Market Urbanism – Page 48 – Liberalizing Cities From The Ground Up

Mercantilist logic and land-use regulation

Adam Smith taught the world that mercantilism impoverished 18th-century nations by erecting barriers to trade and reducing opportunities for specialization and economic growth. Regulations that restrict urban development likewise reduce opportunities for innovation and specialization by limiting cities’ population size and density. Even as improvements in communications technology and falling transportation costs reduce the burden of distance, many industries still benefit from the geographical proximity of human beings that only dense development can provide. Removing land-use regulations will allow greater gains from trade as more people are allowed to live in important economic centers like New York City and Silicon Valley. Cities facilitate innovation by placing people with diverse backgrounds and goals in close proximity. While Israel Kirzner’s research provided a comprehensive analysis of entrepreneurs in the market process and in economic growth, economists have not given sufficient attention to the geography of entrepreneurship. The settings in which entrepreneurs work – Sandy Ikeda’s “action space” – matters, and cities provide a crucial role as the action space for much of human innovation. Silicon Valley is an urban action space where geographical proximity has made entrepreneurs more successful than they would have been without the inspiration they provided one another. The Homebrew Computer Club, a social group founded in 1975 for computer hobbyists, played a crucial role in the development of personal computers. The programmers, engineers, and inventors who attended those early meetings would go on to revolutionize computing thanks, in large part, to the information they gathered from swapping ideas, hardware, and skills from the other group members they encountered. The club began meeting in garages, parking lots, and university auditoriums, but it was only possible because these enthusiasts all worked for semiconductor companies that brought them to the same region of California. Empirical evidence bears out the importance of cities in facilitating […]

Market Urbanism MUsings April 29, 2016

1. This week at Market Urbanism: Carolyn Zelikow of Aspen Institute wrote her first Market Urbanism article, Richard Florida Should Replace The Term ‘Creative Class’ With ‘Country Club’ So I was shocked that reading Florida’s book not only gave me zero ideas for my own community, but actually made me question whether the “Creative Class” was something that cities should try to foster, period. As far as I can tell, the Creative Class is just a new name for rich people. Howard Ahmanson also contributed his first post, No, ‘New Urbanism’ And ‘Smart Growth’ Are Not The Same It is a fact that perhaps 90% of New Urbanists are also Smart Growthers, though many of the leaders of the New Urbanist movement are not; that still does not mean the two philosophies are identical. Michael Lewyn followed up on his article on “school-based sprawl”: “Public Schools Only” Vouchers and Sprawl This plan might discourage sprawl by making prestigious suburban schools available to urban parents. And if both students from affluent families and students from poor families entered these schools, the class differences between urban and suburban schools might be erased in the long run. 2. Where’s Scott? Scott Beyer spent his second week in San Antonio. He wrote two Forbes articles this week–about a Private Proposal To Solve Chicago’s Freight Rail Bottleneck, and whether San Francisco’s Solar Panel Mandate Will Increase Housing Costs: The goals driving the solar panel mandate sound wonderful, but how will they influence San Francisco’s already-high housing prices?…As I learned through recent research and interviews, it doesn’t appear that San Francisco’s officials are too curious about the answer. Scott also published on his blog a radio interview about his visit to Havana, Cuba (starts at the 20:31 mark) 3. At the Market Urbanism Facebook Group: Bjorn Swenson “dropped a bombshell” on his hometown’s Facebook […]

Adam Hengels
April 29, 2016
MUsings

“Public Schools Only” Vouchers and Sprawl

About a month ago, I wrote about the pros and cons of school vouchers as a solution for “school-based sprawl” (that is, parents moving to suburbs to avoid urban public schools). I noted that a voucher program that included private schools might be expensive, since some private schools are quite costly. By contrast, a school choice program limited to public schools would avoid these fiscal problems: the state could simply forbid public school districts from discriminating on the basis of residence. If a school district wanted to avoid radical increases in enrollment, it would have to use a lottery to decide which students were admitted. This plan might discourage sprawl by making prestigious suburban schools available to urban parents. And if both students from affluent families and students from poor families entered these schools, the class differences between urban and suburban schools might be erased in the long run. So such an open enrollment program might both expand student choice and be more egalitarian than the status quo. This plan has one major cost: it would require a considerable investment (either public or private) in transportation, since students in search of good schools might wish to go all over a metropolitan area. Either government will have to buy many more school buses, or parents will have to spend a lot more time transporting their children to faraway schools. Moreover, suburbanites will be unwilling to pay property taxes for schools that other people’s children will attend; thus, states might have to take over school financing. I note that most states have in fact enacted “open enrollment” laws allowing some interdistrict transfers. However, these laws are generally toothless; suburban school districts can generally refuse to admit students from other districts on the ground that there is insufficient space for them. Moreover, open enrollment […]

