Reflexive urbanism

Reflexive Urbanism as a Model for Urban Regeneration

Presented at the Council for Tall Buildings and Urban Habitat,

October 2005, New York

And at the “Global Spaces, Local Places” conference Bartlett School of Planning,

April 2006, London

Kai van Hasselt

Shinsekai Analysis

December 2006

Shinsekai Analysis

Bilderdijkstraat 9hs

1052 NA Amsterdam

The Netherlands

kai@shinsekai.nl

shinkai@skim.com

+31 6 41374515

Abstract:

The regeneration of our cities forms a complex challenge. Sustainability, equality, ethics and the creation of value all play a significant part in the redevelopment of post-industrial brown fields and inner cities. The need to act is growing, as is the complexity of planning and management of ever larger regeneration processes.

Sociologists Ulrich Beck, Scott Lash and Anthony Giddens explain the coming into being of a reflexive, late modernity. Reflexivity in this sense describes a state in which individuals, businesses and the government continuously need to adapt to an increasing array of changes. Cities are the focal point for reflexive processes. Successful redevelopment depends to a certain degree on adjusting to this state.

Reflexive modernity also describes a (financially) retreating government and a redefinition of the role of the state, of businesses and of the civic community. North America and Europe face substantial investments in infrastructure, (elderly) housing, mixed use environments, green areas, as well as in the clustering of business, education and cultural facilities. The necessary capital is scarce, especially at government level. The externalities that come with such investments are difficult to measure but are nevertheless of critical importance. These externalities, both of positive and of negative value, should be taken into account.

With this paper I want to call for a business model that is built around the value capturing of externalities through innovative capital pooling and a Public-Private Partnership approach in the regeneration of our cities in a reflexive manner. I will outline possibilities for such an approach, and show examples of redevelopment based on infrastructure, on clustering, and on post-industrial transformation.

Key words: Regeneration, reflexive urbanism, clustering, value capturing, and Public-private partnerships.

Reflexive urbanism as a model for urban regeneration.

• Introduction.
• Reflexive modernity.
• Why reflexive urbanism?
• How to regenerate cities in a reflexive manner.
  • Clustering.
  • Infrastructure.
  • Post-industrial redevelopment.
• How to finance reflexive urbanism.
  • Externalities and in vesting
  • Financial incentives
  • Public-private partnership and risk
  • Capital pooling
• Conclusion
• Bibliography.

INTRODUCTION

In the mid nineties a number of sociologists and economic geographers wrote on the subject of reflexive modernization and the reflexive processes that shape the late modern world and the built environment. The notion of reflexive modernization has been receiving some attention in the last few years. In this essay I will look at a specific aspect of this concept: The way in which it influences our cities. I will argue that it is important to take into account a number of reflexive urban processes when developing and regenerating 21^st century cities. Reflexive urbanism deals with the two-way relation between built objects and the urban milieu. By now, actors who deal with the built environment have learned that a specific environment plays a key role in the success and growth of cities and regions. From Silicon Valley to the City of London and from Berlin’s busy arts scene to Tokyo’s spectacular Roppongi Hills district, site-specific qualities of urban areas have created their success. Part of those qualities used to be thought of as non-tradable, but we are now gradually beginning to see them as something that can be actively managed. Questions that arise when looking at this development include: How can one influence such environments to regenerate cities? Can one create sustainable and surplus value by developing the whole area instead of just one or a number of buildings? This takes time, capital, attention and an innovative approach. It is important to understand that although such elements have entered our palette of urban strategies, they cannot be easily copied. They are place-specific and relate to a local heritage in a regional- global context. A great part of the success lies not in the bricks but in the soft assets; the local institutions, practices and atmosphere. Therefore, developers need to build all sorts of coalitions, with governments, with the local population and business community, with public transportation companies, with N.G.O.’s and with other organizations that play a role in the built environment. Furthermore, this kind of approach requires specific funding and capital needs. In this essay I will briefly look into some new possibilities for financing such investment and for capturing the created value.

