A question and a link list

Hey guys, before I start this link list, I wanted to ask: Has anybody had trouble posting comments here with Disqus lately? Either you can’t post them, or once you do they disappear? I’ve gotten two complaints in the last few days, so if you’ve been experiencing any problems please don’t hesitate to let me know so I can try to get to the bottom of it. If you can’t post a comment, email me at smithsj[at]gmail[dot]com.

1. DC gets upzoned. Why the Washington City Paper chose to bury that behind items about “neighborhood branding” and “supporting the enactment of pending federal legislation to ensure that insurance reserves are held and invested in the U.S.” is beyond me.

2. DC has, unfortunately, also started to cap the number of cabs in the city. American politicians just can’t get enough of screwing over Somalis, I guess.

3. Jamaica, Queens gets downzoned. The Post tells us joyfully that the city is implementing the “innovative and critically important” FRESH initiative to deal with the area’s lack of supermarkets – which will be sorely needed now that the city is guaranteeing that there will be no new demand for food.

4. “Vertical parking lot” in Chicago, circa 1930.

5. Communism in America: Roosevelt Island.

6. Matt Yglesias and Megan McArdle discuss bars and clustering, but Ryan Advent has the best post in my opinion.

7. Chicago’s Metra boosts home values (duh).

8. India fails at urbanism.

9. One Tea Partier thinks that only property owners (read: homeowners) should be allowed to vote. “If you’re not a property owner, you know, I’m sorry but property owners have a little bit more of a vested interest in the community than non-property owners.”

How local property taxes discourage density

In yesterday’s post about a proposal in Philadelphia to mandate adherence to certain “visitability” standards in new residential construction, but only for multifamily units, I asked if anyone knew of any other burdens that are heaped unfairly on apartment-dwellers. Regular commenter Alon Levy rose to the task, and pointed to a huge one: property taxes. He linked to this great explanation of New York City’s arcade property tax regime that favors outer-borough owner-occupied properties over apartment and condo dwellers, but after just a little bit of digging I found that these property tax differentials are in no way unique to NYC. Here’s (most of) the abstract to a 2006 paper published in the journal Housing Policy Debate (.pdf):

The study finds that for the nation as a whole, multifamily rental housing bears an effective tax rate (tax divided by property value) that is at least 18 percent higher than the rate on single-family owner-occupied housing. This gap appears to have arisen during the 1990s. The level of taxation and the apartment/house differential vary considerably by location. Much—but not all—of the differential is associated with the fact that apartments have a lower average property value per unit than houses. The residential property tax, as implemented, promotes low-density development, disproportionately burdens lower-value properties, and may impose higher taxes on apartment residents than on homeowners with identical incomes.

This is on top of the fact that the vast majority of property taxes in the US are used to fund local roads and schools (right?), which apartment-dwellers surely make lesser use of. So even if the taxes were levied across the board, they’d still be redistributing wealth from poorer apartment dwellers to richer homeowners.

I should also emphasize that these are local property taxes, and are completely separate from the mortgage interest deduction that homeowners can also use to lower their federal tax burdens. We hear a lot about that one, but this is the first time that I’m hearing about property tax differentials. I’m guessing the reason for this is that national journalists find it much easier to cover federal issues that apply nationwide, but this this is a shame, because although local issues are more heterogenous and difficult to research, I think they’re ultimately more important than federal ones when it comes to land use and transportation. I’d like to say that the urbanism blogosphere is immune to this pro-federal bias, but unfortunately I don’t think that’s the case.

So again, thanks to Alon Levy for pointing this out, and for his steady stream of insightful comments. Every so often I fear that I’ll soon uncover every possible tool that governments use to favor suburbs over cities and run out of things to blog about, but then I snap out of it and remember that the possibilities are truly endless.

NoMa’s missing parks

David Alpert at GGW asks us what we think about the up-and-coming DC neighborhood of NoMa and its lack of parks:

And in the future, all cities and towns should avoid making the same mistake. Libertarian-leaning urbanists like Market Urbanism have recommended fewer development restrictions and greater reliance on the free market. In many cases that makes a lot of sense, but the NoMA experience shows a need for at least some mechanism to reserve for public goods some of the value an upzoning generates. Is there a more free market way to handle this?

I have a few thoughts about this. The first is that, to some extent, David answers his own question: developers have to fill every inch of space because of DC’s height restrictions. Lift the restrictions, and I think you’d see some more experimentation with taller towers and more green space.

Not a formal park, but open green space in NoMa nonetheless

But secondly, I’m not sure that I exactly agree that parks that take up large amounts of space are really the answer here. DC is the perfect example of a city with too many parks in all the wrong places – the Mall is a barren wasteland, and even a lot of the more rationally-placed parks are essentially expensive homeless shelters, but without the shelter part. I know that here in Philadelphia, at the corner of 40th and Market, there’s a park-like open space on the edge of a public housing project, and despite the large amount of foot traffic, El station, and bus stop, I have yet to see a single person in the park – people seem to prefer to hang out on the corner. And in terms of a little bit of green space to break up the monotony of buildings and some places for people to sit and eat on their lunch break when it’s nice out, NoMa already has a bit of that. There may be some truth to Ryan Advent’s suggestion that maybe people don’t really want large-ish parks as much as they say they do.

Finally, I’d like to address the issue of public goods. Despite what Ryan says, parks are a relatively good example of a public good. Sure, you could lock up the park, but that detracts from the value of it. But one way to overcome the public goods problem is to allow developers, if they can afford it, to buy up larger tracts of land, so that they can internalize all of the positive externalities of the park. If each building is in different hands, then you can’t overcome the free rider problem through market forces. But if one developer owns a large amount of land in a concentrated area, then all he captures more of the upside of a publicly-accessible park, and has more of an incentive to build one.

But at the end of the day, if the height restriction is lifted and developers are allowed to own larger plots of land and there’s still no open space (and we decide that we actually want parks), then we can discuss market failures and how to overcome them. But until we reach that point, it seems a bit unfair to blame the market for NoMa’s dearth of parks.

Empirical evidence that anti-density zoning breeds racial segregation

With nothing quick to blog about and not being in the mood to write something long, I dug into the Google Scholar pool for some interesting empirical work, which is something this blog hasn’t featured in a while.  This paper shouldn’t come as a surprise to anyone, but it’s interesting empirical work nonetheless (.pdf):

The foregoing analysis suggests that patterns and processes of racial segregation in the post-civil rights American city are strongly affected by density zoning. At any point in time from 1990 to 2000, intermetropolitan variation in Black-White segregation and Black isolation was strongly predicted by a metropolitan area’s relative openness to housing construction, as embodied in maximum zoning rules—the greater the allowable density, the lower the level of racial segregation. Moreover, our instrumental variable analysis suggests that the causal arrow runs from regulation to segregation even if the reverse is also true.

In keeping with these cross-sectional findings, we also found that the prospects for desegregation are greater in areas with more liberal density regulations. From 1980 to 2000, metropolitan areas that allowed higher density development moved more rapidly toward racial integration than their counterparts with strict density limitations, even after controlling for a battery of social, geographic, and economic characteristics and for potential reverse causality between segregation and zoning. Our confidence that anti-density zoning is a true source of segregation is increased by a recent working paper by Rothwell (2009b) that uses the same data and finds essentially the same results for levels of Asian and Hispanic segregation, and consistent with Pendall’s (2000) analysis, we do not find any consistent pattern emerging for other land-use regulations.

In terms of underlying mechanisms, we argue that restrictive density zoning produces higher housing prices in White areas and limits opportunities for people with modest incomes to leave segregated areas, a perspective in accordance with a great deal of research showing that zoning increases housing prices (Rothwell 2009a; Glaeser and Gyourko 2002; Glaeser, Gyourko, and Saks 2005; Fischel 1985).

In their analysis, Cutler and Glaeser (1997) found evidence that decentralized White racism, as revealed in housing preferences, perpetuated contemporary segregation in U.S. metropolitan areas. Our analysis suggests that whatever their racial motivations, homeowners reveal their political preferences to exclude households of modest means through low-density zoning under certain predictable conditions. These conditions are found in metropolitan areas where local governments are relatively fragmented, rural settlements are prevalent, jurisdictions rely heavily on property taxation, and the percentage of African-Americans is high. We believe federal policy should be brought to bear on local land regulations, prohibiting the most severe density restrictions.

Mandates that fall only on multifamily development

So I’m reading a PlanPhilly article about a proposal to mandate half-baths on the ground level and front doors without steps for new residential units (“visitability,” they call it), and while I don’t think that it’s a bright idea to begin with, this part struck me as particularly dumb, albeit very common (my emphasis):

There have been victories. Any homes that are built with money from the City’s Housing Trust Fund – money generated by fees charged for recording deeds – must be visitable. But, Salandra said, while bills that would have required all new housing to be visitable have been introduced to city council, they have gone nowhere.

The visitability task force is trying anew. Klein said that they submitted comments about the proposed new zoning code, asking for a change that any development of 10 houses or more require at least half to be visitable.

Unfortunately, I think that this restriction is just what they need to get this passed. Many burdens – some inscribed in law, but many wrung out in ad hoc negotiations between developers and local governments – are levied only on developers of more than a few units, which almost by definition includes everyone who builds dense housing. In some cases the cut-off is necessary due to the nature of concessions (what do affordable housing mandates mean to someone building a single house for themselves?), but this is definitely not the case here. If this is such a great idea, then why not enact it across the board?

The reason is obviously that it’s easier to foist restrictions on developers, who only have one vote each, than it is to go after the mighty suburban bloc. And while few voters know much about what they’re voting for anyway, the number of apartment-dwellers who see their interests as aligned with those of developers and their landlords is smaller still.

As for mandates, other than inclusionary zoning, that are only imposed on multifamily developments, the ones that come to mind are ad hoc demands of local governments for things like parking, school impact fees (essentially a cash bribe to the municipality), open space, and nearby public improvements. Does anybody know of any other burdens, either enshrined in law or not, that are only borne by those who build and live in multifamily units?

Weekend link megalist

This is probably my favorite link list yet…enjoy!

1. The WSJ claims that delinquent homeowners can expect to stay in their homes after making their last mortgage payment – that is, they can live rent-free – for at least 16 months. The longer it takes for foreclosures to happen, the longer it will take for real estate markets to adjust to the new paradigm.

2. Fascinating article about food trucks in Houston. In it I found a second example of bad anti-terrorism policy trumping good urbanism:

Chimed in Joyce: “We all know that Houston is not a walking city, as much as we wish it was. But there are two areas that are walkable – downtown and the Medical Center. The use of propane trucks is prohibited downtown, however. The regulation was originally put in place as a part of Homeland Security after 9/11, but the Houston Fire Department continues to enforce it. That’s an example of something we’re looking to work with, to allow food trucks to operate in these higher foot traffic areas.”

The article also confirms my suspicion that food trucks may actually be safer than restaurants: “These are essentially open kitchens…you can look in there and see exactly what these guys are doing, where they’re grabbing the food from, how they’re cooking it.”

3. Hong Kong and Singapore are both instituting controls on their residential property markets to avoid bubbles, but they are also freeing government land for developers (in spite of Singapore’s free market reputation, most residents apparently live in public housing). Some speculate that Hong Kong’s controls might be a sign of increasing control from Beijing. Reuters says that “China, Singapore, Taiwan, Thailand and Malaysia have also unveiled more stringent regulations in recent months” – the bubble that led to the 1997 financial crisis had a large property component. The Beijing Communist Party mouthpiece, apparently fearing that investors have too much faith in the local government, blames the city’s high rents on prostitutes.

4. Cap’n Transit on road subsidies. These sorts of debates often frustrate me because I feel like people are not clear as to which roads they’re talking about (federal, state, local?).

5. Al Gore admits that first-generation ethanol was a mistake and he only supported it because of “a certain fondness for the farmers in the state of Iowa” (yes, he really said that). But talk is cheap – he’s still sticking by non-food biofuels, though I think those’re just as bad. On the bright side, though, DeMint and Tom Coburn are apparently ready to let some key ethanol subsidies lapse this year.

6. DC developer forced to offer below-market rents to an IHOP. You know what would really help “small, local, minority-owned businesses”? Eliminating mandates like this that lead to constrained property markets and sky-high rents.

7. Remember that god-awful North Jersey mall project Xanadu, whose demise prompted an item in the last link list?  Well apparently Chris Christie wants to throw more money down that hole. Speaking of which: Did they really not realize the negative associations people have with the name “Xanadu”? Or is that just evidence that not even the person who named it had any faith in it?

8. Real estate investors are bidding up prices for apartment buildings, says the NYT. Hopefully the increase in prices will convince local officials to zone for more multifamily development.

LI Dems to councilman: oppose density so we can get reelected

Earlier today I was reading this article about “cupcake moms” at the local PTA mobilizing online against TOD in Huntington Station, a hamlet in Long Island, and while it looked like your average suburban NIMBY story, this part of the Long Island Press story jumped out at me:

[Supervisor] Petrone had reportedly wanted this revitalization project for the former urban renewal area as his legacy to the town, but he won’t get it now. Instead he was reportedly blindsided by Cuthbertson’s switch last Thursday.

