Market Urbanism – Page 53 – Liberalizing Cities From The Ground Up

Shell Games in NIMBYism

Yesterday the Cato Institute hosted an event featuring William Fischel’s discussion of his new book Zoning Rules! with commentary by Mark Calabria, Matt Yglesias, and Robert Dietz. Fischel explained his theory that zoning was an effective tool for minimizing nuisances between land uses through the 1970s. Until that time, he asserts that city planners did a good job of separating incompatible land uses, such as industrial and residential uses, benefiting residents and protecting home values in the process. His theory is that in the 1970s, inflation increased the value of homeownership relative to cash savings, leading homeowners to increasingly view their houses as investments. At the same time, the rise of environmentalism provided the policy justification for using zoning as a tool to limit the growth of housing supply. According to his theory, homeowners then began using their power to lobby for downzoning to protect their large, undiversified asset, and valued minimizing any potential downside risk in their home value. In his discussion of Fischel’s book, Matt Yglesias pointed out that today, NIMBYism has gone far beyond keeping out polluting land uses and low-income neighbors. For example, some residents in San Francisco’s Mission District are supporting a moratorium on luxury housing development, and some Brooklyn residents are fighting to keep vacant industrial properties in place on the waterfront. Permitting high-end residential development in these neighborhoods would be more likely to raise than lower nearby homeowners’ property values. This opposition to development is at odds with Euclidean zoning in these neighborhoods where expensive housing now abuts abandoned warehouses. It’s also demonstrates that NIMBYs are not motivated by narrow profit interests, but have complex preferences that are not easily understood by observing the policies that they advocate for. In the private sector, profit is measured in money, and it’s generally safe to say that both parties to a transaction […]

Systemic bias against small scale development

In recent years, some of the country’s largest mixed-use real estate developments involved disposition of government-owned land directly to developers. For example, Atlantic Yards in Brooklyn and DC’s City Center and Marriott Marquis came about when municipal governments issued requests-for-proposals for underutilized land that they owned. Last week, MidAtlantic Realty Partners and Ellis Development Group closed on a deal to purchase 965 Florida Avenue NW from the District of Columbia. In 2012 the Office of the Deputy Mayor for Planning and Economic Development (DMPED) issued an RFP for this 1.45 acre at the intersection of the Shaw, U Street, and Columbia Heights neighborhoods. The RFP specified that any development on the site include affordable housing. Ultimately two developers submitted proposals. The winning developer purchased the land for just $400,000, at least $5 million less than appraisers estimated the land’s value to be, even after factoring in the affordable housing provision and needed environmental cleanup. By choosing to allocate very large parcels of land through this process rather than auctioning off small parcels of city-owned land, municipal officials favor large developers not only because smaller developers can’t afford such large parcels, but also because the RFP process favors established developers with political connections. In DC, large development firms provide some of the largest contributions to local campaigns. Not only does the sale of large parcels of public land exclude small developers who have less financial capital, it also reduces the pool of potential buyers to include only those with the political capital needed to navigate the RFP process. In the case of a private owner selling off a large tract of land, we would expect him to list the property for sale, accepting the best price he could get. If he thought smaller parcels would sell for more, the owner would likely try to subdivide before selling, expanding […]

San Francisco Turned Sisyphus: Why the City Can’t Fix the Housing Crisis On its Own

