At Home He's A Tourist

"Suburbia vs. Living in the City" (Part 1)

By Jason Pancake

This week’s column is the first of a two-part series that will take a look at how America’s big cities have tried to deal with the future and how suburbia has grown because of this. Along the way, I’ll hopefully explain a little about why cities welcome so many Wal-Marts and Starbucks and why the South has risen again.

Let’s look at an example in my own hometown of Los Angeles. This past week you might have heard about this massive project called the Grand Avenue Project in Downtown Los Angeles which was approved by both the City and County of Los Angeles. This project will take place in the heart of Downtown near City Hall and bring in huge retail and residential buildings and a new park. Here are a couple of articles from the LA Times and the LA Downtown News . Or do a search for “Los Angeles Grand Avenue Project”

The Grand Avenue Project

As described on its website , “the master plan for the Grand Avenue Project centers on a large park connecting landmark cultural and civic buildings with an ambitious multi-use development to create a unique gathering place in the City. The overall plan includes the development of a 16-acre civic park, streetscape improvements along Grand Ave. from 5th St. to Cesar Chavez Ave. and up to 3.8 million square feet of mixed-use development.” The first major part of this project will be a fancy hotel and a 50-story high-rise with 1000 residential condos/apartments, including 200 reserved for low-income tenants. In addition, workers living within five miles of the site will have priority for about 30% of the jobs generated by the project, which is helpful to people in the area.

The 200 initial low-income residences will be a welcome addition considering how expensive housing is getting throughout LA. This will be especially nice for these residents because this development is right in the heart of Downtown and conveniently located to all kinds of transportation. In general, it’s not surprising that cities and developers don’t want low-income housing in nice areas or places that are very convenient. Imagine if a 50-story residential building in the middle of Manhattan had one-fifth of its units reserved for low income residents. Apartment companies won’t provide low-income housing in nice areas out of the goodness of their hearts, so the local government, in our case the City and County, had to spice up the deal with tax breaks. This brings up one of the main conflicts with the Grand Avenue Project. Included in the deal the City and County worked out with developers was a nice hotel tax-break which could be $40 to $66 million dollars spread over 20 years. In exchange for the land used in the project and tax breaks, the developer paid the County $50 million. Opponents of the project say the tax breaks will be a waste of taxpayer dollars. There is sort of a point to this, however, there’s no way this project would happen without the tax breaks. Also, the tax breaks will come from new taxes generated from the project itself. In the meantime, the County has already gotten paid for the land upfront, so even if the project is unsuccessful, it has still gotten paid.

On one hand, I’m somewhat weary about this project because if it is successful, it will probably open the gates for turning LA into what New York City is; a small area dominated by skyscrapers and apartment-living. Unlike NYC though, people out here enjoy their space and drive their cars, so changing people’s mindsets about their lifestyle will be a challenge. On a more selfish level, I would hate to see the new amount of traffic generated by something like this. However, on the other hand, LA does need to start making some kind of shift and redevelopment to keep from losing the middle class and working class who cannot afford to live in the LA area anymore. While new downtown condos definitely aren’t cheap, they are a lot less then you would find for a full house in a decent area. As I’ll expand on in next week’s column, the shift of people to the suburbs of other regions of the country has had a huge effect on politics in the Bush era.

From a financial standpoint, redevelopment like the Grand Ave Project also happens to be profitable not only to developers. The city and county could earn a lot of tax revenue from the new project, especially compared to the vacant space or small parking lots that are there now. To solve other city/county problems, this tax revenue will come in handy. You and I all pay our income taxes (if we don’t want to end up like Wesley Snipes) and sales taxes on stuff we buy, but cities/counties really need the taxes from businesses in order to support services like road work, police, firefighters, education, and other daily things we need.

Getting back to my earlier Wal-Mart/Starbucks point, cities sure don’t mind having a Wal-Mart and Starbucks on every block because those businesses bring in customers and the city earns taxes off of them. Applebees or Home Depot did not just magically appear in the neighborhood because the company simply put it there. The local government had to approve it being there. The city had to have a public hearing that the average citizen probably didn’t even hear about or care to attend. The major chains make a far larger profit compared to what they pay in taxes, but it is still interesting that the services provided by local government that I mentioned above all benefit from greater tax income.

Unfortunately, as you’ve probably heard many times, these large chains destroy their smaller competition and put them out of business, among other things. Wal-Mart Watch is a cool website that discusses some of the drawbacks to “everyday low prices.” Sometimes the community is able to keep a chain out of town by scaring the local politicians into denying the request to build. Politicians know that the people who voted them in can easily vote them out. Or the citizens can do it themselves, like in Inglewood, CA where voters turned down a measure to build a new Wal-Mart in 2004. While this was a victory for the voters, it is easy to see why so many other cities and local governments support opening new Wal-Marts. According to the Mayor of Inglewood, the new Wal-Mart would have generated $3 million to $5 million in sales tax revenues.

Next week’s column will continue with the topic of cities, and how moving to the suburbs has led to places like Florida and Ohio determining our elections.