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Durante las últimas décadas, la estructura de la economía de los EE.UU. ha cambiado, a medida que experimenta una continua reducción en el empleo fabril en general y un continuo crecimiento en el sector de los servicios, especialmente aquellos relacionados con los trabajadores capacitados. La distribución geográfica de la actividad también ha cambiado debido a que la población continúa moviéndose de las zonas noreste y medio oeste, en donde las estaciones son más marcadas, hacia las zonas sur y oeste, que son más cálidas. Finalmente, en las áreas metropolitanas, las poblaciones y el empleo se movieron de las ciudades a los suburbios, ya que los viajes en autobús y automóvil se han generalizado. Estas tres tendencias han provocado que muchas ciudades del noreste y oeste medio tengan ahora poblaciones mucho menores, economías más débiles, menos empleos fabriles y una incapacidad para compensar las oportunidades de empleo perdidas con las ganancias de sectores que se están expandiendo a nivel nacional. Estas son, hoy en día, las ciudades industriales históricas, que, con frecuencia, poseen una capacidad excesiva de infraestructura, una oferta de viviendas sin utilizar y una tensión fiscal relacionada con obligaciones asumidas en el pasado por sectores públicos que actualmente se encuentran muy disminuidos. En un reciente informe sobre enfoque en políticas de suelo del Instituto Lincoln, Regeneración de las ciudades tradicionales industriales de los Estados Unidos, sus autores, Alan Mallach y Lavea Brachman, analizan el desempeño de una muestra de estas áreas urbanas e identifican las medidas que han tomado las ciudades con más éxito para producir resultados más sólidos.
Aunque la decadencia de las ciudades industriales tradicionales posee causas comunes, el rendimiento económico de las mismas ha sido muy distinto en las últimas décadas, ya que muchas de estas ciudades han logrado resultados económicos, institucionales y fiscales más sólidos que otras. Todas las ciudades industriales antiguas poseen una serie de activos, tales como infraestructura, barrios, instituciones, poblaciones y actividades económicas en desarrollo. Las diferencias en su rendimiento, en forma comparativa, están relacionadas con la manera en que las políticas y el liderazgo municipal han sacado partido de los inventarios existentes de estos activos. En particular, las ciudades históricas tradicionales en vías de recuperación han construido y basado su expansión sobre instituciones preexistentes dedicadas a la investigación, la medicina, la salud y la educación. También han explotado el creciente interés por los barrios urbanos, donde resulta fácil ir caminando a las tiendas y a los restaurantes y donde las densidades residenciales son mayores que las de la mayoría de las comunidades suburbanas. Las ciudades en recuperación también, en general, han mantenido o atraído más residentes con mayores niveles de educación y han experimentado un crecimiento en las actividades relacionadas con el conocimiento.
Las ciudades industriales tradicionales que han visto cómo sus economías comienzan a transformarse y a crecer de nuevo no necesariamente experimentaron aumentos en sus poblaciones. La población de la mayoría de las ciudades tradicionales tuvo su pico de crecimiento a mediados del siglo XX y posteriormente descendió. Por ejemplo, Buffalo y St. Louis presentaron poblaciones más reducidas en el año 2000 que en 1900. A veces, la disminución de la población en estas ciudades se ve compensada por un crecimiento suburbano, por lo que las poblaciones metropolitanas no se reducen. Sin embargo, algunas ciudades tradicionales exitosas, tales como Pittsburgh, han experimentado leves reducciones de población incluso a nivel metropolitano. Cambiar la composición de las poblaciones de las ciudades y de su actividad económica es más importante para lograr el éxito que el crecimiento de la población por sí solo.
La exitosa recuperación de las ciudades industriales tradicionales normalmente no ha sido el resultado de megaproyectos enfocados en el redesarrollo, sino en el aumento de muchas medidas pequeñas que generan un gran impacto por acumulación, un enfoque que Mallach y Brachman han dado en llamar “crecimiento gradual estratégico”. En su investigación, los autores demuestran que las ciudades industriales tradicionales exitosas se han centrado en dicho enfoque de forma continua e incesante. Los elementos clave del crecimiento gradual estratégico requieren de la evolución de nuevas formas de organización física de la ciudad, de componentes económicos, de formas de gobierno y de relacionarse con las regiones circundantes. Desde un punto de vista físico, la práctica implica centrarse en el núcleo de la ciudad, en sus barrios más importantes y en la gestión del suelo vacante. Desde el punto de vista económico, supone restaurar el rol económico de la ciudad según sus ventajas comparativas y sus bienes existentes, compartir los beneficios del crecimiento con la población y reforzar las conexiones con la región en la que se encuentra la ciudad. Las ciudades también deben fortalecer sus formas de gobierno y ocuparse de que la provisión de servicios y de recursos fiscales entre la ciudad y los municipios del área metropolitana sea fluida.
Las ciudades industriales tradicionales han experimentado un deterioro en las últimas décadas, por lo que su recuperación llevará tiempo e implicará una buena dosis de paciencia. Aunque el funcionamiento de algunas de estas ciudades, tales como Camden, Nueva Jersey, continúa disminuyendo, otras ciudades están mostrando signos de progreso. En Pittsburgh, Filadelfia, Milwaukee y otras ciudades industriales tradicionales que se están recuperando, el rendimiento económico ha mejorado y las tasas de desempleo, delincuencia y pobreza se han reducido por debajo de los promedios nacionales, a pesar del hecho de que las poblaciones permanecen bastante por debajo del pico al que habían llegado unos 60 años atrás.
Para obtener información adicional sobre los factores determinantes del éxito de las ciudades tradicionales, ver: http://www.lincolninst.edu/pubs/2215_Regenerating-America-s-Legacy-Cities.
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Adam H. Langley is a senior research analyst in the Department of Valuation and Taxation at the Lincoln Institute of Land Policy. Previously, Langley worked for the New York State Assembly. He earned his B.A. in political studies from Bard College and an M.A. in economics from Boston University.
Langley’s research has covered a range of issues related to state and local public finance, with a particular focus on the property tax. He has coauthored three Lincoln Institute Policy Focus Reports: Property Tax Circuit Breakers: Fair and Cost-Effective Relief for Taxpayers (2009), Payments in Lieu of Taxes: Balancing Municipal and Nonprofit Interests (2010), and Rethinking Property Tax Incentives for Business (2012). He has also led several projects to provide data on the Lincoln Institute’s website, including creation of the Fiscally Standardized Cities (FiSCs) database and a dataset with extensive information on nonprofits that make payments in lieu of taxes and the localities that receive them.
His articles have appeared in journals such as Regional Science and Urban Economics, Public Finance and Management, and Publius: The Journal of Federalism. His research has also been covered by more than a hundred news outlets, including The New York Times, The Wall Street Journal, The Economist, Governing, and The Boston Globe.
Land Lines: What projects have you been working on recently as a senior research analyst at the Lincoln Institute?
Adam Langley: I have been working on several projects related to local government finances. One major project has been the creation of the Fiscally Standardized Cities (FiSCs) database. This subcenter on the Lincoln Institute’s website allows users to make meaningful comparisons of local government finances at the city level for 112 of the largest U.S. cities over the past 35 years. I drew on this data in a recent paper on municipal finances during the Great Recession, which I presented at Lincoln’s 9th annual Land Policy Conference on June 2, 2014. I am also creating a summary table that describes state programs for property tax exemptions and credits, drawing information from Lincoln’s Significant Features of the Property Tax subcenter. I plan to use that table to estimate tax expenditures for these programs in all 50 states.
Land Lines: You’ve worked on several projects to provide data on the Lincoln Institute’s website. What motivates this focus on data?
Adam Langley: These data projects go to the core of Lincoln’s mission to inform decision making on issues related to the use, regulation, and taxation of land. Lincoln’s databases have been used by policymakers to help guide their decisions, by journalists to provide broader context in their stories, and by researchers for their own projects. Providing data that is freely accessible and easy to use greatly magnifies the potential reach of Lincoln’s work on land policy issues, because it empowers other analysts to undertake new research in this area.
It is also essential for Lincoln’s reputation that we base our policy recommendations on high-quality analysis and good data. To impact policy decisions, it’s critical that our research be widely viewed as objective, nonpartisan, and evidence-based.
Land Lines: You say that Fiscally Standardized Cities allow for meaningful comparisons of local government finances at the city level. What’s wrong with simple comparisons of city governments?
Adam Langley: The service responsibilities for city governments vary widely across the country. While some municipalities provide a full array of public services for their residents, others share these responsibilities with a variety of overlying independent governments. Because of these differences in local government structure, comparing city governments alone can be very misleading.
For example, consider a comparison of Baltimore and Tampa. The city government in Baltimore spends three times more per capita than the city government in Tampa—$5,594 versus $1,829 in 2011. However, the difference is almost entirely due to the fact that the City of Tampa splits the provision of local services with overlying Hillsborough County and an independent school district, whereas Baltimore has no overlying county government and the schools are part of the city government itself. Once all overlying governments are accounted for in the FiSC methodology, per capita expenditures for residents in the two cities are nearly identical—$6,083 in Baltimore versus $6,067 in Tampa.
Land Lines: Can you explain the methodology used to create Fiscally Standardized Cities?
Adam Langley: FiSCs are constructed by adding together revenues for each city government plus an appropriate share from overlying counties, independent school districts, and special districts. County revenues are allocated to the FiSC based on the city’s share of county population, school revenues are allocated based on the percentage of students in a school district who live in the central city, and special district revenues are allocated based on the city’s share of residents living in the district’s service area. Thus FiSCs provide a full picture of revenues raised from city residents and businesses, whether collected by the city government or a separate overlying government. These allocations are made for more than 120 categories of revenues, expenditures, debt, and assets. The FiSC methodology was developed with Andrew Reschovsky, a Lincoln Institute fellow, and Howard Chernick, a professor at Hunter College of the City University of New York. We calculate the estimates using fiscal data for individual governments provided by the U.S. Census Bureau, and we will update the FiSC database as data for additional years become available.
