Portland’s regional planning agency, Metro, recently released its 2014 Urban Growth Report, which projects that the region will gain 300,000 to 500,000 new residents between 2010 and 2035. The report suggests that it may not be necessary to expand the region’s urban-growth boundary to house those new residents because people are willing to live in smaller homes on smaller lots.
That’s an extremely distorted view of the future, says Gerard Mildner, an associate professor of real estate finance at Portland State University’s Center for Real Estate. In a paper titled, Density at Any Cost (which was also published in the Center for Real Estate’s quarterly report), Mildner argues that Metro’s report “distorts economic data and will lead the region to make decisions that will harm economic growth.”
Not only will Metro’s vision make single-family housing more expensive, says Mildner, it will increase the cost of rental housing. Contrary to claims that more people want to live in smaller quarters, achieving Metro’s goals will require “multi-billion dollar unfunded mandates on local government to subsidize housing and transportation projects.” Nor will Metro’s plans be good for the environment, since they will just lead a lot of people to move “from our region to places in the southeast and southwest United States where carbon emissions will be higher” because those places require more air conditioning and use more fossil fuels to generate electricity.
The White House has applauded Portland and fifteen other local governments as “climate action champions” for promising to reduce greenhouse gas emissions. Perhaps the White House should have waited to see whether any of the communities managed to meet their goals before patting them on the back.
Take Portland, for example. The Northwest city’s modest goal is to reduce Portland and Multnomah County emissions by 80 percent from 1990 levels by 2050. Planners claim that, as of 2010, the city and county had reduced emissions by 6 percent from 1990 levels. However, this claim is full of hot air as all of the reductions are due to causes beyond planners’ control.
Almost two-thirds of the reduction was in the industrial sector, and virtually all of that was due to the closure in 2000 of an aluminum plant that once employed 520 people. The closure of that plant hasn’t led anyone to use less aluminum, so all it did was move emissions elsewhere.
The evidence continues to grow that so-called transit-oriented development (TOD) is more oriented to subsidies than it is to transit. A new GAO report found lots of places where rail transit failed to stimulate new development. In many if not most of the places it found TODs, “supportive zoning, planning, infrastructure investments, and tax incentives” played a major role in seeing them built.
Based on this, it is not surprising that a suburb along the Minneapolis-St. Cloud NorthStar commuter rail line has had to reduce density expectations in order to attract any development near a station on that line. Similarly, Denver RTD’s latest TOD update admits that one of the lessons RTD has learned is that “trains don’t create markets” (p. 4), and the update proceeds to outline many of the incentives RTD and local governments are providing to see TODs built.
So it is disappointing when The Economist, a magazine that usually does its homework, accepts without question transit agency claims that the Atlanta streetcar will lead business “to soar” for shops along its route. The magazine-that-calls-itself-a-newspaper considers the streetcar to be proof that “Americans are slowly warming to public transport,” when in fact all it proves is that American cities will take federal dollars for any crackpot scheme the feds are willing to fund, even if that scheme involves disrupting traffic and building housing that few people would live in unless it was subsidized.
Debates over Portland-area rail transit and land-use issues typically pit city residents against the suburbs, with urbanites favoring more transit and land-use restrictions and suburbanites opposing them. But a recent poll by Portland’s city auditor reveals that even city of Portland residents are becoming increasingly disillusioned about Portland’s policies.
The complete survey is here. The same survey has been made for each of the last five years, and support for Portland’s land-use and transportation policies in particular has steadily eroded during that time.
The survey found that satisfaction with the city’s policies in general had fallen from 52 percent support in 2010 to 47 percent in 2014. Dissatisfaction was greatest with regard to transportation policies. Where 38 percent thought the city was doing okay on street maintenance in 2010, just 29 percent did in 2014. Where half of the city residents felt they could live with existing levels of traffic congestion in 2010, just 41 percent did in 2014.
As the Antiplanner noted yesterday, the Washington Post has observed that unaffordable housing markets tend to be in liberal metropolitan areas while conservative metropolitan areas tend to be affordable. This is based on a comparison by Trulia economist Jed Kolko of housing prices (in dollars per square foot) vs. voting for Obama or Romney in the 2012 election.
Note that not all liberal metropolitan areas are expensive while not all inexpensive markets are conservative. But nearly all expensive markets are liberal and nearly all conservative markets are inexpensive. (The one exception, Orange County, California, is partly land-locked by other, more liberal communities.)
New Zealand economist Mish Shedlock asks if this is merely a correlation or does one factor cause the other? His weak conclusion is that “Union work rules, land availability, and building restrictions (or lack thereof) are all likely in play.” In fact, there is plenty of land available in all of the expensive regions; it is just rendered off limits to development by state or local land-use rules.
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?
Some two weeks ago, the Antiplanner met regionalist Myron Orfield in a debate over the question, “What is the appropriate role of government in land-use regulation?” A member of the Sensible Land Use Coalition, which sponsored the event, recorded the discussion and asked me to post it to Youtube.
To avoid an overly long video, I elected to post it in four parts. Part 1, above, shows the introductions and my presentation (also available as a 10.5-MB PDF).
Portland doesn’t need to apologize for spending more than $1.5 billion on a 7-mile light-rail line, says Secretary of Immobility Anthony Foxx. “Cities, counties and state need to have bold visions, not be unapologetic about them, and explain them to the public,” he was quoted as saying. Presumably this quote was garbled; otherwise the Department of Transportation is in even worse trouble than the Antiplanner thought.
Let’s see how well Portland is doing as a model for the nation:
- Its streets are falling apart even as it plans to build 140 miles of streetcar lines at a cost that would be enough to repave all 5,000 miles of streets;
- Portland doesn’t even have enough money to maintain city-owned office buildings;
- The general manager of Portland’s transit agency says it will have to reduce all rail and bus service by 70 percent between now and 2025 in order to meet all of its financial obligations;
- Despite all the money spent on Portland transit, transit is so unpopular that, of 50,000 new workers gained between 2005 and 2012, fewer than 100 take transit to work;
- For the Portland urban area as a whole, there were 124,000 new jobs between 2005 and 2012, of which about 700 took transit to work.
- Thanks partly to money stolen from schools by TIF-addicted planners intent on subsidizing TODs, Portland high schools have some of the largest classroom sizes and lowest graduation rates in the nation;
- The “creative class” of young people who have been attracted to Portland (most likely by the city’s 50 brew pubs) do so little work that they have reduced Portland’s per capita incomes, relative to the rest of the country, by 10 percent;
- Portland has funded only half of its pension obligations and just 4 percent of its health-care obligations, giving it one of the worst records of any city in the nation.
Sounds like a model for other cities of what not to do.
The Antiplanner squared off against regionalist Myron Orfield in Minneapolis yesterday over the question of whether governments should try to regulate land uses. My presentation (11.6-MB PowerPoint or 10.5-MB PDF version) argued that urban areas are too complicated to regulate and that attempts to do so end up doing more harm than good. Dr. Orfield responded that letting people do what they want led to housing discrimination and too many septic tanks destroying ground water supplies in exurban areas.
Perhaps the most difficult question anyone asked us is where we agree. We both stared at each other for a minute before answering. Obviously, we both oppose racial discrimination and water pollution. The question is how these problems are solved. Dr. Orfield thinks that regional government is needed; I would push things down to the local level as much as possible.
It is one thing to say that people shouldn’t impose costs on others by polluting the water table. It is quite another thing to have a regional government restricting growth beyond an urban-growth or urban-service boundary based on the idea that it is too expensive to allow leapfrog development.