Month: January 2020

Why we should enable more people to move to opportunity

Posted on by Joe Cortright

Enabling low income households to move to high opportunity neighborhoods is one way to promote equity and intergenerational mobility.  But some people apparently don’t want anyone to move.

Last year, we profiled an experiment in Seattle that tapped into the insights of the Equality of Opportunity Project. As regular City Observatory readers will know, Raj Chetty and his colleagues have shown how local neighborhood characteristics play an out-sized role in determining lifetime economic success. Kids from low income families growing up in high poverty neighborhoods routinely end up with less education, lower income, and more incarceration that otherwise similar kids growing up in mixed income neighborhoods in the same city or metro area.  Working with the Seattle Housing Authority, Chetty’s team designed a program of vouchers and housing search assistance that helped low income families (usually concentrated in just a few neighborhoods) to look at other neighborhoods in the city for housing. The preliminary results of the experiment are promising.

But Cody Tuttle writing at Next City isn’t having any of it.  In a piece entitled “Why we shouldn’t be so quick to move people out of low income neighborhoods,” Tuttle outlines three reasons why these families moving to higher opportunity neighborhoods is a bad thing:  In Tuttle’s view, it weakens low income neighborhoods, it won’t help those who move, and it  will trigger white flight in the neighborhoods they move to.

If any of that were true, it would be a good reason to think twice about this experiment.  But, in our opinion, none of those three points hold any water. Instead, the Seattle experiment is an illustration of one of the key ways we can start breaking down the economic and racial segregation that perpetuates poverty in US cities.

Segregation amplifies poverty and inequality

Before we dig in, let’s go back to first principles.  American cities are still deeply segregated by race and income. That segregation, as it turns out is a pivotal reason why poor people stay poor.  A growing body of evidence shows low income people and people of color fare much better economically when the places they live aren’t so segregated, either by race or income.  In contrast, neighborhoods of concentrated poverty make poverty worse; and, as we’ve demonstrated a City Observatory, we’ve been making more and more neighborhoods of concentrated poverty, and a bigger fraction of the urban poor are trapped in them than ever before.  So, in the aggregate, breaking up the pattern of income and racial segregation in cities is essential to breaking down the barriers to economic mobility.

As bit of a simplification, there are two ways to promote income integration:  if some richer people move into poorer neighborhoods, and if some poorer move into richer neighborhoods.  The first strategy (richer people into poorer neighborhoods) is gentrification, and despite the knee-jerk opposition that term generates, gentrification has been shown to be benign, if not actually helpful to long term residents of low income neighborhoods.  We’ll not dig further into that here, but instead focus on the issue at hand: enabling low income families to find and rent homes in higher income/less poor neighborhoods.  Bottom line though: if you oppose both gentrification and low income people moving to higher income neighborhoods, then you’re pretty much in favor of maintaining the current income segregation of US metro areas.

The Seattle Experiment: Vouchers for Voluntary Moves to New Neighborhoods

So let’s take a closer look at the Seattle experiment.  Over the past couple of years, the Seattle Housing Authority has given vouchers to about 200 households in the experiment’s treatment group.  They were also provided with neighborhood information, apartment finding services, and help with deposits and applications. And here’s the critical part of the experiment:  the participants chose their housing, not the housing authority.  So with that as backdrop (hundreds of low income families given wider choice, and many of them choosing higher opportunity neighborhoods), let’s consider Tuttle’s three arguments.

First, Tuttle argues that the loss of these households harms the neighborhoods they leave.  If these household leave low income neighborhoods, its “removing an integral facet of the community.” If you have a naive model that says every resident of a low income neighborhood has lived their forever, and has a deep commitment to the neighborhood, that might conceivably be true.  But low income neighborhoods have exceptionally transient residents; roughly half of all renters have lived in their homes two years or less.  And this is clearly a straw man: If this were massive, mandatory relocation, the author might have a point.  But what the Seattle program does is provide information and wider choices to a few hundred low income families. And every participating family voluntarily chooses its new neighborhood. Clearly some families are attached to their existing neighborhood; this experiment doesn’t force them to leave. More broadly, as Margery Turner and her colleagues at the Urban Institute have shown, moving to a different neighborhood is a common way low income households progress out of poverty; this experiment helps provide that opportunity to more low income households.

Tuttle’s second argument is that moving to a new neighborhood doesn’t help the low income families that move. Tuttle cites some “earlier” work on the Moving to Opportunity experiment, and by Chetty to support that point. But that leaves out the latest research on the subject by Chetty and others. As we’ve chronicled at City Observatory, the re-analysis of the Moving to Opportunity data, Eric Chyn‘s study of the Chicago Housing Authority, and Chetty research have confirmed that these high opportunity neighborhoods have big payouts, especially for the kids who grow up there. The Seattle experiment estimates that kids moving to high opportunity neighborhoods will see lifetime earnings gains of $200,000.  The authors also report that more than twice as many households that chose high opportunity neighborhoods reported being satisfied with their new neighborhood than did the control group.  The overwhelming evidence points to the benefits to low income kids growing up in mixed income neighborhoods, they’ve chosen them voluntarily, and they report they like it.

Tuttle’s third argument is a blast from the past.  Enabling some lower income families to move to high opportunity neighborhoods, we’re told, will trigger “white flight.” That’s an argument that may have resonated in the 1950s or 1960s, but today, if Tuttle hadn’t noticed, there’s a considerable influx of white people, particularly well-educated young adults back to cities (so much so, and so noticeably in some lower income and minority neighborhoods, that its decried as a problem). The data for the past twenty years shows that when urban neighborhoods become more integrated, they tend to stay that way. We’ve profiled a paper by Kwan Ok Lee, who shows that once a neighborhood became “multi-ethnic” there was a 90 percent chance that it stayed that way for the next two decades. Our own report, America’s Most Diverse, Mixed Income Neighborhoods shows a large number of urban neighborhoods that have achieved both racial/ethnic and income diversity. Again, its worth noting that the Seattle experiment in the aggregate involves only hundreds of households, and they’re moving to neighborhoods throughout the city; its unlikely that the moves are sufficient in scale in any location to be noticeable, much less trigger a new wave of “white flight.”

So, in sum, enabling a few hundreds of lower income households to look further afield for housing, including in those neighborhoods where opportunity is highest, and letting them choose voluntarily to move there, hardly does damage to the low income neighborhoods they’re leaving, gives them and especially their kids access to an environment that produces demonstrably better results, and is not, in the decade of the 2020s, when there’s such a demand to live in cities, going to trigger white flight.

Its simply unreasonable–and unfair–to ask low income families to wait until their neighborhood gets better to find a better life for themselves and their children. For many, their best hope will be to find housing in a neighborhood that’s safer, has better schools and has less concentrated poverty and its associated ills. If we’re going to seriously tackle economic and racial segregation of cities, policies like the Seattle voucher experiment point to one small way to move in the right direction.

 

 

Why TOPA isn’t the tops

Posted on by Joe Cortright

Turning renters into owners is not a simple solution to housing affordability

Housing affordability is a tough, multi-faceted problem. Portland is wrestling with one approach to that, a new ordinance that would make it easier to build “missing middle” housing, like duplexes, triplexes and fourplexes in city neighborhoods.  According to a recent article in Willamette Week, Portland City Commissioner Chloe Eudaly says that her price for voting in favor of the City’s proposed Residential Infill Policy is that the city enact a “tenant opportunity to purchase requirement.” In Eudaly’s view, giving tenants a right to purchase their home or apartments could potentially forestall displacement and insulate tenants from future rent increases.

What is “Tenant Opportunity to Purchase?

