Tuesday, October 24, 2017

Better Corporate Citizens

http://www.citylab.com; September 21, 2017


Hello Everyone:

Another triple digit scorcher of a day finds Blogger, tapping away, in an air conditioned undisclosed location.  Would someone please so kind as to let Summer know that it is October and it is no longer welcome?  Alright then, onward.

Urban anchors is today's subject.  What do urban anchors owe, if anything at all, their host city?  This is the question posed by Richard Florida in his CityLab article "What the New Urban Anchors owe Their Cities."  Some of the urban anchors function as the main engines and the primary beneficiaries of the recent urban renaissance, anchor institutions are frequently the biggest employers in their host communities.  A typical example of an "anchor institution" includes: large universities, hospitals, and medical centers-i.e. "meds and eds-" "that are quite literally anchor urban centers, other powerful anchors, including successful high-tech companies and real estate developers, have the capacity and resources to wield enormous influence on today's cities."

Be that as it may, over the last decade has seen a troubling pattern of "winner-take-all urbanism" (theatlantic.com; Apr. 12, 2017; date accessed Oct. 24, 2017). This disquieting pattern is characterized by a "select group of large, dense cities and an even smaller number of neighborhoods reap the spoils of innovation and economic growth."  Anchors reap enormous enemies from the current urban revival.  While this may sound all well and good, Mr. Florida believes that "they must commit themselves to generating more inclusive proposerity"

To remedy our modern urban crisis, Mr. Florida believes that "we need a broader, more encompassing strategy of inclusive prosperity that allows all residents and neighborhoods to benefit from urban revival."  Mr. Florida recently co-authored a study with Steven Pedigo, The Case for Inclusive Prosperity (scps.nyu.edu; date accessed Oct. 24, 2017), his colleague from the NYUSPS Urban Lab at the Schack Institute of Real Estate (Ibid), which outlined the role that anchor can and should play in creating more inclusive prosperity in the urban centers.

As the federal government retreats from urban development, re-prioritizing its actions elsewhere, the burden of inclusive development has fallen to the urban areas.  With large cutbacks in federal spending in housing assistance, affordable housing, job training, healthcare services, education, the environment, and so forth, municipalities, non-profit organizations, and philanthropic foundations (citylab.com; Sept. 12, 2017; date accessed Oct. 24, 2017) are filling the void.  This sounds well and fine but Anchors (community-wealth.org; date accessed Oct. 24, 2017) could do more help out.

One group of particularly effective anchors are the high-tech companies that have returned en masses to the city centers.  Mr. Florida reports, "Today, five of the ten most valuable companies in the Fortune  500-Apple, Amazon, Google, Microsoft, and Facebook-high-tech corporations.  At least two of them, Amazon and Google, are a massive presence in urban core."

Retail and media juggernaut Amazon is the largest private tenant in Seattle's city center.  Amazon-vile spans 8.5 million square feet (urbanland.uli.org; May 12, 2017; date accessed Oct. 24, 2017) and employs (amazon.com; date accessed Oct. 24, 2017) more than 25,000 workers, most of whom are well-paid engineers, managers, and programmers.  Now that bidding has ended for the right to host Amazon's second headquarters (citylab.com; Sept. 12, 2017), the company's proposed HQ2 will have considerable impact on whichever American or Canadian metropolitan earns the right to host the company.  Further, Amazon will have a significant effect on the shape and content of whatever future economic development policy and implementation.

Search engine giant Google still maintains its large suburban complex-"Googleplex-"in the Silicon Valley suburb of Mountain View and has a major urban presence in New York City, home to 3,000 employees, housed in a renovated Port Authority Buidling in the Chelsea neighborhood.  Mr. Florida writes, "The company as also proposed an estimated 870,000 square-foot tech complex in central London [theverge.com; June 1, 2017; date accessed Oct. 24, 2017), designed by young "starchitect" Bjarke Ingels, which will house another 4,000 employees."  Google has also entered negotiations with the city of San Jose to buy city-owned land near the downtown Diridon Station, which would encompass six to eight million square of mixed office and retail space and house about 20,000 employees.

Real estate companies are another major anchor with enormous sway in cities.  To take better advantage of the urban renaissance, real estate developers are foregoing singe developments and putting entire neighborhoods like the Hudson Yards (hudsonyardsnewyork.com; date accessed Oct. 24, 2017) in New York City or the Seaport Innovation District (seaportinnovationdistrict.com; date accessed Oct. 24, 2017).  Although these developments have the potential to encourage diversity and community engagement, "they also have the potential to become isolated pockets of wealth, alienating nearby residents and amplifying inequality in surrounding neighborhoods."

