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.

Monday, October 05, 2020

Community planning, capitalism, and housing/real estate development

 October is National Community Planning Month.


Population growth increases housing demand.  Single family housing zoning makes it difficult to meet that demand.  ArchDaily has an article, "When the American Dream Became the Urban Planning Nightmare," about how most cities are zoned for single family housing, which uses land grossly and how this contributes to significant price appreciation because of the mismatch between housing demand and supply in the face of significant population increases since the time when most cities were built.

In 1930, the US population was 123,000,000.

Today, the US population is about 328,000,000.

Attempts to upzone housing.  The New Yorker also has an article about planning, "The Plight of the Urban Planner," suggesting that the planning profession has an opportunity to "right itself" if it can be successful in addressing and correcting "the housing.problem."

I wish it were so easy.

In developed places, so long as single family housing remains the dominant type, not much can change.  In such places, multiunit housing is being added, but usually only in areas currently zoned commercial and/or in transit stations catchment areas.

But most often, the housing that is being built is not dense enough relative to today's and future demand.  

This 3 story apartment building in Salt Lake has retail on most of the first floor.  It's in a district of single family housing, but in the neighborhood commercial district and is served by transit and is close to downtown.

Relative to housing demand and the need to support the commercial district and transit, the building should be five stories, and more residents would support all these objectives.

But if 1-2 parking spaces needs to be provided for each unit, because few people travel on foot, by bike, or transit, it quickly becomes uneconomic to build more densely as the provision of parking becomes increasingly expensive if it has to be constructed underground.

So housing demand remains greater than supply, and prices continue to rise.

More population reduces automobile dependence, supports transit, walkable neighborhoods, and locally serving commercial districts.  And lack of enough concentrated population (we don't have to call it density) is the primary reason it's difficult to build walkable communities and/or walkable neighborhood serving retail districts as well as successful transit. Without population density not dependent on the car, transit, walkability, and retail can't reach critical mass.

OTOH, since most households don't have a lot of wealth, real estate appreciation is one of the only ways to build the household wealth portfolio, so many residents are fine with constrictions on housing supply.

Even if they argue in favor of affordable and/or access to lower priced housing, so long as it is built somewhere else.

Housing policy as an illustration of economic illiteracy.  I joke that politics is about doing everything possible to ward off the recognition of how economics works--constrained supply raises prices.  Or not charging enough or at all for something (e.g., parking, pollutant discharges, etc.) increases its consumption.

Elected officials understand how more housing provides greater revenues to cities, and at least over many decades, contributes to housing price stabilization.  

But it is the rare politician that is willing to explain this to residents fighting change, not because they are "against housing" but because they want to "preserve neighborhood character."

Is this the fault of planners?  It's not fair to blame planners for this.  Planners are caught in what in social psychology is called boundary spanning, having to satisfy different interests (developers, public finance, elected officials, residents) usually with conflicting goals and objectives.

1300 Block of Rhode Island Avenue, Washington, DC.

Mixed housing types.  Before 1940, it wasn't uncommon for neighborhoods to be a mix of housing types, with small and medium apartment buildings alongside a range of sizes of single family housing, including carriage or alley housing, duplexes, and courtyard housing.

It seems that changing the zoning to allow for a greater diversity of housing types would be a simple change.  That's what Minneapolis has done, and Seattle has done this in some areas too.  And the State of Oregon.

Incremental change won't change much.  But change incrementally will take decades to have much impact, and by increasing the value of the land today, because of the increase in development rights, won't miraculously lead to less expensive housing.

215 Boylston Avenue East, Seattle. 17 studios were built on this 2,700 s.f. lot.

In Seattle what's happening is different, the demolition of single family houses and the insertion of smaller apartment/condominum buildings, usually with modern architectural styles at odds with the architectural designs that were dominant when the neighborhood was first built.  

It's a much more significant change, a rezoning from single family housing to multiunit housing.

Building more intensely by transit.  The New Yorker article starts by discussing a different policy, the attempt in California to make it easier to build more densely in areas served by transit.  The initiative failed, as a coalition came together of landed residents who fought wanting to keep neighborhoods unchanged and "anti-gentrifiers" who saw the initiative as "rewarding avaricious developers" rather than resulting in the production of more housing.

Real estate developers: it's their fault, right?  It goes on to discuss a range of books about planning and the role of real estate development in shaping cities and driving what urban planning does.

