Market Urbanism

Liberalizing cities | From the bottom up

“Market Urbanism” refers to the synthesis of classical liberal economics and ethics (market), with an appreciation of the urban way of life and its benefits to society (urbanism). We advocate for the emergence of bottom up solutions to urban issues, as opposed to ones imposed from the top down.

Even Midtown Manhattan not immune to anti-density NIMBYism

By

by Stephen Smith

In general, I think of Manhattan below Central Park as perhaps the freest place in America in terms of land use restrictions. There are no minimum parking regulations, zoning variances are relatively easy to get, and FAR restrictions are relatively generous. Historical preservation designations sometimes limit redevelopment, but other than that, developers have a relatively free hand to…develop.

That is, unless you’re talking about building a tall skyscraper within 17 blocks of the Empire State Building:

The owners of the Empire State Building, Anthony E. and Peter L. Malkin, even want a 17-block no-go zone surrounding their 1,250-foot tall tower. This would prevent Vornado Realty Trust, which wants to erect the new building on Seventh Avenue, or any other developer, from putting up a similarly oversize building in the zone.

The City Planning Commission has already approved Vornado’s plan for a tower, called 15 Penn Plaza, opposite Pennsylvania Station. It would be 56 percent larger than what would ordinarily be allowed, in keeping with the city’s desire to promote high-density development close to transit hubs. But Community Board 5, whose district includes the area, did not approve. A committee at the board said the developer had not provided a rationale for such a large zoning bonus, especially since it did not have a tenant and might not build for years.

While we at Market Urbanism are generally not fans of tying density bonuses to private improvement of public infrastructure, we should note that part of the quid-pro-quo for the government allowing the building is that the developer make improvements to Penn Station “worth more than $100 million,” which would be lost if the project is not approved.

(HT: Infrastructurist)

Edit: I may have overstated the freeness of Manhattan’s land use situation – see the comments section for a more nuanced and enlightened discussion of the barriers to development in America’s densest neighborhoods.

Edit II: Reason has prevailed, and the project was approved.

Comments

  1. I find both of the major assertions in this post very surprising.

    1. I can hardly think of any place with more NIMBYs than Manhattan. Large groups have fought to reduce the size of every project I can remember being proposed, ever. Look at the coverage on Curbed for Tower Verre, Hudson Yards, 440 West 42nd Street or anything on the Bowery. Every building draws protests and nearly every building gets cut. Hell, there’s a story today in the WSJ about a movement to downzone all of Chinatown and the LES on the odd grounds that limiting housing supply will keep costs down. For reasons I have never understood, people go to Manhattan for the density but each decides that he is the very last person who should be allowed to move there.

    2. Manhattan south of Central Park may have the nation’s laxest zoning in the sense that it will approve projects that could not be approved in suburban NJ, but I’m not sure that’s the best way to measure zoning permissiveness. I’d argue that the best measure of permissiveness is the gap between the actual cost of real estate and what it would cost in the absence of any zoning laws. And if you believe Glaeser’s assertion that land scarcity is a reasonably small percentage of Manhattan prices, the the gap in Manhattan is probably the largest in the country.

    How can you really assert that builders have a pretty free hand to build when each project requires that they spend several years and several million dollars simply to secure building permits from the seven separate boards/agencies that have to approve each project when there are plenty of places where one you only need permission from one person?

    Also, the assertion that easy variances make for a freer market strikes me as odd. Systems that permit a great deal of building by right make for free construction markets. Highly restrictive systems that offer lots of variances are probably better than restrictive markets with no variances — but they’re still terrible. They make for an arbitrary, corrupt, unfair, litigious construction market. What separates a project that gets variances from one that doesn’t? Intangible public benefits? Probably not. More likely the developer has good relationships with the people in power — or bribes them. (Systems that allow public officials to use “discretion” in taking “intangibles” into consideration are the basis of most public corruption.) Variances reward relationships — whether they’re corrupt or not — and basically shut every non-local developer out of the NYC market, which reduces competition and increases prices.

  2. Anyone who wants a better illustration of why I think variances are so bad, and why they almost automatically lead to huge amounts of public corruption, should read these old posts from my blog, the top one first.

    http://www.metropolitanwalks.com/blog/?p=108
    http://www.metropolitanwalks.com/blog/?p=111

    I tend, these days, to constrain my blogging to posts about things that might help visitors have a better time in NYC, but I fancied, in my early days, that posts on urbanism might somehow help me build a walking tour business. It was an odd idea, but I flatter myself that these posts express something that is true, important and almost never discussed.

  3. I think of Manhattan below Central Park as perhaps the freest place in America in terms of land use restrictions

    I hate to break it to you…
    Like Andrew, I disagree with the characterization of Manhattan as a free-market zone. Despite generous FAR limits in business districts, it takes years to get all the entitlements necessary to build a tower – even in midtown. Many proposed projects have been killed by NIMBY’s (outside of Midtown – it’s worse a nightmare…) Compared to Midtown, downtown Chicago is a developer’s dream…

    Nonetheless, it’s interesting to watch corporate real estate play the NIMBY role to prevent competition….

