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Thursday, September 29th, 2011

Replay: Planning and Free Market Density

I read articles out on the net with the general theme of claiming that a cabal of planners is conspiring to force us all to move back into overcrowded tenements in order to recognize their dream of reurbanizing America. There’s no doubt that plenty of progressives write about how people ought to more or less be forced back into the city and would gladly do it if they had the power. And I’m sure in some places there are planning rules designed to achieve this effect, like urban growth boundaries. But if you ask me, the practical reality in most of the United States is exactly the opposite situation. Virtually every piece of planning regulation I see acts to discourage urbanization and especially to reduce densities below market demand.

If you want people to live more densely, no nefarious planning rules are necessary. In fact, simply remove a lot of the ones we have and American cities would get much more dense in a hurry. The free market wants more density.

If you look at zoning laws across America, almost all of them specify maximum densities, such as residential units per dwelling acre, that put a cap on buildout. Additionally, there are a host of other planning regulations such as minimum parking requirements, setback requirements, etc. that have the same effect. And don’t get me started on historic districts.

The truth of this proposition can easily be verified by simply showing up at your nearest neighborhood meeting or planning hearing when ever a new development is proposed. Almost inevitably, the developer wants to put in a certain number of units, and the neighbors think it is too many. Frequently, developers are forced to scale back their projects in the face of objections.

And this isn’t just in the suburbs. Nor just in smaller cities. This affects even larger and nominally very progressive cities too. Chicago, for example, has down zoned extensively in the city. Neighbors complained about densification, such as by replacing two story, two unit buildings with four story, three unit buildings, and got large tracts of popular neighborhoods down zoned. In a previous era tony Lincoln Park saw the development of many high rise apartment buildings, including ones on neighborhood commercial thoroughfares like Clark St. It seems unlikely these will be permitted again. Minimum parking requirements have turned much of the city into strip mall nation.

Consider even ultra-progressive Toronto. A recent proposal for a 42 story high rise condo building with no parking was recommended for a “No” vote by planning staff. The staff was actually overruled on this one – so far. But again, it seems the planners are on the pro-car, not anti-car side here.

Bigger cities can survive this perhaps. But smaller cities are often devastated by it. For example, an anti-density mindset in Indianapolis has rendered most of the central city, even those areas nominally revitalized, sterile. Many neighborhoods have tidy rows of well kept and attractive single family homes, just like you would find in any Indiana small town, but few pedestrians and few businesses that survive without relying on suburban patrons or commuters. The reduction in density forced on developers has also led to much of the downtown housing stock being unaffordable by local standards since each unit has to carry a lot more land value.

Developers are in business to make money. They obviously have some reason to believe that the market will absorb more density and less parking. They certainly aren’t proposing things out of any purely altruistic motives. Now, certainly some of the initial proposals might be something the development company itself never had an intention to build, all the better to give away in the form of concessions as the planning gauntlet ballet plays itself out. But there is no doubt in my mind we would frequently see greater density if we only allowed the market to operate. No heavy handed planning required.

This post originally appeared on September 29, 2009.

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30 Comments
Topics: Public Policy, Sustainability

30 Responses to “Replay: Planning and Free Market Density”

Vlajos says:

September 29, 2011 at 1:05 pm

“Minimum parking requirements have turned much of the city into strip mall nation.”

Dear lord.
George Mattei says:

September 29, 2011 at 1:48 pm

I agree it would be EASIER to develop urban densities without zoning, but I don’t think the market would support it as much as you think it would.

Look at Houston-no zoning, and they aren’t exactly the poster child for urban living. Now they do have subdivision regulations which MIGHT require parking (not sure on this). Even so, without zoning they could easily build high-rises with parking decks virtually anywhere in the city. However, you don’t see much of that in Houston. It’s still a fairly auto-oriented city.
Alon Levy says:

September 29, 2011 at 4:21 pm

George: yeah, that’s because Houston has very high parking minimums, as well as setbacks, an inducement for deed restrictions, and until recently a large minimum lot size.
EngineerScotty says:

September 29, 2011 at 7:46 pm

Zoning isn’t the only sort of land use restriction out there, after all…
CityBeautiful21 says:

September 29, 2011 at 9:52 pm

” There’s no doubt that plenty of progressives write about how people ought to more or less be forced back into the city and would gladly do it if they had the power.”

Hogwash. I unequivocally declare shenanigans on this statement. There are plenty of progressives who think that we should stop building untolled interstates through rural areas, and distributing federal transportation dollars through state DOTs before they reach this country’s economic engine, its metro areas.

