34 ms·

Poor Neighborhoods Make the Best Investments

430 points by cubecul 10y ago

epistasis 10y ago
That's quite an interesting take! The differences in older and newer city planning regarding street widths, densities, mixing of zoning, etc. are quite drastic. However, I believe it will be at least 20 years before my local municipality will be able to learn from any of these lessons. The planning meetings for any type of development are dominated by those with the time to go to them mid-day: retired people that set up the initial zoning and are dead set against any potential change. The same person who is super concerned about negative impact on property values will in the next sentence rail against those wanting to do development for their "greed." I really gotta move out of California...
- Anechoic 10y ago
  I really gotta move out of California... It's not a California thing. As part of my job, I spend a lot of time presenting at public meetings and in my spare time I do a fair amount of advocacy (for various causes) which also results in a lot of time in public meetings. I've been in public meetings in small rural villages and large cities across 30 states. And I've observed the same thing - the folks that attend those meetings tend to be dominated by those affluent enough to take the time to go. The starkest example of that are public meetings in poor cities where projects will affect large minority areas and yet 95% of the attendees will be affluent folks from the outer suburbs. It's not that the affected folks don't care, it just that when the meeting is held at 2pm or 5pm or even 6pm on a weeknight, they have jobs to go to and they can't make time to attend. The most diverse, well-attended public meetings I've been to have always been held on Saturday afternoons.
  - Spooky23 10y ago
    I think that's a cynical view that doesn't reflect reality. In my experience, people will be engaged if you engage them. Typically what happens in these scenarios is somebody gets a grant and decides to do something, and they put a public posting in the janitors closet in the women's room in the city hall basement. My city is doing a refining effort where they publicly over faux-communicate. There's lots of meetings with brainstorming, fancy pictures, etc. Than a preliminary document dump written in jargon. Then, days before the decisions get made, there's a Friday night drop with the "decisions". Then people find out at the last second if they are lucky. At that point all decisions are made. Partial public financing is typically lined up. The only way to effectively get any voice is to rally around some bullshit regulatory point.
    - thex10 10y ago
      > I think that's a cynical view that doesn't reflect reality. How on earth is that the case? They recounted their experience, which took place in reality. That was their reality.
    - grok2 10y ago
      Not sure why you think it's a "cynical view that doesn't reflect reality" -- the OP indicated it was their direct experience which appears to be vastly more than an armchair commentator's....
  - walterbell 10y ago
    We need to follow the example of Ancient Greece, where citizens got paid time off work to attend the Ecclesia, https://en.wikipedia.org/wiki/Ecclesia_(ancient_Athens) https://en.wikipedia.org/wiki/Ecclesia_(ancient_Athens) > It had the final say on legislation and the right to call magistrates to account after their year of office. In the 5th century BC its members numbered about 43,000 people. It would have been difficult, however, for non-wealthy people outside of the urban center of Athens to attend until payments for attendance were introduced in the late 5th century. It originally met once every month, but later it met three or four times per month. Today, "ecclesiastical" is associated with a centrally managed church, but the term is rooted in a democratic assembly, with payment for attendance enabling representation of more segments of the citizenry.
    - emodendroket 10y ago
      That system worked because of a tremendous number of slaves, though.
      - lawpoop 10y ago
        Well, since that time, we've moved away from slavery to labor saving machines. Since we're at a point where many people are under-employed, and we expect many more to become so, we can probably re-institute something like this. After all, the United States was a crazy experiment to revive 2,000-year-old Greek idea called 'Democracy'. While we did have slaves at the beginning, we have managed to enfranchise all adults politically. Maybe the Ecclesia could work, too.
        emodendroket 10y ago
        > Since we're at a point where many people are under-employed, and we expect many more to become so, we can probably re-institute something like this. Call me old-fashioned but I don't think locking people in as a permanent underclass is a good idea. And practically speaking I'm not sure how a slave society where the slaveholders have special rights to participate in democratic society is an improvement over a system where poor people have trouble participating because of their jobs or their resources but not because they don't have the right to.
  - ryandrake 10y ago
    This is exactly why national US voting is held mid-day on a Tuesday. Sure you have mail-in ballots now, but the default in-person voting time/date is surely deliberately designed to favor a particular demographic.
    - exhilaration 10y ago
      Midday? I agree the that midweek choice is a problem but the voting hours are quite flexing on voting day in the region I live in: New York: 6am-9pm New Jersey: 6am-8pm Connecticut: 6am-8pm Pennsylvania: 7am-8pm
      - brianwawok 10y ago
        You can also mail in for weeks ahead of time... but then I guess you lose the events of the last days to judge...
    - sundvor 10y ago
      That's pretty sickening, but can't help but consider true. Upvoted and added this comment for emphasis. In Australia voting day is always a Saturday, from 8 am to 6 pm, also with ample opportunity to mail in beforehand. Oh and you'll be fined if you don't cast your vote... It may not be perfect, but appears way more democratic to me than the US elections. http://www.aec.gov.au/Voting/polling.htm http://www.aec.gov.au/Voting/polling.htm (When I left Norway nearly two decades ago, so glad I didn't go to the US now.)
      - EpicEng 10y ago
        >but can't help but consider true You may want to reconsider your logical approach here, because it's not true at all.
      - ghaff 10y ago
        I often vote absentee (or "early" this year) in the US because of travel or just because. But if I had to vote in person I'd guess I'd miss at least as many votes on weekends because I'm off somewhere as weekdays. I'm also unconvinced that forced voting is a positive. If you don't care enough to develop an opinion and vote, why should your random "because you have to" vote count?
Kluny 10y ago
This blog, StrongTowns.org, consistently has some of the highest-quality, focused content that I've seen in a long time. I'd encourage donating if you also got something out of it.
- Synroc 10y ago
  Thanks to you, just became a member!
- aaronm14 10y ago
  Yea this site is fantastic. I just discovered the site because of two threads that made it to the front of HN today. I've already spent a couple hours reading all the other articles, I think I'll likely become a member
  - ajmurmann 10y ago
    There is also a great interview about it on the amazing econtalk.
nine_k 10y ago
In short: the poor neighborhoods have the most low-hanging fruits, and can be improved in obvious ways using small, low-risk investments. Affluent neighborhoods are built in a way that cannot be easily improved upon.
- jandrese 10y ago
  Affluent neighborhoods already picked the low hanging fruit.
- gozur88 10y ago
