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Posts from the "Economics" Category

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Our Cities Can’t Afford So Many Rooftop Spas

Rooftop pool with a view of the Washington Monument? All this could be yours if you have insane amounts of disposable income. And I do mean "disposable." Photo: ##http://www.rentalsgonewild.com/propertydetail/183/i-street-nw-washington-dc-20037##Rentals Gone Wild##

Rooftop pool with a view of the Washington Monument? All this could be yours if you have insane amounts of disposable income. And I do mean “disposable.” Photo: Rentals Gone Wild

First, let me be clear: Tomorrow is April Fools, not today. This is real.

There are luxury apartment buildings in Washington, DC, trying to lure renters with communal puppies.

That sounds like the makings of a tiny tombstone engraved with “Tragedy of the Commons,” if you ask me. Who’s going to take responsibility for a dog that lives in the hallway?

In any case, the shared dog is just one of many tricks and teases DC developers are using to entice renters, according to Jonathan O’Connell of the Washington Post.

“When the boom started a few years ago, a nicely finished kitchen or a landscaped courtyard made a project stand out,” O’Connell writes. “Now those are considered baseline essentials if a building is going to compete.”

The new must-have amenities include rooftop pools, pet salons, soundproof music “practice jam-rooms,” 24-hour resident concierge services, dry-cleaning valet, a calendar full of activities for residents, customized cupcakes and a signature cocktail at a nearby bar. Oh yes, and “a six-month-old miniature English bulldog named Emmy will take up residence in the sleek new lobby of 2M, one of dozens of apartment buildings being completed in the region this year.”

This is in a city where the average rent for a two-bedroom is over $2,000.

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HUD and U.S. DOT Embrace Housing + Transportation Metric for Affordability

philly_housing

Looking only at housing costs (top map), much more far-flung parts of the Philadelphia region look affordable (the yellow areas) than if you look at housing and transportation costs together (bottom map). Maps: CNT

A few years ago, the Center for Neighborhood Technology gave a wonderful gift to urbanists and planners: the Housing + Transportation Index. This simple calculation clarified and popularized a key concept: that transportation costs must be taken into account in any measurement of “affordability.”

Without that, potential homebuyers and renters make the mistake of “saving” money by buying a home far outside the city, only to see those savings vanish when they end up driving multiple cars hundreds of miles per week, racking up fuel and maintenance expenses. The H+T index is a simple tool for making better decisions — for families, for planners, and for the federal government.

Today, U.S. DOT and HUD announced that they’re launching a new version of H+T. They’re calling it the Location Affordability Index, and CNT helped develop it. LAI differs from H+T in some key ways (here’s an infographic detailing those differences) but at its root, it gets at the same important question: Where is the best place to live without breaking the bank?

CNT answers that question by showing the huge variations between two maps: one that shows places where the median household pays 30 percent or more of their income on housing, and one that shows places where those households pay 45 percent or more of their income on housing and transportation combined.

The maps show how intimately linked transportation and housing are when determining cost of living, as HUD Secretary Shaun Donovan told reporters today. “For any housing community to succeed, its residents need to be able to get to work, its young people need to be able to get to school, and its families need to be able to access critical resources and services they need,” Donovan said.

philly_ht

Areas farther from the city center no longer appear affordable when transportation costs are factored in.

Donovan noted that for most families, transportation is their second-highest monthly expense, after housing, but said transportation costs aren’t always so easily tabulated. You don’t get one transportation bill in the mail, the way you get your mortgage or rent bill. Transportation costs are paid in dribs and drabs — a tank of gas here, a bus fare there, a parking ticket, a taxi ride, an oil change. The LAI index helps quantify how those costs add up, and see if the transportation requirements of a particular geographic area render it unaffordable.

“It can sometimes be tricky to weigh the pros and cons of all of these options,” said Transportation Secretary Anthony Foxx. “Does it make more sense to live in a community where you have to drive to work every day? Or might it be a better bargain to live where you can walk, bike or ride public transportation? That’s where the Location Affordability Portal comes in.”

