If we’re going to have a lot more missing middle housing; we’re also going to have a lot more landlords

Accessory dwellings, duplexes, triplexes and fourplexes are suited to “mom-and-pop” landlords, but tough tenants rights requirements may discourage many homeowners from creating more housing.

By Ethan Seltzer

City Observatory is pleased to feature this guest commentary by Ethan Seltzer. Ethan Seltzer is an Emeritus Professor in the Toulan School of Urban Studies and Planning at Portland State University. He previously served as the President of the City of Portland Planning Commission and as the Land Use Supervisor for Metro, the regional government. He has lived and worked in Oregon and the Portland region since 1980 and is a contributor to City Observatory. For the past 8 years he has been the co-owner of one rental unit in the City of Portland that has been in the family for 11 years.

Portland, like a few other states and localities in the US, is rethinking it residential zoning. Single household zoning occupies about 40% of the land in Portland, and the lion’s share of land zoned for residential use. Today, Portland is growing rapidly, but the new housing to accommodate that growth is largely being built outside of the single household zones.

Sure, Portland has had zoning to allow Accessory Dwelling Units (ADUs) on the books since 1980, and has long allowed, by right, duplexes on corner lots in single household districts. However, those housing types have amounted to a mere trickle of new housing capacity in the last 40 years, particularly when compared with the rate of population growth and its associated growth in the demand for new housing.

In recognition of the role that every residential zoning district and every neighborhood has to play in meeting the needs of Portland residents for suitable, affordable housing, the City embarked on its “Residential Infill Project.” The Residential Infill Project, or “RIP,” was created to devise new rules for adding missing “middle” housing types to existing neighborhoods:

By updating the rules that govern the types of housing allowed in our neighborhoods, we have an opportunity to accomplish two main goals: 1) Expand housing choices in residential neighborhoods to help ensure a more inclusive and diverse community. 2) Limit the size of new buildings to bring them more in line with existing homes. (https://www.portlandoregon.gov/bps/article/738843, page two)

Far from a wholesale demolition order for existing neighborhoods, the Residential Infill Project envisions an orderly and incremental addition of new housing types to existing neighborhoods, including the retention and modification of existing structures to contain more than a single dwelling unit.

However, missing completely from the RIP is the fact that the creation of new “middle” housing units brings with it the creation of a vast number of new landlords. Phrased another way, the success of Portland’s Residential Infill Project rests entirely on the emergence of a large number of individual land and homeowners willing to become landlords. Build an ADU, and you are now both a homeowner and landlord. Convert a single household dwelling into a duplex or triplex, and you’ve become a landlord.

Because of the incremental nature of the changes, and the relatively small scale of the infill, economies of scale are hard to come by. Certainly someone will figure out a business plan to take advantage of this new development capacity at scale. For the most part though, it is dependent on individuals willing to assume the risk of being a landlord. In short, meeting the goals of the Residential Infill Project to expand housing choices in all neighborhoods and for all households, and to keep new development small in scale, requires a new cadre of committed landlords.

Interestingly, just as the City and the State of Oregon are taking steps to require “middle” housing development opportunities in all single household zones, they are also taking steps to enact new tenants’ rights laws at the behest of the same coalitions advocating for the zoning changes. In Oregon a desire to sell a unit is no longer a legal reason to ask a tenant to leave. In fact, tenants now have a right to stay until the owner has a signed sale agreement with a new buyer. In Portland, no-cause evictions are, for the most part, illegal.

If you are a large landlord, this is simply adding to the cost of doing business. Leases will change, lawyers will be involved, and rents will rise to incorporate and cover these new costs of being a landlord.

However, for small landlords, owners of single rental units, or those contemplating using their existing properties more intensively, these new controls on the real excesses of corporate housing rental companies will also apply, for the most part, to them. This means that the uncertainty associated with owning rental property has just shot up for those considering becoming a part of the “middle” housing movement in Portland and Oregon.

The reaction on the part of small, prospective “middle” housing landlords could take several forms. They may decide to skip it entirely. Or, they might make affordable rents much less affordable to cover the risk. Or they might not put the units they create on the market, renting instead through AirBNB or simply through word of mouth to friends and family.

In all cases, the lack of attention to the needs of small landlords in both the tenants’ rights acts and the Residential Infill Project does not bode well for encouraging a large new group to become the landlords that Portland needs. In short, we’re on a path to become a city of impersonal, large, corporate landlords when what we’ve been working towards, apparently, is just the opposite.

Of course, it doesn’t need to end up this way. Portland could take steps to encourage and incentivize small landlords. It could recognize that there is a world of difference in capacity between those owning 4 or fewer units and those building 50 units at a crack. It could do more to bridge the gap between small landlords and tenants, creating programs to help them find each other and to negotiate mutually fair and supportive leasing agreements. It could even be so bold as to create nonprofit, neighborhood-based housing management associations to make it easier, simpler, and more transparent for investors and tenants to find and hold places in our City.

Unfortunately, the City is pursuing none of these, or to my knowledge, any others. To date, the City is seeking “middle” housing at the same time that it’s villainizing the landlords it’ll need to be successful. Tenants’ rights are important and needed. But more landlords are needed now. Landlords and tenants need each other, and simply changing the zoning is, at best, less than half a step in the right direction.

