Value Creation for Urban Space by ‘We Love Helsinki’ community

By: Ngochi Desmond Tijinbun

‘We Love Helsinki’ (WHL) is a community in Helsinki metropolitan which organizes old-time pop dances, city festivals and other cultural activities that enhance social, sporting and aesthetic perspectives in the city of Helsinki for her inhabitants and visitors. The goal of WLH is ultimately to promote the use of city spaces in new and innovative ways and to help city users develop a feeling of belonging and community through public participation. Some of the activities that have been organized by WLH over the past few years include Dance Schlager, Choir Aisle, Street Art Tour, Bike Day, Sing-along Karaoke, Children’s Art City, City Festival, Flow Festival, etc. ‘The purpose of the festival is to inspire people to take ownership of the city and try out one of urban space limits. The city is ours, and we will build it together.’ (translated from quotation in Helsingin Sanomat 25.07.2011 by Timo Santala, founder and director of WLH.

I herein discuss the aspect of value creation for city spaces through the activities of WLH by looking at the city of Helsinki as an immense real estate property .

The value of space is normally estimated based on one or both of the following 2 factors: the happiness derived from use of the space (intrinsic/use value) and the value at which the space can be sold (market value).

In financial terms, we measure value-in-use as net present value (NPV) of a cash flow or other benefits that an asset or property generates for a specific owner under a specific use.

In simple terms we define value in use as the utility of consuming a good; the want-satisfying power of a good or service in classical political economy. In Marx’s critique of political economy, commodities have a value and a use-value, and when traded in markets, they additionally have exchange values, most often expressed in monetary terms.

In this context of value creation for urban space, the use value definition (utility of consuming a good) is being applied. The point of interest here is an explanation and justification of how the various activities of WLH as a community enhances the creation of extra utility from the consumption of urban space and facilities.

The users and prospective users are the main contributors to value for any given real estate property or space.  There is none, or even negative value for a real estate property that does not find users. In the case of the city and its public spaces and facilities, the investments have already been made from taxpayers’ money. The effective and efficient use of these space and facilities is the only way through which these investments can be justified. WLH facilitates the realization of this value creation through improvising additional use of the city’s space with their activities.

The immobility of urban space and difficulties in modifying physical structures tie down prior investments and constrain future investments. The city must therefore seek non-capital intensive means of upgrading itself until prior investments make positive returns. Assuming that the city managers come up with some method of quantifying use of public space and facilities, and weighing these quantities against the capital invested on them, the resulting value should be positive. That is, the use over time must justify the capital invested. WLH tries to make this possible in different ways through their low-cost aesthetic, social and sporting activities.

As capital constantly sets out in search of profit it requires dynamics that simultaneously make way for the new and discard the old in perpetuity. The dynamics that identify the new and the old and attribute market or monetary value to them have underlying forces that are set in motion by the activities of the users. The users of the city of Helsinki, via activities like those of WLH, bear these forces that in time devalue the obsolete and revalue the trendy; they set in motion the process of ‘creative destruction’ (Schumpeter’s notion of creative destruction) and thus overall value creation.

Look at WLH’s activities as a continuum of loops that injects new value into and purges the obsolete from the autopoietic urban system. With no formal power, but only a spirit of perpetual rejuvenation, the community fetches from the ancient and futuristic to find an optimum in the present.

The sheer materiality and common ownership of urban space makes valuation conflicts inevitable. There is inherent conflict between use value and investment value; between those with emotional attachments to place, and those without such attachments. Goals and interests do not align in the short and middle term. It is known for a fact that given their different levels of power, age, education, ethnicity, etc the temporal horizons of stakeholders do not necessarily coincide. To resolve this conundrum takes identifying the various stakeholders in the city and trying as best as possible through participatory methods to follow popular and optimal paths of action. This brings to light the bottom-top (fostered by WLH through the general public can air their preferences) versus the top-bottom decision making processes. In the latter process, the authorities use their expert knowledge to identify optimal locations and activities for the city. In the former case the citizens (facilitated by communities such as WLH) organize activities and pick locations that indicate to authorities what could optimize use value.

To further articulate the conflict of values in the urban system, let us identify its stakeholders. It is absolutely imperative to employ a systematic and contextualized approach to identify the stakeholders in the sustainability of a city and thus avoid inequitable outcomes in the process. A couple of keywords when it comes to the interplay of stakeholders for sustainability in publicly owned systems such as the city are Participatory and Transparency. The applications of these concepts must take into cognizance variables such as power/hierarchy, economy, demographics and culture, and estimate what weights these variables should carry in a balanced sustainable urban equation. Consumerism and democracy must be applied at efficient proportions with the former providing competitiveness for the private sector, and the latter catering for ethical issues and citizen empowerment. A reasonable starting point in stakeholder identification will be drafting a generic list from 3 interweaving perspectives: those effecting, those being affected, and other possible interested parties. Under these 3 perspectives will fall players such as the developer, client, owner, investor, designer, banks, insurers, professional consultants, local authorities, regional government, central government, environmental and social organizations, local and general public, demographic and ethnic groups, media, users, etc. The spatial confinement of all these players in a system, the city, entails a crucial paradox of interests and values. WLH as a subsystem within a complex system that is the city cuts across the range of stakeholders and provides an atmosphere for all to participate in the creation of value in spite of diverse interests.

The value of space is not solely determined by the market, but also by the activities of big and small, formal and informal institutions that constitute the many stakeholders. ‘Within each locale, a lattice of state and nonstate institutions – thick and hierarchical in some places, thin and ephemeral in others – influence values in the built environment.’  , writes Rachel Weber, Professor of Urban Planning and Policy at University of Illinois, Chicago. WLH falls under a non-state, thin and ephemeral institution that affects the value of its built environment.

The activities of WLH create an image which affects rents, which in turn affect market value. Two major factors that affect rents: improvements of property per se through refurbishment, retrofitting, reconstruction, etc, on the one hand, and improvement of the perceptions on the other hand. The one is an internal measure requiring direct investment, while the other is an external factor not necessarily requiring direct investment but the changing of attitudes and redefinition of proper use such as is embodied in the activities of WLH.

In conclusion, one can but say ‘Keep it up WLH!’ as we build Helsinki together.

References:

  • Marthur N. Vivek, Andrew D.F. Price, Simon Austin and Cletus Moobela, ‘Defining, Identifying and Mapping Stakeholders in the Assessment of Urban Sustainability’, International Conference on Whole Life Urban Sustainability and its Assessment. M. Horner, C. Hardcastle, A. Price, J. Bebbington (Eds),Glasgow, 2007. http://download.sue-mot.org/Conference-2007/Papers/Mathur.pdf
  • Marx Karl, ‘Capital: A Critique of Political Economy’, vol.1. http://www.marxists.org/archive/marx/works/1867-c1/
  • Roulac Stephen, Alastair Adair, Stanley McGreal, Jim Berry, Suzanne Allen, ‘Real Estate Value: Creation and Destruction’, Journal of Property Investment & Finance, Vol. 24 Iss: 6, pp.474 – 489. http://www.emeraldinsight.com/journals.htm?articleid=1571773&show=html
  • Schumpeter J., Capitalism, Socialism, and Democracy, New York, Harper and Row, 1942.
  • Weber Rachel,  ‘Extracting Value from the City: Neoliberalism and Urban Redevelopment’, http://jft-newspaper.aub.edu.lb/reserve/data/soan238-cn-3/week-3_weber_extracting_value.pdf

Posted by Susa

This entry was posted in cs0004 Systems Thinking for Sustainable Communities and tagged , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *