November 10, 2000 - From the November, 2000 issue

Henry Cisneros on Housing, Schools & Challenges For Los Angeles

Urban infill a mainstream doctrine? With the recent union of former HUD Secretary Henry Cisneros and Kaufman & Broad CEO Bruce Karatz in forming American City Vista--which focuses on the development of "villages" in center cities--the answer just might be yes. TPR was pleased to speak with Mr. Cisneros about this new venture, and what he considers the promising signs pointing to the rebirth of America's downtrodden inner-cities into "the center of the action." He also describes the obstacles in fostering this transformation, including American City Vista's own ambition of finding 20 to 50-acre sites in urban centers-quite possibly the biggest challenge yet.

Henry Cisneros

On August 7th, you joined with Bruce Karatz, Chairman & CEO of Kaufman & Broad, to launch American City Vista. Could you share with our readers what enticed you to take on this new challenge and what you believe the opportunities of this new venture are?

Bruce Karatz and I have been friends since 1994, when the earthquake in Los Angeles put close to 30,000 people out of their homes. As Secretary of HUD, I came to L.A. to engage the building community and Bruce Karatz and Kaufman & Broad turned out to be very helpful.

We've had several discussions since then, and we've found that we both speak the same language in terms of the unique opportunity we see to bring large scale home developments into the central areas of America's cities.

Specifically, we believe there are four converging factors making this a good time to explore this concept: First, more and more families are tired of traffic congestion and long commutes, and that want to live in central areas. Second, the homeownership rate is exploding, and there is a whole new generation of homeowners because of low-interest rates and the increasing number of immigrant families intent on pursuing the American dream of owning a home. Third, local governments are paving the way by reviving areas that have lost population, particularly now obsolete industrial areas where the land could be recaptured for large-scale residential purposes. And fourth, the Smart Growth movement-which seeks to provide incentives for using and improving existing infrastructure instead of only building new schools, roads and utilities-is gaining ground.

When you put all these factors together, the audience is a combination of young professionals that want to live near central areas, empty-nesters who are ready for fewer responsibilities in terms of yard and space, and first-time immigrant or minority homebuyers who have extended family and friends in these neighborhoods.

What we're trying to do is unique in two ways. One, we're building villages of sufficient scale. Unlike traditional infill of 10 to 15 homes, we're working very hard to find sites for 80 to 120 homes in order to create communities that stand on their own. We want to build communities that can fight for their rights-better schools, public services-and form identities that set them apart from the rest of the city.

Second, this effort brings the resources-the capital, expertise and building techniques-of the largest and most successful homebuilder in the country (24,000 units this year) to the central city for the first time. Never before has any production builder made such a concerted effort to make its presence felt in central cities across America.

Secretary, what are the targets of business opportunity that you've identified for American City Vista?

The footprint of operations is the operational area of Kaufman & Broad-Texas, Arizona, Colorado, Nevada and California.

We're about to announce a major 600-home development on the south side of San Antonio, which is the first project of that scale the area has seen in 40 years. It will be a planned community integrated into the local school district and other local amenities. We've also been selected to build the first phase of homes on the former Stapleton Airport in Denver, also with Kaufman & Broad. And we're presently reviewing sites for other projects in Houston, Las Vegas and L.A.

So while I envisioned these first months basically prospecting for sites and reviewing projects, it looks like we're going to have as many as five solid projects launched in the next few months

Secretary, in a recent Brookings Institute forum on the American City, you noted, "No urban economic strategy can succeed without dramatic improvements in city schools. Simply stated, upwardly mobile families will not live in cities where they cannot send their children to school with confidence that they will be safe and that they will learn." Having yourself resided in L.A. and having been asked to be LAUSD's Superintendent of Schools, you are well aware of L.A.'s daunting facilities needs-and bureaucratic difficulties in meeting this challenge and leveraging resources for schools, parks and libraries into our inner-city and inner-suburban neighborhoods. Have you any advice to offer?

First of all, almost every central city in the country faces the same issues of educational and financial stress, and we're going to have to assist in addressing these shortcomings in the places we plan to build.

The project in San Antonio will set an example for what we're going to do. Because we'll be adding a significant number of students to their high school and building a new elementary school on our site, we're working with the South San Antonio School District-a financially stressed district-to help secure resources for college prep programs and computer and Internet design programs. We have assigned staff to work with the District to address these issues.

In terms of L.A., because I was part of the recent Superintendent selection process, LAUSD is a situation I know well. L.A.'s biggest challenge is to identify sites that are not prototypical school sites. For example, a new charter school has just opened in what used to be a strip mall in the Pico Union Area-Pueblo Nuevo Academy. They've integrated the parking lot for a playground and adapted the site for a school in other smart and creative ways. Sites like that-office buildings, etc.-are going to have to be envisioned as possible school facilities because concentrating only on building from scratch on empty sites is basically counterproductive in a built-out environment like L.A.'s

I was recently involved with a group in Chicago called UNO, a community-based Latino group working on schools. I participated in a session with about 10,000 parents, and the number-one complaint was the overcrowding of central city schools.