Sources told the Press that Cuthbertson withdrew his support because Huntington Democratic Party insiders wanted to take the housing issue off the table so Republicans couldn’t use it against the Democratic incumbents in the elections next year. Councilwoman Susan Berland, who had straddled the fence for months, finally came out against the AvalonBay proposal this summer. She wanted less density.

I guess we can count this as a point in favor of Matt Yglesias’ suggestion to isolate local elections from party politics by making the races non-partisan.

Another part of the story that I found interesting was all the people hearkening back to their childhoods and their parents’ motivations for moving out of NYC to Long Island and using these as excuses not to let developers build on this site. This is pretty ironic, considering that the development was to be built on a plot of land that was once occupied by housing that was razed in the 1950s in an urban renewal scheme.

I’m a few months late to all this, but it was apparently an important battle in the broader war over land use in Long Island – so much so that there was a post mortem held by a Long Island smart growth group that Newsday covered here and here. The articles are, unfortunately, well gated, but if there are any NYC-area Optimum Online or Newsday subscribers out there, please e-mail me (smithsj[at]gmail[dot]com), because I’d love to learn more about this.

Anybody know of any other local land use decisions that were influenced by party politics?

Edit: Not sure how I forgot to include this since it was the whole reason I chose to post it, but the affordable housing is mandated by local inclusionary zoning – no developer would voluntarily seek out below-market rents. So essentially the developer was forced to include “affordable” units, which then became the very reason that the community rejected the proposal.

Development as preservation

I don’t think it’s a secret that we here at Market Urbanism are skeptical of mandatory historical preservation of private property, but until recently I hadn’t realized how utterly counterproductive some of these efforts really are. I’m talking specifically about cases where historical preservation statutes forbid additions from being added to the tops of buildings – structures that increase a building’s value and floor space without detracting much from the history, facade, or even interior of the building.

Because really, who'd want to live in Brooklyn anyway?

New York City, with its rapacious developers and entrenched preservationists, seems to be a hotbed of addition-induced turmoil. The enormous pent-up demand occasionally surges through the legal barriers, with unapproved additions and penthouses popping up throughout the city, and developers sometimes being forced to tear them down. A relatively innocuous penthouse on top of a hotel in TriBeCa that’s partly owned by Robert De Niro narrowly avoided this fate a few days ago, but a one-story addition atop a townhouse in Chelsea wasn’t so lucky – apparently slaves used the rooftop to flee when it was a part of the Underground Railroad, so the addition is being taken down and the roof is being restored in all its slave-fleeing glory. A few months ago a building in Dumbo lost six stories that were almost five years old because the owners never got a zoning variance to add residential space to the commercially-zoned property. Developers like Ramy Issac and Ben Shaoul have become infamous as “tenement toppers,” and while their tactics are sometimes unsavory and illegal, the fact that anyone is willing to take such a risk is indicative of the extraordinary unmet demand for density in the city.

And with the city’s real estate market already heating back up, this demand is only going to become stronger. Even if the preservationists win today’s battle and stave off redevelopment for a few more decades, densification will need to occur some day. And when it does happen, these small buildings are going to be the first to go. While just a few extra stories would raise their value and protect them against future redevelopment through the price mechanism, these short properties with only a few tenants will only become more attractive targets for developers. And unlike today, when developers want to work with the existing structure and add on to it in an incremental fashion, the redevelopment of the future will likely involve razing the building entirely.

Beijing is currently facing such a dilemma with its traditional hutong neighborhoods, albeit one caused by decades of redevelopment-strangling Maoism rather than the redevelopment-strangling Greenwich Village Society for Historic Preservation. Robbed of the opportunity to densify gradually over the course of the 20th century, the only practical option now is total demolition. The alternative – museumification – is not practical in a rapidly-urbanizing China, and I don’t think that New York is quite ready to accept its fate as a New World Venice either.

So while historical preservation may have its place, it is very shortsighted to use it against developers who want to retain the facade and vast majority of the original structure of a pre-war building. If preservationists in the East Village and Dumbo, for example, succeed in blocking these eminently reasonable proposed additions, they’ll have only themselves to blame when, fifty or a hundred years hence, the buildings are torn down completely because developers see no value in their small size and low revenues. Additions add value to buildings, and this market value is the best way to ensure preservation in a profit-driven society. In its dogmatic opposition to even non-destructive redevelopment, this form of total preservationism is sowing the seeds of its own destruction.