Market Urbanism – Page 58 – Liberalizing Cities From The Ground Up

Many Market Urbanist Elements in DC’s Zoning Rewrite

Yesterday at Slate Matt Yglesias pointed out the poor logic behind AAA’s opposition to the elimination of some parking minimums in the DC zoning reqrite. AAA is not alone, joined by many DC residents who oppose the rewrite that will introduce some deregulation in parking requirements and zoning. The rewrite includes a few basic changes, and Greater Greater Washington provides excellent coverage of each: Eliminate parking requirements for some transit-rich neighborhoods Permit homeowners in some neighborhoods to rent out accessory dwellings such as basements or carriage houses Remove the 30-foot width requirement for developing alleyway homes Allow more cornerstor commercial development in residential neighborhoods Simplify the Planned Unit Development approval process Initially, the plan included a proposal to switch from parking minimums to parking maximums, but fortunately this proposal was rejected in favor of allowing developers to build parking based on what they think will be profitable, allowing for a freer market in parking. Now, those who assert that eliminating subsidies to driving amounts to a “war on drivers” are left without basis for their argument. I am not too enthusiastic about the zoning rewrite because it doesn’t go nearly far enough in permitting a greater supply of housing. It makes no significant changes to allowable floor area ratios, only permitting greater density by tinkering around the edges. However, as the zoning update is focused on simplifying the zoning map and allowing some increased freedom for developers to build what they think consumers want, it is in many ways a step toward market urbanism. It will benefit some homeowners and their renters by permitting accessory dwelling rentals. Additionally the attempt to simplify the Planned Unit Development process could improve rule of law in DC development and take steps toward leveling the playing field for developers. Perhaps the most significant element […]

Emily Hamilton
March 7, 2013
Zoning
3

Developer size and development patterns

Earlier this week I attended an Urban Land Institute event about DC’s new development, The Yards on the Anacostia waterfront. This is a 42-acre area which was formerly a manufacturing center for the Navy. In 2003, Forest City Washington purchased the site from the General Services Administration for residential, retail, and office redevelopment. Generally I don’t have strong architectural preferences, but some of the former factories that now have glass curtain walls are looking very cool. During the presentation, I was reminded of Ronald Coase’s 1937 paper, “The Nature of the Firm.” This paper is about knowledge problems, within and outside of the firm. He explains that firms exist, rather than each worker serving as his own contractor, because firms reduce the transaction costs of contracting for individual projects. However, firms face knowledge problems similar to those that government bureaucracies face: In economic theory we find that the allocation of factors of production between different uses is determined by the price mechanism. The price of factor A becomes higher in X than in Y. As a result, A moves from Y to X until the difference between the prices in X and Y, except if so far as it compensates for other differential advantages, disappears. Yet in the real world, we find that there are many areas where this does not apply. If a workman moves from department Y to department X, he does not go because of a change in relative prices, but because he is ordered to do so. Those who object to economic planning on the grounds that the problem is solved by price movements can be answered by pointing out that there is planning within our economic system which is quite different from the individual planning mentioned above and which is akin to what is normally called economic planning. In the case of The Yard, this […]

A Conversation about the Commonwealth of Belle Isle

Yesterday I learned about a proposed free city in the United States through Arnold Kling. The project, called the Commonwealth of Belle Isle would be located on an island on the Detroit River that is currently a city park. The proposal comes from Detroit real estate developer Rod Lockwood who recently wrote a novel that takes place 29 years in the future when the city-state is developed and prosperous. When Rod wrote the book, he wasn’t aware of the support for international charter cities from economists like Paul Romer and investors like Michael Strong. He said that he got the idea for the city when he was running a marathon that crossed into Belle Isle. “Necessity is the mother of invention. The current state of Detroit led me to think about possible solutions, and I realized that Belle Isle could be the next Singapore or Hong Kong.” As Arnold Kling points out, Rod’s background in real estate development gives him advantages over some other charter city boosters without this background. “I do understand the costs involved in greenfield development such as utilities and I have site planning experience,” Rod said. To move to the city, residents would have to pay $300,000 under the proposal to cover initial infrastructure costs. Rod sees the 982-acre island as home to 35,000 people. The city would be a walking city, with cars stored off of the island, and the initial infrastructure would include a monorail system. Rod said that being a car-free city outside of emergency vehicles and service vehicles is an important quality of life issue. “When I started researching city-states, I looked into Monaco, which does have cars and roads,” he explained. “It would be nice to have more green space than Monaco, and being a walking city will allow for that.” Rod identifies […]

Car and Driver(less) Link List

1) A reader pointed out this post at Volokh Conspiracy arguing that personal cars give us freedom, citing the example of automobiles helping African Americans boycott segregated buses in the 1950s. Sasha Volokh writes: Let’s think back to 1955, when African Americans stayed off segregated buses in Montgomery, Ala. During the year-long boycott, 325 private cars, some owned by African Americans, some by whites, some by churches, picked up people at 42 sites around the town. I don’t think that it works to think of technologies as something that can increase our freedom, per se. While cars give some people greater freedom of mobility, for those who can’t drive or refuse to drive for whatever reason have worse freedom of mobility in cities that are built for automobiles. Rather government spending and regulations that favor one type of transportation over another impede the freedom of those who don’t prefer the favored mode. And in this case of cars presenting an alternative to segregated buses, Volokh explains that drivers picked up passengers at defined stops. They were using their cars to implement a voluntary community transit system, using cars beyond their purpose as personal automobiles. 2) Many people have written about the potential of driverless cars to enhance freedom of mobility and to improve automobile safety, but Meagan McArdle points out that car manufacturers will likely face greatly increased liability when driverless cars reach the roads. Do you think driverless cars are in our near future? I’m sold on their potential to cut back on parking in city centers. 3) My colleague Eileen Norcross writes at US News on Governor Bob McDonnell’s proposal to move to funding transportation with a sales tax rather than a gas tax in Virginia: The governor is right to note that the gas tax suffers from […]

A Trial of Zoning

A recent Wall Street Journal op ed combines two of my favorite topics: Franz Kafka’s The Trial and the inefficiencies of zoning. Roger Kimball explains the roadblocks he has faced in trying to repair his home after it was damaged in Hurricane Sandy. He writes: It wasn’t until the workmen we hired had ripped apart most of the first floor that the phrase “building permit” first wafted past us. Turns out we needed one. “What, to repair our own house we need a building permit?” Of course. Before you could get a building permit, however, you had to be approved by the Zoning Authority. And Zoning—citing FEMA regulations—would force you to bring the house “up to code,” which in many cases meant elevating the house by several feet. Now, elevating your house is very expensive and time consuming—not because of the actual raising, which takes just a day or two, but because of the required permits. Kafka would have liked the zoning folks. There also is a limit on how high in the sky your house can be. That calculation seems to be a state secret, but it can easily happen that raising your house violates the height requirement. Which means that you can’t raise the house that you must raise if you want to repair it. Got that? Disaster rebuilding efforts highlight the impediments that bureaucracies create for economic development, but they are far from the only time that land use regulations create kafkaesque obstacles for property owners. In The High Cost of Free Parking, Donald Shoup explains that parking requirements can create a similar effect. When a business owner goes out of business and wants to sell his property, it’s likely that the next owner will want to operate a different type of business in the location or that parking requirements will have […]

Q&A with David Schleicher

I recently spoke with George Mason University Law Professor David Schleicher about his research on land use law and economics. Here is our conversation including links to some of his academic articles that have earned a lot of attention in the land use blogosphere. Emily: What are some the costs of land use restrictions? Talk about agglomeration economies and how these relate to development restrictions. David: This is a huge area of research that spans back to Alfred Marshall looking at why cities exist in the first place. It comes up with explanations for why people are willing to pay increased rents to live downtown. These include lower transportation costs for goods, which was a major driver of urbanization for much of American history. Today this is a small driver of urbanization because the costs of internal shipping have fallen so dramatically. Now an important advantage of urbanization is market size. You can see this in all different markets. Restaurant rows are a great example of this. When you go to one of these rows where there are a lot of restaurants and bars, you have insurance that if one place you go is bad, you know you have other options nearby. The last category of agglomeration benefits is learning, or information spillovers. We see this in cluster economies like Silicon Valley where people at different firms learn from each other. As Marshall explained, “The mysteries of the trade become no mysteries, but are as it were in the air.” Wage growth is faster in urban areas than in rural areas, and this comes from this learning process. In the aggregate, if you keep people out of dense cities, you will decrease national productivity. Emily: In your paper City Unplanning, you propose a tool called Tax Increment Local Transfers (TILTs) that would compensate property owners for allowing more development […]

Emily Hamilton
January 3, 2013
Economics Law
6

Emergent Order in Cities and Markets

Last week at The Atlantic Cities, Allison Arieff posted a Q&A with Alex Marshall about what Marshall asserts are Jane Jacobs misunderstanding of how cities work. Marshall says: Human interaction takes place, but it shouldn’t obscure what makes it possible, which is government. As much as I admire Jacobs, I suspect her experiences fighting Robert Moses, the master builder and destroyer of New York City, turned her off to government. So much so that I suspect she began to ignore it. Jacobs described how urban economies, such as say the computer ecosystem in the Silicon Valley, emerge in an organic way. I argue that these business ecologies emerge only within the containers that government builds. Both cities and economies emerge as overt political acts. They are constructed things. Here Marshall completely eschews the historical evolution of both cities and markets in making his assertions. Both cities and markets are vehicles for human exchange, but neither is built by a person or a government. Populations, not infrastructure, are cities’ most important assets. Population changes, much like prices in a market, are a product of human action but not of human design. Historians have found evidence that the emergence of cities was not the result of ancient leaders’ direction but was rather the result of individuals acting in their own best interests. Likewise, we see both historical and current examples of trade emerging without government. States have much more power to limit trade or initiate plunder than they do to facilitate successful trade. Jacobs identified that the spontaneous order that allows prices to direct trade likewise leads city streets to serve their residents’ commercial and civic needs when they are not restricted from doing so. Marshall asserts that Silicon Valley didn’t emerge organically because it came about within the legal and infrastructure “containers” that government provides. While it’s true that government […]

Emily Hamilton
December 10, 2012
Economics Policy
4

Meetup this Saturday

This weekend Anthony Ling who writes the blog Rendering Freedom (and has previously written here) will be in DC. Stephen Smith will also be in town, and we’re planning a meetup on Saturday. Anthony is an architect in São Paolo. He writes about architecture, economics, and urbanism, and I’m excited to learn more about his experiences studying and working in Brazil. If you’re in the DC area, I hope that you can join us. Details: Saturday, December 1st at 1:00 p.m. Burger Tap and Shake (at Washington Circle in Foggy Bottom) Please email me at [email protected] if you have any questions.

Emily Hamilton
November 27, 2012
Uncategorized

Irrelevant real estate trends

Earlier this week Wendell Cox wrote a piece at New Geography arguing that projections for increasing demand for multifamily housing relative to single family homes are incorrect. He was criticizing a study by Arthur Nelson that predicts increased demand for multifamily housing relative to single-family housing in California between 2010 and 2035. So far, Cox points out that this hypothesis is not being fulfilled; between 2000 and 2008 slightly over half of newly occupied housing units were single-family homes on conventional lots (larger than 1/8 acre), not indicative of a shift in preferences toward multifamily housing. Cox emphasizes that his data is based on revealed preferences rather than forecasts or surveys which may indicate a false preference for denser housing. However, he does not acknowledge that these preferences he cites are not revealed in a free market. The mortgage interest tax deduction biases home buyers toward larger homes, the complex entitlement process for dense infill development restricts supply of denser housing, and the the zoning and parking requirements that regulate development all shape revealed consumer decisions. Both Cox and Nelson seem to base their views of consumer preferences heavily on introspection, assuming that over time more Americans will come to share their preference for suburban or urban living respectively. And they both take the same approach of looking at the real estate trends aggregated across the entire state. This is an interesting question for academics, but not a particularly relevant area for real estate markets. Real estate is local, and state trends are not likely to apply to many cities and neighborhoods. The average home sold in California went for $309,000 at $195 per square foot last month. However this statistic is meaningless for West Hollywood residents where the average sale price was $378 per square foot. It’s equally meaningless […]

Campaign season is over links

Stephen had great twitter coverage of urbanist election issues last night, but here are a few more links to significant outcomes: 1. Washington state and my home state of Colorado voted to legalize marijuana possession, private use, and in Colorado limited production. Drug policy liberalization is a huge win for cities, as arrest rates among users are higher in urban areas. However, given the current administration’s intolerance for medical marijuana dispensaries that are legal under state laws, I see little reason to hope that the feds won’t prosecute drug users who are in violation of federal but not state laws. 2. In Alexandria, VA voters reelected democratic Mayor William Euille and elected an all democratic city council. This has ramifications for the city’s waterfront redevelopment plan; opponents of increased development have sued, and the case will be heard by the state supreme court this spring. Opponents allege that the zoning change required supermajority support from the city council, but the new democratic plurality makes supermajority support likely. 3. In Escondido, CA voters passed upzoning with Proposition N which will allow increased downtown housing development as well as allow more commercial and industrial development. The city’s conservative leadership supported Proposition N for economic development. 4. Kirk Caldwell was elected mayor of Honolulu. The opposing candidate Ben Cayetano ran on an anti-rail platform. Rail in Oahu is already under construction, but a lawsuit has stalled progress. The elevated 20-mile HART project has a projected $5.2 billion price tag, $1.55 billion of which local officials say will come from the federal government. I don’t know enough about the project to have an opinion on whether or not it’s a good idea. 5. Virginia voters said “yes” on Question 1, requiring authorities to demonstrate public use to employ eminent domain (as opposed to the Kelo public benefit standard). 6. I won my […]

Emily Hamilton
November 7, 2012
Uncategorized
2

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