Three challenges for the civic commons

In Philadelphia last week, the Gehl Institute convened Act Urban—a global group of leaders and practitioners in the field of the civic commons. After three days of fieldwork and observation, expert presentations and intense discussion, I was asked, along with other panelists to sum up what we’d heard and what the challenges are for this emerging field going forward. Here’s an abbreviated summary of what I had to say.

Philadelphia's Chinatown. Credit: Mumu Matryoshka, Flickr
Philadelphia’s Chinatown. Credit: Mumu Matryoshka, Flickr


Like most of the attendees I spoke with, I found it hopeful and encouraging to see the breadth and impact of the projects underway in Philadelphia. As a regular visitor to the city over the past couple of decades, it’s evident that change is very much in the air, and that in important respects, the fabric of the city is beginning to be re-woven in ways that promises to bring Philadelphians closer together. Over the course of three days we saw numerous examples of a range of institutions re-thinking their roles and facilities to promote greater civic involvement and to cross, if not erase, long-established boundaries that divided the community.

From the presentations and discussions, we know that what’s happening in Philadelphia is starting to happen in other cities as well, both in the US and in other countries. All of this is exciting and encouraging.

But, in my view, three big challenges stand directly ahead.

They are the three “M’s”: Moving from micro to macro; Markets; and Metrics. I’ll address each of them in turn.

Micro to macro

Economists routinely make a distinction between micro-economics and macro-economics. Micro is the observation of a single facet of the economy. It’s about learning from and describing the nature of a small, bounded and usually partial segment of the economy. Macroeconomics is the converse—it is the economy of the globe and nations, about how all kinds of small actions and activities add up at a large scale.

The field of civic engagement is strongly grounded in its “micro” phase. It’s about learning how to craft individual pieces of the public realm so that they function better, whether that’s parks, streets, libraries, swimming pools, or other public spaces. This is a logical starting place; it’s easier to mobilize, secure resources, make progress, learn from mistakes and move forward with small scale investment. And the success stories—many of which we heard described in Philadelphia—help inform practice and spread the message about the opportunities and merits of civic engagement.

Pop-up protected bike lane, Minneapolis. Credit: nickfalbo, Flickr
Pop-up protected bike lane, Minneapolis. Credit: nickfalbo, Flickr


But at some point, the civic commons has to explicitly aim to achieve scale. Instead of being exceptional and innovative, changing and challenging the status quo, it has to come to define the regular way of doing things. This is the challenge of moving from micro to macro, of moving from projects to policies and institutions, and moving from tactical urbanism to a broader strategy.

Philadelphia’s decision to impose a tax on soda and to use the proceeds to help fund a multi-year bond to pay for capital improvements to parks, libraries and public spaces is an example of how to transition from micro to macro. Not only does this measure provide the resources to greatly increase the scale of activities, the funding mechanism—which is visible and broad-based—means that every citizen will know that they’re making a contribution, and that they have a stake in these investments.


The second “M” is markets. It may seem odd to invoke markets in the context of public space, but they matter a lot, and they’re telling us something important. When we speak of the civic commons and public realm, we tend to frame it as a largely government-led or public sector function. Municipal governments are primarily responsible for building, financing, operating and regulating public spaces. But viewed more closely, there’s an ambiguity and an interdependence between the public and private sectors on the ground in cities.

At the street level, great urban spaces are formed by mutually reinforcing public and private investments. Great streets, squares, and public spaces attract people, and the flow of people stimulates commerce. And the nearby presence of businesses—shops, bars, cafes, restaurants—reinforces the activity in the public realm. As we showed with our recent Storefront Index (which measures the number and concentration of customer-facing retail and service businesses in cities), the difference between an under-utilized park and an activated one is substantially explained by the presence and density of adjacent storefronts.

At a larger scale, it’s readily apparent that there’s a growing demand of great urban environments. Somewhat paradoxically, just as technology has, at least in theory, freed us from the need to be physically present in a particular place to work, or access information, or have easy access to a wide range of goods, people seem to be craving the opportunity to live in places that afford a wide range of opportunities for easy personal interaction. The rows of people in coffee shops, independently working at their laptop computers, signals a strong desire to be in the public realm, at the same time they are connected to the Internet.

Credit: brewbooks, Flickr
Credit: brewbooks, Flickr


Just as technology is freeing us from place, there’s a growing demand to live and work in cities. Well-educated young adults are disproportionately moving to cities. Companies that hire these workers are moving to cities as well. The rent premium for central locations relative to suburbs has increased sharply in the past decade. All of these trends are a sign that there’s strong market demand for urbanity. At City Observatory, we’ve called this “the shortage of cities” because the demand for urban space and urban living is increasing far faster than we’ve been able to increase the supply. And a key element of the supply of cities is the public realm that makes city living and city neighborhoods so appealing. So as we think about how to expand the civic commons and activate public spaces, we should do so with a clear recognition that this is something that the market demands.


My third “M” is metrics: how we measure the extent and activation of the public realm. The ability to measure the health and extent of public spaces and the activity that occurs within them is important both to designing great spaces, to moving from “micro” to “macro” and harnessing the growing market demand for the civic commons.

Many of the obstacles we face in promoting the public realm are due to the fact that we face a severe disparity in the kinds of things we measure. Some disciplines and some sets of investments have well-developed sets of metrics and copious statistics that make the strong case for their interests. This is very clear in the case of automobile transportation: every city has detailed measures of traffic volumes, vehicle speeds, vehicle delay times and the like. Almost no city has good data on the number of pedestrians, their convenience or comfort, or even good data on the use of parks or public spaces.

In public policy, it’s often the case that what counts is what gets counted. And the effect in the public realm is that great emphasis gets put on what we can count (the number and speed of vehicles moving through a place) and very little emphasis gets put on how many people actually use or inhabit spaces. In essence we often prioritize “traveling through” rather than “being in” urban environments.

The way to change this is to develop a range of metrics of the quality and use of public spaces. New data and new technology make possible a range of new metrics. In the past few years, Walk Score has emerged as a convenient, ubiquitous and easily understood tool for measuring the walkability of urban spaces. At City Observatory, we’ve developed the Storefront Index, which measure the number and concentration of customer-facing retail and service businesses that help frame walkable commercial neighborhoods. New technology lets us count the number of people walking in or using public spaces. We’re just in the infancy of these measures, but they can be useful tools for planning, and for elevating the health and use of the public realm in policy discussions.

Moving from exceptional innovation to commonplace adoption

One of the exciting things about visiting projects that are transforming neighborhoods and urban spaces is seeing the insight and creativity that designers, community groups and enlightened leaders have brought to bear on improving the public realm. Part of the sense of accomplishment from this kind of innovation comes from challenging the accepted norms, bending or negotiating the rules and doing something that hasn’t been done—or that people thought was impossible. While we should always continue to be innovative, the next big challenge for those with an interest in building cities by strengthening the public realm is to transform innovative breakthroughs into accepted, even commonplace practice. The keys to doing this will be to build on the visible evidence of success in particular projects, and use that to leverage institutional change: not breaking the rules for one project, but re-writing the rules for all projects. That’s why the three “M’s” are important: moving to system level change will require thinking about the “macro” rather than just the micro, harnessing the growing market demand for great urban places, and developing metrics that build a strong case for policy and investment.

Joe Cortright presented these remarks to the closing session of the Act Urban convening in Philadelphia on June 17, 2016. For more information about the Act Urban project, visit its website.

More evidence on the “Dow of Cities”

Last summer, we flagged a fascinating study by Fitch Investment Advisers which tracked twenty five years of home price data, stratified by the “urbanness” of housing. Fitch showed that particularly since 2000, home prices in neighborhoods in the center of metropolitan areas increased in value relative to all other metropolitan housing. We termed the price premium that central neighborhoods command “the Dow of Cities” because like the Dow Jones index, it serves as an indicator of the market valuation of urban locations.

Last month, the Federal Housing Finance Agency (FHFA) produced a new data series, a repeat sales index of housing. (For more about ways of measuring housing prices, check out our stats guide.) They analyzed over 100 million property transactions from 1975 through 2015 and produced an index of home prices that can be used to track neighborhood level price changes, and to disaggregate the effects of location from other factors (like home size). A new research paper—Local House Price Dynamics: New Indices and Stylized Facts—based on that data, authored by Alexander Bogin, William Doerner, and William Larson looks at the relationship between urban location and price increases within metropolitan areas. You’ll find a summary of the report and maps for several metropolitan areas in Emily Badger’s Wonkblog analysis.

Their key finding is that more centrally located homes—those closer to a metropolitan area’s central business district—have experienced higher rates of appreciation over the past twenty five years. You can see those findings in the following chart, which shows the appreciation rate by zip code, between 1990 and 2015, based on distance to the central business district. The results are surprisingly strong: in large U.S. metropolitan areas, homes within 5 miles have appreciated, in real terms, at an annual rate of about 1.5 to almost 2.0 percent per year over the past 25 years, while homes 10 or more from the center have appreciated at a fraction of one percent per year. (See the green line in figure four). In smaller metropolitan areas (those with fewer than 500,000 housing units), the relationship is nearly flat, suggesting that the big gains in home values in the center have been in the largest metropolitan areas.

Screen Shot 2016-06-29 at 10.04.47 AM

Maps of several metropolitan areas make the pattern clear. In these maps, zip codes with the highest relative rates of housing appreciation have the darkest blue shading. Those zip codes with the lowest relative levels of appreciation have the lightest shading. In each case, appreciation rates are normed to metropolitan level averages. For example, the Washington Post prepared the following map of housing price appreciation in Portland, showing that the neighborhoods with the highest levels of appreciation are in or very near the center of the metropolitan area, and the rates of appreciation are lower on the suburban periphery. Similar patterns show for metropolitan areas like Houston, Minneapolis, Chicago, Denver and Phoenix.

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Map Credit: Washington Post, from FHFA data.


The authors are making their complete data set of 5-digit zip code level data available for download. You can also explore on-line maps of individual metropolitan areas which allow you to see the rate of price appreciation since 1990 and 2000.

As the authors note, the size and detail of the FHFA transaction database gives it some technical advantages over other ways of measuring home prices. The FHFA data covers more transactions that private databases like the Case-Shiller data used by Fitch, and has the added advantage of being publicly available. And in contrast to analyses of area home price data (such as Zillow’s zip code level price estimates), is able to distinguish between changes in home price and home quality. That said, the FHFA analysis substantially confirms the trends spotted using these other data sources.

The effect is clear, but what’s the cause?

While there’s little question about the trend—housing closer to the city center is appreciating significantly relative to that in peripheral suburbs—there’s still some debate about the causes. One of the FHFA studies authors, William Larson, maintains that the shift in demand back to cities doesn’t necessarily represent a change in preferences, but is instead driven simply by growing higher incomes, traffic congestion, improved urban amenities, and reduced crime. While economists generally want to explain everything in the context of market variables—and we include ourselves in this category—this seems like a stretch. As we’ve shown in our studies of the Young and Restless, well-educated young adults are today dramatically more likely to choose to live in close-in urban neighborhoods than their predecessors of 10, 20 and 30 years ago. Moreover, the growth urban amenities is as much a result as a cause of the shift to urban living—the growing number of well-educated urban residents provides the demand for restaurants and the experience economy. In a forthcoming paper, Jesse Handbury and Victor Couture attribute the rise of central city property values directly to “a diverging preference for consumption amenities” particularly by well-educated workers.

It’s also doubly hard to square the evidence on accessibility, commute times, and travel modes with a claim that preferences haven’t changed. Central locations have always had an accessibility advantage to jobs, congestion and travel times have not increased appreciably—and in fact have decreased in recent years. And as one indicator of a fundamental change in preferences, far more Americans choose to cycle to work in cities today than a decade or two ago; something they could have easily done then—but didn’t, most likely because that generation had a different preference for driving as opposed to cycling; just as it has a different attitude toward urban living. Indeed, the willingness of consumers to pay higher prices to live in cities today, relative to the price of suburban living, is a key indicator of the change in values we attach to great urban places.

And, as we’ve noted before, it’s an indication that we have, nationally “a shortage of cities”—the demand for housing in urban neighborhoods is rising faster than the supply, resulting in steadily escalating relative home prices in dense, central neighborhoods. It’s both a major contributor to the growing challenge of housing affordability and an economic signal that we ought to be doing more to build additional housing in cities.

Cities and Brexit

Last week’s big news was Britain’s decision, via referendum, to leave the European Union. The results of the vote lead Prime Minister Cameron to resign and sent markets reeling, and it’s still unclear what the ultimate economic and political effects will be. For some keen, if depressing, insight on the ramifications of Brexit, you may want to read this essay by Fusion’s Felix Salmon.

