Why are US drivers killing so many pedestrians?

US drivers are killing 50 percent more pedestrians, European drivers are killing a third fewer

If anything else–a disease, terrorists, gun-wielding crazies–killed as many Americans as cars do, we’d regard it as a national emergency. Especially if the death rat had grown by 50 percent in less than a decade.  But as new data from the Governor’s Highway Safety Association (via Streetsblog) show, that’s exactly what’s happened with the pedestrian death toll in the US.  In the nine years from 2009 and 2018, pedestrian deaths increased 51 percent from 4,109 to 6,227:

There are lots of reasons given for the increase, distracted driving due to smart phone use, a decline in gas prices that has prompted even more driving, poor road design, a culture that privileges car travel and denigrates walking, and the increasing prevalence of more lethal sport utility vehicles.  Undoubtedly, all of these factors contribute.

While some may regard a pedestrian death toll as somehow unavoidable, the recent experience of European countries as a group suggests that there’s nothing about modern life (Europeans have high rates of car ownership and as many smart phones as Americans) that means the pedestrian death toll must be high and rising. In fact, at the same time pedestrian deaths have been soaring the US, they’ve been dropping steadily in Europe.  In the latest nine year period for which European data are available, pedestrian deaths decreased from 8,342 to 5,320, a decline of 36 percent. Here are the data from the European Road Safety Observatory:

In the past decade, Europe and the US have reversed positions in pedestrian death rates.  It used to be that the number of pedestrian deaths per million population were higher in Europe, now the US pedestrian death rate per million population is now 75 percent higher than in Europe. The following chart compares the change in pedestrian death rates over the last nine year for which data are available for both Europe and the US.

It’s worth noting that even though walking is far more common in Europe, and streets are generally narrower, and in older cities, there aren’t sidewalks, but pedestrians share the roadway with cars.  Despite these factors, Europe now has a lower pedestrian death toll per capita than the US.

We walk less, but we die more.

These data should be at once heartening and discouraging to advocates of Vision Zero.  On the one hand, they show that it is entirely possible to have a modern economy, with technology and with lots of cars, that doesn’t kill so many pedestrians.  On the other hand, it shows that the US is very much on the wrong track.

Valuing Walkability

A new report confirms the growing market for walkable places

George Washington University and Smart Growth America have a new report on the economic value of and growing market for walkable places. Called “Foot Traffic Ahead–2019” this latest report is an update of research done originally in 2007 and published by the Brookings Institution and an earlier version of “Foot Traffic Ahead, published in 2016.

The key takeaway from the report is that more walkable places command a price premium over less walkable ones, and that premium has increased in recent years.  The report concludes that income property like office, commercial spaces and apartments in walkable areas are valued about 75 percent higher than non-walkable properties, and that walkable residential properties are valued about 95 percent higher.

The report tabulates the “Walkable Urban Places” in the the nation’s 30 largest metro areas, using its own proprietary definition of walkable areas:  they are places that contain at least 1.3 million square feet of office space or 300,000 square feet of retail space and for which the most walkable residential location in the area has a WalkScore of at least 70.

The requirements for more than a million square feet of leasable office space or 300,000 square feet of retail space tend to automatically exclude neighborhood level.  While such metrics may be of great interest to larger scale investors and developers, they no doubt leave out highly walkable neighborhoods that aren’t regionally significant office or retail centers. Plus, as the report notes, these office space estimates include only leased space, not owner occupied offices and most public office space (which often contributes a critical mass of employment density to walkable locations).

No maps

While the report has abundant pictures of walkable urban locations, and makes references to a few specific places in its report (including the 10 most social equitable walkable places, nine of which are in New York City), it doesn’t contain any maps that illustrate or document the number, location and boundaries of identified walkable neighborhoods. That means as a reader, you are left to guess which places in any city that the authors have classified as walkable (or not).  This is an unfortunate omission, because walkability has such a strong visual and intuitive component, and connecting the definitions in the report to the lived experience with which readers are likely familiar would make it both more persuasive and useful.

As we’ve mentioned many times before in the debates about the best ways to measure walkability, one of the most important criteria is transparency:  can readers or users easily see which places are classified as walkable, and why. It’s one of the reasons we’re so enamored of the Walk Score metric.  Anyone, using an internet browser, can look of the Walk Score for any address in the US, and, just as importantly, see what criteria and which nearby destinations were used to compute its walkability.  Inevitably, rating walkability is a complex and often judgmental task, and errors sometimes creep in to the best methods:  transparently showing one’s work with math is the best way to assure that the results are valid and trustworthy.

Centrality and walkability

As we all know, there are lots of factors that figure into the value of a square foot of urban property.  Our work, and research by Zillow, has shown that there’s a statistically significant contribution of Walk Score to home values.  The preferred way of assessing the contribution of walkability is to control for other known factors that are likely to influence property values, including the size of the property, its age, the number of bedrooms and bathrooms, the size of yards, the presence of amenities (fireplaces, swimming pools) and the characteristics of the neighborhood (income, schools, crime, etc).

In general, we find that walkability is often highly correlated with centrality.  Centrally located neighborhoods, in downtowns and in older urban areas, tend to have higher density, a greater mix of different uses, and a better connected street grid than newer lower density, use-segregated suburban areas.  In calculating the value of walkability its important to separate out the effects of centrality (proxied by distance to the central business district) from other walkable features. (You can make an area more walkable in many ways, but you can’t move it closer to the CBD).

Going forward

The case for the value of walkability is now clearly established. The key to moving markets and re-framing policy is to make walkability information even more fine-grained and accessible than it is currently, and to be able to parse out the separate effects of centrality (which are hard or impossible to change) and walkability itself.  The next big research tasks in the walkability field are likely to be to see if we can’t disentangle the various aspects of place, density and the built environment that contribute to walkability generally, and which drive value.


It’s official: I-5 Rose Quarter freeway widening is a boondoggle

Frontier Group and USPIRG’s annual report on highway boondoggles calls out the Oregon DOT’s wasteful, ineffective I-5 Rose Quarter freeway widening project as a national level boondoggle.

Portland is famous for making top ten lists when it comes to urban transportation policy, what with its number one in the nation share of big city bike commuters, its pioneering efforts to revive the streetcar and similar measures. But today it’s on a list that clearly signals the city is headed in the wrong direction.

Today, Frontier Group and the OSPIRG Foundation released its annual report identifying the worst highway projects in the nation.  Among the nation’s top nine highway boondoggles for 2019:  the Oregon Department of Transportation’s proposed half billion dollar widening of the I-5 freeway near downtown Portland.  The report says:

In Portland, a city that has taken great strides toward more sustainable transportation, an expensive highway project would constitute a step backward to the car-dependent policies of the past. It would also likely fail to meaningfully improve safety compared with other investment strategies.

The award comes on top of a long list of critical comments from national transportation policy experts including Robin Chase, Janette Sadik-Khan, Jeff Speck, and others.

For the past five years, the Boondoggles report has cataloged the worst proposed highway projects in the nation. In several cases, the projects have stalled or been cancelled, with big savings for state and local taxpayers and positive results for transportation and the local economy.  For example, local groups stopped the widening of I-275 in Tampa Heights, and the community is thriving, with new restaurants and businesses, and even e orts to reduce tra c capacity on local roads to improve walking and biking. Wisconsin scaled back its freeway widening plans, shifting more resources to a “fix it first” maintenance strategy designed to take better care of existing roads. Freeway removals, like the closure of Seattle’s Alaskan Way viaduct showed that reducing road capacity causes traffic levels to decline.

It will come as no surprise to regular readers of City Observatory that the Rose Quarter freeway widening project has all the hallmarks of a boondoggle.  We’ve chronicled dozens of reasons that the project shouldn’t go forward:

All-in-all, the Rose Quarter freeway widening project is a classic boondoggle.  One can only hope that this critical national attention will help state, regional and local leaders recognize that moving forward with the project is a tragic blunder, one at odds with our stated values.

Full disclosure:  City Observatory was provided with a draft copy of the report prior to its publication and was offered the opportunity to comment on the report. It was not compensated for providing its comments.

Note: This post has been revised to reflect the report’s sponsorship by the OSPIRG Foundation.

Job Density: A new metric for urban economies

Employment is increasingly concentrating, and a few cities lead the way

The Brookings Institution’s Metropolitan Policy Program has a new report out, Where jobs are concentrating and why it matters to cities and regions” looking at the density of employment in the nation’s metro areas, and how its changed in the past decade.  Here are the takeaways:

  • The density of employment in cities and metro areas is increasing
  • A handful of leading metropolitan areas account for most of the increase in job density
  • Job density varies systematically by industry, with knowledge-intensive industries concentrating in dense locations, and goods-producing and distribution industries becoming less dense
  • These data confirm an inflection point after 2007; job density which had been flat to declining, has increased steadily since then

A New Metric:  Job Density

Most urban planners will be familiar with metrics of population and housing density, measuring the concentration of population in particular places by counting the number of people or dwelling units per acre or square mile, and using this metric to compare and contrast the relative density of different areas. The Brookings report develops a parallel metric for the economy.

The heart of the Brookings report is a measure of job density constructed from very detailed, block level data on employment.  The report takes a more sophisticated spatially disaggregated approach to computing job density, developing a metric it calls “perceived job density.”  A simple minded measure of density is just dividing the total number of jobs in a metro area by the region’s urbanized land area. What this misses is the highly concentrated nature of job centers. What the Brookings metric does is to compute job density based on an average that is essentially job-weighted, rather than area-weighted. What is the level of density of experienced by the median worker, rather than the level of density on the median acre of urbanized land?  (This approach is analogous to the way the Census Bureau computes population-weighted population density). Brookings calls its measure “perceived” job density, but might want to think of it as “experienced job density”: the level of density of employment experienced by the typical worker.

The report shows that there are wide variations in job density across US metropolitan areas.  Unsurprisingly, New York has the highest job density of any metro area, with nearly 140,000 workers per square mile.  San Francisco and Chicago are a distant second with fewer than 50,000 workers per square mile, and only a handful of other metros have more than 20,000 workers per square mile. Most other metro areas appear to have job density of less than 5,000 workers per square mile.

Big and successful metro economies have high levels of job density

In basic sense, density is at the heart of urban economies.  Cities thrive and are more productive, because they bring lots of people with different knowledge and skills into close proximity. This is especially true for knowledge intensive industries like finance, software, and professional services.  Brookings data confirms that these industries have high levels of job density, while in contrast, goods producing and goods moving industries like manufacturing, transportation and distribution, tend to be much less dense.  Finance, information industries, professional services and company headquarter employ between 40,000 and 70,000 workers per square mile, while manufacturing and logistics, on average, employ about 7,000 per square mile.

Given this relationship, it’s hardly surprising that the greatest gains in density have been recorded in those metropolitan areas with the strongest concentrations of information and professional services.  The Brookings report concludes that just four metropolitan areas accounted for the bulk of the increase in job density in the US.  The following chart shows that job density in these four metro areas increased 40 percent between 2004 and 2015, while in the aggregate, job density increased by only about 10 percent in all the remaining metropolitan areas.

In a sense, this is more evidence for the emergence of so-called “superstar” cities.  These places flourish because they provide for the dense concentration of talent that supports innovation and productivity. Workers in these locations are more productive than they would be if they were scattered more widely among in less dense job locations. Locating in these dense concentrations of workers gives firms a competitive advantage they would be hard pressed to replicate elsewhere.

There’s been a shift to increasing density

This new Brookings report sheds additional light on a subject we’ve been researching at City Observatory for several years.  In 2015, we published our report Surging City Center Job Growth, measuring job centralization–the number of jobs in the center of metropolitan areas–using the same underlying data Brookings used to compute job density. For decades, metropolitan employment has been decentralizing.  Our analysis showed that this pattern of decentralization held during the last economic expansion (between 2002 and 2007); suburban employment grew faster than in the urban core. But after 2007, a different pattern prevailed: urban cores grew faster than their surrounding suburbs. This marked a historic shift in job location.

The Brookings report doesn’t chart trends in job density prior to 2004, but it seems likely that job density was decreasing steadily in prior decades, as jobs and economic activity suburbanized.  While the Brookings data don’t look explicitly at centralization, but the growth that the report charts in concentration, particularly in knowledge intensive industries, and in thriving metropolitan areas, is consistent with the pattern we documented in Surging City Center Jobs.

Quantifying the urban spatial economy

This new metric is an important addition to the set of fundamental statistical measures we can use to characterize and compare the spatial aspects of metropolitan areas.  Brookings has previously developed other measures of urban economies. In 2001, Ed Glaeser published his analysis of job centralization in different metropolitan areas, using a series of radii and zip code level estimates of employment to measure what fraction of metro employment was in the core compared to the periphery in each metro area.  In 2009, Elizabeth Kneebone updated Glaeser’s original work in her report on Job Sprawl Revisited.  And in 2016, Kneebone used data from the LEHD program to compute job accessibility and median commute distance for different metropolitan areas.  Coupled with the new job density data, these metrics let us triangulate the spatial aspects of metro economies.  Job sprawl measures capture centralization and decentralization, job density shows whether employment is concentrating or becoming less dense, and the job accessibility and commuting measures show how this affects demand for transportation and access to economic opportunity.

Further exploration

The new job density metric gives analysts another way to statistically describe the dimensions of urban economies. The next step will be to take a more detailed look at the correlations between this metric and other indicators of urban economic success.

One of the key questions has to do with the effect of the level of job density in a metro area and its economic health and development.  A few areas (New York, Chicago, San Francisco) have levels of job density that are vastly greater than almost all other metro areas. What advantages (and disadvantages) does a high level of job density confer for these cities? Is there some threshold level of job density that is necessary or desirable for promoting a region’s economic health?  There’ll be plenty of grist for further statistical analysis from this new data series.

The report was researched and written by Chad Shearer, Jennifer Vey and Joanne Kim of Brookings Institution’s Anne T. and Robert M. Bass Center for Creative Placemaking. City Observatory’s Joe Cortright is a member of the Bass Center’s Advisory Committee, and reviewed a draft version of the report prior to its publication. The report, including interactive data displaying job density data for 94 of the nation’s largest metro areas, is available here.

Fruit and economics: Riffing on Krugman

Perishable, special, and local: The economics of unique and fleeting experiences

Friday night on Twitter, Paul Krugman waxed poetic about fruit and economic theory.  Krugman is back from Europe, and thirsting for summer fruits coming into season. That led him to reflect on a fundamental flaw in economic logic, the notion that more choice is always better. The short, uncertain season for his mangoes and figs, makes them all the more valuable, not less so. He observes:

 . . . seasonal fruits — things that aren’t available all year round, at least in version you’d want to eat – have arrived. Mangoes! Fresh figs!  What makes them so great now is precisely the fact that you can’t get them most of the year. . . .The textbooks (mine included) tell you that more choice is always better. But a lot of things gain value precisely because they aren’t an option most of the time. I’d probably get tired of fresh figs and mangoes if I could get them all year round. But still, if you imagine that being rich enough to have anything you want, any time you want it, would make you happy, you’re almost surely wrong.

Krugman’s observation rings true to me.  I can tell you in two words:  Hood strawberries.

I pity you.  You have no idea what a real strawberry tastes like. Unless you spend the three weeks prior to the Summer Solstice in the shadow of this mountain, chances are you have never tasted a Hood strawberry.

Mt. Hood & Hood strawberries: The peak of Oregon & the peak of flavor (in peak season).

The Hood is a variety grown exclusively in the Northern Willamette Valley of Oregon, on family owned farms scattered around the edges of Portland’s urban growth boundary.

The Hood is as different from an industrial strawberry as an heirloom tomato or a piccolo San Marzano is from their rubber factory-farm cousins.

You may not know, for example, that strawberries have juice.  They were meant to be a juicy fruit.  The industrial strawberry has been bred to be a fibrous, indestructible and infinitely shelf-stable.

You may also not know that a real strawberry is monochromatic:  It is red, without a trace of white.  When you cut a Hood  strawberry open, and it is red through and through (and bleeding, in consequence of its wound).

The hood is a fragile vessel for carrying strawberry juice.  It’s both delicate and perishable, taking about three days from being picked to dissolving. It can’t be shipped. You either get it at a farmer’s market, go to the farm and “U-pick” the berries yourself, or find one of a relative handful of markets who’ll stock the tender things. It’s one of the things–along with the ending of the rainy season, that marks the beginning of summer in Oregon.  And it’s just here for a few weeks: gone before the end of June. We’re not alone in our obsession: actual scientists say the same thing about the Hood.

