Reason Foundation

New Study Suggests Transportation Priorities for North Carolina

Posted on April 3, 2013, 2:45pm | Baruch Feigenbaum

The Hartgen Group and the Reason Foundation have released Transportation Priorities for North Carolina, a report recommending several significant changes to North Carolina’s transportation management process such as setting clear performance measures and using maintenance contracting. The election of both Governor Pat McCrory and new legislators to the North Carolina General Assembly provides a rare opportunity for North Carolina to examine its transportation system. The full report is available here and the executive summary is available here. The analysis considered all transportation modes: highways, aviation, freight and passenger rail, ferry, transit and non-motorized transportation. 

The report reviews prior studies, plans, visions, legislation and other state practices to identify suggestions for transportation improvements. The report also solicited suggestions from stakeholder groups and others familiar with North Carolina’s transportation system. One-hundred fifty seven separate suggestions are analyzed by goal, time frame, mode, cost or savings potential, feasibility and regional equity. 

The suggestions can be grouped into 3 categories. The first includes major changes to the transportation program that can be implemented by increasing maintenance and limiting  expansions to highways of statewide signficance. One major recommendation included in this section is to constrain the State Transportation Improvement Program (STIP) to merit-based project selection and to shift some of the savings to maintenance, major projects and rural safety. Fully implemented, these recommendations could save $50 million annually. 

The second category includes several recommendations to strengthen maintenance management and project selection such as using head to head project evaluation, adding maintenance needs for funding formulas and contracting out maintenance. Fully implemented, these recommendations could cost $30 million but provide substantially improved system maintenance. 

The third category includes 10 smaller recommendations that are intended to strengthen Long-Range Planning and improve communications. These measures should also increase organizational efficiency by making increased use of design-build flexibility and strengthen measures of project and performance delivery. 

I want to highlight five report recommendations. More details on each can be found in the New Approaches section starting on page 41.

1) Public-Private Partnerships (PPP): While North Carolina has enabling PPP legislation, the state has made little use of PPPs. PPPs are not appropriate for all projects; typically PPPs are best for large or very large projects including new toll roads, new toll bridges, adding express toll lanes to congested freeways, major reconstruction of existing highways and major bridge replacements. PPPs have several major advantages including lower-risk funding, more total funding, greater risk transfer, guaranteed maintenance, minimized life-cycle costs, innovations. Additionally, these private partners pay taxes.

2) Tolling: North Carolina depends heavily on per-gallon fuel taxes as its highway funding source. But as the fuel-tax is not a dependable revenue source, the National Surface Transportation Infrastructure Finance Commission recommended that fuel taxes be replaced as the primary funding source. North Carolina does not have the funding to substantially expand or rebuild any of its major freeways. Tolling freeways that need to be substantially rebuilt or expanded is one solution. However, any new tolling needs to be implemented carefully. North Carolina should NOT put a per-mile charge on existing highways but it should consider tolling new highways, new express or HOT lanes, and reconstructing and modernizing existing highways.

3) Priced and Managed Lanes: Traffic congestion is a major problem especially in Charlotte and the Research Triangle areas. Adding Managed Lanes can substantially reduce congestion. Such lanes have the added benefit of improving transit service. There are several different types of Managed Lanes; all allow vanpools and buses to use the lane for free but some allow free access to 2 or 3 person carpools while others require carpools to pay a small toll. Potential candidates for Managed Lanes in North Carolina include I-40 in Raleigh and I-77 and I-85 in Charlotte.

4) Interstate/Freeway Widening: A modernized widened Interstate system has three main benefits. First, it makes commuting quicker and less stressful. Second, it makes logistics and shipping more dependable. Third, easily navigable roads may increase tourism. While North Carolina uses a Level-of-Service D standard for widening highways, funding constraints may force the DOT to hold off on widening. (North Carolina DOT typically widens a highway from 4-6 lanes if it is expected to carry more than 58,400 to 67,900 vehicles per day depending on topography and truck share.) Some potential candidates for widening include I-26 in Asheville, I-40 near Hickory, Winston-Salem, Greensboro and Raleigh, I-77 between exits 4 and 31 and I-85 around Gastonia and between Kannapolis and China Grove.

5) Performance-Based Highway Maintenance Contracting: Many transportation agencies in the United States have contracted some road and highway maintenance. However, outside of highway landscaping the NCDOT has made limited use of such contracting. Current best practices in highway maintenance contracting rely on longer-term, multi-year performance-based road maintenance contracts. The public agency defines an end goal and the contractor decides how best to meet that outcome. Such contracts create clearly defined performance measures and timetables. The Transportation Research Board has praised contracting as a way to reduce agency costs, increase service, change to a customer-oriented focus, shift risks from public agency to private contractors and other benefits.   

More details are available here.

Reason recommends transportation solutions at the state and local level. Other recent state focused reports include: 

Examining 20 Years of U.S. Highway and Bridge Performance Trends

XpressWest Train Likely to Fail, Costing Taxpayers Up to $6.5 Billion

Reducing Traffic Congestion and Increasing Mobility in Chicago

Solving the Parking Problem in DuPont Circle

Posted on March 29, 2013, 8:47am | Ike Brannon

One of our neighbors bought a genuine London Cab a couple of years ago. Importing such a vehicle is very challenging: the new cabs off the assembly line do not meet US emissions laws and those that qualify as antiques—and thus are exempt from such standards—are usually rusted through and unusable.  The only way for a London Cab to be legally brought over (as this one was, based on the stickers in its window) is to have a team of mechanics completely rebuild an existing one, virtually from the bottom up, while clearly documenting each step of the operation. Needless to say this cab represents a pricey investment.

However, such cabs are relatively cheap to store: Since our neighbor purchased his London Cab it has been parked on the street, in front of our building in the exact same space. The annual cost to its owner for the decal on his car that allows him to park it on our street is a mere $25.

In some places a fee that low would make perfect sense, but we happen to live on the edge of two very dense, affluent neighborhoods in Washington DC where parking is exceedingly scarce. Private parking spaces rent out for as much as $350 a month, and a parking spot in an underground garage recently sold for $60,000.  In other words, street parking is over 100 times cheaper than private parking.

As a result, street parking is extremely difficult to find in our neighborhood.  During nights and weekends, when people flock to the neighborhood to dine, a significant proportion of the traffic consists of people looking for a parking spot.  Even during the day local residents who park on the street spend a considerable amount of time looking for an open space.

The economist’s solution would be to charge something closer to the market price for the scarce resource of on-street parking, which is precisely what a local politician has suggested. The result has been predictable:  He has been bombarded with vitriol well in excess of anything he’s seen before, and he has since retreated from this stance.

I get why this cohort might be opposed, but simple opposition does not make good policy: there are all kinds of government services that some folks would rather get for free but offering such services for free doesn’t make economic sense. Our National Parks charge an entrance fee, for instance, and public high schools and colleges charge fans to come and watch football and basketball games in arenas and stadia paid for by tax money. They do so because failing to charge a fee would often result in overflow crowds and because asking those who use the facilities to defray some of the costs seems like a fair way to do things. I submit that the same logic applies to people who wish to park (or store) their cars on the street.

Those protesting the proposed parking permit increase offer a variety of arguments as to why it shouldn’t go forward: Some suddenly discovered libertarianism and wish to keep the government from amassing more tax revenue to spend on its nefarious agenda, while others have protested this plan by arguing that it will have a disproportionate impact on the poor, who cannot afford to pay more for a parking fee.

No one in my neighborhood is as worried as I am about the government amassing too much power or money (I suspect that is literally true, given that the Green Party typically fares better than Republicans in our precinct), but this isn’t a valid concern here.  The revenue that would be raised from this would be a pittance compared to how much the District generates from its ten percent sales tax and a personal income tax with rates that exceed nine percent, neither of which are apparently all that objectionable to my neighbors with automobiles. Offsetting this revenue by lowering property taxes in the neighborhood would be one trade-off that should assuage those with this complaint.

And virtually free parking for all is a terrible way to help the lower class in our neighborhood, who are much less likely to own a car than middle or upper income households. If there were a goodly number of working poor who needed inexpensive parking to maintain their cars it would not be terribly difficult to devise a program that would give low-rate permits just to them.

“Nearly free” is a terrible price for a scarce resource, even if it is one that the government owns. Setting a price that reflects the value the market places on on-street parking would greatly alleviate the irritating parking shortage and raise more money in a progressive way than nearly any tax program could hope to accomplish. 

Ike Brannon is director of research at the R Street Institute, a think tank based in Washington DC.

Atlanta BeltLine's Public Funding Should be Eliminated

Posted on November 6, 2012, 4:21pm | Baruch Feigenbaum

Last Friday, the Atlanta-Journal Constitution printed my editorial on the Atlanta BeltLine. The piece argued that the BeltLine transit component is unworkable. In addition, parks and trails do not represent an Economic Development strategy. Further, the BeltLine has a tremendous Jobs/Housing imbalance. Finally, the lack of quality schools near the BeltLine present a tremendous challenge in luring families to the area. 

I strongly support private developers building the BeltLine with private funds. But I cannot support Atlanta BeltLine, Inc. using federal, state, or local taxpayer funds to build this project. Such subsides distort the market and allow billionaire developers to make a profit at taxpayers’ expense. Traditionally, construction of transit and parks is overseen by the city’s comprehensive planning, permitting and civil works division. The fact that the BeltLine is managed by a special city redevelopment authority, which has spent most of its resources on public relations rather than construction or finance management is a major problem. 

In response, Atlanta BeltLine Inc., which was created by the Atlanta Development Authority, wrote an entry on their website where they “checked the facts of my Op-ed.” While their posting was entertaining, it added little new content. Since I have received several questions about my original Op-Ed, I want to discuss the topic in more detail. First, I will propose several arguments that I did not address in the AJC Op-ed due to space constraints. Second, I will specifically address why the BeltLine, Inc’s “facts” are incorrect and misleading. 