Analyses of the vote in Britain point up the sharp generational, educational and geographic cleavages that produced the outcome. Older and less well-educated voters favored leaving, younger and more highly-educated voters preferred to remain the the European Union. As the BBC reported, those 18 to 24 voted almost 3 to 1 in favor of remaining; a majority of those over 45 voted to leave:

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There was a strong correlation between the education level of an area, and its vote on the referendum. According to data analyzed by The Guardian, the highest educated areas voted most strongly to remain; the least well-educated areas tended to vote to leave.

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Credit: The Guardian


And similar to our own red state/blue state divisions—a topic we’ve explored at City Observatory—there’s a strong geographic split in the vote in the UK, especially in England. (All of Scotland and most of Northern Ireland favored staying in the EU, by sizable margins.) As Emily Badger has pointed out in the Washington Post, there’s an urban/rural divide in the election returns. London and its environs, and Liverpool and Manchester supported remaining by substantial margins. The more rural parts of England voted to leave. The Washington Post’s map casts the vote in familiar red/blue hues, with the remain vote shown as blue and the leave vote shown as red.

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Another way to look at this question is to consider the relationship between population density and voting patterns. Studies of the US showed a strong correlation: higher density counties were much more likely to vote for Barack Obama than Mitt Romney in 2012. To dig deeper into this question, we gathered data on the population density of English electoral districts and compared it to the fraction of local electors voting to remain in the European Union. Density data are the number of eligible electors (voters) in each of England’s 380 electoral districts, divided by the number of hectares in the district (electors per hectare). These data come from the Local Government Boundary Commission. We obtained election returns for each district from the UK Electoral Commission.

This chart shows the relationship between each electoral district’s density (shown on the horizontal axis, densest areas to the right of the chart) with the fraction of the voters favoring remaining in the European Union (vertical axis, higher values corresponding to a greater percentage of voters favoring remaining). Since there are varying numbers of voters in each district, we’ve displayed these results as a bubble chart, with the size of each bubble corresponding to the number of votes cast in each electoral district.


In general, the denser an electoral district, the more likely it was to was to vote to remain in the EU. All of the electoral districts with densities of 40 or more electors per hectare voted to remain. The pattern for lower density districts was more diffuse, but on average those with the lowest levels of density cast their ballots for leaving.

The geographic, demographic and generational polarization around issues like Brexit may be a sign of our times. In a world still being reshaped by globalization and technological change—and still working to cope, fitfully, with the aftermath of the worst economic downturn in eight decades, there’s a division between those who greet the future with optimism and those who are looking to return, or cling to, a seemingly fast disappearing past. Many of the fault lines are defined by place, with many city economies drawing and attracting talent, flourishing with the growth of global connectedness. But others, especially in smaller towns and rural areas haven’t gained so much from change. As Britain’s Brexit election shows us, the divisions are deep. Addressing them will be a major issue for all of us.

Sprawl and the cost of living

Over the past three weeks, we’ve introduced the “sprawl tax”—showing how much more Americans pay in time and money because of sprawling urban development patterns. We’ve also shown how much higher the sprawl tax is in the US than in other economically prosperous countries, and how sprawl and long commutes impose a psychological, as well as an economic burden. Today, we’ll take a close look at how ignoring the sprawl tax distorts our view of the cost of living in different regions and neighborhoods.

As one old saying goes, an economist is someone who knows the price of everything and the value of nothing. It’s often claimed that some places, often sprawling Sunbelt cities, have a lower cost of living, based usually on observations about lower housing prices. And judged solely from the sticker price of new homes, the argument has some merit.

Phoenix. Credit: Al_HikesAZ, Flickr
Phoenix. Credit: Al_HikesAZ, Flickr


But as our aphorism about economists implies, there is a lot more to this question than just one set of prices. If you’ve followed our series on the sprawl tax, you know that living in some cities—those with cheap average housing costs, like Houston or Dallas or Birmingham—also carries with it a heavy, and largely ignored cost in the form of the “sprawl tax”: much higher transportation costs. In short, we tend to fixate on the price of something we can easily measure (housing) and simply leave out the value of something that is much less obvious (sprawl and longer commutes)

How big is the sprawl tax, relative to the supposed cost of living differences among metropolitan areas? Quite large as it turns out: enough to erase much of the supposed cost advantages that low density settlement is supposed to offer.

We know that within metropolitan areas, there’s a strong tradeoff between rents and home prices and typical commute distances. Low density housing, at a long remove from the city center and most metro area jobs, commands lower prices, reflecting in large part the added transportation costs implied by more far-flung and less accessible locations. Others, notably the Center for Neighborhood Technology through its H+T calculator, have addressed the tradeoff between housing costs and transportation costs within metropolitan areas. Our analysis here uses the sprawl tax in concert with Bureau of Economic Analysis estimates of housing costs differences at the metropolitan level to examine this tradeoff.

The Sprawl Tax and Cost of Living Differences

In the following chart, the vertical axis shows the sprawl tax: higher values mean that a region’s residents pay more for transportation costs and travel time as a result of sprawl. The horizontal axis shows the rent differential: how much more (or less) the typical resident pays in annual rent/housing costs compared to the typical large metropolitan area. Areas to the right have higher rents; areas to the left have lower rents. And, as discussed in the post-script, at least some portion of the difference in rents reflects real quality of life differences between cities; but for now we use this as an index for housing cost comparisons.


The chart illustrates a range of different combinations. Four metro areas with the highest sprawl taxes (Atlanta, Nashville, Dallas, Houston) all have lower than average housing costs. For example, according to the BEA estimates, the annual cost of housing in Houston is $850 per person less than the national average. But the typical Houston household would face a sprawl tax based on longer commute distances of about $2,900 per worker which would essentially wipe out the superficial price advantage from housing.

The nation’s most expensive housing markets—including San Francisco, San Jose, New York, and Washington—have housing costs that are considerably higher than the national average, with per person annual rental costs exceeding the national average by $5,000, up to almost $10,000 in San Jose and San Francisco. But these cities have much lower than average sprawl taxes. Workers in San Francisco, San Jose and New York pay less than $500 per year in sprawl taxes. This amount doesn’t fully offset the added rental costs, but combined with the quality of life differences between high prices and low prices cities, makes the differences much smaller.

The Bronx, NYC. Credit: Dave Johnson, Flickr
The Bronx, NYC. Credit: Dave Johnson, Flickr


And for many cities, adding the sprawl tax essentially erases the supposed cost of living advantage from cheaper housing. For example, Houston’s housing cost is about $1,100 per person less than Portland’s ($845 below the large metro average compared to $318 above). But Portland’s sprawl tax ($871) is $2,000 less, per worker, than Houston’s ($2,877), which for many households will more than eliminate the housing price advantage.

A sensible discussion of the real differences in the cost of living between places has to look just past the prices of a few commodities and big ticket items, to consider the intrinsic value consumers attach to great urban environments, the variety and convenience of consumption opportunities in compact urban centers and the sprawl tax the consumers must pay.

Methodology: How we calculated living cost differentials

The best measure we have of inter-metropolitan differences in consumer prices is the Bureau of Economic Analysis Regional Price Parities (RPP) estimates. These estimates, prepared from the data used to construct the nationwide consumer price index, confirm some of our fundamental intuitions about differences in costs of living between communities. The cost of goods varies little among places. The difference between relatively expensive and relatively inexpensive cities (that is, the 75th percentile and 25th percentile) in the cost of goods is just 2.5 percent. For services, prices vary somewhat more, about 8 percent. So what’s really making up the difference in cost of living? No surprise: housing, which varies by more than 30 percent.

Regional Price Parities for Metropolitan Areas of Over 1 Million, 2013

Component Weight Mean Interquartile Range (25%-75%)
Goods 41.5% 99.2 97.3 – 99.7
Services (excluding rent) 37.9% 99.3 94.3 – 102.1
Rent 20.7% 107.2 85.5 – 116.0

Source: Bureau of Economic Analysis, City Observatory calculations. Weight is the share of these items in the RPP calculation. Index values are for the entire nation, i.e. U.S.=100. Mean and interquartile range are weighted by metro area.

Here are BEA’s estimates of the rent price index for the 51 largest U.S. metropolitan areas (those with a population of one million or more). The data are indexed to the national average rent (U.S. = 100). On average, rents are about seven percent higher in large metropolitan areas (i.e. the index for the median metropolitan areas of the 51 largest is 107). Rental prices in San Jose and San Francisco are 80 to 90 percent higher than nationally; rents in Louisville and Birmingham are 25 to 30 percent lower than the national average.

Metro Area Rent Index
San Jose-Sunnyvale-Santa Clara, CA 194.4
San Francisco-Oakland-Hayward, CA 181.9
Washington-Arlington-Alexandria, DC-VA-MD-WV 169.9
Los Angeles-Long Beach-Anaheim, CA 166.9
San Diego-Carlsbad, CA 162.7
New York-Newark-Jersey City, NY-NJ-PA 157.2
Boston-Cambridge-Newton, MA-NH 140.6
Miami-Fort Lauderdale-West Palm Beach, FL 128.8
Seattle-Tacoma-Bellevue, WA 127.7
Riverside-San Bernardino-Ontario, CA 120.1
Sacramento—Roseville—Arden-Arcade, CA 120.1
Baltimore-Columbia-Towson, MD 117.4
Chicago-Naperville-Elgin, IL-IN-WI 116.9
Denver-Aurora-Lakewood, CO 115.1
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 113.1
Hartford-West Hartford-East Hartford, CT 110.9
Portland-Vancouver-Hillsboro, OR-WA 110.8
Austin-Round Rock, TX 110.1
Minneapolis-St. Paul-Bloomington, MN-WI 110.0
Virginia Beach-Norfolk-Newport News, VA-NC 109.1
Orlando-Kissimmee-Sanford, FL 104.3
Salt Lake City, UT 104.3
Tampa-St. Petersburg-Clearwater, FL 104.0
Las Vegas-Henderson-Paradise, NV 101.0
Providence-Warwick, RI-MA 100.7
Dallas-Fort Worth-Arlington, TX 100.2
Houston-The Woodlands-Sugar Land, TX 98.5
Milwaukee-Waukesha-West Allis, WI 97.6
New Orleans-Metairie, LA 97.4
Richmond, VA 97.4
Phoenix-Mesa-Scottsdale, AZ 97.3
Jacksonville, FL 96.3
Rochester, NY 95.4
Raleigh, NC 93.7
Atlanta-Sandy Springs-Roswell, GA 92.0
Detroit-Warren-Dearborn, MI 88.1
San Antonio-New Braunfels, TX 87.9
Nashville-Davidson—Murfreesboro—Franklin, TN 86.4
Charlotte-Concord-Gastonia, NC-SC 84.6
Kansas City, MO-KS 84.4
Columbus, OH 84.1
Indianapolis-Carmel-Anderson, IN 84.1
St. Louis, MO-IL 83.9
Cleveland-Elyria, OH 80.4
Cincinnati, OH-KY-IN 80.0
Oklahoma City, OK 79.6
Buffalo-Cheektowaga-Niagara Falls, NY 79.3
Memphis, TN-MS-AR 79.1
Pittsburgh, PA 78.8
Louisville/Jefferson County, KY-IN 75.0
Birmingham-Hoover, AL 70.3

Because housing costs are the biggest source of variation in the measured cost of living among large metropolitan areas, we use the BEA data to estimate how much more, or less, a typical household pays for housing, based on the difference in rents among metropolitan areas. BEA estimates the rents as a combination of the actual rent paid by renters, and the “imputed rent” which is the value of housing services received by households that own their own homes). We compute the difference in the income paid for housing among metropolitan areas by observing the difference between the average rental price parity for the 51 largest metropolitan areas (107) and the actual value for each metropolitan area. We multiply that difference by the per capita personal income of the area and the share of per capita income devoted to rent (estimated by BEA at 20.7%).

A Postscript: Two Big Challenges with Comparing Living Costs

We present the estimates of housing cost differentials here, and compare them to the magnitude of the sprawl tax to illustrate how important urban form is to our economic and personal well-being. But its also worth noting that conventional cost comparison measures understate two important economic advantages of cities.

First, as with other commodities, differences in prices often signal the value that consumers attach to different objects. Housing may be more expensive in San Francisco or Hawaii than in Omaha or Idaho, but much of this difference reflects the value that we attach to being in a vibrant city or a sunny, tropical climate. A two bedroom apartment near the beach in Maui or on Nob Hill in San Francisco represents an entirely different set of amenities than a similarly sized apartment in Fresno or Fargo. Indeed, a whole class of economic analysis—hedonic regression—uses these price differences to estimate the value of natural and manmade amenities.

