Saskia Sassen on “Who owns our cities – and why this urban takeover should concern us all”

The Dutch sociologist paints a disturbing picture of what the current surge of international capital is doing to cities — and who benefits

From mid-2013 to mid-2014, writes Saskia Sassen, corporate purchases of existing properties exceeded $600 billion in the top 100 cities, and $1 trillion a year later – and this figure includes only major acquisitions. She describes a major surge of capital coming into real estate from corporate investors:

I want to examine the details of this large corporate investment surge, and why it matters. Cities are the spaces where those without power get to make a history and a culture, thereby making their powerlessness complex. If the current large-scale buying continues, we will lose this type of making that has given our cities their cosmopolitanism.

Indeed, at the current scale of acquisitions, we are seeing a systemic transformation in the pattern of land ownership in cities: one that alters the historic meaning of the city. Such a transformation has deep and significant implications for equity, democracy and rights.

A city is a complex but incomplete system: in this mix lies the capacity of cities across histories and geographies to outlive far more powerful, but fully formalised, systems – from large corporations to national governments. London, Beijing, Cairo, New York, Johannesburg and Bangkok – to name but a few – have all outlived multiple types of rulers and of businesses.

In this mix of complexity and incompleteness lies the possibility for those without power to assert “we are here” and “this is also our city”. Or, as the legendary statement by the fighting poor in Latin American cities puts it, “Estamos presentes”: we are present, we are not asking for money, we are just letting you know that this is also our city.

It is in cities to a large extent where the powerless have left their imprint – cultural, economic, social: mostly in their own neighbourhoods, but eventually these can spread to a vaster urban zone as “ethnic” food, music, therapies and more.

All of this cannot happen in a business park, regardless of its density – they are privately controlled spaces where low-wage workers can work, but not “make”. Nor can this happen in the world’s increasingly militarised plantations and mines. It is only in cities where that possibility of gaining complexity in one’s powerlessness can happen – because nothing can fully control such a diversity of people and engagements.

Those with power to some extent do not want to be bothered by the poor, so the model is often to abandon them to their own devices. In some cities there is extreme violence by police. Yet this can often become a public issue, which is perhaps a first step in the longer trajectories of gaining at least some rights. It is in cities where so many of the struggles for vindications have taken place, and have, in the long run, partly succeeded.

But it is this possibility – the capacity to make a history, a culture and so much more – that is today threatened by the surge in large-scale corporate re-development of cities.

Read the full article:

The Towering Fallacy

Too many people believe untruths about the actual need for tall buildings in Portland — perhaps because it pays to believe them

Why would we want to be like boring old-fashioned Paris (L) when we could be modern and dynamic, like that paragon of good planning, Houston (R)?

Upton Sinclair famously said, “it is difficult to get a man to understand something, when his salary depends on his not understanding it.” It appears we could apply that maxim to some of Portland’s city leaders, planners, architects and developers of late.  The issue in question is a certain cherished article of faith: that in order to rein in sprawl, promote sustainability, and increase affordability, we need more tall buildings.

What does the evidence actually say? It does seem, intuitively, that if you go up, you’ll get more units, right? And more units mean cheaper units, and less sprawl?

But the evidence actually shows that’s false.

There are other problems too, as our research has previously presented.

Here’s a run-through of the issues:

As Steve Pinger of the Northwest District neighborhood association has pointed out, what you need in order to get more units per acre is more “floor-area ratio” (FAR).  Tall buildings, with their more slender point-tower form, often have relatively low FAR. That means they don’t pack in as much square footage per acre of land as you might think.

Take this interesting comparison of the US Bancorp Tower, currently the tallest in the city at 42 stories, and the Meier and Frank Building, only 14 stories. Which one do you think has more square footage per acre? Clearly the US Bancorp Tower must, right?  Wrong.

ABOVE, L-R: The US Bancorp Tower, and the Meier and Frank Building.

The US Bancorp Tower has about 1.2 million square feet over 96,000 square feet, about two Portland blocks. That’s an FAR of about 12.5. But the Meier and Frank Building has about 500,000 square feet over just 40,000 feet, meaning that it too has an FAR of about 12.5.  They are very close to the same FAR, with far different heights.

So instead of building the tower and the lower “podium,” the US Bancorp could have built two Meier and Frank buildings on the same site, and gotten exactly the same square footage.

And the result at the street might have been more like the area around Pioneer Square, and less like the dark and lifeless canyon on Burnside.

Well, you might say, we can still get more units if we push up building heights anyway, right?  Maybe a lot more units?

Here’s a little “thought experiment” to show the problem with that thinking.

The Portland metro region is growing right now by about 40,000 people per year. That means that in the next decade, if the pattern continues, we will need to accommodate 400,000 more people, or about 160,000 more units (at 2.5 people per unit on average).

How much of that growth can be accommodated by increasing building heights in the core? Currently there are about 30 residential buildings planned or under construction at 100 feet or taller. Historically speaking that’s an exceptional building boom, but let’s assume the trend continues, and each building takes on average two years to complete. That would mean 150 more buildings in the next decade.