While the author mentions the classic books Death and Life of Great American Cities and The Power Broker, rather than mention Urban Fortunes: Towards a Political Economy of Place, which outlines what the authors call the Growth Machine and how city political and economic elites are united on a pro-[real estate] intensification agenda because city revenues are dependent on property taxes, it cites the more recent Capital City by Sam Stein.  From the article:

But Stein’s special aim is not just to show how real estate controls everything, which, if you were halfway paying attention during the financial crisis—rooted as it was in the predations of housing markets—you already know. His principal point is that the power of the real-estate state flows from the dynamic between development and the profession of city planning. Planners are usually thought of as bureaucrats, though sometimes they take on the aspect of legend: Baron Georges-Eugène Haussmann, who tamed rebellious Paris into wide avenues that couldn’t be barricaded; imperious Robert Moses, who pummelled New York with expressways. Stein’s planners are at once lesser and greater than these. Though they may look like mousy cubicle denizens—determining the right sort of window treatment for a historic house, or calculating the Area Median Income for a smattering of affordable units in a luxury building—they’re more influential than they appear. Planners, he writes, “are tasked with the contradictory goals of inflating real estate values while safeguarding residents’ best interests.” The position is an inherently uncomfortable one. But planning holds out the promise that the future is, at least in part, knowable. Explicit in Stein’s narrative is the idea that a different, more democratic kind of planning might lead us to more democratic kinds of cities.

I haven't yet read that book, but I doubt it is as dispassionate about this dialectic around local public finance and how it exists within capitalism.  

The original Growth Machine journal article, which was expanded into the book, is here:

< -- "City as a Growth Machine: Toward a Political Economy of Place," American Journal of Sociology, 1976

Public finance and property tax revenues.  Municipal finance is dependent on a successful real estate market (and as blogreader EE says, "developers are like sharks, who if they stop moving, die; Developers have to keep building, just like sharks keep swimming").

-- "The real lesson from Flint, Michigan is about municipal finance," 2016

In the US form of capitalism, the "state" plays a minimal role in housing production.  Sure planning is important.  But in the US form of capitalism, the state is not the primary constructor of housing it is dependent on the private sector.  Although the state aids the production of lower cost housing through inputs such as free or low cost land, density bonuses, and financing.

In a profit focused system, real estate developers will build housing for more expensive segments of the market, because it is more profitable. That shouldn't be surprising.

Vienna and Singapore and Helsinki.  By contrast, in Vienna, while the city is no longer the primary constructor of housing as it was 100 years ago, it still plans and directs the construction of housing, guided by the principle of housing as a social right, rather than as a mechanism for building household wealth.  (Typically, property taxes are quite low in Europe and not the primary source of local government revenue.)

-- "Learning from Vienna and Vienna's Social Housing Model," 2013

-- ""How Vienna Cracked the Case of Housing Affordability"," The Tyee

Note that Singapore's housing model has some elements from Vienna, but also allows owner-tenants to benefit from housing price appreciation.

-- "Why Singapore Has One of the Highest Home Ownership Rates," Bloomberg

Helsinki and other cities aren't active constructors of housing, but when they do planning, from the outset they divvy up redevelopment sites as a mix of for profit and social housing tenure forms, where certain sites are given to social housing organizations to develop as 100% affordable housing.

The US form of affordable housing production.  By contrast, the focus of "affordable housing" policy in the US is a small proportion of units--usually 10% or less--being included within for profit housing developments. (This is called inclusionary zoning.) This mixes income levels within a development a bit, but doesn't produce significant numbers of low cost units.

It's not an unholy alliance so much as the reality if you don't have community development mechanisms (organizations, financing, land) dedicated to achieving non-market related goals.

Note that there is a separate social housing sector, but it tends to operate in weaker real estate markets.  In high value markets, federal, state and local housing policy defaults to the market, and provides some inducements for the production of a modicum of units through inclusionary zoning.

Planners didn't create capitalism.  But they have to deal with how it is effected in the United States. But yes, lots of policy elements--segregation of housing choice options and financing, allowable density, homogeneous zoning, the dominance of single family housing zones, alongside significant growth in the US population, capital markets, a land use policy centered around automobility--contribute to the state we're in today.

Planners can offer policy responses, but at the end of the day, the decisions are made by others.

-- "Planning the Capitalist City," pages 18-24, Richard Foglesong

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At 3:02 PM, Anonymous charlie said...

Good summary.

Quick comment: The US (somewhere around 1970) decided that we as a country wanted to best housing in the world. And generally we have it. Everyone wants it! Japan, China, Europe. Land, parking, appliances, multiple bedrooms with en-suite bathrooms, etc.

I'd tie it into my obsession with the dollar as a reserve and a few other thing (30 year mortages) but just leave it there. We have that the world wants for housing.

