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Friday, March 31, 2006

 

Aerotropolis revisited

In my last post I tried to answer the question: why do people (and firms) locate near airports? While using our models of urban economics was useful in providing theoretical answers I though this time I would look for the answers the real world has to offer. What I found was: it’s all about the money. Oddly enough I found Dubai tangled up with these answers. Honestly, Karl Rove is not coercing me in any way (that I know of at least).

The first answer I found was that airports aren’t cost effective, by themselves at least. According to an article in the International Herald Tribune by Kevin Brass, “beyond the basics of terminals and runways, many of the largest airports now derive as much as 50 percent of their revenue from sources not directly related to aviation, like shopping areas and restaurants.” As we see from the basics of our monocentric city model, other businesses will locate near by along with residential neighborhoods for the workers of the airport firms.

The second is a little more tantalizing. Form the same article, “outside Seoul, the expansion of the Incheon airport is a crucial part of New Songdo City, a free trade zone of 607 hectares, or 1,500 acres, that includes 4.6 million square meters, or 50 million square feet, of offices and a large residential complex.” To turn a phrase, one could say: if you tax it, they will flee. Airports are attracting firms because of the tax incentives associated with doing business within the confines of these free trade zones.

Could it be that airports will spell the demise of trade barriers, or will airports be swallowed up from sight by neighboring businesses?


 

Affordable Housing, Thanks to Sprawl

In an article from Leonard C. Gilroy for Reason Public Policy Institute, Urban Sprawl:Good for Minorities?, the decreasing cost of owning a home is cited as a reason for opposing anti-sprawl policies. To quote, "...a recent study by Matthew Kahn at the Tufts University Fletcher School of Law and Diplomacy identifies one important benefit of sprawl: it reduces the housing consumption gap between white and black Americans." Controlling for such things as income, family size, and the two-parent household, the finding was that a black family in a sprawling city consumed more rooms, more square footage, was more likely to live in the suburbs, and was more likely to own the home. The conclusion was that "[housing] affordability is likely to decrease in the presence of more antisprawl legislation."

I found this to be interesting empirical evidence of the class discussions that we have had pertaining to the policy effects of containing sprawl via boundaries; creating such zones would necessarily drive up the costs of land and thus homeownership. Also, this study flies in the face of those that claim sprawl creates economic gaps between the wealthy and the poor. In Some Realities About Sprawl and Urban Decline, Anthony Downs of the Brookings Institute concludes that even in the absence of sprawl, the economic gaps between minorities and whites exist in any city that is experiencing growth. In that light, implementing policies that contain sprawl actually act to decrease any economic gains that minorities could hope to gain.

 

Governments failure to sprawl

From the economic efficiency framework the conceptualization it would seem that it is more often governments inability to deal with the effects of sprawl rather than sprawl being the inherent problem itself. It would seem that sufficient planning and implementation of infrastructure related concepts would be all that was needed for successful sprawl. Rather than suggesting that we keep widening roads, continue to put up growth boundaries and invest in poorly planned metro rail systems, we should find a model of successful growth implementaion and follow it.

However, this does suggest that such a model has been initiated and implemented successfully. Even if it doesn't exist, the understanding from an economic efficiency framework would suggest that the market would most likely take care of everything save its failures, which more often than not these days look more and more like government failures, rather than the latter. The governments one way view seem to be more harmful than helpful in some circumstances. As citizens should we just hold up the white flag and let the government failures continue?

 

Smart Growth and Elections

Any current discusion about urban growth is packed with loaded terms and other rethorical gimmicks. Sprawling cities are seen as a threat to the environment, to public finances and even the social fabric of cities. However, EPA smog ratings show that metropolitan areas with the lowest population densities have the fewest air pollution problems. The alleged depletion of open space is negated by the fact that less than 5% of the nation's land is developed and only about one-quarter of the farmland loss since 1945 is attributable to urbanization. According to the National Center for Policy Analysis (NCPA), when assesing the costs of suburbanization on local governments "the evidence is mixed on infrastructure costs and wether low-density development causes them to increase." Although Smart Growth advocates claim that urban sprawl increases the cost of public services, the NCPA does not support their conclusion and the Center's studies explain, "while some infrastructure costs fall as density increases, as a rule increases in density are accompanied by increases in population and in the level of general spending."
The Smart Growth movement suggests that the individual decisions of city dwellers will not result in a desirable urban outline and that local governments must take a stronger, more "constructive" role in the planning of urban development. Yet, aside from creative names that imply an intellectual superiority (Smart Growth) and elicit combined feelings of modernity and traditional values at the same time (New Urbanism), these proposed plans of urban planning do not present any clearly innovative solutions to the challenges of customary urban planning.
What has become an unruly debate of Smart Growth vs. Free Sprawl, however convoluted and unsolved, will probably continue to gain importance and to become more contemptous with the increasing number and size of urban regions and their ever growing political importance.
In his article Suburban Sprawl gains momentum, Stephen Ohlemacher explains how according to the latest U.S. Census Bureau data, the "nation's population is shifting south and west, to the distant suburbs of metropolitan areas," Ohlemacher adds, "the fastest-growing counties in the United States are suburban, rural or a mixture of both as more people seek big yards and open spaces, even if that means a long commute."
Growing urban centers, especially those "fastest-growing counties," may be increasing in political significance as well. It could be the reason why the debate over urban growth is so loaded and heated. The latest gubernatorial race in Virginia is drawing attention to the increasing importance of issues regarding urban growth when it comes to national elections.
Reporter Keith Shneider, in an article for the Michigan Land Use Institute, describes how newly elected governor of Virginia Timothy Kaine,
"staked his election on a strategy of directly confronting
the causes and consequences of rampant development,
and his victory has prompted strategists in both parties
to conclude that the politics of growth could be a crucial
factor in a presidential election, perhaps as early as 2008."
The evidence that Schneider bases his claim on is what he calls "basic electoral math" :
"The last two presidential elections were decided in the
fastest growing counties of a select group of states,
including Virginia, Florida, Colorado, North Carolina, and
Ohio. In 2004, half of President Bush's 3.5 million vote
electoral margin came from the 100 fastest-growing counties,
97 of which voted heavily Republican."
In adittion to the statistical significance of these counties characterized by fast urban growth, the author explains, "growth is one of the top three voter priorities in all of these fast-developing counties." Schneider's article suggests the existence of a trend that would inevitably raise the profile of the debate for Smart Growth vs. Free Sprawl.

The question that should follow Schneider's conclusion is, once the debate over the issue of how to deal with urban growth reaches a level of political prominence such as described by the author, can solutions be constructed, assesed and implemented outside the realm of political manipulation? If the direction of urban development becomes a protagonist in the rethoric of campaings and a vehicle for the mobilization of votes, any treatment of the subject will center around political and not economic efficiency. Can the politization of urban sprawl eliminate any chance of constructing sound and effective solutions to the problem of growth management?

 

Social Equity and Sprawl

Smart growth seems to be touted as a tool to help contain and even possibly stop sprawl, which is an evil because of the costs to transportation, natural resources, etc. This article doesn't look at sprawl from a standpoint of being a nuisance to the environment or even as a problem in terms of convenience. Rather, this article argues that sprawl creates a social injustice because the wealthy, impartially the white or non minorities, are able to move out of the inner cities or other undesirable areas and neighborhoods, leaving behind vacant and run down communities. The minorities are stuck in a community that doesn't offer decent jobs because they too have left with the 'whites'. Smart growth is seen as the tool that will fix these injustices. The article blames the sprawl primarily on public policy, rather than free market responses. I would have to disagree.

The article claims that it is public policies, such as the federal government authorizing funds for interstate, that cause, or at least at a minimum enable sprawl. As the argument goes, the highways make it easy for people to leave the densely populated cities and move outward. The article contends this is not due to free market principles. I disagree. The federal government allocates money to be spent on interstates when demand is such that the interstate is warranted. The way that a demand is established is through people choosing (through free market) to move to the suburbs or other outlying areas. The government doesn't simply choose to put interstates in random locations and then people emerge around them. Rather, an identifiable pattern emerges where people are beginning to locate in an area, without an interstate, and the government decides that the funds for an interstate are best spent in that particular location due to the concentration of residents. Without a doubt the emergence of the interstate makes it easier for people to move to outer areas, but the interstates are only placed there after people choose to be there.

The article also posits the claim that sprawl is unfair to those in the inner cities or neighborhoods that are left vacant because they can not afford to get out like the others. This argument, while possibly true, doesn't seem to be reason enough on its own to warrant drastic measures to implement smart growth to curb sprawl. This is simply a moral argument. The authors of the article obviously feel bad for the people who are left behind and 'trapped' in the ran down neighborhoods, but they fail to make a convincing argument as to how this is such a bad thing. It can't possibly be that because sprawl caused the migration to the outer limits, and abandoned buildings in its wake that this somehow makes those stuck behind significantly worse off. If they were significantly worse off, then that means that they would have had to have been fairly good off before everyone began leaving, and for this to have been true then they too should have been able to afford to flee to the suburbs with everyone else. Because they didn't we have to assume that they were in poverty to begin with or at least not 'well' off, in which case them being left behind doesn't seem to hinder their economic situation much more.

While smart growth may ultimately be a positive economic tool, this article doesn't seem to make a convincing argument that the use of smart growth to control 'white flight' in order to protect the poor left behind is practical or even necessary. Sprawl seems to be a result at least in part to free market activity and not specifically driven by government policy like the article claims.

 

Political Economy

I have been intrigued by the notion that there are some that blame National City Lines owned by GM, Standard Oil, and Firestone for destroying light rail trantsit in the early 20th century. I read an opinion article in the Courant newspaper dated, March 5, 2006 by a Tom Sevigny

http://www.courant.com/news/opinion/commentary/hc-plcsevigny10305.artmar05,0,7131096.story?coll=hc-headlines-commentary .

In the article he contends that Urban Sprawl happened because of a conspiracy by National City Lines (NCL) to systematically destroy light rail transit by buying them up, trashing them and ultimately being able to solidify monopolistic power by getting Americans to buy automobiles.

After further research into this subject, I have come to realize that sprawl was probably going to happen anyway. In the interest of profits this company could probably see the "writing on the wall" so to speak and got in on the action a bit early.

Light rail transit had actually been declining in the previous ten years to NCL buying up all the light rail lines and since it was in a position to do so it did. It then converted what wasn't already converted into bus lines, since bus lines aren't constrained to a certain track like light rail is. Making it more efficient to have bus lines. This also consequently cause a fundamental shift in the preferences of consumers for cars.

I think on a basic level we might all have an innate desire to be more spread out instead of packed into densely populated areas. Since the advent of the automobile this has allowed us to travel further out in our quest to be more "spread out". Obviously, Mr. Sevigny has a slanted view of what caused sprawl but his own conspiracy argument works against him. If it hadn't been GM it could very well have been, Ford or Dodge. The fact remains, "sprawl" was already starting to take hold when the light rail lines of the early twentieth century were in decline.

I wonder, What caused what?

Thursday, March 30, 2006

 

Lowry Redevelopment

This article in the Rocky Mountain News talks about the redevelopement of Lowry Air Force Base in Denver and the positive economic impact it's had on the city. It says that while Denver invested $1.37 million into the redevelopement of Lowry, the area has provided $5.7 billion in economic benefits, $3.3 billion of which has benefited the Denver area. I can't quite tell if it's talking about tax benefits (which would be a transfer) or if it's talking about economic activity within the area such as jobs and the like, though the article does use "economic activity," so it seems the latter is more applicable.

Regardless of how they got their definitions, readers should be a bit skepticle of the study when they see that there is a "240,776% return to Denver on its initial investment." Since you can't do a whole lot with$1.37 million in terms of development, I assume that Denver spent that money planning the development of Lowry. Another clue regarding government intervention is when it mentions price controls on housing.

"The Lowry Community Land Trust has sold 100 affordable homes priced from $115,000 to $167,000, with another 86 homes planned or under way priced from $138,000 to $167,000. And another 100 homes are being sold with no price controls, starting at $150,000, according to the report."

Given these price controls, price controls probably set by planners, it's possible if not probable that Denver's investment actually COST them money in economic activity (by whatever standards they used, which themselves could also be suspect). The $1.37 million Denver spent could have hindered the redevelopment of the area, especially given its location close to Cherry Creek and Downtown Denver. With such a high demand for land in the area, it would be easy to imagine the "benefits" being much greater. Unfortunately, Denverites can't compare these current results with identical results if Denver had just left it alone.

Monday, March 27, 2006

 

Governmental flaw cuts both ways

I've suggested in class that I believe the fundamental problem regarding sprawl relates not to transportation times or excessive land use, as these are all natural outcomes of consumption, but rather inefficient local government. I believe this to be so, largely because local government must provide infrastructure to the vast tracts of low density space, but its unimaginable that government could keep up with the pace of the free market driven real estate market.
However, in researching for the paper, I came upon the above article. Basically, a group of new urbanism developers bought an isolated piece of property, intending to develop it into a successful and self contained New Urbanist community. They sited many potential advantages, many of which we've discussed in class, however, much more interesting are the reasons for its failure. The first major disadvantage was that they choose a tract of land that was simply too far away to justify the convenience of high density containment. I found this amusing, as a fundamental argument against the evils of sprawl involves long commuter times. Naturally, they tried to establish an employment center within the community, but then a series of large scale corruption scandals related to the construction and development were revealed, and the community has totally stagnated. I believe that this highlights the main reason why New Urbanism is destined for (at best) mediocrity. Though we talk about the 'all knowing planer' in the context of a perfect city, perhaps we must also call this person, the incorruptible planner. An additional irony is found in a fact I read related to the topic. According to the Congress for New Urbanism, about half of the NU projects are geared towards 'suburban fill', while the other half is called 'green land-fill', meaning the establishment of a community on previously undeveloped space. As I consider these two topics, it seems that the command economy element of this movement are already rearing its inefficient head. Instead of more densely packed, efficient cities, we may soon see America's heart land (the breeding ground for sprawl) dotted with failed NU communities, established too far way to be of any use and sunk by corruption, actively and wastefully consuming land, which the movement supposedly desires to protect.

 

Planning, New Urbanism, and Sprawl

Community planners in Chesterton, Indiana have seen hopes sunk about a planned new urbanist community at a development called Coffee Creek Center. The vision for the center was conceived in 1996, but the planners have had trouble making the transition from planning over to actual construction of the homes intended for the center. The chief marketing intent was to lure commuters to this area just south of Chicago with the hope of offering country living in an urbanist setting while still providing easy access to the major market in Chicago.

http://www.nwitimes.com/articles/2006/03/26/business/business/214a7026f04a42c78625713b00812fe2.txt

The problem, according to Samuel Staley, director of Urban and Land Use Policy at the Reason Public Policy Institute is that the planners didn't estimate their market properly. Segedy said "the new urbanism concept remains a tough sell in much of the Midwest, where potential homebuyers are still more interested in having a big house on a big lot than in recreating an urban experience". He goes on to state that if someone wanted to live in a city-like setting, then why live one hour away from it? Segedy also claims that most new urbanist projects should be targeting suburban markets or areas near "older, crumbling inner cities", but miss the mark when they go after these other residents.

Robert Steuteville, whose New Urban News (http://www.newurbannews.com/) provides information to planners and those curious about the movement claims that most new urbanist centers have been primarily successful. He points out that many communities developed on new urbanist principles are not only successful, but also motiviating other communities to consider just such developments.

At times the philosophy and ideals of new urbanism seem at odds with what they call the problem of sprawl as well. The Center for New Urbanism's own philosophy is as such: " In all cases, New Urbanist neighborhoods are walkable, and contain a diverse range of housing and jobs. New Urbanists support regional planning for open space, appropriate architecture and planning, and the balanced development of jobs and housing. They believe these strategies are the best way to reduce how long people spend in traffic, to increase the supply of affordable housing, and to rein in urban sprawl. Many other issues, such as historic restoration, safe streets, and green building are also covered in the Charter of the New Urbanism, the movement's seminal document.

Although these new urbanist philosophies tout the lack of dependency on automobiles and the availability of affordable housing, the fact remains that most who would live in such a development would more than likely still have to drive to their place of employment and will still pay a premium for the structure. And although many of these developments have shops and other amenities in the community itself, they still have to drive to get to other, more specialized and cost-controlled centers (even though they probably would never admit it). Also, in the very words of the developer responsible for the Prospect Park neighborhood in northern Colorado, "Current prices range from $285,000 to over $500,000, which at the "lower end" is about the average price of housing in Boulder County". Those kind of prices still do not resonate as the kind of housing a family living at or just below the poverty line would be able to afford.

The communities themselves seem on the surface to be a good idea (and in a sense, a very good idea--who doesn't like the notion of not having to rely on automobiles and would like to be more in touch with their community?), but the problem still remains. Sprawl is sprawl, and even though many new urbanists contend that the new urban community combats sprawl, they still seek out old farmland and build on it, and construct roads on it, and put shops on it. And in essence, isn't that the very sprawl they claim to be fighting? It seems like nothing more than slapping a label on something just to be able to market it a little differently and then sell it to those that consider themselves to be alternative thinkers. Their neighborhoods may be a bit different, but those that are building on farmland are just as "guilty" as those they slam for promoting sprawl.