Now imagine that each and every one of those buildings is raised by ten stories. (That’s a very aggressive assumption, but let’s go with it.) Assume also that each additional story contains on average eight residential units. That makes 80 additional units per building, multiplied by 150 buildings. That would be an additional 12,000 units.

This sounds impressive – 12,000 more units is not nothing. But we need 160,000 units, so we’re talking about just 7.5% of the total. And this is a very aggressive set of assumptions; the actual likely yield is considerably lower. Even in the most aggressive scenario, though, we’ve failed to account for at least 92.5% of the units we’ll need.

ABOVE: In a very aggressive scenario, the Portland region might accommodate up to 7.5% of its needed residential units in taller buildings over the next decade. But what of the other 92.5%?

Clearly we can’t pat ourselves on the back for our sustainability achievements in the relatively small core of Portland, if we haven’t worked hard to accommodate the growth of the region’s other 92.5 percent of units in a more sustainable way.

So over-focusing on tall buildings as a solution is a way of deluding ourselves. We’re not dealing with the vast majority of the demand, and we’re creating other negative impacts from tall buildings, as the research shows.

What about affordability? First of all, 7.5 percent of the overall demand isn’t going to do much to meet the challenge. And even more important, tall buildings are an inherently more expensive form of construction, meaning the units will sell for more on average, not less.

Even worse, there is evidence that tall buildings draw international investors and wealthy part-time residents, making the entire city even more desirable to these buyers, and tending to put even more upward pressure on prices across the region.

An article in the Washington Post has described “torrents of cash” coming from wealthy Chinese investors, who favor this kind of development — and increasingly this is NOT just happening in the big markets:

The spending spree is also upending real estate fundamentals in smaller and mid-size markets from Portland, Ore., to Cambridge, Mass., with local would-be buyers increasingly being disconnected from the economies of their own cities.

The article comes with a photo of several tall buildings in Portland, and the caption: “As the wealth of Chinese citizens grows, some opt to shelter money in U.S. real estate, and West Coast cities such as Portland have proved desirable.”

None of this is new. Here is the conclusion of a report from the UK House of Commons, after reviewing extensive research available at the time:

“The proposition that tall buildings are necessary to prevent suburban sprawl is impossible to sustain. They do not necessarily achieve higher densities than mid or low-rise development and in some cases are a less-efficient use of space than alternatives.”

The report (available here) was written in 2001.

Why are there not more people within the City of Portland, its leadership, staff, and consultant community, that recognize the fallacies in the claims for taller buildings?   A former senior City insider, speaking to me off the record about the “crazy height expansion proposals by the City,” noted that there is ample capacity for housing in the core already:

“[A previous City study] showed that existing entitlements contained a 30-60 year supply within the Central City Area (and was updated in 2011). Sure, the distribution of this capacity might be skewed, but there isn’t a shortage of inherent capacity anytime  soon…The justification to go taller is best made  when there is a genuine shortage of land (which there isn’t).”

The former insider concluded:

“I can only surmise this whole attempt is a giant pander to vested interests.”

Calling Upton Sinclair!

How to kill a city: A warning to Portland?

Journalist Peter Moskowitz describes the process of gentrification:  it is “not a fluke or an accident. Gentrification is a system that puts the needs of capital (both in terms of city budget and in terms of real estate profits) above the needs of people.”

A sign of gentrification in Brooklyn, New York.

At a recent conference on international urban issues in Amsterdam, we were struck by the parallels between other cities around the world and our own home town of Portland.  Around the world, capital is surging into real estate, the hottest commodity of the day, and greatly inflating housing prices in their cores.  The result is runaway loss of affordability, displacement, inequality — and ultimately, negative economic impacts for everyone.

At a session that we co-organized at the Placemaking Week conference, we heard from Professor of Geography Loretta Lees of the University of Leicester, Professor of Social Anthropology Dimitris Dalakoglou of Vrije University of Amsterdam, activist Catherine Greene, president of Arts East New York, a local arts non-profit in Brooklyn, and Juliet Kahne,  Education Manager for the Project for Public Spaces.

It was journalist Peter Moskowitz whose book, How To Kill a City, set the stage.    As he wrote in the book:

In every gentrifying city there are always events, usually hidden from public view, that precede street-level changes. The policies that cause cities to gentrify are crafted in the offices of real estate moguls and in the halls of city government. The coffee shop is the tip of the iceberg…

In [the four case studies of the book], specific policies were put in place that allowed the cities to become more favorable to the accumulation of capital and less favorable to the poor. New Orleans, Detroit, San Francisco and New York gentrified not because of the wishes of a million gentrifiers but because of the wishes of just a few hundred public intellectuals, politicians, planners, and heads of corporations…

When we think of gentrification as some mysterious process, we accept its consequences: the displacement of countless thousands of families, the destruction of cultures, the decreased affordability of life for everyone… I hope to make clear that gentrification is not inevitable, that it is perhaps even stoppable, or at the very least manageable….

