Matt Yglesias’ proposal for reforming DC’s ANC’s

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At the risk of turning Market Urbanism into Reblogging Matt Yglesias, here’s another interesting post from the blogosphere’s most famous market urbanist about reforming DC’s Advisory Neighborhood Commission (ANC) system. After discussing a recent decision by an ANC incumbent to deny Five Guys permission to open up a sidewalk cafe in an otherwise barren area until they pay up for “other community initiatives,” he claims that the problem isn’t necessarily shortsightedness vis-à-vis development, but rather “an error of institutional design”:

Advisory Neighborhood Commissions don’t have very much power or very much responsibility. But they do have a lot of power over liquor licenses, sidewalk cafes, and zoning variances. ANC members, however, have views on things other than liquor licenses, sidewalk cafes, and zoning variances. So the most reasonable way for them to achieve a diverse set of policy goals is to adopt a very stringent attitude toward liquor licenses and sidewalk cafes, and to support very restrictive zoning rules that increase the value of variances, and then to trade permission to do business for other kinds of favors.

If a fixed portion of retail sales taxes raised in a given ANC were put into a neighborhood fund controlled by the commissioners, then I bet commissioners would suddenly be less interested in swaps of these sorts and more interested in attracting businesses to their area. But instead we’ve set up ANCs in a way that encourages them to be systematically biased against just saying “yes” to local retailers.

Practical politics are not my forte, but this sounds like it could be a good idea. If it would work, I like the idea of essentially standardizing the community bribe and having it be paid in fungible money rather than less efficient in-kind donations (more parking, inclusionary zoning, etc.).  I would suppose that the system would work best if applied extremely locally, so that merchants/residents know they will directly benefit and the money wouldn’t be spent funneled into a general fund for the entire city, like it is now. In this respect, Yglesias’ proposal might have a chance in DC, since ANC’s only cover a few small neighborhoods each.

But one fear that I have is that rather than standardizing the development contribution around the current level, it would just set the bar for contributions a bit higher, with commissioners demanding further concessions on top of the tax. (Another fear that I have is that the city wouldn’t be willing to give the ANC’s money from their share, and so the tax rate would rise overall, but if this replaces the de facto taxes that ANC’s currently levy, it could be worth it.) I realize that Matt Yglesias’ argument is that they would be less likely to ask for more since they’d have a fiscal stake in the project already, but it’s possible that government officials wouldn’t act so rationally, and that they are perhaps more motivated by an overaching anti-development attitude rather than by extra revenue. And even if they are in it for the money, they might simply just not realize what side of the Laffer curve they’re on.

I should note that Yglesias’ proposal sounds similar to Donald Shoup’s idea (or did it start before him?) of on-street parking revenue being put towards a “parking benefit districts” – essentially bribing merchants and residents into allowing meter rates to rise towards a market rate by giving them the extra money collected. I know that Shoup’s ideas have been catching on, but that’s not necessarily because of the local reinvestment of the meter revenues, and I don’t even know how prevalent parking benefit districts are (commenters?).

So what do you guys think – would giving money to ANC’s make them more development- and density-friendly?

Mortgage-interest tax deduction cuts on the table

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Urbanism doesn’t get a lot of breaking news (that is, unless Eric Fidler’s prediction pans out), but this might be an exception: the WSJ is reporting that Obama’s (bipartisan?) deficit commission is considering cutting the mortgage-interest tax deduction.  The reports are all very speculative, but it looks like they’re definitely not considering eliminating the tax break entirely.  While most libertarians have advocated eliminating the tax break (and in fact all tax breaks) completely and adjusting the general tax rates to make the measure revenue-neutral, it looks like this (along with cuts to the child tax credit, among others) is a cost-saving measure.

As I discussed earlier today, the tax credit is just one of many highly regressive government advantageous to wealthy homeowners – the vast majority of Americans don’t even itemize their tax returns, and therefore don’t benefit at all from the tax break.  Still, in spite of its regressiveness, it’s enormously popular among voters.

Leaving aside considerations of whether the savings should be used to pay down the deficit or to lower marginal rates, any move to limit this deduction would be a good thing for urbanism.  While the American ideal of the homeowner involved in a positive way in their community and schools is prevalent, I fear that the greater effect of increasing homeownership above the market equilibrium is to encourage NIMBYism by making people look at their home, rather than their wider community, as their biggest asset.  Furthermore, it puts people in the awkward position of desiring a rise in cost for one of life’s most essential needs, which clearly played a large role in the policies that led up to the subprime crash.

While this proposed change is certain to encounter fierce resistance from America’s real estate industry and wealthy, entrenched suburban interests, it is only a small step to correcting America’s pro-suburban bias.  Economists appear to agree that the tax credit does little to actually encourage homeownership (here’s Ed Glaeser), and completely doing away with the deduction doesn’t even appear to be an option, so it should be emphasized that the effects of the proposed reform will probably be minor.