Second, there’s an inherent limitation in trying to compare different places that have widely different sets of attributes and consumption opportunities. Typical estimates of cost-of-living differences will look only at a single commodity (like housing) or a very limited market basket of simple goods and services, and use these to compute differences in living costs between places. The assumption is that consumers or households buy the exact same mix and quantity of goods and services wherever they live. Economists have cast serious doubt on the validity of these simple-minded price comparisons. It turns out, consumers attach value to having convening access to a big range of goods and services, something you find mostly in cities. Columbia’s Jessie Handbury has shown that the greater mix, variety and convenience of shopping opportunities in larger cities means that consumers actually enjoy lower prices for the particular market basket of goods they prefer in larger cities than in smaller ones, contrary to the notion that small town prices are lower. BEA’s Regional Price Parities which imply that New York’s prices for goods are 8.8 percent higher than the national average aren’t adjusted for quality and variety. According to Handbury’s estimates, when you make that adjustment, prices in larger cities are actually lower than in smaller ones.

States on the front lines of housing affordability

For advocates of less restrictive building regulations, especially in high-cost cities where more homes might help bring down housing prices and create more equitable, diverse neighborhoods, state governments often seem like the best bet. At a local level, for reasons we’ve explained before, the politics are incredibly difficult—not least because local elected officials represent nearly all the people who will see the potential downsides of new development, but not the people who stand to benefit by moving into the area once new housing exists. It’s not an accident that places where states have more power over development policy tend to be less segregated.

Still, it’s not as if states around the country are jumping at the opportunity to revolutionize urban development. So two measures that are moving forward in California and Massachusetts—two of the classic “shortage of cities” states—are worth an optimistic look.

The Massachusetts capitol. Credit: J. Stephen Conn, Flickr
The Massachusetts capitol. Credit: J. Stephen Conn, Flickr


In California, Governor Jerry Brown has proposed changes to the California Environmental Quality Act to make it easier to build affordable housing. CEQA mandates an extra layer of local review and discretion over development proposals—a kind of mini-environmental impact statement—even if those proposals meet all existing local zoning requirements. In effect, CEQA eliminates the kind of “as-of-right” development that exists nearly everywhere else in the country, and allows project opponents to tie up routine projects that otherwise meet local zoning codes in months or years of additional review.

Brown’s proposal would exempt projects from CEQA if they 1) meet existing local zoning rules and 2) include a low-income housing set-aside as part of the proposal. Local governments would retain discretion in the form of their zoning codes, but would lose the additional layer of CEQA for projects that include substantial low-income housing. The reaction from many local politicians and residents, predictably, has not been positive, and negotiations in the state legislature are likely to continue for months.

Meanwhile, this month the state Senate of Massachusetts passed a different bill that, in some ways, is bolder: rather than leaving zoning entirely up to local governments, as Brown’s bill does, the Massachusetts proposal would allow accessory dwelling units, or backyard cottages, on the same lots as single-family homes without requiring a special permit, mandate that local governments zone some of their area for multi-family buildings at a minimum zoned density of 15 housing units per acre (or 9,600 per square mile) in urban areas.

A depiction of suburban development at just over 15 homes per acre in suburban Eden Prairie, MN. Credit: Metropolitan Design Center
A depiction of suburban development at just over 15 homes per acre in suburban Eden Prairie, MN. Credit: Metropolitan Design Center


While much of the housing debate nationally has focused on local policies like inclusionary zoning, which tends to produce token numbers of below-market units, or community land trusts, which have proven very difficult to scale up, these sorts of state-level policies were a major battleground in the last generation of housing battles in the fair housing fights of the late 1960s and 70s. Massachusetts, in fact, helped lead the charge with the so called “anti-snob” bill, passed in 1969, which allowed a state board to override local zoning codes if it determined that less than 10 percent of the homes in that municipality were affordable to moderate-income households. Studies have suggested that the law, called 40B, has produced a significant proportion of the low-income housing in Massachusetts in the last several decades without a negative impact on market prices. Another major state fight, called Mount Laurel, began in the New Jersey court system in the 1970s, and similarly attempted to mandate the construction of affordable housing in high-cost municipalities, regardless of their local zoning. Those rulings remain embattled, however.

The battle to establish strong state policies and guidelines that will facilitate more housing supply at the local level promises to be a long one. As the experience of Somerville, Massachusetts, shows, the constraints on development have grown by the steady accretion of individually well-intended by cumulatively stifling measures. Even jurisdictions that nominally allow affordable units like granny flats, impose so many other conditions on their construction that they simply become uneconomical. Granola Shotgun relates the story of how the cost of permits, sewer connection fees, and off-street parking requirements effectively amount to a poison pill that makes it impossible to actually build technically permissible accessory dwelling units.  

Still, state-level policies that both encourage or require the construction of below-market housing while potentially increasing production of market housing as well, helping slow the growth of market prices, potentially carry a much greater impact for affordability than local policies like inclusionary zoning. Advocates in other states may want to look to what’s happening in California and Massachusetts now—as well as to the previous generation of affordable housing fights—for breakthroughs beyond the current round of local fights.

More on the illegal city of Somerville

We got quite a bit of interest on our post last week about how the Boston suburb of Somerville, Massachusetts had written itself a zoning code that would have prevented the construction of virtually the entire city of 80,000 people if it had been adopted at its founding. According to Somerville’s own planning department, just 22 residential buildings in the entire municipality met its zoned density standards—and if you added parking restrictions, it’s likely those last 22 would be illegal, too.

The post purposely steered clear of any sort of real economic or political analysis, focusing on the sort of gut-check question about whether building standards that declare entire neighborhoods illegal—neighborhoods that, by all appearances, are attractive and appreciated by their residents—make any sense.

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Somerville. Credit: Google Maps
Somerville. Credit: Google Maps


But it’s worth underscoring that this is more than just a funny legal “whoops,” the land use equivalent of those old laws about not whistling on Sundays. These sorts of nonsensical land use rules both have serious consequences and are the results of predictable political dynamics—which have, predictably, led to them being adopted in various forms throughout the country. In other words, though we’re using Somerville as our example here, it’s far from an outlier among American cities.

Even semi-regular readers of City Observatory will know that, particularly in a high-demand region like Boston, overwhelming evidence suggests that regulations that restrict new housing (as Somerville’s do, since required density is set below what already exists) tend to increase prices. To be fair, today the city’s planners recognize this, and are planning large amounts of new housing around an extension of Boston’s Green Line. But according to the Census, before the last year or two, there was an extraordinary drought of new construction in Somerville, with barely 100 new homes built since the turn of the century, contributing to a regionwide shortage. Meanwhile, Zillow puts the median price of a home there at well north of half a million dollars.

And the problem isn’t just housing, per se. It’s a shortage of exactly the kinds of communities that Somerville represents, and that its zoning code outlaws: relatively dense, walkable, transit-accessible neighborhoods. Research by Jonathan Levine and many others have both established that demand for these sorts of neighborhoods outstrips their supply, and that the result, too often, is higher prices, more economic segregation, and less opportunity for lower-income people. And this process, writ large, manifests itself as what we’ve called the “shortage of cities”: the growing demand for living in great urban spaces is far outstripping the limited supply, with the result that nationwide, city center home values are rising much faster than in suburbs.

So how do we end up with these sorts of rules? Well, in an earlier post we’ve covered one version of zoning history. But there also seem to be two dynamics here worth highlighting. The first is adopting rules that sound good in the abstract, but that don’t take into account various real-world tradeoffs. An excellent example of that is actually this story about developing a building in downtown Kalamazoo, Michigan’s, where the required amount of parking would take up more room than actually exists on a downtown parcel—even before you’ve built a building. You can easily imagine the thought process here: People are worried about parking, so who could object to requiring that every new building have its own parking spaces? Until you see that, in practice, that means replacing a continuous, attractive streetwall with parking lots that take up as much, or more, space than the actual building. Or, returning to Somerville, who would object to open space? Until you realize that the setbacks and open space requirements you’ve written don’t reflect the community that already exists—and, in fact, would require smaller, more widely-spaced buildings, probably reducing the number of people who live in your neighborhood, and therefore the number of local stores that could be supported, and how often the local bus could come, and raising the price of housing, and so on.

Downtown Kalamazoo. Credit: Google Maps
Downtown Kalamazoo. Credit: Google Maps


The other big issue is that these rules are generally written at a very local level, and so don’t reflect the interests of people who are affected by these decisions, but live elsewhere. It’s completely understandable that a resident of a moderately dense street would be somewhat concerned that more housing might cause some additional traffic, or make parking a bit harder, or make the neighborhood just a bit louder, and so on. Those concerns ought to get a hearing. But they also ought to be weighed against the desires of other people to be able to live in the area—especially when the area is a community that offers good access to jobs, public education, and other amenities that allow people to build comfortable lives. When housing decisions are only made locally, the former set of voices get input, but the latter don’t. No wonder, then, that places where state governments exert more influence on development policy tend to be less segregated.

The key point is there’s a systematic bias here: those concerned with the negative effects of new development are well-represented in the planning and development approval processes.  Those who might benefit from the positive effects aren’t. Over time this tilt results in the steady accretion of zoning and parking requirements, setbacks and height limits that while individually plausible are cumulatively stifling.

That means we end up with a profound disconnect between the kinds of neighborhoods we legislate for and the kinds of neighborhoods we actually want. Planning that actually takes into account the full picture of what these sorts of requirements mean for new development—and the full range of people who are affected by these decisions—could lead to more high-quality, diverse, and opportunity-rich communities.

The Week Observed: June 24, 2016

What City Observatory did this week

1. Urban housing is a massive asset. How massive? Well, a comparison to the valuation of our nation’s biggest corporations shows it’s no comparison at all—housing in major cities has them beat, often handily: housing in America’s 50 largest metropolitan areas is worth about $22 trillion, versus $8.8 trillion for the nation’s 50 largest corporations. It’s a good reminder of just how massive the US housing sector is.

2. Tech clusters are widely credited with breathing economic life into the Bay Area, Seattle, the Triangle region in North Carolina, and other metropolitan areas around the country. But that has led many local political leaders to look for ways to create their own tech clusters—often biotech—from scratch. Unfortunately, the track record of these efforts is poor, and promises of new biotech clusters saving struggling cities often don’t add up to much more than 21st century snake oil, with the politicians claiming credit and leaving office before it’s clear that their economic development plans are bust.

3. Last week, we wrote about how the city of Somerville, MA has adopted zoning laws that would have prevented all but 22 of the actually existing residential buildings in the suburb of 80,000 people from being built. This week, we look atsome of the ways we get to situations like that: often, a slow trickle of new rules that sound good in the abstract, or might have worked somewhere else, that add up to nonsense when actually applied in a given place. Another example: Kalamazoo requires more parking than actually fits on a downtown parcel—even before you can build a building.

4. Research suggests that places where states are more involved in housing development laws tend to be less segregated than places with more powerful local control. Now, two states with major housing affordability problems are taking steps to rein in overly restrictive local governments: California by allowing housing proposals that include low-income units and meet local zoning to bypass an additional level of environmental review; and Massachusetts by requiring municipalities to allow some amount of multi-family housing, as well as accessory dwelling units, or backyard cottages. The hope is that allowing more, and more cost-effective, housing will ease some of the shortage that has pushed up prices.

The week’s must reads

1. The USDOT announced the winner of its $50 million Smart City Challenge, and it was (drum roll) Columbus, Ohio. The city’s proposal focused on connecting low-income neighborhoods to job centers with public transit; the nitty-gritty ranged from logistical fixes like creating a single fare payment system across multiple kinds of transportation, to more futuristic-sounding programs like a fleet of self-driving cars.

2. While new streetcars in Atlanta and Washington, DC, have come under fire for paltry ridership, a new two-mile system in Kansas City is seeing surprisingly high numbers, including over 10,000 riders on weekend days. (That’s particularly impressive given Kansas City’s extremely low overall levels of transit use compared to DC, or even Atlanta.) It’s too early to say whether these figures can keep up, but if Kansas City’s relative success persists, it may be worth investigating what makes its line different from other short pilot streetcars.

3. Is a future with cheap self-driving cars a future of even vaster, even more auto-dominated suburbs? That’s the idea behind this Wall Street Journal piece by Christopher Mims (paywalled; here’s a brief summary by Gawker), which posits that if the cost of driving is dramatically reduced—both in money terms, because renting a self-driving car just for when you need it is cheaper than owning and maintaining it yourself; and in psychological terms, because self-driving cars will allow you to read, work, or nap as if you were on a train—then people will put up with much longer commutes, and create demand for housing even farther from jobs, stores, and other people.

New knowledge

1. At a London School of Economics blog, Naji Makarem writes that one of the reasons for the divergence of the economic fortunes of San Francisco and Los Angeles since 1980 doesn’t have to do with traditional understandings of individual human capital, but social networks. The idea is that more fragmented, fractured social networks reduce the spreading, exchange, and refinement of ideas, and hold back innovation and productivity.

