Here’s how cities can protect creative industries from gentification

Denmark Street, the historic heart of London's music industry. Image: Getty.

The way cultural infrastructure is built in our towns and cities leads to an inherent contradiction. Often, the more successful creative and cultural entrepreneurship – and the people that fuel it – is in a city, the more it exacerbates inequality and fuels gentrification. 

As Richard Florida notes in his article assessing the redistribution of the creative class, creative-led jobs in US metros have grown 72.5 per cent since 2005, compared to a growth of the overall workforce increasing by 13.6 per cent. This equates to an additional 11 million workers. And while some cities have expanded their creative classes more than others, most United States metropolitan areas have seen an expansion of their creative class and with it, an increase in house prices, rent and amenities. Cities are becoming more unequal

In the UK, the story is similar. The creative industries in the UK are now worth £101bn, which makes it Britain’s second largest sector, behind only banking. This equates to 5.5 per cent of the economy, and its growth current is double that of the rest of the economy, or even more depending on the impact of Coronavirus

But at the same time, music venues and nightclubs remain threatened. Some 130 Libraries closed in 2018 alone. Music programmes are in dire straits according to the UK Musicians Union. Britain’s high streets are also in crisis with shops sitting empty, despite a desire to use them for creative community benefit in many places. And like in the US, cities are less equal now than they were a decade ago. 

Despite the way the creative sectors have grown far faster than the rest of the economy in both the US and the UK, we face a crisis across our cultural infrastructure, which facilitates inequality. The places and spaces we need to create – and the land use, zoning and regulatory policies to support them – is not keeping up with the opportunities the creative class presents, which means the rise of it is paired with a dearth of those that benefit from it. 

As we’ve seen, the more creative a place, the more expensive it is. The more expensive, the less places one has to incubate content, despite contents’ success being the reason a place becomes known as creative. While many creators do create at home, many creative sectors still require space outside of one’s bedroom to create, whether it is via WeWork (with prices starting at $550 or £450 per month to hot desk, on average) or a recording studio. Even when cultural infrastructure is prioritised in mixed-use developments, it is often the sort of infrastructure you can see, rather than the sort of back office spaces that are necessary to the creative industries, despite being rarely seen by the public. 

In addition, concert halls, opera houses and ballet halls remain fixtures in most city centres. A glistening, new music venue is far more newsworthy than an affordable set of recording studios and rehearsal spaces. As such, we ignore the causality between the two. And with it, inequality grows, despite creative class related jobs and so-called opportunities increasing. 

For example, in the UK about 300 professional recording studios exist, with 200 in London. This is half of what existed a decade ago, according to the University of Nottingham. Sources of data related to back-of-house uses, like rehearsal spaces, are few and far between. In London, only 27 per cent of dance studios are fitted out for dance. New York City is addressing the issue by providing hundreds of hours of free rehearsal space, recognising such space is in short supply. 

Each of the creative class sectors is different, and as such, requires individual approaches. And planning departments are letting them down. For example, there is no mechanism to allocate future tax revenue to fund grassroots projects by calculating their predicted value to their communities. 

Take the UK for example. There is a Tax Increment Finance (TIF) structure that assumes that, for core infrastructure, such as roadways, transport and cycle lanes every £1 spent brings in £10 of economic benefit over two decades. So the expected property taxes that such land use would be subject to is unlocked as a loan, secured by the projected economic benefit the use will bring. London Underground upgrades, London’s Crossrail train system and road improvements all benefit from TIF financing, as do large, mixed-use housing-led projects. But cultural infrastructure is negotiated later in the community use provisions of development, a process governed by what’s called Section 106 obligations. There is no predictive modelling applied to grassroots cultural infrastructure, so it is not considered suitable for TIF funding, outside of large scale arenas or stadiums. 

We tried to put some financial meat on the bones of why investing in grassroots cultural infrastructure through a TIF-style model could work. So for a report commissioned by the insurance firm Legal & General, we attempted to calculate this. We took a venue in North London that holds 250 people and hosts live music, art and culture events 7 days per week. We had hard numbers related to people through the doors, drink purchases, merch, tax, salaries and liquor duty. We estimated its event programme’s impact on people eating out nearby, using public transit, minicabs and other infrastructure. 

And we found that the venue’s direct economic impact is £1.6m per year. Of that, £9,000 is paid per year in property tax. If a municipality took a 25 year approach to such a venue, that’s £225,000 in total property tax. 

Even taking into account an allocation for street cleaning, garbage pick-up and policing, a small TIF-style loan for a portion of that future value could have provided the premises with more start-up capital to accelerate its growth. This could be done for a recording studio, a dance company, or any business serving the creative class, and prioritised on the grassroots level, rather than large infrastructure projects. 

With it could come community amenity provisions similar to that a housing developer requires. This could include hiring locally, sourcing locally or contributing to a community infrastructure project such as a local garden, beautification or block party. Or it could be attached to environmental requirements, including adoption of green energy or commitment to sustainable development. If multiple businesses participated, networks could be developed to share best practices or develop stronger local ties. Resources could be pooled into renewable energy, or investing in local talent as a cooperative. 

Furthermore, if affordability is an issue, as it will be if the city is successful, commercial (or even housing) rents can be controlled to align with inflation so long as TIF funding is repaid with interest (i.e profit), either to the developer, municipality or both. 

But first we need a workable equation that outlines, and defends, the prospective value of these creative class businesses. And with the sectors growing at the rate they are on both sides of the pond, such an argument is possible. If we have a sector growing at twice the rate of the rest of the economy and that is one of the main reasons people choose to live where they live, it must be further prioritised in land use – and value – planning. But instead, cultural infrastructure is either delivered due to personal preference or planning approval requirement. We can do better than this. 

In the US, there are further models that can be explored. In Austin, the redevelopment of the Austin Convention Centre includes an ordinance to increase the tax on hotel stays from 15 per cent to 17 per cent and allocating 15 per cent of the additional 2 per cent tax to support the city’s live music industry. Austin is, along with Nashville, America’s living lab of music meets gentrification. Both cities attracted ancillary sectors (tech with Austin, healthcare with Nashville) due in part to their promotion of each being a vibrant, music-filled city. 

Both cities have struggled to support the communities that supported this growth, because they are increasingly expensive. A salary of $55,000 means one can live comfortably in Austin. This jumps to $70,150 for Nashville. Each fill hotel rooms, attract conferences and drive tourism in part to their extensive music-related marketing and music scene. Austin’s experiment, expected to bring in over $3m per year, could be implemented elsewhere. But this money will be allocated in this instance to musicians, not infrastructure. 

Austin and Nashville are examples of the power of music, and the creative class in general, to drive growth. But both cities suffer from inequity in their creative ecosystems, which become worse the more each place is seen to succeed and remain cool, creative and hip. This is what happened in Brooklyn and Shoreditch, and solutions are not being implemented to ensure that those who remake places can stay in them once they change.

In both the US and the UK, now is the time to review planning, zoning and city ordinances so all of the cities whose creative classes are growing remain creative. In the UK, the implementation of the Agent of Change principle helps, but its implementation on the ground is yet to be tested. In the US, the prospective financing and investment theoretically made through Opportunity Zones could focus on creative infrastructure, but there’s no guidelines to prioritise culture, or compel investors to consider it intentionally. 

The creative class will continue to grow. The music industry alone is expected to double and be worth $80bn by 2050, according to Goldman Sachs. I have yet to encounter a city that does not want a thriving music and cultural scene, festivals and “music city” branding that means something. It attracts investors, shoots them up “best places to live” indexes and is worth bragging about. 

This requires recognition that with the development of creative jobs must come an increase in infrastructure financing, incentives and programs to not only support them to come, but keep them when they are there. If not, we’ll fuel more inequity through cultural development. And that would be a shame. 

Shain Shapiro is the founder and CEO of Sound Diplomacy.  


To build its emerging “megaregions”, the USA should turn to trains

Under construction: high speed rail in California. Image: Getty.

An extract from “Designing the Megaregion: Meeting Urban Challenges at a New Scale”, out now from Island Press.

A regional transportation system does not become balanced until all its parts are operating effectively. Highways, arterial streets, and local streets are essential, and every megaregion has them, although there is often a big backlog of needed repairs, especially for bridges. Airports for long-distance travel are also recognized as essential, and there are major airports in all the evolving megaregions. Both highways and airports are overloaded at peak periods in the megaregions because of gaps in the rest of the transportation system. Predictions for 2040, when the megaregions will be far more developed than they are today, show that there will be much worse traffic congestion and more airport delays.

What is needed to create a better balance? Passenger rail service that is fast enough to be competitive with driving and with some short airplane trips, commuter rail to major employment centers to take some travelers off highways, and improved local transit systems, especially those that make use of exclusive transit rights-of-way, again to reduce the number of cars on highways and arterial roads. Bicycle paths, sidewalks, and pedestrian paths are also important for reducing car trips in neighborhoods and business centers.

Implementing “fast enough” passenger rail

Long-distance Amtrak trains and commuter rail on conventional, unelectrified tracks are powered by diesel locomotives that can attain a maximum permitted speed of 79 miles per hour, which works out to average operating speeds of 30 to 50 miles per hour. At these speeds, trains are not competitive with driving or even short airline flights.

Trains that can attain 110 miles per hour and can operate at average speeds of 70 miles per hour are fast enough to help balance transportation in megaregions. A trip that takes two to three hours by rail can be competitive with a one-hour flight because of the need to allow an hour and a half or more to get to the boarding area through security, plus the time needed to pick up checked baggage. A two-to-three-hour train trip can be competitive with driving when the distance between destinations is more than two hundred miles – particularly for business travelers who want to sit and work on the train. Of course, the trains also have to be frequent enough, and the traveler’s destination needs to be easily reachable from a train station.