Late 19th Century theorist and activist Rosa Luxemburg hypothesized that under capitalist economies, cities would inevitably be used as a way to absorb capital – that in systems in which there is surplus money floating around, cities become a mechanism, like luxury goods, to open the pockets of the rich…

Those features of cities were the first version of Richard Florida’s urban amenities.  We’re still doing the same thing with coffee shops and art galleries.  They’re all just ways to boost the value of the land and convince people with disposable incomes to come spend their money.

Moskowitz concluded the book with six recommendations for cities:

  1. “Expand, protect and make accessible public lands.”  The cities that best manage problems from gentrification are often those that retain public ownership of large areas of land, including land for affordable housing.
  2. “Give people an actual say in what happens in their city.”  That means empower and respect them – an approach that seems to be on the decline in Portland.  It also means, don’t stack their stakeholder panels with overwhelming numbers of real estate professionals and architects.
  3. “Heavily regulate housing. “ Treat it not as a freely traded commodity, but what it is — a common asset that everyone needs.  Those who speculate in this commodity should be expected to compensate those who are harmed by their actions — like people who are evicted from their homes to make way for more profitable development.
  4. “Implement a new New Deal.” This may be more politically difficult in our era — but the ultimate economic advantages of doing so are becoming more evident.  So is the ultimate penalty for growing inequality.
  5. “End protectionism, and add infrastructure.”  Broadly speaking, create more housing in more places. This doesn’t mean that we should jam it in wherever we can — in tall buildings downtown, for example, which create their own unintended effects, as we have written before.  As the UN’s Undersecretary-General has pointed out, there is more to affordability than a simple-minded “supply and demand.”  On the other hand, this does suggest that we should create more “complete communities” in more parts of the region —  including the suburbs, where most of the region lives, and where increasing numbers of people have been forced to relocate.
  6. “Raise taxes, raise wages, spend on the poor.”  We spoke previously about the potential of a “land value tax” to damp down commodity speculation in real estate – and the “Vienna model” that our friend Patrick Condon described for Vancouver, B.C.  Essentially, a land value tax soaks up the excess capital that would otherwise fuel land speculation, and the familiar spiral of higher prices.  In addition to serving as a damper on land speculation, the money raised from this tax is then used to fund affordable housing on public land.

This last point is part of a broader transition that needs to happen with so-called “Georgist” economic policies.  Essentially, we should treat resources as part of our commons that must be be conserved, shared and protected.  We should require that significant taxes be paid on consumption, while at the same time, taxes are reduced on creative development that uses fewer resources.

This is an essential path to a “repletion economy” – one that conserves resources, and rewards more creative growth that consumes fewer resources– or better yet, that actually regenerates (“repletes”) resources, in the same way that, say, good farmland practice can produce good crop growth while also regenerating the soil.

But right now, we’re doing the exact opposite.  We’re operating a “depletion economy” – one that is fundamentally unsustainable.  We’re rewarding  those who are stripping our resources out from under us, drilling and burning and uglifying the landscape, with results that are increasingly toxic to people and other living things.   It’s happening in the wilderness, in the countryside, in the suburbs — and yes, in the city cores.

It’s tempting to apply the formulas of speculative real estate to the core of our own city.  It’s tempting to be lured by the short-term profits of “voodoo urbanism” as we have called it.  But as Moskowitz points out,  “gentrification is a system,” he says, “that puts the needs of capital (both in terms of city budget and in terms of real estate profits) above the needs of people.”  This is how to kill a city.

Is the City forgetting what neighborhood associations are good for?

Urban equity is a vital goal, and one that Portland must work harder to achieve — but not by destroying its pioneering neighborhood involvement system.

The City of Portland’s “organization chart” for the Office of Neighborhood Involvement. Is the top-down format inadvertently revealing something about ONI’s muddled priorities?

Last week brought an excellent piece (below) by Allan Classen, editor of the Northwest Examiner, making a crucial point about the current dysfunction within the Office of Neighborhood Involvement (as we have written about before).  That agency seems to have forgotten that there is a major distinction between neighborhood involvement via the grass-roots neighborhood association system, and the project of urban equity and justice.   And muddling up these two essential but distinct goals is a very bad idea.

Classen reminds us of the key role of neighborhood associations in securing Portland’s great urban legacy — a role that lately seems to have been forgotten, as some have sought to make them new scapegoats for NIMBYism, racism and worse.

This divisiveness is unwise and unnecessary. More to the point, it discounts the considerable value of neighborhoods in helping to actually meet our future urban challenges — as we discussed previously, after considering some recent wise words of advice from London.

Of course neighborhoods need to be more inclusive and representative of their residents; that’s unquestionably a fundamental principle of democracy.  But that won’t happen if neighborhoods are merely marginalized within ONI, in favor of other “non-geographic communities.”  The larger goal of urban equity and justice — a crucial one, as we have written —  requires involvement of many other communities, which in turn requires a distinct process with distinct oversight.  Especially given Portland’s racist development history, it probably deserves a separate agency altogether.

Cobbling that separate non-geographic function onto the neighborhood involvement system — and the Office of Neighborhood Involvement — is only likely to cause further dysfunction within ONI.  The result will continue to undermine and suppress, rather than respect and empower, Portland’s landmark neighborhood involvement system.


