Thursday, June 7, 2012

Illegitimate Arguments

I've heard two rationales in defense of (my and other's) criticisms of various developments and investments around the city and world for that matter.  One is that it takes "40+ years for a place to develop character, urbanism."  The other is that "it's better than it was."  I first heard the latter on the panel regarding the skyline lights and in particular, the Convention Center Hotel.  Neither of these is a legitimate or logical defense.

The former is some architecture judo the profession learns quickly in design school to deflect any criticism.  These things happen when professions become entirely defined by the subjective.  They focus entirely on cosmetics/aesthetics and pretend that is the solution to urbanism.  They also become irrelevant.  Regarding Victory, how much has been spent there?  I'm not even sure, but by any and all measures and interpretations it has badly underperformed (though predictably for those of us that knew beforehand).

The reason is because the golden rule of urbanism was not followed: Integration begets Accommodation.  You drive demand through the intersection of networks, the market provides the supply of buildings, uses, and all that.

The latter, that "it's better than it was" is also an illegitimate rhetorical deflection against criticism.  It tacitly accepts, "yes, it could and should've been better."  It doesn't really defend itself, but hide from the necessary criticism in order for those developments and future ones to learn from the mistakes and become more useful and therefore valuable.  This correlates strongly with the 40 year argument.

If it takes 40 years, do you think the property owners were sitting idly and patiently by while your vision comes to fruition?  I'm afraid no money is that patient.  If that were the case, would we have seen the immediate returns of small interventions like the Magnolia road diet in Fort Worth?  Or with larger investments like State-Thomas?  No, integration of networks begot accommodation.  In State-Thomas's case the integration was already there for the most part (though the streetcar helped in several unexpected ways), but the supply came as a leavening of pent-up, latent demand. In other words, if it takes 40 years, yer doingz it wrongz.

Back to the "Better Than It Was" argument.  If I spend $1 billion on a site, I sure hope it is better than it was (if it was vacant or just surface parking).  When we get the formula backwards and supply-side cities, we invariably spend a lot and get a little in return.  This is fundamentally flawed and not the way cities were built.  If they weren't profitable and advantageous, cities never would have existed nor sustained throughout the duration of civilization.  You always want to get more return than investment, though you often have to look more broadly than one property at a time.  So it makes sense to examine the return on our large investments.  Are we getting a large return?

Let's look at it financially.  Though it must be admitted that the Convention Center and Hotel as well as the Arts District have their advantages, many worth subsidizing.  For example, the Arts District isn't really a true Arts District as much as it is a port for importing art and culture from abroad.  Necessary, but that doesn't mean the execution of the original plan nor its current design can escape criticism and therefore improvement.

So what does "better" actually mean?  One way to look at it (and the way often promised) is induced new tax base.  The Arts District generates $9.1M in tax revenue for the city.  $1.2billion has been spent on construction of the various venues in 2012 dollars.  Take away Trammell Crow tower, which is really more like part of the CBD and it only generates $4.3M.  If the 65 or so acres of the Arts District were all surface parking (based on another downtown surface parking lot), the city would generate $3.46M in tax revenue.  So it's better than surface parking (or vacant).  However, if it was still car dealerships (as I'm told it was in the 80s), it would generate $6.577M in tax revenue.  Therefore, in terms of tax base an Arts District full of car dealerships would be better.

As for the Convention Center and Hotel (and admittedly, it has its benefits, but once again we're posing the question could it have been done better and is it generating more or less ROI than investment), I'm having a difficult time rounding up all the cost numbers for the various phases of construction  on the convention center starting with the 50s-era auditorium, but considering the hotel was $350M, we can bet in 2012 dollars, we're well over $1Billion.

The entire 72 or so acres is tax exempt, so there is $0 revenue generated and the conventions and occupancy go to paying operations costs and debt.  Whether the visitors offset that cost with other spending is debatable and highly fuzzy math.  And whether those same visitors would be here without the convention center and hotel (say, if that land wasn't so burdened by such a massive structure that private investment could have provided a better, more urban experience than the giant slug, is also debatable.  As it is, whether we want to even be in the convention business competing with such rockstar, world class cities as Vegas (will never compete with their legalized vice) or Orlando (will never compete with Disney).

Same exercise, if that 72 acres was surface parking, it would generate $4.39M in tax revenue per year.  If it were the Costco of car dealerships, it would generate $6.577M/year.  Using Joe Minnicozzi's math, mixed-use development on this acreage would generate $45.8M per year.  And being mixed-use it would have been privately built, all with the simple public investment in proper transportation networks that generate demand for proximity, not ship it outside the city on a highway.

Let's Table these:

Arts District Tax Revenue Per Year:
Current: $4.3M
As surface parking: $3.46M
As car dealership: $6.577M
As mixed-use: $41.21M
Over the magically derived number of 40 years, that's $1.648B in tax revenue generated or $400 Million more than it cost to build.  Though, again don't jump down my throat, I understand that performing arts facilities have value beyond immediate dollars and cents.

Convention Center and Hotel:

Current: $0
As surface parking: $4.39M
As car dealership: $7.22M
As mixed-use: $45.8M
Over the magically derived number of 40 years, that's $1.832B in tax revenue generated or about $800 Million more than it cost to build.  Though, again don't jump down my throat, I understand that performing arts facilities have value beyond immediate dollars and cents.

The way we executed the Arts District, Victory, and the Convention Center do not defy criticism.  It's public money lost.  In fact, particularly with regard to the Convention Center, they tend to be more far more burdensome than the spin-off benefits.  So they end up floundering (for 40 years) and we decide that more supply-side urbanism is necessary.  So we build a hotel.

Focus on integration of networks.  It's the profitable (social, economic, and environmental) way to build cities, drive demand, and let the market provide the supply.