The burgeoning urban renaissance has sparked an increasingly potent backlash (citylab.com; Dec. 15, 2015; date accessed Oct. 24, 2017) that places the blame for rising housing prices and increasing inequality on high-tech companies and real estate developers.  In the middle of this backlash, a increasing number of cities have resorted to inclusionary zoning (huduser.gov; date accessed Oct. 24, 2017) as a strategy to make communities more accessible or low to moderate-income families.  However, solving today's urban challenges requires strategies that move beyond these measures.  "It must also include jobs, innovation, and broadly shared economic growth."  Messrs. Richard Florida and Steven Pedigo'sstudy identified four key concepts that anchor can and must make use in the search for inclusive urban prosperity.

Require affordable housing

Urban anchors can help bridge the divide between the poor and affluent residents by providing affordable housing (nreionline.com; April 10, 2016; date accessed Oct. 24, 2017), with workforce housing that makes it easier for service and blue collar workers to live near their jobs.  New York University and Stanford already offer housing assistance to their faculty in the form of help with mortgages and rental supplements, or university owned housing.

Real estate developers and high-tech companies can follow suit by incorporating affordable and workforce housing into their urban developments.  For example, in Amazon's hometown of Seattle, the company set aside (money.cnn.com; May 10, 2017; date accessed Oct. 24, 2017) 47,000 square feet of commercial space to house over 200 homeless Seattleans every night.  Mr. Florida writes,"Even with initiative like these in please, leading tech companies have the resources and capabilities to do more."

Make good, family-supporting service jobs the centerpiece of development

Richard Florida reports, "Today, around 45 percent of the American work force is employed in low-wage, low-skill fields like food service, home healthcare, and office work.  Anchors can play a major role in transforming these jobs into sustainable, family-supporting careers."  Research conducted by Zeynep Ton of the MUT Sloan School of Management presents "detailed evidence of how successful retail and hospitality companies like Zara or Whole Foods profit from a 'good jobs strategy' [mitsloan.mit.edu; Dec. 18, 2013; date accessed Oct. 24, 2017] that invests in lower-skill workers."  The formula is pretty straight forward: Offer high wages to employees which result in improved service, productivity, and profit while reducing costly employee turnover and cultivating greater levels of engagement and innovation.  The final result is a big win for cities, which benefits from improved economic efficiency.

Focus on inclusive strategies for innovation, entrepreneurship, and creativity

Typically, innovation is often associated with entrepreneurs, engineers, or computer scientists, it also comes from local creativity.  "With just 40 percent [creativeclass.com; July 15, 2014; date accessed Oct. 24, 2017] of the creative class having earned a college degree, many of America's greatest innovators come from humble beginnings."  Therefore, by working with less advantaged communities to support innovation and entrepreneurship, urban anchors can spur greater community benefits that serve all the residents.  Pittsburgh, Pennsylvania (urbaninnovation21.org; date accessed Oct. 24, 2017) and Washington D.C. (dmped.dc.gov; date accessed Oct. 24, 2017) already have inclusive innovation strategies in place that provide low-income residents with technical skills, job training, entrepreneurial know-how.

Real estate developers can be particularly effective in community engagement by incorporating creative incubators and "maker spaces" into their designs, helping the residents to commercialize their creativity.  "At the same time universities can incorporate community groups and neighborhood residents into their existing entrepreneurial, social, and civic innovation programs."  Tech companies can also make use of their vast array of resources to expand upon community-oriented innovation and entrepreneurship initiatives.

Design and build inclusive public spaces

This is a pretty easy strategy.  Public space is both a character defining feature of cities and a space where a diverse range of people can come together.  Yet, as Mr. Florida points out, "However, even well-intentioned public spaces can exacerbate existing urban divides."  The High Line Park in New York City is a good example.  The park, built on a former industrial site in the middle of Manhattan, was predestined to attract high-end development.  Originally the park was designed as a neighborhood amenity, the High Line has struggled to serve its intended local audience.

In recent years, High Line founders have identified the need to incorporate community benefits into their long-term development strategies.  They established mentorship programs (the highlife.org; date accessed Oct. 24, 2017) and engaged local businesses-including restaurant and retail-to employ local residents, High Line has gradually morphed into a more inclusive public space.  High-tech companies and special improvement districts can follow this example by re-adapting their existing public space to serve the local residents.

Historically, economic development and equity have been seen as separate issues.  Inclusive prosperity aims to alter urban economic development strategy from one that understands equity and growth as mutually exclusive toward one that recognizes the primary role of equity in economic progress.

Richard Florida writes, "Cities and communities have much to gain from inclusive prosperity, but so do leading tech companies."  More and more tech companies from Uber and Airbnb to Google, Facebook, and Amazon are increasing looked upon as contributors to the New Urban Crisis": higher housing prices, exacerbating urban inequality, and so on.  As their corporate brand comes under more scrutiny, it is in their best interest to step up to the plate and be better urban citizens.

Tech companies and urban anchors should embrace inclusive prosperity across the board in order to address backlash from their host communities and enhance their battered brand by becoming real partners in creating more inclusive and equitable places.

 Full disclosure: Mr. Florida is a member of the Toronto Global, which is part of the city's bid for Amazon's HQ2.  He has also provided consultations to Kansas City in their bid and other cities on an informal basis.