The point here is not to brag on the Hood Strawberry (well, not entirely). The point is that in an increasingly globalized world, where everything is the same everywhere, thanks to a combination of the World Wide Web, Starbucks, and Fedex, there are still some things that a distinct and different about every single place. These local goods (and services) things that you can’t get unless you’re there, and that you are simply unlikely to know anything about, absent local knowledge, are what make that place special. Ubiquity is over-rated. What matters isn’t the ubiquitous, the interchangeable, the digital. What makes things interesting and desirable is that they are special, and different and even transitory. If you’re not in the right place and the right time, you’ll not discover or enjoy them.

Every city and every place has some special, idiosyncratic feature, it could be food, or music or plants or the smell of the forest after a rain. As Jane Jacobs observed:

“The greatest asset that a city can have is something that’s different from every other place.”

Maybe the thing we need to pay attention to in thinking about the global economy is not “the death of distance” but instead “the dearth of difference.” The more things and places and experiences become standardized, homogenized and universal, the less joy and stimulation we’re likely to get from them. I’m going to grab a handful of Hoods; I hope you’ll enjoy something fresh and local, too.

We are however somewhat less obsessed about strawberries than Humphrey Bogart.

Here’s Krugman’s full ode to seasonal fruit, from Twitter:

Look, the planet and the Republic are both in grave danger, possibly doomed. But it’s Friday night, I’ve just had a couple of glasses of wine, so I’m going to talk briefly about … fruit and economic theory.

OK, two pieces of background. I recently got back from almost a month in Europe, cycling and vacationing, and while it’s nice to not be living out of a suitcase, the adjustment back to reality is proving a bit harder than in the past, for a variety of reasons

The other piece of background is that I’m really into breakfast. I start almost every day with fairly brutal exercise – I’m 66 and fighting it; today that meant an hour-long run in the park. Breakfast, usually starting with yoghurt and fruit, is the reward

So one of the best things about coming home is that some seasonal fruits — things that aren’t available all year round, at least in version you’d want to eat – have arrived. Mangoes! Fresh figs!

Are these fruits better than other fruits? Objectively, no. What makes them so great now is precisely the fact that you can’t get them most of the year. And that, of course, tells you that standard consumer choice theory is all wrong

Does this have any policy implications? Probably not. What really really matters is being able to afford health care, decent housing, and good education; the things I’m talking about are trivial.

But still, if you imagine that being rich enough to have anything you want, any time you want it, would make you happy, you’re almost surely wrong. Limits are part of what makes life worth living. And the big question is, will those peaches be ripe by morning?

Portland is winning the fight against congestion!

New data from TomTom shows Portland number one nationally in reducing traffic congestion:  Where’s the celebration? 

Portland chalked up the biggest reduction in traffic congestion of any city in the US over the past year. But neither the media nor the state transportation department seem to care.  If what they’re doing is working, why aren’t they taking credit, and doing more of whatever it is seems to work?

The favorite click-bait of traffic monitoring companies like Inrix and others is using their big data on traffic speeds to produce rankings of which cities globally have the worst levels of traffic congestion. As we’ve regularly pointed out at City Observatory, comparing cities on these metrics is mostly shoddy and misleading pseudo-science.  The most commonly used measure of congestion, the travel-time index, computes how much longer a typical trip takes a the rush hour than at say, 2 AM, and treats the difference as the “cost” of congestion. That exaggerates the true cost of congestion (no one expects to have zero traffic at rush hours), and importantly inter-city comparisons ignore the wide differences in travel distances, especially commuting distances across cities, with the result that these measures invariably make sprawling cities with extremely long commutes appear to be less congested that more compact cities, where people actually spend less time commuting (even if they’re moving more slowly).

The latest set of congestion rankings comes from TomTom, maker of an in-car navigation system. It aggregates data from its users to see how fast traffic moves in different cities at different times.  These studies are based on questionable methodologies and have some built-in biases. As Felix Salmon pointed out a couple of years ago, the TomTom data is gathered from people who’ve bought the devices, who almost by definition are not typical commuters. It’s highly likely that they represent those who drive the most, and who drive most in peak traffic (hence the value of TomTom’s services); but data gathered from these devices is not necessarily typical of the experience of the average commuter.

While there are good reasons to doubt the level of congestion reported by TomTom, the pattern of congestion across cities is similar to other estimates. Unsurprisingly, large, economically prosperous cities tend to have higher travel time indices than smaller cities and economically struggling ones.  For example, New York, Los Angeles, San Francisco, and San Jose are all in the top five of US cities; Akron, Syracuse, Kansas City and Cleveland are all in the bottom ten (of 80 ranked US cities.) Other studies show similar patterns:  traffic is a pretty strong correlate of a robust economy, and traffic tends to be greater in big cities than small ones.  Not much information here.

The big question about traffic is not this pattern of variation across cities, but what, if anything can be done to make traffic congestion less in the city you live in.  So you’d think that we should pay a lot of attention to which cities are reducing congestion, to see what’s working.

One of the long time meta-messages of these traffic surveys is a claim that traffic is bad and steadily getting worse.  That’s undoubtedly why these reports are the favorite grist for the highway lobby. This was the refrain of the grand-daddy of these reports, the Texas Transportation Institute’s (TTI) Urban Mobility Report–which thankfully hasn’t been prepared for almost five years, and may finally be dead.  We showed that the claim of steadily worsening congestion was an artifact of the way TTI, estimated speeds, and not an actual observation, and that it was contradicted by other sources of information. Inrix, which for a time published monthly data on traffic for US cities, showed big declines in traffic congestion between 2010 and 2013–when gas prices were high. (Inrix has since disappeared this data from its website).

What’s interesting is to look at what the TomTom data show about how much measured congested has changed since last year. The 2018 data show some cities have actually made noticeable improvements in traffic flow in the past year. Overall 23 of the 80 US cities in the TomTom list showed at least some decline in reported traffic congestion. At the top of the list is Portland, Oregon:  Portland recorded a 3 point reduction in its travel time index, falling from 1.27 to 1.24, meaning that in 2018, a peak hour trip took about 24 percent longer than an off-peak trip, rather than 27 percent longer.

You’d think, for all of the concern that the media and highway departments express about congestion that this news would be met with jubilation. But you’d be wrong. So far, Portland’s number one performance in reducing traffic congestion generated exactly zero media coverage by the city’s newspaper of record, The Oregonian, and other local news outlets.  Nor is there any mention of the data on the Oregon Department of Transportation’s website. (Web searches conducted June 6, 2019, two days after the release of the TomTom report).

There’s a calculated asymmetry here: You can bet that if Portland had the biggest increase in congestion per TomTom, it would be a front page story on the Oregonian, and a regularly repeated talking point by the Oregon Department of Transportation. If you’re a highway engineer, or traffic reporter, drawing attention to the terrible (and worsening) nature of congestion is a big part of the way you justify your existence.  But good news, it seems, is no news.  If there were any science or objectivity here, you’d think that the media would be celebrating this success (and praising the policies that led to it), and that the transportation agency would be looking to do more of whatever it was that made the congestion numbers improve.

The reason for this asymmetry, as we’ve suggested before at City Observatory, is that for all their bloviating to the contrary, highway departments really don’t care about reducing traffic congestion. Traffic congestion statistics and rankings are simply convenient public relations fodder for selling the next big highway construction project. If they were serious about reducing traffic congestion, these highway engineers would have looked seriously at the big declines in traffic congestion in the early part of this decade (thanks to higher gas prices), and the decline in traffic generated by tolling congested roads, like I-65 in Louisville, and moved aggressively to implement congestion pricing, which is the only strategy that’s been shown to be effective.  But building things, not solving traffic problems, is really their priority.




A solution for displacement: TIF for affordable housing

The case for using tax increment financing for affordable housing in gentrifying neighborhoods

The problem with gentrification is that rising property values may make it expensive or impossible for lower and moderate income residents to live in an area. But what if we could tap some of that increase in land values to subsidize affordable housing in affected neighborhoods? We can, and that’s exactly what Portland has done for more than a decade:  It now sets aside 40 percent of the tax increment funds (TIF) raised in urban renewal districts.  Since 2006, the program has generated nearly a quarter of a billion dollars to support affordable housing.

