What City Observatory did this week

1. Cities are powering the rebound in national income growth. There was great news in this week’s Census report: After years of stagnation, average household income saw its largest one-year gain on record (5.2 percent). But underlying that story was another one: household incomes in central cities surged even faster (7 percent), growth in suburbs was more middling (4 percent) and incomes in rural areas kept shrinking (by 2 percent). This isn’t just about “winners” and “losers,” though. The underlying force here is that cities are better than suburbs or the countryside at producing the goods and services that the current U.S. economy is best at. As much as we might want to turn rural areas into economic winners, we can’t.

2. McMansions: Fading away? A few months after one (bogus) trend story claimed that McMansions were back, there’s a new round of talk that McMansions are passe. It’s powered by a Trulia discovery that homes of 3,000 to 5,000 square feet, built between 2001 and 2007, don’t command the premiums they did in 2012. Nice to know, but it’s hardly surprising if people paying for flashily large homes prefer homes built to the latest fashions. A more fundamental factor, maybe: McMansions’ tendency to be far from urban activity, which commands more of a premium than it did before.

Photo: Dean Terry.

3. Inclusionary zoning: Don’t screw this up, Portland. As our hometown deals with the costs of a housing shortage, it’s likely headed toward a requirement that some new buildings offer a certain percentage of units to lower-income people at below-market rents. Unfortunately, IZ policies in other cities have failed to create meaningful numbers of low-cost units. The risk here is that even with countervailing incentives, rules like this will dampen new construction, especially of higher-density buildings. Our Joe Cortright argues that steps to minimize the potential damage of an IZ program should include a slow phase-in, a simple approval process and an initially low (but rising) fee on developers that opt out of on-site units.

4. Should parking prices reflect opportunity costs? Think of it as Uber’s “surge pricing,” but for parking: when a certain block or neighborhood is in high demand, meter rates rise to keep a few spots open at all times. That’s the techno-utopian dream of today’s parking reformers, but their supply-and-demand formula misses one key factor. What if a space has public value as something other than a parking space, like a bus lane or a parklet? There’s no simple market mechanism for setting the value of such amenities, so cities must ultimately try to find it themselves.

The week’s must reads

1. An overlooked metric: income volatility. Monthly income isn’t just annual income divided by 12 — and the difference is a major force in the lives of middle- and low-income Americans. Jonathan Morduch and Rachel Schneider tracked transactions by 200 households for a year and found that the typical household earning 36,000 a year will spend five making significantly more or less than $3,000. Since 92 percent of Americans say they prioritize financial stability over higher income, urban policies should take this volatility into account and look for ways to mitigate it.

2. Ford’s plan to reinvent mobility. After years of talking in theory, the country’s oldest major automaker is putting its cards on the table. Ford Motor Company will buy the 2-year-old private shuttle startup Chariot and partner with bike-share industry leader Motivate to create an online service called FordPass that will offer integrated private transit by shuttle and on 7,000 shared bicycles around the Bay Area. It plans to expand Chariot to five more cities in the next 18 months. “Sometimes the old technologies are best,” San Jose Mayor Sam Liccardo said at the announcement.

San Francisco Mayor Ed Lee, arriving at work by bike share. Photo: San Francisco Bicycle Coalition.

3. How Seattle killed microhousing. It’s rare to read a blow-by-blow explanation, complete with anecdotes, of a good municipal policy suffering the death of a thousand cuts. Architect and developer David Neiman tells the story of how this happened in Seattle. He begins with a young woman who most cities would love to have as a resident and shows how one decision after another made it impossible to build more of the sort of home that has made her life possible.

4. How about “Schools on Safe Routes” instead? Strong Towns’ Charles Marohn has a biting observation about the armies of advocates and pros working to retrofit biking and walking routes into school sites using “Safe Routes to Schools” funds: where were those people when new school locations were being determined? He’d rather see the “billions spent annually on new schools be spent in neighborhoods that are already safe for children, neighborhoods where children are actually located.”

