Market Urbanism – Page 57 – Liberalizing Cities From The Ground Up

Potential for Voluntary Infrastructure

Last fall I visited Budapest and learned some interesting history of the city’s beautiful Chain Bridge. Before 1849, the small cities of Buda and Pest were connected by a temporary bridge that was only viable during warm months. In the winter, the bridge had to be taken down due to ice, making it impossible to cross the Danube between the two cities if the ice wasn’t solid enough to walk on. Count István Széchenyi, a Hungarian statesman who traveled extensively throughout Europe, made it his mission to secure financing for a bridge to improve economic growth opportunities and Budapest’s standing on the world stage. His experiences in rapidly modernizing cities like London taught Széchenyi the importance of mobility for economic growth. Legend has it that Széchenyi was motivated to build a bridge between Buda and Pest because ice on the Danube prevented him from getting to see his sick father before he died, but it’s unclear to me if this is an accurate history. The bridge was the realization of both a politician’s ambitions and a private financiers goal to profit from tolling the bridge and by increasing the value of his landholding in Pest. While the bridge lost money during its financier’s life, it ultimately began turning a profit in 1860. It’s impossible to understand Széchenyi’s motivations for securing the bridge centuries later, but it seems he was likely motivated by a combination of profit seeking, nationalistic pride, and philanthropy. The Chain Bridge joined a slew of other privately built bridges and other infrastructure around the world, built either by people who hoped to profit from providing transportation services or who sought to increase their land value by providing mobility. While a voluntarily built bridge seems exceptional from today’s vantage point — when a public private partnership or contracted toll road management seems […]

The Use of Knowledge in Urban Development

This post was written for an essay contest on the question “What would Hayek say today?” Hayek and other Austrian economists demonstrated that government ownership of the means of production is a sure route to poverty, but today, central planning remains the norm in one crucial area: cities. In the United States, the Supreme Court determined that cities could designate sections of city land for specific types of development in the landmark case Euclid v. Ambler. Since then, land use regulation has expanded to include heights limits, parking requirements, and design guidelines across the world’s great cities. Urban planners and politicians determine the rules for the location and types of development permitted within their jurisdictions, and ultimately have veto power over major projects designed in the world’s great cities. If Hayek were alive today, he would focus on applying his work on the knowledge problem to city planning. In the United States, progressive city planners began promoting restrictions on building height and density with the objectives of promoting light and air in the early twentieth century. At the time, these objectives were considered important for public health. Property owners and policymakers soon realized that zoning tools could also be used to protect home values by preventing the construction of low-cost, high-density housing. Today, property owners support a wide range of policies designed to limit housing supply and increase the value of their assets. These policies include minimum lot sizes, density limits, and parking requirements. While a large economics literature describes the regressive effects of zoning, these policies remain nearly ubiquitous in the Western world. They owe their persistence to powerful public choice incentives that lead policymakers to favor their current constituents over the unrepresented people prevented from moving into their municipality or neighborhood by restrictive land use regulations (Schleicher, 2012). […]

Emily Hamilton
November 15, 2013
Economics
9

The Value of Walkability

Last week DC Streetsblog reported on a new survey from Kaiser Permanente. The survey covers Americans’ attitudes toward walking and their self-reported walking habits. While a substantial majority of people believe that walking has health benefits ranging from weight management to alleviating depression, the survey found that most people walk less than the 150 minutes per week that the Centers for Disease Control and Prevention recommends. The Streetsblog coverage attributes a lack of walkable infrastructure to low walking rates, although it’s not clear to me that the survey explicitly supports this conclusion. However, past research demonstrates that people who live in neighborhoods where they are able to complete errands on foot do, unsurprisingly, do walk more than those who don’t. While people may not cite walkabilty as an important consideration in choosing a house, choosing a home involves weighing many factors, from size, price, distance to work and other amenities, aesthetic, and countless others factors. Consumers rely on tacit knowledge to weigh many of these factors because they can’t consciously enumerate all of them in making a decision of where to live. For this reason, revealed preference theory is a more reliable tool than survey data for observing how consumers value one attribute of a complex good like housing. Building on a past project, my colleague Eli Dourado and I are studying whether or not consumers do pay a premium for greater neighborhood walkability. Using a fixed-effects model, across all metropolitan and micropolitan statistical areas in the United States, our preliminary results indicate that, on average, Americans are willing to pay a premium of about $850 for a house with one additional point in Walk Score. Because of the many restrictions that limit walkable development, consumers have to pay this premium for the scarce supply of houses in walkable neighborhoods. This finding […]

