Urban entrepreneurialism and the conquest
for sustainability: Transition towards an
energy-efficient built environment in New
York City and Amsterdam
Maurits Bongenaar
Student number: 10442413 Supervisor: Dr. John Grin Second Reader: Dr. Zef Hemel
Masters Thesis for the University of Amsterdam Research Masters in Urban Studies, June 2018 mauritsbongenaar@gmail.com
2 Table of Contents Summary ... 3 Introduction ... 4 Theoretical Framework ... 7 Methodology ... 19
Developing an alternative hypothesis ... 20
Time planning ... 22
Chapter 1: Urban governance and sustainability planning ... 24
1.1: New York City ... 24
1.2: Amsterdam ... 35
Chapter 2: Urban sustainability governance and the transition towards an energy-efficient built environment ... 43
2.1: New York ... 43
2.2: Amsterdam ... 57
Chapter 3: Case Studies: Power in the transition towards an energy-efficient new built environment ... 67
3.1: Cornell Tech Campus on Roosevelt Island ... 68
3.2: 200 East 21st Street in Manhattan ... 83
3.3: Amsterdam Science Park in the Watergraafsmeer ... 97
3.4: NoMA at the Amsterdam Zuidas ... 116
Conclusion ... 131
Urban entrepreneurialism: public-private partnerships and local boosterism ... 131
Speculative versus rationally planned and coordinated development ... 132
Flagship projects and growth coalitions ... 133
Autonomy for urban governance ... 134
Power dynamics in the transition towards an energy-efficient built environment ... 135
Discussion and limitations ... 142
3
Summary
Sustainability has become an increasingly post-political issue, but the interpretation and implementation vary geographically. Scholars such as David Harvey have addressed how an entrepreneurial approach to urban governance has become prevalent primarily in western, capitalist societies. Since the 1980’s, cities became more autonomous and more responsible to generate their own revenues. Strategies for environmental sustainability were generally pushed aside in favour of economic goals. This research project discusses the relationship between urban entrepreneurialism and sustainability planning in global cities, using New York City and Amsterdam as case studies. The report focuses on the power that actors and sectors in society have to influence the transition toward an energy-efficient built environment.
The thesis concludes that the entrepreneurial approach to urban governance is especially dominant in New York City. The city fits well into the common characteristics for entrepreneurial cities described by David Harvey: Public-private partnerships and local boosterism, speculative development and flagship projects and growth coalitions. However, the recognition of sustainability as a tool for economic growth seems to have sparked municipal efforts towards an energy-efficient built environment. Moreover, the city is successful in presenting itself as a leader and generating a sense of collective effort. New York City performs less well in terms of baseline building energy codes, but is addressing its shortcomings. Amsterdam is less entrepreneurial and has a strong tradition of social democracy, limited local autonomy and an emphasis on welfare policies. The transition toward an energy-efficient built environment has developed more gradually, but limited local autonomy and an ideology of balanced, rational planning prevents have led the municipality to take on a managerial rather than a leadership role. It is suggested that Amsterdam could benefit from developing entrepreneurial traits such as increased autonomy and actor mobilization through image-building.
Cities are increasingly focused on the attraction of knowledge workers and businesses that demand a sustainable living environment, making them powerful actors. It is suggested that the competition between cities for these economic resources could allow sustainability strategies to improve and mature. Liveability as an urban asset makes economic goals increasingly aligned with sustainability goals. This report further suggests that niche activities of commercially certified buildings through LEED and BREEAM will not lead to a radical transition pathway. Rather, the gradual updating of baseline building energy codes will cause a gradual transition for which sector actors can prepare themselves by working on certified projects.
4
Introduction
Sustainability has become an increasingly post-political issue, but the interpretation and implementation vary geographically (Vos, 2007). The dominant ideological paradigm with regard to sustainability can be used to typify what position sustainability has in a society. Sustainability is often addressed at the national level, but since the turn of century there have been an increasing number of cities implementing forms of climate governance (Bulkeley & Betsill, 2013). Cities contain an increasingly larger share in energy demand, and buildings and industrial processes may be responsible for up to 75% of global human-caused greenhouse gas-emissions (Bulkeley, 2010).
A number of scholars have addressed how an entrepreneurial approach to urban governance has become prevalent in capitalist societies (Harvey, 1989; Logan & Molotch, 1987), and more recently how this relates the dominant approach towards sustainability (While et al, 2011; McKendry, 2008). Since the 1970s, Western societies underwent a neoliberal transformation towards more free market policies, deregulation, privatization, austerity, and reductions in government spending in order to increase the role of the private sector (McKendry, 2008). Municipalities together with city actors aspiring overall development to the city became motivated to act more like corporations, in an effort to attract businesses, investments and wealthy citizens. Some argue that this approach can only result in superficial and inadequate projects of sustainability (While et al, 2004; While et al, 2011; North et al, 2017; Affolderbach & Schulz, 2017; Andersson, 2016; Anderberg & Clark, 2013). This entrepreneurial approach to urban governance is especially prevalent in global cities such as New York City and Amsterdam, engaged in competition for limited resources such as wealth, knowledge workers and businesses (Sassen, 2005). These cities, which professionalized their economies while cities in the Third World took over much of the industrial operations, have been selected as cases for this research project.
5 By discussing the approach to sustainable development in the context of New York City and Amsterdam, this study sets out to make a contribution to the field of transition studies. Transition thinking is used to explain how societal influences cause changes to an existing socio-technical system in society (Truffer & Coenen, 2012). The built environment is addressed as an important parameter of the environmental performance of cities. Buildings are responsible for more than 40% of the world’s primary energy consumption and 35-40% of global CO2-emissions (Darko et al., 2017). In order to gain insight into the role of the municipality, this research project will address how power to influence the transition towards an energy-efficient built environment is spread across sectors in society. In order to do so, this study makes use of the Multi-actor Perspective (Avelino & Wittmayer, 2016) and a relational approach to power dynamics (Hoffman, 2016).
This research project sets out to answer the following question: To what extent has the approach toward sustainability in urban planning in Amsterdam and New York influenced the socio-technical sustainability transition towards an energy-efficient new built environment? In order to answer the research question, the focus with each city has been threefold: To analyse 1) how the approach toward sustainability in municipal governance has developed, 2) how this has guided planning in the city with regard to an energy-efficient newly developed built environment 3) the effects this has on the socio-technical transition of the real estate regime. These three foci have been addressed by studying primary documents such as federal and municipal publications, secondary literature written by academic scholars, interviews with scholars involved in the research field and lastly interviews with stakeholders involved in the real estate sectors of New York City and Amsterdam. The first two foci or sub-questions are designed to analyse the context which is necessary for answering the third research focus. To address the third research focus, two cases of project development will be discussed: The Cornell Tech University Campus and 200 E 21st Street residential building in New York City,
6 and the Amsterdam Science Park and NoMA office building in Amsterdam. This third research focus is broken down into two sub-questions: (1) How is power spread across and within sectors in society with regard to energy efficiency in real estate development? And (2) how do actors draw upon their power to affect the current regime for real estate development?