Prerequisites to Community
Allan Classen, Northwest Examiner

Communities are built by individuals committed to the proposition that what people have in common is more important than what divides them.

Neighborhoods and neighborhood associations are not necessarily synonymous with communities, but at their best, they embody a sense of improving lives and environs by cooperating on matters beneficial to all. It may manifest in matters as basic as the need for a stop sign or to remove litter— goals that may not save lives but which are welcomed by all regardless of political leanings or demographic identities.

Strong neighborhood associations hold elected officials and the local bureaucracy accountable, sometimes preventing colossal mistakes having multigenerational consequences.

Are you glad that the Northwest District is not divided by a freeway between Thurman and Vaughn streets, or that the center of the neighborhood is not a 15-square block hospital campus? Then you have the Northwest District Association to thank.

Portland’s neighborhood system was crafted by people who knew what neighborhood associations were about and why they were central to the vision of a vibrant city. That system has been weakened over the years and is now being redirected toward another purpose: incorporating those who have been socially excluded by reason of disabilities, immigrant status, race, ethnicity or sexual identity.

Commissioner Chloe Eudaly and the new director of the Office of Neighborhood Involvement are making the new priorities clear. At her first public meeting, Executive Director Suk Rhee wrote out her top priorities—which she declared to be nonnegotiable—“disability, new Portlanders and race/ethnicity.”

Those goals are unassailable, and no neighborhood association should discriminate against members of marginalized groups. Righting these wrongs, however, should not become the primary mission of the Office of Neighborhood Involvement.

Organizations addressing discrimination today take a very different approach than those doing geographic-based community building. One seeks to unravel things from the beginning, while the other starts with the here and now. Employing both philosophies simultaneously would fracture an organization.

In the diversity-first framework, establishing community involves prerequisites. Before we can work together, there must be an acknowledgment of past sins. Until the dispossessed feel prejudice and bias are conquered, they cannot be expected to trust the broader geographic community.

Nations at war often extend the conflict by demanding preconditions before peace talks can begin. Only when both sides agree that peace is preferable to war can a settlement be reached.

At the Portland neighborhood level, inclusion-first is demanded by those who put the advancement of their subgroup above the success of the community as a whole.

This is not to say full acceptance of all members of society is less important than community building. They are different realms operating by contradictory norms, and they cannot be effectively addressed by the same people and organizations at the same time. Saddling the neighborhood system with the responsibility of first fighting discrimination will tend to weaken neighborhood associations and frustrate what they do best.

While it’s not their primary purpose, neighborhood associations can also break down social barriers. When people of different backgrounds come together for mutual benefit—particularly if progress is made—they become friends, build trust and in time share more of their personal stories.

I believe gay Americans won the battle over bigotry primarily by sharing their own stories and maintaining authentic friendships with straight people rather than by proving past discrimination was inexcusable. That may not be the only way to overcome, but it is one way.

When we emphasize our differences, there is no end to the differences we can find. Portland bars wanting to promote a night for lesbians last year ran afoul for not specifically including bisexuals, transgenders and a list of identity groups so specific it took 10 letters to refer to each one. Reed College protested a speaking engagement by “a cis white bitch” filmmaker considered unworthy of depicting a subculture she was not a member of.

When we create boxes, we can never create enough to satisfy everyone.

In the words of Rodney King, “Can we all [just] get along?”

Why do so many new buildings look so strange? (And does that matter?)

Surveys show that many people are puzzled by new building designs. A provocative new article suggests the origins of their aesthetic lie in the brain disorders of an earlier generation of architects.

Portland’s “Yard” building, a new design at the east end of the Burnside Bridge.

The authors of a recent article on the Common Edge website don’t mince words.   We live in a world of increasingly foreign, blank and detail-free buildings because the founders of the movement that still governs how buildings are designed had brain disorders.

Citing new scholarship as well as evidence from neuroscience and medical research, authors Ann Sussman and Katie Chen lay out a thought-provoking (and likely debate-provoking) argument:

How did modern architecture happen? How did we evolve so quickly from architecture that had ornament and detail, to buildings that were often blank and devoid of detail? Why did the look and feel of buildings shift so dramatically in the early 20th century? History holds that modernism was the idealistic impulse that emerged out of the physical, moral and spiritual wreckage of the First World War. While there were other factors at work as well, this explanation, though undoubtedly true, tells an incomplete picture.

Recent advances in neuroscience point to another important factor: one reason modern architecture looked so different than past constructions was because its key 20th century founders literally didn’t see the world in a “typical” fashion. They couldn’t. Their brains had been either physically altered by the trauma of war or, like Le Corbusier, they had a genetic brain disorder. And while their recommendations for “good design”—a new world, a clean slate—certainly reflected their talent, ambition, and drive, their remedies also reflected their brains’ specific disorders.

The authors go on to cite recent scholarship on the highly influential architect Le Corbusier, and the evidence that he suffered from autism.  That condition resulted in eccentric approaches to handling visual information, and disregard for the normal interests of everyday users:

“For all his genius, Le Corbusier remained completely insensitive to certain aspects of human existence,” Weber writes in Le Corbusier: A Life (Knopf 2008). “His fervent faith in his own way of seeing blinded him to the wish of people to retain what they most cherish (including traditional buildings) in their everyday lives.”