Michael Lewyn
April 27, 2016
sprawl
6

No, ‘New Urbanism’ And ‘Smart Growth’ Are Not The Same

There are two political movements in urban development that have a lot of overlap but are not the same. ‘New Urbanism’ advocates the legalization and building of communities resembling the 19th century American town, with a fair number of single family homes [or maybe ‘single family’ with granny flats], row houses, and clumps of apartments, close enough to commercial places to be walkable, and diverse in terms of income, hopefully without subsidy. Smart Growth, on the other hand, goes farther and advocates the forbidding of building that is not either New Urbanist or denser, sometimes even high-rise; and also any building at all outside a ‘growth boundary’. It is a fact that perhaps 90% of New Urbanists are also Smart Growthers, though many of the leaders of the New Urbanist movement are not; that still does not mean the two philosophies are identical. Smart Growth, in fact, finds itself an ally in many areas of No Growth, which is not the same as Smart Growth either, but is quite popular in the suburbs as people desire to conserve the values that brought themselves to the suburbs in the first place, and not have the value of their investments diluted by ‘printing’ new housing, as the value of our money is diluted by ‘printing’ money. A disproportionate number of Jewish people are ‘progressives’ and ‘socialists’ for very historical reasons, for example, but that does not mean that Judaism and progressivism are the same. And there is a lot of overlap between conservatism and evangelical Christianity, but the two are not the same either. Overlap does not, and must not, mean identity. I will admit that, though the single family suburban house was favored for many years by government policy, nevertheless it is what many people, including especially families with children, desire; […]

Market Urbanism MUsings April 22, 2016

1. This week at Market Urbanism: Nolan Gray Reclaiming “Redneck” Urbanism: What Urban Planners Can Learn From Trailer Parks Trailer parks remain one of the last forms of housing in US cities provided by the market explicitly for low-income residents. Better still, they offer a working example of traditional urban design elements and private governance. Scott Beyer San Francisco Seeks Public, Not Private, Solutions To Housing Crisis However the biggest problem with San Francisco’s housing policy is that officials and citizens alike are hostile to new buildings, especially tall ones, even when they are built in appropriate locations. Emily Washington and Michael Hamilton Market Urbanism Is Underrated Zoning is not a Georgist tax in which landowners are taxed in proportion to their land’s value; rather, zoning hugely decreases the value of the country’s most valuable land, while it props up the value of land that would be less desirable absent zoning. 2. Where’s Scott? Scott flew early this week from his hometown of Charlottesville, VA to San Antonio. He has been hired by the Center for Opportunity Urbanism to do a profile on the city, including its history, growth, and future prospects. 3. At the Market Urbanism Facebook Group: Todd Litman, of the Victoria Transport Policy Institute, talks about The Disconnect Between Liberal Aspirations and Liberal Housing Policy John Morris says, “Ironic: Portland’s best shot at an equitable, environmentally sound, affordable city is to return to development before “progressive” planning.” Jeff Fong found interesting simulations predicting the promising effect of driverless cars on cities Lot’s of discussion about Tyler Cowen‘s skepticism that the deregulation Market Urbanism advocates won’t actually lower rents. (via Anthony Ling) Alex Tabarrok shared his latest post at Marginal Revolution: Regulatory Arbitrage, Rent-Seeking and the Deal of the Year where 4,000sf of valuable New York real estate had to be destroyed to comply with zoning “An eclectic coalition of residents, business owners, […]