The flip of that (leading to a critique) is housing in the US is still very cheap. Urban housing in a bargain. NYC and SF are the only ones on a global list.

So I'd say I could agree with your urban economic model, I'd also say it is largely useless if you don't account for the other 95% of the housing market.

So I'd largely rephrase the question as not why the economics don't work - or rather why the accounting doesn't work -- but rather why the US continues to fail at building urban areas.

And that in the context of a a 20 year mini urban bubble that we've been going through. A bit stronger in DC due to "rebound" that we've talked about but we are talking nationswide.

I do think Alon Levy's argument that the inability to build and sustain urban areas is more of a weak state capacity issue than a dollar or cents issue. Yes. you've got to have a strong state invest multiple billions in things like transit to move choice consumers over from cars.

You kind of address that in the planner part of your argument, and its more grounded in reality that Levy, who is just starting to understand the underlying chaos that is American federalism.

(I mean, if you watched any Western you know the little nice town people in white picket fences are always at risk from the chaos outside of town until the lone outsider comes in and saves the day.

Having the state capacity to move gasoline prices to Candanian levels is just an example.

The piece you referenced some weeks ago on what happened with block grants is another example.

And to go back to global cities, you want development you need to things far more expensive -- and not waste your limited government dollars on warehousing the poor in cities. As long as the politicians want to keep the poor in cities so they can keep voting for the same cats -- well, you're not going to change.

Not trying to be oppositional - as I said its a good summary of your current views. Probably just lashing out as I contemplate the end of days.

At 9:43 AM, Blogger Richard Layman said...

Wow. A lot here.

1. As I always tell you, I am not good at macroeconomics. Although I do understand that the $ as the reserve currency affords the US comparatively cheap interest rates, which has driven the exuberance in the housing market for a long time.

The other benefit to finance comes from the world's chaos and the comparatively safe nature of investment in the US vs. the home countries.

Anyway, did you see this?

Pretty deep.

2. But the thing about the US form of housing market is that it doesn't use inputs very efficiently, and it requires automobility, which furthers inefficient use of resources, and it makes it harder to deliver community and quality of life that goes beyond what's present within the four walls of your house.

SLC is really interesting. We don't live in the richest areas of the city -- in the foothills of the mountains, big houses with valley views. But we live proximate, still in the highest $ housing zip code in the city.

In this area--you don't see it so much in the core--there is seemingly a greater focus on living in your front yards.

I've mentioned this. People have lawn chairs in their front yards, sometimes things like badminton nets, swings affixed to trees. Kids can bike in the street, etc.

And it's walkable even though for the most part people drive, and it's not convenient to do your business on foot, although it's possible (grocery stores half mile away both east and west, etc.).

But it's a non-compact life. I was surprised during the first awakening from the coronavirus when Salt Lake County was ranked as one of the places where people were traveling great distances. Stuff is "close" in terms of automobility. A Sprouts is 4 miles away. A World Market 9 miles away. A bunch of Smith's Markets are a few miles away in almost every direction. Except for a couple streets, traffic isn't bad. (We're actually close to I-80 so we can drive back to DC!!!!). Etc.

There are a couple places in the city, smaller, but more comparable to an Upshur St. or the core of Capitol Hill.

But to achieve that more generally is almost impossible when the car is so overwhelmingly dominant.

I don't see a lot of bike as transportation use. Limited use of transit despite the county being a leader in "metropolitan city era" transit development.

At 10:06 AM, Anonymous charlie said...

Yeah, and Roach had a similar piece in CNBC a few weeks ago.

He's a very smart guy, but too tied to China. 35% decline would bring USD back to pre-2015 levels vs major trading partners. That isn't the exorbitant privilege he speaks of...

From WSJ:

"America’s Main Street Revival Goes Into Reverse, Cutting a Small-Town Lifeline"

The automotive life you describe is what most Americans experience, outside of small towns and maybe 10 metro areas. It's a great lifestyle albeit wasteful. The real issue is doesn't scale -- keep growing and you get Fairfax County or even worse California.

I think the infill economics are what you saying in a very few places; but the question is how to you make a SLC (or Grand rapids to use another example) more urban. Both have stronger non-state institutions (Mormons, Betsy DeVos and the Amway money) but how strong is the state?

At 10:10 AM, Blogger Richard Layman said...

I have never termed it "state capacity" but that's a nice succinct way to put it.

(F****** a, maybe writing about this, although Ezra Klein has done some as I mentioned + that Andreesen piece, which I think is simplistic, terming it state capacity and the US failure to do infrastructure is a way for me to do a book.)

