Glamour in streetscapes

A while ago I attended an Urban Land Institute event on development trends in Fairfax’s Mosaic District. A presenter from the retail developer EDENS described their strategy of adding “sidewalk jewelry,” a design technique used to entice shoppers to travel down sidewalks between stores. Having never heard the term before, it nonetheless stuck with me as I thought about retail developments that manage to create relatively lively pedestrian environments from the top down.

At Mosaic District, this street jewelry takes the form of signage designed to engage pedestrians, fountains, and planters:

Mosaic 1

mosaic_icsc_award

It’s certainly more aesthetically pleasing and engaging to pedestrians than the average strip center. While the typical strip mall has a parking lot for a set back, Mosaic District has a parking garage that allows the rest of the center to be more pedestrian-scaled. With the “sidewalk jewelry” framework in mind, it’s easy to see that many retail developers have embraced this trend toward focusing on the pedestrian experience once shoppers have left their cars at the center’s periphery. While Easton Town Center in Columbus has many of the same stores as any major mall, it’s outdoor shopping environment is distinctly different, attempting to emulate the “town center” in its name:

Easton town center

For shoppers who value retail ambience, these “lifestyle center” sidewalks provide a much nicer atmosphere relative to more dated strip center or shopping mall designs, but they can’t compare to environments where storefront decorations developed more organically. A recent trip to Quebec City reminded me of the sidewalk jewelry term, but there the visual treats that lure pedestrians down the sidewalk have much more texture than the shopping centers’ above because they are the result of an emergent order among the street’s businesses and residents rather than one developer’s vision:

Quebec-City-street-Canada

This type of street meets social critic Virginia Postrel’s framework of glamour. In her book The Power of Glamour, she explains that glamour is something that transcends our everyday life and transports us to better, different circumstances. She explains that shapes that evoke mystery carry glamour because they create mystery at what lies beyond. The fortress walls surrounding the Quebec City add a sort of magic to the city’s charming streets:

Arch

Quebec City’s glamour makes it appealing to tourists, but cities that are home to more productive innovation have streets with even more glamour, such as this Tokyo scene where each sign invites the pedestrian to find out what’s inside the business:

Tokyo

As Postrel explains, this glamour “invites us into a world without giving us a completely clear picture.” While people may dismiss the importance of glamour in cities as a frivolous quality, Postrel explains the importance of glamour in our lives:

Glamour is all about hope and change. It lifts us out of everyday experience and makes our desires seem attainable. Depending on the audience, that feeling may provide momentary pleasure or life-altering inspiration.

[. . .]

Glamour can, of course, sell evening gowns, vacation packages, and luxury kitchens. But it can also promote moon shots and “green jobs,” urban renewal schemes and military action. (The “glamour of battle” long preceded the glamour of Hollywood.) Californians once found freeways glamorous; today they thrill to promises of high-speed rail. “Terror is glamour,” said Salman Rushdie in a 2006 interview, identifying the inspiration of jihadi terrorists. New Soviet Man was a glamorous concept. So is the American Dream.

Glamour, in short, is serious stuff. It can alter life plans, even change history. And as a broad psychological phenomenon, it holds intrinsic interest. While rarely addressed in C-SPAN discussions, glamour is the sort of topic to which such 18th-century titans as Adam Smith and David Hume often turned their attention. It spans culture and commerce, psychology and art.

Land use restrictions do a lot to eliminate glamour from urban development through setback requirements, parking requirements, and height limits. Rules of the game that favor large-scale development over the environment that’s possible with the chaos of many small developments prevent the elements of surprise that glamorous streets have. Today’s retail developers are attempting to add glamour back into their products with sidewalk jewelry, but no amount of attention to design on their part will match the level of intrigue of the streetscapes above. Viewed through Postrel’s lens, rules that remove glamour from cities aren’t just bad for the pedestrian experience, but they also dampen what can be an important source of inspiration in our lives. If glamour plays a role in driving us to action, it may be one factor that encourages people to pursue their work in the place where they will be most productive. Rules that eliminate glamour from a city’s physical environment can ultimately reduce its contribution to economic progress.

 

Urban-Rural Political Alliances Hurt Cities

While House Republicans have stripped food stamp benefits from the farm bill to get enough votes to pass the bill’s agricultural supports,  the Supplemental Nutrition Assistance Program may be added back into the bill in conference with the Senate. The farm bill get its strength because it aligns the interests of urban Democrats and rural Republicans in Congress, facilitating log-rolling where the majority of congressmen are willing to support the bill because it directly benefits their districts.

While the food stamp program has in the past made up a large portion of the bill’s costs, with these these funds flowing primarily to urban residents, urbanists should be leery of the urban-rural alliance that facilitates continued support for the farm bill. Aside from the primary cost drivers including nutrition programs and farm supports, the bill also includes measures like rural broadband and rural utilities services loans designed to subsidize living in areas where providers do not find it profitable to provide services.

Unlike SNAP benefits, which are available for rural and urban residents based on income, rural infrastructure support is allocated to locations rather than individuals. Providing subsidies based on location is hugely attractive to Congress because it allows members to provide concentrated benefits directly to their constituents. However, subsidizing individuals’ choices to live in areas where building infrastructure is inefficient limits economic growth potential. Cities provide better job opportunities and are centers of innovation, so policies that subsidize rural living don’t make sense.

While the farm bill is a clear example of an urban-rural alliance that facilitates these subsidies, many programs similarly subsidize infrastructure in rural areas from USPS providing flat-rate delivery to the Essential Air Service program that subsidizes service to 163 airports that would otherwise not be profitable. Because all senators represent states with rural post offices and most have constituents who use airports in the EAS program, the political system is set up to maintain these subsidies that lead some people to choose to maintain a rural lifestyle.

This isn’t an argument that city residents aren’t getting their fair share of federal spending; in fact, residents of urban counties received more per capita spending than those is rural counties (link to 2010 data, the most recent available). Rather, urbanization is a process that provides benefits both to those who move to cities and those who live there through greater economic innovation and cultural diversity, so the political gains of rural subsidies come with high costs. As Ed Glaeser explains, urbanization is a key part of economic growth within the United States, with people in cities being more productive than those who don’t. “the three largest metropolitan areas producing 80% of GDP but containing only 13% of population.”

Rural living has its own set of advantages that individuals should be free to choose if they like, but this lifestyle choice should not be subsidized by those who choose to live in cities and suburbs. Subsidies should follow individuals rather than locations to avoid discouraging urbanization.

Ranking State Land Use Regulations

Yesterday, the Mercatus Center released the third edition of Freedom in the 50 States by Will Ruger and Jason Sorens. The authors break down state freedom among regulatory, fiscal, and personal categories. At the study’s website, readers can re-rank the states based on the aspects of freedom that they think are most important, including some variables related to land use and housing. The available variables include local rent control, regulatory takings restrictions, the Wharton Residential Land Use Regulatory Index, and an eminent domain index.

Using only these “Property Rights Protection” variables, Kansas ranks as the freest state, followed by Louisiana, Indiana, Missouri, and South Dakota. Texas, sometimes cited as the state without zoning, comes in at 18th. The least free state is New Jersey, with Maryland at 49th, followed by California, New York, and Hawaii. This result — states with some of the most expensive cities being the most regulated — is unsurprising.

In the places with the freest land use regulations, where a developer would be able to build walkable, mixed-use neighborhoods without going through a burdensome entitlement process, there isn’t demand for dense development. This may be one reason why the Piscataquis Village project, an effort to build a traditional city, is happening in a sparsely populated Maine county because new development of this sort is simply not permitted near any population centers.

As Stephen recently pointed out, public opinion in New York tends to see city policies as wildly pro-development:

In spite of the popular impression of New York as a builder-friendly city that’s constantly exceeding the bounds of rational development, the city’s growth over the past half-century has been anemic, and has not kept pace with the natural growth in population.

This ranking of New York near the bottom of the index demonstrates what urban economists already know — new development is not permitted to be built where rents are highest and it’s most needed in spite of perception of pro-development policies. Does anyone have development experience in some of the freest states? Does this ranking match your perception?

Update: For full disclosure I was a project manager on Freedom in the 50 States.