7
Theoretical Framework
Global Cities
Amsterdam and New York have been selected as cases that belong to a population of global cities, a term introduced in work by Saskia Sassen (2005). Sassen developed the concept to analyse the role of cities in a globalising world. A complex political and technical reorganization allowed for the separation of low-wage, routine tasks from high-wage tasks. As a result, cities in the West started professionalizing their economies and cities in the Third World took over much of the industrial operations. This, Sassen argues, coupled with the internationalization of the financial industry and growing connectivity drastically changed the position of cities in the world economy. Cities play an increasingly significant role in the world economy, as nodes in system flows of information and money (Sassen, 2005). Global cities are characterized by a concentration of wealth in high-end firms that agglomerate in nodes, a deterritorialization from the state and growing embeddedness in world systems and a polarization of urban society into a marginalized population and a wealthy elite. Many concrete conceptualizations of the global cities exist. The Global Power City Index for instance features New York and Amsterdam on 1st and 8th spot respectively and is based on several metrics across six categories: Economy, Environment, Livability, Cultural Interaction, Accessibility and Research & Development (Ichikawa, 2016). The Global Cities Index, developed by consulting firm AT Kearney and under advice by Sassen, includes 27 variables across five dimensions: business activity, cultural experience, information exchange, political engagement and human capital (Hales et al, 2017). New York is 1st on this list and Amsterdam 22nd. Most standards agree that both New York and Amsterdam qualify as global cities, with some highlighting New York in a prime category among cities such as London and Tokyo.
8 There have been several attempts to connect global cities literature to literature on urban entrepreneurialism. Ancien (2011) explains that while global cities literature looks at the embeddedness of cities in global capitalist networks, literature on urban entrepreneurialism addresses how cities have developed entrepreneurial, “business-friendly” and strategic economic growth strategies to remain competitive and relevant in a modern, capitalist era. She argues how urban entrepreneurialism can provide insight into the political processes resulting from developments explained in the global cities literature. She argues that the growing need for cities to develop a governing agenda separate from the nation state presents an important avenue for future research (Ancien, 2011).
From urban managerialism to urban entrepreneurialism
Municipalities devoted effort towards ensuring investors that the city is a safe haven for flows of capital. Urban theorist David Harvey described it development as a shift away from urban managerialism and towards urban entrepreneurialism (Harvey, 1989). Harvey summarizes the context under which this shift developed as advanced deindustrialisation, widespread and seemingly 'structural' unemployment, fiscal austerity at both the national and local levels, all coupled with a rising tide of neoconservatism and much stronger appeal to market rationality and privatisation. In these circumstances, social and environmental goals are increasingly pushed aside and a city’s prosperity is increasingly based on economic metrics such as “value for money, the bottom line, flexibility, shareholder value, performance rating, social capital, and so on”. Harvey argues that three characteristics are central to the theory of urban entrepreneurialism. First is “the notion of a public-private partnership in which a traditional local boosterism is integrated with the use of local governmental powers to try and attract external sources of funding, new direct investments, or new employment sources.” Secondly, Harvey indicates that these practices involve high levels of financial risk, which is primarily borne by public institutions. Thirdly, urban governance concentrates on specific projects
9 developed within the urban entrepreneurial strategy and not on the territory within which these projects are located.
Three characteristics of urban entrepreneurialism
In his introduction of the term urban entrepreneurialism, Harvey introduces three broad assertions by which he conceptualizes entrepreneurial cities. Firstly, Harvey argues that “the notion of a public-private partnership in which a traditional local boosterism is integrated with the use of local governmental powers to try and attract external sources of funding, new direct investments, or new employment sources.” Secondly, the emergence of public-private partnerships means that entrepreneurial cities increasingly engage in speculative rather than rationally planned and coordinated development. Thirdly, entrepreneurial cities are more concerned with the political economy of place than the political economy of territory. This means that economic projects are not directed at developing a certain jurisdiction, but could have impacts on a level either smaller or greater than the specific territory. For instance entertainment, retail, cultural and office centres are often designed for the benefit of the whole metropolitan region, and growth coalitions of property developers, entrepreneurs and financiers can be formed to (re)develop very neighbourhoods under a very specific, branded character. As scholars have argued (Hall & Hubbard, 1996; Tickell & Peck, 1996; Roberts & Schein, 1993; Wood, 1998), these characteristics are broadly defined and there have not been many attempts to operationalize urban entrepreneurialism. Therefore, the concept of urban entrepreneurialism is often used as a preface for research rather than as a concrete theoretical framework (Wood, 1998). In this research project, the characteristics described by Harvey will be kept in mind for the narrative in which the level of entrepreneurialism for each city will be discussed.
10
Urban entrepreneurialism in the United States
McKendry (2008) explains the workings of urban entrepreneurialism in the context of U.S. cities. Since the 1980s, welfare services previously taken on by the government such as income subsidies and financial equalization have been adopted by local governments. Moreover, local costs for the prison system greatly increased due to a federal requirement to increase punishments. This forced local governments to generate revenue in ways similar to corporations. Strategies were developed to attract external sources of funding, new direct investments and new employment sources (Portney, 2003). A lot of effort by municipalities became devoted to ensuring investors that the city is a safe haven for flows of capital. This inevitably pitted cities against each other in competition for outside investments. Social and environmental goals are increasingly pushed aside in this new approach that bases urban success on economic metrics such as “value for money, the bottom line, flexibility, shareholder value, performance rating, social capital, and so on” (McKendry, 2008). McKendry argues that this has placed much of the burden for environmental protection in the hands of local government. Slowly, federal intentions “to promote the workings of the market and meet the needs of capital” instead of putting the environment first became noticeable in urban policy as well (McKendry, 2008). The devolution of state power was paralleled with more autonomy and responsibility for local governments. Both developments are seen by McKendry (2008) as the most dominant impacts of neoliberalism on the city.
Urban growth machines
The private real estate market is an important sector that generates revenue for local governments and enhances marketability, outside investment and competitive advantage at the same time. Financing, constructing, destroying, and reconstructing the built environment has become a major industry for urban economic development. The focus on economic growth makes low- and middle income residents less likely consumer target groups for residential
11 development. Urban measures and policies increasingly favour high income groups for their potential to enhance a city’s economic success, in a myriad of ways. Neighbourhoods are selected for redevelopment based on indicators such as income and general involvement in consumer society. This often involves preparing prime urban locations for high-potential residents while gradually ousting sitting residents. At the same time, funding is directed towards highly visible redevelopment projects such as waterfront parks in an effort for cities to present themselves as post-industrial, clean and desirable places to work and do business (McKendry, 2008). These are examples of how economic growth is prioritized over social and environmental goals.