What City Observatory did this week

1. No Deposit, No Return: Another lie to try and sell the $3 billion Columbia River Crossing. The state’s of Oregon and Washington spent nearly $200 million planning the failed Columbia River Crossing, a 12-lane, five mile long freeway project connecting Portland and Vancouver, Washington. The two states walked away from the project over irreconcilable disagreements over the project and its financing. The two states’ departments of transportation have urged a revival of the project, saying that if they don’t break ground in the next five years, they’ll have to repay the federal government $140 million. That’s panicked some political leaders into throwing an additional $44 million in new money after the $200 million already spent. And, unfortunately, there’s actually no requirement that the money be repaid:  Federal Highway Administration regulations specifically waive repayment if local governments choose the “No-Build” alternative as part of the environmental review. The original CRC proposal was plagued with mendacity: false traffic projections, designs for an unbuildable, and then too-low bridge. The revived project seems to be setting out in the same dishonest path.

2. To solve the housing shortange, build a landlord. There’s growing interest in policies that re-legalize so-called “missing middle housing”–duplexes, triplexes and fourplexes, and which make it easier to add accessory dwelling units (ADUs) in single family zones. All of these policies envision “gentle density” which add a few units in built up neighborhoods.  All well and good, but as City Observatory friend Ethan Seltzer argues in this commentary, all of these units will require new landlords. If we’re going to incentivize the development of duplexes and ADUs, we’ll want it to be relatively straightforward to be a landlord for such units. It’s likely that growing tenants rights efforts will make it more challenging and less desirable to be a landlord, which could have the unfortunate effect of discouraging the development of in-fill housing.

Must read

1. Why does it take so long to implement missing middle housing reform? Here’s a plaintive cry from Sightline Institute’s Dan Bertolet, who reflects on the protracted struggle to actually implement “missing middle” housing policies, by re-legalizing duplexes, triplexes and fourplexes, as well as accessory dwelling units, in single family residential zones.  Policy analysts and political leaders have increasing come to realize that this kind of “gentle density” is a logical way to easy housing shortages and improve housing affordability, and many cities and leaders have pledged to get on with such policies. But the going has been extremely slow; as Bertolet points out, its taken Seattle nearly five years to get close to implementing its decision to allow secondary cottages (accessory dwelling units); a forthcoming to legalize duplexes and row-houses, by Bertolet’s calculations, may take another five years, meaning that it may finally be implemented nearly a decade after everyone agreed it was a good idea.

The underlying problem? There’s just so much resistance built into the city politics and the local land use planning process. It has historically been dominated by NIMBY factions, and is designed to move slowly, and change little. The solution, as Bertolet notes, is to have state governments intervene. They tend not to be as politically compromised as cities, and state mandates and overrides can also help break through the “prisoners dilemma” concerns that individual neighborhoods have that they alone will shoulder increases in density. Even with strong state prodding, its still going to take a lot of work to move missing middle forward.

2. Buff Brown on the soft bigotry of low expectations in city climate strategies. Bloomington, Illinois is in many ways a model liberal college town; it skews blue politically, and like many cities has adopted a sustainability plan and endorsed the Paris climate accords. But like a lot of cities, its biggest source of greenhouse gas emissions in transportation, and its losing ground. As transportation planner Buff Brown points out, the city’s vehicle miles traveled per capita have increased more than 11 percent in the past few years. And while the city recognizes it needs to lessen driving, and get more people transit, it’s actions don’t come close to measuring up to its rhetoric.  As Brown notes,

. . . the Action Plan has very weak goals with no math to tie them to the emission goals, and the lists of actions are orders of magnitude below what is necessary to meet these targets.

For example, the city’s goal is to increase transit ridership by 5 percent over the next six years, a gain of just 1 percent a year. This falls far short of what the city actually accomplished between 2002 and 2010, when transit ridership increased almost 9 percent per year.  And it also makes even more alarming the fact that the city has recorded a 6 percent decline in ridership in the past year. The city’s goal is at best a feeble one, far less ambitious than it actually managed in the past, and current performance is showing an decline that should be signaling a need for much bolder action.

At the same time transit ridership is declining, the city is moving forward with a plan to use local tax increment financing (TIF) monies to subsidize construction of a parking garage. The city is planning to spend $29 million in TIF funds to expand one parking garage by 200 spaces and build another with 379 spaces.  If cities are serious about climate change, this is plainly the wrong set of priorities.

3. Even down under, Induced demand. A new report from Australia confirms what science is showing worldwide:  building more highway capacity simply stimulates more driving, and does nothing to ease congestion. The report, commissioned by a Australian ride-hailing company Go-Get

City-dwelling Australians need to end their love affair with private cars and stop building new roads to beat congestion . . . building new roads or expanding existing infrastructure . . .  signals to drivers that commuting will be easier so more road users fill the newly created space, which is known as “induced demand”.

The solution for transportation problems is largely found in how we build our communities. Places that are dense, diverse and walkable enable people to meet many daily needs without car travel. And it turns out that these are exactly the kind of places for which there is robust demand.

“We find that communities that do have walkability, that have local cafes and amenities, they are the most in demand with consumers looking for a home, they have the highest house prices and demand.”

New Knowledge

It’s no accident: How we talk about crashes matters. Its commonplace for media reports of car crashes to describe them as “accidents,” and systematically downplay driver responsibility and instead blame victims.  If you wore dark clothing or were outside a market crosswalk, or it was dark, your injury or death is implicitly your fault.

A new study published by the Transportation Research Board, examines the way that common descriptions of traffic crashes affects reader perception of who’s responsible.  The authors presented subjects with three alternate text descriptions of a single car crash.  One version was pedestrian focused, a second version was driver focused and a third was driver focused and provided additional context about the frequency and location of car crashes. The key finding was the way in which the crash was described made a strong impact on reader’s decisions about who was to blame and policies ought to be pursued to reduce crashes and injuries.  A more complete and driver focused description of crashes led to more support, for example, for infrastructure solutions.

