Thursday, April 23rd, 2015
My latest post is online over at The Guardian. It’s called “What’s the perfect size for a city?” It is an expanded look at the right scale of regional governance – small box cities, large regional governments, etc. This goes beyond the United States to take a more expanded global view, incorporating some recent findings from the OECD and World Bank. Here’s an excerpt:
“Often, administrative boundaries between municipalities are based on centuries-old borders that do not correspond to contemporary patterns of human settlement and economic activity,” the OECD observed in a recent report. The thinktank argued that governance structures failed to reflect modern realities of metropolitan life into account.
Behind the report’s dry prose lies a real problem. Fragmentation affects a whole range of things, including the economy. The OECD estimates that for regions of equal population, doubling the number of governments reduces productivity by 6%. It recommends reducing this effect with a regional coordinating body, which can also reduce sprawl, increase public transport satisfaction (by 14 percentage points, apparently) and improve air quality.
The World Bank, meanwhile, is worried about the way rapid growth in developing cities has created fragmentation there, too. Metropolises often sprawl well beyond government boundaries: Jakarta, for example, has spread into three separate provinces. The World Bank calls fragmentation “a significant challenge in the East Asia region”.
Click through to read the whole thing.
Monday, April 6th, 2015
My latest is in today’s New York Daily News. It’s called “In NYC, throwing good infrastructure money after bad” and it’s about the grotesque costs of transport projects in the NYC area, compounded by terrible decision making. Here’s an excerpt:
Ten billion dollars — for a bus station. And if other projects are any guide, this price tag for a Port Authority Bus Terminal replacement is only going up from there.
That’s after we’ve committed: $4.2 billion at the PATH World Trade Center station; $1.4 billion for the Fulton St. subway station; $11 billion for the East Side Access project; $4.5 billion for just two miles of the Second Ave. Subway, and $2.3 billion for a single station extension of the 7-train.
Having grown numb to multi-billion price tags for building almost anything, New Yorkers might not know just how messed up all this is. In any other American city, even just one of these fiascoes might well have sunk the entire town.
For example, former Chicago Mayor Richard M. Daley attempted to construct an underground “superstation” in the middle of downtown for an express train he hoped to build to O’Hare Airport. Mothballed when the shell was complete after blowing the budget, this was one of his biggest boondoggles. But it still only cost his city $200 million — lemonade-stand money by New York standards.
Click through to read the whole thing.
Tuesday, March 24th, 2015
[ As part of highlighting some of what you’ll find in City Journal, where I’m a contributing editor, I’m presenting this piece from last spring’s issue by Nicole Gelinas, in which she argues that De Blasio’s Vision Zero is nothing less than a new public safety revolution – Aaron. ]
Belkys Rivera wept as her English translator conveyed her words to the New York City Council in February. “I remember my heart breaking when hearing the news. The last day I saw my son alive was December 25, 2011.” Josbel was 23, starting a new store-management job. Belkys worried when he didn’t come home. “Nunca,” she responded when asked if she had expected to see two detectives on her doorstep at dawn. “The police asked me to get my other children nearby, and that’s when I began to realize that something had happened. The detectives were heartbroken as well, and they were explaining through [my] younger children what happened.” Josbel was dead—killed by a hit-and-run driver while crossing the Bronx’s Mosholu Parkway. “The driver . . . left the scene and burned the car,” she said. “I did my job as a mother,” she added, but “because of an atrocity committed by a man who should not have been driving”—the driver’s license had been suspended—“the world will be denied Josbel’s contribution.”
Amy Tam’s story was just as wrenching. She told the council about her three-year-old daughter, Allison Liao, who sang “The Wheels on the Bus Go Round and Round” as she rode the Q44 bus and who loved “using upside-down laundry baskets as drums”—and who died last fall, “holding Grandma’s hand,” after “a huge SUV” abruptly turned into a Main Street crosswalk in Flushing, Queens, and struck her. “We are never going to see her start kindergarten,” Tam lamented.
Too many New Yorkers die every year because of reckless drivers. Thankfully, new New York mayor Bill de Blasio has shown leadership in this area, unveiling an ambitious and workable plan to make traffic safer. Backed strongly by New York Police Department chief William Bratton and the city council, the mayor’s multiagency initiative, called Vision Zero, will seek to reduce traffic deaths in the city to zero, just as the police try to cut murders to zero. The inspiration behind the plan, which reinforces and expands on efforts by Michael Bloomberg’s administration, comes from Sweden’s use of innovative road design and smart law enforcement, which has reduced overall traffic fatalities in Stockholm by 45 percent—and pedestrian fatalities by 31 percent—over the last 15 years. When a child runs after a bouncing ball into a residential street and a speeding car strikes and kills him, the Vision Zero philosophy maintains, the death shouldn’t be seen as an unavoidable tragedy but as the result of an error of road design or behavioral reinforcement, or both. We already think this way about mass transit and aviation. These days, a plane crash or a train derailment is never solely explained by human error (a train conductor falling asleep, say); it also is a failure of a system that allowed a mistake to culminate in disaster. Of course, engineers and regulators can’t eliminate all injuries and deaths; but by applying rigorous, data-based methods, they can cut down on them dramatically.
Nobody favors road deaths, but Vision Zero won’t be an easy sell. Implementing it will require working out complex power issues between city hall and Albany, as well as transforming public attitudes. Even in New York, teeming with pedestrians and traffic, many still view speedy driving as an entitlement. Drivers will need to realize—and here, better engineering, law enforcement, and education will be crucial—that getting behind the wheel in a dense urban environment is very different from seizing liberty on the open road.
New York City has already come a long way in reducing traffic fatalities, it’s important to recognize. Last year, New York suffered 288 crash deaths, including 170 pedestrians. That sounds bad, and it is, but in 1990, New York had 701 traffic deaths, with 366 pedestrians killed. And 20 years before that, the city saw nearly 1,000 traffic deaths in a single year; it wasn’t unusual to lose 500 pedestrians annually. New York’s current traffic-fatality numbers compare favorably with other American big cities. An Atlanta resident is more than three times more likely to die in a traffic crash (adjusted for population); a Los Angeleno faces twice the risk. But New York remains behind—in some cases, far behind—other global cities in this area of public safety: Paris, London, Hong Kong, and Tokyo are all less dangerous. A citizen of Stockholm—the gold-standard metropolis for traffic safety—faces just a third of a New Yorker’s risk in dying by vehicle. Last year, the Swedish city, with a population of 900,000, suffered only six traffic deaths. The Gotham equivalent would be 60 such fatalities—not nearly five times that number.