Competition between cities is an important feat of urban entrepreneurialism, the same driver that spurs innovation for corporations in capitalist societies. Tax breaks, production efficiency training and other incentives are offered to attract businesses, and urban consumption-oriented strategies are offered to ensure business loyalty to the city. Logan & Molotch have written extensively on the workings of cities as machines for economic growth. Their perspective on the commodification of places is featured in the theory of urban growth coalitions. In the book Urban Fortunes: The Political Economy of Place, Logan and Molotch (1989) explain how in the United States, cities and a select group of urban stakeholders cooperate to form urban growth coalitions. These actors organize themselves, manipulate, structure and lobby collectively with the ultimate goal of ensuring economic growth for the city. What brings these actors together in growth coalitions is that they all benefit, in one way or the other, from a city’s enhanced competitive advantage. The most powerful entities in urban growth coalitions are the real estate sector and city government. Actors in the real estate sector benefit directly from economic growth through rising property values, which makes them a natural partner for city governments in the pursuit for economic growth. Because these
12 interests are shared by all actors, Logan and Molotch conceptualize them collectively as the ‘urban growth machine’ (Logan & Molotch, 1987).
Greening the urban growth machine
McKendry (2008) discusses how urban environmental policies are increasingly derived from the neoliberal ideology dominant in many countries in the ‘Global North’. The neoliberal perspective generally rejects a prominent role for the government in promoting environmental protection goals. For the United States, the origins of neoliberal urban policies can be traced back to the rolling back of the welfare state since the 1970s. Urban crises had raged across the country, characterized by the large-scale migration of the white, affluent population from racially mixed urban regions to the suburbs. Nixon reduced the provision of federal redistributions and local tax revenues when he declared the end of the urban crisis in 1972. As discussed, an important characteristic of the neoliberal perspective that became widespread during Reagan’s presidency is the idea that market-based solutions are the most efficient way of reaching sustainability goals. This was a departure from the Keynesian approach to sustainability governance, which reserved an important role for the state in mediating the conflicting goals of economic growth and environmental protection. Cities were considered too much under the influence of local businesses at the time, which is why environmental protection was treated as a federal issue.
McKendry discusses how an urban sustainability strategy can be grounded in a variety of motives. Sustainability strategies can be “hybrids” of urban entrepreneurialism, attempts to curb the negative effects of capitalist societies, environmental justice movements and part of a collective effort to avert global threats (McKendry, 2008). While et al (2004) indicate what they call the incorporation of “two seemingly antithetical sets of pressures on modes of urban governance in advanced capitalist economies and states”: the ‘new urban politics’ and the growing realization for protecting and enhancing the natural environment. The new urban
13 politics describes the rise in popularity of a type of urban governance inspired by entrepreneurialism and competitiveness. Cities are seemingly ‘forced’ to prioritize economic goals because they have limited fiscal and political opportunities to pursue alternative development strategies. This has driven cities to follow a neoliberal ‘growth first’ ideology, and While et al argue that sustainability is increasingly becoming part of this approach. The term ‘urban sustainability fixes’ is used to describe public policy and development strategies in which weak and superficial sustainability proposals are used to conceal a desire for financial gain and economic growth. Sustainability goals are presented as a highly desirable and ultimate goal, but in reality only pursued as a prerequisite for capital accumulation in growth trajectories.
There is a growing number of case studies which discuss the relationship between sustainability and urban economic growth strategies (Affolderbach & Schulz, 2017; Andersson, 2016; Anderberg & Clark, 2013).. The important distinction here is that sustainability has evolved from being ‘not necessarily harmful to economic growth’ to ‘beneficial to economic growth’ or ‘a driver for economic growth’. North et al (2017) introduce the case of Liverpool as an example of the urban sustainability fixes described above. They argue that urban sustainability strategies are often characterised by technocratic, bland, vague commitments to ‘smart cities’ and to ‘sustainability strategies’ that do not lead to a comprehensive transition and hardly challenge the strategy for economic growth that has become so common in neoliberalized, entrepreneurial western cities. In Liverpool, arguments to depart from the economic growth strategy because of the harmful environmental effects were brought forward but this hardly ever contributed to an actual transition. Environmental policy measures were only agreed upon when they were harmless to the overall project of economic growth. This research project has been a response to a call by North et al (2017) for
14 more microscopic analyses of urban development “to understand how urban managers handle competing pressures in making climate policy.”
Transition Studies
The field of transitions in socio-technical systems in the realm of social sciences has its roots in the 1980s. Scholars became interested in the mechanisms that determined innovation processes and the competitiveness of firms, regions and entire nations (Truffer & Coenen, 2012). Starting in the 1990s, a subset of scholars started applying theories from transition studies to processes of environmental innovation and sustainable development (Van Den Bergh et al, 2011). The social aspect of socio-technical systems comes from the notion that technologies and technological functions develop simultaneously with social interests and function. Hence, technological developments are not only influenced by scientists but also by policymakers, consumers, NGOs, businesses and other aspects of society (Hodson & Marvin, 2010). The dynamic patterns of socio-technical transitions in general are often conceptualized using the multi-level perspective, developed by the ‘Dutch school of transition studies’ (Geels, 2011). Following this theory, transitions are seen as non-linear processes that involve interplay between three different analytical levels: niches, socio-technical regimes and an exogenous socio-technical landscape. In niches, technologies are developed that could initiate the collapse of a regime, which is formed by the established practices and associated rules that stabilize existing systems. Both niches and regimes are under the influence of the wider context of the landscape level, which includes demographical trends, political ideologies, societal values and macro-economic patterns (Geels, 2011). The relationship between the three levels is best explained in figure 1.
15 Figure 1: Schematic view of the multi-level perspective (Geels, 2011).
Mapping power in socio-technical systems
This study discusses how power is spread across sectors in society to influence the transition towards an energy-efficient regime for urban real estate development, and how this relates to entrepreneurial urban growth strategies. The literature on socio-technical sustainability transitions so far has focused on the niche level as core factor in causing change, largely neglecting the restrictive mechanisms of the regime (Geels, 2014). Niche markets struggle with the existing regime on economic, technical, political, cultural and infrastructural dimensions. Analyzing shifting power relations is crucial to identify the major contributing factors to the (de)stabilization of the urban real estate development regime, and its resistance to a sustainability transition towards environment- and resource-friendly real estate. In sustainability transitions literature, the Multi-actor Perspective (MaP) categorizes society into four sectors: state, market, community and the Third sector (labour unions + NGOs + science)
16 (Avelino & Wittmayer, 2016). These actor categories are organized in a ‘triangular tension field’ along three axes that explain their institutional logics: (1) informal - formal, (2) for profit - non-profit and (3) public – private (figure 2). The MaP is also used in this study to reflect on the shifting power relations to influence energy efficiency within and between sectors in the regime for real estate development.
Figure 2: The triangular tension field of actor categories in society and their institutional logics. Source: Avelino & Wittmayer (2016).
