Planning Gentrification
What is happening to our cities?
Why are they becoming so impossibly expensive?
Healthy cities exist in a state of flux.1 Change is necessary and good: people come and go, are born and die; industries are carefully harnessed, but almost never become permanent fix- tures. A city that never changes is probably not a city at all.
But a particular kind of change is taking hold in many cities and towns around the world—one that presents itself as neigh- borhood revitalization but results in physical displacement and social disruption for the urban working class. In geographer Ipsita Chatterjee ’s terms, it represents “the theft of space from labor and its conversion into spaces of profit.”2 This change is generally known as gentrification, the process by which capital is reinvested in urban neighborhoods, and poorer res- idents and their cultural products are displaced and replaced by richer people and their preferred aesthetics and amenities.
1 Inam, Aseem. Designing urban transformation. Routledge, 2013.
2 Chatterjee, Ipsita. Displacement, revolution, and new urban politics: Theories and case studies. Sage, 2014, 5.
Every time it happens it looks somewhat different. Spatial transformations are always premised on local political-eco- nomic conditions and shaped by particular narratives and ideologies that are specific to each location. But there are some features that occur again and again.3
Low rents become high. Landlords and speculators profit from the eviction of long-term tenants, who are forced to live farther and farther from their jobs and communities. As space- time contracts for wealthier people moving closer to their central city jobs, it expands for those pushed to the geograph- ical limits of metropolitan areas.4 Bankers walk to work while debtors endure super-commutes.
The people of color and immigrants who built up neglected neighborhoods are recast as outsiders in their own homes and expelled in favor of White newcomers. Neighborhoods and, eventually, cities become places only the rich can afford, with environments designed according to their desires.
The commercial fabric turns over and replaces itself. Exist- ing bars, restaurants, coffee shops, supermarkets, hardware stores and other everyday urban spots are deemed deficient, and are replaced by new bars, restaurants, coffee shops, super- markets and hardware stores deemed superior largely because they charge higher prices and pay higher rents.5
3 Lees, Loretta. “The geography of gentrification: Thinking through comparative urbanism.” Progress in Human Geography 36.2 (2012): 155–71.
4 Katz, Cindi. Growing up global: Economic restructuring and children’s everyday lives. University of Minnesota Press, 2004.
5 Moss, Jeremiah. Vanishing New York: How a great city lost its soul. Harper Collins, 2017.
Planning Gentrification 51
Municipal investment follows real estate investment. After years of complaints about failing schools and subpar parks, new funding suddenly manifests. Though residents used buses and bicycles before, new lanes dot the landscape once new money arrives. These benefits appear as long-term residents are priced out and have to find homes in other divested com- munities.
All this change does not just happen on its own. It requires investors, developers and landlords—the “producers” of gen- trification—to buy and sell land and buildings at ever higher costs. It also requires wealthier homebuyers, renters and shop- pers—the “consumers” of gentrification—to valorize areas they would have previously ignored. Neither side alone makes gentrification a reality, since economic value is only realized when both production and consumption demands are fulfilled. If producers build but consumers don’t bite, the market busts; likewise, if consumers are prepared to purchase but producers don’t invest, the result is unmet demand.
Part of what planners do, then, is ensure that both sides of the relationship are present by luring gentrification’s produc- ers with land use and tax incentives, while inviting its consumers through race- and class-inflected neighborhood initiatives. The state is a central actor, marshaling investment, boosting land values, attracting desired residents and indus- tries, chasing away threats to profits and rolling out the welcome mat for developers and investors. Gentrification, then, is a political process as well as an economic and social one; it is planned by the state as much as it is produced by developers and consumed by the condo crowd. Planners did not invent
gentrification, but they helped foster its development and transform it from a local phenomenon into a global business model.6
Why Gentrification?
While land ownership, property development and speculative investment have always been part of the capitalist economy, until recently, real estate represented a smaller and more spe- cialized business than industrial production. Like real estate, industry requires investments in land, infrastructure and build- ings, but in an industrial context those features’ worth tends to be a function of their productivity—if a factory were not productive, its buildings would not be considered valuable in and of themselves. Historically, as buildings aged their prop- erty values tended to drop, not climb, over time. The central city was the site of production and distribution, and those who lived closest to it usually could not afford to live farther away.
A number of changes in local, national and international political economies during the second half of the twentieth century, however, led investors away from industrial produc- tion in first-world cities. Global treaties among capitalist countries in the postwar era established organizations like the
World Bank, the International Monetary Fund and the World Trade Organization to facilitate low-cost global production
6 Smith, Neil. “New globalism, new urbanism: Gentrification as global urban strategy.” Antipode 34.3 (2002): 427–50.
Planning Gentrification 53
and distribution of goods with minimal taxes and tariffs.7 Labor unions were attacked and marginalized, undermining their ability to act as a counter-hegemonic force for urban industrial retention.8 Advances in transportation technology and the standardization of containerized shipping made the exchange of goods across space a much simpler and cheaper proposition, and required a different spatial layout than most central city planners and politicians were willing or able to provide.9 Real estate-minded city planners actively pushed industry out with land use changes and redevelopment projects meant to mar- ginalize manufacturing while driving up land costs.10
As a result of these and other changes, during the second half of the twentieth century industry decamped from many first-world central cities in search of lower wages, looser envi- ronmental standards and wide-open spaces in northern suburbs, rural towns and international “free trade zones.” New York City is an extreme but telling example: from the 1950s to the
1990s, the city lost 750,000 manufacturing jobs while its land values soared from $20 billion to $400 billion.11
As the complex process of deindustrialization unfolded, capital became both more mobile and, ironically, more grounded: tariffs dropped, firms internationalized and corpo- rate globalization took hold while, at the same time, investments
7 Peet, Richard. Unholy trinity: The IMF, World Bank and WTO. Zed Books, 2003.
8 Aronowitz, Stanley. The death and life of American labor: Toward a new workers’ movement. Verso: 2014.
9 Levinson, Mark. The box: How the shipping container made the world smaller and the world economy bigger. Princeton University Press, 2006.
10 Fitch, The assassination of New York. 11 Fitch, The assassination of New York, 40.
in land and buildings filled the literal and figurative space left by urban industrial flight. Real estate went from being a sec- ondary to a primary source of urban capital accumulation.
This switch is the genesis of gentrification in the United States.12 US urban property investments were patterned by two prior federal programs, redlining and urban renewal. During the postwar era of rational comprehensive planning, the primary project of real estate capital was suburbanization. Massive
amounts of public and private money poured in to create seg- regated residential enclaves located outside central cities and connected by new highways and railways.13 In the 1950s and ’60s, city governments responded with “urban renewal” pro- grams, in which entire working class and industrial neighborhoods were bulldozed to make way for central busi- ness district expansions and infrastructure projects.14 While some low-income developments were produced through these programs—including much of the country’s public hous- ing—90 percent of new residential construction was designed for middle- and upper-class households.15 Robert Fitch called it “real estate Stalinism.”16 With markers of poverty cleared,
12 Harvey, David. “The urban process under capitalism: A framework for analysis.” International Journal of Urban and Regional Research 2.1-3 (1978): 101-131.