Land Lines: Why is it important to compare local government finances at the city level?
Adam Langley: Many people want to know how their city compares to other cities, but it’s critical to account for differences in local government structure when making these comparisons. The FiSC database does account for these differences. Thus, it can be used to compare property tax revenues in two cities, rank all cities by their school spending, investigate changes in public sector salaries over time, or see which cities are most reliant on state aid to fund their budgets.
In a separate project with Andrew Reschovsky and Richard Dye, we’re using the FiSC methodology to estimate pension costs and liabilities for all local governments serving each city. Media coverage sometimes creates the impression that all public pension plans face serious challenges, but in fact there is a great deal of variation around the country. In order to investigate these differences, it’s essential to have comparable data on pension costs for all local governments serving each city. For example, initial estimates show that on average the annual required contribution (ARC) for local pension plans in 2010 was equal to 4.9 percent of general revenues for the 112 FiSCs. However, ARC was more than 10 percent of revenues in both Chicago (11.7 percent) and Portland, Oregon (10.9).
Land Lines: Did revenue declines vary much across cities during the Great Recession?
Adam Langley: Yes, revenue declines ranged widely across the 112 FiSCs during and after the recession. Accounting for inflation and population growth, only eight FiSCs avoided revenue declines entirely through 2011. I calculated changes in real per capita revenues from each FiSC’s peak through 2011: About a third experienced declines of 5 percent or less (41 FiSCs), another third saw declines between 5 and 10 percent (34 FiSCs), and about a quarter had declines exceeding 10 percent (29 FiSCs). FiSCs with very large revenue declines include Las Vegas (20.2 percent), Riverside (18.0 percent), and Sacramento (18.0 percent).
Land Lines: Have local government revenues recovered much since the end of the recession?
Adam Langley: Not really, because revenue changes lagged behind economic changes by several years during and after the recession. Real per capita local government revenues were stable through 2009, declined slightly in 2010, and fell more significantly in 2011. The latest year with comprehensive data is 2011, so I tied together several different data sources to estimate revenues through 2013. Those data suggest that revenues hit bottom in 2012, when they were 5 to 6 percent below 2007 levels. That means revenues did not bottom out until three years after the recession officially ended. Revenues started to recover in 2013 but remained more than 4 percent below pre-recession levels.
This lag is driven by changes in intergovernmental aid and property taxes, which together fund almost two-thirds of local governments’ budgets. The American Recovery and Reinvestment Act provided states with about $150 billion in federal stimulus between 2009 and 2011, and there were additional stimulus funds provided directly to local governments. Most stimulus funds were gone by 2012, however, which led to the largest cuts in state spending in at least 25 years. Moreover, changes in property taxes typically lag behind changes in housing prices by two to three years, due to the fact that property tax bills are based on assessments from prior years, there are delays in reassessing properties, and other factors. That lag means that property taxes actually grew through 2009, did not fall until 2011, and then hit their trough in 2012.
Land Lines: Can you elaborate on your work describing property tax exemption and credit programs?
Adam Langley: I’m nearly finished with the first stage of this project, which entails creating a summary table on states’ exemption and credit programs. The table contains data for 167 programs, with 18 variables describing the key features of each program. There is information on the value of exemptions expressed in terms of market value; criteria related to age, disability, income, and veteran status; the type of taxes affected; whether tax loss is borne by state or local government; local options; and more. Once that table is completed, I will write a policy brief to outline key features of these programs. All of this information is drawn from the table on Residential Property Tax Relief Programs in Lincoln’s Significant Features of the Property Tax subcenter of the website. The original Residential Relief table provides detailed descriptions of each program, while the summary table should be most useful for users who want to make quick comparisons of states or for researchers who want to conduct quantitative analysis.
In the second stage of this project, I will estimate tax expenditures for these property tax relief programs. Despite the prevalence of these programs and their often large impacts on property tax burdens, there are no comprehensive estimates of their costs. Using data from the summary table and microdata from the American Community Survey, I will estimate for each state the percentage of residents who are eligible for property tax relief programs, the total cost of tax relief programs, the average benefit for beneficiaries, and the percentage of residents eligible and their average benefit by income quintile. These estimates will provide valuable new information on the impacts of property tax relief programs in the United States.
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Una versión más actualizada de este artículo está disponible como parte del capítulo 5 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
Actualmente se está llevando a cabo en La Habana, Cuba, un programa de estudio de aprovechamiento del suelo y de su valor para fines de facilitar la revitalización física y el desarrollo económico en Cuba. Participan en dicho estudio investigadores del Instituto Lincoln y del Grupo para el Desarrollo Integral de la Capital (GDIC).
Durante la era soviética, la economía cubana estaba caracterizada por un modelo económico de decisiones tomadas “desde arriba”, en el cual los organismos estatales eran los principales actores de la economía y del desarrollo. La planificación era autocrática e inflexible; el comercio dependía principalmente de los países del bloque socialista; la capacidad financiera estaba centralizada en el presupuesto nacional; y no existía un sistema tributario. Las reformas legales, financieras y económicas puestas en marcha desde 1990 han ayudado a crear un entorno institucional conducente al aumento de la eficiencia económica y de la participación cubana en el mercado mundial (ver tabla 1).
Así y todo, la economía de Cuba sigue tropezando con enormes dificultades que han afectado seriamente la sustentación del estándar de vida de sus habitantes, la calidad de los servicios sociales y públicos, y los programas de desarrollo económico en general. Para citar un ejemplo, en 1995 el producto interior bruto (PIB) de la isla se había reducido a la mitad de su valor de 1989, mientras que la capacidad de importación había caído de manera precipitosa, desde unos US$ 8 mil millones a US$ 2 mil millones anuales.
Tabla 1: Resumen de las principales reformas
Apertura del mercado agropecuario a partir de mecanismos de oferta y demanda
El gobierno cubano ha tratado de promover el turismo como la fuente principal de generación rápida de esas divisas tan necesarias. Siendo una isla del mar Caribe, Cuba ofrece atracciones turísticas significativas que abarcan desde magníficas playas hasta el patrimonio arquitectónico del Centro Histórico de La Habana (declarado “Patrimonio de la Humanidad” por la UNESCO), así como otras áreas naturales, históricas y culturales ubicadas a lo largo y ancho del país. Sin embargo, para estimular la industria turística se precisan socios internacionales que emprendan el desarrollo de hoteles, tiendas, restaurantes y la ampliación del aeropuerto. El hecho de que la mayoría de las tierras disponibles para el desarrollo está en manos del Estado, es un elemento crítico de la estrategia cubana para atraer promotores y turistas extranjeros.
El plan gubernamental de poner en marcha su propia industria turística ha mostrado resultados alentadores. Por ejemplo, en el año 1967 la isla recibió a unos 2.000 visitantes, mientras que en 1998 fue visitada por más de 1,4 millones de turistas. Sólo durante los últimos cinco años, un grupo de inversionistas extranjeros ha aumentado sus operaciones en varios sectores económicos de Cuba, particularmente en el sector turístico. Como resultado, se han construido 2.000 nuevas habitaciones hoteleras en La Habana, con lo cual la capacidad total actual alcanza más de 10.700 habitaciones. A nivel nacional hay 31.600 habitaciones hoteleras, y se planea aumentar la capacidad a 40.000 en el transcurso de los próximos dos años. Aproximadamente el 80 por ciento de las nuevas construcciones cubanas están directa o indirectamente relacionadas con el sector turístico. Ciertos estimados indican que la tierra y los inmuebles estatales ya destinados a estos nuevos proyectos representan unos US$ 500 millones. Cabe destacar que este desarrollo se ha logrado en ausencia de un mercado formal del suelo.
Políticas orientadas al suelo para estimular el desarrollo
El suelo ha sido utilizado de varias maneras para incentivar el desarrollo y generar ingresos públicos. Primero que todo, el gobierno cubano lo ha utilizado como su contribución capital en asociaciones conjuntas con promotores internacionales. Por ejemplo, la empresa canadiense VanCuba Holdings, S.A. se asoció a medias con el gobierno cubano en un proyecto de construcción de once hoteles. La participación cubana del 50 % consiste en el aporte del suelo; por su parte, se espera que la compañía canadiense invierta US$ 400 millones. Similares operaciones conjuntas se han llevado a cabo con promotores canadienses, españoles, italianos e israelíes en proyectos variados, principalmente inmobiliarios y turísticos.
Dado que la principal contribución cubana a estas asociaciones internacionales es el suelo, es fundamental verificar que su valor financiero represente el 50 por ciento del capital social del proyecto. Cuando el valor monetario de la tierra aportada ha sido inferior al 50 por ciento, el socio extranjero frecuentemente ha desempeñado un papel crítico para ayudar a su contraparte cubana a solicitar crédito de bancos internacionales o instituciones financieras a fin de compensar la diferencia. Más recientemente, el crédito para asegurar el 50 por ciento de la participación cubana ha provenido directamente del Banco Central de Cuba (a bajas tasas de interés), en vez de entidades bancarias internacionales.
Un segundo mecanismo para estimular el desarrollo, cuyo uso va en aumento, son los arriendos de tierras (leasing) para proyectos comerciales y de oficinas. Esta modalidad cuenta con muchos adeptos puesto que la venta directa de la tierra estatal es posible únicamente en situaciones muy especiales. Los alquileres se negocian según el valor específico de la tierra, y se establecen por 25 años previo acuerdo de las partes negociantes. Además, es posible revisar los contratos de alquiler y prolongarlos por otros 25 años si las partes involucradas en las renegociaciones están de acuerdo sobre los nuevos criterios. Actualmente existen varios proyectos de este estilo con inversionistas extranjeros, y el área estimada de desarrollo en La Habana sobrepasa las 100 hectáreas.
