Financial Times article: "Why the urban poor will be forced to leave big cities"

 -- "Why the urban poor will be forced to leave big cities"

Thinking back to previous writings, I realize I've discussed this in two different ways, equity and economics.

Economics.  The economics argument is pretty clear.  Since the 1950s, the reason that the poor congregated in cities is because when city land values declined in the face of suburbanization, the impoverished could afford housing, especially as desperate property owners wanted tenants.  (Before the 1950s, most people lived in cities anyway, so they were a mix of all classes.)

Now that residential choice trends include cities (I won't say "favor" but now cities are seen as equal or superior to suburban location by many segments of the housing market), urban locations are seen as desirable.  

In such situations, the poor will be outbid. 

I've written this for years, but more in terms of the middle class.  

-- "Exogenous market forces impact DC's housing market," 2012
-- "Applying the super-gentrification thesis to San Francisco, Santa Monica, and other cities experiencing hyper-demand," 2014
-- "The nature of high value ("strong") residential real estate markets.," 2017
-- "Why "gentrification" is visible now... the Diffusion of Innovations Curve of Everett Rogers," 2018

As urban neighborhoods become more desirable at the scale of the metropolitan residential choice landscape, prices will go up, and people who had been able to afford to live there will be outbid.  In short, the highest wage earners are driving the market in the "best" neighborhoods, not average wage earners. 

Equity.  The counterargument is equity, that all people should be able to live in the city, regardless of income (see the "right to the city" arguments" originally articulated by Henri Lefebvre, and extended by people like David Harvey).

In a market economy for housing, to ensure a place for the economically less well off, that requires public intervention to build, own, and operate housing, as well as other subsidies, such as vouchers for people to pay for private market housing.

Municipal economics and low value housing.  On the other hand, since cities are geographically circumscribed by other municipalities, they can't grow (with the exception of cities like Houston, Oklahoma City, or Charleston, South Carolina, where there are more liberal annexation laws).  Since they can't grow, there is a ceiling on their ability to generate revenue.

Property taxes are the primary revenue source for local jurisdictions ("The real lesson from Flint, Michigan is about municipal finance"), hence the motivation of local political and economic elites to focus on land use intensification, which is the foundation of the "Growth Machine" thesis about the politics of cities ("A superb lesson in DC "growth machine" politics from Loose Lips (Washington City Paper)").  

Balancing equity and economics.  Devoting large tracts of land to low revenue generating property is economically problematic.  To me, the best way to balance equity and economics for low income households is a mix of housing types in neighborhoods--from basement and attic units, to carriage houses, and apartment buildings of various types, alongside single family housing.  This allows for a mixing of incomes with a lot less subsidy.

On the other hand, higher income households prefer not to live by low income households.

Pandemic related shocks: more people become relatively poor when it comes to the urban housing market.  Where the change in the makeup of the market is different from past recessions is the outmigration of not the poor, living in subsidized housing, but the more precarious ("precariat") economic segment of the near/lower middle class.  For example, the people working in hospitality, retail, travel and tourism, entertainment.

Simon Kuper, the author of the FT article, distinguishes between the "workplace," "networking," and "playground" functions of the city, and suggests that the well off working from home will still be attracted to urban living, even if they have fewer retail amenities, as they are able to still benefit from agglomeration economies -- what he calls the "networking" or exchange function -- and the cultural and placemaking benefits ("playground").

Renting versus owning.  Kuper makes the point that renters have a short time horizon, 2-3 years, while housing buyers look at a 20-30 year time frame.  Renters leaving the city has a different effect on pricing compared to property owners leaving the city.  

Buying, when you have money, is attractive especially because when it comes to rock bottom mortgage interest rates.  Which is why  desirable neighborhoods in many cities haven't seen the same drop in housing prices that is happening in the rental market ("Rent: Where rents are rising and falling the most in big cities," USA Today").

The Information Age: cityspaces as sites for digital production.  I haven't liked past arguments by anti-urban critics like Joel Kotkin ("The Childless City," City Journal) criticizing urban living as more about consumption and entertainment and less about production and the workplace, but that is a more apt criticism going forward if work becomes less centered on going to "the office" ("Reimagining the office and work life after COVID-19," McKinsey).

But in any case, the city becomes an even more pronounced space for nonphysical production of "work."  What Manuel Castells calls "The Information Age," where computing and telecommunications support economic output that is less focused on goods.

Conversion of commercial space to housing.  Kuper suggests that unused office buildings and shops will be converted to housing, allowing the recently graduated to still come to the city and start their careers.  Interestingly, the Post just published an article about the conversion of a hotel in Alexandria to condominiums ("Shuttered hotel gives way to luxury condominiums").

Suburban Districts with urban feel: Cityness Index.  Zillow and Yelp have created a new index they call "Cityness" to measure the level of urban-ness in suburban cities, for people looking for alternatives to hyper urbanity in the face of the pandemic ("Zillow and Yelp Name Top Affordable U.S. Suburbs With a City Feel").  

