Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Friday, December 09, 2016

Jay Forrester, Urban Dynamics, and unacknowledged tradeoffs between economic stability and social justice

While I knew already that Jay Forrester, a professor at MIT, was a founder of the field of systems dynamics ("Jay W. Forrester Dies at 98; a Pioneer in Computer Models," New York Times), I didn't know that he published a text, Urban Dynamics, applying system dynamics to cities, the focus being on complex systems being immune to simplistic approaches ("The beginnings of system dynamics," McKinsey Quarterly, 1995).

In Forrester's speech, he has this to say about what we now call affordable housing:
Urban Dynamics was the first of my modeling work to produce strong emotional reactions. It suggested that all of the major urban policies being pursued by the United States lay somewhere between neutral and highly detrimental in their impact, whether from the viewpoint of the city as an institution or from the perspective of unemployed, low-income residents. More, it argued that the most damaging policy of all was to build low-cost housing. At that time, this policy was thought essential to reviving the inner cities.

The conclusions of our work were not easily accepted. It took people several hours to come to an understanding of what urban dynamics was about. City officials and members of local communities would become more and more negative and emotional until they could see and accept the way in which low-cost housing was a double-edged sword for making urban conditions worse. Such housing used up space where jobs could have been created, while drawing in people who needed jobs. Building low-cost housing was a powerful process for producing poverty, not alleviating it.
That is very controversial, but there is no question that there is a lot of truth to it from a strict economic standpoint.

I am not saying don't build affordable housing, but if you want affordable housing to not overly impact negatively a community's revenue stream and costs, then you have to recognize the opportunity costs involved with affordable housing need to be countered with other actions that smooth over the economic impacts.

That's "development," and development that generates greater revenue than costs.  In most communities, residents believe that single family housing generates more net revenue when it actually costs money, while multiunit housing generates more net revenue than costs.  In DC, which collects income taxes, the average household without children generates net revenue for the city while households with children attending public schools are money sinks.

To deal with such costs, be it for affordable housing, great schools, or other public facilities and parks and transit that make the city livable, it means that the opportunity costs of "lopping a floor or two from a building, not having reasonable density bonuses near Metrorail stations, and not taking full advantage of the full capacity of build out in redevelopment opportunities have serious, persistent, and long term economic consequences that are not favorable.

Interestingly, a paper ("Urban Dynamics: the first fifty years,"System Dynamics Review, 1995) on five examples of application of the Urban Dynamics model has some model assumptions that don't necessarily pertain today, such as that all old housing becomes undesirable over time or that buildings as they age aren't able to be reused for higher value applications (Jane Jacobs' point that cities need a large stock of old buildings to seed innovation).

I found this discussion interesting, about a project in Concord, Massachusetts, because it is exactly the issue faced by the City of Washington today, in terms of the failure to acknowledge complex tradeoffs are required to fund the city and to pay for things people say they want, such as "affordable housing." In this particular case, people were concerned about Concord "becoming too popular," and losing the characteristics that made the community special and desirable.
Town goals and tradeoffs

The first models exhibited S-shaped growth patterns, with population equilibrium reached after exhausting whatever resource fueled community attractiveness. Instead of the “Land Fraction Occupied” hypothesis, we substituted housing costs, open space, schools, commuter access, town services and utility use as potential resource constraints. All proved initially attractive, only to ultimately turn negative when population grew to high levels. Little by little, the participants in the “Concord Project” recognized that they faced a very difficult choice: what to sacrifice and what to preserve?

In most communities, such tradeoffs go unrecognized, much less openly debated. Although the simple models did not pretend to forecast future growth, they did get across the point that growth was not inevitable. The town could control its own destiny. It had only to agree which problems to live with, which counterpressures to inflate, and it could lower its attractiveness as a target for developers and a magnet for regional population growth.

In a pluralistic society, such choices are virtually impossible to make. Each group, in seeking its own goals, unwittingly blocks others from achieving theirs. ... After mastering the dynamics of the simpler models, we plunged ahead with several larger models. One combined all of the attractiveness factors in order to examine their interrelationships. Another sought to disaggregate the single population level by age and income.

The models suggested that the tradeoffs would not be enough. The town could not supply affordable housing without fueling rapid growth. Nor could the town purchase sufficient open land for conservation without driving up the price of remaining land. High land prices coupled with restrictive zoning guaranteed high housing costs. Every option led back to the same conclusion: limiting the amount of housing effectively stopped further growth. Yet limiting the housing supply would drive prices sky-high.
Sounds like DC in a nutshell.

I guess I need to track down that book.

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At 2:15 PM, Anonymous charlie said...

Fascinating, thanks.

In many ways, not that different an approach of your "portfolio" approach to development, or the Larry Littlefield pension model.

Or the "strong towns" movement.

Or the Potomac Environmental Council, which of course is a bunch of rich old people in Virginia Horse country who don't want that to be become suburban and fund the Council for Smarter Growth.

Or to go even way back, Malthus.

All very zero sum simulations which leave out the potential changes of technology, society, politics in moving the equation to some other set point.

Interesting that his model on housing identified the problem with the inventory rather than social clustering, which is the now common explanation of why social housing failed in the 1970s (we stuck all the poor people in one place and they ate each other).

At 6:05 PM, Blogger Richard Layman said...

well, you talk about this a lot too. Financing, the ability to pay, the massive increase in social services/human services spending in DC.

LT, funding it at current levels isn't sustainable. Especially when people fight at every turn, adding population in new construction.

Similarly, if we want more and better transit, we need to be able to fund it and a sales tax isn't enough.


At 6:33 PM, Anonymous charlie said...

A bit off topic:

Yes, urban dynamics is all very sim city.

More links:

Politics, of course, is great way to split a pot.

At 2:57 PM, Blogger Richard Layman said...

1. Yes, the British cities have been so f*ed by the Conservative govt. and austerity it is unbelieveable. E.g., Liverpool's budget has decreased by something like 55%.

The mendaciousness is incredible. E.g., Cameron said, sell some of your assets. Or we're letting you charge more Council Tax, but the authorized percentage is = to a few percent of the total revenues foregone.

With the floods, the Conservatives lied about how their cutting the budget for local flood matters contributed to the flooding problems and deaths.

while I agree with the idea of devolution obviously, because parliament and the national govt. shouldn't be the ones deciding those issues, it's a shame that because Osborne suggested it, Labour was reflexively against.

2. re: UD, I don't fully agree with the Forrester point on affordable housing, but do with the recognition that it comes at a cost. The issue comes down to social justice. But also a recognition that (1) housing shouldn't be available based on the vagaries of where you are e.g., Yonkers vs. the Bronx; (2) poverty housing should be addressed at the regional/national scale; and (3) if you're gonna build it and maintain it, then you need to not reflexively oppose building market rate development of various sorts.

The paper looks interesting but I will say, my reading pile keeps getting longer and longer...

At 3:00 PM, Blogger Richard Layman said...

one of the interesting things to me when I did those articles on EU cities was looking at the UK and how little money the national govt. made available for "regeneration." And how EU structural adjustment funding was really important to cities like Liverpool.

Of course, it came up post-vote when Cornwall, which voted against staying, said, keep giving us that EU regeneration money!

(Like the people who say "hands off my social security." If you want to keep it, don't vote for Paul Ryan and his posse. Otherwise don't be surprised when they try to take it away. cf. Scott Walker getting rid of collective bargaining for progressive unions, not the police or fire fighters...)


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