Donut City 2.0: How the COVID-19 Pandemic is Intensifying Urban Decline in the US

Monday - August 21 2023, 12:34 UTC - 1 year ago

The specter of downtown decline is again haunting American cities as a result of the pandemic. Pre and post-pandemic urbanism is leading to tightening city government finances and growing service demands that are producing Donut City 2.0. Making matters worse, federal pandemic relief money is beginning to dry up, and there is an ever increasing demand for city services, such as mitigating homelessnes, hiring law enforcement officers, and addressing large budget deficits. As cities navigate these issues, they must find creative solutions to ensure that urban restructuring works for everyone.

The specter of downtown decline is again haunting American cities. After many decades of reinvestment and repopulation, some American downtowns are now showing signs of hollowing out again. The COVID-19 pandemic certainly bears some of the blame. The widespread adoption of remote and hybrid work schedules has drained commercial offices and caused tenants to terminate leases. In many downtowns, office occupancy is at 50% pre-pandemic levels .

Ripple effects include shrinking lunchtime crowds, slumping retail sales and a drop-off of public transit ridership. For example, New York City's subway is at 65% of pre-pandemic ridership as of early 2023. I study how urban governance challenges shape city budgets, so I'm aware of how these pandemic-related changes are making long-term urban problems worse at a time many cities are dealing with strained budgets .

Pre- and post-pandemic urbanism Tightening city government finances and growing service demands are threatening to produce Donut City 2.0. A donut city is defined by out-migration, with the city center losing residents and businesses to the suburbs. This is not a rerun of hollowing out experienced in many U.S. cities in the 1960s. The usual culprits of economic restructuring, racial tensions, shifting consumer preferences and government inefficiency are all still involved, but these forces are now manifest in new ways .

After the financial crisis that began the Great Recession in 2007, cities got spooked. When housing markets collapsed and stock markets sank, cities found themselves running out of money. Many of them, like Chicago and Memphis, siphoned revenues into reserves and made recessionary budget cuts permanent. Some cities, like Dallas and Portland, have also had to face up to their huge unfunded pension liabilities .

Servicing debts and shoring up finances has often been prioritized over providing services and building infrastructure. This post-Great Recession restructuring has now run headlong into the post-pandemic economy. Exactly what this collision looks like varies from one municipality to the next, but some broad trends are emerging. Front and center is a growing demand for city services. Since 2020, this demand has been slaked by the federal government's pandemic relief money, but now these funds are running out .

A growing demandWhat kind of services are needed? Here are a few examples. According to the U.S. Department of Housing and Urban Development, nationwide homelessness numbers have been trending upward since 2016. In 2022, a post-pandemic spike left this number just shy of 600,000 people, up 50,000 in six years. The demand for law enforcement is also growing. World Bank data shows that U.S. crime rates began trending upward in 2014 .

This trend again accelerated during the pandemic. New York City's 2021-22 spike in crime made headlines globally. Although crime rates have now abated in most U.S. cities, local governments are dealing with a public perception that their cities are less safe. Hiring remains challenging. Donut amid shimmering siliconSan Jose, California, a city of 1 million, does not conjure archetypal images of urban decline .

But behind the glossy veneer of tech wealth, San Jose is dealing with its own particular forms of Donut City. Although Silicon Valley has always had an unequal income distribution, the pandemic's hollowing-out of downtown has revealed an $8 billion budget deficit in San Jose. Mayor Sam Liccardo has proposed slashing jobs, closing playgrounds, canceling holidays and even slashing pension benefits to balance the budget .

In the face of these combined economic and pandemic pressures, cities and their citizens are struggling to stay afloat. Political solutions appear to be gridlocked, which means humanitarian solutions are increasingly pressing. As cities seek out creative solutions to the pandemic, they will also need to think creatively about the next round of their urban restructuring – a restructuring that works for everyone .