PRRES Newsletter

April 2011

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Book Review Associate Professor of Property (Retd) Maurice Squirrell

NEW URBAN DEVELOPMENT: Looking Back to See Forward Author Claude Gruen

Most books on urbanization are long on history and short on solutions. In this book, the focus is on positive and clear articulation of changes that provide opportunities for a strengthened economy following the recent role of USA housing in the Global Financial Crisis (GFC).

In his 2010 book, “New Urban Development – looking back to see forward” Dr Claude Gruen, a private urban economist from San Francisco, commences by carefully explaining the major events in the urban housing market of the USA that led to the bubble that burst during 2008?and precipitated the GFC. While much of this covers the financial climates of the times and the consequences for the mortgage system as it was allowed to develop a sizeable sub-prime portfolio, once the resultant crisis is established, the various, often linked, forces and factors emerging during the last century and leading to that crisis are laid out in detail.

These interesting passages set out the background since the ‘great depression of the 1930s to the time of the recent economic crisis, and, using economic logic and personal experiences over this period, Gruen examines consequences and suggests future courses of action and change as the complex matrix of forces and influences came together in the housing supply and demand relation in the largest market economy of the world.

While some of these issues seem to be USA related only, in most cases it is the nuances only that differ from those impacting on the Australian housing market and urban economy, and in nearly all cases “Lessons Learned” are there for Australia and her policy makers.

Issues covered in detail include: land use restrictions and owner entitlement, agglomeration economics, infrastructure provision and maintenance, planning and zoning, the viscous cycle of inclusionary zoning, filtration, gentrification, negative land values, negative equity, public-inspired constraints on development, effects of large-lot zoning, suburbanisation and sprawl, the no build alternative.

The final chapter “Urban Policies for the New Economy – Equipping America to Thrive in the New Economy’ commences with a knowing quote from President Obama’s Chief of Staff “A Crisis is too good an opportunity to miss”Gruen offers, with reasons, the following eleven changes for urban development policy.

Urban Policies for the New Economy - Suggested Changes for a Strengthened Economy

  • Plan and Zone to Add More Development Than Would Be Required by Estimated Likely Demand Growth.

  • Include Sufficient Zoning for Mixed Uses.

  • Mandate Default Maximum Densities for Zoning in Urban Regions.

  • Encourage the Feasibility of Developing Passed-Over Vacant or Underutilized Land.

  • The Costs of Public Services That Would Be Induced by a New Development Should be Charged to That New Development.

  • Repair and Expand America’s Infrastructure.

  • Using Taxation to Encourage Environmental and Congestion Improvements.

  • Take the burden of Social Housing off the Backs of Market House Producers.

  • Vest tenants of Redeveloped properties with Rent Differential Subsidies

  • Distribute a Portion of Sales Tax Revenue on the Basis of Population Rather Than Point of Sale.

  • A Private Alternative to Public Urban Redevelopment.

  • Put the Genies of Toxic Mortgages and Opaque Derivatives Transactions Back in the Bottle.

  • A fix-It, Don’t Stop-It Culture.

This is a book that should be read at all levels of Australian governments concerned with urban policy as well as planners, developers, investors and other property professionals, academics and graduate students

New Urban Development by Claude Gruen is published by RUTGARS University Press, September 2010. Retail price: US$42.95.

A 20% discount is currently (January 2011) available for Internet purchases: Google: ‘rutgers university press’, then ‘Books’, ‘New Releases’, ‘New Urban Development’, ‘20% Discount Offer’.

Associate Professor of Property (Retd) Maurice Squirrell

RMIT

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