New Census numbers confirm the resurgence of cities

With the release of the new American Community Survey data on Tuesday, we are now able to see how the fine-grained nature of metropolitan areas has changed over the last few years. This is the first release since the 2000 Census that really provides enough detail to map these changes, and the New York Times has stepped up to the plate with a handy mapping tool. The Census American Factfinder website will get an upgrade in about a month, and mapping will be much easier once that happens.

Poking through some of the data, I haven't been able to discern any interesting new trends that have not previously been identified. But we do see some pretty clear confirmation of earlier predictions, such as those made by Bill Lucy and David Phillips in Tommorrow's Cities, Tomorrow's Suburbs. Taking a look at a number of indicators, they outlined the beginnings of a reversal of the 20th century story of urban decline. Instead they found evidence of city centers prospering and the aging suburbs around them falling into economic decline.

Take a look at these maps of changes in median income by census tracts between 2000 and 2005-2009, courtesy of the NY Times site. Orange is positive, blue is negative.

Charlotte, North Carolina

 Chicago, Illinois

 Cleveland, Ohio

 Columbus, Ohio

 Houston, Texas

 Indianapolis, Indiana

 Louisville, Kentucky

 Philadelphia, Pennsylvania

 Pittsburgh, Pennsylvania

 Washington DC

 Atlanta, Georgia

Atlanta offers a particularly striking pattern. During this interval, the median household income in the whole Atlanta metro area grew a reasonably healthy 12.4%. But looking just at urban Atlanta, we see a growth in median income of 44.5%. It turns out that Atlanta's wage growth is being driven almost entirely by wage growth in its core. The suburbs are still a tad bit wealthier in general, but that will probably not last more than a year or two longer.

Then see how this stacks up against the age of the housing stock in the core and the surrounding "suburbs."

Homes in urban Atlanta are, on average, much older than they are in the rest of the metro area. Despite the remarkable wage growth in the center of the metro, there still has been relatively little actual home construction for some reason. Less than 10% of all homes built since 2000 have been built in urban Atlanta (although it's worth noting that this share is up from the low of 5% in the sprawling 90s). Conventional wisdom says that wealthy people gravitate to newer homes, and the houses then trickle down to lower-income households as they are bought and sold over time. But wealthier people are moving to the core of Atlanta despite, or maybe because of, its older homes and neighborhoods.

One last important note: this census dataset doesn't do a very good job showing changes due to the housing market collapse, because the data is sampled from both before and after it happened. We'll have to wait a couple more years for Census data showing the new spatial patterns that emerge from the rubble.

Transit Oriented (affordable) Development

In case you missed it, the Dukakis Center for Urban and Regional Policy at Northeastern University dropped a bombshell of a report about Transit-Oriented Development (TOD) back in October. Key finding:

"Rising incomes in some gentrifying [Transit-Rich Neighborhoods] may be accompanied by an increase in wealthier households who are more likely to own and use private vehicles, and less likely to use transit for commuting, than lower-income households."

Ironically, they found that enhancing transit infrastructure can actually make ridership go down (and car ownership up) in the neighborhood it serves. That's a puzzling dilemma that deserves some attention.

TOD advocates have understood for a while that infrastructure and design need to be carefully coordinated to produce successful results. Just plop down a new station without changing any of the zoning codes in advance, and you're guaranteed to end up with a park and ride lot surrounded by much of the same 20th century stuff. There's transit, and there's development, but the orientation part is missing entirely.

Back in 2003, Patrick Seigman published a handy and oft-cited TOD checklist,"Is it Really TOD?"

"A true TOD will include most of the following:

• The transit-oriented development lies within a five-minute walk of the transit stop, or about a quarter-mile from stop to edge. For major stations offering access to frequent high-speed service this catchment area may be extended to the measure of a 10-minute walk.
• A balanced mix of uses generates 24-hour ridership. There are places to work, to live, to learn, to relax and to shop for daily needs.
• A place-based zoning code generates buildings that shape and define memorable streets, squares, and plazas, while allowing uses to change easily over time.
• The average block perimeter is limited to no more than 1,350 feet. This generates a fine-grained network of streets, dispersing traffic and allowing for the creation of quiet and intimate thoroughfares.
• Minimum parking requirements are abolished.
• Maximum parking requirements are instituted: For every 1,000 workers, no more than 500 spaces and as few as 10 spaces are provided.
• Parking costs are "unbundled," and full market rates are charged for all parking spaces. The exception may be validated parking for shoppers.
• Major stops provide BikeStations, offering free attended bicycle parking, repairs, and rentals. At minor stops, secure and fully enclosed bicycle parking is provided.
• Transit service is fast, frequent, reliable, and comfortable, with a headway of 15 minutes or less.
• Roadway space is allocated and traffic signals timed primarily for the convenience of walkers and cyclists.
• Automobile level-of-service standards are met through congestion pricing measures, or disregarded entirely.
• Traffic is calmed, with roads designed to limit speed to 30 mph on major streets and 20 mph on lesser streets."

But is there anything missing?

We're seeing that having a mix of incomes is not just a bonus policy goal, but something woven into the success of a TOD on it's own terms. On the one hand, attracting the professional class is realistically the only way to generate the capital needed to spur substantial redevelopment. But the service-sector workers are the ones who are more likely to forgo car ownership, use transit more frequently, and actually walk to work in that cool, mixed-use cafe. Both the urban design features the architects want and the return on investment the transit planners want depend on a healthy mix of incomes.

Many cities now seek to capture some of the value generated by their public infrastructure investment into land-banked supported affordable housing. Groups like Denver's Urban Land Conservancy carefully anticipate any market changes along transit corridors and grab some of the land before it becomes prohibitively expensive. Then innovative housing models, such as community land trusts, can be used to hold down the value of the land to a level affordable to low- to moderate-income households indefinitely. When these units are built they'll be doubly affordable, in both housing and transportation costs for the residents.

"Density, Diversity, and Design" is still the operative catchphrase, as long as by diversity we mean the people as well as the structures and uses.

Smart growth and fiscal responsibility

I noticed that Geoff Anderson, President and CEO of Smart Growth America, has come out in favor of the recommendations submitted this week by the National Commission on Fiscal Responsibility, at least the ones pertaining to tax reform.

"Unbeknownst to most, the federal government plays a massive role in the real estate market by subsidizing and enabling all kinds of development in our communities. With ballooning deficits, now seems like a good time to revisit these subsidies and make sure they are achieving a legitimate public purpose -and not, in the commission’s words, 'creating perverse incentives.'"

The smart growth movement has a long history of focusing on fiscal responsibility, dating back the the Costs of Sprawl published in 1974. This makes sense. Those of us who are too frugal to throw away the ketchup bottle before it's completely drained, cringe at the sight of underused parking lots being given over to weeds while far-off greener pastures are built on. It was all the more frustrating to watch this being done around the country with money that didn't actually exist. "Can we really afford this?" has been asked all along by John Norquist and James Howard Kunstler (albeit in very different ways!), and now finally this question is gaining some traction at the federal level.

The Home Mortgage Interest Deduction stands front and center in all of this. The deficit commission wants to limit the deduction to mortgages of $500,000 or less on primary residences. A healthy debate has been occurring among urbanist blogs about whether the HMID, in general, leads to a dispersal of housing. I'll dive in: I think no and maybe, depending on the region, but that there may be an important inter-regional impact to consider. My take on this is heavily influenced by Edward Glaeser and Joseph Gyourko's book Rethinking Federal Housing Policy (free pdf here).

In supply-constrained regions (like San Francisco), the extra money infused into the housing market by the HMID is swallowed up almost entirely into the prices of existing homes. There are few options for more development, so existing homeowners can simply raise their sale price to account for the buyer's willingness to spend more. This doesn't effect the built environment but it does mean housing affordability is compromised. In fact, the lower middle class takes a double-whammy with this. They pay taxes but don't make enough to use the deduction at all. Then they have to compete in a housing market inflated by the wealthier people who do benefit from the deduction. In these situations, the HMID may actually push people away from homeownership - the exact opposite of its stated purpose.

In elastic housing markets (like Houston or Detroit), the HMID probably does effect the built environment and drive down home prices to some degree. However, Glaeser and Gyourko's research indicates that the deduction is still not inducing much homeownership, because the subsidy is only available to wealthier households who are not usually the ones on the margin between renting and owning. They would buy anyway. Instead,

"A more important effect probably is on the quality of the home consumed, with people living in bigger and better homes than they would otherwise."

They question the wisdom of this tax incentive,

"In the old world of dumbbell apartments in dilapidated tenements, there may have been a case for government policies to improve quality and size. That case seems to much harder to make in today's world of suburban McMansions."

This is why I guess "maybe" for these regions. The quality improvement could mean either nicely-built craftsman bungalows or subdivisions of cavernous and disposable homes, but the HMID itself would not have much impact on the land costs - and that's what determines the spatial distribution of housing throughout the region.

What about the national scale? If the HMID pushes home prices higher in San Francisco and, at the same time, makes houses bigger for the same price in Phoenix, it's not hard to imagine some people who are considering a relocation to choose Phoenix partially on account of this effect. So the HMID may not make a region more sprawling than it would be without it, but it may help redistribute the national population away from places that are condensed to places that historically have been sprawling.

Bottom line: the HMID is essentially a one hundred billion dollar program for giving bigger homes to wealthier households in places that don't have much of an affordability problem anyway, all the while exacerbating the affordability in places where it already is a problem. It's not surprising that a group like Smart Growth America may question whether this is the best use of taxpayers' money in an era of overwhelming deficits.

UPDATE:  Here's a recently published study on the Home Mortgage Interest Deduction that puts some empirical meat on the bones I've described here. The Modeled Behavior blog summarizes the results:

"Using national data from 1984 to 2007 they found that the MID did not increase overall homeownership. In areas with light land use regulation they found that homeownership among higher income families was increased, and in tightly regulated housing markets homeownership was decreased for all income groups except the lowest. The effects, both positive and negative, generally range from 3% to 5%. Regardless of the regulatory environment, homeownership among the lowest income group was not affected at all by the MID.

The authors estimate that it each additional homeowner created by the mortgage interest deduction costs the government $53,590, a number they rightly call “staggering”.

An important implication of the findings is that in urban areas, where land use regulations are typically more restrictive, homeownership is likely to be negatively impacted."

The Reluctant Suburbanites

Rod Dreher, a social commentator who writes under the self-titled banner “crunchy conservativism,” shared on his blog an interesting confession about the suburbs. Not interesting because it’s strange, but interesting because it’s so altogether normal. Despite his long-standing preference for, or at times even a philosophical commitment to walkable urban neighborhoods, he thinks he just might choose the opposite kind of house next time he moves. A conventional suburban home. Why?

“Whenever we get ready to buy our next house, it's not going to be in the city -- here in Philly, there's a four percent tax added to your wages -- but in one of the suburbs. I'd be lying if I said schools weren't a big part of it. We can't afford private schools where we live now, and the urban public school in our neighborhood leaves much to be desired, for the usual reasons. … Besides, life with kids is just easier in the suburbs. I hate to admit it, but it's true. The older I get, and the older my kids get, the less tolerance I have for the kinds of things that I didn't much mind when I was younger and in love with city life.”

Looking through the lens of personal morality or rationality or whatever, who can begrudge Dreher this decision? Let me immediately distance myself from those who reflexively cast judgment on suburbia and all who inhabit it like hurling a ball of fire down onto Sodom and Gomorrah. Let the record show, suburbanites are not evil. Yet whatever honesty Dreher reveals in this personal question, there’s still a structural tension in his mind. He can go on to say in an update,

“I think any place that makes you car-dependent is bad for your soul and the community's soul. The way we built suburbia in the 20th century was foolish and destructive in a number of ways. But we are where we are, and the flaws of suburbia don't obviate the flaws of urban life for middle-class families in the year 2010.”

Very obviously, his ideals are clashing with the reality of how things happen to have been built in America.

This is exactly why you should immediately distrust anyone (ahem … Joel Kotkin)  who insists that because people are “choosing” to live in the suburbs, in fact, the suburbs are their market choice - that the silent majority has spoken with their actions. As the logic goes: if everyone seems to be buying cookie dough ice cream then it means they must really like it, so somebody should go ahead and make more cookie dough ice cream. It's only the pistachio-craving elites who urge otherwise. Ok, but buying a home is different:

First, every home is a bundled good. You’re not just buying the roof that keeps rain from hitting your head and a patch of grass. You’re buying the educational options for your children, the transportation access to your job, the character of the neighborhood and the status it confers, membership into a jurisdiction (or HOA, for that matter) and the services it provides, a perception of safety, and on and on. You can’t always just disaggregate these parts, like ordering a Soy Mocha Half-Caf latte at Starbucks, at least not if you need to fit it into a middle-class budget. This is why people like Dreher may have to compromise on neighborhood form for, say, good schools.