13 Jackson, Kenneth T. Crabgrass frontier: The suburbanization of the United States. Oxford University Press, 1985.
14 Teaford, Jon C. The metropolitan revolution: The rise of post-urban America. Columbia University Press, 2006.
15 O’Connor, James. The fiscal crisis of the state. St. Martins Press, 1973, 147.
16 Fitch, The assassination of New York, 141.
Planning Gentrification 55
more city space was produced and coded for urban real estate investment and development.17
Even before bulldozers cleared the way for cranes, bankers and planners had set out on a stealthier form of urban neigh- borhood clearance, which established the preconditions for gentrification.18 In 1934 New Deal legislation established the Federal Housing Administration (FHA) to standardize, regu- late and insure home mortgages. Not everyone, however, could access these loans. Along with the FHA, the federal govern- ment empowered bankers and developers to lead the Home Owners’ Loan Corporation (HOLC). HOLC was tasked with quantifying the risk bankers would take in giving loans to par- ticular people in particular places. This would allow the federal government and the banks to agree on rates for FHA loan insurance. To make these decisions, HOLC sent surveyors out to every residential block in just about every city in the coun- try; those surveyors would look at a neighborhood and grade it on a scale from A (very safe) to D (very unsafe).19
There were three main criteria HOLC used to determine risk: 1) the age of the building stock; 2) the density of hous- ing; and, by far most determinately, 3) the racial composition of residents. Jews were considered communistic and likely to go on rent strike. Italians were characterized as dangerous gangsters. African Americans were written off entirely, and
17 McKittrick, Katherine. Demonic grounds: Black women and the cartographies of struggle. University of Minnesota Press, 2006, 130–31.
18 Aalbers, Manuel B. “The pre-histories of neoliberal urbanism in the United States.” In Pinson, Gilles and Christelle Morel Journel (eds). Debating the Neoliberal City. Taylor & Francis, 2017, 96–118.
19 Jackson, Crabgrass frontier.
virtually any block with any Black people was given a low grade. Following real estate industry “best practices,” the FHA made segregation and suburbanization the United States’ de facto housing policy. Over time, as property owners in Black, immigrant and racially mixed neighborhoods were shut out of the finance system, many of their buildings declined, rents fell and some landlords resorted to abandonment.20
One landlord’s abandonment, however, is another buyer’s opportunity, and in the 1960s, ’70s and ’80s many young urban- ites, as well as a few farseeing financiers, saw an opportunity to grab low-cost properties and renovate them.21 “Brownston- ing” and “loft living” became touchstones for young artists and professionals seeking urban “authenticity” and alterna- tives to the dominant pro-suburban narratives of the 1950s and 1960s.22 Although many considered themselves architec- tural preservationists, few paid much attention to preserving their neighborhood’s social character. Many these new brown- stone owners evicted all of their tenants and converted their buildings into single-family homes, while loft landlords actively pushed out their remaining industrial tenants in favor of resi- dential converters.23
20 Wilder, A covenant with color.
21 Marcuse, Peter. “Gentrification, abandonment, and displacement: Connections, causes, and policy responses in New York City.” Washington University Journal of Urban & Contemporary Law 28 (1985): 195–240.
22 Ley, David. The new middle class and the remaking of the central city. Oxford University Press, 1997.
23 Osman, Suleiman. The invention of brownstone Brooklyn: Gentrification and the search for authenticity in postwar New York. Oxford University Press, 2011; Zukin, Sharon. Loft living: Culture and capital in urban change. Rutgers University Press, 1989.
Planning Gentrification 57
In several cities, these trends coincided with a severe round of fiscal crises and capital strikes—moments when a state can- not raise the capital it needs to maintain its budgets and bond investors refuse to buy shares in its future.24 New York’s late-
1970s recovery from the brink of bankruptcy was led by banks, real estate interests and municipal unions, who disciplined the city through a process of privatization and disinvestment from social services that continues to this day.25 Municipal wages and benefits were slashed; welfare payments fell by one-third; the city’s public universities started charging tuitions. Mean- while, stock taxes were dropped, income taxes were halved and real estate taxes fell to historic levels.26 This became a model for neoliberal governments throughout the country and around the world.27
During this process, gentrification presented an alternative way for cities to continue redeveloping their housing stock and boosting land values without (at first) spending much money. Over time the model proved effective, and local gov- ernments, banks and major real estate firms got into the business of financing gentrification, either through loans to high-income homeowners in places that were previously red- lined, or by building luxury landscapes in neighborhoods that had long been considered unsafe for investment.
24 Phillips-Fein, Kim. Fear city: New York’s fiscal crisis and the rise of austerity politics. Metropolitan Books, 2017.
25 Moody, Kim. From welfare state to real estate: Regime change in New York City, 1974 to the present. The New Press, 2007.
26 Fitch, The assassination of New York.
27 Freeman, Joshua. “If you can make it here.” Jacobin, Issue 15/16, Fall 2014.
Gentrification, then, was a “spatial fix” for capitalism’s urban crisis: a way to profit from previous disasters and to find new places for investors to turn money into more money.28 Dein- dustrialization created the space for real estate ’s revival, and redlining and urban renewal set the spatial patterns for disin- vestment and reinvestment. What first appeared as an opportunistic venture for middle class movers and profit- seeking landlords—a building-by-building, block-by-block phenomenon—became a way to transform entire cities from places into products.
The Economics of Gentrification
By definition, gentrification cannot happen everywhere. It is the third stage in a long-term process of capital flow in and out of space: first comes investment in a built environment; second, neighborhood disinvestment and property abandon- ment; and third, reinvestment in that same space for greater profits. The key to understanding why some places gentrify is the amount of money that a landowner—who effectively holds a monopoly on all rents from a particular geographic location—can expect to generate from a given lot and the building atop it. Real estate speculators choose to invest in a particular location because they identify a gap between the rents that land currently offers and the potential future rents it might command if some action were taken, such as evicting
28 Harvey, David. The limits to capital. Verso, 1982.
Planning Gentrification 59
long-term tenants, renovating neglected or unstylish proper- ties, or demolishing and reconstructing buildings.
Geographer Neil Smith proposed this thesis in 1979 as the primary driver of gentrification at the building level. Gentri- fication, he theorized, “occurs when the gap is wide enough that developers can purchase shells cheaply, can pay the build- ers’ costs and profit for rehabilitation, can pay interest on mortgage and construction loans, and can then sell the end product for a sale price that leaves a satisfactory return to the developer.”29 Smith formulated this theory during a period of urban disinvestment, when the rent gap described the space between falling actual rents and stable or slowly rising poten- tial rents. In today’s context, the rent gap in hyper-invested cities like New York is more likely to be between slowly rising actual rents and exploding potential rents.30
Under these conditions, rent gaps exist at more than just the building scale. When enough individual buildings in an area are brought up to their full potential rents, the remaining surrounding properties exhibit a rent gap (as does the entire neighborhood). The rent regulations that govern prices and tenure rights for nearly half the private rental apartments in New York have tenuously kept hundreds of thousands of apart- ments at below-market rents. This creates a citywide rent gap
29 Smith, Neil. “Toward a theory of gentrification: A back to the city movement by capital, not people.” Journal of the American Planning Association 45.4 (1979): 538–48, 545.
