Much better development, made much easier
Alex Steffen is a planetary futurist and creator of the books Worldchanging and Carbon Zero. His new project The Heroic Future launches in September. Follow Alex on Twitter or to sign up to get his free weekly newsletter.
A question I often get asked when I talk about the need to build in booming cities to build a lot more housing, quickly, is “What about quality?”
Here are a few quick thoughts.
Concern for the quality of new development represents a civic virtue. I favor buildings that make a city more beautiful, and attention to landscape, context and character that helps make streets into places we want to live. I also favor buildings whose siting is wise and whose environmental performance is an order of magnitude better than the conventional buildings of the last decades (passivhaus is currently the gold standard here). I favor, as well, strong tenants’ rights and design-for-affordability.
All of these would seem, at first glance, to be in conflict with my view that in many cities we need to be building an order of magnitude more new housing. They’re not. Or at least they don’t have to be.
To understand why, we need to start with the fact that in most developed-world cities — and especially in North America — private developers and their investors play a large-to-overwhelmingly-large role in deciding what projects get built, and when. [Some interesting new social innovations are adding new kinds of builders to the mix, and public housing is seeing an uptick political support (though little new funding), but for now, for-profit developers are the ones who build the vast majority of housing.] So, if you want more housing, you have to figure out how to incentivize more projects.
Luckily, a strong incentive already exists: profit. Building housing makes developers and their investors money, or they wouldn’t build.
However, real estate development is also a risky business to be in. Unexpected problems with a site, money spent in delays due to construction problems, bureaucratic inertia or lawsuits, lost financing, unpredictable market cycles — a whole host of factors can turn a good project unprofitable, and thus kill it. This risk also means that projects are under pressure to deliver higher returns to investors, since the more uncertain the return, the more return an investor (usually) demands when the project does pay out. All of these risks squelch innovation (since innovation adds places a project can go astray and increases uncertainty), raise costs on housing, and mean less housing gets built.
From conversations I’ve had with developers (from local super-green design-build guys to executives at huge multinational development companies), the two biggest problems they see are delays and uncertainty. Delays cost them money, and being uncertain about when a project can be built (or even if it can be built, where agency approval and public process is involved) makes moving forward with a project risky.
That means that measures which lessen delay and increase certainty are not only worth money to developers, they can even make some projects which seemed too risky suddenly make sense. Make it easier to build, and people build more, and, with the right incentives, they build better.
And here we come back to the question of quality. All of these quality measures (from architecture to craftsmanship to placemaking to green building) cost money (and/or increase risk). Imposing them without changing the planning and permitting process developers face will therefore slow housing construction, which means rising rents and social injustice. [The same, paradoxically, is true of affordability set-asides: if we mandate that developers increase the proportions of their buildings which are “permanently affordable,” we raise their costs; they larger the mandate, the higher the costs, meaning more projects won’t pencil-out financially and we may end up with less housing (and thus higher housing costs) over all: it’s one way to help the poorest find housing, but it does so at the cost of driving up rents for middle class people.]
But there’s another option: make it much, much easier to build, but demand much more from developers in return. Demand that all projects meet high standards, make the permitting and planning approval process almost automatic if projects meet them.
If the process is streamlined enough, even facilitated to be as quick as possible, the extra costs and risks developers face with better buildings can be outweighed by the savings and certainty of a fast, fair, clear process. Developers don’t like rules, period, but when they can make more money (and build cooler stuff) by meeting higher standards, it’s a smart bet they will.
Raise the standards high enough and we’ll drive off some of the worst developers, the ones who want a quick buck for slapping up the cheapest buildings they can. Those guys can make better profits under less supervision elsewhere. On the other hand, we may well draw other, better developers (ones who are actually dying to do good work) to our city.
Combine fast-track permitting with density bonuses for affordable housing, and you’ll get more units built. Add in mechanisms for creating more investment in good projects through, for instance, redevelopment agencies, crowd-financing and social-impact-focused real estate investment trusts, and you can speed the number of good projects that get built even more.
The trick to all this is that we have to give up the piecemeal, incremental, process-focused planning culture of the past. That doesn’t mean that development in cities should be pursued without civic debate. It does mean that we should have that debate quickly and strategically, on a larger scale with much wider and more informed participation; we should decide what kind of a city we want and what kind of development we need to become that city; we should craft rules and plans that get us that development with as few hurdles as possible… and then we should focus the role of local government not on preventing the bad, but on drawing much more of the really good.
A city government focused on proactive building, after all, is what it’s going to take to build an order of magnitude more housing than we are. (It’s also what it’s going to take to meet the climate crisis and help arrest the rising inequality in our societies.)
Obviously, there’s lots of complexity, nuance, conflict and needed learning in all this. Lots of smart people are working on this set of problems, and they face all sorts of obstacles. It isn’t easy. But I believe raising the bar and dropping the roadblocks can help us build better cities.
Indeed, I think this “elevate and accelerate” strategy is probably cities’ best hope for meeting huge challenges before the costs of failure overwhelm our ability to act.
Since the status quo is failing profoundly — failing our lower-income residents as inertia makes housing more and more unaffordable and failing our descendants as our current urban patterns worsen climate change — the riskiest approach would to take no large risks at all.
For some inspirational thinking, here’s Melbourne’s visionary head designer, Rob Adams, talking about sustainable city-building on a rapid pace:
Originally published on October 14, 2013 at www.alexsteffen.com.