Q&A with David Schleicher

I recently spoke with George Mason University Law Professor David Schleicher about his research on land use law and economics. Here is our conversation including links to some of his academic articles that have earned a lot of attention in the land use blogosphere.

Emily: What are some the costs of land use restrictions? Talk about agglomeration economies and how these relate to development restrictions.

David: This is a huge area of research that spans back to Alfred Marshall looking at why cities exist in the first place. It comes up with explanations for why people are willing to pay increased rents to live downtown. These include lower transportation costs for goods, which was a major driver of urbanization for much of American history. Today this is a small driver of urbanization because the costs of internal shipping have fallen so dramatically. Now an important advantage of urbanization is market size. You can see this in all different markets. Restaurant rows are a great example of this. When you go to one of these rows where there are a lot of restaurants and bars, you have insurance that if one place you go is bad, you know you have other options nearby. The last category of agglomeration benefits is learning, or information spillovers. We see this in cluster economies like Silicon Valley where people at different firms learn from each other. As Marshall explained, “The mysteries of the trade become no mysteries, but are as it were in the air.” Wage growth is faster in urban areas than in rural areas, and this comes from this learning process. In the aggregate, if you keep people out of dense cities, you will decrease national productivity.

Emily: In your paper City Unplanning, you propose a tool called Tax Increment Local Transfers (TILTs) that would compensate property owners for allowing more development in their neighborhoods. How would these work?

David: The idea of TILTs is that new development increases the city’s property tax base. By multiplying the increase in the base by the tax rate, we get what is known as the tax increment. If we give some of this increment to neighbors of a project automatically, they may oppose projects less. It’s effectively an institutionalized bribe, but it would have some really neat effects. Currently we use Community Benefit Agreements, in which the developer bribes — “bribes” is so negative sounding — neighborhood opposition. But, CBA’s increase the cost of development. They act as a tax on development, so they are not as effective at lowering real estate costs. TILTs get money from a growing property tax base instead, so they have the neat effect of reducing the incentives to complain about new developments. So if you know you’re going to get paid through a TILT, your incentive to hold up the project goes down whereas with CBAs you have an incentive to make yourself a fierce opponent to development in the hopes of attaining a larger community benefit. Secondly, it has an information component. If residents know that they will receive monetary benefit from a development but they still oppose it, this provides the planning office with the information that residents would rather not have the building than have the cash.

It’s an idea to help overcome NIMBYist opposition to development in their neighborhoods and to help address the problem that we see very little housing and office growth in our largest cities. One source of this low rate of development comes from aldermanic privilege. The idea of this is that because most cities don’t have competitive political parties, we see that every councilman gets to decide on land use issues in his own district. The effect of this inside big cities is to turn a city like New York into something that politically looks like a lot of suburbs. All of the things that we’ve talked about with suburbs  using political influence to prevent new development in their town can happen inside a city legislature. The TILTs proposal is designed to make it attractive for individual councilmen who are going to control land use decisions in their districts to allow development. It’s acknowledging that the only way we might get more development is to pay off NIMBYs.

Emily: Transferable development rights share some similarities with TILTs in that both create incentives to build support for development. Do you see potential for TDRs?

David: I think of these as more similar to zoning budgets, another policy idea I’ve written about. Basically these are an announcement by cities that they want to allow more building, but they’re unsure of where they want to put it. TDRs are basically a market mechanism for setting the amount of building that the city wants to allow. They’re also traditionally a method of building coalitions, because they get preservationists in favor of new development near landmarked buildings because it’s going to channel cash to them. So the theaters of the 42nd Street theaters were able to sell their TDRs to nearby developers, and then the theater community got in favor of the redevelopment of Times Square. I think it’s a relatively attractive idea, and its a procedural solution like the ones I propose. Whether you could imagine it happening at the citywide level has never been done, but I think they’re very attractive.

Emily: I have previously considered a role for states in setting limits for how much municipalities can restrict land use because it seems that homeowner interest groups would not be as organized at the state level. What are your thoughts on that?