Please look for two progressive writers of any level of stature and influence who make the argument in quotes above- you will be hard pressed to find one. There is no functional equivalent on the left of a Randal O’Toole who says that they will never set foot in the countryside again if they can help it.
Emelen says:

September 30, 2011 at 4:19 am

“They obviously have some reason to believe that the market will absorb more density and less parking”.

That’s pretty simplistic. I’m not sure if you could push more density and less parking without ensuring that decent public transportation exists to carry these new residents to work and other spots. It’s happened before that new housing plops down without any real access to bus and train lines. also, is there shopping nearby? Will the market also absorb the necessary retail residents need within walking distance to make these high density developments livable?
Eric O says:

September 30, 2011 at 7:21 am

“..the practical reality in most of the United States is exactly the opposite situation.”

As someone who tries to layout more dense and mixed-use developments, I concur. And I’m in a city that is pretty progressive and pro-New Urbanist, successfully adding density in wealthy neighborhoods. However, I’m still forced to cap my height/FAR/DUA on rezoning petitions and given minimum parking standards. De facto, this means at least 60% of my client’s site ends up being devoted to the vehicle. It kills not just density, it forces development to take on mask-like “urbanist” quality that is really suburban development with a Potemkin urbanist veneer.

My fantasy is to some day plan for a city that turns its parking minimums into MAXIMUMS and have minimum base FARs. Why does this seems like such a far-off dream?
Marc Brenman says:

September 30, 2011 at 7:45 am

Where in heck did you get this bizarre idea: “plenty of progressives write about how people ought to more or less be forced back into the city and would gladly do it if they had the power”? I haven’t read or heard a single thing where progressives wanted to force people back into the city.
Greg says:

September 30, 2011 at 8:02 am

George Mattei, you could read his post as an implicit argument in favor of something like a form-based code in urban areas rather than the conventional euclidean zoning used over the last few decades. I really don’t think he’s in favor of a wholesale elimination of zoning codes. In fact, I don’t know of any serious people want to turn urban development into the wild, wild west.
Andy says:

September 30, 2011 at 8:55 am

‘I read articles out on the net with the general theme of claiming that a cabal of planners is conspiring to force us all to move back into overcrowded tenements in order to recognize their dream of reurbanizing America.’

And by ‘articles on the Net’ you mean the ones by your colleagues Kotkin & Cox at NewGeography?
James says:

September 30, 2011 at 10:45 am

I don’t think it is necessarily true that Chicago is turning into a strip mall city through parking requirements or that density opposition has prevented development. There is a lot of new dense infill in Chicago. In fact I am going downtown this weekend to chronicle the redevelopment of Congress Pkwy and the conversion of a parking garage into a mixed use high rise. Sure there are a few strip malls, but I think that it is only a part of the story.
The Urbanophile says:

September 30, 2011 at 11:23 am

FYI: Houston (the city at any rate) doesn’t have zoning, but does have building codes that include much of what is in zoning in other places.
The Urbanophile says:

September 30, 2011 at 11:30 am

I read a lot and attend conferences and such, and it’s almost a given that we’ll hear about how “unsustainable” the suburbs are than that if we don’t radically change our ways of living, life on earth as we know it will be destroyed through climate change. Clearly there have been calls for public policy to be set by experts in the face of climate change, regardless of public opinion. You might agree that climate change does justify and require radical action, but then that’s still proving the point.

I’d also suggest that a poll of urbanists and planners would suggest a preference for items like UGB’s, even if they don’t believe them politically feasible.

I’m reminded of the NIMBY’s who say that they aren’t opposed to development in principle, but can just never seem to find a development proposal that measures up.

Few would be so crude as to directly say they are going to force people into central cities (though Ray LaHood – hardly a fringe figure – did famously say we needed to coerce people out of their cars). However, there seems to be a default assumption that suburbanization results almost entirely from subsidies and policy, not consumer choice.

I’m all in favor of full cost pricing on the suburbs. I’ve written extensively on their economic unsustainability and how to change things to make them last further. Many of my proposals would retard suburban growth. However, I start from the principle that the reality is most people in the suburbs like living there and that it will remain the overwhelming preference of most people.

