The case against Metro’s $5 billion transportation bond

Metro’s proposed $5 billion transportation measure makes no sense for the region, for transportation, for our economy, for our kids and for our planet.

Portland’s regional government, Metro, will be asking voters in November to approve a $5 billion transportation bond measure. There’s a strong case to be made that this is a badly flawed approach to the region’s future. Today, we lay out the arguments against this measure.

  • The plan is founded on a  highway-oriented concept of corridors, rather than a more sensible approach emphasizing walkable centers and main streets.
  • The $5 billion measure does nothing to lower greenhouse gases.
  • Its wage tax is unrelated to transportation, effectively  taxing those who use the system least, and subsidizes those who drive and pollute the most.
  • The measure amounts to a 30 cent per gallon gasoline subsidy, encouraging more driving and increasing greenhouse gas emissions 50 times more than the amount saved by all its investments.
  • The measure cannibalizes the principal source of funding for transit operations just as Tri-Met is experiencing an operating funds financial crisis.
  • The plan is mired in the past, making no allowance for the changes we’ve already experienced in driving during the Covid-19 pandemic.
  • Metro’s plan plunges the region into debt for the next two decades, using up funds that will be badly needed to combat climate change.
  • This measure makes Portland taxpayers pay for problems created by the Oregon DOT: unsafe and transit hostile state highways.
  • A better approach would be to have road users to pay directly for the services they get, reducing carbon pollution, creating a more equitable transportation system.

After a year-long process Metro has sketched out a $5 billion plan, which includes investments in a number of “corridors”—we’ll come back to that term in a moment— and which would be  paid for by imposing a .75 percent payroll tax on firms with 25 or more employees, roughly for the next two decades.  (For the past fifty years, the region’s transit agency, Tri-Met has subsidized its operations by a similar payroll tax). The plan earmarks funds for a number of projects, most notably another leg of the region’s light rail system, this one to angle to the southwest suburbs. While there are a few set-asides for measures to promote access by low income populations (subsidized transit fares for students), the bulk of the money is allocated to capital construction.

Every part of the region gets an earmark for pet projects and/or pet corridors.  Suburban Clackamas County gets money to build expanded highway capacity. Multnomah County gets a contribution to the cost of a replacement of one of its Willamette River Bridges. The Port of Portland gets a subsidy for a big overpass to speed cars to its lucrative airport parking garages. The entire process was crafted like an overloaded Christmas tree, as a political log-rolling plan to provide something for everyone, and has consequently engineered political support from local governments throughout the region and key community groups.

But while it may make sense politically, the measure is at odds with the region’s stated values and vision, and sensible transportation and environmental policy. As we’ve noted already at City Observatory, in spite of the fact that Metro claims to care about climate change (and even though transportation is already the region’s single largest source of greenhouse gas emissions, and is increasing rapidly), the plan does essentially nothing to reduce carbon emissions.  But there are plenty of more reasons why this is a bad plan.

Corridors versus centers; cars versus people

The central organizing principal of the measure is investing in “corridors.” While it might have some superficial appeal, the notion of prioritizing investments around corridors is fundamentally at odds with the region’s stated planning objectives. Corridors are virtually by definition highways or major, multi-lane arterial streets that move large numbers of cars. While some of what is proposed in the plan are remedial measures to make these highways less hostile to pedestrians and somewhat more conducive to transit, the underlying planning objective is increasing throughput of people and vehicles. It’s a plan whose goal is simply moving things around, rather than improving the region’s livability.

It’s an odd choice because for decades the Metro land use plans have called for investments in “centers.”  The 2040 Regional Plan, adopted in 1995, called for an emphasis on regional centers and town centers and main streets would create nodes of density and diverse commercial, economic and civic activity that would serve as destinations and anchors for walkable, bikeable, transit-served neighborhoods.  In addition, if we need to reduce vehicle miles traveled (VMT) in order to reduce greenhouse gas emissions, facilitating more volume on corridors is actually counterproductive.

This measure makes virtually no investment in centers, and instead invests all the regions capital in bolstering transportation infrastructure in corridors. If this were a house, it would be all about hallways, and nothing about rooms.

Corridors are dead ends for community and climate

It’s a fair point that many of these corridors provide a dangerous environment for pedestrians and cyclists, and slow service and unpleasant surroundings for transit riders.

But nearly all of the major corridors included in the Metro bond measure are state highways, built, owned and managed by the Oregon Department of Transportation, an agency that has systematically prioritized car movement over all other human activity. The key corridors in the project are McLoughlin Boulevard (State Highway 99E), Powell Boulevard (State Highway 26), 82nd Avenue (Oregon State Highway 213), and the Tualatin Valley Highway (Oregon State Highway 8). As City Observatory friend and planning professor Ethan Seltzer observes:

The bulk of the money goes to putting infrastructure in places that will never be great places and that, frankly, ODOT and the State should be paying for, not Metro taxpayers. 82nd Ave, HWY 217, McLoughlin Blvd. …. these are ODOT facilities, made inhumane and inhospitable by ODOT.  Now Metro is expecting the region to pay to fix a problem created by the state on state facilities.  Meanwhile, ODOT gets to shift its resources to building up the system outside the Metro area, and also at metro area expense as the biggest group of gas consumers and taxpayers are in the metro region.

As Metro’s own studies have shown, these ODOT-owned roadways are responsible for a disproportionate number of the region’s roadway deaths and injuries.  Why should regional taxpayers be asked to pay to fix problems that were created by a state agency, especially one which has at least $800 million for a project that most Portland residents oppose?

Pouring hundreds of millions of dollars into these corridors is likely to produce trivial improvements in transportation speed and safety, but worse, will do almost nothing to advance the region’s vision of building more robust town centers and main streets.  Consider 82nd Avenue, which has been developed as mile upon miserable mile of strip commercial development featuring used car dealerships, drive through restaurants, strip malls and occasional big box stores. With between 20,000 and 30,000 cars driving up and down 82nd Avenue daily, its not an environment pedestrians want to linger in.  To be sure, there are a few nodes of activity (a Portland Community College Campus at 82nd and SE Division, the Fubonn Asian Mall at SE Woodward Street, and the Montavilla business district at SE Stark Street, but every one of these places turns its back on 82nd Avenue and the maelstrom of cars it serves. Regardless of the amount invested, unless car traffic were radically reduced and calmed, 82nd will never be a street that attracts and serves cyclists and pedestrians; it will always be what it is now, an barrier between people living on opposite sides of the avenue, separated by a flood of cars.

We know how “corridor” investments like these turn out:  They’re merely a highway engineer’s view of what a freeway for bikes or pedestrians might look like.  Consider as an example, the “multi-use path” that was incorporated into the Interstate 205 bridge crossing the Columbia River.  The path is about 10 feet wide, bordered by concrete walls, and stretching for more than two uninterrupted miles in the median of the freeway with five lanes of deafening car and truck traffic on either side.

Here’s what a “corridor” for bikes and pedestrians tends to look like, in practice.

To be sure, it is a “corridor” that enables people on bikes and on foot to cross the Columbia River, but there’s nothing along the path (or even at either end) that is a plausible or enticing destination. Exclusive, grade-separated and protected bikeways in the middle of a hostile environment and not connecting safe and interesting destinations don’t build a sense of place or create livable neighborhoods.

The focus on moving traffic and corridors undercuts community building. As Ethan Seltzer notes:

The premise of improving corridors itself is bankrupt as a corridor focus is about moving through, not about making better communities. All we’re doing is making a prettier version of a failed system.  Transportation is best seen as a means, not an end.  Metro’s approach only glorifies transportation rather than putting it more clearly in service to more central community aims.

As we’ve observed many times at City Observatory, what Portland and other cities lack is not so much transportation facilities, but great walkable places. People pay a premium for homes located in places with lots of common destinations within easy walking distance. Bolstering centers and main streets for people, not increasing throughput on corridors, should be the region’s investment priority.

Cannibalizing transit’s funding source

In Portland, for the past half-century, a regional payroll tax has been the revenue source for subsidizing transit operations. This proposal would more than double the payroll tax, and thereby fiscally and politically foreclose Tri-Met’s ability to raise the tax to pay for increased operations in future years.  That’s already a serious issue.

The agency is already devastated by the Coronavirus, and lacks the funding to increase transit service to achieve the long-term ridership goals laid out in the Regional Transportation Plan. (The RTP assumes that Tri-Met will be able to increase its ridership from about 280,000 persons per day in 2015 to 480,000 by 2027, but that will require a massive increase in subsidies).

Its very likely that passage of the Metro bond measure will lead to capital spending for expanded light rail and bus rapid transit that the agency has limited financial resources to operate. We’ll build the rails, and maybe electrify some buses, but won’t be able to pay for drivers.

Tri-Met’s revenue and operation issues are even more stark in light of the Covid-19 pandemic and recession. The agency’s operations have been on life-support in the form of $196 milion from the Federal CARES Act, and that money will soon run out.  Ridership and fare revenue is down in June was down about 60 percent from year ago levels, and Tri-Met expects to lose $61 million in its 2021 fiscal year.  How long it will take to rebuild ridership, and how much it will cost, and how it will be paid for are still very unsettled questions.

Doing nothing to reduce carbon emissions

At City Observatory, we’ve already written about the Metro measure’s astonishingly feeble effect on greenhouse gas emissions.  By the agency’s own calculations, the measure will reduce regional greenhouse gases by five-one-hundredths of one percent, even though greenhouse gases from transportation are the largest source of the region’s carbon emissions, and have grown by 1,000 pounds per person in just the past five years.


The agency says it cares about climate change, but its investment of $5 billion on something that does effectively nothing to reduce greenhouse gases shows the emptiness of its climate promises. This package is probably the only serious opportunity to rework the transportation system in the next decade, and it will leave the region too broke and indebted for an actual “plan B.”

Subsidizing driving, sprawl and carbon pollution

Metro’s use of a payroll tax insulates motorists from the true cost of their transportation choices. While its largely a myth, many still believe that we have a “user pays” system for the roads.  The Metro bond measure would require the equivalent of roughly a 30 cent a gallon tax if it were paid for as a user fee, rather than by being charged as a payroll tax. By not insisting that car operators pay for these roadway improvements (and the vast majority of these expenditures are in the right-of-way and eligible for gas tax funding, even in the most narrow interpretation of the Oregon Constitution), we’re subsidizing additional driving.  People who don’t drive at all will end up paying for this measure through payroll taxes; while those who drive a lot will get a huge subsidy.   Despite its problems, the gas tax is crudely proportional to the use of the transportation system and to air pollution. Wages paid are not. The measure further insulates car drivers from the cost their decisions pose on others, and encourage additional driving. And a 30 cent a gallon subsidy to driving leads to more  driving, and therefore crashes and carbon emissions, offsetting the supposed safety and environmental benefits of the package.

Essentially what this measure does is tax work to subsidize the price of gasoline.  It thereby makes car travel cheaper, and encourages more vehicle use (and pollution) than would otherwise be the case.  Using standard estimates of the price elasticity of demand, we can calculate how much this subsidy to car travel implied by the payroll tax would stimulate vehicle miles of travel and  additional greenhouse gas emissions.  The long run elasticity of vehicle miles traveled with respect to gas prices is about -0.3; a 10 percent increase in fuel prices leads to a 3 percent reduction miles driven.  At current fuel prices of about $2.70 per gallon, the 30 cent reduction in gas prices enabled by financing this package from payroll taxes rather than gas taxes works out to about a 10 percent reduction in gas prices.  This suggests that the measure would lead to about 3 percent more driving than would be the case if users paid directly at the pump.  Metro Portland’s current transportation system annually generates about 8.4 million tons of greenhouse gases; a three percent increase represents about 250,000 additional tons of greenhouse gases per year due to the subsidy.  For reference this is roughly than 50 times larger than the estimated 5,000 ton reduction in annual greenhouse gases from the $5 billion spending package, according to Metro.  In addition, more driving would also result in more congestion, lower transit ridership, and more crashes.

For decades, the fiction of the “trust fund” and the state constitutional dedication of gas taxes to road improvements has created the illusion that the road system is paid for by user fees.  That’s never been true.  Roads and road use at every level of government are deeply subsidized.  The federal government has transferred more than $140 billion in general funds to bail out the federal highway trust fund, and is expected to need to chip in a further $176 billion this decade. Oregon shields car owners from nearly $1 billion per biennium in taxes they’d pay per biennium by exempting cars from property taxes.  Cars pay nothing for the cost of cleaning up the toxic runoff from tires, brakes, leaking fuel tanks and precipitated air pollution; according to City of Portland estimates, half of the cost of the city’s “Big Dig” to separate storm and sanitary sewers was attributable to dealing with road runoff. As Portland City Commissioner Chloe Eudaly observed on June 30, 2020, “roads are the only utility we don’t charge based on usage.” The Metro bond measure is one more colossal subsidy to car driving, one that will increase sprawl and financially penalize those who choose more environmentally friendly travel and living options.

Asking Metro taxpayers to fix problems created by ODOT

Ostensibly, one of the major motivations for the package is to increase safety.  According to Metro, a large fraction of the projects are reputed to be “safety” projects.  But almost all of them are about doing something to reduce to the dangers that cars pose to other more vulnerable road users.  Safety is a laudable reason for spending money, users of the road system should pay for the costs of making it safer, not the general taxpayer.

Nearly all of the Metro measures big ticket items are spending on improvements to the right-of-way of state highways, including the Tualatin Valley Highway, McLoughlin Boulevard, 82nd Avenue, Powell Boulevard and Highway 212. Why are Portland area residents being asked to tax themselves to pay for the fixes to these state highways?  In principal part, the answer reflects the fact that ODOT would rather use state money to widen I-5, a project whose cost has already ballooned to $800 million, and which could easily exceed a billion dollars, and further billions on a revived Columbia River Crossing. While the Rose Quarter freeway widening is marketed as a “safety” project, virtually all of the other ODOT highways in the Portland are are vastly more lethal to travelers.  The region should insist that rather than building an unneeded, ineffective and environmentally destructive Rose Quarter project, ODOT ought to first fix the deadly roads it runs in the region. Portlanders are already paying their gas taxes to do just that.  (Moreover: ODOT has also prioritized new construction over simply maintaining and operating existing roads, and it is already asking the legislature for more money on that basis, a classic budgetary bait and switch).

