Who benefits from tax exemptions to nonprofits?

This is pretty far outside my reading area, but I thought it was extremely interesting. Here’s the citation:


Kelly Leroux is an assistant professor at the University of Illinois, Chicago in the School of Public Administration.

From the abstract:

Questions surrounding the distribution of benefits have served as the focus for much research on local economic development. While nonprofit community development corporations (CDCs) emerged in the 1960s as one means of redistributing economic development benefits by targeting job training and business growth programs toward the urban poor, CDCs now represent only a portion of all nonprofit economic development organizations (NEDOs) in the United States. Newer forms of these organizations have emerged in recent years, carrying out diverse economic functions. This evolution of the nonprofit economic development subsector raises a critical question: Do nonprofit economic development activities remain concentrated today in poorer cities, or do wealthier cities also have high levels of nonprofit economic development activity? This study aggregates finance data for several types of NEDOs to the city level, for all U.S. cities with population 50,000 and over, in order to examine this question. Multivariate regression is used to estimate the effects of city-level demographic, institutional, and fiscal explanations on the level of NEDO revenues per capita. The findings demonstrate that revenues from some types of NEDOs, such as CDCs, remain concentrated in higher-poverty cities. However, wealthier cities have higher concentrations of revenue generated by nonprofit business assistance organizations and nonprofit real estate organizations. This paper concludes by discussing the implications of these findings for current federal and local policies related to tax-exempt organizations.

Now, this doesn’t strike me as being a terribly surprising result when you sit back and think about it: rich people give money, and rich people are clustered in particular cities and within particular geographies within those cities. However, I had never put the issue together before I read this manuscript.

However, that’s not what Leroux finds, at least not entirely. She draws on individual analogues: so just as wealthier folks benefits disproportionately from the nonprofit provision of arts and culture nonprofits,

NEDOS (nonprofit economic development organizations) differentially benefit cities according to the overall amount of wealth. She disaggregates the NEDOS into different type and finds:

Specifically, NEDOs that were created to support the growth and development of private businesses, and those created to develop and promote commercial, industrial, and residential real estate, are found in cities with higher average incomes, and fiscally stronger municipalities. Given that the purpose of local economic development is to improve the economic well-being of a city and its residents, these results suggest that nonprofits specializing in business assistance and real estate may be making wealthier cities even more well off. In light of the current federal budget crisis, and commensurate fiscal challenges of state and local governments, it seems timely to raise the question of whether these specific types of economic development organizations continue to warrant across-the-board tax exemptions.

The 1-mile per hour transit ride

I live 4 miles from downtown. I went to dinner downtown with some of my colleagues. I turned down a ride as nobody was going in my direction.

I left my cell phone in the office. This was a terrible tragedy.

Went to Union Station, got on the purple line, went from Union Station to Wilshire/Western. I got off, waited 30 minutes for Metro Rapid bus.

Onboard, the changable message sign does not flash the next stop. No, it flashes super-useful information, like the date.

The bus driver, who is supposed to verbally announce the stops, doesn’t. I miss Crenshaw and Wilshire and finally realize this when I see La Brea pass. Damn! I pull the cord. It’s an express, so it finally lets me off at Fairfax.

Now, in theory, that’s my fault. But having the date instead of the next stop is truly useless in every possible regard. Oh, there’s the date. How splendid. I can now write checks on the bus and be sure I have used the proper date.

I get out and cross the street to get on a Metro 720 bus eastbound. I wait 20 minutes for that.

I ask the driver as I get on: “Do you stop at Wilshire and Crenshaw?” “Yah” he grunts.

How jolly.

Again, no next stop information on the changeable message sign, which helpfully shows me the date and time. He doesn’t announce it either.

So I stand in the center aisle hunched over looking at the street signs in the dark as they whiz by.

Aha! Wilshire and Crenshaw is the next stop. I reach to pull the cord, but somebody is reaching faster than me, and they get to it first.

The bell rings. The sign says “Stop requested: please use rear door exist.”

Alrighty! I can use the rear-door exit. It’s my favorite, in fact.

But, alas, the driver slows down for the stop at Crenshaw, sees the light is green, and then accelerates past the stop without stopping or opening his doors.

Me and 4 other people yell “WTF?”

The next stop is Wilshire and Western, where I first alighted the 720 an hour ago to trundle along the same stretch of Wilshire BLVD twice.

Third time is the charm. After another 20 minute wait, another 720 comes, and I pull the cord immediately.

He stops! It’s magical.

We get out. I walk over to the Metro 710 sign. A nice lady says to me: “That doesn’t run at night. You have to take the 210.” There is not a single map of the route posted. There is not a single schedule posted. Were it not for that woman, I would have had no way of knowing that the 710 doesn’t run at that time of night because waiting an hour for a bus is not unusual in my experience.