Housing prices in San Francisco are obscene. And, in large part, that’s because the city hasn’t permitted enough new construction. But that’s not the entire story. For as hard as San Francisco has resisted development, the Peninsula cities have resisted it even more. And in so doing they’ve pushed the responsibility of development onto their Northern neighbor. If San Francisco’s housing crisis is to be resolved, the Peninsula cities will have to quite literally grow up. Bad Neighbors San Francisco is synonymous with tech, but there’s plenty going on just down the road. Menlo Park has Facebook. Mountain View has both Google and Linkedin. These two cities alone are home to over 1,300 other tech companies and the story’s much the same elsewhere on the Peninsula. But where firms have sprung up and jobs have become abundant, housing has remained in short supply. Tech companies bus an estimated 7,500 workers from San Francisco apartments to Peninsula offices every day. They don’t do this for fun. There’s simply not enough housing near major employers. And what is available is often unaffordable, even for tech workers. But if housing prices are as bad or worse on the peninsula, one might ask why we only hear the word “crisis” in San Francisco. The reason is simple. What makes for crisis in San Francisco is nothing but windfall to the South. According to the U.S. Census, San Francisco’s homeownership rate is 36.6%. Mountain View’s is 41.8%, San Mateo’s is 53.6%, Palo Alto’s is 55.4%, Menlo Park’s is 56.2%, and Cupertino’s is 63.7%. Homeowners in these cities aren’t faced with skyrocketing rent. And thanks to Prop 13, they also pay almost nothing in property tax–no matter how much their homes appreciate in value. They not only face no downside from the anti-development status quo, they […]

Urban Density, Mass Transit, and Uber

Over at FiveThirtyEight, Nate Silver and Rueben Fischer-Baum claim mass transit is Uber’s best friend. They use data from New York to show that Uber is most frequently used in areas with effective mass transit. They explain that residents in areas with poor access to mass transit are more likely to assume the fixed cost of car ownership. Once that overhead has been assumed, these residents are more likely to use the personal vehicle they’re already paying for rather than rely on alternative modes of transportation. There’s variation in use depending on the intersection of income level and transit accessibility, but that the big takeaway is that mass transit supports Uber. And that Uber as well as other TNCs will be most successful where effective mass transit is already in place. It’s a great analysis. And it’s partially right–but not entirely. Mass transit does support TNC growth just as the authors describe. But TNCs, in turn, support mass transit by solving the last mile problem. The two systems are complementary. But without a supportive urban environment, neither system stands any chance of success. Mass transit and TNCs may be allies, but both rely on urban density as their benefactor. Residents in densely developed cities with mixed land use consume less transportation per capita because the distances between work, housing, and recreation are all much shorter. And below a certain level of consumption, the minimum fixed cost of car ownership ceases to make sense. Alternative forms of transportation like a mass transit system or a TNC platform entail only marginal cost, so they begin to look more attractive. Imagine putting a mass transit system–commuter rail, BRT, whatever you’d like–in the middle of Houston or LA style sprawl. It might be a net positive for a TNC, but in no way […]

Jeff Fong
September 9, 2015
Transportation
7

Engineering in the dark

The similarities of urban design across American neighborhoods is no coincidence, but neither is it the result of city planners’ uniform adherence to best practices. Infrastructure is often built based on shockingly little information about the demands of its users. And while poorly reasoned infrastructure policy in one city is bad enough, the United States’ broad adherence to poorly reasoned policies has resulted in a nation in which swaths of neighborhoods are built on poor design foundations. Parking Requirements In The High Cost of Free Parking, Donald Shoup explains the origin of municipal parking requirements. Municipal planning offices do not have the resources to study the amount of parking that businesses should provide. Even with more staff, it’s not clear that planners would be able to determine optimal parking requirements unless they allowed business owners themselves to experiment and choose the amount of parking on their own in a learning process of how to best serve their customers. The Institute of Transportation Engineers is one of the only organizations that provides estimates of the number car trips that businesses generate. Given the lack of information planners have to determine parking requirements, they often rely on ITE’s information to set their parking requirements. However, ITE studies are often conducted at businesses that already provide ample free parking, ignoring the potential for businesses to manage demand for parking on their property through prices. Furthermore, ITE estimates of trip generation are typically based on a very small sample of locations, which are unlikely to be representative of businesses and cities in general. In the example below, the ITE provides a recommendation for fast food parking requirements based on their floor area. Even though the chart includes a line of best fit for the plot of peak parking spot occupation and floor area, the ITE hasn’t demonstrated a correlation between these two variables. Shoup points out: We cannot say much about how […]