Matt Yglesias attacks parking maximums, outs himself as a market urbanist

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Matt Yglesias has been on a roll lately with the urbanism posts, all of which have a heavy “market urbanist” slant, but it’s this post about parking reform in/around Boston (riffing off of this Boston Globe article) that seals the deal for me:

Regulators pushing developers to build less parking than they want is much, much, much better than the near-universal practice of regulators mandating minimum levels of parking. But I do think the message is clearer and the potential political coalition bigger if parking reformers just stick to the idea that this should be left up to the market. Cars are useful, and people who have cars need to park them. So there’s nothing wrong with building parking. But urban space is expensive, and parking spaces take up space, so people should weigh the costs and benefits of building/buying more parking against other possibilities. Getting to market-determined levels of parking construction and parking space pricing would be a huge victory, and it’s not particularly necessary to go beyond that.

I guess the only thing I’d have to add is that while I think these sort of parking maximums and general density-forcing rules are of minor import compared to the massively anti-density status quo, they do give rhetorical ammo to people like Randal O’Toole and other self-proclaimed libertarian types who like to claim that what planners really want is to banish cars entirely from cities. The sad truth is that they’re right – New Urbanism/Smart Growth might have some libertarian issues at heart, but at the end of the day, they’re out to put us all on trains/buses/bikes/our own two feet, not to set the market right. Now again, I think that O’Toole & Co. vastly overestimate the influence of density-forcing regulations, but they do have somewhat of a point.

As a bonus, Matt also reposted an interesting chart that claims that federal housing incentives (mostly subsidies and tax deductions) are massively regressive, acting as a tax on households earning less than $30k/year and a subsidy for those earning more. I can’t vouch for the methodology though – perhaps a commenter could offer some more insight?

Midnight parking round-up

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1. Donald Shoup makes up for last week with an interesting piece on how America’s tax structure biases employers towards providing parking for their employees, similar to how untaxed employer-provided healthcare shapes that industry.

2. Back in August Randal O’Toole asked for proof that minimum parking requirements force Walmart to build more parking than they otherwise would. I think this is a bit of a red herring, since obviously parking reform would have more of an impact in areas that are more urban than where Walmart typically locates, but lo and behold, here’s the proof, at least in the case of one store in Northeastern Connecticut. In this case it looks like the parking minimums are going to be reduced, but I question whether smaller companies without Wal-Mart’s clout and money could have demanded such changes.

3. A survey of urban planners, supposedly biased towards big cities, found that 60% feel that the free market would not provide an adequate amount of parking if developers were not given parking minimums, with only 1 in 10 believing that the market would provide too much parking. The author of the paper, called “Are suburban TODs over-parked?” (.pdf), and published in the Journal of Public Transportation, found that suburban TOD projects in the East Bay and Portland supplied too much parking for the amount of cars that were actually parked. The authors unfortunately don’t do a great job of linking the parking surplus directly to parking minimums, but they do provide some interesting empirical evidence for what Matt Yglesias called “parking feedback loops” and what the study’s authors term a “virtuous cycle” – the idea that parking itself is a barrier to walkability, and thus removing spaces will lessen the demand for parking, even if nobody was using the spots that were removed.

Midnight links

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1. Cap’n Transit weighs in on the ARC debate, and shows that Chris Christie is more interested in shifting resources to his suburban constituents than to cutting spending. Here’s the best part:

Editorial board member: What’s the difference between a gas tax hike and a fare hike, besides who it lands on?

Christie: That’s the difference.

2. The Los Angeles Times profiles Donald Shoup. I liked this part:

Shoup depends on his bicycle for much of his mobility. He freely confesses, however, that when behind the wheel of his silver 1994 Infiniti J30, he often circles the block looking for a free parking space. “I don’t like paying for parking,” he says with a shrug.

3. Matt Yglesias notes DC’s second-only-to-NYC office rents, and blames them on the city’s absurd height restriction.  I’m happy that Yglesias is interested in urbanism, but it doesn’t really appear like he reads/interacts with the wider planning blogosphere (I stand corrected).

The economics of redevelopment and the shape of socialist cities

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Earlier today I read an article by Daniel Garst about Bejing’s awkward population distribution that reminded me of a journal article about the general shape of socialist cities that I read a while back. Garst talks about Beijing being a “circus tent” when it comes to density, with population density increasing as you travel away from the city center, in contrast to the “pyramid” style of most cities, with high densities in the center and lower densities around the periphery (see chart for a visual representation).

