Requiring Privately Owned Public Spaces Is A Recipe For Bad Public Spaces And Too Few Buildings

This is of course not the main issue in Occupy Wall Street, but over at The Atlantic Cities, I have a post about the Privately Owned Public Spaces regulation scheme that lets property owners get a “density bonus” if they create a private park that’s open to the public. My preference, as I’m sure you can imagine, would be to just let people build denser and then use the extra money that generates to build proper parks or other public services.

One problem is that semi-coercing people into building parks is a good way to build some pretty bad parks. The latest version of the plaza guidelines, adopted in 2007, isn’t terrible, but glancing at some of the rules they’ve felt compelled to institute — a ban on using little metal spikes from deterring people from sitting down — is a sign of how misaligned the missions are. There’s a basic tension between the public purposes these kinds of spaces are supposed to serve and the actual interest of the private property owners who own them.

More broadly, the undertaking suffers from the usual suite of problems that occur when the government tries to finance public services through indirect regulation rather than directly paying the cost. The bonus/park trade is, in essence, a kind of tax on dense structures. If the benefit of greater density exceeds the price of the tax, both the building and the park get built. But there are times when a denser structure would have some economic benefit, just not enough to make it worth building the park. In those cases, you get a smaller building and no park. This is perverse, however, because a denser structure would have generated more tax revenue anyway through the conventional property tax, taxes on the salaries of the office workers, and taxes on the retail sales of their lunches and dry cleaning. Simply relaxing the restrictions on how densely you can build, and perhaps levying a slightly higher overall tax rate, would generate much more revenue.

Read the rest.