  If you live in an affluent neighborhood you've probably already improved the property as much as you reasonably can because you get a good return on the cosmetic stuff - what's really costing you money is the location of the property.
- tptacek 10y ago
  That's true but not the end of the argument: it's also the case that the poorer neighborhoods tend to be denser (affluent property owners prize open space) with narrower roads and in economically favorable locations (the poorer neighborhoods tend to be older, and the most economical places to build tend to get the ones that get built up first).
twoquestions 10y ago
It turns my stomach to say this, but I think the reason why these ideas aren't implemented is the people in the "poor" neighborhoods are of a lower social class than the people running the cities in question. I very much doubt a legislator or city council could muster money from Us to spend on places where Those People live, even if it makes financial sense. I would love to be wrong about this.
- esw 10y ago
  I spent the last decade living in a struggling city, and I was actively involved in city government. In my city, it was a case of limited resources more than anything else. There were something like 300 miles of roadway, but only enough money in the budget to pave three miles a year.
- GFischer 10y ago
  To be fair, in my city (Montevideo, Uruguay), government has made a strong effort to spend on poorer areas. The problem is, most of the money (a staggering 80%) goes to pay salaries !!! They aren't helping the poor or the rich, they're helping themselves.
  - mtanski 10y ago
    That's not just a problem in your location but a lot of other places. Many municipalities and some states in the US made unsustainable promises to their employees in forms future salaries (pensions). Except instead of doing 80% today, they are doing 80% in the future.
siscia 10y ago
I would love to these analysis made for Europe. Here in Italy the oldest part of the city are usually the most popular and most expensive. We don't have THAT much land over here and regulation are pretty strict on what you can build and where...
- nine_k 10y ago
  I bet most cities in Italy were not built with cars in mind, especially the city centers / downtowns. If you look at US cities that share this trait, e.g. NYC or Boston or Chicago or even SF, the oldest parts of the city are very expensive and prestigious, and have been for several centuries. Also, "white flight" never happened in Italy, while many US cities were affected last century.
  - siscia 10y ago
    I would say all cities (also in the north) but just few exceptions were build before cars where even an idea...
    - nine_k 10y ago
      An old city could be bombed into a complete ruin and rebuilt from scratch; this happened in Russia, Poland, Germany, UK during WWII. Fortunately, Italian cities were mostly left intact.
      - kbart 10y ago
        Still they were rebuilt without cars in mind.
MichaelBurge 10y ago
[This comment has been removed since it was off-topic]
- apalmer 10y ago
  I think your point is 100% spot on. HOWEVER to be clear no one really should be investing in anything they don't truly deeply understand. There is no invest X amount of money, not understand the business, get X + Y money out... unless Y is negative. Except maybe the stock market with a 30 year horizon.
- lkb2k 10y ago
  He's not referring investment in the sense of individuals coming in, buying houses, improving them and flipping them. > We're talking about things like putting in street trees, painting crosswalks, patching sidewalks, and making changes to zoning regulations to provide more flexibility for neighborhood businesses, accessory apartments and parking. His argument is that small civic investments in infrastructure in poor neighborhoods have a good chance of increasing the average property value of the whole neighborhood and thus increasing the tax base. Not all 'investments' will work, but they are relatively inexpensive so you can experiment and replicate the ones that do work across the whole city.
  - MichaelBurge 10y ago
    You're right, I reread it and it's talking about the city. I guess had never seen it argued before that a city should optimize property values(and hence taxes). That raises the question: Property taxes increasing won't by themselves increase people's incomes. Since they aren't trying to affect jobs(per-capita income) and explicitly mentioned density is not the issue(population), then the only thing left is to change the demographics(transfer wealth in). Investment could be meant more broadly(like education or healthcare), but he explicitly disclaims that at the start("What I'm going to present here is pure dollars and cents. "). Somehow it doesn't seem right to advocate for city policy that swaps out the existing citizens for more profitable ones, though I suppose the existing citizens do come out ahead.
- 10y ago
aglavine 10y ago
Isn't the article describing the classic Gentrification move?
- rhizome 10y ago
  Gentrification involves changing the culture of the neighborhood, not just construction.
- hguant 10y ago
  No, because the gentrification move would be to buy up those $50,000 dollar houses, renovate them/replace with a condo block and drive out the local residents. Gentrification comes from developers, whereas what he's describing comes from the city itself. Key quotes: "It's wealth that is shared throughout the neighborhood." -- about as anti-gentrification as you can get. "American cities can make low risk, high returning investments while improving the quality of life for people, particularly those who have not benefited from the current approach." -- indicates to me that the investment he's speaking of is of cities into existing areas, not developers demolishing and recreating neighborhoods.
  - jandrese 10y ago
    Either way if you make the neighborhood a nice place to live more people will want to move there. The more people who want to move there the higher prices will go. The higher prices go the higher taxes and rents go. After some time the original residents can no longer afford to live there. That's gentrification. The trick would be to apply the improvements to every poor neighborhood at the same time so you don't create winners and losers and upset the balance in the housing market, but this is basically impossible.
    - gohrt 10y ago
      as long as the work keeps happening, there will be more quality housing than gentry. The problem today is that only the gentry get quality housing (because they pay for it out of their income/wealth), so wherever they spend money the housing gets better.
gogopuppygogo 10y ago
There are investment groups like http://www.ohiocashflow.com http://www.ohiocashflow.com that go into the rust belt and buy up homes in the poor neighborhoods, return them to being inhatible and then sell them off as turn key rental properties. With the way automation is taking jobs I wouldn't be surprised if these kinds of low income housing investments turn out to be solid cashflow producing investments.
- shostack 10y ago
  If the people renting these are increasingly likely to be automated out of a job why do you think this would be anything but a very risky investment?
  - godzillabrennus 10y ago
    Welfare systems will keep them in a home.
    - gohrt 10y ago
      why didn't welfare systems keep them in a home last time?
      - jonwachob91 10y ago
        They never said anything about their target audience being homeless. The target audience is low income.
    - emodendroket 10y ago
      One look around you would probably convince you that this is not necessarily the case.
nostromo 10y ago
This seems tautological. Those areas are "profitable" because they are using fewer services. If you invest more there, they would no longer be "profitable" -- and increased investment may not increase future "profits." I think this essay falls down in part because it's nonsensical to use these private industry terms when discussing municipal governance. I want my city to concern itself with equity and quality of life - not which citizens are most profitable.
