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Book Review: The Public Wealth of Cities

The Public Wealth of Cities by Dag Detter and Stefan Fölster proposes a series of reforms to improve municipal finances. The authors lay out guidelines for creating urban wealth funds (UWFs) and argue that financial stability is key to societal success.   Detter and Fölster first call for basic financial competency. According to the authors, most cities don’t even know what they actually own. Real estate and equipment are often owned directly by individual departments with no central record to provide a bird’s eye view of a city’s assets as a whole. When this is the case, good asset management becomes impossible because no one knows what they’re managing.   The authors also point out the need for cities to decide what is and is not a commercial asset. Where administrators designate an asset as commercial, maximizing ROI should supersede all other objectives. That doesn’t mean everything a city owns has to be managed to turn a profit, but where a piece of real estate or a facility is meant generate income, it ought to be managed explicitly to that end.   Professional financial planning is Detter and Fölster’s third major prescription. They argue that cities should hire professional asset managers to oversee their portfolios and that these managers should be shielded from the democratic process. They go on to make a very public choice argument that elected officials have inappropriately short time horizons and that pressure to please constituents can lead to decisions at odds with the long term sustainability of municipal finances. After developing that line of reasoning, they provide Singapore as an example of a municipality that does this pretty well.   In terms of the ideas presented, I loved the book. It touches on the organizational challenges of getting municipal finance right while speaking to what execution has […]

The Progressive Roots of Zoning

by Samuel R Staley Before the twentieth century land-use and housing disputes were largely dealt with through courts using the common-law principle of nuisance. In essence if your neighbor put a building, factory, or house on his property in a way that created a measurable and tangible harm, courts could intervene on behalf of a complainant to force compensation or stop the action. This pro-property rights approach maximized liberty and minimized the ability of citizens and elected officials to politicize the development process. This changed with the Progressive movement. Beginning in the late nineteenth century, Progressives argued that government should become more professional. Rather than being limited, government should use its resources to pursue the “public interest,” loosely defined as whatever the general public decided through democratic processes was the proper scope of government. Legislatures and, by extension, city commissions made up of elected citizens would set policy and goals while a cadre of trained professionals would use the techniques of scientific management to implement policies. One of the leading Progressives of the day, Woodrow Wilson, was skeptical of the value of elected bodies such as Congress because they interfered with scientific management of government. While many in the twenty-first century might be tempted to dismiss this public-interest view of government—indeed an entire academic subdiscipline, Public Choice, has emerged to demonstrate the foibles of governments and explore “government failure”—Progressive ideas held a lot of appeal at the turn of the twentieth century. In addition to national concerns over industries such as oil, steel, and railroads, local governments were rife with corruption, waste, and inefficiency. Reforms, such as the city-manager form of government, civil-service exams, and in some cases even municipal ownership of utilities, were thought to provide more transparency and accountability than the patronage-laden times of political bosses. (Today municipal […]

Exempting Suburbia: How suburban sprawl gets special treatment in our tax code

Our tax code favors suburbia. Homeownership, greenfield development, and sprawl receive preferential tax treatment, and the market responds to incentives built into the code. As a result, a disproportionate amount of capital flows to those investments. In many cases, it has been an unintentional side effect of pursuing other goals. The combined effect is that our tax system plays a huge role in shaping our communities. Its influence is an important factor to understanding how residential design in the US became what it is today.

Subsidizing Suburbia: A forgotten history of how the government created suburbia

This is the first article of a five-part series on suburbia in the United States. In primary school, one of my friends lived in a duplex. This fact blew my mind. To my inexperienced 7-year-old mind, a duplex barely registered as a house. Her family shared a driveway with their neighbors, and their yard was tiny. It was the first house I’d ever seen that shared a wall with its neighbors. I’d seen apartments of course, but in my mind those were temporary, for people who who were saving up to buy a “real” home. I couldn’t understand that some people might actually prefer to live in something besides a private home, because I’d never come across it before. Median income in American cities tends to rise at about 8 percent per mile as one moves away from the business district. My mental model of the world was pretty typical for an American child brought up in a single-family home. It’s easy to see why—US residential development is dominated by suburbs, and home ownership is touted as the ultimate symbol of prosperity. Other types of dwellings tend to be for young people starting out in life or low income households unable to afford a place of their own. The popular image of the American Dream includes a white picket fence and a car, not an apartment and a subway pass. This is in stark contrast with most other countries. The French word for suburb is banlieue, and it has come to connote poverty and social isolation, because that is where immigrants and the poor tend to live. They’ve been known as “red suburbs” because of their tendency to vote Communist. Meanwhile, the wealthy live in the city center. In South Africa, the inner city is reserved for the privileged white […]