This immediately made me think of an article by Alain Bertraud and Bertrand Renaud called “Socialist Cities without Land Markets,” where they describe exactly this phenomenon, and explain it as a failure of administrative urban planning. Here’s an excerpt:

Gross population density by distance from city center in Moscow and Paris

As their economy and their population grow, cities expand through the progressive addition of concentric rings, similar to the growth of trees in successive seasons. New rings are added to the periphery as the city grows. With each ring, land use reflects the combined effects of demography, technology, and the economy at the time when the ring was developed. Wile this organic incremental growth is common to all cities, in a market city changing land prices exert their pressure simultaneously in all areas of the city, not just at the periphery. Land prices exert a powerful influence to recycle already developed land in the inner rings when the type and intensity of the existing use is too different from the land’s optimum economic use. Thus, changing land values bring a built-in urban dynamism as ceaseless variations in land prices put a constant pressure on the current uses of land and trigger changes to new activities and/or densities.

Under the administrative-command economy, the absence of land prices eliminated the main incentive to redevelop built-up areas by removing site value considerations from the investment decisions since the nationalization of land in 1917 [in the Soviet Union]. Without price signals to reveal the opportunity cost of land in alternative uses, it was administratively simpler to respond to current land demand pressure by developing at the periphery than to redevelop well-located areas with obsolete land uses. While the city expanded outward, land use in already developed areas remained unchanged and there was very little land recycling. This process explains the persistence and uniformity of housing types in successive rings around Moscow, with each type being usually named according to the period when it was built. Thus, driving from the center of Moscow, one passes through rings of Stalin, Khrushchev, and then Brezhnev flats.

This socialist land allocation process leads to land that differs from market economies. This land use has three features that imply urban inefficiency on a very large scale, which we will describe in turn. First, the population density gradient has a perverse slope that rises as one moves away from the city center. Second, very large industrial areas occupied by land-intensive, obsolescent industries in prime areas of the city. Third, households are concentrated in the periphery. Residential densities are increasing toward the periphery while “historically” low densities are found in central areas. This pattern tends to increase community requirements, transport costs, and pollution because it requires higher energy expenditures. At the same time the effects of this type of urban planning are not compensated by the provision of better amenities such as large housing unit sizes of a better environment that is the normal trade-off for increasing commuting distance in a market economy.

In Beijing, these ” ‘historically’ low densities” are the one-story hutong/siheyuan neighborhoods. Because they were not gradually redeveloped during China’s heavily communist period, their densities are woefully inadequate for China’s growth, and thus the city is presented with the dilemma that Garst describes – how to rationalize development without destroying the city’s historical character? His solution seems to be creating self-contained “edge cities,” but that makes you wonder why bother developing Beijing at all if you’re going to create neighborhoods that are inaccessible to the traditional core anyway. The only way edge cities have worked is with intense automobile connectivity, which Garst doesn’t want, either.

Unfortunately for Garst, who calls redevelopment of the hutong neighborhoods “not really a practical solution,” it’s likely to be the only way to make Beijing workable. Of course the market city trajectory is preferably – gradual redevelopment, so that the architectural loss is not so immediate and some vestiges of the past can be preserved in graceful ways. But just because Beijing did not have this luxury doesn’t mean it should remain a hostage to its original form, forever doomed by long commutes and low mobility.

I should note that I’d also be very interested to see the population gradient for a few US metro areas. Although I’m sure it’s not as warped as Moscow’s, I’d bet that it’s not quite as steep as other market cities. Obviously America is not a socialist country and its land use policy is significantly more market-oriented than the USSR’s, but I suspect that NIMBY and anti-density forces hamper this organic redevelopment to the degree that it would be visible in a density gradient. Anybody know where I could find a few?

News and thoughts on the gas tax

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An influential highway group has called for replacing the flat tax on gas with a percentage tax, according to the Wall Street Journal. They want to replace the current 18.4 and 24.4 cent taxes on gasoline and diesel, respectively, with more flexible 8.4% and 10.6% tax rates. At current gas prices that would be about a 2-cent increase (at least on the gasoline side of things), and it would at least allow for automatic increases with inflation. It is a bit awkward for road funding to rise and fall with the cost of fuel, but it may be the only politically feasible way to raise the gas tax – to pass it off as an unintended consequence. Of course, there’s the possibility of the price of gas falling, although I don’t know how likely that is over the long-run.

As you can imagine, the political reaction was quite hostile, with Rep. John Mica, who’s on the soon-to-be Republican-controlled House Transportation and Infrastructure Committee, saying that anything that would raise gas prices is a “non-starter.” It’s unfortunate that the gas tax is seen as just another tax and not the explicit cost of the road infrastructure, but it looks like it’s going to be a casualty of the Tea Party’s anti-tax mantra. In any case, the issue will be dealt with after the midterms when hopefully politicians will be a bit more clear-headed. The WSJ suggests that politicians are reluctant to keep borrowing from the general fund for road projects, but I’m afraid that their fear of budget deficits will be overpower by their fear of raising the cost of driving. And as much as I resent Obama and this Congress for refusing to raise the gas tax, it could have been worse – both McCain and Hillary Clinton were in favor of a gas tax holiday during the 2008 election.

