Austin Contrarian

A boneheaded proposal from Cap Metro

I missed this at the time, but it deserves comment.

Cap Metro is developing its long-range plan, which it calls "ServicePlan2020."   It has hired a consultant from Washington state to prepare the plan  (13.1 MB pdf).

I doubt the consultants have set foot in Austin because the draft plan contains a simply horrendous proposal, a proposal that could only be made by someone who doesn't know the facts on the ground.   That is to switch key local bus routes from Congress, Colorado and Brazos to Lavaca and Guadalupe.  Most significantly, the 1L/1M, which runs down Congress, and the No. 3, which runs up Brazos on its northern route and down Colorado on its southern route.  These are Austin's two most important north-south bus routes, linking the southern fringe of town with the northern fringe; they have lots and lots of riders.

The consultant offers a couple of rationales.  One is to relieve bus congestion on Congress.   The consultant accurately observes that Congress is beset by a "wall" of buses creeping ever so solely down Congress's twelve blocks.

I won't even paraphrase the other -- it is so bizarrely wrong, I would feel obliged to understate it:

Why Clusters of Like Businesses Thrive

In New York, for example, diamond dealers, florists and even chess shops are clumped together.

That's from yesterday's All Things Considered (4:44 podcast).  A very nice explanation of economies of agglomeration.

I liked it mainly because the reporter actually used the phrase, "economies of agglomeration."

Aragon

Mueller gets a lot of criticism -- see the grouchy comments to this entry -- much of it unfair.  I like Mueller.  I do agree, though, that it is not a model mixed-use, New Urbanist development.  Among other things, there is  too much segregation of single-family and multi-family/commercial.

So let me offer an example of a model New Urbanist development.   Aragon is an infill development in Pensacola designed by Michelle MacNeil (who happens to be my cousin).   It's several years old, but I got my first tour in August when we visited her during a trip to the Gulf Coast.

One of the most significant features of Aragon is its location.  Many New Urbanist developments are suburban greenfield developments or massive redevelopments of abandoned industrial land or airports (Mueller and Stapleton, for example).

Using asphalt more efficiently

Most mornings on my way into work, I stop at Coffee Bean & Tea Leaf on South Lamar, a new coffee shop between Riverside and Barton Springs, one door down from Bridges on the Park.  (The building used to be a soccer store.)

If you are looking for an example of how code mandates too much parking, here you go.

According to Travis County tax records, Coffee Bean & Tea Leaf occupies an 8,861 sf building.   City code requires restaurants to have 1 parking spot for every 100 sf for the first 2,500 sf, and 1 spot for every 75 sf over that.   This means that CBTL, had it built on a suburban greenfield, would have needed 30 parking spots to comply with code. 

It has 13.

And -- surprise! -- thirteen is enough most of the time.   Most mornings there is at least one  empty spot to the side of the shop.   Some mornings there is not, but even then I manage to get my coffee.   I park on Lee Barton Drive.  Or I park in the Taco Bell parking lot next door -- which is no big deal since Taco Bell lets CBTL use its parking lot before 10 a.m.  I doubt CBTL loses any business because it is "short" 17 parking spots.

I'm not sure how CBTL got away with fewer than code requires.  Perhaps it got a variance.  It sits on a narrow lot and could not have added another 17 spots without tearing down the building.  Perhaps the number of parking spots were grandfathered.

Regardless, CBTL illustrates how our code requires too much parking.

It illustrates another point, too.  Businesses want their customers to have a place to park.  Sometimes they might prefer to provide another 2,000 sf of asphalt.  Sometimes, though, they might prefer to find space elsewhere that is not being used.  The asphalt on Lee Barton Drive, rather than lying  empty, is now being used productively.  Taco Bell's asphalt, rather than lying empty before lunch time, is now being used more productively.  CBTL avoided pouring a bunch of concrete that would have lain empty 23 out of every 24 hours.   Each square foot of asphalt provides more value now than before.  And that's all because CBTL was allowed to figure out an informal solution to its "shortage" of parking.  

If there, why not everywhere?

Is it really necessary for the federal government to introduce new market distortions?

For the reasons I just gave, I don't believe that our past subsidies to suburban development justify maintaining those investments.  End them and let the chips fall where they may.

But even if reasonable people can disagree about that, I see no argument for creating new subsidies.  But that is exactly what our federal government is about to do.

The FHA is a major player in the mortgage business.  It insures mortgages for home buyers who otherwise would not be able to get credit or scrape together a down payment; this allows some to buy homes with as little as 3.5% down.  Without the FHA guarantees, the mortgage market would be much smaller.  A few years ago, its share of the market was 2.7%.  This seemingly small share had an outsized effect by scooping up the biggest credit risks and reducing the risk for private mortgage insurers.  In any event, its share of the market has ballooned recently:  according to Friday's WSJ, its market share reached 23% in the second quarter of this year.

And now the FHA is about to adopt new rules explicitly encouraging home buyers to purchase single-family, detached housing in the suburbs rather than attached (condos) in urban cores:

Until now, almost any condo development could apply to FHA for “approved” status, therefore making FHA financing available in that development.  In addition, in developments that were not approved, “spot approvals” were sometimes available for individual units.  (The lender applied for an approval for the unit you wanted to buy, in spite of the development not being approved).

Following are the new guidelines:  (This is not pretty, so prepare yourself)

1. There will be NO more spot approvals.

2. All development not considered primarily residential are out.  For instance, a development with more than 25% of the total floor area dedicated to commercial business use is out.

3. Noise issues is a new concern, so any development within 1,000 feet of a highway, freeway, or heavily travelled road, 3,000 feet of a railroad, 1 mile of an airport, or 5 miles of a military airfield will become ineligible for approval.

4. If the property has an “unobstructed view , or is located within 2000 feet of any facility handling or storing explosive or fire prone materials, it is not insurable - we're not talking just fireworks factories here.  A gas station 2 blocks away can disqualify this development.

5. Any property located within 3000 feet of a dump, landfill, or superfund site, is ineligible.

6. No more than 10% of the properties can be owned by a single investor, including builders or developers who are renting out or have not yet sold vacant units.  For 2-3 unit developments, no one can own more than one unit.

7. No more than 15% of the homeowners can be more than 30 days late on their homeowner dues.

8. For new developments, at least 50% of the units must be sold prior to applying for FHA approval (valid presales include those with purchase agreement and lender validation of an approved loan in process)

9. A minimum of 50% of the units must be owner occupied or sold to owners who intend to occupy as their principal residence.

10. Projects in designated wetland and flood zones will not qualify.

11. All current condominium project approvals will be invalid (with the exception of projects approved on or after October 1, 2008) and projects must be re-approved under the new options available.  Going forward, all projects will require recertification every two years.

Perhaps most insidiously, the FHA will no longer insure more than 30% of the units in a single condominium development.

I understand that the FHA has been taking large losses on its guarantees.  I also understand that condominiums are riskier to insure than single-family homes.  Some of these new regulations seem reasonable -- it's probably a bad idea to invest in a condominium when the condo association lacks the resources to pay for upkeep.  Higher risks justify higher premiums, too.

But these new regulations seem purposely designed to push new homeowners out of dense, urban areas to the suburbs.  They exclude many mixed-use developments (#2).  In a central city, it is hard to find a condominium not within 1,000 feet of a highway, freeway, or heavily travelled road, 3,000 feet of a railroad, or one mile from an airport (#3).  Allowing developers to tap into FHA guarantees for entire single-family subdivisions but only 30% of condominium units naturally will encourage developers to shift to single-family subdivisions.  These new regulations are fundamentally anti-urban.  

Even if it is somehow possible to defend our existing scheme of suburban subsidies, is it really possible to defend introducing new market distortions?   

Links

1.   Frumination works out the highway and parking capacity Manhattan would need to replace its morning rush hour subway capacity:

At best, it would take 167 inbound lanes, or 84 copies of the Queens Midtown Tunnel, to carry what the NYC Subway carries over 22 inbound tracks through 12 tunnels and 2 (partial) bridges. At worst, 200 new copies of 5th Avenue. Somewhere in the middle would be 67 West Side Highways or 76 Brooklyn Bridges. And this neglects the Long Island Railroad, Metro North, NJ Transit, and PATH systems entirely.

Of course, at 325 square feet per parking space, all these cars would need over 3.8 square miles of space to park, about 3 times the size of Central Park. At that point, who would want to go to Manhattan anyway?

See the neat map at the bottom of his entry showing how much land Manhattan would have to devote to parking.  Commuters of course would abandon Manhattan long before things reached this state.  But Manhattan would not be Manhattan in either case.  

Pointer from a reader.

(NB: Tyler Cowen thought this was interesting enough for a link . . . to Kottke, who merely quoted a snippet of Frumination's entry.  Jerk.  (Cowen, not Kottke.))

2.  A Detroit neighborhood reverts to prairie (images from DetroitYES):

(H/t the Urbanophile.)

3.  Professor Chris Nelson, Director of the Metropolitan Research Center at the University of Utah, projects  that the homeownership rate will fall to 63.5% by 2020, sparking intense demand for rban infill and redevelopment.   (Via Calculated Risk; no link to paper available.)

I think our homeownership rate is too high, a result of tax subsidies and land-use policies.  It ought to drop.  But it won't drop by several percent.   Richard Green, a professor at the Marshall School of Business at the University of Southern California (and no conservative), fisks Nelson's study. 

Links

Two to pass along:

NeoHouston has a great piece comparing the street interfaces of good urbanism and bad urbanism, with a nice use of Houston projects to illustrate his point.

Julio Gonzalez at Keep Austin Wonky argues against Austin "exceptionalism"; i.e., perhaps we're not as great as we thing.  A nicely contrarian piece.

I like his conclusion but am less confident about his analysis.  He runs a regression purporting to show that, among Texas cities, Austin's median household income is low given its high share of residents with masters, professional  and doctoral degrees.    My criticisms:  (1) he  should run his regression on metropolitan areas rather than municipalities because high-wage earners tend to cluster together in exclusive suburbs (this would require using a national panel since there aren't enough Texas metropolitan areas); (2) he should use gross metropolitan product rather than household income; and (3) we should keep in mind that Austin has an unusually high proportion of masters and Ph.D. because of UT; it is an outlier. 

Houston's street design standards

Keep Houston Houston explains how Houston's street design standards interfere with traditional neighborhood development.

Reburbia

Jude points to the Reburbia competition, a design competition "dedicated to re-envisioning the suburbs."  From the competition website:

In a future where limited natural resources will force us to find better solutions for density and efficiency, what will become of the cul-de-sacs, cookie-cutter tract houses and generic strip malls that have long upheld the diffuse infrastructure of suburbia?  How can we redirect these existing spaces to promote sustainability, walkability, and community?  It’s a problem that demands a visionary design solution and we want you to create the vision!

"Visionary design" is all well and good when you're working on a blank slate, but it matters very little when you're trying to retrofit whole subdivisions.  Rising energy prices might create demand for denser and more efficient suburbs someday.  That doesn't mean we will get denser and more efficient suburbs, though.   The obstacle will be the homeowners who like things the way they are, and there will always be lots of homeowners like that.  Sure, they might agree that other homeowners should live in denser and more efficient suburbs, but they won't want their own subdivisions retrofitted with greater density, no matter how visionary the design.

As energy becomes more expensive, those who want to live closer to work or to live in smaller, more efficient apartments or condos will move.  Those who stay won't want their neighborhoods to change.  I don't believe that central Austin neighborhoods, for example, will ever welcome greater density in the neighborhood interiors, no matter how high land prices get.  If density can't get any traction in central neighborhoods where density makes the most sense today, I don't see it ever getting any traction in suburban neighborhoods.  Great design won't entice homeowners in suburban subdivisions to cancel covenants, support rezonings, and make the other hundred changes that would be necessary.

Or perhaps I'm just too pessimistic.

Skilled cities II

While I'm in this nerdy mood, let me point to this paper by Jaison Abel, Ishita Dey and Todd Gabe:

We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area’s stock of human capital. Using new measures of output per worker for U.S. metropolitan areas along with two measures of density that account for different aspects of the spatial distribution of population, we find that a doubling of density increases productivity by 10 to 20 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the elasticity of average labor productivity with respect to density increases with human capital. Metropolitan areas with a human capital stock that is one standard deviation below the mean level realize around half of the average productivity gain, while doubling density in metropolitan areas with a human capital stock that is one standard deviation above the mean level yields productivity benefits that are about 1.5 times larger than average.

This is a little technical, so let me translate:   Cities tend to become more productive as they grow denser.   On average, a city's workforce becomes 10% more productive when the city doubles in density.   But that average obscures the importance of skills.   Less skilled cities benefit a lot less than skilled cities from densification.   In fact, skilled cities, on average, enjoy three times the productivity gain from denser growth than less skilled cities.   This is yet more evidence of the increasing returns and agglomeration benefits from density.

This is a nice complement to the Glaeser and Resseger paper.  Glaeser and Resseger found that workers in skilled cities become more productive as the city grows, while workers in unskilled cities do not.   Abel et al find that workers in skilled cities become more productive as the city grows denser; workers in unskilled cities, less so.

The authors also test their conclusions using a variant of weighted density. They find even greater productivity gains (20% on average) when a city doubles its weighted density.

The authors use a coarse form of weighted density.  They weight urbanized area density by county subdivisions.  But how you chop up a city matters when calculating weighted density.  In order to calculate weighted density, you first divide the city into a bunch of smaller regions.  You then assign each region's density a weight equal to its share of the populations.  In general, weighted density increases as you chop up the city into smaller regions.

I used census tracts for my weighted densities.  There are many more census tracts than county subdivisions.  I thus got a lot more stratification than they did -- e.g., their top weighted density was 19,000 ppsm, while mine was 33,000.  How you divide a city for calculating weighted density is somewhat arbitrary, but I think using census tracts makes more sense than county subdivisions, which are more or less arbitrary.  I suspect the authors would have found even greater returns to density had they weighted density by census tracts rather than by county subdivisions.  

H/t Richard Florida.