Here’s a provocative proposal for getting more affordable housing, especially in rapidly changing, opportunity neighborhoods

In part I of this series we laid out a key challenge to housing affordability described by Washington developer Rob Stewart based on his experience working in development in the Washington DC area.  Today we turn to a possible proposal, a kind of “third way” approach to housing affordability.

Sometimes it seems like there are only two schools of thought when it comes to improving housing affordability, and they seem to be in diametric opposition to one another. There’s the market/supply side that says we need to adopt policies that encourage the private sector to build more housing, because more supply will tend to hold down, or even drive down rents. There’s the subsidized housing side that says the best (or only) way to provide affordable housing is to have the public sector subsidize its construction (through non-profits) or by requiring developers to build it as condition for building new housing (inclusionary zoning). This is of course a bit of a simplification: both strategies are important.

But we heard recently of a new proposal being developed in Washington that doesn’t fall neatly into either of these two schools of thought.  It recognizes that the market won’t fully provide for affordability, but also argues that the combination of inclusionary zoning requirements and subsidized (but expensive) new construction can’t provide enough units, and especially in the right places, to promote affordability and opportunity.

Stewart and his firm are working with the Federal City Council in Washington DC on a proposal they call the Washington Housing Initiative (WHI), which aims to create more affordable housing units, more quickly, in neighborhoods that are on the cusp of change. The essential idea is to use a combination of private investment and public funds to acquire existing housing, and maintain its availability for low and moderate income households. Buying existing housing units is dramatically less expensive that building new units, and can be done much more quickly.

The details of the initiative are spelled out in white papers on the WHI website.

There WHI aims to have a lower cost of capital and lower operating cost that traditional affordable housing approaches. A key economy comes from taking a “fund” approach rather than a “project” approach to structuring financing.  In most affordable housing projects, funding is arranged on a project-by-project basis, with each project consisting of a different set of actors, and funding sources, and with the added complexity of construction financing and site-specific risk.  The WHI would be structured as a pooled fund, with financing not tied to individual projects, but spread across many projects. Because the fund is buying existing buildings, construction lending isn’t needed and other risk factors (approval or construction delays) are minimized. A fund, especially one led by private management, could be quick and nimble, and minimize overhead costs of acquiring properties.

The WHI seems tailor-made for cities like Washington that are concerned about gentrification cutting into the supply of affordable housing and leading to neighborhoods that lose their mixed income character as the existing housing stock is upgraded. In theory, what WHI could do is purchase housing in neighborhoods that are likely to experience redevelopment and upgrading, and maintain a portion of these existing units for low and moderate income households. This would have the direct benefit of maintaining at least some income diversity in these neighborhoods as they develop, and as Stewart points out, would be far less costly than building entirely new affordable units in these neighborhoods.

A fair argument could be made that this approach, unlike subsidizing new construction, doesn’t directly add to the supply of housing. While it may preserve some units for low or moderate income households, it doesn’t increase housing supply which is a key to holding down rent increases market wide. That’s a reasonable concern, but there are at least two mitigating factors:  first, the higher income households that don’t end up occupying the units owned by WHI are a viable source of demand for other housing in the region, including especially new market rate housing. To the extent that private developers don’t buy, remodel, and raise rents on existing housing, they are more likely to pursue private development–so the WHI may effectively reallocate some of the demand for housing to new units. They key then will be, as we well know, whether local zoning codes allow increased development in desirable neighborhoods.

The Washington Housing Initiative offers a provocative third way to tackle housing affordability, not relying solely on expanding the supply of housing via the market, and overcoming some of the cost, speed, and segregation problems associated with our traditional approaches to building new affordable housing in cities. Ultimately, it is likely to be a complement to, rather than a substitute for these other two approaches.  If communities are concerned about the loss of income diversity in redeveloping neighborhoods–as they should be–this could be a valuable tool for keeping a portion of the housing stock affordable to low and moderate income households, and doing so more quickly and cost-effectively than by building new affordable housing units. That said, whether the strategy will help with overall affordability depends on whether local land use and development approval standards allow for the demand for housing by higher income households who might have otherwise occupied the units purchase by WHI to be met through new market rate development. We’ll be watching to see how this plays out.

Coping with the nation’s shortage of cities is a key factor in the Portland housing market in 2019

On January 9, I was invited to talk to the annual housing outlook seminar convened by HFO Oregon.  A video of my remarks is available on YouTube.

My presentation addressed a number of themes that will be familiar to City Observatory readers.  Housing markets around the country are increasingly being shaped by the growing demand for urban living. Cities that offer great urban amenities are facing rising demand, while suburbs, exurbs and weaker market urban cores are struggling.

This demand for cities is underpinned in major part by a generational shift in preference for city living over more distant suburban locations, and has manifested itself in a rising relative price for real estate in and near the urban core.

In turn, the growing preference for urban locations of the young and well-educated has attracted employment growth to urban centers. Because the critical resource for fast growing technology and professional service firms is a ready supply of well-educated workers, location decisions of these firms are increasingly dictated by the H.R. department. As we’ve documented at City Observatory, this has led to substantial and widespread increases in employment in city centers, effectively reversing a decades-old trend of employment decentralization.

Underneath the growing demand for urban living are many of the attributes well-understood by urbanists. For example, our research, and that of others shows that consumers are paying substantial and increasing premium to live in walkable locations. In addition, places that enable residents to drive less also enable households to save money.  We estimate that the lower rate of daily driving in Portland compared to the typical large US city produces annual savings of more than $1 billion for local consumers, a Green Dividend that helps fuel the local economy.

The mismatch between the growing demand of urban living and a relatively slowly changing supply of urban housing has been the principal sources of housing affordability problems in the past few years.  That cycle has plainly played out in the Portland market.  While the region had been adding between 4,000 and 5,000 apartments per year in the first decade of the 2000s (the blue line on the chart below), new construction fell off a cliff during the Great Recession. But due to the continued attractiveness of the Portland region, more people kept moving in (the red line). In the face of rising demand, the supply drought produced a predictable increase in rents.

But if the past three years have demonstrated anything it is that supply and demand really work in the housing market.  New apartment completions have rebounded, and the region completed close to 10,000 apartments in 2017.  The additional supply has, in turn, caused the rate of rent increases, which was in the double-digits just a few years ago, to fall below zero.  Portland’s experience is powerful evidence that increasing housing supply has a significant effect on rental inflation.

In 2019, and in the years that follow, our central challenge will be figuring out how to build more housing in the kind of amenity- and opportunity-rich, diverse, bikeable, walkable and transit-served neighborhoods that Americans are increasingly demanding. If we do it right, there’s a tremendous opportunity not only to tackle our problems of housing affordability, but to build neighborhoods that are more diverse and inclusive.

How can affordable housing help minimize, rather than perpetuate, income segregation?

At City Observatory, we’ve long focused on the challenge of concentrated poverty, starting with our first report Lost in Place, in 2014.  American metropolitan areas have become more segregated by income, and the results of concentrated poverty have been devastating for families that live in these neighobrhoods and especially for the children who grow up in them.

Many factors contribute to the rise of economic segregation. Exclusionary suburbs with widespread single family zoning (and apartment bans) have made it difficult or impossible to build affordable housing in high opportunity neighborhoods. Less noticed is the fact that much of the affordable housing that is built tends to be built in low income neighborhoods, often because there is a political constituency for improved affordable housing in these neighborhoods, and also because there are local non-profit organizations that depend on housing subsidies for their financial existence.

We recently heard a compelling presentation from Rob Stewart, Executive Vice Chairman of JBG Smith, a Washington real estate firm, speaking at the Brookings Institution convening on transformative placemaking. Stewart’s firm has been at the leading edge of urban development in the DC area for years–it’s the owner of the Crystal City location picked by Amazon for one of its two HQ2’s. Despite the region’s success, Stewart is frank about the problems that remain.