And there’s little question that it has supported income diversity in redeveloping neighborhoods. Portland’s tony Pearl District, adjacent to downtown, as blossomed in the past decade, adding more than 7,000 new residential units, plus offices and stores. The city’s policy has plowed tens of millions of dollars in the tax increment from new construction and rising property values into affordable housing in the neighborhood.  That funding, coupled with other resources, has supported the construction of 2,200 units of affordable housing, interspersed with market rate units. Elsewhere in the city, urban renewal funds are being used to support the construction of affordable apartments and subsidize a homeownership program, with funding targeted to helping residents displaced in previous decades.

Portland’s Pearl District

Using TIF to support affordable housing is a key policy for minimizing the effects of neighborhood revitalization. It taps the increase in property values associated with gentrification, and spends that money on building additional affordable housing, and thanks to the geographic nature of TIF districts, puts the funding in exactly the places where development pressure is greatest. In addition, TIF funding is automatically proportional to need: the more property values rise, the more development occurs, the more money TIF generates for housing.

The Ramona: Affordable housing in the Pearl, subsidized with TIF.

And unlike inclusionary housing requirements that drive up the cost of development, and load costs solely on new residential units–which have the effect of restricting supply, and likely worsening affordability problems, TIF doesn’t change the development cost calculus for new housing construction.

Why use TIF for affordable housing in gentrifying neighborhoods?

Urban revitalization projects have the effect of driving up property values, and resulting in increased market rents, which creates justifiable concerns about housing affordability and potential displacement. If cities can harness some of the increase in market value, they may be able to generate resources to subsidize the preservation, rehabilitation or construction of affordable housing, and ameliorate these effects.

Lance Freeman of Columbia University, one of the nation’s leading scholars on gentrification, has suggested using tax increment financing to subsidize affordable housing in neighborhoods experiencing rapid change.  He wrote:

“Financing could come from the increase in property values and consequently property taxes in the zone that by definition accompanies gentrification of the type that might cause displacement. The increase in property taxes in the gentrifying neighborhood could be set aside specifically to fund affordable housing in the very neighborhood undergoing gentrification.”

One of the biggest problems associated with affordable housing is achieving scale.  While community land trusts and inclusionary zoning requirements are often touted as solutions to gentrification, they are seldom able to produce many units of housing in a timely fashion. For example, New York’s inclusionary housing program produced fewer than 200 units per year in all five boroughs combined; in the Pearl District alone, Portland’s  Portland’s TIF program supported more than that number in the Pearl alone in the same time period.

A key advantage of harnessing TIF is that it supports mixed income neighborhoods. TIF financing is geographically limited to redeveloping neighobrhoods assuring that  low and moderate income housing gets built in the same areas that are experiencing new market rate housing construction, automatically precluding the establishment of purely high income enclaves.

Portland’s TIF for affordable housing program

Portland Oregon dedicates approximately 40 percent of its tax increment financing (TIF) revenues to subsidizing affordable housing in urban renewal areas. In the past eight years, the program has generated nearly a quarter of billion dollars for affordable housing, and helped support the construction and rehabilitation of thousands of units of affordable housing. The program provides affordable housing in neighborhoods undergoing revitalization, and does so without creating dis-incentives to private market housing.

For the past decade, Portland has dedicated a portion of the revenue from its tax increment financing to help underwrite the cost of constructing new affordable housing. This program applies in the city’s designated urban renewal areas, which by statute are restricted to include not more than 15 percent of the city’s land area.

This program has evolved over time. Originally, it was applied to a single urban renewal district (the River District, which encompasses the Pearl District).  Since 2010, it has been extended to most urban renewal districts city-wide. Typically, TIF funding is pooled with other sources of funds, such as low income housing tax credits (LIHTC) and state funds. (Additional history of the program is described below). In general, city policy now provides that 40 percent of revenues from tax increment funds in urban renewal zones are to be set-aside for affordable housing. (The policy is waived for some purely industrial urban renewal areas).

Since its inception the program has helped subsidize the construction of several thousand affordable housing units in urban renewal areas citywide.  In the city’s largest urban renewal area, the River District (which includes the rapidly growing Pearl District), the program has generated $83 million in TIF funds which have helped support the construction of about 2,200 affordable housing units. Pearl District affordable housing projects are interspersed with market rate housing in the area. (Red buildings were affordable housing).

Source: (Schmidt, 2014)

The number of housing units financed through the TIF program is significant, especially when compared to the output of other programs local governments have enacted to try to create more affordable housing, such as inclusionary zoning requirements. The total number of units of housing constructed with assistance from the TIF set-aside in Portland’s river district exceeds the number of inclusionary housing units built in all but a handful of cities.

Policy advantages of TIF

Using TIF funds for affordable housing has two especially of desirable properties:

  1. TIF funding doesn’t add costs for developers or impose additional development restrictions. Once a TIF district is established, the provisions are essentially invisible to developers. Moreover, developers pay the same property taxes whether they build inside the TIF district or not. The TIF diverts the taxes that would have otherwise been collected by the city (and other tax levying entities) for the life of the TIF district. Thus, unlike other measures (impact fees, inclusionary zoning requirements), TIF financing doesn’t dis-incentivize  housing construction or development.
  2. TIF captures tax revenues both from the value of new investment in the area and the appreciation of existing properties (developed and undeveloped) in the district. Revitalization tends to increase the property values of existing residential, commercial and industrial land and improvements, and result in higher property tax revenues for the city. TIF then allocates a portion of these property tax revenue increases to affordable housing.

Portland’s program was subject to media criticism for falling short of an announced goal that a certain percentage of all the housing in the River District would be affordable–it produced about 2,200 units, short of a goal of about 2,400 units. Public officials should be cautious in setting expectations for TIF financed housing.

One important limitation of the TIF program in Oregon (which is typical of most states), is that the revenues raised in the district must be expended in the district. Portland is precluded, for example, from building housing in one district with funds from another district.  In the case of the River District, this requires the city to build housing in a high cost area.  This has positive and negative effects: It assures that new affordable housing gets build in high cost and high income areas, promoting socioeconomic integration; on the other hand, it likely increases the cost per unit of affordable housing, and reduces the total number of affordable units that could be built with public funds.

Tax increment financing has rarely been used as part of an inclusionary housing program. A recent survey by the Lincoln Institute of Land Policy of 250 inclusionary housing programs nationwide reports that only 20 programs (8 percent of those surveyed) provided a direct public subsidy (including tax increment financing). Thaden, E., & Wang, R. (2017). Inclusionary Housing in the United States: Prevalence, Impact, and Practices Working Paper WP17ET1 (Working Paper No. WP17ET1) (p. 67). Washington, D.C.: Lincoln Institute of Land Policy.

History of Portland’s tax increment financing for affordable housing program

In 2006, the Portland City Council  adopted the original Set Aside Policy, requiring that “30% of Tax Increment Financing (TIF) over the life of an Urban Renewal District shall be dedicated to the development, preservation and rehabilitation of housing affordable to households with incomes below 80% median family income.”

The Council modified that policy in 2011, to replace change the applicability of the set-aside from each individual urban renewal district to all urban renewal districts, collectively, city-wide.

In 2015, the City Council voted to further revise the program by adopting set-aside amounts for each of the city’s urban renewal areas, with amounts set aside for affordable housing being tied to the opportunity for housing development in the area. Several renewal areas are industrial districts with less land suitable for housing development.


Tax Increment Funds Dedicated to Affordable Housing in Portland, 2006 to 2016


Urban Renewal Area  8 Year Set-Aside
Central Eastside URA  $5,236,964
Downtown Waterfront URA  $17,457,873
Gateway URA  $9,462,159
Interstate URA  $29,780,785
Lents URA  $23,742,202
North Macadam URA  $28,238,027
Oregon Convention Center URA  $10,903,583
River District URA  $83,090,101
South Park Blocks URA  $35,550,080
Total, All URAs  $243,461,774
Fiscal Year  Annual Set-Aside
FY06-07 Actuals  $19,698,857
FY07-08 Actuals  $20,412,794
FY08-09 Actuals  $26,908,476
FY09-10 Actuals  $41,891,776
FY 10-11 Actuals  $27,221,625
FY11-12 Actuals  $43,096,200
FY 12-13 Actuals  $28,004,694
FY 13-14 Actuals  $7,384,641
FY 14- 15 Actuals  $18,292,019
FY 15- 16 Actuals  $10,550,691
Total, All Fiscal Years  $243,461,774

Source: Portland Development Commission/Prosper Portland.