BeltLine, Inc.’s management of the project has created several new problems for the city of Atlanta. First, the BeltLine ties up 75% of the city’s capital bonding power for the next 20-30 years. This severely limits the city’s ability to address other issues. For example, the pavement on many city streets is in serious need of repaving. According to Atlanta Public Works Commissioner Richard Mendoza, the city of Atlanta should be doing five times the current amount of street paving to keep up with the usual wear and tear but lack of funds presents a major obstacle. Bonding could provide some of these needed funds. The city faces other challenges such as keeping its recreation centers open and in good repair. The city could renovate these centers by issuing bonds. Further, Atlanta could update its police and fire equipment through issuing bonds. Bonds alone will not solve Atlanta’s fiscal challenges; but they could certainly help the city make additional investments. 

The next problem is that the BeltLine proposal completely ignores the real estate market. Large numbers of properties have been rezoned for higher densities. But there is no demand for this density today. And it is unlikely Atlanta residents will ever demand this level of density. Atlanta is the least dense metro area in the world with more than 3,000,000 people. Residents of the city of Atlanta have not shown an interest to live in dense surroundings. And even if the city of Atlanta wanted to increase its density, most suburbs do not. As Atlanta is part of a region, it needs to consider not just itself but all of the municipalities around it. 

Another problem is that the BeltLine favors one geographic region of the city over another. The BeltLine may help residents of the northeastern segment at the expense of all other regions. The BeltLine received federal grants because it promised to redevelop low-income minority neighborhoods in southeast and southwest Atlanta. So far, the only change in these areas has been real estate speculation that has forced many of the low-income minority residents out of their homes. But the BeltLine has spent more than half of the total funding on the 20% of land in the northeast quadrant. 

In order to detail the many, many problems with Atlanta BeltLine, Inc.’s logic, I am going to borrow a segment from Bill Maher’s TV show. On his show Maher argues that some politicians are living in a bubble or a world divorced from reality. In Atlanta, BeltLine proponents live in an alternative world where building parks and bicycle paths can solve all of the city’s problems.

Fact 1: Building Trails and Park Space is not a viable economic development strategy.

BeltLine fact from inside the bubble: There has been more than $1 billion in private redevelopment within the BeltLine TAD since 2005. In the Atlanta BeltLine planning area (1/2 mile on either side of the rail corridor) there are more than 90 new developments either completed or in progress, representing more than 12,000 new residential units and 1,500,000 new non-residential square feet. Within a 1/2 mile of the Eastside Trail there has been $775 M in new private redevelopment complete or underway since 2005. In the immediate area around Historic Fourth Ward Park alone there are more than 1,300 new residential units completed or underway. 

Much of the development in this geographic area would have occurred without Atlanta BeltLine, Inc. Economic development experts estimate that 10% of the development at most is due to Atlanta BeltLine Inc. Further, most of the new positions are service jobs in restaurants, banks and retail, and most of these new employees will not be able to afford to live in the high-priced residences on the BeltLine. The city needs more professional jobs. In addition, most of the development has occurred in just 1/5 of the BeltLine. Not coincidentally this was the same area that was attracting development before the formation of Atlanta BeltLine, Inc. Using city of Atlanta data and economic development experts 10% figure, the BeltLine has generated $100,000,000 of economic activity over 6 years. There is no major city in the country that would brag about this kind of result.

Fact 2: Atlanta has many jobs, but few are near the Beltline.

BeltLine fact from inside the bubble: More than 175,000 jobs within a 1/2 mile of the Atlanta BeltLine corridor and streetcar lines included on the Transportation Investment Act project list. (ARC analysis of Bureau of Labor Statistics data)

Almost all of these commercial jobs are located at a few locations. And since residential activity is dispersed throughout the BeltLine very few people actually live near a job. Second, BeltLine, Inc. is counting two auxiliary future rail routes that were not part of the original BeltLine concept. One of these routes is a future east-west rail line passing through the heart of Midtown. By expanding the physical presence of the BeltLine, BeltLine, Inc can expand its job base claim. But residents and employees near North Ave and Peachtree St are not considered a part of the BeltLine. Third, in a metro area with 5,500,000 residents, the fact that BeltLine proponents count every conceivable area that is in any way connected to the BeltLine to reach 175,000 jobs shows the lack of jobs in this area.

Fact 3: “Without quality schools and jobs nearby, you’ll have a few Beltline areas that are attractive to childless 20-somethings and empty nesters.”

BeltLine fact from inside the bubble: Again – the market and demographic trends say differently. There has been more than $1 billion in new private redevelopment in the BeltLine TAD since 2005, and $775 million of private sector redevelopment either completed or underway within a half mile of the trail that has taken place since 2005. According to the ARC, 20-somethings (millennials) and empty nesters are the fastest growing segments of our population and prefer to live in walkable, transit-rich communities, like those developing around the Atlanta BeltLine. The schools near the Atlanta BeltLine include Inman Middle School, Grady High School, Morningside Elementary, John Hope Elementary, Maynard Jackson High School, Atlanta Neighborhood Charter School, Mary Lin Elementary, Booker T. Washington High School, and the Schools at Carver. More than 20 schools are located on or near the Atlanta BeltLine. Some of them are among the best performing in the city.

I think the above argument makes my point. Millennials and empty nesters are a growing parts of our population but their needs will change over time. Today’s millennials will become 30-somethings, have kids, and need what all parents need: affordable quality schools. Most empty nesters today are choosing to age in place, not move to the BeltLine. The BeltLine’s problem is its lack of appeal for 30-65 year-olds with kids who need good schools. And these people are not moving to the BeltLine area. Yes, some of the schools near the BeltLine are strong. But many more are among the weakest in the state. In every testing category Atlanta schools trail their counterparts in Fulton County. This is despite the fact that both have near equal percentages of wealth and poverty and similar percentages of whites and minorities. The Atlanta school district’s graduation rate of 52% among the 11 major Urban school districts is the worst in the country. While Atlanta is again trying to improve its schools, the poor graduation rate and test scores are a real problem.

Fact 4: “…effective transit systems transport people from where they live to where they work, play and shop. The Beltline connects residential areas with other residential areas.”

BeltLine fact from inside the bubble: The Atlanta BeltLine is spurring the creation of new, mixed-use districts, including residential and commercial development. It will also connect with the MARTA rail system and the Atlanta Streetcar network, getting people to and from the largest employment centers in the region. On the Atlanta BeltLine alone, it will connect job centers along 45 neighborhoods such as Piedmont Hospital and the Peachtree corridor.

The BeltLine transit component has been deep-sixed, hopefully forever. However, if it raises its ugly head again, it is unlikely there will be any money to build it. As a result, in the near future the BeltLine transit component will not connect anybody with anything. The 1-mile Atlanta Streetcar network along Martin Luther King Jr. Blvd may connect 10 people’s residences and workplaces. A report completed by five transportation professionals including American Public Transit Association President William Millar stated:

The paucity of ridership estimates for different transit options in the BeltLine corridor (especially given how far the BeltLine concept has come in the City’s policy agenda) is surprising. In some cases, individual projects have had ridership forecasts prepared, but it does not appear that credible ridership determinations have been made that consider the network effect of other transit projects that are being seriously considered.

It seems likely that solely from a transit ridership perspective, portions of this loop will not generate sufficient transit ridership to justify investment in high capacity transit infrastructure.

The currently proposed alignment of the BeltLine presents other significant technical issues associated with potential transit use in the BeltLine corridor such as: right-of-way width, freight use of rail lines, elevation differences, etc.

As was noted to the Panel by several speakers, the amount of revenue generated from the TAD is expected to cover only about half of what will be needed (and depending on the design and technology involved, this could be an underestimate). It is highly likely that additional sources of funding will be necessary to cover the costs associated with capital investment. 

And so on and so on …The entire document is available here. The BeltLine white paper is particularly convincing because it was written by professional Engineers and Planners with years of experience. Counter this with the BeltLine’s public relations staff who have little experience in transportation but are very skilled in creating persuasive multimedia presentations absent actual facts.

Fact five: The BeltLine project has already cost taxpayers more than $260 million. In return, they’ve gotten wasteful expenses, a lack of accountability and an ill-conceived transit plan.”

BeltLine fact from inside the bubble: The return on investment for the Atlanta BeltLine is more than $1 billion in private redevelopment in the Tax Allocation District alone. Additionally the project has saved the city millions of dollars on critical infrastructure projects. For example, the storm water lake at Historic Fourth Ward Park, originally projected to cost $40 million as a traditional tunnel-like facility, cost only $24 million as part of an Atlanta BeltLine greenspace.

The BeltLine project has cost taxpayers $260 million and probably much more. We do not know the real costs because the BeltLine will not release the costs. Under Georgia law since BeltLine, Inc. is an economic development entity it is not required to disclose how it spends its money. Since much of this money comes from taxpayers, the BeltLine should post all of these costs in a place easily accessible to all taxpayers. As mentioned earlier, BeltLine, Inc. directly generated only $100 million of that $1 billion amount. According to figures posted on its website, the BeltLine has spent at least $260 million and likely a lot more. That is a negative return on investment of at least $160 million. And the $16 million the BeltLine saved with that stormwater lake does not make up for the $40 million that they overpaid for just one park—the 4^th Ward Park. 

The BeltLine concept is based more on unrealistic dreams than actual real estate and transit needs. The BeltLine, Inc.'s website, under thier response to my Op-ed, features a beautiful picture from a BeltLine event. Does the picture have anything to do with whether the BeltLine is a good use of taxpayer resources? Of course not. It is similar to a futuristic science fiction movie where society has become an uneducated mass lacking in critical thinking skills. When someone in the futuristic society starts asking questions, he is shown a beautiful picture designed to get him to think about something else. BeltLine, Inc. is using a very similar approach. Atlanta BeltLine, Inc. realizes that the facts fail to convince taxpayers that this project will go forward. Instead it is trying to distract residents with beautiful but meaningless pictures. But, taxpayers need not be sucked into this fantasyland. Taxpayers need to simply look at the facts.