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Apartment Blockers

Alan Durning is the executive director and founder of Sightline Institute, a think tank on sustainability issues in the Pacific Northwest. This article, originally posted on Sightline’s blog, is #9 in their series, “Parking? Lots!”

Have you ever watched the excavation that precedes a tall building? It seems to take forever. Then, when the digging is finally done, construction rockets upward in no time. For the past few months, I’ve been watching a crew excavate the site of a new condo tower on Seattle’s First Hill. It’s on a route I walk three times a week, so I’ve had a ring-side seat. And here’s the thing that finally dawned on me, after years of not really thinking about these holes in the urban ground: what’s all the excavation for? It’s for parking. Underground parking. In most cities and in most soil conditions, the giant holes are only there to satisfy off-street parking rules, and to do that, you need a deep, deep hole. A hole like this one.

At Eighth Ave. and Seneca St. in Seattle. Photo by Alan Durning

Digging these holes is astronomically expensive. They’re real-life money holes. The crew I’ve been watching has been laboring away for weeks, deploying enormous machinery and keeping a fleet of dump trucks in constant motion. They’ve undoubtedly spent millions of dollars removing rock and dirt. One Portland developer told me that each successive layer of excavation—each floor down in the garage—costs two to three times as much as the previous one.

Such costs are one reason housing is so expensive nowadays. A one-bedroom apartment in the city of Seattle rents for upwards of $1,300 on average. In Portland, rents are approaching $1,000 and, in Vancouver, BC, $1,400.

City requirements for off-street parking spaces jack up rents. They jack it up a lot at the bottom of the housing ladder. Proportionally speaking, the bigger the quota and the smaller the apartment, the larger the rent hike. For one-bedroom apartments with two parking places, as is required in places including Bothell and Federal Way, Washington, as much as one-third of the rent may actually pay for parking. A flotilla of studies supports that claim, and I’ll summarize them in this article, but first, a case study of residential real estate development may illuminate how critical parking is to the affordability of housing.

A Housing Dream (in which you are a developer)

Imagine you’re starting business as a developer of housing.

You take a loan from a bank and buy a city lot zoned multifamily. You sit down with your architect and start laying it out for apartments. The more apartments, the more housing you can provide, and the more money you can make. So the architect fills the lot with housing, right out to the city-required “set-back” boundaries near the edges of your property. She builds it as tall as the legal height limit for that zone too. You can erect 50 one-bedroom apartments, she announces, each of about 550 square feet. You do some figuring and realize you can earn a 7 percent return on investment while charging $800 a month in rent. That’s not a screamingly profitable venture, but it’ll do. And you’re sure that price will be popular with tenants, which will keep the building full. A schematic diagram of the development looks like this:
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The Defense Department’s Embrace of Livability Will Save Money — and Lives

On Tuesday, we wrote about the Defense Department’s new rules for the design of their bases and installations. These rules make smart growth the law of the land on hundreds of vast military installations in the U.S. and abroad. There’s more to the story: In this post we examine how a smart growth development model will bring wide-ranging benefits to the defense complex.

Pendleton Avenue at Joint Base Lewis-McChord is being transformed into a complete street, following strategies in the new Unified Facilities Criteria for Installation Master Planning that call for compact infill development, transit, and safe pedestrian access. Image courtesy of the Urban Collaborative, LLC

Many of the benefits of smart growth are clear enough. By mixing uses, clustering destinations together, and improving transit, sidewalks, and bike facilities, a city — or military base — makes driving less necessary and encourages other ways to get around, like walking. That, in turn, reduces congestion, improves health, and gives people back the time they might otherwise spend in their cars.

It can also save lives.

The epidemic of suicide in the military is growing much faster than in the general population. “DoD is suffering from some of the highest rates of suicide ever,” said University of Oregon professor Mark Gillem, the former Air Force architect and planner who helped rewrite the rules that govern master planning on military bases, which were published last year. “And I believe part of that is because our installations have become office parks and not communities.”

When families live scattered around, 30 minutes from base, Gillem said, they don’t have the “esprit de corps” that used to exist.