Which gets to the second point. Real estate supply is always constrained in some way, whether by geography or land use controls (yes, Houston too).  Even in metro areas with plenty of vacant land, there’s only one piece of land with that house on it. That’s just the nature of space. No two places are alike. Because the market price responds to these inevitable supply constraints, consumer demand does not always win the day. Middle-class families like the Drehers can be priced out of even preference bundles that seem logically reasonable - like a modest home on a small lot with ok schools near some neighborhood amenities.

Thirdly, transitions in the housing stock move painfully slowly - as they should, because these are really durable goods. But there are other reasons the supply does not hasten to meet new demand. Infrastructure built to support an old model is hard to readapt, vested financial interests try to maintain property values through land use controls, and well-worn development business models seem less risky. As a result of these forces of inertia, a lot of us are living in houses built for the preferences exerted a generation or two ago, maybe even if it was just built five years ago.

Fourthly, homes have traditionally been investments as well as consumer goods. You’re not supposed to just buy what you want, but you also have to buy what you perceive others to want. This can lead to a self-perpetuating bias for the status quo and an over-emphasis on quantitative measures like square footage. But maybe as the investment side fades these days, we can feel more free to exercise our own desires.

Finally, there’s a long-standing mismatch in most metro areas between the resources for social services and those who need them most. Over many years, the demographic categories have sorted themselves out geographically and circumscribed themselves with political boundaries. This is part of the reason for the extra tax burden Dreher is referring to. Many suburban areas have absolved themselves of having to pay this by ensuring that the region’s share of the poor are not within their borders. Making a personal decision to buck the trend usually does carry a cost.

The point, maybe hidden in here somewhere, is that there has to be many Rod Drehers out there, albeit most of them without the time or ability to wrack their brains over the urban planning implications of their choices. For every household choosing the suburbs as suburbs, in all their backyard-grilling, kid-shuttling, lawn-mowing glory, there’s another household who grit their teeth and accept this spatial arrangement because it happens to be the only option available at their price point. This is hardly an argument for building more of them.

Thanks to Architecture and Morality for launching a discussion on Dreher’s housing thought process.

A housing director who understands the full cost of housing

HUD Secretary Shaun Donovan was interviewed on the financial costs imposed on individual families by lower density housing patterns. Ever since the Costs of Sprawl report was published in 1974, the talking points have mostly hovered around the increased fiscal costs to taxpayers of sprawl - you know, the pipes and roads, public services, environmental clean up, and so forth. Lately this story has been filled out with a more precise understanding of what individual Americans pay for this arrangement not just in taxes but in the everyday effort to balance the household budget.

Consumers need full disclosure of transportation costs

If Walkscore put walkability on the real estate map (it's getting better all the time, by the way), the new online tool Abogo might do the same for transportation affordability. Just type in an address and the home gets placed on a map showing average transportation costs for the surrounding neighborhood and the region. This is what you can expect to pay on a monthly basis if you choose to live here. Seeing this number in black and white may help diffuse the old drive-til-you-qualify myth - that you can find more house for the money the further from the city you move. Living in lower densities may pose less up-front costs per square foot, but the ongoing cost of getting to where you need to go on a regular basis is real and likely much higher. Abogo puts a number on that reality.

 The site is developed by the Center for Neighborhood Technology, who have been amassing an armful of data on transportation and housing for years now. Their Housing and Transportation Affordability Index presented this data last spring to tell the story of affordable living choices from a metropolitan area perspective, and the H+T Index site has already been incorporated into plenty of policy discussions, including the federal Sustainable Communities Initiative. Abogo is the next logical step, because it narrows the story to the consumer level where any real change in the marketplace will have to occur. Markets work best when information is available. As a homebuyer, the basic housing cost information is in your face. You literally have to write the check for your mortgage. Transportation costs are more nebulous, hidden in gas prices, insurance costs, saving for the next vehicle, parking, etc. Because of this, they have not typically figured into the home purchasing decision to the same degree.

I wanted to see how I stacked up out of curiosity. As a new homeowner, this tool is less useful to me now than it would have been a few months ago when we were looking, but it does put my home location in context. Abogo lists my block group as $830 a month in transportation costs for the average resident. We happen to keep meticulous budget records, and, from what I can tell, we’re  spending around $200 per month for transportation. This includes amortization on the vehicle, which is oldish and no-frills. We’re a family of three – pretty average on that account.  The difference probably arises out of the fact that I bike to work, and neither of us use the car every day. When we do drive – to the grocery for instance – it’s usually just a mile or so. Then there’s the occasional out of town trip.

I guess this means we have an extra $630 in our pockets each month just for some of these simple lifestyle tweaks. (Or it could mean the models are out of whack, but I've read through the methodology and it seems sound to me.)

Following the gas tax storyline

New buzz about the federal gas tax is in the air.

A USA Today report found that American motorists are now spending the lowest amount of money per mile to maintain infrastructure since the advent of the automobile.

"Americans spent just 46 cents on gas taxes for every $100 of income in the first quarter of 2010. That's the lowest rate since the government began keeping track in 1929. By comparison, Americans spent $1.18 in 1970 on gas taxes out of every $100 earned."

This interesting finding leads the Washington Post editorial board to connect the dots and call for an increase in the federal gas tax rate, which has not been touched since 1993. While almost every group interested in transportation policy supports some sort of levy on driving like this, it still is a tough sell with the general public. A choice comment on the editorial illustrates this well:

"Since when must citizens pay for the "privilege" of driving on OUR roads? Should I thank Obama for allowing me to drive to work today?"

Reading between the lines, I can only assume the gods of asphalt and rebar have gifted this regular American citizen with motoring freedom, and the government should just get out of the way. What he might not realize is that the Highway Trust Fund is almost bankrupt, and the tab is being picked up by general revenues (read deficit) this year - $19.5 billion, as it was last year - $7 billion, and the year before that - $8 billion. So, this gentleman need not thank Obama, but he might want to thank his grandchildren for the privilege of his drive to work.