The Color of Law: A Forgotten History of How Our Government Segregated America

Richard Rothstein’s “The Color of Law: A Forgotten History of How Our Government Segregated America” should be required reading for YIMBYs and urbanists of any ideological stripe. Rothstein argues that housing segregation in the US has been the intentional outcome of policy decisions made at every level of government and that the idea of segregation as phenomenon driven by spontaneous self-sorting is largely a myth. Two major themes permeate the book: (1) the ways in which government has consistently intervened in the housing and land markets and (2) how these interventions were designed to pick winners and losers. The federal policy of underwriting loans for specific kinds of development (single family detached housing) and for specific people (whites) is an example that the author explores in depth. And after reading his account, I can safely say that I have a far better understanding of how nearly a century’s worth of policy interference has distorted markets and doled out privilege and oppression in equal measure. Throughout the book, Rothstein brings in the stories of specific people and places to add depth to his account. This both keeps things interesting and serves to humanize the story in a way that many tracts on policy fail to do. When he’s describing the lives of black Americans who were forced into soul crushing commutes because they were legally prohibited from living near their jobs, or families who had their houses firebombed for daring to move into a segregated neighborhood while police stood on their front lawns and watched…you remember that policy matters because it affects real people. And that real people suffered terrible wrongs for no other reason than the accident of their birth. Again, if you care about US housing policy, you must read this book. It’s impossible to understand where we are […]

People Over Process: Why Democracy Doesn’t Justify Exclusion

Some people accept the idea that restrictive land use policy is just as bad as all the research suggests, but persist in supporting the status quo. They argue that if a community chooses to regulate its built environment, that choice should be respected as having moral weight because it’s the outcome of a democratic process. This argument, though, is as logically confused as it is normatively problematic. And in the following few lines, I intend to demonstrate exactly why. No decision making process is value neutral. Whatever way we choose to go about collective decision making, we will always privilege certain voices over others. Institutions beget outcomes and the internal logic of our institutions will always favor some outcomes (and therefore voices) over others. The same individuals with the same preferences asked to make the same decisions through different procedures will produce wildly different outcomes. Imagine a U.S. Presidential election based on the popular vote or representation in the U.S. Senate proportional to state population and you should begin to see how the public will is as much a product of procedure as it is aggregated individual preference. Taking the Bay Area as a land use specific example, our system heavily favors the voices of incumbent homeowners to the detriment of everyone else. Land use decisions take place at the municipal level which–given the fact that we have 101 different municipalities–is a hyper local affair. When a new development is proposed, it only takes a handful of angry neighbors to impact decision making. Were land use set at a higher level of government, the typical number of people that get angry over an individual project would be far less effective at killing new housing. Fifty angry homeowners might matter to the Palo Alto City Council, but they’d be quite a […]

An Attack on Market Urbanism

The far-left “TruthOut” web page recently published an attack on YIMBYs,* describing them as an “Alt-Right” group (despite the fact that the Obama Administration is pro-YIMBY).  I was surprised how little substance there was to the article; most of it was various ad-hominem attacks on YIMBY activists for cavorting with rich people.   I only found two statements that even faintly resembled rational arguments. First, the article suggests that only current residents’ interests are worth considering in zoning policy, because “the people who haven’t yet moved in” most often means the tech industrialists, lured by high salaries, stock options and in-office employee benefits like massage therapists and handcrafted kombucha.” This statement is no different than President Trump’s suggestion that Mexican immigrants “[are] bringing drugs. They’re bringing crime. They’re rapists.” – that is, it is an unverifiable (if not bigoted) generalization about large numbers of people.  Furthermore, it doesn’t make sense. The “tech industrialists” have the money to outbid everyone else, so they aren’t harmed by restrictive zoning. Second, the article states that academic papers aren’t as relevant as the actual experiences of San Franciscans displaced by high housing costs.  In response to the argument that less regulation means cheaper housing, it states  “tell that to people like Iris Canada, the 100-year-old Black woman who had used local regulations to stay in her home of six decades, only to be evicted in February.” So in other words, somebody was evicted in San Francisco, therefore San Francisco’s restrictive zoning prevents eviction. I don’t see how the latter follows from the former.  The whole point of the YIMBY/market urbanist argument is that if there was more housing, there would be lower housing costs, hence fewer evictions. *For those of you who are unfamiliar with the term, YIMBY means “Yes In My Back Yard”, a […]