In addition, many of the transit portions of the project are really costs incurred to subsidize automobile travel.  The budget for the Southwest Corridor Light Rail includes more than a hundred million of dollars for the construction of garages to people can drive to take the light rail train. The cost of the Southwest Corridor is also inflated by $200 million by the decision not to reallocate some of the road right-of-way on Barbur Boulevard for transit use.  Similarly, the cost of bus rapid transit on other corridors reflects a conscious decision not to use publicly owned right of way in a way that maximizes the number of people who can travel in the corridor.

Sticking the cost on our kids: A ruined climate and a load of debt

The measure’s key feature is spending the money up-front in the next few years, but passing the cost on to taxpayers over the next two decades by bonding the revenue from higher payroll taxes. It’s understandable politically that Metro would want to get the benefits now, and push the costs off to the future.  But faced with the prospect of irreversible climate change before the bonds are even half paid off, its worth asking whether its in our interests, and especially whether its in the interest of our kids, to commit to spending additional billions for the next two decades to support a car-dependent transportation system and car-dependent living.  Make no mistake—the billions spent on this package won’t be available to reduce greenhouse gas emissions; we’ll be stuck repaying these bonds even as the planet heats up and our state burns.

Transit:  Expensive construction, nothing for operations

The biggest single project in the Metro bond package is the local share of funding for a new light rail extension through Southwest Portland to the suburbs.  In theory, SW Light Rail sounds like just the sort of thing we should be doing, investing in electrified transit to reduce greenhouse gas emissions. But sadly the project fails to actually deliver benefits. Its ridership is expected to only modestly increase above the numbers that would be carried by buses even if no light rail system were built and earlier this year, Tri-Met has already lowered those estimates by a further 12 percent. And the agencies track record on forecasting has been bad, consistently overestimating ridership for new light rail lines.    Moreover, the transit agency doesn’t have either the funds or a plan to provide the level of bus service that’s needed to carry the additional 200,000 daily transit riders called for in the Regional Transportation Plan.

Crumbs for equity

Metro has tossed in a few crumbs for expenditures that would be more just, including funding of reduced fare or free transit service for low income households.  But these subsidies are a tiny part of the overall program:  free transit passes for metro area students would cost only about $9 million per year.  But lower fares will be of little or no value unless theres a good transit system, and this measure actually does nothing to assure buses will keep running.

A key equity consideration is that Tri-Met doesn’t have enough money to expand operations to carry all the people that Metro says will travel by transit in the Regional Transportation Plan.  And Metro’s is draining the well that Tri-Met has depended upon for paying operating costs:  the payroll tax.  This measure more than doubles the payroll tax, and takes all that increase for the next twenty years (or more) and puts it into paying off bonds.  None of that money will be available to pay for the operating costs associated increasing actual transit service.  TriMet will have a new LRT line down the middle of Barbur to the Bridgeport Village lifestyle center, but it could easily have no money to pay to run your local buses.

A plan for the past, not for a post-Covid future

Covid-19 has been a major disruption to the way we get around.  Many more of us are working from home and shopping on line, which may permanently change our transportation system.  Automobile industry experts expect permanent and significant reductions in both automobile commuting and shopping trips—enough to reduce the numbers of cars on the road by millions.  Now, mired in a recession and still fighting a pandemic, we can’t know what the long-term effects of these changes will be.  Rather than borrow and spend all this money now, foreclosing its better use once we know how things shake out, we’d be well-advised to wait a couple of years, and develop a plan that works in a post-Covid world which could be very different from the one built into Metro’s models and projections.

The lesson of Covid-19 is that we can do much more to re-purpose street space for non-automobile uses, and do so quickly and cheaply, in ways that make our communities both healthier and more livable.  Already, Portland has implemented a “Slow Streets-Safe Streets” plan covering 100 miles of city streets.  Globally, leaders like Paris are using the pandemic to re-purpose entire boulevards for bike travel, and focus on “15-minute neighborhoods” that reduce car dependence and promote greater livability.  The pandemic is an opportunity to rethink our communities in ways that make our lives better.

But that’s not what Metro is proposing. As our colleague Ethan Seltzer points out:

. . . there is little, if anything, in this measure, hatched pre-COVID, that applies in any creative way to a post-COVID world.  How have transportation patterns changed with COVID?  What if a significant percentage of folks continue to work at home, even with a vaccine?  What kind of transportation infrastructure will we need?  Is municipal broadband the transportation and equity investment most needed in the future?  None of these questions have been dealt with, and won’t be dealt with until after Metro spends the money on your father’s transportation system.

If we’re going to spend $5 billion on our transportation system for the next two decades, it would be better if we waited just a short while to see how this shakes out, so we make decisions for the world we’re actually living in, rather than one that no longer exists.

A better fix:  Pricing congestion and carbon pollution

What this plan overlooks—and effectively undercuts—is systematically better and more direct ways of tackling our transportation and climate problems. If people are concerned about traffic congestion, we have a globally proven means for eliminating it:  congestion pricing.  The Oregon Legislature has already authorized pricing on Portland area freeways, and the region and City of Portland have said they’re willing to implement it.  The experience of the pandemic and of other cities, shows that transportation demand management (reducing the number of trips, and especially changing when they’re taken) allows us to dramatically reduce congestion without building more roads and creating more pollution. Likewise, carbon pricing, whether through cap-and-trade or a tax on carbon pollution, is the most efficient solution for reducing greenhouse gases and quickly facilitating the more widespread adoption of electric vehicles.  Essentially all of the increase in greenhouse gases in the Portland area after 2014 was due to increased driving because of the decline in gasoline prices.  The direct and indirect effects of these pricing measures also help achieve greater equity:  as we’ve noted, road pricing reduces traffic congestion, which enables buses to move faster, benefiting existing transit users, and making transit more attractive for others.  And the proceeds of congestion fees and carbon taxes could be used to directly underwrite transportation allowances for low income households and students.

In sum: A bad transportation package

  • Metro’s proposed $5 billion measure takes Portland in the wrong direction.  It’s founded on a flawed, highway-oriented concept of corridors, rather than a more sensible, human-centered idea of building walkable, sustainable centers and Main Streets, that reduce the need for car travel.
  • In spite of the fact that transportation is the largest, and fastest growing climate threat in the region, the plan does nothing to lower greenhouse gases.
  • It is funded from a source totally unrelated to transportation use, which has the effect of taxing those who use the system least, and subsidizing those who drive and pollute the most.
  • By shifting the cost away from road users, the measure effectively subsidizes gasoline by about 30 cents a gallon, encouraging more driving and increasing greenhouse gas emissions 50 times more than the amount saved by all its investments.
  • The measure cannibalizes the principal source of funding for transit operations at the time Tri-Met is experiencing tens of millions of losses, and an uncertain future of restoring existing ridership.
  • The plan makes no allowance for the changes we’ve already experienced in driving during the Covid-19 pandemic–changes that even auto industry experts expect to persist well into the future.
  • And the plan essentially takes all the money that will be generated by this tax for the next two decades or more and plows it into a set of short-term highway-corridor oriented projects that our children will be paying for as the climate grows steadily worse; money that will be badly needed for efforts that actually reduce greenhouse gases, and enable us to adapt to climate change.
  • This measure also asks Portland taxpayers to pay for problems created by the Oregon DOT: unsafe and transit hostile state highways.  Nearly all of the “corridors” slated for investment are state highways, and the bulk of all the improvements could be paid for by the Oregon Department of Transportation out of gas tax revenues.
  • A plan for the 21st Century would ask road users to pay directly for the services they get, and create strong economic incentives to reduce carbon pollution, and in the process pay for a more equitable transportation system.