E-Z Pass System on InterCounty Connector is a Curious Target for Smart Growth Group

Posted on October 26, 2012, 10:59am | Baruch Feigenbaum

My friends at Greater Greater Washington (GGW) write about Urbanism and Smart Growth. I do not often agree with them but I believe they bring a valuable viewpoint to the table. But occasionally they write an article that is so lacking in facts and logic that I do not know whether to laugh or cry. Such is the case with the article MD Toll Agency Pushes More Driving to Fill Little Used Road. According to the article:

… the Maryland Transportation Authority, which oversees toll roads, has embarked on a campaign encouraging people to drive more. 

I am going to look past the sin of encouraging people to use their private property in the way they see fit and move onto the actual evidence of the crime. GGW sites as evidence the fact that the agency had a booth at the Bethesda Farmer’s Market. The agency was there to encourage the use of the electronic E-ZPass system. The E-ZPass system is installed on many area roads in the metro area. The E-Z pass system allows customers who set up an account with any of the E-ZPass states to pay their tolls electronically 

There are many advantages to electronic tolling. Electronic tolling saves taxpayers money because tollbooths and toll collectors are not required. Electronic tolling is safer because motorists do not have to come to a complete stop, reducing the speed differential between vehicles. And electronic tolling saves time because motorists do not have to fumble for money when stopping at the tollbooth. 

E-Z pass can be used on multiple roads. While some Maryland travelers will use it on the InterCounty Connector (ICC) others will use it on the I-495 Express Lanes or for the I-95 or I-895 Baltimore tunnels. Most Bethesda residents will probably use it for non-ICC purposes since the ICC runs roughly 15 miles north of Bethesda. If you are traveling to or from Bethesda, the ICC would almost never be a logical route. 

The article next argues that the highway is expensive: 70 cents to travel one exit and $4 to travel the entire length of the road. Actually, this rate is only in rush hour. Outside of rush hour the price ranges from $1.60 to $3.20. But even during rush hour and even if I-495 is not congested, the high-quality road is still cheaper. How? If a customer travels from Laurel to Gaithersburg, chooses I-95 south to the ICC to I-270 north, he has chosen a 23-mile-route. If the customer chooses I-95 south to I-495 west to I-270 north, he has chosen a 31-mile route. That 8-mile difference equates to $4.44 in gas, and wear and tear on the car. That means the ICC more than pays for itself if traffic on both it and I-495 are at free-flow speeds. But of course I-495 is seldom at free-flow speeds. Rush hour conditions can last for eight hours a day and traffic frequently drops far below the 55 mile per hour speed limit on weekends, middays and evenings as well. This makes the ICC an even better deal. 

While living close to enough to walk or bike to work may be certain New Urbanists’ dream scenario, in the real world people often cannot live next to their jobs for various reasons. Occupying either an apartment or a house in Bethesda requires a large income. Many workers do not make such an income. In two-person income households, one person may live far from work so the other can live nearby. In other situations the households may choose a residence in between. Some people live in a certain community for the schools offered. There are many Bethesda residents who work in Largo but choose to live in Bethesda because of the quality of the schools. 

As this is the case and people choose to drive, New Urbanists and Environmentalists should support toll roads. Why? Because on toll-roads motorists pay close to 100% of the costs. As the gas tax no longer covers the entire cost of highway travel, motorists who travel on free roads are not paying the full costs. This helps in two important ways. First, the higher cost will discourage motorists who do not really want to make the trip. Underpriced highways leads to induced demand where travelers consume more highways than is optimal because the service is cheap. Second, as the government has more funds, it can spend more on other types of transportation including transit. Now, transit is often underpriced, which leads to induced demand. But that’s an argument for another day. 

Let’s now visit the claim that the ICC is underused. Since the road has opened in stages and the final section between I-95 and US 1 is still under construction, it is challenging to draw conclusions. However, on the section between I-270 and Georgia Ave, traffic averaged approximately 35,000 vehicles per day last month. The traffic counts on the eastern segment of 26,000 will almost certainly increase when the link to US 1 is opened. Since the highway was designed for traffic counts in 2030, it is a not a disaster if there is some extra capacity today. And there is actually little excess capacity. A six-lane highway such as the ICC is designed for between 40,000 and 60,000 vehicles per day. At 35,000 vehicles in 2012, I feel very confident the highway, which solves a growing area, will easily reach 40,000 by 2030. The bigger problem is that it may exceed 60,000 vehicles by that year. 

How about the claim that the state should work to decrease traffic counts on I-270, US 29 and I-95? First, the goal of the ICC was to relieve I-495 and other east-west roads. I-270, US 29 and I-95 run north-south. But reducing traffic on north-south roads is not a bad idea. I wrote an earlier blog posting on the need for an alternative north-south highway in DC in western Montgomery County. I am doubtful that Greater Greater Washington likes that idea. Promoting teleworking, and increasing cost-effective transit service including BRT is a great goal. But the reality is many residents will continue to be single-occupant drivers. And rather than waxing poetic about the 1920’s when people lived in denser communities we should realize that we have to live in today’s world. 

I do agree with the author on one issue—the speed limit on the ICC is low. However, Maryland is already addressing this issue. The transportation authority has completed an initial evaluation of safety data and will complete a more detailed analysis before deciding whether to increase the speed limit. And the decision will come in the next three months. The likely top speed will be 60 miles per hour.   

Why does GGW oppose toll roads? Toll roads recoup the full costs for travel, decrease demand over non-tolled roads, and in some cases generate money for transit. I suspect the decision-making is guided less by actual logic and more by the goal of preventing any new roads. This approach is mystifying because in the end it will actually hurt GGW.

Innovators in Action: Making Phoenix a 24-Hour City--Privatizing City Permitting to Cut Red Tape and Drive Economic Development

Posted on July 31, 2012, 5:49pm | Leonard Gilroy

While many other cities are increasing the regulatory burden on starting or expanding businesses, policymakers in Phoenix, Arizona have recently taken significant steps toward reducing it. In our latest interview in the Innovators in Action 2012 series, I sat down with Phoenix City Councilman Sal DiCiccio to talk about the city's new plan review and permitting reforms, how they came about and what they mean for economic development.

Regulatory delays and uncertainty in local government—particularly in permitting related to commercial and residential construction—tend to drive up the costs of development and can become so burdensome that they ultimately serve as a disincentive for economic investment. This used to be the case in Phoenix, until its City Council recently enacted reforms that shifted a significant portion of city permitting and inspection functions to the private sector and created 24-hour turnarounds for projects that used to take four to six months.

Phoenix is implementing a "self certification" model where architects and engineers who undertake city training and random audits can submit plans for a variety of residential and commercial construction projects (exceptions include high-rises, steep slope development and hazardous land uses) and be able to walk out with a permit, on the same visit. Next year, the city plans to go one step further by implementing online permitting, which will be even faster and more convenient for permit seekers.

In all, these reforms are intended to improve Phoenix’s economic competitiveness and lower costs for taxpayers. Here's a brief excerpt from the interview:

Gilroy: What did Phoenix pass to help businesses get up and running faster?

DiCiccio: We created a model making Phoenix a 24-hour city when it comes to plan reviews and inspections. Walk in with your building plans, walk out with a permit and start construction that same day. Call for an inspector before 10 pm and get an inspection the very next day. That’s huge, compared to our history and what happens in most metro areas.

Phoenix shifted a significant portion of the planning and inspection functions to the private sector. Phoenix has instituted what’s known as a “self certification” model, which means architects and engineers who have been through city training will submit plans and be able to walk out with a permit, on the same visit. That includes all new construction up to 75 feet, all tenant improvements; civil permits for industrial, commercial/office, multifamily and residential; and historic preservation. More than 100 professionals are now certified on the list.

Next year, permits will be online, so they will be able to push a button and submit plans electronically. Today’s 24-hour process will get even faster.

Gilroy: How will Phoenix’s permitting reforms help business owners?

DiCiccio: Getting permits quickly to do construction and improvements saves time and money. We also have greater predictability, so they will know when to lease, when they can build and when they should hire employees, for example. Unpredictability not only costs them time, money and market share, it also discourages some would-be entrepreneurs from even starting. When you’re a small business trying to build your dream on savings and credit cards, months-long hold-ups can be devastating. We’ve ended that.

It also gives them a choice of whom they want to work with. Private sector architects and engineers may provide more targeted services to a particular industry or business owner, and I believe people must have that choice. Competition creates more and better innovation. Government can't specialize in every field, but the private sector can and does.

The full interview is well worth a read and is available here. For more on the subject, the Arizona Republic's recent coverage of the new permitting reforms is available here.

[Note to readers: In previous years, we have published Innovators in Action in an annual report format, the last edition having been released in early 2010. The publication has been on a temporary hiatus since then, but we have resumed publication in a slightly different format. In order to deliver timely content to our readers on a more frequent schedule, we're publishing one Innovators article per month on reason.org. Other articles featured in the Innovators in Action 2012 series are available here.]

Brain Hubs and the Case for Labor Mobility

Posted on July 27, 2012, 10:44am | Tom Clougherty

Over at The American, Nick Schultz has posted an interview with Enrico Moretti, an economics professor at UC Berkeley and the author of "The New Geography of Jobs". Moretti's thesis is that new jobs and opportunities are increasingly clustered around 'brain hubs' - cities with well-educated workforces and strong innovation sectors. While old industrial areas decline rapidly, these 'brain hubs' thrive. According to Moretti's research, each new 'innovation job' brings with it five non-innovation jobs.