David: You have a problem here that the interest of the state is not necessarily maximizing land value. And of course states do get involved in land use. For example, Massachusetts’ anti-snob law created a work-around for local zoning. But in general, states don’t get involved because people get really angry when they do. I’m not opposed to states getting more involved in land use — I think I would probably be in favor of it — but there are problems. You can tell stories about how states get around land use inefficiencies because they are a higher level of government. People make the same types of arguments for regional governments. One of the problems with this is that states can end up behaving with the same aldermanic privilege that we see in cities, where legislators are allowed to make decisions for their districts. In states where there is not a lot of partisan competition, we see that legislators have a lot more power over bills that affect only their districts. So state land use policies might work better in states like Ohio or Michigan where there is more partisan competition, but in somewhere like Wyoming less so. You can imagine it going either direction.

Emily: What’s your opinion on the relationship between Smart Growth advocates and market urbanists?

David: The conflict between market urbanists and Smart Growth advocates is real, but it can be overstated. Their critiques of current zoning are roughly similar. They both think that we’ve separated land uses too much and that we’ve limited density too much. The modern regime governing land use is bad for the environment and its bad for economic productivity because it splits things up too much and it reduces entry to our richest cities. The answers that market urbanists and Smart Growth people give for how to fix this are different. So Smart Growth activists generally have a vision of what a city should look like. They’re prescriptive. Market urbanists are more demand driven. They say we have no idea what the optimal city should look like, we just think that unless there is a clear case of negative externalities, development shouldn’t be restricted. So the question of whether Smart Growth types and market urbanists are allies or enemies is an interesting one.  For the most part they are allies against the baseline position of modern American policy. That said, there are situations in which we disagree.  So take the never ending debate over the Height Act. Some, though not all prescriptive urbanists like the height limit because they have an idea of what a city should look like, and maybe a mid-rise city like Washington fits that pretty closely, whereas market urbanists think that’s ridiculous. If people want to build taller buildings on K Street, we can’t really see any reason why they shouldn’t. But in a lot of other arguments they agree.

Emily: Do you think that institutions like DC’s Advisory Neighborhood Commissions play a role in limiting development?

David: ANCs are effectively a mechanism through which neighborhoods are able to mobilize and organize opposition to projects. Their decisions are usually not fully binding, but they are able to make recommendations, and they usually win. They are designed to be a step in the process where the opinions of the neighbors can be heard. They are conceived of in opposition to Robert Moses-style trampling of neighborhoods, but their effect is by-intent to give neighborhood opposition to development more sway. And the way they do it is both by formally including them in the process and by providing a mechanism by which they can overcome the ordinary Olsonian limits on collective action. You have a hearing where everyone in the neighborhood gets together, and this allows them to coordinate opposition.

Emily: Some land use writers have focused on the importance of writing about the losses of zoning to educate people and changing public opinion. Do you think this is an important strategy along with advocating for procedural changes?

David: This is an area where the lawyers and the journalists approach the problem from a different method. I think it’s very well and good to educate people about the costs of excessive land use controls. The very use of the word NIMBY or BANANA is an effort to educate people and shame people for their preferences to stop development in their neighborhoods. To the extent this is effective I think that’s great. However, I think that opposition to building is rooted in something that you can’t talk people out of. People have made investment decisions to buy their homes and then have lots of incentives to stop building in their area. Procedural solutions are more likely to be fruitful, whether they’re mine or someone else’s, in changing the manner in which policymakers make decisions. These are differences in emphasis only. I think that educating people about the costs of zoning is great, but because people put so many of their assets into homes, I don’t think that telling people their decisions are economically unattractive is going to be very efficacious in changing their mind.

Emily: When upzoning is considered for broad areas rather than individual parcels, it seems that there could be a lobby among some homeowners who support upzoning for the chance to sell their home for redevelopment. Do you see less opposition to upzoning when the change applies to a larger area?

David: Absolutely. A project that I’m currently working on is that city’s master plans produce less-restrictive results than amendment-by-amendment zoning changes because you’re able to get deals across neighborhoods. So if you’re upzoning all of Washington you would have neighborhoods saying we’ll take a tower here if you’ll take a tower there, and you perhaps get something closer to expressing the city’s preferences. Whereas if you do this project-by-project, there is no reason to believe that if you allow a tower in your neighborhood that the next time the next neighborhood will be willing to take one. So you see cities where this happens. For example Philadelphia’s rezoning was consciously an effort to overcome the slow limitation on building and density created by amendment after amendment of downzoning.