New York City’s improved numbers have resulted in part from state-level policy reforms. New York was the first state to get a seat-belt law, in 1984, a controversial measure at the time—the governor of Maine vetoed a similar bill, saying that it “crosse[d] the line between public interest and personal choice”—but a major lifesaver. New York was also a pioneer in fighting drunk driving. More than half a century ago, everyone, including most public officials, thought it was perfectly okay for people to drink and drive. The legal limit for blood-alcohol content was 0.15 percent, nearly twice today’s limit, and enforcement was nonexistent. A handful of New York State leaders—above all, health chief William Haddon, Jr.—sought to change this blasé attitude. As Barron Lerner, author of One for the Road, a history of drunk driving, recounts, Haddon headed the first state health department driver-research center, in 1954, and it soon found that half the drivers involved in single-car crashes in New York’s Westchester County had blood-alcohol levels above the 0.15 limit, and another 20 percent had levels of at least 0.05 percent. By 1960, thanks in part to Haddon’s visionary work, New York lowered the legal limit to 0.10 percent (it’s now 0.08). During this same period, New York also became the first state to enact an “implied consent law,” which revoked the licenses of drivers who refused to submit to alcohol tests. And police stepped up enforcement while numerous public campaigns targeted drunk driving.
Countless lives have been saved. In Mississippi or Louisiana, you’re two and a half to three and a half times more likely to die in a car crash than in New York State, in part because it’s still more culturally acceptable in those Southern states to get plastered and hit the road. Nationwide, 13 percent of drivers are drunk when they kill a pedestrian. In New York City, 8 percent of vehicular killers are inebriated.
Haddon, it’s worth noting, was one of the first public-health researchers to think of auto crashes as predictable and preventable rather than as random tragedies. “Haddon had come to deplore the use of the word accident, which he believed made automobile crashes sound inevitable, and, by implication, not preventable,” writes Lerner. His approach was to figure out who—and what—was causing deaths on the road, and then work to prevent the fatalities.
Over the past half-decade, New York City has pursued that vision aggressively, seeking to determine who and what continues to kill on the road. Despite media focus on taxi crashes, the city found, 79 percent of New York’s killer drivers are behind the wheel of their own private car or truck, not a commercial vehicle. Most of the drivers are male. In pedestrian deaths, vehicle speed and driver inattention are major culprits. As a recent analysis of five years’ worth of crashes by the city’s department of transportation concludes, “in 53 percent of pedestrian fatalities . . . dangerous driver choices—such as inattention, speeding, failure to yield—are the main causes of the crash. The pedestrians in these cases were following the law.” Three-year-old Allison Liao’s grandmother was following the law when the SUV killed the little girl. The MTA bus driver who hit and killed 23-year-old Ella Bandes on January 31 “was looking in the mirror to try to avoid a taxi at this complicated, pedestrian-unfriendly intersection,” her father, Kenneth Bandes, told the city council; his daughter wasn’t “texting or talking on her phone,” as some people often assume of crash victims. In another 17 percent of pedestrian deaths, a driver error—often excessive speed—made a pedestrian’s mistake a death sentence.
Make no mistake: speed is lethal. Someone hit by a car going 20 mph will live, 90 percent of the time; someone hit at 40 mph has only a 30 percent chance of surviving. Speeding distorts the judgment of both driver and potential victim. “Drivers overestimate their own ability to stop” and “underestimate the impact” of a crash, says Rune Elvik, a civil-engineering professor at Denmark’s Aalborg University. Drivers wrongly think that they’ll save a lot of time by speeding on free stretches of otherwise clogged roads (lights or traffic eventually slow them down). And a child crossing the street has difficulty judging a fast-moving vehicle’s distance. A 2010 paper by the University of London’s John P. Wann and colleagues found that “children . . . could not reliably detect a vehicle approaching at speeds higher than approximately 25 mph.”
Mayor Bloomberg’s transportation commissioner, Janette Sadik-Khan, used her authority over street design to try to reduce speeds and sharpen driver attention. Times Square’s now famous pedestrian island, filled with tables and chairs, and similar islands and protected bike lanes that Sadik-Khan set up across the city give drivers something to notice, reminding them that people live and work where they’re zooming along. Streetscape changes like these often narrow traffic lanes, as well, which tends to make drivers more careful and makes it less likely that pedestrians will get stuck in oncoming traffic as they rush to cross a street—they can now can take refuge on the islands. Other Sadik-Khan changes included “countdown clocks,” which show crossing pedestrians how many seconds they have before a light turns green, and “split-phase” green lights, which let pedestrians cross before cars and trucks get to turn—a response to the fact that left-turning drivers disproportionately kill.
The numbers show the effectiveness of the design changes. At modified intersections, fatalities have fallen by a third since 2005, twice the city rate. Redesigning Jackson Avenue in Long Island City, Queens—a very dangerous road—by extending medians, painting new crosswalks, and delaying turns cut crashes with injuries by 63 percent. Building a pedestrian island and adding crosswalks on Macombs Road in the Bronx reduced deadly crashes by 41 percent. “Pedestrian-oriented designs save lives,” says Polly Trottenberg, de Blasio’s transportation commissioner.
De Blasio’s Vision Zero project will keep up the Bloomberg-era engineering efforts to change driver behavior, focusing on 25 key “arterial” streets, wide avenues like Queens Boulevard (long called the “Boulevard of Death” for its many traffic fatalities) and the Bronx’s Mosholu Parkway, where Josbel Rivera died. These roadways make up just 15 percent of Gotham’s streets—but 60 percent of the city’s traffic-related fatalities occur on them. The arteries “were designed for the fast movement of cars and trucks,” says Trottenberg, and making them look less like highways will slow drivers. To get the job done, though, de Blasio must be willing to take the heat, as Bloomberg did, for imposing changes that a vocal minority will strongly resist. It’s not a good sign that the mayor, in his February press conference on Vision Zero, wouldn’t say whether he thought that redesigning Times Square had been a good idea.
The smart use of data is a second crucial component of Vision Zero. De Blasio is directing his taxi regulators to explore outfitting taxis with “black boxes,” which can record data and sound warnings when drivers go too fast. The devices could not only deter drivers from breaking the law but could also give the city more data on who speeds, and where. The police could use the information to deploy manpower and the transportation department to redesign dangerous intersections. And Commissioner Bratton says that improved data collection and presentation in all areas of NYPD activity, including traffic enforcement, will be a major goal of his second term as the city’s top cop. That Bratton’s NYPD takes traffic safety seriously was evident in its recent flyers warning drivers that illegal double parking, by reducing visibility and forcing bicyclists into traffic lanes, put innocent people in harm’s way. In March, police officers were out in force ticketing drivers who had parked in bike lanes, pleasing street-safety advocates who had long complained of lax enforcement.
