The Social Deal: Urban regeneration as an opportunity for In-Place Social Mobility

The city as a growth machine

Logan and Molotch’s (2007) familiar thesis regarding the ‘urban growth machine’ can explain urban governance in terms of land commodification. To this end, it puts those who aspire to maintain or increase their asset’s use value into inherent conflict with those with an interest in increasing its exchange value (Kim, 2018). The residents are defined as dealing with use values, which link together their non-economic needs, their desires, and their sense of connection to place and community (Harvey, 2006). On the other hand, entrepreneurs focus on the exchange value of the land and take action to encourage urban growth through intervention in the decision-making process (Rodgers, 2009), whereas the residents, who are interested in use value, are left with less influence. Ultimately, the motivations and the actions of the coalitions of growth shape the city in a manner that decreases use value and brings about growth that does not serve the public interest (Logan & Molotch, 2007).

In accordance with this dichotomous structural division, some scholars argue that the desire for apartment ownership, which involves taking out a mortgage, helps perpetuate the status quo. Apartment owners faithfully play their role in strengthening the housing market, whereas the economic and political forces receive much more of the profit from urban growth (Smith, 2015). To obscure this, the mechanisms of urban growth market redevelopment as a collective benefit and conceal the profit that accumulates in the hands of the few (Farahani, 2017; Smith & Floyd, 2013).

Jessop (2004) explains how capitalism, despite its many crises, regularly presents and defines itself anew as a hegemonic social system through social arrangements. In this way, the non-egalitarian models of urban development produce meaningful justification for their own existence by offering effective tools of compensation to relatively broad social layers (in parallel to the promotion of the elite’’s interests in its economic assets): ideological compensation (e.g., building preservation), spatial compensation (e.g., public areas or attainable housing), and economic compensation (e.g., high taxation funneled into the treasury) (Margalit, 2009).

However, urban regeneration involving multi-owner sites may suggest a dismantling of the dichotomy between use value and exchange value for homeowners, who can be found on both sides of the divide. If they live in their own apartment, they are interested in the use value and in increasing the quality of the apartment and the quality of the surroundings but are also motivated by a desire for increased value and maximized profit. In the same way, we can say that the apartment owners are the consumers of urban space but also take part in its production in order generate self-profit from the rent gap.

According to this line of thinking, urban regeneration makes ‘use’ of the belief that private property is a means of providing for welfare needs, a source of income, and a magnet for investment (Forrest & Hirayama, 2015). The ‘compensation’ or ‘arrangement’ stemming from urban regeneration – the Social Deal – lies in the private economic profit and the structure of opportunities for social mobility it ostensibly creates for apartment owners.

Residential Mobility

Social mobility pertains to the movement of an individual or a group from one level of resource control to another. It reflects the dynamic aspect of the stratified structure at the level of the individual. Intergenerational mobility compares the situation of the individual and that of his or her parents, and the range of mobility measures how far the individual has moved from the stratified location of his or her family of origin (Levin Epstein, 2006). In this context, it is customary to distinguish between horizontal mobility and vertical mobility. Horizontal mobility refers to a change of resources within the same class group, without change to the overall social value – as in the case of an individual’s physical relocation from one region to another (Miller, 1960). Vertical social mobility, on the other hand, is reflected in an upward or downward change in an individual’s location in the social pyramid, which may find expression in income level, among other things (Sánchez Flores, Maycotte Pansza, & Chávez, 2016).

Many social studies have dealt with the relationship between the mobile income of parents and the income of their children, which finds expression on the job market and in education (Blanden, 2013; Corak, 2013). However, a recent study has focused on intergenerational wealth correlation, which is manifested primarily in residential properties. This study indicates that home ownership, which is linked to intergenerational family background, constitutes a better assurance of advancement and social success than higher education (Blanden & Machin, 2017). In other words, the best chances of home ownership lie with those whose parents owned a home, and this measure is more influential than any other measure of mobility (Lindley & McIntosh, 2019).