I’ve observed over that period that the system we operate in really does promote the segregation of our community by income and that it has over that period grown to drive the cost of housing and other uses in the urban environment up dramatically.  So it’s made our region, as successful as it is, that much more expensive and that much more inhospitable to people of lesser means. So for the next thirty years, I hope our firm is about the business of trying to make these places more inclusive and more diverse.

Stewart has his own diagnosis of the policies that contribute to segregation, in particular the disparate patterns of public and private sector investment in housing, and the unfortunate tendency of subsidies for affordable housing to flow to expensive projects in already poor neighobrhoods.

I’ll talk about affordable housing and some of the policies that are at work and how they’re counterproductive and inefficient. Fundamentally, what’s happened if you look at our region,and I’m assuming it has parallels in other parts of the country, is you have public dollars flowing into neighborhoods that are struggling and you have private dollars flowing into neighborhoods that are improving and experiencing gentrification.

The public dollars are working at odds with the private dollars and the private dollars dwarf the public dollars. Then you have systems, like low income housing tax credits and housing choice vouchers that ironically serve to further concentrate poverty.
Low income housing tax credit programs are fundamentally complex, difficult, time-consuming and they’re the least desirable buyer of a property. Fundamentally they are going to properties that are already deeply concentrated in terms of poverty.  They also revolve around building new units or doing massive renovation to existing units. New units are obviously much more expensive than existing units that are in good condition so it would be far more effective if you’re concerned about use of resources, to spend the money buying existing units in good neighborhoods rather than building brand new units in bad neighborhoods.

These concerns echo those offered by the University of Minnesota’s Myron Orfield and his colleagues, who have that our current system of housing subsidies  incentivizes and rewards developments in dense urban areas and has been encouraged by a sophisticated “poverty housing” industry with a firm stake certain neighborhoods. While in theory, housing choice vouchers (also known as Section 8), ought to open open housing choice to a range of neighborhoods. But in practice that hasn’t been the case.  In Stewart’s view it’s due in part to the refusal of many landlords to accept vouchers (and the lack of laws preventing this discrimination, but also the tendency of housing authorities to allocate them in ways that lead them to be used primarily in poor neighborhoods.

Stewart also argues that inclusionary zoning turns out to be an expensive and inefficient way of creating a relative handful of affordable housing units, and that–as we’ve suggested at City Observatory–it tends to discourage investment in housing, driving up rents across the marketplace.

Last, if you look at inclusionary zoning, which is in theory about producing housing in good neighborhoods, that’s all about producing brand new units in the most expensive buildings in any market—the brand new luxury unit which is at least double or triple what it would cost to buy a unit in that same neighborhood. So that is honestly fundamental waste of those resources. It also drives up the cost of housing in that neighborhood by making it that much more expensive to build the new units which means rents go up, and the renter that pays those rents is usually a middle income demographic, so your fundamentally tagging the middle income demographic with the needs of funding housing for low income residents.

So here’s the challenge:  our current affordable housing programs produce too few units to make a big dent in housing affordability, and the units they produce tend to be disproportionately built in neighborhoods where they reinforce, rather than reduce, patterns of concentrated poverty.  What’s to be done? It turns out that Stewart has a proposal, which we’ll explore in part II of this commentary.

Editor’s note: This post has been revised to correct formatting errors in the originally published version.

A New DIY toolkit helps neighborhoods and cities measure the state of their civic commons

At City Observatory, we’re all about metrics, and especially keen on metrics that help us better understand the function of cities. We’ve mapped everything from the location and changing status of the nation’s neighborhoods of concentrated poverty to identifying the neighborhoods with the highest levels of racial/ethnic and income diversity.  We’ve created our storefront index, a kind of quantitative version of Jane Jacobs observations about the way stores, shops and restaurants enliven the streetscape and promote social capital. But we recognize that we’ve just scratched the surface.

There’s much more that can be done on the ground to comprehensively assess how a neighborhood is doing, and to analyze the effectiveness of investments and programs. Our friends at Reimagining the Civic Commons have just released a new toolkit that adds to the growing arsenal that community leaders can use to better measure and understand the state of the public realm. The “Measure What Matters” DIY toolkit.

At the heart of the toolkit are two key elements:  observational mapping and intercept surveys. The two elements provide complementary approaches and information to gathering data.  Observational mapping is passive and extensive and provides a broad view of activity, while the intercept survey is more active and probes for more detailed qualitative understanding of who’s using public space and why.

The toolkit’s observational mapping section provides worksheets and instructions for systematically collecting data about who visits a site throughout the day, simply by observing. The data include how many people are visiting a site and when, the kinds of activities they engage in, whether they’re interacting with others around them. It also collects demographic data such as age and ethnicity.

The second part of the toolkit is the intercept survey.  Here you’ll find an explanation of the methodology for organizing and conducting a reliable survey of site users, gathering data about their demographics, and their attitudes about the place you’re studying. In addition, the intercept survey helps better understand how a particular part of the public realm is used by people who live in different places. Together, the two approaches provide complementary perspectives.

Detroit’s Alexa Bush has an essay at Medium introducing the toolkit and illustrating how its been used to assess neighborhood conditions and opportunities in her city. Bush describes how they’ve deployed the toolkit in Detroit’s Fitzgerald neighborhood, and how it serves as a foundation for building local engagement:

Ultimately, our goal is to involve the community in the major decisions that shape how investment takes place in the neighborhood in ways that equip residents to make these choices. Measuring impact with residents at our side has helped us pivot from fear to defining the concrete problems, challenges and potential solutions that include sharing the benefits of investment and change with the community.

Reimagining the Civic Commons is a multi-year initiative sponsored by a collaboration of national foundations, investing in five U.S. cities to support efforts that revitalize and connect civic assets, and build learning about that process. The initiative is focused on four principal goals: civic engagement, socioeconomic mixing, environmental sustainability and value creation. This toolkit is part of an effort to broaden the project’s impact by sharing the tools developed in these cities

Full disclosure:  City Observatory has assisted in gathering and analyzing neighborhood level socioeconomic and demographic data for the Reimagining the Civic Commons project.

It’s a long road to redressing inequality

A half-century ago, Dr. Martin Luther King, Jr. addressed the stilted rhetoric used use to talk about public spending to promote the social good:

Whenever the government provides opportunities in privileges for white people and rich people they call it “subsidized” when they do it for Negro and poor people they call it “welfare.” The fact that is the everybody in this country lives on welfare. Suburbia was built with federally subsidized credit. And highways that take our white brothers out to the suburbs were built with federally subsidized money to the tune of 90 percent. Everybody is on welfare in this country. The problem is that we all to often have socialism for the rich and rugged free enterprise capitalism for the poor. That’s the problem.

“The Minister to the Valley,” February 23, 1968, From the archives of the SCLC.*

At City Observatory, we can add nothing to the eloquence of his analysis.  What we can do, in our fashion, is to simply add two data points that confirm that, fifty years later, too little has changed in this regard.

Today, the federal government spends nearly a quarter of a trillion dollars on housing subsidies each year, in the form of tax breaks for mortgage interest, property taxes, capital gains, and the exclusion of imputed rental income.  Nearly all of the value of this goes to the nation’s highest income households. Meanwhile, only about 20 percent of low income households eligible for rent subsidies get anything from a chronically under-funded voucher program.

Over the past decade, Congress has repeatedly bailed out the Highway Trust Fund with general fund monies, to the tune of $140 billion.  We continue to build new highways, chiefly for the benefit of those who own cars and live in suburbs, while transit systems that provide critical access to the poor are falling apart.

The problems that Dr. King spoke to then are still with us today. His words are an inspiration to our continued efforts to redress these inequities and build a fairer, more just world.