Although I am very excited about a higher gas tax, it would be a shame if the amount of money expended on roads and highways actually increased on net. Robert Poole at Reason has argued that we should spend all money collected in user fees on roads, and while it’s true that a lot of fuel tax money goes to mass transit and non-road expenses, there are also massive amounts of money traveling the other way, from general revenues going to the roads. State and federal highways are covered by their user fees, but the local roads that run outside your doorstep and which are in many ways most important are paid for almost entirely out of general revenues. So although it may sound counterintuitive, unless we stop building roads out of local budgets, spending less of the gas tax on highways will actually bring the total amount spent closer to the total amount collected.

The inanity of airport connectors

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Despite my issues with how new transit projects are implemented in America today, I’m generally happy to see them built. Even though they’re flawed, heavily-subsidized government creations, they make upzoning more palatable and can later be sold off and privately managed. There’s a lot I’d do differently, but on net I think most new transit projects are a step, however imperfect, in the direction of market urbanism. But there’s at least one form of transit that I can almost never get behind: the airport connector.

The airport connector is a special beast of a rail-based transit system that’s a relatively recent phenomenon outside of transit-dense regions like Western Europe and Japan. So manifestly wasteful that it generates more animosity towards mass transit than it does riders, it’s a project that only politicians and unions could love. Unlike more integrated networks where the airport is just one station on an otherwise viable route (like Philadelphia’s Airport Line or DC’s proposed Silver Line), airport connectors generally serve only the airport and one local hub. With no purpose other than to get people in and out of the airport, they provide neither ancillary transit benefits nor TOD opportunities.  Oftentimes they don’t even reach downtown, acting instead like glorified park-and-rides.

The most egregious example in the US would have to be BART’s proposed Oakland Airport Connector. The rail line will extend for a little more than three miles, replacing what is now a bus routes.  The $3 fare will double, along with the half billion dollars that it will cost the government. Like the current bus route, it will only connect Oakland’s airport to the nearest BART station with no intermediate stops. It’s opposed by transit activists, who would rather convert the bus into a dedicated BRT lane and spend the rest of the half billion elsewhere. Its support seems to lie entirely with unions eager for the work, and one commissioner actually called it “too big to fail”…as an endorsement of the project! Even the feds knew better and took back their $70 million in funding, citing its impact (or lack thereof) on Oakland’s low-income population. Still, the city is pressing froward with the guaranteed boondoggle and is continuing to allocate funds for it, though transit activists vow to keep fighting it.

"Rhode Island can't build its way out of traffic congestion," said one parking garage-cum-rail station backer

Oakland is hardly alone, with the Rhode Island DOT recently reaching a deal on its $267 million “Interlink” project, which entails building a station at the airport on an existing line, along with a commuter parking garage and a rental car facility. The station is only expected to see six trains a day initially, which is probably for the best since Providence’s T. F. Green Airport isn’t exactly O’Hare. No word on whether any additional density is being allowed around the new station, but something tells me the answer is no.  New York’s five-destination Stewart Airport could also snag a rail line, as might a couple of other airports if Obama’s high-speed rail plans ever see the light of day – and I doubt they will, but that won’t stop consultants from being paid to consider them.

America, however, has no monopoly on ineffective government, and like all forms of excess, the Chinese have perfected the genre with their maglev airport connector in Shanghai. It literally levitates above a track through a system of magnets, and with only air friction it can achieve speeds of up to 268 mph. The Chinese government can acquire land at zero cost and labor is cheap, so it only cost $1.3 billion to build, but it makes up for its low cost in utter uselessness: in addition to being too expensive for ordinary Chinese to ride, it doesn’t even take you downtown – “it virtually goes nowhere,” as the Asia Times puts it. The project can be seen in the broader context of Shanghai’s misguided rivalry with Hong Kong, where it seeks to copy the trappings of the wealthy city-state while avoiding the attendant economic liberalization.

There may be a limited place for short airport connectors in large, transit-rich cities like New York City, but many of the projects turn out to be far too expensive for the limited service that they provide. They are often a sort of cargo cult urbanism that seeks to emulate the frills of good transit systems isn’t willing to make the hard decisions necessary to actually build a robust network and allow the density to fill it. In the case of the the Providence airport, lawmakers said they hoped the station would attract international service to the currently domestic-only airport – as if Providence can acquire the amenities of a big city without allowing itself to become one. Airport connectors instead are often little more than highly inefficient subsidies to the airline industry, wealthy frequent fliers, and construction unions – which, now that I think about it, might explain why legislators love them so much.