Kaufman Management Center
44 West 4th Street
New York, NY 10012
Thanks to David Schleicher for leading this week’s discussion on the “The Life and Death of Growth Machine Cities.”
Housing has become very expensive in a number of metropolitan areas surrounding some of America’s most productive cities. The lack of affordability is at odds with prior notions of “growth machine cities.” Growth machine cities are those that, captured by powerful developer interests, continue to build new residential and commercial space. Adherents to this view of big cities believed that, even if exclusionary zoning prevented new construction in the suburbs, center cities would always be an ample source of new housing.
Schleicher argues that the “growth machine” story has failed to play out in places like New York City due to the lack of strong political party competition. In the absence of strong political parties, urban development outcomes are determined not by powerful developer interests but by procedures in which city council members largely determine land use decisions within their districts. As a result, not-in-my-backyard (NIMBY) opposition ends up dominating housing development outcomes. Urban neighborhoods end up looking more like a bunch of exclusive suburbs than the constituent parts of a growth machine city.
By constraining the supply of housing in big productive cities like NYC, NIMBYism drives up rents and prices — effectively shutting out many families that would otherwise choose to live and work there. Making such cities more affordable and inclusive would require land use reforms and Schleicher suggested several, including Tax Increment Local Transfers (TILTs) and Zoning Budgets:
TILTs would reward neighborhoods for approving socially beneficial development schemes. If a community board or council member approves a project, the property owners within the district would be entitled to a percentage of the tax increment created by the new development for a number of years. Essentially, this allows existing people in the neighborhood to share in the benefits of development without driving up the costs of building for the developer. TILTs would also give the city useful information about proposed projects. If a neighborhood persisted in its opposition to development in the face of a TILT, it would be evidence that the development proposal may truly be a bad idea.
Zoning Budgets: At the beginning of each year, the city would decide the number of new housing units that need to be built. The mayor would set the budget, subject to an up or down vote by the city council. Until the target is met, the city would not allow any downzonings (a reduction in the density of housing in a given neighborhood). Once the target is met, downzonings would have to be offset by upzonings elsewhere.
Both of these policy ideas are fleshed out in Schleicher’s recent paper City Unplanning. Schleicher also described ideas from a forthcoming paper entitled City Replanning which we will cover on this blog once the working draft is publicly available. For more on Schleicher’s work and the issue of affordability in NYC, see my previous commentary for City Journal.