If you’re a hard pressed tenant, the life of a landlord must seem pretty sweet, sitting back and collecting rent checks and raising the rent, pretty much with abandon. Owners hold the cards, renters play the hands they’re dealt. What if this power imbalance could be addressed by giving tenants the right to buy the places they’re renting? If you just owned your home, rather than renting it, then all those rent checks would go into your pocket, instead of the landlord’s, and you’d be insulated–forever–from rent increases.

That’s more or less the thinking behind the “Tenant Option to Purchase” proposal being floating in Portland. When a building comes up for sale, the landlord would be required to give existing tenants of a house or apartment building a “right of first refusal,” meaning that if the tenant could match the purchase price offered by some other buyer, they would have the legal right to buy the property at that price. In principle, it sounds neat:  tenants can use their money to pay off a purchase mortgage (and own the property) rather than sending in rent checks every month).

In practice, its much more complicated. While simple enough when we’re talking about a single family house or one condominium, where its one household financing and owning one dwelling, its dramatically more complex when we’re talking about multiple tenants in an apartment building. In order to buy anything, the tenant is going to have to find and qualify for a mortgage (which, given the economic status of most renters is going to be a big challenge).  Its even bigger if we’re talking about a group of renters, who would presumably have to form a cooperative or find some non-profit organization to serve as their collective agent.

Washington DC’s TOPA Act

The Eudaly proposal is apparently modeled on one that’s been in place in one form or another in Washington, DC, for about thirty years.  Washington’s program is called “TOPA” the “Tenant’s Opportunity to Purchase Act.”  TOPA generally grants tenants a grace period and right of first refusal to purchase their building if it is to be sold.  It’s problematic to make this work for larger multi-unit buildings, because its difficult for tenants to collectively arrange financing. Creating a co-op or finding a non-profit organization to serve as a purchaser is often extremely difficult.
In Washington, renters have the option of selling or transferring their purchasing rights to third parties.  For many, that seems simpler and more economically advantageous than taking a chance on buying a property.  In Washington, tenants can sell their rights-of-first refusal to a third parties. Third-parties purchasing TOPA rights can either benefit a developer, or blackmail a purchaser. The existence of these shadowy property rights can lead to financial scams. Homeowners can’t sell their homes without demonstrating to buyers that all those with “TOPA” rights have waived them; one first-time homebuyer found was faced with a demand to pay $10,000 at closing to induce a tenant to waive TOPA rights; when she balked, a developer bought them and took the home. The District of Columbia has a small cottage industry of lawyers and developers who capitalize on buying and selling TOPA rights.

As it turns out, TOPA hasn’t created a lot of homeowners. In practice, few tenants succeed in acquiring a building even when they invoke TOPA; according to the Washington Post:

Last month, the D.C. Council sought to remedy this problem. It passed a bill that, to a large extent, eliminated TOPA from single-family dwellings. The council relied, in part, on a study that showed from Oct. 26, 2009, through Aug. 15, 2015, out of 398 TOPA offers only 19 were successful. In other words, although landlords complied with TOPA, less than 5 percent of renters ended up buying their home.

Turning renters into owners doesn’t fix affordability

Even if it didn’t produce this kind of scammery, there are good reasons to question question the utility of a tenant opportunity to purchase plan:  Turning renters into an owners sounds great in principle, but in practice it is a costly and risky option for a lot of renters. Many renters are renters out of economic necessity rather than than choice, and may find it difficult to acquire the down payment or qualify for a loan to purchase property. For many the low commitment of renting is a critical advantage.  Renting month-to-month or for a year or less confers the flexibility of being able to move when life circumstances, family arrangements or job opportunities change.  Owning a home raises the cost and decreases the probability of being able to move. Tenants can walk away from a rental with little financial damage; as millions of homeowners who faced foreclosure and bankruptcy the last time the housing market went south, the personal financial consequences are devastating. Homeownership is no guaranteed financial bonanza; as we’ve long documented at City Observatory, there’s no guarantee that a home is a good investment; a third or more of homes are likely to be worth less than their purchase prices a few years on. Given the way credit and housing markets work, promoting homeownership has been a risky, often wealth-destroying strategy for low income households and people of color.

As Ethan Seltzer pointed out in a commentary at City Observatory, the more difficult, opaque and risky we make it for people to be landlords, the fewer people will be interested in renting out their property. If we want to encourage a profusion of “missing middle” housing types, that necessarily implies a lot more “mom and pop” landlords.  Redefining property rights tends to create uncertainty and raise transaction costs; neither buyers or sellers can be sure of what they’re getting when there’s the possibility, as there is in Washington, that a sale may fall through unexpectedly because someone asserts a right of purchase.  Housing affordability is a big issue, but its not one that’s likely to be solved by recasting property rights to try to turn more renters into owners.

 

Climate Fail: Metro’s 2020 Transportation Package

Posted on by Joe Cortright

Metro’s multi-billion dollar transportation package does nothing to reduce greenhouse gas emissions

Spending $3 billion reduces Portland’s transportation greenhouse gases by .05 percent

This package costs nearly $40,000 per ton in reduced GHG emissions

Metro Portland knows that climate change is one of the most serious problems we face.  We know that transportation, particularly automobiles are the largest source of greenhouse gas emissions. Our state, region and city have all formally adopted legal commitments to reduce greenhouse gas emissions. Officials from throughout the region say that dealing with climate change is one of the key priorities of a proposed multi-billion dollar transportation package.  But in reality, this package will do virtually nothing to reduce greenhouse gas emissions.

A bit of background:  Portland’s regional government, Metro, has convened a year-long process to develop a multi-billion dollar transportation spending proposal. The process is down to selecting projects to receive funding.  According to Metro, one of the project’s core values is to help reduce greenhouse gas emissions.  Early on in this process, the Metro Council set the direction for this package, saying:

Our imperative to reduce greenhouse gas emissions and prepare for a climate-change future is increasing.

More broadly, Metro’s Transportation Work Plan sets six specific outcomes for its Regional Transportation Plan, including:

Climate leadership – The region is a leader in minimizing contributions to global warming.

It sounds pretty bold, but until recently, there’s been little indication how the proposed multi-billion project list will advance the climate agenda. On December 18, for the first time, Metro staff presented their estimates of the decrease in greenhouse gas emissions associated with the approximately $3 billion proposed spending package.  They estimate that the combined effect of the investments would be to reduce greenhouse gas emissions by about 5,200 tons per year.

From Metro’s December 18, 2019 Staff Presentation

Task Force members were quick to ask for a bit of context (not everyone has immediate access to an inventory of the region’s greenhouse gas emissions). Metro staff were at a loss at the time to come up with any figure for a total regional greenhouse gas emissions.

Let us help:  Data from the national DARTE transportation emissions database show that in 2017 (the latest year for which data are available) the Portland metropolitan area had transportation greenhouse gas emissions of 3,892 kilograms per capita.  The region’s population was 2,456,000.  That puts total greenhouse gas emissions from transportation in the Portland area at about 9.5 million metric tons (2,456,000 x 3,892 /1000).

And its not like this number should be so difficult for Metro staff to determine.  Their own “Climate Smart” Strategy, published five-years ago estimated that greenhouse gas emissions from “light-duty” vehicles (cars, SUVs and light trucks) were about 5.2 million tons in 2010.  (That estimate omits emissions from larger trucks, buses, and other modes of transportation, and also is apparently just for the area inside metro’s urban planning boundary–but its clearly in the same ballpark as the DARTE estimates).

So here’s what Metro’s $3 billion transportation plan buys in terms of carbon emission reductions.  That 5,200 tons per year of reduced greenhouse gas emissions works out to five one-hundredths of one percent of all the greenhouse gases currently emitted from transportation:  0.05 percent.

That may be a little bit difficult to visualize, so we’ve prepared a diagram that shows just how big this reduction is.  The following graphic shows 2,000 dots, each corresponding to a little less than 5,000 tons of annual greenhouse gas emissions.  The greenhouse gas reductions attributable to Metro’s 2020 transportation package are equal to one slightly over-sized red dot in the upper right hand corner of the chart.