America’s least (and most) segregated cities.

Racial segregation still prevails in most American cities, but varies widely across the nation.

Portland is the nation’s least segregated large city.

The murder of George Floyd by police has reignited national interest in making more progress toward racial justice. It’s prompted a new round of introspection about the racism that’s deeply embedded in many American policies and institutions. One pervasive and lingering hallmark is racial residential segregation:  our cities have literally been divided by race, and as numerous studies have shown, this has undercut opportunity, perpetuated poverty, limited economic mobility and eroded Black wealth. Today we take a closer look at racial segregation in the nation’s largest cities.

Which cities are the most (and least) segregated?

The most common index of racial segregation is the dissimilarity index, which measures the extent to which different groups of people live in different neighborhoods in a city or metro area.  The index ranges from zero (perfectly integrated, where the composition of each neighborhood matches the composition of the larger region) to one (completely segregated) where each neighborhood consists entirely of persons of a single racial or ethnic group).  The dissimilarity index expresses the percentage of the population that would need to move to a different neighborhood in order for each neighborhood’s racial/ethnic composition to match that of the larger area.

The Census Bureau’s American Community Survey annually collects data on the race and ethnicity of Americans by Census Tract (a geography that corresponds roughly to neighborhoods).  The St. Louis Federal Reserve Bank has used this data to compute the white-non-white dissimilarity index for each of the nation’s counties.  Data cover the years 2009 through 2018, and are based on rolling five-year ACS counts (i.e. the 2018 data are drawn from the years 2014-2018).  As the Federal Reserve Bank explains:

The Racial Dissimilarity Index measures the percentage of the non-hispanic white population in a county which would have to change Census tracts to equalize the racial distribution between white and non-white population groups across all tracts in the county.

We’ve assembled these data for the central county in each of the nation’s largest metropolitan areas, and then ranked them from least segregated to most segregated.  Our tabulation includes only central counties with populations of 100,000 or more. (As we’ve noted, counties are less than perfect units for making these comparisons; metro area data are more indicative, but the Federal Reserve’s tabulations only address counties).

America’s Least (and Most) Segregated Urban Counties

This chart ranks cities from least segregated to most segregated using the white/non-white dissimilarity index for the largest county in each city’s metropolitan area.  The median large metro area has a dissimilarity index of 45, meaning that about 45 percent of a city’s population would have to move to balance the composition of individual neighborhoods to the region’s overall demographic composition.  About half of all large cities have dissimilarity indices between about 38 and 54.

The cities with the highest levels of segregation according to this measure are Detroit, New Orleans, Philadelphia, Buffalo and Milwaukee.  Each of these cities has a dissimilarity index exceeding 60.

The cities with the lowest levels of segregation are Portland, Virginia Beach, Boston, Seattle and Las Vegas.  Each of these cities has a dissimilarity index of 35 or less. Portland, Oregon (defined in this case as its largest urban county, Multnomah County) has, by a wide margin, the lowest level of white/non-white segregation of any large urban county in the United States.  Its index value is 27.3, about half the median value of the typical large metro in the US.

Census data also enable us to plot the pattern of segregation over time.  Small year-over-year variations most likely reflect sampling variability from the American Community Survey, so its best to look at multi-year trends.  For most large US metro areas the trend in segregation is downward:  Dissimilarity indices are declining over time. Here’s a chart showing Portland (Multnomah County) white/non-white dissimilarity from 2009 through 2018:

Over this decade, Portland’s White/Non-White segregation index declined from 31.6 to 27.3. Segegation in Portland has been declining recently, but its actually a trend that’s been in place for many decades.

Portland’s big decline in segregation


Portland has not always been a highly integrated place.  If we look at the historical data on the black-white segregation index for Portland for the period 1970 through 2010, we see that Portland went from being one of the most racially segregated metro areas to one of the least.  (We use the black-white measure because the Census Bureau’s race and ethnic definitions were not comparable in early years.  Data compiled by Sophie Litschwartz at the Urban Institute shows that in 1970, Portland was more segregated than the typical large metro area, but that segregation has declined sharply since then. Portland’s black-white segregation measure fell by half (40 points) in 40 years; while the median rate for large metro areas fell by about 15 points.


It seems odd that Portland would be a leader in integration, given that it is by many media accounts and popular wisdom “the whitest city in America.” While its true that the city has relatively few Black residents compared to most large American cities, as many demographers point out, that particular definition of “white” effectively treats Hispanic, Asian, Native American and mixed race people as white.  When you look at the share of the population that is “Non-Hispanic White,” Metro Portland is more diverse than Cincinnati or Pittsburgh, for example.

A city’s racial and ethnic mix is a product of history and geography.  The geography of Latinos, Blacks and Asians in the United States each have their own geographic contours based on historical patterns of migration. Blacks were brought to the Southern United States as slaves, landed primarily at places like Charleston, Tidewater Virginia and the Gulf Coast, and to this day, are disproportionately concentrated in the South. Most Latinos have migrated from Latin America, and are heavily concentrated in the Southwest.  Asians have a disproportionate concentration on the US West Coast. The patterns that were in place 100 years ago are still reflected today in the regional concentrations by race and ethnicity.

What’s more malleable to change in the short run (over the course of a few decades) is where within metropolitan areas people live.  In general, throughout the United States, we’ve seen a marked decline in residential racial segregation. Localized patterns of segregation can change more quickly than the overall racial and ethnic diversity of a metro area.  Given its more limited overal racial/ethnic diversity, Portland achieves a higher level of integration than nearly all US metro areas, something we explored in our report “America’s Most Diverse, Mixed Income Neigbhorhoods.”

Greater diversity is already baked in Oregon’s demographic cake.  Demographer Charles Rynerson points out that–

2019 Census estimates and found that people of color make up just 10% of Oregonians 65 or older. But they are 37% of those under the age of 15.

This means that the state will become progressively more diverse with each passing year.

U.S. Census Bureau, White to Non-White Racial Dissimilarity Index  [RACEDISPARITY], retrieved from FRED, Federal Reserve Bank of St. Louis;, August 10, 2020.


Is it random, or is it Zumper?

Pay no attention to Zumper’s claims about rent trends

Zumper claims rents for one-bedroom and two-bedroom apartments are moving in opposite directions in about a fifth of all markets

There’s a lot of hyperventilation in the media about falling rents in different places in the US.  It’s certainly likely that in the midst of the worst and most abrupt economic downturn in more than a century, and now, with the expiration of expanded unemployment insurance benefits that we’d see some downward pressure on rents.