In addition to road design and data crunching, the de Blasio administration will take a more traditional approach to combating speeding: reducing city speed limits. Lowering limits was “the most important” step that Sweden took two decades ago in its traffic-safety turnaround, says Stockholm mayor Sten Nordin, whose city helped pioneer Vision Zero. New York will ask Albany, which controls many of the city’s laws, to let it cut the city’s default speed limit—the maximum speed that drivers can move when they’re not on a highway—from 30 mph to 25 mph. And the city wants to set up more “slow zones,” where 20 mph is the top speed. “The standard in densely populated cities where Vision Zero has been implemented around the world” is 20 mph, Amy Cohen, whose son, Sammy Cohen Eckstein, died on Prospect Park West last year, reminded the city council.
The real challenge will be enforcement. “His memorial is still up,” says Cohen of the site where her son died, yet people still speed there. Deterring such lawbreaking will mean ticketing speeders more aggressively, as well as revoking recidivist speeders’ licenses. After a series of high-profile traffic deaths this winter, the NYPD has been nabbing more speeders and other reckless drivers. The police wrote 7,648 speeding tickets in January, up 20 percent from last year.
An NYPD-led traffic-ticketing blitz runs into problems as a permanent strategy, though. As City Council Member James Vacca notes, “Since 2001, the highway division has been cut by 50 percent. Local resources are stretched.” De Blasio is adding some officers but not nearly enough to make up for past cuts. Moreover, enforcement is inconsistent and incomplete. Thus, Elvik argues, “there are advantages in using automated enforcement”: speed cameras. “There is a much higher risk of detection” with cameras, he adds, and they make for “a fairer system. Speed cameras treat all drivers equally”—even drivers with public-sector union stickers on their cars, for example, whom police tend to treat leniently. The unpredictability of “ticket blitzes” also angers the public. Over time, people appreciate consistency and predictability. If you know that you will always pay a price for driving 10 miles over the speed limit, you probably won’t speed.
Speed cameras are common in cities with better safety records than New York’s. A decade ago, London was only 29 percent safer than New York for pedestrians, relative to population size; now, with lots of cameras in place, it’s twice as safe. “London has a pretty decent network of speed cameras,” says Bruce McVean of Movement for Liveable London. “It makes it a lot easier for local authorities.” London’s transport authority estimates that the cameras help save 500 people annually from death or severe injury. And after New York City started ticketing red-light runners two decades ago, serious injuries at the targeted intersections fell 25 percent; more red-light cameras would improve on those safety gains.
New York politics have made speed-camera use tricky, though. Albany, not city hall, controls the number and placement of the city’s speed cameras, just as it controls the speed limit. Last year, the city won the right to install 20 speed cameras only after a protracted campaign, which benefited from then-mayor Bloomberg’s support, including his shaming of three state senators who had stalled legislation. “Maybe you want to give [their] phone numbers to the parents of the child when a child is killed . . . so that the parents can know exactly who’s to blame,” the mayor said. This year, Mayor de Blasio secured Albany approval for an additional 120 cameras. The power the mayors won is limited, though. The city can only use the cameras to enforce the law on roads that run past schools, and during school hours, though drivers have the most opportunity to speed at night, when there is less traffic congestion. The fine for exceeding the speed limit by at least 10 mph isn’t high: $50. And speed-camera tickets don’t result in penalty “points” on a lawbreaker’s driver’s license—a significant omission, since drivers with too many points for violations can temporarily lose their licenses. As part of Vision Zero, de Blasio wants Albany to relinquish its right to dictate the number, placement, and use of cameras.
Albany will probably resist. First, police unions hate cameras, fearing that they will make human officers redundant. “Ridiculous,” says Paul Steely White of the Transportation Alternatives advocacy group. There would still be plenty for cops to do in traffic enforcement—stopping drivers and levying fines and points for failing to yield to a pedestrian, say, or for texting behind the wheel. Another, more reasonable, charge is that cameras will just become another way for the government to shake people down for revenue. The city and state must combat this perception. “The sole purpose of traffic law should be to prevent harm,” says Leonard Evans, a research veteran of the auto industry and author of the book Traffic Safety. As a way of easing concerns, the city and state could announce that they would split camera-ticket money equally among all New Yorkers via a rebate on their tax return. Expanded camera use should actually shrink revenue over time, as drivers learn to obey the rules. Privacy is a third concern. As Evans notes, though, driving is a public activity, monitored by police for a century now, and traffic cameras “record only people who are breaking the law.” Anyone who uses an E-ZPass already has his movements tracked. A fourth obstacle is the state’s dislike of “home rule.” New York governor Andrew Cuomo isn’t known for giving up power, and de Blasio is pushing for home rule on multiple fronts, from the minimum wage to rent regulation. De Blasio would be wise not to take an all-or-nothing approach, as he did for a time in his battle with Cuomo over a proposed city income-tax surcharge to fund a prekindergarten program.
When a cabdriver runs over a little boy in a crosswalk, or an SUV driver mounts a sidewalk and plows into someone, the public reaction is: the driver should be behind bars. But he’s not. As Karen Friedman Agnifilo, chief assistant district attorney in Manhattan DA Cyrus Vance, Jr.’s office, says: “It can be difficult for people to understand why a crash is not always a crime.” For one thing, in 1990, the state’s appeals court ruled that, as Agnifilo puts it, “an unexplained failure to perceive” on the part of a driver—absent some outrageous conduct—“is not a crime.” In other words, a driver really can say “I didn’t see him” and walk free under the law, even if he had been driving irresponsibly.
New York law currently limits vehicular homicide or assault charges to drunk-driving cases. Several states, though, including Illinois and Florida, now make it possible to charge sober drivers with homicide if they kill. New York does let prosecutors charge for criminal recklessness. Vance is willing to use this law aggressively, as he did in charging Adam Tang, who allegedly videotaped himself trying to break the speed record for motoring around Manhattan. The question is whether juries will accept that driving dangerously is similar to driving drunk.