A Guide to Urban Development [Guia de Gestão Urbana]

Caos Planejado, in conjunction with Editora BEI/ArqFuturo, recently published A Guide to Urban Development (Guia de Gestão Urbana) by Anthony Ling. The book offers best practices for urban design and although it was written for a Brazilian audience, many of its recommendations have universal applicability. For the time being, the book is only available in Portuguese, but after giving it a read through, I decided it deserved an english language review all the same. The following are some of the key ideas and recommendations. I hope you enjoy. GGU sets the stage with a broad overview of the challenges facing Brazilian cities. Rapid urbanization has put pressure on housing prices in the highest productivity areas of the fastest growing cities and car centric transportation systems are unable to scale along with the pace of urban growth. After setting the stage, GGU splits into two sections. The first makes recommendations for the regulation of private spaces, the second for the development and administration of public areas. Reforming Regulation Section one will be familiar territory for any regular MU reader. GGU advocates for letting uses intermingle wherever individuals think is best. Criticism of minimum parking requirements gets its own chapter. And there’s a section a piece dedicated to streamlining permitting processes and abolishing height limits. One interesting idea is a proposal to let developers pay municipalities for the right to reduce FAR restrictions. This would allow a wider range of uses to be priced into property values and create the institutional incentives to gradually allow more intensive use of land over time. Meeting People Where They Are Particular to the Brazilian experience is a section dedicated to formalizing informal settlements, or favelas. These communities are found in every major urban center in the country and often face persistent, intergenerational poverty along with […]

The “Foreign Buyers” Argument

A common argument against new housing supply is that in high-cost cities such as New York, demand from foreign buyers is so overwhelming as to make new supply irrelevant.  A recent study (available here) by two business school professors suggests otherwise.  The study does show more foreign involvement in the NYC market than I expected: just over 13 percent of Manhattan buyers, and 5 percent of all regional buyers, come from outside metropolitan New York.  Even this share is less than in some lower-cost markets: the study notes that 17 percent of Las Vegas buyers are from outside the city. However, the impact of “out of town” buyers is pretty small:  the authors conclude that out-of-town buyers “cause an increase in house prices of 1.1% and an 39 increase in rents by 1.6% in both zones.”

Four Warnings For Los Angeles On Measures S

The alternative title for this piece was: “Ballot Box Zoning: Where Needed Housing Goes to Die.” Next month, Los Angeles will be voting on Measure S, a proposed 2-year policy that will effectively serve as a moratorium on new construction.  That is, Measure S will require a public vote on any new development that does not fit within existing zoning.  Most of the city’s major leaders, including Mayor Eric Garcetti, have come out against the measure, and the Los Angeles Times followed suit just a few days ago. I’m not going to rehash arguments for or against the measure.  Instead, I’m going to offer several warnings based on the experience of Davis, CA, which passed its own Ballot Box Zoning Measure in 2000.   Measure J, our ballot box zoning measure, requires voter approval on any attempt to change the zoning designation of open space or agricultural land that sits on the community’s edges.  The law also explicitly names two particular parcels that must be voted on prior to approval.  So for the purposes of this piece, consider it a ballot box zoning law targeting sprawl. Warning 1: These Measures Are Hard To Roll Back Measure J passed in Davis with just 53.6% percent of the vote in a March primary when residents cast just 19,000 votes (in a city with at least 49,000 voting-age residents).  The law contained a renewal clause, and when it came up for renewal in 2010, support jumped to 76.7% percent.   This increased support may be an artifact of how the opposition attempted to stall the measure’s renewal.  Opponents of the renewal made a NIMBY argument the centerpiece of their case: they argued that slowing growth at the edge of town meant more infill pressure in the city’s core, threatening the character of neighborhoods.  As I’ll discuss in a […]

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