Here’s how much Metro’s $3 billion transportation plan reduces Portland’s transportation greenhouse gas emissions: One dot out of 2000.

That’s a trivially small reduction; its about the amount of greenhouse gases produced by fewer than 6 hours of driving in the Portland metropolitan area.  It is so tiny that its within the margin of error of estimates of overall greenhouse gas production.  Also, keep in mind that transportation, while the largest single source of greenhouse gas emissions in the Portland area is about 40% of the total.  That means that the reduction in greenhouse gases based on the total is about 0.025%.

There’s a second way to put this number in context.  Transportation-related greenhouse gas emissions in Portland have been increasing for the past four years according to the DARTE database.  In fact, emissions are up substantially, by about 1,000 pounds per person annually over the level of 2013.  In 2013, total transportation greenhouse gas emissions were approximately 7.9 million tons in the Portland area.  That rose steadily to 9.5 million tons in 2017, mostly due to the big per capita increase in emissions, that in turn are attributable to the 40 percent decline in gasoline prices in 2014.  So, on an annual basis, Portland area transportation emissions were about 1.6 million tons higher in 2017 than in 2013. The annual rate of carbon emissions increased by about 4,500 tons per day over the past four years.  That means that the 5,200 ton yearly reduction in carbon emissions works out to the equivalent of offsetting less than a day and a half of the  growth in annual carbon emissions we’ve recorded over the past several years.

Metro’s reduction in greenhouse gas is smaller than the width of the blue line on this chart.

So on this chart, if Metro’s 2020 projects were in place today, we would expect regional greenhouse gas emissions to decline by about 5,000 tons, from roughly 9,560,000 tons today to about 9,555,000 tons with the Metro projects.  On this chart, that difference is simply invisible: For reference, the blue line on the chart is about 100 tons wide, or about 20 times larger that the reduction in greenhouse gases associated with the Metro plan. Despite the high-minded rhetoric, Portland’s proposed multi-billion dollar transportation initiative does effectively nothing to reduce the region’s transportation-related greenhouse gas emissions.  Finally, it has to be said that we are taking Metro staff’s estimates of the greenhouse gas reductions associated with the spending package at face value. The agency hasn’t disclosed how these estimates were generated, and seems unlikely that Metro’s travel modeling has accounted for the induced demand for travel that would come might be caused by capacity increases and traffic flow improvements in the spending package. Alarmingly, Metro has propagated the fiction that the region’s greenhouse gases can be reduced by speeding traffic to reduce time spent idling, a claim that we’ve repeatedly debunked. A careful independent analysis of the environmental effects of this spending program might show it increased greenhouse gas emissions, rather than decreasing them.

The price of carbon savings

It’s worth considering how much those carbon reductions cost.  The total cost of this package is about $3 billion; that amount has an annualized value of roughly $200 million at a 5 percent interest rate.  The annualized cost of the Metro transportation plan  (about $200 million per year) divided by annual reduction in the number of tons of greenhouse gases is $200,000,000 / 5,200 = $38,500 per ton.

Of course that’s a crude estimate for a variety of reasons.  Reducing greenhouse gases isn’t the only objective of the transportation package, so arguably some of the cost is aimed at achieving other objectives. But its also the case that the investment package doesn’t cover the entire costs of many of the projects.  For example, the package’s largest project is a proposed Southwest Light Rail extension, of which the package would cover only about one-third of the capital cost.

Does it make any sense to spend nearly $40,000 to reduce a ton of carbon?  There’s a lot of debate about the “social cost of carbon” with current estimates running roughly $50 per ton, and some economists speculating that the threat of climate change may necessitate of charge of several hundred dollars per ton to fully reflect climate costs and encourage the needed level of emission reductions

Just as a hypothetical, let’s ask how much it would take to achieve a 50 percent reduction in transportation related greenhouse gas emissions from current levels making this kind of investment.  Current transportation emissions are slightly more than 9.5 million tons per year.  To reduce that to 4.75 million tons per year at a cost of $40,000 per ton would cost on the order of $190 billion per year.  To put that number in context, that is more than three times the total personal income of the Portland metropolitan area — about $57 billion per year.

 

 

Walkable places are growing in value almost everywhere

Posted on by Joe Cortright

Over the past decade, across the nation, the most walkable homes have appreciated the most

In two-thirds of large metro areas, walkable neighborhoods have higher home values than car-dependent ones

Walkable neighborhoods appreciated faster than car-dependent ones in 44 of 51 large metro areas in the past seven years.

For some time, our research, and that of other scholars has shown that houses with high levels of walkability (as measured by Walk Score) command a premium over otherwise similar homes in less walkable locations. Our estimates are that a single additional point of WalkScore is worth $3,500 in additional home value. Real estate analytics rivals Redfin and Zillow have both found statistically significant correlations between walkability and home values for a wide range of US cities.

A recent study from Redfin looks at the variations in home appreciation rates between the most walkable homes and those located in car-dependent locations. The study gathers data for individual metro areas, and compares home values within metro areas for the two types of housing. In most metropolitan areas, homes in more walkable areas are worth more than homes in car dependent areas.

Walkability commands a value premium in most US markets

For each metropolitan area, we’ve computed the walkability premium–the difference in the average value of homes in walkable neighborhoods compared to the average value of homes in car-dependent neighborhoods. This map shows home values for the 50 largest metro areas. Areas shaded green have a premium for walkable homes over ones in car-dependent areas; red shows metros where car-dependent homes are more valuable, on average, than in walkable neighborhoods. You can hover over each metro area to see the average value of each home type.

In 2019, roughly two-thirds (35 of 51) of metro areas with a population of a million or more had a positive walkability premium.  In only a few metropolitan areas, mostly in the Rustbelt, do walkable urban neighborhoods sell at more than a 10 percent discount to houses in car dependent neighborhoods (i.e. Baltimore, Cleveland, Detroit, Milwaukee, Pittsburgh, Providence, Rochester).

While the premium for walkability is important, a more compelling bit of evidence comes from looking at the trend in the relative value of homes in walkable and non-walkable neighborhoods over time. What the data show is that the walkability premium has continued to increase over time. The Redfin report’s headline emphasizes a very small short term decline in the value of homes in the most walkable neighborhoods compared to car dependent ones. In our view, this minor correction masks the much larger, longer term trend of relatively rising values for more walkable places.

Walkable homes are gaining value relative to car dependent homes almost everywhere

To get a sense of the longer term trend in the value of walkability, let’s take a closer look at the data. Redfin thoughtfully makes its estimates available on its website, so we’ve compiled their estimates for the nation’s largest metro areas (those with 1 million or more population). We’ve focused on the changes in home prices between May of 2012 and May of 2019. In this map, green shading indicates which metros experienced an increase in the value of walkable homes relative to car dependent homes.  Red shading shows walkable homes appreciated relatively less than car dependent homes. Again, you can hover over a particular metro to see the home values for each category for 2012 and 2019, and also see the percentage premium for walkable homes, and the change in the premium over the seven-year period.

The trend is clearly for walkable areas to gain value relative to car-dependent ones.  Of the 51 metro areas for which we have data, 44 experienced an increase in average values in walkable areas relative to car-dependent ones over the period 2012 to 2019.

The premium that buyers pay for walkable homes is increasing in size, and is becoming more and more common in metropolitan areas across the United States.  The walkability premium is a clear market signal of the significant and growing value Americans attach to walkability.  Its also an indication that we have a shortage of cities.  We haven’t been building new walkable neighborhoods in large enough numbers to meet demand; nor have we been adding housing in the walkable neighborhoods we already have fast enough to house all those who would like to live in them.

