Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1500

I was planning to write about something else today, but then I saw Fred Wilson’s post on revitalizing urban cores  and I had to switch topics, because I think he makes a great point about turning around declining cities:

I’ve been asked by civic leaders from places like Newark, Cleveland, Buffalo, and a number of other upstate NYC cities that have suffered a similar fate how they can do the same thing. They all talk about tax incentives, connecting with local research universities, and providing startup capital. And I tell them that they are focusing on the wrong thing.

You have to lead with lifestyle. If you can’t make your city a place where the young mobile talent leaving college or grad school wants to go to start their career, meet someone, and build a life, all that other stuff doesn’t matter.

It’s exactly the same point I made in my post entrepreneurship as economic development strategy . You can throw as much money as you’d like at startups, but if young people don’t want to live in your city then you have a serious problem.

Fred goes on to talk about Tony Hsieh’s (founder of Zappos) initiatives in downtown Las Vegas :

When Tony moved Zappos from the suburbs to the former City Hall in downtown Vegas a few years ago, he decided to invest $350mm in a massive urban revitalization project. He set aside $200mm to purchase land at bargain prices and the other $150mm to invest in three areas, arts and culture, small businesses (restaurants, cafes, bars, markets, boutiques, etc), and tech startups. $50mm is going into each area.

It’s an example of leading with lifestyle, urbanism and city building, rather than purely economics. And I think it’s the way to go. But to be clear, I’m not suggesting that the focus should be on large capital projects, such as stadiums and infrastructure. I’m not convinced those are the most effective catalysts. There’s no silver bullet here.

Instead, I think the answer is in building, from the ground up, a real sense of community and place. People need to love your city. That’s easier said than done though.

Yesterday, Toronto’s Chief Planner, Jennifer Keesmaat , tweeted out a link to this primer on the proposed Development Permit System  (DPS) here in the city. The entire initiative is being branded as ResetTO . And it’s intended to convey that the DPS is really about starting again with the same set of planning principles we already use.

The big shift is going from a site-by-site approach to a neighborhood approach. Today, each and every development site is reviewed, approved and fought over. With the DPS, the idea is to establish a neighborhood scaled by-law and then streamline the review process for each individual site (the city will get 45 days to respond to applications as opposed to the 180 days it gets today).

What this should do is shift the big fights–among developers, communities and the city–to the front end (when the neighborhood by-law is being established) and minimize the fights over each site. It takes away an element of incremental urbanism–because you’re in some ways building out a master vision (large batch versus small batch)–but it would do a lot for transparency, efficiency and for creating cohesive urban form. And, it sounds like the DPS by-laws will have some flexibility, so that could address my batch size concern .

Communities don’t seem to like this approach because it takes away their ability to appeal each individual application, but it will undoubtedly speed up the the development process, which I’ve argued many times before is critical to maintaining an affordable and healthy city .

Right now the city is hosting open houses and is expected to issue a report on their public consultations sometime next month. It’ll then go to City Council in July. I think a lot will come down to how the DPS neighborhood by-laws are formed, but I think that anything that improves transparency and efficiency is likely a good thing for our cities.

When I was in grad school at Penn, real estate mogul Sam Zell used to come in and talk to students about once or twice every year. He permanently endowed the Samuel Zell and Robert Lurie Real Estate Center at the school and so there was a strong connection.

Because of Zell, a few of us developed a theory that the entertainment value of a talk was more or less correlated with net worth. In other words, the richer the speaker, the funnier the talk. Zell, for example, would often come in jeans, a baseball hat and a hawaiian-like shirt, and drop f-bombs all throughout his talks. You can do that sort of thing when you’re worth a few billion and you’re signing the checks.

But beyond just being entertaining, Zell shared a lot of insights about the businesses he was in, getting into (Chicago Tribune) and getting out of ( Equity Office Properties ). Some of those businesses turned out to be a disaster ( Chicago Tribune ), but others (Equity Office Properties), made him look like an absolute genius.

One business that he always liked to mention though, was the manufactured home business–also known as the trailer park business. And that’s because, as chairman of Equity LifeStyle Properties , Zell is the largest mobile-home landlord in the US. They control 140,000 sites across 32 states and in British Columbia, Canada.

The reason Zell likes this business is, quite simply, because it makes a lot of money and it's growing. There are an estimated 12 million Americans living in trailer parks . That’s probably why Warren Buffet also bought Clayton Homes –another manufactured home builder–for $1.7 billion in 2003.

But it’s not just the big guys who like this business, it's entrepreneurs at all levels. In fact, I was just reading this article from New York Times Magazine about a couple of entrepreneurs who actually setup a school called Mobile Home University. The objective is to train aspiring entrepreneurs on how to profit from poor people in America:

“The bottom line is Americans as a group are getting poorer,” he told his students — and while that’s bad news for those living on the economic fringes, it also means opportunities for those willing to take advantage of the trend.

Just how poor? Here are typical rents:

The typical tenant who rents from Rolfe and Reynolds pays $250 or $300 a month in lot rent and another $200 or $300 if also renting a trailer. “The trailer park is people’s last choice,” Rolfe says, “and we recognize that.”

Now, trailer parks are not the sort of thing that architects and planners typically like to talk about it. They’re not sexy. They’re not urban. But as the article says, these guys are providing the “dollar store” of housing and making a lot of money doing it (annual returns of approximately 25%).

But is targeting people with rock bottom credit ratings and no other housing options an ethical business model? (The article also talks about 10% a year rent increases.) I’ve personally always found these ethical questions to be difficult to take a stance on and so, for this one, I’m going to put it out to the ATC community. What do you think?