URBS 380 Final

Natural monopoly: arises when an industry has high barriers to entry and large economies of scale
E.g., public utilities, postal service, railroads, public transit

Externality: indirect cost or benefit to a third party as a result of another party’s activity
E.g., air pollution, research and development

Public good: a good or service that is non-excludable (no one can be barred from using it) and non-rivalrous (one person’s use doesn’t limit or prevent others’ use)
E.g., national security, streetlights, public parks
Local government provision is ideal when the benefits are localized

Generally reserved for functions with specific local knowledge, requirements, or conditions

Factors influencing the optimal level of government provision:
Economies of scale: if large, local provision can be costly, or duplication can arise
Externalities: if large, local provision may be inefficient
Variation in demand: if significant, local provision can best accommodate specific needs of local constituents

Coordinate provision of certain services at a higher level
E.g., water, sewage, major roads

Special-purpose bodies
E.g., school board, regional transportation authority

two-tier metropolitan government
E.g., Municipality of Metropolitan Toronto (1953)

Voluntary co-operation
E.g., two towns share snow-removal service

Consolidation/amalgamation
E.g., Montreal megacity (2002)

1970–2001: Montreal Urban Community (MUC)
28 municipalities
Responsibilities: public transit, police, regional planning, sewage
Governing council: Montreal mayor and councillors, one delegate each from other municipalities

2001–present: Montreal Metropolitan Community (MMC)
New regional body intended to increase international competitiveness and address fiscal mismatch
82 municipalities
28-member governing council (14 from Montreal)

2002–5: Megacity
“Une île, une ville” (One island, one city)
Governed by 73-member council
Strong public opposition

Economic efficiency (cost reductions)
Regional equity
International competitiveness
For province, can facilitate “downloading”

But at what cost?
Reduced local democracy and accountability
Greater bureaucracy → lack of “healthy” competition

1. Property tax
2. User fees
Required payment for good or service provided by municipality
3. Privatization
Municipality contracts out certain services to private sector
Assumption: saves money because the private sector is inherently more efficient
4. Intergovernmental transfers
Grants from provincial and federal governments
Often “matching” grants (higher-level government contributes a certain amount for every $1 in local spending)

Tool for financing municipal infrastructure and redevelopment projects
Widely used in US (since 1952)
Portion of future property-tax increase (“increment”) within a defined area is used by the municipality for current investment
Financed by bonds/loans issued against expected property tax increases (Borrowing from the future)
Commonly used in blighted areas and for job creation
Need to establish that area wouldn’t be redeveloped without TIF
Most effective when “rent gap” is high
Depends on capitalization (realization of benefits over time)

Advantages
“Self-financing,” if it works as intended
Flexible—can be applied to a range of projects

Criticisms
Who gets the tax increments?
Often used to subsidize developers
Can property-value increases be attributed solely to the TIF?
Zero-sum effect
Over 80% of Hudson Yards tenants relocated from other parts of city
Promotes gentrification
Lack of accountability
“Value destruction”: developers may negotiate or appeal for lower assessments

Municipality designates an area as TIF district
Property valuation within district is held constant for 20–30 years
Value creation: public investment enhances appeal of area
Private investment arrives; property values increase
Value capture: municipality captures increased value through property taxes
Tax increment: Difference between baseline value and new assessed value (used to finance debt)

Popularized in 1990 by Michael Porter
Business environment, not just corporate strategy, is critical to firm performance
“Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (e.g., universities, standards agencies, trade associations) in a particular field that compete but also cooperate.”
More than single “industries”—encompass an array of linked industries and other entities related to competition
Emerge at several geographic scales
More prominent in “advanced” economies

demand side economic development

Industrial
International competitiveness rests on building an industry that has great wealth-creating potential
Targets desirable industries for support
Typically national- or regional-scale strategy

Cluster
What matters is not what a place competes in, but how it does so
Emphasizes linkages and spillovers (externalities)
By grouping together, firms, suppliers, related industries, institutions, and government can share information and address common problems
Strategy may be set at city or regional scale

1. Enhance productivity
Access to specialized inputs and employees
Incentives and performance measurement (E.g., motivation from competitive pressure and peer pressure

2. Promote innovation and productivity growth
Companies can readily discern buyer needs and trends
Firms can learn about new technologies, operations, delivery methods, concepts, etc.

