The problems of success in the new urban era

Cities face challenges associated with rising values, an influx of more educated residents, and gentrification. Here’s what cities can do.

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In the mid-1990s, downtown Philadelphia had zero outdoor cafe tables. Today, more than 4,400 tables are available to enjoy the mid-Atlantic weather with a meal or a drink immersed in the City of Brotherly Love. Abundant cafe tables indicate how this city, and many others, are transforming.

In the latter half of the 20th Century, historic cities and towns in the US were dying. That brought disinvestment, declining values, rising poverty, and crime. The one silver lining was cheap land and low housing costs.

Since about 2000, the demand for living and working in cities built prior to World War II has skyrocketed. Investment and values are rising and crime is down. But cities now face the problems of success.

In a recent public meeting, a woman asked how Ithaca, New York–my small city—can remain affordable to long-time residents. Ithaca is not Brooklyn or San Francisco, but it has many of the qualities in demand today: Walkability, mixed-use, historic architecture, and abundant culture. Values are rising. The same question is being asked again and again in cities across America.

There is no easy answer. The demand for walkable urban places, outstripping supply, is likely to persist. We haven’t built many walkable places for a long time, and zoning laws and publicly built roads work against creating enough new places with similar qualities. Most US companies want to locate in walkable places, which is fueling continued relocation to urban centers. As jobs move, housing demand grows.

We live in the new urban era.

Gentrification challenge

The return of the middle-class and wealthy to cities is called gentrification–a loaded term. The people returning to cities and towns are typically not “gentry.” Most are college-educated, hard-working, and ambitious. They have dreams that can’t be satisfied on a suburban cul-de-sac. But the dreams have consequences for existing residents, who sometimes face rising rents and property taxes.

Putting the problem into proportion helps. Cities connected to the international economy like New York, San Francisco, Seattle, and the District of Columbia have pockets of extreme gentrification—where even middle class people are priced out. Extreme gentrification is rare. Even in these cities, most neighborhoods have not gentrified, according to a 2015 study by Governing magazine.

Neighborhoods that change from high-poverty to low-poverty are rare. From 1970 to 2010, only 100 neighborhoods nationwide made that transition, according to a study by City Observatory. Meanwhile, more than a 1,000 neighborhoods switched from wealth to poverty during that era. The problems of decay persist in American cities.

Gentrification presents serious problems, but it also offers benefits. For example: African-American children growing up in neighborhoods that transition from high to low poverty have incomes that are 30 to 40 percent higher than otherwise similar African-American children who grow up in neighborhoods that remain in concentrated poverty (Sharkey, 2013).

Displacement in gentrifying neighborhoods is no higher than in non-gentrifying neighborhoods (Freeman, 2009; McKinnish & White, 2011), in part because existing residents are motivated to stick around when neighborhoods improve. Absent gentrification, residents are displaced when buildings become uninhabitable and burn down due to lack of investment and arson. Look at Detroit, where miles upon miles of blocks have only a few houses left standing. One thing worse than gentrification is no gentrification.

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That said, we have an obligation to ease the pain of rising property values in urban places. There is no silver bullet—but there is a box of effective tools.

What can be done

• Provide transportation choice. The average American family spends 19 percent of their income on transportation. “Location-efficient neighborhoods,” where the car is optional, can reduce average household transportation costs to 9 percent of income, according to the Federal Highway Administration. Families that eliminate a car save about $9,000 a year in after-tax dollars. Providing more transportation choice–walkability, transit, bicycling, and car share included–helps families to reduce household expenses.

• Build more housing in walkable places. That’s economics 101, but implementing this concept is complicated. Many cities have long, difficult approval processes that could be streamlined. Moreover, cities and towns are hemmed in by suburbs. The suburbs have big potential to be made more walkable–but that means changing zoning codes and transforming streets to allow multimodal transportation.

• Build more affordable housing using tax credits, land banks, inclusionary zoning and other policy tools.

• Preserve the stock of older housing. New housing, built to modern standards, is usually expensive. As buildings become old, they are generally less expensive. To the extent possible, cities benefit from a preservation of old buildings and housing to maintain affordability.

• Build a range of housing types. The latter half of the 20th Century was dominated by large-lot single-family construction. High-rise buildings, which require expensive steel-frame construction, are associated with urban places. Small-lot single-family homes, townhouses, courtyard units, duplexes, shopfront houses, granny flats, and small apartment buildings can all be part of an urban mix. All of these types can be built with less expensive, wood-frame construction.

Missing Middle housing types. Source: Opticos Design

Missing Middle housing types. Source: Opticos Design

• Mitigate tax increases. While homeowners gain wealth from gentrification, they also face rising property taxes. Philadelphia has adopted a series of tax relief measures to help long-time homeowners deal with dramatic increases in property values.

As cities move into the new urban era, they face unfamiliar problems of success. These problems won’t go away, but they can be alleviated.


This column was originally published here.

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