30 Hackworth, Jason. The neoliberal city: Governance, ideology and development in American urbanism. Cornell University Press, 2007.
that landlords are working hard to close through evictions and demolitions as well as political lobbying.31
In some markets, real estate firms try to profit from the potential value of their properties by selling rather than rent- ing them. This can take the form of townhouses being converted from apartment buildings to single-family homes, or individ- ual apartments in larger buildings being sold as co-ops or condominiums. As the market for such housing rises in cities around the world, the value gap between the income they gen- erate as rental properties and their potential sale price expands and the potential for gentrification rises.32
A similar dynamic exists in places where a property’s cur- rent use masks the potential income that property could generate if it were given over to another activity. The clearest example of this functional gap would be the remaining facto- ries in central city locations.33 In Manhattan’s Chinatown, for example, the garment industry—which by the 1980s employed roughly 20,000 people in 500 shops—has now nearly vanished, not only because of competition from cheap imports but also because of a widening functional gap: the difference between current manufacturing rents and potential residential or com- mercial rents became so great that building owners were willing to evict their industrial tenants to make room for higher
31 Teresa, Benjamin Francis. The new tenement landlord? Rent regulated housing and the financialization of urban change. Dissertation, Rutgers University- Graduate School-New Brunswick, 2015.
32 Ley, The new middle class and the remaking of the central city.
33 Sykora, Ludek. “City in transition: The role of the rent gap in Prague ’s revitalization.” Tijdschrift voor Economische en Sociale Geografie 84.4 (1993): 281–93.
Planning Gentrification 61
paying alternatives.34 By now, most of Chinatown’s factories have been converted into offices, hotels or condominiums, forcing the workforce that sustained them to shift to service- sector jobs, while enabling the industrialists who ran them to move on to other, more profitable pursuits.35 John Lam, one of the neighborhood’s most infamous garment titans, went from owning fifteen factories, employing 1,200 workers and doing over $40 million in business annually to being one of the “undisputed titans of Manhattan’s hotel scene.”36
By the twenty-first century, real estate developers and city planners learned how to identify and exploit these opportuni- ties, turning grit into gold. They developed housing, policing, education and design strategies to identify rent, value and functional gaps, and encouraged speculators to close them.37
This has given rise to new and peculiar forms of gentrifica- tion. Rich neighborhoods that never truly experienced disinvestment have become “super-gentrified,” with homes in places like New York’s Greenwich Village and Brooklyn Heights selling for astronomical figures to finance titans, and
34 Chao, Eveline. “A Makeover for Chinatown’s Garment Industry.” Open City, January 7, 2014; Hum, Tarry. “Chinatown and the decline of immigrant garment clusters in the fashion capital of the world.” Progressive
Planning 190, Winter 2012.
35 Hum, Tarry and Samuel Stein. “Gentrification and the Future of
Work in New York City’s ‘Chinatowns.’” In Leong, Russell C. (ed.). Asian American Matters: A New York Anthology. Asian American Research Institute,
2017.
36 Kwong, Peter. The new Chinatown. Hill and Wang, 1987; Schram,
Lauren Elkies. “Ex-Partners Sam Chang and John Lam Are the Undisputed Titans of Manhattan’s Hotel Scene.” Commercial Observer, October 8, 2015.
37 Hackworth, James and Neil Smith. “The changing state of gentrification.” Tijdschrift Voor Economische en Sociale Geografie 22 (2001): 464–77.
unregulated rents pricing out even relatively wealthy house- holds.38 Far from central cities, some rural towns are moving through the phases of gentrification, with rent gaps making historic barn houses and ranch-side cottages alluring sites for speculative investment.39 Some rural areas, like billionaire Ted Turner’s sprawling 2 million-acre ranches in Montana and New Mexico, are gentrified virtually overnight and send their effects rippling outward through the local land market.40 Mean- while, billionaires like Warren Buffett and Sam Zell are buying up trailer parks and raising rents for tenants, many of whom are displaced urbanites.41 Beyond housing, global media cor- porations like Disney, Universal and Sony have worked with city planners to transform commercial areas such New Orleans’ French Quarter and Manhattan’s Times Square into gentrified tourist traps.42
As much as the process mutates, it always retains its core: landlords and developers identify gaps and act to close them. In most cases, however, it’s not just capitalists initiating the process, but also local state actors who, in responding to the
38 Lees, Loretta. “Super-gentrification: The case of Brooklyn Heights, New York City.” Urban Studies 40.12 (2003): 2487–2509.
39 Darling, Eliza. “The city in the country: Wilderness gentrification and the rent gap.” Environment and Planning A: Economy and Space 37.6 (2005): 1015–32.
40 Wiener, Jon. “‘Hell is other people ’: Ted Turner’s two million acres.” In Evil paradises: Dreamworlds of neoliberalism. New Press, 2007.
41 Rivlin, Gary. “The cold, hard lessons of Mobile Home U.” New York Times, March 13, 2014.
42 Gotham, Kevin Fox. “Tourism gentrification: The case of New Orleans’ Vieux Carre (French Quarter).” Urban Studies 42.7 (2005): 1099– 1121; Sagalyn, Lynne B. Times Square roulette: Remaking the city icon. MIT Press, 2001.
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changing economic landscape as well as the demands of spe- cific landholders, aim to lure investors and developers to particular areas.43 The politics of gentrification are therefore just as important as the economics.
The Politics of Gentrification
The emergence of gentrification in the late 1960s and ’70s tracked closely with important political changes at the national and local levels. For gentrification’s advance, the most signifi- cant was a shift in US cities’ governing coalitions.
When manufacturing firms exited post-war urban centers, they left behind not just a tremendous amount of property but also a political vacuum. Since the industrial revolution took hold, cities had been governed by the political party that could best bridge the divide between the needs of industrial capital and its workforce. But with the flight of manufacturing from cities, real estate and finance became the remaining major urban power bloc and the key to rebuilding local economies.44 Real estate was an especially potent force in urban politics, because while finance can be ephemeral, real estate is always place-based.45
This economic restructuring forced local governments to seek out new coalitions for securing political power. Being
43 Sites, William. Remaking New York: Primitive globalization and the politics of urban community. University of Minnesota Press, 2003.
44 Mollenkopf, John H. “The post-war politics of urban development.” Politics & Society 5.3 (1975), 247–95.
45 Logan and Molotch, Urban fortunes.
a friend of industry and a champion of industrial unions was no longer a viable strategy for winning (or financing) elec- tions. By the late 1960s, it was becoming much more important to be a friend of real estate capital and the service and building trades unions.46
This new growth coalition looked little like the old, and as a result some of the elected officials who rose to prominence during this transitional period—like New York’s mayor, John Lindsay—were branded as refreshing reformers. They made common cause with the nascent community development movement, which, with support from federal anti-poverty programs and the Ford Foundation, was encouraging reinvest- ment in central city neighborhoods that had long been redlined or targeted for “urban renewal” clearance. They tweaked city land use laws to allow for a balance of renewed commercial development and historic preservation. They recognized that the country was moving toward social liberalism, and spurned overt racism and bigotry (without fully addressing the struc- tural racism embedded in their policies and programs). They embraced art and cultural production as ways to bring people with money to their cities; when artists began renovating indus- trial lofts and middle class professionals were renovating brownstones, they saw a smart strategy for redevelopment that was simultaneously edgy and posh.47
New regional blocs in New York City, along with Philadel- phia, Pittsburgh, Baltimore, Washington, DC, and a number
46 MacDonald, Ian. “Beyond the labour of Sisyphus: Unions and the city.” Socialist Register 50 (2013).
47 Zukin, Loft living.
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of other deindustrializing cities with historic housing stocks, made it part of their mission not only to encourage downtown construction, but to create policies that would hasten gentri- fication.48 The City Planning Commission’s 1969 Plan for New York City stated, “If brownstoners have done what they have done in the face of major difficulties, it is staggering to think of what could be done if the difficulties were removed.”49 The plan proposed guaranteed mortgage loans for one- and two-family home purchases, long-term loans for renovations and tax abatements for home improvements.
Loft conversions were legalized and encouraged in sections of the city where planners wanted to spark industrial flight and residential reuse. Some housing leaders were initially bemused by the fury over “obsolete” loft buildings. Union co-op developer Abraham Kazan joked sardonically that
“a finer collection of fire traps would be hard to find anywhere.”50 Over time, however, many policymakers came to embrace the idea and were relieved to be dealing with artists demanding live-work spaces rather than impoverished tenants demanding livable conditions. In her book Loft Living, sociologist Sharon Zukin quotes a SoHo resident recalling a crucial public hear- ing on a proposed artists’ district:
48 Smith, “Toward a theory of gentrification.” On regional blocs in planning history, see: Woods, Development arrested; and Woods, Clyde. Development drowned and reborn: The blues and Bourbon restorations in post-
Katrina New Orleans. Verso, 2017.
49 “Plan for New York City 1969,” as quoted in Whyte, William H. City:
Rediscovering the center. Doubleday, 1988, 327–28.
50 Freeman, Joshua. Working class New York: Life and labor since World
War II. New Press, 2000, 188.
[T]here were lots of other groups giving testimony on other matters. Poor people from the South Bronx and Bed-Stuy complaining about rats, rent control, and things like that. The board just shelved those matters and moved right along. They didn’t know how to proceed. Then they came to us.
All the press secretaries were there, and the journalists. The klieg lights went on, and the cameras started to roll. And all these guys started making speeches about the importance of art to New York City.51
Early gentrification was a boon to politicians who were both hamstrung by shrinking municipal budgets and unwilling to take on serious problems of entrenched poverty and structural racism. To their relief, the face of early gentrification was a group of middle class, mostly White liberals looking to add value to the city’s building stock—just the kind of constituents they were seeking to cultivate. In many cities, these newcom- ers took over neighborhood associations, asserted their power within party clubs, and steered the work of local governance and planning bodies that had recently been created in response to the urban civil rights struggles of the 1960s. In so doing, they exerted power far disproportionate to their actual numbers.52
By the 1970s, conditions were in place to promote gentrifi- cation as a spatial fix for capital and a political fix for cities in crisis. It would take planners, however, to scale up
51 Zukin, Loft living, 117–18.
52 Tissot, Sylvie. Good neighbors: Gentrifying diversity in Boston’s South End. Verso Books, 2015.
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gentrification from a neighborhood phenomenon of renova- tion and reinvention to a larger process of displacement, demolition and development.
Planners for Gentrification
Real estate fortunes are cyclical. The job of planners, then, is to keep business booming as long as possible, and when land and property values ultimately fall, to get them back up as quickly as possible. In order to do so, planners and policy elites have developed a wide range of mechanisms, which they put to use in various forms depending on particular local circumstances.
Local property tax cuts are one of the main incentives cities use to lure and retain real estate investment. They come in two main forms: those for renovation, and those for construc- tion. In 1955, New York lawmakers created the J-51 tax abatement, which gives landlords a fourteen-year tax break for repairing their properties. In 1975 they expanded it to encourage industrial-to-residential conversions. At a cost of over $250 million per year in lost revenue, building owners continue to use J-51 to gut and renovate old buildings and drive up rents, or convert their rental properties into condo- miniums.53 In 1971, to spur new apartment construction, the city created the 421-a tax incentive program, which gives enormous tax breaks to luxury developers in gentrifying areas.54 By 2016, the program was costing the city $1.2 billion per year in lost property tax revenue; it was subsequently tweaked to extend the tax break at an estimated cost of $2.4 billion per year.55
Critics call this “geobribery”—the way planners use public finances to lure private investment into specific areas.56 Among the most direct examples of geobribes are Payment In Lieu of
Taxes (PILOT) projects, which have become commonplace in municipalities large and small. Under these schemes, devel- opers pay a low annual fee to the municipality rather than a full tax load. Sometimes these deals are negotiated for deep-pock- eted nonprofits or developers building on publicly owned (and therefore tax-exempt) land, but many cities—like New Jersey’s Jersey City—have found ways to apply them more generally in order to incentivize downtown development.57 In some cases, in order to pay PILOTs instead of ordinary tax bills, for-profit developers will pay nonprofits to buy a piece of land, then lease it back to them. Cities get a little bit of cash from these deals, but they are often legally bound to use those funds to upgrade nearby infrastructure. In this sense, the developers
54 Bernt, Matthias. The ‘double movements’ of neighbourhood change: Gentrification and public policy in Harlem and Prenzlauer Berg. Urban Studies, 49.14 (2012): 3045–62.
55 Waters, Tom. “Governor Cuomo’s flawed 421-A proposal.” New York Slant, November 29, 2016.
56 Roy, Ananya. “Why India cannot plan its cities: Informality, insurgence and the idiom of urbanization.” Planning Theory 8.1 (2009): 76–87. 57 Wharton, Jonathan. “Abatement addiction: A case study on Jersey City’s municipal tax abatements, urban gentrification and the politics of rights.” Conference presentation, American Political Science Association, Seattle, 2011.
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win twice—they pay lower fees over time and they get improved public services.
An even grander geobribe is Tax Increment Financing (TIF), a widely used development incentive. Under TIF, planners usually start by designating an area as “blighted”—terminol- ogy borrowed directly from “urban renewal” planning.58 Next, the city issues bonds for new infrastructure development in the district. After making improvements to the land and rais- ing its value tremendously, the city hands the land to a developer, who builds private commercial or residential buildings. If their property values rise, their tax revenues are
“captured” and used first to pay off bondholders, and then for renewed investment inside the TIF zone; if property values are stagnant or fall, the city is on the hook to pay back the bondholders. Risk is thus transferred from the private sector (real estate developers) to the public sector (the rest of us). When they fail, TIFs blow up budgets; when they are success- ful, they magnify uneven development. In such “successes,” TIFs can generate more revenue than an entire city’s munici- pal budget, reinforcing the disparity between gentrified and disinvested neighborhoods.59
In addition to geobribery, planners have taken steps to sur- render public ownership of land and buildings. One important manifestation is selling off tax-foreclosed properties acquired during recessions. In the wake of its mid-1970s fiscal crisis, New York City seized thousands of buildings when their owners stopped paying property taxes. In severely disinvested neighborhoods, this represented an enormous transfer of prop- erty and wealth; a 1983 study showed that 19,588 buildings had been taken in Harlem, representing more than a third of the total housing stock and nearly as many buildings as were owned by private landlords.60 Some of these foreclosed build- ings were turned into limited-equity co-ops and controlled by former squatters.61 Most of them, however, were sold cheaply or given away to landlords who wanted to upgrade them.62 Years later, Obama’s Housing and Urban Development sec- retary, Shaun Donovan, would look back on these actions as
“the largest privatization of housing anywhere in the country.”63 This form of strategic liquidation played a large part in the
gentrification of disinvested neighborhoods.