  4. Variances – that’s an interesting topic. My conclusions would be different, but I agree with your analysis: development is so restricted, that developers have to “beg” for the right to develop. This means only the most unscrupulous developers get to do business…

    I agree that abuse of variances is a symptom of the problem. But, in my mind the problem is the restrictiveness.

    I think I’ll write a post on this – it’s a great subject.

  5. This kind of thing is ludicrous. Regardless of the visual quality, or lack thereof, of this proposed tower, that doesn’t mean that the Malkins have any need to fight for restrictions just because they want to control the midtown skyline. Even the presence of NIMBY mentalities in New York continually surprises me.

    I live on 15th Street, between 5th and 6th where a proposal has come through the renovate and expand a building that is now, for all intents and purposes, vacant. The street front has been closed for the entire 3 years I have lived there. It adds nothing to the sidewalk or the neighborhood. As far as use is concerned, it is a gap. But the neighborhood is fighting against development of a residential tower, and before that a hotel that would regenerate the site. Their argument revolves around traffic and congestion. This is 15th street, between two of the busiest Avenues in the city and one block from one of the busiest streets and people (in my building I am sad to say) are lobbying against a more vibrant urban fabric.

    Those searching for peace and quiet should not be on the island.

  6. PART ONE

    From what I’ve read about the controversy (and I’ve read only a few mainstream media accounts, so I’ll admit that I may not have all the relevant facts here), it seems to me that the granting of variances and bonuses for 15 Penn Plaza is NOT something that market urbanists should be celebrating. In my opinion, true market urbanism results when governments institute “good” basic ground rules for the marketplace (e.g., rules that are not overly restrictive; not overly intrusive; not overly discretionary; etc.) and then let the marketplace do the rest. Good basic ground rules are rules that meet the legitimate concerns of the general public-at-large (e.g., determining the extent to which one landowner should be allowed to impinge upon the rights of other landowners, and vice versa), and they set out the rights and obligations of all the “players” (e.g., landowners, etc.) in a clear and transparent way. These basic ground rules should be ones that are the same for everyone – rules that create a level “playing field” in order to bring out the best performances of all the “players” for the benefit of the public-at-large. Speaking in general economic terms (i.e., outside of just real estate), it’s similar to having governments set down good basic ground rules for monetary policy, for commercial transactions (e.g., bankruptcy, copyrights, and so on), etc., and then letting the marketplace do the rest.

    It seems to me that New York City’s zoning rules for Manhattan business districts are, generally speaking, pretty good ones, e.g., they are not overly restrictive, etc. I think the original 1916 zoning rules are greatly underrated and much better, especially with regard to market urbanism, than the 1961 rules. But both systems seem pretty fair and generous with regard to densities, etc. In neither case, 1916 or 1961, have very large buildings been disallowed — NYC certainly has plenty of them, including the Empire State Building (which was built “as-of-right,” as far as I know, within the restrictions imposed by the 1916 zoning code) and many, many other less famous ones that were built as-of-right under the 1961 zoning code.

    As I see it, then, the question is why should market urbanists be celebrating the bending of marketplace rules that seem to be basically good and fair rules to begin with? What’s there to celebrate when bending the rules benefits just one particular developer – to the detriment of both the other landowners in the area (which includes not just the owners of the Empire State Building) and the other landowners in the city-at-large who are still being constrained by the unbent rules?

    The bending of the rules for the benefit of one particular landowner, to the detriment of others still constrained by the rules, doesn’t seem like market urbanism to me. Rather, it seems to me to be more like urban “planning” (with politicians and government bureaucrats trying to “micro-manage” development by picking winners and losers) and more like what I understand to be “state capitalism,” where governments are there to bend the rules of the market place for benefit of those “capitalists” who are particularly politically astute, or well connected, etc.

    (To be continued.)

  7. PART TWO

    In practical terms, it seems to me that the granting variances such as those granted to the owners of the proposed 15 Penn Plaza also 1) undercut, at least to some degree, the legitimacy of the City’s zoning rules and 2) wind up distorting the marketplace.

    1) Undermining the legitimacy of zoning

    Although I’m not a fan of zoning in general (I think it’s overdone), I think even market urbanists can support limited, basic rules that deal, in a measureable and objective way, with legitimate public concerns – such as a concern that public streets get enough “light and air.” It seems to me that the original 1916 zoning rules, with their height and setback regulations that were directly related to plot size and street width, were such rules, and that zoning codes like the NYC’s 1961 code, which instead restrict development according to density (i.e., floor area ratio), have a somewhat lesser legitimacy – as I don’t think most people, including most experts, really know what they are talking about when they talk about densities. Most people who talk about densities don’t seem to really know how densities work in real life – and I doubt that most of them can even tell you accurately what the BUILT density (as opposed to the prescribed density) of an area is. So, it seems to me that there is a “mumbo jumbo,” or maybe an “emperor’s clothing,” aspect to the regulation of urban development by using F.A.R.s instead of height and setback regulations.

