NYC: Sustainable Land Use Policies Retain, Attract Green Jobs

Having spent two days here in L.A. as a guest of CRA/LA, touting the critical link connecting land use policy, the preservation of manufacturing jobs, and sustainable cities, what have you discovered?

New York's vision of sustainable development has set a very ambitious agenda for the city in preparing the infrastructure to accommodate and improve the quality of life for a million new residents. The component that has been missing from that agenda is how to create jobs for those residents and for residents that are already in here.

One of the challenges that New York faces is the growth in income disparity. The vast majority of New Yorkers have been experiencing downward mobility and the loss of real income for at least 15 years. Part of the reason for that is the mix of business, the economic base. We are generating jobs that pay very well, highly-skilled jobs, and we are generating jobs that pay very poorly. We are not generating jobs in the middle. We are losing all sectors that generate jobs for a middle class family. There are a variety of reasons for that; one is the loss of manufacturing. The average production wage in New York City is well over $48,000. That is significantly better than other sectors that people point to as providing career alternatives for people with modest skills: retail, restaurants, and the lower tiers in health care. Manufacturing provides quality jobs.

New York has engaged in a prolonged, aggressive rezoning campaign in which more than 20 million feet of industrial space has been rezoned within the past six years, including some of the densest concentrations of industrial jobs within the city. Frankly, there is no more industrial space. If a company is displaced it is going to have a very hard time finding a place to relocate within New York City. Real estate is the greatest single challenge facing New York City manufacturers today.

In February, TPR interviewed Joel Kotkin regarding his report about reviving the "City of Aspiration" and the loss of the middle class in NYC. Share the politics involved in NYC's effort over the last six years to preserve its industrial space?

First of all, we had to overcome the misperception that manufacturing was gone. In the old days-the 60s, 70s, and even the 80s-there was still enough manufacturing left that virtually every family in New York had some relative who was still in the industrial, manufacturing sector. As the numbers have gone down we have lost that human touch.

Secondly, there has been tremendous pressure for housing. The real estate development community in New York is very powerful, very well organized, and the advocacy is very well funded. A lot of the manufacturing land is on the waterfront, which is absolutely prime real estate. Long Island City, from Sunset Park, and from North Brooklyn-which are really the heartlands of the New York manufacturing sector-have fabulous views of the New York Harbor.

What explains NYC's ability, politically, to overcome opposition and preserve industrial land?

Most people engaged in community politics in New York City recognize the need for a diverse economy, which includes a healthy manufacturing sector, in part because it is one way of stabilizing communities and preventing gentrification. Secondly, they appreciate that manufacturing provides quality jobs. Thirdly, there is an aesthetic to it. People value a mix of activities. Why do people come to New York? People in New York are stimulus junkies. We like to see what is going on; we like to see things happen. There is something absolutely inspiring or attractive about seeing raw materials transformed, for example, walking through a bakery or walking through a furniture manufacturing company. The other component, the movement in support of industrial retention, has to do with labor in New York City: labor organizations realizing that this is an incredibly important part of the constituency and that without land, you can not have jobs. The labor community has come to the table as one of the most forceful advocates for industrial retention.

Are you comparing support for industrial land to the preservation movement?

I would not analogize this to the preservation movement at all. When we talk about preserving land we are not talking about preserving a particular company, or even a particular industry. Within a manufacturing zone there is competition. Companies die; new companies are born. There is still evolution; there is still change. What you are doing is saying that this entire segment of the economy merits some space, but you don't have to pick the winners and losers. A market still operates there. You can, in some ways, define the contours of that market-just like you have created an office district or just like you have created a residential district.

Residential developers in Los Angeles often assert that 21st century manufacturing zones do not provide the best return on investment, nor does manufacturing have promise today for the U.S. economy. How do you respond to that argument?

I would say that they are wrong. When they say that it doesn't have the biggest return on the investment, they mean their investment. What they are not taking into account is the city as a whole. New York City, as L.A., has an extraordinarily diverse population, and to give employment and entrepreneurial opportunities to a diverse population you need a diverse economy. To have a diverse economy, you need diverse land use.

You serve on the board of the Brooklyn Navy Yard Development Corporation with David Kramer, who was the first editor of The Planning Report. How is that public/civic effort creating an economic/jobs engine for New York's economy?

The Navy Yard is about 300 acres of city-owned property that the city contracts with the Brooklyn Navy Yard Development Corporation. There are well over 400 industrial tenants there, ranging from very small, one-to-two person wood-working shops to a dry dock to very large furniture companies to printing companies. It has created a very intense give-and-take between the tenants. They are beginning to collaborate as a vehicle for providing assistance. Over the course of the life of manufacturing businesses, they grow and they contract; they grow and they contract. Here is a good landlord who will work with them to accommodate their needs so that as they grow, they can find other space inside the yard to accommodate them. As they shrink they can do the same thing. That is just an example of how an intense or intimate landlord-tenant relationship can really benefit an economic development objective.

So the Navy Yard Development Corporation is neither governed by an agency of the city, nor a public sector enterprise?

It is public-private, which is a very important distinction because it brings a level of expertise to these issues that might not be available if it were tucked inside a city agency. Any commissioner of any city agency has two dozen issues on the table in front of him. If he goes in to talk to the mayor or the deputy mayor, he has to choose what is most important that day. At the Navy Yard they are really focused on a narrowly defined mission of retaining industrial jobs, which centers the thinking so that all of the talent on the board stays focused.