Electric vehicle subsidies: Inefficient & Inequitable

Subsidizing electric vehicle purchases is an expensive way to reduce carbon emissions, and mostly subsidizes rich households who would have bought electric vehicles anyhow

There’s a new study from the National Bureau of Economic Research that looks at the effectiveness and distribution of the electric vehicle (EV) purchase credits. The study, by economists from Peking University, Resources for the Future and Cornell concludes:

  • Most people who got the subsidies would have bought an electric vehicle even without the subsidy.
  • Electric vehicles mainly substitute for highly efficient internal combustion engine or hybrid vehicles
  • The net cost of reducing a ton of carbon with electric vehicle subsidies is $552 — at the high end of such strategies.
  • Most of the benefits of EV subsidies go to high income households

A largely wasted subsidy

A key finding of the study is that most of the buyers of electric vehicles who got the subsidies would have bought them even without the subsidy.  Some inefficiency is to be expected with any subsidy, but the authors estimate that 70 percent of all buyers would have bought their EV even without a subsidy.

Tesla P100D, 0 to 60 in 2.5 seconds via “ludicrous mode.” Also ludicrous: EV subsidies.

Chiefly benefiting high income households

New car buyers have, on average higher incomes than the average household, and given the price premium for most electric vehicles, incomes of EV buyers are higher still.  The authors report than the average household income of buyers of electric vehicles was $140,000.  As we pointed out in our article “Ten things more inequitable than road pricing,” subsidizing new car purchases tends to automatically be a pretty regressive policy.

In addition, most of the “wasted” subsidy goes to higher income households. The subsidy makes the biggest difference in buying decisions for price-sensitive moderate income households considering the more modest EVs (like a Nissan Leaf or Chevrolet Bolt). As the authors point out:

Since higher-income households are less sensitive to prices and have a stronger preference for newest technologies, they are more likely to adopt EVs without the subsidy.

Substituting for relatively cleaner cars, not dirty ones

In theory, subsidies to EVs make sense because the substitute cleaner cars for dirty ones. Many climate adaptation strategies now assume, for example, that vehicle electrification will spur rapid reductions in CO2 emissions. But most models of the effects of electrification are based on the naive assumption is that each eleçtric vehicle substitutes one-for-one with the “average” internal combustion engine (ICE) vehicle, and so the reduction in carbon and other emissions ought to simply be calculated as the difference between carbon pollution from the average car and carbon pollution from the electric vehicle (which is determined by the source of its electricity).  But the market data examined in this study show that those who bought electric cars were not typical buyers, and that if they hadn’t bought an EV, they would likely have purchased a highly efficient ICE vehicle or hybrid. If they hadn’t purchased an EV, the recipients of tax credits would have purchased a vehicle with an estimated fuel economy about 4.2 miles per gallon greater than the fleet average. Electric cars turn out not to attract folks who were planning to buy a gas guzzling SUV or pickup, instead, they seem mostly to cannibalize prospective Prius purchasers.

That has a critical implication for transportation models that assume that electric car adoption will quickly reduce carbon emissions.  If EVs substitute for highly efficient gas powered vehicles rather than the average vehicle (or better yet, the least efficient), the gains in carbon reduction will be much smaller and come more slowly than the “naive” model suggests.

In his famous essay Pollution, Property and Prices, the Canadian economist J.H. Dales, pointed out the folly and expense of trying to subsidize our way to lower pollution levels. Handing out subsidies–as opposed to a straightforward allocation of costs–turns out inevitably to be highly inefficient, prompting overconsumption of the things we subsidize, and turns out to be an inefficient way to get less pollution. It’s why a carbon tax–with the proceeds spent on some combination of equal per person rebates (the carbon dividend) and widely shared services, (like transit)–is a superior alternative.

Jianwei Xing, Benjamin Leard, Shanjun Li, “What does an electric vehicle replace?,” NBER Working Paper 25771 , April 2019.

Hat tip to Aaron Gordon of Jalopnik, who wrote “EV credits go mainly to rich people who would buy EVs anyway.


Another housing myth debunked: Neighborhood price effects of new apartments

New research shows new apartments drive down rents in their immediate neighborhood, disproving the myth of “induced demand” for housing

If you’re a housing supply skeptic, there’s one pet theory that you’ve been able to hang your hat on, in the face of a barrage of evidence that increasing the supply of housing helps hold down, or even drive down rents. It’s the theory of “induced demand”–that building nice new apartments (or houses) in a neighborhood, so changes a neighborhood’s attractiveness to potential buyers that it drives up prices. It’s a plausible sounding argument, but in our view a wrong one, meaning it’s time for another episode of City Observatory’s own “Myth Busters.”

Like Adam and Jamie, but for housing policy.

Regular readers of City Observatory will immediately recognize the term “induced demand” because we talk about it frequent in the context of transportation.  When a highway department widens a road (invariably, in a vain attempt to reduce traffic congestion), it tends to quickly attract new traffic and becomes just as congested as before (a phenomenon so common and well-documented that it is now termed “the fundamental law of road congestion“).

The induced demand theory applied to housing then, is that building new housing somehow signals a big change in the neighborhood’s amenities and livability and the new supply of housing triggers an even bigger increase in demand, such that any beneficial effects of added supply that would occur in the textbook model are more than offset.

A slightly more nuanced version is a claim that while it may help with supply regionally, in may trigger a change in a neighborhood’s relative perception as a desirable place to live, and while the supply effect may help lower rents regionally, it drives up rents locally:  Rick Jacobus makes this argument

In other words, the demand for housing in any neighborhood is highly variable and can switch from very low to very high quickly. But the supply is almost entirely fixed. In established neighborhoods, no matter how much building is going on, the new supply will be small relative to the overall market so increased supply will have almost no impact on rents. It might theoretically drive rent down some tiny amount but, in practice, the impact of new development in a neighborhood is usually the opposite because it increases demand (for that neighborhood) by more than it increases supply. Partly this is true because any new development is visible, new and exciting. Developers push this process along with marketing campaigns that invariably promote not just one building but the surrounding neighborhood (even if they have to coin a new name for the neighborhood). The result is that—on the neighborhood level—adding supply may not lower rents. It may raise them.

While it’s a semantically appealing analogy, it makes little if any economic sense.  A key difference between roads (nearly all roads, anyhow) and houses, is that we charge positive prices for housing in a way we don’t for freeway capacity. The reason expanding capacity induces demand in the case of roadways is that we charge road users a zero price. Thus capacity (and willingness to tolerate delay) are the only things regulating demand, and when capacity is expanded, demand responds quickly.  As we’ve shown time and again, as in the case of the Louisville I-65 Ohio River Crossing, when you actually price new capacity at even a fraction of its cost, demand evaporates.

Crying “induced demand” seems to be an increasingly popular gambit from housing supply skeptics.  The Southern California Association of Governments deployed it as part of its “Regional Housing Needs Assessment” a state mandated document to calculate how many housing units the region needed to add. SCAG argued that adding more housing to improve affordability would be futile because it would induce additional demand, as on freeways.  UCLA Professor Paavo Monkkonen, challenged that analogy:

The package compares housing supply and affordability to induced demand on freeways (page 23), which they properly note is unlikely to alleviate congestion in the long run. This comparison is not apt, because freeway access is free and housing is not. Congestion occurs when the absence of prices causes a shortage. A housing crisis occurs when a shortage of housing causes high prices. This crucial difference means that new supply is almost useless in the former and incredibly important in the latter.

Still, in the abstract, its possible to imagine that the construction of a new apartment building is some sort of watershed event that triggers a mass re-appraisal of the attitudes of potential renters.  There is evidence at least some externalities and positive feedbacks in development.  The empirical question is whether the size of these effects is enough to swamp the downward effect on rents from expanding the supply of housing in the neighborhood.

Until now, that’s been a factual void–one which lets supply side skeptics assert the induced demand hypothesis for housing.  But it is a void no more:  A forthcoming paper–“Does Luxury Housing Construction Increase Rents in Gentrifying Areas?” from Brian Asquith, Evan Mast, and Davin Reed, explores this question in detail.  Asquith and Mast are economists with the Upjohn Institute; Reed is an economist with the Philadelphia Federal Reserve Bank. Their paper, available in preliminary draft form here, uses very geographically detailed data on apartment rents and new apartment construction in gentrifying neighborhoods to see whether a new building drives up prices nearby (the induced demand theory) or whether it depresses them (the supply side theory).  Earlier, we reviewed an paper from Mast on the chain reaction of migration triggered by the construction of new buildings; it showed that constructing new market-rate buildings triggered a series of moves that produced significant numbers of vacancies in lower income neighborhoods.)

