Commentary: ‘Smart Growth’ Won’t Save Cities, but a Market Solution Might

Commentary: ‘Smart Growth’ Won’t Save Cities, but a Market Solution Might
December 1, 1999



One reason for the popularity of the "Smart Growth" idea among some public officials is the claim that curbing new development at the outskirts of metropolitan areas can revive declining central cities.

Tighter government restrictions should bar new home construction and new shopping, industrial, and office areas in outlying locales, Smart Growth proponents contend. They suggest that families and businesses will flock back to the cities once moving to newer areas they disparage as "sprawl" is no longer an option.

Take away their ice cream, in other words, and your kids will come to love spinach.

While suburbs have been attacked by a few social critics for decades, they have been an overwhelming popular success. Given the choice between city and suburban locales, families and businesses have for a half-century been increasingly opting for the latter.



Prohibition, Suburban-style

Even if Smart Growth should dry up the supply of jamoca almond fudge, it is unlikely to make any spinach farmers rich. The idea perhaps best resembles another idealistic social experiment: Prohibition.

Prohibitionists also attempted, by compulsion, to deny Americans something large numbers of them wanted. Even the rationale was similar: the deprivation would be good for them and for society.

Spirits were nonetheless widely consumed during the Noble Experiment. But three generations after its legality was restored, hard liquor consumption is declining. People came to understand the health and safety risks attendant to alcohol use. And as the success of places like Starbucks suggests, much of the public now supports both substitute beverages and alternatives to taverns as milieus for socializing.

What government proscription utterly failed to achieve has been gradually accomplished by people simply voluntarily changing what they wanted. That can work for cities as well. They can regain popularity even as suburbs continue to grow.



Working the Demand Side

In our own day, it seems that Demon Rum has been replaced as a villain by Demon Sprawl. The public peril posed by suburban home building has spawned its own Carrie Nations, with growth-slashing hatchets at the ready.

As with the 18th Amendment (today it would doubtless be dubbed the "Smart Drinking" program), Smart Growth restraints aim to make what large numbers of people want--a new single-family home on the urban fringe--illegal to produce.

The decline of cities is, of course, both real and tragic, as have been the consequences of drinking problems. But history suggests that, as with alcohol use, urban problems can better be dealt with on the demand side than by artificially restricting supply.

People are likely to rediscover cities because they want to, not because Washington pulls the plug on the alternative environments they have for decades preferred. Harnessing market forces is likely to be a more effective option for depressed areas.



A Marketing Failure

Older cities' decline can best be understood not as the consequence of adverse social and economic forces (the usual explanation), but as a colossal failure in marketing.

Cities once enjoyed a virtual monopoly as locations for non-agrarian businesses and families. Modern building, transportation, and communication technologies ended their monopoly, making mass suburbs and edge cities possible. Satellite communications and the Internet now facilitate even greater decentralization.

But what is rarely acknowledged is that while developments like widespread car ownership made suburban living possible for city dwellers, they did not per se make it desirable. Suburbs grew because people liked them better, not because they could get to them more easily. No one takes even the fastest freeway to a place he doesn't want to go.

Author and consultant Harry S. Dent Jr. predicts the fastest-growing areas in coming decades will be small town and rural communities. Rather than a return to the cities, the ultimate response to Portland, Oregon-style urban growth boundaries is likely to be suburbanites jumping over the no-growth areas and "sprawling" into the remote countryside, beyond the reach of metropolitan planners.

But despite the new competition, some cities have still clung to a monopoly mentality. Just like businesses, cities have lost out in the marketplace whenever they have allowed the quality of their "product" to deteriorate, when they have been unresponsive to their "customers," and when they have failed to market the competitive advantages they still enjoy.

In the past, some large cities have considered their residents and businesses as a captive market that would willingly tolerate poor quality public schools, high taxes, unsafe streets, decaying infrastructure, stifling regulations, and officious municipal bureaucracies. But as suburban growth suggests, when a city treats its customers as if they were a captive market, it is soon left with only those who are a captive market and have no other options.

Originally the exodus to the suburbs involved largely white middle-income families. But now the suburbs have attracted stores, factories, entertainment centers, offices, blue-collar workers, singles, minorities--almost everything and everyone that once could be found only in the city. What cities still manage to attract or keep they do too often only by virtue of heavy taxpayer subsidies.

Families and businesses won't willingly go back to places with reputations for crime, decay, and low-quality schools just because of a "No New Suburbs" program from Washington. Some will, however, return to cities that improve their product, treat their customers better, and market what they offer as skillfully as suburban home builders and office and shopping center developers have marketed the suburbs.