Of course there are also the second tier cities, like Columbus, Omaha or Des Moines, which as Kyle Ezell wrote in the book Get Urban, have a number of walkable neighborhoods anchored by traditional commercial districts -- the kinds of places that aren't Williamsburg in Brooklyn, but cool enough, at least relatively.

The Cityness Index combines data from both Yelp and Zillow:

Yelp

• A mix of businesses similar to major cities 
• A diversity of restaurant and nightlife businesses 
• A diversity of arts businesses 
• A high level of consumer activity 

Zillow

• Ratio of typical home values in the suburb compared to the principal cities, defined as those named in the official Census MSA name (e.g., Dallas, Fort Worth and Arlington home values were used for comparison in the Dallas-Fort Worth-Arlington metro) 
• Ratio of typical home values in the suburb compared to the national median 
• Ratio of new for sale inventory in the suburb compared to the principal cities 
• Ratio of rental inventory in the suburb compared to the principal cities 
• Ratio of existing for sale inventory in the suburb compared to the principal cities

Lessons learned: European culture districts article series and certain recommendations relevant to DC Government's economic development and culture functions

The European Union flag flies at the Embassy of Greece in Washington, DC.

The series of articles I did on European culture-based revitalization as practiced in eight cities (Bilbao, Dublin, Hamburg, Helsinki, Liverpool, Marseille, Thessaloniki, Vienna) for the Europe in Baltimore project conducted by the European Union National Institutes of Culture Washington Cluster is finished (for the most part, there is an additional article in the hopper based on a trans-atlantic conference that was held a couple weeks ago).

The final article in that series is a long one, and includes a lot, my basic conclusions and understandings, an expansion of the original framework of the types of revitalization programs and the scale at which they operate, (some of the) things I missed, academic work I was introduced to that I still need to delve into more deeply, and "recommendations" for cities considering participating in the European Capital of Culture program, for Baltimore, and for the U.S. Federal Government in terms of how to better focus resources and attention on revitalization practice, in part by adapting certain programs of the EU--the Capital of Culture and Green Capital programs specifically--and a German program, the International Building Exposition--as diffusion and innovation models.

EU knowledge networks for urban improvement are superior.  Perhaps the biggest lesson is the difference between the European Union/European Commission and the US knowledge ecosystem--universities, the federal government, other state and local governments, nonprofits, etc.--in terms of knowledge capture and innovation diffusion.  It's not that various entities in the US don't generate tons of information on culture-based revitalization and planning practice more generally, we do.

The difference is that in the US we haven't created "practice networks" in the same way, and we don't capture the benefit of focused cooperative and collaborative "competition" between cities as a way to improve outcomes for all participants.

Instead, much of what we do in the US is "one-off" and repetitive (plus cheerleading is big and critical analysis is not appreciated) and we waste a lot of time and money doing similar things, but over and over.

Relevance to DC government's economic development and cultural activities.  It happens that some of the recommendations for Baltimore are relevant to DC, in particular how Liverpool has restructured its economic development and culture functions into two branded agencies directed by plans, Liverpool Vision and Culture Liverpool specifically, that combine various city government functions but also integrate the private and nonprofit sectors in particular ways.

Vienna does something similar.  It has a branded economic development agency, with two sub-brands focused on the creative economy (Departure) and on information technology and communications.

I hear that the same business schools that produced the city's "economic development plan"--which I was not particularly impressed by, are producing a similar study on DC's cultural offer and the creative economy.  I am not expecting very much, but I suppose I shouldn't be so negative.

First, what should happen is a restructuring of DC's economic development activities.  Right now, the various economic development projects pursued by the Office of the Deputy Mayor for Economic Development feel disjoint and political considerations shape the priorities in significant ways.  I'd like to see a real plan, on the scale of those done for Liverpool (and Bilbao).

Second would be a restructuring of activities related to the cultural offer as well as the creative economy.

Third would be to direct more of the city's tourism tax revenue stream to support the development of cultural assets at various scales throughout the city, including within neighborhoods, because cultural assets are what makes the city attractive both to residents and to visitors (e.g., what a paper about Thessaloniki calls "city break" tourism, which is what DC's "local" tourism offer is).

Fourth, I would consider the development of an IT-oriented sub-agency of the "economic development department" (Vienna does this) that also has the innovative thrust of Helsinki's Forum Virium Helsinki agency.  (Allegedly, DC's CTO unit does some of this kind of innovation too, although it's not evident from the DC.gov website design...)

Past writings.  I wrote a memo in 2006 (reprinted in 2007 in "Cultural resources planning in DC: In the land of the blind, the one-eyed man is king") that discusses how to reorganize the city's cultural resources programs in an integrated fashion.

The paper I wrote on culture districts and revitalization in 2009 is as relevant today as it was then.

Plus by early next week I will have another piece on "knowledge clusters"-'Innovation districts" in response to a report released earlier this week by the Brookings Institution, which will extend the other writings.  (The reality is that the precepts for "creating" culture districts are pretty much the same for knowledge quarters.)

Plus I guess this piece from a few months ago, "Naturally occurring innovation districts | Technology districts and the tech sector," presages my thinking about how innovation district concepts are relevant to DC.

the more things change, the more they remain the same: Could McCormick Spice Co. move back to Baltimore City?