3. Promote new business formation
Businesses can identify opportunities and gaps in the market
Lower barriers to entry (access to inputs, skills, customers, etc.)

Porter’s suggestions for the role of government
Promote an understanding of role of clusters in competitiveness (productivity and innovation)
Remove barriers to competition
Forge broad coalitions
Let the private sector lead
Set concrete, attainable tasks

Government is a major producer and buyer
Government provides critical infrastructures and public services that enable innovation
E.g., telecommunications networks, education
Need for publicly instituted social and environmental regulations
E.g., living wage, emissions limits

Some socio-economic groups have limited “social capital” and networks and are excluded from job and learning opportunities
Clusters can promote gentrification and displacement
E.g., Silicon Valley firms employ many low-wage and unskilled immigrants, often as contingent workers; the cluster contributes to growing wage disparities

A city (or project) that uses new technologies to acquire large amounts of digital data as a means to rationalize planning and better manage and develop cities (Skelton et al. 2015)
Key proponents: Cisco, IBM, Microsoft, Intel, Siemens, Google, philanthropic foundations, IT advocates, city governments

New-build cities
E.g., Masdar (UAE), Songdo (South Korea), PlanIT Village (Portugal)

Initiatives within existing cities
Focus on economic development and enhancing city management

Urban development led by information and communications technologies (ICT) is seen as important to cities’ growth, efficiency, and prosperity
Posed as the solution to numerous urban problems
Crime, traffic congestion, inefficient services, economic stagnation, etc.
Framed as a “technology-led urban utopia” (Hollands 2015, 61)
Initiatives often emphasize sustainability

Often vehicles for large profits by IT, engineering, property development, and construction companies
Top-down initiatives that offer a narrow, corporate vision of the ideal urban life
Privileges economic objectives over social and environmental goals
Projects themselves may contribute to social inequality and polarization
Technology seen as an end in itself, rather than a means to an end
Data collection, privacy, surveillance, profiling
Do residents have a say?

Challenges
Limited budget
Downloading of responsibilities to boroughs without sufficient resources
Key proponents: France-based OVH in partnership with Cisco; Microsoft
Questions about who controls the data and who will be served

Smart-city initiatives are often technology led, corporate influenced, and linked to entrepreneurial forms of urban governance. Are there alternatives?

Principles of progressive, grassroots smart-city initiatives (Hollands 2015):
Technology isn’t the only solution to urban problems
Focus on the people who live in cities (city as a social, not technological, entity)
Engaging and empowering citizens to address complex problems

2011- plan for a smart city initiated
2014- mayor coderre establishes the bureau de la ville intelligente et numérique
2015- launch of Montreal, Smart and Digital City: Action Plan 2015-2017
2015- Montreal hosts Smart City Expo
2015- Launch of InnoCité MTL, first smart-city start-up accelerator
2018- BVIN is renamed Laboratoire de l’innovation urbaine de Montréal (LIUM)
2019- City of Montreal is a winner of Infrastructure Canada’s Smart Cities Challenge
2020- Launch of “Montréal in common” program (2020–24)

Digital Divides—The Impact of Montreal’s AI Ecosystems on Parc Extension (2022)
“AI supercluster” (merging of cluster and smart city) in Mile-Ex
Contributing to gentrification in neighbouring Parc-Ex
Parc-Ex residents lack access to technology, well-paying jobs

Investments in convention centres, stadiums, museums, amusement parks, casinos, etc.
Increasingly central to economic development in “post-industrial” cities
Touted economic benefits for cities (Levine 2003):
Jobs (employment multipliers in tourism and retail)
Property-market investment and revitalization
Local tax revenues

manegerial:
entertainment investment came with pop growth
refelction of wealth
enetrtainment facility meant for local population
rarely cost over 125 m for stadium

entrepreneurial city:
cities build statdiums even when population shrinks, less taxe base etc
pace of development increasing; greater variety of amenities being built
designed for tourists
stadiums farmore expensive of luxury boxes, retractable roofs, restaurants etc

Even if tourism sparks employment, it rarely pays a living wage
Property investment occurs in a “tourist bubble”
Fiscal benefits to city are minimal