* A hat tip to @kaseyklimes for reminding us of the quotation and sleuthing its provenance.

Data shows Portland’s scooter experiment worked. Maybe it’s time to critically appraise the failed 110 year experiment with cars.

Starting in July, Portland, Oregon began allowing fleets of e-scooters, as an experiment, to see how they would work. Portland’s Bureau of Transportation (PBOT) just released its 36-page report on the city’s 120-day trial of allowing fleets of electric scooters on the city’s streets.  It’s profusely illustrated–it looks more like a sales brochure than a government report–and it has mostly favorable things to say about the city’s recent experience with scooters.

In four months, scooters went from nothing, to providing more an average of 5,800 trips per day.  About 30 percent of city residents rode the scooters at least once during the trial period.  The city estimates that roughly a third of scooter trips substituted for private car trips, helping to reduce traffic congestion.  Scooters also tended to be used most during peak travel hours, with 20 percent of all trips taking place between 3pm and 6pm on weekdays. City surveys indicate that six percent of scooter users reported getting rid of a private car as a result of scooter availability. In addition, the city’s survey’s also suggest that scooters effectively expanded the market for non-automobile transportation by attracting users who haven’t ridden bicycles for transportation. The survey also shows that 60 percent of Portlanders have a positive or somewhat positive view of scooters. As transportation innovations go, this seems like a pretty wild success.

The city required scooter companies to share their per ride data, enabling PBOT to produce a detailed map showing where the 700,000 trips took place.  Rides occurred all over the city, but were especially concentrated in the downtown area. PBOT made this data available on line with a interactive map that lets you see how many rides occurred in different neighborhoods.

Scooters are a clean, green, fiscally-responsible alternative for making lots of short trips in dense urban areas.  They’re overwhelmingly popular.  Thanks to GPS, web-based applications and data sharing requirements, we have a clear picture of where and how scooters are used.  If this is a data-driven process, the data clearly make a case for bringing scooters back–and widely expanding the program as well. Which is something that the Portland Bureau of Transportation indicates it will do later this year–although unfortunately, and inexplicably, only as a second trial period.

So that’s all to the good:  The city regulated scooters, took a close and careful look at their impacts, and found that they work.  But that got us thinking:  Why are we applying this standard of scrutiny just to one tiny element of our transportation system.  Why isn’t the Portland Bureau of Transportation taking this same careful, deliberate and detailed approach to analyzing all aspects of our transportation, especially the dominant mode of transportation:  private automobiles?

The Double Standard:  Why aren’t we holding cars to the standard applied to scooters?

We plainly aren’t applying the same standards to cars that the city has applied to scooters. That’s abundantly clear both in the framing of the report, and in the substance of the questions asked. Consider the first paragraph of the report’s executive summary:

E-scooters emerged in 2017 as a new shared mobility service in the United States. Less than a year after their debut, e-scooters were operating in 65 U.S. cities. They did not arrive without disruption; companies Bird and Lime began operations in 43 markets without government permits or consent. Several cities responded with cease and desist orders, fines, or both. Portland chose a different, proactive path, creating the E-Scooter Pilot Program. With the pilot, the Portland Bureau of Transportation (PBOT) focused on giving Portlanders access to this new transportation option while also ensuring that e-scooters would support Portland’s fundamental policy values

There’s an almost insufferable tone of condescension about the idea Portlanders have any right to use scooters on the public streets.  It is as if the mandarins of the Portland Bureau of Transportation have deigned, for a brief period, to suffer to allow the presence of these scooters on their streets. The report’s opening paragraph sets the tone:  while scooter companies set up shop without asking permission in many cities, Portland strictly regulated their presence. And, as if to remove all doubts about the bureau’s hegemony of public streets, it terminated the operation of scooters entirely on November 20. The New York Times applauded Portland’s aggressive approach to regulating the entry of scooter companies into the city.  Its report signals that it PBOT is pleased with the performance of these companies and that it will suffer to allow that they may return for another trial period in the coming year.

One is left to wonder, at what point was it determined that small, personal two-wheeled electric vehicles required special bureaucratic dispensation (and per trip fees paid to the city), and that large gas guzzling, polluting, frequently deadly four-wheeled ones were allowed to roam free in unlimited numbers?

What if BPOT took a similar attitude, not to the paltry 2,000 scooters that operated on city streets for a few months, but instead at the hundreds of thousands of motor vehicles that have inundated the city over the past century? We’re waiting for a similarly incisive assessment of the city’s policy of allowing these vehicles to run rampant in the public realm.  If we applied even a fraction of the scrutiny to cars that PBOT has applied to scooters, and applied even a tenth as stringent a standard to their performance, we’d be looking to have radical change. When will PBOT do a similarly rigorous assessment of the climate, health and safety, fiscal, equity and land use impacts of unfettered car use on the public streets?

Let’s focus just one issue:  How much do scooters and cars pay to use city streets?  The PBOT report indicates that the city levies a charge of 25 cents per trip for each scooter.  The average length of a scooter journey, according to PBOT, is 1.1 miles.  This means that scooter rider is paying 21.8 cents per mile to use city streets.

How does that compare to what people pay to drive cars?  Let’s take the gas tax, which is the major source of state and local road finance.  Oregon’s gas tax is currently 30 cents per gallon, and the City of Portland has a gas tax of 10 cents per gallon.  With the average vehicle getting about 20 miles per gallon, this means that the average automobile pays about 2 cents per mile (40 cents divided by 20 miles per gallon equals 2 cents per mile).  And it has to be added that these are total taxes paid to city and state–the city receives only a fraction of the state imposed gas tax to pay for its streets.  Bottom line: Scooter riders pay ten times as much in fees per mile traveled on city streets as car drivers pay in gas taxes.

And as we’ve pointed out before, its vastly unfair to charge scooters more than cars.  Whether proportionate to vehicle value, the space vehicles take up on the roadway (in use and when parked) weight (and therefore road wear and maintenance costs), or pollution generated, cars should be paying anywhere from 10 to 1000 times more for use of the roadway. Instead, they pay ten times less.

Why doesn’t PBOT apply the same approach to private cars that it has to scooters?  Why doesn’t it impose a cap on the number of cars in the city, to be sure that cars don’t overwhelm the street system?  Why doesn’t it impose a fee of 20 cents per mile on car trips?  Why doesn’t it require that cars operating in the city have electronic speed governors that keep vehicles from being operated at unsafe and illegal speeds? Why doesn’t it require that every trip by automobile be reported to a centralized database operated by PBOT:  After all, if we can insist that the operators of 35 pound, $500 scooters share detailed telemetry on every trip taken in the city, why shouldn’t we have similar data about the two-ton, $20,000 or $50,000 vehicles.

There’s a clear double standard here:  Scooters have been put to the test, and they’ve passed.  Scooter operators have provided detailed data, have electronically limited vehicle speeds, reduced traffic and pollution, and paid the city generously for city streets. When will PBOT ask the same questions or impose the same standards on our car-dominated transportation system? We’re really looking forward to that report.

An obsession with gentrification obscures the urban problem: concentrated poverty

Editor’s Note:  We’re again pleased to offer a guest commentary from Akron Planning Director Jason Segedy, who  has some keen insights on cities, poverty and neighborhood change. Like City Observatory, Segedy puts great stock in the longer argument made in Alan Mallach’s book “The Divided City.” Jason calls it a must-read, and we put it on your summer reading list for 2018. In a series of tweets last month, Segedy reflected on his experience, the state of the debate around cities, and Mallach’s book. With his permission, we’ve edited his tweetstorm into the following commentary.

by Jason Segedy

The national urban policy conversation, particularly with regards to affordability, housing policy, and gentrification, is completely dominated by voices from the superstar cities on the coasts.