2019: The Year Observed

Posted on by Joe Cortright

What City Observatory did in 2019

We spent a lot of time this year addressing Portland’s proposed half-billion dollar Rose Quarter freeway widening project. You may have thought Portland put its freeway fights behind it in the 1970s, when it killed the Mt. Hood freeway and used the money saved to start a light rail transit system. But the freeway-builders haven’t gone away, they’ve just gotten a good deal more glib–and in our view, less honest–about the implications and impacts of their projects. While this particular battle is specific to Portland, as Alissa Walker of Curbed pointed out in December, a distressingly large number of self-proclaimed climate Mayors are also supporting freeway projects around the country. If we’re serious about climate change, building wider freeways is taking us in the wrong direction.  We summarized our extensive analysis of the Rose Quarter freeway widening project in the post “25 reasons not to widen Portland Freeways”

Our most read post of the year was: “Ten things more inequitable than road pricing.” Road pricing seems to automatically generate push back that its somehow unfair to lower income people; what that argument misses is the larger context of a transportation system that is systematically inequitable. Those without cars a second class citizens at best, and our current systems of transportation finance force people to pay for cars and car travel whether they own cars or not.  Moreover, these existing subsidies are overwhelmingly regressive.

Everyone has a pet explanation of gentrification, and we’ve compiled all the suggested suspects into an A to Z list.  Everything from Arts to Zoning is on the list, and while lots of things are blamed, its mostly guilt by association. The underlying problem, in our view, is the shortage of cities and our chronic failure to allow the construction of housing in the great urban neighborhoods we have. The growing demand for urban living has run headlong into a slowly growing stock of housing in dense, walkable places. Perversely, efforts to block new development in the name of preventing gentrification typically have the opposite effect, making housing even more expensive.

A solution for displacement? Frequently, the tactics proposed to deal with gentrification–by trying to block new development–backfire, by limiting the growth of the housing supply and pitting new residents against existing ones in bidding up the price of a fixed or slowly expanding housing stock. If we want to avoid or minimize displacement in urban areas, we need to build more housing, both market rate and subsidized. One tactic for capturing the value from property appreciation in gentrifying neighborhoods is to dedicate a portion of tax increment revenues to building affordable housing. Portland has done just that for more than a decade, and amassed nearly half a billion dollars to support affordable housing, and built thousands of affordable units in rapidly redeveloping neighborhoods.

New Knowledge

Two of the most important studies of the year come from a single author:  the Upjohn Institute’s Evan Mast.  If you care about housing, you should read both of these papers.

The first study looks at the process of filtering, the way in which the construction of new housing sets of a chain of household moves that makes more housing available for people of all incomes.  We summarized it in our commentary, Kevin Bacon and Musical Chairs teach us housing economics. It’s an article of faith among economists that more housing, even higher end housing, will help ease rising rents. But to lay-people, that seems counterintuitive. A new paper from the Upjohn Institute shows that the construction of new housing creates a kind of chain-reaction of moves by households that propagates to housing in low income neighborhoods. When a household moves to a newly built, market-rate unit, they move out of the home they previously occupied–and the household moving into that unit frees up another unit, and so on.  The Upjohn paper uses a detailed private database tracking changes of address to see exactly how moves into one unit create vacancies elsewhere. And like the famous game “Six Degrees of Kevin Bacon,” it turns out that just a few moves connect widely disparate neighborhoods. The paper estimates that building 100 units of new market rate housing generates 60 household moves into housing in low income neighborhoods.

Mast’s second paper, with two co-authors looks at a closely related question, whether the construction of new high priced housing causes the prices of nearby homes to rise or fall.  We summarized this research in our essay: 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.

In the News

Some of our most prominent media mentions during 2019 included the following:

Joe Cortright’s Op-Ed, “Portland’s phony, failing climate policy,” was published in the December 14, 2020 Oregonian.

Willamette Week cited Joe Cortright’s work in fighting the Columbia River Crossing in its story on “The 20 moments that made Portland famous in the past 10 years.”

The Vancouver Columbian included in its Top Ten Stories for 2019 our debunking of state Department of Transportation claims that Oregon and Washington would have to repay the federal government $140 million if they didn’t build a $3 billion Columbia River Crossing.

Slate reported on our comparative analysis of pedestrian death rates in the US and Europe in their article “Don’t count on US regulators to make self-driving cars safe for pedestrians.”

In June, Governing Magazine covered our A to Z list of the supposed causes of gentrification in “The Fables of Gentrification.

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

City Journal cited research from our City Observatory report Lost in Place in its article on “The Bifurcated City.”

Happy 2020 Everyone!

 

The Week Observed, January 10, 2020

Posted on by Joe Cortright

What City Observatory this week

1. 2019:  The Year Observed.  We take a look back at 2019 and review some of the most important City Observatory commentaries, interesting stories and valued research.  Our most read post of 2019 was “Ten things more inequitable than road pricing.” Other highlights were our “A to Z” list of all the things people claim cause gentrification (a list that expands weekly, and now includes “little libraries.” We were also proud to offer up our on policy prescription for pre-empting displacement (dedicating a portion of TIF funds in gentrifying neighborhoods to affordable housing construction).

2. Why helping people move out of low income neighborhoods is a good idea. We now know that the neighborhood you grow up in has a huge impact on your future success, especially for kids from low income households. Building on this insight, Seattle has created a pilot program to provide vouchers, along with some more intensive home-finding services, to enable low income households to find and rent housing in “high opportunity” neighborhoods. The preliminary results of the experiment are promising: many households in the experimental group have chosen to move to these high opportunity neighborhoods–where their children are expected to have lifetime earnings about $200,000 higher than in low income neighborhoods; they also report significantly greater satisfaction with their neighborhoods. But a critique published by Next City claims that the experiment is bad for low income neighborhoods, for the households that move, and are likely to cause white flight.  In our commentary, we debunk each of these claims.

3. Why TOPA isn’t necessarily the tops.  Tenant opportunity to purchase is one idea for promoting homeownership.  The idea is to give renters a right of first refusal if their landlord decides to sell their apartment. In theory, such a requirement gives tenants a chance to buy their homes if the come up for sale, and thereby insulate themselves from the possibility of future rent increases. In practice, especially in Washington, DC, the only large city with this requirement, the program has some serious challenges. Few renters have the down payment or credit to buy their homes, and putting together a co-op or non-profit to by an entire apartment building is difficult. Moreover, its not clear that owning rather than renting is better financially for many households, especially those who may need or want to move before they could recoup the expense of purchasing. Also, as we’ve noted a City Observatory, there’s no guarantee that any particular home’s price will appreciate, and many buyers may find that they lose money on their purchase. Finally, in practice, the creation of a “right of first refusal” which can be sold to a third party has led to financial scams.

Must read

1. Habitrails for Teslas? Elon Musk is a master of media manipulation, regularly baiting “tech” reporters into providing free marketing exposure for Tesla and assorted other ventures. Curbed’s Alissa Walker does some real journalism taking a look at the steadily shrinking promises around Musk’s proposed Vegas people mover.  While was billed as “mass transit” what actually seems to be under construction is more like a glorified test rides.  Top speeds, billed originally at xxx miles per hour now seem likely to peak at 45; cool illustrations of 12 passenger vehicles have given way to off-the-shelf 5 passenger Tesla model 3s.  Most of the media types are hopeless suckers for whatever technology Musk is touting this week. While that might be regarded simply as the usual puffery, it comes at a cost to serious discussions to our urban transportation problems. As Alissa Walker puts it:

But the bigger problem is this: Each time a city (or a reporter) shows interest in Musk’s tunnel-boring scheme, it helps him sell more cars. And each time city leaders promote one of his fantastical ideas—tiny tunnels! autonomous vehicles! platooning!—it does serious damage to the real-life solutions being proposed by experts that will actually make life better for their residents.

The Habitrail: The latest technology for hamsters.