If Zumper’s data is to be believed, rents are collapsing in San Francisco and New York (down 11 and 7 percent, respectively) and exploding in Cleveland, Columbus, St. Louis, Indianapolis and Detroit (all up more than 14 percent year over year).  But the wild fluctuations across markets should immediately raise questions about how these data are calculated.

But please, oh, please, do not look to the Zumper real estate data to tell you anything meaningful about what’s happening.  We’ve been over this before, several times.  Zumper aggregates listings of current rentals from various sources and reports on the median asking rents at any moment in a city.  The trouble with this methodology, as we’ve pointed out, is that its highly susceptible to “composition effects.”  If a new building is completed in a city and adds 100 or 200 high priced apartments to the mix in the marketplace, Zumper treats this as an increase in rents.  If low priced apartments rent quickly and high priced ones linger on the market, this too drives up the apparent rent–but not because rents have gone up market-wide, but only because the composition of “for lease” apartments has changed.  The same thing works in reverse as higher value units get rented–they drop out of the for lease category, and aren’t counted, so it appears that the rents in the pool of available apartments has gone down.

Because there are constant shifts in the set of apartments that are for lease at any one time, Zumper’s method really is measuring that shift in composition, rather than changes in market prices.

There’s plenty of evidence from Zumper’s own data to show how erratic and non-sensical its measures are.  Zumper separately reports prices for one-bedroom and two-bedroom apartments.  In general, when rents are rising (or falling) in a market, one would expect these two measures to move synchronously (i.e. rising or falling by about the same amount, especially over longer periods, like a year).  But Zumper’s data show little correlation between year over year trends in one-bedroom and two-bedroom apartments.

The clearest indicator of Zumper’s craziness is that in 18 of the 100 markets for which it reports data, the price trends for one-bedroom and two-bedroom apartments are moving in opposite directions over the last 12 months.  For example, in Oakland, California, Zumper says rents for one-bedroom apartments fell by 3.5 percent, while rents for two-bedroom apartments went up by 6.6 percent.  That’s a ten percentage point difference in the price trajectory of the larger and smaller apartments. The same pattern of increased rents in one category and decreases in the other holds for Washington, Minneapolis, New Orleans, Pittsburgh, Raleigh, Columbus and a dozen other markets.

Year-over-year change in rents reported by Zumper, via

In these 18 markets, the absolute value of the difference in reported rent changes between one- and two-bedroom apartments is not small:  it averages more than 8 percent, which is larger than the typical year-over-year change within categories for these markets. The big variance in rent trends between one- and two-bedroom apartments within a market is a pretty clear indication that Zumper’s method is biased by these composition effects.

Okay, business journalists, we get it.  Someone sends you a press release with a ream of data (with decimal points!) that ranks US cities.  You don’t have the time to look into their methodology, you’ve got a deadline. But you can do much better than this.  Other sources of data (we like Zillow and ApartmentList.Com) report much better behaved data based on much more transparent methodologies.  If you care about understanding what’s really happening in real estate markets, don’t rely on Zumper.




“Let them drive Teslas” is not a climate or a justice plan

Portland’s climate emergency efforts are tarnished by an inability to plainly speak the facts about climate change

But the tragic fact is that the city is utterly failing to meet even its own previous goals, and more alarmingly, isn’t owning up to the failure of its 2015 plan to reduce emissions.

Instead, the Bureau of Planning and Sustainability is promoting trivial and incorrect stories about greenhouse gas emissions.

On June 30, the City of Portland adopted a climate emergency declaration. It steps up the city’s goal for 2030 to reducing emissions by 50 percent from 1990 levels (the previous plan had a 40 percent goal). The resolution declaring the emergency contains some sensible findings:  for example, explicitly acknowledging that “expanding roadways does not solve congestion but leads to additional vehicle miles and carbon emissions.” The resolution is an expression of concern, and a promise to do more, but rather than specific concrete steps, simply says that the city will, later this year, “co-convene” a process to talk about what we might do to reduce greenhouse gases while promoting climate justice.

You’d hardly know it from reading the climate emergency resolution, but as we wrote earlier, Portland has essentially failed to make any progress in reducing its greenhouse gas emissions under the Climate Action Plan it adopted five years ago.

On July 10th, Andrea Durbin, Director of the City’s Planning and Sustainability Bureau, appeared on Oregon Public Broadcasting’s “Think Out Loud” to discuss the city’s climate emergency declaration  She was interviewed by host Dave Miller, who quickly cut to the chase:

Dave Miller:
As you know, emissions reductions countywide have stalled in recent years and if I understand the numbers correctly, its largely because of an increase over the last five years, in emissions from the transportation sector.  In other words, even though the city has this climate action plan, compared to five years ago, emissions from people driving around are going up—its the opposite direction.  What’s not working?
Andrea Durbin:
Well, that’s correct.  More people are driving.

The only way to attain the city’s stated goals is to reduce vehicle miles traveled, as the the technical analysis done for the 2015 plan made very clear:  It said that the city would need to reduce vehicle miles traveled (VMT) by more than half by 2050 in order to achieve the planned greenhouse gas reductions. Instead VMT (pre-pandemic, at least) increased sharply after gas prices declined in 2014, and greenhouse gas emissions went up as well—by 1,000 pounds per person per year in the Portland metro area.

The new climate plan will fail unless it, too, reduces driving. The Portland City Council laudably adopted Commissioner Chloe Eudaly’s proposed amendment to require demand management, such as congestion pricing, before allowing any new freeway capacity to be built in Portland.  While that’s a good step, Planning and Sustainability Director Andrea Durbin could only point to two things as concrete examples of how to reduce transportation emissions:  reducing freight-related emissions by electrifying delivery vehicles, and mandating electric vehicle charging stations in new apartment buildings.

Climate justice: Let them drive Teslas?

The city’s new climate direction puts considerable emphasis on helping “front-line communities,” which it defines to include low income Portlanders, and people of color. It’s absolutely correct that climate change affects low income people more than others, which is why fighting climate change is, by its nature, intrinsically just. But Durbin’s example for how the plan will help low income Portlanders strains credulity:

For instance, in transportation, we will be doing work, again with multi-family housing, rental housing, to require electric vehicle hookups in those buildings as they’re being built, because we know there’s really an opportunity and a need to provide electric vehicles for communities of color, low income residents, because it is less costly to operate and so if we can provide those opportunities, and build out the infrastructure so that people have more choices, to pay less for their energy bills, or pay less for their gas costs because they’re driving an electric vehicle to work, those are the kinds of solutions that we’ll be looking for and trying to enable.

It’s hard to understate how small and potentially counterproductive requiring electric vehicle charging facilities are for fighting climate change or aiding the poor. Many poor households can’t afford cars at all; none can afford Teslas (MSRP:  $37,990) or other new electric vehicles.  Many can’t drive, due to age or infirmity. And aside from a few hundred newly built affordable housing units, few will be able to afford to live in newly constructed apartments with vehicle charging hookups.

Let them drive Teslas?

