Competitive local economic development through urban renewal in the city of Port Elizabeth, South Africa

Abstract

In 2005, the city of Port Elizabeth, in the Nelson Mandela Bay Municipality (NMBM) of the Eastern Cape Province of South Africa, initiated an urban renewal project of its derelict city centre areas and the southern part of the old Port Elizabeth port. This, after the newly constructed Port of Ngqura, 34-kilometres north of Nelson Mandela Bay, was designed to serve as a state-of-the-art industrial port within a specially established Industrial Development Zone (IDZ). This has freed the existing southern part of the old Port Elizabeth port – strategically centred on the doorstep of the city – up for re-development for nonindustrial purposes, effectively opening it up to retail, residential, office and tourism/leisure/entertainment development; and causing it to become an extension of the inner city. The Urban Renewal Plan and the implementation thereof, address specific local economic growth-related factors, integrated with urban development challenges applicable to the city. Since the process began in 2005, significant progress has been made, embracing a long-term approach incrementally implemented on the basis of a well-researched overall plan. This plan is hinged on the strong foundation of in-depth, extensive market research in the retail, residential, office and tourism/leisure/entertainment sectors and aims at the creation of a strong cluster around these areas of development. The term cluster describes the concept of groups of inter-connected and related firms, suppliers, related industries, and specialized institutions in particular fields, uniting in particular a location to - amongst other reasons - maximise their reach, lower their costs and enhance their business (Porter: 1990: 71). In this study, the cluster concept is broadened to encompass a constellation of urban developments around and complementing retail, residential, office and tourism/leisure/entertainment business. As such, the urban renewal project becomes an important element in the Local Economic Development (LED) planning of Port Elizabeth. The practical experience of traditional, rational and urban planning methodology, often conflicts with the reality of market demand - particularly in the South African case. Therefore, this study explores an alternative method for approaching urban planning, by focussing on the bottom-up approach, which essentially takes into account the needs of the customer – or local community – through a special purpose vehicle: a fresh, alternative approach to urban renewal that still makes a positive contribution to local economic development. The Mandela Bay Development Agency (MBDA) – a separate company formed by the NMBM to manage the redevelopment of the city – strategy embraced an interventionist approach to urban renewal as an alternative framework for encouraging overall development in a particular urban node. The cornerstone of the MBDA’s urban renewal approach is an overarching philosophy of “private sector investment following public sector infrastructure investment” (MBDA: 2010: 2). This research is the result of a long-standing interaction between theory, praxis and reflection. Experiences of practical implementation have been framed by the MBDA project over a five year period and build the case-study presented. viii Urban planning and urban renewal are used in a pro-active, action-orientated manner, to achieve sustainable, competitive LED through the development of a viable multi-purpose, non-industrial retail and leisure cluster in Port Elizabeth. Port Elizabeth is still known as the Friendly City. This epithet originated from an effective tourism marketing campaign in the eighties, but as a true description, has become somewhat diminished by the urban decay of the past twenty years. The Friendly City concept refers to a city that presents a healthy mix of work, housing and leisure – a combination of lifestyle offerings that no longer really exist in Port Elizabeth. However, through interventionary initiatives such as the MBDA’s Urban Renewal Plan, this situation is likely to change as a result of catalytic urban developments. Port Elizabeth was built on an internationally competitive motor manufacturing and industrial cluster, but had few other major industries. As such, the creation of an innovative urban renewal cluster was critical for the diversification of its economy – not only from a local economic perspective, but also from a national and international competitiveness point of view. It is the general feeling amongst city planners, economists and industrialists that the current industrial base of Port Elizabeth is not sufficient and that a more diversified economy would have the potential to improve the domestic and global competitiveness of the city. This interaction between the dual goals of economic and urban development, produces farreaching effects on the discourses of urban management and planning, as the two compete and converge to push development forward. Diversification is, however, not an easy endeavour. Considerations around growth-related objectives on planning demands – a shift from the rational, linear and government-based structure of urban management, to an interactive governance of planning and development – where integrated urban and economic strategies inter-play with planning and implementation, has become important in the creation of a more diversified economy. In Port Elizabeth, this approach is referred to as an “alternative method” of urban planning: An approach that involves a process of guided development through a collaborative bottom-up engagement, involving