Adam Hengels
April 22, 2016
MUsings

Market Urbanism Is Underrated

Michael Hamilton and I coauthored this post. Tyler Cowen has two new, self-recommending posts questioning whether or not market urbanist arguments are internally consistent. He argues that if land-use regulations are analogous to a tax on land, then either the benefits of deregulation would go to landowners or the costs of regulation are greatly overstated. The problem with this argument is that zoning is not a Georgist tax in which landowners are taxed in proportion to their land’s value; rather, zoning hugely decreases the value of the country’s most valuable land, while it props up the value of land that would be less desirable absent zoning. This is because zoning only acts as a tax on land to the extent that regulations are actually binding. A 250-foot height limit would create zero costs for the vast majority of the country, but would be devastating in Manhattan. Likewise, the large variation in land-use regulations across localities means that the costs of land-use regulation are imposed unevenly, even though there may be some correlation between land value and the tax imposed by zoning. Their repeal would have complicated and mixed effects. Tyler’s post focuses on desirable neighborhoods within the nation’s most highly-demanded cities because it assumes large increases in Ricardian rents from liberalization, i.e. those places where zoning is often the most binding. A broader view would also consider what would happen outside hip neighborhoods, especially exurban commuter suburbs that mostly exist because workers are excluded from areas closer to city centers. These suburbs could see land values plummet under broad liberalization. Whether these price changes are good or bad is a value judgement, but Tyler’s theoretical distributional concerns should also take potential decreases in land value into account. Empirically, cities with more liberal land-use regimes are more affordable, so the premise of zoning being analogous to a land value tax may not be accurate. Toronto, Houston, Chicago, and […]

Reclaiming “Redneck” Urbanism: What Urban Planners Can Learn From Trailer Parks

"Life in a Trailer Park in Florida" (Boston Public Library/Flickr)

Given that “redneck” and “hillbilly” remain the last acceptable stereotypes among polite society, it isn’t surprising that the stereotypical urban home of poor, recently rural whites remains an object of scorn. The mere mention of a trailer park conjures images of criminals in wifebeaters, moldy mattresses thrown awry, and Confederate flags. As with most social phenomena, there is a much more interesting reality behind this crass cliché. Trailer parks remain one of the last forms of housing in US cities provided by the market explicitly for low-income residents. Better still, they offer a working example of traditional urban design elements and private governance. Any discussion of trailer parks should start with the fact that most forms of low-income housing have been criminalized in nearly every major US city. Beginning in the 1920s, urban policymakers and planners started banning what they deemed as low-quality housing, including boarding houses, residential hotels, and low-quality apartments. Meanwhile, on the outer edges of many cities, urban policymakers undertook a policy of “mass eviction and demolition” of low-quality housing. Policymakers established bans on suburban shantytowns and self-built housing. In knocking out the bottom rung of urbanization, this ended the natural “filtering up” of cities as they expanded outward, replaced as we now know by static subdivisions of middle-class, single-family houses. The Housing Act of 1937 formalized this war on “slums” at the federal level and by the 1960s much of the emergent low-income urbanism in and around many U.S. cities was eliminated. In light of the United States’ century-long war on low-income housing, it’s something of a miracle that trailer parks survive. With an aftermarket trailer, trailer payments and park rent combined average around the remarkably low rents of $300 to $500. Even the typical new manufactured home, with combined trailer payments and park rent, costs […]

