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.
Portland from Mount Tabor. Flickr photo by Patrick Michael McLeod.
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.
Planning of outer southeast Portland has failed so badly that even the planners are recommending that the city slow densification of the area. As reported in the Oregonian late last year, the city upzoned the area to much higher densities but failed to install basic urban services to support those densities. The result is just one more disaster in the model of urban planning called Portland.
Some background: In 1994, Metro, Portland’s regional planning agency, gave every city in the region a population target and told them to upzone neighborhoods to reach that target so they wouldn’t have to make large expansions of the region’s urban-growth boundary. Metro specifically targeted 36 neighborhoods for densification, including outer southeast Portland and the Portland suburb of Oak Grove.
At the time, the Antiplanner lived in Oak Grove, the only targeted neighborhood that successfully fought densification. In 1996, I met someone from outer southeast Portland whose neighborhood was not so lucky. The planners came to their neighborhood and proposed upzoning to as high as 65 housing units per acre. The residents strenuously objected, and after much haggling, the planners agreed to a modest amount of upzoning, but warned that if the neighborhood failed to add enough new housing, even more upzoning would take place later.
Washington DC has proposed an anti-auto transportation plan that is ironically called “MoveDC” when its real goal is to reduce the mobility of DC residents. The plan calls for reducing auto commuting from 54 percent to no more than 25 percent of all workers in the district, while favoring transit, cycling, and walking.
Click image to download the plan’s executive summary. Click here to download other parts of the plan.
The plan would discourage auto driving by tolling roads entering the district and cordon-pricing. Tolls aren’t necessarily a bad idea: as the Antiplanner explained in this paper, properly designed tolls can relieve congestion and actually increase roadway capacities. But you can count on DC to design them wrong, using them more as a punitive and fundraising tool than as a way to relieve congestion. Cordon pricing is invariably a bad idea, much more of a way for cities to capture dollars from suburban commuters than to influence travel habits.
Early this month, a Texas judge ruled that developers can proceed with the Ashby high-rise in Houston, but that they have to pay nearby residents $1.2 million for damaging their property values. Planning advocates say this makes the case for zoning, while zoning critics say the damage award will merely encourage NIMBYs.
Developers plan to proceed with construction even as they promise to appeal the damage award. The case has been in court for seven years, damaging Houston’s reputation as a place where developers can easily get permits and build for the market.
Planning advocates should be careful what they wish for. As residents of Vancouver, BC, Portland, Seattle, and the San Francisco Bay Area have learned, zoning can be used to impose high rises and other high-density developments on neighborhoods that didn’t want them just as easily as it can be used to prevent such developments.
The Antiplanner has a rule: anytime someone mentions how wonderful a transit-oriented development is or will be, just Google the name of that development with the words “tax-increment financing.” So, when Atlantic Cities writer Rebecca Burns breathlessly praises the Atlanta BeltLine as a “magical TOD,” I immediately looked it up.
It turns out the development is expected to eventually receive a modest $1.7 billion in tax-increment financed (TIF) subsidies. Total subsidies will be even more: of the $337 million in subsidies to date, only $120 million are from TIF. That’s not magic; that’s crony capitalism. If you want magic, go to Disneyland, which only cost $17 million (not billion) to build in 1955, which is less than $150 million in today’s dollars. (Disney World cost about $331 million in 1973 which, converted to today’s dollars, is in the ballpark of $1.7 billion–but it was virtually all privately financed.)
Regular readers know that the Antiplanner is not fond of TIF. Though public officials like to portray it as “free money,” in fact it takes money from schools, fire, and other property-tax-supported services. At best, TIF doesn’t stimulate development of an urban area; it only influences where that development will take place and what it will look like. If the development would have taken place anyway–perhaps in another location and at lower densities–then the taxes earned by the development would have gone to schools, etc. if there had been no TIF. At worst, TIF actually slows the growth of an urban area by increasing the tax burden or reducing the quality of urban services.
It’s been more than three years since much of Christchurch, New Zealand, was devastated by an earthquake, and recovery is far from complete. Now, a new report from the New Zealand Council for Infrastructure Development blames the government for hampering the recovery.
Government meddling has not only hampered recovery, it made the effects of the earthquake worse. The owner of the building that collapsed onto this bus, killing all but one of the occupants, had wanted to demolish it before the earthquake, but the city held it up because it was considered a historic structure.
This is a familiar tale: after a natural disaster, instead of letting people rebuild, government planners attempt to impose their ideals of what the city should look like on the supposedly blank landscape. The same thing happened in New Orleans: people from New Urban architect Andrés Duany to the free-market Mercatus Center agree that government planners have impeded recovery of that city after Hurricane Katrina.