    Therefore, it seems to me that by granting these variances and thereby jettisoning objectively measureable height and set back rules (contained even, if I remember correctly, in the 1961 zoning rules), which are rules that genuinely reflect the concerns of the general public, in favor of the vague, mumbo jumbo benefits of added density, the legitimacy of zoning is somewhat undermined.

    (P.S. – for those who have access to a good library and who have the time, I greatly recommend an article, in the February 1976 issue of “Architectural Record,” which I think illustrates, at least to some degree, how difficult determining an area’s built F.A.R. can be: “Density: The Architect’s Urban Choices and Attitudes,” by Herbert McLaughlin.)

    (To be continued.)

  8. PART THREE

    2) Creating Market Distortions

    It also seems to me these kind of bonuses / variances distort true market urbanism. It’s like having tax laws that favor one company, one industry or one sector of the economy over another.

    Left to its own devises, the marketplace will usually know when to “stop” and readjust (and rethink development in a particular area, or move on elsewhere). But this is not the case when a government maintains restrictions in some parts of a city, but relaxes the restrictions in another part of the city – or maintains restrictions for most parcels in a district, but then relaxes them for one particular parcel owned by a politically astute developer.

    So “overdevelopment” – which I think is less likely to occur in a market place environment, since developers have to worry about the effects of overdevelopment on their own investment too – becomes more likely when urbanism is planned or “managed” (since development is being shunted from one area to another by the government policy and the overdevelopers are being protected or held up by government support). The unpleasant product that results from such a system isn’t a product of genuine market urbanism, however, but a product of “planning” that is masquerading as marketplace development – and I think it winds up giving market urbanism a bad name, as though what is being produced is indeed the product of market urbanism, when it really is the product of “planning.”

    Plus, it seems to me that good, basic zoning rules (whatever the limits that are being set) serve a purpose of indirectly helping other parts of a city in the long run, too. As one district of a city fills up, other parts of a city become more attractive and more feasible for development. However, when a government then “artificially” increases the density of an area that is already built up (by relaxing restrictions in the area in question, but maintaining them elsewhere), two negative things are happening: 1) the City is discouraging (or at least delaying) development elsewhere in the City; and, 2) the City is artificially making the built up area attractive for overdevelopment and thereby damaging it (i.e., “killing the goose that is laying the golden egg”).

    P.S. – It seems to me that this is something that Jane Jacobs inveighed against throughout her career, both in terms of cities and economies. In terms of cities, she decried a public mindset and government policies that encouraged a mindless extension and intensification of the status quo. Such an approach winds up damaging both the area where diversity is being destroyed in the name of added density AND the less developed areas of the city where the increased density would be very beneficial.

    Benjamin Hemric
    Sat., August 28, 2010, 4:10 p.m.

  9. Test — please leave as I am going to try to arrange my three part post in chronological oder — and then I will try to delete the extra post.

    Thanks!

  10. I see that Henry Stern has recently posted a very interesting article on this controversy on his “New York Civic” blog. (For those of you who are unfamiliar with Henry Stern, he is a long-time, knowledgeable “student” of NYC history — especially it’s political history. He was a member of the NYC Council in the 1970s and he was for many, many years, the City’s Commissioner of Parks. ) In his blog post, he gives additional information about what happened and why he was opposed to 15 Penn Plaza. In one of the “New York Times” articles or blog posts that I read about the controversy, he was quoted as being against granting the bonuses and variances for 15 Penn Plaza because of its effect on the Empire State Building. But, apparently he was against it for more than just this reason — as were some other opponents too.

    While I don’t necessarily agree with the other reasons mentioned (they seem to me to be, at least implicitly, too approving of OVERLY INTRUSIVE government “planning”), these reasons do have some similarities to the arguments I give in my previous posts. In any case, I think his blog post helps illustrate in more detail why the bonuses and variances that were approved for this building do not really advance the cause of “market urbanism.”

    Here the link:

    http://nycivicblog.blogspot.com/

    If the link doesn’t work, Google, “New York Civic Henry Stern” and go to the New York Civic website. The article is entitled, “The Great Giveaway, Gargantuan Tower Approved,” and is dated, Thursday, September 02, 2010.

    – – – – – –

    P.S. — Please ignore my immediately previous post in this thread, the one that begins with the word, “Test.”

    I didn’t realize that I couldn’t edit and delete posts in this thread, and that cutting and pasting wouldn’t be necessary to put the posts in chronological order anyway. I now see that comments are ordered depending upon the criteria selected in the drop down “Sort by” box at the beginning of the Comments section. So to put all posts in correct chronological order one just has to select, “Oldest first.”

    Benjamin Hemric

    Sat., September 4, 2010, 5:25 p.m.

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