Manville on Downtown Revitalization: What, How and Why?

Guest post by Michael Manville, UCLA (recently published in JAPA, Urban Studies, the Journal of Urban Planning & Development, and the Journal of Planning Literature)

I’ve been thinking a bit recently about downtown Los Angeles, which led in turn to my thinking about downtowns in general. Downtown revitalization is one of the oldest policy projects in urban planning and calls to rescue the downtown, or assertions that a city is nothing without a 24-hour downtown, are common in conversations about cities. So too is the idea that downtown is having a comeback. The American downtown, at long last, seems to be growing again. Fueled by loft conversions, the Los Angeles downtown is growing as well (which has led to a curious boom in stores devoted to dog-pampering).

Aside from dogs and their needs, what should planning researchers ask about when they ask about downtown? I can think of three broad questions.

The What
First, if we are going to call this a comeback (or a “rebound”), what exactly are we coming back from? The decline of American downtowns is often framed as deviation from some longstanding norm, but the heyday of the American downtown was quite short (roughly 1880-1920) and the apex of the Los Angeles downtown was even shorter. A growing downtown is not, in other words, the historic norm, and there seems little reason to frame the decline of downtown as some sort of failure, rather than the next step in urban evolution.

This would be a semantic point, except that governments in almost every city intervene in their downtowns, and this intervention does imply that some sort of failure is occurring. It implies that the downtown should be growing, and that growth downtown is more important than growth in other stagnant areas that do not receive as much government money (anyone looking at the redevelopment expenditures of the City of Los Angeles would have to conclude that rebuilding downtown is more important than rebuilding Watts).

The How
Which brings up the second question. How much of the recent growth that we see in downtowns is actually the result of downtown-oriented public policy? Actually, maybe that one question should be five questions:

1. What do we mean when we say “downtown”?
2. Is the downtown growing, in population or jobs or both?
3. If the downtown is growing, can any of this growth be attributed to public intervention?
4. If yes, is the amount of growth attributable to public intervention sufficient to justify the public expenditures?
5. What factors other than government intervention contributed to the growth?
6. Is the portion of growth generated by public intervention beneficial to the city at large, and more beneficial than if the money had been invested elsewhere?

These are all fairly standard questions for evaluating an economic development policy, but in my reading of the downtown revitalization literature, they don’t show up a lot. In an illuminating panel on downtown housing convened by Fannie Mae, some of the discussants suggested that today’s downtown housing growth is the long-sought payoff to 50 or even 70 years of policy interventions. Unfortunately, perhaps because of the discussion format, there wasn’t much evidence to support that claim.

Assuming the claim is true, however, the next question is whether a policy that requires 50 years to bear fruit is really an efficient use of public resources. That’s where evaluation would be helpful. But many studies of downtown interventions are descriptive and prescriptive: they tell us what planners are doing and what planners should be doing. Policy recommendations and case studies abound, but there isn’t a lot of cost-benefit analysis.

(With some exceptions, of course. Economists, in particular, have helped out by demolishing the idea that sports stadiums and convention centers are engines of downtown redevelopment. Which hasn’t stopped cities from building them.)

In part the lack of evaluation may stem from the practical difficulty of deciphering the costs and benefits of some downtown programs. Many of the public-private partnerships that drive downtown renewal are quite complicated, and it is hard enough to figure out what’s going on—who’s getting what subsidy—let alone decide whether any of it is actually working. But not being able to answer a question isn’t an excuse for not asking it. And with that in mind, I’ll ask my third question.

The Why
Why are large cities in the business of revitalizing their downtowns at all?

If that sounds adversarial, it isn’t meant to: I happen to like downtowns (including LA’s) quite a bit. But assuming that our goal in economic development is to help people rather than places, downtowns seem a strange candidate for public resources, because they often don’t have many people.

The revitalization of Downtown Los Angeles has been ongoing since 1949, and literally billions of dollars have been spent on it. Yet in 2000 downtown LA, with some 30,000 residents, was home to just under 1 percent of LA’s population, and just under 0.5 percent of the LA MSA’s population. Is there anything about these people that warrants public intervention? Some of downtown LA’s residents are quite wealthy. Of those who are low-income, a disturbing number are homeless and in desperate need of help. A fair number are in jail. Many are students. This seems an instance where we would want to target certain populations for assistance, rather than an entire area.

And if for some reason we like the idea of helping places (or if funding formulas dictate place-based assistance), then South Los Angeles, which has well over 100,000 residents and grinding poverty, would seem a more justifiable target for concentrated economic development. The South LA neighborhood of Watts has slightly fewer people than downtown LA (although if you subtract away downtown’s students and prisoners the populations might be almost the same) but a poverty rate that approaches 50 percent.

Another way of saying this is that we should ask what the goal of downtown revitalization is. Revitalizing the downtown is not necessarily the same as revitalizing the center city, nor is it necessarily progressive. A revitalized downtown might help revitalize a center city, but the causality could just as easily run the other way. And a revitalized downtown might help the poor more than the affluent, but the goal of many revitalization efforts seems to be luring affluent people into empty commercial buildings and/or new residential buildings. The equity effects of such a policy seem ambiguous, especially in regions that aren’t growing and don’t have tight housing markets.

So what is the purpose behind downtown revitalization? Why are so many resources devoted to places that seem, on balance, to have so few people? I can think of three possible explanations offhand:

1. The fiscal base explanation. The downtown has traditionally been the most valuable land in the city, and as it atrophies the city’s ability to collect tax revenues falls, and therefore so does its ability to provide services. In the past cities could annex outlying areas to compensate for the falling desirability of land in their borders, but today this is less of an option. Thus the city needs to invest in its downtown in the hope that the private sector will follow its lead. Arguably the public money will end a prisoner’s dilemma among private developers, none of whom want to “go first.” 
2. The public psyche explanation. The downtown’s importance is larger than its contribution to employment or population. The vibrant downtown is a source of pride for residents and a source of allure to people and firms outside the region. It is the face of the region. It conveys vitality and energy, and suggests that the city is “world class” and cutting-edge. The traditional bustling downtown is associated with successful cities, even if its presence or absence means little to a city’s actual economic health, so cities that wish to compete should have a dynamic 24-hour core with tall buildings and bright lights. People may value the idea of a downtown even if they do not live in or travel to it. (A related, although somewhat different explanation, is the possibility that the public values a government that will subsidize downtown more than it values downtown itself. Citizens may not live in or travel to downtown, but they may nevertheless want a government that subsidizes the downtown, because they consider such subsidies to be evidence of commitment to an ennobling purpose. For subsidies like this efficiency is less important than visibility, because the subsidy satisfies a preference about government, not about downtown.) 
3. The public choice explanation. In this interpretation downtowns are obsolete regimes lacking in market power but strong in political power. Members of these regimes fight their own decline through rent-seeking: tax-increment finances, stadium and convention center subsidies, lavish government buildings and cultural monuments; and subsidies to downtown-centered public transportation. These projects are backed by coalitions that reap concentrated benefits from them, while the costs are spread over the city, county and even federal taxpayers. In Los Angeles, examples of rent-seeking redevelopment could include the Staples Center, the CalTrans building, the new MTA headquarters, the Disney Hall, the Grand Avenue Project, the convention center, the LA Live project, the region’s four rail lines, and the Bunker Hill redevelopment. The political power enjoyed by downtown boosters can explain why money is channeled into downtown rather than into areas that have more need but less political influence.

Of course there are other explanations, some of which are variations on the three above, many of which are not. Downtown revitalization occupies a strange spot in urban economic development. It is resolutely place-oriented rather than people-oriented — the goal is to help the downtown, rather than a population within it (such as the homeless). The place-orientation lends itself to a strong capital bias: when the goal is to develop a place the solution is often to build things in that place. Capital bias, unfortunately, often lends itself to waste.

The downtown revival is continuing to garner media attention, and we should start asking in more depth how much of what we are seeing is policy-driven, and how of what is policy-driven is actually worthwhile.

Gratuitous postscript: One of my advisors would probably not be happy if I discussed downtown Los Angeles for as long as I have without adding that it devotes entirely too much space to parking.