In Defense of Chicago

First of all, I should start out by saying that I’ve only ever been to Chicago once, and I really don’t remember anything but the inside of my aunt’s house. I remember asking them if there was good mass transit, and they said Metra is good, but the L, which is near them, is not something they’d ride. My aunt, who led the family, was a financial services executive in Chicago, but they moved to the Research Triangle in North Carolina when she went into tech/healthcare. I imagine just the people Aaron Renn has in mind when he wrote “The Second-Rate City?” for City Journal.

That anecdote aside, I think Aaron Renn is being a little too hard on Chicago. I’m sure my view of the city unduly weights its land use and transportation policies, but I do think it’s got more potential than Aaron gives it credit for.

A lot of his article is based on this grim demographic observation, which I admit, is hard to stomach:

Begin with Chicago’s population decline during the 2000s, an exodus of more than 200,000 people that wiped out the previous decade’s gains. Of the 15 largest cities in the United States in 2010, Chicago was the only one that lost population; indeed, it suffered the second-highest total loss of any city, sandwiched between first-place Detroit and third-place, hurricane-wrecked New Orleans. While New York’s and L.A.’s populations clocked in at record highs in 2010, Chicago’s dropped to a level not seen since 1910. Chicago is also being “Europeanized,” with poorer minorities leaving the center of the city and forced to its inner suburbs: 175,000 of those 200,000 lost people were black.

Poor minorities abandoning the center to wealthy whites, while it has a lot of unfortunate aspects, doesn’t seem to me to be an altogether bad thing. Aaron says “Europeanized,” but the idea that the wealthy, not the poor, poor live in the center of the city isn’t a European thing, it’s an urban thing! It happens in Tokyo and Hong Kong, Cairo and Beirut, New York and São Paulo. To say nothing of Chicago before urban decline!

Landlords walking away from properties in the South Bronx isn’t supposed to be the norm. There’s much that I think could be done to mitigate the effects of gentrification – such as letting cities grow in already-gentrified areas, where demand and prices are highest, which I’ve written about before – but short of solving the problem of racial inequity or rent controls (which are illegal in Illinois anyway), I don’t see how cities are supposed to retain minorities in close-in urban neighborhoods whose ornate buildings belie the fact that they were built for much richer people.

Aaron does, however, have a point when it comes to municipal government – at least, most parts of it. Illinois and Chicago’s pension and budget woes are legendary, as is its corruption. And while I don’t know much about small business regulation in Chicago, I’ve heard that it’s no walk in the park, either.

However, I’m not sure how much I agree with his criticism of Chicago’s land use regime:

It also hurts small businesses that Chicago operates under a system called “aldermanic privilege.” Matters handled administratively in many cities require a special ordinance in Chicago, and ordinances affecting a specific council district—called a “ward” in Chicago—can’t be passed unless the city council member for that ward, its “alderman,” signs off. One downside of the system is that, as the Chicago Reader reported, over 95 percent of city council legislation is consumed by “ward housekeeping” tasks. More important is that it hands the 50 aldermen nearly dictatorial control over what happens in their wards, from zoning changes to sidewalk café permits. This dumps political risk onto the shoulders of every would-be entrepreneur, who knows that he must stay on the alderman’s good side to be in business. It’s also a recipe for sleaze: 31 aldermen have been convicted of corruption since 1970.

I’ve heard this criticism many times before, but how do you square that with the fact that Chicago is also the most (urban) developer-friendly big city in America?

A totally as-of-right regime under a reasonably liberal code would probably be preferable to Chicago’s aldermanic privilege system, but the aldermen’s choices seem to be manifestly better than those made by planners and citywide politics in every other large city in America. Chicago has been going through an apartment boom for at least a year now, and the commercial property market is showing surprising signs of life – the 45-story City Point office tower will be the first delivered on spec in downtown Chicago since 1998, and tight class-A vacancies mean another large tower is likely coming soon, as well.

Other than ubiquitous parking podiums that the city’s not-so-progressive minimum parking requirements foist on developers and architects, Chicago’s quite tolerant of density and growth. At least so far, supply has been allowed to keep up enough that housing is shockingly cheap to this East Coaster.

Chicago may be hemorrhaging population everywhere else, but the ring of wealth around the Loop is getting bigger and bigger. It’ll be a long time before it’s large enough that its growth will compensate for the post-crash exodus from the exurbs and slow trickle from the suburbs. But if Chicago post-urban decline is anything like Chicago pre-urban decline, the city’s got a ways to go, whereas its ‘burbs can only fall so far.

Speaking of which, being the unofficial capital of the Midwest ain’t half bad. With 65 million people, it’s about as large as France or the United Kingdom, and there isn’t a city in the region that even comes close to matching Chicago’s cultural and economic opportunities. If indeed there is going to be a massive migration from the exurbs and suburbs on the scale of immigration around the turn of the last century, Chicago’s in a pretty good position to pick up a lot of refugees from America’s vast, auto-bound interior.

And hey, with the Onion coming to town, maybe Chicago will soon be able to add comedy to the list of things it’s the center of, along with derivatives, supertalls, and corn-fed folk?

Links

1. Maps of sprawl and gentrification in Detroit, St. Louis, Chicago, and Boston. At first the picture looks bleak for cities, but Jesus – even downtown Detroit is growing! (More here.)

2. A real, live Texan (just kidding – he lives in Austin) replies to O’Toole on parking.

3. Why aren’t (more) urbanists cheering on Jerry Brown’s attempt to kill sprawl-inducing California redevelopment agencies? (Streetsblog SF/LA, I’m looking at you!)

4. NY lawsuit alleges that LEED standards are meaningless, and Charlie at Old Urbanist takes the opportunity to review the case against America’s most popular “greenness” metric.

5. This is awesome: The DC Office of Zoning makes the code and all the overlays accessible on Google Maps. Is there any other city with anything like it?

A question and a link list

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

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

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

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

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

5. Communism in America: Roosevelt Island.

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

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

8. India fails at urbanism.

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

Irrationality Towards Shortages

Brendan Crain at Where tipped me off to a great post by Ryan Avent at The Bellows. Here’s a little snippet of Shortage:

For whatever reason, we’re not built to naturally internalize negative externalities. When riding on a crowded highway, no one (no non-economist, at any rate) curses the government for not making the road more expensive; they demand more capacity — fewer traffic lights, higher speed limits, more lanes, more roads. And when free parking results in no available parking, no one demands market pricing for spots; they ask why the lot’s so small and the garages so scarce, and they get angry about those two new developments that just went in, bringing new residents who unsurprisingly use the valuable, yet free, parking spots when they’re open.

We see a shortage of a public good, and we think more, not more expensive. And as a result, the failure to price public goods appropriately leads to an inefficient use of existing resources, and an inefficient allocation of new resources. We don’t use existing roads well, and we spend too much valuable capital building new roads. We don’t use existing parking well, and we spend too much valuable capital building new parking OR we allow shortage concerns to undermine good investments.

This type of anti-market bias which seems to be the natural default in humans creates unhealthy positive-feedback loops such as the highway -> development -> congestion -> widen/extend highway, etc. loop. But in that light, we should be glad modern society has been able to overcome so many of its anti-market biases such as making profits, charging interest, and trade between strangers. Hopefully, as society adapts to deal with issues of scacity of land, resources, and time, it will overcome the unhealthy biases it needs to shed to sustain growth.

The Bellows post also refers to a post Matthew Yglesias wrote about the Chicago parking meter privataization, where he said:

In general, the market price of street parking should be very similar to the market price of garage parking. Since a garage is more secure and protected from the elements, that has certain advantages. But a street spot might be more convenient. So you’d be looking at rough similarity. And in parts of the city where there’s no viable market in garage building, that’s a market signal that parking demand is low and therefore street parking should be very cheap. But where garages are charging a lot, street parking should also be expensive. Among other things, that would reduce the need for new construction to be accompanied by expansive parking garages.

Perhaps more important, it would reduce the tendency for conversations about any new development to become immediately dominated by people’s fear of parking shortages. The whole shortage phenomenon is (as shortages tend to be) a symptom of bad pricing policy. Chicago is a big city with a vibrant downtown and tons of economic activity. Space is limited and expensive. Unless you charge more than a quarter for it, you’ll get shortages.

Still, the privatized meter pricing will remain highly regulated (to satisfy the anti-market bias of political constituents), preventing the full “market price” efficiency to be achieved.

Chicago Privatizes Parking Meters

Of course, Chicago is just privatizing the revenue from meters, not the actual parking spaces. Plus, the city will regulate rate increases, but it’s a step in the right direction. (right?)

For today’s politicians, this is a great way to get windfalls of money today for revenues of future generations in order to mask their fiscal irresponsibility. I think we’ll see more of this during the current mess as other municipalities catch on.

Ideally, cities should auction off the spaces (including the land), with no regulations on rates or use of the land. Let market mechanisms determine the highest-and-best use of the spaces and land.

Chicago Tribune: Most city parking meters to cost $1 an hour [Hat Tip: reader, Dan M]

City Hall officials said that after the first five years of the 75-year parking meter lease, rate hikes will be subject to approval by alderman and are expected to be at the rate of inflation.

The $1.1 billion to city coffers will come from Chicago Parking Meter LLC, which is made up of two Morgan Stanley infrastructure funds.

The Daley administration said $400 million will go into a long-term reserve, $325 million will be spent in city budgets through 2012 and $100 million is earmarked for programs helping low-income people. An additional $324 million is headed toward a fund city officials said “may be used to help bridge the period until the nation’s economy begins to grow again.”

and a video:

Cook County (Chicago) Sheriff Won’t Evict in Foreclosures

Cook Co. sheriff won’t evict in foreclosures from Associated Press

Cook County Sheriff Tom Dart says he’s ordered his deputies to stop taking part in evictions of properties that have been foreclosed upon.

Dart says the change goes into effect Thursday. He says the decision comes because many of those being evicted are people who’ve been faithfully paying rent and didn’t even know about the foreclosures.

Dart says he thinks he’s the first sheriff in a major metropolitan area to stop such evictions during what’s become a major foreclosure crisis around the nation.

Dart says the number of mortgage foreclosures in Cook County has skyrocketed this year and that he expects that number to climb much higher.

It’s really tragic that renters who have otherwise valid lease contracts, lose that right because of their landlords’ failure. But, I don’t have the same sympathy for the defaulters themselves.

What do you think will result from this move? Will banks stop foreclosing in Chicago without the rule of law on their side? Will defaulters squat?

Housing + Transportation Affordability Index

affordability in the LA area

affordability in the LA area

affordability in NYC
affordability in New York City

Play with the HUD-Brookings Institution’s new index maps here:

The Housing + Transportation Affordability Index, developed by CNT and its collaborative partners, the Center for Transit Oriented Development (CTOD), is an innovative tool that measures the true affordability of housing. Planners, lenders, and most consumers traditionally measure housing affordability as 30 percent or less of income. The Housing + Transportation Affordability Index, in contrast, takes into account not just the cost of housing, but also the intrinsic value of place, as quantified through transportation costs.

I enjoyed playing with the maps to see the interplay of accessibility and affordability. In New York, some very accessible places are not-so affordable, such as many areas of Manhattan. Same goes for upscale parts of Chicago. At the same time, very affordable housing locations in exurbs become less affordable when considering transportation costs.

I plan to spend more time investigating how they produce the index.

[tip of the hat to Peter Gordon]

Glaeser: State of the City

I’m a little slow picking up on this one, but the Wall Street Journal recently interviewed Harvard Urban Economist, Ed Glaeser. Here are some excerpts from State of the City:

THE WALL STREET JOURNAL: What effect will higher gasoline prices have on urban planning in the U.S.?

MR. GLAESER: I would be very surprised to see a wholesale change in the nature of American urban development. We should certainly see changes in the short run, [such as] a slight decrease in demand for housing that’s particularly far away from city centers and dependent on long drives. That [type of housing] won’t be abandoned entirely, but it will certainly be cheaper.

WSJ: What about the idea of having the government purchase foreclosed homes and convert them into affordable housing? Would that be good for the economy?

MR. GLAESER: The government’s track record as a property owner is not so great. I am less enthusiastic about the government getting into this business. If we want strong policies towards taking care of the least well-off in our society, we should make sure supply is unfettered and continue working on the Section 8 [low-income housing] voucher program — that’s the right strategy.

Glaeser discusses Chicago’s success:

MR. GLAESER: I think Chicago has been remarkably successful in lots of ways. The city has managed to stay pretty affordable and Mayor [Richard] Daley has been extremely pro-growth.

Chicago, for many years, has had a relatively pro-growth environment, at least relative to California and New York — especially [before current Mayor Michael Bloomberg]. The climate in Chicago is, of course, far less pleasant than San Francisco and wages are lower than New York.

Still, it is somewhat remarkable that condo prices in Chicago [a median $232,000 in 2007] are less than those in Trenton, N.J. [$248,000], and not that far above Philadelphia [$197,000].

Over the past two years, Chicago has permitted around 14,000 units per year. Los Angeles permitted less than 10,000 units in 2007 and 14,500 units in 2006. Yet Los Angeles has almost twice the land area and over 50% more population. It is substantially less dense than Chicago, and there is substantially more demand for Los Angeles, yet Chicago is building more.

Bringing more units to market — think of all those cranes along the lake — explains in some part of why Chicago is more affordable. The absence of land-use controls [means] prices for condos will tend towards construction costs. After all, you can always build taller buildings.

Unfortunately, some local politicians have begun pandering more to NIMBYs. It hasn’t gotten out of control like coastal big cities, but I wouldn’t be surprised if the development climate changes once Daley retires.

New York City is a great place to be really rich and not a terrible place to be really poor, but it’s a pretty hard place to live on $60,000 a year. You don’t experience anywhere near the basic standard of living you would in Houston on the same income.

After living in NYC vs Chicago, I concur…