Asquith, Mast, and Reed gathered data for 100 new apartment buildings in each of eleven cities around the country. They identified geographically isolated buildings, and then gathered data on rental listings for apartments in the area surrounding the new building. They analyzed the data to see whether rents went up or down closer to the new building in the year after it was constructed.  If the “induced demand” theory were correct, one would expect the rental prices of existing apartments close to the new building to rise more or faster than other apartments located further away.  This chart summarizes rents by distance (in meters) from the newly constructed building.  The dashed line is the “before” showing the level of rents prior to construction, while the solid line is the “after” showing rents after construction.  (And to be clear:  the rents shown are for apartments in the area excluding the apartments in the newly built building.)

This chart shows that rental prices for apartments close to the new building fell relative to the prices for apartments located further away. The dashed “before” line has a negative slope, suggesting that prices declined the further you got from the site of the new building.  The solid “after” line has a positive slope (prices increase the further you get from the new building).  Overall, prices are higher (the solid line is above the dashed line), but prices actually went down next to the new building, and increased far less than in the area further away from the new building.

These data are a strong challenge to the induced demand theory.  If a new building made an area more attractive, one would expect the largest effect in the area very near the building. But, consistent with the traditional “more supply reduces rents” view, the addition of more units in an area seems to have depressed rents (or at least rent increases) compared to buildings in the surrounding area.

While this is still a preliminary paper, and has yet to be published, it does offer the best evidence yet presented on the theory of induced demand. We’ll reserve a final judgment until after review and publication, but based on the data presented here, this myth is busted.

Addendum: A hat tip to Trulia economist Issi Romem for flagging this study.


The Week Observed, June 14, 2019

What City Observatory did this week

1. The economics of fruit, time, and place. Last week, Paul Krugman, fresh off his European vacation, waxed poetic about the fleeting joy of summer fruit, and true to form, may an economic argument about how this illustrates the value of such perishable time-limited experiences. Here in Portland, we’re in the midst of the brief season of Hood strawberries, a fragile, juicy fruit that puts the crunchy industrial strawberry to shame, and which is available only for a few weeks just prior to the Solstice. You can only enjoy the Hoods for a few weeks, and because they don’t travel, only in a few places. More broadly though, as Jane Jacobs pointed out, its that kind of distinctive, highly local attribute that’s one thing that places can’t have competed away. In an era of globalization and technology that makes so much of our lives ubiquitous and indistinguishable from place to place, its the little, local, time-limited things that will matter more and more.

2. How to deal with gentrification: TIF for affordable housing. The hallmark of a gentrifying neighborhood is rising property values, and increasing rents may make it difficult for low and moderate income households to stay in the neighborhood. What if we could harness some of the wealth creation that takes place with revitalization to assure mixed income housing? One model is to use tax increment financing, capturing a portion of the increased property taxes from new development, and from appreciation, and using that to subsidize affordable housing.  Portland has had such a policy for more than a decade, and has raised a quarter of billion dollars for affordable housing, and built more than 2,000 affordable units in its hottest new upscale neighborhood, the Pearl District. Unlike inclusionary requirements TIF set-asides don’t discourage new housing investment, and automatically generate new revenue in proportion to the rate of property value escalation. It’s a policy that could assure mixed income development and dramatically reduce displacement.

The Ramona: Affordable housing in the Pearl, subsidized with TIF.

Must read

1. Asset-building policies for people who don’t own homes. For too long, our principal national strategy for encouraging saving and wealth creation has been subsidizing home ownership.  A combination of generous tax benefits, guarantees for mortgage lending, infrastructure construction, and protective local zoning have helped many Americans to build wealth by owning a home. But as the Brookings Institution’s Jenny Schuetz argues, we’ve done precious little to help the 40 percent or so of Americans who rent to build assets, and effectively treat renting as a “tenure of last resort.” In addition, home ownership can be an expensive and risky proposition, especially for low and moderate income households. Schuetz advocates tapping the insights of behavioral economics to create more “nudges” to support and encourage everyone to save money in a more diversified, less risky fashion.

2. Uber and Lyft:  Scourge and Scam? Hubert Horan has carved out a position as one of the most thoughtful and persistent critics of the ride-hailing industry, and in the wake of Uber and Lyft’s public offerings, has weighed in with a lengthy essay questioning their economics (and just about everything else). Horan argues that the growth of Uber has been driven almost entirely by the company’s decision to have venture capital (and now shareholders) underwrite billions of dollars in losses to provide rides below costs.

Uber’s massive subsidies were explicitly anticompetitive—and are ultimately unsustainable—but they made the company enormously popular with passengers who enjoyed not having to pay the full cost of their service.

Massive subsidies are plainly unsustainable. If it’s ever to turn a profit, Uber will have to raise prices. Higher prices will check its growth rate, and create room for other entrants, perhaps ones that can replicate Uber’s technology, while offering driver/owners a bigger share of the take. Unless the company can erect and maintain barriers to entry–and Horan argues that’s effectively impossible–the ride hailing industry, and Uber’s role in it, is going to look very different–and shareholders should be prepared for a bumpy ride.

As an aside, it’s worth noting that sweeping, unsustainable (and counterproductive) subsidies for car rides are nothing new.  Nearly a century of public policy, in the form of publicly subsidized road construction, the devotion of huge amounts of public space to socialism for private car storage, to shifting the costs of crashes, air pollution and climate destruction to society at large have fueled the growth of the automobile industry. That set of policies were a template for the-ride hailing industry, and coupled with the low hanging fruit of a poorly managed, technologically obsolete taxi cartel, and a gullible set of “we’re looking of the next Amazon” investors produced the business models we see today.

New Knowledge

How overstored is America? Technically, this qualifies as old knowledge rather than new knowledge, but it bears repeating just the same.  Despite the steady attrition of mass market retailers and wave after wave of store closures, the US has vastly more retail store space than almost every advanced country. We draw on a 2017 Cushman Wakefield comparison of the US market with other large nations. In the US, we have about 70 to 100 percent more square feet per capita than other sprawling anglophone nations (Canada, Australia), and three to five times more square feet than more compact, urban European nations (Germany, France and the UK).

It’s also worth noting that in these countries, the retail square footage is much more productive, the average square foot in France generates $2,000 in sales per year, more than four times the average of about $500 per square foot in the US. These data suggest that we could get by with many fewer stores and much smaller ones.


The Week Observed, June 7, 2019

What City Observatory did this week

1. Myth-busting:  Building new market rate housing doesn’t drive up nearby rents. A favorite assertion of some housing supply-side skeptics is the theory that building new market rate housing in a neighborhood drives up rents in the immediate area. It’s a mistaken analogy to the idea of “induced demand” in transportation. The idea is that expensive new housing makes an area more desirable, and rents rise nearby. A new study uses fine-grained data on changes in rents around newly constructed market-rate apartment buildings in eleven strong-market cities around the country to test this theory.  It finds that new buildings tend to depress the level of rents and rent increases in their immediate vicinity.  The myth of “induced demand” for housing driving up rents is busted.

2. Inefficient and inequitable subsidies for electric vehiclesSubsidizing electric vehicle purchases is an expensive way to reduce carbon emissions, and mostly subsidizes rich households who would have bought electric vehicles anyhow. There’s a new study from the National Bureau of Economic Research that looks at the effectiveness and distribution of the electric vehicle (EV) purchase credits. The study concludes:

  • Most people who got the subsidies would have bought an electric vehicle even without the subsidy.
  • Electric vehicles mainly substitute for highly efficient internal combustion engine or hybrid vehicles
  • The net cost of reducing a ton of carbon with electric vehicle subsidies is $552 — at the high end of such strategies.
  • Most of the benefits of EV subsidies go to high income households

3. Portland records nation’s biggest decline in congestion–and nobody cares. This week, traffic data provider TomTom came out with its global congestion rankings, and Portland recorded the biggest decline in congestion of any US city. You think it would be cause for civic celebration, and trumpeting effective policies. But neither the media nor the state transportation department paid the slightest attention. The reason:  traffic engineers really don’t care about reducing congestion. Congestion statistics and rankings are just public relations fodder for selling the next big freeway widening project. If they paid any attention to data, engineers would notice that higher gas prices and road pricing seem to be the only things that consistently lead to lower levels of congestion.