New York unquestionably needs tougher penalties for deadly driving. “Look at these sentences,” says Agnifilo, pointing to two 2013 vehicular-homicide cases in the city. One defendant got a maximum of four years; the other, six. “Do these sentences seem long enough to you?” Without stiffer punishments for drunk offenders like these, it’s hard to justify longer sentences for other forms of careless driving; the maximum penalty for criminal recklessness is a year. State Senator Mike Gianaris and Assemblywoman Marge Markey of Queens have introduced a bill that makes it a felony if someone with a revoked or suspended license injures or kills someone with a vehicle. Senator Joseph Addabbo, Jr., a cosponsor, observes that, over the last five years, license-less drivers have killed 181 people in New York City crashes—and largely gotten away with it. Under the bill, they could face four years in prison. The measure not only targets a particularly lethal set of drivers; it also could help change public attitudes by making it clear that operating a potentially deadly machine on roadways is a privilege. A related proposal empowers police and prosecutors to seize the plates from a car or truck operated by a driver without a license before he crashes. City hall, backed by several local lawmakers, is asking Albany for several other legal changes, including increasing the punishment for fleeing a crash—one year in prison—so that it’s equivalent to the four-year penalty, practically speaking, for inflicting a drunk-driving injury or death. As Juan Martinez, general counsel at Transportation Alternatives, explains, the driver who hit Josbel Rivera faced a more serious charge (arson) for torching his car than he did for leaving Rivera to die.
Agnifilo says that the NYPD’s “crash investigation squad” now responds to crashes that result in death or “critical” injury. That’s an improvement over two years ago, when the police investigated crashes only when victims were “likely to die.” She would like to see them respond to crashes that cause “serious” injury, the standard for criminal charges. In that case, “district attorneys would be called to more crash scenes, allowing prosecutors to make more appropriate charging decisions,” she says.
To prepare cases, the DA relies on witness testimony as well as subpoenaed cell-phone and text records and, increasingly, thanks to a new federal law, on black-box evidence from cars. Agnifilo wants some straightforward changes from Albany to give prosecutors more resources to prepare their cases. Prosecutors need the right to draw blood at the scene of a serious crash without a warrant, which can take hours to secure—while the driver detoxes. The DA’s office would like more time, under “speedy trial” requirements, to prepare vehicular-homicide cases—as it gets for other homicide cases.
Prosecution of smaller infractions can serve as another deterrent. Thanks to better police enforcement, the Manhattan DA received 2,556 drunk-driving cases last year, up 18 percent from 2009. Though the charge is only a misdemeanor, it can mean thousands of dollars in legal costs and a license suspension, as a current public-service advertisement reminds potential drunk drivers. Here, too, tighter laws could complement better police enforcement and prosecution. Currently, if you rack up two DUI convictions in five years, you lose your license for six months. Cuomo wants anyone convicted of drunk driving twice in three years to lose his license for five years. “Three strikes, and you’re out and you are off the road, period,” the governor said this winter.
The most potent factor in making Gotham traffic safer is that citizens and lawmakers are starting to demand change. “We’re reaching a point of critical mass on the pedestrian safety issue,” says Gianaris. The senator says that after two Queens deaths—eight-year-old Noshat Nahian and Angela Hurtado, an older woman on her way to play bingo—caused by drivers with suspended licenses, he grew angry. “This should be a felony.”
New York is a city made up of powerful special interests, and now a grim new lobby has organized itself: family members of crash victims. Parents, including Amy Cohen and Amy Tam, have helped create Families for Safe Streets, encouraging the public to push for speed cameras and other traffic-safety measures. Lerner, the historian of drunk driving, whose own nephew, Cooper Stock, died on the Upper West Side in January after a cabdriver struck him in a crosswalk, says that the movement is similar to the early movement against drunk driving. “Angry parents and relatives” highlighted “the absurdity of a society” that looked the other way as drunk drivers killed. Just as you now know that you shouldn’t drink and drive, texting and driving should be equally taboo. “As more and more potential distractions for drivers emerge, we should be less—not more—tolerant of a mind-set that excuses such behaviors because ‘everybody does them,’ ” says Lerner. The politically active New Yorkers who show up to community meetings to pressure city council members and Albany legislators on bread-and-butter issues are starting to view dangerous driving as one of those issues. Parents want their kids to get to school safely; elderly people perceive themselves as vulnerable.
Those demanding safer streets expect local government to use better data and smarter engineering and enforcement to achieve that end. Many observers once contended that the murder rate would never fall, but thanks largely to smart policing, it is down 85 percent since 1990—nearly twice as big a drop as traffic deaths. New Yorkers are thus likely to hold de Blasio to his stated goal: a quick and marked reduction in traffic deaths. “We are thrilled that the mayor is so supportive,” says Amy Cohen. But she and her fellow grieving parents, grandparents, siblings, uncles, and aunts will be “a public force” if “things aren’t moving along as expected.”
This post originally appeared in the Spring 2014 issue of City Journal.
Monday, March 2nd, 2015
Here’s another one of those Resident Advisor documentaries about the electronic music scenes in various cities. This one features New York. And like the others, it’s as much as about the culture of the place (or at least certain aspects of it), as music itself. In this particular episode, we’re treated to a long list of complaints about gentrification (and plenty of F-bombs I should warn you). Whether you agree with it or not – and there’s a lot to disagree with – it gives a window into how some people see the world.
It also appears to me that if you’re really into electronic dance music, you’d be better off in Berlin, Detroit, or Jo’burg than New York or Paris, where rising rents are putting a lot of pressure on the edgy underground scene.
If the video doesn’t display for you, click here.
Monday, February 9th, 2015
[ I’m going to be giving a keynote at Governing Magazine’s Summit on Performance and Innovation in Louisville this Wed. The entire conference is live streaming at Governing’s web site. My session is Wed at 1:30pm, but looks like a lot of great stuff you won’t want to miss, such as the mayor’s roundtable immediately following me.
As you know, I recently joined the Manhattan Institute and its quarterly magazine City Journal. So obviously I’m interested in promoting our work. I think it’s fair to say that for those of you with a strong left orientation, you’re not going to agree with some of what’s published in City Journal. On the other hand, I think that regardless of what your political philosophy is, you’ll find some things that you do resonate with – but more importantly things to engage you. I want to share a couple of pieces from the magazine to give you a sample of what you might find. Here’s one by Mario Polèse from the Winter 2014 issue talking about how (some) downtowns have come back – Aaron. ]
Not so long ago, most urbanists were predicting the demise of downtowns. The data, after all, pointed unambiguously to declining central-city populations and expanding suburban ones in nearly every American metropolitan area between 1950 and 1980. Manhattan lost a quarter of its residents, for example, and Boston nearly a third. The exodus wasn’t confined to the United States. The population of inner London fell by more than a million residents during the same period, and my hometown, Montreal, watched the central borough of Ville-Marie hemorrhage half its population between 1966 and 1991. Businesses were fleeing, the urbanists noted. Central business districts were becoming vestigial organs, legacies of a bygone era before the automobile and the truck liberated us from the tyranny of proximity and brought us the suburban shopping mall.