Tercero, el gobierno cubano ha celebrado acuerdos de alquileres directos en tierras estatales en zonas francas que en algunos casos generan alta rentabilidad. Ya unas 120 empresas privadas extranjeras y públicas-privadas se han establecido en dos zonas comerciales de La Habana.
Tanto los arriendos como los alquileres directos del suelo del Estado son importantes fuentes de nuevos fondos que, a su vez, se inyectan en la economía local para mejorar la calidad de vida de las comunidades locales mediante la prestación de servicios sociales (educación y salud), el desarrollo de proyectos económicos, la modernización y ampliación de la infraestructura básica, y la generación de empleos. Como ejemplos del impacto positivo generado por estos ingresos para la ciudad y la comunidad figuran el nuevo Aeropuerto Internacional de La Habana, la creación y el mejoramiento de un sistema telefónico digital, y los proyectos del parque metropolitano en la región del río Almendares.
Otro mecanismo interesante de captura de la plusvalía resultante de las inversiones públicas, es el establecido por la Oficina del Historiador, la entidad pública encargada de promover, financiar y desarrollar el programa de revitalización de La Habana Vieja. Esta oficina ya comenzó a recaudar impuestos directos e indirectos que suman el 35 por ciento de los ingresos de empresas privadas no relacionadas con la Oficina, tales como hoteles, establecimientos comerciales y restaurantes que se han beneficiado de las labores de rehabilitación del distrito histórico. Tales ingresos externos, así como también las entradas generadas por proyectos iniciados por la oficina misma, se utilizan en una especie de fondo rotativo para financiar no sólo inversiones adicionales en el ambiente construido, sino también una variedad de programas sociales entre los que figuran viviendas, hogares para ancianos y actividades educativas y culturales en La Habana Vieja. En 1998 los ingresos totales de la Oficina sobrepasaron los US$ 40 millones, y excedieron de US$ 50 millones en 1999. El gobierno también está negociando otras clases de programas de generación de ingresos para capturar los incrementos del valor del suelo, con el fin de financiar la rehabilitación de las áreas del Paseo del Prado y Rampa en La Habana, así como el proyecto de desarrollo Boca de la Chorrera, en la boca del río Almendares.
Dificultades de aplicación
La aplicación de estas diferentes herramientas de captura de plusvalía no ha sido una tarea fácil. En lo que se refiere a los gravámenes indirectos y directos introducidos en La Habana Vieja, muchos dueños de negocios aducen que sus fuentes de ingresos no son resultado de las labores de mejoramiento de la Oficina del Historiador, y que por tanto no deberían estar obligados a pagar impuestos. Por ejemplo, la empresa petrolera cubana (CUPET) tiene su sede en un área valiosa en el corazón del centro histórico, pero no paga el impuesto. La compañía argumenta que sus fuentes de ingresos (es decir, sus instalaciones y redes de distribución) están situadas fuera del centro, y que por tal motivo no se benefician del proceso de remozamiento.
Los acuerdos de alquiler por 25 años ilustran otro problema que surge del dilema implicado por las “metas a corto plazo” frente a las “metas a largo plazo”, porque los acuerdos no incluyen una actualización periódica de pagos de alquiler. Por una parte, si los pagos se establecen sobre la base del valor y uso existente, las autoridades públicas corren el riesgo de perder considerables recursos financieros que podrían derivarse de estas inversiones y otros cambios en el valor del suelo a lo largo del período de alquiler de 25 años. Sin embargo, si las autoridades intentan capturar el esperado aumento del valor inmediatamente, tendrán dificultades para vender esos costosos proyectos a inversionistas cautelosos.
La falta de un adecuado sistema legal para el desarrollo de bienes raíces y préstamos hipotecarios en Cuba es un obstáculo principal para la puesta en práctica de todos estos instrumentos. Si bien ya existen borradores de nuevas propuestas de leyes inmobiliarias, aún no se han adoptado las leyes que se esperaban introducir el año pasado. Esta situación incierta e impredecible puede entorpecer la formación de sociedades comerciales serias, que por lo general requiere estabilidad, transparencia y visión a largo plazo. Además, esta falta de protección legal puede alejar a promotores de calidad que podrían tener la capacidad de realizar proyectos más sofisticados y de mayor envergadura. Como resultado, el gobierno cubano ha recibido menos propuestas sólidas y ha estado aceptando proyectos menores con promotores internacionales menos establecidos.
Estos proyectos menores son a veces problemáticos por varias razones. Primero que todo, frecuentemente se destinan a las zonas más deseables de La Habana, aun cuando no sean necesariamente apropiados para dichas zonas. Segundo, están obligados a depender de infraestructura existente, dado que no son lo suficientemente grandes como para aportar esa inversión adicional. Tercero, la calidad estética e incluso los servicios básicos de estos nuevos hoteles o apartamentos son algunas veces cuestionables. Dado que estas edificaciones afectan la imagen general de la ciudad, pueden hasta ejercer un efecto negativo y contribuir a la desvalorización de la zona.
Otro problema relacionado es la incertidumbre que deben afrontar los promotores al tratar con nuevas instituciones y políticas que se están negociando dentro del gobierno cubano al mismo tiempo que se están implementando en la calle. Mientras las políticas están siendo objeto de revisión, el gobierno ha introducido una moratoria para nuevos proyectos de desarrollo en ciertas áreas de La Habana y ha retrasado el proceso de negociación de bienes inmobiliarios en general. La inestabilidad y falta de confianza en los organismos y políticas gubernamentales pertinentes conllevan riesgos que desalientan a los inversionistas privados de proyectos comerciales o residenciales a largo plazo. Obviamente, ello perjudica los costos de desarrollo y las tasas de rentabilidad esperadas.
Finalmente, la ausencia de mercados formales dificulta efectuar avalúos del suelo y enturbia las transacciones. Los organismos gubernamentales involucrados en proyectos de desarrollo tienen dos opciones: 1) utilizar los precios administrativos para determinar el valor de alquileres o aportes financieros, aun cuando la base de estos precios puede no reflejar el valor real de los atributos del suelo; o bien, 2) negociar el precio con promotores extranjeros sobre la base de la dinámica de la región en particular. Ambas opciones están limitadas por la carencia de transacciones comerciales continuas e independientes sobre las cuales evaluar los precios reales.
Dilemas de la política del suelo
Si bien es cierto que Cuba ha hecho avances significativos, también es cierto que se está enfrentando a muchos problemas para utilizar la tierra de una manera eficaz para estimular el desarrollo y generar recursos financieros. Por ejemplo, muchos proyectos pequeños y “convenientes” pueden acelerar los desarrollos y la generación de ingresos, pero no tienen la capacidad de crear una visión más amplia para usos futuros del suelo y frecuentemente causan daños a la infraestructura histórica y al ambiente natural. Por otra parte, los proyectos mejores financiados y de más envergadura pueden crear tal visión y mejorar el ambiente, pero son mucho más difíciles de negociar y exigen más tiempo.
Más aún, los proyectos más grandes pueden requerir inversiones cuantiosas en la infraestructura básica dada la deficiente calidad de las condiciones existentes. El gobierno ha carecido de los recursos necesarios para apoyar estas inversiones, lo cual amenaza la sustentación de las nuevas intervenciones urbanas, y los proyectos pequeños no son capaces de afrontar tales cargas. Además, incluso si los proyectos grandes pueden financiar las inversiones en infraestructura, corren el riesgo de convertirse en enclaves exclusivos separados de la comunidad vecina al proporcionar la infraestructura sólo como parte de su propio proyecto. El problema que se plantea aquí es cómo financiar la infraestructura de una manera no excluyente a fin de alentar otros proyectos de desarrollo de menor escala. Para ello se están estudiando tres opciones que actualmente son objeto de un acalorado debate:
Otro aspecto del debate entre los expertos cubanos de planificación y desarrollo se refiere a las ventajas y desventajas de introducir mercados libres de tierras acompañados de un fuerte sistema tributario, en contraposición a seguir manteniendo el manejo público de la tierra estatal. Aquellos que abogan por la idea de introducir los mercados libres de tierras opinan que es un paso necesario al desarrollo, para que así Cuba pueda beneficiarse de los vínculos con la economía mundial y con diferentes clases de inversiones extranjeras. Estos expertos también defienden la idea de desarrollar mecanismos de captura de las plusvalías urbanas.
Por su parte, el grupo que defiende la continuación del sistema actual señala el éxito cubano en aspectos tales como la reducción de la segregación espacial, el equilibrio de los servicios sociales y urbanos, la conservación del patrimonio histórico y otros valores patrimoniales de la ciudad, y la reservación de suficiente tierra para los proyectos de desarrollos futuros. También apunta a la reciente experiencia latinoamericana con los mercados libres, que han redundado en mayor segregación entre ricos y pobres, falta de servicios sociales en las zonas pobres de las ciudades, y aumentos de la violencia urbana, la especulación, y los problemas ambientales.
En resumen, la agenda cubana de desarrollo de suelo tiene dos prioridades: establecer un sistema legal con parámetros claros, e introducir mecanismos rigurosos y transparentes para efectuar los avalúos de inmuebles y suelos. Además, la diversificación de los socios cubanos disponibles para participar en proyectos de desarrollo internacionales ayudará a establecer criterios para una perspectiva de planificación a largo plazo que alentará la realización de proyectos de infraestructura de gran escala y la provisión continua de beneficios a la comunidad. En realidad, todos estos asuntos e inquietudes no son muy diferentes a los desafíos que enfrentan otros países en vías de desarrollo en lo que se refiere a las políticas del suelo. El continuado estudio del valor de la tierra como un instrumento de desarrollo en Cuba ofrece lecciones importantes para investigadores y funcionarios públicos de toda América Latina.
