Webmaster’s Note: you may be wondering why an article about NYC is posted on an Arizona Real Estate website.  The article explains the reversal of the urban/suburban migration pattern for growing cities.  This reversal coupled with Sunbelt migration further highlights the Real Estate growth expectations of the Phoenix area and its impact on the rest of the sate. 

The Big Apple, Getting Bigger, Sets New Goals

By ALEX FRANGOS
December 12, 2006; Page B1

New York City has had its share of problems over the years. But its latest challenge isn't about urban decay, crime or terrorism. It's growth.

Long the largest and most densely populated big city in the U.S., Gotham is about to get even more crowded. Already at its highest population ever -- 8.2 million -- the city could grow another nearly 1.3 million souls in the next 25 years, with a commensurate increase in jobs, according to a study from the New York Metropolitan Transportation Council, an association of government agencies. The boost in population is a result of young people and empty nesters moving into the city, immigration from abroad, and people simply living longer.

To handle the growth, New York Mayor Michael Bloomberg today plans to unveil a set of development goals that envision massive infrastructure investment, land-use reform, and a heavy emphasis on doing it all in an environmentally sustainable way. It will be the initial step toward the first comprehensive citywide growth plan since the late 1960s, city officials say. The move could both create billions of dollars in real-estate investment opportunities and stir up opposition from people concerned that construction could alter the charm or character of their communities.

New York is dealing with a phenomenon that was almost inconceivable for big American cities just a decade ago: success. At that time, urban populations were falling, crime was high and businesses were wary of investing in city centers.

The picture is different today, as businesses, ambitious college grads and culture-seeking empty nesters and retirees return to cities, especially New York. Crime is lower than it has been in the past and the population in New York has exceeded the mark that the current infrastructure -- trains, roads, parks, sewers -- was designed to handle in the 1950s.

Atlanta, Chicago, Los Angeles and Seattle are among the big cities that have adopted similar plans in recent years to anticipate growth. A paper published last month by University of Virginia professors William H. Lucy and David L. Phillips found the income of non-Hispanic whites in cities is now higher than their counterparts outside city centers and their incomes are growing faster than suburban counterparts. "This finding reverses the standard belief that most middle and upper income whites had left cities," the study says.

Some New York City officials argue that the time is ripe for a new growth strategy. "We are a city that was built for a capacity of 8 million people and 3.5 million jobs. We had that roughly in 1950," says Daniel Doctoroff, deputy mayor for economic development. A draft plan for future growth in the 1960s was shelved as the city's population declined, crime increased and businesses fled. The city's population hit a low point of just over 7 million in 1980.

Already, several local mega projects that have gestated for decades are nearing construction, giving the city a running start on its growth plans. Just last week, the city sold $2 billion in bonds to finance a subway extension to the far West Side, home to the city's convention center and recently rezoned office and residential district. The subway extension will allow tourists, commuters and conventioneers easier access to neighborhoods near the Hudson River.

The rezoning and subway extension also will also unlock billions of dollars worth of real-estate development. The office space now allowed to be developed there will be almost as much as in downtown Houston, and will generate $60 billion in tax revenue for the city and state over 25 years, according to New York City's estimates.

Some infrastructure dream projects are closer to breaking ground than ever, including new rail tunnels connecting Long Island and New Jersey to Manhattan and a new subway line for Manhattan's East Side. A rebuilt Pennsylvania Station project could include the construction of two rail terminals, a new Madison Square Garden arena and five million square feet of office and retail space. The so-called Atlantic Yards development in Brooklyn, though mired in controversy, would include a basketball arena and over a dozen skyscrapers filled with apartments and offices.

Mayor Bloomberg's goals will emphasize building infrastructure such as tunnels, power plants, schools and affordable housing, while sustaining drinking water supplies, reducing congestion and commute times, increasing sewage-treatment capacity and tackling air quality and greenhouse-gas emissions in a time of rising electrical demand.

Many of the major infrastructure projects would rely on federal transportation funding along with local revenue, including the Second Avenue subway's first phase, which will cost $3.8 billion and run up the top half of Manhattan's East Side. A commuter rail tunnel from Long Island will be $6.3 billion. Another tunnel to New Jersey will be $7.2 billion.

But the West Side subway expansion funding could set a precedent. It is fully funded through bonds tied to future city tax receipts, something that's only possible with the bond markets confident in the area's economic future, as is the case now.

To New York City officials, the planning effort has as much to do with simply accommodating growth as staying competitive with cities such as London, Los Angeles and Shanghai. To compete, Mr. Doctoroff says, New York has to "strengthen its position as a global hub of commerce and culture."

To be sure, New York City's plans could run into problems. Mr. Bloomberg's quest for a massive stadium in Manhattan failed, after opponents argued they would alter the city's character and encroach on existing businesses. Redevelopment at the World Trade Center site has only recently begun amid considerable uncertainty, more than five years after the Sept. 11 attacks. Efforts to attract businesses to secondary centers such as Long Island City, Jamaica, and Brooklyn, have met mixed results.

The Atlantic Yards development in Brooklyn, run by Forest City Ratner Cos., a division of Forest City Enterprises Inc., could be a preview for those fights. It is slated to use eminent domain, a hot button topic with residents. A vocal opponent of the plan, Daniel Goldstein of Develop Don't Destroy Brooklyn, hopes the mayor's long-term vision changes the way the city approaches megaprojects. He says the city needs to plan projects from the ground up, rather than to follow those that are "developer driven."

Robert Yaro, president of the Regional Plan Association, a local civic group and member of the mayor's advisory panel, says the city will need "major intensive development," to accommodate the growth. "What all of these plans are about is managing growth and managing success," he says. "The city has to build a half-million units of housing over the next decades."

Write to Alex Frangos at alex.frangos@wsj.com