2. Road building is outstripping transit investment.  You frequently hear about calls to have a “balanced” transportation system.  But the evidence shows that we’re still overwhelmingly spending more and more on car infrastructure than on transit. The indispensable Yonah Freemark of the Transport Politic has tabulated collective spending on car versus transit infrastructure over the past decade in the United States, and come up with the disturbing conclusion that we’ve invested vastly more in subsidizing road construction and car use than we have transit.  We’ve built about 1,200 miles of additional transit service (counting rail and bus rapid transit) and during the same time, built almost 22,000 additional lane miles of freeways and other high capacity arterials.

3. Building places, not banning cars. The Brookings Institution’s Joe Kane has a commentary arguing that we need to spend much more time and attention thinking about how to build great urban places, rather than just demonizing cars. His essay, “Banning cars won’t solve America’s biggest transportation problem:  long trips,” draws a close connection between urban form and car dependence.  The way we’ve been building our cities and suburbs for the past half century (or more) has accentuated car dependence.  Owning a car is a necessity in much of this landscape.  Overall, we have more than 1.8 cars per household; although some denser, more compact metro’s manage with far fewer.  This map shows car ownership per household in the nation’s largest metro areas, with darker dots representing the most car intensive metros, and lighter ones representing the least.

The key to reducing car dependence is to build more great urban spaces, and to build more housing in the walkable places we already have.  A combination of strategies that promote greater density, and more mixing of different land uses, plus transit, cycling and walking will be needed if we’re going to reduce car dependence.

In the News

In its look back at the teens, “The Twenty Moments that made Portland Famous in the past ten years,” Willamette Week credited freeway opponents, including Joe Cortright with successfully challenging plans for a multi-billion dollar freeway between Portland and Vancouver Washington. They wrote:

On the Oregon side, a ragtag guerrilla squad of skeptics led by economist Joe Cortright poked holes in the rationale for the new bridge: The highway departments’ traffic and financial projections were wrong, they argued, and creating new vehicle capacity would not relieve congestion.

The Oregonian quotes City Observatory’s Joe Cortright in its story examining the Oregon Department of Transportation’s plans to form a new office to guide highway megaprojects:  It’s a hopeful sign that the state is charging the office with also developing congestion pricing, and a chance to bring ODOT into the 21st Century.

 

The Week Observed, January 24, 2020

Posted on by Joe Cortright

What City Observatory did this week

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

Must read

1. Brookings Institution’s Jenny Schuetz has a gentle corrective on who or what is to blame for housing affordability.  Too often, the debate about housing costs is a search for villains to blame. Senator Bernie Sanders recently singled out corrupt developers causing gentrification. In a commentary, “Who’s to blame for high housing costs? It’s more complicated than you think.” Schuetz contrasts two different theories about housing affordability.  The first theory is the YIMBY analysis that constraints (like zoning limits and parking requirements) that make it hard to build more housing in high demand cities drive up housing costs and create displacement.  The opposing view is expressed in Sanders view pinning the blame on some combination of greedy landlords and developers.

To come up with her answer to this debate, Schuetz diagrams all the players in what she describes as the “housing development ecosystem” and focuses on the critical role that the regulatory process plays in influencing development decisions. Development is inherently uncertain and risky, and regulations that prolong the development process, and inject uncertainty as to its outcome tend inherently to drive up costs and reduce investment.  Schuetz diplomatically concludes that  “It’s complicated,” which is true, but also sounds a lot like  the policy wonks version of the Southern expression, “Bless his heart.”

2. Bloomberg’s Noah Smith: “The Rent Crisis won’t go away without more housing.”  It’s fair to say that job growth, especially in city centers, is a key factor in housing demand.  Activists in San Francisco have made the connection between new office construction and housing demand, and have put forward a ballot measure that would restrict office construction in order to reduce demand for housing, and thereby decrease the pressure on rents.  Noah Smith points out that while that may work in a narrow sense, it undercuts the economic value that comes from concentrating activity in cities, and is a diversion from the more sensible approach, increasing housing supply.  He writes:

The quickest solution is widespread upzoning. Oregon and the city of Minneapolis have recently banned single-family zoning, allowing duplexes and other forms of moderately dense housing everywhere. . . . If measures like these become common nationwide, the country’s suffering renters will finally get a break and the economy will get a boost.

3. Greenhouse gas emissions: Coals is fading, which is good news, but progress elsewhere is insufficient.  It will be a while before the US government comes up with its official estimates of greenhouse gases for the year just ended, but the Rhodium Group has its preliminary estimates of the nation’s carbon footprint for 2019. The good news: overall carbon emissions dropped about 2 percent–chiefly due to a decline in coal burning to produce electricity. Outside of that bright spot, the news isn’t so good. Transportation is now the largest single source of greenhouse gases, and were basically flat over the past year.

 A much faster decline in greenhouse gas emissions is needed to meet globally agreed upon targets, as Rhodium concludes:

If our preliminary emissions estimates prove correct, hitting the Copenhagen Accord’s 17% target exactly will require a 5.3% reduction in net GHG emissions this year—a bigger annual drop than the US has experienced during the post-war period, with the exception of 2009 due to the Great Recession.

 

In the News

Oregon Public Broadcasting quoted City Observatory director Joe Cortright on the problems facing the proposed $800 million I-5 Rose Quarter Freeway widening project. “Planned I-5 Freeway Widening Project in Portland Keeps Taking Hits.”

 

 

 

The Week Observed, January 31, 2020

Posted on by Joe Cortright

What City Observatory this week

1. A massive regional transportation spending plan that does nothing for climate change.  Portland’s leaders are in the process of crafting a $3 billion plus regional transportation package. One of its stated objectives is to help reduce greenhouse gas emissions. But a recently released staff analysis shows the multi-billion dollar plan will lower greenhouse gas emissions by just 5,200 tons out of a regional total of more than 9.5 million. That works out to a five one-hundredths of one percent reduction.  Graphically, something like this:

Each dot represents almost 5,000 tons of greenhouse gases; the one red dot shows how much reduction the region will get for its $3 billion transportation package.

What’s particularly alarming is that Portland’s greenhouse gas emissions from transportation have been growing rapidly since the collapse of oil prices in 2014, with the region emitting 1.6 million more tons of greenhouse gases now than in 2013; The entire multi-billion dollar package will offset just a couple of days worth of the growth in emissions. If the region is serious about climate change, its going to need something very different from this package.

2.  When it comes to climate change, it’s always Groundhog’s Day.  We seem to be stuck in an infinite loop when it comes to climate policy.  We adopt bold declarations that we’re going to reduce our greenhouse gas emissions . . . someday.  But when we look at the latest accounting, well, it turns out that we’re not making any progress, and when it comes to greenhouse gases from transportation, we’re making things worse, almost entirely because we’re driving more. We highlight the continuing–and growing–disconnect between the high minded rhetoric (and much celebrated long-term goals) that Oregon and other states have adopted for climate change, and the actual progress, which has been not just nil, but negative, when it comes to transportation. If we’re serious about climate change, we’re going to have to do something different, or next Groundhog’s Day is going to look pretty much the same.

Must read

1. The optimal serendipity of industry clusters. Rents near Kendall Square in Cambridge are pushing $100 per square foot, making it one of the most expensive places to locate your business. Yet biotech businesses willingly pay these high rents, rather than relocating to cheaper suburbs (or one of the many cities questing to be a biotech center).  Why? Well, as economist Robert Lucas opined three decades ago, people pay high rents in cities, and places like Kendall Square, to be near other people.  The Boston Globe recites first-hand accounts of the benefits that researchers, industry executives, venture capitalists, and other biotech specialists reap from being in close proximity to thousands of their peers. Some of this is the straightforward benefits of propinquity, its easier and quicker to connect with just the expert you need. But a big part of the benefit is serendipitous interaction, things you learn from the random accidents of who you encounter. This source of cluster competitive advantage is over-whelming and almost impossible to duplicate, which is why calls to spread innovation based industries more evenly across the landscape are almost certainly doomed to fail.

