Cherrypicking the sprawl-bankruptcy connection

Bill Fulton has a piece in the LA Times where he argues that sprawl contributes to municipal bankruptcies. There’s so much wrong with his argument that I don’t even really know where to begin.

It’s easy to mistake a sprawling new development for prosperity. New buildings and wide new roads look great at first. But over time, the cost of serving such developments gradually bleeds taxpayers dry. More firetrucks have to travel longer distances to serve fewer people. So do police cars. And ambulances. And school buses. And dial-a-ride buses. And, up in the mountains at least, snowplows too.

This is not a terrible argument as far as it goes; density does leverage economies of scale in the provision of urban services, and so the cost per person goes down. The problem is the assumption that all urban services are cheaper to deliver via density–and that the marginal cost curve associated with service delivery continues to slope downwards with additional people. But that can’t be true past a certain point: using Fulton’s own example, a fire truck is also subject to congestion, which means at some point, the marginal contribution to delay that additional people bring can cause the service to slow beyond what gains to proximity yield–though it’s an empirical question about where that inflection point might occur, and whether most cities that might be more dense are anywhere near it. But that point probably varies for a whole bunch of municipal services. That was the goal of all the economics literature in the 1980s and 1990s about ideal city sizes. People have known for some time about the economic trade-offs between scale and congestion, the tensions between them, and how congestion of urban goods can act as a prompt for de-centralization.

Or, and this is one of our questions, how those economies of scale and marginal cost curves might change slope when cities get institutions large enough to unionize, or how and when collective bargaining attained through statewide public sector union activity acts as a particular problem for small-scale municipalities within the state.

Fulton is a smart growth guy. It’s what he does, so he just nods at pensions: yes, I guess that pension thing is a problem, but let me tell you about my pet issue: sprawl. But really? No mention of Prop 13 or the redevelopment money grab, and just a nod at the pension issue?

Then there’s the cherry picked examples: Stockton and San Bernardino, contrasted with his own shining Ventura, where he was mayor, which he happily notes is ‘not bankrupt.’ Come on. There are currently 3 cities in California that have filed for bankruptcy, and hundreds that, like Ventura, are not currently bankrupt, so don’t self-congratulate too much yet.

Both Stockton and San Bernardino are gritty older cities with struggling downtowns and dreams of urban revitalization. They have sometimes overreached in their zeal to achieve those dreams. Stockton in particular kept trying to rescue the city with grandiose redevelopment projects, none of which were within walking distance of one another and, not surprisingly, none of which succeeded.

Those redevelopments weren’t within walking distance of each other, and that was they reason they “didn’t succeed”? Not the fact that the developments were in Stockton? But if that’s the case, why do redevelopments in LA that everybody drives to walk around in ‘succeed wildly’ (like the Grove, the 3rd Street Promenade?), if by “succeed” you mean “they make a lot of retail cashola and generate an enormous amount of traffic.” You can’t walk between those, though, either.

FYI, the other city that is bankrupt is Mammoth Lake. Sprawled? Meh. What appears to have brought Mammoth Lake to its fiscal knees is…a conflict with developer trying to do one of those fancy new mixed use airport development. Now, in fairness, plenty of Smart Growth folks would guffaw at the notion that this resort town development was in any way sustainable, but it did have a bunch of mixed uses that went along with the airport expansion.

So here’s a story about Stockton that actually makes sense, from the HuffPo. It tells a story that is, indeed, related to the housing market, but also to the pension dodges that a cash-strapped city used to deal with unions and Prop 13. It’s a mess.

Here is a map of municipal bankruptcy filings of all city institutions (including school and park districts) from Governing. You can break out the whole-city chapter 9 filings.

Look, I’m all for the idea that it’s generally cheaper to provide infrastructure to greater population densities, but oye. Smart Growth is not medicine for every problem, even if ‘dumb growth’ doesn’t help.

Chris Leinberger on Sprawl in the NYT

I got a number of emails about this Op-Ed from Chris Leinberger, and it prompted some discussion as it was passed around on PLANET. I was hoping to ignore it, but it’s been sent to me so many times that it’s probably time to write about it.