While cities were giving away their seized properties, many
were also demolishing much—if not all—of their public hous- ing. In conjunction with federal and state governments, cities across the country—from Atlanta to Chicago to Baltimore to New Orleans—severely underfunded their public housing and allowed projects to fall into dangerous disrepair. Building off architectural analyses and social science fads, many planners claimed the problem was bad design and a concentration of poverty—a problem they never seemed to associate with a
60 Schaffer, Richard and Neil Smith. The gentrification of Harlem? Annals of the Association of American Geographers 76.3 (1986): 347–65.
61 Starecheski, Amy. Ours to lose: When squatters became homeowners in New York City. University of Chicago Press, 2016.
62 Mele, Christopher. Selling the Lower East Side: Culture, real estate and resistance in New York City. University of Minnesota Press, 2000.
63 Hevesi, Dennis. “Transforming city’s housing: Act 2.” New York Times, May 2, 2004.
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concentration of wealth elsewhere.64 Financed by the federal government’s HOPE VI program, these cities developed plans to destroy their public housing complexes and build small- scale, mixed-income, subsidized private housing wherever lots were available. The numbers of new apartments rarely came close to the number of homes destroyed, and they often cost significantly more to rent, but the process freed up coveted central city land for new development and gentrification.65
As cities destroyed their public housing, they chipped away at rent controls or abandoned them altogether. This helped cement the relationship between planning and gentrification.
With strong rent controls in place, urban planning interven- tions like new parks, schools and transit do not necessarily produce elevated housing costs; while public investments in neighborhoods might widen rent gaps, rent controls would prevent landlords from closing them. With rent controls dimin- ished or removed, however, landlords could more easily raise rents based on new neighborhood improvements; they market these planning interventions as amenities for their property, and thus immediately turn inclusionary public investments into exclusionary private gains. Today a weak form of rent control still stands in some California, DC, Maryland, New York and New Jersey cities, but these systems have been sys- tematically undermined by landlord-backed legislators and under-enforced by regulators. Many US states have passed ordinances outlawing further controls.
In addition to straightforward land giveaways and deregu- lation, planners have overseen a subtler but more systematic privatization of urban spaces.66 Historic gathering places have been turned over to private developers for the creation of fes- tival markets—an economic development strategy that rarely benefits city residents as much as it does tourists and develop- ers. Such projects, like Harborplace in Baltimore and South Street Seaport in New York, were especially popular among neoliberal planners in the 1970s and 1980s.67 Management of many older parks has been handed over to conservancies, who raise private funds for improvements and impose new rules that often target the poor.68 Newly designed public spaces are often privatized from the start. Not only do they come with conservancies attached to them, they are even sometimes pri- vate property—as in the case of New York City’s privately owned public spaces. In cities throughout the country, com- mercial main streets are encouraged to form business improvement districts (BIDs), self-taxing entities run by and for landlords that collude to raise rents, bring in big box stores, and impose new security regimes on streets, sidewalks and
66 Low, Setha and Neil Smith (eds). The politics of public space. Routledge, 2006.
67 Frieden, Bernard J. and Lynne B. Sagalyn. Downtown, inc: How America rebuilds cities. MIT Press, 1989.
68 Katz, Cindi. “Whose nature? Whose culture?” In Braun, Bruce and Noel Castree (eds). Remaking reality: Nature at the millennium. Routledge, 2005, 56.
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public parks.69 Reflecting on the impact of one such BID on a strip of immigrant-owned small businesses, Tania Mattos of the group Queens Neighborhoods United recalled, “it used to be Calle Colombia. Now it’s Calle Corporate.”70
Likewise, planners have increasingly used zoning to facili- tate gentrification. Zoning holds an outsized place in US municipal politics because of the particular dynamics of polit- ical devolution during the neoliberal period: responsibilities have been pushed to the local level, while control over policies and purse strings is held at higher governmental scales.71 For planners, this is a catch-22: cities are responsible for solving their own housing crises but the federal government restricts their abilities to build public housing and states often preclude them from enacting rent controls. Incentivizing development through zoning, then, becomes key to many municipal hous- ing plans.72
Both upzoning (which increases building density and devel- opment capacity) and downzoning (which limits it) can be used to channel investment to particular areas, and either open up new rent gaps or close them where they remain.73 More than almost any other tool in the planners’ kit, zoning has tremen- dous impact on both land and property values. When a city upzones a particular lot, it makes that land far more valuable by increasing the amount of rent-producing units a developer can build. Upzoning can therefore encourage developers to buy existing properties, knock down the buildings and build something bigger. When planners downzone, they can dra- matically raise property values for existing buildings, which may be bigger than the zoning allows for future developments. Downzoning can therefore encourage developers to reinvest in older properties and derive higher rents from existing build- ings. In either case, planners produce enormous value with the stroke of a pen, and hand it over to land and property owners.74
Rezoning can thus facilitate a vertical enclosure movement, which privatizes the air above and the ground below.75 In the case of upzonings, planners allow developers to own a new piece of the sky, turning everyone’s airspace into someone’s property. In the case of downzonings, planners can drive such
schemes underground. In parts of central London, for exam- ple, where strict zoning caps limit building heights, property owners are allowed to create enormous and luxurious base- ments that elongate the boundaries of private property deep below the pavement.76
Rezoning does not equal gentrification; under the right cir- cumstances, zoning can be used to slow or even prevent gentrification. It can also be used to undo exclusionary land
74 Angotti and Morse, Zoned out!
75 Graham, Vertical.
76 Watson, Angus. “Going underground.” Financial Times. August 6,
2010.
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uses, like the giant single-family home zones that keep work- ing class people out of sprawling, segregated suburbs. What zoning does is change the economic calculus of present versus future land uses. In conditions prone to gentrification—hyper- invested cities run by the real estate state—any rezoning will likely alter conditions such that landlord or developer incomes rise, and public benefits shrink.
Under these circumstances, even planners’ provision of public goods—such as investments in schools, parks, transit and technology—tends to contribute to gentrification. The relationship, however, is complex.
Sometimes planners channel new services toward neighbor- hoods that are already gentrified, giving the wealthy the most resources even though their taxes go into a common municipal fund. This is the case, for example, when wealthy neighbor- hoods get better trash pickup than poorer ones, even though they are all served by the same sanitation department.
Sometimes planners invest in currently gentrifying areas in order to speed along the process. For example, when planners fix up the streets as rents start to rise, they are signaling to potential investors that these neighborhoods will no longer be neglected by the city.
And sometimes they focus their attention on areas that are not yet undergoing gentrification in order to attract real estate capital. This is the case when working class strongholds in gentrified cities are suddenly lavished with public attention— as in New York Governor Cuomo’s plans for Brownsville, Brooklyn discussed in the Introduction. In all three cases, plan- ners end up stimulating and compounding uneven development.
This lose-lose-lose situation is one of the main reasons so many residents caught in the violence of gentrification are deeply skeptical of urban planners.
This violence is real and material: despite legal protections for tenants, landlords and their hired hands regularly seek to close rent gaps by force, using harassment, intimidation, evic- tion, and sometimes even arson, assault and murder. But it is not only owners who inflict this pain. Just as gentrification’s violence is no metaphor, neither is planners’ “police power.”
Urban police forces act as the armed wing of the real estate state: what planners and policy makers enact, police enforce. Planning and police departments are separate entities, with separate leadership, budgets and institutional cultures. Their missions are nevertheless often aligned around protecting property and encouraging gentrification.77 Rising real estate values are a crucial performance metric for many urban police departments, who point to gentrification as proof that their ballooning budgets represent money well spent.78 With increased resources, police are mirroring planners by speaking the language of data-informed decision-making and adopting the tools of geographic information systems to target their activities. Using quality of life and broken windows campaigns, police aggressively stop, ticket, arrest, beat and even kill peo- ple accused of low-level infractions like loitering, unpermitted
77 Maharawal, Manissa M. “Black Lives Matter, gentrification and the security state in the San Francisco Bay Area.” Anthropological Theory 17.3 (2017): 338–64.
78 Beck, Brenden and Adam Goldstein. “Governing through police? Housing market reliance, welfare retrenchment, and police budgeting in an era of declining crime.” Social Forces 96.3 (2017): 1183–1210.
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vending and turnstile jumping, particularly in gentrifying neighborhoods.79 This geographical targeting is neither inci- dental nor accidental: aggressive policing clears the terrain for future investment and makes wealthier households more com- fortable with the idea of living among poorer people.
Planners do not encourage gentrification out of some undy- ing commitment to violence, displacement or inequality; rather, gentrification is what happens when real estate rules and plan- ners follow. Even if planners understand their work as promoting livability, growth and sustainability rather than as enabling inequality, as geographer Loretta Lees argues, “we need to see gentrification as mutating, as parasitic, as attach- ing to and living off other policies.”80 Whatever else they are working toward, planners in the real estate state are also plan- ners for gentrification.
Justifying Gentrification
Mainstream planners recognize that gentrification presents both moral and economic problems for their cities. In rhetoric, they attest to the importance of balanced growth, inclusion and increased opportunity; in practice, however, most plan- ners facilitate uneven development and measure their progress against rising land values.81 To bridge that gap, planners need theories and ideologies that let them feel altruistic while under- mining the urban working class.
One of the most important is highest and best use. This con- cept turns land use planning into real estate appraisal, positing that the best use for any piece of land is that which derives the greatest value at the lowest cost and allows buildings to actu- alize their full potential rent.82 Measuring this, however, is nearly impossible, and always contested. Parks, for example, do not necessarily bring in much money, but they result in increased property values for the surrounding areas, which in turn deliver higher property tax revenues. The benefit of the park, then, is measured not just by its use and enjoyment, but by its value as a real estate amenity.83 Low-cost housing in the central city will rarely be a “higher” use than luxury housing, even if it is what most people in the city need. According to the theory, however, if planning is done according to highest and best use, then more money will land in the city’s coffers and can be used for the social good. In the end, however, the copious real estate tax breaks that accompany this sort of plan- ning ultimately rob the city of the very revenue that development is supposed to generate, creating little opportu- nity for income redistribution.
81 Wolf-Powers, Laura. “Up-zoning New York City’s mixed-use neighborhoods: Property-led economic development and the anatomy of a planning dilemma.” Journal of Planning Education and Research 24.4 (2005): 379–93.
82 Angotti and Morse, Zoned out!
83 Krinsky, John and Maud Simonet. Who cleans the park? Public work and urban governance in New York City. University of Chicago Press, 2017.
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Often planners openly admit that they are trying to lift land values, but justify this action with attempts at value recapture— using tools that reclaim some social benefit from publicly generated private profits. Whenever cities upzone an area, for example, they create a rent gap out of thin air. In exchange, planners sometimes create mechanisms to “recapture” a por- tion of this value by demanding a public benefit from the landlord: an accessible open space in exchange for more devel- opment capacity (in the case of “privately owned public spaces”); a set of affordable apartments in new and bigger developments (in the case of “inclusionary zoning”); payment into a fund for nearby infrastructure improvements (in the case of PILOTs and TIFs); or a dedicated funding stream for transit that boosts property values (as in the case of New York City’s proposed streetcar).84
These policies are often considered progressive, since they make explicit demands on landlords and force them to pay their “fair share.” This framing, however, has three major flaws. First, it assumes that planners must always give away value if they ever hope to win anything for the public. Actions that do not make money for landlords are therefore deemed worthless because they do not create any value to recapture. Second, it engages a sort of magical thinking whereby it is the landlords who actually pay these costs. Landlords’ incomes come from tenants, so in the absence of very strong rent con- trols, the cost of these fees are more likely to be borne by renters than they are to cut into landlord profits. Third, it fails to account for the effects of increased property values in a pri- vate land market—i.e., gentrification. Even if some public benefits are secured at the site of the deal, residents who hope to enjoy them are at risk of displacement. As Marina Ortiz of the anti-gentrification group East Harlem Preservation admon- ishes, planners frame these value capture projects as “‘looking toward the future,’—and that future will not include us.”85
Whereas value recapture tends to add new regulations to the urban environment, other programs seek to remove regu- lations from working class districts. In these cases, planners seek to unlock what economist Michael Porter calls the com- petitive advantage of the inner city.86 Porter argues that working class neighborhoods are underexploited markets that represent major opportunities for national retailers, and prescribes plan- ning policies that clear the way for big box stores and large chain operations: lax zoning codes, loosened labor and envi- ronmental laws, and lower corporate taxes. The Clinton administration used this logic to promote “empowerment zones,” a planning model derived from Margaret Thatcher’s
“enterprise zones” and recently rebranded and expanded by the Trump administration as “opportunity zones.” In the name of increasing competitive advantage, these programs slash
85 Savitch-Lew, Abigail. “4 months after rezoning, East Harlem stakeholders remain vigilant.” City Limits, March 19, 2018.