2. Harvard’s Joint Center for Housing Studies has released its “State of the Nation’s Housing 2016” report. Among the major findings: new household formation has finally reached expected levels for the first time since the recession, a good sign for the economy, and housing production increased by 11 percent over the previous year. Single-family starts, while up, remain far below historic levels, while multi-family housing starts are at a 27-year high. The national homeownership rate continued to decline and now stands at 63.7 percent, near a 48-year low. Home prices continue to rise, but nationally are still 20 percent below their inflation-adjusted peak, and more than 4 million households are still underwater on their homes. Meanwhile, the apartment vacancy rate is at its lowest rate since 1985, pushing prices up faster than inflation.

3. Does an increase in households using housing vouchers increase crime in neighborhoods? Leah Hendey, George Galster, Susan Popkin, and Chris Hayes find that the answer is mostly not, in a new paper that looks at changes in Chicago neighborhoods. There’s no association with higher rates of violent crime; in high-poverty neighborhoods, or areas that exceed a certain threshold of voucher-holding households, there is an associated increase in property crimes.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at,, or on Twitter at @cityobs.

The market cap of cities

What are cities worth? More than big private companies, as it turns out: The value of housing in the nation’s 50 largest metropolitan areas ($22 trillion) is more than double the value of the stock of the nation’s 50 largest corporations ($8.8 trillion).

Market capitalization is a financial analysis term used to describe the current estimated total value of a private company based on its share price. It’s a good rough measure of what a company is worth, at least in the eyes of the market and investors. The market capitalization—or “market cap,” as it is commonly called—is computed as the current share price of a corporation multiplied by the total number of shares of stock outstanding. In theory, if you were to purchase every share of the company’s stock at today’s market price, you would own the entire company.

Checking up on your cities. Credit: OTA Photos, Flickr
Checking up on your cities. Credit: OTA Photos, Flickr


In roughly similar fashion, we can compute the market capitalization of cities—or at least of their housing stock. We start with Zillow’s estimate of the market value of owner-occupied housing in each of the nation’s largest metropolitan areas which is computed by estimating the current market price of each house in a metropolitan area, and sum that value over all of the owner occupied houses. We also estimate the value of rental housing. For rented units we use a commonly accepted technique of estimating current values based on the income generated from rent. (Americans paid about $535 billion in rent in 2015, according to data compiled by Zillow; we can use this data and some financial formula to estimate the value of rental housing. Details of this calculation are explained below.) Then we add together the value of all owner-occupied housing and the value of rental housing to compute the total market cap of housing in each metropolitan area in the US.

Together, the 50 largest publicly traded private corporations in the United States had a market capitalization of $8.8 trillion at the end of 2015. The total market value of housing in 2015 in the 50 largest metropolitan areas was $22 trillion. For reference, the gross domestic product—the total value of all goods and services produced in the US in 2015—was estimated at $18 trillion. It’s hard to find things measured in trillions of dollars, so we’ve juxtaposed GDP against the market cap of housing and businesses. Keep in mind that the GDP is a flow (trillions of dollars per year) while the value of corporations and housing is a stock (trillions of dollars in value at one-point in time).

The following table shows the market value of housing in each of the nation’s 50 largest metropolitan areas and the current market capitalization of the nation’s 50 largest publicly-traded private sector businesses.

For metro areas, the value of housing is divided into two components (owner-occupied housing) shaded blue, and rental housing (shaded orange).

The most valuable company is Apple, with a market cap of $541 billion; the most valuable metro area is New York, where the market value of owner-occupied and rental housing is $2.9 trillion—more than five times higher. The current market value of Apple is about the same as the current market value of housing in Seattle (the twelfth most valuable market on our list).

Some modest-sized metros have housing that’s worth as much as the entire value of some very well-known corporations: IBM’s market cap ($128 billion) is about equal to Indianapolis housing ($138 billion). Orlando’s housing ($208 billion) is valued at more than 25 percent over all of Disney ($164 billion). Three Seattle-based companies (Microsoft, at $418 billion; Amazon, at $285 billion; and Starbucks, at $84 billion) are worth more combined ($787 billion) than all the housing in Seattle (about $617 billion).

The differences are smaller at the bottom end of our two league tables. The fiftieth largest firm, the oil services company Schlumberger, is worth about $15 billion more than the fiftieth most valuable metro housing market, Buffalo: $82 billion versus $67 billion.

Buffalo! Credit: Zen Skillicorn, Flickr
Buffalo! Credit: Zen Skillicorn, Flickr


It may seem strange to compare the market value of houses with companies, but this exercise tells us more than you might think. Just as the share price of a corporation reflects an investor’s expectations about the current health and future prospects of a company, the price of housing in a metropolitan area also reflects consumer and homeowner attitudes about the quality of life and economic prospects of that metropolitan area. So, for example, as the price of oil has fallen, weakening growth prospects in the oil patch, it’s quickly translated into less demand and weaker pricing for homes in Houston. Just as stock market investors purchase and value stocks based on the expectation of income (dividends) and capital gains from their ultimate sale, so too do homeowners (and landlords)—they count on the value of housing services provided by their home as well as possible future capital gains should it appreciate.

In fact, these two commodities—housing and stocks—are among the most commonly held sources of wealth in the United States. And while the financial characteristics of the two investments are dramatically different the underlying principle is the same, making market cap is a useful common denominator for assessing the approximate economic importance of each entity.

Each day, the financial press reports the market’s assessment of the value of individual firms, through their stock prices. But viewed through a similar lens, the housing markets of the nation’s cities are by this financial yardstick an even bigger component of the nation’s economy.

Technical Notes

How we computed the value of rental housing. In real estate, the value of rental housing is usually estimated using a “cap rate” capitalization rate, that approximates the rate of return on capital that real estate investors expect from leasing out apartments. To estimate the current market value of apartments, we take Zillow’s estimate of the total amount of rent paid in each market and deduct 35% to estimate “net operating income”—the amount the investor receives after paying maintenance, other operating expenses, and taxes—and then we divide this number by a capitalization (cap) rate of 6%. Both of these figures (net operating income and capitalization rates) are rough estimates—values vary across different times of properties, different markets, and over time with financial conditions (such as with the change in market interest rates).

Many thanks to Zillow’s Chief Economist Svenja Gudell and Aaron Terrazas for doing the hard work here of estimating property values and rental payments. For more keen insights on housing markets, follow their work at Zillow’s Real Estate and Rental Trends blog.

21st century snake oil

Thanks to technological innovations, our lives are in many ways better, faster, and safer: We have better communications, faster, cheaper computing, and more sophisticated drugs and medical technology than ever before. And rightly, the debates about economic development focus on how we fuel the process of innovation. At City Observatory, we think this matters to cities, because cities are the crucibles of innovation, the places where smart people collaborate to create and perfect new ideas.

While the emphasis on innovation is the right one, like any widely accepted concept, there are those who look to profit from the frenzy of enthusiasm and expectation.

Around the country, dozens of cities and many states have committed themselves to biotech development strategies, hoping that by expanding the local base of medical research, that they can generate commercial activity—and jobs—at companies that develop and sell new drugs and medical devices. There’s a powerful allure to trying to catch the next technological wave, and using it to transform the local economy.

Over the past decade, for example, Florida has invested in excess of a billion dollars to lure medical research institutions from California, Massachusetts and as far away as Germany to set up shop in the Sunshine State. Governor Jeb Bush pitched biotech as a way to diversify Florida’s economy away from its traditional dependence on tourism and real estate development.

The historic Florida capitol. Credit: Stephen Nakatani, Flickr
The historic Florida capitol. Credit: Stephen Nakatani, Flickr


Of course it hasn’t panned out; Florida’s share of biotech venture capital—a key leading indicator of commercialization—hasn’t budged in the past decade. And several of the labs that took state subsidies are down-sizing or folding up their operations as the state subsidies are largely spent. Massachusetts-based Draper Laboratories (which got $30 million from the state) recently announced it was consolidating its operations at its Boston headquarters and closing outposts in Tampa and St. Petersburg—in part because they were apparently unable to attract the key talent that they needed. The Sanford-Burnham Institute, which got over $300 million in state and local subsidies, is contemplating leaving town and turning its Orlando facilities over to the local branch of the University of Florida.

And while Florida’s flagging biotech effort might be well-meant but unlucky, in one recent case, the spectacular collapse of a development scheme has to be chalked up to outright fraud. As the San Francisco Chronicle’s Thomas Lee reports, both private and public investors have succumbed to the siren song of biotech investment. Last month, the Securities and Exchange Commission issued a multi-million dollar fine, and a lifetime investment ban, to Stephen Burrill, a prominent San Francisco-based biotech industry analyst and fund manager. Burrill diverted millions of dollars meant for biotech startups funds to his personal use. Not only that, but Burrill was a key advisor to a private developer who landed $34 million in state and federal funds to build a highway interchange to service a proposed biotech research park in rural Pine Island, Minnesota, based on Burrill’s promise he could raise a billion dollar investment fund to fill the park with startups. In the aftermath of the SEC action, Burrill is nowhere to be found, and the Elk Run biotech park sits empty.

But puffery and self-dealing are nothing new on the technological frontier or indeed, in the world of economic development. The most recent example, biomedical equipment maker Theranos, which claimed that it had produced a new technology for performing blood tests with just a single drop of blood. The startup garnered a $9 billion valuation, and conducted nearly 2 million tests before conceding that its core technology didn’t in fact work. Theranos has told hundreds of thousands of its patients that their test results are invalid. As ZeroHedge’s Tyler Darden relates, the company rode a wave of fawning media reports that praised its disruptive “nano” breakthrough technology (WIRED) and lionized its CEO as “the world’s youngest self-made female billionaire” and “the next Steve Jobs.” All that is now crashing to earth.

When it comes to biotech breakthroughs, consumers, investors and citizens are all easy prey for the hucksters that simultaneously appeal to our fear of illness and disease and our hope—borne from the actual improvements in technology—that theirs is just the next step in a long chain of successes. Investors pony up their money for biotech—even though nearly all biotech firms end up money losers, according to the most comprehensive study, undertaken by Harvard Business School’s Gary Pisano. And as my colleague Heike Mayer and I pointed out nearly a decade ago, it’s virtually impossible for a city that doesn’t already have a strong biotech cluster to develop one now that the industry has locked into centers like San Francisco, San Diego and Boston.

At first glance, biotech development strategies seemed like political losers: you incur most of the costs of building new research facilities and paying staff up front, and it takes years, or even decades for the fruits of research to show up in the form of breakthroughs, products, profits and jobs. No Mayor or Governor could expect to still be in office by the time the benefits of their strategy were realized. But as it turns out, the distant prospects of success always enable biotech proponents to argue that their efforts simply haven’t yet been given enough time (and usually, also resources) to succeed. And likewise, no one can pronounce them failures. When asked why the struggling Scripps Institute in West Palm Beach hadn’t produced any of the spin off activity expected, local economic developers had a read explanation, reported the Palm Beach Post:

“Biotech officials urge patience and repeat the mantra that a science cluster needs decades to evolve. “This takes a lot of time to develop,” said Kelly Smallridge, president of the Business Development Board of Palm Beach County.”
“The biotech bonanza Jeb Bush hoped for? It didn’t go as planned,” Palm Beach Post, June 15, 2015

So rather than being a liability, the long gestation period of biotech emerges as a political strength. Apparently, you’ve got to give the snake oil just a little bit more time to kick in.

The Week Observed: June 17, 2016

What City Observatory did this week

1. In previous installments of our “Sprawl Tax” series, we’ve calculated the billions of dollars that longer distances between homes and workplaces cost American commuters, and shown that US workers pay more for transportation, and spend more time getting to and from their jobs, than peers in other rich countries. This week, we dove into how sprawl affects our quality of life, showing that self-reported satisfaction with local transportation systems is negatively correlated with longer commutes—but actually weakly positively correlated with “traffic congestion” as measured by the Texas Transportation Institute.

2. What happens when cities change? At a gathering of the Congress for New Urbanism in Detroit, the Kresge Foundation’s Carol Coletta argued that cities need to embrace the ever-changing urban environment—even as they work to make sure that transforming job and housing markets offer opportunity to everyone. While rising housing prices are a key issue in many places, deepening poverty is a much more common issue—and one that needs to change.

3. Somerville, Massachusetts is a town of nearly 80,000 people. Recently, its planning department issued a report revealing that its zoning code would outlaw all but 22 of its residential buildings from being built again as they exist today. While discussions about land use law and housing economics can get wonky and laden with seemingly obscure details, these big-picture facts need to be kept in mind: When regulations say that over 99 percent of a pleasant, diverse, and thriving city is “nonconforming,” the issue is with the rules, and not the buildings.

4. A few weeks ago, we wrote about the ways that Houston manages to write sprawling, car-dependent development into its laws without a formal zoning code. This week, we look at the other side: What Houston’s more lax rules allow that other cities’ don’t. The story is more recent than you might think, but still worth telling: Since 1999, Houston has become one of the only cities in the country to allow wholesale redevelopment of single-family home neighborhoods to “missing middle” type density, largely in the form of townhomes.