Other founders like Walter Gropius and Mies van der Rohe were also victims of brain changes as the result of traumas suffered during World War I, write the authors:

The impact of World War I turns out to be quite significant for other founding modern architects, too—for different personal reasons. Both Walter Gropius (1883-1969), who brought the modern curriculum to Harvard’s Graduate School of Design in the 1930s, and Ludwig Mies van der Rohe (1886-1969) who did the same for the Illinois Institute of Technology, likely suffered from post-traumatic stress disorder (PTSD), or brain damage from surviving years of military conscription in the German Army which lost more than two million men in the four-year conflict.

The authors suggest that Gropius, in particular, was inspired in his radically simplified design ethic in part by his experience of post-traumatic stress as a result of the war:

Again, given the disorder, his directive to students to “start from zero” in their design process, or his dismissal of architectural history as entirely irrelevant, becomes effectively reflexive, since avoidance of the past is a PTSD response.

Does this matter?  Yes, because if architects think certain buildings are positive contributions to the environment, but the rest of society does not, that raises the question of who gets to decide.  Can architects dictate to others what they have to experience, even if the others don’t like it?  Is that professionally responsible?

In fact many studies show that there is a strong divergence between what architects think is a “good” building, and what almost everyone else does. For example, a paper by Robert Gifford et al. (2002) cited extensive evidence of this divergence, and concluded: “If we are ever to have more delightful buildings in the eyes of the vast majority of the population who are not architects, this conundrum needs study and solutions.”

A paper I wrote with the physicist Nikos Salingaros also speculated on the reinforcement of this divergence as the result of cult-like architectural training — a phenomenon I have observed first-hand, both as a student and an instructor of architecture, at the U of O and elsewhere.  (My Ph.D. is also in architecture at Delft University of Technology, a program currently ranked third in the world; before that I did grad work at UC Berkeley, ranked fourth.) I saw first-hand that my profession certainly has its own silos and its own blinders — and its own economic incentives, biased toward the status quo.

Do Portland architects care about this issue?  Should they?

Read the full article:  Warning to architects and their fans:  this material may be upsetting to comfortable ideas!  You may want to vent your angst in the comments section.


“We don’t have a housing problem, we have a land speculation problem”

Vancouver urbanist Patrick Condon calls for a land value tax to house the fleeing middle class

Far from helping the city’s affordable housing crisis, Vancouver’s tall buildings are increasingly serving as “safe deposit boxes in the sky” for global capital.

Our friend Patrick Condon has a very insightful new article that critiques the failed “supply-side” approach that has been used to address Vancouver’s soaring housing cost – an approach that Portland is also using, with similarly dismal results. Patrick looks at economist Henry George’s proposal for a “land value tax” to provide affordable housing for a much broader segment of the market:

“We have unwittingly unleashed a speculative frenzy through our policies, a frenzy that is enriching only those speculators who enjoy the natural monopoly created by the limited supply of land.”

“It may now be of value… to tax land more heavily, using the proceeds to insure that decent housing exists for everyone who works in this city. Not just 20 per cent of us, but everyone.”

“It seems time to admit that depending on the market itself to solve our housing problem will never work. The market is broken and requires intervention. One need only look at the failing Cambie corridor experiment, where a single house lot is on the market for the outrageous price of $11 million dollars, doubling in price in only 18 months. We are enduring a tsunami of international capital which is being used to create speculative real estate values that are robbing us of the community we have collectively created. This uncontrolled, illogical and immoral speculative wave is forcing our sons and daughters to other lands to survive. A tax on land speculation, tried with success in other nations, is worth considering.”

Tax Land to House Vancouver’s Fleeing Middle Class

We don’t have a housing problem, we have a land speculation problem.

By Patrick Condon, The Tyee


The City of Vancouver, in the context of its “Housing Reset” initiative, has set a goal of 20 per cent affordable housing for new construction. This is a laudable goal, but it makes you wonder about the other 80 per cent. Is our collective ambition to have a city where only one out of five of us can afford to live? And who are those other 80 per cent anyway?

Let’s take a step back in history. In both Canada and the United States the “20 per cent affordable” target has come out of a somewhat wonkish process. First you assume that the market can supply housing to 80 per cent of the employed and able bodied. That leaves 20 per cent that the market can’t reach and thus need a helping hand from the state.

That strategy has worked OK in most metropolitan areas. In most metro areas in the U.S. and Canada there was a firm relationship between the average family income in the region and the average cost of housing.

But we all know that here in Vancouver that is no longer true. Our average cost of housing is about three to four times higher than it should be if you use average family income as your measuring stick.

So while a housing strategy that targets 20 per cent affordable housing might make sense in Tulsa, Oklahoma, it is clearly not calibrated to the enormity of the task at hand here in Vancouver, where the majority of working residents need affordable housing, not just 20 per cent.

