The Status of Smart Growth Regulation

Image via Urban Milwaukee

Debates over land use policy often devolve into opponents arguing over how to interpret the same set of facts. For example, “market suburbanists” argue that because apartments in walkable neighborhoods tend to cost more per square foot than suburban single family homes, high densities make coastal cities expensive. Smart Growth advocates may look at the same data and argue that zoning rules that restrict the supply of high-density housing in desirable locations is what makes housing expensive.

In order to provide clarity to the debate on land use regulations, Mike Lewyn and Kip Jackson survey the zoning codes of the 24 cities with populations between 500,000 and 1,000,000 residents. In their new Mercatus Center study, they find that while some cities have in fact enacted the sorts of policies that market suburbanists fear — minimum density requirements and maximum parking rules — these regulations remain very rare relative to near-ubiquitous maximum density rules and minimum parking requirements.

Lewyn and Jackson list the mid-size cities that have adopted various types of Smart Growth regulations below. While a handful of cities have adopted the types of regulations they surveyed, every U.S. city in this sample has a maze of traditional zoning rules.

Lewyn Table

A perpetual challenge in studying the effects of both traditional and Smart Growth regulations is finding data. Municipal codes are all housed on unique websites with varying degrees of accessibility. The difficulty of achieving clear answers as to what causes high housing prices contributes to advocates of traditional zoning and Smart Growth to shout past one another.

While Smart Growth as a whole is maligned by some advocates of the free market, many Smart Growth tenets are actually deregulatory. Policy changes including upzoning, reducing parking requirements, and permitting mixed-use development are all steps toward laissez-faire land use relative to the status-quo, even though these policies are sometimes criticized by those who claim to support free markets. A clear analysis of whether and how cities are implementing Smart Growth allows us to evaluate whether Smart Growth as a whole is a step toward or away from the free market.

Lewyn and Jackson’s study shows that rather than embracing the deregulatory tenets of Smart Growth, regulators in some cities have layered Smart Growth rules on top of their traditional zoning rules, creating a complicated web of regulations. They explain:

Fort Worth imposes a variety of minimum parking requirements, adding simply that the “maximum number of parking spaces shall not exceed 125% of the minimum parking requirement.” For example, the city requires one parking space per bedroom for multifamily housing, which means the maximum parking requirement is 1.25 spaces per bedroom. Because the difference between Fort Worth’s minimum and maximum parking requirements is so small, it appears that almost all parking that is not prohibited is compulsory.

The authors show that while many Smart Growth objectives of such as permitting higher density, mixed-use neighborhoods could be achieved with deregulation, urban planners have instead chosen in some cases to replace traditional zoning rules with Smart Growth rules, in some cases requiring development that would have been prohibited under the traditional zoning regime. As Stephen has pointed out previously, some cities have gone from parking minimums directly to parking maximums without giving the market outcome a chance.

By assessing the legal environment in this sample of cities, Lewyn and Jackson have set the stage for empirical work on how Smart Growth rules are affecting prices. This empirical work is badly needed. Understanding the costs of both these new rules and traditional zoning rules is crucial for evaluating these policies, and these costs cannot be estimated without a clear understanding of which rules cities are putting on the books. This paper demonstrates that today Smart Growth policies are unusual relative to traditional zoning rules that restrict density. However Smart Growth is in some cases complicating the policy landscape rather than providing more freedom for developers to respond to consumer demand.

Cities and the Tax Code

We spend a lot of time here talking about the local regulations that harm cities, from parking minimums, to height limits to restrictions on mixed-use development. I’ve been thinking recently about another policy that impacts cities at the federal level: the tax code. I bring up this topic not to stoke the political debate on redistribution, but to think about the outcome that results if tax burdens push and pull people out of cities.

I’ve often heard libertarian and conservative types say that they prefer suburban or rural living because city residents are more dependent on government services, but is it really true that city dwellers depend on government programs more so than others? City residents clearly pay higher local taxes and receive more local government services, but I would argue that this isn’t as important as federal taxation and spending because local taxes benefit the taxpayers more directly than the wider net of federal redistribution.

In Triumph of the Cities, Ed Glaeser points to the mortgage interest tax deduction as an important factor that pulls people to the suburbs by way of home ownership, and I would certainly agree that all federal policies with the goal of promoting home ownership or facilitating easy credit harm cities. Another much-talked-about tax expenditure for ethanol fuel blenders has benefits that fall on drivers, and this is on top of all of the other tax benefits that domestic oil companies receive.

Several government programs subsidize those who choose to live in inconvenient places. The USPS delivers many packages for a flat rate fee, while I doubt that FedEx would find this pricing profitable. Similarly, the American Recovery and Reinvestment Act provided funds for expanding broadband to areas of the country that could not otherwise support the service.

On the other hand, some federal policies transfer wealth to city residents, like the federal income tax deduction for state and local taxes and grants for public housing. My city-loving bias is probably blinding me to many other programs that further complicate the question. Washington, DC is in a class of its own in receiving federal goodies, but my gut tells me that most cities are net losers. Calculating the tax burden less federal spending for city residents vs non city residents would be an incredibly complex research project, but I think it would be a valuable one as we look at the policies that shape the geographical distribution of where people choose to live.

Does anyone know of  existing research on this topic? The Tax Foundation provides at least two data sets that are somewhat relevant, but neither answer the question. They show here which states receive more money than they spend and here the per capita federal tax revenues by municipality.

Socialism and the roads, then and now

I’ve been reading Stephen Goddard’s Getting There: The Epic Struggle between Road and Rail in the American Century, and it’s a great book with lots of excerpable content, but here’s one thing that caught my eye on page 170. I should note that when Goddard talks about “the highwaymen,” he’s talking about the old technocratic highway corps that focused on improving rural roads, which was only a small subset of the overall highway lobby. (The broader highway lobby included politicians looking for Keynesian votes, auto/tire/rubber/oil companies looking for customers, and, increasingly, big city mayors in a misguided attempt to reverse the auto-powered trend towards decentralization.)

Seeing to advance these watershed ideas, yet wary of the power of the highway coalition, FDR set up the urban-oriented Interregional Highway Committee (IHC) in 1941. He borugh traditional engineers and visionaries together and named his osmetime-nemesis MacDonald its chair. Its mix of disciplines led the IHC to the pregnant conclusion that highway building was not merely an end in itself but a way to mold the declining American city while reviving it. At the core of the concept was a twofer: by cutting a selective swath through “cramped, crowded and depreciated” cities and routing downtown highways along river valleys, Washington could eradicate “a long-standing eyesore and blight” while easing gridlock. The autobahns may have inspired the interregional highways, but on one element they differed fundamentally: the German roads sought to serve the cities, while the American roads aimed to change them. The variance would become startingly apparent a generation later.

To the highwaymen, the Roosevelt administration’s visionary proposals were anathema. Michigan Representative Jesse P. Wolcott warned that a “small coterie of individuals who would socialize America” were taking control of American highway policy. A member of the House Roads Committee decried the NRPB’s “cradle to the grave” recommendations, under which Americans’ lives were “mapped out, and planned and controlled and regimented.”

Of course, the old highwaymen were themselves practicing a brand of socialism – the roads they built might have taken in small user fees in the form of gas taxes, vehicle registration fees, and the capital costs of owning an automobile, but they were (and indeed still are) relieved of general tax obligations and much of the land costs, so say nothing of being insulated from the competitive pressures of of opportunity costs by virtue of their socialist allocation.

But the idea of one highway advocate accusing another of socialism reminds me very much of today’s road advocates at places like Cato and the Reason Foundation, who levy the charge of statism (essentially a less politically charged accusation of socialism, or general state interventionism) at New Urbanists and smart growth-inclined planners, while at the same time holding up places like Houston as a paragon of free market urbanism and refusing to acknowledge the massive state intervention in favor of the automobile. Of course, that doesn’t mean the New Urbanists and liberally-inclined planners in general aren’t guilty of much of what they’re accused of – after all, their designs may be different than what we have now, but they’re no less totalitarian.

David Alpert calls out Virginia Tea Party group as land use statists

David Alpert at Greater Greater Washington has been on top of a story out of Virginia about a Virginia Tea Party group and its bizarre and seemingly anti-free market opposition to a state law forcing local governments to make room for dense growth.

The law – which was passed a few years ago by Republicans, as David notes – included a few provisions, but the one in question, which a longtime Northern Virginia Republican is seeking to overturn, required each locality to designate an “urban development area” in which it would allow medium density development. It appears that the original plan was to have an urban growth boundary too, outside of which development would be much harder, but I’m not sure that was included in the version that passed.

But whatever the rest of the law contained, Del. Robert G. Marshall and Virginia’s Campaign for Liberty are only opposing the provision that forces localities to provide upzoned land “sufficient to meet projected residential and commercial growth” for the next decade or two. I’ve read the bill (it’s relatively short), and the provision in question doesn’t even put a floor on density in the zoning area or cap the amount of parking allowed – all it does is force local governments to allow developers to build at higher densities. Here is, as far as I can tell, the strictest condition on the UDAs, which also have to allow mixed uses and smaller lot set-backs:

The comprehensive plan of a locality having a population of 130,000 or more persons shall provide for urban development areas that are appropriate for development at a density on the developable acreage of at least eight single-family residences, 12 townhouses, or 24 apartments, condominium units, or cooperative units per acre, and an authorized floor area ratio of at least 0.8 per acre for commercial development, or any proportional combination thereof.

The Tea Party and Del. Marshall want to make the program voluntary, essentially killing it. Despite what appears to me to be a move against liberty, the Tea Party affiliate is using the language of the free market to argue against state enforcement of the UDAs:

Speaker Howell is siding with big corporate developers and eco-extremists to rob you of the right to own and control the use of your private property.

He is blocking a critical piece of legislation that is vital to preserving the property rights of every Virginian.

If he has his way, you’ll be forced to forfeit your land in the suburbs for the development of high-density ‘urban development areas’ also called ’smart growth’.

This is a gross violation of property rights. The inalienable right to own and control the use of private property is perhaps the single most important principle responsible for the growth and prosperity of Virginia.

Thanks again to Greater Greater Washington for staying on top of this story. David’s blog and Washington City Paper‘s Lydia DePillis have been running laps around the Washington Post on land use/transpo coverage. I’m not old enough to remember a time when newspapers weren’t struggling, but I doubt that even in their heyday they were doing half as much reporting on these issues as David & Co. and Lydia do today.

Must Read: The Demand Curve for Sprawl Slopes Downward

Sandy Ikeda’s latest article at FEE’s “The Freeman” is a great summary of the libertarian sprawl debate.

There has been a lot of Internet chatter lately about what libertarians ought to think about urban sprawl and its causes, including pieces by Kevin Carson, Austin Bramwell, Randal O’Toole, and Matthew Yglesias. The title of Ben Adler’s post basically sums it up: “If You Love the Free Market, You Should Hate Mandated Suburban Sprawl.”

Sandy includes a mention of the ongoing minimum parking debate. Sandy concludes that the more the government subsidizes items related to low-density development, the more low-density development we’ll get.

But the bottom line is that the law of demand still holds – other things equal, the cheaper you make something the more of it people will want to buy, and that includes low-density development. You’ll get more of that, too, if those direct and indirect subsidies make it cheaper for people to get it. Government intervention has done just that, and it’s hard to understand how you can argue, whether you’re a proponent or (especially) an opponent of Smart Growth, that the free market alone is responsible for the amount of sprawl that we actually have.

This doesn’t mean, of course, that Smart Growth regulations are the place to begin. Instead, if you think sprawl is a bad thing, it would seem logical to first remove the vast array of interventions that over the decades have pushed it along.

On this, I would have thought all market urbanists could agree.

Well said!

HSR Urbanists: “We Are All O’Tooles Now”

I probably won’t make any friends today, but now I’ve read one too many urbanist (many who’s ideas I usually respect) use unsound logic to support high speed rail. This argument often includes something like this: “…and furthermore, highways and airports don’t come close to paying for themselves, therefore high speed rail need not meet that hurdle either.”

Here’s some examples of the typical contradiction many usually-reasonable urbanists are making when arguing for high speed rail-

Ryan Avent in an article plagued with this pseudo-logic:

Government is going to build more capacity. Given that, what is likely to be the best investment, all things considered?

Available alternatives, as it turns out, are not all that attractive. Roads do not appear to pay for themselves any more than railways do. Receipts from the federal gas tax come close to covering federal highway expenditures, but gas is used on highways and non-highways alike, indicating that at the federal level, highways are subsidized.

and:

I respect Mr Cowen very much, but I think it’s long past time we stopped listening to libertarians on the issue of whether or not to build high-speed rail. Who will ask whether road construction remotely passes any of the tests they’re so prepared to push on rail? And if we begin charging an appropriate fee on drivers to maintain existing roads and reduce congestion, what do they all think will happen to land use patterns and transportation mode share?

Some have emailed to ask me why I dislike Randal O’Toole so much.  The main reason is because people like Avent will always be able to point to the government highway-lover from CATO and rashly proclaim all libertarians have forever lost credibility when it comes to transportation and land use.  Of course, Avent’s narrow-mindedness on this topic deserves contempt too.

And Infrastructurist’s take seems to be favored by Avent, Yglesias, and others:

The construction of a high-speed rail line would require a large environmental sacrifice – construction crews would need to shape the land, poor concrete, lay the tracks, and build the stations. This work would release millions of tons of carbon dioxide into the atmosphere. But building a new highway such as Texas’ planned I-69 would require similar work and would almost certainly be just as ecologically damaging. On a somewhat smaller scale, the same can be said for new terminals or runways at airports.

In a rapidly growing state like Texas, though, a serious need for a transportation capacity upgrade is bound to arise over the next decades – especially between the state’s two biggest cities. The construction of this infrastructure would require carbon emissions on a large scale–but since we don’t yet have competing plans for highway or airport capacity expansions if the high-speed system is not built, the most meaningful question for us is the rail system’s environmental effects in operations rather than construction.

So, in other words, building either of the options, roads or rail both require “a large environmental sacrifice”, but all other options must be kept off the table, so let’s just sweep that under the rug.  Yet, there is an other option to consider for those who really think something should be done about carbon: STOP WASTING MATERIAL AND ENERGY ON CONSTRUCTION OF INFRASTRUCTURE BOONDOGGLES THAT SUBSIDIZE TRANSPORTATION!  That still goes double for roads and airports, where congestion and carbon emissions could be reduced through revenue-generating measures such as congestion tolling.

To me, the high-speed rail logic just doesn’t sound much different from what O’Toole might say (just interchange some words and continue to ignore facts):

Not only did the Interstate Highway System cost much less and move much more than our visionary rail network is likely to do, interstate highways have the virtue of being 100 percent paid for out of user fees. The rail system would require subsidies for pretty much all of the capital costs, most or all of the periodic rehabilitation costs, and at least some of the operating costs.

In the Infrastructurist article quoted above, Yonah Freemark smear’s Ed Gaeser’s back of the envelope critique of high speed rail (I admit, a little sloppy) with a hand-waving claim sounding eerily similar to the type Mr. O’Toole is so often criticized for making, “High Speed Rail Pays For Itself”.

He backs this bold claim with a calculation that shows how a hypothetical Dallas-Houston high speed corridor would cost $810M annually for construction and maintenance, while providing $840M in benefit.  Surely, we will see many more people use this analysis as evidence to back claims that high speed rail is good without proper scrutiny.  However, this analysis doesn’t even pass the O’Toole-level test of credibility, because it claims it pays for itself with 150M annually in carbon savings.  I can understand making the case for analyzing carbon savings as a “benefit” to society, but one must compare against all other options for use of cash to reduce carbon emissions – at least against a no-build + congestion toll option.  Just think of all the alternatives one might consider with a $810M annual budget for carbon reduction. At say $20/ton, that comes to 40 million tons a year.

On top of that, Freemark ignores all the other opportunity costs Randal O’Toole conveniently omits when claiming roads pay for themselves.  These omissions include:  opportunity cost of investment capital, opportunity cost of right of way land used, legal costs of eminent domain and related delays, inevitable cost overruns, accounting for optimism bias, and interest on bonds.  In my opinion, the largest of these is the opportunity costs of investment capital, which I would guess at over 15 percent compounding annually (vs a non-compounding 5% generously assumed by Glaeser and Freemark) for all costs during the 10 years (just a little optimistic?) of construction, and 8-10 percent once ridership is stabilized.  Responding to Matthew Yglesias’ hasty endorsement of Freemark’s analysis as “A real cost-benefit analysis of HSR”, Tyler Cowen similarly noted:

I’m not sure what discount rates he is using but even if we put that problem aside this screams out: don’t do it.  Given irreversible investment, lock-in effects, and required hurdle rates of return, this still falls into the "no" category.  And that’s an estimate from an advocate writing a polemic on behalf of the idea.  I’m not even considering the likelihood of inflation on the cost side or the public choice problems with getting a good rather than a bad version of the project.  How well has the Northeast corridor been run?

The urbanist in me would love a vast high speed rail network – it would centralize density at rail nodes and aid agglomeration.  But it just won’t be viable until government first stops wasting money subsidizing automobile and air travel.  In the meantime, HSR advocates commit an intellectual fraud similar to ones Randal O’Toole and his ilk make regarding roads when they make claims that HSR can pay for itself. 

If Ryan Avent is expecting to keep any credibility on infrastructure spending using these words:

In this country, we do not build transportation infrastructure for profit. Perhaps this is upsetting to the libertarians among us, but that’s how it is and how it should be.

Then, perhaps he should think twice next time he thinks of laying into Randal O’Toole for attempting to reconcile infrastructure spending using similarly shoddy arguments. Otherwise, similar to O’Toole, all the HSR advocates are saying is, “Never mind billions of dollars that must be appropriated from people of future generations. Never mind that most of those footing the bill will never ride high speed rail if they’re not fortunate enough to afford a ticket or don’t live in one of the chosen cities. Never mind the drastic effects of the construction on the environment. High speed rail would be a pretty neat thing for some cities, so ‘build baby build’.”

O’Toole Under More Fire

At Streetsblog, Ryan Avent presented a scorching attack on the most notorious free-market impostorRandal O’Toole: Taking Liberties With the Facts for his consistent hypocrisy:

The Cato Institute’s Randal O’Toole gets under the skin of many of those interested in building a more rational and green metropolitan geography, but in many ways he’s an ideal opponent. It would be difficult to concoct more transparently foolish arguments than his. The man is an engine of self-parody.

The requisite identification of “libertarian” contradictions:

This is one thing I’ve never understood about the libertarian love affair with highways; they seem utterly blind to the fact that it has required and continues to require massive government action to build and maintain the road network. The interstate highway system is perhaps the single largest government intervention in the economy in the 20th century. Reading O’Toole you’d think it was a wonder of the free market.

And with ease, Ryan points out the data needed to take O’Toole to task on his persistent assertion the “roads pay for themselves”:

The source of his blindness on the issue seems to be due to his belief that roads pay for themselves, and that congestion exists only because governments shift gas tax revenue to pay for transit and other smart growth projects. Nothing could be farther from the truth.

In the first place, gas tax revenue comes nowhere near paying for roads. Federal gasoline tax revenues cover barely half of the annual budget of the Federal Highway Administration. Add in diesel tax revenues and you’re still short. And that’s just the federal budget picture.

In response, Randal replies to critics in the comments of his latest post of his “Antiplanner” blog:

The Antiplanner sees the American dream as freedom of lifestyle choices and opportunities to realize those choices unfettered by government subsidies or restrictions.

As for the claim in D4P’s link that the Antiplanner ignores highway subsidies, I’ve addressed that many times in this blog. Yes, there are highway subsidies, but they are tiny compared to transit subsidies. I oppose all subsidies. Will D4P agree with me that we should get rid of all subsidies and then let people make their own choices?

Great!  So, this is the standard by which the “anti”planner wishes to be judged?  Very well – From now on, this shall be the standard I shall point out his hypocrisies.

The rhetoric of his first statement is noble, but I don’t think Randal read Avent’s post, or simply evades the arguments.  I’d like to see him rebut Avents arguments directly, as opposed to brushing them aside.  To assert that transit subsidies outweigh highway subsidies may be true when only considering the proportion of public vs private funding, but is absolutely absurd when compared on a national scale, especially over the past 70 years.  I’m more than willing to grant to him that transit is significantly over-subsidized, but the vast subsidies to highways over the years have empowered planners to shape the landscape irreversibly away from what one would expect when “unfettered by government subsidies”.

Nonetheless, O’Toole and Avent both understate the scale of highway subsidization when looking at explicit costs (or accounting costs) and neglecting opportunity costs.  First, highways take up a vast amount of real estate, which can no longer be used productively.  Second, publicly-run transportation enjoys tax-free status, saving agencies on property taxes, sales taxes, taxes on revenue generated, and other significant expenses.  At the same time, accounting costs neglect the opportunity cost of capital diverted from private investment for public projects, Capital projects should earn a return sufficient to “pay for itself” plus a profit for the capital put at risk, but funding for public projects usually come from low-interest, tax-exempt bonds.  I didn’t even mention parking mandates and subsidies, cost of policing and a vast array of externalities.

Thus, when considering opportunity costs under any accounting comparison, all transportation is clearly subsidized at an amount that is absolutely unsustainable by private (“unfettered by government” interventions) means.  For the intellectually corrupt “anti”planner to consider highway subsidies “tiny” is a completely absurd disregard for the rational examination of reality.

For more, read, Urban[ism] Legend: Gas Taxes and Fees Cover All Costs of Road Use.

or some of O’Toole’s rare attempts at analyzing gas taxes and highway subsidies:

http://ti.org/antiplanner/?p=88

http://ti.org/antiplanner/?p=500

Yglesias Has My Head Spinning…

In his last two urbanism-related posts, Matthew Yglesias makes great points only to dissolve them in a vat of unrelated statements posed as conclusions.  His logical inconsistency seems to invalidate his otherwise pretty good blogging on urbanism.

A couple days ago, Matthew blogged about regulation of neighborhood retail, quoting a DC blog:

“In DC, zoning laws make that idea [mixed-use retail] prohibitive, and what the zoning laws don’t cover ANC and neighborhood groups do in their zealousness to protect residents from interspersing residences with commercial activity.”

….

I really and truly wish libertarians would spend more time working on this kind of issue. And I also wish that ordinary people would think harder about these kind of regulations.

Yes!  More, please?   But then, the next sentence leaves me saying, “huh?”:

I’m a big government liberal. I believe business regulations are often needed. But still, there ought to be a presumption that people can do what they want.

So, I really don’t understand what this post has to do with libertarians anymore – why even mention them. It seems logically inconsistent to presume people can do what they want, while presuming a big government can regulate their economic choices.

Now, on to today’s post:

Randall O’Toole is a relentless advocate for highways and automobile dependency in the United States. Consequently, I don’t agree with him about very much.  But the thing I consistently find most bizarre about him, is that the Cato Institute and the Reason Foundation have both agreed to agree with O’Toole that his support for highways and automobile dependency is a species of libertarianism.

then…

Central planning, of course, is the reverse of libertarianism. So if promoting alternative transportation is central planning, then building highways everywhere must be freedom! But of course in the real world building highways is also central planning. The Long Island Expressway is not a free market phenomenon.

Alright!  This fits in with our recent discussions at Market Urbanism! (and here)  But, of course he concludes:

It’s just a field that, intrinsically, requires a lot of planning. The question is about what kinds of plans to make.

So, libertarians should agree with you, but they’re wrong anyway?

Either Yglesias has some hidden respect for free-markets and has to add caveats to maintain his progressive street-cred, or he has some kind of chip on his shoulder and has to call out the hypocrites in circles he doesn’t respect anyways…  (the latter, I would interpret as a rational fear of the potency of free-market philosophy – at least not the impostor brand)

—-

Also check out c4ss:  Libertarians Against Sprawl:

Fighting sprawl isn’t a matter of imposing new government mandates.  It’s a matter of scaling back existing restrictions on mixed use development, and prying the mouths of the real estate industry and the automobile-highway complex off the taxpayer teat. It’s not clear that can be done without abolishing government completely.