There are a whole bunch of problems here, as Joel Kotkin notes in this response in Forbes. There’s a yucky ad you have to sit through, but it’s worth it.

Leinberger’s camp say he’s right; his research shows that real estate in central cities has retained its value better, and of course, there’s always the argument that auto-oriented suburbs increase family’s costs of living, and thus, add too much strain to family’s finances, thereby making it hard for them to be able to stay in their houses.

Chicago’s Census numbers nicely illustrate a bunch of internal tensions with Leinberger’s arguments. There is a chance that Census data haven’t captured a lag in people moving back to central cities, but the city of Chicago lost 200,000 people from 2000 to 2010. Chicago is a New Urbanist dreamland, with a downtown full of walkability and design frills, with copious rail transit, and a robust commercial life downtown. How could it possibly have lost population?

Some other hypotheses/ideas:

1. We had overvaluation in the market, and there was far too much risky borrowing gone on. All apparently true. But keep in mind what exposed the house-of-cards in the tranches in the first place: a surge of unemployment led to a concomitant surge in distressed sales of real estate started the house-of-cards falling. So, yes, the housing bubble contributed, but we also have that surge in unemployment to deal with. Unemployment is a major reason why people may not move at all, let alone to real estate that is relatively more expensive, as Leinberger now says urban land is.

2. If auto-oriented suburbs were the problem, with the strain of car and house, how do we explain the number of countries where a) there is a ton of transit and relatively low levels of car ownership and b) household debt to income ratios are much, much worse now than ever, bubble or no bubble, in the US: Spain, Sweden, Britain, Canada, and the Netherlands (another New Urbanist poster child).

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.

Rolf Pendall on upstate sprawl and a commentary on urban social science

In answer to my questions the other day about Aaron Renn’s idea that sprawl is driving to fiscal crisis for cities like Buffalo, Rolf Pendall from the Urban Land Institute sent along a link to a 2003 report he penned for Brookings: Sprawl Without Growth.

You can download the entire report in addition to reading the summary of the findings. Among the culprits are those I suggested in the post–greater individual incentives to sprawl–and some I didn’t think of (and should have) like high tax differentials between cities and outlying areas.

Pendall also grouched at me for suggesting that there is only direction of causation, arguing that urban systems are complex, adaptive systems–not mechanistic ones.

So what does it mean for systems to be complex and adaptive? Changes in any part of the system can prompt individuals to change their behavior and vice versa–that is, there isn’t one direction of causation, and multiple factors can cause the same change, or the same change can cause different subsidiary changes, and changes can either reinforce other factors of change (as I suspect is the case with fiscal crisis urban outmigration), or there can be multiple, overlapping, and conflicting factors.

I would argue that I didn’t suggest in my original post that there is only one direction of causation, but that’s clearly what he read, so let’s throw down over it. I did suggest, and I still do, that Renn has attributed causation to the wrong factor when suggesting that cities are broke due to sprawl. (Nonetheless, Renn’s probably right in that sprawl is probably reinforcing other factors that are driving central city fiscal crises even if it isn’t causing it per se.)

Since Rolf is one of those people I look up to, the comment struck a cord because the complex, adaptive system argument is everywhere. And it is both a) probably absolutely 100 percent correct and b) an excuse for extremely poor scholarship among urban planners.

As an urban planner in a school dominated by economists, I live in the whipsaw between the complex, adaptive argument and the mechanistic argument.

The complex, adaptive systems argument indeed allows us to see the many many nuances and factors in play.

It as often as not leads us to one descriptive, noninformative, blithering case history after another, where what’s deemed causal by the end comes down to whatever the planning scholar wants. Like “we need more transit, more urban growth boundaries, more of my pet policies because those all clearly worked here.” If, at any point, somebody raises a counter example of how, say, more transit accomplished very little, the response can always be “But these are complex, adaptive systems and you can’t generalize.” Well, you just generalized from your case. “But my case is exemplary.”

If I had a dime for every time an urban planner has given this talk in front of my economist and quantitive political science colleagues to be met with eye rolling and general disdain, I would be looking for a house in Beverly Hills now.

