Culs de sac for safety?

"Evil cul-de-sac" flickr user rleong101

“Evil cul-de-sac” flickr user rleong101

At Cato At Liberty, Randall O’Toole provides a list of recommendations for reversing Rust Belt urban decline in response to a study on the topic from the Lincoln Land Institute. He focuses on policies to improve public service provision and deregulation, but he also makes a surprising recommendation that declining cities should “reduce crime by doing things like changing the gridded city streets that planners love into cul de sacs so that criminals have fewer escape routes.” This recommendation is surprising because it would require significant tax payer resources, a critique O’Toole holds against those from the Lincoln Land Institute. Short of building large barricades, it’s inconceivable how a city with an existing grid of streets would even go about turning its grid into culs de sac without extensive use of eminent domain and other disruptive policies.

O’Toole is correct that the grid owes its origins to authoritarian regimes and that today it’s embraced by city planners in the Smart Growth and New Urbanist schools. But while culs de sac may have originally appeared in organically developed networks of streets, today’s culs de sac promoted by traffic engineers are hardly a free market outcome. As Daniel Nairn has written, the public maintenance of what are essentially shared driveways “smacks of socialism in its most extreme form.”

Some studies have found that culs de sac experience less crime relative to nearby through streets, perhaps in part because they draw less traffic. However, it’s far from clear that a pattern of suburban streets makes a city safer than it would be would be with greater street connectivity. Some studies find that street connectivity correlates with greater social capital. O’Toole’s promotion of social engineering through culs de sac to create a localized drop in crime at the expense of a city’s residents’ social capital is not a clear win. If a pattern of culs de sac streets reduces a city’s social capital, it could increase overall crime rates.

O’Toole also makes a smart land use recommendation, suggesting that struggling Rust Belt cities can reduce regulation to foster development. He writes:

Reduce regulation, including zoning rules, so property owners can engage in urban renewal without government subsidies or top-down planning. Historic preservation ordinances may sound cool, but they are one of the biggest obstructions to private redevelopment.

It makes sense for cities like Detroit to reduce or eliminate their zoning and permitting requirements, allowing as many new businesses as possible to take advantage of the their inexpensive prices. Interestingly, this recommendation for deregulation in the Rust Belt directly contradicts his past writings on deregulatory upzoning in other cities. O’Toole’s native Portland has seen deregulation allowing denser development, and in this case he advocates preserving neighborhood character over allowing the market to drive development styles. I’m glad to see he’s changed his tune to support deregulation.

Irrelevant real estate trends

Earlier this week Wendell Cox wrote a piece at New Geography arguing that projections for increasing demand for multifamily housing relative to single family homes are incorrect. He was criticizing a study by Arthur Nelson that predicts increased demand for multifamily housing relative to single-family housing in California between 2010 and 2035. So far, Cox points out that this hypothesis is not being fulfilled; between 2000 and 2008 slightly over half of newly occupied housing units were single-family homes on conventional lots (larger than 1/8 acre), not indicative of a shift in preferences toward multifamily housing.

Cox emphasizes that his data is based on revealed preferences rather than forecasts or surveys which may indicate a false preference for denser housing. However, he does not acknowledge that these preferences he cites are not revealed in a free market. The mortgage interest tax deduction biases home buyers toward larger homes, the complex entitlement process for dense infill development restricts supply of denser housing, and the the zoning and parking requirements that regulate development all shape revealed consumer decisions.

Both Cox and Nelson seem to base their views of consumer preferences heavily on introspection, assuming that over time more Americans will come to share their preference for suburban or urban living respectively. And they both take the same approach of looking at the real estate trends aggregated across the entire state. This is an interesting question for academics, but not a particularly relevant area for real estate markets. Real estate is local, and state trends are not likely to apply to many cities and neighborhoods. The average home sold in California went for $309,000 at $195 per square foot last month. However this statistic is meaningless for West Hollywood residents where the  average sale price was $378 per square foot. It’s equally meaningless for Bakersfield residents where the per-square-foot price was $87. Only one of these local areas faces a housing affordability problem, which Cox emphasizes is an important concern for land use policy.

Fortunately for consumers, it’s not necessary for academics to accurately forecast changing real estate preferences. They only need for local developers and homebuilders to do so, and the profit incentive leads developers to do just this, unless policy prevents them from doing so. High housing costs indicate supply restrictions that prevent developers from meeting consumer demands. If Bakersfield city planners adopted a binding urban growth boundary, the type of policy Cox decries, we would see the cost of conventional single family homes rise. In most of the places where we see housing affordability problems such as West Hollywood, it’s not Smart Growth policies that are to blame, but rather conventional zoning that prevents increased density from bringing down housing costs.

The most notable exception to this is Portland’s Urban Growth boundary which, in conjunction with density restrictions, keeps house prices in the city at $200 per square foot compared to the state average of $135. This UGB seems to be the driving force behind the work of many anti-density “market suburbanists,” which alone is enough of a reason to oppose this policy. However, in the cities where residents pay the greatest premium for housing, it’s likely that we would see much more multifamily home construction in a freer market.

If zoning restrictions and parking requirements were relaxed in areas of the country where residents currently pay the highest premiums to live, we would in large part see more multifamily construction rather than single family. This is why, despite the cumbersome entitlement process for multifamily buildings in many cities, and the mortgage interest deduction luring consumers to larger owner-occupied homes, over half of last year’s building permits were for multifamily units in some of the country’s most expensive cities like Los Angeles, New York, and Washington, DC.

Fields of Dreams in Tysons Corner

Earlier this week Cap’n Transit wrote about Tysons Corner in the context of the Silver Line TIFIA loan application and Tysons’ Smart Growth redevelopment. This development plan is something I am quite familiar with as it was the subject of my MA thesis, and his post brought to mind some of the weird issues in the plan.

I am skeptical of Smart Growth generally, and the Tysons plan exemplifies some of the problems that are common to grand Smart Growth redevelopment plans. In an effort to win the support of all progressive causes, Smart Growth plans sometimes encompass many competing objectives. For example, a Smart Growth agenda may advocate increased density while simultaneously championing historic preservation and open space without acknowledging that these goals are opposed. Because of the emphasis on top-down planning inherent in Smart Growth, prices do no reconcile these competing goods.

In the Tysons plan, this planning and consensus building somehow came to include strong support for emphasizing athletic fields. Developers who build in Tysons are required to either provide fields or pay into a fund to support fields on public land. I think that the support for athletic fields comes from the popularity of intramural sports on the National Mall where 20-somethings play sports in think tank or Hill staff leagues after work. Maybe Fairfax planners think that providing athletic space will lure young adults to the suburbs. This issue has gotten so much attention that residents outside of the Tysons area have even started lobbying for fields in Tysons to avoid the traffic of young Tysons residents driving to other parts of the county to find sports fields. The plan calls for 20 new fields of two-to-three acres each for a projected population increase from 17,000 to 100,000.

From a pedestrian perspective, dedicated sports fields in Tysons will create long expansions of dead space, contrary to county planners’ stated objectiveness of liveliness and walkability. Maybe I’ll be surprised and the Tysons fields will all be well-used. Even if they are though, this valuable space will not be put to much use outside of the evening and weekend hours when the weather is decent. This space will be used by a narrower group of people than those who would use more general park space that could include fields.

Given that the objectives of the Tysons redevelopment include creating a more walkable urban form, it would make sense for the plan to take cues from existing places that succeed in these areas. I’m trying to think of an example of a successful and walkable downtown scattered with dedicated full-size athletic fields, but I’m coming up blank. Sure, they may have some open space, but nothing like the Tysons field quota. Northern Virginia developer Keith Turner explains the difficulty of striving for open space and density at the same time:

“We can turf and light dozens and dozens of fields for the cost of building one or two fields in Tysons,” Turner said. “I am not saying that’s the solution, or we won’t try to build as many fields required in Tysons, but it should be looked at,” he said. “Just from an economic standpoint, it just makes sense.”

Developers’ resistance to providing these fields indicate that these acres of green space could be put to more valuable and more walkable use. If other cities take this approach of attempting to lure residents with athletic fields, maybe someday we’ll all be reading The High Cost of Free Soccer.

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.

Opportunity for States to Protect Land Use

If this season’s political campaign rhetoric has demonstrated anything, it’s that governors love to take credit for job creation. What I haven’t seen any governor mention, though, is that there is huge opportunity for economic growth in relaxing zoning codes. Most obviously, allowing new opportunities for infill development will create construction jobs. More significantly though, in the long run, cities allow for faster economic growth (and job growth) than other locations.

The regulations that prevent cities from growing keep economic progress below what it otherwise would be. While researchers disagree over whether population density or total population is the variable that is most significantly correlated with economic growth, either way zoning plays an important role in holding back job growth, providing policymakers who are willing to deregulate with opportunities to improve their competitive standings next to other cities.

Political incentives stand in the way of this growth opportunity, however. Most zoning restrictions benefit a city’s current residents at the expense of potential residents. For example, minimum lot size requirements serve to raise the price of homes, preventing low-income people from moving into neighborhoods that current residents wish to keep exclusive. By changing this current order, policymakers risk losing the support of their homeowning constituents, and interest likely to be better organized than renters and potential city residents. Limitations on housing supply raise the value of existing homes, artificially raising the value of residents’ assets, which homeowners strongly fight to protect.

At the local level, policymakers are therefore incentivized to privilege homeowners’ interests at the expense of broad economic growth. At the state level however, the incentives may be different, such that economic growth may benefit state policymakers more than protecting home values. State policymakers have constituents who live in a wide variety of municipalities, some where land use restrictions are less binding in some than others. Additionally, homeowners will face greater challenges in organizing to support artificially propping up home values at the state level compared to the municipal level. State policymakers could therefore benefit themselves by setting limits on the how much municipalities are permitted to restrict development. Importantly, limiting the degree to which municipalities can restrict development does not force density; rather, it allows developers to provide more density if residents demand it.

California legislators considered a bill of this model earlier this year which would have limited cities’ abilities to set parking requirements in neighborhoods where transit is widely available. As Stephen explained, this bill came under criticism from both the American Planning Association and the Reason Foundation, both citing the need for local control of land use. However, this misses the key role of higher level governments within a federalism model.

After the Supreme Court decided in Kelo v. City of New London that municipalities have the power to use eminent domain for economic development, 44 states adopted amendments to protect their citizens from eminent domain for non-public use to various degrees. States did not have this type of reaction to Euclid v. Ambler, which set the precedent allowing cities to create zoning codes, but there is nothing stopping them from setting limits on cities’ zoning power now.  Federal and state governments have a role to set a floor of freedom for all of their residents, which gives states an opportunity to set limits on how much their municipalities can restrict land use.

Some Empirical Evidence on Preference for Cities

This semester I took an econometrics class because I got an MA with the bare minimum of quantitative classes. For the class, I wrote a paper asking the question, “Are consumers willing to pay a premium to live in dense urban areas?” It’s easy to see that urban density is correlated with higher housing prices, but this could come from many factors such as people having to live in dense cities to find jobs or to earn higher salaries or from supply restrictions that impact dense cities more than suburbs.

As a proxy for cities’ urban qualities, I used Walk Score. Walk Score is based on residential distance to amenities, block length, and road connectivity and ranks cities on a scales of 100. It is designed to test the feasibility of living in a city without a car, but it excludes some factors that are often considered relevant to facilitating pedestrianism, including street width, sidewalk width, and population density. Still, I think Walk Score provides a pretty good measure of a city’s urbanist quality. The correlation between Walk Score and median house price is pretty striking:

To test demand for urban living, I wanted to control for the economic factors that drive demand to live in a given city. I tested the impact of Walk Score on median house prices controlling for household income, unemployment, and cost of living. The sample includes 259 cities for which I had Walk Score data and house price data from Kiplinger. The results suggest that for a one-point increase in Walk Score, we can expect a .5% increase in a cities’ median house price, and this result is statistically significant.

In another way of measuring the same question (an IV regression using the year the city was founded as the instrument), I found that a one-point increase in Walk Score can be expected to increase home prices by 3%. This result is also statistically significant, but I have less faith in this model.

For the most part, the other studies that I’ve seen of Walk Score’s relationship to house prices look at one city or a few cities and control for variables like a neighborhood’s crime rate and housing quality. While there are obvious advantages to these more detailed, local studies, I think the national view gets around the sample selection problems that make other results ungeneralizable.

I’d be happy to hear your criticisms of this model — what important variable are omitted, etc. I think there is a lot of room to study people’s preferences for urban form. As Stephen has said previously, looking at where people live without controlling for other factors gives us a better sense of allowable land use than free market revealed preferences, but looking at home prices while controlling for important variables can remove some of this bias.

Thanks to Eli Dourado for helping me think through this model, but of course its problems are my fault.

[Note: I had originally said that the house price data came from the Census. I realized that Kiplinger does not get this data from the Census as their Statistical Abstract only covers select MSAs. The data was collected by Clear Capital, but I haven't seen it publicly available from them.]

Mandating attractive urban design

The most recent installment of the American Enterprise Institute’s series Society and Culture Outlook features a piece about the role of urban design in how people use cities. The article “A plea for beauty: a manifesto for a new urbanism” by Roger Scruton is a deviation from AEI’s typically conservative view toward central planning. Scruton favors heavy-handed planning of the appearance of the built environment, essentially advocating for strict form-based zoning codes:

Many suggestions have been made as to how an attraction to the center might be generated. Building downtown convention centers, expensive museums, and concert halls; offering tax credits for city-center businesses; creating enterprise zones; and removing some of the regulations that make living, moving, and trading downtown so difficult have all been tried, and none has worked. And the reason they do not work is because they are addressing symptoms instead of causes. People flee from city centers because they do not like city centers. And they do not like city centers because they are alienating, ugly, and without a human face. Or rather, they do not like city centers when they are alienating, ugly, and inhuman, the normal case in America.

[. . .]

The proof of this is easy to find in the old cities of Europe. People choose to live in the center of Paris, Rome, Prague, or London rather than the periphery. Others who do not live in those cities want to spend their vacations there to enjoy the culture, entertainment, and beauty of their surroundings. These are flourishing cities, in which people of every class and occupation live side by side in mutual dependency while maintaining the distance that is one of the great gifts of the urban way of life. And there is a simple explanation for this: People wish to live in the center of Paris because it is beautiful. It is also lively and rich in every kind of cultural and recreational opportunity. But it is rich because people of all walks of life live there—not just people engaged in specific occupations, but also the cultural elite—and this has made Paris a symbol of the urban experience, the cité pleine de rêves (“city full of dreams”) of Baudelaire.

I disagree on the cause and effect in this process. Cities are beautiful because they are largely the spontaneous result of individuals’ efforts to build attractive places. Scruton cites Washington, DC as an example of an aesthetically well-planned American city because Pierre L’Enfant paid close attention to details like sight lines down avenues. While DC’s layout is certainly orderly, Scruton and I have a different sense of aesthetic appeal. To me, areas of the city that were planned from on high like the National Mall are pretty desolate when not being used for a  festival or team sports. While he advocates top down planning of city design, he doesn’t distinguish between DC’s long blocks and wide avenues and the narrow winding streets of Venice for what planners should look to. Planned urban design can vary in quality, but the evidence that city planning of today produces results that are preferable to cities built before the rise of planning is unconvincing.

I’m in complete agreement with Scruton that for cities like Venice or Prague, urban design plays an important part in their appeal. But there are plenty of places like Singapore, Hong Kong, or many parts of Manhattan that have no problem attracting residents with more modern aesthetics. Traits that lead cities to become less useable, in my estimation, include surface parking, poorly designed open space, wide blocks, and setbacks. These design features come from the top down at least as often as from the bottom up.

One reason Scruton advocates top-down decisions for urban design is that individuals are prone to making poor design decisions, which could ultimately lead people to abandon center cities for suburbs. What he leaves out is that central planning is also prone to creating aesthetically unpleasing urban design. (See, for example, the snout house. I don’t think the free market could have come up with this one without setback and lot size requirements and wide streets.) Scruton laments that suburbs do not bring people together the way that cities do, but this is at least in part a product of centrally planned requirements for suburban zoning.

The real problem with mistakes in top down urban aesthetic design is that these mistakes are likely to be systematically repeated. If an individual architect or business owner comes up with an unpopular building design, the market provides feedback that will identify the mistake. Scruton writes about poor aesthetic design in the context of today’s architectural trends:

Appearances do not matter, when utility stares from every glass façade, and when the demands of the human eye are everywhere repulsed or ignored.

