Our Urban Future

Written Paper 4, WRIT150 Writing Seminar on Globalization

I used to play a game called SimCity: Cities of Tomorrow. Instead of shooting enemies in Call of Duty, or racing down open roads in Fast and Furious like my peers, Simcity gave me a square plot of land, and unlimited power to create tax rates, dictate land use ordinances, build infrastructure, and zoning laws. Hours passed as I watched my virtual city grow as miniature cars zipped through and buildings began to occupy the landscape. I watched as small row houses morphed into towering glass skyscrapers. I watched as natural disasters devastated the city and how changing land values brought about different types of buildings, and led to the destruction of others. However, I found myself constantly confronted by an elite, high-tech infrastructure known as the ControlNet, which brought about profound socioeconomic change. The Atlantic describes my predicament as: “The mayor can do things to limit their power, but only at the risk of stifling the city’s economic growth. Too little growth, and the city devolves into dystopian squalor; too much, and it becomes so unequal that its citizens can hardly afford to live in it” (Florida). In order to ensure the future of my city, I, as the mayor, had to constantly find a balance between these two total opposites.

 

SimCity perfectly epitomizes the progressive forces 21st century cities have been forced to contend with.  Fast-moving industries that drive innovation and have an immense societal impact such as finance, technology, media, and entertainment have elevated the largest urban centers into ‘superstar cities’ creating a phenomenon described as ‘winner-take-all’ urbanism. “This small group of elite places forge ever forward, while most others struggle, stagnate, or fall behind.” As this sect of the economy drives innovation and growth at breakneck speed, they converge on cities, drawing in the most wealthy, ambitious, and talented people from all over the globe. These cities experience unprecedented economic growth, yet deal with a multitude of problems such as a skyrocketing cost of living, and worse yet, an ever-widening inequality between the ‘haves’ and the ‘have-nots’.  Instead of the affirming the aphorism ‘the rising tide lifts all boats’, rapid urban economic development sinks the neglected minorities and the under-privileged populations.  Global corporate expansion, coupled with high-end residential real estate growth, replaces traditional housing blocks, dramatically changing the homes of the working class, the minorities, and the disadvantaged. Newfound development wreaks havoc on their livelihoods, displacing them from their homes, robbing them of economic opportunity and their communities. They are simply powerless in the face of waves of capital investment, money, and concrete.  Globalization has led to the rapid development and skyrocketing costs of living in cities today, dramatically reducing the availability of residential housing, even amidst record-high immigration rates into cities. The concentrating of people in urban centers has created a critical supply shortfall in living space, which could quite possibly be the defining issue of our time. In order to ensure the future of world cities for all, cities must implement affordable housing and rent provisions, responsible city planning and zoning, and socially conscious development that will benefit populations from across the socioeconomic spectrum.

Even in the midst of rapid inner-city development, an affordable housing crisis has gripped global cities around the world, and can only be mitigated by a principle called affordable inclusionary housing. The chief reason for displacement in inner-city communities is housing and rent prices. In the past two decades, the skylines of cities around the world have grown at an astounding rate. Urban centers have engaged in an all-out construction boom in a competition to out build each other. Asian and Middle Eastern skylines have been shaped out of seemingly empty fields and deserts. However, these world cities are paradoxically facing a severe housing shortage. In global cities such as Shanghai, New York, and London, there is a surplus of large penthouse luxury apartment units, but a deficiency of accessible, affordable, high-density units for the working class. As a result, the cost of living continues to increase with the constant influx of higher-end industries and developments, but wages stay stagnant. This leads to a profound housing crisis faced by many cities today. The sheer scale of housing pressure faced by populations worldwide is shown by this McKinsey Global Ventures statistic. As many as “330 million urban households around the world live in substandard housing or are financially stretched by housing costs. Some 200 million households in the developing world live in slums” (Woetzel).  In order to alleviate the tremendous shortage of high-density, low-cost housing, affordable housing units must be integrated into real estate projects. The inclusionary housing provision compels developers of luxury housing to allot a certain percentage of the units to rent control protections and cost minimization. Inclusionary housing is the only realistic economically viable solution to increase the affordable housing stock, as the increased profitability of luxury units offsets the costs of the affordable units. Additionally, city governments often provide cost offsets and financial incentives for developers to incorporate these units. For example, large cosmopolitan world cities such as London, which is experiencing a rapid rate of development and a high-cost of living, have mandated that up to 50% of new apartment units within a development be made affordable (London). Evidently, in order to alleviate the housing crisis caused by rapid economic and urban development, city governments must diversify affordable housing provisions for communities interspersed throughout the area.

