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MANAGEMENT UPDATE.

DOOM LOOP OR BOOM LOOP

With the arrival of the Covid-19 pandemic in 2020, “cities across the country have been forced to reckon with the possibility of a ‘Doom Loop’ scenario of vacant offices, depleted central business districts, declining economic competitiveness, and fiscal stress,” according to a report from the Volcker Alliance, which was  published last week. “However, given the right set of policies, cities can reverse their fortunes and embark upon a path to a “Boom Loop” of greater productivity and economic growth.”


This paper, written by Dick Voith, Susan Wachter, David Stanek and Hyojin Lee, examines the paths ahead for five cities, given a “work from home” future: Chicago, Miami, Philadelphia, New York City, and San Francisco. It provides a list of opportunities these and other cities may have to make a “Boom Loop” more likely. These include the following (both italicized recommendations and quotes are taken directly from the report):


  • Leveraging the employment of remote workers. “Firms should consider using remote workers for tasks that do not require physical presence... thus optimizing operational efficiency and enhancing profits.”

  • Ensuring that the municipal tax system encourages in-person work. “Municipalities can offer tax incentives for businesses to encourage in-person work. For example, cities might offer a tax break on occupancy taxes that are tied to the number of hours workers work from the office.”

  • Adapting public and private infrastructure, including mass transit, to thrive in an environment that increasingly requires flexibility “This should include implementing congestion pricing measures to alleviate traffic, encourage the use of public transit, and generate revenue for transit services.”

  • Building more amenities to attract residents. “While this may require comprehensive planning, empirical evidence suggests that amenities play a crucial role in supporting high-density living and are outsize factors influencing residential choices.”

  • Lowering the price of housing by increasing allowable density under zoning regulations and reducing production costs (including construction and regulatory costs) and the time required for permits and land-use reviews. To increase housing supply, “the repurposing of vacant office space to residential units should be encouraged via regulatory reforms to streamline construction along with changes in zoning regulations and fiscal incentives such as tax abatements.”


On May 29, The Volcker Alliance and the Penn Institute for Social Research also hosted a special “Doom Loop or Boom Loop” briefing, with a panel of experts (including the authors) discussing “Work From Home and the Challenges Facing US Cities.”


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