Emergent Order in Cities and Markets

Last week at The Atlantic Cities, Allison Arieff posted a Q&A with Alex Marshall about what Marshall asserts are Jane Jacobs misunderstanding of how cities work. Marshall says:

Human interaction takes place, but it shouldn’t obscure what makes it possible, which is government. As much as I admire Jacobs, I suspect her experiences fighting Robert Moses, the master builder and destroyer of New York City, turned her off to government. So much so that I suspect she began to ignore it. Jacobs described how urban economies, such as say the computer ecosystem in the Silicon Valley, emerge in an organic way. I argue that these business ecologies emerge only within the containers that government builds. Both cities and economies emerge as overt political acts. They are constructed things.

Here Marshall completely eschews the historical evolution of both cities and markets in making his assertions. Both cities and markets are vehicles for human exchange, but neither is built by a person or a government. Populations, not infrastructure, are cities’ most important assets. Population changes, much like prices in a market, are a product of human action but not of human design. Historians have found evidence that the emergence of cities was not the result of ancient leaders’ direction but was rather the result of individuals acting in their own best interests. Likewise, we see both historical and current examples of trade emerging without government. States have much more power to limit trade or initiate plunder than they do to facilitate successful trade. Jacobs identified that the spontaneous order that allows prices to direct trade likewise leads city streets to serve their residents’ commercial and civic needs when they are not restricted from doing so.

Marshall asserts that Silicon Valley didn’t emerge organically because it came about within the legal and infrastructure “containers” that government provides. While it’s true that government provides infrastructure and rule of law in Silicon Valley, it’s impossible to point to a person or group who created this tech cluster from the top down. Rather many individuals pursuing their own plans created this tech center. We can see a clear difference between unplanned clusters like Silicon Valley and top down attempts to create similar economic centers. As Gert-Jan Hospers, Pierre Desrochers, and my former colleague Frédéric Sautet explain, governments are not equipped to create successful clusters:

There are no fundamental reasons to believe why policy makers are better informed than entrepreneurs in assessing the future economic potential of particular ventures (including clusters). Due to the inherent uncertain character of new technologies such government failure is likely to occur especially when it comes to high-tech clustering. As Schmookler (1966, p. 199) argues, almost all instances of innovative activities that he studied were not stimulated by policy-pushed scientific research but by the realization that a costly  problem had to be solved or that a profit opportunity could be seized. According to Miller and Côté (1985), this is one of the main reasons why ‘innovation centers’ and other greenhouses in innovation parks opened in the USA and Canada in the 1970s and 1980s have failed without exception. Also French high-tech policy in the 1980s shows the risks of a strategy of picking winners. After five years of subsidizing the micro-electronics sector the French had to admit that they backed the wrong horse.

The dispersed knowledge that prevents governments from creating economic clusters likewise leads to countless failures in government efforts to build or rebuild cities. While Jacobs recognized that both urban and economic development must be driven from the bottom up to succeed in the face of these knowledge problems, she was not anti-government as Marshall claims.  Benjamin Hemric, a regular Market Urbanism commenter, commented on the post to point out that Jacobs did not in fact disregard the importance of government. In fact while libertarian writers have often pointed out the free market themes in her writings with her appreciation of emergent orders, Jacobs herself rejected the libertarian label and instead spent the end of her life promoting the role of good government in both cities and economic development.

 

The Renewed Debate on Inclusionary Zoning

Stephen Smith and I co-wrote this post. In case you haven’t been following Stephen elsewhere, he’s also been writing at The Atlantic Cities and Bloomberg View.

 

This year, some of the first apartments and condos subject to inclusionary zoning laws in DC are hitting the market, stoking debate over development laws that the city adopted in 2007. The inclusionary zoning requirement is currently stalling the city’s West End Library renovation with Ralph Nader leading efforts to include an affordable housing aspect with the library project. Inclusionary zoning advocates often base their support on the desirability of mixed-income neighborhoods, while challengers argue that inclusionary zoning is an inefficient way to deliver housing with unintended consequences.