The author’s helpful have some succinct advise for reporters and editors; and its a grammar for talking about roadway deaths that all of us should embrace.  To translate one big of unfortunate academese: “non-agentive” ignoring humans and their choices, for example, don’t say “the pedestrian was struck by the car,” say “the driver ran over the pedestrian.”

• Avoid non-agentive and object-based language.
• Shift the focus away from the pedestrian and towards the driver (or if necessary, the vehicle).
• Be conscious of the counterfactuals that you include. Specifically, if you mention that the pedestrian was outside a crosswalk, check Google Street View to quickly determine whether there are any crosswalks available and note that in many jurisdictions it is legal to cross outside marked crosswalks.
• Include data on the number of crashes, injuries or deaths, preferably locally. Time permitting, consider contacting a local transportation, urban planning, or public health expert to provide further context.

Tara Goddard, Kelcie Ralph, Calvin G. Thigpen, Evan Iacobucci, “Does news coverage of traffic crashes affect perceived blame and preferred solutions? Evidence from an experiment,” Transportation Research Interdisciplinary Perspectives, 2019.

In the News

Willamette Week wrote about our commentary on the untrue claim that not proceeding with the $3 billion Columbia River Crossing will require Oregon and Washington to repay $140 million to the federal government, in an article entitled:  “One less reason to restart the Columbia River Crossing.”

The Oregonian featured our critique of this same claim about a federal repayment liability in its story discussing Governor Kate Brown and Governor Jay Inslee’s plan to revive the Columbia River Crossing project.

What City Observatory did this week

1.  Copenhagen’s cycling success hinges on tax policy and pricing, not just bike lanes.  The New York Times offers up yet another postcard view of cycling in Copenhagen, where riding a bike to school or work is the most common mode of transportation.  The Times reports that this is because cycling is just “easier” and “more convenient” due to the city’s extensive networks of bike lanes.  That’s true, but leaves out an important part of the story.  In Copenhagen, new cars are heavily taxed (a 150% sales tax), and gasoline costs more than $6 per gallon.  In addition, parking is in short supply, and the city is raising the price of parking to further discourage car use.  It’s also critical to recognize that the city’s compact development pattern means more common destinations are close-at-hand, making cycling a viable means of transportation for daily trips. By all means, lets build more bike lanes; but getting a more balanced transportation system also depends critically on asking cars to pay something close to the full social, environmental, and economic costs they impose on all of us.

2. Carmaggedon is a no-show in Seattle once again. Earlier this year, when Seattle shut down its crumbling Alaskan Way viaduct, traffic experts widely predicted gridlock, expecting more than 90,000 cars to divert to city streets. That didn’t happen, and in fact traffic levels were subdued. The same predictions were made about the effects of turning on tolling on the new $3 billion SR 99 downtown tunnel (the roadway built to replace the viaduct). Traffic engineers predicted a third or more of tunnel users would divert to city streets, producing Carmaggedon. Once again, the predictions were wrong, at least as evidenced by Google Maps contemporaneous reporting of road conditions.

What Seattle’s experience shows–again–is that measures that reduce road capacity, or price roadways, actually reduce traffic levels. It’s the opposite of “induced demand”–reducing highway capacity in the city reduces the number of cars flowing onto city streets, and enables the transportation system to work better. The naive models that highway engineers peddle, implying that traffic is an inexorable, tidal force, are simply wrong. If you want less traffic and congestion, price roads and constrain highway capacity.

3. The city as a labor saving device.  Some of the most powerfully transformative technologies have been those that save human labor; indoor plumbing, washing machines, refrigerators, vacuum cleaners and the like have all reduced dramatically the amount of domestic work, and given us more leisure time. While we don’t think of cities as a “technology,” a dense, mixed-used urban neighborhood is actually a big time saver. With more common destinations (grocery stores, coffee shops, restaurants, and friends) close at hand, cities can be a big time saver. A big part of the demand for urban living comes from households looking to live in places that save them the one form of wealth you can’t get more of:  time.

Must read

1. The limits of micro-transit. The problem with buses, rail lines, and other “fixed route” transit, is that unless you live at a station or bus-stop, and all your destinations are adjacent to stops, you have to walk to and from the place the transit serves. One regularly imagined solution to this problem is the idea of micro-transit:  small vehicles that would ply varying routes, picking up people at their homes or orgins in one area, and then ferrying them to a common destination (or destinations).  In theory, that ought to eliminate pesky walking, and given enough trip density (and computerized scheduling) it ought to be possible to pool multiple trips with a single vehicle. The trouble with that idea, though (as Human Transit’s Jarrett Walker has frequently pointed out, is that is inefficient and expensive.  For those who are looking for a succinct statement of what microtransit is (mostly) a dead-end, they have a new policy brief that makes that case.  Here’s a excerpt:

Picking people up at their doorstep involves traveling greater distances than operating service along a fixed route, and a microtransit driver in a van or car can carry far fewer people than the operator of a bus or train. For these reasons, microtransit typically costs agencies much, much more to run than an average bus route. And while subsidies for bus and train service fall as more people ride, microtransit is locked into a high-cost format that consumes more subsidies as usage increases.