Ricardo Núñez es investigador del Grupo para el Desarrollo Integral de la Capital (GDIC) en La Habana, Cuba. H. James Brown es Presidente y Jefe ejecutivo del Instituto Lincoln, y Martim Smolka es Senior Fellow y Director del Programa para América Latina y el Caribe del Instituto Lincoln. También contribuyó a este artículo Laura Mullahy, asistente de investigación del Programa para América Latina y el Caribe.
En la Web
En la página Web del Instituto Lincoln, www.lincolninst.edu, hay artículos relacionados sobre Cuba, los cuales están disponibles para bajarlos sin costo alguno.
“Participatory Planning and Preservation in Havana: Q & A with Mario Coyula”. Land Lines 9:4 (julio de 1997). (Sólo en inglés.)
Ricardo Núñez. “El suelo urbano como factor de inclusión económica y social: La experiencia de La Habana.” Artículo. 1999. (Sólo en español.)
Ricardo Núñez. “La ciudad de La Habana: Prácticas y perspectivas de captura de plusvalía urbana.” Artículo. 1999. (En inglés y en español.)
Ricardo Núñez y Carlos García Pleyán. “La regeneración en La Habana Vieja: ¿Un modelo de gestión que moviliza las plusvalías urbanas?”. Artículo. 1999. (En inglés y en español.)
Peter Pollock. “Exploring Cuba’s Urban and Environmental Heritage.” Land Lines 10:5 (septiembre de 1998). (Sólo en inglés)
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Cuba is a striking country. Its historic capital city of Havana boasts 400 years of architectural heritage. Many areas are in a state of sad decay but some represent very creative approaches to preservation and economic development. Because of the focus on rural development after the 1959 revolution, Cuba did not experience the same kind of popular migration from the countryside to the cities as did other parts of Latin America. What modern redevelopment did occur happened largely outside the historic core of Havana. The good news is that the city’s architectural heritage is still standing; the bad news is that it is just barely standing.
Architects and planners in Cuba are struggling with the basic tasks of improving infrastructure and housing while encouraging economic development appropriate to their socialist vision. They are developing models of neighborhood transformation through local organizing and self-help programs, and are creating models of “value capture” in the process of historic preservation and tourism development.
Through connections with the Group for the Integrated Development of the Capital (Grupo para el Desarrollo Integral de la Capital, GDIC), nine environmental design professionals traveled to Cuba in June to explore the issues of decay and innovation in the built and natural environment. The team included nine of the eleven 1997-98 Loeb Fellows from the Harvard University Graduate School of Design.
The Loeb Fellowship in Advanced Environmental Studies was established in 1970 through the generosity of Harvard alumnus John L. Loeb. The Fellowship annually awards ten to twelve leaders in the design and environmental professions with support for a year of independent study at Harvard University. A recent tradition of the Fellowship program is for the Fellows to take a trip together at the end of the academic year, to solidify their ties developed over the year, explore a new environment together, and share their knowledge and expertise with others.
The Loeb Fellows who traveled to Cuba have a variety of interests that together represent a cross-section of the environmental design professions:
The Fellows were hosted in Havana by GDIC, which was created in 1987 as a small, interdisciplinary team of experts advising the city government on urban policies. “The group intended since its very beginning to promote a new model for the built environment that would be less imposing, more decentralized and participatory, ecologically sound and economically feasible-in short, holistically sustainable,” according to Mario Coyula, an architect, planner and vice-president of GDIC. He and his GDIC colleagues put together a series of informative seminars and tours for the Fellows in Havana, and made arrangements for them to visit planners and designers in the cities of Las Terrazas, Matanzas, and Trinidad.
Several foundations and groups lent support to the project: the Arca Foundation, the William Reynolds Foundation, the Lincoln Institute of Land Policy, the Loeb Fellowship Alumni Association, and the Harvard University Graduate School of Design Loeb Fellowship Program. Each Loeb Fellow will write an essay on a relevant area of research and its relationship to conditions in Cuba. These papers will be compiled and made available to GDIC, Harvard University and potentially to others through publication in a journal or special report.
Peter Pollock is director of community planning for the city of Boulder, Colorado. In 1997-98 he was a Loeb Fellow at Harvard and a visiting fellow at the Lincoln Institute.
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Imagine two communities in the Rocky Mountain region in the late 1860s. One is located along the transcontinental railroad, the other is 100 miles to the south. Which community would come to dominate the region by the turn of the century? Counterintuitively, the latter community did. There, aggressive entrepreneurs and community leaders orchestrated the completion of a spur linking the town to the railroad and then commenced a promotional campaign on the community’s behalf. Over time, that town, Denver, flourished, while the other, Cheyenne, did not. Denver leaders did not rely on chance. Instead they mobilized public resources to pursue their vision of Denver as a major city.
As product cycles ebb and flow, populations and firms migrate, natural resources peter out and consumer tastes change, cities either adapt to their changing environments or succumb to the invisible hand of the marketplace. Local elected and appointed officials can shape their cities by deciding whether or not to implement nonmarket, city-sponsored development.
Politics is important because these city officials either respond to a tax-services imbalance or they pursue an image or vision of their city’s future, its cityscape. Although city-sponsored development might lower business costs and spur economic growth, such development is not an automatic response to changing economic circumstances. Rather, public economic development is the result of a purposive political decision and is undertaken selectively.
Mobilizing Public Capital
City governments search for an equilibrium in their relations with the external environment. Governments operate within fixed territorial jurisdictions, but capital is not similarly constrained. To avoid driving business elsewhere, officials must try to maximize services while minimizing taxes. Two factors are important to our argument: (1) efforts to restore the tax-services equilibrium are rooted in a city’s development function, and (2) the decision to mobilize a development tool has to do with the tax-services disequilibrium and is unrelated to employment and income issues.
Threats to a city’s revenue stream disrupt the tax-services balance and most assuredly trigger the search for an appropriate development policy to redress the imbalance. But for some city officials, a perceptual concern motivates their actions. They may want their city to move into a higher orbit or plane within its “system of cities,” the spatial and market area within which cities compete to provide goods and services. These city leaders hope to expand their city’s influence beyond the immediate region rather than cast its fate to the workings of the marketplace. They actively intervene in hopes their city will catapult to a higher level or regain lost status within its relevant system.
City Types
A city government’s orientation reflects both its leaders’ aspirations and its tax-services balance. We have defined four city types based on levels of economic stress and political activism to promote development. In “survivalist cities” development decisions are triggered by a tax-services imbalance. These cities experience economic and fiscal stress and employ a greater-than-average number of development tools. In “market cities” that also suffer economic and fiscal stress, officials do not implement many economic development tools but instead leave the city’s economic fortunes to the private marketplace. “Expansionist cities” are in fairly healthy economic shape, but they mobilize more economic development tools than the average city out of the desire to become a higher order city. “Maintenance cities” also enjoy economic and fiscal health, but city officials refrain from mobilizing many economic development tools because they want to control or manage growth.
Duluth, Minnesota, is an example of a “survivalist city.” It was mired in economic and social malaise after the mid-1970s shutdown of U.S. Steel and many subsequent plant closings. Unemployment was well above the national average, emigration decreased the population by nearly 16 percent in a decade’s time (1970-1982), and general fund revenues declined in constant dollars. By the early 1980s, insufficient revenues and the prospect of lower services triggered Duluth’s response to become exceptionally active in promoting itself as a business location. Development projects ranged from sprucing up the downtown business district through a storefront renovation program to involvement in constructing a several hundred million dollar paper mill.
Since the 1970s, declining manufacturing employment in the industrial belt hit Springfield, Ohio, a “market city,” particularly hard. However, city officials there have been hesitant to invest in public development because of fiscal realities and the dominant political culture, which favors limited government involvement. They clearly understand that by not risking city resources in the development process, it is possible that Springfield will “ratchet down” the hierarchy in its relevant system of cities.
In Huntsville, Alabama, an “expansionist city,” there are no reservations about using the public sector to prime the economic development pump. But unlike in Duluth, Huntsville officials are not responding to economic decline. Instead, their motivation is a vision of Huntsville as the major high-tech, regional city of the new South. To pursue that vision, the city has constructed an economic development program around extant defense installations and the aerospace industry. Huntsville markets itself as a limitless place, as a community reaching for the stars.
Santa Barbara, California, is a “maintenance city” guided by its vision as a Refuge from the Commonplace. It does not offer money or underwrite programs for commercial rehabilitations. It provides no low-interest subsidies for business. It offers no tax abatements. It has no marketing program for economic development. It conducts no industrial recruitment. There is no program in Santa Barbara to leverage private investment, nor is there a public/private partnership. City assistance or involvement in development often is nothing more than approval of a proposed project. The city’s dominant policy instrument is the comprehensive plan. Zoning variances, manipulation of the parking supply, and the imposition of fees are additional tools. The city does not promote development the way other cities do; instead, Santa Barbara molds it.
Politics Matters
The envisioned city of tomorrow is not static; it evolves in response to shifting economies and political coalitions. A city’s underlying economic base, its governing coalition, and the vision of its leaders are in constant tension with other conflicting opportunities, possibilities and visions. A change in city leadership and the governing elite, the closing or downsizing of a large firm, or a substantial change in state aid or in unfunded mandates will, among other factors, influence the vision of the city’s leaders and affect the underlying economy. These changes in vision and market adjustments, then, profoundly affect a city’s approach to economic development. The mobilization of public capital as a mechanism for achieving the vision may change as well.