“And when families live off base, the on-base amenities that used to serve them — the theaters and chapels and community centers — no longer have the patronage, so they have to shut down,” Gillem said. “So there are very few places people can go to be amongst their friends and colleagues. And I think that hurts, especially with our high operations tempo and consistent deployments. When you have a spouse that’s hanging out in the middle of nowhere, alone, that’s very hard.”

Gillem’s work to bring walkable development patterns to military bases is partly based on his conviction that by designing better, more attractive and livable installations, the military can lure families back on base, bringing a return to the kind of community that not only builds friendships, but saves lives.

The military uses another rationale to explain its turn away from sprawl and toward smart planning: Walkable development saves a ton of money. The Unified Facilities Criteria [PDF] – the document that mandates the new rules — focuses almost exclusively on cost when listing the benefits of the new model. It starts with lower initial costs during planning and construction and moves on to lower life cycle costs (less energy consumption, less pavement), reduced maintenance costs, general efficiency, and, of course, safety – which has its own economic benefit.

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Suburbanization of Poverty Isolates a Growing Number of Americans

Poverty is no longer a predominantly urban problem — and the suburbs are no longer the refuge of the upper classes. There are now almost 3 million more poor people living in suburbs than in cities, according to a new book, “Confronting Suburban Poverty in America,” by Elizabeth Kneebone and Alan Berube of the Brookings Institution. While cities still have a much higher poverty rate, poverty in the suburbs is growing twice as fast: Between 2000 and 2011, the suburban poor population grew by 64 percent, compared to 29 percent in cities.

That means more people living without cars in places designed exclusively for cars. In the suburbs, destinations are farther apart and getting to many places involves traveling on wide, high-speed roads where walking or biking is especially dangerous. Transit access is spotty and infrequent, where it exists at all. And providing transportation services to the poor in spread-out areas is less efficient and more expensive than in compact cities.

“Overall, in the nation’s largest metropolitan areas, 700,000 households do not have a vehicle and are not served by public transit of any kind, and 95 percent of those households are suburban,” the authors write.

Kneebone and Berube tell the story of Penn Hills, Pennsylvania, which used to be a middle-class bedroom community for workers at the Westinghouse Electric Company and other thriving businesses in the Pittsburgh area. Diminished employment opportunities have reduced the population by more than a quarter and increased the poverty rate from 8 to 11 percent:

Low-income residents of Penn Hills, Pennsylvania, often can't afford to buy or maintain cars -- and the community lacks effective transit service. Photo: City-data

Among the more pressing problems facing the growing low-income population in Penn Hills is access to transportation. The suburb covers nineteen square miles, has more than twenty distinct neighborhoods, and is traversed by an interstate highway, a few major state roads, and a series of local roads with only a few sidewalks that wind their way up and down the hilly terrain. Infrastructure in some parts of the township resembles that of a rural community more than a major metropolitan suburb. More often now, residents must navigate these byways without a car. By 2008–10, almost one in ten (about 1,700) Penn Hills households lacked access to a vehicle, notably more than three decades earlier, when the local population was much larger.

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Transport U: Colleges Save Millions By Embracing Policies to Reduce Driving

Jeffrey Tumlin was managing transportation programs at Stanford in the mid-1990s, when he made an important finding: It was cheaper for the university to pay people not to drive than to build new parking structures.

Offering employees just $90 a year not to drive to campus was enough to entice many of them to use transit, carpools, or bicycles. Meanwhile, the annualized cost of each parking space can range from about $650 for surface spots in suburban locations to over $4,000 for structured spaces in cities, according to the Victoria Transport Policy Institute [PDF].

Biking means big savings at Stanford. Image: FHWA

Stanford offered further incentive by raising parking prices 15 percent. Then, it invested $4 million in bicycle facilities, including turning a main road through campus into a bike and transit mall. This $4 million enticed 900 people out of their cars and onto bicycles, according to a case study in Transportation & Sustainable Campus Communities, by Will Toor and Spenser Havlick. Building parking facilities to accommodate those 900 people would have cost $18 million.