1. THE PURPLE LINE. I haven't gotten around to writing about it. But I think about it a lot. WHAT A F****** DISASTER. I haven't quite managed to write about it yet because I am so flabbergasted.

I will use your "state capacity" term, credited of course, when I do.

But so was the Silver Spring Transit Center on a smaller scale. The Silver Line construction generally. The Silver Line's impact on the rest of the system. WMATA in general. Hogan (and Ehrlich's) wet dream for HOT Lanes which I don't think are particularly successful. Hogan's cutting of tolls, thereby depriving the system of revenue it will need when bridges, like the US 301 Nice Bridge connecting Maryland and Virginia needs to be replaced -- they dropped bike accommodation "because they didn't have the money."

(+ DC's refurbishment of schools)

+ Hogan's interest in Maglev (sure go for it) while blowing off transit more generally and the opportunity present within MARC specifically.

Talk about advertising the lack of state capacity.

That's why what they did in Oklahoma City is so interesting. It's the perfect example of a transformational projects action planning approach. (Like Bilbao, and Liverpool pre-austerity. And I guess Barcelona. Or the French promotion of light rail systems throughout the nation. Medellin. And to some extent Bogota with transit.)

It's Republican. They made the argument that to make OKC competitive and attractive to new business, while simultaneously making it better for themselves, they needed to invest.

Although rather than bonds, it's pay as you go through sales taxes. And it's not perennial. It's been through four phases, and there are gaps of time in between phases. But for each a program is developed. A vote is held. And there are various serious citizen involvement and oversight processes.

== continued ==

At 10:11 AM, Blogger Richard Layman said...

== continued ==

(Cities like Seattle have done similar but much smaller programs focused on transportation. Fixing roads, transit, etc. That was an earlier model for me. Separately, Seattle's public utility is another great example in how it funds sustainability measures. Not unlike Medellin.)

Portland has done something similar to OKC, although it's not quite so wrapped up into a branded program. But definitely around transit and sustainability (e.g., energy, electric vehicles too).

What Portland has done is remarkable.

There was a piece a couple years ago in the Oregonian about how Seattle has surpassed Portland in terms of doing transit. And it's true that Sound Transit continues to expand and a few years ago the extension to Capitol Hill resulted in a doubling of ridership, plus all the things that Seattle proper is doing with transit expansion (funding it separately from the County) and biking.

But compared to the DC area, I think that Portland is really underselling how f****** successful they are -- a model of state capacity so to speak.

While the DC area f*ed up on the streetcar, Portland not only was the first city in the country to do modern streetcar in a serious way, they've been expanding it (even if their attempt to develop streetcar industry failed--too much lack of predictability in the US market for streetcars to make it work independently, whereas the companies like CAF or Siemens or Stadler can do manufacturing in the US based on their overall footprint). They added the aerial tram to cross the Willamette River and serve the OHSU campus, which otherwise was topographically difficult to reach. They added commuter rail.

They built a light rail network. Sure, because of complicated two state politics they haven't been able to extend it to Vancouver.

But compared to DC's screw up with the streetcar, the Arlington streetcar debacle, the Purple Line debacle, and the failure to unite into a single commuter rail system, let alone an integrated fare card system including rail, Portland has a lot to be proud of.

At 10:26 AM, Blogger Richard Layman said...

We fail at building cities because we have an either/or approach. It's cars or transit. Not both. Homogeneous development paradigm.

In places like the UK and Germany they do both. (Obviously in part because they both are important vehicle manufacturers.) And granted in the UK they stint on transit and favor the car. But legacy transit is still decent, as much as they keep f*ing it up with privatization. E.g. as much as people complain about railroads in the UK, it's far better than the US. You can get around the country on railroad. You can't in the US. (Granted it's a small country.)

Germany doesn't stint on transit, at least in the major cities. And it still is "Fahren, fahren, fahren auf der Autobahn".

Granted I haven't been to Berlin, Frankfurt, or other cities, but their transit systems are comparable to Hamburg's and Hamburg is like Paris or London.


And you mention Canada and gas prices.

But also look at Europe (not that you don't know). You can have expensive gas, still have car culture, and use the excise taxes to support sustainable mobility.

You can allow cars but make it very expensive, have to have proof of parking, make getting a driver's license difficult, make the motor vehicle operator primarily responsible for crashes with pedestrians and cyclists, charge high purchase excise taxes, etc.

Yes, neoliberalism in both the UK and US is reaching its apotheosis in terms of debilitating the state.

So it can't do nuthin' especially build infrastructure.

The FT article gets at something I've been trying to express for awhile, but haven't been able to do so succinctly.