- Vraxx 10y ago
  This is certainly a factor with any investment, because they may only be able to effectively utilize a certain amount of assets. With that being said, I think that it is a reasonable expectation that investing into the area would inflate the values of the property in that area, which directly translates into increased tax revenue (profit). Obviously too much too quickly and you might run into the aforementioned limit of effective asset utilization, but that isn't what the author was suggesting.
  - nostromo 10y ago
    Increasing the value of land without increasing the incomes of the people who live on that land leads to displacement and gentrification. The goal of a city shouldn't be to increase land values -- it should be to increase the affluence of residents.
    - Vraxx 10y ago
      I don't think that displacement alone is a reason to avoid an action necessarily. I say this because while it may not be increasing their income, even if they were displaced they would get more money for being displaced (when selling the property). I'd also argue that the status quo of letting the area languish is hardly a better alternative for your stated goal (increasing the affluence of it's residents). It seems to be a dichotomy, but I don't think it's a decision between displace everyone or do nothing and displace nobody. Given the tools that a municipality actually has to increase the affluence of it's residents, I think making their living area nicer probably has the best shot at doing so because it might attract better opportunities than might normally frequent the area. Last thought, what do you think these municipalities should do instead of minor QoL improvements that might modestly increase average property value (as stated in the article)?
agumonkey 10y ago
Poor neighborhoods are latent negative pressure. In time things will flow back to them because they have no better choice.
RangerScience 10y ago
> These places are built all at once to a finished state. Today is peak wealth; it's all downhill from here, regardless of how much public investment is made. This. I've struggled to phrase why most developments seem so terrible, or sterile, or what-have-you, while the areas that developed over time seem so much more... Alive? Valued? This is an amazing way to phrase that difference - it's possible to invest yourself in places that are not at peak value.
- PaulHoule 10y ago
  Go to the poor neighborhoods and look closely and you often find that they built a bunch of row houses that are maybe two to four stories high. Some of them got knocked down, some of them are still there but they've been altered or decorated. When the trees get taller the monotonous aspects are less visible. Some of them are now vacant lots or rebuilt houses, stores, parking lots, etc. When they went to see Levittown for it's 50th aniversary they were unable to find a single house that had not changed in a major way. Even the worst architecture and urban planning will be reprocessed over time.
  - jonlucc 10y ago
    You might be interested in the episode of 99 Percent Invisible [1] that talks about how an architect was tasked with designing a bunch of housing for very poor residents in Chile after a disaster. He chose to build half-houses that are literally unfinished roofs on one side. Over time, people were encouraged to build the other half as they saw fit. [1] Episode 231 - Half a House - http://99percentinvisible.org/episode/half-a-house/ http://99percentinvisible.org/episode/half-a-house/
    - RangerScience 10y ago
      Oh so very cool. So very cool. This is going into the research pile; after Ghost Ship, this content seems excessively relevant.
    - WildUtah 10y ago
      There's a famous National Geographic photo of a cookie-cutter suburb an hour east of Mexico City. [0] Identical brand new tiny homes in cheerful monotone colors extend into the distance. If you visit that neighborhood today, you can see the results of laws very different from those in American suburbs. Most of the houses have been expanded. Each one has grown in a different way. They've been repainted different colors, there are Virgin of Guadalupe icons and paintings and Aztec designs and decorations and every other kind of individualistic expression all over. Small shops have opened to provide typical neighborhood corner store services and light industry like auto repair and electronics servicing is going on during the day. Lots of the car parking has been enclosed and some has been eliminated entirely in favor of more living space. [1] All of those changes would be illegal in the vast majority of American suburbs. When older American cities were built, the laws were more like Mexican laws and neighborhoods could grow up with residents and families and provide local services and develop character. Plus, the Mexican neighborhood and older American neighborhoods are significantly denser than new American suburbs, without being remotely like really dense development. That makes things much more accessible by walking and creates more cooperation. That's the difference a reasonably open and humble set of laws makes. [0] http://www.nationalgeographic.com/photography/photo-of-the-day/2013/5/housing-development-mexico/ http://www.nationalgeographic.com/photography/photo-of-the-d... [1] Try a satellite or street view somewhere around 19º18'30'' N and 98º51'30'' W
cjslep 10y ago
Alternate cynical title from the red/green map: Towns pump money from poor neighborhoods and dump it into affluent ones.
- warfangle 10y ago
  Socialized risk, privatized profit, 'trickle down' economics
adolph 10y ago
I don't understand the author's argument. Is it "spiff up the 'poor' neighborhoods so the inhabitants will pay more property taxes?" When I look at the map, it looks like most of the city is lightly in the red and it has several extremely red areas which may drive most of the losses. What is driving those? Are they stadiums or large government facilities that aren't taxable? Or maybe middle-aged neighborhoods with severe drainage problems that can't withstand a hurricane? What’s driving the difference between the lightly red and the green areas? Some of the comments here propose that people in those neighborhoods aren't asking for improvements or the infrastructure is naturally cheaper. It could also be a city-favorable tax to liability balance since the larger portion of the green area is rented and thus doesn't get a homestead property tax exemption or growth cap. "Putting in street trees, painting crosswalks, patching sidewalks, and making changes to zoning regulations" might put a city in better financial position if they think gentrification makes sense and is possible. But that by definition is not a social justice argument.
- outworlder 10y ago
  > Are they stadiums or large government facilities that aren't taxable? Usually not. Low population density and far from city center is usually enough to make it very "red". See also, suburbs.
  - adolph 10y ago
    I wasn't able to orient the map to align with Google maps, but Lafayette does have a medium sized university and I didn't see an obvious blank place where it's facilities would be located on the article's map. Were you able to spatially correlate the large red blocks with actual suburban developments?
- sAuronas 10y ago