When voters replaced the leadership of Boise, Idaho, with more proactive officials in the mid-1980s, for example, a new vision was one of the most obvious results. The new mayoral-led coalition talked about regional prominence, and boldly marshaled public capital in support of development projects. The city used development tools and sponsored projects that were vastly different from those of the previous regime. In effect, Boise was transformed from a “maintenance city” to an “expansionist city.”
Thus, politics plays an important role in explaining the path and direction a city chooses. Local officials may perceive a relevant orbit and then try to mobilize public capital in order to keep their city in (or move it to) that orbit. Or, they may choose to allow the workings of the marketplace to determine the city’s orbit. In either case, market forces, a city’s comparative advantage, the relative factor prices of land, labor, and capital—in short, the underlying local economy—influence these perceptions and the city’s approach to development policy.
Political leaders’ images of the good society and their perceptions of their city’s relevant orbit are the foundations for a city’s economic development functions and for the political decision to mobilize public capital. City investment in, and regulation of, development projects is the most effective means by which a city controls and molds its growth in pursuit of its future cityscape.
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Ann O’M. Bowman is professor in the Department of Government and International Affairs at the University of South Carolina, Columbia. Michael A. Pagano is professor of political science at Miami University in Oxford, Ohio. This article is excerpted in part from their book Cityscapes and Capital: The Politics of Urban Development (Johns Hopkins University Press, 1995).
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Supporters of land taxation view it as an efficient and effective means of financing government, and the concept has wide appeal among public finance scholars. Many economists, including several Nobel Prize winners, actively endorse this method of taxation, which taxes land value separately and instead of buildings and improvements. At least from an academic perspective, then, the case for the efficiency and fairness of a land-based tax system seems irrefutable.
Despite that support, the concept of land taxation has not been widely embraced in the United States. Property tax bases are set by state constitutional or statutory law, so local governments cannot implement a land tax, or its split-rate variant, without authorization from their respective state legislatures. Other than a handful of Pennsylvania cities that have adopted split-rate or two-rate tax systems, no American jurisdictions currently place higher tax burdens on land than on buildings and other improvements. Virginia recently responded to interest in two-rate taxation with legislation allowing two local governments to adopt graded tax programs, but they have not yet done so. While split-rate taxation is discussed periodically as a reform measure, there are no current proposals for its adoption awaiting action before a state legislature (Brunori and Carr 2002).
Statutory or constitutional enactment of a land tax would entail revising property tax laws that have been substantially unchanged for more than a century. In general, state legislators are cautious about implementing dramatic reforms in any public policy area, and comprehensive tax reform has been a particularly elusive goal. Adoption of split-rate or land taxation would be a dramatic change, requiring significant awareness, advocacy and support in the ranks of the legislature and at the local level.
There are few areas of government finance in which scholarly opinion and actual public policy diverge so dramatically. This situation prompted me to undertake two nationwide research surveys. The first survey sought to ascertain the level of knowledge of land taxation on the part of the nation’s state legislators. Without an understanding of the issues presented by the taxation of land, legislators are unlikely to champion, advocate or even vote for such measures. I also surveyed local elected officials, because state legislators will not advocate any reforms without constituent support. Moreover, since the reforms at issue will affect primarily local government finances, any legislative body seeking to reform a tax system will solicit the views and advice of local officials.
The Survey Questions
To gauge general awareness of the concept of land value taxation, the survey began with a broad question, describing it as “taxing the full value of land but exempting buildings, structures and other improvements from tax.” The next question narrowed the scope to determine familiarity with split-rate taxation, the version of land taxation practiced in Pennsylvania and authorized in two Virginia municipalities. Because it entails less dramatic reforms, split-rate taxation is the version of land taxation most likely to be adopted in the U.S. This concept was described as “taxing land at a higher rate than buildings, structures and other improvements.”
Legislative research has long found that state lawmakers are likely to support policies that they believe will foster economic development and oppose policies perceived to deter development (Beamer 1999). Taxing land at a higher rate than improvements has historically been thought to encourage building and investment by eliminating or reducing the tax burdens of improving the land. Thus, the third question asked for the respondents’ opinion on the effect that taxing improvements at a lower rate than land would have on economic development, defined as capital investment and job creation.
The proliferation of suburban sprawl is a growing concern among legislators and local officials across the country. The vast academic literature suggests that policy makers view sprawl unfavorably and that most officials think that policies that promote sprawl are unsound. Some public finance scholars believe that adopting split-rate tax policies will limit the negative effects of sprawl (Brueckner 2001). If this belief is true, split-rate taxation could play an important role in the continuing debate over policies intended to deter suburban sprawl. Question four asked what effect taxing improvements at a lower rate than land would have on sprawl. Sprawl was not defined in the question because the term can refer to a number of developments affecting density, suburban growth, loss of open space and decrease in population. Indeed, scholars have lamented the lack of a single operational definition of sprawl. Still, the perception of sprawl as an undesirable land use pattern and policy outcome warranted inclusion of the question in the survey.
Finally, state and local legislators are influenced by the desires and concerns of their constituents. The more important a particular issue is to constituents, the better informed a legislator will become about that issue. Thus, survey participants were asked if during the past year any citizens or organizations had contacted their offices with respect to the issue of split-rate taxation, and if so, whether the constituent supported or opposed the idea.
State and Local Respondents
The first survey focused on state legislators who served on committees with primary responsibility for tax policy and local government finance during the period January–June 2003. There were 106 such committees in the 50 state legislatures, but I excluded those in Pennsylvania and Virginia. Since those states have either adopted or authorized graded tax systems, I assumed that their legislators would be more familiar with the concept and could bias the results.
For the second survey I chose city and county officials from 15 randomly selected local jurisdictions within the 25 largest metropolitan areas in the U.S. To insure a national perspective, I also included city council members from the largest city in each state. Again I focused on officials with primary responsibility for implementing and administering public finance policy and excluded all jurisdictions in Pennsylvania and Virginia.
The survey questions were sent to 1,284 legislators, of whom 780 responded (see Brunori 2003 for more information on methodology). An identical survey was sent to 3,298 city and county officials, of whom 430 responded. The response rate for the state legislators was far above national standards, and the response rate for the local officials was considerably below national standards, but both were statistically significant.
Before revealing the results of the survey research, I must confess that I entered this project with a bias. Having worked in the state and local tax field my entire professional life, as a lawyer, teacher and journalist, I think about tax policy more than any sane person should and have come to know many state legislators and local public officials. In my experience, these government officials are quite capable of finding revenues to pay the bills, but they generally have little in-depth knowledge of the more philosophical and theoretical underpinnings of tax policy. So I assumed that few of them would understand what I was talking about when I began asking questions about land taxation. After all, I did not think most politicians were using their spare time to read Henry George’s classic book, Progress and Poverty. I was quite surprised at the responses.
The Results
In a country where there are virtually no land tax policies in place, the survey results show that a vast majority of elected political leaders do know about land and split-rate taxation (see Table 1). More surprising, to me at least, most political leaders are aware of the benefits of adopting land tax policies. More than 70 percent of the state legislators and 65 percent of the local government officials responded that they were either very or somewhat familiar with the concept of land value taxation, and 67 percent of state legislators and 65 percent of local officials were very or somewhat familiar with split-rate taxation.
The single most important policy goal (after public safety) that concerns American politicians is economic development. When asked about the relationship between the economy and land taxation, more than 62 percent of state legislators and 76 percent of local government officials replied that adopting a split-rate tax system would promote economic development. About one-quarter of both state and local officials thought that taxing improvements at a lower rate than land would have no effect on economic development. These results are arguably consistent with the conventional view that land taxation would have a benign effect on economic decision making. Only 5 percent of the state legislators and no local officials believed that taxing land at a higher rate would deter economic development.
One of the common misperceptions about land taxation is that it will lead to more sprawl, and many, but not a majority, of the respondents shared that misperception. Forty-one percent of surveyed state legislators and 46 percent of local officials said they believed that adopting a split-rate tax system would lead to more suburban sprawl. About 51 percent of the state legislators and 53 percent of local officials surveyed said that split-rate taxation would have no effect on sprawl or would deter sprawl. The fact that so many respondents believe that split-rate taxation would foster more sprawl, presumably by encouraging development of open space in suburban and rural areas, should be troubling to advocates of land taxation.
Finally, a surprisingly small number of elected political leaders have been contacted by constituents regarding land taxation. Eleven percent of state legislators and 9 percent of local government officials said an individual constituent or organization had contacted them regarding the issue of land-based or split-rate taxation, and all were supporters of the idea.
What Does It All Mean?
What originally sparked my interest in this research project was the disconnect between scholarly opinion about land taxation and political action to promote it. I thought this discrepancy might be the result of ignorance of the concepts of land taxation on the part of state and local political leaders. If state legislators and city council members were unaware of land or graded taxation, then they could not be expected to champion such reforms.
The survey results show, however, that this discrepancy cannot be resolved by looking at level of awareness alone. Most state legislators and local officials involved in public finance and taxation issues are familiar with both land taxation and split-rate taxation, and they know that moving to a split-rate tax system would have a positive effect on economic development. Moreover, a slight majority of those surveyed believe that graded taxes would have no negative effects on sprawl.
Since state and local officials know about land taxation and believe it could lead to positive policy outcomes, why are so few local governments using this method of public finance? It is difficult to answer that question without eliciting views on more technical aspects of land or split-rate taxation. Implementation of land taxation raises complex issues as to the feasibility of adopting major property tax reforms, the effects on other revenue sources, and the administration of a land tax system, particularly with respect to valuation. Solving the mystery as to why more jurisdictions are not exploring the policy of taxing land at a higher rate than improvements may lie in analyzing these important operational factors.
References
Beamer, Glenn. 1999. Creative politics: Taxes and public goods in a federal system. Ann Arbor: University of Michigan Press.