Power and agency are dispersed among actors in different ways in the state, market, community and Third Sector (Avelino & Wittmayer, 2016). The researchers emphasize that this does not only involve questions of who has power over whom or who has more or less
17 power than the other, but also of what kind of power different actors possess. This qualitative and horizontal understanding of power in transitions is necessary for understanding the condition of energy-saving practices in urban real estate development and its shifting power relations. To summarize, the authors argue that the MaP can be used to explore (1) how individuals, groups and organizations act and relate within different sector logics, (2) which sector logics tend to be ‘dominant’ in the actions and discourses of specific organizations, groups and individuals, and (3) how the power relations between and within the sectors, organizational and individual roles shift over time (Avelino & Wittmayer, 2016). These perspectives will be kept in mind in the discussion for each of the case studies involved in this research project.
Relational perspective on power dynamics
In order to discuss different types of power applied by sectors in society, this study will make use of Hoffman’s perspective. Hoffman rejects the idea that power is a possession or an entity that can be held or disposed and instead argues for a relational perspective of power: “power is not a thing, but a relational phenomenon” (Hoffman, 2016). He developed a relational perspective on power, based on an earlier distinction between relational, dispositional and structural power (Grin, 2010; Arts & Van Tatenhove, 2004). Hoffman built on an earlier framework by Grin by further analysing how actors act through and remake relationships on different levels of scale, causing a regime to change. In this conceptualization, relational power is defined as “Power in the form of the means (e.g. money, knowledge, social capital) on which actors may draw in their (innovative) practices), co-determining the outcomes of their interactions with other actors.”
Dispositional power is defined by Hoffman as “positioning of actors in a regime (comprising rules, resources, actor configurations, and dominant images of the issue involved) privileges particular practices and discourages/ complicates others.” In the case of wind energy in
18 Denmark that Hoffman describes, the rising prices of import fuels in the 1950s formed a structural power that discredited normalized practices and increased the attention for novel practices such as wind energy. This changed the dispositional power of wind energy actors in the regime of energy provision. Structural power is defined as “long-term socio-historical trends, such as liberalization, Europeanization, and the emergence of information society.”
Transition studies in the urban context
Transition studies using the Multi-Level Perspective has been applied to many European nations and cities, but areas in North America have been largely overlooked (Coenen et al, 2012). Most studies on socio-technical transitions address the national level or even higher levels of scale. However, cities and city-regions are becoming increasingly relevant in transition studies as protective environments that provide space for the development, testing and failure of novel innovations (Coenen & Truffer, 2012; Hansen & Coenen, 2015; Hodson & Marvin, 2010). The urban level is closest to the actors involved in sustainability transitions (Hansen & Coenen, 2015) and increasingly contains policies that deviate from the national strategy. Moreover, cities are seen as the hotbed of niche activities and therefore the locus where sustainability transitions originate (Hansen & Coenen, 2015). Cities are connected in complex ways to the global economy and transitions on the local level have the potential to spread to larger levels of scale (McCormick et al, 2013). Cities contain an increasingly larger share in energy demand, buildings and industrial processes and may be responsible for up to 75% of global human-caused greenhouse gas-emissions (Bulkeley, 2010). After periods of experimentation in the 1990s, the 2000s have seen a rapid growth in the number of cities implementing forms of climate governance (Bulkeley & Betsill, 2013). However, academic literature has seen relatively little use of theoretical approaches addressing how sustainability transitions work in urban contexts (Bulkeley & Betsill, 2013).
19
Methodology
In my research preparations, I selected the most-similar case study as the most suitable research design (Gerring, 2006). The cases that I have selected differ at least in terms of the outcome, indicated with a Y in table 1. This complies with what Gerring says about most-similar case study design. Both cases show clear most-similarities, being highly developed, western and rich cities. Factors that make Amsterdam and New York belong to a population of global cities, along with other characteristics that both cities share, can be considered the control variables (X2). As explained, the research focuses on factors that might contribute to a difference in building energy policy between the two cities. Gerring calls these factors the differentiating causes (X1). Scientific inference is drawn by identifying a differentiating cause in the case of New York, which is different or absent in the case of Amsterdam. The differentiating causes serve as a hypothesis; a possible explanation for outcome Y. A most-similar case study does not start out with a formulated hypothesis. As explained the design started out hypothesis-generating and exploratory, and developed into an explanatory design once the hypothesis was formulated.
Table 1: Hypothesis-generating research for a most-similar case study (Gerring, 2006).
The hypothesis initially developed for this research project was based on the Varieties of Capitalism (VoC) literature. Despite the similarities of both cities on the basis of the global cities literature, the cities are located within vastly different political-economic contexts. Following literature on drivers of climate change policy (Lachapelle & Paterson, 2013), this
20 study hypothesized a higher potential for CME’s such as the Netherlands to work towards a low-energy transition of the regime for urban real estate development, compared to LME’s such as the United States (Hall & Soskice, 2001). CME’s are better equipped to develop ambitious environmental policies, due to high government intervention and the cooperative relations between state and business (Lachapelle & Paterson, 2013; Dryzek et al, 2003; Scruggs, 2003). An interventionist logic allows states to promote the public good, with larger power to decide over its citizens (Dryzek et al, 2011). In a market-oriented society typical to LME’s, the state has less power to force sustainability measures upon its economy. Moreover, cultural and corporate norms and values are expected to be geared towards individual profit and freedom (Dryzek et al, 2011). However, this claim requires a side note. Whether free-market characteristics reduce the potential for socio-technical transitions remains to be seen, since sustainability is now increasingly being recognized for its market potential. The freedom that firms have in LME’s might accelerate sustainable development when businesses recognize the profitability of energy-saving measures.
Developing an alternative hypothesis
The first two months of background research for the case of New York were used to reflect on the preliminary hypothesis. The hypothesis on the basis of the VoC literature developed into a related hypothesis on the basis of urban entrepreneurialism. Cities play an increasingly significant role in the world economy, as nodes in system flows of information and money (Sassen, 2005). Global cities are characterized by a concentration of wealth in high-end firms that agglomerate in nodes, a deterritorialization from the state and growing embeddedness in world systems and a polarization of urban society into a marginalized population and a wealthy elite. Therefore, an important requirement of the global cities concept as discussed by Saskia Sassen is that these cities are increasingly embedded in a system of competition between each other. There is a growing body of literature that discusses the increased interest
21 for cities in sustainability to enhance international competitiveness. While conducting background research for the New York case, the hypothesis was developed that New York is traditionally more autonomous and entrepreneurial, that the dominant paradigm for sustainability is related to this feat and that this leads to a different municipal governance strategy for sustainability and energy efficiency compared to Amsterdam. Amsterdam has a strong tradition of social democracy, limited local autonomy and an emphasis on welfare policies. Whereas there is a growing body of literature on neoliberalization of urban governance in Amsterdam, it was hypothesized that urban entrepreneurialism is an important driver for differences in both cities with regard to the energy efficiency of the built environment. The three characteristics discussed by David Harvey were used to operationalize the concept of urban entrepreneurialism, and guide the narrative for chapters 2 and 3.