Mallach’s book reminds us that while downtowns and some favored close-in neighborhoods may be thriving, the vast majority of urban neighborhoods in our older post-industrial cities are getting worse, and experiencing visible, potentially irreversible decline.

There are articles and blog posts aplenty focusing on the (very real) improvements in a small handful of revitalizing neighborhoods; running the ideological gamut from mindless chamber of commerce boosterism, to far-left gentrification hand-waving.

But it is all-too rare to read anything about the equally very real, and worsening, problems of poverty, disinvestment, and segregation that affect exponentially more urban residents in these cities.

We obsess about revitalization, while ignoring “displacement by decline”

We hear a lot about the potential evils of hipsters, coffee shops, and bicycles, along with murky allegations of displacement by gentrification, levied by activists and academics.

We hear far less about the primarily black middle class residents fleeing previously stable urban neighborhoods for the suburbs each year (displacement by decline), while the poor are left behind in crumbling communities, trapped in concentrated generational poverty.

Cities are dynamic, fluid, and geographically diverse places, which are revitalizing in some areas and declining in others. The relative proportion of resurgence to decay varies greatly from city to city. In this part of the country, that proportion is less than 0.10.

Not enough people are connecting the dots between the woeful and declining state of many urban neighborhoods, and our nation’s economic future: not just trends like globalization and automation, but traditionally stable sectors like eds and meds that have kept cities afloat. How will the “Eds and Meds” economic base fare as the 21st century wears on, particularly in light of demographic changes, and spiraling, out-of-control education and health care costs? Is an economy that runs on these sectors really enough to sustain equitable economic growth? It is nice to see someone (Mallach) ask, and at least begin to wrestle with, these questions. Too few people are.

How about race and concentrated poverty? The untold urban story of this still-young century is how segregation, urban decline, abandonment, and disinvestment has never been worse in the hundreds of neighborhoods that are overwhelmingly black and poor.

Our society has largely given up on even talking about racial integration and the importance of mixed-income neighborhoods, let alone actually doing anything to create them.

And I’m not just talking about people on the political right. Today, there is a palpable cynicism and fatalism, even among left-leaning urbanists, which simply believes that it cannot be done. Segregation now, segregation tomorrow, segregation forever. Across the political spectrum, we seem to have resigned ourselves to racial segregation. And many of the people who say they believe it is important, don’t live it. Integration for thee, but not for me.

People on the neoliberal center-left have largely given up on any type of economic integration that involves creating opportunities for the poor to live in better housing, closer to jobs, in more affluent suburbs.

Meanwhile, people on the far-left are increasingly hostile to the notion that the affluent should move back to the urban core to live near the poor. It’s getting harder and harder to know what leftists actually want to see happen in our cities – other than unhappiness.

Gentrification has become a useless word

Which brings us to gentrification. It has become a useless word. Words lose their value when they no longer have an agreed-upon meaning. No one knows what the hell that word even means anymore. But we know this much: neighborhoods described as “gentrifying” are rarely the most distressed areas of a city, particularly where demolition has unraveled a neighborhood’s fabric, and where few attractive homes or buildings of any kind remain.

And, as Mallach points out: “predominately African-American neighborhoods are less, not more, likely to experience gentrification than largely white, working-class neighborhoods.”

Instead, gentrification typically follows a pattern of black avoidance. People like @petesaunders3 make the point that black neighborhoods continue to be bypassed by reinvestment, and that displacement by decline is a far larger problem than displacement by gentrification.

And there’s this. . .neighborhoods change. They always have. They always will. The Nepali neighborhood used to be the Italian neighborhood. The black neighborhood used to be the white neighborhood. The poor neighborhood used to be the middle-class neighborhood.

Neighborhood change should be managed in ways that promote justice and equity, but the change itself will not stop. Physically and socioeconomically speaking, most neighborhoods are somewhere along a continuum between getting better and getting worse.

The way forward

So how precisely do we build stronger, more equitable neighborhoods and cities? Mallach is smart enough and pragmatic enough to acknowledge that neither he, nor anyone else, has all of the answers. But he leaves us with some solid and wise thoughts about a path forward for our older post-industrial cities.

He addresses the “U-Haul” school of urban policy, which gives up on our foundering places altogether, encouraging everyone to abandon their friends, family, and community, and head for greener pastures. While this can be a solid course of action for an individual, it is suicidal as a urban development strategy. When people with more opportunities leave, the rest of the population, now poorer and more uneducated, and the place, with its worsening problems, remains. Mallach:

As a nation, we must decide what we want the future of the cities to be. Our present course relegates many cities to a sort of limbo, where, despite their best efforts, they drift gradually downward, losing jobs, becoming gradually poor, and offering progressively less hope for those who live there. Is that the only thing that we have for the hundreds of small cities and towns of the American heartland?

That would be, in my opinion tragic. These cities are not disposable places, roadkill on the highway of capitalist creative destruction. They are real places with Rich histories, full of real people they have real assets.

How do we harness these assets? How do we create more of them? Mallach counsels a kind of focused, visionary pragmatism that avoids the two extremes of timid incrementalism, and radical utopianism.

Of the two extremes, given the history of urban policy in this country, he makes the case that utopian thinking may be worse, arguing that incrementalists, for the most part, do no harm. Utopians often do, or would if they could. Mallach (his quote is worth reading):

I have little tolerance with the line of argument that holds that all efforts are in vain as long as the underlying economic or political system falls short of the ideal. Representative democracy and the capitalist economic system, for better or worse, are two conjoined frameworks that have defined the reality of American life for well over a century and are likely to do so for the next century as well, assuming Western Civilization survives. Moreover, should they be replaced by anything fundamentally different, whatever that is will probably be much worse. Finally, although I share many people’s beliefs that thing many things about American society needs fundamental change, including the racism that remains so resistant to change, I see radical change as being at best a distant prospect. I do not believe that we should forgo the opportunities that exist to change the lives of people in communities in important ways, even while Injustice and racism may continue to exist, in the interest of a far-off and most probably illusory better society. That posture is a luxury of the affluent that the poor cannot afford.

In order to become effective change agents, Mallach argues that city leaders must step back from daily crises, difficult as that sometimes is, and think about systemic issues and power structures in their communities.

Lack of money and federal support are not the primary impediments to their success; lack of strategic thinking, and lack of willingness to change the status quo are. Top-down solutions from Washington are neither forthcoming, nor desirable. People who believe that massive federal programs are the solution are making the mistake of thinking that money equals progress. All money equals, he says, is money.

Change will only happen if the networks of people who make local decisions want it to happen, or can be persuaded to let it happen, regardless of what the federal government does.

The ideological fluidity and freedom of thought which “The Divided City” exhibits is like a breath of fresh air in today’s toxic and stultifying political environment. Most of us recognize that the political right checked out of the urban conversation a long time ago. With a few notable and laudable exceptions, the right vacillates between calculated indifference and unabashed hatred for cities.

The political left, meanwhile, spellbound by the Dada performance art that bills itself as “The Resistance” in this absurd age of Trump, staggers drunkenly between a wonky and bloodless urbanism, and an increasingly strident and unhinged leftism.

As with so many other vexing issues, neither of these approaches are what our cities need. This book doesn’t have all of the answers, but it will cause you to rethink what you know to be true about our cities and their neighborhoods, and about how best to help them.

The Oregon Constitution exempts refunds and debt repayment from the limits on how revenue from taxing cars and fuel is spent

Note: What follows is a hypothesis and a question. What’s presented here is not a legal opinion, nor does it purport to be one. This commentary raises the question–which deserves a thorough examination in the legal process–as to what restrictions attach to the expenditure of funds raised by taxing cars and fuel in Oregon.