The company was founded in Baltimore in 1889 and grew through acquisition.  They left the city for quarters in Baltimore County in 1989.  Their old main headquarters building in the city is long gone.

The Baltimore Business Journal reports ("Spice company McCormick is considering 4 states for its new HQ") that the company is considering Pennsylvania, Delaware, Northern Virginia, and Maryland as sites for a new consolidated headquarters.

The article states that easy access to an international airport is highly desired, mentioning BWI Airport outside of Baltimore.

Why not just move back to Baltimore City?

Too bad the old headquarters is no long around for a triumphant return by the company.

Also see "Silicon Valley Fans San Francisco's Flames" from the Wall Street Journal about how many Silicon Valley tech firms are building up their operations in San Francisco, to have better access to quality talent, the same issue that is motivating McCormick to consider options other than their very suburban location in Baltimore County.

-----
In my forthcoming summary article for the EUNIC Washington Cluster "Europe in Baltimore" project, I suggested that the next phase for culture districts is to move towards knowledge clusters, and I suggest that Baltimore City and the city's higher education institutions need to consider this.

From the article:

From creative clusters to "creative economies" and knowledge quarters/knowledge precincts.  The basic precepts for the development of cultural districts as a revitalization strategy were laid down beginning in the 1980s, starting with various projects in the UK.   Researcher-consultants such as John Montgomery, Simon Roodhouse, Charles Landry and others have written extensively about "the creative city," and culture district development, planning and management.

The "Five Star" Model of Knowledge Development-Innovation Districts.  Source:  Aalto University.

As more places took on culture-based regeneration projects, the field has continued to develop and advance and define culture more broadly and integrate additional disciplines into more wider scale "creative economy" initiatives which tend to be focused on what are called "knowledge quarter" initiatives, as opposed to arts districts.  Perhaps knowledge quarter initiatives should be considered "next generation" culture district initiatives.

The Knowledge Quarter in Liverpool, which includes higher education institutions, government research facilities, private research ventures, medical and health care institutions, and research parks is one example.

-- "Liverpool City Region's Knowledge Economy: Delivering New Opportunities for Growth

Helsinki's Arabianranta district, which is centered around the design oriented University of Art and Design (now part of Aalto University) is another as is the Alexander Innovation District in Thessaloniki.  (There are many other examples around the world, including the MaRS Discovery District in Toronto.)

The URBACT publication, Creating knowledge hotspots in the city: A handbook | Practical guidelines for developing campuses, science quarters, creative districts and other knowledge hotspots, provides guidance for considering the development of broader knowledge development focused initiatives.

and...

3.  Baltimore has an incredible array of higher education institutions and while research and technology development initiatives by certain of the institutions have high profiles and there is the Baltimore Collegetown effort focused on retaining students in the metropolitan area after they graduate, there isn't the sense of Baltimore's higher education institutions operating at the scale of an integrated "knowledge quarter."  This needs to be addressed. 

Presently, there isn't a network of all of Baltimore's higher education institutions, although there are many examples of cooperation between institutions on more bi-lateral bases.  And Johns Hopkins University's president, Robert Daniels, who previously had been Provost at the University of Pennsylvania, which has a wide-ranging revitalization program within its urban interest area ("The University and Urban Revival," Judith Rodin, former president of Penn) has stepped up JHU's interaction with the city at large.

The Baltimore Student Exchange Program, like the Five College Consortium in Western Massachusetts, lets students take courses at different colleges and universities in the city, and is an initiative that can be built upon.

Could Baltimore's higher education institutions develop a network comparable to the Committee on Institutional Cooperation linking the Big 10 universities and the University of Chicago or the Washington Research Libraries Consortium in DC?

4.  Definitely there isn't a university-involved initiative within Baltimore that operates at the scale of Liverpool's Knowledge Quarter.

Could such a district be created in Baltimore, as the next generation of "culture district" development initiatives?

The way that the Arabianranta district was regenerated in association with the relocation of the University of Arts and Design and how design and information technology initiatives developed around it is another example of university-business-community revitalization that is especially relevant to the Station North Arts and Entertainment District as a way to better leverage and heighten the integration of these educational institutions into a broader program.

Also, the City of Helsinki's information technology innovation unit, Forum Virium Helsinki, a public-private partnership but also an agency of the city government, is another example that Baltimore could consider in the development of broader knowledge innovation efforts.

That being said, the East Baltimore Development Initiative, in part focused on leveraging the opportunities present within the medical research community at the adjacent Johns Hopkins University Medical School and Hospital is an example of a nascent effort along these lines.

Two worthwhile Financial Times special reports

Most of the articles in the special report on Barcelona touch on various issues relating to the knowledge economy.

The special report on Urban Resilience addresses disaster preparedness and planning, including Superstorm Sandy.

WRT the latter, the uptick in earthquakes along the Pacific Rim is an advance warning of the possibility of serious earthquakes on the west coast.  So it's a good think that Mayor Gil Garcetti of Los Angeles is upping the city's game on earthquake preparedness planning.  See "It's a big task for Lucy Jones: preparing us for the Big One" from the Los Angeles Times.