An overview of how fieldwork was conducted for the case of New York is presented in table 2. . In the research proposal, time was scheduled in phase three to reflect on the results obtained in phase two. Initially, there was a plan of focusing on stakeholder categories in general. The five primary stakeholder categories identified in the research project proposal are architects, construction units (includes engineers), funders/investors, developers and government authorities (Darko et al, 2017). Interviews with six stakeholders were conducted in this “Phase 2” of the fieldwork process. In close cooperation with the research supervisor, a decision was made to identify two specific development projects as core units of analysis, instead of selecting a number of stakeholder categories. This allows for triangulation of interview results, by letting different stakeholders share their experience with regard to the development project at hand. Singular interviews provide only one perspective on a certain case, an opinion that might not be shared by other stakeholders involved. Public documents and public interviews could be used to provide supporting information, and to cross-reference. It allows for a more accurate analysis of which actors have had the power to implement
22 measures of energy efficiency. Moreover, by discussing specific cases in-depth, the focus of the research projects shifted from the stakeholders towards the practices of sustainability and energy-efficiency, how they come about and how they are motivated. It was concluded that this approach provides a valuable dimension for answering the overarching research question.
Time planning
Phase Procedure Product
Phase 1 – Process tracing
4 weeks
Secondary data analysis
Internet search through academic databases
Internet search through government documents
Overview of socio-technical transitions over time
Phase 2 – Interviews 4 weeks (each case)
Conducting in-depth interviews focused on gaps in the process tracing-results, power relations regarding energy efficiency in the real estate sector and processes of regime (de)stabilization
Coding interview results
Coded qualitative data
Phase 3 – Reflection 2 weeks (each case)
Evaluating qualitative data from phase 2 and linking to process tracing results Preliminary mapping of power
relations in the real estate sector Preliminary analysis of power dynamics for influencing energy efficiency
Selecting Varieties of Capitalism as hypothesis or proposing an alternative hypothesis
Determining the data and number of respondents required in remaining time to answer research question
Overview of power relations Overview of power
dynamics
Definitive hypothesis Plan for research continuation
Phase 4 – Interviews 4 weeks (each case)
Identification of two specific
development projects as core units of analysis
Conducting in-depth interviews with actors involved in both cases
Coding interview results
Interview transcripts Recorded interviews
Phase 5 –
Processing results 4 weeks
Developing definitive overview of power relations in real estate development regime
Analysis of power dynamics for influencing energy efficiency Linking results to the theory on Varieties of Capitalism/alternative
Answers to research question and sub-questions
23 hypothesis Phase 6 – Writing report 4 weeks Writing report
Developing possible policy implications
Discussion
Policy recommendations Suggestions for further research
Table 2: Planning overview for the research project. Source: Bongenaar (2017) Research proposal for the Research Master Urban Studies at the University of Amsterdam
An identical approach, including interviews with stakeholders from several stakeholder categories followed by an in-depth discussion of two project development cases, was used for the case of Amsterdam.
24
Chapter 1: Urban governance and sustainability planning
Sustainability is a concept for which several definitions exist. Most of these definitions, including the prominent definition from the Brundtland report, emphasize the assurance of livability and prosperity for future generations (Brundtland, 1987). Sustainability has become increasingly post-political, but the interpretation and implementation vary geographically (Vos, 2007). The dominant ideological paradigm with regard to sustainability planning can be used to typify what position sustainability has in a particular society. It can be regarded both as an explanatory variable for and an influence on the factors shaping sustainability and energy saving practices in a real estate regime. In this chapter the following research focus will be discussed: To what extent is the sustainability strategy in both cities a consequence of the approach towards urban planning? The chapter starts with an analysis of the research focus in the context of New York City, followed by an analysis of Amsterdam.
1.1: New York City
New York has been characterized by a developer-led approach to urban planning planning since the 1970s, and a reluctance of the city and state to start projects unless a developer is involved from its conception (Fainstein, 2008). Consequently, the real estate sector is a powerful actor in the process of agenda setting for planning in the city. Since New York is a typical American city in the ways conceptualized by Logan and Molotch, an urban growth coalition can clearly be identified. Angotti and Marcuse describe the role of the real estate sector in the urban growth machine of New York as follows: “Real estate drives the growth machine, government oils and repairs it, the building trades make the parts, and global and local capital deliver the fuel” (Angotti & Marcuse, 2011). In New York City, the real estate sector is comprised of “a medley of established family firms, new corporate giants and thousands of small players” (Angotti & Marcuse, 2011). Other actors involved in the growth machine of New York City are small- and medium-sized landlords, brokers, builders and
25 contractors, the construction trades and unions and civic groups in favour of new development.
1.1.1: Power and the real estate sector
An important organization safeguarding their shared economic and institutional goals is the Real Estate Board of New York (REBNY). Real Estate is part of the FIRE sector of the city, which also comprises the finance and insurance sectors. Since a quarter of the city budget stems from corporate-, property- and personal income taxes from these sectors, the city is concerned with keeping real estate healthy and generating revenue. As described earlier in this thesis in the section on urban entrepreneurialism, the US federal government has limited its involvement with local planning. This became especially noticeable when support from the federal and national government diminished since the 1980s (Angotti & Marcuse, 2011). Moreover, the absence of a comprehensive approach to urban planning in New York City can be explained by the strong real estate influence in city government since the beginning of the 20th century. The real estate sector had little to gain from such an approach and as a result, the “preservation of parkland and farms, concentrated new development around rail lines, and integrated industry, housing, and retail development” common to European cities such as Stockholm, was not prioritized in US cities such as New York. As Fainstein concludes, “Although government agencies play an important role in affecting the physical environment, the main progenitor of changes in physical form within London and New York is the private real estate development industry” (Fainstein, 2001).
Fainstein illustrates her point by discussing the case of Hudson Yards, a mixed-use commercial and residential development project in Brooklyn (Figure 3). Critics of the project emphasize the loss of affordable housing and radical transformation of neighborhoods, neighborhood backlash, sharpening of socio-economic segregation, profit concentration with hedge fund managers and investment bankers and erosion of green development and
26 sustainability. The large sums of public money and tax forgiveness, lack of public participation in the development process and lack of transparency demonstrate the political power of real estate in municipal governance. The fact that the project stems from a developer’s initiative and not from a public bid or tender is emblematic for how the municipality works with the real estate sector to facilitate development. The preference for direct transactions of land between the city and developers stems from the sustained fiscal crisis of the 1970s. Tax breaks and other perks were handed to real estate actors to keep them from leaving the city (Angotti & Marcuse, 2011). The survival of some of these perks and the conviction that the best disposition of city-owned land is to return it to the private sector are based on free-market economics. The private sector is thought to have the most efficient approach to urban development. Base building regulations such as the NYCECC are in place to address issues such as the energy efficiency of the built environment, so the city does not demand additional conditions in the sale of public land. This approach is still apparent in New York City, as can be concluded from the Cornell Campus on Roosevelt Island which will be addressed later and Fainstein’s discussion of the Atlantic Yards development project. Moreover, it is provides a major difference with Amsterdam’s approach to energy efficiency of the built environment (Angotti, 2017). Jan Straub, senior planner at the Municipality of Amsterdam, would argue that while a powerful private sector makes the real estate sector in New York City more responsive, the city has had to give up influence in planning that Amsterdam still possesses to a large extent (Straub, 2018).