New knowledge

1. How to make private transit work for the public interest. Cities and transit agencies have things that Uber, Chariot and other mobility startups want — like parking spaces and public right of way. They should use those to negotiate for things the public wants from private companies, like equitable coverage, open data and contracted services. A new report from Transit Center offers lessons for transit agencies on planning for a new multimodal age.

2. Pick your poison: sprawl, demolish or displace. An analysis of 60 years of U.S. housing outcomes by economist Issi Romem for the contractor service BuildZoom finds a classic “trilemma” for urban regions. They can accommodate growth by sprawling into rural areas; they can accommodate growth by allowing physical change to occupied areas; or they can minimize housing construction and watch home prices climb. (BuildZoom observes that since 1950, most metro areas have chosen either “sprawl” or “displace.”) Data and maps for 569 metro/micro areas are open and downloadable.

3. Race-neutral school admissions can lead to less gifted student bodies. When it scrapped its race-aware admissions process for a race-blind system in 2007, Chicago Public Schools also created a complicated workaround for preserving socioeconomic diversity without selecting for race. In a new National Bureau of Economic Research working paper, Economists Glenn Ellison and Parag Pathak analyze the new policy and conclude that it’s much less efficient: not only are fewer low-income students admitted, they’re less academically gifted than if race had been considered. The authors consider various alternative approaches.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org or on Twitter at @cityobs.

What City Observatory did this week

1. Which cities and metros shop most at small retail firms? A new “big data” set from the JPMorganChase Institute offers some answers. It uses 16 billion transactions from the bank’s customers in 15 metro areas to estimate the share of retail spending that goes to businesses of different sizes — as defined by the share of the local market they control in their product category. Since developers and politicians often speak of the value of small businesses, we mined the data to find out which metro areas spend more of their money at small firms. In a separate finding, the Institute itself found that residents of urban centers spend more at small businesses than residents of suburbs.

2. The variable value of walkability. Living in a walkable neighborhood is more prized in some cities than others. A new Redfin study found that each point on a house’s Walk Score adds $4,000 to its value in San Francisco, Washington or Los Angeles, but only $100 to $200 in Orange County or Phoenix. We’ve got qualms about the analysis (it didn’t control for the fact that walkable neighborhoods also tend to be closer to downtowns) but it adds nuance to the truth that people place value on proximity.

3. The politics of grand housing bargains. Interested in housing politics but lost track of the details of New York City’s affordability battle? We’ve got the one-pager for you, including a brief summary of Mayor Bill de Blasio’s two-pronged attack on high rents; a short update on the zoning battles since his bills passed; and some lessons for similar bargains in other cities. Here’s one: it can be helpful to bundle low-payoff, high-visibility affordability measures with high-payoff, low-visibility ones.

4. British lessons for American cities. Two months after Brexit, we look at a recent report from the UK think tank Centre for Cities, “A Century of Cities: Urban Economic Change Since 1911.” Stateside readers will find a useful mirror of the U.S. experience. Cities with high-skill workers have thrived, while those that remained dependent on physical work have not. For every job created in the industrial North, Midlands and Wales, 2.3 jobs were created in the services-dominated South. Even in the world’s first superpower, nostalgia is not a valid economic strategy.

The week’s must reads

1. The futility of economic development metrics. What gets measured gets improved — unless you can’t actually measure it to begin with. Municipal economic development organizations should stop fooling themselves that they can calculate precise economic payoffs for their investments, argue Ryan Donahue and Brad McDearman of the Brookings Institution. Tax incentives and other short-term job-attraction strategies can nudge firm location decisions from “maybe” to “yes,” but they can’t turn “no” to “maybe” — which makes attempts to calculate the ROI for any particular initiative ridiculous.

2. White flight from a developing “ethnoburb.” “Asians are only ‘model minorities’ when they are small in number with minimal influence,” writes Anjali Enjeti in Pacific Standard. In her Atlanta suburb of Johns Creek, 23 percent of the relatively prosperous population identifies as Asian — and it’s spurring all-too-familiar reactions from white people who fail to see anti-Asian behavior as racist. “Race, not education, is the fuel for white flight,” she writes.