The 2019 session of the Oregon Legislature will convene shortly, and when it does, its expected to be hard at work on what’s called a “Clean Energy Jobs” bill.  A key aim of the bill is to effectively put a price a carbon pollution as a way of achieving the state’s adopted legislative goal of reducing greenhouse gas emissions. The bill would produce some additional revenues that could be used to help facilitate the transition to a lower carbon economy. But there seems to be a hitch: At least some of the revenue from the bill would be paid from taxes levied (at least indirectly) on automobile fuel, and there’s a widespread belief that such fuel taxes must be spent on roads. It would be a perverse and self-defeating policy if the Oregon Constitution were held to require that carbon fees be plowed back into road construction.

This belief apparently stems from a particular provision of the Oregon constitution which generally requires that funds raised from taxing cars or fuel must be spent on maintaining or improving roads. Sightline Institute’s Kristin Eberhard repeated this commonly accepted position in a depressing article about the prospects for using carbon tax revenues to encourage more environmentally benign forms of transportation:

Oregon’s Constitution holds a rude surprise for climate crusaders: Article IX prevents the state from investing revenue from transportation sector polluters—nearly half the potential climate pollution revenue in Oregon—in solar panels, bikes, and buses. The constitution funnels pollution revenue exclusively into the Highway Fund.

The particular provision in question is Section IX of the Oregon Constitution, which reads:

Section 3a. Use of revenue from taxes on motor vehicle use and fuel; legislative review of allocation of taxes between vehicle classes. (1) Except as provided in subsection (2) of this section, revenue from the following shall be used exclusively for the construction, reconstruction, improvement, repair, maintenance, operation and use of public highways, roads, streets and roadside rest areas in this state: (a) Any tax levied on, with respect to, or measured by the storage, withdrawal, use, sale, distribution, importation or receipt of motor vehicle fuel or any other product used for the propulsion of motor vehicles . . .

While people focus on the narrow restrictions contained in paragraph 1 of this section of the Constitution, they generally ignored the fact that the Constitution carves out clear exceptions to this restriction (as shown in the bolded language in the paragraph above).   The exceptions are for two broad classes of expenditure:  refunds and repayment of debts.  Let’s take a close look at each of the exceptions in subsection 2, and how they might provide a way to realize greater flexibility in using road or carbon taxes to achieve environmental objectives.

Refunds and Credits

Article IX, Section 3a, subsection 2,  provides that the the restricted funds may be used for “refunds or credits.”

(2) Revenues described in subsection (1) of this section:

(a) May also be used for the cost of administration and any refunds or credits authorized by law.

A straightforward reading of this section is that the Legislature may authorize that these monies be refunded to Oregonians according to some system provided for by law. The Legislature has routinely enacted a wide variety of tax credits, to incentivize and reward behavior and to achieve broad policy ends. For example, in 2015, the state issued $69 million in refundable earned income and working family tax credits to more than 250,000 households statewide. The refundable nature of these credits meant that in many cases individual households got more money back from the state than they paid in taxes.

In the context of discussions about a carbon tax or revenue from pricing carbon emission permits, this section of the Oregon constitution seems to clearly allow the legislature wide discretion to provide for rebates or credits of these funds to Oregonians. So, for example, the Legislature might authorize a uniform per person “carbon dividend” to be paid to all Oregonians out of the revenues from a carbon tax. Gordon Levitt and Tom Bowerman have made a similar argument in a brief for 350.org.  Nothing in the constitution says that rebates or credits must be paid in proportion to the taxes or fees paid by individuals, nor that credits or rebates be paid only to those who pay the tax or fee.  The Legislature has wide latitude to pursue redistributive or other public policy objectives–such as minimizing the equity effects of taxes–by allocating credits.

Similarly, this authority to provide refunds or credits could be used to address the equity concerns that many have raised about the effects of road pricing. The state could use revenues from congestion pricing of freeways in the Portland area to provide tax credits as a kind of “transportation allowance.”

Debt Repayment

The second broad exemption to the use of car and fuel tax revenues is for debt repayment. Article IX, Section 3a, subsection 2 continues:

(2) Revenues described in subsection (1) of this section: * * *

(b) May also be used for the retirement of bonds for which such revenues have been pledged

The purpose of this exemption is straightforward: it is to assure potential creditors (i.e. purchasers of state bonds) that they state can tap any source of revenue to repay these debts.  Importantly, this applies not just to revenue bonds secured by the gas tax revenues (the Oregon Department of Transportation periodically issues such bonds to finance capital construction projects), but applies to any of the state’s bonded debt.  In the case of general obligation bonds, the state is telling bond purchasers that it will assure their repayment of debt out of any moneys it has, including gas tax revenues.  The reason that general obligation bonds can be sold at a lower cost to the state (at a lower interest rate paid to purchasers) is that the state has offered this very broad assurance.

One might argue that the state would only need to tap gas tax funds to repay general obligation bonds in the event that other sources of funding (for example, general fund revenues from the income tax) fell short of the amount needed to make debt payments due in some particular year.  While that may be the state’s practice, nothing in the constitution restricts the use of these funds to repaying debt only in the event of an actual or predicted shortfall in other funds, or a likely default on debt.  It simply says, that the restriction on the use of these funds doesn’t apply to using them for debt repayment.

What this appears to mean is that the Legislature could authorize some portion of the gas tax (or carbon fees or other revenues on fuels or automobiles) to be used to repay bonds, any bonds.  They might be bonds specially issued to be backed by these revenues; alternatively, they might be some other bonds that the state has issued:  the state has about $3 billion in outstanding general obligation debt.

As a sample of what might be done, the Legislature could provide that $100 million of revenue from a carbon tax (or the sale of carbon emission permits) be used to repay bonds issued for a green energy adjustment fund.  Nothing in the constitution appears to prohibit the state from using revenues gained from car taxes or fuel taxes or similar fees, they would be exempt as provided in Article IX, Section 3a(2).

There seems to be almost a folk belief that the Legislature’s hands are tied when it comes to spending monies raised by the gas tax (or, indirectly, through a tax on carbon pollution). But a straightforward reading of the exceptions laid out in the Oregon Constitution appear to provide a clear path for the Legislature to use revenues from the carbon tax or fees to fund a system of carbon dividends (to address equity concerns), and also to pay back debt. The Legislature should not let a paper tiger of folk wisdom persuade it not to take a close look at these alternatives, especially if it’s serious about about crafting an equitable, and environmentally sound “clean energy jobs” bill.

What City Observatory did this week

1. You’re going to need a bigger boat. We’re excited that Minneapolis has pushed forward with the legalization of duplexes and triplexes in formerly single-family only zones, and that others (including Oregon) appear to be following suit. It’s a major achievement to recast “missing middle” housing as one way to meet the growing demand for urban living, and promote affordability. But, in our view, its just a first step.  Duplexes, triplexes and fourplexes at best offer only a modest increment to housing supply. We also need to legalize apartment construction in more places.  We offer up a side-by-side example of the housing market impacts of fourplexes and apartments. The apartments accomodate more people, use land more efficiently and are far more affordable. Achieving greater density by building apartments also means we need to demolish fewer existing housing units to accomodate more new residents. The missing middle is a step forward in rethinking urban housing, but it’s just the first step.

2. Ten things more inequitable than road pricing. Congestion pricing is the one proven way to reduce traffic congestion; but almost every time its advanced as a real possibility, opponents suddenly discover a deep concern for the plight of the poor. It’s inequitable, they argue, to charge low income people for using the roads. For anyone with a passing familiarity with the way we finance urban transportation in the US, this is concern-trolling of the highest order. We itemize ten features of our current transportation finance system that are more inequitable that congestion pricing. There are lots of things we can do to make transportation more equitable–and applying this standard only to congestion pricing, while turning a blind eye to the deep inequities of the current system, means transport continues to be both less efficient and less fair than it should be.