During this time, I have not seen a single taxi.

So I go stand at the 210 station. It is pitch black except for headlights on Wilshire and some sad streetlights.

I wait for 45 minutes. I see a taxi coming, but the 210 is right behind.

Eh, I think. I’ll save the 10 bucks and take the bus. I let the taxi go by.

I look up. The 210 bus now says “Not in Service.”

I utter words you can not put on a family blog and I turn around and walk 1.7 miles from Wilshire/Crenshaw home, to Crenshaw on Washington, at 10 o’clock at night.

As I turn the corner from Crenshaw& Washington, 500 yards from my house, a taxi turns around and says “Honey, let me give you a ride. You don’t need to walk in this neighborhood at night.”

My travel time: approximately 4 hours.

David King on the Co-Development of Subways and Real Estate in JTLU

The Journal of Transport and Land Use always has good things in it, and this time out is no exception. I’ll pull out two papers to discuss this week.

The first is from fellow UCLA alumni and now assistant professor at Columbia University, David King. His manuscript is

King, D., 2011, Developing Densely: Estimating the Effect of Subway Growth on New York City Land Uses The Journal of Transport and Land Use, 4(2), pp. 19-32.

From the abstract:
Abstract:In the early twentieth century, New York City’s population, developed land area, and subway network size all increased dramatically. The rapid expansion of the transit system and land development present intriguing questions as to whether land development led subway
growth or if subway expansion was a precursor to real estate development. The research described in this article uses Granger causality models based on parcel-level data to explore the co-development of the subway system and residential and commercial land uses, and attempts to determine whether subway stations were a leading indicator of residential and commercial development or if subway station expansion followed residential and commercial construction. The results of this study suggest that the subway network developed in an orderly fashion and grew densest in areas where there was growth in commercial development. There is no evidence that subway growth preceded residential development throughout the city. These results suggest that subway stations opened in areas already well-served by the system and that network growth often followed residential and commercial development. ăe subway network acted as an agent of decentralization away from lower Manhattan as routes and stations were sought in areas with established ridership demand

This is a wonderfully written paper, and I can’t claim any particular objectively because I think David is the shizzle. However, it’s worth chatting about the paper in some depth.

In this introduction, King notes three factors that reinforced the idea that the subway followed people rather the other way around:

1. The subways were developed by private transit companies with public financing. These companies were not real estate developers: they relied on fares alone for their business. I strongly suspect that this is the biggest single factor in the story he has to tell. If you are a private company, you don’t pour capital investment into places unless you are pretty clear that there are going to be passengers. Contrast this behavior with the behavior of pork-barrel, get-my-slice-of-the-capital-funding-pie-no-matter-how-few-passengers-there-are temptations of public funding for capital improvements.

2. There was no real zoning prior to the 1960s, so developers could cram as many units as they could pencil out into the parcels they owned.

3. Land values were on the rise, which would reinforce #2, and which drove manufacturing off Manhattan in favor of offices–so that we today can stroll around Manhattan and oooh and aaaah at its sustainable urban form populated by, among others, billionaire I-bankers holding the reigns of a capitalist machine that is currently eating the entire universe. But they live in apartments and walk more than everybody else, so they must be The Better Environmental People.

Anyhoozily, I am not the world’s biggest fan of Granger models, but King’s application of them is clever here. To make a long story short, the models look for a first period change in a variable that correlates with a second period change in different variables. King sets up the analysis to look at both possible directions: subway supply change lagged against real estate development (the subway following the people hypothesis) and the alternative, development lagged against subway supply (the people follow the subway hypothesis).

He tests against both commercial and residential development, and he finds that there is no support for the belief that the subways were speculative–that is, that they came before the development. Instead, subways followed development, and commercial real estate most importantly.

One quibble is that I wish he’d left Staten Island in the analysis. He drops it because it’s not a part of the subway network, but I think that makes for an interesting control. Another swing at the questions King brings up concerns whether there is a change in the rate of development once the station appears.

David King blogs about transportation over at Getting From Here To There.

Holy macaroni, batman, UP has shown a profit

Yours truly is an avid loser of money on rail freight stocks. I won’t bore you with my pathetic history of investing in BNS, those bastards, but let’s just say I’ve done my fair to enrich other people in the realm of freight rail investing.

Today’s Financial Times rubs it in a bit with this story on UP:

Please respect FT.com’s ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article – http://www.ft.com/cms/s/0/7e3e766a-abe3-11e0-945a-00144feabdc0.html#ixzz1VsU907TJ

The operator of the US’s largest railway network has crossed a key profitability threshold for only the second year in its 149-year history, amid a rebound that has vindicated Warren Buffett’s 2009 gamble on the sector.
Rob Knight, finance director of Union Pacific, told the Financial Times that its 2010 returns on invested capital exceeded its cost of capital – a key test that the industry’s regulators and investors consider when deciding how much railways can reasonably charge their customers.