Where the Highway Trust Fund is headed (in billions) from Congressional Budget Office.

One interesting twist on the public perception front is that new polls have shown that Americans are more receptive to a gas tax if they can be assured the revenues would go toward reducing climate change. It seems that there is a sizable segment of the population that agrees, in theory, that externalities from driving should be paid for, but worries that more funds would just set us back on the course of business-as-usual highway building. Check out the full 19% spread in approval of a simple .10 gas tax and the same gas tax with dedicated environmental goals.

Survey Results from a gas tax poll, June 2010 from Mineta Transportation Institute

To wrap this up, Brookings' Robert Puentes offers an astute reaction to the Washington Post call for higher gas taxes. He's principally concerned with this trend:

Graph compiled from FHWA Traffic Volume Trends 2000 - 2010

Vehicle miles traveled plateaued between 2006 and 2008 and we seem to be dropping off the other end of the curve. With Americans driving less and less every year (and driving more fuel-efficient vehicles when they do), pinning the bulk of infrastructure revenues onto gas taxes alone is boarding a sinking ship - while jabbing more holes in the hull all the way down.

Puentes,

"So while near-term gas tax increases are necessary on the federal and state levels just to stay afloat, we need to be thinking about a range of other options to raise transportation revenue such as pay-as-you-drive charges, tolls, congestion fees and -- most significant -- a carbon tax."

The future does need to be paid for

This month's Atlantic is a special Future of the City edition with a number of thought-provoking features and essays. Before getting into the actual material, I just have to say ... it's interesting how cities have always been associated with the future, and countryside the past. We picture the gleaming skyscraper and the quaint red barn, when, in reality, today's farms are as tricked out in chemicals and high-tech machinery as a heavy pharmaceutical plant and cities are a repository for layers and layers of cultural artifacts. Still there's something about cities that stoke the imagination, and countryside a nostalgic sense of comfort. This seems appropriate to me.

Anyway,  Chris Leinberger writes a follow-up to his landmark The Next Slums? piece from 2008. As a real estate developer, he knows that the old model of building housing as quickly and cheaply as possible on the metropolitan fringe is no longer viable. On the other hand, building the kinds of walkable urban neighborhoods that are in demand (and in short supply) is difficult to do given the infrastructure and local regulatory systems currently in place. To roll with this paradigm shift, rail lines have to be built and zoning has to be reformed to open up the ensuing development potential.

His solution for doing this is simple,

"Transportation drives development, so development can and should help pay for transportation"

To me, Leinberger's argument has echos from 19th century economic reformer Henry George, only told in reverse. George noticed an injustice in the way the benefits from public improvements were distributed throughout society. Selected landowners, because they possess a natural monopoly over a particular geographical space, are able to capture much of the value of new infrastructure, parks, and other public amenities, when they have not put in the labor to produce this value. Essentially, they are just lucky or well-connected. George advocated a land value tax to redistribute the benefits back to the community, and Leinberger is saying the "landowners" should be the ones paying for the improvements in the first place.

Financing transit with private capital will certainly be complicated. In the days when a streetcar line could be extended out into fresh greenfields, it made sense of the fields owner to foot the bill for the transportation in order to bring people to his land. But retrofitting a rail system on top of existing development requires a much more complex financial calculation and enough buy-in from numerous property owners, some of whom are more interested in redeveloping than others.

Still there's lots of smart people thinking about this financing strategy. Here's a 2008 report from Reconnecting America, Capturing the Value of Transit. Another from the Victoria Transport Policy Institute in 2009, The Value Capture Approach To Stimulating Transit Oriented Development And Financing Transit Station Area Improvements. Finally, a 2009 report to the Minnesota Legislature from a group including David Levinson, Value Capture for Transportation Finance.

Urban places and authentic marketing

This month's Harvard Business Review features a story on the many businesses that are deciding to move back to the city. A few decades after the great push to relocate to the suburbs, the tables have turned as the business climate in general has changed.

What's intriguing about this story is not simply the locational decision-making, but how the urban and the sprawl environment lead to very different ways of doing business. For example, take the standard retail or food service operation. If you've set up shop in sprawl, you have a matter of seconds to make your potential customer want to stop and come in. This is simply because he is traveling 45 miles an hour and experiencing the outdoors through a windshield.

This forces you to decouple the marketing from the actual customer interface and reconnect it back again through branding. The hope is that Joe driver has built enough of a positive experience through television commercials and other ads beforehand that they all come rushing back to him the moment he sees your brand hoisted on a sign above the highway. This process tends toward economies of scale in a big way, hence the dominant position of franchises and multinational companies.

The customer interface in an urban environment has the ability to be more prolonged and textured. The proverbial window shopping experience piques the imagination of customers by putting actual products right in front of them. The window display can be changed, so the experience changes with time. The chalk board announces the special of the day. Perhaps there are smells wafting out from the bakery, or the familiar clanging of glasses alerting the customer to the bustle of a restaurant inside. The retail environment can spill out onto the public realm and beckon passers-by to ease themselves in, something William H. Whyte called the "sensory street." Most importantly, the customers themselves are on display, either siting outside at cafe tables or browsing the goods in the window. People are attracted to the hub-bub.

The whole urban marketing experience is more relational, playing off both the merchant-client relationship and the client-client relationships. Branding may always be important for establishing trust and connecting experiences to each other, but in cities that function as cities it's not the only game in town. This arrangement allows local businesses to vie head-to-head with the major franchises.

The article concludes:

"In many ways, New Urbanism and the trends it captures are part of broader recent changes businesses already accept: the shift to an experience economy, consumers’ and employees’ demands for greater corporate social responsibility, an emphasis on work/life balance, and the importance of interaction between companies and their customers. The demographic aspect is simply the newest part of an ongoing conversation. Companies that recognize the larger trend, however, and seize the opportunities that it presents will contribute to its social impact—and may gain a competitive advantage in the process."

The H&T Index is not "muddled" at all

Wendell Cox thinks he has poked a hole in the Housing and Transportation Index from the Center of Neighborhood Technology:

"The H and T Index is particularly susceptible to misinterpretation by ideological interests contemptuous of America's suburban lifestyle, who would use public policy to force people to live in higher densities. While the H and T Index reports data at the neighborhood level, it is not a neighborhood index. However, the H and T Index does not compare neighborhood housing and transportation costs with neighborhood incomes. Rather, the H and T Index uses the metropolitan median household income."