Must read

1. San Francisco Sierra Club position paper on housing. For a long time, San Francisco’s Sierra Club has been closely allied with the NIMBY side of the housing debate. That’s generated a considerable amount of ridicule: increasing density in cities is one of the best ways to reduce sprawl and pressure to develop environmentally sensitive areas.  A new position paper from the Sierra Club shows a dramatic shift in position. Entitled “Unpacking Myths about housing development in the Bay Area” the paper makes a strong YIMBY case for supporting an increase in housing supply in San Francisco (and by extension, elsewhere in California cities.  The paper takes on common NIMBY arguments about displacement, traffic, loss of local control, and “neighborhood character.” It appears that this change of heart has come too late, however, to make a material difference in the battle in Sacramento to adopt Senator Scott Wiener’s SB 50, which would legalize apartment construction near transit stops.

2. Rent control: Stockholm’s syndrome. Some advocates harbor a naive belief that if we could just take capital (or capitalism) out of the housing market we could solve the housing affordability and availability problem. The Guardian has a short article offering some insight into how such systems work in practice. Stockholm has long had a strong system of rent control, with about 40 percent of the region’s residents living in rent controlled apartments. While those fortunate enough to get apartments enjoy low rents (the equivalent of $600 monthly for a modest apartment), the city has a severe shortage and more than 500,000 people are on the waiting list for housing, with an expected wait of 20 to 30 years to get a unit. The shortage means there’s a black market for rent controlled units, with people illegally subletting units or paying bribes to become a favored tenant.

“It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” McCormac [head of the local property management association] says. Students, young people and immigrants are consequently shut out, and ethnic and social segregation is increasing.

Throttling the market doesn’t eliminate the underlying shortage of housing, nor does it magically create a better way to allocate apartments. (Hat tip to Market Urbanism).

3. More lying about highway widening. At City Observatory, we’ve chronicled the long series of lies told by the Oregon Department of Transportation in its efforts to sell a half-billion dollar widening of the I-5 freeway in Portland. Apparently, there was a seminar on this best practice at AASHTO, as we’re seeing it spread to other states. Alissa Walker of Curbed reports on the Maryland Department of Transportation’s phony claim that speeding freeway traffic will reduce carbon emissions–a claim we’ve repeatedly debunked here at City Observatory. Cars consume more fuel and generate more CO2 at higher speeds, and importantly (and ignored by the DOTs) reducing congestion prompts more traffic, and the effect of this induced demand more than offsets any efficiency from lowered idling.  CO2 increases with VMT and MPH!

In the News

Phys.org‘s article “Traffic congestion reconsidered” cited our analysis showing the increase in traffic congestion that resulted after the widening of Houston’s Katy Freeway.

StrongTowns republished Joe Cortright’s essay, “Change is a constant in most neighborhoods.”

The Oregonian quoted City Observatory’s Joe Cortright in its article, “Construction gridlock: Portland area faces years long stretch of freeway, street and bridge projects.”

The Week Observed, June 21, 2019

What City Observatory did this week

1. It’s official: The Rose Quarter Freeway Widening is a Boondoggle. Frontier Group and USPIRG released the latest version of their annual Highway Boondoggle report, and the Oregon Department of Transportation’s half-billion dollar Rose Quarter freeway widening. The report underscores the verdict from national experts that the project will do nothing to resolve transportation problems, and is at odds with the region’s stated environmental and safety goals.

2. A new measure of the urban economy. The Brookings Institution has a new report measuring the density of employment in the nation’s hundred or so largest metropolitan areas.  We’ve long known that the concentrations of workers in cities is a key driver of economic growth:  cities promote the interactions among people that generate new ideas and raise worker productivity. The Brookings report adds a new metric, perceived job density, that shows how concentrated employment is within individual metropolitan areas. Their analysis shows that job density has been increasing nationally, with most of the increase being driven by the clustering of information technology and professional services jobs in a handful of superstar cities, including San Francisco, Seattle, and New York. Coupled with other metrics, like job sprawl and median commute distances, the job density measure gives analysts a  more precise way to characterize urban form, and measure what matters to metropolitan success.

Must read

1. The New York Times Editorial Board goes YIMBY. Sunday June 16th’s lengthy lead editorial, “Americans’ Need More Neighbors” sounds a lot like a distillation of themes you might have read at City Observatory.

The United States is suffering from an acute shortage of affordable places to live, particularly in the urban areas where economic opportunity is increasingly concentrated .  . . Increasing the supply of urban housing would address a number of the problems plaguing the United States . . .allowing more people to live in cities could mitigate inequality and reduce carbon emissions. . . . The loose fabric of single family neighborhoods drives up the cost of housing by limiting the supply of available units.  It contributes to climate change by necessitating sprawl and long commutes. It constrains the economic potential of cities by limiting growth. . . . Market rate construction can also help reduce the need for public housing subsidies in the long run. Today’s market rate apartments will gradually become more affordable, just as new cars become used cars.

And, at times, the gray lady sounds even snarkier than an strident urbanist blogger:

. . . advocates for affordable housing should be jumping up and down and screaming for the construction of more high-end apartment buildings to ease demand for existing homes. Those buildings are filled with people who would otherwise be spending Saturdays touring fixer-uppers in neighborhoods newly names something like SoFa, with rapidly dwindling populations of longtime residents.

2. Tolling gets automated. The technology for enforcing and collecting tolls has advanced slowly. Toll booths have slowly given way to electronic systems for reading RFID (radio frequency identification) tags, but these require expensive gantry structures and have to be backed up by optical license plate readers to detect vehicles without tags. The growth of cellular technology, vehicle automation and global positioning systems are likely to further shift the paradigm for toll collection. PayTollo, a subsidiary of satellite radio provider Sirius, has rolled out its cellular/GPS based system for toll payment in several states, including California, Florida and Texas. This technology plugs into the OBD-II port on cars, and using GPS, automatically pays tolls, informing users of charges via smartphone app. Such a system portends tolling that is much more seamless and fine-grained than existing tolling technology. Ultimately, we’re going to need to reflect back to road-users the costs of their decisions to drive on congested roads. This technology points out the way to do that in an efficient fashion.

3.  Cities help keep you fit. A new report from the Centers for Disease Control reports Americans are getting slightly more exercise than in previous years, but still far less than is recommended for optimal health. As Time highlights, the built environment plays a key role, and urban residents  get more exercise than their rural counterparts:

City dwellers were more likely than rural residents to get enough exercise, according to the new CDC data: about a quarter did, compared to a fifth of people in rural areas. That’s in part because urban environments tend to include sidewalks, bike paths and other resources that make it easier to combine transportation and activity, the report says. Taking public transportation also typically builds some physical activity into a commute, versus driving door to door.

4. Opportunity Zone investment windfalls. The 2017 federal tax cuts established the Opportunity Zone program, a special set of capital gaines tax breaks for investments in depressed areas. ProPublica takes a close look at an Opportunity Zone in Baltimore which will benefit a previously planned project being financed by sports apparel firm Under Armour. In theory, the opportunity zone tax break is supposed to catalyze new investments in distressed areas.  But as Pro Publica documents, the Under Armour project has been in the works for years, and their site managed to be designated as an eligible zone, even though it isn’t actually economically distressed. This example underscores how poorly targeted the Opportunity Zone program is in practice, and how its cost will be driven up by forgiving or deferring taxes on investments that would have been made anyhow.

In the News

The Pittsburgh Business Times reported on Joe Cortright’s speech to the National Association of Business, INdustrial  and Office Parks (NAIOP) raising concerns about the effects of inclusionary zoning policies.

The Portland Oregonian cited Joe Cortright’s critique of traffic congestion estimates in its story, “Wait, Portland’s traffic improved last year? TomTom navigation company says so.”

Note:  This post has been revised to correct errors.

The Week Observed, June 28, 2019

What City Observatory did this week

1. Why is the US killing so many pedestrians? The grim data from 2018 are now available:  More than 6,200 US pedestrians were killed by automobiles last year, an increase of more than 50 percent in the past decade.  Many reasons are given to explain the trend, and some make it sound as if pedestrian deaths are inevitable in a modern country with cars and distracted drivers. Meanwhile, the evidence from Europe shows that highly developed economies–ones with lots of cars and universal smart phone ownership–can have low and declining rates of pedestrian fatalities.  Indeed, in the past nine years for which data are available, European pedestrian death rates have fallen by more than a third.  Even though Europeans walk far more often, and on narrower streets that regularly mix cars and pedestrians, the pedestrian death rate in the US is now 75 percent higher than in Europe. In the US, we’re a long way from Vision Zero, and we’re heading in the wrong direction.