local government, public participation and the private sector. The alternative method of urban planning is further reinforced by the current economic recession, which is, and will continue to, change property development and its response to the needs of the market for the foreseeable future. The solution to urban renewal does not only lie in well-targeted, well-researched public-sector infrastructure investment (that responds strongly to the market and customer needs), but in a joint participatory process that ensures that the final design of infrastructure projects is the outcome of what the market requires, as a means to ensure sustainability and the biggest possible response in private sector investment. Because of global economic forces, the functional and developmental structure of the neighbourhood – where the epicentre of the growth system is situated – has become of paramount significance. This thesis attempts to demonstrate how urban renewal and the redevelopment of designated, formally idle city buildings and public spaces may serve as a site for the creation of an urban growth node or urban cluster. A key focus of this study is how new economic and social growth based structures can be induced to integrate with the process of urban redevelopment. Further demonstrated is that the agenda for urban management, illuminated in the light of the described practices, conducts a fundamental re-appraisal in its local economic development context. Local economic development has been lauded as the saviour of development at a local level in South Africa. LED, however, has by no means utilized the required level of property development pragmatism and has thus, throughout the duration of its approach, not culminated in specific sustainable, capital-driven projects – which is probably one of the reasons for its overall market failure in South Africa and Port Elizabeth. LED has therefore become an outdated economic approach that leaves in its wake, the necessity and opportunity for a fundamental change. Urban renewal and the city’s economic contribution to LED, requires a completely new conceptualisation of urban renewal in its narrow sense, and urban design and planning in its broader sense. Concepts such as redevelopment and urban renewal are frequently used in planning discourse. Redevelopment is understood to encompass actions of clearing (such as slum clearance), reorganising or reconstruction. Renewal signifies rebirth, breaking new ground or innovatively refashioning; a form of re-growing or bringing new and more prolific life. In this thesis, reference is made to urban renewal as an attempt to influence social and economic forces in a desired direction, integrated with planning and development. It re-conceptualises redevelopment as more than a matter of reconstructing an urban arrangement. These concepts are often used in line with the new governance-based style of urban planning, such as guided development, development planning and efforts for enabling the feasibility thereof. This thesis attempts to clarify under what conditions redevelopment is unified with social and economic regeneration. Its approach intends to scrutinise regional strategies, urban management and urban planning to generate an understanding of the urban environment as it relates to growth issues. Many growth-related discourses are discussed in terms of development and innovation. The grammar of this process, when unified with urban development, is referred to as a Dynamic Place Initiative (DPI). In the DPI, issues of feasibility (enablement) are unified in formal government, planning and implementation, restricted to a specific bounded area. The core focus of interest in this thesis is not primarily concerned with architecture and urban design, but rather with the principles of how the process may be implemented as a leverage tool to encourage a range of factors to interact with government agents in an LED-orientated field of action. This field includes not only the built infrastructure, but also the inherent economic and social targets that come with such infrastructure. This thesis discusses economic and innovation theory, as a method of understanding urban development, yet should be understood as an analysis of urban renewal and urban planning. The MBDA case study is a brownfield (redeveloped/renovated) development within an economic cluster of retail, residential, office and tourism/leisure/entertainment. The MBDA uses greenfield (new) development to complement urban renewal and systems of innovation x that endeavour to meet customer needs. The development case aims to focus on its customer (or local community) needs in an all-encompassing approach. Specifically, this includes guided development - a process using well-defined urban design briefs that ensures urban designs are complementary in their overall impact and culminate in a dynamic place initiative. The situation in Port Elizabeth is not unique. On account of global forces of industrial transformation, many countries have, and continue to, find themselves struggling with the renewal of large and redundant inner urban areas that were formerly used for industry and logistics. A typical challenge in this type of context for renewal is to design development schemes that will encourage economic growth and revitalisation within these areas. Although planning, construction and development are systematically methodical activities, economic and social regeneration are more complex. Due to the on-going transformation of the economy in South Africa, the urban context is under constant pressure to change in tandem with pressurised demand for change. The driving forces in the economy are progressing from a nation-orientated and raw-materialbased production origin, which formed the industrial society, to a global, regional and information-orientated urban growth-based structure. The condition of cities has become one of the qualities – or a prominent part of the overall quality – of this so-called knowledge economy. The urban environment, the territorially bounded areas which comprise it and the conditions of the environment within which it exists, are important factors for competitiveness, at both a city and regional level. Observed in reverse, competitiveness has also become a critical factor in achieving complex urban change from a new perspective of economic growth. Cities are the engines of regional and national growth. The economic success of cities and CBDs in South Africa is vital and will effectively ensure the much-needed upgrading of CBD and township infrastructure, using the revenue streams generated during city-centred economic revival. In South Africa (and likely elsewhere in the world), urban renewal is not only about aesthetics, but also about providing a foundation for urban planning, functional architecture and LED. In situations where cities undertake the urban renewal of redundant areas and buildings, economic competitiveness is foremost on the agenda. In order to understand how the forces of production and growth are linked with urban development, it is important to consider the new growth-orientated context for planning. An awareness of these changes and their trends, expressed as a paradigm shift, is reflected in the current discussions concerning the revision of urban planning in South Africa. This specifically targets integration between the previously disadvantaged communities and the advantaged communities. The Strategic Spatial Implementation Framework (SSIF) (2005), often referred to as the “Master Plan” of the MBDA, is an interventionist plan to ensure that the urban renewal infrastructure programme has well-researched projects with a strong catalytic impact leading xi to private sector investment and that thus secure the highest possible economic multiplier impact. Over the past four years, extensive capital has been deployed in Port Elizabeth’s urban infrastructure to lay the foundation for an enabling environment for private sector investment that will culminate in mobilising people to live, work and play in the city again. Public participation and market research have shown that the demand for residential, office, retail and tourism/leisure/entertainment will be directed largely by the black population; more specifically, the “black diamond” middle class anticipated to dominate the future Port Elizabeth economy (MBDA: 2010). It was the initial infrastructure programme in the CBD – which included projects that codepended or linked up with one another, to form a collective whole – which lifted the inner city to another level. It is these urban projects that culminated in renewed interest in the city, inter-linking this interest with the retail, residential, office and tourism/leisure/entertainment customer needs of the city. In most European countries, as in the case of South Africa, urban planning is in the process of transformation, from being a method for regulation and control into becoming a channel for possibilities and enabling development at local level. It is common cause that society needs to be more involved in a city’s planning processes. Tax payers now increasingly demand the use of government funds for infrastructure and the improvement of public areas and open spaces. In the 1980s, the liberal alternative to meet the shortage of tax money was to rely on private investment for urban development. The society used its organisational and planning capacity to encourage market investment through public-private partnerships (PPPs). This strategy is viable in situations where the level of financial risk is low or where conditions are reasonably predictable. Private actors refrain from investment in complex settings where the returns are projected to be far ahead in the future. In South Africa, this is often perceived as a degree of business fatigue; particularly in respect of public-private partnerships. Urban development through private sector investment requires leadership. This can come in the form of the precreation of an enabling environment, i.e. extensive publicly funded basic urban infrastructure investment. Consequently, the urban context requires development to a level where investment can be motivated by core business economic reasoning. In short, other than making social and political sense, urban planning must adhere to financial and economic sense. The society is an important actor and one that has far-sighted motives. In Port Elizabeth, as in the case of many other municipalities, the revenue pool drawn from rates and taxes is simply insufficient to meet the demands of society. The Dynamic Place Initiative represents an alternative that unifies the advantages of the two previous planning discourses. Through a limited agency – such as the MBDA – positioned to guide urban development, the city is enabled to form advanced, politically-set strategies and at the same time, isolate the financial risk through the response of private sector investment. It should be emphasised that the private sector enters the realm of urban development through property actions guided by the planning system. Planning questions ought to be based around the there and then rather than the here and now. The MBDA has become a conduit for dealing with these systems gaps, ensuring that urban and port planning is not limited in focus but speaks to customer needs and makes financial and economic sense.