In addition, requiring parking (and attendant charging infrastructure) will drive up the price and likely reduce the supply of new apartments, which could collectively be worse for the economic prospects of low income households. Eliminating parking  and parking requirements (including ones with built-in charging) would do more to reduce greenhouse gases and promote affordability; parking requirements add an estimated $200 a month to apartment rents. Subsidizing electric cars is one of the most expensive ways to reduce carbon emissions and chiefly benefits higher income households.  And the plan doesn’t even acknowledge the vast subsidies the city provides to motorists, with free and under-priced parking on public streets.  It’s also paradoxical that the city charges a per mile fee for the use of electric scooters—the one type of electric vehicle that is arguably within the economic reach of low income populations—that is about ten times higher than the comparable fees charged to gas-powered cars.

Freight follies: On-line shopping reduces greenhouse gases

Pushed by Think Out Loud Host Dave Miller to elaborate on how the city would grapple with rising transportation emissions, Durbin singled out freight and specifically increased e-commerce deliveries as a source of rising emissions.

We’re also seeing an increase in emissions from the freight sector as more and more people are ordering their goods and products on line, on Amazon, and having it delivered. And we to make sure when they’re having it delivered, they’re being delivered in clean freight vehicles. And that also has direct benefits for communities of color, and low income communities, because its these communities that are most directly impacted by the air pollution

While much talked about, there’s actually no data to support the claim that Portland’s emissions growth is attributable to either freight generally, or e-commerce deliveries in particular.  The city’s most recent climate inventory, produced by Durbin’s office and released late last year contains no greenhouse gas estimates for freight or deliveries, and in fact, doesn’t contain the words “freight,” “trucks,” or “e-commerce.” A single reference to “delivery” discusses the operation of the  electric grid. As we’ve demonstrated at City Observatory, rising transportation emissions are almost entirely due to an increase in driving following the decline in gas prices in 2014. Also, the available evidence on e-commerce is that it reduces greenhouse gas emissions, by reducing the number, frequency and distance private car shopping trips. Each UPS, Fedex or USPS delivery vehicle takes dozens of Suburbans and Subarus off the road.  MIT economist Will Wheaton estimates that each dollar spent on E-commerce generates about 30 times less vehicle miles of travel that conventional brick and mortar shopping.

Delivering packages and reducing urban traffic congestion! Credit: Jason Lawrence, Flickr
Delivering packages and reducing greenhouse gas emissions! Credit: Jason Lawrence, Flickr

Focusing on electrical vehicle charging stations in new apartments and e-commerce deliveries, two categories that have almost nothing to due with the city’s failure to meet its greenhouse gas reduction goals signals that the Bureau of Planning and Sustainability isn’t taking climate change seriously. This fashionable trivia diverts attention from the much larger and more difficult steps we’ll need to take to reduce greenhouse gases. This city’s 2015 plan made it plain that achieving a more modest goal would require a huge reduction in driving; the new declaration and the BPS director, are virtually silent on this question, despite an even more aggressive goal. Soaring rhetoric about front-line communities is no excuse for a climate plan that simply won’t own up to past failures and lay out policies and strategies that will actually work at scale.

Editor’s Note:  Revised August 18 to include additional references on electrification.




Climate Fail: Metro’s 2020 Transportation Package

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

Spending $5 billion reduces Portland’s transportation greenhouse gases by .05 percent

This package costs  $50,000 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:  In November, Portland area voters will be asked to approve a $5 billion transportation package, to be funded by a regional payroll tax of up to .75 percent. The package is the product of Portland’s regional government, Metro, convening a year-long process to develop a regional shopping list of road and transit projects to receive funding.  According to Metro, one of the efforts’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 $5 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 $5 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 $5 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 $5 billion; that amount has an annualized value of roughly $250 million at a 3 percent interest rate.  The annualized cost of the Metro transportation plan  (about $250 million per year) divided by annual reduction in the number of tons of greenhouse gases is $250,000,000 / 5,200 = $49,050 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 $50,000 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 $50,000 per ton would cost on more than $230 billion per year.  To put that number in context, that is roughly four times the total personal income of the Portland metropolitan area — about $57 billion per year.

An earlier version of this commentary appeared at City Observatory in January; this version has been revised to reflect the increased cost of the proposed Metro Bond Measure.



The Week Observed, August 28, 2020

What City Observatory did this week

The case against Metro’s $5 billion transportation bond. Portland’s regional government, Metro, is asking voters to approve a $5 billion package of transportation improvements, to be funded by borrowing against an increase in payroll taxes.  We take a close look at the proposal, and conclude that its a bad deal on a number of grounds:  It emphasizes investments in corridors, mostly highway corridors, rather than on bolstering the dense, walkable centers the region’s transportation plan has emphasized for years.

In practice, this is what a “corridor” plan for cycling and walking can look like.

By the agency’s own estimates, it does virtually nothing to reduce greenhouse gas emissions, even though increased driving is the single biggest source of carbon pollution in Portland.  By paying for road improvements with a payroll tax, rather than a user fee, like the gas tax, it implicitly subsidizes driving, with the result that the proposal both insulates drivers from facing the costs of their decisions, and leads to more driving, pollution and crashes. We estimate that the subsidy to driving offsets by a factor of 50 the gains Metro claims from lower carbon emissions from its $5 billion investment package.

Must read

1. Jerry Seinfeld explains why New York (and other cities) aren’t “over.”  A New York comedy club owner has picked up and moved to Florida, but not before leaving a trash-talking note for his former city.  Jerry Seinfeld takes offense, and explains why leaving the city says more about the club owner than the city.  New York, and other cities will thrive, Seinfeld argues, for the same reasons they always have. We won’t all be decamping to the suburbs or rural America and  “zooming it in.”

There’s some other stupid thing in the article about “bandwidth” and how New York is over because everybody will “remote everything.” Guess what: Everyone hates to do this. Everyone. Hates.

You know why? There’s no energy.

Energy, attitude and personality cannot be “remoted” through even the best fiber optic lines. That’s the whole reason many of us moved to New York in the first place.

You ever wonder why Silicon Valley even exists? I have always wondered, why do these people all live and work in that location? They have all this insane technology; why don’t they all just spread out wherever they want to be and connect with their devices? Because it doesn’t work, that’s why.

Real, live, inspiring human energy exists when we coagulate together in crazy places like New York City.

It’s an entertaining but well informed argument about why cities matter, and why they’ll persist even in a post-Covid world.

2. How biased traffic models enshrine highway expansion. Vice’s Aaron Gordon has a detailed article illustrating how state highway departments have used biased transportation modeling to justify ever wider roads and freeways.  Drawing on examples like Louisville’s massively overbuilt Ohio River Bridges project, Gordon shows that state highway agencies developed multiple, conflicting forecasts, exaggerated ones to justify building the project, more accurate ones to sell bonds.

As Gordon explains, the problems with the “four-step” models have been well-documented for decades, but they continue to be used because they’re structured in a way that can be used to produce just the answers that State DOTs want:  Build baby, build.  As we’ve noted at City Observatory, these models routinely overestimate future traffic and overstate congestion in a “No-build” world, and that at best they become self-fulfilling prophecies, where building additional road capacity induces additional travel and congestion that wouldn’t have occurred if the project hadn’t been built.

