen even in the face of the externalities that Bertaud describes. Aside from roads, private enterprise has historically provided canals, streetcars, and elevated rails demonstrating the powerful incentive that people have for identifying opportunities for cooperation even when the benefits to buying and selling a good aren’t fully captured by the consumer and producer. Bertaud points out that, unlike regulators, the price system can effectively make tradeoffs between land uses. Similarly, the price system could determine resource allocation between different types of transportation, but instead this role is delegated to “designers” in developed countries today.

History demonstrates that privately built and financed roads are in fact possible, but Bertaud is likely correct that they would not be possible in developed countries today because government infrastructure spending and regulations have largely crowded out private investment in the industry. Those who assume that roads must be built by the government rely on market failure arguments to assert that the private sector fails to produce the efficient amount of infrastructure. Bertaud writes, “to build an effective, citywide circulation network, a city needs to connect privately-built roads, linking various neighborhoods and allowing travel speeds consistent with the efficient functioning of labor markets.”

It’s possible that the free market would fail to reach some optimum level of travel speed as identified by technocrats, but it’s key to note that government’s infrastructure building record is rife with failures. The political process results in bridges to nowhere and costly mixed-traffic streetcars. Robert Caro provides a detailed account of Robert Moses’ trangressions against the people of New York for the cause of his infrastructure building mania, but neighborhoods across the country were irreparably damaged by highways with relatively little recognition of the damage wrought by government road building. Unlike state road designers who can raze entire neighborhoods for the sake of infrastructure, privately built roads would not likely be built through densely populated neighborhoods.

Government infrastructure planning is subject to many of the same problems that Bertaud points out plague government land use planning. If neither the market nor government can reliably provide the “efficient” amount of infrastructure in the right places, which sector does it better is an open question that won’t be answered without developed countries’ governments drastically curtailing their involvement in infrastructure. Those who argue that the market cannot provide the level of infrastructure deemed efficient by econ 101 models make an unfair comparison to idealized models of how the public sector provides infrastructure rather than looking at the infrastructure that government actually delivers. Infrastructure provision presents private sector challenges because it isn’t bought and sold according to the textbook example of perfect competition. But starting with the assumption that government can identify and execute an optimal infrastructure plan whitewashes publicly provided infrastructure failures.

Thanks to Anthony Ling for pointing out the article.

Planned Manufacturing Districts: Planning the Life Out of Districts

Chicago’s Goose Island and surrounding Planned Manufacturing Districts

They are called different things in different cities, but they are similar in form and intent among the cities where they are found.  For simplicity’s sake, a Planned Manufacturing District (PMD), as they are called in Chicago, is an area of land, defined by zoning, that prohibits residential development and other specific uses with the intent of fostering manufacturing and blue-collar employment.

Proponent of PMDs purport to be champions of the middle-class or blue-collar workers, but fail to consider the unintended consequences of prohibiting alternative uses on that land.  At best, PMDs have little effect on changing land-use patterns where industrial is already the highest-and-best-use.  At worst, they have the long-run potential to distort the land use market, drive up the costs of housing, and prevent vibrant neighborhoods from emerging.

A Race to The Bottom

Before getting into it further, it is important to examine the economic decisions industrial firms make in comparison to other uses.  Earlier in the industrial revolution, industry was heavily reliant on access to resources.  Manufacturing and related firms were very sensitive to location.  The firms desired locations with easy access to ports, waterways, and later railways to transport raw materials coming in, and products going out.

However, the advent of the Interstate Highway System and ubiquitously socialized transportation network have made logistical costs negligible compared to other costs.  Where firms once competed for locations with access to logistical hubs and outbid other uses for land near waterways in cities, they now seek locations with the cheapest land where they can have a large, single-floor facility under one roof.  This means sizable subsidies must be combined with the artificially cheap land to attract and retain industrial employers on constrained urban sites.

Additionally, today’s economy has become much more talent-based rather than resource based, and patterns have shifted accordingly.  In contrast to industrial, residential and office uses are still very sensitive to location.  In fact, residential preference for urban locations are increasing.  Likewise, most office and other commercial firms seek to locate where they can best attract talent or customers, or simply put, convenient to residential.  To the dismay of the politicians, blue collar jobs are destined to leave cities to seek cheaper land in less desirable locations.  We should expect industrial firms to prefer exurbs and sites close to negative externalities, such as near highways and airports where noise and air pollution drive out residential uses.  Efforts to stem the tide of these realities will surely incur dead-weight losses.

In a race to the bottom, prohibition of housing and other uses in PMDs drives the value of that land down to the point it can compete on price with the most undesirable suburban locations. That is, until a non-manufacturing use compatible with the wording of PMDs emerges to crowd out industrial.

We are are in an interesting time, and are witnessing the first cases where the long-term consequences of PMDs are beginning to emerge for us to witness.

Google and Chicago’s Fulton Market

Over the past two decades, Chicago’s West Loop has become one of the most desirable neighborhoods in the City.  Developers flocked to the neighborhood to take advantage of the neighborhood’s proximity to Chicago’s Loop, and abundance of underutilized warehouses waiting to be converted to hip lofts.  However, Fulton Market and meatpacking district on the northern part of the West Loop remained immune to the radical transformation.  Neighboring West Town, River West, and West Loop blossomed during the housing boom.  Was Fulton Market less desirable?  Far from it – meaningful redevelopment was forbidden.

