The title of this post is from the song Downtown sung by Petula Clark in the mid 1960s. The song was inspired by composer-arranger Tony Hatch’s visit to New York City in which he extols the vibrant atmosphere of Broadway and Times Square. Having been to New York City, I would agree with this characterization of Manhattan. With its museums, nightspots and Central Park, New York City truly is the city that does not sleep!
If you read the recent Florida Times Union series on downtown Jacksonville, you get a sense that Jacksonville’s political leaders really want to transfer some of that vibrancy to Jacksonville’s city core. According to the Florida Times Union, downtown Jacksonville is essentially dead in the weeknights and weekends and is short on residents and workers. What city leaders envision is a walkable downtown full of shops, restaurants, condominiums and lots of people frequenting and living in them. As usual, this vision requires tax money and city government planning.
Before we go flying off the cliff in our enthusiasm to keep moving forward with this vision, let us pause for a second and ask why we need a vibrant downtown. Even if we agree that the downtown area should be different from what it currently is, is it possible for realize this new vision for downtown? How should we realize this vision? How much taxpayer money are we willing to sink into downtown to realize this vision?
First, we need to ponder is if there is a market for downtown living. Despite what the movie Field of Dreams suggests, “if you build it, he will come” doesn’t necessarily work. The United States’ economic graveyard is full of companies that have failed to understand their markets and found themselves in bankruptcy court despite all their efforts to get out of the holes in which they dug for themselves. So our city leaders believe that 10,000 people living downtown are needed to attract retail development. But if even if we build the condominiums and apartments needed to house that many people and all the shops and restaurants needed to support them, will 10,000 people want to live downtown? Maybe, the many attempts to jump start downtown development in Jacksonville have failed because there is not a large enough market for downtown living in Jacksonville.
For the sake of argument, let’s assume that 10,000 people want to live downtown. What is stopping them from doing so? According to the Florida Times Union, approximately 2,600 people already live downtown. That surely should be a good start towards growing the downtown area. There may not be many retail establishments in downtown Jacksonville at the beginning, but this should change as more people pour into the area and create a need for a larger retail sector unless there are government policies that hinder growth in that sector and therefore hinder any further increase in the downtown population. We should at least ask this question before we pick the pockets of Duval County taxpayers in another failed attempt to subsidize downtown development that may be too expensive to build due to regulations and taxes. Also, according to the Florida Times Union, government agencies (federal, state and local) own nearly a third of downtown Jacksonville. Could it be that they grabbed the choicest real estate in the downtown area for themselves and this is hindering downtown development?
Now let’s assume again that 10,000 people want to live downtown and there are no government barriers to doing so, should city government subsidize downtown development? The problem with government subsidizing any activity is that it inevitably leads to inefficient usage of resources. In the real world of unsubsidized commerce, businesses have to keep their expenses down and their revenues up. Otherwise, they go out of business. Subsidizing business activities reduces the incentives to do either or both of those. Also, if business owners have to put up less of their own money when starting development projects, they are more willing to take bigger risks since they do not stand to lose as much money as they would if they are on the hook for the entire investment. Finally, will the downtown development project pay for itself or will it continue to come back periodically to the public trough when it encounters rough times?
One suspects that the motivation for downtown development could come from the smart growth mantra that is so popular within the urban planning community. Smart growth emphasizes compact development, mass transit, walkability and bike friendliness, mixed use areas (shops and office buildings in close proximity to residential neighborhoods), etc. Much of this is echoed in the Florida Times Union series on downtown development. Whatever the merits of smart growth, one would hope that downtown development would not be used as a stealth strategy for pushing smart growth on a city that is not as concerned about urban sprawl as the planners are.
The reason that free markets work is that they adapt to the changing needs of consumers. If people want to live downtown in significant numbers, the market will respond to that need and downtown Jacksonville will grow. The involvement of government in downtown development will only distort the market response and will lead to an outcome that satisfies the politicians and planners but not the consumers.