27 Figure 3: The Hudson Yards development project
1.1.2: Financial situation and revenue sources
In terms of revenue, unrestricted federal and state aid is a marginal resource for the municipality of New York, especially compared to Amsterdam. In the 2016 fiscal year, unrestricted financial aid amounted to 176.168.000 and 0,2% of total revenues, and categorical aid amounted to 21.966.162.000 and 26,6% of total revenues. By comparison, the city’s local taxes, primarily real estate taxes ($23.180.583.000), personal income taxes ($11.392.473.000) and sales and use taxes ($8.540.154.000) amounted to $ 53.564.673.000 and 66,0% of the city’s total revenues (City of New York, 2016). Statistics are extracted from the governmental funds statement of revenues, expenditures and changes in fund balances. Unrestricted federal and state aid was already marginal in 2007, when it amounted to and 0,06% of total revenues. Unrestricted in this sense means that financial support is not tied to specific rules with regard to spending, but free to expend by local governments for any legal and non-discriminatory purpose (Salkin & Gottlieb, 2011).
28 The principle of federalism is included in the tenth amendment of the constitution, and divides responsibilities between a central governing authority (federal government) and constituent political units (state governments). In the US system of fiscal federalism, federal government authority is limited and states are primarily responsible for most policy areas. Therefore, the US federal government has traditionally limited its financial involvement in local government but simultaneously ‘pushed down’ many responsibilities to lower government levels (Peck & Whiteside, 2014). Unrestricted financial support has a limited history in the US, and financial aid from the federal government is now primarily tied to specific programs (Salkin & Gottlieb, 2011). In 1972 the Nixon Administration introduced revenue sharing, capital distribution between the federal government and lower levels, as a way to relieve financial stress on local governments. The system had redistributed $10.8 billion to local governments up until 1980 (Salkin & Gottlieb, 2011). During the Reagan Administration however, in line with its strategy of ‘starving the beast’ or limiting government spending, the revenue system lost significance. Growing uncertainty about the size of financial aid caused a strain on local budgets, and can be seen as a contributing factor to NYC’s budget crises in 1990 and 1991 (Salkin & Gottlieb, 2011). With limited support from higher levels of government, local governments are increasingly dependent on property taxes and categorical aid. Downsizing local government often remains as the last resort before bankruptcy (Peck, 2013). Reduced state aid and revenue from property tax together with growing demand for social services are identified as growing threats for local governments (Peck, 2013).
1.1.3: Economic growth and sustainability: PlaNYC
PlaNYC, New York City’s first plan for economic growth that includes sustainability was released in 2007. The plan focused on ten specific areas: Housing and Neighborhoods; Parks and Public Spaces; Brownfields; Waterways; Water Supply; Transportation; Energy; Air Quality; Solid Waste; and Climate Change. The plan contained 127 initiatives designed to
29 “strengthen New York City’s economy, public health, and quality of life.” (New York City, 2007). With regard to energy efficiency of the newly developed built environment, the document contains some recommendations for the future. In order to address climate change and the concentration of greenhouse gases in the earth’s atmosphere, the city set out to reduce the energy consumption in buildings by 16.4 million metric tons. In doing so the city “requires efficient new buildings, an increase in the efficiency of appliances, a greening of the city’s building and energy codes and an increase in energy awareness through education and training.” (New York City, 2007). In 2009, the city released the Greener, Greater Buildings Plan designed specifically to address the existing building stock. The document includes a set of Local Laws, of which number 85 (LL85), the New York City Energy Conservation Code, is also applicable to new developments. It requires buildings to meet the most current energy code for any renovation or alteration project, and includes a series of local energy laws collectively called the New York City Energy Conservation Code (NYCECC) (New York City, 2014 [2]). The NYCECC was established in 2009 as the city’s first building energy code. It was based on the 2007 Energy Conservation Construction Code of New York State (ECCCNYS).
The city had explored the use of LEED requirements to make buildings more energy-efficient and sustainable, but concluded that LEED is designed “as a tool that promotes innovation, not necessarily regulation” and instead opted for a separate building energy code (New York City, 2017). National and state energy laws are updated periodically, and the city expressed its intention that “New York City’s energy laws must also be updated to reflect equal or more stringent regulations.” Since 2009, the NYCECC has been updated periodically, and often in relation to updated national or state model codes. Local Law 48 for instance, which was released in 2010, required use of occupancy sensors in non-residential spaces such as break rooms, conference rooms and classrooms. Under Local Law 1 in 2011, stringency of the
30 NYCECC was altered to follow requirements set in 2010 updates of the federal and state energy codes. The adoption of these requirements “increased stringency of the code with roughly 7 percent over prior codes.” (New York City, 2017). In the 2011 update of PlaNYC, the last update before the city would transfer to its new sustainability plan OneNYC, the city expressed its intentions to consistently adopt the latest versions of national and state model codes over the coming years, which would involve “an improvement to the code of 23 percent.” (New York City, 2013).
1.1.4: Ambitions for carbon reduction: 80 x 50
New York City’s current sustainability efforts are based on a pathway to reduce emissions with 80 percent by 2050 from a 2005 baseline, reducing emissions in sectors such as transportation, solid waste and energy supply and the built environment. This “80 x 50” emissions reduction plan was part of PlaNYC’s last document called “New York City’s Pathways to Deep Carbon Reductions”, which was also the last comprehensive sustainability strategy document released under Bloomberg’s mayoralty. The 80 x 50 goal is based on recommendations by the IPCC, the International Panel on Climate Change, for what cities and metropolitan areas need to do to fend off the most adverse effects of climate change (Love, 2018).
1.1.5: Sustainability as an economic growth strategy
Rohit Aggarwala, Director of New York City’s Office of Long-Term Planning and Sustainability from 2006 until 2010, explained during a 2013 panel discussion with Columbia’s Earth Institute that PlaNYC started out not as an environmental initiative but as an economic strategy: “It was fundamentally a strategic plan for growth and quality of life.” The re-election of Mayor Bloomberg in 2005 was during a time when the city had just surpassed its former maximum population of 8 million people. The city had grown until about 1970, after which the population plummeted and began to grow again in the 1980’s.
31 Neighborhoods were densifying between 2003 and 2005 and there were calls of alternative perspective on growth. This context was crucial in the creation of PlaNYC: “There were two options left at this moment to maintain quality of life for its citizens. The first was a strategy to cap growth, which is usually not a good strategy because it leads to a stagnation of the economy or drives up prices and pushes people out. The second was to think of a way to grow and add more people to a constrained space while maintaining the quality of life. This involves infrastructure investment and a smarter, more efficient use of infrastructure.” (Earth Institute, 2013). Aggarwala thus argues that sustainability was a solution that facilitated dual pursuit for economic growth and quality of life. As moderator Steve Cohen, Executive Director at Columbia’s Earth Institute mentioned during the panel: “If you don’t have clean water, clean air and a safe environment, nobody wants to live in the place.” (Earth Institute, 2013).