As developers began converting West Loop buildings in the 90’s, the Randolph Fulton Market Merchants Association proposed the formation of the Kinzie Street Industrial Corridor.  The Association ultimately triumphed in their lobbying for the district, which formed a PMD to protect them from the encroachment of competing land uses.  They also won a Tax Increment Financing district to fund subsidies, and other programs aimed at enriching incumbent and new businesses in the area.

Then, along comes Google.  According to the wording of the PMD, “High Technology Office” is a permitted use in the Kinzie Street Industrial Corridor.  Google, in search of an office with large floor plates for its Chicago headquarters, chose to move into a former cold storage building in the Fulton Market that is being converted into office.

As a result of Google’s impending arrival, Fulton Market has attracted a flurry of speculative real estate investment as other technology firms, hotels, restaurants, and entertainment venues flock to the area.  Land prices have been driven up to extent that no matter how much the subsidy, Fulton Market is no longer an economically viable location for industry or manufacturing.  We should expect politicians to scramble to fight this over coming years, but extinction of Fulton Market industry is imminent.  Efforts to hamper market-forces, millions of dollars of wasted subsidies, and unnecessarily higher housing costs were sacrificed to achieve nothing of lasting value.

i3xnk4

Vibrancy Thwarted

Possibly the biggest victim of the vast prohibition on uses of land in Planned Manufacturing Districts are the neighborhoods in which they are located.  In her treatise, The Death and Life of Great American Cities, Jane Jacobs discusses the ingredients of what makes urban districts flourish or fail.  Jacobs makes the case that great urban districts typical have a diversity of primary uses, short blocks, diversity of the age of buildings, and sufficient concentration of people.  Districts aimed at preserving and fostering limited uses, such as PMDs, stand in the way of all of these factors necessary for the emergence of vibrant city life.

Most obviously, if residential and other uses are prohibited, a diversity of primary uses and sufficient concentration of people are impossible.  Since the optimal sites for today’s manufacturing and logistics firms are very large, single-story buildings, firms are likely to demolish older multi-story buildings otherwise desired by residential loft-lovers.  They are also prone to spread their facilities over several blocks, sometimes incorporation what was once a street into their property.

Clybourn Corridor, Elston Corridor and Goose Island PMDs

Inspired by Fulton Market’s sudden success, some developers have begun to set their sights on other well located PMDs.  These developers intend to snatch up the preserved land at artificially low prices and entice technology companies to come.  One such developer, South Street Capital intends to do just that in Goose Island, straddled between River North and Lincoln Park to the east, and River West and Wicker Park to the west.  Developers also have also been eyeing the nearby site of the former Finkl Steel Plant.

Ironically, it was Finkl who successfully lobbied for the formation of Chicago’s first PMD, the Clybourn Industrial Corridor.  In the debates leading to the formation of the PMD, light manufacturing firms and developers were opposed to protections.  Light manufacturing wanted to keep the option to sell their land to developers and move to the suburbs.  As reported by the Chicago Reader:

On the other side were a handful of industrial-property owners from the area and their battery of lawyers, who argued that Eisendrath was offering them protection they do not want. Someday they may want to move, they say, because their buildings are too small, old, or obsolete. And they want the right to sell to whomever they choose–builders of shopping malls, condos, town houses, it doesn’t matter–at the highest dollar the market will bear.

“I like doing business in Chicago,” says David Schopp, chairman of U.S. Sample Company, the second-largest manufacturing employer in the area. “But I don’t want to be restricted. I don’t think it’s government’s role to say who I can and cannot sell to.”

Now, it is Finkl who wishes for that option.

The southern part of Fulton Market, as much as zoning hampers it’s potential, should enjoy some vibrancy as adjacent uses spill over into the district. (further, we do expect the city to begin allowing more residential in it’s latest plans for the district)  However, without lifting the PMDs altogether, there is little reason to be optimistic about the Goose Island and Elston Corridor PMDs.  Unfortunately, development of the PMDs in line with current prohibitions will result in a large area devoid of residential uses and other essential ingredients needed to become vibrant districts.  The area currently lacks transit alternatives, so employees will get to work by car or bike, exasperating traffic on roads connecting Lincoln Park to the expressway. We cannot expect the area to be rescued by spillover from nearby residential areas, as the river acts as a border vacuum preventing interconnection and transit access is minimal.  Failure to remove the PMD before further development takes place will condemn the area to eternal dullness.

Chicago’s Goose Island, protected by PMDs

Other PMDs

There are a total of 15 PMDs in Chicago.  The PMDs mentioned above, in addition to the Chicago/Halstead PMD, are the PMDs that have successfully thwarted residential encroachment.  Because of their undesirable locations, the remaining PMDs are impotent at altering land use patterns.  Impotent PMDs only serve as a mechanism for politicians to pay lip service to manufacturing jobs, and window dressing that goes hand-in-hand with subsidies.