But downtowns didn’t go the way of the dinosaur. In fact, most of them have begun to grow again. Of the 50 largest central cities in America, all but five saw their populations grow between the 2000 and 2010 censuses, and only two exhibited declines after 2010. For some, the turnaround came in the 1980s; for others, in the 1990s; and for still others, more recently. The title of Alan Ehrenhalt’s recent book, The Great Inversion and the Future of the American City, reflects the nature of this shift—which, again, isn’t limited to the United States. But why are downtowns coming back? And how can we account for the holdouts?
The modern history of the central city is a story of three consecutive waves. The first began during the decades following World War II, though its full impact on urban economies became apparent only later. It involved a structural change sometimes called “deindustrialization” or “tertiarization”: a massive shift from manufacturing to services. The principal beneficiary of this shift was the “business services” sector, which includes finance, insurance, real estate, engineering, management consulting, advertising, publishing, and legal services.
All these business services sought out locations offering a high potential for personal interaction. The objects of exchange weren’t goods but information; human relations were the glue that held the sector together. Unlike manufacturing, business services required little floor space to generate income. Office towers allowed numerous firms to inhabit small spaces, producing correspondingly high property values. In the downtowns of large cities, such industries as manufacturing and warehousing, which demanded a lot of space, were unable to afford the rising cost. They began to decamp for less expensive locales. Meantime, the development of standardized containerization meant that trucks could now carry cargo from ships directly to factories and warehouses. Manufacturers and wholesalers no longer needed to be adjacent to ports and railheads in cities like New York and Montreal, giving these businesses more flexibility in choosing their locations.
So over time, business services replaced manufacturing as the principal economic base of large cities. You might define the tipping point as the moment when combined employment in the three main industry classes that constituted business services—finance, insurance, and real estate; professional, scientific, and technical services; and administrative support services—surpassed employment in manufacturing. In New York, that moment arrived in 1980. Manufacturing still accounted for a quarter of the city’s employment in 1970; today, it has fallen to well below 10 percent. The tipping point came in 1988 in Toronto, Canada’s largest metropolis, and some 15 years later in runner-up Montreal.
Until the late 1980s (or later, depending on the city), business services hadn’t grown enough to undo employment and land-use patterns that downtowns had inherited from the industrial era. Heavily polluted brownfields were left vacant, as were unused docks, empty warehouses, and factory shells. But many of these industrial sites have since been transformed. In Montreal’s old port, for instance, one abandoned dock now houses a science museum; a second has become a popular entertainment venue.
The growth of business services irreversibly altered not only the appearance of most big-city central neighborhoods but also their employment profile. This brings me to the second wave, which we might think of as the residential counterpart of the first. It was a turnaround in the population decline of central neighborhoods.
To see why it happened, we need to understand the forces that had previously been driving households away from the center: rising incomes, growing ownership of cars, the postwar baby boom, and high crime. A general rule of housing economics is that as incomes rise, households demand more floor space per person. As they prospered during the postwar years, families aspired to better, bigger homes, perhaps with a garden and even a pool. They found the space they sought in the suburbs, where land was cheap and plentiful. Automobile ownership also rises systematically with incomes, and it enabled numerous households to move to those spacious suburbs. And the baby boom, of course, meant more households with children, which demand more space than childless households do. Over the four decades following World War II, these trends produced ideal conditions for urban flight and suburban growth, especially when combined with the growing urban crime and disorder that marked the era.
But eventually, the lure of the suburban dream began to diminish. Starting in the 1990s, incomes rose less rapidly than in the past, slowing the demand for housing space. Automobile ownership stopped rising, stabilizing at about 800 cars per 1,000 people, according to the World Bank. Single-person and childless households accounted for an increasing share of the American population. The suburbs kept growing, but the great era of rapid suburban expansion seemed to have ended.
It can be argued, too, that tastes and preferences changed. The car is no longer the status symbol that it once was, having been replaced, among today’s youth, by concert tickets or the latest smartphone. As America’s infatuation with the car wanes, owning a two-garage split-level house becomes less glamorous. In an article published in Urban Studies in 2006, City Journal contributing editor Edward Glaeser and Joshua Gottlieb convincingly demonstrated Americans’ change in preferences toward urban living. Before 1990, the larger the city, the higher the average wages paid there, even after accounting for cost of living. After 1990, that relationship reversed itself, meaning that workers now accept lower wages for the privilege of living in big cities. They must be receiving something in return, the authors argue—specifically, access to the amenities and pleasures that central big-city living offers, from restaurants and museums to concerts and learning institutions. I’m inclined to agree with Glaeser and Gottlieb that the fall in urban crime rates since the 1980s explains only part of the new taste for urban living, but it, too, was important.
But the most powerful reason for the second wave was the first wave, which produced well-paying jobs downtown. That is, the main reason households began to return to the center was that the best jobs were there. New Yorkers have long since grown familiar with gentrification, the replacement of poorer, generally blue-collar, populations by wealthier, professional ones. But the phenomenon took place in downtowns all over North America.
The two waves that I’ve just described reshaped central neighborhoods, making them magnets for rising cohorts of entrepreneurs in digital firms. This is the third wave, currently in full motion: high-tech start-ups seeking out central neighborhoods. Downtowns are the new battlegrounds of the digital economy.
True, Silicon Valley remains the top player in that economy, whether you’re measuring the number of high-tech start-ups per year or the amount of venture capital invested. That isn’t about to change; few places can match the Valley’s buzz, its location near two top engineering schools, its superb scenery, and its local supply of risk-tolerant venture capitalists—not to mention the entrepreneurial spirit that California, despite its dysfunction, seems to bring out in people. Nevertheless, smaller clusters of high-tech start-ups are springing up in many central cities. New York’s cluster has (predictably) been dubbed Silicon Alley (see “Net Gains,”); London’s, Silicon Roundabout. San Francisco’s South of Market area, or SOMA, is an emerging hub of high-tech activity. Following a multibillion-dollar cleanup, the South Boston waterfront area, a short walk from the financial district, is also becoming a high-tech hub, attracting firms from nearby Route 128 and Cambridge.
To understand what’s happening, take a closer look at the neighborhoods being colonized. New York’s tech cluster is located chiefly in lower Manhattan—specifically, the Flatiron district, Tribeca, Chelsea, and nearby neighborhoods that have completed the transition from warehousing and manufacturing to residential and nonmanufacturing commercial uses. In London, the heart of the cluster is Shoreditch, an old blue-collar neighborhood to the northeast of the financial district. South Boston is also an old warehousing district with recycled rail yards and docks. These areas’ distinguishing feature is that each is within walking distance of the central business district. If the second wave took place because of housing, the primary factor here is proximity to other firms.