2. Why more cyclists are dying. The National Transportation Safety Board has just reported the grim death tally for 2018: Some 857 cyclists were killed on the road, the highest number in decades. In the face of a roundly (and justifiably) criticized call by the NTSB to make helmets mandatory, Bicyclist has a thoughtful look at the reasons why cyclists deaths are increasing.  By identifying the causes of deaths, this analysis points to a more reasonable set of recommendations for reducing the toll. Chief among the causes: more people are driving more miles (we might add, due to cheaper gasoline), more drivers are distracted by technology like smart phones, and  more of the cars on the road are especially lethal trucks and truck-like SUVs. It’s also true that more people are cycling than in previous years, but it appears the “safety-in-numbers” effect of more regularly encountering cyclists has been more than offset by the other negatives. As a result, cities who only a short while ago adopted great-sounding goals around Vision Zero, have seen this particular metric going in the wrong direction.

3. New cars are for old people. Michael Sivak has an interesting analysis in the shift in the demographics of car buyers in the past decade.  Sales data show that new car buyers are proportionately older than ever. Sivak reports that 52 percent of all car buyers are 55 or older. Only 28 percent of car buyers are under age 45, down from 45 percent of all buyers just a decade ago. Much of this trend is driven by the overall aging of the population (millions more baby boomers are turning 65 every year), but much of it is evidence of the declining interest (and perhaps purchasing power) of young buyers.

New Knowledge

More evidence of the ineffectiveness of rent control.  Around Germany, municipalities have implemented new rent control regimes in the past few years, and the roll-out of the program has provided researchers with a natural experiment for testing the actual effects of rent control against the theoretical predictions. Three researchers, Andreas Mense, Claus Michelsen & Konstantin Cholodilin, gathered data on the offering rents for apartments in German cities.

. . . since 2010, urban agglomerations have become more attractive. Thanks to an inflow of migrants from smaller cities and from abroad, the population of large German cities began to expand quickly. The result was a housing shortage, particularly putting pressure on rents for new contracts

Like many rent control systems, the German approach regulates the rents of some units, but not others. One of the key findings of this study is that while units under rent control are less expensive, rents go up even more in the uncontrolled sector.  In addition, rent control isn’t “means tested” meaning that people can benefit from rent control regardless of income.  One of the theoretical predictions of economics is that rent control will tend to artificially discourage people from moving to a new home.

They find that:

In the News

The New York Times quoted City Observatory’s report Less in Common in their article “Are my neighbor’s spying on me?”

What City Observatory did this week

A two cent solution to climate change?  Around the world, plastic bags are an environmental scourge, both in the form a litter (a nuisance) and as a threat to wildlife. In response, many cities have implemented plastic bag fees, asking consumers to pay a nickel or more per bag. The result of such policies is dramatic:  In Britain, plastic bag consumption has fallen almost 90 percent. Our thought is that we apply the same idea to carbon pollution, asking people to pay about 2 cents per found of carbon that they emit.  That two cent a pound fee works out to about $40 a ton, which is in the range for what many economists are recommending as a way to fundamentally shift incentives in a way that would reduce greenhouse gas emissions.  If we’re willing to charge people a nickel for a plastic bag, why don’t we consider charging 2 cents a pound for carbon?

Must read

1. Why all the panic over gentrification? The premise of Matthew L. Schuerman’s new book “Newcomers” is that “gentrification is all around us.”  In his review at Washington Monthly, Wil Stancil asks whether gentrification is really as pervasive as Schuerman imagines:

As a demographic researcher, I decided to check. Using U.S. Census data, I looked at the share of people in New York, San Francisco, and Chicago living in places that met Schuerman’s definition of having gentrified between 2000 and 2016. In New York, it’s 3.1 percent of residents. In San Francisco, the number is 4.4 percent. In Chicago, it’s 4.8 percent.  . . . Using Newcomers’ own definition, the story of urban America is not a tidal wave of gentrification but creeping racial and economic transition. 

As City Observatory’s research, and that of others has regularly shown, concentrated poverty and neighborhood decline are far more widespread and far more devastating for the urban poor than the relatively few instances of gentrification.  But for author’s like Schuerman, who don’t dig deeply into the data, its unsurprising that their personal perceptions about gentrification hinge greatly on lived personal experience. It turns out that gentrification is all around “us,” if “us” is defined as well-educated, upwardly mobile, urban-leaning intellectuals.  As Stancil writes:

Almost by definition, it is members of the urban professional class who are the most likely to be exposed to affluent neighborhoods in the late stages of gentrifying. Among movers and shakers in media and politics, gentrification may truly seem to be everywhere they go. Often, it’s because they’re bringing it with them. 

Gentrification seems to be one of those subjects where personal anecdotes regularly trump careful data. We’d be much more likely to effectively address neighborhood change if the policy dialog were better grounded in facts.

2. How to talk about reforming housing policy.  Sightline’s Michael Andersen opens the hood on the right way to talk about changing housing policy. Earlier this year, Oregon passed pioneering legislation that legalizes duplexes, triplexes and fourplexes in single-family residential zones in the state. One key to this breaktrhough legislation was a conscious decision to talk about housing in different way than we have in the past.  The Sightline Institute prepared a guide to the rhetoric of housing reform that underscores the key messages. For starters, rather than talk about “density” and “housing units” Sightline urges advocates to adopt more meaningful and concrete terms that allude to specific kinds of homes, i.e. “re-legalizing duplexes.”  The umbrella term “Missing Middle Housing” helps communicate what they’re trying to achieve that puts it in a historical context and defuses some of the fears that added density can raise.  Sightline has published its full communication guide, and its a helpful resource for all housing advocates.

