Markets for Parking

Matthew Yglesias: Parking

How much will they pay? Well, it’s hard to know in advance which is why you need markets.
But that’s what you should have — as much parking as the market will bear. Not government-mandated parking, and not government-provided free or discount parking. Let people build garages and if it’s more economical to provide less parking, let there be less parking.

SFGate: SFpark would micromanage city’s scarce spaces

As SFpark is envisioned, parking rates would be adjusted based on time of day, day of week and duration of stay. People would be able to pay not just with coins, but with credit cards, prepaid debit cards and even by cell phone. If a meter is set to expire, a text message could be sent to the driver. More time could be purchased remotely.

It’s a step in the market direction for public parking spaces, but why not privatize all those spots? City links CTA improvements, higher parking fees

While proceeding with these plans, the city also is privatizing operation of its thousands of parking meters. That could provide the city with a substantial cash infusion.

Abolition of Density Restrictions Would be Great for NYC In The Long Run

Tyler Cowen of Marginal Revolution asks a great question: How good would the abolition of zoning in New York City be? He argues that zoning restrictions prevent Manhattan from being a “forest of skyscrapers” such as Sao Paulo.

Many of Manhattan’s skyscrapers are much taller than typical Sao Paulo skyscrapers. This is mostly because the rock that lies under Midtown and Downtown nearly eliminates the marginal cost of foundations for taller buildings. On the rest of Manhattan island the soil is less friendly to skyscrapers, rendering tall buildings less economical. Nonetheless, restrictive zoning prohibits optimal density in almost all areas of Manhattan.

The restrictions are mostly created to cater to NIMBY activists who are afraid of too many people moving to their neighborhood, using more parking spots, making sidewalks more crowded, blocking views, and altering the “character” of their neighborhood. These activists have been granted property rights over their neighbors’ land by pandering politicians. Of course, this restricts creative destruction, and prevents entrepreneurs from increasing supply to meet the market demand. Shortages arise as a result of the density restrictions coupled with a limited stock of developable land.

On top of all that, bureaucracy creates barriers to entry for new development. Only well-connected developers are able to grease city hall to get favorable zoning, and subsidies that others could not. This raises the price of land to a level that only well-connected developers can afford, flushing out wannabes that would build more housing and office space. Zoning restrictions, bureaucratic delays, and barriers to entry in NYC create a shortage of housing and office space, drive prices though the roof, and forces people to migrate to the outer boroughs and suburbs to find an affordable place to live.

Without density restrictions, Manhattan would still be very expensive due to the higher construction costs of denser development. However, if developers were allowed to meet the market demand, a greater “forest of skyscrapers” would arise. Higher land costs would be absorbed by more units/office space, which would help keep rents in check.

Matthew Yglesias’ Response: In The Zone

If all our major metro areas simultaneously allowed for increased density, the short-term impact on any particular place would be relatively modest.

Yes, in the short-term, but over the long run, development patterns would shift drastically in every region. Once restrictions are removed, more people would be able to locate closer to workplaces, while employers would locate closer to quality employees. High-level employers would still choose dense cities due to agglomeration, and NYC could accommodate more of these firms with higher density.

Not every place would be denser. In fact, places that are not as accessible to business would naturally remain less dense. People who telecommute and retirees could still live in low-density areas very affordably. Also, location-flexible industrial firms would still find affordable land, and lower wage employees could live more comfortably near these firms since location-sensitive housing needs are met elsewhere.

For most areas, the density vectors spreading from business districts would be steeper. Near the CBD and transportation accessible areas would be more dense. The outlying areas would still sprawl, since worker’s location needs would be more effectively satisfied closer to their jobs. Overall, population shifts would naturally tend towards higher overall productivity. Add in a more-free market for transportation, and productivity gains would be greater.

Recent Links 4/24/08: PA Turnpike, NYC Rezoning, Tudor City NIMBYs, Houston Zoning

Out of Control blog: Terms of Potential PA Turnpike Lease Announced

Curbed NYC 4/22/08: Developer-Driven Rezoning Prepares to Enter Ring

AMNY 4/24/08: Residents fight Tudor City development
Curbed NYC 4/24/08: Neighborhood Love: Tudor City Residents Suing to Block Solow

Houston Strategies 4/24/08: The renewed zoning debate

Should the Government Build the Cars or the Roads?

I tend to agree that there is some hypocrisy in the conservative/libertarian world when it comes to transportation, which is part of the reason I started this blog. A more free-market transporation system would certainly lead to a more urban land use pattern; something between pre-auto, transit-reliant density and current auto-reliant sprawling suburbs. Regardless, market-based solutions will lead to a denser land use pattern in the long-run. This article discusses governement’s role in infrastructure and some libertarian free-market advocates’ strange love affair with government planned highways:

Maybe the Government Should Build the Cars

Is transportation like education, a communal service that works best through heavy general funding that pays off down the road in a community’s overall prosperity, or is it best delivered by targeting users, especially road users through congestion pricing to reduce demand and increase revenues?

Also: King of the Road

They seem to see a highway as an expression of the free market and of American individualism, and a rail line as an example of government meddling and creeping socialism.

However, the above article portrays the government as the hero for overspending on highways, but what do you expect from a magazine named Governing?

Rationalitate: Libertarians for Statism on the Governing article:

“[o]ur national road system would never have been built if every street were required to pay for itself.” Yeah, that’s exactly the point! Our “national road system” is the problem, and the author’s implication is that not only would there be no “national road system,” but that roads are indeed synonymous with transportation. But just because we wouldn’t have trillion-dollar pavement stretching across the continent doesn’t mean we wouldn’t be able to get across the continent – or, more importantly, wherever it is that we want to go.

Latest: How McCain or Obama Can Permanently Eliminate the Gas Tax, Cut Pork, Help the Environment, and Save Face

Mortgage-Interest Deduction: The Unseen Costs

In general, I am opposed to just about any tax increase. However, the mortgage interest deduction is one of my least favorite tax breaks. First of all, it’s a regressive tax deduction that transfers wealth from renters and businesses to homeowners. Second, it causes home prices to rise relative to the value of similar rentals, causing conversions of rental properties to condos and other imbalances. Thus, many markets have had a net loss of rental housing stock.

As a result of this imbalance of demand related to ownership incentives, developers have less incentive to build for long-term holding since it is more profitable selling condos instead of rentals. Because condo developers will not be responsible for maintenance over the life-cycle of the property, they tend to care less about durability and energy-efficiency than construction cost. In the long run, the homeowner pays the added costs of the higher-maintenance, less-efficient home.

Repealing the deduction will be an uphill battle. Homeowners are a reliable voting block, so pandering to them usually pays off for politicians. Repealing the deduction would probably drive home values down further, so it will probably have to be tabled until the credit markets recover.

For more in-depth economic insight, read John Tammy’s article:
Repeal Housing’s Mortgage-Interest Deduction

Are Late-Night Speakeasies on their way to NYC?

Somebody tell the mob, there’s a new prohibition in town:

From the New York Sun:
4 A.M. Last Calls Could Be Headed The Way of Smoky Bars

Although they have no authority to mandate hours, Community Boards have tightened their grip on late night establishments. Of course, they claim to be protecting the neighbors: “In our neighborhoods, most people don’t want to live next to a nightlife establishment.” Yet, why did those people choose to live in the noisy, trendy areas of Manhattan?

If this trend continues, could we expect underground speakeasies to open midnights; driving business away from the legitimate establishments? I would have no reservations about patronizing such a place.

There’s quite a discussion here: Curbed: Drying of NYC