And not just other digital firms: as the tech industry moves away from simply making hardware and software and begins producing computer-accessible content—from music and video games to news and broadcasts—it finds value in being located near the entertainment, publishing, and broadcasting industries, traditional foundations of large-city downtown economies. Proximity to financial institutions, another traditional downtown pillar, is also helpful: meeting a rich banker or an eager venture capitalist is easier in lower Manhattan than in the New Jersey suburbs.
There are cultural reasons for the third wave as well. Asked on TV why his large computer-animation firm, Ubisoft, decided to locate in downtown Montreal, a founding shareholder pointed out that the company’s employees worked at all hours. They wanted to be able to walk across the street for coffee or a sandwich at midnight—or, alternately, to visit a bar at noon. Few wanted to commute, he added, and of those who did, many biked. Is it any surprise that such firms want to be in 24-hour cities, rather than in suburban districts that empty out after 5 PM? And that such employees are choosing to repopulate center-city neighborhoods, rather than drive in from afar? The symbiosis of workplace and residence is further strengthened by a growing construction trend in which condos occupy upper floors, offices occupy lower ones, and retail stores occupy the ground floor, creating a new generation of mixed-used neighborhoods.
It’s also the case that high-tech companies, like the business services of the postwar years, require relatively little floor space. Many need nothing more than a few laptops and desks and can consequently pay those downtown rents. And in some downtowns, third-wave firms can recruit graduates of nearby engineering or tech schools, such as Montreal’s McGill University and École de Technologie Supérieure. New York mayor Michael Bloomberg was hoping to accelerate just this kind of symbiosis when he announced plans for an ultramodern technological campus on Roosevelt Island, across from Manhattan, to be run by Cornell University and the Technion–Israel Institute of Technology.
In several big American cities, though, the downtown resurgence hasn’t taken place; the areas continue to struggle and deteriorate. In most cities, the average office rent per square foot is higher downtown than in the suburbs—in New York, downtown rents are twice as high. But in Cleveland, according to data from the major real-estate firm Cushman & Wakefield, office space is no more expensive downtown than in the suburbs, and in St. Louis, it’s actually cheaper. Office-based firms in those cities don’t see downtown as a valued location and aren’t willing to pay more to locate there. Data for downtown Detroit are unavailable from Cushman, probably because demand from prospective clients is so tiny that there aren’t enough properties on the market for information to be produced.
An economic geographer would call this phenomenon a loss of “centrality,” which refers to the geographic point with the highest market potential for firms. It’s highly unusual for a big city to lose centrality. Even during the height of the population exodus—the 1960s and 1970s—the central business districts of New York, Boston, San Francisco, and most other cities never lost it. Why have Detroit, Cleveland, and St. Louis?
No simple answer exists to that question, though part of the explanation involves successive badly run city administrations, white middle-class flight, and a shrinking tax base, things that create a downward spiral of deteriorating services and rising taxes. And just as the reasons that some big-city downtowns have failed to revive are various, so are the solutions. No magic pill—be it a sports stadium, a convention center, or a shopping mall—can single-handedly bring back a moribund big-city downtown (see “Urban-Development Legends,” Autumn 2011).
Still, these troubled areas could learn a few lessons from the success of many of their peers across the nation. For one thing, the key to downtown resurgence is jobs—chiefly, jobs in business services. If finance firms, consultancies, head offices, advertising companies, and so on flee to the suburbs, the task of reviving a downtown will prove far more difficult.
Also, successful downtowns are mixed-use centers that are busy around the clock, not just from nine to five. A 24-hour downtown isn’t built overnight, so to speak. But it’s true that teaching institutions can sometimes bring in clienteles with a taste for 24-hour living. It wasn’t a coincidence that New York’s first gentrified neighborhood—long before the word “gentrification” came into fashion—was Greenwich Village, near New York University.
Another lesson is that you can’t separate the health of a downtown from that of the wider metropolitan area. Cities with resurgent central neighborhoods also have strong metropolitan economies. This means, for one thing, that strong national or regional corporate centers will find it easier to maintain strong downtowns; by contrast, smaller cities whose downtowns are largely dependent on retail have a harder row to hoe. It also means that revitalization initiatives can’t be limited to the central city. Some level of cooperation between city and metropolitan area is necessary—if only to ensure that they effectively share the cost of metro-wide infrastructure, such as public transit.
A related lesson: strong downtowns and suburbanization are not mutually exclusive, as anyone who has driven through the sprawling suburbs of Washington, D.C., or New York can testify. An exodus from the center can occur for two diametrically opposed reasons. Suburban office parks can spring up because a downtown is too strong (and therefore expensive) or because it’s too weak. Firms leaving Manhattan for cheaper office rents in New Jersey are the sign of a growing downtown; firms leaving central Detroit for the safer, cleaner suburbs are the sign of a dying one.
Finally, the many current policies that restrict real-estate supply downtown—rent control, restrictions on building heights, and so forth—are a luxury that only cities with solid, growing downtowns can afford because they drive up prices in the center and discourage people and businesses from settling there. How far we’ve come since the 1970s, when downtowns seemed doomed and governments were concerned with revitalizing them! Today, those governments are doing the opposite, restricting growth in downtown areas and, in too many cases, turning them into coveted prizes occupied by a lucky few. Abandoning these misguided policies would reinforce the gratifying shift that cities all over the country and the world are witnessing: a return to the center.
This article originally appeared in the Winter 2014 edition of City Journal.
Thursday, February 5th, 2015
[ Alon Levy’s Pedestrian Observations site is a great look at public transit for those seriously interested in the subject. He’s lived in many countries and has studied systems around the world, bringing a global perspective to local projects. And he takes an analytical, “good government” approach of proposing systems that both produce high value and are cost effective. Here’s his take on what’s need at the New York MTA – Aaron. ]
In the last few years New York’s MTA has gone through multiple cycles in which a new head talks of far-reaching reform, while only small incremental steps are taken. The latest is the MTA Transportation Reinvention Commission, which has just released a report detailing all the way the MTA could move forward. Capital New York has covered it and hosts the report in three parts. Despite the florid rhetoric of reinvention, the proposals contained in the report are small-scale, such as reducing waste heat in the tunnels and at the stations on PDF-pp. 43-44 of the first part. At first glance they seem interesting; they are also very far from the reinvention the MTA both needs and claims to be engaging in.
Construction costs are not addressed in the report. On PDF-p. 53 of the first part, it talks about the far-reaching suburban Grand Paris Express project for providing suburb-to-suburb rapid transit. It says nothing of the fact that this 200-km project is scheduled to cost about 27 billion euros in what appears to be today’s money, which is not much more than $150 million per km, about a tenth as much as New York’s subway construction. (Grand Paris Express is either mostly or fully underground, I am not sure.) The worst problem for transit in the New York area is that its construction costs are an order of magnitude too high, but this is not addressed in the report.