In contending with the increasingly expensive housing market of recent years, housing reform, and the strict mortgage practices that have been in place since the global financial crisis of 2008, parental support has come to play an increasingly important role in providing the possibility of secure housing or homeownership for young adults (Arundel & Doling, 2017; Lennartz, Arundel, & Ronald, 2016). Moreover, as shown by Hochstenbach (2018), the intergenerational transmission of inequalities has become more prominent with regard to housing. Parental wealth has implications for spatial segregation, deepens existing spatial and social disparities, and establishes new disparities, with young adults from wealthy backgrounds concentrating in expensive neighborhoods and young adults from poor backgrounds finding greater representation in lower class areas.

On this basis, housing must be understood as both a source of financial profit and a major element of the lifestyle of consumerism and wealth-accumulation that is typical of the middle class (Savage et al., 2013). Allen (2008) argues that we can no longer refer to class as a category of employment structure – that is to say, as a productive category within the logic of capitalist production or with regard to the collective interest of the labor movement. On the contrary, social class today is based on the systems of consumption that are unique to members of a specific social class. For example, the flocking of the new middle class to the central city, as reflected in the literature on gentrification, creates for its members a package of aesthetics, an object of desire, and economic profits on the housing market as well as in other realms of consumption (Allen, 2008).

Considering this, the horizontal meaning of social mobility has recently undergone a paradigm shift known as the ‘‘mobility turn’’ (Sánchez Flores et al., 2016). The mobility turn seeks to understand the considerations, patterns, and expressions of spatial mobility as a framework for analyzing phenomena such as ‘residential mobility’ (Faist, 2013). From this perspective, housing-based social mobility combines the horizontal and vertical aspects of mobility. Today, from a vertical perspective, the dynamic nature of the stratified social structure is contingent upon ownership of a residential property (Adkins, Cooper, & Konings, 2019; Savage et al., 2013). The property is improved as a result of movement toward a residential environment that is considered to be higher on the social ladder, which of course also produces horizontal movement on the ground. For example, while much work has been invested in gentrification studies to examine the consequences of social division or mixing for poor neighborhoods (Davidson, 2008; Lees, Slater, & Wyly, 2008; Slater, 2006), Pawson and Herath’s (2017) study examines the possibility of disadvantaged neighborhoods serving as springboards in the ‘housing career’ trajectory of young couples.

This kind of mobility is also referred to as spatial mobility and is considered an essential aspect of the fundamental dynamic of change in urban spaces (Faist, 2013). According to this approach, the socio-economic attributes of the household, in conjunction with the location of the residence, impact migration, shape the housing market, and define urban spaces (Bacqué et al., 2015). The opposite is also true: the relationship between urban territory and class identity is highly interactive, and transactional residential routes into and out of the neighborhood have impact on class identity. Bacqué et al. (2015) refer to this as ‘localization effects’ that are seen in practices of social reproduction.

IPSM: The Case of Bat Yam, Israel

Between 2007 and 2017, apartment prices in Israel experienced a cumulative increase of approximately 90% due to erosion of the housing supply per household and a drop in mortgage interest rates (Eckstein, Kogot, & Somkin, 2018). During the same period, the average and median wage increased by only a few percentage points (Rabinowitz & Ziv, 2021). In terms of average wages, there was a sharp increase in the number of salaries required to buy an apartment, indicating a further distancing of the ability to purchase an apartment (Ben-Shahar & Meni, 2021; Shraberman, 2018). Although more than 70% of the middle class households today reside in an apartment they own (Dagan-Buzaglo & Konor-Attias, 2013), their children’s inability to buy an apartment at current prices impacts their capacity for social mobility, and especially that of the classes beneath them (Swirski & Hoffmann-Dishon, 2016).

Against this background, we seek to theoretically claim the options of homeowners today in urban regeneration in Israel. This attribute of this social-physical event, to which we refer as IPSM, constitutes a new configuration of social mobility and of the relationship between the class and its urban space within the framework of a social agreement. For the sake of illustration, we chose the city of Bat Yam, located in the first ring of the Tel Aviv Metropolitan Area. Bat Yam is characterized by a lack of land reserves, old and in some cases run-down buildings, residents from low and middle socioeconomic strata, and an impoverished city treasury in desperate need of income (Levine, Sussman, & Aharon-Gutman, 2021). At the same time, however, the city’s strategic location near Tel Aviv, its Mediterranean coastline, and its relatively low land values together create real estate profit potential.