  > "What is obvious here is that the poor neighborhoods are profitable while the affluent neighborhoods are not." I didn't understand the argument either. I've lived all over the country and doubt the poor neighborhoods in Chicago (where I'm from) and Detroit (where I once lived) do their respective cities much good from an investment point of view (whatever that means). Another thing to consider is that poor people use social services, and anyone who has been to Oakland will tell you a lot of those services live downtown. As a former resident of downtown Oakland, I'd say this rule wouldn't hold up there either. Still, we should invest in poor neighborhoods because it's the right thing to do for the environment as well as the residents of said neighborhoods. I'd argue the government should start the process by cleaning up brownfield and greyfield (obsolete shopping centers) sites and consolidated land for ease of development. The initial costs are certain to be higher but the returns are larger (in many cases).
DoodleBuggy 10y ago
Just wait for gentrification to hit the area. Then the $50k houses will be worth $650k+.
jgalt212 10y ago
Tell that to Robert Moses. His slum clearance work turned poor neighborhoods into destitute neighborhoods.
supernumerary 10y ago
Detroit is implementing a program along these lines. They are selling properties in so called 'bad neighborhoods' and mandating that they be rehabbed and renovated within 6 months to code. The average cost of rehabbing a home bought for $1000~$2000 say is $50,000. Have a look at the website: http://www.buildingdetroit.org/ http://www.buildingdetroit.org/ The 'Rehabbed and Ready' (http://auctions.buildingdetroit.org/RehabbedAndReady http://auctions.buildingdetroit.org/RehabbedAndReady) homes demonstrate the transformation from a $1000 to a $50000 property. To my eyes this approach closely matches the 10% target described in the article, and seems to be a smart way to build a tax base.
- omegaworks 10y ago
  From a cursory view I couldn't find information on buildingdetroit.org about incentives to create neighborhoods from these rehabbed properties that would solve this infrastructure debt issue. Looks like the argument the article is trying to make relates to zoning, traffic design, and density - which I don't think is changeable by people taking advantage of this house flipping program.
- yabatopia 10y ago
  These conditions are crazy. Requiring in investment of ten thousands of dollars in a home in a high risk neighbourhood within six months after purchase is borderline preying on the gullible. A street in Detroit can go in a downward spiral within months. All it takes is one bad apple (home) that gets boarded up or goes down in flames near your investment and your purchase becomes a super high risk gamble, most probably with a very unhappy ending. Add the high property taxes, completely out of touch with the current values of the properties in such neighbourhoods. And don't forget the back taxes from previous owners that you're often required to pay. You lure people with a limited income, attracted by the low auction prices, force them to invest a significant sum to renovate a property to code within a limited time frame, saddle them with a mortgage and then you slap them with high taxes. I'm not saying investing in such properties in Detroit is a bad move, you can make a lot of money with it, but it's not for the inexperienced or someone without a buffer to overcome setbacks!
  - 10y ago
malloryerik 10y ago
I wonder what Strong Towns would think of a land value tax.
azernik 10y ago
A very insightful (but needless rude) comment from a user called Memetic: "No sh*t, it's called gentrification and has been around forever. Thanks for reinventing the wheel."
twblalock 10y ago
Be aware of unintended consequences of improving neighborhoods. If poor people can't afford to live in nice neighborhoods, and we transform their surroundings into nice neighborhoods, they won't be able to afford to stay. Richer people will move in and drive up the prices. These effects are likely to be amplified in towns with high demand for housing and low supply.
- OrwellianChild 10y ago
  I think a lot can be learned from inverting the spin of the advice you are proposing... What you are saying is: "Leave neighborhoods unpleasant so only poor people want to live in them." Looking at it this way gets at the heart of the problem with this way of thinking. Can I suggest a counter point? Solve the systemic issues that prevent low-income people from seeking good housing, rather than advocating to keep them in their place.
  - twblalock 10y ago
    Your interpretation changes the meaning of what I said, and it is uncharitable at best. I never advocated keeping the poor "in their place." I just pointed out that unintended consequences can occur in these kinds of situations.
    - Chris2048 10y ago
      How is the above not the implication though? At least if a neighborhood changes, there is a chance a % of poor locals are able to profit from it and stay.
      - twblalock 10y ago
        Saying that one should be careful when trying to help people is not the same as saying that one should not help those people at all.
iopq 10y ago
The reason why poor neighborhoods are profitable is because the city doesn't spend money on them. If the city spent money on them, they'd be less profitable. There's no reason to expect that the city spending more money on a neighborhood increases any tax returns.
- YokoZar 10y ago
  These are property tax returns. Property tax returns come from property prices. Making a neighborhood nicer raises property values, and thus prices. The article is making the observation that it's much easier and cheaper to improve bad neighborhoods than rich ones. Painting crosswalks and planting trees is cheap, but rich neighborhoods already have those things.
  - huherto 10y ago
    So it is an application of the Law of diminishing marginal returns ?
baron816 10y ago
Many economists argue for taxing every equal sized plot of land the same (vs. taxing based on assessed value). There are a lot of benefits to doing it this way, but the main one is that it encourages efficient land use. If a 40 story high rise with 200 apartments in it is taxed the same way as a lot with 6 ranch style homes, then you're going to incentivize building up.
- mjmahone 10y ago
  If you're thinking of land value taxes (Henry George style taxes, considered highly efficient), it's not taxing every property that's the same size the same exact amount. It's taxing each property based on its raw (unimproved) value. So an acre near a subway would be worth more than an acre that's further away, and would be taxed more, even if it was just an empty plot while the further away lot had a high rise on it.
anon363764 10y ago
OMG, apples and oranges terrible analogy. The best monetary returns investment in the real world is typically accomplished rehabbing the worst home in the best area because of the undeniable market power of comparables... the nice, expensive homes will boost the value of a now more attractive-seeming home by carefully-chosen upgrades which deliver maximum ROI, i.e., looks (good front landscaping), wow features and/or adding area/rooms; not sinking cash into pricy, low ROI money pit/white elephant work or hoping a nicer-seeming home in a bad area will magically not be depressed by terrible comparables.
tomohawk 10y ago
It seems like what they're saying is that taxation per square inch is higher in poorer areas, and that areas that are doing better have less taxation. Could it be that the areas that are doing better are doing better for that reason? A land tax instead of a property tax seems to be the way to go. This would avoid punishing people from improving their property.
Nano2rad 10y ago
For development of an area, civic infrastructure has to be developed. When there are people living in an area govt will start providing necessary infrastructure and also presence of people reduce crime. Poorer people migrate to the empty areas first.
Rugsandbeyond 10y ago
Investment can be made by anyone but it must be in a proper way. Few of my friends have also done the same and today they are taking the benefit of those past investment.

430 points by cubecul 10y ago

That's quite an interesting take! The differences in older and newer city planning regarding street widths, densities, mixing of zoning, etc. are quite drastic. However, I believe it will be at least 20 years before my local municipality will be able to learn from any of these lessons. The planning meetings for any type of development are dominated by those with the time to go to them mid-day: retired people that set up the initial zoning and are dead set against any potential change. The same person who is super concerned about negative impact on property values will in the next sentence rail against those wanting to do development for their "greed." I really gotta move out of California...

Anechoic 10y ago
I really gotta move out of California... It's not a California thing. As part of my job, I spend a lot of time presenting at public meetings and in my spare time I do a fair amount of advocacy (for various causes) which also results in a lot of time in public meetings. I've been in public meetings in small rural villages and large cities across 30 states. And I've observed the same thing - the folks that attend those meetings tend to be dominated by those affluent enough to take the time to go. The starkest example of that are public meetings in poor cities where projects will affect large minority areas and yet 95% of the attendees will be affluent folks from the outer suburbs. It's not that the affected folks don't care, it just that when the meeting is held at 2pm or 5pm or even 6pm on a weeknight, they have jobs to go to and they can't make time to attend. The most diverse, well-attended public meetings I've been to have always been held on Saturday afternoons.
- Spooky23 10y ago
  I think that's a cynical view that doesn't reflect reality. In my experience, people will be engaged if you engage them. Typically what happens in these scenarios is somebody gets a grant and decides to do something, and they put a public posting in the janitors closet in the women's room in the city hall basement. My city is doing a refining effort where they publicly over faux-communicate. There's lots of meetings with brainstorming, fancy pictures, etc. Than a preliminary document dump written in jargon. Then, days before the decisions get made, there's a Friday night drop with the "decisions". Then people find out at the last second if they are lucky. At that point all decisions are made. Partial public financing is typically lined up. The only way to effectively get any voice is to rally around some bullshit regulatory point.
  - thex10 10y ago
    > I think that's a cynical view that doesn't reflect reality. How on earth is that the case? They recounted their experience, which took place in reality. That was their reality.
  - grok2 10y ago
    Not sure why you think it's a "cynical view that doesn't reflect reality" -- the OP indicated it was their direct experience which appears to be vastly more than an armchair commentator's....
- walterbell 10y ago
  We need to follow the example of Ancient Greece, where citizens got paid time off work to attend the Ecclesia, https://en.wikipedia.org/wiki/Ecclesia_(ancient_Athens) https://en.wikipedia.org/wiki/Ecclesia_(ancient_Athens) > It had the final say on legislation and the right to call magistrates to account after their year of office. In the 5th century BC its members numbered about 43,000 people. It would have been difficult, however, for non-wealthy people outside of the urban center of Athens to attend until payments for attendance were introduced in the late 5th century. It originally met once every month, but later it met three or four times per month. Today, "ecclesiastical" is associated with a centrally managed church, but the term is rooted in a democratic assembly, with payment for attendance enabling representation of more segments of the citizenry.
  - emodendroket 10y ago
    That system worked because of a tremendous number of slaves, though.
    - lawpoop 10y ago
      Well, since that time, we've moved away from slavery to labor saving machines. Since we're at a point where many people are under-employed, and we expect many more to become so, we can probably re-institute something like this. After all, the United States was a crazy experiment to revive 2,000-year-old Greek idea called 'Democracy'. While we did have slaves at the beginning, we have managed to enfranchise all adults politically. Maybe the Ecclesia could work, too.
      - emodendroket 10y ago
        > Since we're at a point where many people are under-employed, and we expect many more to become so, we can probably re-institute something like this. Call me old-fashioned but I don't think locking people in as a permanent underclass is a good idea. And practically speaking I'm not sure how a slave society where the slaveholders have special rights to participate in democratic society is an improvement over a system where poor people have trouble participating because of their jobs or their resources but not because they don't have the right to.
- ryandrake 10y ago
  This is exactly why national US voting is held mid-day on a Tuesday. Sure you have mail-in ballots now, but the default in-person voting time/date is surely deliberately designed to favor a particular demographic.
  - exhilaration 10y ago
    Midday? I agree the that midweek choice is a problem but the voting hours are quite flexing on voting day in the region I live in: New York: 6am-9pm New Jersey: 6am-8pm Connecticut: 6am-8pm Pennsylvania: 7am-8pm
    - brianwawok 10y ago
      You can also mail in for weeks ahead of time... but then I guess you lose the events of the last days to judge...
  - sundvor 10y ago
    That's pretty sickening, but can't help but consider true. Upvoted and added this comment for emphasis. In Australia voting day is always a Saturday, from 8 am to 6 pm, also with ample opportunity to mail in beforehand. Oh and you'll be fined if you don't cast your vote... It may not be perfect, but appears way more democratic to me than the US elections. http://www.aec.gov.au/Voting/polling.htm http://www.aec.gov.au/Voting/polling.htm (When I left Norway nearly two decades ago, so glad I didn't go to the US now.)
    - EpicEng 10y ago
      >but can't help but consider true You may want to reconsider your logical approach here, because it's not true at all.
    - ghaff 10y ago
      I often vote absentee (or "early" this year) in the US because of travel or just because. But if I had to vote in person I'd guess I'd miss at least as many votes on weekends because I'm off somewhere as weekdays. I'm also unconvinced that forced voting is a positive. If you don't care enough to develop an opinion and vote, why should your random "because you have to" vote count?

Kluny 10y ago

This blog, StrongTowns.org, consistently has some of the highest-quality, focused content that I've seen in a long time. I'd encourage donating if you also got something out of it.

Synroc 10y ago
Thanks to you, just became a member!
aaronm14 10y ago
Yea this site is fantastic. I just discovered the site because of two threads that made it to the front of HN today. I've already spent a couple hours reading all the other articles, I think I'll likely become a member
- ajmurmann 10y ago
  There is also a great interview about it on the amazing econtalk.

nine_k 10y ago

In short: the poor neighborhoods have the most low-hanging fruits, and can be improved in obvious ways using small, low-risk investments. Affluent neighborhoods are built in a way that cannot be easily improved upon.

jandrese 10y ago
Affluent neighborhoods already picked the low hanging fruit.
gozur88 10y ago
If you live in an affluent neighborhood you've probably already improved the property as much as you reasonably can because you get a good return on the cosmetic stuff - what's really costing you money is the location of the property.
tptacek 10y ago
That's true but not the end of the argument: it's also the case that the poorer neighborhoods tend to be denser (affluent property owners prize open space) with narrower roads and in economically favorable locations (the poorer neighborhoods tend to be older, and the most economical places to build tend to get the ones that get built up first).

twoquestions 10y ago

It turns my stomach to say this, but I think the reason why these ideas aren't implemented is the people in the "poor" neighborhoods are of a lower social class than the people running the cities in question. I very much doubt a legislator or city council could muster money from Us to spend on places where Those People live, even if it makes financial sense. I would love to be wrong about this.

esw 10y ago
I spent the last decade living in a struggling city, and I was actively involved in city government. In my city, it was a case of limited resources more than anything else. There were something like 300 miles of roadway, but only enough money in the budget to pave three miles a year.
GFischer 10y ago
To be fair, in my city (Montevideo, Uruguay), government has made a strong effort to spend on poorer areas. The problem is, most of the money (a staggering 80%) goes to pay salaries !!! They aren't helping the poor or the rich, they're helping themselves.
- mtanski 10y ago
  That's not just a problem in your location but a lot of other places. Many municipalities and some states in the US made unsustainable promises to their employees in forms future salaries (pensions). Except instead of doing 80% today, they are doing 80% in the future.

siscia 10y ago

I would love to these analysis made for Europe. Here in Italy the oldest part of the city are usually the most popular and most expensive. We don't have THAT much land over here and regulation are pretty strict on what you can build and where...

nine_k 10y ago
I bet most cities in Italy were not built with cars in mind, especially the city centers / downtowns. If you look at US cities that share this trait, e.g. NYC or Boston or Chicago or even SF, the oldest parts of the city are very expensive and prestigious, and have been for several centuries. Also, "white flight" never happened in Italy, while many US cities were affected last century.
- siscia 10y ago
  I would say all cities (also in the north) but just few exceptions were build before cars where even an idea...
  - nine_k 10y ago
    An old city could be bombed into a complete ruin and rebuilt from scratch; this happened in Russia, Poland, Germany, UK during WWII. Fortunately, Italian cities were mostly left intact.
    - kbart 10y ago
      Still they were rebuilt without cars in mind.

MichaelBurge 10y ago

[This comment has been removed since it was off-topic]

apalmer 10y ago
I think your point is 100% spot on. HOWEVER to be clear no one really should be investing in anything they don't truly deeply understand. There is no invest X amount of money, not understand the business, get X + Y money out... unless Y is negative. Except maybe the stock market with a 30 year horizon.
lkb2k 10y ago
He's not referring investment in the sense of individuals coming in, buying houses, improving them and flipping them. > We're talking about things like putting in street trees, painting crosswalks, patching sidewalks, and making changes to zoning regulations to provide more flexibility for neighborhood businesses, accessory apartments and parking. His argument is that small civic investments in infrastructure in poor neighborhoods have a good chance of increasing the average property value of the whole neighborhood and thus increasing the tax base. Not all 'investments' will work, but they are relatively inexpensive so you can experiment and replicate the ones that do work across the whole city.
- MichaelBurge 10y ago
  You're right, I reread it and it's talking about the city. I guess had never seen it argued before that a city should optimize property values(and hence taxes). That raises the question: Property taxes increasing won't by themselves increase people's incomes. Since they aren't trying to affect jobs(per-capita income) and explicitly mentioned density is not the issue(population), then the only thing left is to change the demographics(transfer wealth in). Investment could be meant more broadly(like education or healthcare), but he explicitly disclaims that at the start("What I'm going to present here is pure dollars and cents. "). Somehow it doesn't seem right to advocate for city policy that swaps out the existing citizens for more profitable ones, though I suppose the existing citizens do come out ahead.
10y ago

aglavine 10y ago

Isn't the article describing the classic Gentrification move?

rhizome 10y ago
Gentrification involves changing the culture of the neighborhood, not just construction.
hguant 10y ago
No, because the gentrification move would be to buy up those $50,000 dollar houses, renovate them/replace with a condo block and drive out the local residents. Gentrification comes from developers, whereas what he's describing comes from the city itself. Key quotes: "It's wealth that is shared throughout the neighborhood." -- about as anti-gentrification as you can get. "American cities can make low risk, high returning investments while improving the quality of life for people, particularly those who have not benefited from the current approach." -- indicates to me that the investment he's speaking of is of cities into existing areas, not developers demolishing and recreating neighborhoods.
- jandrese 10y ago
  Either way if you make the neighborhood a nice place to live more people will want to move there. The more people who want to move there the higher prices will go. The higher prices go the higher taxes and rents go. After some time the original residents can no longer afford to live there. That's gentrification. The trick would be to apply the improvements to every poor neighborhood at the same time so you don't create winners and losers and upset the balance in the housing market, but this is basically impossible.
  - gohrt 10y ago
    as long as the work keeps happening, there will be more quality housing than gentry. The problem today is that only the gentry get quality housing (because they pay for it out of their income/wealth), so wherever they spend money the housing gets better.

gogopuppygogo 10y ago

There are investment groups like http://www.ohiocashflow.com http://www.ohiocashflow.com that go into the rust belt and buy up homes in the poor neighborhoods, return them to being inhatible and then sell them off as turn key rental properties. With the way automation is taking jobs I wouldn't be surprised if these kinds of low income housing investments turn out to be solid cashflow producing investments.

shostack 10y ago
If the people renting these are increasingly likely to be automated out of a job why do you think this would be anything but a very risky investment?
- godzillabrennus 10y ago
  Welfare systems will keep them in a home.
  - gohrt 10y ago
    why didn't welfare systems keep them in a home last time?
    - jonwachob91 10y ago
      They never said anything about their target audience being homeless. The target audience is low income.
  - emodendroket 10y ago
    One look around you would probably convince you that this is not necessarily the case.

nostromo 10y ago

This seems tautological. Those areas are "profitable" because they are using fewer services. If you invest more there, they would no longer be "profitable" -- and increased investment may not increase future "profits." I think this essay falls down in part because it's nonsensical to use these private industry terms when discussing municipal governance. I want my city to concern itself with equity and quality of life - not which citizens are most profitable.

Vraxx 10y ago
This is certainly a factor with any investment, because they may only be able to effectively utilize a certain amount of assets. With that being said, I think that it is a reasonable expectation that investing into the area would inflate the values of the property in that area, which directly translates into increased tax revenue (profit). Obviously too much too quickly and you might run into the aforementioned limit of effective asset utilization, but that isn't what the author was suggesting.
- nostromo 10y ago
  Increasing the value of land without increasing the incomes of the people who live on that land leads to displacement and gentrification. The goal of a city shouldn't be to increase land values -- it should be to increase the affluence of residents.
  - Vraxx 10y ago
    I don't think that displacement alone is a reason to avoid an action necessarily. I say this because while it may not be increasing their income, even if they were displaced they would get more money for being displaced (when selling the property). I'd also argue that the status quo of letting the area languish is hardly a better alternative for your stated goal (increasing the affluence of it's residents). It seems to be a dichotomy, but I don't think it's a decision between displace everyone or do nothing and displace nobody. Given the tools that a municipality actually has to increase the affluence of it's residents, I think making their living area nicer probably has the best shot at doing so because it might attract better opportunities than might normally frequent the area. Last thought, what do you think these municipalities should do instead of minor QoL improvements that might modestly increase average property value (as stated in the article)?

agumonkey 10y ago

Poor neighborhoods are latent negative pressure. In time things will flow back to them because they have no better choice.

RangerScience 10y ago

> These places are built all at once to a finished state. Today is peak wealth; it's all downhill from here, regardless of how much public investment is made. This. I've struggled to phrase why most developments seem so terrible, or sterile, or what-have-you, while the areas that developed over time seem so much more... Alive? Valued? This is an amazing way to phrase that difference - it's possible to invest yourself in places that are not at peak value.

PaulHoule 10y ago
Go to the poor neighborhoods and look closely and you often find that they built a bunch of row houses that are maybe two to four stories high. Some of them got knocked down, some of them are still there but they've been altered or decorated. When the trees get taller the monotonous aspects are less visible. Some of them are now vacant lots or rebuilt houses, stores, parking lots, etc. When they went to see Levittown for it's 50th aniversary they were unable to find a single house that had not changed in a major way. Even the worst architecture and urban planning will be reprocessed over time.
- jonlucc 10y ago
  You might be interested in the episode of 99 Percent Invisible [1] that talks about how an architect was tasked with designing a bunch of housing for very poor residents in Chile after a disaster. He chose to build half-houses that are literally unfinished roofs on one side. Over time, people were encouraged to build the other half as they saw fit. [1] Episode 231 - Half a House - http://99percentinvisible.org/episode/half-a-house/ http://99percentinvisible.org/episode/half-a-house/
  - RangerScience 10y ago
    Oh so very cool. So very cool. This is going into the research pile; after Ghost Ship, this content seems excessively relevant.
  - WildUtah 10y ago
    There's a famous National Geographic photo of a cookie-cutter suburb an hour east of Mexico City. [0] Identical brand new tiny homes in cheerful monotone colors extend into the distance. If you visit that neighborhood today, you can see the results of laws very different from those in American suburbs. Most of the houses have been expanded. Each one has grown in a different way. They've been repainted different colors, there are Virgin of Guadalupe icons and paintings and Aztec designs and decorations and every other kind of individualistic expression all over. Small shops have opened to provide typical neighborhood corner store services and light industry like auto repair and electronics servicing is going on during the day. Lots of the car parking has been enclosed and some has been eliminated entirely in favor of more living space. [1] All of those changes would be illegal in the vast majority of American suburbs. When older American cities were built, the laws were more like Mexican laws and neighborhoods could grow up with residents and families and provide local services and develop character. Plus, the Mexican neighborhood and older American neighborhoods are significantly denser than new American suburbs, without being remotely like really dense development. That makes things much more accessible by walking and creates more cooperation. That's the difference a reasonably open and humble set of laws makes. [0] http://www.nationalgeographic.com/photography/photo-of-the-day/2013/5/housing-development-mexico/ http://www.nationalgeographic.com/photography/photo-of-the-d... [1] Try a satellite or street view somewhere around 19º18'30'' N and 98º51'30'' W

cjslep 10y ago

Alternate cynical title from the red/green map: Towns pump money from poor neighborhoods and dump it into affluent ones.

warfangle 10y ago
Socialized risk, privatized profit, 'trickle down' economics

adolph 10y ago

I don't understand the author's argument. Is it "spiff up the 'poor' neighborhoods so the inhabitants will pay more property taxes?" When I look at the map, it looks like most of the city is lightly in the red and it has several extremely red areas which may drive most of the losses. What is driving those? Are they stadiums or large government facilities that aren't taxable? Or maybe middle-aged neighborhoods with severe drainage problems that can't withstand a hurricane? What’s driving the difference between the lightly red and the green areas? Some of the comments here propose that people in those neighborhoods aren't asking for improvements or the infrastructure is naturally cheaper. It could also be a city-favorable tax to liability balance since the larger portion of the green area is rented and thus doesn't get a homestead property tax exemption or growth cap. "Putting in street trees, painting crosswalks, patching sidewalks, and making changes to zoning regulations" might put a city in better financial position if they think gentrification makes sense and is possible. But that by definition is not a social justice argument.

outworlder 10y ago
> Are they stadiums or large government facilities that aren't taxable? Usually not. Low population density and far from city center is usually enough to make it very "red". See also, suburbs.
- adolph 10y ago
  I wasn't able to orient the map to align with Google maps, but Lafayette does have a medium sized university and I didn't see an obvious blank place where it's facilities would be located on the article's map. Were you able to spatially correlate the large red blocks with actual suburban developments?
sAuronas 10y ago
> "What is obvious here is that the poor neighborhoods are profitable while the affluent neighborhoods are not." I didn't understand the argument either. I've lived all over the country and doubt the poor neighborhoods in Chicago (where I'm from) and Detroit (where I once lived) do their respective cities much good from an investment point of view (whatever that means). Another thing to consider is that poor people use social services, and anyone who has been to Oakland will tell you a lot of those services live downtown. As a former resident of downtown Oakland, I'd say this rule wouldn't hold up there either. Still, we should invest in poor neighborhoods because it's the right thing to do for the environment as well as the residents of said neighborhoods. I'd argue the government should start the process by cleaning up brownfield and greyfield (obsolete shopping centers) sites and consolidated land for ease of development. The initial costs are certain to be higher but the returns are larger (in many cases).

DoodleBuggy 10y ago

Just wait for gentrification to hit the area. Then the $50k houses will be worth $650k+.

jgalt212 10y ago

Tell that to Robert Moses. His slum clearance work turned poor neighborhoods into destitute neighborhoods.

supernumerary 10y ago

Detroit is implementing a program along these lines. They are selling properties in so called 'bad neighborhoods' and mandating that they be rehabbed and renovated within 6 months to code. The average cost of rehabbing a home bought for $1000~$2000 say is $50,000. Have a look at the website: http://www.buildingdetroit.org/ http://www.buildingdetroit.org/ The 'Rehabbed and Ready' (http://auctions.buildingdetroit.org/RehabbedAndReady http://auctions.buildingdetroit.org/RehabbedAndReady) homes demonstrate the transformation from a $1000 to a $50000 property. To my eyes this approach closely matches the 10% target described in the article, and seems to be a smart way to build a tax base.

omegaworks 10y ago
From a cursory view I couldn't find information on buildingdetroit.org about incentives to create neighborhoods from these rehabbed properties that would solve this infrastructure debt issue. Looks like the argument the article is trying to make relates to zoning, traffic design, and density - which I don't think is changeable by people taking advantage of this house flipping program.
yabatopia 10y ago
These conditions are crazy. Requiring in investment of ten thousands of dollars in a home in a high risk neighbourhood within six months after purchase is borderline preying on the gullible. A street in Detroit can go in a downward spiral within months. All it takes is one bad apple (home) that gets boarded up or goes down in flames near your investment and your purchase becomes a super high risk gamble, most probably with a very unhappy ending. Add the high property taxes, completely out of touch with the current values of the properties in such neighbourhoods. And don't forget the back taxes from previous owners that you're often required to pay. You lure people with a limited income, attracted by the low auction prices, force them to invest a significant sum to renovate a property to code within a limited time frame, saddle them with a mortgage and then you slap them with high taxes. I'm not saying investing in such properties in Detroit is a bad move, you can make a lot of money with it, but it's not for the inexperienced or someone without a buffer to overcome setbacks!
- 10y ago

malloryerik 10y ago

I wonder what Strong Towns would think of a land value tax.

azernik 10y ago

A very insightful (but needless rude) comment from a user called Memetic: "No sh*t, it's called gentrification and has been around forever. Thanks for reinventing the wheel."

twblalock 10y ago

Be aware of unintended consequences of improving neighborhoods. If poor people can't afford to live in nice neighborhoods, and we transform their surroundings into nice neighborhoods, they won't be able to afford to stay. Richer people will move in and drive up the prices. These effects are likely to be amplified in towns with high demand for housing and low supply.

OrwellianChild 10y ago
I think a lot can be learned from inverting the spin of the advice you are proposing... What you are saying is: "Leave neighborhoods unpleasant so only poor people want to live in them." Looking at it this way gets at the heart of the problem with this way of thinking. Can I suggest a counter point? Solve the systemic issues that prevent low-income people from seeking good housing, rather than advocating to keep them in their place.
- twblalock 10y ago
  Your interpretation changes the meaning of what I said, and it is uncharitable at best. I never advocated keeping the poor "in their place." I just pointed out that unintended consequences can occur in these kinds of situations.
  - Chris2048 10y ago
    How is the above not the implication though? At least if a neighborhood changes, there is a chance a % of poor locals are able to profit from it and stay.
    - twblalock 10y ago
      Saying that one should be careful when trying to help people is not the same as saying that one should not help those people at all.

iopq 10y ago

The reason why poor neighborhoods are profitable is because the city doesn't spend money on them. If the city spent money on them, they'd be less profitable. There's no reason to expect that the city spending more money on a neighborhood increases any tax returns.

YokoZar 10y ago
These are property tax returns. Property tax returns come from property prices. Making a neighborhood nicer raises property values, and thus prices. The article is making the observation that it's much easier and cheaper to improve bad neighborhoods than rich ones. Painting crosswalks and planting trees is cheap, but rich neighborhoods already have those things.
- huherto 10y ago
  So it is an application of the Law of diminishing marginal returns ?

baron816 10y ago

Many economists argue for taxing every equal sized plot of land the same (vs. taxing based on assessed value). There are a lot of benefits to doing it this way, but the main one is that it encourages efficient land use. If a 40 story high rise with 200 apartments in it is taxed the same way as a lot with 6 ranch style homes, then you're going to incentivize building up.

mjmahone 10y ago
If you're thinking of land value taxes (Henry George style taxes, considered highly efficient), it's not taxing every property that's the same size the same exact amount. It's taxing each property based on its raw (unimproved) value. So an acre near a subway would be worth more than an acre that's further away, and would be taxed more, even if it was just an empty plot while the further away lot had a high rise on it.

anon363764 10y ago

OMG, apples and oranges terrible analogy. The best monetary returns investment in the real world is typically accomplished rehabbing the worst home in the best area because of the undeniable market power of comparables... the nice, expensive homes will boost the value of a now more attractive-seeming home by carefully-chosen upgrades which deliver maximum ROI, i.e., looks (good front landscaping), wow features and/or adding area/rooms; not sinking cash into pricy, low ROI money pit/white elephant work or hoping a nicer-seeming home in a bad area will magically not be depressed by terrible comparables.

tomohawk 10y ago

It seems like what they're saying is that taxation per square inch is higher in poorer areas, and that areas that are doing better have less taxation. Could it be that the areas that are doing better are doing better for that reason? A land tax instead of a property tax seems to be the way to go. This would avoid punishing people from improving their property.

Nano2rad 10y ago

For development of an area, civic infrastructure has to be developed. When there are people living in an area govt will start providing necessary infrastructure and also presence of people reduce crime. Poorer people migrate to the empty areas first.

Rugsandbeyond 10y ago

Investment can be made by anyone but it must be in a proper way. Few of my friends have also done the same and today they are taking the benefit of those past investment.