In his reflections on the debate we had last week, Charles Marohn’s main comment is that he found my ideas “utterly impractical.” What were those ideas? Privatizing local streets. Privatizing utilities. Privatizing other common goods.
Just how impractical are these ideas? Most utilities in this country are, after all private. Many streets are private–I live on one. St. Louis has privatized some of its streets.
During the debate, Marohn called himself a libertarian, but his response reveals him to be a progressive. Progressives believe that commonly owned resources are a good thing because they value the tragedy of the commons. Without the tragedy, there is no need for government intervention. Without a need for government intervention, the role of progressives is greatly diminished.
Last week’s debate between the Antiplanner and Charles Marohn was supposed to be about urban planning, but it ended up being more about urban finance. Marohn had been hired by the city of Lafayette, Louisiana to help it decide where to fund its infrastructure. He and his organization, Strong Towns, advocates that cities use return on investment model to help make such decisions.
Marohn raised some legitimate questions about city finances. For example, in a typical subdivision, the developer builds roads and streets and then deeds them over to the city. The city collects property and sales taxes on the new development, which can be a windfall for many years. But then, after 25 years or so, the street needs to be repaved, and the cost of doing so may not be justified by the taxes collected from adjacent properties.
City officials regard tax-increment financing as free money, when actually they are stealing it from other taxing entities. Nowhere is this more visible than with a special kind of tax-increment financing involving sales taxes. In Missouri, Colorado, and other states, private shopping malls and other retail districts can effectively assess their own sales tax, just like a government agency, and keep the money. Their patrons end up paying the tax but probably don’t realize it because taxes aren’t included in advertised prices.
Under Missouri law, a community improvement district can assess its own sales tax with the approval of all voters in the district. If there are no voters residing in the district, then a majority of property owners get to decide whether to assess the sales tax. Since other people will pay the sales tax while the property owners get the benefit, it’s an easy question.
The inequity of this system was made clear when a group of property owners in Columbia, Missouri defined their district in a way that, they thought, excluded all voters. As it turned out, there was one voter, and when she examined the proposal, she realized that it “just didn’t seem to be as good as they were saying to me at first.” As a result, the district may not hold the election, at least until it can figure out a way to gerrymander the sole voter out of the district (or perhaps bribe her into supporting their scheme).
The Portland Tribunereports that the number of police officers in Portland has declined by 9 percent since 2001, even as the city’s population grew by 13 percent, resulting in a 20 percent decline in officers per capita. This decline is typical for a city that is neglecting its streets, its schools, and other essential services all so that it can fund streetcars and transit-oriented developments.
The Portland Development Commission (the city’s urban-renewal agency) is using tax-increment financing (which is a polite term for stealing) to gobble up as much tax revenue as it can. According to the State Department of Revenue, that’s nearly $100 million per year (see page 45). Since nearly all of that development would have taken place without the subsidies (though perhaps not as dense as planners would like), that’s $100 million that’s not available for police, streets, schools, and other services that depend on property taxes.
All of that urban renewal isn’t doing much to create jobs. Oregon was just ranked the second-worst state to make a living in due to its high cost of living (meaning housing costs), low average incomes, and the highest income taxes in the country.
The Economistlaments that cities are shrinking all over the world. More than a third of the cities in Germany are losing population, as are nearly one in ten in the United States. What the Economist fails to note is that most of the cities it uses as examples–Detroit, cities in the former East Germany–were once dominated by strong governments that taxed people heavily and often tried to control how people lived.
American urban planners are no longer trying to make people live in high-rise housing that is so common in eastern Europe. Instead, they are trying to make people live in mixed-use, mid-rise housing, so-called transit-oriented developments. The type locale for this kind of housing is New York City’s West Village, where Jane Jacobs lived when she wrote The Death and Life of Great American Cities. Jacobs was convinced that the urban planners of her day didn’t understand how cities worked, but she was just as convinced that she did understand how cities worked, and in her mind the West Village was the model.
Her book, in turn, became the model for New Urbanists. Indeed, some call her the mother of what passes today for urban design. Unfortunately, she was as wrong about how cities work as the planners she criticized.
Transit-oriented developments (TODs) are supposed to promote economic growth because the demand for it is so high. But if so many people want to live in dense, mixed-use developments, why do they so often need subsidies?
The latest proposal to subsidize TODs comes from Senator Cory Booker (D-NJ). He wants to expand use of the Railroad Rehabilitation and Improvement Financing (RRIF) program to allow the funds to be used for TODs. RRIF was created mainly to provide low-interest loans to smaller freight railroads improve their facilities and restructure debt so shippers along those rail lines would not be stranded (or have to resort to trucks) if the rail lines failed.
However, some of the money has been used for passenger rail, including $663 million for Amtrak and $72.5 million for the Virginia Railway Express commuter trains. Considering that these are perpetual loss-making enterprises that have no hope of repaying the loans except out of other tax dollars, expanding this fund for money-losing TODs may seem a natural next step to Booker. But Booker’s fundamental assumption, like that of many Democrats, is that the federal government has an infinite capacity to give away funds, which is what these “loans” are if they can’t be repaid.
The City of Roses is also sometimes called the City of Trees. Look down on Portland from Council Crest, Mount Tabor, or Rocky Butte and, except for downtown, much of it looks more like a forest than a city. But 165 years of history as a forested city is not good enough for the city council, which just passed a 100-page tree ordinance that regulates what people can do with trees on their own land with even stricter rules for trees in their front yards that happen to be partly or wholly on city right-of-way.
Under the rules, if a tree on your property is greater than 12 inches in diameter, you can’t cut it down without a permit and a promise to plant a new tree. If you have a tree of any size on your property that happens to be in one of six overlay zones, then you can’t cut it down without a permit and a promise to plant a new tree. If you want to cut a “street tree”–a tree of any size on your front berm, the land that is technically in the street right of way even though you are legally obligated to landscape it–you can’t cut it without a permit and a promise to plant a new one.
Here’s a continuation of yesterday’s post with five more economic principles for planners. Today’s principles are a little more complicated than yesterday’s. To clarify, I am using the word “planners” as shorthand for “advocates of government infrastructure subsidies and regulation.”
6. There’s no such thing as a free lunch.
Planners would like you to believe that there is free money available to do the projects they propose. Sometimes they mean federal money (“it’s going to be wasted somewhere, so we might as well waste it here”), while other times they mean tax-increment financing (“if we didn’t subsidize the development, the taxes wouldn’t come in to pay for it”).
Planners and economists often come to the exact opposite conclusions about various policy proposals. In too many cases, this seems to be because planners (which I define here as “advocates of government spending and regulation”) have a poor understanding of basic economics. To help them out, the Antiplanner has developed ten economic principles for planners. I’ll present five today and five tomorrow.
1. Capital costs are costs.
Too many planners want to ignore, or want other people to ignore, capital costs. Like a high-pressure car salesperson whose job is to get the customer to buy the most expensive car they can afford, they’ll say, “Pay no attention to the number of zeroes at the end of that number. You only have to pay the capital cost once, and then think of all the benefits you’ll get.” Why get a Chevrolet when you can get a Cadillac? Why get a Yaris when you can get a Lexus? Why improve bus service when you can build light rail?
As most Antiplanner readers know, Portlandia is a television comedy dedicated to making fun of the weird things that happen in Portland. The only problem is that (as actress Carrie Brownstone noted), “no matter how far out on a limb we went, we always ran into that person [in Portland] within two days.”
Such is the recent plan to rely on bicycles to rescue the city in the event of an earthquake or other natural disaster. “One of the bright, shining spots for Portland in a disaster like an earthquake is that we’re still going to get around,” a Portland disaster specialist told the Oregonian. “When roads are broken, when fuel supplies are cut, those kinds of things, you can bet that our city will still get around.”
On one hand, even the biggest cargo bikes will not be able to move the fire and rescue equipment needed to truly handle a natural disaster. On the other hand, even the worst earthquakes in modern times in the U.S. did not seriously impede the ability of motor vehicles to participate in rescue and recovery.