Photo: Charlie Essers/Flickr.

3. A communitarian case for exclusionary zoning. It may be “gratifying” to suggest that “zoning conflicts are strictly class-based conflicts about assets between owners and newcomers,” writes USC planning professor Lisa Schweitzer, but it’s not that simple. Plenty of renters oppose new development, and for strongly held reasons, including “the desire that individuals have to maintain a specific culture.” YIMBYist progressives may believe in the righteousness of their goals, but pretending conflict doesn’t exist makes it harder to build coalitions for change.

4. “Peak Car,” revisited. Economic growth, low gas prices and easy auto credit have driven “blistering growth” in driving over the last two years, but is it permanent? The Frontier Group, one of the first observers to call the 2004-2014 slowdown in driving growth as more than a blip, takes a hard look at recent numbers and argues that though some assumptions (like continued expensive gasoline) have been dashed, others (like the sensitivity of consumers to gasoline prices or the impact of autonomous cars) are apparently in flux or hugely unpredictable.

New knowledge

1. Housing markets don’t seem to be self-correcting. The U.S. housing markets that were the most expensive in 1986 are mostly the still the most expensive, according to a Trulia analysis by Ralph McLoughlin. What’s changing fast, though, is the yawning gap between the priciest tier and the rest of the country. What’s driving this “great divergence” in housing prices? McLoughlin finds two strongly predictive factors: income growth and housing supply. Some lower-construction metros (like Miami) saw prices spike without much income growth, and some faster-construction metros (like Austin) added income but didn’t join the price spiral.

2. Incomes rise faster in integrated cities. Urban economies work better when high-skill and low-skill workers, and in some cases workers of different races, live relatively close together. Cities that were highly segregated by race and skill level in 1980 were less likely to see worker incomes rise over the next 25 years, according to a 2013 study by Huiping Li, Harrison Campbell, and Steven Fernandez revisited this week by the Chicago Policy Review. They also found that big income gaps between suburbs and central cities were associated with slower long-term income growth in the suburbs.

3. Exploring the city/suburb “regime change.” A paper from Penn’s Institute for Urban Research, authored by Arthur Acolin, Richard Voith & Susan Wachter offers a crisp, readable summary of the literature and some of the key data on the shifting economic and population balance between cities and suburbs. They conclude that the shift to a knowledge economy, the growing importance of education and the importance of place-based consumption amenities is likely to continue to drive growth toward the center. Whether cities can realize this potential opportunity hinges critically on fiscal, policy and governance questions.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org or on Twitter at @cityobs.

What City Observatory did this week

1. How economically integrated is your city? It keeps getting clearer: Mixed-income neighborhoods are an important force in helping more kids escape poverty. So has economic integration been getting worse or better? A study this year by Kendra Bischoff and Sean Reardon found that income integration has declined in virtually every metro area over the last 40 years, with Milwaukee, Philadelphia and New Haven seeing the biggest shifts to income segregation. As of 2012, the most income-segregated metros are Dallas, Philadelphia and New York; the most integrated are Portland, Orlando and Minneapolis.

2. Why talent matters to cities. The single best predictor of a metro area’s prosperity isn’t the tax rate, the average speed of a cargo truck, or the acreage of parkland — it’s the percentage of the population with a college degree. Even workers without college degrees tend to have higher wages and lower unemployment when more of their neighbors have college degrees. In a two-year update of our data on this Talent Dividend, we find that the association between college attainment and per-capita income has gotten even stronger since the recession, increasing the rewards for cities that attract and retain skilled workers.

3. The link between parking and housing. Every parking space that sits empty has added thousands of dollars, sometimes tens of thousands, to the cost of the building. That’s enough to stop many potential projects from being built. Yet even cities suffering severe shortages of housing for people continue to mandate housing for cars — more of it than people are actually using. A more effective answer to scarce street parking: parking-permit districts that force developers to include as much parking as their tenants will actually need, but no more.