3. Uber’s car killed a pedestrian because it was programmed to ignore people outside crosswalks.  More than a year ago, Elaine Herzberg was struck and killed by an Uber autonomous vehicle in Arizona. The National Transportation Safety Board has been investigating the crash, and newly released documents show that Ubers sensors detected Herzberg several seconds before the crash, plenty of time to brake the car before striking her.  But the car’s software was programmed not to treat people outside of crosswalks as objects.  The cars software struggled to correctly categorize Herzberg, and by the time it alerted its on-board human supervisor of its confusion, it was too late to avert the crash. As Wired relates:

. . . despite the fact that the car detected Herzberg with more than enough time to stop, it was traveling at 43.5 mph when it struck her and threw her 75 feet. When the car first detected her presence, 5.6 seconds before impact, it classified her as a vehicle. Then it changed its mind to “other,” then to vehicle again, back to “other,” then to bicycle, then to “other” again, and finally back to bicycle.

It never guessed Herzberg was on foot for a simple, galling reason: Uber didn’t tell its car to look for pedestrians outside of crosswalks. “The system design did not include a consideration for jaywalking pedestrians,” the NTSB’s Vehicle Automation Report reads.

It appears that the software for autonomous vehicles is replicating the implicit bias of current road use conventions: and for pedestrians, that can have fatal consequences.

In the News

Willamette Week has a story reporting on the pushback climate advocates are offering to Portland’s proposed $3 billion, highway heavy transportation bond measure, slated to go before voters next year.  The article quotes City Observatory’s Joe Cortright on the climate implications of highway “improvements.”

What City Observatory did this week

1. Tim Bartik explains business incentives. States and cities spend about $50 billion a year on tax breaks and other incentives to try to influence business location decisions.  The nation’s leading scholar on the subject, Upjohn Institute’s Tim Bartik, has a new book explaining succinctly and in non-technical terms about whether these incentives work and what can be done to make them work better. Bartik’s research shows that roughly three-quarters of time, incentives make no difference to business location choices–they’re simply wasteful. But its almost always impossible to convincingly argue that any individual deal is one of the three-quarters that are giveaways, and it’s very much in the interest of prospective recipients (and economic development agencies) to always argue that their incentives is making a difference. Ultimately, the reason incentive deals persist (and have grown to such huge proportions) is that the political calculus rewards deal-makers, who are seen as “doing something” to benefit the economy, while the costs are generally hidden and passed on to others. Because of this dynamic, we can’t expect incentives to go away, but Bartik has four concrete suggestions for policy makers looking to minimize the costs of incentives and maximize their benefits. You can buy printed copies of the book, or download a free PDF; either way, its a must read for anyone interested in economic development.

2. Portland’s regional government is push-polling a climate change denial message. Portland and Oregon have both fallen behind in their stated efforts to reduce greenhouse gas emissions, largely due to increases in driving. At the same time, the regional government is moving forward with a multi-billion dollar transportation funding measure. It commissioned some survey research, ostensibly to gauge public attitudes on the subject, but in practice, the survey is a thinly veiled effort to foist some phony choices and factually inaccurate claims on the public. The survey repeatedly claims that greenhouse gas emissions can be reduced by eliminating congestion so that cars don’t have to idle in traffic so much–a thesis that has been disproven. Actually, the opposite is the case: measures that speed traffic create induced demand, and the carbon emissions from more driving increase greenhouse gas pollution, rather than decreasing it. The purpose of the survey is plainly to develop the talking points and media campaign for selling a funding measure. It’s dishonest and reprehensible for a public body to disseminate a phony and misleading message about the causes, and solutions to the climate crisis. This is what climate change denial looks like.

3.  More evidence for the importance of talent to metropolitan economic success.  The Brookings Institution has a new report “Talent-Driven Economic Development:   A new vision and agenda for regional and state economies.” As the title suggests, the authors build the case for focusing on building skills and talent and outline the steps cities and states can take. Their research confirms the strong relationship between the educational attainment of the population and the productivity of the local economy.

It’s clear that working to increase the talent level of the local population is key, and the report describes a series of strategies for doing so, including more formal education (helping high school students reach college, and succeed once they’re there), and also helping and encouraging employers to provide additional training to their entire workforce (and not just those with the highest levels of skill, which tends to be the pattern). The sole caveat one might add to this report is the observation that talent is mobile, and well-educated workers tend to be gravitating to great urban locations. As a result, cities should look both to investments in increasing skills and talent, and also in building the kinds of great urban neighborhoods that will attract and retain talented workers.

Must read

1. Forget new technology, fixing transportation is about making the right choices. Henry Grabar has a perceptive essay at Slate debunking the fascination with technological solutions to our transportation problems, and emphasizing that how we build cities, and how we employ well-proven technologies like bikes, buses and elevators is really where the future lies. Hyperloops and autonomous vehicles get all the attention it seems, but miss the point that building walkable, human-scaled cities and neighborhoods rather than sprawling automobile-dominated ones is needed.

The tools we need to change transportation are right there in front of us. It’s not the lack of bleeding-edge technology that has stopped us from building cities where a person can live without owning a two-ton, $25,000 vehicle . . .  It’s not for want of “innovation” that we aren’t turning parking into parks, or traffic-clogged arterial roads like New York’s smoggy crosstown arteries into multimodal streets. It’s not the deferred promise of automation that stops us from charging people for the full, ice cap–melting cost of driving. The future of transportation is not about inventions. It’s about choices.