Heather Schwartz, who studies education and housing policies at the RAND Institute, says that one important feature of this policy tool is that it gives low-income families access to high-income neighborhoods while at the same time limiting the number of low-income residents in a neighborhood. She said, “Since IZ is a place-based strategy that tends to only apply to high-cost housing markets, it can offer access to lower-poverty places than housing vouchers and other forms of subsidized housing have historically done.”

David Alpert, editor-in-chief of Greater Greater Washington, a local urban planning blog, offers another argument in favor of inclusionary zoning, “a policy that builds support for both greater density and affordable housing,” he said in an email. “Much of the opposition to greater density involves a feeling that it is just a ‘giveaway’ to developers who make the profit and impose some collateral burden on a neighborhood, but many people are more supportive of the density if it serves an affordable housing goal.”

While inclusionary zoning proponents may see its ability to introduce just a few low-income residents to a higher income neighborhood as an asset, it does not typically meet an area’s demand for affordable housing. Montgomery County, MD, outside of Washington, DC has one of the nation’s most established inclusionary zoning problems. In over 30 years, inclusionary zoning has created fewer than 13,000 housing units in the county, which area developer AJ Jackson with EYA describes as “a drop in the bucket of housing demand.”

Jackson explains that the requirement to take a loss on some units leads developers to build only higher end housing, where they can make up the losses they take on the affordable units, making the remaining market-rate units still more expensive. Jackson suggests that the only viable solution to the problem of a lack of affordable housing is to increase allowable densities broadly. He points to several neighborhoods in DC and surrounding counties are currently zoned for commercial or light industrial uses, but that profitable residential development could succeed with zoning changes.

However, he points out the political obstacles to this type of development. He said, “For these jurisdictions, office density and jobs are great. But residents take more than they give in tax revenues,” so city officials may oppose residential development for budget purposes. An even greater obstacle may be current residents’ opposition, a well-documented setback to all sorts of DC-area projects from residential to restaurants.

The political incentives that confront politicians when they do decide to embrace more development complicate the density bonus calculus. The pro-density argument for inclusionary zoning is that the bonuses allow developers to build where they otherwise could not, but when an area is being targeted for development anyway, anti-density activists can easily anticipate bonuses when base zoning allowances are being hashed out and factor them in to their maximum tolerated building envelope. If those who oppose development in and of itself have enough clout, the “bonus” that developers can be reduced just a technicality.

For example, during the rezoning process for Manhattan’s West Chelsea neighborhood in 2005, New York City Assemblyman Richard N. Gottfried wrote in a statement that the city should follow the lead of the Hudson Yards rezoning, where the affordable housing programs were made “effectively, if not technically, mandatory,” which he attributed to “the leadership of Councilmember Christine Quinn,” now frontrunner to succeed Bloomberg as mayor.

The city did eventually take steps to increase the amount of affordable housing built by Hudson Yards developers by tweaking the “bonus” formula so that the rezoning yielded more affordable housing without more bulk than the administration’s proposal. Some below-market units were carved out of the proposed development, while others were pushed off-site – the affordable housing “will not generate additional bulk in the neighborhood through an inclusionary bonus,” as Chelsea Now wrote in 2009. The affordable apartments will be built on city-owned plots 15 blocks north, which given their location, were destined for development soon anyway.

And for those who support inclusionary zoning programs because of the extra density they can bring to neighborhoods, Assemblymember Gottfried’s suggestion for West Chelsea should be especially troublesome: “The Commission should look for places to lower the base FAR to allow the area available for affordable housing to increase.

Indeed that seems to be what happened. “Building density in the entire [West Chelsea] district has been reduced from the previous plan,” The Villager wrote the next month, “in order to provide more incentives for developers to apply for higher density under the inclusionary housing program.”

And New York City is not the only place that affordable housing groups have fought as-of-right density in the name of bonus incentive programs. Last year in California, some housing advocates were hostile to legislation, supported by developers and environmentalists, that would have forbidden municipalities in the state from requiring more than one parking space per unit in neighborhoods adjacent to frequent transit corridors.

