Are urban planners overstepping their bounds?
In March, urbanist and author Alain Bertaud, a senior research scholar at the NYU Marron Institute of Urban Management, visited Toronto to give a presentation on cities and discuss the findings of his new book, Order Without Design: How Markets Shape Cities. Bertaud is a free market thinker, a man that believes in the “invisible hand” of the market to shape the design, the spatial allocation of new buildings, and built forms within a city.
According to Bertaud, urban planning started as a way to reduce the negative externalities of development. In his example he spoke about a new building that could be situated in a certain way to reduce the shadowing on neighbouring properties. However, in many places around the world, Bertaud contents that planners wanted to shape cities in their own image, instead of allowing them to grow organically and to react to the needs and desires of the residents.
The central thesis of Bertaud’s latest work is that successful cities adapt and react to the needs of its inhabitants. Codifying rules and regulations about how buildings and areas grow can be harmful in the long run as many of those zoning regulations are difficult and costly to modify and cannot keep up with rapidly changing market forces. He points to minimum unit size requirements implemented 50 years ago in New York City, when there were many families living in urban apartments in Manhattan. As household sizes changed, employment patterns altered and space was in short supply, demand for small units increased dramatically and developers couldn’t provide the supply to match this spike in demand given the zoning restrictions. Developers could only build large, expensive units that were severely unaffordable.
There were several Toronto planners in attendance at the event, fresh off patting themselves on the back for a new plan called TOcore, that has minimum unit size guidelines and strict unit mix requirements. This plan will only add more large expensive units to the market at the expense of much-needed smaller suites suitable for first-time buyers and renters.
Before making big policy or zoning changes, planners should meet with economists to understand the financial consequences of their actions, says Bertaud. The lack of communication between these two groups has had dire consequences for cities despite the desperately well-intentioned moves by planners to encourage families to return downtown, to preserve historic architecture, and to protect jobs. Those three initiatives alone can often lead to less housing supply, accelerated gentrification, and an unfair subsidy to a dying industry at the expense of a new one.
Bertaud doesn’t let planners off that easy, however. He does believe that there are planning departments that purposely restrict development in order to create leverage over developers. Their intention is to force the developer to negotiate in order to secure suitable density permissions in exchange for certain community benefits or design features. In strong markets, these restrictions and negotiations result in many shared community benefits and societal gains, but in a weak market they just kill developments by making them financially unfeasible.
During the final question and answer period, Bertaud stressed the need for the media to present an unbiased and impartial coverage of planning policies, zoning changes, and new development. While it’s true that five additional floors may increase a developer’s profit, they also represent 50 new homes.
A systematic and comprehensive review of the trade-offs that planners encounter on a daily basis is required to improve the productivity of cities. After 50 years of rules intended to be thorough and precise in programming a city, the planning profession may have overstepped their bounds. In the language of real estate, perhaps it’s time we removed that easement.
Ben Myers is president of Bullpen Research & Consulting, a boutique real estate advisory firm that works with land owners, developers, and lenders to better inform them of the current and future macroeconomic and site-specific housing market conditions that can impact their active or proposed development projects.