Instead of tackling this question, the report prefers to dwell on how to raise money. As is increasingly common in American cities, it proposes creative funding streams, on the last page of the first part and the first six pages of the second part: congestion pricing, cap-and-trade, parking fees, a development fund, value capture. With the exception of congestion pricing, an externality tax for which it makes sense for revenues to go to mitigation of congestion via alternative transportation, all of these suffer from the same problem: they are opaque and narrowly targeted, which turns them into slush funds for power brokers. It’s the same problem as the use of cap-and-trade in California.
One of the most fundamental inventions of modern government is the broad-based tax, on income or consumption. Premodern governments funded themselves out of tariffs and dedicated taxes on specific activities (as do third-world governments today), and this created a lot of economic distortion, since not all activities were equally taxed, and politically powerful actors could influence the system to not tax them. The transparent broad-based tax, deeded to general revenue through a democratic process, has to be spent efficiently, because there are many government departments that are looking for more money and have to argue why they should get it. Moreover, the tax affects nearly all voters, so that cutting the tax is another option the spending programs must compete with. The dedicated fund does neither. If the broad-based tax is the equivalent of market competition, a system of dedicated funds for various government programs is the equivalent of a cartel that divides the market into zones, with each cartel member enjoying a local monopoly. In this way there’s a difference between the hodgepodge of taxes the MTA levies and wants to levy and Ile-de-France’s dedicated 1.4-2.6% payroll tax: the payroll tax directly affects all Francilien workers and employers, and were it wasted, a right-wing liberal politician could win accolades by proposing to cut it, the way New York Republicans are attacking the smaller payroll tax used to fund the MTA.
The proposals of where to spend the money to be raised so opaquely are problematic as well. There is a set of reforms, based on best practices in Continental Europe and Japan, that every urban transit system in the first world should pursue, including in their original countries, where often only some of those aspects happen. These include proof-of-payment fare collection on buses, commuter trains, and all but the busiest subway systems; all-door boarding on buses; mode-neutral fares with free transfers; signal priority and bus lanes on all major bus routes, with physically separated lanes in the most congested parts; a coherent frequent bus network, and high off-peak frequency on all trains; and through-service on commuter rail lines that can be joined to create a coherent S-Bahn or RER system. As far as I can tell, the report ignores all of these, with the exception of the vague sentence, “outfitting local bus routes with SBS features,” which features are unspecified. Instead, new buzzwords like resiliency and redundancy appear throughout the report. Redundancy in particular is a substitute for reliability: the world’s busiest train lines are generally not redundant: if they have parallel alternatives those are relief lines or slower options, and a shutdown would result in a major disruption. Amtrak, too, looks for redundancy, even as the busiest intercity rail line in the world, the Tokaido Shinkansen, has no redundancy, and is only about to get some in the next few decades as JR Central builds the Chuo Shinkansen for relief and for higher speeds.
The only foreigners on the Commission are British, Canadian, and Colombian, which may have something to do with the indifference to best industry practices. Bogota is famous for its BRT system, leveraging its wide roads and low labor costs, and Canada and to a lesser extent the UK have the same problems as the US in terms of best industry practices. Swiss, French, German, Japanese, Spanish, and Korean members might have known better, and might also have been useful in understanding where exactly the cost problems of the US in general and New York in particular come from.
The final major problem with the report, in addition to the indifference to cost, the proposal for reactionary funding sources, and the ignorance of best industry practices, is the continued emphasis on a state of good repair. While a logical goal in the 1980s and 90s, when the MTA was coming off of decades of deferred maintenance, the continued pursuit of the maintenance backlog today raises questions of whether maintenance has been deferred more recently, and whether it is still deferred. More oversight of the MTA is needed, for which the best idea I can think of is changing the cycles of maintenance capital funding from five years, like the rest of the capital plan, to one year. Long-term investment should still be funded over the long term, but maintenance should be funded more regularly, and the backlog should be clarified each year, so that the public can see how each year the backlog is steadily filled while normal replacement continues. This makes it more difficult for MTA chiefs to propose a bold program, fund it by skimping on maintenance, and leave for their next job before the ruse is discovered.
I tag this post under both good categories (“good transit” and “good/interesting studies”) and bad ones (“incompetence” and “shoddy studies”) because there are a lot of good ideas in the report. But none of them rises to the level of reinvention, and even collectively, they represent incremental improvement, of the sort I’d expect of a city with a vigorous capital investment program and industry practices near the world’s cutting edge. New York has neither, and right now it needs to imitate the best performers first.
This post originally appeared at Pedestrian Observations on November 25, 2014.
Wednesday, January 28th, 2015
The “storm of the century” hit New England hard but was a bust in New York. I went out and surveyed the realm yesterday morning and filed at story over at City Journal:
New York’s “storm of the century” turned out to be a bust. Rather than the predicted 30-inch “snowpocalypse,” only eight to 10 inches hit most of the city. That’s not to say that it had no effect. It happened to be the perfect amount of snow needed to turn Central Park gorgeous. By 10 o’clock, park streets and paths had already been plowed, and joggers, kids with sleds, and even skiers were out enjoying the winter wonderland. With the streets mostly empty, the morning was a welcome respite from traffic noise, bicycle rickshaws—and bikes, period, as cyclists appeared to be skipping the festivities. I missed the clop-clop of horse-drawn carriages, however—a sad preview of what awaits if Mayor de Blasio succeeds in his quest to ban carriage rides.
Thursday, January 15th, 2015
My latest post is online at City Journal and is called “Why Policing?” in which I reiterate my view the crime reduction is overwhelmingly the most important things for cities to get right, especially struggling cities and neighborhoods. Here’s a short excerpt:
New York’s biggest accomplishment was making many poor neighborhoods safe. It’s nearly inconceivable that the struggling neighborhoods of Chicago, Indianapolis, or other cities will see legitimate recovery until they get crime under control. Safe streets in all neighborhoods, not just some, are a precondition of social equality. New York’s experience with policing shows that crime can be greatly reduced with enough political and public will. Such will is lacking in too many places. Other matters of public order, it’s worth noting, don’t get overlooked in any city.
It’s a curious blind spot in the urbanist discussion. There’s this belief that crime is just an ambient force in cities that ebbs and flows as it will no matter what we do. For example, activists routinely deny that police strategy and tactics drove the decline in NYC crime. We always hear instead about an overall crime decline. Sure, without a doubt there was a secular decline in crime that benefited NYC, but that doesn’t explain that city’s vastly outsized success. Places like Chicago and Indy have murder rates 4x NYC. Cleveland is something like 7x.
And of course such arguments never apply to any urbanist preferred policy. For example, pretty much every downtown in America is seeing a bit of a resurgence, with new apartments, restaurants, etc. Yet we are frequently hear streetcars or some other such credited as producing these, even when there are similar results in places without them. I think in this case advocates would clearly see that there is a trend, but that policy and implementation also matter.
Others want to bring up police misconduct. Accusations of that should be investigated thoroughly and fairly, and bad cops need to be held accountable for their actions. But that doesn’t somehow mean good cops implementing good policies should stop doing so. I think we can walk and chew gum at the same time.
And I can’t help but notice an endless stream of pieces pounding the drum about police improprieties juxtaposed to next to nothing about the far too large number of innocent people killed and otherwise victimized by criminals each year.
Twitter user @True_Urbanism shared his remembrances of NYC in this consolidated tweet storm in response to my piece (translated from Twitterspeak):
The most successful economic development policy in NYC was the big reduction in crime. In declining years, so many people fled because of high crime crime. It’s hard to communicate the pall that fell over NYC — even in relatively “safe” neighborhoods — people staying home in evenings, etc. Weird safety “precautions”: carrying mugger $ (so mugger won’t slash out of frustration); triple locked doors…Popular special “Fox police locks” on doors: leaning bars that prevented aggressive robbers from pushing in weak doors! Special instructions from friends regarding which street to use and not to use when visiting (e.g. on Upper West Side, Chelsea). In poor neighborhoods, great demoralization: coming home and being robbed of week’s pay or home robbed of hard-earned appliances. And concerned minority families sending kids to live with relatives to be safe and to be away from bad influences. It seemed like “everyone” was planning to leave NYC when they could finally afford to, or could get a job elsewhere.
The thing is, this is the reality in a lot of urban neighborhoods today in cities outside New York. Parents still have their kids trained to hide under the bed or in a bathtub when the bullets start flying. Just because the rich neighborhoods in many places have crime rates at near-NYC levels doesn’t mean its still not the civic equivalent of 1974 in others.
If we really care about inequality, the first thing we should care about is public safety inequality. Yes, that means building better police-community relations and a lot of other things. But it also means aggressive policing using best strategies we’ve seen work in places like New York.
By the way, this the exact approach urbanists loudly agitate for constantly when it comes to traffic safety: more policing, more enforcement, more technology, more prosecutions, etc. for those violating traffic laws.
I’ll mention one other argument I hear that I don’t believe even the people making really believe. Namely this idea that because NYPD stopped writing parking tickets and such for a couple weeks and chaos did not ensue, that means policing is overrated. As if we’d suffer an instant wave of building collapses if inspectors stopped citing small code infractions, or a major outbreak of food poisoning instantly if health inspectors did the same. I don’t believe the 1970s are sitting in a cage waiting to escape the minute we turn our eye way. It takes time or changes in policy, enforcement, and incentives to percolate through. But you can be sure that if the police stopped enforcing speeding or parking laws, drivers would eventually figure out they could do what they want with impunity. There are eventual consequences to changes in enforcement behavior.
Friday, December 19th, 2014
It’s no secret housing costs are high and going higher in major US cities like NYC, San Francisco, etc. I was just tweeting with someone this week who moved back from Park Slope, Brooklyn to Indianapolis because her rent was being raised by over 50% (possibly that’s a cumulative increase over time – not sure).
Most of the urbanist discussion tends to focus around zoning as the reason prices are high. That’s certainly an important factor. But there are also other things driving up costs and rents. The NYT highlighted one of them last Sunday, namely the permit expediter tax:
When Mark Brotter dies, the inscription on his tombstone will read simply: “Thank God — no more plumbing Schedule B.”
Mr. Brotter, 55, is an expediter, an imprecise term that is used to describe the men and women whose workdays are spent queuing up at the Manhattan branch of the New York City Department of Buildings to file the documents and pull the permits that allow construction projects — your kitchen renovation and the high-rise next door — to go forward. “I’m basically a middleman,” he said. For its part, the Buildings Department insists on the title “filing representative.”
Others are employed by large firms that do nothing but expediting, or are on the staffs of architectural or engineering firms. In the early 1990s, expediters numbered 300 to 400; today there are more than 8,300. (Filing representatives must register with the Buildings Department and pay a $50 annual fee for the right to stand on lines at department offices.)
The expediter’s fee varies depending on the outlay of time and the complexity of a job. The charge for securing a permit for a contractor ranges from $200 to $400; for filing a project, $1,500 to $3,500. Plans that must go before the Landmarks Commission are a more costly proposition, as are projects that involve the conversion of a commercial space to a residence.
Now these prices aren’t ridiculous in the grand scheme of things for New York City real estate. But the idea that there are 8,300 people making a living standing in line to file permits for people points to the entire structure of how development gets done in big cities (NYC is hardly alone in this particular industry) in ways that continually raise costs. This is beyond the cost of delays that a baroque permitting process introduces.
Particularly when you are trying to build lower rent buildings, all of the fixed costs you have to incur to built anything (land, permits, expediters, etc.) have to be recovered and amortized across the units. When you have a hyper-complex development environment, these fixed costs raise the minimum viable rent threshold and thus push the cost of construction towards the higher end of the market that is already being served.
To bring the cost of housing down, cities should be working on all fronts, not just zoning to make it happen.
This particular case is instructive regarding barriers to reform, however. If the city made it easy enough to file plans and get permits in ways that didn’t require an expediter industry, 8,300 people would be out of work. Presumably they would squawk about it. I’m sure I would if I were in their shoes As with many regulatory reforms, the benefits are diffuse and hard to see, whereas the costs are concentrated and obvious.
Also, just one reform in and of itself is unlikely to produce immediate substantive change. Broad based reform in many areas is needed, then there will be a lag as investors adjust to and take advantage of the new environment. This may involve shorter term pain for longer term gain, much like disruptive technical innovation.
That’s not a formula politicians like. It’s one reason Japanese Prime Minister Abe’s “third arrow” of structural reform remains mostly in its quiver. Too many interest groups face immediate pain from reform, but the payoff is raising the economic potential of Japan and creating conditions in which future growth can occur, the exact nature of which can’t be predicted. That’s a hard sell to make, which is one reason politicians tend to focus on things that have immediate benefits to at least some people, such as tax cuts or spending programs.
Regardless, beyond just changes in zoning or this or that process or regulation, there needs to be a mindset shift in how these cities approach development to bring about a broad based change in housing affordability.
Wednesday, December 17th, 2014
This week’s video is a split screen comparison of New York and Paris that’s kind of fun. If the embed doesn’t display for you, click over to Vimeo. h/t Likecool