I don’t believe that there’s any set of policies that could be put in place such that, if it resulted in continued suburbanization, the urbanist crowd in general would say, “Great, we stopped subsidizing and removed policy incentives, so sprawl away.” I just don’t ever see it.
George Mattei says:

September 30, 2011 at 3:36 pm

Right now I’m not sure it matters. Most places aren’t building much, because the demand’s not there. I don’t expect it to come back any time soon.
John Aubin says:

October 1, 2011 at 11:43 am

As an architect, planner and developer of a 685,000 s.f. zero net energy mill complex ( http://www.opensquare.com ) in the heart of the city of Holyoke, MA for the past 12 years, I agree with Aaron completely and can attest to the both the market demand and what I see as institutionalized obstacles to urban density (zoning is just the start, it would take a few chapters to go through them all).

Yet, after years of advocating for a variety of typical urban planning and zoning changes/eliminations in our city to over come these obstacles it became obvious to me that the urban planning talking points for any small city, “24/7 walkable streets” and “vibrant downtown” that go along with this approach more often than not go hand in hand with de facto downtown dedensification plans and that simply changing the parking and other zoning requirements, though helpful, is not the answer to leveraging a market demand for higher density. Instead, I now advocate for simple population growth targets (ie “what does the city want to be when it grows up?”). A large population increase target (which I support and which our city’s existing planning and infrastructure could easily support) REQUIRES certain zoning, planning and infrastructure steps (little or no parking requirements, coordinated transportation development, market analysis of timing and numbers – how many housing units are needed to support how many businesses, restuarants, etc ). It also sends a clear message to both developers and would be urban inhabitants. On the other hand a small target sends (or confirms in our case) an entirely different message. The responses from fellow business people, residents, politicians and public employees are both interesting and telling. To date the pertinent city agencies have eluded answering this question, but it is gaining some traction and perhaps within the next two years there will be official growth targets.

Raise your hand if you would spend your own money and time designing a menu, a kitchen, an atmosphere, and a business plan for a new restaurant without ever considering the size of the dining area and the number of seats, not to mention your customer base . . . this seems to be the current approach for much of city planning.
Kieran S says:

October 1, 2011 at 3:20 pm

You ignore the laws that promote higher density, most obviously transit subsidies. If bus and train tickets cost 3 or 4 times their current price, dense urban transit-oriented lifestyles would become a whole let less attractive.

I suspect a truly free market in land use and transportation would lead to lower average densities, not higher. But no one except a few extreme libertarians really wants a truly free market anyway. Urbanists don’t want to get rid of transit subsidies, or laws that protect public spaces like parks from development, or laws that force builders to comply with health and safety standards.

People oppose densification of their communities and neighborhoods because it threatens their lifestyle and quality of life. Densification means more noise, more crowded sidewalks, more congested streets, less privacy, and so on. These costs are not reflected in market prices.
Chris Barnett says:

October 1, 2011 at 6:07 pm

Kieran, how can you support your assertion that costs of the “negatives” (you mention noise, congestion,etc.) are not priced into dense urban living?

Or did you mean that only in regard to situations where increased densification is newly proposed and not yet fully reflected in market pricing?
Chris Barnett says:

October 1, 2011 at 6:14 pm

Also keep in mind that there are countervailing street, road and highway subsidies for suburban and exurban commuting. In most US cities these are much higher than transit subsidies.

The most egregious ones are the lane-miles of major-city streets and boulevards that exist mainly for the convenience of suburban commuters.
Kieran S says:

October 1, 2011 at 8:41 pm

Noise, congestion, crowding, loss of privacy, etc. are negative externalities of higher density. They’re costs imposed on third parties, and hence are not reflected in the market price of the transaction. So to limit these costs, communities pass laws that limit densification.

As for road subsidies, transit users are subsidized at a much higher rate than drivers. Subsidies account for about 75% of the total direct costs of mass transit. Fares cover only about 25%. These subsidies provide an enormous incentive to overconsume transit and overproduce dense, transit-oriented development.
Chris Barnett says:

October 2, 2011 at 9:46 am

Kieran, as the resident of an “inner city” I must press the poin about street and road subsidies.

In most metro areas, suburban dwellers pay zero to the central cities for construction and maintenance of the streets and boulevards they rely upon to get to work, college, leisure, and health care locations in the central city. Suburbs “free-ride” on this and other significant infrastructure (emergency services, water/sewer) paid for by city-dwellers. This amounts to a direct subsidy of suburbs and causes overconsumption of sprawling development.