However, developers and the private sector argue that governmental oversight limits the development potential of a city region, and inhibits its long term economic growth. Wix, a real estate industry publication highlights the two primary arguments detractors of inclusionary housing programs use: 1) inclusionary housing programs do not produce much or any affordable housing, and 2) inclusionary housing programs have a negative impact on the overall housing market by depressing supply and pushing up market prices. (Sturtevant). The impact of enforcing affordable housing initiative on developers can drastically impact profitability of developing in a city neighborhood, and allows for other regions and city governances to potentially outcompete for crucial development dollars. Additionally, these initiatives may dissuade potential large-cap companies, such as Amazon from investing in cities. One example of this competitiveness is Amazon’s HQ2 proposal, which rapidly morphed into a bidding war between cities around North America. The selected winning region or city would receive $5 billion dollars and 50,000 high-paying jobs. Cities must also be able to provide vast financial incentives, tax breaks, and enable development freedoms for corporations such as Amazon. However, in order to remain competitive in the race for corporate dollars, cities prioritize pro-growth free-market urban development and flexibility over socially conscious development ordinances such as affordable housing.

In contrast, affordable housing, when implemented in world cities, provides unrealized positive economic benefits. Many developers shy away from including low-income housing units in project proposals, and often lobby for reductions in the percentage of inclusionary housing. In fact, inclusionary low-cost housing presents a tantalizing growth opportunity for investors and developers, as explained by McKinsey Global Insights. The think-tank asserts that affordable housing “is an overlooked opportunity for developers, investors, and financial institutions. Building units for 106 million more poor urban households by 2025 could require more than $200 billion a year and account for 7 percent of mortgage originations” (Woetzel). With the saturation of the luxury housing market in many world cities such as New York and Toronto, the  residential developments present future growth opportunities for players in the real estate sector. Clearly, affordable housing is a potentially overlooked market for investors and real estate developers, and can be capitalized on in the next decade.

 

The stabilizing ability of rent controlled, low-income housing preserves ethnic and socioeconomic diversity while allowing the original citizens of a city to remain, preserving the unique cultural fabric of a world city. The traditional row houses of Shanghai, the Kowloon blocks of Hong Kong and the Tenderloin district in San Francisco, are all examples of culturally rich neighborhoods that give world cities their unique societal identity. In a world where the global city is becoming increasingly homogenous, cosmopolitan urban centers all have tall glass skyscrapers housing multinational financial institutions, streets filled with multinational chain stores, and the prominent presence of world languages, all of which have often replaced traditional cultures and traditions.  Affordable housing and rent control ordinances allow the people who preserve the fabric of urban cities to remain in the cities. Around the world, this may be implemented in a multitude of ways. Some governments directly subsidize housing, or provide their citizens with homes, such as the city-state of Singapore. Others, such as the United States, the responsibility lies in a coalition of developers, urban planners, and city officials. The need for a regulated housing market is crucial, and very few cities have balanced social responsibility and uncontrolled real estate market action. However, Minneapolis epitomizes affordable housing done right. In order to maximize economic diversity and fight concentrated poverty, affordable housing was dispersed throughout the region.  “Minnesota passed a law in 1976…compelling the construction of low-income housing throughout the fastest-growing suburbs. “In the 1970s and early ’80s, we built 70 percent of our subsidized units in the wealthiest white districts” (Thompson).  In order to combat deepening racial and social divide, ordinances like Minneapolis’s economically integrate housing throughout the region, decentralizing poverty. This allows entrapped lower-income minorities an opportunity to live in upscale developing neighborhoods, while improving the existing inner-city neighborhoods by luring young, wealthier investors into the communities.