2. Valuing Walkability.  A new report from Smart Growth America and George Washington University looks at the real estate value associated with walkable urban neighborhoods. The study reports that more walkable neighborhoods in US cities command substantial market premiums over less walkable places, and that this premium has increased in recent years. The growing value attached to walkable, urban places is evidence of what we’ve called the “Dow of Cities”–a market signal that urban living is both valuable and in short supply.


Must read

1. Google pumps a billion dollars into Bay Area housing affordability.  Google CEO Sundar Pichai published a blog post announcing Google’s intention to devote a billion dollars to addressing housing affordability in the San Francisco Bay Area. It’s a testament to the severity of the housing shortage to the economic vitality of the region, that the company would make such a large commitment. It’s also a reminder of the scale of the problem. Three-quarters of the Google commitment is in the form of the company’s plan to seek to get housing built on land it owns which is apparently now designated for commercial or industrial use.  The company says this $750 million in property, could support 15,000 houses, meaning the land alone is worth $50,000 per housing unit.

2.  Brookings connects the dots on transportation, accessibility and urbanism. A new essay “Connecting people by proximity: A better way to plan metro areas” by Adie Tomer, Joseph Kane and Lara Fishbane of Brooking’s Metropolitan Policy Program, makes a strong case that cities need to shift the focus of policy from moving people (and things) to building the kinds of places people want to be. For too long, they argue, we’ve optimized cities to increase travel speed, chiefly by car, to enable people to more easily connect to one another. That’s simply generated decentralization and sprawl, and ended up increasing the amount of travel we all have to undertake.

Instead, they argue, we should be looking to improve the accessibility and connectedness of cities by designing land use patterns–and promoting density–in a way that minimizes the need to travel.

3. The kids are alright. The older generation may have trouble spotting the connection between spending billions of dollars to widen freeways and taking the challenge of climate change seriously, but the young do not.  BikePortland reports that SunrisePDX, the local affiliate of the national climate action network has made blocking construction of new freeway lanes in Portland one of their signal priorities, along with fighting an export terminal for fracked crude oil. The group marched on City Hall in Portland last week, taking their campaign to the office of Portland Mayor Ted Wheeler.

SunrisePDX protestors at Portland City Hall (Bike Portland)

Their letter to the Mayor makes an eloquent case for a change of direction.

It is far past time for words without meaningful action. We are tired of hearing about “environmental protection” in the abstract, while new projects are being built to facilitate the continued expansion of fossil fuel usage. The time is now to act boldly; to break cleanly from the status quo; to take the political risks necessary to secure the future of our planet and its inhabitants.

New Knowledge

Excessive land use regulations increase vacancy and produce longer commutes.  We’ve long understood that strict local controls on new development can drive up the price of housing. A new study from England shows that development restrictions can have other negative effects as well.  The study by Paul Cheshire and colleagues from the London School of Economics looks at the connection between development restrictions in English local planning areas and variations in local vacancy rates and commuting distances.

The theoretical effect of development restrictions on vacancy is ambiguous. By driving up prices, restrictions essentially raise the cost of leaving a unit vacant, and thereby encourage sellers to sell more quickly. But at the same time development restrictions may tend to amplify the mismatch between the characteristics that buyers are seeking and what’s actually available in the market. If it’s harder to build new units that match what people are looking for, they have search longer to find what they want and to make due with something that’s less that optimal. The study finds that this “mismatch” effect dominates, and that a one standard deviation increase in the strictness of local planning requirements leads to a 0.9 percentage point (23 percent) increase in vacancy rates. Also, because buyers have to look further afield for a home that matches their needs, they tend to end up commuting farther to work. The author’s estimate that the increase in development strictness by one standard deviation increases commuting distances 6.1 percent (which is in essence an additional, but generally unrecognized, increase in the cost of housing, as workers have to spend more time and money to live where they want).

Cheshire, Paul and Hilber, Christian A.L. and Koster, Hans R.A. (2018) Empty homes, longer commutes: the unintended consequences of more restrictive local planning. Journal of Public Economics, 158. pp. 126-151. ISSN 0047-2727

In the News

In Governing, Alan Ehrenhalt quotes City Observatory’s Gentrification A to Z commentary in is column “The fables of gentrification.” Ehrenhalt writes: “Far more urban change is being created by poorer people and immigrants moving to suburbs than by rich people moving downtown. And actual displacement — the popular notion of wealthier white newcomers forcing out long-term minority residents — is even more rare.”


The Week Observed, July 19, 2019

What City Observatory did this week

Homeownership is frequently a bad bet. Although homeownership gets treated as the best way to built wealth, it’s actually a highly risky financial strategy for many households, especially those with modest incomes. It turns out that buying a home is a highly leveraged, and non-diversified investment that exposes the buyer to considerable risk. New data shows that in any given five year period, there’s about a 30 percent chance that a home will experience a decline in value, which can wipe out a families investment if it has to sell.

Must read

1. What if a big coastal city with a thriving economy built lots of apartments? Look no further than Sydney, where the market has been building apartments with reckless abandon.  Tens of thousands of new apartments have been finished, more are in the pipeline, and rents are down as much as $100 a month, and vacancies are still rising. The Sydney Morning Herald reports:

Sydney is in the grip of an apartment building boom, with 30,880 multi-unit dwellings built last year, a record for any Australian city. There were 16 multi-unit projects finished in the first three months of 2019, adding another 1948 units.

Sydney has a pipeline of 194,000 multi-unit dwellings at various stages of development, a report by the Urban Development Institute of Australia (UDIA) shows. These numbers are flowing through Domain.com.au, where 17,500 units were listed for rent in June 2017, and ballooned to 32,680 listings in June 2019. The result has been landlords asking for $25 a week less median rent than last year.

Who says you can build your way to lower rents:  If you build enough apartments, rents will fall.  The problem is US cities seldom encourage (much less allow) this kind of irrational exuberance that works to the benefit of a city’s renters.  (Hat tip to Market Urbanism)

2. Free-park-and-ride lots at transit stops are evil. Sightline’s Michael Andersen makes a compelling case that the standard US practice of surrounding major transit stops with acres (or floors) of free parking is actually a clever plot by super-villains aiming to destroy transit systems. Seattle’s King County Metro is considering whether to start charging for use of its Northgate parking lot, which generally tends to be full at 7am. As a result, those who come later in the day find no parking (even if they would gladly pay for it), and other riders queue up or take earlier buses to be sure they get a “free” spot.  And, by everything that’s Shoup, we know that parking isn’t free; it costs the transit agency tons to build and maintain parking lots, and the money spent on that, can’t be used to run buses, with the result that those who don’t use the park and ride pay for it twice: through the money that supports it and through lousier transit service.

the parking garages you build are massive money-losers that every user of your system will have to pay for in the form of less frequent, less reliable transit service

Parking is a valuable premium service.  Charging users the actual price of providing it is a better way to allocate the parking, and a fairer and more efficient way to run a transit system.

3. Why integration matters.  The New York Times Thomas Edsall uses the recent resurfacing of the busing controversies of past decades to explore the logic, merits and obstacles to integration. His column presents a powerful summary of research showing the striking benefits of living in more integrated communities:

There is a large body of evidence that shows that African-American children perform better when they move out of high-poverty areas into more middle class, less segregated neighborhoods. Academic achievement improves, college completion rates go up, arrests go down, unwed parenthood declines and employment rates go up, with better pay.

In addition, these same studies show the gains for students of color don’t come at the expense of white children. Edsall also explores the tight relationship between housing segregation and school segregation.  The experts Edsall interviews have a range of opinions, from pessimistic to optimistic as to whether the nation is likely to make progress in promoting further integration, but there’s general agreement that it matters greatly to the nation’s future well-being and to reducing persistent inequality.

In the News

In an editorial asking “Is Zoning a Promise,” the CT Examiner quotes City Observatory’s observation that there’s an inherent contradiction between public policy goals of promoting housing affordability and treating homeownership as a wealth-building strategy.

Highway advocates use the same phony claims around the world it seems.  In an article entitled “Axing the Silvertown Tunnel,” The Ecologist (a UK publication), cited our myth-busting of the oft-repeated claim that road widening to reduce car idling in traffic will reduce CO2 emissions (expanding capacity induces added traffic that actually increases emissions.)