This begs the question: what can we do instead? A possible answer: tax land to house the middle class.

This might take a bit of explaining so bear with me. What we have in Vancouver is a classic case of speculative investment going into non-productive uses — that non-productive use is land which by itself doesn’t produce anything. Now certainly that speculative value shows up on the provincial ledgers, especially in the form of transfer taxes and other taxes on real estate sales. But land doesn’t produce anything. Factories make things, stores sell things, barista’s foam things, farmers grow things, miners mine things. These activities combine capital (i.e. the money needed to purchase the store, the factory, the espresso machine, the mine, etc.) and labour (jobs) to produce new value. These are productive uses of capital. Productive combinations of capital and labour are the very engine of wealth creation, also known to some as capitalism. But “rent seeking” in the form of land speculation adds nothing to the capital value of society and does not, according to some very eminent figures, add wealth — it consumes it.

Even Adam Smith himself, known mostly for his faith in the “invisible hand” of free markets, derided the passivity of land owners who produce nothing when compared to the farmer, craftsman, or factory owner: “As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.”

With this lens we might now separate the productive and non-productive elements of our local economy, and conclude that we don’t really have a housing problem, we have a land speculation problem. I and others have many times delved into where all this money is coming from and what impact it has on our local wage earners (all bad), so no need for more of that here. What we all want to know is what to do about it.

Vancouver’s own Matt Hern points to a potential solution in his new book What a City Is For.

He is among those who would revive the proposals of Henry George who was an economics phenomenon at the turn of the 20th century. His proposal was simple. Tax only land: do not tax other property or incomes. In this way, the burden of maintaining society falls most heavily on those who passively benefit from the work of others. Land speculation yields an unearned “wind fall” profit which can and should be heavily taxed. In our city, all of the value in the land is the consequence of generations of public efforts. Roads, parks, SkyTrain systems, airports, hospitals, all of it, gives our land value. And yet the benefit of this public effort accrues passively to a few private land owners, and increasingly to speculators, who, as Adam Smith lamented, “reap what they never sow.”

It may now be of value to take a similar approach, i.e. to tax land more heavily, using the proceeds to insure that decent housing exists for everyone who works in this city. Not just 20 per cent of us, but everyone. And not by depending entirely on the marketplace to supply 20 per cent “affordable market rate” housing in most new projects as the city currently proposes. Affordable market rate housing (beyond being an oxymoron) translates into very tiny apartments, generally unsuitable for the domestic needs of the families Vancouver needs to retain.

Certainly those at the top end of the income scale can be housed by the market, as can those who increasingly resort to the “bank of mom and dad” for their six-figure down payments. But what of the rest? Under these circumstances more than half of those who presently work in the city (or, importantly, those we would like to attract here to support other aspects of our local economy besides real estate) would not be accommodated. And 20 per cent of our families living in “affordable” micro suites just won’t do it.

A more appropriate and achievable goal might be to supply housing for closer to 50 per cent of our wage earners, housing that would be protected from the market and not be its victim. This would mean an additional 35 per cent truly affordable and right-sized housing, on top of the roughly 15 per cent of this city’s housing that is already supported in one way or another. Funding for some of this may be partly in the pipeline, with provincial commitments to supply thousands of units; but that won’t be enough. Perhaps under our present circumstances it’s time to look further afield for models, like Vienna where over 60 per cent of housing is held outside of markets, or Singapore where the number is over 80 per cent. In these attractive cities, wage earners are guaranteed an affordable home and housing stress on the middle class is virtually eliminated.

And where would this additional money come from? Not from income tax or tax on productive businesses, but, as Henry George would recommend, on our land. We have unwittingly unleashed a speculative frenzy through our policies, a frenzy that is enriching only those speculators who enjoy the natural monopoly created by the limited supply of land. They invest but do not have to worry about risk or competition and this is not a proper fair or logical “market.” The City of Vancouver currently tries to capture up to 80 per cent of the “land lift” (value increase) created by rezonings in the form of charging a Community Amenity Contribution tax on development. But increasingly we lose out as the speculators move in well before the rezoning application process begins, allowing them to claim that the market can’t support a high CAC tax given how much the land cost them. This is going on right now all along Cambie Street where the city’s green light to development has unleashed a speculative torrent of value created by public investment in rapid transit.

A more even citywide land tax in the form of a higher citywide or district-wide Development Cost Levy would reduce the rage of speculation that focuses on one or two new designated development areas of the city, while generating the hundreds of millions necessary for the city to become the Vienna of Canada. A key benefit of this model, as proven in Vienna, is that it reduces the speculative value of development land without increasing the market cost of units, while allowing the city to purchase land for housing at a lowered cost (due to the way that the tax on land mitigates speculative increases in the cost of development land throughout the city).

