The Changing Landscape of Urban Development Dr. Eric Anthony Johnson University of Delaware November 6, 2014
“To be successful today, cities have to develop their own unique formula that addresses the four dimensions of urban success: talent, innovation, connections and distinctiveness.” CEOs for Cities
Presentation Overview The purpose of today’s presentation is to discuss the changing landscape of urban development In doing so, we will discuss the following: Context of the urban development today An emerging development strategy using a housing authority as an example Questions and Answers 1/9/2015
The World We Live In Approximately 83 percent of America’s population resides either in a metropolitan area or its surrounding suburbs, according to US census and labor statistics. Strong demographic and economic trends also are contributing to a “new urbanism” that is changing how Americans want to live and work — both in our cities and their surrounding inner ring suburbs. A combination of lifestyle and economic factors, as well as heightened environmental consciousness, are all contributing to this New Urbanism direction. 1/9/2015
The Opportunity: New Urbanism New Urbanism is a movement that promotes the development of communities — both in urban areas and their surrounding inner ring suburbs — where people can live, work and play. Easy access to a range of housing, retail, cultural and employment options is an important goal. Developers borrow from traditional principles of neighborhood design, many of which are reminiscent of the small towns of the past, and add a few new twists for residents that appreciate amenity-rich living for today. Pedestrian-friendly design elements encourage walking and a greater use of bicycles, rollerblades, and scooters. Proximity to public transportation, such as light rail stations, can provide commuters with opportunities to reduce their dependence on personal vehicles, potentially reducing energy costs and conserving energy resources. 1/9/2015
Comeback of Urban Real Estate Development: From Suburbs to Infill Some core city developments help bring new vitality to underused areas near the urban core that previously may have been in decline. This approach enables potential residents and new residents to make better use of any existing mass transportation infrastructure, which can reduce pollution, conserve energy, and reduce costly dependence on personal transportation. Closer proximity to the city’s amenities provides lifestyle advantages preferred by Baby Boomers and Echo Boomers alike. Host cities benefit from improved land use when people are brought back to older parts of the city that may have been overlooked and underused. The increased city tax base helps provide funding for urban investments such as improvements to the public transportation infrastructure. As urban reinvestment progresses, demand for housing in these areas could rise, potentially increasing the value of multifamily developments located nearby. 1/9/2015
Attracting Talent, Industry and Investment to America’s Core Inner Cities United Airlines Quicken Loans Walgreens Comcast Cable These companies according to the Harvard Business Review (May, 2010) are getting a jump on the major cultural and demographic shift away from the suburban sprawl. The change is imminent, and businesses that don’t understand and plan for it may suffer in the long run, especially in attracting talent. 1/9/2015
Capturing the Opportunity As urban development history repeats itself, the urban core is becoming the locale for increased real estate investment and rehabilitation, job creation, entrepreneurship and innovation, private investment and economic growth. Some communities will be able to capture the opportunity while others will struggle. There is no one shoe fits all solution. Cities must continue to reinvent themselves if they are to survive in a rapidly changing global society. As Harvard urban economist Ed Glaeser points out in his book Triumph of the City , not every once prosperous city can achieve or be restored to economic strength. But some cities can be saved if their efforts are aligned to do so and begin to redevelop their urban development playbook which emphasizes creativity in the use of local tools and limited Federal support. 1/9/2015
Challenge of Capturing the Opportunity Limited Resources (Local, State and Federal) Many communities are working off outdated playbooks Political Fragmentation (Give me what I want now) Competition (Every community is trying to figure it out) Not much patience for planning around a comprehensive vision (Do something now) Growing social and economic inequality Adjusting to the changing context of redevelopment and job creation (Things are not what they use to be) Measuring economic impact and making good investment decisions that drive both financial ROI and SROI for the community and the private sector Collaboration, Collaboration, Collaboration
Resource Context: What Development Programs No Longer Exist? Urban Renewal General Revenue Sharing HUD Section 235 & 236 Urban Action Grants War on Poverty Programs (exception Head Start) Funding for CDC’s HODAG grants Empowerment Zones HUD HOPE Six Program Renewal Communities Tax Credit Program Congressional pork spending frozen New Markets Tax Credit Program on watch (No appropriation beyond 2014) Declining capital funds to Public Housing Authorities KEY IMPORTANT NOTE: Community development block grant program (under increased pressure with annual cuts to the program). Funded at $4.5 billion in 2000 and now funded at $3.5billion to be shared with all communities across America.
What’s Left? Direct Entitlement Grants (CDBG, HOME) CDBG (to be split among entitlement cities, urban counties and state CD programs) CDBG Section 108 Loan Program (Part of CDBG). Must pledge future CDBG funding as collateral for economic development projects Shift Public Housing to a Voucher system COMPETITIVE PROGRAMS EB5 Visa Immigration (Must meet jobs test) Limited Competitive Grants through federal agencies ( Transportation, USDA and EDA) for community planning Grants such as Promise & Strong community grants LOCAL DEVELOPMENT TOOLS (Based on Local Implementation and Creativity) TIF (Tax Increment Financing) Special Improvement Districts
Operating Context America's cities are economic powerhouses. "In the next 15 years, the 259 large U.S. cities are expected to generate more than 10% of global GDP growth," writes the McKinsey Global Institute. However, economic restructuring has taken a toll on many communities in America. Many places search for a recipe for prosperity, seeking to understand what appropriate action can be taken and what investments will yield consistent economic growth and development. These concerns are heighten by cultural, demographic and social and economic inequality trends which suggests furthering economic vitality in cities will be challenging. Communities have to make due with less The opportunity lies in an emerging emphasis on the core city as a place to invest, live work and play
Developing a Path Forward: A Paradigm Shift in Development Approach Thinking Traditional Emerging (Shared Value) Developers decide for public Public agencies decide before agencies what’s best engagement of private partners what the development goals are Public agencies give up valuable and how to best utilize limited assets and resources and receive resources. little if any in return for doing so. Public agencies retain valuable Revenue generation for the public assets and receive benefit for agency is not a priority. doing so. Social ROI is a secondary thought Revenue generation for the in the development process. public agency is a priority. Social ROI is at the forefront of the development process
Why a New Approach? Mission and Sustainability, the case of Public Housing Public housing authorities are facing a constrained fiscal environment. The central question facing PHA’s in confronting this reality is how to do so while pursuing four mutually conflicting goals: Housing and providing services to the neediest 1. Achieving diversity of income mix 2. Attracting private capital and complementary partners 3. 4. Generating new forms of revenue beyond HUD support 14
What PHA’s Get Today Operating Fund $6 Billions $5 $4 Administration Request $3 Industry Request $2 Operating Fund Appropriation $1 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Capital Fund $6 Public Housing capital Billions repair needs are in excess $5 of $25.6 Billion $4 Administration Request $3 Industry Request $2 Capital Fund Appropriation $1 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
What PHA’s Get Today $6 Billions $5 $4 $3 PIH Capital Fund PIH Operating Fund $2 Graph does not include $4billion in 2009 to Cap $1 Fund through ARRA $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The Future $18 Billions $16 $14 $12 $10 PBRA OCAF ~4% per year PBRA TBRA $8 $6 Graph does not include $4 $2billion in 2009 to PBRA through ARRA $2 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
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