Must read

1. Seattle rents are going down, thanks to increasing supply. The Seattle Times Mike Rosenberg has another data-laden article on the local housing market. The city is still in the midst of an apartment building boom, and the number of new units coming on line is having a visible impact on rents and vacancies. Citywide apartment vacancies are at double digit levels, and vacancy rates near job centers are even higher:  downtown is 16 percent and South Lake Union (home to Amazon) is 18 percent. As a result, landlords are offering concessions, and rents are dipping. Moreover, effects of added supply are spilling over to affect the existing, older apartment stock. Rosenberg writes, “even landlords with older apartments are having more trouble finding renters.”

2. Mall of America taps Opportunity Zone tax break. Depressed inner-city neighborhoods and their low income residents were the poster children for the Opportunity Zone program included in the 2017 tax act. But as it turns out, the big payoff of the opportunity zone is for big dollar, high profile real estate development projects that would seem to have few, if any benefits, for the chronically disadvantaged. First, there was Amazon’s Long Island City HQ2, located smack dab in on Opportunity Zone.  Now, as related by the Star Tribune, there’s another high profile project that’s cashing in on the Opportunity Zone law: the Twin Cities Mall of America.  How does this bustling mall qualify as a distressed neighborhood, you ask? The law ties eligibility to the demographics of a census tract, and Mall of America is located in a tract that includes some low income residents living in older apartments, some almost a mile away from the mall itself.. The underlying theory behind opportunity zones is that its proximity to jobs that determines economic success and poverty, but that’s a remarkably simplistic and incomplete hypothesis, as this example illustrates.

3.  Big Cars Kill.  Canada’s National Post has a thoughtful summary of the research on the lethality of taller, heavier vehicles. Because of their height and weight, when they collide with smaller vehicles–not to mention bicycle riders or pedestrians–they’re much more likely to maim and kill. Adding a thousand pounds to a vehicles weight increases the probability that it will kill someone in a collision by 40 percent. Declining gas prices has prompted people to buy more sport utility vehicles, and perversely, the widespread understanding that larger vehicles are safer (for their occupants, though not for society at large) is one factor prompting greater SUV sales.  But that’s a negative sum game: one study estimates that for every occupant saved by being in a bigger, heavier vehicle, four pedestrians, cyclists or occupants of smaller vehicles die. It’s an expensive, unwinnable arms race that’s bad for society and the environment.

New Knowledge

Global poverty has been reduced by two-thirds since 1990. We tend to focus a lot on the implications of globalization for those who are dealing with disruption in the US; but in the Third World, there have been huge economic benefits.  The World Bank estimates that the rate of extreme poverty–measured by the share of persons living on the equivalent of $1.90 or less per day, has fallen from about 35 percent of the world’s population to about 10 percent. There’s much, much more we need to do to address poverty and inequality, but the past few decades have witnesses a remarkable reduction in poverty among the worst off.

In the News

Our commentary on the limits of missing middle housing was the number one read story at The Overhead Wire this past week.

Strongtowns re-published our commentary on ten things that are more inequitable than congestion pricing.

What City Observatory did this week

1. Scooters are a success in Portland, but there’s an insidious double standard. A new report from Portland’s Bureau of Transportation details the success of the city’s 120-day long experiment allowing about 2,000 scooters from Bird, Lime and Skip to be operated on city streets.  The report judges the scooters against a number of tough standards and finds they provided over 700,000 trips, that nearly a third of Portlanders tried them, and they led to reduced car travel, and were most heavily used in the evening peak hour, when the city most needs alternatives. It’s a positive report, but it begs a much larger question:  Why aren’t the same questions and tests being applied to letting cars run rampant on city streets? We notice, for example, that the city charges scooter users more than 20 cents a mile for their trips, about ten times what car users are asked to pay in state and local gas taxes. And if the city can strictly limit the number of scooters allowed, and require operators to install electronic governors to limit their speed in the name of safety, why isn’t it doing the same thing with two ton automobiles? We’re looking forward to PBOTs next report applying these same tough standards to the city’s obviously failing 110-year experiment with cars.

2. Carmaggedon never comes (Seattle edition).  Seattle just closed it’s decrepit Alaskan Way Viaduct, an ugly double decker freeway that separates the city’s downtown from Elliott Bay. Losing the roadway means that more than 90,000 vehicles will have to travel somewhere else, and has led to predictions of “carmaggedon” in the Emerald City–at least until a new $3 billion highway tunnel opens sometime next month). We take a look at the first few days of traffic without the viaduct, and find, surprisingly to some, that downtown traffic in Seattle is not only no worse than usual–in many spots it’s actually better. It’s yet another example of “reduced demand”–taking away road capacity leads to a reduction in total vehicle traffic in an area.  This is a kind of mirror image of the well documented phenomenon of “induced demand” in which newly build roadways rapidly fill to capacity. It’s also an object lesson in why we need to revise our outdated mental models that tend to treat traffic as a fixed, irreducible quantity. Cities can quickly adjust to lower levels of road capacity, with beneficial results.

3. Why the Columbia River Crossing will remain dead. In the past few months, there have been a stirring of efforts to revive the proposed Columbia River Crossing, a 3 plus billion dollar freeway widening project connecting Portland Oregon and Vancouver Washington.  The original proposal never made much sense, and the deal foundered over disagreements between Oregon and Washington on whether the project should include a short light rail extension. Despite continued frustration with traffic on the route, it is still apparent that there’s no agreement on the fundamental issues here, which in addition to the fact that neither of the state’s currently has any money for such a project, means that its likely to stay dead for a good time longer. The acceptability of light rail in Vancouver is still a deal-breaker: Washington Governor Jay Inslee says the project must include rail; local Republican lawmakers and the city’s daily paper insist it can’t or must be balanced with two or three new highway bridges.

Must read

1. A Green New Deal has to address land use.  The newly elected House Democratic majority is making waves with a proposal for a kind of “Green New Deal” that would make big investments in de-carbonizing the US economy while creating lots of jobs.  That’s a worthwhile policy objective, but as proposed this “deal” has been short on re-thinking how we re-build our communities to support the kinds of low-carbon living that are impossible in our sprawling, car-dependent communities. The Brookings Institution’s Jenny Schuetz has some friendly amendments to offer to those pushing for a Green New Deal that spell out how we can address these issues, as well as promoting housing affordability, and addressing the shortage of cities. As she says: “The Green New Deal should set clear benchmarks for environmentally sound land use, provide financial assistance to offset compliance costs for lower-income households and communities, and enforce penalties from localities that do not improve.”

2. Congestion pricing advances in Los Angeles.  Metro, the transit operator for Los Angeles is hinting that it will propose some form of congestion pricing to tackle that city’s perennial traffic problems, according to Curbed. The plan would provide incentives to reduce car travel at peak hours and also provide funding to support expansion of transit, a key part of the city’s 2028 Olympic plans. It’s especially good news that the effort is benefitting from the advice of UCLA’s Michael Manville, who’s carefully studied congestion pricing around the world, and has a wealth of ideas on how to employ it successfully. For example, Manville is urging the city to use some of the revenue from congestion pricing to reduce impacts on low income drivers.

3. All of thriving downtown Portland is an opportunity zone. In an article entitled “Welcome to Taxbreaklandia,” Bloomberg Business Week has a compelling close-up look at one of the most problematic aspects of the new opportunity zone tax break.  All of downtown Portland–an area that is doing quite well in terms of job and investment growth–has been designated as an opportunity zone. Lots of investment that would have undoubtedly happened anyway will qualify for generous capital gains tax breaks. Downtown neighborhoods qualify because a significant fraction of residents live below the poverty line. There’s a disconnect between the Opportunity Zone’s simplistic theory of change (i.e. people are poor because there aren’t jobs and investments near where they live) and the incentives that state and local governments (and private investors) have to make maximum use of the federal tax break.  There are 8,700 opportunity zones nationally.  With so many eligible places, including ones that are already great investment locations offering this tax break there’s precious little incentive for investors to look seriously at marginal or troubled locations. Opportunity zone tax breaks may end up mostly rewarding investors for things they (or others) would have done anyhow, costing the federal government billions, while doing little or nothing to address the plight of the poor.