But of all the problems that schools could have, having an abundance of students to teach and work with is preferable to watching neighborhoods become depopulated and schools become useless. These are immigrant neighborhoods with a tremendous level of vibrancy, and I'm confident school districts can rise to the challenge and address these needs.

Secretary, the October issue of The Planning Report featured excerpts from California State Treasurer Phil Angelides and Secretary of HUD Andrew Cuomo, related to revitalization of the urban core. But we have yet to see any serious conversations in the presidential debates or mayoral debates here in Los Angeles about housing and land-use--or an economic strategy to link the two. Why is housing policy avoided in our local and national political debates?


Earlier this year Vice President Gore did put the issue of Smart Growth on the table for presidential discussion, but unfortunately it didn't have much resonance with the press or the other candidates as a broad theme. However, I think the Vice President understands this issue; USA Today outlined his thoughts on federal strategies to balance growth, reduce congestion, invest in central city infrastructure, and so forth. But regardless of who wins the Presidency, it's going to be a big issue because this is a magic moment in America's urban history.

My thesis is that the American urban "crisis" is not so much a crisis as an "economic transformation," a catharsis, if you will. Most cities' basic economic function-which used to be manufacturing-has changed. Manufacturing has gone both offshore and to the suburbs, and has been totally replaced by the New Economy. Left behind is the residue of old plants and factories in older neighborhoods. And cities have basically watched their economic lifeblood drain away.

Now that the catharsis has occurred and we can see the shape of the New Economy, we're finding that many of its elements are city-centered and actually lend themselves to city settings. Even though we've thought of this transformation as essentially suburban research parks and industrial parks, the New Economy has a very large urban dimension. For example, in Santa Monica high-tech Internet firms are now locating on the Promenade, displacing retail even. And some cities are actually turning away New Economy jobs because they don't want to displace retail and the other things thought to attract people.

The major factors contributing to this changing economy are outlined in my Rouse comments. (See page 20.) Taken together, we're living in a time when a little national leadership could put us over the top-and make America's cities the center of the action.

Now, I'm certainly not naive in underestimating the size of the task. We have immense related problems of racial divisions, drugs, crime, as well as the fact that political weight still lies in the suburbs. However, the city constituency is on the upswing. And it's not just urban minorities and central city advocates; its returning empty-nesters and young professionals too.

In cities all across America-Seattle, Denver, Dallas, Houston, Cleveland, New York, Washington, Atlanta-there is strong evidence of a new constituency for urban redevelopment.

In that Brookings, Enterprise & Fannie Mae American City lecture, you quoted the late Jim Rouse as follows, "For the first time in the history of the American city, the people who live in it have available to them powers, facilities and potential for organization and leadership to make their city into what they want it to be." Here in the metro Los Angeles area approximately $5 billion of voter-approved bond money for city parks, libraries and schools is available for investment, but we're having immense difficulty finding the leadership and political will to implement the vision you allude to. Why?

L.A. is certainly one of the tougher places to establish an urban redevelopment strategy simply because of its complexity and size-and the difficulty in operating its governing institutions.

However, it is certainly possible. With the Democratic National Convention, L.A. showed that the New Economy is taking hold here in the software and entertainment industries. And Pacific Rim trade is massive, meaning real potential to fuel that continued job growth. We have a Superintendent of schools who's working hard. We have an entrepreneurial Mayor who has been successful in bringing coalitions together. His successor will have to bring those same qualities to the office, characteristics reminiscent of Tom Bradley at his peak. USC has also been instrumental and has gotten national recognition for its role in revitalizing South Central; UCLA is one of the nation's best public universities. And our Downtown remains strong, especially with the energy that the new immigrant neighborhoods are bringing-a vibrancy that other cities would give their eyeteeth for.

Two more questions. What facts on the ground will attract American City Vista to new infill ventures in California-whether Los Angeles or even the Central Valley?

Principally it's scale-we're looking for 15-20 acre sites, which is hard to find in central city areas.

But we're also looking for sites that are well served by public transit, street systems and public utilities. And we're looking for places where we can have a relationship with the community that is positive and uplifting, especially the school districts.

Obviously, the land price matters a great deal as well, and if the site is impeded environmentally it costs more to mitigate.

We're also trying to address affordable housing-80% of median income-in our developments. But we want to be attentive to the population within a three-mile radius as well, creating mixed-income communities.

Lastly, Mr. Secretary, could you offer us a vision statement of what the urban core of our cities of the future will look like?

I'd like to see thriving villages that have the capacity to provide a high quality of life for their residents. The streetscape will be inviting and safe. Commercial activity will be within walking distance. And the entire community design will promote a civic spirit allowing people to know their neighbors and bond at a civic level.


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