Billionaire-built cities would be better than nothing

Billionaire-built cities would be better than nothing

In a New York Times article co-authored with Edward L Glaeser, MIT-Italy Program Faculty Director Carlo Ratti argues for privately built infrastructure in major cities to advance economic prosperity. This article was originally published in the New York Times.

December 12, 2023 | The New York Times | Edward L Glaeser and Carlo Ratti
Edward L Glaeser and Carlo Ratti
December 26, 2023
The New York Times

A company backed by Silicon Valley’s most powerful investors, including the LinkedIn co-founder Reid Hoffman and the venture capitalist Marc Andreessen, assembled a land empire outside San Francisco and announced a bold vision to build a brand-new city — and was immediately castigated by the world’s urbanists.

Critics describe the effort by the company, Flannery Associates, as greed in urbanism’s clothing that would create an environmental disaster in the form of a mere commuter suburb. As more details emerge about the ugly tactics used against local landowners, the project appears increasingly likely to drown in its creators’ hubris. But beneath Flannery Associates’ accumulating mistakes remains an important idea: The Bay Area needs a lot more housing, and we may need privately built cities to get there.

There is nothing new about cities built by investors and corporations. Celebration, Fla., was developed by the Walt Disney Company and includes buildings from architectural giants like Philip Johnson and Robert A.M. Stern. (Disney has sold off most of its holdings.) Not far from Seoul, the Songdo International Business District was developed by a consortium of real estate developers; it is planned around a two-square-mile eco-friendly, high-tech downtown that is meant to house over 60,000 people.

There is also no rule that cities planned by governments are morally superior. In 1910 the mayor of Baltimore, Barry Mahool, signed America’s first racial zoning ordinance, explicitly barring Black Americans from moving into majority-white city blocks, leaving the city hypersegregated for decades. During the 1960s, the high-water mark of racial segregation, a private developer named James Rouse planned an integrated city in nearby Columbia, Md. Columbia is not perfect, but it remains racially diverse, and according to data from the Opportunity Atlas, it does vastly better than nearby Baltimore at promoting upward mobility for Black American children.

Another planned community, the Woodlands in Texas, was born out of the Columbia experience. It offers a powerful example of how a privately conceived city can provide a great deal of public good.

George Phydias Mitchell, a pioneer producer of natural gas, was inspired to create the community after attending a symposium hosted by Columbia’s developers. He hired many of Mr. Rouse’s former employees and even hired a Wharton-trained Lutheran minister to help provide appropriate support for social, particularly religious, activities.

It took 40 years for the population of the Woodlands to grow from 8,400 (in 1980) to 114,000 (in 2020). But patience paid off: The schools-ranking website Niche lists it as one of the best U.S. cities to live in.

Today, with median housing values of $456,400 and median gross monthly rent of $1,723, the development is no longer the bargain that it once was. Still, the prices are a sign that people like it. And while the Woodlands does not share Columbia’s history of racial equality, 19 percent of its households are Hispanic, and the Opportunity Atlas shows that upward mobility for low- and middle-income Hispanic children is higher there than in most of Houston.

Deng Xiaoping justified China’s move to free enterprise by saying that “it doesn’t matter whether a cat is black or white, as long as it catches mice.” The California version should be that it doesn’t matter if the developer is private or public, as long as it builds the housing that the state needs to become more affordable. Even if these would-be city builders make boatloads of mistakes, getting anywhere close to the goals of Flannery Associates to house 400,000 people — up to 5 percent of the Bay Area’s current population — would significantly help make the region more affordable and inclusive.

Building in the Bay Area will enable America to continue its history of allowing people to relocate to more productive places. In the early decades of the 19th century, farmers left the rocky soil of the East for better farmland in the Midwest. A century later, millions of people left agriculture behind in favor of even more fertile economic ground: cities. This huge transition was possible only because cities built vast quantities of housing. In the 1920s alone, New York City added 700,000 units. In recent decades American growth has moved to the Sun Belt, and people are going there not just for the nice weather. As Southern cities like Houston and Atlanta build enough housing to keep prices low, they are siphoning population away from the booming metros of yesteryear.

Today, California is one of the most productive places in the country, but it doesn’t let people in because homeowners figured out how to block new construction, which pushes prices up and productivity down. Work by Chang-Tai Hsieh and Enrico Moretti found that limited access to America’s most productive places “lowered aggregate U.S. growth by 36 percent from 1964 to 2009.”

Even though opponents to development in coastal California often base their arguments on environmental grounds, building there is one of the best things that America could be doing to counter global warming. One of us, Professor Glaeser, and a University of Southern California environmental economist, Matthew Kahn, calculated that coastal California was easily the least carbon-intensive part of the country because of its mild climate.

The Flannery Associates effort to build in Solano County, about 60 miles northeast of San Francisco, faces major obstacles that have been compounded by the group’s arrogance. The more than 50,000 acres of land the venture has obtained is not zoned for residential use. Securing governmental approval to get the project off the ground will require far more expertise in the workings of democracy than is typically found in Silicon Valley. As the company engages in fierce legal battles with local landowners, who accuse it of strong-arming them and turning family members against one another in the name of rapid land acquisition, it appears that the project is alienating itself from the very allies it would need to succeed.

City building has usually been a collaborative affair that requires openness and thrives on a hive of talent. Without assembling a wide and supportive community, Flannery Associates is on the way to suffering the same fate as Sidewalk Labs, an Alphabet company that failed to build a futuristic city in Toronto.

Moreover, a city built by Silicon Valley moguls will succeed only if it puts people before buildings. There are city-building entities, like the Woodlands, that have developed the social muscles to create community, but they don’t emerge overnight.

But even if Flannery Associates ends up in failure, we shouldn’t forget that private hands have built great cities. The Woodlands shows us that support from private capital can play a productive role in creating communities. Solano County is close enough to San Francisco that the area can meaningfully expand the housing stock in the region.

Giving it a try is better than the status quo. Let’s not throw the baby out with the bath water.

This article was originally published in the New York Times.