My larger point: we can’t look only at one kind of subsidy to determine which way the overall playing field is unlevel. There are simultaneous subsidies promoting both sprawl and density. I’m not one of the “planner cabal” which Aaron suggests promotes anti-growth measures like UGB’s; their negative effect on housing affordability is well known. But neither am I blind to the clear subsidies to suburbanization. Since these are largely free-rider effects, only “toll booths” (wage, ticket, and congestion or VMT taxes) at the city limits would equalize matters. Those are the economic equivalent of “full cost” fares for transit.
Kieran S says:

October 2, 2011 at 12:07 pm

Suburban dwellers most certainly do not pay zero. They pay for roads through gas taxes, vehicle registration fees, property taxes and other kinds of tax. If road subsidies were completely eliminated, it would increase the cost of driving by only a small amount, a few per cent. If mass transit subsidies were eliminated, it would raise the cost of using mass transit by an enormous amount. Fares would need to be 3 or 4 times their current levels to cover the costs of current transit services. But if transit fares were raised to 3 or 4 times their current levels, demand would plummet and there would be massive cuts in services. The only services that would survive are the ones that could pay for themselves through fare revenues. Transit subsidies have created a much larger transit system than we would have if transit users had to pay anything close to the full costs of providing the services they use.
Kieran S says:

October 2, 2011 at 2:18 pm

Suburbs “free-ride” on this and other significant infrastructure (emergency services, water/sewer) paid for by city-dwellers.

I see this claim a lot from critics of suburbanism, but I’ve never seen any serious evidence that it’s true. It seems highly doubtful. Where is the evidence that city dwellers subsidize suburb dwellers for emergency services, for example? From what I have read, crime rates, especially for serious crimes, tend to be higher in cities than in suburbs. So I would expect policing and criminal justice costs to be higher in cities than in suburbs. I would also expect fire service costs to be higher in cities. Fire is more likely to spread in areas where construction is dense and in multi-unit buildings.

In addition to mass transit, there are all sorts of other development projects that are heavily subsidized by taxpayers and that seem to be much more common in cities than suburbs. Things like convention centers, sports stadiums, arts centers, low-income housing projects, transit-oriented development, and so on. “Urban renewal” projects in general.
Chris Barnett says:

October 2, 2011 at 2:28 pm

Subsidy is subsidy, and you can’t look at one in isolation.

I’ll be more specific: residents of suburban and exurban areas may pay for the streets and roads in their home city or county. They pay a part of the cost of state highway and interstate construction and maintenance. But I (a city-dweller) also pay for those interstates and state highways through my gas taxes even though I seldom drive on them. That’s a transfer from city to suburb.

But the suburban commuters (except in those few places with commuter income taxes) pay zero for municipal services in the cities they commute into. They pay nothing to the cities “in lieu of taxes” for regional non-profits (hospitals and regional institutions). This is a significant transfer. If suburbanites had to pay the full value of city services they consume (street maintenance, public safety protection and services, etc.) there would be less suburbanization. And maybe more density and transit ridership.

On the other hand, a certain portion of the transit subsidy (at least here in Indy) is city-funded, a self-tax imposed because local elected officials value transit, density, and the increased tax base that accompanies mobility and employability for city residents. The supposed subsidy is actually paid in some part by users.
Chris Barnett says:

October 2, 2011 at 2:50 pm

When a suburban resident has a wreck in the city, the first responders are city EMTs. When they drive daily on city streets, they’re free-riding on city construction and maintenance (paving, cleaning, drainage, plowing/salting). When they need sophisticated medical care, they use non-profit (untaxed) regional med centers. When they buy major-league sports tickets, they sit in city-subsidized seats. When they visit their union hall or trade association office, it pays no taxes either. When they take university classes, the buildings and parking lots generate no property taxes for the city.

There is no question that suburban commuters free-ride on city services, and that those costs are an externality of suburban low-density development. The only question is how much it’s worth. It’s more than zero.
Kieran S says:

October 2, 2011 at 5:06 pm

The mere fact that a suburban resident consumes city services when he’s in the city (and vice versa) tells us nothing about net subsidies to suburbs vs. cities. In order to show that suburbs are subsidized at a higher rate than cities you would need to account for all forms of subsidy. That includes roads, mass transit, emergency services, urban development projects and so on. You’re just ignoring all the money that cities get through state and federal grants from taxpayers who live outside the city. NYPD, for example, is funded in part by the federal Department of Homeland Security. The New York MTA is funded in part by federal and state grants. The Lower Manhattan Development Corporation is funded in part by the federal Department of Housing and Urban Development. And so on.
Danny says:

October 3, 2011 at 5:58 pm

“Suburban dwellers most certainly do not pay zero. They pay for roads through gas taxes, vehicle registration fees, property taxes and other kinds of tax. ”

By this standard, transit isn’t subsidized either. It is paid for with taxes.