As Lisa Payne, policy director at the Southern California Association of Nonprofit Housing, told the California Planning & Development Report in regards to their opposition to Assembly Bill 710, “We have 30 years of history with density bonus law, that recognizes the value of trading a planning concession, whether it be height, density, or parking for supplying the mix of incomes in a project. This bill would have removed that tool.” Affordable housing groups withheld their criticism of the 2012 iteration of the parking reform bill, but it has yet to pass.

While inclusionary zoning provides significant benefits to residents who are lucky enough to live in allotted affordable units, it does not provide sufficient housing units to address many cities’ housing affordability challenges, and in some cases can even breed alliances between affordable housing advocates and anti-density constituents. As Jackson explains, permitting more and denser development is the only viable path to this goal.

From the experts on charter cities

After my post on charter cities, I received some interesting feedback from Michael Strong, CEO of MGK Group, the company investing in Honduras’ charter cities and Brandon Fuller, a Research Scholar at NYU’s Urbanization Project. The Urbanization Project is headed by Paul Romer who is no longer involved with the Honduras effort.

Both stressed that their visions of charter cities do not rely on heavy-handed urban planning or much initial infrastructure. Brandon, speaking from his own perspective rather than on behalf of the Urbanization Project, said that he views the role of charter city investors as building arterial roads and providing some open space. The charter city government would not set any parking requirements or height limits, so the market would drive urban form at the block level. He writes:

For planning, we favor a decidedly light touch approach. Our thoughts on planning are influenced by our colleague Solly Angel, an adjunct at NYU and one of our principal researchers at the Urbanization Project.

Michael explained that the charter cities where MGK is investing will draw more from LEAP zones than from Romer’s charter city model. One important distinction is that MGK is purchasing land where these zones will be located whereas Romer suggests charter cities should be built on land donated by the host country. He writes:

The Honduran government is not designating a specific location for us.  The current proposal is for them to designate fairly large regions within which we can identify specific parcels and sub-regions that are most appropriate for getting started.

While Brandon might support a larger role for city leadership in building a street grid than Michael does, both made clear that urban development should fall to entrepreneurs rather than charter cities’ initial investors or governments. Both envision that a change in the rules governing the sites of charter cities will draw people who previously lacked an option for living under free market institutions.

As Brandon explains:

The conjecture behind charter cities is that rules, or institutions, play a significant differentiating role. In other words, there are lots of places around the world that, but for lack of effective governance, would be successful cities based on geography and accessibility. What’s more, there’s plenty of pent up demand for life in well-run cities that is not currently being met.

Today Hong Kong and Singapore, often cited as models for charter cities, are two of the economically freest place in the world (pdf). Hopefully charter cities and LEAP zones of the future will continue building on this model, allowing the market to drive urbanization  patterns.

The High Cost of Free Parking Chapters 16 – 18

This post follows on the earlier discussion of the The High Cost of Free Parking.

Chapter 16 — Turning Small Change in Big Changes

Here Donald Shoup gets to the idea of using Business Improvement Districts to manage street parking as Brandon Smith mentioned in the last post’s comments. When parking revenue goes to municipalities’ general funds, drivers see it as a fee with questionable benefit. Contrarily, when parking revenue stays in the neighborhood, it can provide tangible benefits in the form of neighborhood improvements. This may make drivers more willing to pay for parking. More importantly, it creates an interest group in favor of charging a rate for parking that provides an funding source for neighborhood improvements. Seen from this angle, paid street parking benefits businesses from multiple angles.

He uses to Los Angeles neighborhoods to demonstrate the potential benefits of parking revenues. In the 1980’s, Old Pasadena was suffering from a vacant building problem because historic buildings did not include onsite parking. As a result, they could not be repurposed. In 1993 the city introduced parkign emters and gave the revenues to the neighborhood to finance public improvements. Additionally, building owners were given the right to pay a fee for parking in a public garage rather than providing parking onsite, allowing existing buildings to be repurposed. These policy changes have created an environment where drivers can easily find parking and a streetscape that is more inviting for pedestrians.

Shoup contrasts Pasadena with Westwood Village which has been in decline since the 1980s. In 1994 a parking study revealed that curb parking was 96 percent occupied, meaning the neighborhood had a significant cruising problem. As a response to the neighborhood’s decline, though, the city decreased hourly parking rates from $1 to 50 cents, worsening the parking shortage. This revenue goes to the city’s general fund even though the neighborhood is in need of streetscape improvements. Shoup explains that Old Pasadena has become as desirable as Westwood Village once was.