86 Porter, Michael E. “The competitive advantage of the inner city.” Harvard Business Review 73.3 (1995): 55–71.
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taxes and induce investment in areas that have not yet gentri- fied.87 In Harlem, the Clinton-era Empowerment Zone provided subsidies and protections to a host of incoming big box stores. Most of the decades-old Black-owned small businesses were pushed out of Harlem’s main street, 125th, and several store- fronts were replaced with a Harlem-themed shopping mall.88
Another way planners carve out a competitive advantage is by luring the so-called creative class. This is a slippery social category that can mean anything from artists to tech workers and tends to focus more on high-end consumption habits than actual creative output. The language comes from planning theorist and consultant Richard Florida, who argues that cit- ies today compete for their ability to attract and retain artists and idea creators.89 Appeals to creativity do not automatically constitute gentrification; Floridian language aside, creativity is not actually a class trait and working class neighborhoods are always home to working class artists.90 What most plan- ners take away from the concept, however, is that yuppies like artists, so cities should promote arts-based gentrification as a means to attract both.91 Planners then use lifestyle amenities and place-making strategies to attract capital—creative, as well as the more common kind.92 According to visual artist and Take Back the Bronx member Shellyne Rodriguez, “art- ists have this lingering stench that follows us around... It’s a trojan horse tactic. You place art events in the middle of the community and then this shit starts to happen.”93
Wrapped up in this “creative class” discourse is the notion of livability, or the idea that cities should be human scaled, environmentally sustainable and just plain nice. “Livability” can mean many things and can be a way to frame planning issues around the needs of people over profit.94 Most of the time, however, planners use “livability” to describe every urban nicety except the two most closely aligned with people ’s ability to live—the prices of labor and shelter.95 Like many planners, Amanda Burden, director of the New York City Planning Department under former mayor Bloomberg, used the word “livable” as a substitute for “gentrified.” Referring to a neighborhood undergoing severe gentrification, Burden told the New York Times, “We are making so many more areas of the city livable. Now, young people are moving to neigh- borhoods like Crown Heights that 10 years ago wouldn’t have
92 Brueckner, Jan K., Jacques-Francois Thisse and Yves Zenou. “Why is central Paris rich and downtown Detroit poor? An amenity-based theory.”
European Economic Review 43.1 (1999), 91–107.
93 Maleszka, Jamie. “Did Swizz Beatz’s ‘No Commission’ art fair benefit
the Bronx?” Mass Appeal, August 17, 2016.
94 Evans, Peter (ed.), Livable cities? Urban struggles for livelihood and
sustainability. University of California Press, 2002.
95 Etienne, Harley. “Response to progressive planning in the American
south.” Progressive Planning 196, Summer 2013.
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been part of the lexicon.”96 No “livability” improvements are actually specified, other than the presence of “young people,” a euphemism for White people with disposable income.
One of the names most commonly associated with urban livability is Jane Jacobs, a paradoxical hero of both leftist advo- cacy planners and libertarian market urbanists. In her 1961 book The Death and Life of Great American Cities, as well as in her later work, Jacobs pilloried the planning profession for creating sterile environments based on flawed ideas about how people should interact with their environments. As a writer as well as an organizer, she lashed out against highway projects and modernist developments, and advocated instead for the slow, organic growth of cities, centered around vital and lively neighborhoods, short blocks, medium-to-high densities, mixed uses, and a combination of new and old buildings. She shook up the thinking around cities and neighborhoods, and brought a feminist, street-level perspective to urban analysis.
The main lesson many planners pull from Jane Jacobs, how- ever, is that gentrification is the best way to make cities more livable. Planners around the country cite Jacobs when they are tearing down housing projects or encouraging industrial conversions. Airbnb, a firm targeted by tenant movements for contributing to housing crises in cities around the world, has sponsored “Jane ’s Walk NYC,” a set of walking tours in Jacobs’ honor.97
Jacobs, for her part, did not want to be associated with gen- trification planning. In a note buried in her final book, she wrote that the fight against gentrification was “unwinding vicious spirals” that had resulted from well-intentioned projects:
By the end of the 1990s, gentrification was under way in what had been even the most dilapidated and abused dis- tricts of Manhattan. Again, the poor, evicted or priced out by the higher costs of renovating, were victims. Affordable housing could have been added as infill in parking lots and empty lots if government had been on its toes, and if com- munities had been self-confident and vigorous in making demands, but they almost never were. Gentrification ben- efited neighborhoods, but so much less than it could have if the displaced people had been recognized as community assets worth retaining. Sometimes when they were gone their loss was mourned by gentrifiers who complained that the community into which they had bought had become less lively and interesting.98
This analysis is at once prescient and deficient. It presents an alternative vision of economic development in which social preservation is as coveted as landmark preservation and liv- ability is actually measured by people ’s ability to live in a place. But Jacobs unfairly faults communities for not fighting back and thus ignores the myriad examples of forceful activism that were contemporaneous to her argument. At the same time, she
98 Jacobs, Jane. Dark age ahead. Vintage, 2004, 214.
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locates the problem in a government that was not “on its toes”; the issue was not that the state was unprepared for the devel- opers sneaking into neighborhoods, but rather that it was functioning at a high capacity to invite them there. When Jacobs claims that “gentrification benefited neighborhoods,” she presumably means that they became more livable for those who could afford to live there, and the physical qualities of the neighborhood—its buildings, shops and schoolhouses—were reinvested and upgraded. True as this might be, it elides the central lesson of Jacobs’ work: that cities are their neighbor- hoods, and neighborhoods are their residents. To say that gentrification benefited neighborhoods while displacing its people flies in the face of this notion. When she writes that gentrification benefited neighborhoods “much less than it could have,” she implies that the alternative should have been a friendlier form of gentrification, rather than another mode of urbanization altogether.
While Jacobs dreamed of a more livable gentrification, oth- ers argued that the standard mode was already livable enough. In the first decade of the twenty-first century, several promi- nent researchers produced studies claiming that gentrification was, on the whole, a positive force for cities and their residents. Geographer Tom Slater compiled an infuriating list of such studies and their media coverage, including New Urbanist planner Andres Duany’s triumphalist “Three cheers of gen- trification: It helps revive cities and doesn’t hurt the poor” and
Jacob Vigdor’s 2002 Brookings Institute paper entitled “Does gentrification harm the poor?” (Answer: not particularly). Another report by economists Mckinnish, Walsh and White
called “Who gentrifies low-income neighborhoods?” claimed that, in general, “it looks like gentrification is a pretty good thing.” That report was picked up by Time magazine, who titled their article on the findings, “Gentrification: Not oust- ing the poor?”99
Using a version of the neighborhood effects thesis, or the idea that social outcomes are highly influenced by environmental factors, planning scholar Lance Freeman has presented research arguing that gentrification, while potentially disruptive, is not that bad for poor people.100 Moreover, Freeman argues, gen- trification does not actually cause much displacement; poor people move more than anyone else, he argues, but they are actually less likely to leave gentrifying neighborhoods because they enjoy the benefits that reinvestment brings. Many schol- ars disagreed with this analysis, as did many of those most vulnerable to gentrification, but it nonetheless fascinated plan- ners and the press.101 Freeman’s output became some of the most reported academic work on gentrification, landing news
99 Slater, Tom. “Missing Marcuse: On gentrification and displacement.” City 13.2 (2009), 292–311; Duany, Andres. “Three cheers for gentrification: It helps revive cities and doesn’t hurt the poor.” The American Enterprise, April
2001, 37–39; Vigdor, Jacob L. “Does gentrification harm the poor?” Brookings- Wharton Papers on Urban Affairs, 2002, 133–82; McKinnish, Terra, Randall Walsh and T. Kirk White. “Who gentrifies low-income neighborhoods?” Journal of Urban Economics 67.2 (2010): 180–93; Kiviat, Barbara. “Gentrification: Not Ousting the Poor?” Time, June 29, 2008.
