Havana, Cuba–Stagnation Doesn’t Preserve Cities, Nor Does Wealth Destroy Them

[My second in a two-part series on Havana, Cuba. Here’s the first article.]

Havana, Cuba

Before taking my trip to Havana, one thing that I was curious about was how a half-century of Communism had affected the built fabric. While there are obvious disadvantages to economic stagnation, I figured that it would have at least created a charming-looking city. There are, after all, a handful of U.S. cities, and numerous European ones, that have resisted growth, modernization, and the automobile, only to remain quaint and historic. But it didn’t take even a 10-minute cab ride from the airport to realize that my assumption about Havana had been naïve—even if it is still held by many of the city’s blissfully uncurious tourists.

In fact, very little about Havana has been “preserved.”  Instead, everything in the city is merely old, and because little gets produced, nothing is replaced. This applies to the automobiles, furniture, hand tools, manufacturing equipment—and most certainly the buildings. Collectively, this stagnation has destroyed the look of the city, with a physical blight that stretches nearly every block from downtown to the outer slums.

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If I could define in one statement what Havana looks like, after four days of extensively biking and walking through, I’d call it the Latin American Detroit. It was a once-great city that declined because of bad policies, and its pervasive ruination serves as a constant reminder of this. The houses themselves, while large and ornate, are almost uniformly inadequate by U.S. standards. If they have not crumbled to the ground altogether, many are caving in. The foundations are crooked, full of holes, and marred by broken windows and doors. Because of Havana’s European roots, stucco is a common material, but on most buildings is falling off, or in some cases has disappeared. Almost every building has dirt and grime, while some are covered in it.

And this is for Havana’s nice parts. Once I began biking out of the central neighborhoods and into the slums, I found that symbols of past wealth disappeared altogether, and were replaced with what in the U.S. would be considered shacks. These structures were usually patched up with knotted wood, metal scraps, and thatching. One gentlemen who lived in the poor neighborhood of Cerro, and who I spoke with at length, described his area as akin to a Brazilian favela—which I found believable. The two pictures I took below were from his front porch, and mirrored the aesthetic of such areas.

So what is it like to live and work in these buildings? As one might expect, the outside decay permeates to the inside. The best access I got was through a 24-year-old working-class woman named Indira. I met Indira on my first night in Havana when stopping to ask directions, and after noticing that she spoke good English, took her to dinner. We became friends, and she invited me into her downtown apartment, where she lived with her mother and father-in-law. The apartment was roughly 150 square feet—far smaller than a typical New York City micro-unit. Because it had a high ceiling, the family had built a horizontal wooden floorboard halfway up the wall that served as the second floor, and built a makeshift staircase leading up. This upstairs “room” was for the mother and father-in-law, while Indira lived in the main room below, sleeping crammed against the kitchen.

Even in such a small space, there were numerous malfunctions. There was no hot water, either for cooking or showering. In fact, the shower did not even work, meaning that the family instead took scrub baths. Because the toilet didn’t flush, they had to pour water into it each time after use to accelerate the draining. The built-in wooden floorboard was clearly sagging under the weight of the upstairs furniture, raising concerns that it would one day collapse. As for the actual roof—it had been crumbling for years, and was fixed recently by a neighborhood handyman. To pay for the work, the family had to spend over a year saving up $150.

 

The main story of Indira's apartment.

The main story of Indira’s apartment.

 

The second story, upheld by a wood board

The second story, upheld by a wooden board

 

Public Infrastructure

Just as peoples’ private houses were crumbling, so too was the public infrastructure—again, much like Detroit. The public spaces, while well-used, were typically full of trash, overgrown weeds, and broken objects. Many parks, for example, were defined more by concrete than grassland. Streets, if they were even completely paved, were filled with potholes and had such poor drainage that, after it rained, they would gather huge puddles.

A water-less pool

A water-less pool

 

I wasn’t able in my short time there to analyze the underground infrastructure. But if it is like everything else in Havana, I would assume that it, too, is crumbling. For example, contrary to what tourist brochures say, Havana’s tap water is considered undrinkable by locals, and I was routinely offered bottled water to avoid catching chlorida.

Indeed, the substandard nature of Havana’s built entities were so common that after awhile I stopped noticing. For example, when I attended a rainy futbol match at a renowned Havana stadium, I sat underneath a roof that leaked constantly, getting soaked alongside other fans. Can anyone imagine this being tolerated at a U.S. arena? When I used bathrooms even in nice establishments, I would find that there often weren’t toilet seats, door locks, or (you guessed it) toilet paper. Schoolyards had swimming pools without water and basketball hoops without rims. And on it went.

This is how life is in Havana. And I soon realized, given this, how buffoonish it would have been to go around looking for examples of “historic preservation.” Such preservation is an aesthetic notion from the First World, driven by those who are willing to pay more to retrofit attractive old housing. But in a city of extreme poverty, preservation is the pragmatic steps people take to prevent their roofs from caving in.

a public park...

and a public waterfront

So How Does Havana Compare To…San Francisco?

Have you ever read an article that was so hilariously wrong that you wanted to pick your laptop up and chuck it across the room? This was my reaction to one article I read several days after returning from Havana, with the city’s horrific conditions still on my mind. On June 8, MarketWatch.com published an article by columnist Therese Poletti called “New Tech Money Is Destroying The Streets Of San Francisco.” Poletti explained that a flood of wealthy executives were moving into San Francisco, buying old homes, and altering the interiors.