Trickle-Down Housing Economics? Laying Reagan’s Ghost to Rest

In a recent 48 Hills post, housing activist Peter Cohen aimed a couple rounds of return fire at SPUR’s Gabriel Metcalf. The post comes in response to Mr. Metcalf’s own article critiquing progressive housing policy. Mr. Cohen bounces around a bit, but he does repeat some frequently used talking points worth addressing. Trickle-down economics Mr. Cohen calls the argument for market-rate construction ‘trickle down economics’. Trickle down economics actually refers to certain macro theories popularized during the Reagan years. These models assumed a higher marginal propensity to save among wealthier individuals. And given this assumption, some economists concluded that reducing top marginal tax rates would result in higher savings. This would then mean higher levels of investment which would, in turn, have a positive effect on aggregate output. And from there we get the idea of a rising tide lifting all ships. Note that none of that has anything to do with housing policy. Labeling something ‘trickle down’ is a way to delegitimize certain policy proposals by associating them with Ronald Reagan. It’s somewhere between rhetorically dishonest and intellectually lazy. Though to be fair, it’s probably pretty effective in San Francisco. The concept Mr. Cohen is trying to critique is actually called filtering. In many instances, markets do not produce new housing at every income level. But they do produce housing across different income levels over time. Today’s luxury development is tomorrow’s middle income housing. The catch, however, is that supply has to continually expand. If not, prices for even dilapidated housing can go through the roof. For a more thorough explanation, see SFBARF’s agent based housing model. If you build it, they’ll just come But even accurately defined, Mr. Cohen still objects to the concept of filtering. He cites an article by urban planning authority William Fulton to make […]

The History of Progressive Housing Policy

Maya Dukmasova recently published at Slate an interesting piece about the potential for current trends in affordable housing policy to tear apart the social capital of low-income people. She makes the Ostromian point that policymakers’ lack of understanding of the informal institutions that govern communities makes it likely that government housing policies are likely to have unintended consequences. While Dukmasova aptly characterizes some of the problems with American anti-poverty programs to date, she gets some key history wrong. In particular, she writes: Part of the liberal establishment’s failure to address this problem stems from its inability to embrace truly progressive understandings of poverty. Those advocating for solutions to poverty rarely speak about the way our economy and social infrastructures entrench it. Rather, much of liberals’ efforts have been crippled by unexamined and unchallenged beliefs that the spaces where poor people of color live are morally compromised, beliefs summed up by one well-intentioned but ultimately damaging term: concentrated poverty. In fact, the programs that she criticizes directly grew out of progressive scholarship and politics. Nineteenth century progressives set their sights on demolishing tenements occupied by low-income, immigrant populations with the goal of relocating residents to suburban homes deemed healthier and better for the morals of their inhabitants. Jacob Riis’ influential work in How the Other Half Lives fueled a progressive movement to eradicate tenement housing, with activists motivated both by altruism toward the poor and by a fear of disease and cultural changes that immigrant-dominated neighborhoods brought. Riis became one of the first reformers demanding that “light and air” be a key consideration in new construction. While he used this phrase to campaign against unventilated tenements that actually did create unhealthy indoor conditions indoors, it ultimately provided the policy rationale for the the New York 1916 Zoning Resolution that would limit building height and massing to protect outdoor light and air, as if shade is […]