Neoliberalism could work because it was able for a long time to draw upon/consume/use up previous overinvestment by the state, like the New Deal, the Interstate Highway system, etc.

We invested a lot into infrastructure and government capacity and then started stinting and stinting and eliminating capability.

It's not just about slack resources and redundancy but that too.

Eventually the elastic in your underwear stops holding them up and you have to get rid of them. Or finally, there's nothing left in the toothpaste tube or the stick of deodorant no matter how many mornings you squeeze out the last drops. Or razor blades. Eventually, the dullness is too severe and you cut yourself too much so you have to put in a new blade.

At 10:34 AM, Blogger Richard Layman said...

Also about private equity and financialization of the economy. The comments section has two good cites.

Makers and Takers..... Rana Foroohar.

Sabotage......Anastasia Nesvetailova

At 10:39 AM, Blogger Richard Layman said...

Speaking of state capacity, obviously I can't go see the new MLK Library.

There's been a couple of super positive articles in the Post.

All I can think of is what could have been achieved had the city been willing interested and capable of vision.

The library director conceded that my ideas and concept were superior but couldn't be conceived, although he put it more on the program being severely limited by being forced to use the same building, which didn't have much capacity for expansion.

... but while the city keeps building new libraries, they aren't doing all that much in terms of expanding the program in new ways.

F* even Brighton (not quite at the scale of Grand Rapids--Michigan's second largest city since Flint tanked). I saw the mention of this in a Politico article about the Congressional District race there.

At 11:02 AM, Blogger Richard Layman said...

I can't speak of GR. Yes both places have incredible philanthropy. DeVos but I think Meijer too. The furniture company wealth. Etc.

But at the same time it's incredible how much DeVos f*ed schooling in Michigan with charter schools. (It's sort of like the impact of Brexit on the UK. "Self-own". A couple years ago there was an NYT Magazine cover story on the Michigan charter schools. OMG. I don't know what other nasty stuff they do.)

Mormons are really interesting. It's partly their business orientation. They seed areas by building churches. And the intent, not unlike Orthodox Jews, is that you should be able to walk to church.
I don't see that. But it's amazing how many churches there are within my area. It's because once it's too far to walk, you build another church.
It's amazing how many there are.

There is a paid column by a real estate person in the City Weekly that's pretty good. She wrote a couple months ago about how the church is building a new set of buildings in a particular area out in the sprawl and how you can be sure that there will be growth around it. So invest in that area she said.

SLC benefited during the recession by the Church's building of a $1-2B City Creek Center, a mixed use shopping district. They did it because investing at the time had been shifting to a different area of the city and they were worried that the area around the big Temple would become seedy.

And it was patient capital. They could overinvest in quality. And they weren't in a rush to sell condos etc. They could hold out for better pricing. Etc.

(You probably saw the article in the Post about their $100 Billion investment account sitting around.)

But this is very much "individualistic" and communitarian only within the context of the church. Not in building non-church centric community.

Otherwise the State Government is pretty constrained in being able to do stuff vis a vis the Mormon political domination (the Legislature is mostly men, 70%+ of the Mormon denomination).

Roads and the airport, yes. Transit, yes, but TRAX is polycentric so it doesn't have the concentrating effect I clamor for. And while there was talk in the legislature of doing a broader state program for rail. (There is a commuter rail line that runs 7 days I think, from Provo to Ogden. It could be the foundation of a statewide program.)

And in Michigan, as manufacturing and therefore union employment declined the state shifted Republican and building stuff--uh, no.

Outside of philanthropy in GR and legacy Mott investment in Flint what really gets built there?

Although you have the various Detroit efforts. Which are great. the dude before Illitch doing theater restorations + Karmanos and Illitch + Gilbert.

Impressive. (Although all the coverage on Gilbert bugs me not because of what he is doing but because it fails to acknowledge that his effort is at best the third phase of these investments.)

But Detroit has "been down so very damn long"* that it will take billions before you can see significant change. (Although I have to stop thinking of what I remember as the city's heyday--I didn't know it was in decline--when I was a child.)


Plus the racism and oppositional approaches of Oakland and Macomb Counties.

Obviously the kind of demonization employed by Trump vis a vis cities has been going on for decades in Michigan. Not just for Detroit, but Flint, Pontiac, Saginaw, Benton Harbor, Muskegon, etc.

And that kind of anti-city approach dominates most states.

Why can't we just "live and let live." By that I mean let cities be great. And that doesn't mean that rural or suburban areas can't be great too.

And that focusing on sustainable mobility doesn't somehow mean that automobility is absolutely execrable, just that it doesn't work well for cities.


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