It seems time to admit that depending on the market itself to solve our housing problem will never work. The market is broken and requires intervention. One need only look at the failing Cambie corridor experiment, where a single house lot is on the market for the outrageous price of $11 million dollars, doubling in price in only 18 months. We are enduring a tsunami of international capital which is being used to create speculative real estate values that are robbing us of the community we have collectively created. This uncontrolled, illogical and immoral speculative wave is forcing our sons and daughters to other lands to survive. A tax on land speculation, tried with success in other nations, is worth considering. No amount of rearranging deck chairs on the Titanic will do. Vancouver real estate is a rigged game of monopoly with a few winners and a vast public body whose lives are severely diminished. A city that is unaffordable to 80 per cent is not a goal worth reaching, nor is it a city worth living in.

Central City 2035 plan moves toward adoption – in spite of apparent conflicts of interest

But at least global capital will have a place to invest!

Portland’s Central City 2035 plan includes increased building heights designed to encourage a wave of new tall buildings. Critics say they will fuel demolitions of historic assets, further drive up prices, negatively impact livability, and cause other problems.

On Thursday, September 7, the Portland City Council will hear testimony from citizens on the adoption of the Central City 2035 plan, which was approved previously by the Planning Commission.

That happened in spite of a finding by the City Auditor’s office that the Stakeholder Advisory Committee for the West Quadrant Plan – a key part of the CC2035 plan — did not properly disclose potential conflicts of interest. The finding by the Auditor’s Office, and specifically by Ombudsman Margie Sollinger, also included a requirement that the Bureau of Planning and Sustainability secure disclosures after the fact by members of the SAC.

The Ombudsman found that the SAC members are “public officials” under Oregon law, and therefore must not enrich themselves in the course of their conduct. In five cases, SAC members refused to comply with the disclosure requirement, and at least two of those members had major real estate holdings in the West Quadrant Plan that likely increased significantly in value as the result of their votes.

Many of us (including the two bloggers for Livable Portland) believe it is urgent that we restore the integrity of the planning process, in perception and in reality. We believe this will require, at a minimum, a re-convening of a new stakeholder committee charged with re-assessing the heights and FARs of the West Quadrant, comprising a, quote, “broadly representative… cross-section of affected citizens.” This is the requirement of Oregon’s Statewide Planning Goal One – and a basic principle of public involvement, and transparent, accountable government.

Perhaps a new SAC will be convinced on the evidence that building heights of no more than 100 feet will be fully adequate to accommodate a more benign, diverse, diffuse form of urban growth, and to preserve Portland’s priceless livability and heritage.  In any case, we believe a proper review is essential to the integrity of the process.

If you would like to testify at Thursday’s hearing, you are advised to arrive by 1:30 to sign up at Council Chambers, 1221 SW 4th Avenue.

Forbes: U.S. Cities Have A Glut Of High-Rises And Still Lack Affordable Housing

Another blow for “voodoo urbanism” in Portland and elsewhere.

The Vancouver skyline, where massive construction of high-rises has failed to improve affordability — in fact, new evidence suggests the practice has fueled greater problems.

In a convincing rebuttal to the myth that high-rises can help address housing shortages and loss of affordability, Forbes Magazine has cited statistics of a growing glut of high-rises on the market – at the same time that the crisis of affordability (in Portland and other cities) continues to spiral out of control.

The author is Joel Kotkin, a demographer and urbanist with whom the authors of this blog have had big disagreements in the past, and still do. Mr. Kotkin seems to be fond of car-dominated  sprawl, and not particularly appreciative of urbanism, i.e. livable neighborhoods with walkable streets, ample parks and squares, transportation choices and a mix of amenities. (Say it ain’t so, Joel!)

Well, urbanism is not the same thing as a city core, and while Mr. Kotkin perhaps doesn’t get urbanism, the boosters of hypertrophic growth in the core – what we previously referred to in this blog as “voodoo urbanism” – don’t seem to get the possibility of a more geographically diverse urbanism either.

The population of the Portland metro region is 2.3 million, but the population of Portland itself is only 670,000 – meaning that over 70% live outside of Portland. Even fewer live in the truly urban core of Portland, where high-rises are economically viable.

Kotkin rightly points out that focusing on this small area with high-rises creates a great many negative outcomes – of just the sort the authors of this blog have been warning about:

“…a high-density strategy tends to raise the price of surrounding real estate…”

“Critics also note that high-rises in urban neighborhoods often replace older buildings, which are generally more affordable.”

“High-density housing is far more expensive to build. Gerard Mildner, the academic director of the Center for Real Estate at Portland State University, notes that development of a building of more than five stories requires rents approximately two and a half times those from the development of garden apartments.”

“…in many cases, these units are not people’s actual homes; in New York, as many as 60% of new luxury units are not primary residences, leaving many unoccupied at any given time.”

“The notion that simply building more of an expensive product helps keep prices down elsewhere misses the distinction between markets…”

“These expensive units are far out of reach for the younger people who tend to inhabit the neighborhood, instead serving as what one executive called ‘vertical safe deposit boxes’ for people trying to get their money out of China.”

“In the end, the real need is not for more luxury towers. What is needed, particularly in America’s cities, from the urban core to the urban fringe, is the kind of housing middle- and working-class families can afford.

This is very true – although Kotkin seems a little too focused on the fringe. It still seems true that he conflates “suburban” with “sprawl,” and “center city” with “urban”.