An important factor in reaching higher railway speeds is the recent federal law requiring all trains to have a positive train control safety system, where automated devices manage train separation to avoid collisions, as well as to prevent excessive speeds and deal with track repairs and other temporary situations. What are called high-speed trains in the United States, averaging 70 miles per hour, need gate controls at grade crossings, upgraded tracks, and trains with tilt technology – as on the Acela trains – to permit faster speeds around curves. The Virgin Trains in Florida have diesel-electric locomotives with an electrical generator on board that drives the train but is powered by a diesel engine. 

The faster the train needs to operate, the larger, and heavier, these diesel-electric locomotives have to be, setting an effective speed limit on this technology. The faster speeds possible on the portion of Amtrak’s Acela service north of New Haven, Connecticut, came after the entire line was electrified, as engines that get their power from lines along the track can be smaller and much lighter, and thus go faster. Catenary or third-rail electric trains, like Amtrak’s Acela, can attain speeds of 150 miles per hour, but only a few portions of the tracks now permit this, and average operating speeds are much lower.

Possible alternatives to fast enough trains

True electric high-speed rail can attain maximum operating speeds of 150 to 220 miles per hour, with average operating speeds from 120 to 200 miles per hour. These trains need their own grade-separated track structure, which means new alignments, which are expensive to build. In some places the property-acquisition problem may make a new alignment impossible, unless tunnels are used. True high speeds may be attained by the proposed Texas Central train from Dallas to Houston, and on some portions of the California High-Speed Rail line, should it ever be completed. All of the California line is to be electrified, but some sections will be conventional tracks so that average operating speeds will be lower.

Maglev technology is sometimes mentioned as the ultimate solution to attaining high-speed rail travel. A maglev train travels just above a guideway using magnetic levitation and is propelled by electromagnetic energy. There is an operating maglev train connecting the center of Shanghai to its Pudong International Airport. It can reach a top speed of 267 miles per hour, although its average speed is much lower, as the distance is short and most of the trip is spent getting up to speed or decelerating. The Chinese government has not, so far, used this technology in any other application while building a national system of long-distance, high-speed electric trains. However, there has been a recent announcement of a proposed Chinese maglev train that can attain speeds of 375 miles per hour.

The Hyperloop is a proposed technology that would, in theory, permit passenger trains to travel through large tubes from which all air has been evacuated, and would be even faster than today’s highest-speed trains. Elon Musk has formed a company to develop this virtually frictionless mode of travel, which would have speeds to make it competitive with medium- and even long-distance airplane travel. However, the Hyperloop technology is not yet ready to be applied to real travel situations, and the infrastructure to support it, whether an elevated system or a tunnel, will have all the problems of building conventional high-speed rail on separate guideways, and will also be even more expensive, as a tube has to be constructed as well as the train.

Megaregions need fast enough trains now

Even if new technology someday creates long-distance passenger trains with travel times competitive with airplanes, passenger traffic will still benefit from upgrading rail service to fast-enough trains for many of the trips within a megaregion, now and in the future. States already have the responsibility of financing passenger trains in megaregion rail corridors. Section 209 of the federal Passenger Rail Investment and Improvement Act of 2008 requires states to pay 85 percent of operating costs for all Amtrak routes of less than 750 miles (the legislation exempts the Northeast Corridor) as well as capital maintenance costs of the Amtrak equipment they use, plus support costs for such programs as safety and marketing. 

California’s Caltrans and Capitol Corridor Joint Powers Authority, Connecticut, Indiana, Illinois, Maine’s Northern New England Passenger Rail Authority, Massachusetts, Michigan, Missouri, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Texas, Vermont, Virginia, Washington, and Wisconsin all have agreements with Amtrak to operate their state corridor services. Amtrak has agreements with the freight railroads that own the tracks, and by law, its operations have priority over freight trains.

At present it appears that upgrading these corridor services to fast-enough trains will also be primarily the responsibility of the states, although they may be able to receive federal grants and loans. The track improvements being financed by the State of Michigan are an example of the way a state can take control over rail service. These tracks will eventually be part of 110-mile-per-hour service between Chicago and Detroit, with commitments from not just Michigan but also Illinois and Indiana. Fast-enough service between Chicago and Detroit could become a major organizer in an evolving megaregion, with stops at key cities along the way, including Kalamazoo, Battle Creek, and Ann Arbor. 

Cooperation among states for faster train service requires formal agreements, in this case, the Midwest Interstate Passenger Rail Compact. The participants are Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, and Wisconsin. There is also an advocacy organization to support the objectives of the compact, the Midwest Interstate Passenger Rail Commission.

States could, in future, reach operating agreements with a private company such as Virgin Trains USA, but the private company would have to negotiate its own agreement with the freight railroads, and also negotiate its own dispatching priorities. Virgin Trains says in its prospectus that it can finance track improvements itself. If the Virgin Trains service in Florida proves to be profitable, it could lead to other private investments in fast-enough trains.

Jonathan Barnett is an emeritus Professor of Practice in City and Regional Planning, and former director of the Urban Design Program, at the University of Pennsylvania. 

This is an extract from “Designing the Megaregion: Meeting Urban Challenges at a New Scale”, published now by Island Press. You can find out more here.