The week’s must reads

1. For many housing reform advocates, the politics of local government seem too stacked against efforts to reduce the growth of housing prices—a suspicion confirmed by a paper by Lens and Monkkonen that found greater state-level involvement in planning is associated with lower levels of residential segregation. Now, the state of Massachusetts (which already has one of the nation’s marquee state interventions, the “anti-snob zoning law”) is taking a further step, with the state senate approving a bill that would aim to increase housing production in a state with high housing prices by requiring local governments to designate an area where developers can build multifamily housing as of right, and allow “accessory dwelling units,” or backyard cottages. The bill faces steep local resistance, however.

2. For 33 years, St. Louis city and county have had a program to transfer public school students between them, with the goal of fostering integration between the disproportionately black city and disproportionately white county. Now, the governing board that manages those transfers is considering ending the program. These sorts of programs are rare in major metropolitan areas, despite extensive evidence about the benefits of racial integration—and economic integration, which is much more difficult without the former in a region where, like most of the country, racial identity and economic outcomes are correlated. The St. Louis Post-Dispatch lays out the case for continuing the program.

3. Access Magazine, from the University of California Transportation Center, gives a great primer on what’s wrong with parking requirements. From the more-than-inexact science of determining how many spaces every bar, hardware store, and barbershop needs, to the high cost paid to build and maintain each space, and the effects on people, especially low-income people. It’s a rigorous introduction to one of the more important reform efforts in modern urban planning.

New knowledge

1. Since 1979, power plants have been a bigger contributor to carbon dioxide production in America than transportation. But as reported in Vox, the University of Chicago’s Sam Ori, the amount of CO2 produced by power plants has fallen so sharply over the last decade or so—while production by transportation has continued to rise after dropping during the Great Recession. Today, for the first time in over a generation, transportation is the leading cause of climate emissions in America. In light of that, the potential for urban form to reduce transportation emissions becomes even more important.

2. Smart Growth America has released “Foot Traffic Ahead 2016,” their latest analysis of “walkable urban places,” or WalkUPs. They find continuing price premiums for these places over less-walkable places: 90 percent for office, 71 percent for retail, and 66 percent for multi-family rental residences. They also find that based on spending for housing and transportation for a somewhat below-average-earning household, these areas offer better social equity than car-dependent neighborhoods.

3. In the Washington Post, Columbia professor Lance Freeman takes on “five myths about gentrification.” He tries to complicate widespread ideas about a simple and direct relationship between gentrification and reductions in crime, displacement, and race, among other things. In the context of media coverage that frequently asserts the very connections that Freeman says evidence doesn’t support, this is an important corrective.

Why Houston has been special since at least 1999

A little while ago, in a post called “Sprawl beyond zoning,” we argued that even though Houston doesn’t technically have a zoning code, it still regulates the built environment in lots of ways that make it difficult or impossible to safely or conveniently get around without a car.

But we also promised to get into the ways that Houston’s lack of an official zoning code actually does allow for more flexibility, and densification, than the vast majority of American cities.

Or at least, it does now. In fact, much of the story of Houston’s densification begins with reforms adopted in 1999. Prior to that date, residential lots could be no smaller than 5,000 square feet: not such an extreme requirement in a country where plenty of suburbs demand, say, a quarter acre or more (nearly 11,000 square feet), but still big enough that, combined with wide roads and sprawling, parking-heavy commercial developments, real walkable density wasn’t quite possible. (Chicago’s Bungalow Belt neighborhoods, which maybe skirt the lower threshold of “walkability” with single family homes, are built on lots that are generally 3,250 square feet.)

But just before the turn of the millennium, Houston decided that within its inner belt highway, residential lots could be as small as 1,400 square feet. (Of course, leave it to Houston to define even a radical pro-urban reform with reference to an expressway.) That decision set of an explosion of “townhouse” type developments in inner neighborhoods, adding significant amounts of housing while retaining, generally, the basic form of a single-family home.

A handy diagram from this slideshow from Barbara Tennant shows what this looked like from the perspective of a city block:

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And here’s a bit of what this looks like on the ground, via Google Streetview, with these two midcentury suburban homes in 2007…


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…becoming four townhomes in the same amount of space by 2014.


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It’s important to note that this change isn’t just special because, in most American neighborhoods, the original density of those two midcentury homes would be legally preserved in perpetuity—allowing, perhaps, larger single-family homes to be built on the same lots, but not more of them. It’s also special because of how it represents a more gradual, almost contextual ratcheting-up of density.

In most other cities, as we’ve covered, politics and the regulatory costs of building housing conspire to make almost all new development either of the density-neutral (or -negative) single-family home variety, or very large multifamily buildings. That’s because if you’re going to go through the process of getting a zoning variance, battling neighborhood opposition, and so on, there needs to be a big payoff on the other end—and building a three-unit building probably isn’t going to cut it. That means when cities do add density, they generally do it with buildings that are often quite a bit larger than their surroundings. Whether or not that’s objectively a problem is up for debate—but clearly, for many people, it is. But by making “missing middle” density legal to build as of right (at least in certain neighborhoods), Houston has seemingly attracted a lot more of it.

Of course, Tennant’s slideshow makes the point that Houston’s flexibility allows for some rather odd-looking buildings…

Screen Shot 2016-06-15 at 3.29.55 PM

…but a lot of these new townhomes range from inoffensive to downright attractive, even by the snobbish standards of urbanists who prefer older, pre-World War Two cities.

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These are human-scaled, street-focused developments built at a density that makes walking possible, even pleasant, minus the bayou weather. If you wanted to see what a genuine, 21st-century American urban neighborhood looked like, you probably couldn’t do much better.

Perhaps the greatest endorsement of the change was that it has not only been preserved, but expanded: In 2013, Houston eliminated the inside-the-beltway/outside-the-beltway distinction, and now the entire city has the denser, “townhouse” type regulations in residential areas.

But in the long run, the test of Houston’s exceptional policies will be to determine whether inner-city housing prices remain relatively low compared to other large American cities. For most of its history, most of Houston’s famously elastic housing supply has come from the same place as other Sunbelt metropolises that do have zoning: sprawl on the suburban periphery. In fact, studies comparing the development regimes of Houston with its zoned cousin, Dallas, found little to no difference.

But as far as I can tell, no studies have looked at the effects of Houston’s central city development since the adoption of townhouse regulations in 1999. An important research project in the coming years will be to see if Houston’s willingness to allow more housing—and especially missing middle housing—in the center of a growing metropolitan area can reduce the growth of housing prices and keep neighborhoods more diverse and affordable than they would otherwise be.

When cities change

This is the text of a speech delivered in Detroit last week at the Congress for New Urbanism conference by Carol Coletta, a senior fellow at the Kresge Foundation’s American Cities Practice.

Could there be a more apt place to observe “The Transforming City” than Detroit?

On behalf of Rip Rapson and my colleagues at the Kresge Foundation, welcome to Detroit. If you travel to Detroit regularly, as I have over the past 15 years, you see that Detroit changes quickly.

The speed of change here sometimes takes your breath away.

How many of you have walked the Detroit Riverfront or ridden the Dequindre Cut?

Visited the expanding Eastern Market?

Seen the Q Line construction on Woodward?

Eaten a meal at Selden Standard or Wright & Company, one of those meals so special that it deserves its own social media channel?

Walked the streets of downtown or Midtown and discovered Great Lakes Coffee, City Bird, or the El-Moore Lodge?

Or met Claire Nelson at the Urban Consulate, or any one of Detroit’s arts and civic innovators responsible for some of the most exciting urban work in the country?

This is the Detroit you can see right outside this theatre.

But there is another Detroit, one that is harder to see. It’s the Detroit that feels threatened by the pace of change in the city, suspicious of newcomers eager to be part of the change, and wondering when their loyalty to Detroit will be rewarded.

Such feelings are not unique to Detroit. Every morning my Google Alerts brings a new batch of headlines from around the country detailing the gentrification battles.

Because “new urbanism” is the butt of some of this criticism, I want to spend the next few minutes unpacking the myths and the realities of gentrification and what those of us who care about great places can do about it.

First, let me share some numbers.

In 1970, about eleven hundred urban Census tracts were classified as high poverty.

By 2010—40 years later—the number of high poverty Census tracts in urban America had increased from 1100 to more than 3,000. (3165)

The number of people living in those high poverty Census tracts had increased from 5 million to almost 11 million. And the number of poor people in high poverty Census tracts had increased from 2 million to more than 4 million.

So over a 40-year period, the number of high poverty Census tracts in America’s core cities had tripled, their population had doubled, and the number of poor people in those neighborhoods had doubled.

Given that record, I’ll bet a lot of people are hoping for a little gentrification– if gentrification means new investment, new housing, new shops without displacement.

The idea that places might benefit from gentrification runs against the popular narrative. But here’s the really startling fact: only 105 of the eleven hundred Census tracts that were high poverty in 1970 had rebounded to below poverty status by 2010. That’s only ten percent! Over 40 years!

A similar study of Philadelphia by Pew found almost exactly the same result in that city’s neighborhoods. There, ten times as many poor neighborhoods (164) experienced real declines in income as experienced gentrification since 2000.

It is the lack of gentrification that we rarely count and never see. The deterioration happens too slowly for us to notice. But it doesn’t mean the deterioration isn’t devastating. In fact, the high poverty neighborhoods of 1970 lost 40 percent of their population in 40 years.

You could make the case that poor people are displaced from poor neighborhoods because of their poor schools, their lack of jobs, their more chaotic public spaces, their lack of opportunity.

Understand, this is not the fault of the people who live there. This is a public policy failure.

But… when a combination of government intervention, philanthropic support, community development, and market forces combine to change a place as quickly as Detroit—even when that change means new residents, new jobs, and new places to live—it also rightfully generates concern.

See, we are conflicted about change. Many of us wish we could fix place in time.

But neighborhoods do change. You know that. You change them. And when change results in mixed income neighborhoods—in other words, when we achieve investment without displacement — it’s good for everybody.

The research on this is quite clear: The ability of people to improve their economic status from one generation to the next is strongly correlated with mixed-income neighborhoods.

Many of the public policy interventions to achieve economically integrated neighborhoods have supported poor people moving to wealthier neighborhoods. But that is an expensive, slow political slog that is hard to scale.

But what if we flipped that script? What if… we could lure people with financial options about where they live to disinvested neighborhoods—resulting in the kinds of places that enable opportunity?

And what if we also made a special effort to insure that the people remaining in low-income neighborhoods—people without options about where they live—what if an extra effort were made to insure they benefited from new people and new investment in their neighborhoods?

The research tells us that mixed-income neighborhoods benefit poor people naturally. But can we double down to accelerate those benefits?

Think of it this way: Can we get gentrification with broadly-shared benefits.

I think so. But it’s not easy. Remember: Only 10 percent of high poverty neighborhoods “gentrified” over the past 40 years. And today we have triple the number of high poverty neighborhoods than we had 40 years ago.

Clearly, mixed income neighborhoods won’t happen if we don’t work at it.

So how can we do that?

First, let’s acknowledge that, for the first time in 50 years, the market is moving in our favor. People (and jobs) are moving to cities. We need to see that as the opportunity it is to get mixed-income neighborhoods and not fear good, thoughtful development.

That means we can’t let NIMBYs win the day. The same people who complain about high prices also complain when developers show up to build more supply. We have to make the connection between supply and demand for the protesters and the press.

But attention must be paid to creating more mixed income housing. Our success on this has been mixed, and I’m struck by the comparison on methods used in NYC and in Portland, Oregon’s Pearl District to create more affordable housing in mixed income settings.

As City Observatory reported today, The City of New York, one of the nation’s hottest housing markets, has had inclusionary zoning for the past 10 years. And over that time, the city has produced an average of 280 units per year for a total of 2800 units.


In contrast, Portland took a very different approach. Portland used additional property tax revenue from construction in one neighborhood to subsidize affordable housing. Using just a third of such revenues from The Pearl District (along with Low Income Housing Tax Credits), Portland has built more than 2300 units of affordable housing—almost as many units as the much larger New York.

Portland’s Pearl District is an example of a desirable neighborhood. The cost of desirable neighborhoods goes up. And it is the fear of rising costs, new investment, (and sometimes a changing demographics) that spawned the “just green enough” movement.

Think about that: Disinvested neighborhoods lack access to parks and quality public space. But wait! Let’s not make it too nice for fear it will attract new investment. That’s craziness born out of legitimate frustration when prices start going up.

The fact that buyers and renters are willing to pay more for quality neighborhoods means we need to build more of them, not fewer of them.

How do we do that at scale?

When Paul Krugman or—the American electorate willing—the next president calls for new investments in infrastructure to stimulate the economy, will we be ready with a plan that defines infrastructure as something more than roads and bridges?