Brueckner, Jan K. 2001. Property taxation and urban sprawl. In Property taxation and local government finance, Wallace E. Oates, editor. Cambridge, MA: Lincoln Institute of Land Policy.
Brunori, David. 2003. Awareness of land taxation: Survey of state legislators. Working paper. Cambridge, MA: Lincoln Institute of Land Policy.
Brunori, David, and Jennifer Carr. 2002. Valuing land and improvements: State law and local government practices. State Tax Notes (September 30):1023–1033.
David Brunori is contributing editor of State Tax Notes for Tax Analysts in Arlington, Virginia, and research professor of public policy at The George Washington University in Washington, DC. This article is based on research he conducted as part of a David C. Lincoln Fellowship in Land Value Taxation, awarded by the Lincoln Institute.
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Past trends will not foretell the future, but charting how state and local finances weathered the 2001 recession suggests viable ways to navigate going forward. Lacking the deficit finance ability of the federal government, states and localities must set a spending course based on anticipated taxes and revenues. An unexpected crisis-like the stock bubble burst at the beginning of this century and the subsequent economic slowdown-that throws budgets into fiscal chaos requires such unpopular bailouts as tax increases or cuts in services and welfare. Did that happen?
Participants at a Lincoln Institute-sponsored conference in March 2007 gathered at the Urban Institute in Washington DC, to discuss the recession and share findings on how states and localities determined various actions and policies to address its impacts. This conference, titled “State and Local Finances after the Storm: Is Smooth Sailing Ahead?”, was also hosted by the Urban Institute-Brookings Institution Tax Policy Center, and by the Kellogg School of Management and the Institute for Policy Research, both at Northwestern University.
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Canfei He earned his Ph.D. degree in geography from Arizona State University in 2001, and then moved to the University of Memphis, Tennessee, where he taught as an assistant professor. In August 2003, he returned to China as an associate professor in Peking University’s College of Urban and Environmental Sciences, and was promoted to full professor in 2009. In addition to his academic duties at Peking University, Dr. He has served as associate director of the Peking University–Lincoln Institute Center for Urban Development and Land Policy since 2007. He is also the associate director of the Economic Geography Specialty Group of the China Geographical Society.
Dr. He’s research interests include multinational corporations, industrial location and spatial clustering of firms, and energy and the environment in China. The World Bank invited him to write a background paper on industrial agglomeration in China for the World Development Report 2009: Reshaping Global Economic Geography.
Dr. He has authored four academic books and his work is published widely in English journals including Regional Studies, Urban Studies, Annals of Regional Science, International Migration Review, Eurasian Geography and Economics, Post-Communist Economies, and China & the World Economy. Dr. He also serves on the editorial board of three journals: Eurasian Geography and Economics, International Urban Planning, and China Regional Economics.
Land Lines: How did you become associated with the Lincoln Institute of Land Policy and its programs in China?
Canfei He: I learned about the activities of the Lincoln Institute of Land Policy’s recently established China Program from one of my colleagues at Peking University in 2003soon after I returned from the United States. At that time, the Lincoln Institute was working in China on a number of specific programs, and I became involved in several associated research projects.
My official relationship with the Institute began with the establishment of the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC) in October 2007. The Institute had been exploring a more long-term partnership with Peking University for some time, and as those discussions progressed, my previous contacts offered opportunities for me to serve as a liaison between the two institutions. I was nominated by Peking University to serve as the associate director with its director, Joyce Yanyun Man, who is also a senior fellow of the Lincoln Institute and director of its Program on the People’s Republic of China. Over the past two years or more, I have been helping to develop the center and coordinate its work with other partners at Peking University, as well as serving as a research fellow of the center.
Land Lines: Why are urban development studies so important in China?
Canfei He: China’s urbanization during the past three decades has been remarkable. As an overwhelmingly rural population in 1978 when reforms began, China is now 45.7 percent urbanized, and the country is projected to be 60 percent urbanized by 2020. This means that China’s cities will need to accommodate more than 100 million new urban residents in this decade.
Market forces, local forces, and global forces are all conspiring to influence the pattern of China’s urbanization and development. Accompanying large-scale and rapid urbanization are revolutionary spatial, structural, industrial, institutional, and environmental changes in an incredibly brief span of time. The multiplicity of these driving forces makes the study of urban development in China both complex and challenging. The next wave of urbanization will have far-reaching implications for the country’s future development, and thus there is a critical need for more high-quality, objective research on the subject.
Land Lines: What are some of the most unusual aspects of urban development in China?
Canfei He: China’s current urban development is quite different institutionally from that of most Western countries. Urbanization in China has occurred at the same time that its economy has become market-oriented, globalized, and decentralized. Whereas most Western urbanization occurred in a period of greater economic isolation, China’s urban development has been directly influenced by international investment and global economic trends.
A second factor is China’s hukou system of personal registration that limits the mobility of its people in part by linking their access to social services to the location of their registration. This system thus presents an institutional barrier that inhibits rural-urban migration despite ongoing reforms.
Regional decentralization is another important aspect that, combined with the state and collective ownership of land, has allowed local governments to play a distinct role in China’s urban development. Land acquisition fees resulting from the sale of multi-decade leases for the use and development of state-owned lands have generated enormous revenues, and have been a critical source of municipal financial resources for urban infrastructure investment. This fee-based revenue, in turn, creates incentives that have promoted even more intense urbanization. On the other hand, the major planning role afforded to local governments in China means that urban planning practice lacks consistency across the country’s diverse regions, and is often hostage to local interest groups.
China is facing increasing global challenges and pressures from many sources including multinational corporations, nongovernmental organizations, global environmental standards, and rising energy prices. These challenges may increase the costs of urban development, but at the same time they may encourage a more sustainable process of urbanization.
Land Lines: How do you approach urban development studies in China through your own research?
Canfei He: China’s urbanization goes hand in hand with its industrialization, and foreign investment has played a significant role in the country’s growth. Urbanization demands labor, land, capital, and technology, as well as supporting institutions. Consequently, there are myriad approaches to studying urban development in China that focus on a particular factor or set of factors.
My own research interests fall within the capital and institutional approaches. Specifically, I investigate industrial agglomeration and foreign direct investment in Chinese cities by highlighting the institutional environment of economic transition. Investigating the elements driving industrial agglomeration in different cities and understanding the locational preferences of foreign and domestic firms are crucial for designing coherent and focused urban planning policies.
For instance, my research on foreign direct investment in real estate development and the locational preferences of international banks found that local market conditions and regional institutions largely determine the locational preferences of multinational services. This type of observation can be of use to planners and politicians in China seeking to foster the growth of the service industry.
With the increasing emphasis on global climate change and acknowledgement of the environmental impacts of China’s first 30 years of reform and development, I am also becoming more involved in research on the environmental impacts of urbanization, including energy consumption and carbon emissions. China has made a commitment to reduce its CO2 emission by 40–45 percent per unit of GDP by 2020, relative to 2005. This means that building low-carbon and energy-efficient cities is another goal on the already lengthy list of challenges that includes servicing, housing, and employing the country’s millions of future urban dwellers.
Land Lines: Given this ongoing international dialogue, how can China best learn from Western urbanization experiences?
Canfei He: We recognize that there is much to learn from the West, including alternative approaches to land policy, housing policy, transportation policy, environmental policy, suburbanization, and the development and planning of megacity regions. China has the benefit of using the West’s experience as a roadmap to help it avoid many of the problems that have arisen in Western cities, such as urban sprawl and gridlock. That economic, political, and geographic diversity offers a wealth of reference points for China’s cities that should not be ignored and can help China avoid problems that have plagued many Western metropolises.
However, it is necessary to research the applicability of particular international experiences, considering the uniqueness of China’s history and culture. Too often analyses of Western urbanization are presented as a blueprint for China, when in fact institutional, economic, and political differences mean that, for one reason or another, those solutions are impractical or unfeasible.
Land Lines: Why is China’s urbanization and urban development so important to the West?
Canfei He: China’s urbanization will be one of the most important dynamics of the twenty-first century, not only for China but also for the West and the rest of the world. Millions of newly affluent consumers and empowered global citizens will exert significant new demands on the world’s finite natural resources in several ways.
First, with the United Nations Millennium Development Goals, China and the world committed themselves to halving the number of people living on less than $1 per day by 2015. Given China’s large number of rural poor, the country’s urbanization and economic development will be instrumental in meeting this important goal, as well as in achieving other goals such as those related to education and improving children’s health. Only cities have the institutional reach and financial capacity to meet these goals on a large scale.
Second, much has been made of the gulf in understanding between China and the West in recent years. Urbanization and urban development will help to integrate China further into the global community, but it may also create more opportunities for cultural friction. The West has a vested interest in seeing that China urbanizes in an atmosphere that encourages openness and intercultural exchange.
Third, history demonstrates that urbanization entails a much greater demand for energy and other resources as living standards rise and as consumption and dietary patterns change. It has become a cliché to say that “as China goes, so goes the world,” but China’s urbanization and its related environmental impacts will have direct implications for the West and the rest of the world.
The recent memory of $150 per barrel of oil shows that this future demand is likely to put great stress on international energy markets and the global economy. This latent demand also has broad implications for China’s CO2 emissions and for global climate change. The United States and China are key to any real hope of keeping the increase in average global temperatures less than 2 degrees Celsius warmer than preindustrial levels, as proposed at the recent climate conference in Copenhagen. Whereas the high level of development in Western countries means that changes happen incrementally, China’s rapid urbanization offers hope to limit the world’s future emissions by making significant changes now as the country develops.
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Sustaining local communities will require mechanisms to envision and plan for the future and to engage residents in the process. Scenario planning is an increasingly effective way to address these efforts, and Western Lands and Communities, the Lincoln Institute of Land Policy’s joint venture with the Sonoran Institute, is working to advance the necessary tools.