4. We can’t address climate change without reducing car use. The Transit Center’s Steve Higashide has a commentary at The Hill emphasizing an important point: technology alone, say in the form of vehicle electrification won’t be enough to get the kind of carbon reductions we need fast enough to advert a climate crisis. In the transportation realm, the political compromise between the highway lobby and transit advocates is a kind of pie-splitting multi-modalism. But that just tends to perpetuate policies that lead to increased driving and emissions.  As Higashide argues, “an ‘all-of-the-above’ approach to surface transportation doesn’t cut it. It’s not enough to build more transit, as long as federal policy continues to subsidize the highway-and-sprawl machine.”

New Knowledge

Higher Minimum wages don’t reduce employment. One of the perennial issues in economic policy is whether higher minimum wages can be an effective tool to fight poverty. One common objection is that higher wages will lead employers to reduce employment. A new study from four four economists looks at this question using a new statistical technique, called a bunching estimator, that looks at the distribution of the number of jobs right around the level of the minimum wage. The study compares the number of jobs just below the new minimum wage before the minimum wage is increased with the number of jobs just above the minimum wage after the increasing.  Using data from 138 instances in which minimum wages were increased, they find no net impact on employment, i.e. the decrease in the number of jobs just below the threshhold balances almost exactly the increase in jobs above the threshhold. The following chart summarizes their results:  the blue columns show changes in employment levels at each point above and below the new minimum wage; the red line shows the cumulative change in employment measured from the lowest paid jobs to the highest.

The authors conclude that, especially at the relatively low levels of the minimum wage in most states and cities, negative employment effects haven’t been felt.

Doruk Cengiz, Arindrajit Dube, Attila Lindner and Ben Zipperer The effect of minimum wages on low-wage jobs:  Evidence from the United States using a bunching estimator.  NBER Working Paper 25434, http://www.nber.org/papers/w25434

In the News

Brookings Institution’s Jennifer Vey has a thoughtful column on the value and importance of transformative placemaking. She challenges those who automatically conflate any effort to improve neighborhood livability with gentrification, citing Jason Segedy’s City Observatory commentary on the growing meaninglessness of that overused term.

What City Observatory did this week

1. Remembering Dr. King. We were reminded of Dr. Martin Luther King’s speech about the pronounced tendency in public policy to prescribe socialism for the rich and rugged, free market capitalism for the poor.  Much has changed in the half century since that remark, but sadly, it’s still the case that many federal policies subsidize the rich while providing little for the poor.  For example, the federal government provides nearly a quarter of a trillion dollars in subsidies for housing each year through the tax code, but the bulk of it goes to high income households. Similarly, despite the pretense that roads pay for themselves, the federal government has pumped nearly $140 billion out of the general fund to provide welfare for road users. The dream is still yet to be realized.

2. A toolkit for measuring what matters. There’s an old adage that “it doesn’t count if you don’t count it,” and that seems to especially apply in the realm of public policy. As part of its efforts to help communities strengthen the public spaces, like parks, libraries and community centers, the Reinvigorating the Civic Commons project has created a toolkit for measuring these spaces are used. The toolkit features instructions and worksheets for observational mapping to identify broad patterns of activity over time and space and conducting intercept surveys of individual users to better understand demographics and gather qualitative information. The use of these tools have been piloted in five cities around the country, and now the toolkit is available, free, at Reinvigorating the Civic Commons website.

3. The outlook for Portland’s housing market in 2019.  Joe Cortright was a keynote presenter to the January 9, 2019 Apartment Investors Roundtable in Portland.  We have a synopsis of his remarks.  Portland’s affordability problems of the past few years are directly attributable to the drought of new apartment construction in the region as a result of the Great Recession. The continued in-migration of population in the face of a slowly growing supply of housing triggered rent increases. But over the past few years, this supply-demand imbalance has been corrected, causing rent inflation to fall to zero.

Must read

1. “The cars just disappeared.”  Why Carmaggedon didn’t come to Seattle.  Last week, our quick look at the Seattle traffic map showed that despite shutting down the city’s Alaskan Way viaduct (which usually carried 90,000 cars per day) traffic in the Emerald City was tame. Prognostications of “Viadoom” weren’t born out.  Ten days in to the “Seattle Squeeze,” the city’s paper of record, the Seattle Times makes what happened sound like a city-sized David Copperfield illusion:

For the past ten days reported traffic was not anywhere near as bad as predicted.  In fact, the Washington Department of Transportation reports traffic volumes are down 1 to 6 percent in the Seattle area. But what happened wasn’t magic, and shouldn’t have been a surprise:  time after time, in cities from Atlanta, to Seattle, to Los Angeles, Carmaggedon doesn’t come. Plus, it’s not like Seattle wasn’t told. For one, Sightline Institute’s Clark Williams Derry was not at all surprised to report “For now, Seattle is surviving quite well without the Viaduct.” When viaduct removal was being debated, Williams-Derry wrote 53 articles for Sightline forecasting just this evaporation of traffic. It’s an object lesson that building more freeways in dense urban spaces doesn’t reduce congestion, it creates it.

2. Congestion Pricing Video Explainer.  Speaking of traffic, there’s one proven way of reducing traffic delays:  congestion pricing. While the idea appeals intuitively to economists (and to almost no one else), there’s enough experience around the world, from London and Stockholm, to Milan and Singapore, to know that charging drivers for using scarce roadways leads them to find alternatives.  The concept can be a bit difficult to grasp, but there’s a terrific new video explainer from Will Chilton that describes in detail how and why congestion pricing works. It even digs into the arcane science of traffic flow, showing how keeping traffic volumes below a tipping point with pricing moves more cars, faster. Helpfully, it also points out that while the public is usually skeptical (if not hostile) to the idea of pricing before its implemented, once they see how it reduces congestion and produces reliable travel times, and that congestion prices provide value for money, the schemes generate widespread support. A hat tip to StreetsblogNYC for highlighting this great video.

3. The case for re-legalizing duplexes, triplexes, and fourplexes in Oregon.  Sightline Institute’s Michael Andersen has an essay laying out the arguments for legislation proposed in Oregon to make it legal to build missing middle housing in cities throughout the state. Anderson notes one of the under-appreciated aspects of the state’s half-century old land use planning system: requirements that every community zone land for a range of housing types, including apartments. That, coupled with a requirement that local governments approved developments under clear and objective standards, has blocked the kind of exclusionary zoning practices that are prevalent in suburbs around the US. The next logical step in assuring a range of housing types in every community, Anderson notes, is re-legalizing duplex, triplex and fourplexes wherever residential development is allowed.

New Knowledge

Do energy efficiency upgrades reduce energy use?  It seems like we’re always looking for technical fixes to ecological problems that avoid or circumvent the need to change our behavior. One good example is better weatherization and insulation of our homes:  if houses were just more efficient we could reduce energy use without having to think about it.  A recent study from Mexico casts doubt on that idea. The study used a quasi-experimental approach, fitting some houses in a new residential development with higher levels of insulation and other energy saving features, but not disclosing to buyers which homes had this treatment and which did not. The researchers carefully monitored the houses living environment and energy use. Even though engineering models suggested that the treated homes would use about one-fourth less electricity, the researchers found essentially no difference in the energy uses of the treatment and control groups. They conclude that occupant behavior can easily overwhelm the theoretical benefits of more efficient construction.