Cox thinks a true "neighborhood index," as he phrases it, would grab the income number for each block group instead of fixing it for the whole metro area. This would be an accurate portrayal of the housing and transportation cost burden being felt by the current residents of the block group.

However, Cox's alternative quickly descends into absurdity as a measure of affordability, which is the question that an affordability index is naturally asking. For instance, it's quite possible that Cox would have to consider the Beverly Hills neighborhood of Los Angeles County to be affordable, simply because the preponderance of it's uber-weathy denizens happen to have plenty of money to afford living there. We all know that different income groups separate themselves out according to their ability to pay - indeed this is the definition of exclusivity - but the point of the affordability question is to ask how the rest of us would fare in the particular location. Someone finds a job (income is now fixed) and wants to know where within the metro area she can afford to live. That's the question being asked.

All of the peer-review mechanisms we have don't share Cox's problem with the methodology. From the CNT report on the index, Penny Wise Pound Fuelish.

"The H+T Index represents a body of research spanning 20 years that has evolved from location efficiency research in the late 1990s to its vetting in 2008 by transportation experts and subsequent publication in the Transportation Research Record, the Journal of the Transportation Research Board of the National Academies."

Perhaps Cox is so diligently watching out for those "ideological interests contemptuous of America's suburban lifestyle" that he doesn't want to see even accurate data give them any crazy ideas. Besides, as Cox sees it, automobiles are about to get a whole lot more affordable for Americans anyway:

“Transportation costs will be reduced in the future by the far more fuel efficient vehicles being required by Washington.”

I'm tempted to just let this quote sit as a beautiful testament to the desperation of Cox's ideological position, but I can't pass up the chance to hand this one over to Michael Lewyn.

"In other words, don't worry about Americans being impoverished by the cost of a car for every man, woman, and 16-year old in the House: the technological miracle of fuel efficiency will save us.  

Now, this argument has a grain of truth: new EPA regulations will require the average vehicle to get 35 miles per gallon by 2016, so cars will become somewhat more fuel efficient if next year's Republican Congress or the federal courts don't get in the way.  But even so, the benefits of fuel efficiency may be canceled out by gasoline price rises - and even if they don't, gasoline costs comprise only about 30 percent of vehicle-related expenses. In 2007 the average household spent $2384 on gasoline and motor oil, $3244 on car purchases, and $2592 on other vehicle-related expenses ...

Tomorrow's Wonder Cars of the Future will drive the problem away."

Affordable living data released for 337 metro areas

The Center for Neighborhood Technology has been working on a Housing + Transportation Affordability Index for at least five years. Census block by census block, the index evaluates the cost burden, relative to area incomes, for housing and transportation on the average family living there. They released a pilot project for the Minneapolis-Saint Paul region in 2006, then expanded the analysis to major metro areas all around the country.

The index has made a big splash. It has been used to inform mortgage underwriting practices as well as regional housing public policy. Today they release data for a broader range of metropolitan areas, including the Charlottesville MSA. The newer website also allows users to break all of the data down into owners costs and renters costs, different income classes, greenhouse gas emissions, and a variety of other factors.

Screenshot from CNT Housing + Transportation Affordability Index for Charlottesville region

Andres Duany made the following point about affordable housing ten years ago,

"Affordable housing must be provided in a form and a place that allow for affordable living, even if it comes at a greater cost. Although land may be cheaper on the urban fringe, that location fails to provide residents with easy access to jobs and services."

Working toward the availability of truly affordable living requires a coordinated effort between the various spheres that make demands on the family budget, housing and transportation being the two largest. For too long the affordability goal has been set strictly at spending no more than 30% of income on housing, a rule of thumb based not on data but on convention. (It's also migrated upward over time. No more than 25% used to be advised.)

The trouble is that the old measurement leads to a systematic bias in favor of a low-cost housing/high-cost transportation arrangement, what is known in the real estate business as "drive until you qualify." If you can't afford a home closer to jobs and services, just head outward toward the urban fringe where land costs are cheaper. Or from a policy perspective, outer suburban jurisdictions appear to be performing better on affordability goals because, strictly speaking, housing costs are relatively in line with area incomes.

In reality, transportation costs are not only substantial, about 18% of expenditures, but they are volatile and tied directly to housing choices. One gas price spike can squeeze a budget to the breaking point, and families can only cut back so much with a lifestyle tweak if they've chosen an inaccessible home location.

If housing costs are the only measurement we have to work with, it makes some sense to run with it as a rough estimation of affordability. That's why these CNT numbers are so important. Maybe some day we'll see this model shimmy its way upward into the Census Bureau or coordinated federal agencies and built into policy, like the current convention is. The State of Illinois just adopted the H+T index as a benchmark for their own agencies. The affordability index will become that much more robust and accurate to a finer grain as it evolves.

... then maybe we could start talking about incorporating affordable food access (12% of the budget) into it.

Update: Elana Schor provides a nice outline of how this index is already being used at the federal level.

A walkable grocery thought experiment

Randal O'Toole has proposed a thought experiment that he uses to "debunk the smart growth myth" of the ideal walkable neighborhood grocery store.

"For smart growth to work, then population densities must be high enough for businesses to have enough customers within walking distance to keep them going. Smart growth won't work if businesses in pedestrian-friendly neighborhoods must attract hordes of auto drivers from other areas in order to survive. A modern large supermarket needs to draw patrons from a community of about 40,000 people. This is known as the trade population for this kind of store.

Joel Garreau says that, as a rule of thumb, 'the farthest distance an American will willingly walk before getting into a car' is 600 feet. However, 'if you do everything you can to make casual use of the automobile inconvenient at the same time that you make walking pleasant and attractive, you maybe, just maybe, can up the distance an American will willingly walk to 1,500 feet'...

The population density required to place 40,000 people within 1,500 feet of a grocery store is almost 124,000 people per square mile. That's about two-and-one-half times the density of Manhattan."

Therefore, smart growth won't work. QED.