If this is true, then one obvious implication is that labor mobility is vitally important. People need to be able to move where the work is. As Moretti puts it:

The United States is a large and diverse nation. Economic differences across American cities (for example, unemployment rates and salary levels) are very large and keep growing. These growing differences mean that the economic returns to economic mobility have never been higher. But not all American workers are equally mobile. College graduates have the highest mobility of all, workers with a community college education are less mobile, high school graduates are even less, and high school dropouts come at the bottom of the list.

He goes on to make a crucial point:

Government policies are part of the problem. The unemployment insurance system does not provide any incentive for unemployed workers to look for jobs in places with better labor markets. If anything, it discourages mobility from high-unemployment areas to low-unemployment ones, because it does not compensate for the difference in cost of living. If you are living off an unemployment check in Flint, you do not have a lot of incentives to move to San Francisco to look for a new job, because your housing expenses would triple, but your check would still reflect the cost of living in Flint.

This is really one of the core problems with modern welfare states: they do not sit well alongside dynamic market economies, in which change is constant, and creative destruction drives progress and prosperity. Rather than encouraging people to seek out new opportunities, state welfare seeks to sustain people in their present circumstances. This may be more comfortable in the short term, but its long term implications are very worrying.

The solution Moretti hints at - redirecting welfare spending to help people move - reminds me of this excellent study, which was published by Policy Exchange, a British think-tank, several years ago. It advocated a hard-headed assessment of redevelopment policies, and an acceptance that once cities "have lost much of their raison d'etre... it is hard to imagine them prospering at their current sizes." The policy emphasis should instead be placed on removing barriers to growth in prospering areas, and making it easier for people to relocate there. Rather than trying to buck the market, governments should get out of its way.

Yet that study also highlights the political pitfalls of such an approach. Policy Exchange, at that point a favorite of soon-to-be-British-prime-minister David Cameron, was widely condemned for wanting "shut down Sunderland" and other struggling post-industrial towns in the North of England. Politicians, predictably enough, couldn't run away from the idea fast enough.

Likewise, it would take a very brave US policymaker to stand up and say that glory days just aren't coming back for some rust belt towns, and that no amount of bailouts, subsidies, tariffs, or stimulus checks are going to change that sad fact. Nevertheless, the case for labor mobility - not just for highly-educated Americans, but for everyone who wants to work - is a case that deserves to be made.

California Parking Bill Needs Revisions

Posted on June 20, 2012, 9:08am | Baruch Feigenbaum

Last week the California chapter of the American Planning Association (APA) upset several groups including the website Market Urbanism by writing a letter to its members asking for comment on California Assembly bill 904. One version of the bill is available here. The bill requires maximum parking standards for certain types of communities. APA’s letter to its California members includes the following:

APA California is not opposed to the concept of lower parking requirements near transit when a community decides it is right for them – the issue is that a one-sized-fits-all statewide standard is not appropriate.

AB 904, on and after January 1, 2014, would prohibit a city or county (including charter cities) from requiring minimum parking requirements in transit-intensive areas greater than the following:

[The bill authorizes] one parking space per 1000 square feet for nonresidential projects (including commercial, industrial, institutional, or any other nonresidential projects regardless of type of use); one parking space per unit for non-income-restricted residential projects; 75/100ths parking spaces per unit for projects that include both income restricted and non-income restricted units; 5/10ths parking spaces per unit for units that are deed restricted at least 55 years to rents or prices affordable to persons and families making less than 60% of area median income.

The definition of “transit-intensive area” means an area that is within 1/2 mile of a major transit stop or within 1/4 mile of the center line of a high-quality transit corridor included in a regional transportation plan, including a major transit stop such as a High Speed Rail transit stop) included in a regional transportation plan but not completed.

The proposed bill has both positives and negatives. The positives include introducing a market-based approach to parking, allowing local governments to set higher standards if it is appropriate for the community, granting certain exemptions to the law including rent control and deed-restricted housing and using substantially more quantitative standards than the old ITE approach. (Under the ITE standards, there were multiple categories for each business using insufficient data points and low r-squared values. For example, adult entertainment had multiple categories. The nude dancing category had separate subcategories for different types of nude dancing including fully nude, partially nude, etc.)

However, there are significant problems with the bill that outweigh its positives. First, the bill sets a statewide standard. California is one of the largest, most diverse states in the country. What is effective in San Francisco may not work in Truckee, CA. 

The bill applies one standard to all types of transit (i.e. heavy-rail, light-rail, BRT, local bus, express bus, etc.) and all times of day. Local bus service serves different areas than BRT or rail. The plan also applies to any planned transit service in a regional plan including HSR. It can take years before a planned system is actually built. In some cases, planned systems are never built. Waiting on a proposed but unfunded HSR system is crazy. Many systems operate only during rush-hours, others on weekdays but not on weekends. Some communities are served by multiple line both bus and rail. Others are served by only one bus per day. Applying one blanket solution is not the best approach.

Although there are exemptions the criteria for meeting these exemptions is uncertain. According to the original version of the bill an area must prove it has insufficient walkability, insufficient transit service, that the lower standards undermine Transit-Oriented Development (TOD) or affordable housing and that the standards conflict with reduced off-street parking. In other words, a local area is exempt if it already has existing standards similar or more restrictive than the proposed standards. But if the area wants higher standards for 3 of the four reasons or because it believes transit will not work as well in that community, it appears there is no wiggle room. The bill’s author has stated that she intended for communities to be exempted if any ONE of the FOUR reasons are true, not ALL FOUR of the reasons. She will try to add an amendment to the bill. However, I am currently basing my interpretation of the actual language in the bill not the intended language. 

The bill is sponsored by the California Infill Builders Association. The association is a trade group working to increase infill housing. As parking spaces cost money, for developers to be able to build these apartments/houses they need something in return. The something could be lower parking standards. Parking should be priced and I understand the desire for infill housing. However, the bill would be best originating from someone without a stake in the game. Such legislation can then be reviewed by a university researcher, the California Legislative Analyst’s Office, and another independent party. The only professional transportation group that has weighted in, APA, is not a strong supporter of the bill. 

This bill presents a big government solution to a government created problem. Free market solutions should operate outside of big government meddling. If the government is restricting free-market parking pricing (which it is) the bill should end subsidies to automobile drivers and developers. All transportation modes should operate on an equal plane. Creating a subsidy to counter another subsidy is both expensive and counterintuitive. 

Assemblyman Nancy Skinner deserves credit for trying to encourage market-based pricing. And APA California could be more open to the concept. However, this bill is a big government state-imposed solution that may or may not offer exemptions, does not consider the different geographies of the state and does not separate existing from current transit service. As written this bill needs substantial changes. If the author’s amendment passes, it still has some significant aspects that need fine tuning before it should be considered on a statewide basis.

Polling Metro Denver Voters' Support of Tax Hikes for Public Transit

Posted on May 18, 2012, 12:09pm | Harris Kenny

Last month I wrote on Reason Foundation's Out of Control Policy Blog about the Denver Regional Transportation District (RTD) Board's decision to abandon a proposed tax hike that would have doubled the current transit-dedicated, 0.4 percent regional sales tax along the Northwest Corridor.

For context, the new revenue would have specifically gone towards FasTracks, a regional transit program approved by voters in 2004 projected to cost $4.7 billion and be complete by 2017. According to the latest estimates, FasTracks costs ballooned up to $7.4 billion and won't be complete until 2042. For more on FasTracks see my previous posts here, here and here.

Two major factors behind RTD's decision were uncertainty over voter support and ambiguity over the proposed use of funds. A reader recently sent me a poll conducted by Ciruli Associates, a Colorado-based research and consulting firm, which sheds light on metro Denver voters' attitudes towards tax hikes for FasTracks. This poll was released prior to RTD's decision and likely played a role in their decision.

According to Ciruli Associates:

The Ciruli Associates question in this survey used a historical context of the revenue provided for the project since its 2004 inauguration.  Previously, polls have shown people like transit, especially light rail, and would like the system built out quicker.  But, the decline in trust in government makes RTD and its ability to manage finances and the project an issue in this election.

First, the broad numbers. 49 percent of voters support the tax increase, while 46 percent of voters oppose it. Only 17 percent of voters definitely support the tax increase, while 30 percent (almost one-third) definitely oppose it.

Next, a breakdown by party affiliation. A majority of Democrats (65 percent) support the tax increase, while a majority of Republicans (57 percent) and independents, or unaffiliated, voters (56 percent) oppose it.

Finally, a breakdown by geography. Ciruli Associates note that interestingly, "Voters in the two counties that should receive the most benefit from the next phase of transit expenditure, Adams and Boulder, are among the least supportive of the tax increase. Even Denver is only mildly supportive."

This poll was conducted from April 6-10, 2012 in the seven-county metro area known as the Northwest Corridor by Ciruli Associates for The Buzz. Ciruli Associates used RDD probability sampling with 500 voters and calculated a margin of error of ⁺ 4.4 percentage points.

This poll was not widely cited in the lead up to the RTD Board's vote and only came to my attention today, however its results remain informative. Most Colorado transportation observers recognize that the relevant question is not if RTD will seek voter approval for another transit-dedicated tax hike, but when?

For related research, see Reason-Rupe's December 2011 national poll on transportation and public transit here.

Las Vegas City Neighborhoods Fare Worse Than Suburbs

Posted on April 25, 2012, 5:00pm | Baruch Feigenbaum

Much of the hype from the Great Recession has focused on how exurbs are losing population while closer in neighborhoods are gaining population. In reality the opposite is often true. At last week’s American Planning Association conference in Los Angeles, Alan Mallach of the Brookings Institution highlighted that in Las Vegas the suburbs and exurbs have survived the recession while the older parts of the city have not fared as well.