2. Grand strategy for housing affordability. The re-legalization of four-plexes in Oregon and triplexes in Minneapolis represent an important symbolic victory in the effort to restore housing affordability in the nation’s cities. But Sightline Institute director Alan Durning argues that its just a first step in a much longer and more difficult effort to reshape housing policy.

Legalizing these is just the start.

Durning compares the housing debate to World War I’s continental scale trench warfare, and while hopeful, the advances in “missing middle” housing are just a mile long incursion in what amounts to a thousand-mile front. We raised much the same concern in our 2019 commentary:  You’re going to need a bigger boat.  While triplexes and fourplexes are a step in the right direction, its only a beginning.  As Durning says:

And they are breakthroughs. They have few precedents in recent decades of local housing law on this continent: the sanctum of single-family zoning has been breached. But viewed from a broader perspective, they are breakthroughs in a war we are losing. Or at least, a war we’re winning so slowly that we might as well be losing.

This commentary steps back from the policy tactics of local and state legislation to consider the broader political map on which housing debates turn. Advancing from the current breakthrough is going to require new and stronger political coalitions. Durning promises to explore new political strategies that will help build the case for affordable, low carbon cities. We’ll follow this with interest.

3. There’s no shortage of housing–for cars. Streetsblog Boston has a fascinating analysis of new housing developments in Boston. The good news? The city is building more housing, and doing so in transit served locations.  The bad news: The housing developments have a huge amount of parking. In the 27 projects permitted in the past year, there are 1,984 housing units and 2,152 parking spaces–more than 1.1 per unit. That parking tends to be expensive, more than $25,000 per above ground parking space, (making housing less affordable), and according to careful studies, also tends to be underutilized (even at peak occupancy, 30 percent of parking spaces remain un-used).  Boston’s climate goals call for more housing and less driving, but the way real estate is getting developed, car dependence is built in to new housing.

New Knowledge

How green are electric cars? A defining feature of the electric car is the absence of a tailpipe. That leads some to conclude that electric vehicles are completely green or “zero emission,” but that misses the fact that both the car (and importantly its battery) require energy for manufacturing, and the electricity that the car uses has to come from some other sources of energy. If your Tesla gets charged up with electricity from a coal-fired power plant, its decidedly less green than if it draws its electricity from a windmill or solar cells.  And the same with its battery:  battery manufacturing requires a fair amount of electricity, so whether the battery factory is in China, for example, where most electricity comes from coal, it will have a substantial carbon footprint.

There are plenty of dueling studies out there estimating the greenhouse gas emissions from electric cars compared to traditional internal combustion engines and hybrid vehicles.  One study compares the life-cycle greenhouse gas emissions of a battery-powered plug-in Nissan Leaf with a Mazda 3, a similarly sized vehicle powered by a conventional internal combustion engine.  The following map shows the results, with the areas shown in blue being places where the Leaf has lower emissions, and red showing places where the Mazda has lower emissions. The difference reflects the relatively high use of coal for electricity generation in the Northern Plains States.

As Prof Jeremy Michalek, director of the Vehicle Electrification Group at Carnegie Mellon University, tells Carbon Brief, “which technology comes out on top depends on a lot of things”. These include which specific vehicles are being compared, what electricity grid mix is assumed, if marginal or average electricity emissions are used, what driving patterns are assumed, and even the weather.

Electric cars have the potential to reduce greenhouse gas emissions, but as this study suggests, when and where they are deployed, and how rapidly we can de-carbonize electricity generation are important factors in determining the role they should play in any climate strategy.

 

 

Our updated list from A to Z of everything that causes gentrification

Posted on by Joe Cortright

Gentrification:  Here’s your all-purpose list, from artists to zoning, of who and what’s to blame

We first published this list in 2019, but the search for scapegoats has expanded, and now includes little libraries and microbreweries.

When bad things happen, we look around for someone to blame.  And when it comes to gentrification, which is loosely defined as somebody not like you moving into your neighborhood, there’s no shortage of things to blame.  We’ve compiled a long–but far from exhaustive–list of the things that people have blamed for causing gentrification. (This task has been made easier by the seemingly inexhaustible editorial/journalistic appetite for stories pitched as exploring the gentrification of “X”, although an essay at Jacobin branding graphic novels as the “gentrification of comic books” seems to represent the moment that this meme has jumped its shark.)

It may be cathartic to point the finger of blame at someone or something else, but as this list shows, the blame game sheds precious little light on what’s really causing gentrification, and none at all on what we might do to minimize its negative effects.  Any discernible symptom of change in a neighborhood is likely to change the way it is perceived by residents and others.

Cities, and their constituent neighborhoods are in effect living social structures–they’re always in a state of change. Sometimes the change is imperceptibly slow, and other times, when new buildings are built, it can be rapid and noticeable. But no neighborhood remains the same.  Even places with no new construction see a constant inflow and outflow of residents, driven mostly by the natural course of people’s lives. It’s an illusion to suggest that any neighborhood will remain unchanged, and especially so for low income neighborhoods. As we’ve shown at City Observatory, the three-quarters of urban high poverty neighborhoods that recorded no decline in poverty rates from 1970 to 2010 didn’t remain unchanged, they lost 40 percent of their population over those four decades–and concentrated poverty and all its ills increased and spread.

The challenge with that portion of urban change that people call gentrification is not to stop it, but to figure out ways to make sure it produces benefits, if not for everyone, than for a wide range of current and future neighborhood residents. To do that, we have to do more than complain about the symptoms of change, but instead look deeper to understand its causes, and fashion policies that will minimize its negative effects.

The real problem: A shortage of cities

The real underlying cause of gentrification, affordability challenges, and displacement is our shortage of cities.  Now that we’ve rediscovered the long-established virtues of urban living, we don’t have enough great urban neighborhoods, or enough housing in the few great urban neighborhoods that we have, to accomodate all those who would like to live there.  This shortage coupled with growing demand is running head on into land use planning systems that make it impossible to build more of the kind of neighborhoods more and more people value.  The reason housing prices are rising in great (and improving) urban neighborhoods is that we have so few of them, there’s so much demand for them, and we’ve made it too hard to build more, and build more housing in the ones we have.  If we’re looking to reduce displacement from neighborhoods that are becoming nicer, along a whole series of dimensions, the answer isn’t to block change, its to build more housing and more such neighborhoods, so that they’re not in short supply and everyone has a chance to live in one.  

As you read through our alphabetic list of the things people blame for causing gentrification, spend a minute to think about what’s really behind urban change, and what we might do to build more inclusive, more equitable cities.

A – B – C

Artists. In this BushwickTED talk, Brooklyn artist Ethan Petit argues that art causes gentrification, based on his personal experience. Petit says that art and gentrification are two heads of the same hydra, a conclusion long litigated in academia.

Banks. Finance and speculation figure prominently in many accounts of what causes gentrification. Forbes’ recent recent article, “What do hipsters and banks have in common: Gentrification.” is an example of how the narrative that greedy developers buy up low-cost housing and raise the rents, with money provided by shadowy banks, has made it even to mainstream financial publications

Climate Change. Rising sea levels are plainly a threat to low-lying places like South Florida. Already, several studies are claiming that Miami is experiencing “climate gentrification,” as real estate developers buy property in higher elevation locations in the city, like Liberty City, which have traditionally been regarded as less desirable, precisely because of their distance from water.

D – E – F

Declining Crime Rates. One of the biggest and most persistent changes in US cities in the past twenty years has been a steady reduction in crime rates. When crime rates decline in a neighborhood, property values tend to rise, and research shows a correlation between declining crime and an increase in the number of higher income and better educated residents.