As Transportation for America’s Beth Osborne trenchantly observes highway builders use the models conceal who’s making the decision:

“This is the fundamental problem with transportation modeling and the way it’s used. We think the model is giving us the answer. That’s irresponsible. Nothing gives us the answer. We give us the answer.”

3. Parking’s dominance of Kansas City. When you look closely, its astonishing home much of the urban realm is dedicated to private car storage. Writing at StrongTowns, Daniel Herriges lays out the key findings from an Urban Three analysis of land use patterns in Kansas City. This map tells much of the story—everything in red is dedicated for parking; all the arrows point to parking structures.


Between parking and the roadway itself (with much of that right-of-way dedicated to parking as well), moving and storing cars is the city’s dominant land use. On a per capita basis the city devotes more land to parking than it does to buildings. How did Kansas City end up with so much parking, you ask?  For the answer, you’ll want to read all five installments of Herriges’ series on Kansas City, which chronicles how abandoning streetcars and embracing freeways (and sprawl) led to today’s fiscally challenged “Asphalt City.”

New Knowledge

A carbon price tied to net zero emissions. Economists, ourselves included, love the idea of a pricing carbon.  The reason we pollute so much is because everyone gets to treat the atmosphere as a free dumping ground for greenhouse gases. If we charged polluters for the damage their emissions do to the atmosphere, they’d switch to other less polluting or non-polluting activities. The trick is setting the right price for carbon emissions.

In a perfect theoretical world there’s an ideal price for carbon that equilibrates the amount charged to the exact value of a eliminating one more pound of carbon.  But in reality, its devilishly hard to compute that price, inasmuch as it depends on complex (and largely insoluble) questions of long term interest rates, technology trends, and questions of inter-generational equity. Consequently, estimates of a fair and equitable “social cost of carbon” are all over the map.

Economists Noah Kaufman and his colleagues propose to cut through this Gordian knot of complexity and disagreement by working backwards from a desired level of carbon emissions, and estimating what price of carbon would be required to reach a specific goal; in their proposal net zero carbon emissions by 2050.

This is of course, a bit of a dodge, inasmuch as choosing a particular goal implies that that corresponds to a social optimum (and it implies values for all those hard to estimate factors that underly a social cost of carbon).  But it is a way to truncate the debate and move quickly to action.  Their modeling hinges on the accuracy of their technological forecasts and their estimates of the responsiveness of consumer demand, investment and innovation to particular carbon prices. But if they’re right, the solution to climate change would be within reach with 2030 carbon prices of $77 to $120 per ton.

Also, they’re not pricing deists:  Prices can be accompanied by selected regulations and investments:  Banning coal or fracking and paying compensation for affected workers and communities, and investing in low-carbon research and development would make sense.  Pricing helps reinforce these policies.

Kaufman, N., Barron, A.R., Krawczyk, W. et al. A near-term to net zero alternative to the social cost of carbon for setting carbon prices. Nat. Clim. Chang. (2020).

In the News

City Observatory’s Joe Cortright is quoted extensively in Aaron Gordon’s Vice article on the biases in traffic forecasting models (see “Must Read,” above).

Planetizen offered a detailed summary of our ranking of the nation’s least and most segregated cities.

The Week Observed, August 21, 2020

What City Observatory did this week

America’s most and least segregated cities. Residential racial segregation is a fundamental and persistent aspect of system racism in the United States. Segregation cuts of disfavored groups from economic and social opportunity, and cities with higher levels of segregation tend to have lower levels of intergenerational economic mobility.  In general, American cities have made progress—albeit slow progress—in reducing the levels of racial segregation.

This week, City Observatory presents data on the white/non-white dissimilarity index to show the level of racial segregation in the central, urban counties of the nation’s largest metro areas.  The dissimilarity index measures come from the Federal Reserve Bank of St. Louis’s voluminous economic database, and rank cities from least to most segregated. Portland, Oregon has the lowest level of white/non-white dissimilarity of any large US metro area.  That represents a dramatic change from 1970, when Portland was more segregated that typical large US metro area.  We have data for the 50 largest US metro areas as of 2018, the latest year for which the underlying census data is available.

Must read

1. Portland adopts the nation’s most aggressive re-write of single family zoning.  Sightline Institute’s Michael Andersen has an extremely comprehensive examination of Portland’s new residential infill project, which essentially allows four-plex, and even six-plex homes in the city’s single family zoned neighborhoods.  The policy has been years in the making, and got a big push last year from the Oregon Legislature’s mandate that most cities allow four-plexes.  Portland’s residential infill policy does that one better:  it allows six-plexes in single family zones, provided half the units are set aside for households with incomes below 60 percent of the area’s median household income.  The plan also makes important supporting changes:  it eliminates nearly all off-street parking requirements for these new residential developments, and also allows buildings with more units to have greater floor space, incentivizing developers to build additional units rather than McMansions.

Sightline Institute

It started slowly, but the measure built a strong political following of activists who recognized that the key to addressing the city’s housing affordability problems is getting more units of housing built.  And this measure leads the nation in showing how, technically and politically, this can be done. Plus, Andersen knows whereof he speaks: he and his colleagues at Sightline have been deeply involved in this effort for years.

2. Police-involved shootings by city.  The murder of George Floyd by police has triggered a rising awareness of police violence. Sadly, its not isolated and uncommon.  The website Cops in the Hood has tabulated data on “police-involved shootings”—itself a tortured and evasive term—and computed the per capita instance of such shootings in major US cities.

3. Why can’t we make cars safer for the people outside of them? CityLab’s David Zipper notes that we’ve invested considerable energy and regulatory emphasis on making cars safer for their occupants, with things like crush zones, seat belts and airbags. But in the US, little if any attention has been paid to making cars safer for people who aren’t seated inside their vehicle. In fact, the growing weight and height of cars, especially of trucks and SUVs has made them deadlier to others in collisions, especially to those on foot or cycling.

There are a whole range of technologies that could make cars safer for non-occupants, most notably using geographic positioning system information to limit vehicle speeds. That technology is already in place on 35 pound, $500 electric scooters (which pose negligible risks to non-occupants), but isn’t required on two-ton, $50,000 vehicles that are much more dangerous to others. The disparity speaks volumes about the deeply embedded privilege that drivers enjoy relative to those who don’t travel by car.

New Knowledge

The coming senior housing sell off.  Inexorably, baby booms are getting older, with more and more turning 65 every year. As they age, boomer homeowners are increasingly likely to want or need to sell their homes.  And the generations behind them are numerically smaller, less wealthy, and in many respects less enamored of low density living that boomers.  The result, according to the University of Arizona’s Arthur Nelson, is that in the coming decade there’s going to be a glut of sellers and a dearth of buyers for large suburban homes, with predicable impacts on home prices.

Nelson marshals an impressive array of data about the tenure patterns of different generations, and contrasts these with the generational shift in preferences for smaller, more central locations. In his view, the market demand for housing will shift from three-quarters of increased demand coming for households in their peak housing consumption years, two three-quarters of household growth being among those looking to downsize.

