Austin Contrarian

Trading Places

From Wells Dunbar, writing at KUT News:

It’s no secret Interstate 35 congestion takes a toll on Austinites.

Out of a list of Texas’ 100 most congested roadways, the portion of I-35 running through central Austin is the fourth most congested in the state. Meanwhile, State Highway 130, out east of I-35, is open for business.

Officials have tried all manner of incentives to divert traffic from I-35 to SH 130, including the lure of an 85 mph speed limit.

But SH 130 is tolled and I-35 isn’t. That has some folks asking if we’re tolling the wrong road.

Like me.  (I'm quoted.)

Some Legislators are inching closer to this. Representative Paul Workman recently proposed making SH 130 toll free, using the state's rainy day fund to make up the lost toll revenue.

I say "inching," but that's halfway there, right?

Eliminating tolls on lightly-traveled SH 130 in order to reduce congestion on badly-congested I-35 would make everyone who drives either route better off (or at least no worse off), but of course at a pretty steep loss of revenue to the state government. Eliminating tolls on SH 130 and imposing variable tolls on I-35 would maximize aggregate welfare (mainly by converting wasted time into useful money), but some drivers would be better off and some worse off.  Not surprisingly, it's the "make SH 130 free" half of the plan that gets proposed first.

Routefacts.org

Austinites for Urban Rail Action (AURA) has a new page up: Routefacts.org, a "one-stop repository of the key facts in the Austin urban rail sequencing debate." The idea is that there should be something approximating a public debate on the initial alignment of Austin's urban rail line, which in turn requires careful sifting of facts and data.

Of course, AURA's main point -- a point Routefacts.org makes quite effectively -- is that that the facts are mostly unknown and the data are mostly undisclosed. For example, we have ridership estimates for the proposed Mueller line, but not Guadalupe/Lamar. Advocates who want a robust public debate on alignment are left to fend for themselves using bus ridership numbers or estimates for the 2000 light rail route that are now over 13 years old.

 

New York City is much cheaper than such a dense place ought to be

Charlie Gardner finds an association between metropolitan area weighted density and housing affordability:

Income is more strongly correlated with weighted density than total population, although not dramatically so. However, median home values were even more strongly correlated with weighted density.  The result is that, for cities of equivalent size, the city with the higher weighted density will generally be less affordable in relative terms, even if incomes are higher (for instance, Sacramento is almost twice as dense as similarly-sized and lower-income Kansas City, but is only two-thirds as affordable).

I believe high home prices are generally caused by housing being too scarce rather than housing being built too close together, so I didn't expect weighted density to have much bearing on home affordability. In fact, it doesn't: the association between weighted density and affordability is weak, with weighted density explaining only about 17% of the variation in affordability (the ratio of median home price to median income*) among metropolitan areas. Whatever the culprits for unaffordability, they're mostly something other than density. (Being located in California is a better predictor of high relative housing cost, for example, than having high density. The variation in affordability explained by weighted density drops to 10.5% when California cities are excluded.)

Below is a scatterplot pairing the weighted density of each MSA with the ratio of its median home price to median income. The trend line slopes upward, which means that housing tends to get less affordable as the metropolitan area gets denser. As the scatterplot should make clear, though, weighted density doesn't really have much predictive value, particularly for MSAs with weighted densities less than 5,000-6,000 pssm. (Contrast this with having "San" or "Santa" in the city name; this seems to be a very good predictor of high unaffordability.)

 (click to enlarge). 

One thing that jumps out from the chart is just how much of an outlier the New York City metropolitan area is. It's an outlier in density, of course - it's almost three times as dense as LA and San Francisco. But it's also an outlier in its distance below the trend line.  The New York City metropolitan area is much, much more affordable than the trend line predicts. The trend line predicts that the median home in the New York MSA should cost a bit more than 15 times the median income; in reality, the ratio is under 11. Moreover, the slope of the trend line is itself skewed downward by New York City: if you fitted a trend line to the data ignoring NYC, it would predict a home value-to-income ratio of arond 20 for a city with 31,000 ppsm. 

New York City has horrible land-use regulations. Ed Glaeser et al. estimated a few years ago that regulatory constraints are responsible for at least 50% of the overall unit value in the average owned apartment in Manhattan. Vast swaths of the City have been mummified by historic preservation districts. The City has casually downzoned large chunks of Brooklyn. Many of New York's suburbs are notoriously NIMBY.

Still, it ain't California.

As California's coastal cities prove, a city (with sufficient amenities) can make itself completely unaffordable at any given weighted density. While California has many natural amenities, they're no greater than, say, Honolulu's. Honolulu, of course, is squeezed into a small sliver of land on an island between volcanos and the ocean. (Note that roughly half of New York's metropolitan population is also situated on three islands.) Santa Cruz and San Luis Obispo don't have Honolulu's (or New York's) geographic constraints. What they do have is a nasty set of land-use regulations that are, evidently, just as effective as volacanos, rivers and oceans  in depressing the supply of new housing below the market-clearing level.

*Charlie uses the reciprocal; i.e., median income divided by median home value.  That yields a slightly stronger correlation with weighted density, but the resulting trend line is not as steep.

(NB. Corvalis, another outlier, is not particularly expensive; it just has a very low median income. I assume this means that college students are an unusually high percentage of the population.)

Old Urbanist on weighted density (and other stats)

Charlie Gardner at Old Urbanist has done the tedious but very useful work of collecting a bunch of metropolitan area statistics, running pairwise regressions, and then publishing the correlation coefficients in an elegant little chart. If you are looking for the correlation between, say, 2010 metropolitan area population  and 2010 weighted density (spoiler: it's 0.793.), or the correlation between weighted density and median home value (0.582.), there you go.

He's also got some provocate thoughts on the relationship between weighted density, productivity and affordability.

Run urban rail up Guadalupe/Lamar

Jeff Wood at The Overhead Wire has been running a series on the history and politics of Austin's urban rail endeavors. Today he's posted an immaculate argument for running the line up Guadalupe and Lamar rather than out to Mueller.  The aerial photo below, which contrasts the proposed line (orange) and a Lavaca/Guadalupe/Lamar alignment using current bus ridership, makes the case succinctly:

Guadalupe and Lamar are at capacity and have been at capacity for decades.  Planners are shying away from them, evidently because they are too congested. But "being too congested" is the reason to make this massive investment in rail in the first place. Reserved guideway transit is the only way to significantly increase the capacity of these prime gateways to UT, the Capitol Complex and downtown.   Spending a couple hundred millioin on the four-mile segment from UT to Mueller is largely a waste at this point -- that's not a congested route, and it doesn't have much existing transit ridership.

More from David Schleicher

Mark Bergen at Forbes has an interesting interview with George Mason law professor David Schleicher, whose paper, City Unplanning, I discussed a couple of weeks ago.  Schleicher's thinking hard about the political dynamics that lead large cities to systematically underzone. He correctly focuses attention on downzonings, which tend to occur quietly (if not stealthily):

1) Here’s the game theory part: Local legislators may prefer more development than we have now to less, but have stronger preferences for stopping development in their districts because these projects would hurt homeowners in their neighborhoods—either directly through things like increased traffic or indirectly through increasing the supply of housing, harming the value of existing houses.

This is a prisoner’s dilemma and absent a political party to organize the vote in local legislatures, one-by-one votes on projects will result in “defect” results, or situations where every legislator builds coalitions to block projects in their own district and nothing gets built. City Councils end up featuring what one journalist called the “ironclad principle of aldermanic privilege” or a norm that Members of the City Council have an absolute power to veto zoning changes in their district.

This makes a big city like a bunch of exclusive suburbs, at least for zoning purposes. Projects that would help the whole city, benefiting economic growth and reducing housing costs for newcomers or renters, lose out because the neighborhood in which they are located doesn’t want them and because each project is presented to the Council seriatim.

2) The process works differently for big developers and small ones. When a big new project is proposed, the politics look pretty ordinary, with a big developer fighting against local homeowners.

But big developers don’t care about “downzonings” or reductions in the size of the zoning envelope to current use, so that no one can build in a neighborhood as of right. The developers don’t care because they haven’t an investment yet, and the only concentrated and political powerful group are nearby homeowners who want to restrict development. These downzonings—which have become increasingly common—really matter because small developers can’t afford to go through the city planning process to get changes made.

Because we consider changes seriatim, small developers can’t piggyback on the lobbying strength of the big developers. Cities end up with a bunch of towers but strong limits on incremental housing growth—small new buildings, granny flats, and the like. This too pushes up housing costs.

That sounds a lot like Austin. Infill development in this town is conspicuous because the projects are so big. What you don't see much of here are small new multi-family buildings or granny flats. Note that downzonings don't have to be formal changes in zoning categories (i.e., from MF 3 to SF 3). The McMansion ordinance was a downzoning -- by drastically restricting the floor space and envelope of buildings, it made granny flats, garage apartments and duplexes less desirable in single-family neighborhoods.  The "superduplex" ordinance was also a downzoning, because it made duplexes more difficult, or at least less attractive, to build.  Austin should be moving in the other direction to permit small, multi-family buildings as of right in more places.

Forbes will publish the second half of the conversation tomorrow.

The risk to building before a final decision on your neighbor's appeal

Account of the demolition via Massachusetts Land Use Monitor, with full background here.

Making corruption easier won't make it less likely

Critics of Austin's current system of city-wide Council elections are correct that Council elections are dominated by a "white, liberal, central city power base" a/k/a central Austin homeowners.  I think this is a bad thing.  Central Austin homeowners are a parochical lot and they elect parochial Council members who adopt policies that stifle new housing and development and run up the price of existing housing.  Central Austin has fewer residents, more expensive housing, and lower-quality housing than it should have, thanks to a system dominated by central-city voters.

And I will support an alternative system as soon as someone proposes a better one.

From where I sit, parochialism is the City's principal problem.  Single-member districts are not a cure for  parochialism.  On the contrary, they institutionalize parochialism.  A Council member whose district will be affected directly by a particular vote will have an incentive to consider only the effect on his or her district, rather than the broader harm or benefit to the City as a whole.  Council members whose districts will not be affected  directly will have an incentive to defer to the affected Council member; they will want and expect that deference to be reciprocated.  That is the genesis of "ward courtesy."

SMD proponents argue that city-wide elections are corrupted by money, but it is the SMD system that is prone to corruption.  In a ward courtesy system, you only need one vote for zoning changes as a practical matter.  That makes corruption a more feasible proposition, both economically (fewer people to buy off) and logistically (fewer people on the take means less chance of getting caught).   And for those who really believe that money has been buying Austin's elections, note that switching to single-member districts will make elections cheaper to buy.  SMDs won't rid politics of money; they'll just stretch the money a bit farther.

If someone can convince me that Austin won't degenerate into ward-based politics, I'll switch my support to SMDs.  I'd like to see a larger Council representing more diverse viewpoints.  But I don't like the incentives created by single-member districts, and I think incentives are a better predictor of the system we'll get than banal assurances that our new Council members will act for the common good.

Cops and water lines

As the comments here and here show, discussions of subsidies for suburban development often become entangled with discussions of the relative cost of city infrastructure and suburban infrastructure, and with density's impact on those costs.

I'd like to focus here solely on the dynamic of infrastructure costs.  The distinctions between capital costs, long-term variable costs and short-term variable costs seem to get muddled in the discussion of infrastructure, so let me use police costs as an analogy.  It will help to make some simplifying assumptions.

Imagine a city hiring its first police force.  It has to pay an upfront cost for training the policemen.  But after it makes that investment, its initial yearly labor expense is pretty low.  Young policemen aren't paid much, their health expenses are low, and their pension payments aren't due for many years.

But as the police force ages, it gets more expensive.  The city has to pay higher salaries.  Older policemen need more medical care.  And, eventually, everyone notices the looming, gigantic pension expenses.  The mayor and city auditor and the local newspaper begin to moan about excessive health and pension benefits and shortsighted politics.

Suppose the city's population is constant.  The residents pay the upfront cost of the police either through initial assessments incorporated into home prices or a tax levy.  But the per capita annual cost of the police force is low at the beginning.  As the police force ages, the per capita cost rises if, as we've assumed, the city maintains a stable population.  If the city's residents are in fact sensitive to their tax burden, though, some will move away rather than pay the higher per capita fees.  This will increase the per capita burden on the remaining citizens, which will encourage more to move, and so on in a vicious cycle.   (Something like this has played out in many aging midwestern industrial cities.)

Allowing density to rise breaks this cycle, or at least slows it, as long as the police costs don't rise as fast as the population.  And there's no reason they should -- there are a lot of fixed costs, and it won't take twice as many officers to patrol one square mile if the population of that square mile doubles. 

The same cycle will play out in any other city, including a suburb.  A young suburb in the early part of the cycle might seem to be in a better position -- and in a sense it is, since its day of reckoning is further away.  But it eventually will face the same reckoning.  Its police force, too, will become an ever-increasing burden, and its tax-sensitive citizens will move in increasing numbers -- unless the suburb attracts more residents over time.

Water and sewer infrastructure works almost the same way.  There is a large upfront cost, low initial expenses because young lines don't require much maintenance, but rising costs as lines age and break and water treatment plants wear out.  These culminate eventually in very large charges for digging up and replacing lines or replacing other infrastructure, which lead to a lot of hand-wringing by the mayor and the city auditor and the local newspaper.

A growing population helps with water infrastructure just like it helps with the cost of an aging police force.  A city cannot simply decree that people move within the city limits.  Most central cities don't enjoy a growing population.  But if there are people clamoring to move into the central city, the incumbent residents ought to realize that as a good opportunity to spread spread long-term costs among a larger population.

Sentence of the day

[T]he optimal urban area size is about 750,000 people and the optimal density is about 2,000 jobs per square mile–roughly Baltimore or Philadelphia.

That's from Randal O'Toole.

I did not know that.  The Census Bureau has not yet released "2010" census figures for urban areas, but in 2000 there were at least 33 urbanized areas with too many people. 

(The paper O'Toole cites does not, in fact, attempt to calculate the population that maximizes productivity but rather the population that maximizes patent intensity per capita.  See The Gated City for the extensive evidence that productivity rises with density.)

Ryan Avent has a detailed response to O'Toole here.