Book Review: Perverse Cities by Pamela Blais

In her new book Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl, Pamela Blais explores the impact of flat-rate fees for development charges and network services like sewer, water, and cable. She explains in detail how these little-discussed policies play an important role in shaping development and redevelopment and how the current funding of these network goods incentivizes large lot, greenfield development over infill development on smaller lots. Blais focuses her analysis on Canada and the United States. Development charges provide an easy inroad into her critique of average cost over marginal cost pricing for infrastructure. Many North American municipalities charge developers a flat-rate fee for each lot they develop. They often set this fee at the rate for lots of varying sizes, even though larger lots require more asphalt, sewer and water pipes, and cable to service them. While the cost differences may be small between one 25-foot versus one 60-foot lot, infrastructure for a new suburb of 100 houses will cost significantly more if the houses have 60-feet of frontage versus 25, but because these costs aren’t reflected in prices, residents don’t take them into account. Because the same development fee will be capitalized into each house, those who live on smaller lots cross-subsidize the services like road maintenance, garbage collection, and snow clearance of those who live on larger lots when these services are provided by local governments. Blais provides detailed accounts of how these fees shape development patterns and that the resulting sprawling development is both environmentally detrimental and expensive for cities to maintain. She points to several network services that fit a model similar to development charges: water and sewer, electricity, gas, telephone, cable television, internet connectivity, and postal service. While she cites extensive empirical evidence that the cost of delivering these services is inversely related to […]

Local Greenhouse Gas Rules Likely to Backfire

Next week the Cambridge City Council will consider a petition to require new or newly renovated buildings of 25,000 square feet or more to be net-zero emissions. Under the rule, any energy that buildings use beyond what they produce must be sourced from approved, renewable energy sources. While intended to reduce greenhouse gas emissions, the rule would have some easy to foresee side effects: Jeff Roberts, a land use and zoning project planner for the city, said the cost of developing what is being called “net zero” buildings could be passed on to tenants, and could drive away new development. “There’s always the possibility that this would create a shift–that the cost might cause development that would otherwise occur in Cambridge to occur in other communities that don’t have similar requirements, such as Boston or Somerville or suburban areas,” Roberts said. With this rule, Cambridge would follow in the path of other cities that have attempted to reduce greenhouse gas emissions at the local level. Santa Monica has been one of the municipalities leading the way on attempts to reduce greenhouse gas emissions since 1994. The city has adopted its own standards for greenhouse gas reduction, but has made little progress toward its defined targets, today using 35% more electricity per household than the average California household does. While the environmental activists that support these local-level rules surely realize that greenhouse gases do not recognize political jurisdictions, local greenhouse gas emissions reductions in cities like Santa Monica and Cambridge miss the real opportunities to reduce reliance on fossil fuels. It’s unsurprising that very left-leaning cities have pioneered these types of rules, but in doing so, these cities are missing the real opportunities they have to reduce emissions. Santa Monica is one of the most walkable places in the Los Angeles area, offering […]

Why the Left and the Right Should Join Forces against Eminent Domain

The destruction of inner cities at the hands of bureaucrats wielding eminent domain has been well documented by urban theorists from Jane Jacobs to Richard Epstein. As Ilya Somin points out, eminent domain has played an important role in destroying property in Detroit, contributing to its population losses. Dating back to the implementation of Title 1 of the Housing Act of 1949, urban policymakers began using federal funds for slum clearance. Unsurprisingly, destruction of housing units correlated with the population decline in Detroit and other cities. While one would think that the horrors of slum clearance under Title 1 have been adequately demonstrated to prevent planners from pursuing neighborhood destruction as an economic growth strategy, cities across the country continue using eminent domain to clear “blighted” neighborhoods. Last year Denver declared an area of its Five Points neighborhood, including 246 homes, blighted, meaning that now developers interested in building in the area can request the city to use eminent domain to grant them the properties that they want. While the Atlantic Yards project received extensive press coverage, policymakers often employ eminent domain more quietly on behalf of stadium builders, benefiting sports fans at a dear cost to neighborhood residents and business owners. Like urban renewal projects dating back to the 1950s, Forest City Ratner has failed to deliver the promised housing that was part of the Atlantic Yards agreement when the city agreed to condemn the neighborhood. Perhaps Robert Caro provides the most poignant description of the horrors of eminent domain in The Power Broker, explaining the losses of neighborhood cohesion when the tool is used to demolish private housing to be replaced by public housing or in some cases vacant lots when promised public works are not delivered. One would think that the well-documented failures of urban renewal would lead policymakers […]

Emily Hamilton
August 1, 2013
housing Law
3

Chapter 9 Links

1) Ed Glaeser writes at the Boston Globe on Detroit, “Sensible people don’t incur debts during their peak earning years and then expect to pay the bills when their income starts to fall. Detroit did just that. Detroit’s debt overhang doesn’t just impose overly high costs on the city’s now modest tax base. It also scares off new businesses. What firm wants to own part of that obligation?” 2) I’m on the Cato Daily Podcast talking about Detroit and municipal bankruptcy and writing about how creating a charter city could help the city’s population and economic growth challenges at The Umlaut. 3) Ilya Somin points to the role of eminent domain in slum clearance and urban renewal efforts as a key contributor to the city’s decline. 4) Cost overruns aren’t just for transit. Construction on a Wayne County jail was halted after costs went 30-percent over budget, and the county is now seeking proposals from developers to buy the seven acre site. This is a fortunate development from an urban development perspective because anything a private investor builds will be better for downtown Detroit than a prison. 5) On an uplifting note, Sandy Ikeda writes at Wabi Sabi about the role of cities in the market process: Living cites and successful markets bring intellectually and culturally diverse people together to their mutual advantage, but they also create conditions in which vast amounts of novel information—about science, technology, religion, music, the arts, and lifestyles—get dispersed very rapidly. That in turn allows all kinds of people, the ordinary and the extraordinary, to experiment and to make new connections among all that information, generating even more diversity and attracting even more people. In this way, cities become “incubators of ideas” and economic growth. The process is highly dynamic, but also very messy and, yes, in a sense inefficient. […]

Urban-Rural Political Alliances Hurt Cities

While House Republicans have stripped food stamp benefits from the farm bill to get enough votes to pass the bill’s agricultural supports, the Supplemental Nutrition Assistance Program may be added back into the bill in conference with the Senate. The farm bill get its strength because it aligns the interests of urban Democrats and rural Republicans in Congress, facilitating log-rolling where the majority of congressmen are willing to support the bill because it directly benefits their districts. While the food stamp program has in the past made up a large portion of the bill’s costs, with these these funds flowing primarily to urban residents, urbanists should be leery of the urban-rural alliance that facilitates continued support for the farm bill. Aside from the primary cost drivers including nutrition programs and farm supports, the bill also includes measures like rural broadband and rural utilities services loans designed to subsidize living in areas where providers do not find it profitable to provide services. Unlike SNAP benefits, which are available for rural and urban residents based on income, rural infrastructure support is allocated to locations rather than individuals. Providing subsidies based on location is hugely attractive to Congress because it allows members to provide concentrated benefits directly to their constituents. However, subsidizing individuals’ choices to live in areas where building infrastructure is inefficient limits economic growth potential. Cities provide better job opportunities and are centers of innovation, so policies that subsidize rural living don’t make sense. While the farm bill is a clear example of an urban-rural alliance that facilitates these subsidies, many programs similarly subsidize infrastructure in rural areas from USPS providing flat-rate delivery to the Essential Air Service program that subsidizes service to 163 airports that would otherwise not be profitable. Because all senators represent states with rural post offices and most […]

Book Review: What Killed Downtown?

Michael Tolle’s book, What Killed Downtown? Norristown, Pennsylvania from Main Street to the Malls, details the rise and fall of Main Street in one American small town. His case study relies on interviews with many Norristown residents who lived through the growth and decline of downtown alongside detailed analysis of downtown retail statistics. Tolle paints a picture of Norristown dating back to the time of William Penn through 1975, at which point he pronounces downtown dead. The depth of history in this case study including both economic trends and urban policy dating back to the town’s Colonial origins puts the story of the city’s street grid in a historical context that is not often available in urbanist literature. Of particular interest, Tolle details the policy debates in Norristown surrounding traffic and parking dating back to the 18th century. This includes a description of Norristown’s location near the intersection on the Native American trails fanning out from Philadelphia, to the transition from turnpikes and toll bridges, to free, public roads. He explains the origins of the town’s original street grid, with 50-feet wide streets and 24-feet wide alleys and covers in detail the Borough Council’s more recent debates on parking meters and the move to making downtown streets one way. Even having never been to Norristown, I was engaged by Tolle’s descriptions of Norristown’s retail, restaurants, hotels, and personalities. In the first chapters, Tolle explains that downtown Norristown grew increasingly successful with the advent of railroads and streetcars that made it easier to travel to and within Norristown. While the growth of highways in the following decades increased the ease of automobile travel passing by Norristown, frustrations with traffic and parking on Main Street mounted. The Borough Council implemented parking meters as a step toward managing parking supply. Initially their revenue […]

Detroit’s art is not the key to its revival

Detroit’s art assets have made news as Emergency Manager Kevyn Orr is evaluating the city’s assets for a potential bankruptcy filing. Belle Isle, where Rod Lockwood recently proposed a free city-state may be on the chopping block, but according to a Detroit Free Press poll, residents are most concerned about the city auctioning pieces from the Detroit Institute of the Arts’ collection. I’ve written previously about the downsides of publicly funding art from the perspective of free speech, but the Detroit case presents a new reason why cities are not the best keepers of artistic treasures. Pittsburgh’s Post-Gazette contrasts the Detroit Institute of Art’s situation with the benefits of a museum funded with an endowment: As usual, Andrew Carnegie knew what he was doing. The steel baron turned philanthropist put the City of Pittsburgh in charge of operating the library he gave it in 1895, but when he added an art museum to the Oakland facility just one year later, he kept it out of city hands. “The city is not to maintain [the art gallery and museum],” Carnegie said in his dedication address. “These are to be regarded as wise extravagances, for which public revenues should not be given, not as necessaries. These are such gifts as a citizen may fitly bestow upon a community and endow, so that it will cost the city nothing.” Museums and other cultural amenities are a sign of a city’s success, not drivers of success itself. The correlation between culturally interesting cities and cities with strong economic opportunities is often mistakenly interpreted to demonstrate that if cities do more to build their cultural appeal from the top down, they will encourage job growth in the process. Rather, a productive and well-educated population both demand and supply these amenities. While an art museum may increase tourism on the margin, […]

Trending now