A big part of our problem is that we’re obsessed with movement, rather than with destinations. We treat transportation as an end in itself, rather than as a means of accessing people, opportunities and experiences. When we build systems to maximize speed and travel, we produce sprawling, automobile-scaled environments that are inimical to enjoying life. Just as the last great technology revolution (the automobile) only made things worse, newer iterations, like the autonomous vehicle and the hyperloop, will not overcome this essential problem. As Grabar writes:

A better world is possible, and it doesn’t start in the U.S. patent office or with what is on display at the Detroit Auto Show, the Paris Air Show, or the Consumer Electronics Show in Las Vegas. It won’t require supersonic travel tubes or cars that drive themselves. The ideas are here if we want them. We’ll have to rethink the trip, but even more than that, we’ll have to rethink the places we’re trying to connect.

2. Devin Bunten:  Housing affordability and gentrification. Writing at CityLab, economist Devin Bunten sets out to untangle the links between housing affordability and gentrification.  This is a thoughtful, and extremely well-written essay.  It makes many important and salient points in eloquent and persuasive fashion.  For example, Bunten writes:

Housing policies are designed to ensure that new neighborhood entrants are as rich or richer than those who arrived before them. The typical resident of multifamily housing in the U.S. earns half as much as the typical resident of a detached single-family home. A ban on apartments is a ban on these families. Within single-family-home neighborhoods, minimum lot sizes are wealth sieves.

While in some senses these problems are separable (affordability problems tend to be region-wide; gentrification is much more localized), it’s difficult to argue that they are un-related. Gentrification is a more severe and widespread problem in markets where housing shortages and affordability problems are most acute. In many cases, gentrification occurs when demand for high amenity housing can’t be met by building additional units in high amenity neighborhoods, chiefly because of zoning limitations and NIMBY opposition. Gentrification and housing affordability are both symptoms of our shortage of cities:  the growing demand for urban living is running headlong into serious constraints on building more housing in great urban neighborhoods. Gentrification and housing affordability may not be exactly the same problem, but an essential part of any solution to both problems is allowing for more housing to be built in cities.

3. How Los Angeles is planning to make its housing problems worse.  It’s well-established that Southern California’s housing affordability problems stem from the difficulty of building additional housing in the most desirable parts of the region. In theory, the state’s land use laws require the region to plan for enough space to accomodate housing demand, but there’s a hitch. The estimated regional total demand for new housing is allocated across different local jurisdictions under a process know and RHNA, the Regional Housing Needs Allocation.  The allocation is prepared by the Southern California Association of Governments, a confederation of cities and local agencies. The problem is that the allocations are skewed away from high demand locations. As Leonora Camner, writes in an Op-Ed in the Los Angeles Times, the allocations bear little relation to where housing is needed.

Beverly Hills, which has nearly twice as many jobs (57,000) as people (34,400), needs only 1,373 new units of housing. Meanwhile, the desert city of Coachella, with a population of 42,400 and 8,500 jobs, will be expected to build a whopping 15,154 units.

This matters because building more housing at the urban fringe, far from job centers, makes the region even more car-dependent, and locks in long commutes and high levels of greenhouse gas emissions. It may seem like a minor technocratic detail, but tweaking these planning estimates to allow for more new housing where its most needed is essential to addressing housing affordability, transportation challenges, and climate change.

Let’s put a price on using the atmosphere as a garbage dump for carbon

It works for plastic bags; let’s use the same idea for carbon

Consider the plastic bag:  It’s a highly visible environmental problem, one that we all encounter.  Around the world, retailers routinely provide shoppers with “free” plastic bags to carry home their purchases.  The bags show up as refuse in municipal disposal systems (when they’re properly binned) and but are a major litter nuisance, and turn out to be a threat to wildlife.

For economists, the solution to the plastic bag problem is straightforward:  Charge consumers for taking them.  And in Britain, where this pricing policy has been in places for some time, the results are compelling. Large retailers in the UK are required to charge 5p (about 7 cents) for plastic bags. The fee has dramatically reduced plastic bag consumption, as the BBC reports:

Asda, Marks and Spencer, Morrisons, Sainsbury’s, the Co-op, Tesco and Waitrose sold 549 million single-use plastic bags in 2018-19, down from one billion in the previous year.

Since 2015, when a 5p charge was introduced to tackle plastic pollution, the number being used is down by 90%.

Customers now buy, on average, 10 bags a year compared to 140 bags in 2014.

Similarly Chicago has been charging shoppers a 7 cent fee for using disposable grocery bags. Rather than banning the bags outright, the city settled on the fee as a way to preserve consumer choice and yet encourage less use of the plastic bags. Those who don’t bring their own bags to the store pay a the 7 cent fee, which is itemized on their receipt; the grocer keeps 2 cents for their trouble, and the nickel per bag goes to the city.

What if we did the same thing for carbon pollution?

The relative ease and simplicity of the bag fee got us thinking about how we might apply the same idea to another, somewhat more serious environmental problem: climate change. What would happen if we asked consumers to pay, say 2 cents per pound, for every pound of carbon that they emitted into the atmosphere? If consumers got some small signal that dumping carbon into the atmosphere wasn’t “free” then they’d have a strong incentive to change their behavior.

Of course, this actually isn’t a new idea. The world’s leading economists of every political stripe are in broad agreement that a carbon tax is a foundation for any effective climate change policy. But how we package it is important. Carbon tax advocates have always talked about pricing in “dollars per ton” but that puts it a little bit out of the reach of daily life and the average consumer. Talking about pounds of carbon makes it a little bit more comprehensible, and puts it in the same context as the plastic bag fee. Is it unreasonable to ask everyone to pay, for example,  just two cents for every pound of carbon they emit?