What Stanford had discovered was “transportation demand management,” or strategies to minimize transportation costs by reducing driving. Today almost every college and university in the country employs some form of TDM, whether it’s providing discounted transit passes for students or offering special parking rates to carpoolers.

Colleges and universities — by nature of their fixed locations and limited resources — are excellent laboratories for transportation innovation, says Tumlin, who now works for the firm Nelson\Nygaard.

“Even the well-funded institutions have to make a choice about putting money into parking or putting money in a classroom,” said Tumlin.

Many schools are now well ahead of even the most progressive cities and state DOTs when it comes to saving money and improving public health by reducing car trips.

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Study: Homes Near Transit Were Insulated From the Housing Crash

Percent change in average residential sales prices relative to the region, 2006-11. Image: APTA and NAR

If you live close to a transit station, chances are you’ve weathered the recession better than your friends who don’t.

Your transportation costs are probably lower, since you can take transit instead of driving. Transit-served areas are usually more walkable and bikeable too, multiplying your options. And while home values plummeted during a recession that was triggered by a massive housing bubble, your home probably held its value relatively well – if you live near transit.

The National Association of Realtors and the American Public Transportation Association commissioned the Center for Neighborhood Technology to study the impact of transit access on home values during the recession. For the report, “The New Real Estate Mantra: Location Near Public Transportation” [PDF], CNT looked at five metro regions — Boston, Chicago, Minneapolis-St. Paul, Phoenix, and San Francisco.

While nearly everyone in hard-hit cities experienced some setback from tanking housing prices, transit-served areas were largely insulated from the worst of it, CNT found:

Across the study regions, the transit shed outperformed the region as a whole by 41.6 percent. In all of the regions the drop in average residential sales prices within the transit shed was smaller than in the region as a whole or the non-transit area. Boston station areas outperformed the region the most (129 percent), followed by Minneapolis-St. Paul (48 percent), San Francisco and Phoenix (37 percent), and Chicago (30 percent).

This is consistent with a study released last year by the Center for Housing Policy showing that access to rail transit created a “transit premium” for nearby home values of between six and 50 percent. That study, like CNT’s, looked at Minneapolis and Chicago, as well as Portland. The Center for Transit Oriented Development has also looked at this phenomenon and found transit premiums as high as 150 percent.

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Bicycling Means Business: How Cycling Enriches People and Cities

If bicyclists want to convince policymakers of the benefits of cycling, they need to stop talking about cycling. That was one major lesson of this year’s National Bike Summit, thanks to some strategic research done by a friendly consultant. So the Summit’s theme was “Bicycling Means Business” – and the economic impacts of a healthy cycling culture don’t end with the cyclist.

New York's Eighth Avenue bike lane increased profits for neighboring businesses. Photo: BicyclesOnly/Flickr

“Bicycling is a good investment, not just for cyclists, but for the entire city, state and region,” said the Bike League’s Darren Flusche at a morning panel of the Summit. He warned activists against showing up to a lawmaker’s office and spewing data without the personal narratives that really get people’s attention. But data is important to back up that personal testimony – and here’s the data.

Business Is Booming, Thanks to Bikes

As Janette Sadik-Khan told the Women’s Bike Forum, businesses on Eighth and Ninth Avenues in New York saw a 50 percent increase in sales receipts after protected bike lanes were installed on the corridor. On San Francisco’s Valencia Street, two-thirds of the merchants said bike lanes had been good for business. If a business has a bike-share station out front, bike-share users are more likely to patronize it.

Chuck Marohn of Strong Towns told the story of a Memphis neighborhood where people, without authorization, spent $500 on paint and made their own bike lanes. Six months later, commercial rents on the strip had doubled, and all the storefronts – half of which had been vacant – were full.

Bike Infrastructure Is a Better Value Than Car Parking

Businesses in some cities are also beginning to see the spatial logic of the bicycle. After all, 12 bikes fit in one car parking space. Providing bike parking is also an extraordinary bargain compared to building structured parking: one parking space in a garage costs at least $15,000 to build and hundreds of dollars per year to maintain, while building a rack for two bikes costs $150 to $300.