Why can’t “infrastructure” include new and redesigned parks and libraries, neighborhood community and cultural centers, trails and gardens—a reimagined civic commons? That’s the defining line I want to hear from our next president. I want so many desirable neighborhoods that people will have good choices at all price points.

The way we live today is changing so fast. We are decoupling and recoupling. We have mothers raising kids alone, and people delaying childbearing—some forever—who want to help. We are sharing jobs, cars and homes. We are retiring later and living longer. And our lives, increasingly, are lived in public.

We need to ready our cities for these changes. We need to figure out how to revalue what exists and give new life to the material, the buildings, the neighborhoods, the cities and the people we too often discard and write off.

Equity does not sit in opposition to a thriving, appealing city. It is central to it.

This is the work of CNU. This is your work. And that’s why I’m happy to be with you here in Detroit to celebrate and learn alongside you this week. Thank you for inviting me.

The illegal city of Somerville

Zoning is complicated. It’s complicated on its own, with even small towns having dozens of pages of regulations and acronyms and often-inscrutable diagrams; and it’s complicated as a policy issue, with economists and lawyers and researchers bandying about regression lines and all sorts of claims about the micro and macro effects of growth rates and whatever.

This post will not get into any of that.

Rather, this post will ask a very simple, first-order question that absolutely anyone, regardless of expertise or math skills, can answer just by pondering their own hearts and minds for a minute. This is, in other words, a gut-check moment, if you’ll excuse the mixing of anatomical metaphors.

The question is: Should zoning rule out virtually all of the kinds of buildings that already exist in your city or neighborhood? In other words, imagine taking a walk around the block where your home is. All those buildings you see: Are they so terrible that you’d like to pass a law making it illegal to build them again?

This may seem like a silly question. After all, local officials and neighborhood groups often rely on regulation to “preserve community character.” Isn’t the point to encourage the kinds of buildings that already exist?

But—especially in places that were largely built up before World War Two—that is often not what building regulations do. Take, for example, Somerville, Massachusetts, an inner-ish ring suburb of Boston. Somerville is the kind of in-between density that you’ll often hear people praise: compact enough to walk to stores and friends’ houses, but with virtually no buildings over four floors, lots of trees and yards, and a mix of small apartment buildings and single-family homes.

Credit: Google Maps
Credit: Google Maps


Credit: Google Maps
Credit: Google Maps
Credit: Google Maps
Credit: Google Maps


But recently, the Somerville planning office released a report in which they confided that, in a city of nearly 80,000 people, there are exactly 22 residential buildings that meet the city’s zoning code. Every single other home is too dense to be legal: Either it takes up too much of the lot, or it has too many homes, or it’s too tall, or it’s not set far back enough from the street, and so on. (Note that this calculation actually doesn’t include parking requirements, which might very well do away with those last 22 conforming buildings.)

Screen Shot 2016-06-14 at 5.11.38 PM


Is Somerville really such a dark, dystopian place that the entire city ought to declare itself illegal?

No. Although my question above really is an open one—I don’t know where you live, and maybe your neighborhood really is that awful—my guess is that for the vast majority of people, the discovery that your city had declared your home and all your neighbors’ homes too deviant to be legally allowed would come as something of an unpleasant surprise. It might also make you think that, at some sort of fundamental, does-two-plus-two-equal-four level, something had gone wrong with the way your city regulates buildings.

And I think that, for most of you, that impulse would be correct. And while Somerville may be an extreme case, chances are pretty good that if you live in an area where most buildings are at least 60 or 70 years old, your situation is not entirely different. Only a few weeks ago, the New York Times discovered that fully 40 percent of all the buildings in Manhattan would be illegal to build today. Last year, we published a Portlander musing on how all the things he loved about his long-established urban neighborhood—its density, diverse mix of uses and housing types, and buildings built up to the sidewalk—were the things even that city had subsequently declared illegal. And near where I live, in Chicago, it’s quite common to find entire blocks that have been apartments since at least the 1920s, where the city has declared that the only “compatible” kind of building is single-family homes. “Compatible” with what?

Credit: New York Times
Credit: New York Times


Don’t worry: City Observatory will get back into the econometric weeds soon, probably in our next post. But it is valuable, from time to time, to step back and gawk at the big picture of contemporary land use law, which has taken its mandate to protect people from dangerous or noxious buildings and ended up declaring that the neighborhoods where tens of millions of people live—neighborhoods that, if surveys and housing prices are to be believed, many people consider pleasant and desirable—are themselves dangerous and noxious. There is something wrong here that you don’t need an economics or planning degree to understand.

How sprawl taxes our well-being

In the first installment of our “Sprawl Tax” series, we explained how laws and patterns of development that make our homes, businesses, and schools farther apart cost us time and money—on average, nearly $1,400 a year per commuter in America’s 50 largest metropolitan areas. In the second installment, we showed how the Sprawl Tax is levied much more heavily on Americans than our international peers, with US commuters paying a much larger proportion of their income on transportation and spending much more time on their trips to and from work than people in other wealthy countries.

Today, we want to talk about another cost of sprawl, and the greater distances it forces us to travel: Our quality of life. Powerful evidence suggests that longer commutes make us individually less happy and less healthy, in addition to having detrimental effects on our communities. In recent years, behavioral economics has made great strides in determining how different factors influence our happiness. Consistently, this literature finds that long commutes are strongly associated with lower levels of “subjective well-being”—the technical term that researchers use to describe “happiness.”

One study from Germany, for example, calculated that reducing one’s daily commute time from 23 minutes each way (the German average) to zero minutes would produce an increase in happiness equal to about an 18 percent increase in income. Research in other countries, including the United States, has produced similar results.

In a survey of working women in Texas, behavioral economist Daniel Kahneman and his collaborators found that time spent commuting had the lowest positive ratings of all daily activities.

Other studies have confirmed that commute distances are correlated with happiness and health. The Gallup Healthways Index shows that Americans with longer commutes report lower levels of subjective well-being. The data also show that long commutes are correlated with a higher incidence of back pain, obesity, and high cholesterol.

Minutes from home to work Average Index Score
0-10 69.2
11-20 68.3
21-30 67.5
31-45 67.1
46-60 66.4
61-90 66.1
91-120 63.9

Source: Gallup

We also have detailed data from a survey taken by the state of Connecticut. For nearly every income group, self-reported well-being declined as commute distance increased. The chart below shows that relationship. The power of commuting distance was such that low-income households (making under $30,000) with a roundtrip commute of 40 minutes or less reported being as happy as households making roughly twice as much money (between $50,000 and $75,000), but with commutes of 80 minutes or more.


It’s not a surprise, then, that average commute times are also correlated with satisfaction with the local transportation system itself. Using data from a survey of homeowners commissioned by Porch, an online home improvement information firm, and the median commute length as calculated by the Brookings Institution, we can see a strong negative correlation between metro area commute times and satisfaction with the region’s transportation system: the longer the median commute, the less satisfied homeowners are.



Conversely, it turns out that transportation satisfaction is almost completely uncorrelated with “congestion”—at least as it’s often measured. As you can see below, the Urban Mobility Scorecard ratings of metropolitan traffic congestion calculated by the Texas Transportation Institute bear almost no relationship to whether homeowners report being satisfied with their region’s transportation system. If anything, congestion is associated with more satisfaction.



Taken together, this analysis suggests that overall commute distances—and not traditional measures of traffic congestion—are the chief factor influencing homeowner perceptions about transportation.

Finally, there is evidence that longer commutes have social, as well as personal, costs. Robert Putnam reported that each additional ten minutes of commute time reduces social capital—things like church-going, civic participation, club attendance—by 10 percent.

As we’ve shown, Americans around the country bear the financial burden of the sprawl tax. But sprawling car dependent development patterns don’t just end up costing us time and money. The long commutes they engender also make us less happy. They’re correlated with lower levels of mental and physical health, and reduce our social capital. Among metropolitan areas, long commutes—and not traffic congestion—are what we find least satisfactory about our transportation systems.

The Week Observed: June 10, 2016

What City Observatory did this week

1. Last week, we introduced the “Sprawl Tax”: the time and money American commuters spend just because their cities are more spread out than they might be. This week, we compare American sprawl to that of our international peers, and it’s not pretty. On average, in 17 European countries plus Canada, households spend 12.8 percent of their income on transportation; in the US, it’s 18 percent. Commuters in those countries spend, on average, about 39 minutes commuting roundtrip per day; the average American spends 51 minutes. We can do better.

2. Inclusionary zoning seems like a win-win, but…: Communities with new development get some affordable housing, and taxpayers don’t have to spend a dime. But as with most cases of free lunch, there’s less here than meets the eye: A meta-analysis of the literature on inclusionary zoning doesn’t find much evidence that one of the main fears about IZ, that it will significantly drive up market prices. But that seems to be because the scale of IZ programs is so small, delivering a relatively pittance of units: 280 per year in New York City, for example, a city of more than 8 million people. Solutions that actually deliver housing on the scale of the need are almost certain to require actual public resources.

3. How many carless workers are there, really? Often, we hear statistics about workers with “access to a car.” But that really just means that someone in their household has a car. If there are three adults and one vehicle, all of them nominally have “access,” but it’s likely that only one can really drive to work. So while, for example, 97.4 percent of all workers in the San Diego metro area have “access” to a car, more than one in ten lives in a household where there are more workers than cars. That’s a distinction worth making.

The week’s must reads

1. At City Observatory, we write a lot about economic segregation and the ways that disadvantaged neighborhoods reduce opportunity for the people who live in them. ButVox might have done us one better: instead of just writing about that, they drew about it, in a piece entitled “How living in a poor neighborhood changes everything about your life.” In an epic piece that combines cartoons and text, Alvin Chang breaks down the latest research about what we know about how segregation acts as a barrier to the American dream, how our cities came to be so segregated to begin with, and what we might do about it.

2. Nikole Hannah-Jones has become perhaps the nation’s foremost journalist on issues of segregation and education. In The New York Times Magazine, she writes an intensely personal and informative essay about her own struggles with choosing whether to send her child to a segregated New York City school—and what happened when the city decided to try to integrate that school with a nearby, much whiter school. For those of you who listened toher two-part report on school segregation in suburban St. Louis for This American Life (and if you haven’t, you should), the fallout is alarmingly similar to a similar situation there.

3. When it comes to transit, the difference between a line on the map and service you can depend on is vast. TransitCenter, using data compiled by the Center for Neighborhood Technology, measured how many people in various cities live close to any kind of transit service, and then how many live close (within half a mile) of high-frequency transit service: a bus or train that comes at least every 15 minutes. Those things turn out to be very different, in many cases: take a look at Detroit and Dallas on the chart below.

New knowledge

1. Sand Hill Road, the famous Silicon Valley venture capital district, is prototypical postwar suburbia. But new research from Richard Florida and Karen King finds that those important investments are happening more and more in urban areas. Today, more than half of all venture capital deals happen in urban neighborhoods, as defined by ZIP codes with more than 2,200 households per square mile. In top venture capital ZIP codes, the average bike-walk-transit commute share is nearly 26 percent, three times higher than the national average. Because venture investments are a leading indicator of future business growth, this is another data point signaling the growing economic importance of cities.

2. Pick two of three: Affordable housing, quality of life, and economic strength. That’s the message of Josh Lehner at the Oregon Office of Economic Analysis, who uses a set of metrics to place the nation’s 100 largest metropolitan areas on a Venn diagram of those three desirable policy outcomes. Just eight metro areas—mostly in the Great Plains—rank in the top half of all three categories. None are in the top 20 in all three. One takeaway: while metros that score well in economic strength and quality of life and build lots of housing do better on affordability than those that don’t build much housing, they still face affordability issues. There’s room to improve on construction, but making sure our below-market housing policies are actually working is also important. (See our post on inclusionary zoning above for more.)

3. We know that America is more urban—or perhaps metropolitan is the better word—than it has ever been. But Hamilton Lombard at the University of Virginia’s StatChat shows that it’s especially larger metropolitan areas that are coming to dominate the residential locations of Americans. In fact, all of the growth in the proportion of people living in metropolitan areas over the last 65 years has come from the growth of people living in metropolitan areas with over a million people. Now, that’s not just because people are all moving to New York or Houston or another huge city—many smaller metropolitan areas have grown to surpass the one million mark themselves. Still, by 2015, nearly six in ten Americans lived in such an area, versus less than three in ten in 1950.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at,, or on Twitter at @cityobs.

How many carless workers are there really?

One of the first posts I ever wrote for City Observatory was called “Undercounting the transit constituency,” and it made a simple point: We dramatically undercount the number of people who depend on public transit to get around.

While we usually talk about transit use in terms of the number of people who ride a bus or train to get to work, most trips aren’t commutes—in fact, all trips aren’t commutes if you’re retired or a full-time student. And so if you count the number of people who use transit for any kind of trip, you get a much bigger number than if you just look at commutes.