Included is one of the links to the local Prospect Park community that has stated just such an ideal here in Colorado. It's a fascinating place to visit, and actually does look like a nice place to live. It just seems odd not to consider it as also being part of our evil "sprawl problem" (http://www.terrain.org/unsprawl/8/.

Wednesday, March 15, 2006

 

Academic paper

here is the link to the academic paper I will be summerizing in class

Thursday, March 09, 2006

 

Benefits of Sprawl

Matthew Kahn has posted a research paper on his blog titled The Benefits of Sprawl. Here are the first 2 paragraphs of the paper:
"Today, most Americans who live in metropolitan areas live in single detached homes and commute to work by automobile. New York City is America’s sole urban center where a significant fraction of the population lives in apartment buildings, works downtown and commutes by public transit. As transportation costs continue to decline and household incomes rise, we are choosing sprawl as we live and work in the suburbs.

The conventional wisdom is that this trend imposes major social costs relative to its benefits. An advanced Google search reveals that there are 39,500 entries for the exact phrase “costs of sprawl” while there are only 455 entries for the exact phrase “benefits of sprawl”. The beneficiaries of sprawl may be a “silent majority” who are not as politically active as center city boosters, environmentalists and the urban poor’s advocates in voicing their views on the merits of the ongoing decentralization of jobs and people taking place across cities in the United States.
This paper seeks to address this intellectual imbalance by presenting original empirical work documenting some of the benefits of living in a sprawled metropolitan area. This paper uses a number of U.S data sets to explore how sprawl improves quality of life. I focus on how sprawl affects firms, workers and consumers."
Perhaps someone would like to read the paper and gives us a summary in class?

Tuesday, March 07, 2006

 

sprawl

There is an article on the Sierra Club website titled, “If We Don’t Like Sprawl, Why do We Go On Sprawling?” I think it is one of the most important questions we can ask as economists dealing with sprawl. Is sprawl the result of government giving into the rent seeking behavior of a few very rich, well connected people, or are our own preferences more involved than we want to admit? The article paints a pretty bleak picture of government subsidies and developers. It states that growth isn’t all good, that sprawl raises taxes, and that a few profit at the disadvantage of the masses. But I still wonder what would really happen if the invisible hand of the market were left on its own and people made their own decisions without government building stadiums or giving out tax breaks. Would the allocation of resources people would choose put cities in a place where they are all neat, low cost, close together, with low-cost transportation? I’m not sure. Besides the government interference, which is admittedly huge, why do people move outside of the city? Is it because people just don’t like living in cities, is it due to people wanting lower cost homes?

Taxes are a big issue. The governments give large tax breaks to companies that move into town. This is not efficient, and I’m against it. Let them build where they build. The article I read states that, In Redmond, Washington, single-family houses pay 21 percent of property tax but account for 29 percent of the city budget.” This is obviously an issue.

Sprawl is definitely an issue worth considering. However, I’d hate being the economist who has to analyze the benefits and costs with different sprawl reducing policies. The topic is so loaded, so vague, so made up of a bunch of individual issues that should be considered on their own, that it seems impossible to get a clear picture of what sprawl is, let alone how to fix it. The fact that sprawl happens in the midst of all the heat around the issue, is a pretty interesting fact. We won’t get to the bottom of it until we separate the individual issues under sprawl and find out where the market failures are. It seems like it’s another of those issues that the government created, not one that the government is going to fix.

Wednesday, March 01, 2006

 

Rebuilding New Orleans

Richard Florida writes an interesting commentary on rebuilding New Orleans. He doesn't seem to offer specific proposals, but he does seem to offer warnings. Here is his concluding paragraph:
"The people of New Orleans know what they want. More than just reconstructed levees, a refurbished downtown, or even rebuilt homes, they want the soul of the city back. Their insights - both angry and enthusiastic - remind us of the underlying source of resilience that really rebuilds fallen cities: the people. Let's hope that their leaders will understand this, and provide us all with a compelling model of a creative, prosperous and sustainable city."
Please read the entire piece. Then consider whether or not you think New Orleans can be successfully rebuilt, in view of Florida's warnings, if government planners and government officials are going to be involved?

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