Scenario Planning to Address Uncertainty
Land use decisions and planning efforts are critical as communities look 20 to 50 years into the future to guide policy choices and public investments that are sustainable across economic, social, and environmental dimensions. As uncertainty increases and available resources decrease, it becomes ever more important to consider the full range of emerging conditions and to strive to ensure our ability to respond to those changes, adopt policies, and pursue investments that will be resilient across a variety of potential futures.
Key areas of uncertainty include population and demographic changes, economic trends, climatic variability and change, resource costs and availability, land markets, housing preferences, housing affordability, and the fiscal health of local governments. Simultaneous with increasing uncertainty and decreasing resources, or perhaps in part because of them, decision makers face conflicting perspectives on desired futures and on the role of government in providing services and infrastructure as well as regulation and planning.
Increased polarization means that more civic engagement and an informed and supportive public are needed to ensure stable policies and adequate investments in a community’s future. Scenario planning offers a mechanism to address these needs and issues of potential uncertainty and conflict. Fortunately, as the scope and complexity of planning and the demand for broader engagement have increased, advances in computing power and public access to technology are making new and more powerful tools available.
The Lincoln Institute has a long history of supporting the development of planning tools and publishing the results (Hopkins and Zapata 2007; Campoli and MacLean 2007; Brail 2008; Kwartler and Longo 2008; Condon, Cavens, and Miller 2009). This article covers lessons learned from the use of scenario planning tools in several projects undertaken by Western Lands and Communities (WLC), as well as mechanisms to expand their application.
Superstition Vistas
Superstition Vistas is a 275-square-mile expanse of vacant state-owned trust land on the urbanizing edge of the Phoenix metropolitan area (figure 1). State trust lands such as this site in Arizona are key to future growth patterns because the state owns 60 percent of the available land in the path of development. Colorado and New Mexico to a lesser degree face similar opportunities with their state trust lands (Culp, Laurenzi, and Tuell 2006). Creative thinking about the future of Superstition Vistas began to gain momentum in 2003, and the Lincoln Institute, through the WLC joint venture, was an early proponent of these efforts (Propst 2008).
Initial WLC objectives for Superstition Vistas scenario planning included capacity building, tool development, and opportunities to catalyze a planning process. More specifically, we sought to:
WLC, along with regional partnerships, neighboring jurisdictions, the regional electric and water utility, two private hospital providers, and a local mining company, formed the Superstition Vistas (SV) Steering Committee to advance the planning effort, secure funding, and hire a consulting team. The consultants, working with the committee over a three-year period, conducted extensive public outreach and values research, assembled data on Superstition Vistas, developed and refined a series of alternative land use scenarios for the development of a community of 1 million residents, evaluated the impacts of the different scenarios, and produced a composite scenario for the site.
The Arizona State Land Department (the landowner) adapted the consultants’ work to prepare a draft conceptual plan for Superstition Vistas in May 2011 and submitted a proposed comprehensive plan amendment to Pinal County. The county is now considering the proposed amendment and its Board of Supervisors is expected to act in late 2011.
Sustainability Lessons
The scenario analysis, utilizing enhancements supported by WLC, identified the most important factors in shaping development patterns and potential conflicts among desired outcomes (figure 2). The inclusion of individual building and infrastructure costs for the alternative scenarios facilitated examining the sensitivity of varying these key factors and the cost effectiveness of four increasing levels of energy and water efficiency in each building type.
The scenarios also examined the impact of urban form on vehicle miles traveled (VMT). Scenario model outputs included land use indicators, energy and water use, VMT, carbon emissions, and construction costs. This analysis revealed the “low-hanging fruit” for sustainability improvements. The consulting team, working with the Steering Committee, identified a number of lessons that illustrate the value of scenario planning tools and can be applied to other efforts to design more sustainable and efficient urban areas (Superstition Vistas Consulting Team 2011).
1. Create mixed-use centers to reduce travel times, energy use, and the carbon footprint. Mixed-use centers along public transportation routes and close to homes and neighborhoods are one of the most effective ways to reduce travel times, energy use, and the resulting carbon footprint. Smaller homes, more compact forms of urban development, and multimodal transportation systems all create similar benefits (figure 3). However, the scenario modeling for Superstition Vistas demonstrated that mixed-use centers would be substantially more important than increased density in affecting transportation choices, energy use, and the carbon footprint.
2. Foster upfront investments and high-quality jobs to catalyze economic success. A strong local economy and a diverse balance of nearby jobs, housing, and shops are critical for a sustainable community, especially when high-quality jobs are provided at the beginning of development. Significant upfront public investment and public-private partnerships can supply critical infrastructure and have an enormous impact on shaping development and increasing the value of state trust land. State owned trust land could also provide unique opportunities for patient capital, with enhanced trust land management authorities providing access to resources for upfront capital investment and the ability to recapture these investments when the land is sold or leased later at a higher value.
3. Provide multimodal transportation infrastructure and regional connections to facilitate efficient growth. Another critical step is determining how to phase transportation improvements as the region grows and the market can support increased services. Phased components may include buses first, then Bus Rapid Transit (BRT), with rights-of-way set aside for eventual commuter or light-rail corridors. Identifying and building multimodal transportation corridors and infrastructure prior to sales for residential and commercial development should establish the cohesiveness of the entire area and enable the evolution to more capital-intensive transportation infrastructure as the community matures.
4. Design efficient buildings that save water and energy resources and reduce the community’s carbon footprint. Incorporating construction costs and return on investment (ROI) data in resource planning allows for financial feasibility and cost-benefit calculations. The consulting team modeled four levels of water and energy use (baseline, good, better, best) for each scenario and building type. Results demonstrated that investments in energy efficiency would be better spent on residential than commercial and industrial buildings. An additional finding showed that building centralized renewable power generation may be a better investment than extreme conservation.
5. Offer housing choices that meet the needs of a diverse population. Ensuring a viable community means meeting the needs of all potential residents with a broad variety of development types and prices that local workers can afford and that allow for adjustments under future market conditions.
6. Incorporate flexibility to respond to changing circumstances. A challenge for large-scale master plans that will take shape in multiple phases over 50 years or more is how to plan so the development itself can evolve and even redevelop over time. Plan implementation needs to include mechanisms to limit future NIMBY (not in my back yard) problems for necessary infill and redevelopment projects.
Procedural Lessons
The visioning process for Superstition Vistas involved planning a completely new city or region of communities in a vacant area with a single public landowner and no existing population. Given the recent economic downturn, as well as the limited capacity of the state agency to bring land to market, development of this area will likely be postponed for a number of years. Despite these particular conditions, procedural lessons learned in the project to date are relevant to other long-term and large-scale efforts, and to the expanded use of scenario planning for community decision making in general.
Agreed-upon procedures and planning processes become increasingly important as the planning and development time period grows and the number of stakeholders increases. Significant changes in participants, perspectives, and external factors, such as the recent collapse of the development economy, should be expected in any long-term, multiparty project. Such challenges need to be considered and incorporated into project tasks.
1. Design for change. Long-term projects need to accommodate changes in stakeholders, decision makers, and even political perspectives during the course of planning and implementation. Projects would benefit enormously from anticipating such changes, agreeing on mechanisms to transfer knowledge to new participants, establishing certain criteria and decisions that new stakeholders would be expected to follow, understanding how to deal with political or market conditions that will change, and building resiliency for such factors into the alternative scenarios themselves.
2. Consider governance. This is an issue for planning and implementation efforts and for the political decision-making structure of a new community. In building a new city it is important to consider how to create a governance system capable of implementing a consistent, comprehensive vision for a community that does not yet exist.
3. Incorporate new community designs into local and regional comprehensive plans. It is also critical to consider how a project at the scale of Superstition Vistas, with up to 1 million residents and a buildout plan of 50 years or more, can be incorporated into the framework of a typical county comprehensive plan. Scenarios and visions must reflect ideas and plans that local jurisdictions will be politically willing and administratively able to incorporate into their planning processes.
4. Phase development. Communities need to establish mechanisms that allow the adoption of a long-term buildout vision and then incorporate a series of flexible and adaptable phased plans to implement that vision in appropriate stages.
5. Plan for market changes. Market conditions, housing preferences, and employment opportunities will evolve, and large-scale projects with creative and compelling visions may even create their own demand. No one knows what future markets may offer, so consideration of alternative markets and adaptable community designs are critical. Projected housing mixes and estimates of development absorption need to be flexible and not based only on current preferences and trends.
6. Connect to common values. Demonstrating how development proposals connect to common visions and values that are shared and stable over time is also important. For Superstition Vistas, values such as an opportunity for healthy lifestyles and choices for residents across the socioeconomic spectrum were found to be broadly accepted. Planners also need to recognize values that are more controversial or may be transient and likely to change.
Challenges and Opportunities
The WLC experience in planning for Superstition Vistas has been successful in several respects. The community came together through the Steering Committee to develop a consensus vision that represented multijurisdictional cooperation around sustainable “smart” growth. Neighboring communities, at the request of the state land commissioner, deferred any consideration of annexation. In addition, the Arizona State Land Department developed a plan for a geographic scale, time horizon, and level of comprehensiveness well beyond anything attempted previously. However, the proposed comprehensive plan amendment for Superstition Vistas is at best a first step toward a vision for a community of up to 1 million people.
The Arizona State Land Department has been unable, at least so far, to push the envelope very far on new and more creative ways to conceptualize large-scale developments that could enhance the economic value of state trust lands and improve regional urban form. The recent collapse of land and housing markets throughout the country has also impacted this project and local perceptions of future growth potential. Since the overall effort to conceptualize and implement development plans for Superstition Vistas is just beginning, initial on-the-ground development is not expected for at least a decade. There will be multiple opportunities to build on these planning efforts to bring bolder and more comprehensive visions forward as the real estate economy recovers and the land becomes ripe for development.