And two cents is pretty darn close to the correct number. While there are various recommendations for the appropriate level for a carbon tax, currently a number of experts are suggesting something like a tax of $40 to $80 per ton.  Divide that number by roughly 2,000 (we’ll just ignore whether the experts want that tax for a metric or an imperial ton) and a $40 per ton tax on carbon works out to about a 2 cents per pound tax.

Just to put that in perspective with our shopping bag, recognize that a typical polyethylene shopping bag weighs about five or six grams. So Chicago is charging consumers about 1 cent per gram for their shopping bag.  That’s roughly 200 times more than a 2 cent per pound tax on carbon (about 450 grams in a pound, so our 2 cents per pound tax works out to less than .005 cents per gram).

What does that mean in practice? Consider our most common form of carbon emissions: driving a gas-powered car.  If your car gets 20 miles per gallon, it produces about one pound of carbon per mile. There are slightly more than twenty pounds of carbon generated by burning a gallon of gas, so a five-mile round-trip to the store would generate about five pounds of carbon, which would cost you a dime with our proposed  2 cents per pound carbon fee. So in this scenario, if you’re buying two bags of groceries, your bag fee (in Chicago) would be 14 cents and your carbon emission fee would be 10 cents. Although if instead of driving your car, you rode your bike, and brought your own bags, you could save almost a quarter.

As a result, the fee we’re talking about to save the planet is not out of line with what we’re perfectly willing to ask consumers to pay to discourage the visible, but largely nuisance effects, of plastic bags.

A small fee, say 2 cents a pound on carbon would send consumers small, but pervasive signals about the effects of their buying choices and travel behavior on the environment. Sometimes–just as when you forget to bring your own bag, you might be willing to spend the 7 cents to have the convenience of a plastic bag, you pay for the privilege (and in the case of a carbon fee, generate revenue that could be used to reduce our dependence on fossil fuel, and offset the regressive effects of the tax). But overall, the fee would bias consumer (and investor) decisions in favor of all kinds of things that resulted in lower carbon emissions. It would make solar energy, and electric cars, and walkable urban places more economical, and make fossil fuel, gas-powered cars, and sprawl even less attractive than they are today. It would automatically reward businesses, inventors, and investors who came up with lower carbon ways to get all of the goods and services we value. It would gradually, but powerfully push us in the direction of lower carbon emissions and greater sustainability.

Shopping bags are a visible, annoying form of pollution. The are a regular feature of litter almost everywhere in the world. And while they’re a blight, and an unnecessary one, the fact is we’re willing (at least in Chicago) to make consumers pay a fee that reflects the environmental damage they cause, and to give a gentle nudge to their behavior in a direction that is better for the environment. And it’s working–plastic bag use in Chicago has dropped 42 percent in six months, and Britain reduced plastic bag use by nearly 90 percent over five years.

So why aren’t we willing to do the same with carbon? Perhaps its as simple as this: Carbon dioxide (the most common form of carbon pollution) is invisible.  We can’t see it.  If you’re car exuded fist-sized lumps of carbon at the rate of one per mile and they cluttered the roadway, we’d probably acknowledge the problem and agree to do this almost instantly. But the carbon evanesces into an invisible–and global–atmosphere, slowly, but surely raising global carbon levels and steadily raising the planet’s temperature. Plastic shopping bags aren’t an existential threat to the planet, so why are we willing to charge consumers 200 times as much (per pound) for these bags as we would charge for carbon emissions?

Is a couple of pennies a pound for carbon pollution too much to ask?

Once again, Carmaggedon doesn’t materialize; this time when Seattle started asking motorists to pay a portion of the cost of their new highway tunnel

Initial returns suggest that tolling reduced congestion by reducing the overall volume of traffic in downtown Seattle

The most favored mythology of traffic reporters and highway departments is the notion of traffic diversion:  If you restrict road capacity in any one location, then it will spill over to adjacent streets and create gridlock.  It’s invariably used as an argument against any plans to slow car movement or repurpose capacity for transit, cyclists or people walking.

Time and again, however, when road capacity is reduced, either by design or accident, the predicted gridlock fails to materialize.  The latest instance of this was just in the past month, when New York closed 14th Street to most car traffic; speeds on parallel streets 13th and 15th, were unaffected, according to traffic monitoring firm Inrix.

Crying Carmaggedon, again

The latest case study of comes from Seattle. Earlier this year, the city opened a new $3 billion tunnel under downtown Seattle, to replace the road capacity lost by the demolition of the city’s aging eyesore, the Alaskan Way viaduct.  Since it opened, the new SR 99 tunnel has been free to vehicles, but starting last Saturday, the state department of transportation started collecting tolls (electronically). What was free last Friday, now costs afternoon peak hour travelers between $2.25 (if they have a transponder) and $4.25 if they use the pay by mail option).  Even so, the toll revenues will ultimately cover only about 10 percent of the cost of constructing the tunnel.

The Washington State Department of Transportation (WSDOT), which operates the new SR 99 Tunnel, warned of severe traffic congestion, predicting that more than a third of the 70,000 vehicles that use the tunnel each day would divert to city surface streets.  Local TV Station KIRO warned motorists:

WSDOT projects around 35 percent of tunnel drivers will avoid tolls in the tunnel and jam downtown streets instead.

That’s pretty scary stuff.  How is Seattle’s latest brush with Carmaggedon turning out? Because Monday was Veterans Day, Tuesday, November 12, was the first regular business day in which the tolls were charged on the new tunnel.  So what happened?