The other side of the whipsaw are the urban economists, who hope to find more generalizable knowledge and, thus, more mechanistic causal relationships.

As often as not, they have carefully controlled for every variable under the sun. They have found the cleverest instrumental variable known to mankind. They have used a marvelous fixed effect that has captured (in a general way) the nuanced differences from one administrative jurisdiction to another. They have thus produced a model that shows, definitively, that time costs matter when people select travel modes. No shit.

And my students wonder why I’m bitchy.

Both planners and economists are going to object to my characterization–and these are two, reductive extremes–but I stick by it. I hear this argument every damn day in some form. The economists use it to try to claim they are better than the planners, the planners use it to argue they are better than the economists.

As usual, I’m a person with a foot in both worlds with divided loyalties.

My preference, though I doubt there’s much merit, is to accept the belief that the world is complex, we can’t model everything (but neither can we describe everything–ask a historian; choices have to made about what is in and out of our memories) and that our knowledge of the phenomenon in any situation is miserably partial. Nonetheless, it’s worth making the effort to try to capture the complexities and exigencies using history on the one hand, and to try to look for the dominant levers to affect change on the other hand (seeking generalizability).

I have no big rationale for believing as I do, other than giving up on the idea that the truth is out there would put me out of job. The endgame of the first extreme is that nothing is truly generalizable; everything is happening for the first time and the only time, as everything depends on context. The end game of the second extreme is dancing on the head of a pin. Both are a lot work for remarkably little payoff in terms of knowledge.

Sprawl and decline, and reversing the directions of causation

Aaron Renn, the Urbanphile, has a post up arguing that cities are broke because of sprawl. Oh boy. Go read.

I have trouble believing that Buffalo is going broke because of sprawl. It’s such an extreme case of industry loss over the last 40 years that it’s hard for me to use it as an exemplar for any urban phenomenon other than “a place where the weather makes Dr. Schweitzer want her mommy.”

So what’s my point about the direction of causation? In a place like Buffalo, where populations began to decline due to employment loss and demographic shifts, land prices go down, and so larger lots become comparatively more affordable to the people there who remain a) employed and b) in the housing market. My friend who teaches in Rochester, for example, routinely sends me the absolutely beautiful homes she thinks about buying.

This is what you can buy in the Fillmore area of Buffalo for $115,000. SWEET CRACKER SANDWICH that’s a big honking house on a big honking parcel of land.

Voila Capture37

For comparison, I looked for comparable 3,800 square foot houses anywhere in the Bay Area, and it’s just not happening. I don’t know that market as well as I know LA, so looking there, I find this little darling (holy buckets) in Sherman Oaks:

Voila Capture38

Ok, apples and oranges, and all that, but still: $115K in relatively suburban Buffalo versus $1.5 million in suburban Los Angeles. Yes, wages are different, but I am pretty sure I don’t make 15 times as much as a university professor at SUNY Buffalo.

And in Buffalo, your suburban life really carries few transport-housing costs trades, either, because as population goes down, your travel costs go down (no congestion of any real magnitude). Fuel costs, yes, the costs that Buffalo winters take out of vehicles, yes, but time costs–low. The incentives for individuals in these places to consume land is nicely set, and the city/regional government is not in a strong position to implement growth controls when they are not growing.

I suspect that Detroit is rather like Buffalo’s story; decades of industry decline and outsourcing leave very few reasons for young people to stay there, or for immigrants to move there. Other than it’s cheap.

But Renn’s claim about Chicago is hard to reconcile. The Chicago metro area grew, and Chicago is a region with multiple urban centers (like most thriving metros).

The city of Chicago has been a darling amongst planners for doing everything right for past decade: they cleaned up their downtown, you can’t turn around without hitting a pedestrian walkway, public art smacks you in the eyeball every time you look up from your iphone, pocket parks galore, and they have invested heavily in every part of their transit. If that’s a pro-sprawl, laissez-faire central city government, I’m a size 2 (hint: I ain’t). So what’s up with that? Chicago usually ranks pretty low or moderate on sprawl indexes as well. So either those policies aren’t working, which is bad news, or something else is going on. According to one of the commenters, Chicago’s policy and planning methods haven’t had enough “teeth.” What teeth, exactly, can the city use to try to starve it suburbs? And how smart would that be? Most New Urbanist and Smart Growth tools are voluntary, incentive and amenity-based strategies. They are not widely implemented with teeth. How do you lay down an urban growth boundary when your city is surrounded by other cities? If you think regional governance is the answer, you have never ever attended a meeting at the South Coast Association of Governments.

