Order by a bit of design?

Alain Bertaud in his book ‘Order without design - how markets shape cities’ makes the case for land values to more strongly shape city density and zoning than planning-led principles relating to compact cities or transit-oriented development.

Bertaud (along with others) contends that if land values and their associated price signals played the key role in determining density and height of development in a city, then there would be better outcomes for all. Development markets would be more efficient; more quickly responding to different demands and pressures, households and businesses would benefit from more choice.

Much of what he says has merit. The basic notion is that urban land values reflect demand to live or work in a particular area. High land values mean high demand, perhaps because of good amenities or proximity to main centres.   In areas of high land values, density and building height should be high, as developers respond to the demand and increase supply of housing and business floorspace. In areas of lower land value, building density will be lower, and pressure for further development less strong. In general, there is a land value gradient across a city, with  the highest value in the centre of the city and lowest on the edges. How high or how low land values and building density and height might be doesn’t really matter to the story. What does matter is that land values are constantly changing as population growth occurs, waves of demographic and economic changes pass through the city and infrastructure, especially transport infrastructure is developed. The city needs to adjust constantly to these changes if it is to deliver the housing and workplaces needed.

The theme of the book is in part encapsulated in the NPS on Urban Development Capacity and its notions of feasible development capacity. However the NPS is a ‘lite’ version of the concept. All the NPS wants is sufficient capacity - this could be in the form of lots of low density capacity in areas of low to moderate land values, it does not have to be more concentrated capacity in areas of high land values.

In Bertaud’s view, the planner’s role is to anticipate and feed the markets response to changing land values - inform the community about likely changes and help co-ordinate infrastructure and market responses; provide the necessary infrastructure; improve accessibility for growing areas; develop the appropriate controls to manage the externalities that arise.

In the book, planning is cast as the polar opposite to the market - socialism versus capitalism. There is no third way.

The questions I have, and which the book skirts around are:

1. What if much of the area of higher land values is an area of recognised special character that can’t easily be redeveloped?
2. What if parts of the city with higher land values have got ageing infrastructure which cant cope with extra density, resources are limited and the infrastructure cant be replaced in the short term?
3. How do you anticipate land values and associated density patterns 30 or 50 years out when you are spending billions of dollars re configuring a city’s transport infrastructure, like shifting from a motorway-based to transit-based transport system?
4. What about equity of access to and equity of supply of public infrastructure.

There are usually some simple answers to the above:

1. Save some of the heritage, but not all.

2. Prioritise and stage the renewal of infrastructure and perhaps put up with a few ‘overflows’ (exceed the capacity of infrastructure) in the interim.

3. Don’t worry about trying to anticipate market  responses too much, stick in the new transport infrastructure and ensure that there are the opportunities for the market to respond. Even better, price the use of transport infrastructure correctly.

4. Worry about equity after improving efficiency, improved efficiency should flow through to better opportunities for all - more development (and infrastructure) in areas of high value will trickle or filter down to other areas.  Once the city is operating efficiently, then there will be enough surplus to spread around to satisfy equity.

These simple answers don’t really help:

Saving some heritage but not all implies - given a rising population and other pressures in the urban system - a reassessment every 20 years or so, with the likelihood that the heritage resource will get whittled away each time there is a reassessment.

Who should get upgraded infrastructure  and who pays is complex in a city with a range of legacy issues, as well as new growth on the edge to support. User pays may help, but will not iron out all of the choices to be made about how to fix historical problems.

These days, big transport infrastructure is likely to require some form of public private partnership - the private sector part of the deal will be looking for certainty over demand and future revenue growth.  In other words, they will want a more fixed land use pattern.

Equity is getting more and more important as the pace of change in urban areas heats up and there is a starker boundary between winners and losers.

Equally the other simple answer of slowing population growth so it would be much easier to accommodate all that growth and build all those infrastructure renewals and expansions, is not very helpful.

Bertaud  does identify the heritage issue. He  says that protecting the character of central Paris may be OK, so long as people understand the costs. Otherwise you get the feeling that unless the city has a UNESCO world heritage area, then heritage protection is troublesome.

What he doesn't tackle is how to compensate for an inner city being protected, where that protection is justified. If the area of highest land values cannot increase in density, then that density needs to be shifted to somewhere else. That shifting implies more growth elsewhere than might otherwise be the case, and more growth than land values might suggest. That extra density needs infrastructure to support and enable it, with more investment ahead of growth.

The importance of pricing infrastructure features in the book. Correctly pricing the use of transport infrastructure is important, and there is an argument that until pricing is sorted out, then planning has a role in shaping land use patterns. Even with correct pricing, shifting transport modes usually involves shifting growth from one corridor to another (motorway corridors to transit corridors) over a long period of time. There needs to be some certainty over the scale and pace of growth in the new corridor to justify the expenditure, and not too much growth along the ‘old’ corridor in the interim.   

Perhaps an even bigger issue lurking in the book which is kind of acknowledged but not addressed is the extent of change implied. Bertaud refers to  changing exogenous forces which are constantly modifying urban land uses. He says these forces (he doesn't mention them but they could be sudden surges in migration, economic shocks, financialization of urban land markets and financial booms and busts) are getting more numerous and their effects more volatile. These shocks raise the issue of ‘everlasting uncertainty and agitation’. He says that changes to land use and the spatial concentration of employment can be alarming for workers and residents. However rather than resist change (which will delay the benefits of change), urban dwellers should embrace it.  

For the city, the economic shifts in the 1980s from protected industries to an ‘open’ economy could be said to be a similar transition to changes needed in the city. Zoning should not protect areas from change (like import tariffs protected industry sectors), rather zoning should enable change. That sounds OK, but the analogy misses the point that there are a range of tools used to help workers deal with changing work patterns that arise from an open economy:

Employment contracts can provide some restraint to knee jerk reactions. There is often redundancy to be paid out, as well as a notice period

There is, in theory at least, publicly funded re education to help workers learn new skills

Support for a long transition period (unemployment benefit)

Long term needs like the costs of retirement are covered by the state, taking some of the pressure off when jobs change.

Perhaps a bit more tangential, but in theory at least, a state run education and health system should mean that there is no 'penalty' to people moving within or between cities in search of better jobs. At a macro level, there is the Reserve Bank to help dampen changes in inflation rates and if need be, use tools like quantitative easing in times of recession.

All up, you may say that there is some support to ease the transition process. This is the third way - not protectionism, not exposure to the full force of free markets, but rather the path of preparing people for change, managing risks and giving a helping hand.

Is there an urban planning equivalent to the third way? First up, while workers may put up with changing workplaces, change in the neighbourhood raises a whole bunch of different, value driven issues. Second, change usually means a step up the density and value ladder.

What typically ‘gives’ in a process of change and transition in an existing urban area?

• Prices can go up (or down) quickly
• Loss of heritage / local landmarks
• Reduction in the rental stock
• Displacement of lower income households
• Loss of older, cheaper workplaces.
• Loss of diversity of activities.

There can be some pluses, like more convenience shops and the setting up of the beloved neighbourhood cafe of urban designers. If there are other places in an urban area for displaced business and households can go to, then change might not be such a problem. But increasingly, market processes seem to see a closing down of choice and diversity rather than an opening up. Market processes also seem to be much more volatile. How to respond to these pressures needs more of a look than a simple dichotomy between more market and less planning.