O'Toole has asked a worthwhile question but plugged in the wrong numbers to answer it. Out of curiosity, I'd like to take a closer look at this hypothetical scenario to see how feasible the walkable grocery may really be.
Customer Base. O’Toole uses the concept of trade population, but this is begging the question. His trade population number is generated assuming an automobile-oriented environment, which is exactly what the proposed scenario is an alternative to. The more objective measure is the actual pool of customers a large grocery draws from. To get a feel for this I counted all of the food sources that serve the Charlottesville-Albemarle area. I came up with 14 large "modern grocery stores," between 30,000 and 60,000 sq. feet. This does not include:

• medium-sized full-service grocers
• about a half dozen health food stores
• specialty ethnic food stores
• big box stores like Target that sell food
• dozens of small convenience stores

I'm only counting the kinds of places O'Toole considers an unreasonable sacrifice to do without.

Taking the combined service area's population to be 134,086 from current ACS data (Charlottesville and Albemarle County), this breaks down to about one large grocery store per 9500 people. APA has determined the average customer base for a supermarket in the U.S. to be 8,412 , but I’ll just stick with my more conservative 9500.

Modal Split. O'Toole, as usual, characterizes the smart growth position as something far more extreme than anyone would actually propose: a 100% walking grocery store, as if bicycles, transit, and automobiles do not exist at all. The term walkable means able to be walked to, not only walked to. Every smart growth proponent I know would actually hope to see a multimodal balance to allow an array of transportation options. For the sake of this scenario, let's suppose our store has 50% walkers (with some cyclists included in here), 25% transit users, and 25% drivers.

Walking Distance. If you ignore Garreau's snarkiness, the 1,500 foot number is an alright estimate for typical behavior in a pedestrian-friendly environment. Walking 600 feet will seem intolerable if it's between the Best Buy and the Bed, Bath, and Beyond through a parking lot and grass berm, but Charlottesville's downtown pedestrian mall is 2,100 feet long and people will regularly walk its length for an errand because it is so enjoyable. A more objective way to go about this would be to fix the travel time. Apparently, the average drive to the grocery store currently takes about 20 minutes, including the walk from the parking lot. At a leisurely pace, the average walker could traverse about 3,000 feet in 20 minutes. I'll stick with the 1,500 foot number, noting that this will cut the travel time in half even for the furthest walkers.

Needed Density. Considering all of these conditions, a back-of-the-envelope calculation shows that this grocer could be supported with a population density of 18,885 people per square mile surrounding it. This is about half the density of Brooklyn. If this still seems unreasonably high, it should be noted that this is only the density for one quarter of a square mile area. In theory, it could be surrounded by a greenbelt of parkland and have no effect on the calculation.

Charlottesville's new Market Street Market serves a walkable neighborhood

The more important question that I have not addressed is whether easy access to a “large modern grocery store” really adds much to quality of life. Granted that more choices are usually better than fewer, but is a whole wall of ketchup options that much more preferable than one or two choices. Psychologists for a while have been pointing to the phenomenon of too many choices, leading to customer confusion and even anxiety, so much so that major retailers have begun simplifying their selections and stepping up quality control. New corporations like Trader Joes are mastering this market.

There’s no reason why a medium-scaled grocer could not carry almost anything the average household would want on a much smaller footprint. And rather than singling out a one-size-fits-all shopping location, whether you're preparing Thanksgiving dinner or picking up milk, it's easy to imagine a full spectrum of grocery stores organized between convenience and selection. Walk to the neighborhood store twice a week; take a longer trip to Costco every two months.

The Detroit transportation industry

flickr credit (via infrastructurist)

Amidst all of the media hype and congressional soundbites surrounding the Detroit Auto Show, Robert Reich, a regular commenter on NPR's Marketplace, drops a heavy dose of reality:

"The world auto industry -- including GM, Ford, and Chrysler -- will have to rationalize, consolidate, reduce capacity. Bailing out GM and Chrysler, bailing out GM's finance division, giving cash for clunkers, hoping the American auto industry will bounce back, throwing another big auto show in Detroit. All this is irrelevant to the real challenge.

And that challenge is getting new, good-paying jobs for all the auto and auto-parts workers who will continue to be laid off, even when the U.S. economy is fully recovered. And helping Detroit and other auto communities create new industries that move people from place to place at minimum cost, with minimum carbon.

This is what the Detroit Auto Show ought to be about. Not more cars."

And if current market conditions are not enough to compel the Detroit transportation industry to diversify its portfolio, today's announcement by Ray Lahood about new criteria for federal transit funding may strengthen the case. Insiders are hailing this as a big shift in federal priorities. Cost effectiveness for transit projects will no longer be determined only on the basis of speed, but other "livability" factors will be considered as well - spurring development, limiting congestion, reducing carbon output, and in Lahood's words "how it makes our communities better places to live." If we're going to be buying more streetcars and rail equipment, it would be nice if Americans could make it.

The Infrastructurist has been beating the drum for a revived American train industry for a little while now, with an interview with Michael Dukakis, an interesting series on global train manufacturers, and an announcement from Michigan's governor over the summer.

What will a recovery look like?

The Urban Land Institute and PriceWaterHouseCoopers has released their 2010 real estate forecast, a market analysis considered by many to be the most reputable in the industry. The first line gives a good impression of the tone of the report:

"More investors recognize massive losses—value declines will eventually total “40 to 50 percent” off market highs, propelled by lagging impacts of the deep recession."

Other descriptive words from the first page: "savaged," "debacle," "even worse," "enveloping gloom," "doom," "anemic demand," "carnage," "comatose," "mammoth value busts." (I didn't see "apocalyptic" but I didn't read the whole thing). You get the picture.

However, some smart growth advocates are seeing a silver lining in the fact that urban infill and redevelopment projects have shown to be more resilient than the typically housing on the exurban frontier of metropolitan areas. Kaid Benfield pulled out this quote from the report:

"Next-generation projects will ori­ent to infill, urbanizing suburbs, and transit-oriented develop­ment. Smaller housing units-close to mass transit, work, and 24-hour amenities-gain favor over large houses on big lots at the suburban edge. People will continue to seek greater convenience and want to reduce energy expenses. Shorter commutes and smaller heating bills make up for higher infill real estate costs."

On the one hand, I see this as a hopeful sign for movement toward a more sustainable economy. On the other hand, I'm a little reluctant to cheer too loudly during a recession. The million dollar question, in my mind, is not what the best investment bets are during the low period (could these not simply be inferior goods?) but what kinds of development will usher us out of the recession entirely and into a new economic paradigm.

The news media is filled with pundits prescribing a way toward "recovery": by which they usually mean resumption of the status quo - getting our savings rate back to zero, pushing the Per Person Vehicle Miles Traveled back onto its upward climb, getting the average square footage of houses back onto the upward trend (and by implication the average screen size of the televisions, so you can see them from across the room). But I don't think this is the only shape economic growth can take.

Jane Jacobs differentiates between "expansion" and "development",

"Expansion and development are two different things. Development is differentiation - new differentiation of what already existed. Practically every new thing that happens is a differentiation of a previous thing. Just about everything - from a new shoe sole to changes in legal codes - all of those things are differentiations. Expansion is an actual growth in size, volume, or activity. That is something different."

Development for Jacobs is the "creative destruction" of innovation, taking the raw materials of what we already have and making it better. In many ways the analogy of exurban expansion and urban infill fits these two models of economic growth very well. Instead of growing outward in size, consuming new land and leaving the internal remnants of a disposable core, a sustainable economy would continually augment the developed land. This is not a "steady-state economy" or some other fictitious narrative. The economy would be an organism that evolves, not simply to grow in size and energy consumption, but to grow intelligently to adapt to the conditions of its environment.

I understand that values are not normally welcomed in a discussion about economics, but Wendell Berry lays out the contours of such an economy with the succinct language of a poet,

"We must learn to prefer quality over quantity, service over profit, neighborliness over competition, people and other creatures over machines, health over wealth, a democratic prosperity over centralized wealth and power, economic health over 'economic growth'"

The three responses to congestion

David Owen, whom I referenced a few weeks ago, opened up a major can of worms with a recent piece in the Wall Street Journal: "How Traffic Jams Help the Environment." As the title suggests, he argues that congestion compels drivers to shift to alternative modes, and therefor there is no reason to attempt to alleviate it. Randal O'Toole, of the Cato Institute, jumped in right away, seeing confirmation of his long-held suspicion that the "anti-auto" crowd are really only interested in making life as miserable as possible for the greatest number of people. Finally, Ryan Advent also joined in criticizing Owen, only from an entirely different angle. He favors congestion pricing as a way to encourage efficient use of the existing roadways. To me, these three posts create a very instructive framework to view the issue.

Breaking the problem of congestion down into the most simplistic terms, I can only think of these three ways to deal with it. They strike at an age-old dilemma in political philosophy, concerning the distribution of any scarce resources (think health care, for example).

1. Build more Supply – This is O’Toole’s preference, to keep paving until adequate automobile mobility is achieved, presumably in perpetuity. In dense cities, this would require large government expenditures and liberal use of eminent domain (a strange position for a self-professed libertarian to take). Of course, the more you pave the more demand you create, thus the more you pave …


2. Manage Demand through Queuing – This is Owen’s preference, to distribute the scarce resource of urban roadways by requiring that users wait in line to use them. This has the advantage of egalitarianism. The BMW and rusty, old Ford Escort wait in the same line. But it's not very efficient, either economically or environmentally. The engine is still running while the driver sits in traffic, and she's late for work.


3. Manage Demand through Monetizing - This is Ryan Advent's preference. As an economist, he sees a price point at which the use of the roadway can be optimized to carry enough traffic to justify its existence but not so much as to generate congestion. There are equity considerations that must be faced with essentially auctioning the resource to the highest bidder, but presumably transit expenditure or other safety net programs can help mitigate this problem.
   

Contrary to O'Toole's characterization, most advocates for livable streets support congestion pricing (and similar policies, such as performance parking). Letting congestion increase is not some nefarious plan that urbanists whisper to each other behind closed doors, I can assure you. Frankly, it's mostly the journalists who are drawn to these kinds shocking idiosyncrasies ("Chocolate is actually good for you!"). Most of us really mean it when we aspire to enhance transportation options for everyone.

Charting the reinvestment in central cities

The 2008 American Community Survey data was released a couple of weeks ago, and the analyses of trends are starting to come out. One of the big stories is the notable increase in bicycle mode share in several cities, including huge one-year increases in the two leading cities: 42% in Portland and 78% in Minneapolis. Others have teased out the preliminary results of the recession from this data.

An ongoing trend of reinvestment in central cities is evident as well. After several decades of decline, central cities in the U.S. have, on average, been rebounding for the last several years. Bill Lucy has been tracking indicators of this trend for quite a while. He and David Phillips published Confronting Suburban Decline and Tommorow's Cities, Tomorrow's Suburbs, and a forthcoming publication from APA Planner's Press under the working title of Foreclosing the American Dream will continue observing the shifting fault lines between cities and suburbs.

The 2008 numbers reveal a steady continuation of the reinvestment in the cores of metropolitan areas. Lucy charted the differences between a sample of central cities, as defined by traditional political boundaries, and their metropolitan areas for a number of indicators: per capita income, median home values, and income of non-hispanic whites (to account for racial variations).

The money is still flowing outward in a few formerly industrial metropolitan areas, but most metropolitan areas are swinging in the other direction. Washington D.C. has, for the first time in decades, arrived at income parity between the city and its suburbs. The relative housing values in the District jumped between 2007 and 2008, making them now considerably higher than home values in the suburban counties. Other cities have also shown a notable reversal in recent years.

Roundup of HSR discussion

I've been sucked into the vortex of High Speed Rail cost/benefit analyses this last week. The backlash has begun against Obama's decision to supplement the usual torrent of highway spending with about $15 billion in rail infrastructure improvements.

In the online New York Times, Edward Glaeser published a series of posts on a hypothetical HSR line between Houston and Dallas, arguing that the economic benefits don't pencil out. Eric Morris used the Times' Freakonomics blog to say basically the same thing for HSR in general. Then Robert Samuelson wrote an op-ed in the Washington Post on what he sees as the 'boondoggle' of rail. Two of the three, approvingly reference the perennial Randall O'Toole.

Prominent bloggers were on this right away. Ryan Advent responded to Glaeser blow-by-blow in StreetsBlog, and Yonah Freemark took a closer look at the numbers Glaeser used in the Infrastructurist. I should add that these criticisms were echoed by a number of really perceptive commenters. Here are some of the conceptual problems they found with the analysis:

1. You have to consider alternatives. Glaeser and Morris compare the cost of implementing HSR to the cost of doing nothing, but, given projected population increases, doing nothing is not a viable option. Full cost accounting of continually widening highways and adding more flights needs to be part of the equation.
2. Energy prices are a crucial factor. All are in agreement that HSR is more energy-efficient, so it's performance relative to other modes will inevitably be accentuated if energy costs rise. Glaeser bases his numbers on the assumption that energy costs will remain steady for the next 20 years, but there is no reason to believe this assumption is true.
3. Just because conditions are not right everywhere right now doesn't mean that are not right anywhere. The Houston to Dallas route Glaeser uses to debunk HSR is not currently being proposed. Samuelson brings up the nonsensical fact that U.S. has an average density of 86 people per square mile, which makes it unsuitable for trains (I'm sure the whole world has an even lower population density, making the world unsuitable for trains). The point is that some places are denser than others, and those are places where HSR is being proposed.
4. Major infrastructure improvements are always long-term investments that may not reap a return for many years. We have been willing to be more patient with other major projects in the past, including the federal interstate system.
   

Without pointing any fingers, it's worth noting, as this conversation continues, that there are enormous vested interests involved in our transportation system. Right now the average American household spends over 19% of the budget on transportation - mostly cars. That adds up. When Obama talks about "removing x number of cars from the road" with HSR, some people hear reduced congestion but other people hear loss of market share.

For the story of the automobile industry's early public awareness campaign to defeat rail, see the book Getting There. For their public awareness campaign to displace pedestrians from city streets, see Fighting Traffic.

Like always, this just means you need to make up your own mind about things.

Just a little comment about taxes

Pittsburgh has been taxing land and improvements at a different rate since 1913

In the Atlantic’s How to Fix the World issue, Reihan Salam, of the New America Foundation, uses his piece to extol the virtues of a land value tax. This simple economic concept, often attributed to 19th century reformer Henry George, has curiously popped in and out of U.S. public discourse ever since George introduced it over a century ago. Bill Hudnut, of the Urban Land Institute, brought it up a few months ago, and sparked some good online conversation. I have not been able to take a look yet, but the Lincoln Institute of Land Policy has just published a set of essays on land value taxation. It has the adamant support of many tax reform nerds but pretty much no interest from the other 99% of the public. That's too bad.

The property taxes currently in use usually assess the value of land and improvements made to the land, or the entire market value of the property. A landowner sitting on a vacant lot is taxed less than one who has put the property to a productive use by building on it. This tax structure ends up not only dampening human productivity in general, but also discouraging landowners from making the highest use of their property. In contrast, The idea of land value taxation is to tax the value of only the land itself. Holding costs would be higher the closer a parcel is to the center of a city, leading to increased pressure for infill development.

James Howard Kunstler makes the connection between tax structure and urban development: “our system of property taxes may be the single most insidious, pathological factor contributing to the geography of nowhere … site-value taxation would encourage more compact town and city development, and would take the development pressure (demand) off property in the hinterlands.”

And this is why I'm bringing it up here.

Land value taxation makes a certain philosophical sense as well. The modern notion of property rights springs from John Locke, who based his understanding of property on the labor the owner "mixes with the land." If you're a farmer, you want to know that you will be able to reap a harvest in the fall from the seeds you plant into the land in the spring. Otherwise, you might not plant at all. However useful the labor theory of property is, there has been a big gaping hole in the logic that Eric Freyfogle, among many others, has clearly pointed out. Often the value of land is socially created. The same farmer can sit on the field doing nothing, and because of the actions of the community around him, he can sell the field after a period of time at great profit. Lockes' labor theory doesn't have a good explanation for land speculation. A land value tax would attempt to capture for public use the socially created value of land, while allowing the owner to be the sole beneficiary of any work that has been added to the land. This strikes me as fair.

Is this yet another noble yet quixotic quest, like eliminating the Electoral College or granting D.C. voting rights? After all, the current system is pretty financially entrenched and any change will result in winners and losers. Even in the face of this, I think land value taxation may have a shot for two reasons: it may be locally implemented and a transition can be phased incrementally. Perhaps certain cities or counties can devise a 10-year transitional period, with the the tax burden shifting a little away from improvements and toward land each year. The clear and advanced notice will help investors adjust themselves in preparation for the change.

Gladly paying for parking

Yesterday, I slipped my credit card into a solar-powered parking kiosk in the Baltimore neighborhood of Fells Point. Two dollars gave me a little receipt to put on my dashboard, which was good for two hours worth of parking in a prime spot on Broadway. I found the open spot within a minute. We enjoyed a walk around the harbor area and a nice dinner at a Fells Point restaurant.

This meter system has been in place in Baltimore for around five years, and it's been popular among business owners, the local government, and the public as a whole. There is only need for one machine per ten parking spots, which reduces street clutter. There's no more shuffling around for change. Meter collection theft is managed. Variable pricing could be a possibility. What's not to like about these new systems that are being installed in cities around the country?

That is if you believe that those who park should pay for their own parking. In some areas, many people still believe motorists have an inalienable right to have their cars stored for free (or at least really cheaply). Matthew Yglesias has an analogy for this particular form of government subsidy.

"It’s overwhelming conventional wisdom in the United States that price controls are bad. If I suggested that the city implement price controls on Diet Coke, people would say that it would lead to shortages. And if I proposed dealing with the ensuring shortages by saying that anyone who wants to build a new building needs to also provide millions of dollars worth of Diet Coke to people in the neighborhood, people would look at me as if I were insane. Creating the Diet Coke shortages is not a favor to anyone—neither fans nor haters of Diet Coke benefit—and the regulatory mandate is an absurd subsidy to Diet Coke drinkers with no conceivable policy justification. It’s bizarre."

True freedom or lead weight around the neck?

Sources:

1. Pew Research Center asked Americans, "Do you pretty much think of this as a necessity or do you pretty much think of this as a luxury you can do without?" Released April, 2009.
2. AAA estimates average automobile costs of $8,095 per year, including ownership and operation. Released April, 2009.
   
3. American Community Survey records a mean vehicle availability of 1.78 per household in the United States for 2005-2007.
4. The other costs are personal estimates, assuming 10-year life span for appliances and 3-5 year life span for electronics and minimal financing.