Bat Yam was founded in the 1920s as a Garden City on the Mediterranean Coast. However, in the initial decades of Israeli statehood, entire neighborhoods were planned and built in the city using state funding to house new Jewish immigrants (Levine, 2018). The 1980s witnessed a reduction in the share of income transferred from the central government to municipal governments, and Bat Yam was forced to base its budget on self-income and to find other sources of funding. The Planning Deal appears to have been Bat Yam’s way to develop in the conditions of no government support. During these years, the city grew to be one of the most densely populated working-class cities in Israel, earning it the dubious title ‘the City of Contractors’ (Cohen, 2011). However, despite the development efforts, the municipality suffered from an inability to function due to budgetary imbalance. The housing density, along with a shortage of municipal tax revenues on profit-earning uses such as commerce, offices, hotels and industry, brought the city to a state of spatial and social neglect (Cohen, 2013; Eizenberg & Cohen, 2015). As noted by Blank (Blank, 2003), the creation of a competitive market among Israeli municipalities did not contribute to equality among municipalities but actually exacerbated the situation.

Over the years Bat Yam’s wealthier residents have left the city, leaving mainly low-income population. Today, Bat Yam is ranked last in the Quality of Urban Life index among Israeli cities and highest in terms of population density (CBS, 2019), with 129,000 residents living on an area of 8.16 square kilometers (CBS, 2020) and leading the poverty indices vis-à-vis the metropolitan and national averages. Most of the city’s population receives support, and the percentage of immigrants among its residents is double that of the national average. Bat Yam is also home to the highest concentration of elderly people in the country (Shnoor & Be’er, 2019). Most of the city’s buildings are old and poorly maintained, and hundreds have been declared hazardous.

In this situation, the municipal management of the past decade has viewed entrepreneurial urban regeneration as the only outlet for improving the built environment, attracting a medium and high-income population, and generating income for the municipal treasury. Consequently, Bat Yam has been the leading city in Israel with regard to the approval and building of urban regeneration projects (Zeon, 2020). The municipality is advancing hundreds of urban regeneration projects using all the statutory tools at its disposal. Overall, the addition of 26,000 housing units to be added to the existing 50,000 units has been planned within the borders of the city (Levine et al., 2021).

The cost of the central government’s failure to invest in protecting residents from the possibility of an earthquake has been borne by the municipal treasury, which has been compelled to provide the city’s increased population with infrastructure and to meet public needs without the ability to tax capital gains, from which the outline plan (#38) was exempted (Mualam, Salinger, & Goldberg, 2020). With regard to the Raze and Rebuild projects, although capital gains taxes are levied, the density and the burden on the infrastructure has been much greater, as the new units have taken the form of high rises replacing buildings of 3-4 stories (Levine et al., 2021). The municipality, one might say, sacrificed itself for private profits, without being compensated by the central government and sometimes without being able to bear the burden of the required investments in practice.

However, the intensive urban regeneration that is underway in the city holds meaningful potential as a Social Deal. With the scaling back of the welfare system and the sharp rise in housing prices in Israel, apartment improvement enables the older population to bequeath a higher-value apartment to the next generation. At the same time, it allows a younger population to exercise intra-generational social mobility toward ownership of a prestigious asset that corresponds to the deciles above them. For the long-time population, paying the maintenance fees in the new buildings is likely to pose difficulty (Mualam, 2018; Shamai & Hananel, 2021), although government policy charges the developers with paying the difference in expenditures during the first few years of occupation.

On the level of individual profit, apartment owners who take part in regeneration projects enjoy a new or renovated reinforced building with an elevator, as well as a roomier apartment. The estimated value increase in comparison to the original apartment is 16% in reinforcement and addition projects, and 35% in Raze and Rebuild projects (Mualam et al., 2020). Neighbors living in nearby buildings can also expect a 6% value increase in their own properties due to the nearby regeneration project (Golan, 2019). In such cases, the neglected neighborhood on the edges of the area of demand constitutes a springboard for homeowners. Collapsing buildings are replaced, living conditions are improved, and the apartment value increases, all without moving out of the neighborhood. IPSM, therefore, constitutes a phenomenon through which the members of the lower and middle classes in disadvantaged areas can tilt the commodification of housing in their favor, giving them the ability to at least remain afloat in the prevailing neoliberal current.