1.1.6: PlaNYC: Balancing environmental governance and competitiveness
In their discussion of Liverpool’s sustainability strategy, North et al (2017) repeatedly reference PlaNYC. Their research was performed to develop a more nuanced understanding of how urban actors debate conflicting pressures, decide on priorities, and develop a capacity to govern. The city was aspiring to become European Green Capital and, between 2007 and 2016, developed a plan that reconciled the need to avoid dangerous climate change with securing urban prosperity in a competitive neoliberal environment. Researchers and officials from public sector agencies founded the Liverpool Green Partnership to investigate whether the city’s environmental performance was adequate to develop a bid for European Green Capital, and whether this would contribute to wider decarbonisation. PlaNYC was suggested as “a model for a comprehensive approach to creating a climate-proofed city that also maintained its competitiveness.” (North et al., 2017). The LGP recognized the strategic significance of sustainability in urban governance, an approach that was embraced by the city
32 of New York: “The researchers could see that the recommendation worked with the grain of entrepreneurial urbanism while emphasising the importance of long-term sustainability and adaptation to climate change within a context of strategic competitiveness.” (North et al., 2017). North et al also make the connection with the work on growth coalitions by Logan and Molotch: “We argue that many city leaders see climate and sustainability as a distraction from, or at least not a priority, when set against, their core task – maximising economic growth. Growth coalitions (Logan and Molotch, 1987) are unlikely to be convinced of the need to act on climate at all. There is, in short, no consensus on climate.”
In the PlaNYC document, the city’s Economic Development Corporation had been clear in its stated objectives. The city did not deny its pursuit for economic growth, stating that the plan was designed to address “growth, an aging infrastructure, and increasingly precarious environment.” The plan contained some ambitious goals: “PlaNYC: A Greener Greater New York aims to establish New York as the “first sustainable 21st century city.”
Despite his faith in the private sector, Cohen sees an important role for the state in facilitating sustainable growth. He believes that the US already has a track record when it comes to green economic development. “What we’ve demonstrated is that we don’t have to trade off economic development and environmental protection. The concept of a job-killing regulation we are hearing out of Washington is idiotic. Regulations create economic growth, jobs and quality of life. Regulations might kill the jobs in one factory, but if you aggregate it over the whole society there’s no question that environmental regulation pays off at a very massive benefit to cost ratio.” (Earth Institute, 2015). An important realization here is that faith in the private sector to spur a sustainability transition does not mean that there can be no role for public institutions as well.
33 A year after PlaNYC was released in April 2007, Hunter College Urban Affairs Professor Tom Angotti published a paper titled “Is New York’s Sustainability Plan Sustainable?” Angotti argues in his paper that PlaNYC is “in substance a continuation of the finance/real estate sector’s historic policy of promoting extremely high densities at the highest-valued locations. This policy of market-driven land development has produced some environmental benefits associated with high-density clustered development but it has also resulted in spatial inequalities, environmental injustice, and negative environmental impacts.” The paper shows remarkable similarities with critiques of superficial neoliberal sustainability strategies discussed above. Angotti repeatedly emphasizes how PlaNYC was designed to benefit a select group of urban stakeholders: “The plan advances above all the interests of the real estate industry which, along with finance and insurance, is often heralded in local policy discussions as the engine of economic growth.” Moreover, Angotti leaves little doubt about the motivations behind the plan: “In general the New York plan is a growth plan that neglects community and housing preservation, and if fulfilled will further exacerbate economic inequalities and disparities in urban health.”
Aggarwala was hired directly from consulting firm McKinsey & Company by the city’s Economic Development Company. As the city’s economic development agency the NYCEDC provides tax incentives, bond financing and city subsidies to businesses. Angotti states that the plan utilizes the discourse of Smart Growth to rationalize a market-driven strategy that is not necessarily environmentally or socially beneficial, and that this is largely due to the primary focus on economic growth. Angotti further argues that the plan reads “more like a strategic planning report for a corporation anxious to save money on energy than a blueprint for city government.” (Angotti, 2008).
34 1.1.7: Hurricane Sandy
According to Love, policy advisor regarding the built environment at the Mayor’s Office of Sustainability, hurricane Sandy had made it clear at the end of 2012 how ill-prepared New York City was to fend off climate change-related natural disasters. It revived a sense of urgency that might have moved Bloomberg to establish such an ambitious goal in his final weeks as Mayor. The document was published in December 2013, and the 31st of December was his final day in office. With OneNYC, the next strategic sustainability plan published in 2014, next mayor of NYC Bill DeBlasio committed the city to the 80 x 50 goal.
Sergej Mahnovski, Aggarwala’s successor as Director of the Mayor’s Office of Long-Term Planning and Sustainability in 2010, explained that he was responsible for incorporating resiliency into the Office’s goals. Plans were already underway, but the city’s experiences following hurricane Sandy in 2012 had greatly emphasized the need for stronger resilience (Earth Institute, 2013). Aggarwala agrees that Sandy had been a major factor in leading people to believe the need for sustainability was more urgent, and in this way had a big influence on shaping the city’s sustainability strategy as it is today (Aggarwala, 2017).
35 Figure 4: A rare blackout in New York City due to a power failure, caused by hurricane Sandy in 2012. Picture is taken from the East Village, towards the Empire State Building.
1.2: Amsterdam
Amsterdam and New York are characterized by very distinct planning traditions. Contrary to New York City, a strong social democratic conviction and comprehensive approach to regional planning have left their mark on Amsterdam’s urban structure. Social equity, public space, and social housing have received special attention in projects of city expansion. These characteristics have yielded Amsterdam the title of “planning paradise” (Savini & Salet, 2016). However, the city government has also shown insensitivity for social issues in certain periods. In the 1970s, major plans for urban regenerations set out to demolish large parts of the city centre in order to construct large, modernistic social housing blocks. Mass backlash from the neighbourhood communities managed to halt a significant part of these plans, and the story stands as a successful campaign for more democratic involvement (Fainstein, 2008). Amsterdam is further characterized by two broad movements in housing provision.
36 The most significant of these two has been the city’s campaign for the provision of a sizable social housing stock. Social housing has a long history in the Netherlands, starting with the intention of idealists and charity organizations to provide adequate housing for the working class (Musterd, 2014). The intent to address deteriorating housing conditions in urban slums were included in legislation with the Housing Act of 1901. Mass social housing projects were developed in the early 21st century, and especially the housing shortages and expansion of the welfare state after the Second World War led to a rapid increase in the social housing stock, both in Amsterdam and in the Netherlands as a whole. The amount of social housing relative to other forms of tenure in the city of Amsterdam reached its peak with 55% in 1995 (Musterd, 2014).
