By: David A. Smith
Next to parenting (a commitment for eternity and beyond) and marriage (intended to last ‘til death do us part), real estate development takes the most trust in the future. Investing money into the built environment is an irreversible commitment – liquid flexible capital gets nitrogen-fixed into a location and can never be extracted, only resold – whose return takes years or decades to realize, and hence is fraught with dozens of risks that span the prediction horizon.
Having written twice a while back about the de-fencing of a small stretch of the New Haven-Hamden border, and how deeply symbolic (and hence in many ways significant) that was, I was pointed by faithful reader Matthew Healy to an illuminating little schmaltz-fest, reported in the New Haven Register (June 21, 2013), between retiring New Haven mayor John DeStefano (now a Yale professor) and retiring Yale president Richard C. Levin.
Ze fun ve haff: New Haven Mayor John DeStefano, Jr. left, and Yale President Richard C. Levin, communing in early nostalgia
Part reverie, part protest and part lecture, Mayor John DeStefano Jr. and Yale President Richard C. Levin sat down Friday for a conversational stroll through twenty years of shepherding the city into the 21st century.
The event, part of this year’s International Festival of Arts & Ideas, offered perhaps the most revealing look yet at how this pair of leaders recast New Haven and Yale.
As we’ve seen before in Flagstaff, Arizona (and Northern Arizona University), in Providence (with Brown), and in Boston (with Harvard and others), the relationship between a major university and its host city or town is edgy, tense … and ongoing.
I don’t like you, I don’t trust you, but I’m stuck with you
It becomes less tense only if the two principals reduce the friction by finding ways to work personally together.
Both are set to leave their posts soon – Levin at the end of this month [June, 2013] and DeStefano early next year [January, 2014].
A non-profit university’s property is generally exempt from local real estate taxation, even as the university is a massive income-generating business.
Actually, Levin had turned in his office keys earlier in the afternoon.
“A few minutes before this event,” Levin said.
The university is at once both the city’s biggest employer and its biggest population driver. Anyone who doubts this need only drive to any neighborhood in New Haven that is outside the warm rays of Yale’s ever-expanding campus and its faculty’s residential areas.
Cops in the Farnam Court housing project
A university often operates as a parallel universe to the city, with its own police force, its own infrastructure and construction capacity, and certainly its own arcane insider politics.
As Yale goes, so goes New Haven?
Moderated by Yale professor and former city chief administrative officer Douglas Rae[Note revolving door between New Haven government and Yale – Ed.], Levin and DeStefano recounted their first meeting, their biggest disagreements and the challenges of tinkering with large institutions. It was their final joint appearance in their current jobs.
Finally, a major university and an equivalently sized city or town may have vastly different economic and financial resources, leading to immense isometric opposition.
I’ll prevail over you
The rich university can put up walls around itself, leaving the poor city to starve – as, for much of the 1970s, Yale did in New Haven, and the University of Chicago did to the South Side – all the while tut-tutting the apparent incompetence of the local civic leadership and offering ivory-tower suggestions as to how those townies could fix things if they were just smarter.
One houses the headquarters of a city …
… and the other houses the headquarters of a university
“I had a chip on my shoulder about the relationship,” DeStefano said, admitting that as a kid growing up in New Haven, he hadn’t felt welcome on the Yale campus. “There was a little anger.”
Trust is seldom spontaneous, as illustrated by the photo below, taken in 1994 shortly after Mayor DeStefano and President Levin had assumed their roles.
We’re going to see a lot of each other; what kind of person are you?
Though seemingly bland, that photo is fraught with suppressed anticipated conflict. Each new leader is flanked by a trusted aide, and the trusted aides are watching each other’s newcomer. The two men sit with closed body language – hands down, legs turned away from each other, magnifying the space between them. The expressions are watchful, wary. Materials scattered on the table before them are mere props; this is a meeting to sniff each other out, starting from a premise of impersonal distrust.
“Genuine anger, from time to time,” Levin interjected, to laughter from the crowd.