REFLEXIVE MODERNITY

In 1994 Ulrich Beck, Scott Lash and Anthony Giddens wrote a book together on the subject of reflexive modernization. Independently they were working on the notion of late modernity. They argued that this notion is not so much characterized by post-modernity as well as by a reflexive modernity. In their view, the energy of the first wave of modernity was outward bound, modernizing pre-modern societies. The focus of the second wave, on the other hand, known as reflexive modernity, is inward bound. Reflexive modernity modernizes a world that is already modern. This re-take of modernity on itself gives late modernity its reflexive character.  It is characterized by a number of reflexive processes and phenomenons that are fundamentally changing our modern Western world. Reflexive modernity is not omnipresent worldwide, nor is it only a product of the West. It is relevant in all late modern societies that are undergoing a fundamental change right now. This metamorphosis is the coming of, and adjusting to, a state of reflexive modernity.

For one, ecology, the advanced mixture of culture and nature, makes it impossible to keep up the traditional division between man and the nature that surrounds him. We have to take the effects of our industrial growth into consequence. These effects have created risks that could be enormous, but that are also very difficult to measure. If one combines this with the possibilities to inflict major damage by individuals, and with the dependency of society on advanced technology, we arrive in what Beck calls a “risk society”. He argues that the way we handle risk has changed and that it has become an integral part of our lives: Precisely because we are conscious of its presence yet unable to calculate its dimensions.

Modernity, as the coming into being of the modern world, is strongly interwoven with the rise of capitalism and the industrial world, with a vast urbanization and globalization and with the ecological impact of our actions. In a later phase, this was followed by an ongoing migration, by the individualization of our society, and by the rise of the welfare state in Europe. After the 70’s, capital became more and more footloose. A massive flow of outsourcing to low wage countries meant the end of certain forms of industrial activity in the West. What rests after this restructuring has been theorized as a form of post-industrialism by Peter Drucker, or as a post-fordist production by Edward Soja.[1] Capital and industrial production span the globe and are both highly flexible. A set of leading cities has developed, which fulfill the command and control functions of the global economy. They are interconnected through air transportation and data communication, as well as through flows of capital and friendships. New York and London are so strongly connected that they have been captured the city of “NYLON” in Businessweek a couple of years ago. Saskia Sassen has researched how the growth of an advanced financial service industry has given rise to an informal economy of semi-legal immigrants, who perform a myriad of small day-to-day jobs that enable the advanced late capitalist service-sector to prosper. Such demands have co-created continuous labor migration. Manuel Castells analyses the difference between a traditional “space of places” versus a new “space of flows” that facilitates all these differing kinds of flow; of people; capital; goods; services; information; and of experiences[2]. I will come back to this further on.

The above-mentioned characteristics are the somewhat abstract qualities of late modernity and it is not difficult to see the impact they might have on the built environment. We need to make buildings that can withstand all kinds of (unknown) risks inflicted by the natural as well as the human. In the manner in which new cities are developing, patterns of post-traditionalism can be found, from the New Urbanism dwellings in Florida to the entertainment developments of Las Vegas. What function should we give to a growing league of post-industrial brown fields? How should we build optimal transportation hubs, housing, offices, retail, and recreational areas for people for whom Manuel Castells spaces of flow are a reality?

WHY REFLEXIVE URBANISM?

Reflexive urbanism concerns the strategic and reflexive shaping of the built environment. One can create more value by investing in the (re)-development of larger areas such as a city quarter, a neighborhood, a transport node, a commercial area, or a former industrial site, than one can create by investing in a specific building or a small group of buildings. Such reshaping of the environment creates externalities, both of the positive and the negative kind. Positive externalities are, for instance, a creative atmosphere; eye- to eye contact business centers; knowledge spillovers; more effective land use and infrastructure; higher land prices; and less claims on the environment (versus sprawl). Negative externalities include an increased risk from industrial sites; pollution; and more traffic.

The question remains why one should redevelop and plan cities in accordance with reflexive urbanism. Reflexivity has important economical consequences. Michael Storper showed how cities are important focal points for, and sources of, such processes. He analyses two layers in the city. On one level transactions occur. These are on the level of individual buildings or a small group of buildings. They are easily tradable and are bought and sold on the market. The other level is the urban milieu. This is less easy to define. The urban milieu captures the atmosphere and the history of a location, as well as public facilities such as parks, infrastructure, and other factors of proximity and access. A part of this urban milieu is seen as pertaining to government responsibility, depending, however, on whether one holds a more American or a more European perspective.

Another part depends more on un-tradable and subjective factors, such as how people and organizations interact which each other. Not everybody values these assets the same, yet they can make or break a city, a region or a quarter. While we used to take such environments as given, Los Angeles geographer Michael Storper convincingly points out that we have arrived in a time where we reflexively shape our built environment. We no longer take our surroundings for granted but instead seek to actively manage and develop whole areas:

Economic reflexivity refers to the possibility for groups of actors in the various institutional spheres of modern capitalism — firms, markets, governments, households, and other collectivities — to shape the course of economic evolution through reflexive human action. […]

Important and distinctive urban dimensions of this reflexivity, in both production and consumption, take place in cities; they are dependent on the concrete relations between persons and organizations which are formed in cities; and they are coordinated by conventions which have specifically urban dimensions and in addition are often different from one city to another.[3]

Reflexivity in this sense refers to the interplay between the level of transactions and the level of the environment: Changes on an object level create externalities for its surroundings and vice versa. It is therefore my thesis that developers and planners alike could create value by focusing on this environmental level in a reflexive manner. If one wants to develop urban areas successfully, it makes good sense to facilitate reflexive processes in cities and at the same time to let cities flourish on these processes. Reflexive urbanism researches the relation between these factors and the patterns it creates in urban areas. As more and more people worldwide are living in cities, this is of increasing relevance. Reflexive urbanism can be found in the streets of Beverly Hills or Los Angeles as well as in the downtowns of Bangkok or Lagos.

On the one hand, reflexive urbanism describes patterns of high end reflexive consumption. The contemporary global arts market forms a good example. It has developed simultaneously into a highly global as well as local (or, as Soja formulates it, “glocalized”[4]) circuit of artists, dealers, collectors and institutions that communicate and travel across the world from art fairs to biennales. Although the art market is small compared to other industries, it is nevertheless a high-end consumer market, especially in the US, where it has forged strong alliances with media and celebrity culture. One could describe it as an industry with a pattern of distinctly reflexive and collective consumption. People frequent the same places, reed the same magazines, enjoy the same way of traveling, and in so doing have developed a global style. A good example of such “glocalization” is the Art Basel Miami Beach organized by ArtBasel, the leading contemporary art fair. The fair, held in Miami Beach each December, is an alternative to New York’s Armory show which is held in March, and caters to an international public and specifically a local crowd of wealthy Americans living in Florida in the winter.

On the other hand, however, reflexive urbanism can also answer the challenge of the sustainable shaping and regeneration of a growing number of mega-cities in the third world. Especially relevant is the question of how to manage growth and the ever-increasing claim on natural resources. This demands strategic and holistic planning. The Brazilian city of Curitiba has been a role model because of its innovative transportation solutions and the way it has integrated city growth with nature. Its former mayor, Jaime Lerner, led the city in this process. Lerner now is chairman of the Union of Architects and in this position promotes similar solutions worldwide.[5] Finding ways to develop mass transportation is one of the areas where reflexive urbanism can be practiced. Another area is the development of new models that take negative externalities of certain investments in the city into account. More effective use of access to public transit and better management of environmental issues drastically affect the lives of Third World inhabitants.

HOW TO REGENERATE CITIES IN A REFLEXIVE MANNER

There are many ways in which cities can be redeveloped and regenerated, just as there are many areas where reflexive urbanism can be relevant. Combining these two issues, I will identify three key areas where reflexive urbanism is used as a model to regenerate cities: 1) clustering, 2) infrastructure projects and 3) post-industrial redevelopments. Each one of these holds a number of subcategories, which will often overlap in real world situations. These forms of generation not only create value for the (re)-developed object, but also entail important externalities for its surroundings. The side effects arise where the crucial development of value occurs. In the traditional style of urban development, however, these values are not easily captured. They are open to free riders and other types of agency problems. It is well-nigh impossible to finance necessary investments without capturing the value they create. One needs to take a partnership approach and find innovative ways of financing. Later on, I will briefly discuss such finance and investment solutions.

Clustering

A cluster is a related group of actors, businesses, cultures, governments or other organizations, which are geographically located in each other’s surroundings. Such clusters may have formed historically or they may be the result of more deliberate choices. Especially in more recent examples, a certain strategy or rational of clustering can often be discovered. Famous clusters are Silicon Valley, Hollywood, the financial districts in many global cities, the garment district in New York, the military-industrial complexes in Los Angeles’ Orange County, the Miami Design district, London’s West end theatres, the galleries in Berlin Mitte, Lissabon’s nightlife district beneath the old red bridge, Tokyo’s Ginza shopping and entertainment district, Milan’s fashion quarter, and Washington DC’s museum mile. In all these examples, certain functions prosper in each other’s proximity.

We know how New York ‘s SoHo has developed from a hotspot for artists into a mainstream commercial district. While designer boutiques and retailers have moved in, contemporary art galleries went on to Chelsea and, to a lesser extent, Williamsburg in Brooklyn and other areas. Such processes of neighborhood gentrification may have disastrous effects for the original inhabitants who are forced out of their homes as the cost of living rises and developers and speculators move in. In Miami a similar process can be seen in the areas of Wynnwood and in what is now know as the Design district. Yet in this particular case, private individuals and entrepreneurs deliberately jumpstarted the change of atmosphere. Developers and art collectors such as Craig Robins, Martin Margulies, the Rubell family and the De la Cruze family have actively helped to create the recent success of Miami as a contemporary art center. Craig Robins and his development company “Dacra” gave away space to artists and galleries for low prices. In a period of 8 to 10 years these neighborhoods have developed into lively communities and commercially viable areas. The developers have bought large real estate positions that rose in value and repaid there initial investments in the community and the arts. Yet the change they accomplished took place not so much in the buildings as in the institutional environment. The neighborhoods did not only rise in economic value, they became safer and thus constitute more of a community. From a European perspective, it is especially interesting to see how significant the role of private agents was in regenerating these parts of Miami. In Europe such initiatives are tried occasionally but city-governments rarely succeed in creating the kind of vibe and success witnessed in Miami.

The above-mentioned process is an example of art functioning as a catalyst for growth. Clusters can develop along a number of themes or industries. The domain of sport, education, culture, technology, R&D, the FIRE industry (Finance, Insurance and Real Estate), ICT, entertainment, retail, and offices offer good possibilities for planning and developing clusters. In all of the following projects and areas significant value has been created through the role of the arts: the Guggenheim in Bilbao, London’s Tate Modern, New York’s Soho and Chelsea, Williamsburg in Brooklyn, and the Miami Design district.

Sports events and infrastructure do not always produce the same success in regenerating cities and in creating durable value. The fierce competition among the potential hosts for the 2012 Olympics illustrates how high the stakes are considered to be. Yet cities continue to be confronted with high bills long after the Olympics have finished, as is illustrated by the examples of Athens and Sydney. Similarly, a large part of the attention in the debate regarding the prospective new Jets stadium in New York has been focused on the question whether or not this investment could earn itself back. Other large scale events, such as the world fairs in Seville and Shanghai, have triggered and might further provoke similar processes. The city of Barcelona has a special tradition of using big events as catalysts for urban development. It has integrated a new part of town through the 1992 Olympics and repeated the same maneuver on a smaller scale last year when organizing the World Urban Forum Barcelona.

It is important to note that while trade fairs and conference facilities might seem to create the same kind of positive externalities, a recent study of the Brookings Institute showed that such investments were actually destroying public wealth. This study focused mainly on the situation in the US. It showed that although out of town conference visitors do indeed spend money on the local economy, by spending money in hotels and restaurants for instance, such a large amount of cities have recently been expanding their conference facilities with public money, that the competition has become almost too fierce. As a result, conference locations are now given away at low prices or even for free. In this way, the facilities make serious financial losses which the state or city has to finance. Frequently, the extra taxes that cities receive are less than the costs they make. This example illustrates that in general the context should always be taken into account when regenerating in a reflexive way. Cities and investors should make sure that they do not blindly copy apparent successful formulas.

Infrastructure

Infrastructure developments are the second major driving force behind reflexive urbanism. Of special importance here are the aforementioned “spaces of place” and “spaces of flow” as defined by Manuel Castells. The first describes the traditional way of planning retail space, offices, and housing, regardless of possible connections to the outside world. The latter, on the other hand, describes the world of communication nodes, infrastructure networks, and flexible spaces. In the nodes, different levels of transportation meet: international; national; regional; and local. These could be (combinations of) important airports and train stations such as London’s Heathrow airport, Grand Central Station in New York, or the Amsterdam South Axis development. Access to these points is crucial, and being in their proximity is of immense value. In his book The Age of Access, published in 2001, Jeremy Rifkin describes the transition from the importance of ownership to the prevalence of access. [6] Although Rifkin’s theory has many digital implications, one can see the same logic as in Castells theory of spaces of flow. As Jeffery Smith and Thomas Gihring point out, “[accessibility] is affected by both the quality of transportation systems (sidewalks, roads, public transit services) and the distance to common destinations”.[7] Research shows a convincing correlation between proximity to transportation nodes and property prices.

On a regional level, Transit Orientated Developments (T.O.D.’s) have become a way for cities and urban areas to build high density developments around transit nodes. The T.O.D. approach is related to the New Urbanism and Smart Growth movements and illustrates the value of the effective use of the scarce land that is in the proximity of public transportation nodes. It stresses the need to build dense and efficient mixed-use projects. Transportation costs can be kept low, which is especially important for people with low incomes who are more dependant on public transportation. Transport and housing costs form a relatively large share of their income. Smith and Gihring note a number of other economic values related to transit-oriented communities: they have better walking conditions; lower overall transactions costs; better commercial clustering; lower parking cost; and less air pollution. They note a number of consequences of proximity to transit. First, the proximity of transit has a positive relation to property prices. Second, being very close to a transit station or line has a negative impact on property value. However, it also gives locations a relative advantage over other not-connected locations. Finally, it also increases overall value by reducing transport and transaction costs. As it promotes clustering, it also creates economies of scale and agglomeration. (William Coffey and Richard Shearmur, 1997)

In a number of examples, the total rise in real estate prices after a new infrastructure development has been much greater than the initial infrastructure investment; researched examples include, for instance, the construction of the DART lines in Dallas, certain extensions of the San Francisco BART system, the Washington DC subway, and the extension of the Jubilee line in London.[8] The Hong Kong Transit organization finances its infra-investments through the sale and lease of adjoining land under ownership. In Amsterdam, a second city center is under development on the city’s South Axis. It will be a new, mixed-use, high-density urban area, built on top of a highway and a railway. It connects local, regional, national, and international flows of transport and provides space for offices and residential towers. The underground infrastructure will be paid with the profits of the development of land on top of it. Positive externalities cause a rise in economic values. This brings forward the question whether it is possible to finance transport and infrastructure investments by capturing part of the created value. If so, one has entered a situation where full economic costs and profits are being taken into consideration. Later on, I will look into the possibilities of financing such investments.

Post-industrial redevelopment

Post-industrial areas form another type of urban structures were the dynamics of reflexive urbanism are felt. A number of subsets can be identified, which all offer different possibilities for regeneration. Since the initial industrial revolution, the urban landscape has been host to different types of industrial buildings and sites. Many factories, harbors, garbage-belts, and cargo train stations now await a new destination as their original function has become out of date. Two major directions of redevelopment are possible: First, a redevelopment from industrial to post-industrial areas (such as, for instance, the London Docklands and the Düsseldorf Media Harbor). Second, a regeneration from sites of production to sites of consumption (as can be seen in Manchester’s city centre, for example). In some cases, the form of these sites may undergo radical metamorphoses. In other situations the original is kept as ‘authentic’ as possible, or the original function of the site is brought back to memory by means of a certain name or theme. In the U.S. one frequently encounters this in the naming of certain spaces. South street Seaport in New York, the Chicago Pier, and San Francisco’s Fisherman’s Wharf are all examples of waterfront developments that are marketed as authentic and real. Yet in their new role they have little to do with their original function. They have been developed into places of consumption.

A number of European cities have planned or developed harbor restructuring projects. One can find examples in Amsterdam, Rotterdam, Oslo, Genoa, Antwerp, Hamburg and the London Docklands. In all cases a specific strategy was chosen to determine which authentic elements should be retained from the original, which elements should be redeveloped, and which should be built from scratch. Cities, in combination with private parties, have to decide upon a strategy.  Amsterdam chose mostly for new residential buildings, with some space for offices and retail. The London Docklands have become a major office-anchored mixed-use development. Oslo and Genoa both chose to refurbish a whole strip of harbor site, Rotterdam and Hamburg chose for a kind of mixed-use city-harbor model, and, finally, Düsseldorf changed its industrial harbor into a combination of media industry offices and a yacht harbor.

Former harbor sites are often big and/or public-owned. That makes partnering or change of ownership relatively easy. Besides, because of their location they often have a sort of natural monopoly; they are partly surrounded by water, and often rather closed off from the central city. Cities and private developers acknowledge the complexity and size of such projects, and look for public or private partnerships to redevelop them. Because of the natural monopoly of these sites, the created value of an investment is captured with comparative ease. Harbor redevelopments thus form a well of knowledge on the reflexive shaping of the built environment.

The metamorphosis from sites of production to sites of consumption forms a special case. The involved investments are often much higher, as are the risks involved. Especially when a redevelopment takes on a whole neighborhood or downtown area, developers have the responsibility to create meaningful projects. On the other hand, the rise of land value in such redevelopments is often high. The relocation of the Fiera Milano convention center from the city centre to a more peripheral industrial location is an example of such a redevelopment. In this case, the cost of the relocation was paid by the profits that were made on the sale of the original site. A number of consortia have bid to redevelop that site.

The city of Manchester has witnessed the change from a former industrial city with low wages into a rapidly developing consumer city. It now houses six department stores, a number of malls, as well as new apartment towers, redeveloped former warehouses, and waterfront developments. Similar processes can be seen on a smaller scale in, for instance, Birmingham, the German Ruhr area, and New York’s meat packing district and Chelsea quarter. In post-industrial redevelopments there is an obvious need to take up whole districts. This makes it a good field to practice reflexive urbanism. Much depends on the successful result of regeneration. Therefore, one should carefully weigh the possibilities for such a process, and then choose and execute a particular path, possibly according to the principles of reflexive urbanism. By means of such an approach, the development of value is centralized. Value here not only means an economic advantage, but encompasses a broader definition that includes the indirect value projects may have for the community (social capital), and for other stakeholders.

HOW TO FINANCE REFLEXIVE URBANISM

Reflexive urbanism aims to offer a new model for the regeneration of cities and urban areas. The creation of value through strategic planning and through the reflexive interaction between an object and its surroundings are key factors. For such an approach to be successful, a new set of

strategies is necessary. Reflexive urbanism is more complex than simple or standard planning or developing, since it often involves larger areas, more parties, and a longer time span. Such projects might carry a higher risk, yet they may also produce more value for the involved stakeholders. Developers, planners and governments will only be able to invest money in reflexive urbanism processes if the possibility exists to capture (part) of the created value. In the European and North American situations there are a number of financial tools or procedures with which this can be accomplished. The two continents have a different planning history, and a different role-division between the private and public sector. Where in the U.S. a lot of development was taken on by the private sector, in Europe the government has been an active developer itself. However, the continuing demise of the welfare state in Europe has had a profound impact on the ability of state, regional, and local governments to act. At the same time, complex plans and developments have become more expensive. Thus, there exists in Europe a strong demand for new public-private partnerships. In both systems there is space for a reflexive approach. In each system, a set of different incentives can be developed to create value. Extensive literature exists on each of those financial tools, which documents both practice and theory. I will mention a number of them in their relation to the business of reflexive urbanism and in trying to determine what role they can play in financing and value capturing.

Externalities and investing

The externalities that occur between the transactional and the environmental are central to the creation of value. First of all, value has a plural and open meaning. A lot of things can be of value to different stakeholders, and they don’t necessarily have to be merely of the economic kind. Yet in the end, these values can be more or less recalculated to economic or financial values. Therefore, possible externalities must first be analyzed and subsequently calculated or estimated. Within Dutch planning practices, societal cost-benefit analyses have become popular since the late nineties. The country saw the development of a number of highly politically charged infrastructure projects, the costs of which were difficult to predict. Costs and benefits of infrastructure projects are notoriously hard to measure in monetary terms. A model was designed to make projects more comparable to a standard, which attempts to show all the costs and benefits of a project on the level of society at large. This kind of planning takes externalities into account. 

Financial incentives

In the U.S., a government can steer development to a certain area through zoning and fiscal policies. The zoning law gives an indication of what kind of development is possible, and what conditions a building has to fulfill. With Tax Incremental Financing (T.I.F.) a city government can give tax credits to companies working in a certain area. As a result, they have a lower tax level. They receive a financial incentive to be in a certain place and act in a specific manner. This incentive, however, is not a binding directive. Tax credits are also used for preservation and the regeneration of neighborhoods. The Business Improvement District (B.I.D.) is a common tax for all businesses in a certain area. The government collects the tax by law in order to avoid free riders, but businesses decide themselves where they want to spend the collected money. Often, they spend it on collective facilities such as parks, lighting, more parking spaces, or extra security, which make an area more attractive. While cities usually compete with each other by lowering taxes, in this case taxes are actually increased. B.I.D.’s are often started as a private initiative. It is a bottom-up measure instead of a top-down one, which avoids bureaucracy because the business community can decide for itself where they spend the money. This is a well-known phenomenon in the Anglo-American world. London, for instance, has set up an effective system of road pricing around its core center. This is another form of financial incentive. It targets individuals and organizations and tries to let them make the most effective use of the road system. At the same time, it is also a way of capturing some of the value that the center of London holds for its users. The money thus made can be used, for example, to finance new infrastructural projects.

Public-private partnerships and risk

In Europe, public-private partnerships (P.P.P.) are used for larger and smaller infrastructure and regeneration projects, for land developments and for a range of other complex tasks. The latest development in this field in the Netherlands is to make one tender for the whole process. In a D.B.F.O. tender (an abbreviation of Design, Build, Finance and Operate), the whole development process is brought under one contract. Developers, financiers, designers, and maintenance companies work together to make one bid, for example on the construction and management of a new high way. The UK has a long tradition of such services, which are delivered by the private sector to the public sector. Private companies get a return on their capital costs out of a public revenue stream. Bill Rodney and Philip Clark of London’s City University’s Business school analyze different forms of P.P.P.’s in their article on financing urban regeneration. The P.P.P. and the related P.F.I. (Public Finance Initiative) have been created to minimize risk. They quote a R.I.C.S. report from 1998: “Urban regeneration scenarios are no different from the normal decision making process based upon the application of risk reward strategies“.[9] Public-private partnerships should make manageable the risks of projects that would not otherwise be accomplished. The question of who runs these risks is central to Beck’s characterisation of late modernity as a risk society. Government and private actors should each acknowledge they need each other and not try to avoid the risks of a project.

Capital pooling

In some cases, local foundations, and possibly also rich N.G.O.’s (non governmental organization), can be a financial partner for regeneration efforts. A recent New York Times article highlighted how a number of local foundations helped revitalize Pittsburgh. The Heinz Endowments and the R. K. Mellon, Benedum and McCune Foundations all paid $10 million for 1.5 miles of waterfront to prevent the piecemeal development of a former cokes factory. Such a collective action can be highly influential in making sure regeneration efforts work out well. The article quoted Maxwell King, president of the Heinz Endowments: “A lot of our major foundations share a focus on economic development, urban design issues, and the health of the urban core”.[10] Furthermore, the article makes clear how effective capital pooling allows for the regeneration of a whole area. Under a pure market situation, the factory, or any larger area for that matter, probably has been developed in pieces. In such a situation, a developer is not able to make the extra investments that a reflexive urbanism approach calls for. The positive externalities of the investment would also flow to the neighboring areas that are in the hands of competitors. Consequently, the developer is not able to capture the economic or financial value and he has no incentives to make investments with positive side effects that benefit the whole area. Through capital pooling larger areas can be managed and taken under development. Furthermore, through capital pooling, parties can participate in a project for a longer period of time. However, many developers do not have the financial capacity to participate in a project for a longer time span. This is an important factor, since different parts of a regeneration project return cash flows at different times. The real creation happens in the long run. If capital is pooled, the cash flows of a project can be distributed evenly among the partners during the life time of a project. If the capital pool is flexibly structured, a partner can even decide to sell its participation during the life cycle of the project.

Lastly, we come to the question of value capturing. It is a complex yet important part of successful urban regeneration. In each specific situation, one has to search for the possibilities of capturing value in a way that taxes users in a fair way and makes sure the right incentives are put forward. For infrastructure projects, a lot of experience is built up with road pricing and tolling. For clustering and post-industrial redevelopment, new forms of capital pooling seem a good option. It is one of the ways in which the emphasis on partnerships as a success factor for regeneration is given shape, yet not many similar examples are known. Hence, I would like to propose further research into the possibilities for private and public actors for innovative forms of capital pooling to facilitate value capture

CONCLUSION

In this paper I have brought forward a number of instruments for successful urban regeneration. These instruments, taken in their context of late modernity, form the framework for reflexive urbanism. My discussion of this concept operates on a number of levels. First, it explains how late modernity can be seen as reflexive and it describes the consequences analysis has for the way we think about cities, ecology, industry and urbanization. Secondly, it examines the effects this has on how modern cities operate and on how we perceive them. Michael Storper makes the important point that many new factors have entered our palette of instruments. As a result, we have to adapt to an abundance of changes and developments, which make our modern urban world more complex. Finally, my discussion focused on clustering, infrastructure and post-industrial redevelopment as areas where reflexive urbanism can be practiced. In order to facilitate the transition to this new state of affairs, new financial incentives are necessary to overcome initial barriers within the real estate industry and, of course, within city politics. The cities we inhabit, with an ever-increasing amount of people, offer great challenges. To regenerate them in a reflexive manner will create value to all of its citizens.

The model recaptured as an image, showing the relations between the different aspects of reflexive urbanism and the possibilities for urban regeneration:

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[1]  The discourse on Post-fordism is set out in Soja’s Postmetropolis, cf. pp. 156 -188.

[2] Cf. Manuel Castells, “Spaces of Flow”, in The Castells Reader on Cities and Social Theory

[3] Michael Storper, “The City, Center of Economic Reflexivity”, in Service industries journal, p. 4

[4] p. 201

[5] Jaime Lerner held a presentation at Global City Forum, just before MIMIP 2005, Cannes on low cost transportation strategies. http://www.curitiba.pr.gov.br/ http://www.dismantle.org/curitiba.htm.

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[6] Jeremy Rifkin, describes how ownership becomes of less importance in the new digital world were products, services and experiences can be easily shared, yet at the same time one has to have continuous access to mobile phones, wireless internet, software applications etc.

[7] Smith and Gihring in Financing Transit Systems Through Value Capture. 2004, p.1.

[8] Cf. examples mentioned and researched in Smith and Gihring’s extensive literature overview.

[9] P.10

[10] nytimes.com July 20, 2005