Mr. Mallach who researches urban revitalization and real estate divided sun-belt towns into four categories: bust high-cost, bust low-cost, small-decline and stable. Mallach found that although some cities particularly in California, Florida, and Nevada have high unemployment rates and depressed housing prices, any notion that the sunbelt is declining is a myth. Some sunbelt cities are outperforming the rest of the country. Texas metro areas have been some of the least affected places in the country by the recession. Mallach found that over the past fifty years, the only significant variable in predicting migration and growth is the average January temperature. This research supports the idea that the Sunbelt will begin growing again when the recession ends.

Typically the ghost towns in boom/bust cities such as Las Vegas are not distant suburbs but closer in neighborhoods. Home prices in the newer planned suburban communities decreased less than home prices in the older urban neighborhoods. The “less walkable” suburban developments saw smaller price depreciation than the “more walkable” urban developments. The vacancy rate in the new planned communities actually decreased during the recession. And during the recession, most home buyers continued to purchase a dream-house in a planned community with a 15-30 minute drive from their workplace. These homeowners do not consider a 15-30 minute one-way drive time an inconvenience. Other boom/bust cities across the country have housing characteristics similar to Las Vegas.

Mr. Mallach does not expect a radical change in the economy of demographic patterns. The most popular places in boom/bust cities like Las Vegas will most likely remain the suburbs. 

There are two takeaways from this research. First, while many have been quick to promote the death of the suburbs and the rebirth of central cities, in many metro areas this is not the reality. While revitalized cities have many positives, policymakers need to use facts not desires to create new policy. 

Second, many people still prefer to live in suburban areas. Yes many people, particularly the young prefer cities for their variety and excitement. Historically, younger people prefer cities. As these younger people age, have families, look for better schools and more affordable housing, they often move to the suburbs. People should be free to choose between the cities and the suburbs; both have advantages and disadvantages. The U.S. is a large country; promoting the same solution for every metro area is not the way to improve the neighborhood or the economy.

Romney's Transportation and Land Use Policies may be Little Different than Obama's

Posted on April 25, 2012, 1:54pm | Baruch Feigenbaum

Many people know that “Obamacare” was modeled on former governor Mitt Romney’s Massachusetts health-care law. However, few know that one of President Obama’s landmark “smart growth” initiatives known as the Partnership for Sustainable Communities was also based on a Romney program. 

When Romney was governor of Massachusetts he fought sprawl and encouraged density. According to The Grist, in 2002 he said, “Sprawl is the most important quality of life issue facing Massachusetts.” After winning Romney changed the state’s land-use laws in several ways. First, he created the Office for Commonwealth Development and appointed environmentalist Douglas Foy to lead it. According to Commonwealth Magazine, the business community was furious. The state office ensured that transportation, housing, energy, and environmental offices all worked together to promote smart growth. The Partnership for Sustainable Communities has accomplished the same goals on the federal level with the department of transportation, department of housing and urban development and the environmental protection agency.

Romney’s administration worked to concentrate development in town centers, construct housing near transit stations, and improve existing roads instead of expanding them. 

Further according to The Grist:

Romney was a vocal advocate for the cause. “I very much believe in the concept known as smart growth or sustainable development, which is the phrase I used in the campaign,” Romney told Commonwealth Magazine in 2003. “You do not want to deplete your green space and air and water [in order] to grow, and the only way that’s possible is if your growth is done in a thoughtful, coherent, strategic way.

As Romney put it in 2005, “By targeting development to areas where there is already infrastructure in place, not only can we revitalize our older communities, but we can also curb sprawl as well.” His administration actively pursued a “sustainable development agency” and promoted “transit-oriented development,” “multi-modal transportation,” “village-style zoning" “green building,” “mixed use” development, “mixed-income housing,” and other approaches that would delight any green-leaning city planner — and rile up any red-blooded Tea Partier.

Environmental activists still found plenty to criticize in Romney’s approach to land use and development, but many greens and smart-growth advocates were pleasantly surprised, at least in the first half of Romney’s term. In 2006, the U.S. EPA gave Massachusetts’ Office for Commonwealth Development its National Award for Smart Growth Achievement.

There are several parallels between Romney’s state program and the current federal program:

Just as Romney’s Office for Commonwealth Development incentivized local communities to embrace smart growth by offering grants, so does the Partnership for Sustainable Communities. Since its launch, the partnership has helped to allocate about $3.5 billion in grants and other assistance to more than 700 communities that want to better coordinate housing, transportation, and economic-development projects and make neighborhoods more walkable, transit-accessible, and sustainable.

In fact Romney’s policies were smart growth oriented until his last year as Governor when he decided to quit the Regional Greenhouse Gas Initiative (RGGI):

 [I]n mid-December (2005) Romney abruptly pulled the state out (of the RGGI)— despite the fact that several staffers in his administration had spent two and a half years and more than half a million dollars negotiating and shaping the deal.

Romney had until (December of 2005) been an advocate and architect of RGGI, which includes a market-based trading system that will let big fossil-fuel power plants buy and sell the right to emit carbon dioxide. As recently as November (2005), he was publicly talking up the agreement: “I’m convinced it is good business,” he told a clean-energy conference in Boston. “We can effectively create incentives to help stimulate a sector of the economy and at the same time not kill jobs.”

So why did then Governor Romney pull out? It was about this time he considered running for the Republican 2008 nomination for President. 

So where does Romney stand now? He recently told several donors that he might eliminate HUD, the department his father headed during the Nixon administration. He has said the EPA under President Obama is “out of control.” Would he approach smart growth in a similar manner to health-care and argue that promoting smart growth at the state level makes sense while promoting it at the federal level is unconstitutional? Since the President’s smart growth policies mostly apply at the local level, applying the health care reasoning to the smart growth arena is not the same. 

Still people who worked with Romney are not sure of his real views. I will try to hazard a guess. Romney is a moderate Republican; in a few states he might qualify as a Democrat. He believes in smart growth, providing universal healthcare, reforming immigration, and is pro-choice. However, to become President his views have “evolved” to become more in line with the base of the Republican party. While he is not the first politician to switch his views to become more electable, he is pressing the limits of believability. 

The question is what happens after he is elected. Will his true opinions on smart growth shine through or will he take a politically popular path. And what happens if he is elected to a second term?

Much of the current opposition to smart growth has arisen as a result of a United Nations document titled Agenda 21. The non-binding agenda that came out of the 1992 Rio Earth Summit contains many policies that could be harmful to the United States. However similar to most other bad United Nations policies it has been ignored by most of the world and will likely continue to be ignored. Some in the tea party are making a mountain out of this molehill of a document. Neither Obama’s nor Romney’s policies are based on Agenda 21. In reality, they are based on smart growth dogma that is emotionally charged and largely factually unsubstantiated. Programs such as the Partnership for Sustainable Communities, applied indiscriminately with no regard for the differences between different places, are potentially more damaging to the United States in the long-term than any United Nations document. 

From a land use and transportation viewpoint, Romney’s policies may be little different than Obama’s policies. In some ways Obama is more believable because he actually believes in what he preaches. Romney preaches just to be elected. In transportation matters, President Obama has been one of the least effective Presidents in the last fifty years. The fact that Governor Romney may be little different is a depressing thought indeed.

Livable Centers Initiative Grant Program Needs to be Refocused

Posted on April 6, 2012, 11:00am | Baruch Feigenbaum

The Livable Centers Initiative (LCI) by the Atlanta Regional Commission (ARC) is intended to promote urban regeneration in metro Atlanta communities. But the projects it has funded have had little success in creating any sustained new economic activity. Moreover, the program is supported by federal gas taxes that are supposed to be dedicated to national highways. Nonetheless, other cities around the country, from Albany to San Francisco are using it as a model.  If ARC wants to continue with the LCI program, and if other cities want to follow the model, two simple rules should be followed: first, it should be funded locally; second, it should focus on activities that have been shown to actually underpin economic development, such as the construction and maintenance of roads –especially if it is funded by gas taxes. 

When the LCI program helps cities build appropriate infrastructure, it has the potential to be a useful tool. Planning for future growth can create higher-quality developments at lower costs. Some of the grants have supported transportation improvements. The city of Marietta and Cobb County received a grant to study bus rapid transit (BRT) in the Delk Road area. The city of Alpharetta used an LCI grant to study transit possibilities in the Northpoint Activity Center. Typically LCI grants are modest, between $80,000 and $150,000. In some cases, part of the cost of studies has been funded by private businesses, thereby leveraging the public funds. 

However, there are numerous problems with the LCI program. 

First, LCIs use federal gas tax funds to support local projects. Funding for this program comes specifically from the L-230 funds in the highway section of the state’s transportation bill, not the transit section or the intermodal section. Highway funding is intended to support national highways that facilitate interstate commerce by moving goods and people along roads such as I-75 and GA 400. Yet LCI grants have been used to support non-highway-oriented projects such as the development of Cycle Atlanta on the premise that it would connect job centers and residential areas by bike lanes. Another LCI grant is slated to enhance the Marietta University District which focuses on land usage, and not highway infrastructure, along U.S. 41. 

More generally, non-motorized transport receives most of the resources from LCI grants. As of March 2011, $97,631,660 supported pedestrian facilities. Another $44,934,471 supported combined bicycling and pedestrian facilities. Only $15,438,929 supported roadway operations; $9,221,900 supported transit facilities, and $9,020,229 supported multi-use trails and other facilities. Sidewalks and bike paths do not facilitate much interstate commerce. Moreover, the transportation elements of these projects are regional at best.

The full commentary is available here. 

No Such Thing as a Free Parking Space

Posted on March 16, 2012, 4:12pm | Harris Kenny

While the benefits of market pricing are readily accepted for items like consumer electronics, it’s difficult for people to accept the value of pricing on things they think should be free to the user (i.e. parking, road use, etc.). To adapt Milton Friedman’s famous maxim: there’s so such thing as a free parking space. There are in fact a myriad of problems associated with underpriced and zero-priced goods. 