1.2.1: Shift toward a more liberal planning ideology
During the 1980s however, the city faced the challenge of keeping middle class families from leaving the city. Planners and city officials concluded that the almost exclusive focus on social housing had caused a congestion of the housing market and prevented families from finding a place to live in the city. The city aimed at reviving deteriorating inner city neighbourhoods and industrial sites, under the promotion of owner-occupied housing and the private rental sector. Tenure conversions were an often used tool to reorganise the social composition of inner city neighbourhoods. Since the end of the 1990s, the city of Amsterdam has promoted the conversion of old social housing units into higher rent units and owner occupied housing (Van Beckhoven & Van Kempen, 2003). Bontje & Musterd (2009) argue that further deregulation of was carried out to accommodate high-educated workers and the ‘creative class’. However, the city is still keen on maintaining its sizable social housing composition. On the 21st of March 2018, GroenLinks became the biggest political party in the municipality of Amsterdam, with more than 20% of votes in regional elections. Leading up to the elections, the party had been clear in its intentions of preserving social housing as part of
37 Amsterdam’s identity, maintaining at least 40% of social housing on the neighbourhood level and in newly built housing in the future (GroenLinks, 2018).
One other measure by which Amsterdam maintains control of urban planning is its ground lease system (erfpacht). Almost all of the land is owned by the municipality, and users of the land pay a monthly or yearly lease based on the function and value of the land on which the house is located (Savini, 2016). Aside from it being an instrument to maintain control in urban planning, 4.3% (251,8/5876,7) of the city’s revenues stem from the ground lease system (Municipality of Amsterdam, 2017). Revenues from the ground lease system decreased with 41.4% from the 429,8 million euros it reached in 2007 (Municipality of Amsterdam, 2008). According to the municipality, this is because many home buyers decide not to buy off the ground lease canon for an extended time but pay a monthly fee (Municipality of Amsterdam, 2017). Savini (2016) discusses the ground lease system together with cost-recovery plans (publieke grondexploitatie) and off-setting funds (vereveningsfondsen) as instruments in Amsterdam in which investment risk has shifted toward the public sector and private individuals. These modifications are implemented in the context of austerity urbanism, growing stress on city budgets and pressure to engage in entrepreneurial activities.
1.2.2: Land ownership as a tool for municipal governance
Almost all the land in Amsterdam is owned by the municipality, either in complete ownership or through the city’s land lease system (Savini, 2016). The city uses the position of full ownership to attach specific conditions to the sale of land for development projects. The city organises the sale of land in a tender process, in which anyone can submit a development proposal. Minimal requirements for development projects are specified for each plot of land along with an explanation of the extent to which each specification will be included in the evaluation of proposals, expressed in percentages. For a tender organised by the municipality titled ‘A10-Strook Kop Zuidas’ in Amsterdam’s southern business disctrict, the municipality
38 specified that it would evaluate proposals on the basis of four criteria: Organisational profile (15%), concept and programme (40%), quality (30%) and sustainability (15%). Each criterion is then further explained broadly and descriptively, the municipality seldom delineates specific requirements other than the number of pages (Municipality of Amsterdam, 2017).
1.2.3: Financial situation and revenue sources
Land sales by the municipality (€740,7 million), parking fees (€414,0 million) and local taxes (€269,6 million) are important sources of revenue for the municipality with 12,4%, 7,3% and 5,2% of total revenues respectively. In the 2016 fiscal year Government Municipal Funds, the Dutch equivalent of unrestricted federal and state aid, amounted to €2.000,3 million and 35,2% (€2.000,3 million / €5.674,9 million) of the city’s total revenues. These statistics are extracted from the section revenues and expenses per program component. Yearly categorical aid or ‘specific payments’ by the national government amount to around €660 and 11,6% (€660 million / €5.674,9 million) of the city’s total revenues. This last estimation is unclear in the financial report for the 2016 fiscal year and therefore based on the budget estimate for the 2017 fiscal year. In a research report about the financial position of the municipality of Amsterdam, the audit office of Amsterdam has analyzed the city’s dependency on the Government Municipal Funds between 2005 and 2015. Revenues from the Government Municipal Funds have increased steadily from €1.073 in 2005 to €1.536 in 2014, steeply increasing to €1.935 in 2015. The dependency on the Government Municipal Funds or Government Municipal Funds as share of total revenues increased from 23% in 2005 to 36% in 2015 (RMA, 2017).
1.2.4: Austerity and neoliberalism in urban governance
Savini et al (2017) argue that the renewed growth of neoliberalism and austerity after the 2008 crisis has penetrated urban governance in Amsterdam. This is especially visible in the demise of large-scale urban planning projects and the emergence of small-scale entrepreneurial
39 policies related to creative economies and sustainable development (Savini et al, 2017). The authors further argue that reorganizations for the municipality after the financial crisis in 2008 have not reduced risk, but rather “reorganized and redistributed risk to both public institutions and private individuals.” However, improved economic conditions and pressure on the housing market have recently revived ambitions for large-scale urban projects such as Zeeburgereiland and Haven-Stad. The preference for small-scale interventions has also been visible in Amsterdam’s sustainability planning, especially during the recent period of economic downturn when it is harder to mobilize market actors for sustainability practices.
Figure 5: Zeeburgereiland, an area designated for urban development where the city hopes to build 5.500 new homes, the first of which should be ready in 2020.
The tender-system discussed above is an important tool by which the municipality can translate broad sustainability objectives into more concrete requirements on the project level. Sabine Lebesque coordinates the tender-system for the Department of Property and
40 Development at the Municipality of Amsterdam. She argues that for future tenders, the evaluation of proposals will be carried out at least for 30% on the basis of sustainability criteria (Lebesque, 2018). The municipality has ambitions to excel above national regulations, which is why the municipality sets sustainability criteria. Lebesque argues that very few developers would develop progressively in terms of sustainability without stimulation from the municipality. However, the municipality can facilitate competition between developers in terms of sustainability but does not have the authority to demand requirements above nationally established regulations. This means that they can express certain ambitions in the preconditions for tenders, but not in terms of strict criteria. In the case of land transactions between the municipality and a single buyer, the municipality loses its capacity to set criteria and is left with persuasion and encouragement to influence sustainability (Lebesque, 2018).
1.2.5: Housing shortages and the power for sustainable development
Housing shortages dominate any deliberations by consumers to involve sustainability in their decision for a home. Therefore, since demand for housing is high, consumers have limited ability to influence sustainability in the supply of homes. Karst Hagedoorn, who works as a project manager of the Cruquius-region for real estate development and investment corporation Amvest, also argues that consumers are primarily preoccupied with qualitative aspects of the house rather than aspects related to sustainability. This is especially true for consumers in Amsterdam, since the demand for housing is so high that they have little to choose from. For the developer, Hagedoorn argues that sustainability is more of a pressing matter, especially when the developer is also the property manager in the future (Hagedoorn, 2018). This is an additional reason why sustainability and energy efficiency are not seen as problematic, but as a requirement for healthy assets.
On the other hand, pressure on the housing market has strengthened the position of the municipality as a land owner to set criteria in the tender program: “Right now, developers are
