If you follow both this blog and Urban Returns, you've probably noticed that I cross-post every entry here. I intended to separate the content when I started Urban Returns -- the national stuff there, the Austin stuff here -- but several Austin readers told me they like the national stuff, or at least don't mind it. And very few (maybe three or four) of my AC subscribers unsubscribed to switch to UR. So I'll keep posting everything here. Again, if you only care about national stuff, you can stick to Urban Returns, but my sense is that even readers from elsewhere find the Austin goings-on mildly interesting.
A reader has pointed me to this registered neighborhood organization. (Go to the city registry and scroll down to Super Duper). The organization's "main contact" identifies himself as the "Great and Powerful Oz." The "organization's" declared boundary includes virtually all of Austin and much of its extra-territorial jurisdiction.
Anyone in Austin can form and register a "neighborhood organization" and define its boundaries as arbitrarily as he pleases. The Great and Powerful Oz figured this out and evidently is enjoying a little joke.
Except this joke is costing the rest of us. City code entitles "interested parties" to notice of public hearings before the city can act, and registered neighborhood organizations are "interested parties" when the property falls within their boundaries. This applies not only to Council hearings, but to boards and commission hearings, such as the Board of Adjustment and the Planning Commission.
Notice is expensive. City staff must print and mail a separate notice for each hearing. There can be dozens of hearings per week -- zoning changes, variances, site plan approvals, subdivision approvals, and a host of others. And the Super Duper Neighborhood Objectors and Appealers Organization is entitled to written, mailed notice of each and every one. (If you doubt SDNOAO is entitled to notice, go to the city's GIS, pull up the zoning map, check the circle next to "neighborhood association," and click "identify" on any point on the map.)
The Great and Powerful Oz might object that lots of other organizations get free notice of citywide hearings (e.g., ANC, the Homebuilders Association of Greater Austin, the Homeless Neighborhood Organization.) If they can ask for free notice, why not me?
Rather than attempt to distinguish between "legitimate" and "nonsense" organizations, the City should simply charge notice recipients a fee. I'm sure that applicants are entitled to free notice. Nearby property owners may have a good argument for free notice as well. But everyone else should monitor the city's posted notices like the rest of us, particularly since the typical organization cares about only a small fraction of the hearings. If they want premium service, they should pay for it.
Update: Karl-Thomas Musselman identifies the Great and Powerful Oz as 1993 Special Election City Council candidate Bill Gammon. (The registry lists Oz as William Gammon without further ID.)
Sorry for the light posting, but I've been on a beach for the past few days without computer internet access. I'll try to catch up.
First up is the fight over the Grayco project on East Riverside, which Council is scheduled to consider today. Although the Grayco property is nearly 400 feet from Lady Bird Lake at its closest point, it still sits within the Waterfront Overlay. The developer has proposed a PUD allowing 1,200 units. It is asking for an exception to the overlay's height limit to build to 90 feet rather than the 60 feet allowed by the Overlay.
View Grayco in a larger map
But this argument needs rebutting:
[O]pponents say the project would set a troublesome precedent for development along the lake, where the new city rules would limit building heights on part of the Grayco site to 60 feet.
Tom Cooke, chairman of Save Town Lake, which was created several years ago to protect the lakefront against intense development, said the project would set a "dangerous precedent" for developers to circumvent the rules by seeking approval for their projects on a "case-by-case basis" as planned unit developments.
"The message needs to be clear to the development community that the community has made themselves very clear" in favor of ordinances protecting the waterfront, Cooke said.
We can debate whether the Grayco project provides enough community benefit. We can debate whether the Grayco design passes muster. But Cooke's argument is a bit of misdirection. When Council passed the ordinance on June 11, it debated whether to exempt PUDs from the height limits. Save Town Lake pushed hard to hold PUDs to the height limits. Council ultimately made PUDs subject to the ordinance, but explicitly provided that "[t]his does not limit a PUD's ability to modify the Waterfront Overlay exemption." In other words, Council decided then to allow exemptions for PUDs on a "case-by-case basis." Save Town Lake lost that one.
The debate over the Grayco project should focus on whether it is good enough for an exception. But stating that the Grayco project would establish a "dangerous precedent" for case-by-case exceptions is misleading when Council has already resolved to allow case-by-case exceptions.
I'm reading The Tome. My favorite lines so far:
When planners set minimum parking requirements, they do not define demand and supply the way economists do. For example, economists do not define the demand for food as the peak quantity of food consumed at free buffets where overweight diners eat until the last bite has zero utility. Nor do economists, when asked for policy prescriptions, recommend that restaurants should be required to supply at least this quantity of free food no matter how much it costs. Yet planners do define parking demand as the peak number of spaces occupied at sites with free parking, and cities do require developers to supply at least this number of parking spots, whatever the cost.
The Statesman has published its annual list of Austin’s top ten water users. Neil Webber, Vignette’s founder, tops the list. He used 1.74 million gallons between February and July.
The Statesman’s annual outing predictably (and understandably) stokes outrage. Many Austinites struggle to get by with 15,000 gallons per month. That’s not that much water if you have a yard of any size. And 15,000 gallons per month is a steep $48.59. News that a single property owner is using more than 100 times as much makes people mad.
But Webber is paying a stiff premium thanks to the water utility’s progressive rate structure. Webber used as much water as 117 households using 15,000 gallons per month. These 117 households paid a total of $5,682. Webber forked over more than $14,300, a 250% premium. With another round of price hikes this fall, next year Webber will owe more than $17,000 for the same amount of water.
Rich people are naturally less sensitive to price than the rest of us. But remember that a progressive rate structure ensures that they subsidize the rest of us. We can debate whether our rate structure is as progressive as it ought to be — it’s actually quite progressive compared to the rate structures I’ve seen elsewhere — but the premium heavy water users pay can can be used for sidewalks, libraries or anything else we want to spend it on. That’s a good thing.
One strategy would be to estimate the benefits to subway riders, the benefits to drivers (who face less congestion), the benefits to businesses (which enjoy a deeper labor pool and increased productivity), the benefits to retailers (which enjoy a larger market), etc., and add them up. I don't know how to do that.
But another strategy is to estimate the subway's impact on property values. After all, the value of the subway ought to be capitalized into property values. (Randal O'Toole agrees, but inexplicably refuses to reckon this a positive.) Real property in Manhattan is very expensive in part because of its density of residents and employees. Real property elsewhere in the city and the metropolitan area is very expensive in part because residents there are close to -- and can get to -- Manhattan. Without the subway and commuter rails, Manhattan's density would be impossible, and residents in the metropolitan area would have a harder time getting to it, assuming they'd still want to.
This estimate, too, is beyond my capability, but at least I can estimate the value of New York City property to one order of magnitude. In 2008, the assessed value of all real property in New York City was $800 billion. (The market value surely was higher.) Estimating the value of the property elsewhere in the metropolitan area is a lot trickier. But because New York City has only 42.5% of the metropolitan area population and just 4.5% of the metropolitan area's land area (Wikipedia), it's a safe bet that the rest of the metropolitan area was worth at least as much in 2008, for a total of $1.6 trillion. Since property values have declined sharply in the metropolitan area over the last year, let's discount this by 25% to $1.2 trillion.
The value of the subway and commuter lines to New Yorkers is the difference between the value of the metropolitan area property with and without the subway/commuter lines. (Consumer surplus will increase the total, but I ignore it for convenience.) The subway and commuter lines are, conservatively, worth at least $12 billion per percentage point in difference.
I can only make a wild guess about the magnitude of the difference. We do know, though, that Manhattan's density would have to drop sharply without the subway. Manhattan's standard density is more than 70,000 ppsm. New York City's standard density is 26,000 ppsm. Among large American cities, San Francisco's is next, at 17,000 ppsm. And San Francisco is quite compact for an American city; it's just twice the size of Manhattan. Chicago, 25% smaller than New York City (and blessed with the "L"), has a density just half of New York City's. I don't see how Manhattan could sustain a density more than quadruple San Francisco's, nor do I see how New York City could sustain a density more than twice Chicago's. In other words, I think it's likely that Manhattan and New York City would lose half their population; Manhattan surely would lose more than half its daytime work force.
My wild guess is that New York City proper would lose a large percentage of its value and the metropolitan area a similar percentage. 20%? 30%? These numbers seem extremely conservative to me. And that puts the total value of the subway and commuter rail to New Yorkers at a rock-bottom minimum of $240 billion.
One check on this would be to look at the cost of a disruption in service. During the 2005 strike, the city estimated each day of disruption after the first cost the city $300 million. If we annualize that loss (ignoring weekends) and capitalize it using a 10% discount rate, the total value of the subway (and just the subway) is $795 billion. The long-term loss would be lower as residents adjusted (by switching to buses, say), but it's hard to see how the long-term loss would fall by more than two-thirds. (And, remember, we've ignored weekends.)
My $240 billion estimate, while just a guess, seems a reasonable guess. And it seems very reasonable to assume that the value falls somewhere within the range of $100 billion to $500 billion.
A common meme around the internets is that high gas prices will spell the end of Walmart sooner or later. Expensive fuel will kill Walmart's business model of importing cheap Chinese goods on fuel-guzzling container ships and then hauling them all over the country on Walmart trucks.
And according to this Bloomburg review of $20 per Gallon (which I haven't read), so does author Christopher Steiner, who imagines how life will change at each $2 jump in gas prices:
At $6 a gallon, Americans will embrace diesel engines. At $8, many airlines will shut down, leaving Southwest Airlines Co. and JetBlue Airways Corp. as the dominant domestic carriers.
At $10, car ownership rates will plummet. At $12, exurbs will start becoming ghost towns. At $14, Wal-Mart Stores Inc. will die; its business model is built on cheap oil.
This a claim I frankly don't understand. Walmart will do just as well -- or no more poorly than anyone else -- when gas prices climb to $10 or $12 or $14 per gallon. Steiner and many others don't understand the Walmart model.
The Walmart model is to ruthlessly minimize a function of product cost and transportation costs. That is the model it has followed since its birth in the 1970s and its rapid expansion in the decades since. Only recently (the last 10 or 12 years) has Walmart shopped in China for the vast quantities of goods it sells. Walmart buys Chinese because it can get the goods to the United States, including the cost of freighting them over, at less than the cost of buying them in the United States. Should labor prices rise in China, or bunker fuel become too expensive to run 1,000 ft container ships profitably, then Walmart will turn to other suppliers who can get its goods to the United States at the lowest possible cost.
And the new suppliers might very well be American producers. If Youngstown Steel Tubing & Toasters becomes the low-cost maker of toasters, Walmart will buy its toasters there. By the truckful. It will carry them off by the truckful to one of its giant distribution centers, which will dispatch truckloads of toasters and coffee pots and other things to other distribution centers around the country. And these in turn will stock the local stores and Sam's Clubs.
Because this is Walmart, Youngstown Steel Tubing & Toasters will quickly feel pressure to cut its prices. Walmart will have helpful suggestions on how to do that. Some good. ("Couldn't you figure out how to use less packaging?) Some a little more sinister. ("Your toaster springs maker sure has a fat contract.") If Youngstown wants to be a long-term supplier, odds are its prices will go down.
Because this is Walmart, goods move from manufacturer to distribution center to distribution center to store efficiently, more efficiently than any other retailer can manage. Walmart is constantly looking for ways to squeeze waste out of its transportation costs. For example, it redesigned the loading bays in its warehouses so outgoing trucks load on one side of the building and incoming trucks offload on the other, which sped up the turnaround time.
What fools people, I think, is the sheer number of Walmart trucks on the highway. So many trucks mean so much fuel. Walmart therefore must be vulnerable to a sustained spike in gas prices.
But every retailer depends on goods delivered via highway. Some retailers (smaller ones, usually) have their goods delivered by a UPS truck (which perhaps took the goods off a UPS plane). Some have their goods delivered -- by truck -- from a regional wholesaler, who restocks its supply of goods . . . by truck. Unless that toy store has its toys handtrucked in by a bunch of elves from a shop around the corner, its toy shipments are moving by road. Walmart uses the highway more efficiently. And -- this is the killer -- Walmart does not have to deliver to 20,000 or 2,000 locations in a city, as UPS or a wholesaler might. Walmart gets the goods to a regional distribution center which gets them to the few dozen stores in the area. All retailers have to worry about the "last mile" of transportation costs, but Walmart has fewer "last miles" to worry about.
If gas prices do become too high for truck-hauling, then Walmart can switch to rail more easily than anyone else. It would be easy for Walmart to build giant distribution systems near rail lines. (Walmart could build its own railroads if it wanted.) Walmart's system of moving huge loads of goods from one large center to another would mesh nicely with rail.
One last point: If Walmart can indeed continue delivering the lowest-priced goods even after gas prices rise, then it will increase its market share. Consumers will effectively be poorer becausethey will be spending a large percentage of their budgets on energy costs. This will make them more price sensitive, and Walmart always benefits when customers get pickier about price. That's why Walmart does well during recessions. High gas prices thus won't kill Walmart; it might even thrive.
Sometimes I think Randal O'Toole is putting us on. He reacts to Frumination's calculation of the highway and parking capacity Manhattan would need to replace it's rush-hour subway capacity. O'Toole's alternative? Buses, of course:
Many 40-foot bus can carry 64 passengers (42 sitting, 22 standing, which means a higher proportion sitting than on a subway). Spaced five bus lengths apart, 11 buses per minute can cruise down a highway lane carrying more than 42,000 people per hour. That means fewer than 10 new lanes would be needed to carry the people now taking subways — and those 10 lanes would take up a lot less space than the 22 subway lines.
This can be further reduced by assuming that some people will time shift. During the 8 to 9 am hour, the average subway car carries 108 people, but in the afternoon peak hour the average subway car carries only 87 people. If some of the 108 people in that morning hour time shifted to the 7 or 9 am hour, then even fewer bus lanes would be needed to carry people into Manhattan.
Randal should have finished his calculations. Forty-foot buses can cruise down a highway at 11 buses per minute only if they are averaging almost 30 mph. But buses traveling into Manhattan could not approach that speed because once they got to Manhattan, they'd have to exit the freeway onto crowded local streets. The ensuing bottleneck would back up bus traffic for miles.
Worse, Randal ignores the sheer amount of space his buses would occupy once they got to Manhattan. It would take 6,250 buses to move 400,000 commuters. At 40 feet per bus, 6,250 buses would take up 47 linear miles of street space -- if they were lined up nose-to-tail. (94 miles if we allow one bus-length between buses.) Manhattan is only 13.5 miles long.
And this ignores that commuters would need another bus network once they got to Manhattan, because express buses couldn't drop commuters at their final destination.
This is absurd. Randal must understand this, because he generously allows that buses might not be able to replace the entire subway capacity:
If there were no federal subsidies to New York City transit, it is possible that the subways would decline and not be entirely replaced by buses. If so, downtown Manhattan might lose some of its allure as a job center. Would that be so horrible? A lower-density Manhattan might have had less attraction as a terrorist target. It would save taxpayers money. And people would get to their work faster, as (thanks largely to its high proportion of transit commuters) New York has the longest average commuter times of any urban area in the nation.
It sounds to me like getting rid of the subway might benefit everyone except, of course, downtown property owners. And that is really what rail transit is all about: transferring wealth from millions of ordinary taxpayers to a few downtown property owners, rail contractors, and transit agency officials and employees.
Let's ignore that highways and bridges are also a subsidy to property owners. (Is he factoring these capital and maintenance costs into his bus fares?) Let's also ignore that all of the boroughs and suburbs served by the subway are much more valuable thanks to their accessibility to Manhattan.
It's clear that Randal simply doesn't understand the concepts of increasing returns and agglomerations. New York metropolitan residents are willing to endure longer commutes, pay higher commercial rents and housing costs, and fork over a good chunk of their income in taxes because they receive at least that much value from living in or close to the city. New York City is a wealth-generating machine, and that is largely -- if not entirely -- due to a bunch of highly productive people crowding together. Density begets productivity, and rising productivity is ultimately the source of rising wealth. Turning Manhattan into Jacksonville or any other low-density city would destroy vast amounts of wealth. Subway subsidies are trivial by comparison. Most New Yorkers understand this, which is why you don't hear them argue for the elimination of the subway but instead leave that to an "economist" from Oregon.
"Regression" as in "linear regression."
Last Thursday's debate on Water Treatment Plant No. 4 got awfully technical, but I was still surprised to see a councilmember (Laura Morrison) discuss a linear regression from the dais.
The video is jerky but the audio is fine.
H/t Keep Austin Wonky.