Environmental improvement. Poor neighborhoods often have worse pollution and less green space than other places in cities, but when these environmental problems are addressed, property values rise. This has led some scholars to argue that we shouldn’t make living conditions in these poor neighborhoods too nice, for fear of increasing rents. Instead, we’re told, we should settle for improvements that make the neighborhoods “just green enough.”

Florida, Richard. Florida’s 2002 book Rise of the Creative Class led cities around the country to pursue strategies of improving urban amenities to attract creative workers. To many that was a recipe for gentrification, a charge that Florida wrestled with in his most recent book, The New Urban Crisis. And last year, a Washington DC lawyer sued the city government for following Florida’s ideas, which he claimed led to gentrification and displacement. The suit alleges the city “catered to what urban theorist Richard Florida famously identified as the “creative class” and ignored the needs of poor and working-class families,” which “lead to widespread gentrification and displacement.”

G – H – I

Galleries. In Los Angeles, Boyle Heights neighborhood, newly opened art galleries have has been ground zero for a sustained battle between neighborhood activists and gallery owners, replete with graffiti, assaults and performance-art like demonstrations. (See also: artists.) Publicly vowing to “stop at nothing to fight gentrification and capitalism in its boring art-washing manifestations, the group has staged protests, called for boycotts and used social media in savvy and withering ways — for example, describing one gallery owner as bearing the “stench of entitlement and white privilege.”

The Highline.  In 2009, a decrepit elevated industrial railroad on the city’s West side was saved from demolition and turned into a landscaped, mid-air linnear park. The city also upzoned the area, and development took-off. Metropolis magazine termed it the “Highline effect” and fretted that “our new parks are trojan horses for gentrification.”

Independent shops. A 1992 dissertation looked at change in Southeast Portland’s Hawthorne Boulevard (a street that then and now has almost no national chain businesses) and concluded an influx of independent stores and boutiques had triggered “commercial gentrification.”

Internet.  A close look at Chattanooga’s plan to roll out a municipal broadband system uncovers an insidious plan to gentrify city neighborhoods, leading Fast Company to ask: “Municipal broadband: Urban savior or gentrification’s wrecking ball.”

J – K – L

Java. The opening of a new coffee shop is often taken as a harbinger of gentrification. Whether it’s Starbucks or an independent local shop, espresso is often equated with upscaling from coast to coast, from Los Angeles, to Washington, D.C.—and even in Berkeley, Calif., where the San Francisco Chronicle implied that a “fourth-wave” shop opening across the street from Chez Panisse (in a former Philz coffee space) might gentrify a neighborhood where the average household income is over $98,000 per year, and the average home is worth $1,127,100. (Sometimes, though, coffee shops bring it upon themselves: Denver’s Ink coffee shop, rightfully,was a subject of protests for a sign saying “Happily gentrifying the neighborhood since 2014.”)

 

Kids. Gentrifiers are usually stereotyped as single, young hipsters. But demographically, these people are in (or approaching) their prime child-bearing years, and many are staying in cities and raising their children.  The New York Times wrote of a burgeoning number of “strollervilles” popping up in neighborhoods and apartment buildings that previously had few children. “

The El: Improved transit is often blamed for driving up rents and property values and bringing in gentrifiers. As developers race to erect fancy apartment buildings and condominiums that cater mainly to young professionals, longtime residents of neighborhoods adjacent to established or newly planned transit hubs. it is claimed, are increasingly finding themselves priced out of their own communities.

Little libraries.  You wouldn’t think to look at these tiny-free-standing book houses as harbingers of displacement, yet according to some, the undermine the traditional public library, by enabling people to get (and share) free reading material without patronizing the public building. The assumption here is that there’s a fixed demand for reading, and that little libraries rob big ones of needed customers; this ignores the high likelihood that little libraries will help kindle a lifelong interest in reading, and democratize the spread of knowledge. There are over 90,000 little free libraries, so it looks like we’re pretty much doomed.

M – N – O – P

Moms riding cargo bikes. In June, the Atlantic published an article entitled: “‘Cargo-Bike Moms’ are gentrifying the Netherlands: In Rotterdam, the bakfiets utility bike has become a symbol—and a tool—of urban displacement.”

Image by Amsterdamized/CCBY2.0

Microbreweries. Yes, it seems,  even drinking locally brewed beer–instead of the Fordist, mass-produced swill of some global mega-corporation–contributes to gentrification. University of Toledo geographer Neil Reid, summarizes the academic research on this one, and concludes that microbreweries mostly tend to follow, rather than precede neighborhood change. Still he finds that in Cleveland and Denver, microbreweries showed up first, before property values escalated, so even though they represent local entrepreneurs creating sociable, community accessible “third places,” they’re going to get fingered for gentrification.

Neo-Liberalism:  No two words are more conjoined in leftist academic urbanism than “neoliberal” and “gentrification.” There are too many fish in this barrel to justify choosing just one, but, for a flavor consider these titles: “Engagement, Gentrification, and the Neoliberal Hijacking of History,” “Gentrification in the Neoliberal World Order,” “Fighting gentrification in the neoliberal university,” and “Race, Space and Neoliberal Urbanism: Gentrification and Neighbourhood Change in Nashville.”  

Opportunity Zones. The Jobs and Tax Cuts Act Congress passed in 2017 contains a new provision sheltering taxes on capital gains made in designated distressed areas.  These opportunity zones are supposed to lead to additional investment that will help poor neighborhoods, but there are widespread concerns that the tax break will just fuel gentrification, by subsidizing the construction of market rate housing in distressed neighborhoods. Houston’s Kinder Institute says the opportunity zone program threatens to be “gentrification on steroids.”

Parks:  Poor neighborhoods often suffer from a lack of local parks, but efforts to improve local parks often raise concerns about possibly raising property values. In Los Angeles, “a proposal to improve bike safety and pedestrian access to parks along the Los Angeles River was recently denounced as ‘a gentrification scam.'”

Q – R – S

LGBTQ:  By moving in to low and moderate income communities, LGBTQ populations are sometimes labeled as the advance guard of gentrification, and paradoxically, some gayborhoods have themselves been gentrified by others.  As Peter Moskowitz wrote at Vice, “When It Comes to Gentrification, LGBTQ People are Both Victim and Perpetrator; The role queer people—and especially white queers—play in the history of urban inequality is thorny, to say the least.”

Restaurants. In Chicago, according to local real estate website DNAInfo, protesters are treating a new restaurant as life-threatening: “Anti-Gentrifiers Say New Pilsen Restaurant Puts ‘Our Lives … In Danger.'”

Smart Phones. Governing magazine reports on a study that easy access to Yelp and other place-based reviews leads swarms of hipsters to quickly colonize and gentrify new spaces. They write: “That smartphone in your pocket just might be speeding up the gentrification of urban neighborhoods.”

Soccer. The Guardian looks at Orlando’s Major League Soccer franchise, which has built a new stadium in a city’s neighborhood, it worries, “the specter of gentrification only grows.” Soccer is turning its back on greenfield, suburban stadiums, because so much of the fan base consists of urban-dwelling young professionals.

T – U – V

Tech firms. In her now-classic 2014 essay, “How burrowing owls lead to vomiting anarchists,” Kim-Mai Cutler described how the demand for housing stimulated by the growth of the Bay Area tech industry ran head on to the highly regulated California housing market.

Urban Renewal: Many urban renewal efforts that consciously targeted “blighted” lower income neighborhoods, did a pretty good job bringing in higher income households, but often fell short in replacing the low and middle income housing that they demolished.

Vouchers. A couple of academic studies have come to the conclusion that school choice, including policies like No Child Left Behind’s option to leave failing schools, boosts housing prices and triggers gentrification. Planetizen reports that one review found, “The ability to opt out of the neighborhood school increased the likelihood that a mostly black or Hispanic neighborhood would see an influx of wealthier residents.”