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Virginia’s Transpo Future: Charge Drivers Less to Build More Roads

Congratulations are owed to Bob McDonnell. He’s scored a victory on his transportation funding plan, cementing his legacy (though infuriating conservatives, including his hand-picked successor). His achievement is being called the first bipartisan initiative to pass in Virginia in decades. And what does this great deed accomplish? Secure revenue to fuel a new era of wasteful road-building in the commonwealth of Virginia.

McDonnell's new transportation funding plan will pay for the wasteful and unnecessary expansion of Route 460. Photo: Doug Kerr/flickr

Virginia’s state House and Senate both voted this weekend to approve McDonnell’s funding plan for transportation, despite opposition from anti-tax activists. McDonnell’s original proposal to eliminate the gas tax entirely got massaged a little bit, turning into a 3.5 percent tax on the wholesale price of gas.

His proposal to raise the sales tax survived the legislature, as did the $100 tax on alternative fuels – an idea that is somewhat less backward now that some semblance of gas tax remains. Democrats hate it, though, and McDonnell has already signaled a vague willingness to “review” it.

The sales tax hike, however, is as backwards as ever. McDonnell is raising the sales tax 0.3 percent in most parts of the state but 6 percent in the populous Hampton Roads and northern Virginia areas. Much of the extra funds raised in those areas will go to local projects, but it still means the most urban and transit-rich areas, where most of the state’s non-drivers live, will pay more for a plan that disproportionately funds rural roads.

Drivers will pay five cents per gallon less than they did under the old gas tax, given current prices — shrinking their contribution by about 30 percent. Rather than strengthen the gas tax’s small but important incentive to drive less, McDonnell’s plan turns it the other way.

The other reason the sales tax hike won’t do the trick is that sales taxes aren’t an appropriate tool when what you need is a stable source of funding.

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Fiscal Cliff Deal Leaves Big Questions on Transportation

The most significant part of the fiscal cliff deal for transportation was the bump that some transit riders got in the form of a commuter tax break that’s now on par with what drivers get. There are two more minor elements in the bill for transportation — both of them random enough to fit into the Washington Post’s list of “weird” provisions in the deal — but Congress punted on the bigger questions for another two months.

Electric motorcycle enthusiasts got a tax break in the fiscal cliff deal, but there wasn't much else for transportation. Photo: Engadget

Here’s what they did decide:

Extension of the Railroad Track Maintenance Credit. This provision has been around since 2004 but expired last January. It gives a tax credit to shortline railroads for maintenance work they do on their tracks. The fiscal cliff deal extends this tax credit until next January.

The credit encourages shortline railroads to invest in repair, rather than abandon the lines that serve 11,000 rail shippers in 49 states.

“This bill is not about saving short line railroads,” lobbyist Adam Nordstrom told a trade magazine. “It is about keeping short line railroad customers connected to the national railroad network with adequate and safe rail service, which is why this provision has such broad appeal.”

Extension of Credit For 2- or 3-Wheeled Plug-In Electric Vehicles. This tax credit, which can cover up to 10 percent of the vehicle’s cost up to a maximum of $2,500, applies to electric motorcycles but not electric bikes. To qualify, the vehicle has to have a 2.5 kilowatt-hour battery and be capable of speeds higher than 45 miles per hour. Electric bikes top out at about 20 miles an hour by law.

Meanwhile, the fiscal cliff agreement between Congress and the White House postponed the day of reckoning for the “budget sequester” two more months. The cuts in the sequester included an 8 percent reduction in all discretionary spending, which would have taken a bite out of new transit construction and Amtrak funding. The threat of those cuts still hangs over the next round of budget negotiations, which face a March 1 deadline.

At that time, the debt ceiling will need to be raised again and the interim federal budget will be expiring. So don’t expect a measured, thoughtful debate over solutions to long-term policy and economic issues. Expect another frenzied bout of negotiations, characterized more by finger-pointing and name-calling than substance, and another punt of some kind.