Which means I was wrong. Again! Because I guffawed at Buffet last year when he went in. (Brilliant investor (1), rail pundit (0)).

LA Times sets up the Nate Silvers of this World to Sermonize to Brookings about transit–again

Now, I have been a faithful subscriber to the LA Times for years–years. But this article makes me want to rip my hair out in handfuls:

Car-Loving LA May Actually Be A Transit Paradise


This headline is reporting on the findings from a study just released from Brookings called Transit Access and Zero-Vehicle Households.

Nowhere in this report does it even remotely suggest that Los Angeles is a transit ‘paradise.’ The report does say that transit in Los Angeles does go to neighborhoods where many households do not have cars.



Read the research. The comments on this story on Fboo are driving me nuts as they sermonize on about West Los Angeles rail.

The Brookings report is not worried about transit access for rich people (ie West Los Angeles) here. Mmmmmmokey? And the reason west LA still doesn’t have rail transit is west LA’s own damn fault, and they’ve subsequently managed to tax the rest of the county to get the subway to the sea, so put a sock in already.

Transit is a very complex field. I have a semester long course on transit operations, and we only skim the surface of trying to understand what measures quality in public transit. Is transit access measured by walking distance to a transit stop? What if the transit only serves the stop once an hour? What if you can get to a transit stop, but then the transit doesn’t go where you want to go? How about timed transfers? How much parking has to be there? How much commercial activity should surround a station? How much seating?

As a result of this complexity, studies are *partial*. In real-deal research, you don’t get to walk away with Flavorwire tidbits like “10 Metro Systems that Serve Every Population’s Needs All The Time.” Transit doesn’t really work like that.

Finally, calling this a transit story–and focusing on the transit the way the commenters do–is wrong. This is a transit supply story, but it’s also a housing supply and distribution story. Where the transit goes is only one aspect to access. The other concerns where low-income people live, and where people without cars live (often the same group, but sometimes not). There are plenty of places where I’d bet that housing supply aspect dominates the transit supply aspect.

Even so, the Los Angeles numbers may be influenced by the fact that many low-income households here have cars already. Again, that’s pretty clear from the report.

David King, Sarah West, Alan Atschuler and me on the Equity of Evolving Transportation Finance Mechanisms

We are here: TRB Special Report 303: Equity of Evolving Transportation Finance Mechanisms – has now been made available in prepublication format on the TRB website. Our individual commissioned papers have also been posted and can be accessed via the links provided in the blurb and in Appendix C of the report.

Very cool. Many thanks to the wonderful Jill Wilson of TRB for helping us put this report together.

Saying goodbye to Lee Schipper

Very sad news. Lee Schipper, physicist and researcher with Lawrence Livermore and then founder of the sustainable transport research program at the World Resources Institute, passed away from cancer yesterday. He was a great speaker, a terrific role model, and wonderful writer on transportation and energy, and he will be missed.

Here is a link to his obituary at the WRI site.

Go read:

Are We Reaching Peak Travel? Trends in Passenger Transport in Eight Industrialized Countries (3.0MB PDF) Preprint of an article submitted for consideration in Transport Reviews © 2011

and one of my favorite papers of all time:

Measuring the long-run fuel demand of cars: separate estimations of vehicle stock, mean fuel intensity, and mean annual driving distance.

Brookings’ Transit Access and Zero Vehicle Households

I got this in the mail from Brookings this morning:

This Thursday, August 18, the Brookings Institution Metropolitan Policy Program will release a report that analyzes how well public transit systems serve households that do not own cars and so have few other transportation options.

Transit Access and Zero Vehicle Households uncovers, for the first time, the fact that 700,000 households across the country have no access to cars or transit and so are severely constrained in getting to jobs and commercial centers. This presents a significant challenge to metros working to grow their economies, which, in turn, presents a challenge to our nation’s economic future.

The report will go live on the Brookings Metropolitan Policy Program website at 10 AM ET on 8/18. Accompanying the new report will be individual profiles showing how the country’s 100 largest metros perform individually in this area.

Also on Thursday, we will be launching an online interactive mapping tool that uses Bing maps technology to analyze transit data for all 100 metropolitan areas. This tool will give users a wealth of information on how well transit systems perform.

If you have any questions in advance of this release, please feel free to contact Rachel Harvey, 202.797.6073, rharvey@brookings.edu, or John Fairbanks, 202.797.6087, jfairbanks@brookings.edu.

Heaven help them if there is the vaguest hint that transit in NYC could improve its service in any way, shape, or form given the histrionics that greeted their last report…