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Car-Centric Developments Are Bankrupting Cities
Here's an excellent short film highlighting the excellent work of Joe Minicozzi at Urban3. Joe provides in-depth analysis about how different types of development impose costs (for public goods and services) and generate revenues (through taxes and fees).
My only complaint is that the film makes it appear that we simply have to create an "intention" for less sprawl and for more compact, mixed use development. In reality, our tax system encourages land speculation and sprawl. So good intentions will not produce meaningful results unless they are accompanied by policy changes that include tax reform.
Blight is a big problem in many communities. But, based on other places that have tried this approach, this well-intentioned ordinance is likely to make only a minor improvement or even be counter-productive.
All properties need to be vacant for at least a little while to allow new residents or businesses to move in and out. But how long is too long? Three months seems very short.
But whatever threshold we pick, it will be an arbitrary threshold. And, as soon as we compile a list of properties that meet our criteria, the list becomes obsolete because vacant properties get occupied or those that had not been vacant long-enough now exceed the threshold.
A better approach that has been used successfully where it has been employed is to remedy the upside-down property tax. We say that we want more affordable housing and more jobs. But when property owners construct or improve buildings, we punish them with higher taxes. And when they allow their buildings to deteriorate, we reward them with lower taxes. In other words, our economic incentives are upside down.
This can be remedied by reducing the tax rate applied to privately-created building values while increasing the tax rate applied to publicly-created land values. The lower tax on buildings makes them cheaper to construct, improve and maintain. Surprisingly, the higher rate on land value helps keep land prices more affordable by reducing the profits from land speculation. Thus, without any new spending (or any loss of revenue), this tax shift makes both buildings and land more affordable.
The long-term, upside-down incentives of the property tax cannot be corrected by an arbitrary, short-term penalty. Instead, reforming the property tax creates long-term incentives for property development and maintenance, particularly where land values are high, which are sites in the centers of our cities and towns where we want development to occur. This economic incentive for infill development can reduce sprawl which is bad for the environment and bad for taxpayers because it requires the wasteful (and expensive) duplication of infrastructure.
An excellent summary of the process and consequences of building urban highways.
Roadway pricing, if properly implemented, can improve quality of life, the environment, and the fiscal health of urban areas. But the devil (and the angels) are in the details.
LEXUS LANES - One of the first places in the USA to employ High Occupancy Toll (HOT) lanes conducted a poll. Certainly, affluent people used them more than others. HOWEVER, they were important to some low- and middle-income people as well. For example, you're picking up your kid at day-care. You're stuck in traffic and there's a $20 late fee. It's worth it to pay $5 to use the HOT lane and avoid the $20 late fee. Plumbers, electricians, landscapers, etc. spend lots of time going between jobs. With access to HOT lanes, they can get an additional job each day, more than offsetting the cost.
REGRESSIVE TAX - Except for air and water, nothing is more essential than food. But food isn't free. We pay for food. We pay more for steak than hamburger. BUT, we provide food stamps for low-income folks. We could do the same for transportation. ALSO, low-income folks depend on transit. Transit buses get stuck in traffic. Slow and unreliable transit can cause workers to lose their jobs. Priced roads can help the poor in at least two ways: First, congestion reduction makes buses quicker and more reliable. Second, some of the toll revenues should be used to operate, maintain and improve transit.
BUSINESS COSTS: Roadway prices, paid for deliveries, will be passed through to customers. BUT, lower congestion will reduce delivery times, and this will reduce costs that, in a competitive environment, will also be passed through.
INCENTIVES - Some places (e.g. London) use "cordon pricing." Thus, drivers pay a fee to cross a boundary (e.g., into the central business district). Initially, those who don't have any choice, will grumble and pay the fee. But, in the long term, some residents and businesses will avoid the fee by moving away from the center. Thus cordon pricing motivates sprawl -- one of the major causes of auto-dependency and congestion. A BETTER APPROACH is to apply roadway pricing by the mile over the entire length of the priced roadway system. The fee should rise when the roadway is congested and fall when it isn't. To minimize the fee in the short term, drivers will make discretionary trips at off-peak times. In the long-term, people will locate homes and businesses closer to the activities that they engage in regularly. Thus a mileage-based pricing system encourages more compact development, and this promotes walking, cycling and economically viable transit as alternatives to auto dependency.
Shelterforce Weekly went out this morning, featuring articles by Just Economics, LLC, the Center for Community Progress, the National Housing Law Project, and an In Memoriam honoring a founding member of Reinvestment Fund and Opportunity Finance Network. Plus the latest job listings, events, Shelter Shorts, and more. The link to sign up is inside!
https://conta.cc/2N3cNyS
Most communities are giving away 80 to 90 percent of the land value they create. Here's how they can fix that.
Rick Rybeck, Just Economics, LLC
http://bit.ly/2LqLA8v
A good explanation of an often-overlooked approach to resolving the housing crisis and about why so few of us know about it.
Despite some nods toward "smart growth," urban sprawl continues unabated. Transportation costs rise as a result. They are to the economy like friction is to a machine. They wear it down and make it less productive.
Sprawl often requires a car trip for each and every activity outside the home. This is very expensive for our pocket books and very damaging to the environment. Achieving a better balance between transportation user fees and access fees can promote more compact development. This would increase transportation options (walking cycling, transit, car-sharing, etc.), reduce household and business transportation costs and enhance the environment. Let me know if you want the details.
I had the good fortune to be interviewed about value capture by Karl Fitzgerald.
Good job Rick Rybeck
Ted Gwartney