Scenario planning and effective visualizations become both more important and more challenging to achieve when conducting larger and longer-term visioning exercises. Visualizations that provide compelling depictions of activity centers and higher-density, mixed-use neighborhoods can help to gain public acceptance. Effective mechanisms are also needed to convey to current participants that the planning process is imagining community characteristics and housing and lifestyle preferences for their grandchildren or great-grandchildren many years in the future.
As noted earlier, upfront investments in transportation, economic development, education, and utility services can significantly shape a community, serve as a catalyst for higher-level employment, and earn high returns. To achieve this potential, mechanisms are needed to facilitate these investments, whether on private lands or state trust lands. Continued work on the contributory value of land conservation, infrastructure investment, planning, and ecosystem services, as well as the integration of this information into scenario planning, would greatly aid efforts to address uncertainty and advance community sustainability.
Other Projects and Lessons Learned
WLC conducted three additional demonstration projects to further enhance scenario planning tools and apply them in different situations.
Gallatin County, Montana
Sonoran Institute staff worked with Montana State University (MSU) to engage local stakeholders in a workshop where each of four teams produced scenarios for concentrating projected growth within the currently developed “triangle” region of Bozeman, Belgrade, and Four Corners. This effort successfully integrated Envision Tomorrow scenario planning with housing unit projections from the Sonoran Institute’s Growth Model and demonstrated the value of ROI tools as a reality check on proposed land use and building types. The project also demonstrated the value of scenario planning to local experts.
Lessons learned include recognizing that (1) for many participants working with paper maps was more intuitive that the touch screen technology we had employed; (2) additional information on land characteristics, such as soil productivity and habitat values, should be used in preparing growth scenarios; and (3) more effective techniques are needed to visualize the density and design of different land use types, as well as to incorporate political and market realities that are not typically captured with scenario planning tools.
Products from this Montana project will include the creation of a library of regionally appropriate building types for use with ROI and scenario modeling and a report examining the costs and benefits, including sustainability impacts, of directing future growth to the triangle area of Gallatin Valley. With WLC support MSU has been able to incorporate the use of scenario planning tools in its graduate program.
Garfield County, Colorado
Sonoran Institute’s Western Colorado Legacy Area office, with support from the Lincoln Institute, U.S. Environmental Protection Agency, and other local contributors, utilized the Envision Tomorrow tool in a new way to advance implementation of previously adopted plans calling for mixed-use infill and redevelopment in target growth areas. This project focused on stakeholder education regarding the mechanisms necessary to implement recently adopted comprehensive plans calling for town-centered development, rather than on scenario generation for a comprehensive plan.
Examination of policy and market feasibility for redevelopment in downtown Rifle, Colorado, was one of three separate efforts undertaken. The City of Rifle project successfully utilized an ROI tool to identify financial and regulatory factors that could impact revitalization efforts and engaged the key parties necessary for implementation, including property owners, developers, realtors, planning commissioners, local officials, state transportation representatives, and local staff.
Among the lessons learned from this project was the importance of grounding bold visions with market reality. For example, previous planning efforts in Rifle had focused on six-to-eight-story mixed-use buildings, but in the current market even three-to-four-story projects are not considered feasible (figure 4c). Most attention now is given to two-story mixed-use projects and townhomes. Visualizations for an underutilized parcel in the center of town illustrated the type of one-story option that may be most feasible for initial commercial development (figure 4b). Constraints related to parking requirements and high minimum lot coverage requirements were also identified as limits on investment. In addition to pinpointing changes in Rifle’s building code, these findings spurred discussion about the role of public-private partnerships in catalyzing downtown development.
Morongo Basin, California
This area of high open space and wildlife habitat values between Joshua Tree National Park and the Marine Corps Air Ground Combat Center in Southern California may be impacted by spillover from regional growth. This project with the Morongo Basin Open Space Group involves an innovative effort to link results from the ongoing conservation priority-setting efforts with both a GIS tool to analyze and predict how land use patterns impact wildlife habitat and the scenario planning capability of Envision Tomorrow.
We are evaluating the environmental impacts of the current and potential alternative development patterns and location-specific planning and land use options. The tools being developed for this effort will be useful to land trusts throughout the country that are interested in engaging partners on local and regional planning issues and incorporating larger landscape conservation and wildlife habitat goals into their projects.
Open Source Planning Tools
Western Lands and Communities has recently been focusing on efforts to develop open source planning tools as a mechanism to increase the use of scenario planning. Key factors that hinder their use include: (1) the cost and complexity of the tools themselves; (2) the cost and availability of data; (3) a lack of standardization, making integration of tools and data difficult; and (4) proprietary tools that may be difficult to adapt to local conditions and may impede innovation.
Proponents of open source modeling tools believe open and standardized coding will facilitate increased transparency and interoperability between models, ultimately resulting in faster innovation and greater utilization. As a result of our work with Envision Tomorrow on the Superstition Vistas project, WLC and other members of an open source planning tools group are continuing to advance scenario planning tools and pursue the promise of open source tools that can foster sustainable communities in many more locations.
About the Author
Jim Holway directs Western Lands and Communities, the Lincoln Institute’s joint venture with the Sonoran Institute, based in Phoenix, Arizona. He was previously assistant director of the Arizona Department of Water Resources and a professor of practice at Arizona State University.
References
Propst, Luther. 2008. A model for sustainable development in Arizona’s Sun Corridor. Land Lines 20(3).
Superstition Vistas Consulting Team. 2011. Superstition Vistas: Final report and strategic actions. www.superstition-vistas.org
Lincoln Institute Publications
Brail, Richard K. 2008. Planning support systems for cities and regions.
Campoli, Julie, and Alex S. MacLean. 2007. Visualizing density.
Condon, Patrick M., Duncan Cavens, and Nicole Miller. 2009. Urban planning tools for climate change mitigation.
Culp, Peter W., Andy Laurenzi, and Cynthia C. Tuell. 2006. State trust lands in the West: Fiduciary duty in a changing landscape.
Hopkins, Lewis D., and Marisa A. Zapata. 2007. Engaging the future: Forecasts, scenarios, plans, and projects.
Kwartler, Michael, and Gianni Longo. 2008. Visioning and visualization: People, pixels, and plans.
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Over the past several decades, the structure of the U.S. economy has changed as it experienced a continuing reduction of overall employment in manufacturing and ongoing growth in the service sector, especially services involving knowledge workers. The geographic distribution of activity has also changed as population has continued to shift from the seasonal Northeast and Midwest to the warmer South and West. Finally, within metropolitan areas, populations and employment moved from cities to the suburbs as trucking and automobile travel became ubiquitous. These three trends have left many cities in the Northeast and Midwest with much smaller populations, weaker economies, fewer manufacturing jobs, and an inability to offset lost employment opportunities with gains from sectors that are expanding nationally. These are today’s legacy cities, which often have excess infrastructure capacity, underutilized housing stocks, and fiscal stress related to past obligations from public sectors now greatly diminished in size. A recent Lincoln Institute policy focus report, Regenerating America’s Legacy Cities, by Alan Mallach and Lavea Brachman, reviews the performance of a sample of these urban areas and identifies steps the more successful cities have taken to produce stronger outcomes.
While the declines of legacy cities have common causes, their economic performance has become quite diverse in recent decades, as some have delivered much stronger economic, institutional, and fiscal results than others. All legacy cities have an array of assets including infrastructure, neighborhoods, institutions, populations, and ongoing economic activity. Differences in their comparative performance are related to how local policies and leadership have leveraged existing inventories of these assets. In particular, recovering legacy cities have built upon and expanded existing institutions in research, medicine, health, and education. They have also exploited the growing interest in urban neighborhoods where it is easy to walk to stores and restaurants, and where residential densities are higher than those in most suburban communities. Recovering cities also typically have maintained or attracted more educated residents and have seen growth in knowledge-related activities.
Legacy cities that have seen their economies begin to transform and grow again have not necessarily experienced population increases. The population of most legacy cities peaked in the mid-20th century and then declined. Buffalo and St. Louis, for example, had lower populations in 2000 than in 1900. Sometimes the decline in city populations is offset by suburban growth, so that metropolitan populations do not decline. But some successful legacy cities, such as Pittsburgh, have experienced modest population declines even at the metropolitan level. Changing the composition of city populations and economic activity is more important for success than population growth alone.
The successful recovery of legacy cities normally has not resulted from megaprojects that focus on redevelopment, but on the accretion of many small steps with a large cumulative impact—an approach Mallach and Brachman have dubbed “strategic incrementalism.” Their research shows that successful legacy cities have pursued such an approach continually and relentlessly. The key elements of strategic incrementalism require the evolution of new forms for a city’s physical organization, economic components, governance, and linkages to its surrounding region. Physically, the practice involves focusing on the city’s central core, its key neighborhoods, and the management of vacant land. Economically, it involves restoring the economic role of the city based on its comparative advantages and existing assets, sharing the benefits of growth with its population, and strengthening connections to the city’s region. Cities also must strengthen their governance and address the flow of services and fiscal resources between the city and the municipalities in the greater metropolitan area.
Legacy cities have declined over many decades, and recovery will take time and require patience. While the performance of some, such as Camden, NJ, continues to deteriorate, others show signs of progress. In Pittsburgh, Philadelphia, Milwaukee, and other legacy cities on the rebound, economic performance has improved, and the rates of unemployment, crime, and poverty have fallen below national averages despite the fact that populations remain well below their peak 60 years ago.
For additional information on the determinants of legacy city success, see http://www.lincolninst.edu/pubs/2215_Regenerating-America-s-Legacy-Cities.