He suggests that the ugliness of glassy towers plays a part in driving people from center cities to suburbs. This doesn’t make much sense to me, as the rising popularity of glass facades correlates with increasing demand to live in city centers. I can certainly see that modern architecture is not to everyone’s taste (the horror of having to live somewhere like this), but precisely because tastes are subjective, we should leave design decisions to entrepreneurs, not planners. Many factors drive people to choose the suburbs over cities, but I don’t see building aesthetics as a major culprit.

A hole in the literature?

In the comments of a previous post, readers discussed the incentives facing different types of landowners whose properties are facing potential upzoning, demonstrating just how complicated the relationship between land use regulations and property values is. As I see it, theory tells us that upzoning will increase the value of much of the land that will be redeveloped by opening up options for the developer to put the land to a higher valued use. However, land that is not economically viable for redevelopment and perhaps some land near this margin would fall in value due to the increased supply permitted.

The example from the earlier post was a proposal for upzoning in Hollywood. I would think that plenty of properties there would be ripe for redevelopment, as single family zoning is constricting supply to well below the market clearing level. If this is true, many homeowners would stand to receive a windfall with upzoning. I’m not very familiar with Los Angeles, but I’d think it likely that owners on the periphery of the area to be upzoned could potentially lose money, as the supply of housing would increase in the most desirable parts of Hollywood, devaluing homes in the less desirable areas. In the comments, awp provided clear analysis of what’s going on in this situation:

The excess “rent” comes from having a part of a limited SUPPLY. Any one individual would be able to increase their portion of the “rent” by being the only one allowed to increase their supply, while lowering the total “rent” through the increase in SUPPLY.  If the zoning is removed there will be no remaining excess “rent”.  It would take some serious analysis that I have never seen to figure who would benefit the by moving from a zoning regime to a free market regime.  My guess would be those whose real estate’s spatial properties (i.e. proximity to the amenity) had the greatest value that was underutilized.  So that those closest to the park or downtown would see a marked increase in their land values and would increase the density of the built environment on their real estate, while those the farthest away (who before had valuable buildings on their land because of the restrictions on the built environment closer in) could see their property values fall drastically.

One of the tricks of examining an upzoning is unbundling the value of current land uses from the land itself, as this is where the potential for redevelopment lies. I tend to stretch a priori reasoning to its limits, but analyzing the financial impacts of upzoning is an empirical question. The policy change will create winners and losers, but the number of people on each side and the change in land values can’t be deduced without looking at the data. I went looking for studies on upzoning and the resulting changes in land values but came up disappointingly short.

Gerrit J. Knaap of the University of Maryland’s National Center for Smart Growth Research and Education has conducted the only study of the impact of upzoning on land value that I’ve found. He studied land values outside of Portland because the city’s Urban Growth Boundary offers an opportunity to compare the value of comparable land parcels under different zoning regimes. His paper, titled “The Price Effects of Urban Growth Boundaries in Metropolitan Portland, Oregon,” was published in 1985, but unfortunately doesn’t appear to be available without institutional access or purchase.

Knaap looks at sales of vacant land in two Oregon counties, Washington and Clackamas. He writes:

Suppose there exist two types of residential land, urban and nonurban, where the difference is enforced by zoning regulations and defined by housing denisty, minimum-lot sizes, or some other allowable-use criteria. Suppose further that as a result of zoning, urban rents, Ru, are higher than nonurban rents, Rn, for some radial distance from the urban core. For ease of graphical exposition, urban rents are assumed to decline linearly with distance, t, and nonurban rents are assumed spatially invariant under permanent zoning. The market values of urban and nonurban land equal the present value of their respective rental streams.

Washington County, he finds, was more strongly impacted by the UGB because in Clackamas County development is limited primarily by sewer access rather than zoning. His results in Washington County offer support for this model. There, Knaap finds a positive, statistically significant impact on the price of land located within the UGB, the land allowed to be upzoned sooner than land outside the UGB:

In sum, and as the model suggested, urban land is higher valued than nonurban land; nonurban land inside a growth boundary is higher-valued than nonurban land outside a growth boundary; and urban land, when it exists, on both sides of a growth boundary, is not higher valued inside the boundary than outside.

Knaap’s results demonstrate that, unsurprisingly, restrictions on land use reduce its value. However, this study doesn’t get into the issue of land that is already developed and sold to be redeveloped following upzoning. Has anyone seen such a study? In the effort to provide support for the value created by permitting dense urban development, this seems like key data to have.