Thursday, May 07, 2009

Maybe Bigger Isn't Necessarily Better

If Memphis was a real estate business, we would say that it suffers from a low occupancy rate.

If we ran a shopping center with this problem, we could spend some money making it more attractive and offering special leases, we could lose money and suck it up, or we could raise rents, but if we did, it could lead to our tenants leaving.

The same goes for Memphis. We can spend a lot of money on big-time projects like an NBA arena, Beale Street Landing and Shelby Farms Park in hopes of keeping our taxpayers in the city and attracting more. We can respond to a decrease in people by an increase in revenues in the form of property taxes, but it results in an exodus of families.

A friend of ours offered a lesson for us. Faced with similar scenarios, he made his shopping center smaller. He consolidated the stores that are still successful and ran a smaller, more efficient and more profitable operation.

Tough Times

So, here’s the question: if businesses can downsize, if nonprofit agencies and private institutions can downsize, if the military can downsize, why can’t cities like ours?

We’ve written about Memphis as a shrinking city twice in the past week, and to summarize, here’s the premise: we delude ourselves into thinking that annexation is the answer to all that ails us when in fact it simply masks the 28% drop in population in the central city in the past 35 years and we deliver the same services over a larger area and with roughly the same budgets and personnel.

Back behind the annexation in the central city, there’s the same number of water lines, sewers and streets to be repaired and policed, the same number of neighborhoods but even more serious problems to confront. Meanwhile, despite the annexation, more people leave and the downward spiral continues on.

Aggravating the problem is a simple fact of life: the decline across Memphis is not equally distributed. There are census tracts with less than 50% of the population who lived there in 1970. With the expansion of area and concentrated poverty left in its wake, urban life itself deteriorates. There aren’t enough people to keep the grocery store in the neighborhood open, vacant lots become havens for criminal activity, and the neighborhood feels less safe and becomes less livable and inviting.

Misery Loves Company

It’s a self-reenforcing cycle. The problems become more than symptoms of serious challenges. They actually become the source for them.

We have plenty of company. During the 20 years between 1970 and 1990, one third of all U.S. cities lost population (the number we used in last week’s post was for world cities). And yet, what is strange about our shrinking city is its location.

Most cities undergoing these changes are Midwestern industrial cities, notably Detroit, St. Louis, and Cleveland. And while Memphis has propped up its population through annexation, like these Midwestern cities, our density has been cut in half.

Cleveland has 3,300 acres of vacant land within its city limits and 12,000-15,000 vacant buildings. That’s why city government there is demolishing up to 2,000 houses a year.

Breaking The Cycle

According to Terry Schwartz, senior planner at the Kent State Cleveland Urban Design Collaborative, said recently on Smart City: “Our goal is to find productive uses for managing, for holding, and for extracting value out of this growing portfolio of vacancy that’s within the city. The rhetoric of shrinking cities is that there is nothing to say that Cleveland or Toledo or Pittsburgh or St. Louis can’t be a good city with a smaller population.

“But the challenge we face is that the vitality, the vibrancy, the density of the city is really scattered, and also in some ways a phrase might be ‘like perforated.’ You have these pockets of strength and growth and what we think of as a convention city, but in between, there are these vast and growing voids where it’s harder and harder to get conventional real estate development to take root.”

Shrinking cities are faced with hard choices. Like Youngstown, they may decide which neighborhood are abandoned because it’s simply too costly to deliver services to them. To accelerate the abandonment already under way, there would need to be incentives to relocate people to neighborhoods that can still be saved.

There’s even discussion of special land-use policies and zero occupancy zoning, which would lead to the elimination of city services. It might sound insensitive, but it’s no less insensitive than the conditions in which our cities in these neighborhoods live now and the pretense of providing public services to neighborhoods which are only glimmers of their former selves.

Bigger May Not Be Better

In Cleveland, they are creating a citywide plan of core investment areas where real estate development and economic development, population growth and stabilization are most likely to occur. Based on market typologies, they are the places of the greatest strength within the city.

We’re not suggesting that Memphis has reached such a crisis point, but we ought to start planning for it. If trends continue and nothing happens to change the trajectory of our region, conditions in these neighborhoods will only get harsher and more untenable, not to mention, unaffordable, and the population of the traditional city will continue to fall.