Nelson argues that public policy ought to insulate seniors from any erosion in the value of their homes.  Given that baby boomers have more wealth than any other generation, that seems like a stretch. Some softening of home prices, will by definition, make housing more affordable to younger generations who’ve had a hard time becoming homeowners because of high housing prices. The mismatch between a growing demand for urban locations and a glut of suburban housing seems like a very likely future.

Nelson, Arthur C. (2020) “The Great Senior Short-Sale or Why Policy Inertia Will Short Change Millions of America’s Seniors,” Journal of Comparative Urban Law and Policy: Vol. 4 : Iss. 1 , Article 28, 470-525.

In the News

Bloomberg Quint‘s Peter Coy draws from City Observatory’s most recent report, Youth Movement, in his article about urban inequality.

CityLab’s Laura Bliss quoted City Observatory Director Joe Cortright in her article examining Portland’s new residential infill policy.


The Week Observed, August 7, 2020

What City Observatory did this week

1. Is it random, or is it Zumper? Are rents going up or down in your city?  Listicles showing which places have the biggest jumps (or declines) in rents are a perennial media favorite, but as we’ve warned before, when it comes to data on rent changes, caveat rentor.  We once again sift through Zumper’s claims about rent trends, and find that their methodology (which is subject to composition effects) produces inexplicable deviations in trends for one-bedroom and two-bedroom apartments in the same market in about a fifth of metro areas.

It’s implausible to suggest, as Zumper’s data claims, that rents on two bedroom apartments in Columbus are down 5 percent while rents on one bedrooms in the same market are up 15 percent over the same time. There are better behaved and more reliable sources of rent data.

2. Self-proclaimed climate leaders shouldn’t spend $5 billion on transportation to reduce greenhouse gases by 5/100ths of one percent. Portland’s regional government, Metro, will ask voters this fall to approve a $5 billion dollar transportation measure, but despite the fact that it claims to care about climate change, and transportation is the biggest and fastest growing source of greenhouse gases in Portland, this package does essentially nothing to reduce emissions.

At a time when we all recognize the growing climate emergency, dedicating a huge chunk of revenue to projects that don’t move the needle on greenhouse gas emissions is a tragic mistake.

Must read

1. The Covid-19 Recession is hitting big cities harder.  Jed Kolko, Chief Economist for Indeed has parsed BLS job-loss data by metro size to show the differential impact of the recession.  The key takeaway:  job losses have been proportionally greater in the largest metros.  Metro’s with 5 million or more population have lost more than 11 percent of their jobs, compared to between 8-9 percent for metros under a million.

The reason likely has a lot to do with the knock on effects of the varied ability of people to work from home in large metro areas. While the people who work from home are able to keep their jobs (and paychecks) the businesses that depend on them purchasing services–think restaurants that cater to the lunch-trade, or business travelers–are harder hit in these  metros.  Looking at Indeed’s own data on new job postings, Kolko explains:

In sectors that serve local customers in person, job postings have fallen more in metros where people are more likely to have jobs that can be done  from home, allowing them to practice more physically distancing. Job postings in these in-person service sectors — retail, food preparation, sales, and beauty & wellness — have fallen more in metros where people are more likely to work from home, like San Francisco, Washington, Boston, and Seattle.

There’s an important lesson about economic linkages here: While work-at-home is good for those who have the opportunity, it doesn’t insulate other workers in service industries from the downturn. That’s why comprehensive policies, like enhanced unemployment insurance benefits are critical to keeping the economy from auguring downward.

2. Europe agrees to implement a carbon border tax.  In 2023, the member states of the EU have agreed to implement a carbon border “adjustment fee” that effectively adds the price of embedded carbon emissions into goods imported from other countries. A domestic carbon tax is a useful first step, but to make sure that a nation doesn’t disadvantage local producers, and simply end up exporting its carbon footprint, the border adjustment fee makes sure that consumers see the price of carbon in goods regardless of where they’re made. The fee will increase incentives to decarbonize within and beyond the EU, as those seeking to tap the European market will want to reduce carbon intensity to lower their likely fees. Some worry that this disadvantages lower income countries, but nation’s imposing the carbon fee could easily use at least some of the revenue to finance more generous foreign aid, rather than forcing less developed nations to depend on dirty industries to escape poverty.

3. Looking for patterns in the rent slowdown.  Since the onset of the pandemic in the Spring, rental markets across the nation have softened, and Zillow reports that nationally rents are down about one and a half to two percent in the past few months. Zillow focuses in on the city/suburb variation in these patterns and reports that the rent slowdown has been more pronounced in urban areas than their surrounding suburbs, although so far, the differences are generally small, and the patterns doesn’t hold for all metro areas. Rents have decelerated most sharply in the centers of New York, San Francisco and Dallas compared to their surrounding suburbs.  Nationally, urban centers have seen roughly a 2 percent deceleration; suburbs about a 1.5 percent deceleration. But some cities show the reverse pattern:  in 14 of the 34 markets Zillow studied, the city deceleration was less than in the suburbs, including Philadelphia, St. Louis, Baltimore, Portland, Cleveland, and Minneapolis.

New Knowledge

The costs (and benefits) of inclusionary housing requirements.  MIT economist Evan Soltas has a new paper estimating the costs and benefits of inclusionary housing policies which should be of tremendous interest to everyone interested in affordable housing. Cities around the country have a variety of policies that incentivize (or require) that developers include a certain portion of affordable housing units in new developments.

Voluntary programs offer developers financial incentives to participate, and its possible using variations in the terms of those programs over time and space to compute just how much subsidy one has to provide to get developers to participate. Soltas uses New York’s property tax exemption program (called 421a) to measure how much it costs (in foregone tax revenue) to prompt developers to build an additional unit of affordable housing. City-wide, Soltas finds that the city has to forego about $1.6 million in property tax revenue for each additional affordable unit.

But there’s much more to the story.  The cost varies widely across neighborhoods in the city, with even higher subsidies needed in expensive locations, and far smaller ones in lower income neighborhoods. And cost isn’t the only important factor at work here: one objective of the inclusionary programs is to create more opportunities for low income households to live in high opportunity neighborhoods. Soltas taps data from the Equality of Opportunity project’s estimates of the impact of neighborhoods on lifetime earnings of low income kids to estimate how much they gain from living in different neighborhoods. Even though its cheaper to subsidize units in some neighborhoods, the long term cost to kids in terms of lower lifetime earnings makes this a bad bargain. And while the most expensive neighborhoods (in Manhattan) produce greater benefits, they aren’t worth the costs.  Soltas does identify some “opportunity bargains” places that are relatively cheap to get more affordable units, and which provide better lifetime opportunities for kids.

All this suggests a couple of key findings:  First, inclusionary housing programs aren’t free, or even particularly efficient, at a city-wide cost of $1.6 million per additional unit. Second, it makes a huge difference to both the costs and benefits of inclusionary programs where in a city these units are built.  Few strategies have given much thought to how to tailor incentives to minimize costs while maximizing benefits.

Evan Soltas, The Price of Inclusion:  Evidence from Housing Developer Behavior, July 2020.

In the News

City Observatory director Joe Cortright presented the results of our recent study, Youth Migration, Accelerating America’s Urban Renaissance, for a webinar sponsored by the Manhattan Institute.  Full video available here: