What City Observatory did this week

Driving stakes, selling bonds, overdosing on debt.  The Oregon Department of Transportation is following a well trodden path to push the state toward a massive highway expansion project. For example, Oregon DOT has kicked off the half billion dollar I-205 project with no permanent funding in place, instead relying on short term borrowing.  It’s planning the same for the $1.45 billion I-5 Rose Quarter project.
Taking a page from the Robert Moses playbook, they’re planning to drive stakes on three billion-dollar-plus highway expansions, and then issue bonds to pay their costs.  The bonding will obligate the state to pay off these projects ahead of every other transportation priority for the next several decades.  Debt is a powerful drug, and Oregonians should be wary of the financial burden the highway builders are pinning on them.

Must Read

Induced Distance:  Earlier this month, we and others criticized the latest iteration of the congestion cost scare-mongering reports, this one from Inrix. These fictional and inflated congestion cost estimates are used as a rationale for road-widening projects, which are inherently self-defeating, because of induced demand:  building more roadway capacity simply induces more driving.  But it’s actually worse than that. Lloyd Alter, writing at Treehugger, adds another dimension to these critiques, pointing out that building more roads also leads to greater distances between destinations.  The more land we use for roads, parking lots, yards, and setbacks, the further away are all of the places we want to travel to.  Alter credits Bart Hawkins Kreps with coining the term, “induced distance”

It’s widely recognized that if you keep adding more traffic lanes, there will be more traffic—that’s ‘induced demand.’ Just as important is that as we clear space for wider roads and more parking, we push destinations farther apart—that’s ‘induced distance.’ As bad as induced distance is for drivers, it’s even worse for the pedestrians who now need to walk much farther to get around in their formerly compact cities.”

This is one of those instances in which a picture is worth a thousand words, from Twitter:

That’s true in a physical sense, but to add to it, we also need to acknowledge that car-centric transportation systems tip the economic balance in favor of large scale uses and penalize smaller scale firms (for example, enabling big box retail, and killing off local, mom and pop stores).

How inclusionary housing makes housing less affordable.  San Francisco has some of the most expensive housing in the United States, and in a seeming paradox, some of the nation’s most stringent affordable housing regulations. The city requires developers of new apartment buildings to set aside a portion of new apartments to be rented at rates affordable to low and moderate income households.  But these requirements make much new development uneconomical.

A new study prepared for the city by real estate consultants at Century| Urban, shows that for rental housing, the city affordability requirements make development uneconomical for 19 of 20 studied pro-formas, and for the the one-in-twenty that came close to pencilling out, it didn’t comply with the city’s affordability standard.  Housing advocates like to take credit for the relative handful of affordable units that do get built under inclusionary requirements, but what they and others miss is the vast amount of housing that simply doesn’t get built at all because of these requirements, and this constraint on housing supply actually makes affordability worse–for everyone.

There’s no such thing as affordable housing.  Much housing discourse is an argument over whether we should be building affordable housing or market rate housing.  That misses the critical point that affordability isn’t determined by the characteristics of a particular house or apartment, but by the overall balance between supply and demand in a city.  What determines whether a particular home is affordable has to do with how many homes we have.  As Daniel Herriges of Strong Towns explains:

Developers don’t build affordable apartments or unaffordable apartments. They build apartments. Some are, no doubt, nicer than others, but this alone doesn’t make them expensive or inexpensive. That only happens when those apartments are sold or rented. At that point, the price is determined in a transaction that is influenced by market forces, public policy, or both.

And here’s a tangible example.  Two similar Victorian homes (one in Scranton, another in San Francisco) sell for wildly different prices.

The Scranton one is, by any standard pretty affordable.  But that’s almost entirely because it is in a market where supply has more than kept up with demand.

We’ve made a similar case looking at the variation in prices among the millions of ranch homes built in the US in the 1950s and 1960s.  The reason some are affordable and others are not, as Herriges points out, has little to do with the structure, as built.

In the News

Pennsylvania’s Center Square cited City Observatory’s analysis that subsidies for electric car purchases tend to disproportionately benefit high income households.

Note:  An earlier version of this post mistakenly identified the location of the Scranton home.  Our apologies!