Three Game Changers in Rebuilding America

A Commentary from the Sustainable Cities Design Academy

The Sustainable Cities Design Academy (SCDA), organized by the American Architectural Foundation in partnership with United Technologies Corporation (UTC), provides leadership development and technical assistance to local leaders engaged in planning a sustainable building project in their communities. The second of four SCDA events scheduled for 2010 convened August 11–13 in Washington, DC. Immediately following the Academy, design team member Martin Melaver reflected on the experience.

I had the opportunity recently to serve as a design team member for the Sustainable Cities Design Academy, a program of the American Architectural Foundation. This second of four Academies scheduled for 2010 focused on three challenging case studies.

The projects addressed were Brattleboro, VT, and its efforts to redevelop brownfield land on the edge of Main Street, fronting the Connecticut River; Prince George’s County, MD, and its push to create a multi-modal corridor where there is currently an asphalt speedway; and the Lower Ninth Ward in New Orleans, LA, and its attempts to prioritize a monumental list of revitalization projects and create a clearly-defined implementation program. Brownfield mixed-use development, multi-modal transportation, restoration of community through restoring affordable housing, and catalyzing economic development: it’s a heady mix of issues that most cities looking to restore their urban core areas are facing.

In one respect, the challenges for each of these three municipalities seem quite distinct. Brattleboro’s big task is to convince town leadership to play an active role as at least a quasi-developer of the site. Prince George’s County’s key issue is to persuade its planning commission and the state’s transit authority to work collaboratively from the get-go so that a shared vision and shared strategies can facilitate planning, financing, and implementation. The Lower Ninth Ward’s daunting challenge is to tunnel its way out from underneath the mound of planning ideas generated since Hurricane Katrina, execute on some low-hanging fruit projects, and start the monumental work of rebuilding a community that once housed 18,000 residents (but now houses only about 2,500).

But the differences among the three projects and locales mask a few larger, shared challenges (or opportunities) that are common across the country. Each project underscores market forces highlighting (1) the growing in-fill of neglected urban areas; (2) the need to shape development projects through systemic thinking (transportation, housing, economic development, etc.); and (3) the need for innovative financing structures through various public/private partnerships. And the intersection of these three market forces brings us to three game-changers for America. In both subtle and obvious ways, these forces are revolutionizing the way we will be thinking about rebuilding our cities in the decades to come.

GAME-CHANGER #1: THE SHIFT BACK TO URBANIZATION
Not only are we an urban culture for the first time in US history, but we are also in the early stages of rebounding from more than a half century of suburbanization. An Urban Land Institute study done back in 2004 noted that over the next 20 years, 50 million Americans—or about 40% of the current non-urban dwelling public—will be moving into cities with dynamic work/live/play environments. A 2010 study by the Brookings Institution, “The State of Metropolitan America,” provides a more extensive analysis of this same phenomenon—basically, greater growth within urban core areas, with the caveat that a significant portion of that growth is happening on the fringes of these areas.

The significance for anyone concerned about the future viability of his or her town could not be sharper. There are going to be winners and losers in this migration back to urban environments. Get it right—like Portland or Austin—and you are likely to ride a wave of livability for decades to come. Get it wrong—maybe Detroit is the whipping boy here—and you’ll find yourself having to downsize your extensive environs significantly.

GAME-CHANGER #2: SHAPING URBAN DEVELOPMENT SYSTEMICALLY
This past year has seen an unprecedented level of collaboration among three of the most important federal agencies around: DOT, HUD, and EPA. Together these agencies have formed a Partnership for Sustainable Communities, which has reached some promising conclusions: (1) that housing, transportation, and environmental issues are all interrelated and (2) that their respective funding of projects really ought to leverage each other.

Out of such basic and desperately needed collaborative thinking came the decision to agree upon six livability principles to help guide the allocation of federal grant monies: more transportation options; economic competitiveness; equitable, affordable housing; support of existing communities; the valuing of communities and neighborhoods; and the leveraging of policies and investment.

Again, the message could not be clearer to any municipality looking for largesse. Following the money means planning systemically. As the August 23 deadline loomed for community and regional planning grants through the Partnership for Sustainable Communities, cities across the country scrambled to figure out how to tell their stories of working collaboratively across historically-siloed lines to plan for systemic urban revitalization. It’s creating a sea change in how governments are having to function.

GAME-CHANGER #3: THE VACUUM CREATED BY THE COLLAPSE OF THE CONVENTIONAL CAPITAL MARKETPLACE
Most anyone involved in real estate development these days is painfully aware that the conventional capital marketplace has dried up. There’s virtually nowhere to go for either debt or equity. It’s dead. Kaput. So if you are involved in development today, one of a handful of things is happening: you are trying to dig yourself out of negatively-leveraged holdings; you are sitting on a boatload of cash and hoping to cash in on hugely discounted sales and foreclosures; you are devoting your time to planning until the next up-cycle occurs; or, you are looking at creative financing schemes to help move projects forward. And those creative schemes invariably involve some form of public/private partnership (PPP). These various PPPs come in a whole slew of shapes and guises, but they invariably involve the following paradigm shifts:

• The public is weighing in with its own interests (the price of admission for helping source the capital on either the debt or equity side or both). This means that most development occurring these days has a strong social/public component.
• There is a strong push not only to develop projects with public interest in mind, but to structure these deals in ways that extend the time-frame of investment. Instead of having private capital invest with a typical short-term exit strategy whereby money enters and then soon after exits a community, public/private ventures mean that the length of investment in a community is likely to be extended.
• There is also a strong push for deals to result in a type of revolving loan structure. Typically, private investment capital exits the community after a short period of time. Private/public ventures can result in at least a portion of investment returns being reinvested in future community projects.

So, paradigm shifts in population demographics, governance, and capital structure are all happening simultaneously. It’s a perfect storm for shaping long-term investment in projects that integrate housing, transportation, economic development, and environmental stewardship within urban core areas. This perfect storm could not have happened at a more opportune moment, just when we need to design cities that are more livable and environmentally benign.

Martin Melaver is a principal and founder of Melaver McIntosh, a development-consulting firm focused on sustainable, transformative strategies for regenerating cities. He is also the author of Living Above the Store: Building a Business that Creates Value, Inspires Change, and Restores Land and Community.