Well, see if you can tell.  Here are the Google maps for traffic conditions in downtown Seattle on a typical Tuesday afternoon and for Tuesday, November 12, the first regular business day with tolling in place on the SR 99 tunnel.   On the left is Google’s map of actual traffic levels at 5:10 PM on Tuesday November 12, showing Google’s familiar color-coded congestion rankings (green is moving smoothly, yellow is slowing, red is stop and go). On the right is Google’s depiction of traffic conditions on a typical Tuesday at 5:10 PM.  You can spot one big difference right away.  The left-hand map shows the the tunnel as two parallel bright green lines; with tolls, traffic is moving smoothly in the tunnel.  But what about all the nearby side-streets in downtown Seattle?  Surely they’ll be overwhelmed by diverted traffic.  Actually, no.  Most of the streets leading to and near the tunnel show green, and traffic conditions in this area are actually better than on a typical Tuesday afternoon.

Overall, if you compare these two pictures, it’s pretty clear that today’s traffic situation in downtown Seattle is much better than a typical day.  Sure, Interstate 5, the freeway to the East of downtown Seattle is congested (as it is most late afternoon weekdays)  But downtown Seattle streets, particularly on the west side of downtown are “green.” or free flowing.  Overall, there’s a lot more “green” on Tuesday’s traffic charts than on a typical day. In other words:  no gridlock or Carmaggedon here.

Tolling the new SR 99 Tunnel didn’t make traffic worse.  If anything, it made traffic better.  The tunnel itself was flowing smoothly–it was green rather than red, meaning those paying the toll were getting value for their money.  Not only that, but it doesn’t appear that traffic on downtown streets in Seattle was any worse than on an ordinary Tuesday.  It’s likely that by reducing travel volumes on the tunnel, tolling reduced the number of cars driving onto downtown Seattle Streets.  Small reductions in travel demand that keep roads from crossing a tipping point and becoming congested make traffic move more smoothly.

If this gives you a bit of deja vu, dear reader, it should.  Back in January, just before the tunnel opened, the city had to commence demolition of the old viaduct, in order to connect on ramps to the new tunnel.  As a result, the city suddenly lost its old waterfront freeway, and didn’t have access to the new tunnel. State highway officials warned that the city was in for weeks of gridlock.  But when they closed the viaduct, not only did nothing happen, but as we related at City Observatory, traffic on most of downtown Seattle got better. Rather than simply diverting to other city streets, traffic levels went down; as the Seattle Times reported “traffic just disappeared.”

What road closures teach us about travel demand

So what’s going on here? Arguably, our mental model of traffic is just wrong. We tend to think of traffic volumes, and trip-making generally as inexorable forces of nature.  The diurnal flow of traffic on urban roadways seems just as regular and predictable as the tides.

What this misses is that there’s a deep behavioral basis to travel. Human beings will shift their behavior in response to changing circumstances. If road capacity is impaired or priced, many people can choose not to travel, change when they travel, change where they travel, or even change their mode of travel. The fact that Carmageddon almost never comes is powerful evidence of induced demand: people travel on roadways because the capacity is available for their trips, when when the capacity goes away or its price goes up, trip making changes to reduce traffic.

If we visualize travel demand as an fixed, irreducible quantity, it’s easy to imagine that there will be Carmaggedon when a major link of the transportation system goes away.  But in the face of changed transportation system, people change their behavior.  And while we tend to believe that most people have no choice and when and where they travel, the truth is many people do, and that they respond quickly to changes in the transportation system and to road pricing.  Its a corollary of induced demand:  when we build new capacity in urban roadways, traffic grows quickly to fill it, resulting in more travel and continuing traffic jams. What we have here is “reduced demand”–when we cut the supply of urban road space, traffic volumes fall.

If Seattle drivers quickly change their behavior in response to a dollar or two of tolls, that’s a powerful indication that more modest steps to price roads don’t really mean the end of the world. If we recognize that, in the absence of pricing, traffic will tend to adjust to available capacity, we then end up taking a different view of how to balance transportation against other objectives. For example, this ought to be a signal that road diets, which have been shown to greatly improve safety and encourage walking and cycling, don’t have anything approaching the kinds of adverse effects on travel that highway engineers usually predict.

There’s one other fiscal codicil to this tale.  The tolls that drivers pay to use the new $3 billion tunnel cover barely 10 percent of the costs of construction.  The fact that tolls reduce traffic by a third (or more) show that a good fraction of tunnel users are don’t value the tunnel at even a tenth of the cost of providing its right of way; and that they’ll use it only if its free.  That’s a pretty solid indication that this “investment” has negligible value.  In addition, the fact that implementing pricing has caused traffic conditions in much of downtown Seattle to improve is an indication that simply charging a modest price for roadways actually produces net benefits for road users–it encourages those with choices to travel at other times or avoid congested areas, producing better service for everyone.  And that may be the real lesson here:  the tunnel didn’t make traffic in downtown Seattle better, the toll did.

Carmaggedon never comes

Of course, we’ll wait for detailed data on traffic conditions that will be collected over the next few weeks before making a definitive judgment.  But this phenomenon of reduced demand is so common and well-documented that it is simply unremarkable.  Whether it was Los Angeles closing a major section of freeway to replace overpasses, or Atlanta’s I-85 freeway collapse, or the I-35 bridge failure in Minneapolis, or the demolition of San Francisco’s Embarcadero Freeway, we’ve seen that time and again when freeway capacity is abruptly reduced, traffic levels fall as well. There’s a lesson here, if we’re willing to learn it:  if you want to reduce traffic congestion, reduce traffic levels. Whether you do it by restricting capacity, or (more sensibly) by imposing tolls that ask motorist to pay for even a fraction of the cost of the roads they’re using, you get a much more efficient system.