I often hear urbanists defend PMDs, repeating the Urban[ism] Legend that we need them to keep manufacturing jobs in the city.  We urbanists can do much to make these districts vibrant if we overcome our nostalgia for urban manufacturing and come to terms with how dangerous PMDs actually are.  Economically speaking, PMDs can only serve the purpose of keeping land prices low enough to compete with undesirable suburban locations for industry. PMDs nonetheless do little to overcome the enormous economic forces repelling industry out from desirable locations in cities.  At worst, PMDs permanently plan the life out of otherwise desirable areas in the long run after serving their purpose temporarily.  At best, PMDs are impotent to drive down land prices in already undesirable places any further than they already are.

At a time when housing affordability is a major issue affecting cities, one way to remove barriers to increased housing supply is to abandon our counter-productive nostalgia for urban manufacturing.  PMDs abolish urban vibrancy, and it’s time for cities to abolish PMDs before it’s too late.

See also:

2005 Study by the University of Wisconsin-Milwaukee on the performance of the Clybourn Corridor PMDs

 

Glamour in streetscapes

A while ago I attended an Urban Land Institute event on development trends in Fairfax’s Mosaic District. A presenter from the retail developer EDENS described their strategy of adding “sidewalk jewelry,” a design technique used to entice shoppers to travel down sidewalks between stores. Having never heard the term before, it nonetheless stuck with me as I thought about retail developments that manage to create relatively lively pedestrian environments from the top down.

At Mosaic District, this street jewelry takes the form of signage designed to engage pedestrians, fountains, and planters:

Mosaic 1

mosaic_icsc_award

It’s certainly more aesthetically pleasing and engaging to pedestrians than the average strip center. While the typical strip mall has a parking lot for a set back, Mosaic District has a parking garage that allows the rest of the center to be more pedestrian-scaled. With the “sidewalk jewelry” framework in mind, it’s easy to see that many retail developers have embraced this trend toward focusing on the pedestrian experience once shoppers have left their cars at the center’s periphery. While Easton Town Center in Columbus has many of the same stores as any major mall, it’s outdoor shopping environment is distinctly different, attempting to emulate the “town center” in its name:

Easton town center

For shoppers who value retail ambience, these “lifestyle center” sidewalks provide a much nicer atmosphere relative to more dated strip center or shopping mall designs, but they can’t compare to environments where storefront decorations developed more organically. A recent trip to Quebec City reminded me of the sidewalk jewelry term, but there the visual treats that lure pedestrians down the sidewalk have much more texture than the shopping centers’ above because they are the result of an emergent order among the street’s businesses and residents rather than one developer’s vision:

Quebec-City-street-Canada

This type of street meets social critic Virginia Postrel’s framework of glamour. In her book The Power of Glamour, she explains that glamour is something that transcends our everyday life and transports us to better, different circumstances. She explains that shapes that evoke mystery carry glamour because they create mystery at what lies beyond. The fortress walls surrounding the Quebec City add a sort of magic to the city’s charming streets:

Arch

Quebec City’s glamour makes it appealing to tourists, but cities that are home to more productive innovation have streets with even more glamour, such as this Tokyo scene where each sign invites the pedestrian to find out what’s inside the business:

Tokyo

As Postrel explains, this glamour “invites us into a world without giving us a completely clear picture.” While people may dismiss the importance of glamour in cities as a frivolous quality, Postrel explains the importance of glamour in our lives:

Glamour is all about hope and change. It lifts us out of everyday experience and makes our desires seem attainable. Depending on the audience, that feeling may provide momentary pleasure or life-altering inspiration.

[. . .]

Glamour can, of course, sell evening gowns, vacation packages, and luxury kitchens. But it can also promote moon shots and “green jobs,” urban renewal schemes and military action. (The “glamour of battle” long preceded the glamour of Hollywood.) Californians once found freeways glamorous; today they thrill to promises of high-speed rail. “Terror is glamour,” said Salman Rushdie in a 2006 interview, identifying the inspiration of jihadi terrorists. New Soviet Man was a glamorous concept. So is the American Dream.

Glamour, in short, is serious stuff. It can alter life plans, even change history. And as a broad psychological phenomenon, it holds intrinsic interest. While rarely addressed in C-SPAN discussions, glamour is the sort of topic to which such 18th-century titans as Adam Smith and David Hume often turned their attention. It spans culture and commerce, psychology and art.

Land use restrictions do a lot to eliminate glamour from urban development through setback requirements, parking requirements, and height limits. Rules of the game that favor large-scale development over the environment that’s possible with the chaos of many small developments prevent the elements of surprise that glamorous streets have. Today’s retail developers are attempting to add glamour back into their products with sidewalk jewelry, but no amount of attention to design on their part will match the level of intrigue of the streetscapes above. Viewed through Postrel’s lens, rules that remove glamour from cities aren’t just bad for the pedestrian experience, but they also dampen what can be an important source of inspiration in our lives. If glamour plays a role in driving us to action, it may be one factor that encourages people to pursue their work in the place where they will be most productive. Rules that eliminate glamour from a city’s physical environment can ultimately reduce its contribution to economic progress.