Community-Based Economic Development

This week my family enthusiastically celebrates both Canada Day and Independence Day, wishing Canada a happy 145th birthday, and the US a happy 236th. We honor the effective portions of the collective community vision that made these two nations great! The oldest continuously occupied settlements in each country are St. John’s, Newfoundland & Labrador, at 429 years, and Acoma and Taos Pueblos, both in New Mexico, at 1,012 years.

The Peace Arch. Photo credit: Rachel Patterson

Considering oldest nations include the Roman Empire at 1,484 years, Ancient Egypt 3,000 years, and unified China 2,233 years old, their average age is 2,239 years. Assuming a 78-year human lifespan, that’d put Canada at about a 5-year-old human equivalent, and the US at about an 8-year-old. Isn’t it about time that we give our nanny states a rest?

Just as with diligent parents, governments put restrictions on its peoples to protect health, safety, and welfare. However, from time to time in certain arenas, just the opposite happens. Since relocating to Canada, I’ve noticed that it is much less of a nanny state than the US. Maybe it’s partly because Canada is a commonwealth, not a republic, leveraging the English system whose roots are 1,183 years old. That’s a 41-year-old human equivalent.

Playing with these numbers may be a fun holiday distraction, but there are a few other related numbers that are more sobering. Let’s look at some examples.

Pittsburgh, PA. Image credit: Steve Mouzon.

Risk and Return

I’ve written before about real option theory of land development. Generally in finance, beta (β) is the volatility of an asset in comparison to the market. As beta decreases, the required rate of return also decreases, because people don’t need to be paid so handsomely if they aren’t taking as much non-diversifiable risk.

However, neither governments nor bankers invest based on levels of urban risk and return, partly because they are only recently being quantified. Take for instance our investments in infrastructure over the last 60 years, where wide, fast roads were assumed to be high return investments. Instead, they have failed to pay for themselves, leaving us with an estimated $2.2 trillion of infrastructure repairs needed to get above our current grade of a “D,” last time American Society of Civil Engineers checked.

Looking at ROI on transportation investment, the more walkable the place, the greater return it provides. And yet they generally have lower β over time. To correct this misalignment, bankers need to retool deeply homogeneous bundled mortgages into the new world of mixed-use projects that generate the highest levels of walkability.

Over time, “each step up the walkability ladder adds $9 per square foot to annual office rents, $7 per square foot to retail rents, more than $300 per month to apartment rents and nearly $82 per square foot to home values, ” according to Chris Leinberger.

Certain federal programs are doing a great job of aligning risk and return in local planning practices, including the HUD-DOT-EPA Partnership for Sustainable Communities and TIGER grants.

But what else can be done at the local levels to ensure more resilient economies?

New Haven, CT. Image credit: Steve Mouzon

Community-Based Economic Development

Rarely can a city planning conversation be had these days without the topic of economics being a big part of the deliberation. We can’t justify spending any government money unless there are long-term returns that are in line with and actualize the collective local community vision.

So how do initiatives like zoning reform and urban design spark local economies? By allowing walkable, compact, mixed-use, resilient development, at the scale of the lot, block, neighbourhood, and region. Changing the law to allow urbanism by right makes walkable communities go “in the money” for several reasons, including decreased uncertainty, shortened planning and approval processes, increased flexibility, and increased long term asset value.

For best results, urban designers and coders should collaborate closely with an economic development team who can leverage the codes and plans to build stronger local economies. The form-based code then becomes an important part of the city’s business plan to get those businesses to be in character with local development and in line with local vision. (Check out Geoff Dyer’s Back of the Envelope series for the urban design particulars of nurturing walkable shops and hotels, and watch for more on upcoming Thursdays.)

Simplifying somewhat and taking inspiration from our recent work in Ranson, the economic development team is usually looking to facilitate several dynamics:

Charlottetown, PEI. Image credit: Steve Mouzon.

1. Get more money to circulate – cultivate local economies. This often includes developing a retail program for downtown to attract residents to live within walking distance and expand civic, employment, shopping, and entertainment opportunities. Tools usually include consolidated marketing, incubation, micro loans, Community Enhancement District, Downtown TIFF, Public Private Partnerships, technical assistance, and farmers’ markets.

2. Bring money in from outside – increase exports. Undertake measures to increase tourism and educational offerings by attracting visitors. Consider processing, marketing, and insurance to enable agricultural, industrial, and other exports. Explore renewable energy assets including electric generation: geothermal, solar, biomass, landfill gas, and wind. Tools might include Community Supported Agriculture, Food Innovation Center, Multi-Use Community Center, and Cooperative Processing Facility.

Over-The-Rhine, Cincinnati, OH. Image credit: Steve Mouzon

3. Get money to relocate – attract new business and grants. Seek out employment centers including corporate headquarters and manufacturing, using form-based code Special Districts developed for large industrial. Encourage growth of new residents through increased transit connections, housing choice, and quality of life via walkability. Develop a regional and national retail business recruitment task force: participate in trade leasing shows for the International Council of Shopping Centers (ICSC) and Urban Land Institute (ULI). Consider retaining a third party business recruitment consultant. Develop Governmental Affairs Program with capacity building for grant applications and administration from all levels of government and private foundations for character-appropriate projects that implement the master plan and/or form-based code.

4. Right-sizing – be thoughtful with smart decline. Regardless of inventive economic development efforts, many rust belt and sunburnt cities are on the decline. In this case, consolidating development and shrinking smartly is essential. The principles of walkable urbanism become even more important, to allow some dense development within neighborhood structures, reduce parking requirements and other barriers to character-based development, and increase public transportation. Reforestation and local ag become larger players, as well as connections within the regional context.

5. Get diverse and stay there. Just as homogeneous development patterns of housing, strip mall, or big box monocultures didn’t pay off, economic diversity is more essential than ever in post-recessionary times. Remembering that β is non-diversifiable risk, keeping local economies diverse while in keeping with local character is essential for resilience. Even if it has to come from some degree of entrepreneurial incubation, diversify!

Made Local

Urban design and zoning is only as good as the collective local vision. The same goes for community-based economic development. You have to start with the community. Extract the local wisdom, and enable it as a matter of right.

It isn’t coming from the nanny state at the federal level. Or from the national consultants. The feds and consultants can facilitate, but transformative change is made local.

–Hazel Borys

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1 Comment

Filed under Economic Development, Experience, Financing, Planning and Design, Public Policy, Resilience

One response to “Community-Based Economic Development

  1. Reblogged this on Stupidityflowering and commented:
    A bright light this quiet morning.

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