The Economics of Place

The Value of Building Communities Around People

Edited by Colleen Layton, Tawny Pruitt, and Kim Cekola. The Michigan Municipal League, 2011, 175 pp., $14.95 paperback

The first decade of the 21st Century was not kind to Michigan. In 2000, the state ranked 18th in per capita income. By 2009, Michigan was 37th — a virtual free-fall. Speaking of which, Detroit lost 25 percent of its population, or an estimated 237,000 residents, during the decade.

The auto industry has recently made a comeback and Michigan’s budget is in surplus. Nevertheless, no one expects the state or Detroit to return to their former days of industrial glory. A new plan is needed.

Dramatic shifts in economic fortune can get leaders to think outside of the box. That may be why Michigan has emerged as a national leader in recognizing the potential of placemaking for economic development.

In April, Gov. Rick Snyder launched the state’s MIplace Initiative (miplace.org), which ties place to economic development. The Michigan Municipal League published The Economics of Place: The Value of Building Communities Around People in late 2011.

The Economics of Place consists of 10 essays from leaders in Michigan and throughout the US that wonderfully pull together diverse aspects of placemaking — from transportation to tourism, from entrepreneuring to arts and culture, from real estate investment to economic development.

The subject is momentous. As land-use strategist and developer Christopher Leinberger notes in his essay, the built environment is the largest asset class in the US economy, more than double the size of the New York Stock Exchange and NASDAQ combined.

Many of these assets are contained in what Leinberger calls “drivable suburban” development. “To the present day, it is the only legal way of developing real estate in the vast majority of jurisdictions throughout the US,” he says. “But drivable suburban development has recently become overbuilt. The demand is substantially satisfied for possibly the next generation.”

The pent-up demand is for “walkable urban” development, he says. Since it involves integrating uses rather than separating them, walkable urban development is more difficult and complex, Leinberger explains. Walkable urban development centers on what this book calls “placemaking,” a lost, or at least misplaced, art in many communities. Placemaking is the key to future prosperity, according to Leinberger and other essayists in the book.

Place with a capital ‘P’

There’s a difference between “place” and “Place,” explain Soji Adelaja, professor in land policy at Michigan State, and Mark Wyckoff, expert in Michigan land use law. “An intersection between two streets is a place,” they write. “Add red-brick buildings, shops, and trees between the street and the sidewalk and it is a place with specific characteristics. Add transit, bicycle paths, a park, a few restaurants with outdoor seating, and pubs, and people will come there because they want to be there and enjoy being there, and one has a special Place.”

That’s the kind of setting that will draw cultural tourists, a growing industry, as educated, prosperous Baby Boomers have more time on their hands. The Economics of Place takes a broad view of what constitutes a “Place.” Such settings can enliven every part of the urban-rural Transect. Examples include a downtown with museums and opera house; a main street with historic buildings and restaurants; and a coastline with lighthouses. Michigan boasts more lighthouses, 120, than any other state, and more coastline than any state save Alaska.

Arts and culture are critical to placemaking. Artists are among the coveted first wave of “risk oblivious” new residents in a revitalizing neighborhood. They are followed by developers and investors, the “risk aware,” and finally by the risk averse, sometimes described as “dentists from New Jersey.” When the latter arrive, the artists are long gone, revitalizing other neighborhoods.

Artists are part of the broad range of talented people who contribute to economic revival, notes Joe VanderMeulen, executive director of the Land Information Access Association, a Traverse City, Michigan, nonprofit. “If we want our communities to succeed in the new economy,” he says, “we must make them attractive to the young, the educated, and creative people. The knowledge workers and entrepreneurs that move to our communities will be our next economic engine.”

Strong placemaking creates the conditions in which entrepreneurial activity can thrive, writes Rob Fowler, president and CEO of the 10,000-member Small Business Association of Michigan. Good places require better transportation policy, others argue. Streets that carry more automobile traffic are currently rated higher by transportation officials, says John Norquist, president and CEO of the Congress for the New Urbanism. Consequently, “federal and state funding flows to street designs that actively undermine the community’s efforts to create valuable, livable, and sustainable communities,” he says.

In the last four decades, cities and towns focused considerable effort on trying to get a larger piece of the federal pie, Norquist observes. “The mostly unsuccessful effort to extract more money from the federal government should perhaps be replaced with an effort to remove obstacles that the federal government has placed in the way of urban development and redevelopment.”

What people want today is not simply places, they want Places, write Adelaja and Wyckoff. These are created through the conscious act of “placemaking” in order to achieve social, economic, environmental, and other objectives. As The Economics of Place makes clear, the public, private, and nonprofit sectors will have to learn to work together on this task. But nobody said building a new future would be easy.