What makes a subsidy a subsidy is when the user doesn’t pay in proportion to their use.

“If road subsidies were completely eliminated, it would increase the cost of driving by only a small amount, a few per cent.” This is completely false. Even if we threw out the cost of carbon emissions, the price of driving could easily double.
Kieran S says:

October 4, 2011 at 9:17 pm

By this standard, transit isn’t subsidized either. It is paid for with taxes.

I didn’t road users are not subsidized at all. They are subdidized, but at a vastly lower rate than transit users.

“If road subsidies were completely eliminated, it would increase the cost of driving by only a small amount, a few per cent.” This is completely false. Even if we threw out the cost of carbon emissions, the price of driving could easily double.

Road subsidies amount to something like 20 cents per gallon of gas, or about 1 cent per vehicle-mile, on average. The total cost of driving is around 50 cents per vehicle-mile. So completely eliminating road subsidies and raising the gas tax to cover the shortfall would increase the cost of driving by something like 2%. Eliminating transit subsidies, and raising transit fares to cover the shortfall, would raise the cost of using transit by something like 300%. Transportation subsidies overwhelmingly encourage the use of transit over driving.
Rob says:

October 4, 2011 at 11:44 pm

Okay… Dynamic systems are dynamic. The CTA moves 42,600,000 million people a month in Chicago. If you privatized the system (or raised fares to cover the cost of the subsidy, same difference) a chunk of those riders will become drivers. Having done my fair share of driving through the city of Chicago on its arterials at 6 in the evening, I can safely assure you that traffic that is now merely “bad” would become gridlock.

For a city like New York, whose surface transportation away from Manhattan is concentrated around a very limited number of river crossings, I would think things would become many times worse.

Of course a possible solution to the resulting gridlock would be to enact a congestion charge on the most affected areas, but I suspect libertarians don’t learn towards that solution.

Being a bicyclist, maybe with luck, more than a few people would switch to bicycle commutes to avoid the gridlock, which would mean improved bicycle facilities. But I digress.
Kieran S says:

October 5, 2011 at 7:55 pm

The sudden elimination of transit subsidies would obviously be hugely disruptive to cities that have come to depend heavily on transit, like Chicago and New York. But I don’t know anyone who is seriously proposing to suddenly eliminate transit subsidies. Instead, the subsidies could be gradually reduced over a long period, giving residents and businesses time to adjust. The likely result would be a gradual shift away from transit, and a gradual migration of residents and businesses out of the central, most transit-oriented areas of the city and into lower-density outer areas and suburbs. In fact, that trend is already underway. Chicago lost 200,000 residents between 2000 and 2010. New York lost over a million domestic migrants (its population still grew, but only because of continued large-scale immigration.)
Wad says:

October 5, 2011 at 11:26 pm

@Kieran, I reject your proposition and make a counteroffer. I propose that all subsidies of any kind remain in place, and in exchange, all parties must keep their mouths shut about subsidies in exchange for the promise of a better material standard of living for all.

See, I come from a camp that categorically rejects your ideal that a transport subsidy-free, “lowest density possible” is necessary or even desirable. You can’t win me over to your point of view, you won’t win me over to your point of view, and the longer you debate me about the topic the more I will pull apart your structure from the bricks and the foundation.

Rationally, I would only be willing to consider your proposition if and only if I am absolutely certain that your proposition means that everybody is better off and nobody is worse off.

I can say with more certainty that the disruption will cause more irreparable material pain than the alleged fairness of everybody paying their own freight.

If we were to assume, optimistically, that removal of subsidies is cost-neutral, then the burden of shared cost will merely redistribute itself according to people free to choose their own prerogatives. What will then happen is that all modes of transportation will become more expensive. If mass transit cannot be monetized (>100% farebox recovery) under any circumstance, then the cost of all remaining alternatives will rise in concert with the absence of the alternative. All cars will become more expensive, all automobile operating costs will rise, and the cost of travel increases because you pay more in time and money for a fixed amount of mobility.

And that’s the optimistic scenario. Realistically, you have to factor in feedback loops, which mean that once costs start moving higher or lower, expectations of a pattern tend to reinforce costs continuing in their general direction. You’re now going to have to answer to how people are expected to continue maintaining higher costs for a diminishing return (think of healthcare), or what to do when lower costs degrade the quality of what’s available (think of the stagnant job market).

Under both the optimistic and realistic scenarios, not only is there a higher risk of a material loss than a gain, but there is the probability that more people will suffer a material loss, outweighing the potential for future gains.

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