4. More driving, more dying: summer 2016 update.After many years of rising road safety, the traffic safety news keeps getting worse. National Safety Council statistics for the first half of 2016 put the United States on track for more than 38,000 road deaths, up from 33,000 in 2014. Though the NSC is eager to blame increased driving on the stronger economy, gas prices seem to be the clearer culprit, especially given research showing that the trips deterred by pricier gas seem to be disproportionately likely to be deadly.

The week’s must reads

1. How bail traps people in poverty. Last week, the U.S. Department of Justice argued for the first time that it should be unconstitutional to jail people for not posting bail. In Vox, a public defender from Oakland uses two stories to show how bail requirements lead to disproportionate plea bargains and felony charges on poorer people. She suggests broader use of ankle monitors, or bail set at a percentage of a person’s assets. (Also see this related finding that bail seems to increase recidivism and false conviction.)

2. Japanese zoning 101. TgrPeople intrigued by recent coverage of Tokyo’s success at keeping housing prices low amid growth may be interested in this short guide to Japanese zoning, written in 2014. “Japan’s zoning laws are more rational, more efficient and just plain better,” writes the author of Urban Kchose after exploring the country’s top-down approach to regulating land use, building size and building height.

3. Wider roads vs. affordable housing. Cities that require road widening as a condition of new development should check their math: more than half the time between 2002 and 2012, roads expanded by developers wound up with more capacity than they needed. Not only do overlarge roads encourage speeding — they also added as much as $50,000 to construction costs per new home, stifling development.

4. Opposition kills California housing reform. The “boldest California housing policy proposal in years” is dead for now, reported the San Francisco Business Times. Gov. Jerry Brown has been pushing for any housing projects with at least 5 percent below-market-rate units to be approved without local review as long as they followed local zoning. But numerous players opposed the change. The SFBT says the final blow came from the state’s building trades union, which came out against it after Brown rejected their call for all such projects to be built by higher-wage laborers.

New knowledge

1. About one in 10 Airbnb units in big cities displaces long-term housing. Using fresh data from consulting firm Airdna, FiveThirtyEight offered the closest look yet at the effects of short-term rentals on urban housing supply. In Los Angeles, almost half of Airbnb revenue comes from the 16 percent of local local listings (about 1,300 units) percent that are rented out close to full time, essentially displacing a possible long-term unit. In Airbnb’s top 50 markets, such units account for 9.7 percent of listings, with plenty of variation by city.

2. Berkeley’s local soda tax worked. Last year the California city became the nation’s first to put an excise tax on sugar-sweetened drinks. Jennifer Falbe and colleagues at the University of California found that sales of those beverages plummeted 21 percent after the city imposed a tax of one cent per ounce (12 cents on a can of Pepsi), and water consumption rose 63 percent, compared to 19 percent in comparison cities.

3. Are entrepreneurship and innovation created by cities and regions, not founders and firms? “Place has replaced the industrial corporation as the key economic and social organizing unit of our time,” argue Richard Florida, Patrick Adler and Charlotta Mellander in a sweepingly theoretical working paper for the Martin Prosperity Institute. Drawing on sources from Marx to Jacobs to Glaeser, they propose that contrary to common thought, “innovation and entrepreneurship are an urban or regional process.”

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org or on Twitter at @cityobs.

What City Observatory did this week

1. The high price of cheap gas. We’ve hit the peak of summer driving season, and also the 103rd consecutive week of falling year-on-year gas prices. Though the 39 percent drop in gas prices over the last two years has led to only 4 percent more driving per person (so far), it also seems to be driving up traffic fatalities (up 8 percent), reducing fuel economy and accelerating damage to the climate. All of these things are bad for the economy in the long run. Cheap gas isn’t worth celebrating.

Vacation Traffic (Flickr: Lunavorax)

2. Data-driven planning has serious shortcomings. There’s a subtle but profound bias to our current transportation data: it’s all about vehicle travel, and not at all about walking, biking and how we might have fewer and shorter trips. Traffic engineers can immediately tell us when a road’s pavement has deteriorated, or its level of service has become (or might someday become) degraded. But if you don’t count it, it doesn’t count – and many things that matter to cities are hard to count or uncountable. As Google’s city planning arm, Sidewalk Labs, tries to apply “big data” to urban problems, we must remember that better technology can’t solve bad priorities.