It is now hard to find a Victorian home for sale that has not been gutted, its architectural details stripped and tossed. And owners or developers — looking to sell at a premium in the frenzied real estate market to “techies with cash” — hope to appeal to the tastes (or lack thereof) of current buyers, by turning once-charming homes with detailed woodwork, built-ins and art glass, into clones of Apple’s minimalist retail stores.

This trend has been developing for several years, but it seems far more prevalent today, with construction sites sprouting across the Bay Area and especially in San Francisco. And in addition to the remodeling frenzy, older buildings appear to be disappearing at a scary pace.

Before even addressing Poletti’s point, let me just set the record straight: San Francisco is not being “destroyed.” I can testify from having lived there in 2012, and visiting several times more, that the city is an architectural gem that has largely stayed in character since being rebuilt after the 1906 earthquake. Much of the city—including almost the entire northeast portion—is an oasis of historic Italianate, Queen Anne, Craftsman, and Art Deco construction. These buildings roll along the hills flanked by clean, well-paved streets, and small, impeccably-landscaped yards. From a purely aesthetic standpoint, San Francisco surpasses any other major U.S. city, and perhaps any European one.

The reason for this is two-fold. San Francisco has expansive historic preservation laws that make it difficult or illegal to alter thousands of structures. Compelling arguments have been made that the city takes this preservationist impulse too far, to the detriment of adding new housing supply–although such laws help maintain its unique character. But the other factor—to which Poletti seems oblivious—is that the city has a large professional class with the financial wherewithal to maintain these homes.

I would argue that this second factor, more than the first, has preserved San Francisco. You could put a historic overlay designation across Detroit, and it wouldn’t change much. The Motor City suffers from decay because it has undergone six decades of depopulation, and this has left no one around to preserve its own large historic stock. But the Bay Area has been flooded with capital during this period, and this has strengthened its culture of preservation. Maintaining a historic home, after all, can be an expensive endeavor that requires ripping out floorboards, replacing pipes, and other structural changes. It is usually done by educated, well-off households who have either the money to fund repairs, or the time to dedicate sweat equity. Perhaps not every family preserves their homes precisely to Poletti’s specifications, and I don’t blame them, since it is difficult to live in a floor plan that was laid out a century ago. But she should not miss the broader point, which is that San Francisco has remained as it is because of the demographics it attracts.

Instead, she claims that these groups are “destroying” the city. She is thus spouting the same myth that is advanced about historic preservation by urban progressives, who seem to think that wealth and gentrification works against preservation. But a fair-minded look at U.S. cities demonstrates the opposite. If one looks at America’s most notable historic neighborhoods–the Back Bay in Boston; Capitol Hill in DC; the French Quarter in New Orleans; much of northern San Francisco; much of Manhattan and northern Brooklyn; downtown Savannah; and downtown Charleston–a unifying feature is that they have great residential wealth. Meanwhile, there are numerous cities—Baltimore, Philadelphia, Detroit, St. Louis, Cleveland—that have a similar number of historic structures. But many of them sit hollowed-out because of decline.

The same could be said when comparing Havana with Poletti’s San Francisco. Both cities have similar architecture and planning, but their differing economic histories have led to opposite preservationist destinies. Wealthy and growing San Francisco is a city where thousands of structures remain in superb shape, and where people grieve over minor alterations. Havana’s system has produced a crumbling city where the desire for preservation gets lost in a sea of basic needs. If Poletti really wants to see a “destroyed” city, she should visit the latter.

a public housing complex from the outside...

a public housing complex from the outside…

 

and from the inside.

and from the inside.

 

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Has The Urban Planning Profession Declined? (Like Planners Claim)

As readers know, Market Urbanism has for several years had a strong homepage and Twitter presence. And thanks to Adam, it is getting a stronger Facebook one, both on MU’s official Facebook page, and its chat group. If you enjoy reading substantive things, I recommend following both, but especially the chat group, which is available for anyone to join.

Many of its updates feature links from around the web posted by MU readers, informing us about the world’s biggest urban issues, with everything from mainstream news clips, to esoteric working papers and book chapter pdf’s. We would love to have more of you join and begin posting! This doesn’t mean the group is open to trolls; we don’t want to hear your grammatically-tortured vitriol. But we do like potential skeptics who ask questions and start debates, as they have received strong responses in the past.

All that said, here are some of my recent favorite links shared by the group, and let’s raise a Friday night glass for the many more to come.

1. Robert Moses’ 23-page response to The Power Broker. Like the man himself, the letter was angry, rambling, irrational, and condescending, yet had moments of rhetorical flash:

The current fiction is that any overnight ersatz bagel and lox boardwalk merchant, any down to earth commentator or barfly, any busy housewife who gets her expertise from newspapers, television, radio and telephone, is ipso facto endowed to plan in detail a huge metropolitan arterial complex good for a century.

I wonder which “busy housewife” he could have been referring to…

2. Richard Sennett comes from a school of sociological thinking–alongside academics like Saskia Sassen and Mike Davis–who criticize global capitalism and urbanization. But here is his rather balanced review in 1970 of Jane Jacobs’ The Economy Of Cities (you can access the review through a Facebook post via Anthony Ling).

3. This is an old Economist article that aims to define “rule of law.” It cites a study arguing that “a country’s income per head rises by roughly 300% if it improves its governance by one standard deviation,” with the efficiency and reasoning ability of its legal system playing a huge factor.

4. Here’s yet another article, this time from PlacesJournal, claiming that the growth of conservative economic theory in the 1940s, followed by the failures of 1950s urban renewal, led to the death of central planning and rise of “market urbanism” (his usage) in America. “By the ’70s and ’80s,” writes architect Anthony Fontenot, “the discipline of planning had come under such sustained attack that in many design schools the planning programs were jettisoned altogether and relocated — banished — to schools of policy and administration.”

I read this charge about the decline of American city planning frequently from architecture/planning writers. But can anyone please tell me what the hell they are talking about? The fact is that land use regulations–the most essential planning tool– have grown substantially in America in the last century, and even more so in recent decades. Zoning has transformed from merely separating incompatible uses to policing the design, coloration, placement, shape, density and “form” of buildings. Lots that years ago would have been subdivided in suburbia, or built upwards in cities, are now, respectively, preserved. Practically every city of minor significance has a planning department (not to mention an urban development corporation and design review board). Whereas America’s great legacy cities–New York, San Francisco, DC, Chicago, Boston, Philadelphia–adopted their built pattern during the relatively laissez faire industrial era, and thus in a manner that was dense, walkable, and attractive, land use controls often prevent them from furthering these goals today–and prevent newer cities from mirroring the old ones.

I thus can’t agree with Fontenot and similar-thinking architects and planners. Their profession has not declined in the U.S.; it has metastasized, only to inhibit many of the outcomes that they seem to want. Market Urbanism, meanwhile, is still an ideology confined to the internet, and not even close to being practiced today in any major U.S. city.

What is wrong with “How to Make an Attractive City”

critica

How to Make an Attractive City”, a video by The School of Life, recently gained attention in social media. Well presented and pretty much aligned with today’s mainstream urbanism, the video earned plenty of shares and few critiques. This is probably the first critique you may read.

The video is divided into six parts, each with ideas the author suggests are important to make an attractive city. I will cover each one of them separately and analyze the author’s conclusion in a final section.

1 – Not too chaotic, not too ordered

The author argues that a city must establish simple rules to to give aesthetic order to a city without producing excessive uniformity. From Alain Bertaud’s and Paul Romer’s ideas, it can make sense to maintain a certain order of basic infrastructure planning in to enable more freedom to build in private lots. However, this is not the order to which the video refers, suggesting rules on the architectural form of buildings.

The main premise behind this is that it “is what humans love”. But though the producers of the video certainly do love this kind of result, it is impossible to affirm that all humans love a certain type of urban aesthetics generated by an urbanist. It is even less convincing when this rule will impact density by restricting built area of a certain lot of land or even raising building costs, two probable consequences of this kind of policy: a specific kind of beauty does not come for free.

Jane Jacobs, one of the most celebrated and influential urbanists of the modern era, clearly argued that

“To approach a city, or even a city neighborhood, as if it were a larger architectural problem, capable of being given order by converting it into a disciplined work of art, is to make the mistake of attempting to substitute art for life. The results of such profound confusion between art and life are neither art nor life. They are taxidermy.”

The video also makes a factual mistake when it states that London skyscrapers are carefully planned. Their location, in fact, is based on preserving specific viewing corridors established almost 200 years ago. As The Economist reported last year, views of these landmarks have completely lost its relevance in contemporary London.

2 – Visible Life

The video argues that cities full of street life are more desirable. That is observably apparent, as people’s preference is observable in their chose to be drawn to these spaces. Nevertheless, the video makes a contradiction: first saying that Hong Kong is an example of a city with street life, then claiming cities full of skyscrapers aren’t conducive to street life.  Cities with “anonymous commercial towers” do not necessarily lacks street life: New York, Hong Kong, Tokyo and City of London are examples of cities full of skyscrapers that have active street life.

3 – Compact cities

Suburbanization and sprawl has been vigorously incentivized by public policy, most massively in the United States. United States policy featured an Interstate Highway System with massive investment in large road projects; education funding that favored good public schools in the suburbs; subsidies that favored owning larger-and-larger homes such as Mortgage Interest Deduction; zoning restrictions such as minimum lot areas and setbacks, as well as state support for the auto and oil industry. These programs fueled a form of urbanization we’ve come to know as suburban sprawl. Compact cities, which the videos celebrate have typically grown spontaneously without significant interventions.

The historic European and Brazilian downtowns typically have shorter commute distances, an intensive street life and a smaller dependency on the automobile.

4 – Orientation and mystery

It is true that people have diverse preferences for urban form, and that an attractive city can supply a greater variety of forms. However, it is dangerous for a city to dictate a certain kind of urban form for the city as a whole, even if it is a mix between different models. Although we can control form within a neighborhood or a large-scale development, municipal norms with these goals in mind can generate distortions exactly because of the infinitely varying  preferences of the citizens. Incapable of catering to all the subjective preferences of everyone that participates in the city environment, planners inherently lack the capability to determine ideal quantities of orientation and mystery the video suggests. In a truly organic and complex city, orientation emerges in a truly spontaneous and decentralized way that brings more “mystery” than any planner can fathom.

5 – Scale

Here the author quotes Joseph Campbell: “If you want to see what a society really believes in, look at what the biggest buildings on the horizon are dedicated to”, and deduces that we don’t actually collectively value sports shoe corporations, tax specialists, the oil industry and pharmaceuticals, as a few examples. But is that in fact true? A certain citizen may even say that he does not value these corporations and services, but he is a daily consumer of shoes, he pays his taxes, burns fuel and uses plastic products. And when he gets sick, he relies on pharmaceutical drugs. In the behaviors of each person, a preference for these goods and services is in fact revealed.  The video misunderstands how the complexity of the economy actually works and how preferences in society are be manifested.

What happens within tall commercial buildings is never as simple as their appearance. They often house the companies that produce or support the computers we use, the planes we fly in or the milk we have with our everyday breakfast. Such a city reflects the social valuation of a complex network of voluntary action that generates the products and services that make our lives better.

Soon the author argues for preserving views and limiting building heights to five stories. The rule itself is a paradox, as a four story building will have its view blocked by a five story building. Going even further with this reasoning, we can infer that a single-story house can block the view of another single-story house. Arguing for the preservation of views is, in fact, a direct contradiction with what it means to live in a city.

In any case, it is not reasonable to limit buildings within a city to five stories. The height of the old cities the video refers to was not defined by planning norms, but by practical necessity of walking up and down stairs in an era before the elevators we now take for granted. In contrast to today, top floors in pre-elevator buildings were always the cheapest as they were the hardest floors to reach. Limiting building heights to five stories suggests an artificial and arbitrary limit to real estate supply, a tangible side effect of the “sense of insignificance” the producers of the video talk about.

6 – A local city

The video says that buildings must not look alike everywhere in the world, as his trips get boring and because each city has a specific climate, needs and different positive and negative attributes. It argues for a strong local character and for the use of local forms and materials.

This is very true with commercial real estate in Latin America, where developers have built several glass towers which are totally inadequate for a tropical climate. These designs are intended to copy temperate climate buildings in developed countries, where the “greenhouse effect” within glass-enclosed buildings is conducive to indoor working environments. Smart builders will certainly learn from these mistakes and develop more adequate local solutions instead of imitating inefficient and inadequate forms.

The use of local forms and materials, however, is a major problem. Aesthetic and architectural form – trying to separate it from building technology – were always globalized, being influenced by different cultures and ideas. The same argument goes for materials: locally available materials will hardly be the best for every specific building.  This principle can be applied to any object. It is impossible to imagine a pencil, a single and relatively simple object, to be produced only with local materials, much less an entire city. The historical examples given in the video were built that way mainly by lack of options, not by an aesthetic or functional preference. The only contemporary example given, architect Glenn Murcutt, does not use local materials and whether he designs are distinctly “Australian architecture” is a very subjective interpretation.

Conclusion

In the last section, the author asserts that the greatest challenges to implementation of these ideas are a lack of political will and intellectual confusion about aesthetics. This was one of the most dangerous ideas the video communicates. In saying that it is possible to affirm what is inherently beautiful or ugly, is realistically impossible as these are not universal truths. I personally know people who find the glass towers the author hates beautiful. Others think the Brazilian favelas or the shantytowns in Bangkok are the most amazing and spontaneous expression of humanity. Some even think Paris is not the romantic city travel guides tell us, but instead a repetitive and boring vision of the past. The stand the video takes is worrying, as it argues for a correct and universal aesthetic enforced by increasing political power.

The tourism statistics used in this argument is simply false. Dubai, Singapore, New York and Hong Kong are part of the top ten most visited cities in the world and represent urban aesthetics and form opposite to the one argued in the video. For example, my personal experience of Frankfurt does not align with what the video says: I had the opportunity to spend a few days there on vacation and thought the city was amazing.

The final conclusion is an attack on real estate developers, who apparently greedily fight to make the city an ugly unattractive place. Unfortunately not everything is easy in this world. Some developers invest in renowned architects to serve niche clients and citizens that are willing to pay a premium for aesthetic extravagance. However, those who build for the masses cannot budget for extravagance, as real estate is usually the largest expenditure in someone’s life – and the burden of housing costs ever growing in most part because of very regulations the video is promoting. The given example of New Town, Edinburgh is actually perfect, as it is one of the most expensive neighborhoods in town.  Ironically it’s probably the neighborhood with the least amount of street life because of it’s strict residential zoning.

Another contradiction is when the video argues a city cannot be shaped by a free real estate market.  However, most of the cities the video uses as good examples were, in fact, built by within extremely deregulated real estate market compared to today’s standards. This is true for almost all medieval cities, old London neighborhoods, the Marais in Paris (what was untouched by Haussmann’s renovation) with the additional examples of Hong Kong, New York and even the historical centers of Brazilian cities.

By understanding the city as a complex, emergent environment, we should let go of the urge to impose our personal interests in urban form. The video’s final conclusions, calling for an increase in government control and a rigid regulation of the urban environment is as dangerous and has the same mindset as the failed plans of Brasilia.  And as dangerous as modern urbanism theory in general, which sees the city as built physical space that can be modeled by what planners want to achieve. Cities must be the result of spontaneous and voluntary action by all its citizens, not of a committee that decides what is right, wrong, beautiful or ugly.  Restraint from imposition by those who arrogantly proclaim they know what’s best for the extremely complex organisms we call cities will eventually lead to what I like to call planned chaos.

Urban[ism] Legend: The Free Market Can’t Provide Affordable Housing

Over at Greater Greater Washington, Ms. Cheryl Cort attempts to temper expectations of what she calls the “libertarian view (a more right-leaning view in our region)” on affordable housing.  It is certainly reassuring to see the cosmopolitan left and the pro-market right begin to warm to the benefits of liberalization of land-use.  Land-use is one area the “right,” in it’s fear of change, has failed to embrace a widespread pro-market stance.  Meanwhile, many urban-dwellers who consider themselves on the “left” unknowingly display an anti-outsider mentality typically attributed to the right’s stance on immigration.  Unfortunately, in failing to grasp the enormity of the bipartisan-caused distortion of the housing market, Ms. Cort resigns to advocate solutions that fail to deliver widespread housing affordability.

Yes, adding more housing must absolutely be a part of the strategy to make housing more affordable. And zoning changes to allow people to build taller and more usable space near transit, rent out carriage houses, and avoid expensive and often-unnecessary parking are all steps in the right direction. But some proponents go on to say relaxing zoning will solve the problem all on its own. It won’t.

Well, if “relaxing” zoning is the solution at hand, she may be right – relaxing will only help a tad…  While keenly aware of the high prices many are willing to pay, Cort does not seem to grasp the incredible degree to which development is inhibited by zoning.  “Relaxing” won’t do the trick in a city where prices are high enough to justify skyscrapers with four to ten times the density currently allowed.  When considering a supply cap that only allows a fraction of what the market demands, one can not reasonably conclude “Unlimited FAR” (building density) would merely result in a bit more development here and there. A radically liberalized land-use regime would deliver numbers of units several times what is permitted under current regulation.

Ms. Cort correctly concludes that because of today’s construction costs, new construction would not provide housing at prices affordable to low income people.  This will certainly be the case in the most expensive areas where developers would be allowed to meet market demands by building 60 story skyscrapers.  Advocates of land-use liberalization who understand the costs of construction would not claim that dense new construction will house the poor.  But if enough supply is allowed to come to market today, today’s new construction will become tomorrow’s affordable housing.  And this brings us to the more meaningful discussion: filtering.  Here’s where Ms. Cort’s analysis completely falls apart.

It is true that increasing supply eases upward pressure on all prices. But the reservoir of naturally cheaper, older buildings runs out after a while.

Tragically, Ms. Cort is using the current radically supply-constrained paradigm to analyze a free-market counter-factual.  If development at levels several times the current rate were allowed over the past few cycles, the reservoir of cheaper, older buildings would have remained plentiful and affordable.  If the market were allowed to meet demand for high-end units in the form of dense new construction, there would be little or no market pressure for unsubsidized market-rate units to be converted into luxury units.  The 1400 Block of W Street NW example she gives would almost certainly still be affordable.

On a larger scale, the increased supply of housing in the area helps absorb demand for more housing, but it’s not enough to stem the demand for such a sought-after location. Between 2005 and 2011, the rental housing market’s growth added more than 12,500 units. But at the same time, $800/month apartments fell by half, while $1000/month rentals nearly doubled. Strong market demand will shrink the availability of low-priced units. That’s what has happened over the last decade as DC transformed from a declining city into a rapidly growing one.

But, 12,500 units is the amount of supply added under the current over-regulated regime.  This amount of development is minuscule in a large city. (see diagram below)  What if DC allowed as much supply growth as Austin or Miami?  The 12,500 figure would triple.  Further, since Austin and Miami are far from free-market, the development rate in a truly free-market DC would certainly exceed a tripling.  If you consider the amount of supply that would have been added over the last several decades in an unlimited FAR DC, Ms. Cort’s position starts to sound quaint.  Conservatively assuming 50-100,000 units of rental housing would have been developed over the last few decades of DC’s growth, rents certainly would not have doubled.  I’ll go out on a limb and estimate that average rent growth would be close to inflation.

Chart by the Citizens Budget Commission (via NYYIMBY)

Chart by the Citizens Budget Commission (via NYYIMBY)

Ms. Cort wants housing to be less than 30% of gross income for nearly all residents.  Will the market provide new housing affordable to minimum wage earners at the most expensive intersection in Georgetown?  Probably not, and I hope she isn’t setting the bar that high.  While nobody is wise enough to know whether a free-market in land use would accomplish this, a free-market DC could be affordable to 50-100,000 more people than the zoned-to-death DC of today.  Will stock of units deemed affordable to low wage earners be of the quality, location, and size acceptable to Cort?  The necessity for further intervention is a subjective preference.

While acknowledging the validity of liberalization in her critique of supply-and-demand denialism, Cort’s conclusion fails to look at supply and demand wholistically:

Supply matters, but it’s not the whole story

Wrong. Supply really must be part of the whole story.  A city is only affordable to the number of residents it houses affordably.  Failure to recognize this only shifts the burden from one demographic to another. (and it won’t be the rich who pays the price)  If a zoning-plagued city fails to provide 1,000 units demanded, 1,000 people can no longer afford to live there.  Even if that city chose to subsidize housing for 2,000 people at 50-80% of AMI, that doesn’t change the fact that 1,000 people who wanted to live in that city must leave.  Any viable solution (free-market or otherwise) must involve increasing supply significantly, either through creating supply directly or subsidizing demand through vouchers, which induces new development.  But, this simply can’t happen if overall supply is capped through zoning.

Planned Manufacturing Districts: Planning the Life Out of Districts

Chicago’s Goose Island and surrounding Planned Manufacturing Districts

They are called different things in different cities, but they are similar in form and intent among the cities where they are found.  For simplicity’s sake, a Planned Manufacturing District (PMD), as they are called in Chicago, is an area of land, defined by zoning, that prohibits residential development and other specific uses with the intent of fostering manufacturing and blue-collar employment.

Proponent of PMDs purport to be champions of the middle-class or blue-collar workers, but fail to consider the unintended consequences of prohibiting alternative uses on that land.  At best, PMDs have little effect on changing land-use patterns where industrial is already the highest-and-best-use.  At worst, they have the long-run potential to distort the land use market, drive up the costs of housing, and prevent vibrant neighborhoods from emerging.

A Race to The Bottom

Before getting into it further, it is important to examine the economic decisions industrial firms make in comparison to other uses.  Earlier in the industrial revolution, industry was heavily reliant on access to resources.  Manufacturing and related firms were very sensitive to location.  The firms desired locations with easy access to ports, waterways, and later railways to transport raw materials coming in, and products going out.

However, the advent of the Interstate Highway System and ubiquitously socialized transportation network have made logistical costs negligible compared to other costs.  Where firms once competed for locations with access to logistical hubs and outbid other uses for land near waterways in cities, they now seek locations with the cheapest land where they can have a large, single-floor facility under one roof.  This means sizable subsidies must be combined with the artificially cheap land to attract and retain industrial employers on constrained urban sites.

Additionally, today’s economy has become much more talent-based rather than resource based, and patterns have shifted accordingly.  In contrast to industrial, residential and office uses are still very sensitive to location.  In fact, residential preference for urban locations are increasing.  Likewise, most office and other commercial firms seek to locate where they can best attract talent or customers, or simply put, convenient to residential.  To the dismay of the politicians, blue collar jobs are destined to leave cities to seek cheaper land in less desirable locations.  We should expect industrial firms to prefer exurbs and sites close to negative externalities, such as near highways and airports where noise and air pollution drive out residential uses.  Efforts to stem the tide of these realities will surely incur dead-weight losses.

In a race to the bottom, prohibition of housing and other uses in PMDs drives the value of that land down to the point it can compete on price with the most undesirable suburban locations. That is, until a non-manufacturing use compatible with the wording of PMDs emerges to crowd out industrial.

We are are in an interesting time, and are witnessing the first cases where the long-term consequences of PMDs are beginning to emerge for us to witness.

Google and Chicago’s Fulton Market

Over the past two decades, Chicago’s West Loop has become one of the most desirable neighborhoods in the City.  Developers flocked to the neighborhood to take advantage of the neighborhood’s proximity to Chicago’s Loop, and abundance of underutilized warehouses waiting to be converted to hip lofts.  However, Fulton Market and meatpacking district on the northern part of the West Loop remained immune to the radical transformation.  Neighboring West Town, River West, and West Loop blossomed during the housing boom.  Was Fulton Market less desirable?  Far from it – meaningful redevelopment was forbidden.

As developers began converting West Loop buildings in the 90’s, the Randolph Fulton Market Merchants Association proposed the formation of the Kinzie Street Industrial Corridor.  The Association ultimately triumphed in their lobbying for the district, which formed a PMD to protect them from the encroachment of competing land uses.  They also won a Tax Increment Financing district to fund subsidies, and other programs aimed at enriching incumbent and new businesses in the area.

Then, along comes Google.  According to the wording of the PMD, “High Technology Office” is a permitted use in the Kinzie Street Industrial Corridor.  Google, in search of an office with large floor plates for its Chicago headquarters, chose to move into a former cold storage building in the Fulton Market that is being converted into office.

As a result of Google’s impending arrival, Fulton Market has attracted a flurry of speculative real estate investment as other technology firms, hotels, restaurants, and entertainment venues flock to the area.  Land prices have been driven up to extent that no matter how much the subsidy, Fulton Market is no longer an economically viable location for industry or manufacturing.  We should expect politicians to scramble to fight this over coming years, but extinction of Fulton Market industry is imminent.  Efforts to hamper market-forces, millions of dollars of wasted subsidies, and unnecessarily higher housing costs were sacrificed to achieve nothing of lasting value.

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Vibrancy Thwarted

Possibly the biggest victim of the vast prohibition on uses of land in Planned Manufacturing Districts are the neighborhoods in which they are located.  In her treatise, The Death and Life of Great American Cities, Jane Jacobs discusses the ingredients of what makes urban districts flourish or fail.  Jacobs makes the case that great urban districts typical have a diversity of primary uses, short blocks, diversity of the age of buildings, and sufficient concentration of people.  Districts aimed at preserving and fostering limited uses, such as PMDs, stand in the way of all of these factors necessary for the emergence of vibrant city life.

Most obviously, if residential and other uses are prohibited, a diversity of primary uses and sufficient concentration of people are impossible.  Since the optimal sites for today’s manufacturing and logistics firms are very large, single-story buildings, firms are likely to demolish older multi-story buildings otherwise desired by residential loft-lovers.  They are also prone to spread their facilities over several blocks, sometimes incorporation what was once a street into their property.

Clybourn Corridor, Elston Corridor and Goose Island PMDs

Inspired by Fulton Market’s sudden success, some developers have begun to set their sights on other well located PMDs.  These developers intend to snatch up the preserved land at artificially low prices and entice technology companies to come.  One such developer, South Street Capital intends to do just that in Goose Island, straddled between River North and Lincoln Park to the east, and River West and Wicker Park to the west.  Developers also have also been eyeing the nearby site of the former Finkl Steel Plant.

Ironically, it was Finkl who successfully lobbied for the formation of Chicago’s first PMD, the Clybourn Industrial Corridor.  In the debates leading to the formation of the PMD, light manufacturing firms and developers were opposed to protections.  Light manufacturing wanted to keep the option to sell their land to developers and move to the suburbs.  As reported by the Chicago Reader:

On the other side were a handful of industrial-property owners from the area and their battery of lawyers, who argued that Eisendrath was offering them protection they do not want. Someday they may want to move, they say, because their buildings are too small, old, or obsolete. And they want the right to sell to whomever they choose–builders of shopping malls, condos, town houses, it doesn’t matter–at the highest dollar the market will bear.

“I like doing business in Chicago,” says David Schopp, chairman of U.S. Sample Company, the second-largest manufacturing employer in the area. “But I don’t want to be restricted. I don’t think it’s government’s role to say who I can and cannot sell to.”

Now, it is Finkl who wishes for that option.

The southern part of Fulton Market, as much as zoning hampers it’s potential, should enjoy some vibrancy as adjacent uses spill over into the district. (further, we do expect the city to begin allowing more residential in it’s latest plans for the district)  However, without lifting the PMDs altogether, there is little reason to be optimistic about the Goose Island and Elston Corridor PMDs.  Unfortunately, development of the PMDs in line with current prohibitions will result in a large area devoid of residential uses and other essential ingredients needed to become vibrant districts.  The area currently lacks transit alternatives, so employees will get to work by car or bike, exasperating traffic on roads connecting Lincoln Park to the expressway. We cannot expect the area to be rescued by spillover from nearby residential areas, as the river acts as a border vacuum preventing interconnection and transit access is minimal.  Failure to remove the PMD before further development takes place will condemn the area to eternal dullness.

Chicago’s Goose Island, protected by PMDs

Other PMDs

There are a total of 15 PMDs in Chicago.  The PMDs mentioned above, in addition to the Chicago/Halstead PMD, are the PMDs that have successfully thwarted residential encroachment.  Because of their undesirable locations, the remaining PMDs are impotent at altering land use patterns.  Impotent PMDs only serve as a mechanism for politicians to pay lip service to manufacturing jobs, and window dressing that goes hand-in-hand with subsidies.

I often hear urbanists defend PMDs, repeating the Urban[ism] Legend that we need them to keep manufacturing jobs in the city.  We urbanists can do much to make these districts vibrant if we overcome our nostalgia for urban manufacturing and come to terms with how dangerous PMDs actually are.  Economically speaking, PMDs can only serve the purpose of keeping land prices low enough to compete with undesirable suburban locations for industry. PMDs nonetheless do little to overcome the enormous economic forces repelling industry out from desirable locations in cities.  At worst, PMDs permanently plan the life out of otherwise desirable areas in the long run after serving their purpose temporarily.  At best, PMDs are impotent to drive down land prices in already undesirable places any further than they already are.

At a time when housing affordability is a major issue affecting cities, one way to remove barriers to increased housing supply is to abandon our counter-productive nostalgia for urban manufacturing.  PMDs abolish urban vibrancy, and it’s time for cities to abolish PMDs before it’s too late.

See also:

2005 Study by the University of Wisconsin-Milwaukee on the performance of the Clybourn Corridor PMDs

 

Bike Shares and Public Goods

Yesterday, Maryland Governor Martin O’Malley announced that seven jurisdictions in Maryland will be receiving grants to start bike share programs. The money for these grants comes from the Maryland Department of Transportation’s Federal Congestion Mitigation and Air Quality, so these bike shares will be federally subsidized. O’Malley says of the program:

“As we celebrate Bike Month, these grants will help bring Bikeshare stations to Maryland,” said Governor O’Malley.  “Bikesharing allows Marylanders an affordable option for short-distance trips as an alternative to public transportation, driving or walking.  By getting out and taking a bike ride, we also learn to enjoy more of Maryland’s natural treasures, help reduce the impact on the land, improve our fitness and well-being, and enhance our quality of life.”

The program would be of a similar model to DC’s Capital Bikeshare with capital costs covered primarily with federal grants and some local contributions. I am not much of a bicyclist myself, but I can clearly see the appeal of bike share systems. They provide the convenience of riding a bike to a destination without having to ride it back again, introducing additional flexibility to this mode of transportation. Also, the bikes are better-quality than what many cyclists would buy for themselves.

The problem with the politics surrounding bikeshares is that bicycles are not public goods, but elected officials such as O’Malley like to paint them as such. As Adam has previously pointed out, no transportation investment is a public good. The two characteristics that define public goods are nonexcludability and nonrivalrous consumption. Bike shares are perfectly rivalrous and excludable. Because no more than one  person (maybe two people) can ride a bike at a time, bicycles are lower on the public good scale than transit or roads.

Greater Greater Washington cites a study that publicly-supported bicycle shares are, shockingly, not making money, but GGW says this doesn’t matter since bicycles provide so many benefits to their riders. In a system of better incentives, though, both a private company and cities with bikeshare programs could make money if the private company leased public space for docking stations.

TBD points to a study that analyzes the demographics of Capital Bikeshare users, unveiling the regressive nature of this program. About 80% of CaBi annual members are white, over 80% have college degrees, and 43% have graduate degrees. But from a politician’s perspective programs don’t get much better than this. The capital costs are spread across all US taxpayers through CMAQ grants while the benefits are narrowly concentrated on a population of likely voters.

Lydia DePyllis reports on a pilot program that would bring CaBi access to 10 homeless people who are willing to jump through major hoops, and new proposals to require developers, rather than federal taxpayers to pay for new docking stations. Both of these programs could make CaBi somewhat more equitable. We could provide targeted benefits to low-income bicyclists though with a voucher system for a privately run bike share and achieve greater benefits at a lower cost.

By leasing sidewalk space to private companies to have bikeshare docking stations, these programs could easily become an all-around win for customers, companies, and cities, but as it stands, they hurt everyone except for their users, a government contractor, and vote-seeking politicians.

Compared to other transit modes, CaBi is doing very well, nearly covering its operating costs, but none of its capital costs, with membership fees. I’m picking on this program, because it is currently so regressive and because perhaps it’s new enough to turn over to the market. The private bikeshare system proposed in Los Angeles demonstrates that some investors think there are profits to be made in this industry in an arguably less-bikeable city without imposing the costs of bike sharing on those who don’t use it.

Urban[ism] Legend: Transportation is a Public Good

In a recent post, commenter Jeremy H. helped point out that the use of the term “public good” is grossly abused in the case of transportation.  Even Nobel economists refer to roads as “important examples of production of public goods,” ( Samuelson and Nordhaus 1985: 48-49).  I’d like to spend a little more time dispensing of this myth, or as I label it, an “Urban[ism] Legend.”

As Tyler Cowen wrote the entry on Public Goods at The Concise Library of Economics:

Public goods have two distinct aspects: nonexcludability and nonrivalrous consumption. “Nonexcludability” means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive.

And nonrivalrous consumption means that one consumer’s use does not inhibit the consumption by others.  A clear example being that when I look at a star, it doesn’t prevent others from seeing the same star.

Back when I took Microeconomics at a respectable university in preparation for grad school, I was taught that in some cases roads are public goods.  We used Greg Mankiw’s book, “Principles of Economics” which states the following on page 234:

If a road is not congested, then one person’s use does not effect anyone else. In this case, use is not rival in consumption, and the road is a public good. Yet if a road is congested, then use of that road yields a negative externality. When one person drives on the road, it becomes more crowded, and other people must drive more slowly. In this case, the road is a common resource.

This explanation made sense, but I was skeptical – something didn’t sit right with me.  Let’s take a closer look.

First, Mankiw uses his assertion as an example of rivalrous vs nonrivalrous consumption, while not addressing the question of excludability.  Roads are easily excludable through gates or any other mechanism that could restrict access.

Furthermore, Mankiw’s assertion that an uncongested road is nonrivalrous is simply confusing rivalrousness with the fact that the road is under-utilized and/or over-supplied at certain times.

For a silly example: if the government literally manufactured mountains of marshmallows free for the taking, Mankiw would have to consider marshmallows equally as non-rivalrous and non-excludable as uncongested roads in the US.  Would he then call marshmallows a public good?

Thus we can clearly see that all roads (when done right) are neither nonrival nor non-excludable.   We can use the diagram below (from Living Economics) to see that a congested (or tolled to prevent congestion) road is a private good, and in the case that a roadway is oversupplied, it is simply a “low-congestion good”, often called a “club good.”

I found this diagram at a very helpful site: livingeconomics.com

Roads are the more commonly misused example of a public good, but we can apply the same logic to transit.  First, most transit operations in the US already use a method of exclusions: the turnstyle.  Second, we can see that non-rivalrousness is simply a function of over-supply in the case of the subway car that isn’t full to capacity.

As economist, Don Boudreaux puts it :

So I’m more than sympathetic to the claim that government provision of roads, bridges, and highways distorted Americans’ decisions over the years to drive and live in suburbs.  But my sympathy for this claim comes from my rejection of the classic, naive case for government provision of public goods — and once that case is rejected, it cannot then be used to argue for government provision of, say, light-rail transport.

Does this alone prove that roads should be privatized? No, but the fact roads are either private goods or grossly oversupplied help weaken anyone’s case that transportation is government’s business in the first place.

I should warn you, if your Microeconomics professor teaches you this misconception unchallenged (perhaps using the Mankiw book), and gives you a true/false exam question of whether an uncongested road is a Public Good, you may want to answer “true”, or else be prepared to dispute your grade.  (And feel free to send your professor a link to this post.)

Next time you catch a commenter repeating this Urban[ism] Legend (like Jeremy H. did), refer them to this post.  Here are a few other links to back you up:

Are Roads Public Goods, Club Goods, Private Goods, or Common Pools? by Bruce Benson, Floria State University

Privatizing Roads by Tim Haab, “Environmental Economics” (blog)

Public Goods and Externalities: The Case of Roads by Walter Block, Loyola University

Highways Are Not (Economic) Public Goods by Rob Pitingolo, “Extraordinary Observations” (blog)

Public Goods from an Austrian Economics perspective


Urban[ism] Legend: Traffic Planning

Mathieu Helie at Emergent Urbanism posted a link to a interesting game created at the University of Minnesota. Mathieu explains it better than I can:

The game begins in the Stalinian Central Bureau of Traffic Control, where a wrinkly old man pulls you out of your job at the mail room to come save the traffic control system. You are brought to a space command-like control room and put to work setting traffic lights to stop and go. Meanwhile frustrated drivers stuck in the gridlock you create blare their car horns to get your attention, and if their “frustration level” rises too high you fail out of the level. As the road network gets as complicated as four intersections on a square grid, the traffic becomes completely overwhelming and failure is inevitable, but the old man reassures you that they too have failed anyway.

OK, you’ve played the game? If not, don’t go further until you have.

Now that you’ve played the game and failed to control traffic, compare that top-down system with this amazing video a friend sent to me from Cambodia. You’ve gotta see this:

Man, I love this video! I must have watched it a couple dozen times. I keep expecting a crash, in what to me (only being familiar with top-down planned traffic systems) looks like complete chaos. Yet pedestrians, bikes, motorcycles, scooters, rickshaws, and cars all make it to their destinations safely, and probably quicker than in the system in the game above. It must be similar to how capitalism must seem chaotic to people who have always lived in planned economies.

Don’t mistake me as an advocate of a world without traffic signals. I am quite certain that some sort of traffic signaling would likely emerge from a free-market street system. But, my bigger point is that when information is dispersed widely among decision-makers without government monopoly, sustainable solutions emerge from the uncoerced behavior of individual agents over time.

Another article at Infrastructurist discusses the philosophical differences Dutch and American road designs, and gives an example:

A fascinating example is a major–20,000 cars a day!–intersection in the Dutch city of Drachten that used to look a lot a typical American intersection, with lots of bright paint and traffic signals and enormous signs telling you what and what not to do. Traffic planners tore that stuff out and went naked, just putting down a roundabout in the center. The sidewalks even disappeared as distinct structures. Everyone figured it out though. Fatalities at the intersection dropped markedly, as did travel times.

Also read Tom Vanderbilt: News for Traffic Signal Manufacturers