Austin Contrarian

Dictating homeownership

Developers are frequently criticized for failing to provide community benefits.   This is sometimes a fair criticism.  But neighborhoods often deserve the same:  they have no incentive to consider anything other than their own parochial interests when developing their neighborhood plans.  

Here is a case in point.  

Grayco Partners wants to put 1,300 residential units and commercial space between East Riverside and South Lakeshore Boulevard: 

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It is pushing for (much) more height than existing zoning allows, which is drawing predictable opposition.

But this neighborhood objection really is too much:

The East Riverside/Oltorf Combined Neighborhood Planning Area, made up of several neighborhood associations, has "serious concerns" about the development, Chairwoman Gayle Goff said.

Goff said the proposed project violates guidelines of a neighborhood plan that envisions more homeownership opportunities in a part of town that has hundreds of apartments.

Drenner said Grayco "has proposed the possibility for some condos, depending on the market."

We give neighborhoods a say on urban form.  We give neighborhoods a say on density.  We give neighborhoods a say on the placement of uses.  But allowing neighborhoods to dictate the mix of apartments and condominiums?

Homeowners inevitably have a greater interest in local development than renters because of their obsession with property values.  But, as I've argued before, that obsession makes homeowners risk averse and is a prescription for NIMBYism.  (The resistance of some Town Lake condo owners to the proposed Town Lake boardwalk is a vivid example.)  Austin does not need to create more NIMBYs on a key transit corridor like East Riverside.  

I suspect that the neighborhood's ulterior motive is to draw (what the neighborhood perceives to be) a higher class of residents.   Neighborhood activists are entitled to their preferences, but this is hardly one the City ought to help implement.  This is particularly true today, given the collapse of the credit market; we need an ample supply of rental units now more than ever. 

(By the way, don't read this as an unqualified endorsement of Grayco's plan.  I'm particularly unhappy about its decision to defer commercial development on the strip of land fronting East Riverside Drive.)

Megapixel photo of inaugural crowd

David Bergman has made a pretty cool photo of the inaugural crowd.  It's a photo of each member of the inaugural crowd, or at least most of them.

You can start here:

and then zoom down to this:

Or you can start here:

and then zoom down to here:

So if you want to know whether that friend really did get off the couch after the wild night and drag herself over to the Mall to witness the inaguration of our lifetime . . . just ask her where she was standing.

Taxing land rather than buildings: A reply to Market Urbanism

A couple of months ago I suggested jacking up property taxes on downtown lots while cutting property taxes on buildings in order to discourage "land banking."  (But see here for my characteristic wishy-washiness.)  

Market Urbanism thinks this is a bad idea because it would discourage land speculation.  He argues that, while land speculation might stick us with surface parking lots in the short run, speculation serves a useful function by reserving land until development is optimal for the site.  This ultimately facilitates denser development.  (He offers a couple of other reasons as well; check out his post.)

I'm on firmer ground, though.  Although I couched my suggestion as a way to penalize vacant lots, taxing land rather than buildings is perfectly sound economics.  A tax on buildings is a tax on capital.  Taxing capital discourages investment in capital.  This underinvestment creates a deadweight loss:  the investor foregoes the return the capital investment would have yielded; consumers (potential renters) lose the consumer surplus they would have enjoyed.  Taxpayers are no better off because the government can't collect a tax on a building that isn't built.  Switching to a land tax eliminates this deadweight loss.

By reducing the returns to investment, a capital tax makes undeveloped lots (such as surface parking lots) relatively more attractive and causes investors to demand  higher returns from their investment -- which may indeed mean greater density.  But that assumes property values eventually rise enough to create those higher returns.  That's no sure thing.

In any event, who's to say a 2.5% tax encourages an optimal level of density?  Why not a 4% or 8% tax on buildings?  Or 20%?  I don't see a rationale for choosing one rate as "optimal."  It's better to let investors make decisions based on the real returns to investment and avoid the distortionary effect of taxes altogether.

One New Urbanist community's battle for approval

See this account of a developer's struggle to gain approval for I'On, a New Urbanist community in Mount Pleasant, South Carolina, just outside Charleston:

[T]he neighborhood is located in close proximity to two historic districts that are, if price is any measure, the most sought after places to live in the area; through its Master Plan and Strategic Plan the Town had adopted a clear vision for the kind of development they wanted; we had two of the best, if not the best, planning teams in the country creating the initial plan [Dover Kohl and Andres Duany's DPZ - AC]; no less than four environmentally oriented groups endorsed the plan along with a substantial number of community leaders; and the developer had a track record of successful TND development within a 90-minute drive of the subject property.

But to gain approval, the developer had to cut the project from 800 single-family homes, 440 multi-family units, and 90,000 sf of commercial space to 749 single-family units and 30,000 sf of commercial space and eliminate the multi-family units, a gross density of only 3.1 units/acre.  It took two city council votes spaced over two years and a lawsuit appealed all the way to the South Carolina Supreme Court; the council members who voted for the project were turned out of office after bitter elections.  Attempts to connect the development to surrounding neighborhoods were shot down.  The developer won the right to locate a Montessori school in the village center only after obtaining another judgment affirmed by the court of appeals.

Although one can  speculate why there are not more New Urbanist greenfield developments, this kind of story, I think, explains why we don't see more NU infill developments.

More than a quibble

On second thought, I have more than a quibble with the City's proposed matrix for prioritizing new sidewalks:  it sometimes ranks residential streets with one sidewalk ahead of residential streets with no sidewalks at all. 

Arterial and collector streets obviously need sidewalks on both sides of the street. It is nice to have sidewalks on both sides of low-traffic, residential streets, too, but it is not critical because it is easy to cross from one side of the street to the other.  Residential streets that already have a sidewalk along one side should not get first dibs on new sidewalk money.  

But the City's matrix does not put much weight on whether a street already has a sidewalk.   Residential streets without a sidewalk get a 5-point bump (on a 100-point scale) over residential streets that already have a sidewalk on one side.  That's an awfully small bump.  A park, library and other amenities -- factors that raise a neighborhood's position on the list -- could erase that advantage.

That's happened in south Austin.  West Mary and Monroe in Bouldin Creek already have sidewalks on one side of the street.  Yet their second sidewalks are given "high" priority.  Meanwhile, no street in my neighborhood (which abuts Bouldin Creek) rates better than "medium high," despite the absolute dearth of sidewalks in our area.  

For example, here is Thornton, the only route connecting my neighborhood to Oltorf (aside from South Lamar):

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I won't walk this street because it is unsafe.  It's not fair to double-sidewalk streets in Bouldin Creek while leaving us to walk in the middle of the street.  

Speaking of equity, my neighborhood ranks relatively low because we have no parks, libraries, schools or bus stops close to the neighorhood's center -- i.e., we don't rank high because we don't have enough nice stuff.  

Sidewalk Master Plan

Here (5.5 MB pdf).  Council likely will consider it in February.

Austin has 3,500 linear miles of absent sidewalk.  City staff estimates it will cost $750 million to build out the network.  Staff is floating the idea of a 2010 bond election, but the City obviously won't try to fund the entire build-out.  Hence, the Master Plan will determine who gets sidewalks within the next few years.

The City's consultants developed a matrix to prioritize absent sidewalk segments.  The matrix (pdf) assigns a score to each missing segment.  50% of the score is based on "pedestrian attractors" like proximity to employment, transit, government offices, area density and core transit corridors and area household income. 40% of the score is based on pedestrian safety factors like street classification (arterial streets get more weight than residential streets) and the number of pedestrian/automobile incidents in the vicinity.  Finally, the matrix assigns some weight to the availability of developer money and neighborhood plan priorities.

Below are the matrix results for three parts of town.  Expect the dark red and perhaps the dark blue segments to be built out within the next few years.  I have no idea about the others; the schedule obviously will depend on the amount of bond funding.

First, south Austin (north of Ben White):

   

I do have a quibble with this.  My neighborhood, SLNA, is essentially cut off from Oltorf because Thornton, the only connecting street, is inhospitable to pedestrians.  It is a poor-visibility, heavily-traveled, fairly high-speed street, but parked cars force walkers into the middle of the street.  The proposed scoring system ranks almost all of Bouldin Creek's sidewalks ahead of Thornton.

Oh well.  I recognize that people will quibble no matter the scoring system.

Next, east Austin:

East Austin gets most of the high priority streets.  No complaints here.

Finally, central north Austin:

Pull up the map on page 17 of the plan to check out your neighborhood.

By the way, the consultant is putting together a GIS viewer to view sidewalk conditions, routes, and so forth.  It ought to be pretty cool.

Update:  I've extracted the city's map from the packet.

An Austin light-rail proposal by some guy who doesn't know anything

Bearing in mind that (1) I really don't know anything; (2) I don't understand the technical aspects of light rail; and (3) this proposal isn't on the table, or even on the floor by the table, here's my proposed light rail starter line:

This route would go by, through or near:

1. SoCo
2. Palmer/Long Center 
3. City Hall 
4. Second Street's dense residential and retail center 
5. The cluster of office buildings at 5th and Lavaca 
6. The office buildings at 5th and Congress (and just one block from the arguable "heart" of the city at 6th and Congress) 
7. Just two blocks from the office buildings on Congress north of 6th street 
8. 6th street's bars 
9. The State Capital complex (right through the heart of it) 
10. Brackenridge Hospital 
11. The Erwin Center 
12. The heart of UT 
13. West Campus (much closer than the proposed route) 

In other words, this route would go where people want to go. 

By my rough calculation, it would be only 4-5 miles long.  Thus, it would be much cheaper and quicker to build than the 19-mile route under consideration.  And I think it would be a smashing success, like Houston's Main Street line, which I've heard has the highest density of riders per mile of any light-rail line in the country.  The success of Houston's starter line has built support for extensions to the rail line, and this line would do the same thing.

Other big advantages:  (1) It could have reserved lanes the whole way since it would avoid the most congested roads; (2) it would avoid cluttering Congress with overhead wires; (3) it would be perfectly positioned for future lines down Riverside to the airport; down Dean Keeton to Mueller; up Guadalupe to the Triangle; over to Seaholm and the dense residential area there and thence down South Lamar/Manchaca; and through West Fifth's burgeoning residental/office corridor.

Finally, a spur down Dean Keeton would go by St. David's, connecting St. David's to Brackenridge, and would run close by the dense development at the old Concordia site.

I'm sure M1EK and/or the Overhead Wire will weigh in and explain why this won't work.  

Taxing land rather than buildings

The Overhead Wire points to this at the ULI blog:

How about restructuring the property tax across America to install a two-tiered system? More tax on those horizontal pieces of empty land and asphalt, less on the buildings. That is, reduce the tax rate on homes and other improvements, and substantially increase the rate on the site value. I think such a system would induce more compact development and more infill work.

I've floated this before for downtown property in order to discourage surface parking lots.  One commenter kindly pointed to this institute devoted to promoting  this idea.  I haven't had time to study those materials yet.  

Obiously, I like the idea, but, thinking it through, I envision one problem.  In order for the tax to be revenue neutral, the tax must be equal to the tax on a fully-developed property.  Suppose a $95 million office building is built on a $5 million dollar lot.  Annual taxes are assessed at 2.5% (for simplicity's sake), so the total tax is $2.5 million.

A revenue-neutral tax would require that a $2.5 million tax be levied on the vacant $5 million lot.  But how do we determine the value of the improvement before it is  built?  I.e., how do we determine that the value of the "appropriate" capital improvement is $50 million, $100 million or $200 million?

The tax system has to be consistent.  The only solution that comes to mind is to assume a build-out to the maximum zoning entitlements.  That would incentivize property owners of vacant or under-developed properties to campaign for lower entitlements.  In other words, they would seek a cap on the permitted density.  This is the opposite of their incetive today.

Perhaps that wouldn't be a disaster -- it would lead to development at a uniform scale, which would be an aesthetic improvement of what we have today.  But I'm not sure the trade-off for lower density (and thus higher prices for existing space) is worth it.

Perhaps Pittsburgh or other jurisdictions that have implemented this type of taxation have come up with a better solution.    

Stock up on poultry, eggs and cheese

Because of this:

An outbreak of salmonella food poisoning has made 388 people sick across 42 states, sending 18 percent of them to the hospital, U.S. health officials said on Wednesday.

The U.S. Centers for Disease Control and Prevention is trying to trace the source of the outbreak, which began in September. The Department of Agriculture, state health officials and the Food and Drug Administration are also involved.

The CDC said poultry, cheese and eggs are the most common source of this particular strain, known as Salmonella typhimurium.

Dear poultry, eggs and cheese producers:  Be afraid. Be very afraid.

Or maybe not.  Perhaps chastened by the wanton damage it needlessly inflicted on tomato growers (and tomato consumers) last year, the CDC appears to be taking a more conservative approach this time:

"Because foods of animal origin may be contaminated with Salmonella, people should not eat raw or undercooked eggs, poultry, or meat. Persons also should not consume raw or unpasteurized milk or other dairy products. Produce should be thoroughly washed," [the CDC spokesman] said.

In other words, "You don't need to take special precautions."

A plan should set priorities

Austin is getting ready to draw up a comprehensive plan, its first since the 1979 Austin Tomorrow comprehensive plan.

I'm sure debates over land-use issues will hijack the planning process.  These debates will be pointless because Austinites are divided into fractious groups with irreconcilable visions of what our city should look like.  Someone's vision will win out, I suppose, but whatever plan emerges will be under constant attack from the losers.

I think there is one thing a plan could accomplish.  We need to prioritize our goals for capital improvements and improvements to city services.  A new plan gives us the chance to do that.

Here are some things we can do with our money:

• Improve sidewalks on core transit corridors (South Lamar's are a disgrace).
• Accelerate the construction of sidewalks in neighborhood interiors.
• Increase our budget for improving and resurfacing city streets.
• Add parks.
• Improve existing parks. 
• Add traffic lights to better manage traffic and pedestrian crossings. 
• Improve bicycle routes. 
• Improve library circulation.  
• Extend library hours. 
• Conduct archaeological digs.
• Bury power lines on key streets. 

I'm sure you can come up with many, many other projects.

We obviously must spend money on many of these things no matter our priorities.  What I mean, though, is a plan for spending that last $1 million or $10 million of discretionary spending.  The money that doesn't have to be spent on a specific project.  We need a plan for getting the best returns on that money, and that in turn requires deciding which returns are the "best."  Our plan needs priorities, otherwise it will be just a list of stuff we like.