Friday, June 7, 2013
Matt Yglesias looks at the promise and the legal hurdles of selling small shares in urban real-estate projects to the masses:
The real promise of Fundrise is that it gives pro-growth members of the community a way to become literally and figuratively invested in the success of a project. A building owned by hundreds of local people, rather than owned as part of a pooled investment vehicle marketed to pension funds, is one that’s much more likely to get a sympathetic hearing from local authorities. It’s also one that’s much more likely to inspire people to show up to meetings and hearings and make the case for development and expansion. As George Mason University Law School’s David Schleicher has observed, despite the stereotype of politically powerful real-estate developers, in practice most cities’ legal framework “creates a peculiar procedure that privileges the intense preferences of local residents opposed to new building.” The best solution to this would be to change the legal framework and reduce the peculiar privileging. But within the existing political order, broadening the scope of potential stakeholders is promising solution. Perhaps if people owned little slices of their neighborhood, urban politics could take a broader view of development and unleash more of the economic potential sitting beneath our cities.