Nolan Gray
April 21, 2016
housing planning
19

Market Urbanism MUsings April 15, 2016

1. This week at Market Urbanism: Michael Lewyn So Much For The Foreign Oligarchs One common argument against new housing in high-cost cities is that the rise of global capitalism makes demand for urban housing essentially unlimited: if new apartments in Manhattan or San Francisco are built, they will be taken over by foreign billionaires…But a recent article in Politico New York suggests otherwise. Michael Lewyn Supply-And-Demand Denial And Climate Change Denial Climate change denialists reject climate science; SDD true believers reject economics. Dan Keshet Five Ways To Understand Food Trucks They are an indicator species for land with unmet commercial demand, and where they meet that demand, they incrementally improve our city one taco at a time. Johnny Sanphilippo The Stealth Guide To Nimbyville Hovering somewhere just beyond all the land use zoning regulations, building codes, finance mechanisms, aspirational comprehensive municipal plans, state mandates, and endless NIMBYism lies… reality. Adam Hengels Why No Micro-Apartments in Chicago? Chicago doesn’t have an outright ban on small apartments like New York, but there are four regulatory obstacles in the Chicago zoning code. These are outdated remnants from eras where excluding undesirable people were main objectives of zoning. Scott Beyer The Federal Housing Administration Encourages Sprawl Over Density In the event that HUD and the FHA further ease the condo certification process, they won’t be doing any special favors for aspiring high-density urban builders and dwellers. They will simply be narrowing the advantage long granted to single-family homes. 2. Where’s Scott? After flying to Washington, DC, Scott went to his hometown of Charlottesville, VA, to catch the Tom Tom Founders Festival, a music/innovation fest founded in 2012 by his brother Paul. He reported from there for Forbes on a start-up that wants to become the Airbnb of kitchen rentals: Organizations in a given city who had large, underused kitchen spaces would advertise on […]

Adam Hengels
April 15, 2016
MUsings

Why No Micro-Apartments in Chicago?

Several cities have jumped on the bandwagon of building Micro-apartments, a hot trend in apartment development. San Francisco and Seattle already have them. New York outlawed them, but is testing them on one project, and may legalize them again. Even developers in smaller cities like Denver and Grand Rapids are taking a shot at micro-apartments. At the same time, Chicago is building lots of apartments, and is known for having low barriers to entry for downtown development. Yet we aren’t hearing of much new construction of micro-apartments here. Premier studios are fetching as much as $2,000 a month. Certainly there must be demand for something more approachable to young professionals. In theory, we should expect to see Chicago leading the way in innovative small spaces. Chicago doesn’t have an outright ban on small apartments like New York, but there are four regulatory obstacles in the Chicago zoning code. These are outdated remnants from eras where excluding undesirable people were main objectives of zoning, and combined to effectively prohibit small apartments: 1. Minimum Average Size: Interestingly, there is no explicit prohibition of small units. This is unlike New York City’s zoning, which prohibits units smaller than 400sf. There is, however, a stipulation that the average gross size of apartments constructed within a development be greater that 500sf. Assuming 15% of your floor-plate is taken by hallways, lobbies, stairs, etc; this means for every 300sf unit, you need one 550sf unit to balance it out. Source: 17-2-0312 for residential; 17-4-0408 for downtown 2. Limits on “Efficiency Units”: Zoning stipulates a minimum percentage of “efficiency units” within a development. The highest density areas downtown allow as much as 50%, but these are the most expensive areas where land is most expensive. In areas traditionally more affordable, the ratio is as low as 20% to discourage studios, and encourage […]

The Stealth Guide To Nimbyville

Hovering somewhere just beyond all the land use zoning regulations, building codes, finance mechanisms, aspirational comprehensive municipal plans, state mandates, and endless NIMBYism lies… reality. If you happen to want to live in certain parts of coastal California you need to come to grips with a serious supply and demand imbalance. Demand is endless. Supply is highly constrained. And there’s a huge amount of money on the table. Horizontal growth is essentially verboten. A powerful coalition of existing property owners, environmental groups, resource allocation schemes, and multi-tiered government regulations stymie new greenfield development. The personal interests of conservative Republicans and liberal Democrats line up exactly when anyone attempts to build anything near them. “Over my dead body.” It’s understood that if a town accepts endless low density horizontal development the overall quality of the area will decline. You can’t have expansive large scale suburbia without paving over the countryside, creating a great deal of traffic congestion, and inducing strip mall blight. At the same time, no one wants infill development on existing not-so-great property that’s already been paved over and degraded. The neighborhood associations break out the pitch forks and firebrands at the suggestion of multi-story condos or (Heaven forbid) apartment buildings. The population of any older suburb could double or triple without using a single inch of new greenfield land. But that kind of growth is feared and hated. So the aging muffler shops and parking lots linger in the middle of a massive housing crisis. Google Google Google On the other hand there’s radically less regulatory or community push back against expanding and improving existing suburban homes. Google Street View makes it possible to observe how a little post war tract home was transformed into a substantially larger residence. This kind of growth is entirely acceptable. The building […]

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