The bottom line is that investments in infrastructure on the fringe of declining regions make little sense–that’s Renn’s major point, and of course he’s right–but I can’t credit his connection between being broke and sprawl. There’s probably a connection between tax aversion and suburbanization, but I don’t think Chicago, Detroit, and Buffalo are suffering from the same urban malaise, unless that malaise is “too damn much snow for the human mind to fathom.”

If sprawl is the reason we’re broke, why are states having trouble financially? The Federal government? It’s not like they pay for water infrastructure to serve irresponsible, bloodsucking suburbanites.

Thomas Sowell in the National Review on housing in San Francisco

Thomas Sowell has an interesting essay up in this edition of the National Review..

There are a number of things here that I find especially interesting. One: we start with an experiential anecdote about how few black men Sowell encounters in San Francisco. It will be interesting to see if the Census data bear him his experience out empirically.

Two: his association of growth control policies with liberals, and his association of those growth control policies with higher land and housing prices. In theory–in theory–I am told by advocates of growth controls that with infill and higher density, you can create more housing than you restrict with growth controls. However, if political support for one of those strategies (growth controls) bangs up against anti-infill neighbors–or advocates are just plain wrong in believing San Francisco has all this excess capacity in land that could be densified easily–the results will be a cherrypicked policy where growth is controlled and affordable housing gets left by the wayside.

I’m told this problem doesn’t happen in Portland, but I am also told that New Urbanism and growth controls increase real estate values so I have to wonder how affordability and higher prices go together in urban land markets. It’s quite clear what Sowell believes.

Third: I routinely sit through assertions that the New Urbanism and Smart Growth are actually “free market” phenomena because they argue for less restriction on development densities. I suppose. But there are the form-based code people running all over planning, along with those who only read one thing in Don Shoup’s book, The High Cost of Free Parking: the fact that you can regulate maximum parking as well as minimum. Required mixed use doesn’t strike me as market based any more than disallowing it does.

Sowell doesn’t buy any of it:it’s all a bunch of envirozealot liberals at work. If he’s right, there’s a lot of fodder for research about what happens to traditionally urban populations, like African Americans, who get pushed out. Whither Harlem in 25 years?

Matt Kahn and housing in liberal cities

Well, while I was brushing my teeth, Matt Kahn went out and published another very interesting paper:

Kahn, M E. 2010. Do liberal cities limit new housing development? Evidence from California. Journal of Urban Economicsdoi:10.1016/j.jue.2010.10.001.

The finding? Cities with a higher score on liberal voting also permit less housing.

It’s less clear what this finding reflects. Kahn brings up Berkeley’s attempts at growth control–which in some ways make no sense from an anti-sprawl perspective because already developed areas should be taking more housing, not less, to direct growth away from fringe areas. As my former colleague Jesse Richardson says, Smart Growth is not birth control, and if urban areas are to grow not on the fringe than existing areas have to take their lumps.

Kahn’s manuscript may be an indicator that California cities are not taking their lumps.

So why is this a problem? It is more evidence that cities can cherrypick Smart Growth and New Urbanist principles to take what they like and leave what they do not: the line from the New Urbanism as that we could, with more density, get plenty of housing–some of it affordable–if we simply stopped allowing suburbs and we deconstructed single-use, residential zoning. Unfortunately, the application appears to be to shifting housing to other jurisdictions or restricting housing permits overall–a far miss from the sort of densification that the New Urbanist and Smart Growth advocates envisioned.

This is, of course, only if the connection to liberal voting and housing permits occurs via this increased willingness to take on growth controls. It could be something else, as Kahn doesn’t have regulatory structure.