But the “sub-urbs” can be urban too – that is, they can offer livable, walkable neighborhoods with a diversity of amenities and transportation choices – and here is the real challenge for most people in most cities, including Portland.

So the question is NOT how many people we can jam into high-rises in the core – again, “voodoo urbanism,” imagining that tokenistic over-building there will somehow solve broader problems, when in fact it exacerbates them – but rather, how well we create a truly continuous, diverse, polycentric urbanism.

Read the full article:

UN Undersecretary-General: “Supply and demand are not sufficient to guarantee housing affordability”

UN Undersecretary-General Joan Clos (left) meets with the author (right) at the COP21 climate conference in Paris. To his right are Louise Belfrage of Ax:son Johnson Foundation, and Raf Tuts of UN-Habitat.

The former chair of the UN’s Habitat III conference says, “If you leave the market alone, it’s going to be a spiral of prices.” 

Joan Clos, former Mayor of Barcelona and now head of UN-Habitat, has weighed in on the growing housing affordability crisis, now a global problem.  In an interview in Metropolis magazine he pointed to the need to address economic factors, and to target the financial mechanisms necessary — especially above the local level.  (For Oregon, this would presumably include the State.)

Clos chaired the recently concluded UN Habitat III conference, which produced an outcome document known as the “New Urban Agenda.”  The document was adopted by consensus by all 193 member states of the United Nations, including the US.

In the interview, Clos was asked what was required to meet the affordable housing crisis.  He replied:

“Successful affordable housing policies are always an outcome of a good coordination between a national housing policy and then local implementation. You need a strong national housing policy, which can help to develop financial mechanisms for addressing affordability, because affordability cannot be guaranteed only by the market. Supply and demand are not sufficient to guarantee affordability, especially in successful cities. If you leave the market alone, it’s going to be a spiral of prices.

“Strong affordability policies have two components. One is income redistribution, usually paid for by the redistribution funds of the budget, which are usually national funds. Then you need another component, which is the local design of the solution. How do you make sure that there are no gated communities, that they are not segregated, that there are no massive poor housing schemes, these kinds of things?

“These are mostly in the hands of local authorities. In order to be successful, you need a good relationship between both. This is the difficulty, because in many places you can have a very committed local authority that puts affordable housing at the center. But if you don’t have the financial mechanisms to support that, it’s not going to work.”

Read the full article here.

Simon Jenkins: Broader lessons from the Grenfell Tower Fire

Simon Jenkins, a dean of London’s urban critics and journalists (and former Editor for The Times) writes in The Guardian that the Grenfell disaster reveals more than issues of fire protection.  He argues that the very idea of residential towers is fundamentally flawed and anti-urban.

“Towers are again raising their heads across the urban landscape, creatures of egotistical architects, greedy developers and priapic mayors.. They do not converse with their context, they thumb their noses at it.

“They are antisocial, high-maintenance, disempowering, unnecessary, mostly ugly, and they can never be truly safe. No tower is fireproof. No fire engine can reach up 20 storeys, period…

“The housing expert Anne Power spoke of the craving of architects and planners at the time for “something distinctive and prestigious”. Architects even invented a vocabulary to justify what was in effect a sales pitch. They would build “vertical streets … villages in the sky … new cities for a new age”. Social consequences were damned….  

“The most “crowded” parts of London are not around towers but in eight-storey Victorian terraces. The boulevards of central Paris have treble London’s residential density without towers. Westminster council’s aborted Paddington Pole, at some 60 storeys, had fewer housing units than the high-density street housing suggested by its opponents. The tall blocks wanted by Boris Johnson for Clerkenwell’s Mount Pleasant estate are at a lower density than the low-rise town houses proposed by the consultants Create Streets…”

“Today’s surge in tower building – some 400 are in the pipeline of London’s uncontrolled property market – is driven by a quite different demand. It is from high-income migratory couples and foreign buy-to-leave investors. These people do not want a neighbourhood. Their social life is dispersed. They want a locked gate, a concierge and a pied-à-terre with a view. They want a gated community in the sky. When I moved from a tower flat to a street flat, I encountered a completely different city, exchanging what amounted to a self-catering hotel for a community of neighbours.

“Lessons will need to be “learned” from the Grenfell disaster. But I hope they extend beyond just more sprinklers and safer cladding. They should plead for the sensitive planning of a modern, sociable city. This has nothing to do with the nature of property tenure, with wealth or poverty, or with population density. Streets can be just as densely packed as towers. By whom they are occupied is a matter for housing policy. What matters in the long term is how flexible the buildings are, how they interact with each other and their surroundings. No one asked such questions of Grenfell.

“North Kensington used to be a tough area, and has long been under pressure from inward migration. That it has responded so well is, I believe, because of its topography, its intimate streets and squares and its relatively subtle rich/poor mix. Towers are here wholly out of place and character. Their plutocratic reincarnation, backed by developer-led mayors Ken Livingstone and Boris Johnson, signals only a crumbling, atomised urban society.

“Such atomisation delivers ugly, inappropriate buildings under distant, careless custodians. That is the true message of the Grenfell tragedy.”

Full article: