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Shrinking Cities: The Antidote to Greenfield Development

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sunshine
sunshine  
3/2/2014 6:24:52 PM
User Rank Urban Legend
Re: Shrinking Cities
Hi Amy, Your post highlighted a likely major differential of costs per household. London which has a population of 8.2 million and with a household cost of £80 will result in a massive return on investment. My jibe about the alternative being too difficult was clearly wide of the mark .... the 'super sewer' disruption to London is meaningless to those making a 15-24% profit. I wonder if Washington's citizens will be assisting such a good financial return to the sewer makers.   

Extract from Bloomberg New Energy Finance press release 21 october 2013

THAMES WATER'S 'SUPER-SEWER' TARGETS BUMPER PROFITS

Thames Water is planning a GBP 4.1bn 'super-sewer' that could cost GBP 80 per London household by the early 2020s. New research shows that this could correspond to a 24% post-tax return on equity invested or more than three times the average return in UK water assets.

London, 21 October 2013 – London operates a 19th century sewer system which frequently overflows during heavy rains and puts the UK in breach of the EU Urban Wastewater Treatment Directive. Thames Water, the capital's water utility, is currently seeking final consent for a 25km long storage tunnel that would collect these overflows.

But the tunnel is controversial for two reasons: first, no in-depth study has ever been carried out on alternative solutions based on managing stormwater at source and using new technologies (Integrated Water Management); second, Thames Water's dividend policy has left it unable to finance the investment from existing capital reserves or borrowing capacity.

In a White Paper released today, Bloomberg New Energy Finance's modelling demonstrates that increasing wastewater charges of GBP 70 to GBP 80 per year, as proposed by Thames Water, to pay for the new GBP 4.1bn tunnel might result in post-tax returns to equity investors of between 15% and 24%, considerably higher than the estimated 7% post-tax cost of equity for existing water utilities. Additionally, the modelling shows that an increase in household bills of between GBP 31 and GBP 35 by the 2020s would suffice to match the 7% post-tax return that water utilities have recently yielded for their equity investors.

sunshine
sunshine  
3/2/2014 6:01:57 PM
User Rank Urban Legend
Re: Point to progress?
Hi Mary, the house for a pound has also been used in more deprived inner city areas of the UK. Of course, it will cost the purchaser more than £1 to make the house inhabitable. There are stipluations which are aimed at ensuring that the purchasers is capable of repairing and maintaining the property (as they're generally in very poor condition) and also that they will stay in the house and not financially benefit from a rapid sale.  

http://www.telegraph.co.uk/property/investmentinproperty/10385407/Liverpool-families-cash-in-with-homes-for-a-pound.html

http://www.theguardian.com/society/2014/jan/29/one-pound-houses-stoke-on-trent-regeneration

There is clearly a benefit in establishing a community based on those with an enterprising spirit. It is certainly a much better option than the 'right to buy' scheme which took the better quality social housing stock out of the public realm and into the hands of those who simply saw it as a good investment.

Amy Rogers Nazarov
Amy Rogers Nazarov  
2/26/2014 4:45:53 PM
User Rank Urban Legend
Re: Shrinking Cities
Oy, sunshine! Your post points up some of the political and geographical and cost differences  in our cities' situations. The population of Washington is just over 675,000 now - a fraction of London's population, methinks (don't know off the top of my head. If I were a betting woman, I would be investing now in sidewalk materials that soak up rain, rather than add to the run-off. Going forward I imagine these products will be laid down around many of the world's cities. 

Mary Jander
Mary Jander  
2/26/2014 12:23:28 PM
User Rank Staff
Re: Point to progress?
Sorry, @sunshine, I mean return on investment. And clearly, your point about inner city land prices being sky high is well taken. That said, though, in Detroit and other blighted cities, land prices are very low -- so low, in fact, that in Gary, Indiana, the mayor launched a "buy a home for $1" program awhile back. I'm not sure how it actually worked.

sunshine
sunshine  
2/25/2014 7:16:05 PM
User Rank Urban Legend
Re: Shrinking Cities
Hi Amy, we have the same problem in London. Just 2mm of rainfall can send enough water to discharge raw sewage (as much as 16 million tonnes per year) from the combined system through the Victorian overflows into the river Thames. Solution? Simple, like Washington use tunnel borers to construct a super sewer to take away the excess rainfall. Only problem it will cost £4.2 billion ($7 bn) and disrupt, (and in some cases destroy), significant areas of London.  Is there an alternative? Why yes of course. Stop discharging all the rain of paved and roofed areas into the sewer system instead allow it to soak into the ground as it does outside the city. Wow, amazingly simple, instead of solving the problem we avoid it in the first place.   

Ah but there's a small difficulty, this would need all the boroughs, and the Mayor and the various Highways Agencies, and Building Control, statutory bodies and Thames Water etc. etc. all to agree and act in unison. Well that's not going to happen so let's put the idea into the 'too difficult' basket and go back to the original idea. We simply throw a lot of money at it and build a super sewer. If it's good enough for Washington it must be good enough for London! 

 

 

   

sunshine
sunshine  
2/25/2014 6:17:10 PM
User Rank Urban Legend
Re: Shrinking Cities
Kate you're quite right about making our cost of the car far more expensive .... as an individually controlled environment the car is very seductive but we rarely, if ever, factor into the cost of the motor vehicle the consumption of a finite resource (fuel), pollution, deaths, injuries, time wasted in traffic etc.

sunshine
sunshine  
2/25/2014 6:00:26 PM
User Rank Urban Legend
Re: Point to progress?
Mary, you'll have to remind me what ROI means(?!) .... but in terms of incentive for developing 'brownfield' rather than greenfield sites, in London it is simply that land prices in inner areas are so high that they easily outweigh the additional costs of dealing with contamination, demolition etc.  In other smaller cities or towns where land prices do not warrant the high cost of site clearance, then either incentives need to be provided for clean-up or higher charges made for those causing the need for clean-up or additional local charges for providing infrastructure to outlying areas. We cannot simply expand our cities with all the associated uncharged costs caused by reliance on motor vehicles e.g. accidents, deaths, pollution. 

Interestingly one of the reasons why inner cities became more popular as residential areas in the UK in the 1980s was the desire to emulate the New York loft-style, which became the epitome of chic living. This, together with the 'buy-to-let' mortgage has subsequently encouraged vast numbers of 1 and 2 bedroom flats in our inner cities...... not great for developing a mixed community.    

  

Kate
Kate  
2/25/2014 1:28:58 PM
User Rank Blogger
Re: Which antidote?
I agree that aging populations will not be the source for radical change.  This is why it is gratifying to see young people and immigrant groups gravitate towards cities.  The fearless and energetic life that they bring with them has reinvigorated many urban areas.  Still, most were probably never tempted to move into newly developed greenfields in the first so their residency in cities did not somehow, even abstractly, help maintain or free up pristine areas. Well-coordinated, robust incentives for revitalizing depressed areas, coupled with an honest and comprehensive reckoning of everything our society loses when wild ecosystems are destroyed, is essential.  

you54
you54  
2/25/2014 12:46:44 PM
User Rank City Slicker
Which antidote?
Let's not forget why most shrinking cities went into decline in the first place, namely the inability of their leaders, both public and private, to anticipate or even react to domestic and global mega-trends and to undertake the radical changes required in policies and business models to remain globally competitive and nationally relevant. I fear that for many shrinking cities in North America and even more so in Europe (given the demographics), the future is bleak unless there is concerted approach by all tiers of government to work together with the communities concerned and business. We are dealing with not only ageing infrastructure but also ageing populations that rarely vote for radical change. 

CitySolver
CitySolver  
2/25/2014 12:32:07 PM
User Rank Blogger
development attractions
I am no expert but as someone who is interested in these issues I have to say that there is always more to be done to bring empty properties into repiar, use brownfield land that is redundant (and I dont mean local wildlife sites that so happen to be brownfield as these need to be kept). I like what you say about cities helping developers:- we need to make it easier to develop in urban areas. I think the reason greenfield is so attractive is its virginity. Why settle for a crumby urban site in a crumby neighborhood full of trash and buildings that need to be demolished when you can get fresh lands to conquor for the same price and have no restrictions or complications to development layout. Thats why it has to become easier to develop in urban areas. incentives are the only answer in my opinion.

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