From your experience in New York, what are the industries that have the most potential for growth? Will they require government subsidy to realize their potential?

If you are talking about the greening of an industry then virtually anything has that potential. It then becomes a marketing challenge. Whether it is furniture, cleaning products, or food, there is a green attribute that can be expanded. The market is demanding greener products and there are opportunities for growth there. When I say that the market is demanding it, there is a fundamental shift in consumer preferences going on today. People want to see products made that have environmental benefits.

In terms of what is needed to make that happen-you used the word subsidy. I am not sure it is a financial subsidy. These are small businesses. They just don't have the capacity to do the market research and technical research to identify needs and position themselves.

We have been running an industrial energy conservation program. We have completed about 30 projects. Some of them are sort-of high tech solar projects. Some of them have been incredibly low-tech products like replacing old motors, replacing inefficient lighting fixtures, or simply repositioning workstations underneath the existing lighting.

How did we get there? The industrial retention industry took responsibility as an outside entity. We project-managed it-we brought in the auditor; we got the results. Often we had to take those results, translate them into a scope of services and then find a contractor to bid on them. We provided a small grant. The average-sized grant was under $20,000. In aggregate for the 22 projects that we completed in the first round, we deferred in excess of two megawatts of power from the grid and reduced energy consumption by ten to 15 percent in each facility.

Based on your brief exposure to the assets in the Los Angeles region, what are the industries that LA might want to cluster in an industrial zone, whether the CRA/LA's Clean Tech Corridor or other industrial sites?

The first area for growth centers on traditional urban industries that have high knowledge, value-added components-design orientated work. Proximity to market matters because the manufacturer actually has to work with the customer or the designer to get the product right and fit customized specifications. The second area centers on green manufacturing and reflects growing consumer preferences. It could be green furniture; it could be green apparel or organic foods. There is a transformation happening in consumer preference.

What role, if any, does zoning and land use planning have regarding facilitating the retention and creation of manufacturing jobs and middle class economic growth?

Having stable manufacturing space is absolutely essential for growing manufacturing industries, including efforts to green existing companies. There are a couple of reasons for that. In greening a manufacturer you are looking for them to reinvest. You want them to put money back into their company, buy new equipment, experiment with new methods and new processes, and provide training. If you want a company to reinvest there has to be some prospect that they can recover their investment before they are booted out of the space. If you have unstable real estate conditions, you cannot expect reinvestment. Unsustainable real estate leads to a downward spiral of disinvestment.

Zoning should be used to stabilize those industrial areas. Zoning sends the message that they can define what can occur in an area. It sends a message to manufacturers that they are welcome, that this is where they belong, that we want to keep them here, and that we want them to grow here.

Without the aid of subsidies, are industrial zones a better land use than residential developments?

Zoning can work. Let me add two examples of what I would regard as successful special district zoning in New York-zoning that was successful in either preserving jobs or creating a thriving community that was conducive to job creation. The first one is in the Garment Center, the cluster of apparel that anchors the entire apparel industry in New York City. The apparel industry has 75,000 workers-the fashion photographers, the models, FIT, Parsons, and all of the designers and sellers. They are anchored by the Garment Center in Midtown Manhattan, which is sandwiched between Penn Station and Times Square-absolutely prime office space. It has special zoning that protects manufacturing space. It only allows the conversion of manufacturing space to office use if an equal amount of manufacturing space is then dedicated in perpetuity. So while it envisions some transition, it also sought to preserve some space for production.

The zoning was created in the early 80s, and 20 years later we did a survey. There are still 8,000 production jobs in Midtown Manhattan. To me, that shows that if you have the right type of zoning you can preserve manufacturing space, even in an incredibly desirable location like Midtown. It was after the dot com boom, after the financial services boom, and after any of the number of real estate booms that have occurred in between.

The other example is in North Brooklyn where there is a special district that led to a thriving creative arts community, including residents, artists, artisans, and light manufacturing. What led to that was a special type of zoning that divided blocks between predominately manufacturing space and predominately residential space. It was the diversity of that space that gave rise to the diversity of uses. There was a tremendous synergy between those uses. The production and the manufacturing was really stimulating and inspiring a lot of the artistry. The artistry was promoting the design talent for the manufacturers. It was not uncommon for somebody who had their day job assembling wooden crates to then go off in the evening to do their visual artwork. It was the perfect symbiosis.

Web Exclusive

You have been here in Los Angeles for the last two days. What have you shared and what have you learned from this experience of being on the opposite coast?

I am amazed with the similarities in the issues we are struggling with-the similarities in the population, our needs, the economics of real estate development, and the economics of manufacturing. We both are dealing with certain pieces of the puzzle. What strikes me about L.A. is the ability to think on a grand scale. I am very impressed by the efforts to green the ports, which is an effort to look at a problem in an extraordinarily comprehensive way, coming up with a new market solution. Part of our message is about making markets work and I perceive that as an effort to continue to make markets work. But what they have done is taken some of the dysfunctionality in the market-those external thoughts born by the communities surrounding the port-and made the companies engaged in port activity pay for them.

In New York City we have focused most of our efforts on working company by company, meaning we take the technical expertise and go into a company to help them develop a new manufacturing process, help them learn about energy conservation strategies, and help them reposition into growing markets. We work very much on the groundwork and less on the big picture of the large projects.