3. How do we know zoning constrains urban development? Some people look at expensive central cities and argue that with no zoning, we’d have more density. Others look at growing suburbs and argue that with no zoning, we’d have less density. Who’s right? An important 2005 study used data from Boston and Atlanta to test this. It found that Atlantans who said they preferred dense areas were much less likely than Bostonians to succeed in living in one – implying a “shortage of cities” in greater Atlanta.

4. More evidence that mixed-income communities connect poor families with opportunity. Chicago children who moved out of very low income neighborhoods were 5-10 percentage points more likely to be employed as adults, according to the long-term outcomes of a randomized voucher program in the early 1990s. Because previous research didn’t draw on a randomized test, it may have understated this effect. The lesson: cities are well-served when neighborhoods have a mix of people from different income groups, rather than being segregated by income.

The week’s must reads

1. Is violent urban crime rising or falling? The question is a football in the presidential race, and the truth is that crime rates fluctuate by year and vary by city. Yes, Baltimore did see a big spike in 2015; yes, the national trend is a huge drop since 1990. The Marshall Project transcribed 40 years of FBI crime data by city to show how much the great crime decline varies from place to place. At the national level, the answer is clear: violent crime is down 50 percent since 1992, and lower now than any time since 1976.

2. Should cities replace population forecasts with vacancy targets? Traffic forecasts have proved horrifically inaccurate in the last 15 years. Why do cities assume they can predict population changes? Shane Phillips argues that (much like cities should set a target curb vacancy rate rather than trying to guess the perfect parking price) cities would be better off setting a target housing vacancy rate and then using tools like zoning and public financing to move it up or down.

3. The bleak future of suburban poverty. More people in poverty now live in suburban areas than in urban ones. In some ways, that’s a reversion to the mean – rich people in the core, poor people further out. But it’s also “hard to imagine a more despotic environment to be poor in than America’s suburbs,” built around the car and around infrastructure that’s hugely expensive to maintain. Strong Towns spent the week examining modern suburban poverty from different angles.

4. One last push for smarter traffic modeling. Ahead of an Aug. 20 deadline for public comments on the U.S. Department of Transportation’s proposed congestion measure, Smart Growth America’s Alex Dodds has an op-ed in The Hill, arguing that federal rules should recognize that a “10-minute commute at 10 miles per hour is better than a 50-minute commute at 50 miles per hour.”

New knowledge

1. Who’s living in crowded bedrooms? Eight percent of homeowner households and 26 percent of renting households have nonmarried household members sharing a bedroom. To make the estimate, Trulia’s Mark Uh used American Community Survey data and started from the assumption that each married couple shares a bedroom and others get their own bedrooms unless they can’t. The ratio varies considerably across metro areas: in higher-priced ones, room-sharing is much more common, with Los Angeles leading the pack among both renters and homeowners.

2. “Economic distress” doesn’t really capture the Trump coalition. Gallup economist Jonathan Rothwell mines a wealth of demographic and polling data to conclude that support for Trump is not strongly correlated with economic distress, as many pundits have suggested. Though Trump supporters are more likely to be blue collar, they tend to have higher than average incomes. And they’re more likely to live in neighborhoods that are less racially and ethnically integrated. It’s the latest sign that residential segregation is closely related to polarized national politics.

The Week Observed is City Observatory’s weekly newsletter. Every Friday, we give you a quick review of the most important articles, blog posts, and scholarly research on American cities.

Our goal is to help you keep up with—and participate in—the ongoing debate about how to create prosperous, equitable, and livable cities, without having to wade through the hundreds of thousands of words produced on the subject every week by yourself.

If you have ideas for making The Week Observed better, we’d love to hear them! Let us know at jcortright@cityobservatory.org or on Twitter at @cityobs.