“Pyramid scheme”: new investments (e.g., amusement centre) are needed to ensure viability of past ones (e.g., large hotel)
“Carnival city” must be constantly reinvented

Can skew civic agenda away from investment in education, health, social services in favour of “visitor class”

Games originally budgeted at $120 million; would be self-financed from revenues Corruption, fiscal mismanagement, work stoppages, construction delays, and stadium design flaws increased cost to $922 million
Games nearly relocated at last minute; province took over management from city

The “Big Owe”
After Olympics, stadium used for Expos baseball, concerts, trade shows, exhibitions
1977–2002: annual losses of $170 million roof always broken or doesnt work 2006 finally paid off total cost of 1.61 billion

Florida (2002): we need to rethink economic development strategies centred on luring firms
Quality-of-life strategies stress the role of “human capital” (“talent”)— associated with innovation—as the new basis of growth
Talent seen as driving innovation
For cities, the aim is to attract highly skilled, mobile workers (talent); in turn their presence will attract firms and jobs

Those whose economic function is to create new ideas, technology, or creative content All human beings are creative, but only some are mainly paid to create
Florida’s “Creative Class” (30% of US workforce in 2002):
“Super-creative core”: workers in science, engineering, architecture, design, education, arts, music, entertainment
“Creative professionals”: workers in business and finance, law, health care, etc
An occupational definition of class (not about income, property, consumption, etc.)

Tolerance (“diversity”)
Florida measures using “Gay Index” and “Melting Pot Index”
Cultural amenities
New: street life, performance, cafes, bars, festivals, outdoor recreation
Old: fine arts, professional sports
Florida measures using “Bohemian Index”

Focus on “people climate,” not “business climate”
Cultural policies
Support for popular arts and independent artists Cultural festivals (Pride, Caribana, etc.) Performance venues
Urban design and architecture
Widening of sidewalks
Beautification and historic architecture
Bike lanes and pedestrian paths
Create “live/work/play” neighbourhoods

Fit well with existing “entrepreneurial” urban agendas
From building stadiums, convention centres, shopping malls . . . to cultural districts, architecture, streetscapes
Resonate with “growth coalition” actors who dominate urban development
Align with neoliberal ideology Florida argues that unions, higher minimum wages, redistribution stifle creativity

Conceptual criticisms
Assumes all skilled workers are mobile and can access creative jobs, but:
Women face discrimination
Immigrants face discrimination at the borders and in “creative” labour markets
No consideration of the needs of “non-creatives”

Methodological criticisms
Does the presence of “talent” (skilled workers) lead to a concentration of jobs, or vice versa?

Policy criticisms
Focus on marketing places rather than nurturing them (Peck 2005)
Creative class is associated with inequality
Only some “creative” activities are valued
Focuses on amenities for an urban elite
Can promote gentrification

Invest in education and training to nurture local creative workers (including foreign born)
Affordable live-work spaces; collective studio and exhibition spaces
Rent regulations (for residents and local businesses)
Social housing provision
Accessible, affordable (or free) public transit

1. Urban entrepreneurialism
Leads to a focus on downtown as a competitive advantage and space of consumption
Aim to attract businesses, capital and jobs

2. shift to a knowledge-based economy and 'creative city' policies

3. gentrification pressures

4. chnaging urban planning paradigms, ideologies and policies
Dominant urban planning ideas in North America in the mid-20th century:
Outward suburban expansion (sprawl)
Auto-oriented development
Fossil-fuel-intensive lifestyles
Privacy, domesticity, morality

Dominant urban planning ideas in North America today:
High-density development, intensification, “smart growth”
Mixed land uses, “15-minute cities,” “live-work-play” neighbourhoods
Sustainability, low-carbon lifestyles
Public space, spontaneity, recreation, “active” streetscapes

culture/ consumption
“new middle class” that rejects suburban conformity and embraces innercity diversity
Shifts in market demand and changing lifestyle, cultural, and location preferences

capital/production
innner city disinvestment creates a 'rent gap'- difference between existing and potential income from property

Toronto’s condo boom has been driven by:
municipal and provincial planning policies aiming to redirect growth to already built-up areas, transform inner-city brownfield sites, and intensify the existing urban fabric
housing policies that seek to attract “creative” industries and knowledge-based workers
But condo development represents a new form of gentrification that displaces low-income residents, marginal industries, and social services

Growth plan for the greater golden horseshoe
Aims to limit sprawl (containment) and redirect growth to already built-up areas (intensification)
Municipalities required to revise official plans to conform with the regional growth plan
Intensification said to be critical to sustainability and Toronto’s international competitiveness
Plan effectively encourages downtown condo development and property investment
This has driven up land values and pushed out low-income residents

Toronot’s “two kings”
Planners used “permissive zoning” to open up two downtown neighbourhoods, KingSpadina and King-Parliament, for redevelopment
The new zoning policy attracted significant private real estate investment
Condo developments, loft conversions, etc.
Transformed the physical and social fabrics of both areas
Considered a success—but likely made downtown Toronto less affordable and less diverse

356-hectare area southeast of downtown Toronto, on former Don River delta
Home to shipping port, former industrial sites, large-scale infrastructure, parks and recreational sites, significant open space
“One of North America’s largest underused urban areas”
Limited connections to downtown and surrounding neighbourhoods
Major barrier to redevelopment: flood risk from Don River
Waterfront Toronto (trilateral government agency) is spending $1.25 billion on river naturalization, flood control, decontamination, parks, and infrastructure to “unlock” the area for development

Abandoned elevated rail line in Chelsea, New York City
Turned into a park with $115 million in public money Now a global tourist destination Development around the high line US$2 billion in private investment flowed into the area around the High Line, including new high-end condominiums
Rents in apartment buildings near the High Line doubled in the three years after it opened
Has led to the gentrification of Chelsea
High line effect

“A process through which citizens take charge of planning and managing economic development in their region, with the aim of creating employment for residents, improving quality of life, and developing greater regional autonomy”

"aims to analyse and mitigate the consequences of historic patterns of uneven investment, racial discrimination and gender oppression, and to catalyse economic development within marginalized and disinvested communities”

Key CED principles include local decision-making, creating local linkages, reinvesting profits locally, long-term employment of local residents, skill development, and economic stability

Growth
Increased economic output or employment

Development
Structural changes in the arrangements that produce and distribute economic output
Implies an increase in residents’ well-being, including positive changes in the level and distribution of employment and income

“Liberal”
Focuses on economic objectives: business development, job creation
Encourages entrepreneurship; less emphasis on public participation or control
Pursues development through “balanced” growth
Dominant approach

“Progressive”
More holistic: focuses on social and environmental objectives
Encourages community participation and control
Emphasizes long-term, comprehensive plans

1. Use of locally produced goods and services
2. Production of goods and services for local use
3. Local re-investment of profits
4. Long-term employment of local residents
5. Local skill development
6. Local decision making
7. Public health
8. Physical environment
9. Neighbourhood stability
10. Human dignity
11. Support for other CED initiatives

Doesn’t address the root causes of unbalanced capitalist growth; still at the mercy of the broader system
Comes to operate as a “shadow state” that fills gaps in public welfare provision
Initiatives too small and under-resourced to properly address issues like poverty
As CED institutions grow, their democratic nature tends to erode

“People-centred enterprises jointly owned and democratically controlled by and for their members to realise their common economic, social and cultural needs and aspirations. . . . Managed by producers, users or workers, cooperatives are run according to the ‘one member, one vote’ rule.”

Consumer co-operatives: owned and managed by customers
Eg Desjardins, credit unions

Worker co-operatives: owned and managed by workers
eg La Livrerie, Evergreen Cooperatives (Casper-Futterman 2011), Neechi Foods
(Enns 2008)

Producer co-operatives: producers pool outputs to negotiate lower prices or access larger markets
Ocean Spray

Multi-stakeholder (“hybrid” or “solidarity”) co-operatives: ownership shared among different types of members
Concordia Co-op Bookstore, Hive Café Co-op, Reggie’s Bar

Increased control over income and wealth
Greater economic security and anchoring (place rootedness)
Reduced costs
Can help reduce poverty and build wealth
Increased productivity
Living wages, benefits, job stability

Economic democracy: a system in which people have equal formal decision-making power in economic activities and processes that affect their lives
Involves democratization (and/or collective ownership) of workplaces, homes, money

Federation (network) of worker-owned co-ops in Basque Country of Spain
Founded in 1956 to establish economic and political independence
Encompasses 240 firms (81 co-ops) that employ 70,000 people worldwide World’s largest and best-known co-operative experiment

Mondragon’s co-ops produce a range of goods and services
60% are exported

Co-operative principles
Employees own the firm: must invest €13,400 to become a member
Every worker-member has a vote:
Egalitarianism: in Mondragon enterprises, the average wage differential is limited to 5:1 (compare with 670:1 among US corporations)

Low unemployment 2018: 9.6% in Basque Country, 14.5% in Spain
Economic activity is anchored in place
10-year success rate for start-ups: 80%
Compare with 30% for US businesses “In Mondragon, I saw no poverty, I saw no signs of extreme wealth” (Peters 2016)

Must compete on global markets with capitalist firms
Since the 1990s, market pressure has challenged co-operative principles
Offshore production
27 overseas plants, 6,000 employees in China
Increase in non-owning employees
Bankruptcies and job losses
But with a difference—guaranteed wages for 2 years

A non profit membership based community organization that acquires, holds and stewards land together for community benefits and priorities
Ex: dudley street neighbourhood in boston

Milky way garden, long-term land stewardship, intensifying pressures of gentrification and financialization
18-month community driven planning
37 promising directions fro community action and policy
Concentration of rooming housing in parkdale
Rooming house closure and mass eviction
Parkdale rooming house study
First community led preservation in 2019, 2nd in 20021
Transfer of 81 TCH scattered homes to PNLT in 2022
Community control over the flow of economic resources
Social procurement

Pathways to community ownership
Little jamaica report 2020 says to focus on
Supports for black-owned small businesses
Highlight impacts of transit infrastructure projects and transit oriented development on existing communities
Canadian network of community land trusts
Pursuing community ownership on stolen land?

Views underdevelopment as caused by a “divergence” between local production and local needs, leading to a lack of self-sufficiency
With foreign ownership, profits “leak” out of the community and are controlled by outsiders, who exercise power over community resources

Aims to meet local needs with local goods and services
Requires community participation and ownership
Prioritizes a strong, inward looking, self sufficient, economy based on filling community needs
Aims to create internal linkages by focusing on “basic goods”: goods used in many local industries (cf. staples and export-based theory!)
Subsidies may be needed to help new start-ups compete

Institutions that have large investments in the community and tend not to move
Main examples: “eds” (universities) and “meds” (hospitals)

A common CED approach involves leveraging these institutions’ economic power to create community benefits, through a range of strategies:
Purchasing from local vendors
Hiring local workers
Leveraging real estate development to promote local retail, affordable housing, or community land trusts

Network of worker co-ops in Greater University Circle area of Cleveland, Ohio
Co-ops seek to create linkages between disinvested local communities and anchor institutions
Co-ops in network: laundry service, insulation company, café chain, LED gauges, shipping crate manufacturing

The use of business or government procurement (purchasing) activities to deliver social and economic benefits
Restaurant commits to buying ingredients from local farmers
Federal government commits to awarding 5% of contracts to Indigenous-owned and Indigenous-run businesses
Can be used in procurement of goods or services (or in hiring)
Minimizing cost is no longer the sole objective
Often used as a community economic development (CED) strategy

Contract between a real estate developer and community organizations
Requires developer to provide certain amenities or mitigations in exchange for community support for a project
Local example: Bâtiment 7 in Pointe Saint-Charles

Fair wage
Many governments across Canada have fair-wage policies
Sets minimum wage rates for specific occupations
Must be paid by contractors doing work for a government with a fair-wage policy

Living wage
Minimum hourly wage required to pay for basic needs, based on local cost of living Ranges from $17 (Medicine Hat, Alberta) to $39 (Canmore, Alberta)
In most large cities, legal minimum wages are at least $5 lower than living wages

Much Indigenous economic activity occurs in rural areas, which pose unique barriers
Remoteness, distance to markets, higher costs for goods and services

How to enhance Indigenous economic development in Canada?
1. Improving data about
Indigenous businesses Indigenous economies currently invisible and marginalized
2. Rights to land and water
Vital resources for economic development; can increase economic opportunities
Extension of the reserve land base to include urban areas
3. Facilitating Indigenous entrepreneurship and CED
4. Place-based Indigenous economic development

Grassroots, bottom-up exchange of resources to meet immediate survival needs
Often used when state provision is insufficient or doesn’t reach all groups
Proliferates during disasters and emergencies—but also vital in “normal” times

Democratic process in which local residents decide how to spend part of a public budget through deliberation
Often designed to involve those left out of traditional public engagement processes (low-income people, new immigrants, non-citizens, youth, etc.)
First used in 1988 in Porto Alegre, Brazil

Representative democracy: People rule through elected representatives
The most familiar institutional system for realizing democratic principles
Associational democracy: Collective organizations (unions, business associations, community groups, etc.) are directly involved in decision-making
Much less familiar
Direct democracy: Ordinary citizens involved in political governance
Plebiscites, citizen participation in law-making, participatory budgeting
Participatory budgeting is a form of direct democracy, but can be designed in more or less democratic ways

Participatory budgeting in Porto Alegre has resulted in:
Massive shift in spending toward the poorest areas
A clear sign of popular empowerment
High and sustained participation
About 8% of adults
Growth of civil society associations to articulate people’s needs
Near-disappearance of corruption
Increased support for the Workers’ Party (PT), which instituted the process
Signs of increased tax compliance

Over a three-year pilot study (2015–17), 37 projects were funded, at a total cost of $1.87 million E.g., lighting improvements in parks, bicycle locker, playground, accessibility improvements Most projects involved capital improvements to existing public amenities But participation at community meetings, voting, and evaluation process was lower than expected

Most participants are white and affluent
In North America, low-income people care less about streets and parks than about jobs, health, housing, etc.
small-scale initiatives are inadequate to really transform governance
“Token local efforts” (p. 3) involving very limited funds

1. Use pots of money that matter to poor people
Housing, jobs, schools, programs, operating funds—not streets, parks, capital funds
More money attracts more participation
2. Empower community members to design and lead the process
3. Make participation accessible Scheduling, languages, food, facilitation, games
4. Focus outreach on underrepresented populations

Began in Le Plateau-Mont-Royal borough (3 districts), 2006–8
Funding source: Triennial Capital Expenditures Program (10% of borough budget)
Challenges:
Opposition from other borough councillors
Limited transparency and follow-up
Participation not representative and declined over time
Projects generally oriented to promoting cultural activities, community building, greening initiatives
Projects had to contribute to Montreal’s ecological and social transition and be feasible on public property

1960s-1970s
Context: top-down urban renewal programs with racially disparate impacts
CED emerged as a decentralized set of tools to target and coordinate resources for development in disinvested areas

1980s-1990s
Context: neoliberalism, globalization, retreat of welfare state
CED evolved to include more market-oriented approaches, as part of the focus on urban entrepreneurialism
Key strategies: anchor institutions, community-university partnerships

2010s
Context: 2008 global financial crisis, Occupy movement, inequality
Key strategies: co-operatives, local wealth-building enterprises, urban social movements

20202s
Conext: COVID 19
Key strategies: mutual aid?

1. exactive/concessionary strategies (“Pay up”)
Aim to extract some resources (concessions) from corporations or development
Don’t challenge underlying power relations or dynamics of capitalist development
Profit-maximizing businesses are tolerated if they “pay up” in ways that benefit communities

2. Localist strategies (“Made here”)
Aim to build a local economy instead of a global one
Challenge the logic of globalization, which says that regions should specialize and trade in whatever they do best
Promote local economic activity (“made here”) as a way to generate local wealth

3. transformative/democratic strategies (“economic democracy”)
Aim to build a different type of economy that foregrounds democratic control
Reject neoliberal logics and mainstream approaches to economic development
Emphasize democracy, equity, and community control
For the “transformative” model to be viable:
need to scale up E.g., Mondragón
need state support that enables (rather than replaces) bottom-up, community-led initiatives

Non-profit organization responsible for coordinating and promoting Quebec’s social economy

Provides:
Financial support (investment funds)
Research extension support
Training
Business development