What City Observatory this week

1. The Urban Institute gets inclusion backwards. The Urban Institute has released an updated set of estimates that purport to measure which US cities are the most inclusive.  The report is conceptually flawed, and actually gets its conclusions backwards, classifying some of the nation’s most exclusive places as “inclusive.” Highly equal cities are almost always either exclusive suburban enclaves (that achieve homogeneity by rigid zoning limits that exclude the poor) or impoverished cities that have been abandoned by upper and middle income households, leaving them homogeneous but poor. (For example, many of Urban’s Institute’s “most inclusive cities” are suburbs like Bellevue, Naperville and Santa Clara–among the wealthiest 20 cities in the US; while Detroit and Cleveland are also highly ranked for inclusiveness. Small geographies, neighborhoods/cities that have high levels of measured income inequality (90/10 ratio, Gini Index) are generally much more inclusive than comparable geographies that with lower levels of measured inequality.  Rich and poor living closer together produces more measured inequality, but also means greater inclusion.

2. Parking should pay its way:  Hartford’s land value tax lite.  One of the perverse effects of the US system of property taxation is that improving urban property, by say building apartments, offices or stores, triggers an increase in tax liability.  That tends to discourage development and reward low value uses of valuable urban land. Effectively the biggest subsidies from this arrangement go to surface parking lots, which usually pay taxes only on the value of land. While in theory a land-value tax would fix this incentive problem, its politically hard to change the whole tax system.  Hartford, Connecticut has a proposal to up fees on parking lots by a modest amount (about 50 cents per space per day) to fund transportation.  The fee would work like a kind of land value tax “lite.”  This is definitely a step toward making the tax system fairer; as parking lots don’t pay anything close to their full-freight in local finance. Take for example stormwater:  Hartford’s building a multi-billion dollar subway for sewage, largely to deal with the runoff from roads and parking lots.  City water users pay the full cost of this project; cars and parking lots pay nothing for a problem they largely create.  More cities should look into asking parking to pay its way.

Must read

1.  The geography of sedition:  Geolocation of Parler Videos, 6 January 2021.

2.  A roundup of what’s been written about Covid-19 and cities.  At City Observatory, we’ve spent a good deal of time tracking data on the Coronavirus pandemic as it spread, paying particular attention to a couple of themes, one linking density to the virus, something which appeared as a popular theory early on, but which must now deal with higher rates of death in rural areas.  A second theme looks at the future of urban areas in an era of work-at-home for many professionals.  James Brasuell at Planetizen has compiled a comprehensive list of news articles and blog posts on these themes; it’s a useful resource for following the debate.

3. Todd Litman:  Housing first, cars last.  Leave it to one-man transportation think tank Todd LItman to succinctly make lay out the definitive strategy for advancing equitable urbanism.  In an essay at Planetizen, Litman writes:

Our current laws do not mandate housing for people, but virtually all jurisdictions do mandate an abundant and costly supply of housing for motor vehicles. Our zoning codes require that most buildings include numerous parking spaces that are generally unpriced, which is a huge and unfair subsidy for automobile use. This increases housing costs, encourages driving, and forces car-free households to pay for expensive parking facilities they don’t need.

There’s a shortage of affordable housing nearly everywhere, particularly in some of our most livable cities. But at the same time, we’re awash in “free” (meaning un-priced) parking, with three or four or more parking spaces for every car in most metro areas.  Indeed, parking requirements essentially tax housing to subsidize parking.  Reversing this fundamentally wrong-headed prioritization is the key to building better  and more equitable cities.

4.  How Covid-19 debunked one old gentrification myth.  Jake Ambinder, writing in the Atlantic.  One of the most resilient folk narratives of gentrification is the idea that by building more housing greedy developers drive up rents and cause displacement.  Not only has that theory never made much sense, and has been disproven by repeated studies, but the deflation of demand in some previously super-heated urban markets shows that when demand and supply are in closer balance, rents actually come down.  The real cause of the affordability crisis in thriving metro areas isn’t the developers, but the constraints on development fomented and defended by NIMBY homeowners.  The prevalence of single-family zoning and widespread apartment bans wrought by nominally pro-environment homeowner groups constrict housing supply, drive up rents, and trigger displacement.  As Ambinder concludes:

The homeowner-friendly slow-growth activism that marked American cities in the late twentieth century is thus best understood not as the predecessor of today’s anti-gentrification politics but as the progenitor of the gentrification crisis itself. In wealthy coastal cities today, one need not develop skyscrapers or shopping malls to be a speculator in urban property. With widespread housing scarcity, simply owning a modest home in Berkeley or Brooklyn will suffice.

New Knowledge

Tragically slow progress in improving vehicle fuel efficiency.  For decades, the big technical fix to our energy problems was the idea that imposing progressively tougher fuel economy standards on the sale of new vehicles would lower energy consumption.  That same idea has been bolted on to many climate action plans (don’t worry, new cars will consume less fuel, and therefore generate fewer greenhouse gases).  A new tabulation of real world fuel consumption and driving data by Michael Sivak shows that what progress we made in this regard largely petered out more than a decade ago, and alarmingly, in the latest year for which data are available, fuel economy actually declined.
Early on, there was a lot of low hanging fruit, and fuel economy improved dramatically between the late 1970s and 1990.  But from 1990 through 2004, there was basically no change in average fuel economy.  Between 2004 and 2008, fuel economy improved appreciably.  Overall, there’s been a startling slowdown in the improvement in fuel economy.  Sivak calculates that from 1973 to 1991, fuel efficiency improved by 2.3 percent per year, since 2008, fuel efficiency has improved by 0.2 percent per year.  In other words, it now takes us ten times as long to get a given improvement in fuel efficiency as it did 40 years ago.
As economists, we’d be remiss if we didn’t note that a lot of these changes had everything to do with fuel prices.  Fuel prices were flat (declining in real terms) during the 1990s, and there was a big jump in oil prices in the early 2000’s.  Car buyers responded both times, buying less fuel efficient vehicles when gas was cheap in the 1990s, and more efficient vehicles as fuel prices rose after 2004.
Since 2010, progress has been very slow.  More and more Americans are buying sport utility vehicles, and the decline in gas prices after 2014 has prompted purchases of more large vehicles, with the predictable result that fuel economy fleetwide actually declined in the most recent year.  As Sivak notes in his analysis, vehicle purchase decisions cast a long shadow in terms of fuel consumption and pollution.  Only about 6 percent of the vehicle fleet turns over in any given year, and the average vehicle lasts for almost 12 years.  This means that much of the fleet that will be on the road in 2030 consists of the large, inefficient vehicles people are buying today.
Finally, it’s worth noting that if anything, Sivak’s numbers actually understate the failure of efficiency standards, because they only consider the per-vehicle and per-mile energy consumption.  The combination of somewhat more efficient vehicles and low energy prices has prompted people (at least prior to Covid-19) to drive more miles, producing even more emissions in the aggregate.  Simply making individual cars more efficient is easily overwhelmed by more driving, with all its external costs.
There’s a naive, carrotist belief that we can painlessly achieve our energy efficiency and climate goals simply by mandating progressively more efficient cars.  The data shows this strategy isn’t working.
Michael Sivak, “Actual fuel economy of cars and light trucks: 1966-2019,” Green Car Congress, January 7, 2021.