Many business districts may believe that free parking is an asset, and in a sense it may be. But turning parking revenue over to the neighborhood will make the change politically palatable and will reallocate parking spaces to those drivers who are willing to pay for it. Additionally, higher prices will increase parking turnover, allowing more customers to visit local businesses.

Chapter 17 — Taxing Foreigners Living Abroad

The title of this chapter plays on the perennial desire of residents of one jurisdiction to receive public services at the expense of those outside the jurisdiction. Shoup suggests this may be possible when it comes to neighborhood parking. At present, property owners and tenants in residential areas often oppose commercial development because of parking spillovers. With good reason, these NIMBYs have concerns that commercial developments will lead to increased parking pressure for the free spots on their streets, making it difficult for them to park near their homes. Shoup suggests this creates an opportunity for residential parking benefit districts. Those with residential permits could park free in these neighborhoods, but drivers visiting the adjacent commercial uses would pay for parking. This parking management could ensure that parking does not become overly congested and also provide the neighborhood with money to finance improvements.

This policy contrasts with some neighborhoods that have created zones where only those with residential permits can park. This policy often leads to excess street parking availability and eliminates potential gains from trade.

In some residential neighborhoods, however, the parking commons problem comes from the residents themselves who pay below market rate for their residential permit prices. In these cases Shoup suggests that all street parking should be allocated with prices high enough to provide some availability. He points out that this could also reduce NIMBYism toward converting carriage houses or garage space to accessory dwellings, permitting new affordable housing. Because parking would be governed by prices, new residents will not lead to a parking shortage.

Shoup writes:

The twentieth century saw a great competition between two economic systems: central planning and market prices. . . . Parking is a perfect example of an economic activity where planners have usurped markets without justification. We have relied almost exclusively on the command-and-control approach to regulate parking, and we have failed spectacularly.

Chapter 18 — Let Prices Do the Planning

In this chapter, Shoup emphasizes that prices are the only way to allocate goods given consumers’ varying preferences. He models parking decision based on the variables of distance to destination, price of the parking spot, parking duration, walking speed, number of people in the car, and value of time. In a world of free parking, drivers varying preferences for time and willingness to pay cannot be served; rather everyone must pay for parking with their time. When parking is priced according to demand on each block, the invisible hand will efficiently lead drivers to park in the spot that meets their preferences for saving money and saving time for each trip.

Additionally, charging appropriate prices for curb parking reduces political pressure for off-street parking. In this scenario, develoeprs will have the incentives to provide the amount of off-street parking their customers demand, and planners can begin rolling back parking requirements. Retailers that choose not to include parking in the price of their goods will be able to compete with lower prices or on other aspects of their service.

Thoughts on this Section:

These chapters provide some solutions to current parking problems that seem both effective and politically possible with BIDs and residential parking benefit districts receiving parking revenues in their neighborhoods. It’s heartening to see some market urbanist solutions that have succeeded in neighborhoods and cities already. However, I’m not convinced that the proposal to charge for all street parking in some neighborhoods would be accepted by many residents, and Shoup acknowledges it could be difficult. At present neighborhoods often oppose new development because of its parking pressures, but it’s not clear to me that residents would prefer paying for street parking than dealing with parking congestion.

Also, I think it’s important to acknowledge that some people benefit from the current situation, predominantly those who place a low value on their time, make frequent car trips, and prefer cruising to paying for parking. This is not to say that charging for street parking and eliminating off-street parking requirements wouldn’t be a step toward fairness and efficiency, but rather that it’s honest to acknowledge this change will make some people worse off.

I enjoyed this section as it focuses on the power of prices to create order and the role of institutions in the parking problem. He ends chapter 18 with an idea picked up in Eran Ben-Joseph’s Rethinking a Lota book I recently reviewed at City Journal. Shoup and Ben Joseph suggest that cities should move from regulating to the number of parking space to regulating parking design. However, as I see it regulating for design will be subject to the same knowledge problems Shoup points out in regulating for quantity.