In the case of parking, Donald Shoup (parking guru and professor of urban planning at the University of California at Los Angeles) calculates that in some cases up to one-third of urban congestion is caused by drivers circling city streets to find a parking space. The lower rate of parking space turnover inhibits mobility making it more difficult to get from A to B. There’s also a lost opportunity to generate revenue that could be re-invested in infrastructure, like more parking.

Cities around the world are working to fix the problems associated with underpriced and zero-priced government-owned/operated parking assets. One approach being explored in San Francisco is variable market-based parking pricing. The program is known as SFpark and is being implemented by the San Francisco Municipal Transportation Agency (SFMTA). The premise is simple: use technology to allow variable pricing in urban parking. 

SFpark is accomplishing this goal by installing 8,300 wireless parking sensors for metered and unmetered parking spaces in eight pilot areas across San Francisco. Meters were also installed at the entrance and exist of several public parking garages, and separate control neighborhoods. Then, SFpark installed a data feed responsible for maintaining parking space sensors and meter data. Finally, the city replaced existing meters with new ones that accept joins, major credit/debit cards and SFMTA parking cards that operate for extending time limits. For more on the program, read my April 2011 reason.org commentary entitled “San Francisco’s Experimental Market-Based Parking Pricing Program” available online here.

It’s a logistically complex program highlighted by Michael Cooper and Jo Craven McGinty yesterday in The New York Times, they write:

It is too early to tell whether the program is working over all, but an analysis of city parking data by The New York Times found signs that the new rates are having the desired effect in some areas. While only a third of the blocks in the program have hit their targeted occupancy rates in any given month since the program began, the analysis found, three-quarters of the blocks either hit their targets or moved closer to the goal. The program has been a bit more successful on weekdays.

Of course, price is only one factor that influences behavior. About a fifth of the time prices rose but more spaces filled up, or prices fell but fewer people parked. And the full effects of the phased-in price changes have yet to be felt, because the most expensive spots cannot hit the $6-an-hour maximum until next year at the earliest.

So far so good. However some my critiques of the program from nearly a year ago still apply. As I wrote last April, By only using eight pilot areas, SFMTA is taking a gradual approach that excludes most destinations within the city, meaning many drivers’ behavior will not be impacted. It is also difficult to know what impact private parking garages may have in reducing the program’s efficacy, since private parking garage prices do not seem to be included in SFpark’s data feed. And lastly, SFMTA has severely restricted its ability to raise or lower prices in a dynamic way, meaning it will take a significant amount of time to equilibrate parking prices with demand.

San Francisco isn’t the only city exploring alternative approaches to urban parking. Another noteworthy approach is implementing long-term concession public-private partnership (PPP) agreements whereby the city transfers operation of city-owned parking assets to a private operator. These types of PPP agreements are being successfully leveraged in cities like Chicago and Indianapolis.

For more urban parking, see my previous reason.org commentary here, and reason.tv’s interview with Donald Shoup (below):

Miami Stadium Shows Complexity of Crony Capitalism

Posted on March 13, 2012, 10:20pm | Samuel Staley

When the city of Miami-Dade County, Florida decided it wanted to build a new home for the Miami Marlins (formerly the Florida Marlins), it sunk $347 million into the ball park (with a total cost for the complex, including financing, amounting to $2.4 billion). The Marlins fronted $155 million, which is nontrivial, but still well short of the full construction cost for a facility that was built almost exclusively for their benefit. The deal and sports complex has been controversial since the proposal was first floated by the city-county council in the early 2000s, and has even been mired in an investigation by the Securities and Exchange Commission.

What caught my eye recently, however, was an interesting wrinkle in the contract. Apparently, the county leases parking spaces to the Marlins on game days for $10 a spot, allowing the team to sell them to fans and patrons for a profit. It's a nice little deal for the Marlins, and a back door way to subsidize the team even further.

There was a catch. Apparently, Florida courts have decided that if public parking spaces are leased out to a private company they are no longer serving primarily a public purpose so they should be taxed. Sounds logical. But Miami-Dade didn't have the funds to pay the property tax bill (and the team refused to pay the property taxes since they weren't in their contract).

Not to worry. In the wee hours of the Florida legislative session, the Miami Herald reports (3/12/2012) that a bill was passed exempting Miami-Dade from having to pay property taxes on the garage.

Sacramento City Council Proceeding with Arena Deal

Posted on March 8, 2012, 11:49am | Harris Kenny

The Sacramento Bee reports:

In a historic vote, the Sacramento City Council approved the financing plan Tuesday night for a $391 million sports arena in the downtown railyard.

By a 7-2 vote, the council accepted a nonbinding "term sheet" agreed to by city officials, the Sacramento Kings, arena operator AEG and the development firm slated to build the project.

Under the current term sheet taxpayers will be on the hook to give $255.5 million towards the arena project that’s projected to be complete by the 2015-6 NBA season. Most of that money is expected to come from parking revenue, while officials are considering additional opportunities for asset divestiture to make up the difference. Additionally the Kings will spend $73.25 million and the Anschutz Entertainment Group (that will operate the arena) will spend $58.75 million. Pre-development and revenue sharing agreements are still being written.

Until recently, privatization of parking assets has been widely discussed as the way to generate revenue for the arena deal. This policy tool has been proven in cities like Chicago and Indianapolis, and soon Sacramento is expected to issue a formal request for proposals (RFP) from eleven interested firms.

However officials are also considering instead creating a municipal finance authority that would retain public operation of parking assets. The municipal finance authority would then issue bonds to fund the arena project and rely on future parking revenue to pay the bonds. Negligible formal analysis has been conducted on how this alternative scenario might play out.

Comments made by Councilmembers that voted for the deal are basically indistinguishable, but comments made by the two Councilmembers that voted against the deal provide insight into legitimate concerns with the project. 

Councilmember Sandy Sheedy voted no saying:

What we have in front of us is an incomplete plan… that is going to scoop up every spare nickel and dime. I don’t think an arena is worth putting the city general fund at risk. I am not interested in pursuing the same path that has put Stockton on the verge of a bankruptcy.

Councilmember Kevin McCarty voted no saying:

At this moment, I don’t think this is a good enough deal for the city of Sacramento… What would happen if there are bad attendance numbers? A number of these deals around the country are based on rosy revenue projections. Our lingering city priorities, we can’t ignore them. They exist. At this time, I think the risk is too great, and the rewards I don’t think are there at this current date.

Councilmembers Sheedy and McCarty echoed concerns that my colleague Len Gilroy and I outlined in a March 2, 2012 op-ed in The Sacramento Bee entitled, “Privatize Parking, But Not for the Kings.” We wrote at the time, “Despite arena boosters' rosy claims, research shows subsidizing new professional sports arenas is bad business for taxpayers.” We go on to explain that instead:

Sacramento could invest the parking lease revenue to build infrastructure and transportation projects, pay down city debt or even shore up underfunded public employee pensions. Any of these steps would put the city on significantly better fiscal footing and deliver greater long-term benefits to taxpayers than the arena.

For more, read the full piece available online here or here.

[Op-Ed] Privatize Parking, But Not for the Kings

Posted on March 3, 2012, 3:38pm | Harris Kenny and Leonard Gilroy

Sacramento is on the verge of becoming the third U.S. city to privatize its parking assets. As my colleague Leonard Gilroy and I explain in our recent op-ed in The Sacramento Bee entitled "Privatize Parking, But Not for the Kings":

Sacramento's burning desire to keep the Kings in town has the city considering privatizing its parking meters and garages. By itself, the plan to bring the private sector in to modernize and operate the city's parking assets would be a good one. But taking the proceeds from a privatization deal to help build an arena and subsidize an NBA team is not.

The City Council recently voted unanimously to see which companies might be interested in operating the nearly 13,000 city-owned metered parking and garage spaces. Privatizing city parking assets makes a lot of sense. Cash-strapped governments do a poor job of maintaining and modernizing parking meters and facilities. And urban parking rates are rarely what they should be because few politicians want to be blamed for raising parking costs.

The piece goes on to detail successful public-private partnerships for surface transportation projects, such as parking assets in Indianapolis and the Indiana Toll Road. Next we debunk arguments for using parking proceeds to finance the arena:

First, taxpayer subsidies to the arena are likely to be higher than advertised. In a 2005 study of major U.S. professional sports stadiums and arenas, Harvard University's Judith Grant Long found each NBA arena costs taxpayers $53 million more than advertised due to unexpected operating costs, capital improvements, municipal services and forgone property taxes that weren't accounted for in initial projections. Grant Long found that, across all major professional sports, taxpayers end up paying an average of 40 percent over initial facility cost projections.

Perhaps worse than the hidden costs, a large body of academic research suggests that sports arenas are economic losers for cities. A study by researchers from Vanderbilt University and Smith College found "there is no correlation between sports facility construction and economic development." Arenas tend to simply reallocate what's already there, as opposed to drawing new jobs and money into the local economy.

Finally, we conclude:

Sacramento could invest the parking lease revenue to build infrastructure and transportation projects, pay down city debt or even shore up underfunded public employee pensions. Any of these steps would put the city on significantly better fiscal footing and deliver greater long-term benefits to taxpayers than the arena.

Government should focus on what is essential. It shouldn't be in the business of building NBA arenas. And it shouldn't run parking meters and garages, either. The current arena plan to do both is a steal for the Kings and an air ball for taxpayers.

Read the full piece available online here. For more on leveraging parking assets through public-private partnerships, see here, here and here.

Portland Area City Does Unthinkable: Adapt to Market

Posted on February 12, 2012, 9:16am | Samuel Staley

Events in Beaverton City near Portland, Oregon would be unremarkable in most cities in the U.S.: Faced with property that has been undeveloped for 15 years, the city has approved rezoning that will allow developers more flexibility. Local residents are up in arms.

The protests surround the designation of the Sunset Transit Center as a transit-oriented develoment in a devleopment called Peterkort Town Center. Peterkort is a 250 acre development, and the rezoning, which would allow for less commercial development in the short term, applies to 13 properties making up 138 acres of the total development. The city of Beaverton's planners argue the maximum development potential designated in the plan--11 millions square feet of commercial develoment and high densityhousing at the transit stop--is unrealistic. So, the rezoning allows the developers to start out with 2.7 million square feet of commercial and higher density development in places within the zone (but not at the transit stop) where they think it will be commercially viable.

As one city planner told OregonLive.com (Feb 8, 2012):

"The county generally agreed with the city's approach, said Stephen Roberts, a county planner, but there were points of concern.

"In a letter to the Beaverton Planning Commission, county staff asked the city to consider more housing density close to the transit center, permitting less retail north of Barnes Road, the significance of a park or civic space near the station, and when housing would be phased in.

"McIntyre said the problem with the leeway provided by the new zoning is that up to 80 percent of commercial development could occur before any of the mixed-use housing is built, a recipe for spread-out strip malls.

"For example, in theory, Beaverton's code allows for a maximum of 11 million square feet of commercial development, about eight times larger than Washington Square mall.

"Realistically, city officials said, that won't happen, because the layout of the land, residential densities and traffic would prevent such a plan.

"The likelihood of that happening is so remote that it's not a real possibility," [Beaverton city planner Steven] Sparks said. A more likely scale is 2.7 million square feet of mixed residential, office and retail development, he added."

In some ways, this is a classic problem of modern planning implementation: modern comprehensive plans are by definition static, prescribing outcomes that aren't supported by the market. Beaverton is simply trying to change the plan to conform to what the market is willing to support.

If Beverton followed the original plan, or Washington Counyt's harder line prescriptive approach, Peterkort Town Center could lay undeveloped for another 15 years.

Of course, this outcome wouldn't be new. The land that the City of Euclid, Ohio prevented from being developed in the precedent setting case that established zoning, Village of Euclid vs Ambler Realty, lay vacant for more than 20 years after zoning precluded its development. Even more infamously, the acres cleared by eminent domain in New London, Connecticut (Kelo vs. New Londdon) to make way for private development also never materialized.  

Hotels May Pony Up to Fund Convention Center Expansion

Posted on January 21, 2012, 10:06am | Samuel Staley

The economic benefits of sports stadia and convention centers are dubious at best. (See here and here.) Often, taxpayers are asked to cough up hundreds of milllions of dollars (sometimes billions) to pay for facilities that almost exlcusively benefit private interests such as owners, players, and private investors. Such is the case playing out in Sacramento where the NBA is extorting the city to get a new $400 million arena. City council has been thankfully resistant to dumping more tax dollars into this abyss.

Now, local hotel chains and operators have come up with a plan to impose a new hotel tax to help fund the convention center expansion. This is a good sign because, as a direct beneficiary of these facilities, they are taking on more of the burden for financing them. This moves policy more toward a beneficiary and user pays principle for financing these facilities even if it doesn't fully privatize them. According to the Sacramento Bee (20 January 2012):

"Sacramento hotel owners are considering a plan to generate $1 million a year for the proposed downtown sports arena, officials said today.

"The complicated, still-evolving plan is tied to a potential expansion of the Sacramento Convention Center.

"Brian Larson, chairman of the Sacramento Convention and Visitors Bureau, said an expanded Convention Center could yield as much as $5 million a year in new hotel occupancy taxes.   

"Currently, the hotel tax goes mostly toward renovations of properties like the Convention Center and the Community Center Theater. Members of the City Council have swatted down proposals to earmark some of the hotel tax dollars to the proposed arena."

Read more here: http://www.sacbee.com/2012/01/20/4203316/sacramento-hotels-may-tax-themselves.html#storylink=cpy

For a broader discussion of how special districts can be used to pay for these facilities, see the article 1998 article in Public Administration Review by David Swindell and Mark Rosentraub "Who Benefits from the Presence of Professional Sports Teams?"

The Washington Post: D.C. Gov’t Loans Create “Million-Dollar Wasteland”

Posted on January 18, 2012, 12:00am | Harris Kenny

The Washington Post recently published an investigative report entitled “Million-Dollar Wasteland,” which finds Washington, D.C.’s Home Purchase Assistance Program (HPAP) for low-income residents is scourged with foreclosures, liens, and financial hardships. The following outline of HPAP’s operating procedures is distilled from the original investigative report, which is worth reading in full and is available online here.

The D.C. Department of Housing and Community Development has managed HPAP for over three decades. HPAP is funded primarily through grants from the U.S. Department of Housing and Urban Development and is intended to assist low-income families by making home ownership more affordable. First, applicants must apply and receive a first mortgage from a private bank. Eligible lenders meeting these first criteria then have their loan reviewed by the Greater Washington Urban League. Approved lenders then receive a second taxpayer subsidized no interest loan with payments deferred for five years. Some lenders receive further help in the form of equity from the D.C. Housing Authority.

In practice however, HPAP’s intentions belie its impact.

The Washington Post finds:

Nearly one in five buyers participating in the city’s 35-year-old loan program for first-time homeowners is behind on mortgage payments, city officials said — a default rate that’s at least three times higher than the overall rate in the region...

… The money can be a lifeline for working families in the District, which has wrestled with steep rent increases and an acute shortage of affordable housing.

But the program has put some families in financial distress.

The Post tracked more than 1,300 loans, about 80 percent of the loans awarded by the District between 2005 and 2009. The analysis found that about one in three were made on homes priced at $250,000 or more, with some houses topping $375,000.

The practice appears to run counter to a city guideline that suggests a buyer in a four-person household have the ability to purchase a $218,000 house. The price point has fluctuated somewhat in recent years: In 2006, it was $235,000.

No investigation into government loans would be complete without examples of waste, fraud, and abuse! The report continues:

Real estate records show that among those who have been involved in the loan program is Jack Spicer, a longtime developer involved in a sweeping 1980s real estate scheme where straw buyers would purchase properties in the District at inflated prices using fraudulent appraisals. HUD backed the loans and ultimately lost millions of dollars. Spicer cooperated with prosecutors during the investigation and served four months in a halfway house.

More recently, he was one of several developers who sold distressed apartment complexes in Southeast to a government-subsidized nonprofit group that later declared bankruptcy; the deal was detailed in a Post investigation in May about troubled HUD-funded construction projects.

Records show that Spicer and his companies sold six houses to city-subsidized buyers for far more than he had paid.

The full investigative report recants unfortunate stories of people who were drawn into mortgages to buy homes they simply cannot afford. At first glance I’d suggest that borrowers in over their heads peruse the Federal Trade Commission’s pointers for Americans “Knee Deep in Debt.” Then again, government loans incentivized borrowers’ problems in the first place. This ultimately begs the question: With government financial assistants like these, who needs loan sharks?

For more on failed government loans, see my recent op-ed in The Denver Post entitled, “Government Loans Bring Trouble.”

When It Rains It Pours (Denver Failed Gov't Loan Edition)

Posted on January 16, 2012, 7:42pm | Harris Kenny

I recently had an op-ed published in The Denver Post entitled, "Government Loans Bring Trouble" (also available on reason.org here) that explores failed urban renewal initiatives in Denver, Colorado. Last week The Denver Post's Jeremy P. Meyer wrote a piece entitled, "91 housing groups, businesses in arrears on loans from city of Denver" that sheds more light on the city's burgeoning failed loan portfolio. Meyer reports:

Nonprofit housing groups, restaurants, a tavern, a furniture store and a theater company are among 91 borrowers with delinquent city loans through Denver's Office of Economic Development.

The city is working on cleaning up its portfolio of 655 loans, of which roughly 14 percent, or $21.6 million worth of loans, are in arrears.

Past-due amounts on those delinquent loans total more than $8 million, according to documents the city supplied to The Denver Post in response to an open-records request.

Meyer continues:

Nine of the loans in collection with the city are in liquidation, meaning all efforts to get borrowers to pay back the amounts have been exhausted and the city is working on foreclosing on the business or property...

Foreclosure and liquidation is the last resort, say city officials who manage the portfolio of loans that use federal grants for small-business loans and to provide affordable housing...

Of the 91 distressed loans, 38 are in the process of being "worked out," meaning city officials are working with the borrowers to find solutions to get them to pay back the loans. That can include deferring payments, suspending the payments on the principal or refinancing. Those borrowers in the "workout category" owe more than $6 million in past-due payments.

Meyer's full piece is worth reading and is available online here. It's unlikely the city will be able to work through its loan portfolio without generating more controversy, which makes this an issue to watch in 2012.

[Op-Ed] Government Loans Bring Trouble (in Denver)

Posted on January 10, 2012, 5:44pm | Harris Kenny

On Friday January 6 I had an op-ed published in The Denver Post entitled "Government loans bring trouble," which explores a failed economic development project known as the Lowenstein Project in Denver, Colorado. The Lowenstein Project is enabled by special tax increment financing loans and demonstrates the folly of having bureaucrats take risks with taxpayer money that private banks aren't willing to.

This issue came to light last month when Jeremy P. Meyer of The Denver Post reported that, "About 15 percent of the loans in the Denver Office of Economic Development's $127 million portfolio are in arrears or default..." 

The piece continues:

One of these loans, known as the Lowenstein Project, illustrates how local officials have been gambling with taxpayer money on dubious urban renewal initiatives. The Lowenstein Theatre, located across from Denver's East High School on East Colfax, had been essentially vacant for 20 years. In 2006, former Office of Economic Development (OED) Director John Huggins proposed the Lowenstein Project, which would target the area for a $14 million redevelopment effort to build a movie theater, bookstore, music store and restaurants.

Denver officials loved the idea and helped private companies buy the Lowenstein property by handing out tax increment financing (TIF) loans of $475,000 each to Charles Wooley; Denver-based real estate firm St. Charles Town Co.; Twist & Shout; and Neighborhood Flix Cinema and Café.

By 2008, Neighborhood Flix Cinema and Café was bankrupt, taking taxpayer money that had been loaned to the company down with it. Then, in February 2011, the Lowenstein Project developers defaulted on their $2.4 million TIF loan.

Fast forward to now: On Dec. 19, the Denver City Council amended the $2.4 million TIF loan sitting in default so that a separate, more senior $1.5 million TIF loan can be paid off first.

The piece concludes:

Government-issued loans amount to taking money from productive taxpayers and wasting it on politically connected insiders. Politicians interested in urban renewal might instead look in the mirror and see if their own policies are stifling economic growth.

For more, read the full piece available online here.

Local Tea Party Activists Stump Planners

Posted on January 7, 2012, 8:07am | Samuel Staley

The Tea Party has stirred the pot in national politics, but apparently they're also making their mark in local politics and land-use planning. Anthony Flint recently wrote a lengthy lament for the The Atlantic Cities (Dec 14, 2011) that pointed out how Tea Partiers are mucking up the process. Flint notes the irony that the Tea Party activists are actually taking a page from the activism of Jane Jacobs when she stood up to Robert Moses and his plans to put a highway through Greenwich Village in New York:

"So it is with particular angst that many of these same planners now are forced to reckon with the modern-day Jane Jacobs, at least in terms of tactics and a libertarian streak: the Tea Party.

"Across the country, Tea Party activists have been storming planning meetings of all kinds, opposing various plans by local and regional government having anything to do with density, smart growth, sustainability or urbanism. In California, Tea Party activists gained enough signatures for a ballot measure repealing the state’s baseline environmental regulations, while also targeting the Senate Bill 375, the 2008 law that seeks to combat climate change by promoting density and regional planning.

"Florida’s growth management legislation was recently undone, and activists in Tampa helped turn away funding for rail projects there. A planning agency in Virginia had to move to a larger auditorium and ban applause, after Tea Party activists sought to derail a five-year comprehensive plan and force withdrawal from the U.S. Mayors Agreement on Climate Change.

"What’s prompting the ire is anything from a proposed master plan to a new water treatment plant, rules governing septic tanks, or a bike-sharing program. What’s driving the rebellion is a view that government should have no role in planning or shaping the built environment that in any way interferes with private property rights. And in almost all instances, the Tea Partiers link local planning efforts to the United Nations’ Agenda 21, a nearly two-decade old document that addresses sustainable development in the world’s cities – read as herding humanity into compulsory habitation zones."

Ultimately, Flint sees the Tea Partiers as driven by conspiracy theorists who really don't understand urban planning. Oddly, he cites a recent report by Ron Utt and Wendell Cox admonishing Tea Partiers to avoid tying their opposition to Smart Growth to the U.N.'s Agenda 21 because Smart Growth is largely a home-grown effort, not a global one, as evidence that the global conspiracy theorists are driving the anti-smart growth movement.

My read on local Tea Party activism is very different from Flint's. In a blog post a Planetizen.com before the November 2010 election ("Planning for Tea Parties), I noted that Tea Partiers are largely fiscal conservatives; they're reacting to bloated government spending and overreach and using the political process to move politicians to reduce government. Many of these activists are not well informed about the local planning process, but this doesn't make their concerns or complaints invalid. Moreover, just because they start from a ideological perspective that embraces a more limited government doesn't mean that their criticisms are purely ideological. On the contrary, more than one non-ideologue has emerged from a public hearing or charette (a planning tool used to get public input on a project) believing that the end result was effectively rigged regardless of input from the general public.

Fortunately, some planners recognize that these home-grown critics of government overreach have valid concerns. Nathan Norris has a very insightful and practical blog post at "Placeshakers and Newsmakers" (Jan 6, 2012) on how practicing planners can work with local activists motivated by Tea Party issues. In short, Norris outlines a constructive four-step engagement process for professional planners. Planners should not dismiss Tea Party activists out of hand, and recognize they come from diverse perspectives. Planners should listen to their concerns, identify the issues that are most important to them, and engage them in the local decisionmaking process.

Many libertarians will continue to object to urban planning in principle, but at least Norris is laying out a strategy for making the process more productive, more inclusive and less ideological. This opens the door for reforms that might well advance the Tea Partiers political agenda, albeit incrementally. If they are able to infuse more transparency and accountability into the planning process, then everyone benefits. Just as Tea Party activists are not a monolithic bunch, neither are urban planners.

Whither the Back to the City Movement?

Posted on November 5, 2011, 9:14pm | Samuel Staley

Aaron Renn, the Urbanophile, has a useful post over at newgeography.com that examines some of the data from the 2010 census on migration in and out of big cities. The takeaway? The back to the city movement is much ado about nothing...except for downtowns. Most people are fleeing to the suburbs, and the central cities continue to languish. According to Renn:

"Despite claims of an urban renaissance, the 2000s actually turned out to be worse than the 1990s for central cities.  The one bright spot was downtowns, which showed strong gains, albeit from a low base.  The resurgence of the city story seemed largely fueled by intra-census estimates by the government that proved to be wildly inflated when the actual 2010 count was performed."

But, there's a twist, Renn says. If we look at county-level tax data, the migration to suburban counties as slowed and migration into central city counties has remained flat or ticked up a bit. Renn looks at New York City, Washington, DC, San Francisco, and Philadelphia. This is good news for older parts of our metro areas. A Renn concludes:

"Still, these are clearly figures that should inspire some at least small-scale optimism in urban advocates.  There has clearly been a shift affecting the net migration in these cities. And the same pattern is visible, though less easily attributable to just the urban core, in a large number of other metros around the country.  In particular, the fact the in-migration from the suburbs to the core held steady or even increased is a sign of some urban health.

"Back to the city as a mass movement?  Not yet.  But it’s certainly an improvement. These intra-regional migration statistics are key figures to keep an eye on as we look for any sign of a true inflection point in the overall population trends for America’s urban centers. The whole pattern could also shift again --- in one direction or the other --- as the economy, albeit slowly, comes back to life and people once again get back into the housing market."

To me, this suggests that the pace of decentralization in metropolitan America might actually be slowing even if it doesn't represent a rush back to the city.

Detached Housing Still A Crucial Part of the American Dream

Posted on November 1, 2011, 10:13pm | Samuel Staley

Wendell Cox has plowed through the Census data and discovered the single-family detached home--the icon of American sprawl--isn't going away anytime soon. Nearly 80 percentof the households in the top 51 US metropolitan areas chose single-family detached housing over apartments, condominiums, duplexes, mobile homes, and boats. In fact, over the last decade, single family detached housing has increased its market share of total housing, even in metropolitan areas like New York-Newark. Writing over at newgeography.com (11/1/2011), Wendell also observes:

Another conventional assumption is that single family homes have been disproportionately abandoned by their occupants, particularly since the collapse of the housing bubble. This is also not true. In 2010 detached housing enjoyed a 92.4% occupancy rate in 2010 which is higher than the 89.4% occupancy rate in attached housing and 84.2% occupancy rate in multi-unit buildings. Because a more of the multi-unit housing is rental, it is to be expected that the vacancies would be the highest in this category. However, at the national level, overall vacancy rates rose the most in multi-unit housing, with an increase of 61%, from 10.7% in 2000 to 17.1% in 2010. The vacancy rate in detached housing rose at a slower rate, from 7.3% in 2000 to 10.7% in 2010, an increase of 48%. Attached housing – such as townshouses – have the slowest rise in vacancy rate, from 8.4% in 2000 to 11.0% in 2010, an increase of 32%.

This is not a trivial finding. Many in the planning community and leading urbanists are claiming that the housing recession has resulted in a "Great Reset," where American households will be choosing fewer traditional homes and living in more dense and urban environments. The data so far suggest that the "reset" may not be as great as some may think.

"The Folly of City-Owned Parking Garages"

Posted on October 18, 2011, 5:15pm | Harris Kenny

Parking privatization has found an unlikely ally in Matthew Yglesias, fellow at the Center for American Progress Action Fund. Yesterday Yglesias posted a piece entitled "The Folly of City-Owned Parking Garages" that includes arguments for parking privatization that should sound familiar to regular readers of Reason Foundation's Out of Control Policy Blog, he writes:

Clearly, the ability to park one’s car is valuable. But that’s precisely why there are privately owned garages around to create competition. This is a service that can be provided at market prices for a profit. Alternatively, office developers or retail businesses may construct garages for their own use to encourage customers to show up. The availability of garages does create positive externalities for area businesses, but these can (and often are) re-internalized through deals to provide free or discount parking to people with validation from a nearby retailer. Parking is great—great enough to pay for.

There are parts of Yglesias' piece that miss the mark, but overall it is encouraging to see broadened support for privatizing services that are clearly not a core function of government.

Reason.tv recently sat down with Donald Shoup, economist at the University of California: Los Angeles (UCLA), to discuss this very subject:

For more of Reason Foundation's work on parking privatization, see my colleague Leonard Gilroy's writing here, here and here."

The Tragedy of Urban Renewal

Posted on October 2, 2011, 8:07pm | Samuel Staley

Reason.tv has just released an excellent six minute video on urban renewal, focusing on several blocks of Manhattan's Upper West Side (around 99th street) bulldozed to make way for new development. It's definitely worth spending some time watching. Of course, eminent domain was used to clear the slums. Another, complimentary video showing how eminent domain for redevelopment can be avoided, using Anaheim, California, as a case study (Drew Carey Video #5) can be found here. (See also the video on eminent domain abuse in National City, California here.)

For those looking for something a bit meatier, check out Florida State University economist Bruce L. Benson's recent (2010) book on Property Rights: Eminent Domain and Regulatory Takings Re-Examined. This book may be the most up to date free-market view of eminent domain, takings and redevelopment on the market.