Beaverton Round, a transit-oriented development in a Portland suburb, is going bankrupt — again — for the third time. It has already received more than $10 million in subsidies, and some people want to give it even more.
The Beaverton Round. Photo by John Charles.
“All residential construction is subsidized,” says Portland planner Carl Hosticka. So he sees nothing wrong with throwing more good money after bad.
I hear this argument all the time. “All transportation is subsidized,” say rail advocates, “so it is okay to spend billions of dollars on light-rail lines that few people will ever ride.”
These people are either innumerate or deliberately misleading. I think very few things should be subsidized, but when they are we have to keep them in proportion. Subsidies to highways amount to well under a half a penny per passenger mile of travel. Such tiny subsidies do not justify the 65-cent-per-passenger-mile subsidies we give to public transit, much less the much larger subsidies needed for most rail transit.
In the same way, whatever tiny subsidies go for ordinary housing do not justify the huge subsidies needed to prop up Portland’s transit-oriented developments. For those not familiar with the project, the Beaverton Round was supposed to be an office-retail-residential complex surrounding a light-rail station.
The original plan for Beaverton Round.
Since it was on a light-rail line, planners allowed very little parking. After receiving about $9 million in subsidies, the first developers partly completed the project, then went bankrupt because they couldn’t get anyone to finance housing with inadequate parking.
After sitting uncompleted for several years, the city of Beaverton coughed up some more money and enticed a new developer to finish the project — but the developer insisted on having lots of parking.
Unplanned parking. Photo by John Charles.
But the city demanded that the developer replace the surface parking with a garage and finish building the planned retail area on the parking lot. Garage parking costs much more than surface parking, and eventually the new developer defaulted as well.
According to The Costs of Sprawl 2000, it costs about $11,000 more per unit to provide urban services to typical low-density housing than to high-density housing on the same site. Whether this $11,000 is a subsidy depends on local financing.
It is clear, however, that most homebuyers are willing to pay an extra $11,000 to be able to own their own single-family home. After all, planning-induced housing shortages in Oregon, California, and elsewhere have driven home prices much higher than $11,000, and people still buy these homes.
In contrast, part of the problem with high-density developments like the Round is that most people don’t really want to live in such developments. According to one survey, 82 percent of Americans aspire to live in single-family homes, while only 18 percent say they would like to live close to transit, shops, and jobs.
So Hosticka (who was an urban planning professor before he was elected to the council of Metro, Portland’s regional planning authority) is blowing hot air when he justifies subsidies to places like the Round based on supposed subsidies to other housing. He points to planned subsidies to new developments elsewhere in the Portland area without noting that those subsidies exist only because Metro planners decreed that they should exist.
If planners would allow builders to build the homes that people wanted to buy, homebuyers would gladly pay the full cost of their housing. And if there were no planning-induced land and housing shortages, the resulting prices would be significantly lower than Portland housing prices are today.