Emily Hamilton
July 14, 2015
housing
4

Free parking isn’t free

Last week I wrote a piece for City Journal on how smart parking could allow New York City to implement variable pricing. Street parking sensors allow prices to change to maintain an empty spot on each block, as parking expert Donald Shoup recommends. By eliminating the incentive to drive around looking for parking, this policy could drastically reduce traffic congestion and save drivers significant amounts of time. All of the comments on my post argue that charging for parking according to demand would increase the cost of living in already expensive cities and hurt low-income people. While this argument is very common among supporters of underpriced street parking, it’s false. In actuality, today’s standard policies of underpriced street parking and off-street parking requirements increase costs of living, and low-income people bear a disproportionate share of the costs of these policies. Properly implemented variable pricing systems may not even increase the total price that drivers pay to park their cars. San Francisco has gone farther than any other city to implement variable parking. Its SFPark system updates the prices on the city’s meters periodically with the goal of keeping the occupancy on each block below 80%. While this objective has led to significant price increases for the most in-demand blocks, it has actually reduced the city’s total parking meter revenues because prices were allowed to fall on many blocks to reach the 80% target. Whether they cause total parking meter revenue to increase or decrease, variable parking prices are key to reducing off-street parking requirements, which is a huge cost of development. The political pressure for off-street parking often stems from homeowners who live near commercial destinations. Because people who drive to businesses prefer free parking to paid parking, they may park in a zero-price curb spot in a residential neighborhood near their destination rather than at a […]

Emily Hamilton
July 2, 2015
parking
4

Urban Renewal in Philadelphia

The Philadelphia Housing Authority will seize nearly 1,300 properties for a major urban renewal project in the city’s Sharswood neighborhood. The plan includes the demolition of two of the neighborhood’s three high-rise public housing buildings — the Blumberg towers — that will be replaced with a large mixed-income development. The new buildings will increase the neighborhood population tenfold with the majority of the new units to be affordable housing. The majority of the 1,300 lots slated for eminent domain are currently vacant. At a City Council hearing on Tuesday, Philadelphia Housing Authority CEO Kelvin Jeremiah testified that the redevelopment plan furthers the agency’s efforts to replace high-rise housing projects with lower-density units. However, PHA’s plan misses the forest for the trees. The benefits of demolishing the two towers are immediately undone by creating an entire neighborhood of public housing, effectively increasing the concentration of poverty in Sharswood. Adam Lang has lived in Sharswood for 10 years, and he posted about the plan in the Market Urbanism Facebook group. Adam has raised concerns that the PHA does not have an accurate number of how many of the 1,300 properties in the redevelopment territory are currently occupied. Adam’s primary residence is not under threat of eminent domain, however he owns four lots that are. He uses two lots adjacent to his home as his yard. The other two are a shell and a vacant lot. He purchased them, ironically, from the city with the plan to turn them into rentals. Adam’s concern about the inaccuracy of PHA’s vacancy statistics stem from the method that PHA employees used to create their estimate: driving by homes to see if they look occupied or not. Adam’s own property was on the list of vacants, and he said that he’s aware of other properties in the neighborhood […]

Market Fundamentalism in the Mission?

There’s a proposal to place a moratorium on all market rate construction in the Mission District, one of San Francisco’s most rapidly gentrifying neighborhoods. Needless to say the proposal has sparked a debate. And Dan Ancona’s Putting Market Fundamentalism On Hold is another rock hurled into that particular fray. But in trying to take the anti-moratorium/pro-supply camp to task, it falls into the same unproductive bomb hurling we’ve been watching now for years. The following are a few thoughts on some of the points Mr. Ancona makes in his recent piece. Talking Past Each Other The first point is about a fundamental misunderstanding of the motivations behind the moratorium. Mr. Ancona makes this mistake, but so do the exasperated anti-moratorium/pro-supply advocates he quotes at the beginning of his piece. Hint: The moratorium is not about lowering housing prices. To be sure, the anti-moratorium camp wants lower aggregate housing prices throughout San Francisco and the entire region. The indisputable way to accomplish this goal is by building more housing. And as far as the anti-moratorium camp is concerned, this includes plenty of below market rate (BMR) construction to mitigate some of the distributional effects of development. For the pro-moratorium camp, however, this doesn’t cut it. Lower aggregate prices are not their goal. Their goal is keeping the existing population of the Mission intact and in place. Even a 70/30 ratio of market rate development to BMR construction wouldn’t do that. There would still be demographic churn and this is specifically what they want to avoid. For the pro-moratorium camp, lower housing prices are all well and good, but not if that means the dispersal of the existing community in the process. Searching for the Endgame The second issue is that there’s no endgame for the pro-moratorium camp. Mr. Ancona seems to think there is, but doesn’t go […]

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