100 Freeman, Lance. There goes the ‘hood: Views of gentrification from the ground up. Temple University Press, 2006.
101 Newman, Kathe and Elvin K. Wyly. “The right to stay put, revisited: gentrification and resistance to displacement in New York City.” Urban Studies 43.1 (2006): 23–57.
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stories with headlines like “Studies: Gentrification a boost for everyone” and “Exploding the gentrification myth.”102
Most planners are ultimately (and sometimes jubilantly) resigned to the idea that gentrification is a necessary outcome of urban change. From this standpoint, working class displace- ment is the price a city has to pay for improvements to neighborhood schools, parks, streets and housing. Robert Yaro, a longtime planner with New York’s influential Regional Plan
Association, represents this hand-wringing wing. In an inter- view with geographer Scott Larson, he characterized gentrification as “a real quandary. You preserve character and preserve the quality of life and people with money buy in, and people without are pushed out. How do you deal with that? Subsidies? Direct investment? New York has had a housing crisis since the 1940s. [Gentrification] is one of the constants, one of the results of the success of the city.”103
Dan Doctoroff, who served as New York City’s deputy mayor for economic development under Mayor Bloomberg and oversaw his redevelopment efforts, represents the una- pologetic wing. Invoking his then-boss, Doctoroff once told a reporter, “As the Mayor says, ‘if you want to solve the prob- lem of gentrification, you should have crime go up, the schools get worse, the parks dirtier.’ Gentrification is a natural product of market forces.”104 Under this school of thought, gentrification is an unassailable public good and a feature as basic to urban development as commerce is to capitalism.
In recent years, the hand-wringing approach seems to be winning out, with even boosters like Richard Florida waving the red flag and penning critiques of urban inequality.105 None- theless, this viewpoint still sees gentrification as a symptom of
success and often prescribes private development as its cure. Taken together, these narratives—highest and best use, value recapture, competitive advantage, creative class, livability and neighborhood effects—represent some of the most potent ways
planners legitimate displacement. They help reframe dispos- session as development and popularize the notion that gentrification is something to be desired, not disparaged. Ulti- mately, according to these theories, gentrification is the outcome of good city planning.
Coercing Compliance
Beyond self-justification, planners are compelled by external forces to reshape their cities for investment. While real estate is a lead actor in cities’ transformation, its costar is finance. By directing flows of money into and out of places and projects, banks and investors act as capitalists’ own private planners. As economist J.W. Mason explains,
105 Florida, Richard. The new urban crisis: How our cities are increasing inequality, deepening segregation, and failing the middle class—and what we can do about it. Basic Books, 2017.
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the financial system is also where conscious planning takes its most fully developed form under capitalism. Banks are, in Schumpeter’s phrase, the private equivalent of Gosplan, the Soviet planning agency. Their lending decisions deter- mine what new projects will get a share of society’s resources, and suspend—or enforce—the “judgment of the market” on money-losing enterprises.106
Property development is a big, intensive fixed-capital invest- ment, and as such it requires enormous amounts of debt for both the builder and the buyer. That capital is provided by banks, which package bonds and mortgages into securities and sell them off in pieces to investors.107 The result is a net of finance that stretches across most of the world, and places enormous power over city governance in the hands of finan- ciers, bondholders and debt speculators.108 Politicians and planners who try to challenge this historical bloc are frequently frustrated by its sheer power and control, and those who per- sist are often punished.109
In the international sphere, this disciplining usually comes from global development organizations like the World Bank and the International Monetary Fund (and, as in Chile or the Congo, the CIA). On the local level, neoliberalism’s enforcers
106 Mason, J.W. “Socialize finance.” Jacobin, November 28, 2016.
107 Katz, Alyssa. Our lot: How real estate came to own us. Bloomsbury Publishing, 2009.
108 Weber, Rachel. “Selling city futures: The financialization of urban redevelopment policy.” Economic Geography 86.3 (2010): 251–74.
109 Polin, Robert. Contours of dissent: United States economic fractures and the landscape of global austerity. Verso, 2003.
are much more banal: municipal credit rating agencies. Three companies—Moody’s, Standard & Poor’s and Fitch Ratings— control just about every city’s ability to access capital through the bond markets by grading them based on their likelihood to repay their debts or default. These agencies look at each city’s economic mix, finances, debt level and management, and they come to a decision about whether or not it is safe for investment. As creatures of finance, they look for the markers of neoliberalism: a small state making limited expenditures targeted at bringing in investment; public policies that support the FIRE sectors; weak unions, especially for public-sector workers; public-private partnerships to manage major urban projects; and business-friendly political regimes that fight the class war from the bankers’ side. Where they find these traits, they mark a city as safe: AAA. Where they do not, the city’s grade suffers.
Credit rating agencies are not hands-off investigators or passive reporters of economic prospects. They are ideologi- cally driven activists who meet regularly with municipal governments in the United States and around the world to ensure capital’s expanded reproduction. In New York, credit rating agencies rewarded the city for granting tax abatements and exemptions to developers in the 1980s, and for reducing benefits for government workers in the 1990s. In Detroit, despite the signs of an impending collapse of the city’s primary industries, municipal credit ratings rose during the 1980s because its government was willing to pursue gentrification as a planning strategy. In the early 1990s, the city of Philadel- phia was rewarded for a program of government shrinkage,
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municipal employee wage freezes and health care cuts. After improving the city’s credit rating, Moody’s wrote, “The only test for the city is to keep up the momentum.”110
While many planners wish to opt out of this trap, they are left with few options. As federal spending on local projects declines, cities are on their own to pay for programs and close their budget gaps. Their ability to raise taxes is also often con- strained by state and federal guidelines (as well as voters’ will), and they are legally prevented from deficit budgeting. The remaining vehicle is the bond market, and both the amount of bond issuances and their value has grown rapidly since the
1970s, with an especially sharp upturn from 2000 to 2010.111 Under these conditions, the consequences of a bad credit score can be severe. Not only will many private investors back away from poorly rated cities, but pension funds, money market funds and insurance companies—all major bondholders— generally will not invest in anything but top-graded bonds. The city that rejects gentrification planning is therefore taking a significant financial risk.
By choice or by force, planners use gentrification to create the physical environments for capital to thrive. It is the pro- cess by which cities seek capital, and capital seeks land. Its endgame is a city controlled by bankers and developers, run like a corporation, designed as a luxury product and planned
110 Hackworth, Jason. The neoliberal city, 37.
111 Peck, Jamie and Heather Whiteside. “Financializing Detroit.” Economic Geography 92.3 (2016): 235–68.
by the finance sector.112 What was public becomes private; what was common becomes enclosed; what was cheap becomes expensive; what was shared becomes traded. Through the real estate state, the city becomes gentrified. Through gentrifica- tion, the city becomes neoliberal.
112 Aalbers, Manuel. B. “Introduction to the forum: From third- to fifth- wave gentrification.” Tijdschrift voor Economische en Sociale Geografie, forthcoming.