Lucas Davis, Sebastian Martinez and Bibiana Taboada, How Effective is Energy-Efficient Housing? Evidence from a Field Experiment in Mexico,  Inter-American Development Bank, Working Paper 843, February 2018

In the News

Willamette Week featured Joe Cortright’s analysis of Portland’s trial e-scooter program in an article entitled, “Portland Economist Says City’s E-Scooter Experiment Was a Success—and Wants to Apply the Same Standards to Cars.”

What City Observatory did this week

Widening freeways doesn’t reduce crashes or crash related delay.  The Oregon Department of Transportation is proposing to spend half a billion dollars to widen a mile-long stretch of Interstate 5 near downtown Portland. They’ve already conceded that the project will do nothing to reduce the recurring daily delay that the region’s commuters find so frustrating. Instead, they’ve argued the project will reduce “non-recurring delay”–the traffic jams associated with freeway crashes (in this area, mostly fender benders). But they’ve actually produced no evidence that shows that a wider road will reduce crashes–it’s just something they’ve assumed as an engineering rule of thumb.  A decade ago, Oregon DOT widened a mile long stretch of I-5 just north of the new project area, and we looked the state’s own crash data to see what happened.  Not only did widening that roadway not reduce crashes, it was associated with a noticeable increase in crash rates. As a result, there’s no reason to believe that widening I-5 will reduce congestion associated with crashes–which is the fundamental rationale for the project.

Must read

1. Todd Litman takes out the trash that is the latest Inrix congestion cost report. Traffic monitoring firm Inrix has released the latest in a long series of tub-thumping reports that make the utterly fictitious claim that traffic congestion is somehow costing Americans untold billions of dollars each year. As we, and Litman and others have long pointed out, these claims are based on faulty methods that, in part, count the inability to exceed posted speed limits as a cost, and which never explain how one could ever, at any cost, build enough roadway capacity to eliminate slower travel at peak hours.  Why do we keep seeing these reports, year-after-year? As Litman observes, Inrix is in the business of selling data about traffic jams, and has a strong self-interest in making the problem seem as dramatic as it can:

The INRIX Research corporation uses various data sets to track roadway conditions. Users receive guidance on how to avoid delays caused by congestion and accidents. As a result, they tend to exaggerate congestion costs in order to enhance the value of their services.

2. Car ownership is dragging American households even deeper into debt. The freedom of car travel is only available to those who can afford to own and operate a car, and as a new report from the US Public Interest Research Group–“Driven into debt”–shows,  the high cost of car ownership is increasingly a financial risk for many households. American’s now owe $1.2 trillion in car debt, and amount that has increased 75 percent in the past decade. More Americans are borrowing to purchase both new and used cars, and are taking out longer term car loans. That frequently means they are “underwater” on their loans (owe more than the car is worth), and then frequently when trading in an old vehicle for a new one, households transfer negative equity to their new car loan. A third of all trade-ins had negative equity, with an average of over $5,000 a vehicle rolled into a new car loan.

3. Jennie Schuetz argues for a wealth-building strategy for America’s renters. Our chief wealth building policy in the US has long been the promotion of homeownership. Not only did the housing bubble show the riskiness of that as a policy, the continued and growing wealth disparities in the country are a strong signal that we need other ways of helping American’s achieve some measure of financial security.  Scheutz argues that instead of simply suggesting that renters need to become homeowners, we need a broader set of policies, including building more rental housing in high opportunity neighborhoods, promoting more long-term leases that give rent-predictability, and creating new means for households to save and invest.

In the News

The Boston Globe cited our critique of the Inrix congestion cost methodology in its story on traffic congestion in Boston.

The Seattle Times quoted City Observatory’s Joe Cortright in its coverage of the latest Inrix report.

What City Observatory did this week

1. Displacement by decline.  Akron Planning Director Jason Segedy offers a guest post on our misplaced obsession with gentrification. He argues that pundits and urban policy people are fighting the wrong battle. Too much time is spent on the challenges of urban success, and not enough time is spent on poverty, disinvestment, segregation, and displacement by decline.

2. A paper tiger? Oregon’s constitutional limits on road tax use.  Like many states Oregon has a “lock box” for its gas tax revenues: a constitutional provision that says that taxes on cars and auto fuel generally have to be used to build and maintain roads. Some have argued that this provision would prevent the Legislature from using funds from a carbon fee to pay for other things, like transit or environmental remediation (because carbon is indirectly a product of motor vehicle fuel).  But the Oregon Constitution has two important exceptions to the limited uses of road funds: they can be used for credits and refunds, and also to repay debts.  These two exemptions appear to give the Legislature plenty of leeway to provide a green dividend to Oregon households out of carbon fees, and to issue bonds to fund a variety of purposes, paid for from the same source.

Must read

1. Crime is trending down, but Americans think the opposite. The Pew Research Center has a helpful reminder of the yawning gap between the widely held belief that crime is trending upwards year after year, and the reality of a pronounced and continuing decline in recorded crime.  Nearly every year for the past quarter century, two-thirds or more of American adults think crime went up in the past year. Over that same time, reported crimes have steadily declined, to the point that crime rates are about two-thirds lower than in the 1990s.

2. A condo sells for $1.25 million . . . in Detroit. The Detroit Free Press tells of a local family that just sold for $1.25 million the condo it bought a decade ago for less than a tenth that amount. It’s a clear sign that parts of Detroit (this is in the Brush Park neighborhood) are rebounding. While some take rising property values as an indication of gentrification, rising values help build wealth for those who own property in Detroit (and held on through some tough times). It’s also an indicator of optimism about the city’s future prospects. This rebound isn’t happening everywhere in the city, but as we’ve pointed out before, the nature of revitalization is it happens first in a few neighborhoods that achieve some critical mass. With luck, it will spread.

3. You can’t get lower CO2 without fewer VMT. California legal scholar Meredith Hankins draws a direct line between building places that allow and encourage less driving and achieving that state’s greenhouse gas reduction goals. Many are counting on technical fixes, like electric vehicles to counter global warming. She argues that “We’re never going to meet our GHG transportation goals unless we radically rethink our cities.” Hankins outlines the case for focusing on reducing vehicle miles of travel, and sketches out some of the goals the state should pursue, including quadrupling the number of trips taken on foot, shooting for a nine-fold increase in bike travel, and encouraging big increases in transit use.  All those steps, and more will be needed to lower greenhouse gas emissions.

New Knowledge

Where housing choice vouchers help people live, by metropolitan area.  One of the federal government’s principal housing programs for the poor is “Housing Choice Vouchers” also known as section 8.  The program provides millions of families with a voucher that covers a substantial portion of their housing costs. Vouchers offer the potential for low income families to find housing in a wide range of neighborhoods, potentially escaping places of concentrated poverty.  Whether vouchers produce this result depends on a variety of factors, including local zoning, landlord policies, and how local authorities administer the voucher program. A new report—Where Families With Children Use Housing Vouchers: A Comparative Look at the 50 Largest Metropolitan Areas—from the Council on Budget and Policy Priorities and the Poverty and Race Research Action Council provides a detailed picture at the allocation of vouchers.

In theory, vouchers ought to enable families to move to affordable locations with lower rates of poverty. But a consistent theme of the report is that voucher holders still tend to be more concentrated in high poverty neighborhoods, in spite of the fact that there are  of potential affordable rental units in low poverty, high opportunity areas. In every large metro area, voucher using families are more concentrated in low opportunity neighborhoods than is affordable housing.

In addition to a comprehensive report, you will find a map showing the location of voucher-assisted housing in each metropolitan area, along with interactive data tables. 

In the News

Next City pointed its readers to Daniel Kay Hertz’s commentary on the fundamental contradiction between our stated goals of using housing to create wealth and promoting housing affordability.

Willamette Week published City Observatory’s analysis of Census data on the proportion of single family homes in major cities in its article previewing proposed Oregon legislation that would legalizing “missing middle” housing throughout the state.