Finally, city governance must represent the collective interests of the neighborhoods they were elected to serve. Without responsible governance, ordinances such as zoning mandates, affordable housing provisions, and rent control ordinances will never see the light of day. Cities inherently face a scarcity of land, and an ever-unfolding battle ensures on how to best use the land. City governance, including urban planning commissions, often determine zoning laws and density ordinances that mandate what gets built on the land.  Many city planning boards and government positions often receive donations from prominent real estate developers, and as a result, become heavily pro-development. The Wall Street Journal, a prominent news agency in the United States, describes Bill de Blasio, the mayor of New York  and someone who wields considerable influence in city planning, as someone who “has developed a close relationship with New York City’s real estate sector and accepted millions of dollars in donations from the industry’s executives” (Dawsey). The impact of lobbying dollars on urban policy is considerable, and as a result, private real estate developers directly affect city planning decisions, leading to gentrification and ballooning housing prices in many of the world cities today.  In developing worlds with more authoritarian governments, states will directly sponsor high-end development in order to boost tourism or luxury spending. Although the encouragement of active high-end developers is a boon for city governments, tax and tourism revenues, many of these apartments become investments where overseas billionaires park their capital, and become empty shells, adding little tangible value to the urban fabric other than towering pieces of fancy architecture. Evidently, external interests greatly influence city planning policy, and shape the future of our urban centers.

A city that responds to the needs of the working class and the citizen residents will ensure the execution of socially beneficial policies, creating urban centers that are livable, accessible, and economically sustainable. In order to mitigate this, we must elect governance that will represent the greater good. Responsible individuals who will push the envelope and resist abiding by the social norm and the allure and profits of personal gain. In urban centers such as London, where in many places, gentrification is in its nascent stages, residents and city governance alike have become conscious of the potential for drastic socioeconomic change, and have taken action. One example of an individual is Sadiq Khan, the Mayor of London, who has fiercely advocated for the expansion of affordable housing. His affordable housing plan, will “see an estimated £1.7bn invested in 49,398 genuinely affordable homes being built, with new homes in all 32 boroughs and the City of London” (London). People like Khan are the future drivers of sustainable, responsible, and economically equal urban development. They are the ones who stubbornly oppose profit-driven developers, luxury construction and advocate for the common citizen. Urban centers are the nexus of the world today, and will only continue to play a larger role in the lives of people around the world. People, not policies, are the ones who will drive the future of cities.

 

In this globalized 21st century, cities are our lives. They define the way we work, the way we live, how our relationships are formed, and our futures. Throughout this past century, we have all moved into cities, expanding these burgeoning urban centers to house populations of millions or even tens of millions. This worldwide phenomenon has elevated cities into the most important social construct of our generation. The world city is now a living space, and a place to do life with others. The arrival of new businesses, commercial and residential developments, and the overall beautification of the city led to the immense inner-city economic growth. Moving forward, the trajectory that global cities follow will reshape social interactions, the economic fortunes of all the people inhabiting them, and the urban fabric of what the vast majority of the world’s population resides in.

Sources

1.     Florida, Richard. “Why America's Richest Cities Keep Getting Richer.” The Atlantic, Atlantic Media Company, 12 Apr. 2017.

2.     Sisson, Patrick. “How Cities Are Getting Creative about Affordable Housing.” Curbed, Curbed, 25 July 2017.

3.     Sturtevant, Lisa A. “Separating Fact from Fiction to Design Effective Inclusionary Housing Programs.” Center for Housing Policy, Wix, May 2016.

4. Thompson, Derek. “The Miracle of Minneapolis.” The Atlantic, Atlantic Media Company, 18 Feb. 2015.

5. Dawsey, Josh. “De Blasio's Ties to Real-Estate Industry Are Scrutinized.” The Wall Street Journal, Dow Jones & Company, 22 Apr. 2016.

6. Reyes, Emily. “Seeking an Edge over Incumbents, These L.A. City Hall Candidates Are Saying No to Real Estate Developer Donations – LA Times.” Los Angeles Times, Los Angeles Times, 17 Jan. 2017.

7.     LDN_gov. “Mayor Strikes Deal for 50,000 New Affordable Homes.” London City Hall, 13 July 2017.

8. Jonathan Woetzel, Sangeeth Ram, Jan Mischke, Nicklas Garemo, and Shirish Sankhe. “Tackling the World's Affordable Housing Challenge.” McKinsey & Company, Mckinsey, Oct. 2014.

9.     “Amazon Announces 238 Proposals for HQ2 from across North America.” Amazon.