Cities Still Offer Advantages

Cities have been hurt by a victim mentality promoted by some theorists who blame suburban development for urban woes. But decrying the success of their suburbs has diverted attention from cities' own substantial advantages.

Predating large-scale development, city homes often have individuality and architectural character impossible to find in new suburbs--and often better construction as well. The mature shade trees that line city streets put urban subdivision saplings to shame.

City parks are often lusher, school buildings grander, shopping districts more convenient, and stores and restaurants less cookie-cutter. And cities' walkability and transit systems are looking better as suburbs choke on traffic.

Harvard University's Michael Porter cites competitive advantages cities retain for certain kinds of businesses. Suburb-based retail chains are now finding central cities an attractive under-served market, where higher densities more than compensate for lower incomes. A lot of hidden gold still waits to be mined in our cities.

Ironically, the trendy small-lot neo-traditional or new urbanist style of development is commonly cited to promote Smart Growth restrictions. But its successes instead support the contrary idea that, sans growth curbs but with a little promotion, some home buyers will willingly opt for the denser, urban milieu widely available only in cities. Neo-trad really says markets, not government. It's not Prohibition: It's Starbucks.

Attempting to save the cities by cutting new suburbs off at the knees converts an unappealing defeatism into civic protectionism. Cities can do without the demeaning assumption that urban communities can survive only by suppressing their suburban competitors.



City Officials Discover Marketing

But despite all the noise being made about Smart Growth strictures in Washington, some city officials outside the Beltway are beginning to discover a less controversial and economically sounder solution. Like businesses losing customers, they're starting to market better.

A couple of years ago, the State of Illinois surveyed local officials and learned that marketing their cities to promote growth was rated a "great need" by more than half of municipal respondents. It ranked second among all needs they expressed.

Years ago, Norfolk, Virginia, attracted investment to its decaying downtown not with suburb-bashing, but with an advertising campaign. Out-of-town investors who were veterans of World War II knew the city mostly as a wild and wooly Navy town. Attention-getting ads frankly admitted the town's unflattering reputation, but then offered evidence it no longer applied.

The largest city in metro St. Louis east of the river, the City of Belleville for years watched new suburbs snatch away its retailers, car dealers, and nearly all new development. Perceptions of the 185-year-old city had been tarnished by its proximity to a blighted neighboring town. Belleville's counter-intuitive virtues--like safe streets and award-winning public schools--were little-known.

In 1998 its mayor commissioned a marketing survey that resulted in the production of two full-page long-copy ads. One touted the city's excellent schools and cultural environment (Do you really want to raise your kids, it asked, "in a town where the closest thing to a cultural center is the local shopping mall?"). The other highlighted a record of civic leadership and innovation that it made it a town that "knows how to be First."

Rather than supporting efforts to stifle its competitors with suburban growth curbs, Belleville opted to go after them in the marketplace, winning growth by selling its own considerable accomplishments.

Barberton, Ohio, is a heavy-industry town that suffered massive job losses in the 1970s and 1980s. It has seen fine homes in older sections snatched up by out-of-town investors at fire-sale prices and carved into low-rent apartments, while young families bought homes in new subdivisions in suburban townships.

While Baberton has attempted to stem the conversion trend through zoning regulation, it has also come to appreciate the demand-side origin of the problem. If they could boost home buyer interest in close-in neighborhoods--including the beautiful but under-valued district around Lake Anna in the heart of town--city officials concluded that older Barberton homes could be fixed up, rather than carved up. And neighborhoods on the brink could be stabilized through more widespread home ownership.

An urban development consulting firm and a marketing professor at Kent State University are now working on a marketing plan aimed at home buyers for the City's older residential neighborhoods.



Selling Beats Compelling

"Smart Growth" curbs on development recall not only the fiasco of Prohibition, but also multiple other attempts by government over the years to over-rule public preferences.

Cities are hardly so helpless as to require artificially induced shortages of metropolitan real estate to assure their own revival. They will be more successful by working with market forces than by fighting them with over-restrictive regulations.

Despite some outdated municipal government policies that can drive people away, there are still compelling advantages to living and doing business in older cities. Notwithstanding suburban competition, cities still have a lot to sell . . . even if they've often done a poor job of selling it.

So instead of fighting the suburbs' success, cities should be learning from it. Rather than fight growth in their hinterlands, city governments should upgrade their services and facilities to suburban standards and make it easier to live and do business within their boundaries.

And they should initiate active marketing programs to sell the substantial benefits cities still offer--benefits that even today's toniest cornfield subdivisions can't come close to duplicating.


John L. Gann Jr. is president of Gann Associates, an urban development and marketing consulting firm. One of the last e-mail holdouts, Gann may be reached, voice or fax, at 630/469-7851 or 800/762-GANN.