But there’s another option: deannexation. Some economists suggest that large tracts of land that no longer have to pay city taxes could attract development that would otherwise avoid them like the plague. Perhaps, it could result in decreased costs to the city and increased revenues. Best of all, it might attract people back into the urban area, and perhaps, lured by lower taxes, some of them would be the middle income families we are hemorrhaging.

We know all this runs counter to Americans’ obsession with bigger and bigger as the definition of success. Perhaps, just perhaps, success isn’t measured in larger and larger population. Absent a tax-sharing arrangement or a major overhaul of our tax system, it’s hard to see a way that the population of the “old” city of Memphis will stabilize anytime soon.

Getting The Focus Right

Most of all, we’re not saying that shrinking Memphis would be the magic answer to solving our city’s problems, but it would allow us to target our energy, our efforts and our resources to an area that allows for more efficient deployment of city services.

It’s unlikely that Memphis will ever see a return to the population within the beltway that it once had, but it just may be our best chance of stabilizing things long enough to triage our problems.


bob said...

In a shrinking city, real estate development becomes a zero-sum game. Is this not true?

Yet Memphis still believes that we'll be saved by more development -- that we can just "build it, and they will come."

Smart City Consulting said...

In a shrinking city, you assemble large tracts of land, and they may or they may not ever be developed. It's no longer about development as the driving force. It's about more efficient city services over a more dense, compact area. As you suggest, our "build it and they will come" led to the overbuilding that is at the heart of so many problems.

Anonymous said...

Ze Zero-Occupancy Zoning Should be partnered with Ze 'Weapons-Free Overlay' allowing tourists and interested locals to shoot the various remaining squatters, low lifes,crackheads,defaulters,buggerers, muggers,and other wasters of planetary resources.

They would be allowed to shoot back on alternate days, in the interest of equal rights, ja?

Bass Pro could handle the safaris from the pyramid.

Anonymous said...

Planning is a critical need. In the past, we handed the planning process to the developers who got rich building more and more on the fringes of the city, encouraging an emptying of the center city and making added infrastructure mecessary to support more and more neighborhoods.

One thing you do not mention is the ease of sprawl in the Memphis area. Unlike many cities, we are relatively flat but without major flooding problems like New Orleans or Houston or mountains to build on or around as in other cities.

Your "deannexation" idea, at first glance, is incredibly naive but I would want to know details. Are you thinking of "deannexing" Wolfchase and the tax revenue that comes with it or some of the more affluent areas on the fringes OR possibly Frayser, Raleigh, Hickory Hill, or Whitehaven? There has always been a tendency to segregate people, not only racially but economically and would be a temptation in this case.

How would it help to cut out major revenue sources or affluent (and influence) citizens from out city? On the other hand, if we deannexed working class and poor citizens, would this not cause charges of ridding ourselves of some of the most needy?

There may be merits but until some of those questions are addressed, this idea will likely go nowhere.

Anonymous said...

the earlier attempt at 'forced consolidation' by memfrica dissolving the city charter lead to an interesting concept:
Bartlett and Germantown would be free to annex Cordova and meet at Walnut Grove; Germantown could get all of productive East Memphis; etc.
Too bad Nashoba County was such a non-starter. Back then.

Anonymous said...

charter surrender is the answer; it would force the county to run things. It would spread the tax burden and responsibility to the whole county. But the politicos like WW would never want to give up the clout.

Smart City Consulting said...


Charter surrender doesn't work because of multitudinous legal and finacial issues. Chief among them is that if Memphis simply gives up its charter, the towns can start annexing up parts of Memphis.

Also, there's the question of who would be responsible for paying the bonded indebtedness of the former city.

Midtowner said...

Hey, hey, hey ... give me a little credit here ... I've been proposing deannexing for quite awhile!

Of course the other municipalities could gobble up the deannexed areas if they wanted them ... or may be they could be deannexed in away that they could form their own municipalities ... or held in a Memphis reserve area for future reannexation.

I know that this may surprise a few people but there are poor areas out in the county! Ever wonder why Memphis hasn't annexed Northhaven???

We just need to discuss the boundaries. Maybe deannex everything outside the 240 loop?If that isn't enough, then we can do more.

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