Even as a university offers enormous resources to a town, it also maintains an intellectual smugness and self-righteous that any normal person would find perpetually infuriating. But for all its pontificating, the university cannot relocate – its physical plant is so large, its location-specific advantages so great, and its community so rooted, that like older mobile homes, they’re immovable, and thus they’re economically shackled to the fortunes of their neighbors. (Roughly two decades ago, Emerson considered capitalizing on the Boston real estate boom to relocate to Lawrence, only twenty miles away, but decided against, despite the potential to triple or quadruple its campus size and completely rebuild its physical plant.)
Levin took over as Yale president in 1993, the year DeStefano won his first mayoral election.
DeStefano recalled that back then, the East Shore neighborhood wanted to secede from the city –
On the far side of the river, and with little in common: East Shore and adjacent East Haven
Secession from a failing conglomerate city is perfectly rational, and as we saw in Chicago, in effect Business Improvement Districts operate to create an economic home rule that is a first part toward full autonomy. So, in all practical terms, Yale is a rich city within a poor city, and the poor city doesn’t like that fact.
– there were monumental fights between City Hall and the Board of Education, horrific violence plagued the city, and “downtown wasn’t too pretty. Downtown was pretty sad.”
If the university is geographically entangled with the city, its economic fortunes are likewise interdependent. Harvard benefits from nestling within Cambridge and Boston, whose economy has always been anchored by banking and trade; Columbia, by contrast, abuts Morningside Heights, whose economy has often been either moribund or illegal. No wonder Columbia has been seeking to expand its campus, if only in self-defense, and using aggressive and contentiouseminent domain for economic development.
He glanced at Levin and added, “I sort of felt we were a little bit in a lifeboat together.”
Still no sign of land … how long is it?
Cities and their universities are always in an economic lifeboat. A university cannot attract world-class students (and their world-class tuitions) unless it has world-class courses and faculty, and the faculty will not live in a town where the spouse has to lock the car doors upon exiting her garage, and where the children can’t play without both parents being terrified.
Both universities and cities are corporations in the legal and political sense, and by definition these entities are impersonal, yet trust, which is the essence of urban real estate development, must be deeply personal. So the city becomes personified by its mayor, and the university by its president, and those personalities must be compatible.
Which face plays better in Cambridge: his?
Or hers?
Trust, therefore, is built 1-to-1, person to person. It begins with candor:
Levin recalled that in his first substantive meeting with DeStefano, the mayor asked him for two favors: one was to help bring a hotel to downtown New Haven and the other was to assist in combining school reform with community development in the West Rock neighborhood.
The candor must be met with kindness:
[Levin agreed, and though] neither project panned out, it set a collaborative tone.
“The mayor’s political courage in embracing a partnership with Yale is not to be discounted,” Levin said. “It wasn’t obvious that this was an easy thing to do.”
Trust is recursive: I trust you because you have proven trustworthy when I trusted you before.
So trust is built up, recursively, each unit leading to the next, starting with small things (political endorsement for a single property) and moving to bigger ones.
For instance, Levin talked about how he and Bruce Alexander, Yale’s development guru, went to DeStefano with their initial master plan for campus growth, more than a decade ago. DeStefano suggested that Yale shift some of its focus to an area on the other side of Grove Street Cemetery – which Yale did.
Grove Street Cemetery, being engulfed by expanding Yale
In this, the returns on trust are akin to the returns on real estate: they are synergistic, scale-based, and network-dependent.
Not far away, the former Elm Haven housing project was being reborn as stand-alone housing[HOPE VI – Ed.], with a neighborhood feel, thanks in part to help from Yale in writing the grant applications for federal money.
In an improving environment, each additional investment has a higher marginal profitability (real estate or trust-based) because it is levering more of what has already been built. Where that first downtown hotel was the best thing in a declining neighborhood, eventually the university and city are working on the few remaining worst things in an improved neighborhood.
These upgrades, in turn, made it possible for the university to consider adding two new dormitories near the Yale hockey rink, a plan that is ongoing.
Higher density benefits both university and city because enterprise and sociability are contagious.
Trust, however, is neither symbiosis nor union; it does not mean surrendering self-interest, nor does it require consensus at every decision.
We haven’t got consensus yet
[Continued tomorrow in Part 2.]