But even when it comes to workers, we often overstate the ubiquity of cars. One common way to measure car access, for example, is the percentage of workers with “access to a car.” In practice, “access” just means that someone in your household owns a vehicle.

But that kind of “access” doesn’t always mean much. For example, for several years I lived in a household with three working adults, one of whom owned a car. By the standard measure, all three of us had “access.” But in reality, only one of us could actually use it to commute. Moreover, even the one of us who drove to work really depended, in a meaningful sense, on public transit: if the other two of us hadn’t been able to get to work, get paid, and contribute our share of the rent, the one driver would still be in deep trouble. In other words, a household with at least one worker who doesn’t drive is a household that probably depends on some kind of non-car transportation.

How many workers live in such a household? Fortunately, the American Community Survey makes it easy to tell, by breaking down the number of cars in a household by the number of workers in that household. Here, then, is a chart with the proportion of workers without “access,” as well as the proportion of workers in households that have fewer cars than workers:


In most cases, these numbers are quite different. In the DC metro area, less than six percent of workers live in zero-car households—that is, “lack access to a car.” But three times as many—nearly one in five—live in a household with fewer cars than workers. In San Diego, “access” is nearly universal: just 2.6 percent of workers live in zero-car households. But more than one in ten live in fewer-cars-than-workers households.

And again, these numbers underestimate the number of people who live in households that rely on some kind of non-driving transportation. They don’t count households where each worker has a car, but a retiree, stay-at-home parent, or full-time student, for example.

But even leaving that aside, these numbers help make a better case on how your city’s workforce depends on non-car transportation.

The Week Observed: June 3, 2016

What City Observatory did this week

1. In real life, somehow, Google patented sticky cars so that when their autonomous vehicles hit pedestrians, they won’t get thrown into the air, but will rather be pinned to the vehicle’s hood. In the spirit of helpfulness, we have diagrammed some other solutions Google might want to investigate, including pedestrian airbags that would inflate upon impact. Or, more seriously, we might want to consider how to build cities and prioritize human safety such that all vehicles, including autonomous ones, don’t hit pedestrians at dangerous speeds (or at all) to begin with.

2. A new report from the Urban Institute shows that Washington, DC public schools’ test scores are rising. Even more, the rising scores are much greater than what the changing demographics of the city might predict by themselves. Given the literature on the positive effects of racial and economic integration on education, one possibility is that we are seeing some dividends from the growing middle class presence in the District. More research at the school level is needed to parse whether this is in fact happening.

3. You’ve heard of “congestion costs”—the economic drag of snarled traffic and longer driving times. But what about the costs of land use patterns and transportation policies that require people to live farther from work and use cars to begin with? To help answer that question, we’re introducing the “Sprawl Tax.” In the first post in the series, we calculate that the average commuter in America’s 50 largest metro areas pays nearly $1,400 a year in time and money as a result of urban sprawl—ranging from just $166 in New Orleans to nearly $3,300 in Atlanta.

The week’s must reads

1. Governing looks at what will happen to suburbia in a world where housing demand and jobs are increasingly drawn to cities. Columnist Will Fulton reports on a panel of suburban developers talking about the market case for relatively dense, urban-like master planned communities with apartments and townhomes. But there’s a difference between an urban appearance and urban functionality: Even to the extent these types of developments are allowed outside of cities, will they just be isolated pockets of “drive-to-walk” urbanism?

2. Why are “complete streets” and “traffic calming” a big deal? ProPublica helps make the case with an interactive tool that shows your chance of surviving an impact with a car as a pedestrian at various vehicle speeds. At 20 mph, an average of seven percent of collisions will be fatal; at 40 mph, that number climbs to 45%.

3. There continues to be a lot of excitement about the ways that new technologies might help us solve longstanding urban issues—and not without some justification. But in an interview at Civic Hall, longtime Chicago “civic tech” leader Daniel X. O’Neil lays out why he thinks the movement has failed to deliver on its promises. Rather than developer-led hack nights or hackathons, O’Neil makes the case for bringing people with technological expertise to civic meetings and organizations that already exist, beginning with what they’re working on, and figuring out how to help. One example: the Smart Chicago “Documenters” program, which sends people to record and document public meetings for those who can’t be there.

New knowledge

1. At Planetizen, Todd Litman digs into a claim by New Geography writer Fanis Grammenos that data show that more compact neighborhoods are more expensive in terms of housing and transportation costs than more low-density areas. But Litman points out that the study conflates rental costs with the cost of mortgages—some of which may be based on loans taken out years or decades ago, reflecting outdated prices very different from those a contemporary buyer would be facing. Moreover, judging on a regional level misses that most of the difference between compact and non-compact living depends on neighborhood-level characteristics.

2. We have a new indication that transit is an important component of economic development. A study by Dagney Faulk and Michael Hicks of Ball State University finds a correlation between the existence and extent of fixed-route bus systems in counties in Illinois, Indiana, Michigan, Ohio, Pennsylvania, and Wisconsin and employee turnover rates: the more extensive the bus system, the less turnover. And that, they point out, has economic consequences for both workers and businesses, who save money on finding and training new employees.

3. This paper isn’t new, but it’s new to us, and fun and revealing: Leah Brooks of McGill University and Byron Lutz of the Federal Reserve find that dense development in LA is clustered around long-gone streetcar lines. But that’s not mostly because the city built so much housing when the streetcar lines still existed: It’s because neighborhoods near streetcars became zoned for high-density development, and remained zoned that way after the streetcars disappeared, while other areas remained zoned for low-density development.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at,, or on Twitter at @cityobs.

Sprawl Tax: How the US stacks up internationally

In our first post on the “Sprawl Tax,” we’ve explored the ways that our decisions about how to build American cities have imposed significant costs—in money, time, and quality of life—on all of us. We pay more to drive more, spend more time traveling instead of being at our destinations, and as a result deal with more stress, than we would if our destinations weren’t so widely separated from one another.

It's a good bet that the people who live here have long and expensive commutes. Credit: Kaizer Rangwala, Flickr
It’s a good bet that the people who live here have long and expensive commutes. Credit: Kaizer Rangwala, Flickr


But the sprawl tax isn’t equally costly for everyone. We’ve shown how cities that are more compact enable their residents to spend significantly less time and money on transportation than less compact cities.

And what about beyond our borders? When we compare the typical American to her counterpart in other rich countries, it’s clear that the sprawl tax is a national concern, dragging down our disposable income and free time relative to residents of other countries.  To illustrate the international dimension of the sprawl tax, we draw on data on travel time and transportation spending compiled by Stephen Redding and Matthew Turner in a recent paper on the connections between transportation infrastructure and urban form.

Household Budgets

The table below shows the fraction of household income that people in 15 European countries, Canada, and the US countries spent on transportation from 2005 to 2009, as well as how much time the average worker in each of these countries spends on a daily roundtrip commute. Let’s take the spending side first.

During this time, the average American household spent approximately 18 percent of its budget on transportation. Among the other 16 countries, none spent more than 16 percent, and the average spending level was just 12.8 percent. That means a typical US household spent about five percentage points more of its income on transportation than the residents of other developed countries—which translates to about $1,500 every year.

Here’s how we arrive at this figure: In 2007 (the median year of the estimates presented above) disposable household income in the United States was $31,000 compared to an average of $21,000 in these other nations, according to estimates from the World Bank, based on purchasing power parities that adjust for price differences between countries. If US households spent the same share of their incomes on transportation as did the households in the typical high income country, they would have spent about $1,500 less (.05 * 31,000) on transportation.

Commute Time

The average American worker spent about 51 minutes commuting between home and work and back again—more than all but one other country in the sample. That exception was Canada, where the typical worker spent 63 minutes on their commute—but the rest were lower, all the way down to Portugal, where roundtrip commutes took up just 29 minutes per worker per day. For the other 15 nations examined the average commute time was 39 minutes—about 12 minutes less per day than in the US.

This means that over the course of a year with 250 working days, the typical American commuter spends about 51 more hours (12 minutes times 250 days) commuting to and from their place of work than workers in other high income countries. Valued at $15 per hour, the additional cost of commuting to US workers comes to $770 per worker worker per year.

The International Sprawl Tax

Compared to other high income nations, we spend about $1,500 per household on transportation costs and about $770 per worker more on commute time costs. While there are many reasons for these disparities, in large part, they reflect American cities’ more sprawling development patterns, and the represent a sprawl tax that is paid by Americans.

Achieving scale in affordable housing

There’s little question that housing affordability is a growing problem in many cities around the country. Rents have been rising faster than incomes, especially for low- and moderate-income households.

One of the most widely touted policy responses is “inclusionary zoning,” which requires developers who build new housing to set aside at least a portion (typically 10 to 20 percent) of new units that will be sold or rented for less than the market price.

In many respects, inclusionary zoning seems like a win-win, free lunch policy: by making developers pay for new affordable housing, these new homes don’t directly cost taxpayers a dime. But developers have to make up the cost of these below-market units somewhere, and typically it will be by passing the costs on to the buyers of the market rate units in their development. At least one study* suggests that this results in higher prices. In some cases, cities offer density bonuses to developers to ease the financial burden of constructing below market units, but it’s far from clear that the bonuses cover the additional costs, plus the uncertainty and negotiation that attends these frequently discretionary approval processes adds to costs.

But the larger problem with inclusionary zoning requirements is that they may simply not be up to the scale of the problem. Although dozens of jurisdictions have enacted inclusionary zoning requirements, they simply haven’t produced many units of housing. Consider New York City’s decade-old policy. In many ways, New York ought to be a perfect place for inclusionary zoning, which tends to do best in hot real estate markets. But in one of the nation’s hottest housing markets, in its largest city, inclusionary zoning produced about 2,800 units of affordable housing its its first decade—about 280 per year, in a metropolis of over eight million people.

Credit: Josh Liba, Flickr
Credit: Josh Liba, Flickr


Most inclusionary zoning programs are much smaller, and cities have less leverage with developers because market-rate development is not nearly as profitable as it is in robust markets like New York. A recent compendium of inclusionary zoning programs showed that only six cities nationally operated inclusionary zoning programs that had produced more than 100 units per year, and just one jurisdiction—Montgomery County, Maryland, a high income suburb of Washington, DC—accounted for nearly half of all inclusionary zoning units.

The fundamental problem with inclusionary zoning is also its primary advantage: it asks for, and receives, virtually no taxpayer money. But skimming off the top of developer profits is almost by definition an inadequate source of funding for affordable housing, particularly in places like New York and San Francisco where the need is most acute. All newly built housing is generally a fraction of one percent of a city’s housing market in any given year; housing that triggers inclusionary requirements is less than that; and you then have to reduce that number by 80 to 90 percent to get to the 10 to 20 percent set-aside of affordable units. It’s not an accident that Montgomery County has built so much inclusionary housing, relatively speaking—it’s also built vastly more housing, period, than most cities, nearly doubling its population since 1970. How many inclusionary housing advocates in other parts of the country are eager for such a breakneck pace of development?

Solutions, then, are likely to require some actual tax money. One possibility: dedicate a portion of the added property tax revenue from new real estate construction to subsidizing affordable housing. Portland, Oregon has dedicated about a third of such revenues to affordable housing, and has built more than 2,300 units of affordable housing in one neighborhood near downtown—nearly as much as New York’s affordable housing ordinance has produced in the five boroughs of New York. Portland has dedicated $67 million on tax increment funds over the next decade to support affordable housing in the city’s fast changing neighborhoods. Also, unlike inclusionary zoning, using tax increment financing doesn’t have the undesirable side effect of driving up the price of market rate housing or constricting the supply of market rate units.

Ultimately, a solution that addresses the scale of the nation’s affordability problems will have to tackle the nation’s highly skewed subsidies to homeownership by higher income households. The combination of the mortgage interest deduction, property tax deduction, capital gains exemption and the non-taxation of imputed rents amounts to a federal subsidy to owner-occupied housing on the order of $250 billion per year, most of which goes to the nation’s highest income households. There’s a lot we could do: like expand funding for rental vouchers, which reach only 22 percent of those who qualify. Or tap the capital gains that accrue to homeowners (in substantial part due to the constriction of housing supply by zoning regulations. But it should be clear that feel good programs like inclusionary zoning are mostly a token response to a problem of much more substantial dimension.

* See: Schuetz, Meltzer & Bean, Silver bullet or trojan horse? The effects of inclusionary zoning on local housing markets in the United States, Urban Studies 2011;48(2):297-329. The authors note that most inclusionary zoning programs have had a modest scale relative to housing markets, and conclude: “Results from suburban Boston suggest that IZ has contributed to increased housing prices and lower rates of production during periods of regional house price appreciation. In the San Francisco area, IZ also appears to increase housing prices in times of regional price appreciation, but to decrease prices during cooler regional markets. There is no evidence of a statistically significant effect of IZ on new housing development in the Bay Area.”

Neighborhood change in Philadelphia

Last week, the Pew Charitable Trusts released a fascinating report detailing neighborhood change in Philadelphia over the past decade and a half. “Philadelphia’s Changing Neighborhoods” combines a careful, region-wide analysis of income trends with detailed profiles of individual neighborhoods.

Using tract-level income data, Pew researchers classified Philadelphia neighborhoods according to their median income in 2000 and the increase in their median income between 2000 and the five-year 2010-2014 American Community Survey.

A tract counted as “gentrifying” if its income was below 80 percent of the regionwide average in 2000, but grew by at least 10 percent in real terms by 2014, and its income was then in the top half of all the neighborhoods in the city of Philadelphia.

Credit: Tom Ipri, Flickr
Credit: Tom Ipri, Flickr


A couple of key conclusions emerge from this work.

Though it gets a lot of press attention and generates controversy, gentrification in Philadelphia has been rare, and is concentrated in just a few neighborhoods. By Pew’s reckoning, just 15 of the region’s 371 Census tracts (or about four percent) experienced gentrification.

For low-income neighborhoods, a continuing decline in income was a far more common outcome. In Philadelphia, ten times as many poor neighborhoods (164) experienced real declines in income as experienced gentrification since 2000.

These findings for Philadelphia echo our own analysis of neighborhood change from 1970 through 2010, presented in our report “Lost in Place.” (Lost in Place used poverty rates to identify low income neighborhoods and identified gentrification as a decline in poverty rates to below the national average in formerly high poverty neighborhoods.) Our key conclusion—that gentrification affected just five percent of those living in high poverty neighborhoods, and that most place over high poverty remained poor for decades—is very similar to Pew’s Philadelphia analysis.

Much of the controversy surrounding gentrification stems from the widespread belief that gentrification automatically results in the displacement of long-time neighborhood residents. Implicitly, many people seem to visualize neighborhood change as a kind of zero-sum game: each new resident moving in must mean that one previous resident moved out. The published academic literature, however, mostly fails to find widespread displacement. While the Pew study doesn’t address displacement directly, their research provides an interesting sidelight to this question.

The authors of the study also graciously provided us with unpublished data on the population levels for each of the Census tracts in their study, with data sorted according to their classification of neighborhood change. Like many cities, since 2000 Philadelphia has begun to experience a population increase. Gentrifying neighborhoods played an outsized role in contributing to city population growth. Between 2000 and 2014, the 15 gentrifying neighborhoods grew by 13.4 percent, adding 7,000 new residents. Citywide, the population increase was only 2 percent. These 15 tracts accounted for 22 percent of citywide population growth.

Meanwhile, poor neighborhoods that didn’t gentrify only managed to tread water in terms of population levels. Overall, population in these neighborhoods increased only 0.2 percent between 2000 and 2014; some 40 percent of all poor neighborhoods lost population. The different growth trajectories of poor neighborhoods that don’t gentrify compared to those that do is a good reminder that neighborhood change is seldom a zero-sum game.

Special thanks to Emily Dowdall for sharing the tract level data.

Introducing the Sprawl Tax

If you read the news, you’ve probably seen reports about “congestion costs”: how much American commuters pay, in money and time, when they’re stuck in traffic. It’s fair to say that we’ve got some issues with many of these reports—but they’re popular nonetheless, perhaps because they help quantify a frustration that so many people can relate to.

That got us thinking: What if we could quantify some of these same issues from a city-friendly angle—measuring not the cost of congestion, which suggests that the solution is to build highways until every car is free on its own field of asphalt (a solution, by the way, that we know doesn’t work), but the cost of sprawl: of patterns of building that make people travel longer because their home, work, and other destinations are so physically far from each other?

So this week, we present the “Sprawl Tax”: what it is, how much it costs us, and what we can do about it. We found that the in time and money, American commuters have to pay a sprawl tax of over $107 billion dollars a year in the 50 largest metropolitan areas—nearly $1,400 for the average commuter. That includes the costs of the 3.9 billion additional hours American commuters spend traveling to and from work per year, or about 50 hours per worker.

Credit: Jay Jansheski, Flickr
Credit: Jay Jansheski, Flickr


The method

But first, how did we get those numbers?

To figure out a metropolitan area’s sprawl tax, we began with statistics on the average commute length, in miles, as calculated by the Brookings Institution for their 2015 report, “The growing distance between people and jobs in metropolitan America.”

Our next task was to estimate how much shorter daily commutes might be if metropolitan areas were less sprawling. We know that commute distances vary by metropolitan size (more populous areas tend to have longer average commutes), so we stratified our metropolitan areas into groups for the purposes of estimating how much shorter commutes might be if the regions were more compact. We assigned each metropolitan area a “benchmark” commuting distance based on its population: six miles for areas with 2.5 million or fewer people, and 7.5 miles for areas with more than 2.5 million people. These levels were chosen to ensure that each metropolitan area’s benchmark was within 0.5 miles of the real average commuting distance of another metropolitan area with similar or larger population—that is, a region with a similar population but less sprawl. Both benchmark levels are below those of the metropolitan areas in their category with the shortest average commute to reflect the reality that even the most “compact” American urban regions contain a large amount of sprawl.

The difference between the real average commute length in each metropolitan area and its benchmark became its “excess commuting distance.” We then multiplied this distance by 58.1 cents, the AAA’s estimated cost per mile for a mid-range sedan. Doubling the result gives the total sprawl tax per worker, per day, including both journey to and return from work. Multiplying by the number of workers according to the 2014 one-year American Community Survey figures gives the total sprawl tax per day for the metropolitan area. Finally, multiplying that number by 261 workdays per year gives the total annual sprawl tax for the metropolitan area.

How it adds up

Adding together the sprawl tax for each of the largest 50 metropolitan areas gives $48.5 billion dollars per year—or nearly $630 for every commuter annually. The financial aspect of the sprawl tax varies from $34.7 million in New Orleans to $4.7 billion in Dallas. In per commuter terms, the region with the biggest sprawl tax is Atlanta, where sprawl costs the average commuter more than $1,600 a year. The city with the smallest per capita sprawl tax is New Orleans, at just $60.66 per commuter per year.

But these figures reflect just the out-of-pocket costs of owning and using cars. What if you take time into account? After all, the longer trips forced on commuter by sprawling cities cost money, but they also cost time. Using a similar methodology, we calculated an “excess travel time” index, applying average travel speed for each metropolitan area to its benchmark commute distance, as opposed to its actual commute distance.

The result? In the 50 largest metro areas, sprawl costs commuters 3.9 billion hours per year, or more than 50 hours per year per commuter. That means sprawl makes the average commuter spend over two entire days per year traveling to and from work unnecessarily. The worst offender? Atlanta, where the average commuter loses 112 hours per year, or over four and a half days. In the metro area that performs best, New Orleans, commuters lose just over seven hours per year.

Sprawl tax versus congestion costs

Of course, this is almost by definition an underestimate, since it only counts journeys to work. But most travel is not to or from work, and so adding trips to other destinations—schools, grocery stores, doctor’s offices, and so on—would add significantly to the total. Nor does the sprawl tax measure the other real costs of longer commuters: more pollution, worse physical and mental health outcomes, and the medical and human costs of car crashes.


But even so, the sprawl tax rivals common estimates of congestion costs. To make the sprawl tax more comparable to estimates of congestion costs, which measure time lost in money, we converted our own time costs to dollars. At $15 an hour, that adds up to $58.7 billion. Add that to direct monetary costs ($48.5 billion), and you get $107.2 billion in total sprawl tax in the 50 largest metropolitan areas.

In contrast, INRIX estimated the congestion costs in all metropolitan areas at $124 billion in 2013. Given that only about half of all Americans live in the 50 largest metro areas, it seems likely that if the sprawl tax were calculated for the entire country, it would reach or exceed INRIX’s congestion cost estimate—even though it counts only a small fraction of the total costs of sprawl.

In other words, urban sprawl, and the longer commutes it makes necessary, is a major source of financial and time costs for American workers—and everyone else who has to travel in our sprawling metropolitan areas.

But it’s also a major drag on quality of life. Next, we’ll tackle that side of the sprawl tax.

Schools and economic integration

There’s a growing body of evidence that economic integration—avoiding the separation of rich and poor into distinct neighborhoods—is an important ingredient in promoting widely shared opportunity. The work of Raj Chetty and his colleagues shows that poor kids who grow up in mixed income communities experience far higher rates of economic success than those who live in neighborhoods of concentrated poverty.

We know that one of the principal channels through which this process works is the quality of local schools. Schools in mixed-income neighborhoods tend to have students from both high-income and low-income strata, and benefit from the generally higher levels of parental involvement and resources that higher-income families are able to lavish on schools. Massey and Rothwell have shown that one’s neighbors educational level is nearly half as powerful as one’s own parent’s level of educational attainment in explaining children’s long term economic success, and they hypothesize that much of this effect is transmitted through the school system.

At the same time, the composition and quality of urban schools has been a critical challenge for cities around the country. For decades, as higher income families decamped cities for the suburbs—in part to get access to what were perceived as better schools—urban school districts have faced a triple whammy of declining enrollments, a growing concentration of students from poor families, and declining fiscal resources. The results are chronicled in a new Government Accountability Office report.

GAO compiled data from the National Center for Educational Statistics, and classified schools as low poverty, high poverty, and all other based on the fraction of students in each school eligible for free and reduced-price school lunches.  (Low poverty schools were those where no more than 25 percent of students were eligible; high poverty schools had at least 75 percent of students eligible.  The data show that in little more than a decade the number of students enrolled in low poverty schools has fallen by half (from 39 percent to 20 percent), while the number of students in high poverty schools has increased from 14 percent to 25 percent.  As the GAO report details, students of color are much more likely to attend high poverty schools; 48 percent of black students and 48 percent of Latino students attend high poverty schools, compared to only 8 percent of white students.

Share of K-12 Students Enrolled by Poverty Status of School

2000-01 2005-06 2010-11 2013-14 Change, 2000-01 to 2013-14
Low Poverty 39% 33% 24% 20% -19%
All Other 47% 51% 56% 54% 8%
High Poverty 14% 16% 20% 25% 11%

Source:  GAO, K-12 EDUCATION: Better Use of Information Could Help Agencies Identify Disparities and Address Racial Discrimination, April 2016, GAO-16-345.


In the past couple of decades, as we’ve long noted, there’s been a revival in the fortunes of urban centers. In many cities, population growth has been rekindled, particularly by the movement of well-educated young adults into urban centers. But the long-term resilience of this trend depends on whether young adults will stay in cities once they start having children, a question that hinges directly on the quality of urban schools.

Against this backdrop comes news that test scores in the Washington, DC school system have chalked up some impressive gains in recent years. According to the National Assessment of Educational Progress (NAEP), reading and math scores for fourth and eighth graders have seen significant increases.

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As the population of the District of Columbia has changed in recent years, that’s begun to alter the demographic characteristics of the students in DC schools. More kids are from wealthier and whiter families, fewer are from poor families, immigrant households and families of color. But as we’ve written, the growing wealth of urban centers has not yet entirely converted them into the sort of playgrounds for the white and wealthy that is sometimes supposed: it’s still the case that two out of every three school age kids in the District of Columbia are black, and an even higher fraction of public and charter school students. Some have feared that the increase in test scores is solely a result of these demographic changes—that scores are higher simply because different students are taking the tests.

A new analysis from the Urban Institute challenges that view. After controlling for changes in the race and ethnicity of the student body, they find that scores have increased much faster than can be explained by demographic changes. The analysis also concludes that the gains in test scores can’t be explained solely by changes in parental educational levels—one key measure of socioeconomic status. The data show gains in scores in both conventional public schools, and also in charter schools. The Urban Institute findings echo an earlier analysis by District of Columbia’s Office of Revenue Analysis, that shows that adjusting for race and ethnicity does little to change increase in test scores.

While the Urban Institute study confirms that test score increases are real, it doesn’t answer the question of why scores improved. There have been a series of changes enacted in the District in the past decade: new educational management under Michelle Rhee and her successors, a stronger Mayor role in school governance, and increased resources and more widespread adoption of charters.

And while the increase in educational scores isn’t simply a product of the district’s changing population, it could well be that gentrification in the district has a synergistic or interactive effect with these other forces. Education reform measures in the district may be more successful if they’re undertaken with a slightly different mix of students, in schools where a higher fraction of families have the resources to support learning and engage in the schools. They may also be more politically effective in holding the city and schools accountable for results.

While the data gathered so far can’t definitively answer these questions, the noticeable improvement in educational results in the District of Columbia is an encouraging sign for the city’s future growth. It suggests that city schools can improve, and that, in turn, makes the city a more attractive home for young families who might have felt compelled to move to suburbs to get better school quality. And for city students who otherwise might have been isolated in economically segregated, under-performing schools, it means that they have better educational, and in the long run economic opportunities. We’re looking forward to future research that can help measure and sort out these explanations.