W – X – Y – Z

Whole Foods. The opening of a Whole Foods Market at 125th and Lenox led one resident to call it “the final nail in black Harlem’s coffin,” noting the Whole Foods effect, “which is shown to drive up property values by as much as 40 percent.”

GenX:  While millennials draw much of the attention for current gentrification, the “back to the city movement was propelled by the previous generation. An essay published by Slate argues ” . .  among all age groups, the biggest shift toward high-density urban living has been among 35-to-39-year-olds—the younger slice of Gen X.”

You: As City Observatory’s Daniel Kay Hertz has written, “there’s basically no way not to be a gentrifier.” Your demand for living space in a city, regardless of what neighborhood you personally choose to live in, tends to create more pressure on housing markets, including in lower-income neighborhoods, especially if your city has a growing population but has not build more places for those people to live.

Zoning: Arguably, we’ve saved the best and most important cause for last. What prompts affluent people of means to choose to move into what have been low income neighborhoods. A huge and wildly underestimated cause is the fact that we’ve generally prohibited building more dense, affordable housing in the most desirable neighborhoods. Restrictive zoning in high income neighborhoods displaces this demand elsewhere, contributing to gentrification.

While there’s an entire alphabet of factors to blame, we urge our readers to focus on “Y” and “Z.”  It is, individually and collectively our demand for urban spaces that’s the key factor fueling gentrification wherever it occurs. We simply need more great urban neighborhoods, and more housing in the great urban neighborhoods we’ve already built. And the chief obstacle to getting more such neighborhoods is that we’ve essentially made it illegal to build dense, new mixed use urban neighborhoods, and zoning (and a host of related restrictions) make it impossible or prohibitively costly to build more housing in these desirable places. When we realize that the challenges that manifest themselves as “gentrification” are problems of our making, and that the solutions are within our control, maybe we can move past a bitter and unproductive blame-game.

 

 

Dr. King: Socialism for the rich and rugged free enterprise capitalism for the poor

Posted on by Joe Cortright

It’s a long road to redressing inequality

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

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

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

 

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

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

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

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

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

 

With climate change, it’s always Groundhog’s Day

Posted on by Joe Cortright

Every year, the same story:  We profess to care about climate change, but we’re driving more and greenhouse gas emissions are rising rapidly.

Oregon is stuck in an endless loop of lofty rhetoric, distant goals, and zero actual progress

Sunday, February 2nd is Groundhog’s Day, and City Observatory has an annual tradition of looking around to see if we’re making progress on climate change.  The short answer is, we’re not.  If it seems like you’ve read this post before at City Observatory, you’re not wrong. For the past three years, every Groundhog’s Day, we’ve stuck our heads up and looked around to see whether anything has changed when it comes to coping with the growing crisis of global warming. Once again, we find ourselves in the same predicament as Bill Murray in the 1993 movie, Groundhog’s Day–waking up every morning to discover that it’s still February 2, and that he’s done nothing to change any of the behaviors that have messed up his life.

The original inspiration for our Groundhog’s Day commentary was the 2017 report of the Oregon Global Warming Commission, a body set up to monitor how well the state was doing in achieving its legally adopted goal to reduce greenhouse gas emissions by 75 percent from 1990 levels by the year 2050.  The short story two years ago was:  Not very good.  Although the state reduced some power plant and industrial emissions, nearly all these gains were wiped out by increased driving. The 2017 Legislature that received that report not only did essentially nothing in response, it arguably laid the groundwork to make the problem worse, by approving a new transportation finance package providing upwards of a billion dollars to widen Portland area freeways.

Two years later, the 2019 Oregon Global Warming Commission report told us that almost nothing had changed:  we’ve made no progress toward reducing our state’s greenhouse gas emissions. The stark reality of climate change was brought home in the late summer of 2018, when massive forest fires in California choked most of Oregon in acrid brown smoke, a fact captured on the cover of the 2019 report.

 

The reasons for the growing problem were itemized in the commission’s biennial report to the state Legislature. In addition to its goal, Oregon has a tiny citizen commission charged with riding herd on the state’s emissions inventory, and looking to see what, if any progress the state is making in reducing greenhouse gases. The news is not good. Oregon’s emissions are rising. And the culprit is clear:  More driving.  Here’s the verdict from the commission’s report.

This finding confirms exactly what we’ve pointed out at City Observatory: the decline in gasoline prices in mid-2014 prompted an increasing in driving and with it, an increase in crashes and carbon pollution.  As we’ve reported before, per capita greenhouse gas emissions from transportation have increased more than 14 percent since 2013, by about 1,000 pounds per person. Total greenhouse gas emissions from transportation have increased by about 1.6 million tons per year over that time.

As a result of the growth in driving and related emissions, and slower than expected progress in reducing emissions from other sources, there’s no way the state on the path it needs to be on to reach its 2050 goal. Transportation emissions, which are now the single largest source of greenhouse gases in Oregon, are actually increasing from their 2010 levels–at a time when the state’s climate strategy called for them to be declining. (The blue line is the glide slope to achieving the state’s adopted 2050 goal, and the pale green line is the estimate of where the state is headed).  The best estimate is that rather than the eighty percent reduction from 1990 levels that the state has set as a goal, we’ll see barely a 20 percent reduction by 2050.  And these reductions are predicated on assumptions about more rapid fleet turnover, lower sales of trucks and SUVs, and steadily tougher fuel economy standards, when in fact the fleet is getting older (and staying dirtier), trucks and SUVs have dramatically increased their market share, and the federal government has walked back its fuel economy standards.  So its highly unlikely that even the 20 percent reduction by 2050 will be realized.

In the best of all possible worlds, this warning would prompt the Governor and legislators–ever mindful of their legally enacted commitment to reduce greenhouse gas emissions–to redouble their efforts and figure out ways to discourage carbon pollution, especially from transportation. After all, Oregon’s government passed a law mandating a reduction in greenhouse gases.

Oregon was, in fact, one of the first states to set its own local goals for reducing greenhouse gases. In a law adopted in 2007, the state committed to reducing its greenhouse gas emissions by 10 percent from 1990 levels by the year 2020, and the further goal of reducing them by 75 percent by 2050. Many other states and cities have similar adopted goals. Around the nation, much hope is being placed on the continued rhetorical commitment of many mayors and governors to achieving these reductions and thereby making progress to holding up America’s obligations under the the Paris accords. Ardent proponents of “The New Localism” tell us that even if the federal government ignores climate change, state and local leaders will get us on the right track.

Sadly, there’s a deep flaw in this approach. Despite the high-minded and quantitative nature of these goals, the actual date for their achievement is set far in the future, typically beyond the expected political lifetime of any of the public officials adopting these goals. And there’s little if any mechanism, aside from moral suasion, to require accomplishment of these goals. So in practice, what they may do is simply give politicians cover for expressing concern about climate change, without actually having to do anything substantive or difficult to attain it.

The Hippocratic Oath directs physicians, first, “to do no harm.”  The same ought to apply to state and local governments who profess to care about climate change. If we know driving is the biggest source of carbon pollution, and it’s causing us to increase emissions when we need to be decreasing them, the very last thing we should be doing is expanding freeways, which encourage people to drive even more. That’s why we think that Portland area freeway widening projects like the proposed $800 million expansion of I-5 should be taken off the table.  That money–and billions of dollars in other subsidies to automobile transportation, would be far better spent in building communities that are designed to enable low carbon living.

The International Panel on Climate Change has made it clear in its most recent report that we’re rapidly approaching a point of no return if we’re to avoid serious and permanent damage to the climate. We’re going to need something more than soothing rhetoric and distant goals to avoid dramatically altering our planet. We’d like to believe that things will be very different next Groundhog’s Day, but alas, we’ve seen this movie before.