LocationAffordability’s denominator problem

Location Affordability: numerator problem

HUD’s LocationAffordability.info, which maps CNT’s H+T Index ([housing + transportation costs]/income), shows a sharp affordability divide slicing across Maryland’s suburban heartland, from the northwest to the southeast. This particular example emerged while I was researching yesterday’s Streetsblog USA post about the Citizens Budget Commission’s report citing DC, SF, and NYC as being rather affordable from an H+T perspective — but using some slightly odd figures.

Here, I’ve highlighted Crofton, Maryland, just inside Anne Arundel County, with apparently more affordable Bowie just inside Prince George’s County next door. Curiously, though, costs are $700 higher in Bowie, but it’s still deemed “more affordable.” How? Prince George’s is within metropolitan Washington, where median households have incomes $10,000 higher than in metropolitan Baltimore, which includes Anne Arundel.

The added irony: median household incomes in Anne Arundel (again, metro Baltimore) are quite high: $14,000 higher than in Prince George’s. Similarly, Howard County (Clarksville, Columbia) is Maryland’s wealthiest, with median household incomes $12,000 higher than in neighboring Montgomery (Olney, Gaithersburg). Although Anne Arundel and Howard derive much of their income from their legions of Washington commuters, they do border Baltimore County and the Maryland state legislature has designated them as part of metro Baltimore. Thus, for the H+T Index’s purpose, they’re comparatively deprived.

The H+T Index is a useful tool, but it does rely on a lot of moving data points. In this case, it’s a bit strange that the numerator (H+T costs) are defined by a very small geography (census tracts in the map, cities in the CBC report), but the denominator (income) is related to entire metro areas. While it’s true that labor markets are metropolitan in scale, it’s also true that incomes vary locally just as much as housing and transportation costs do.

Why inclusionary zoning has a cash-out provision

Daniel Kay Hertz has a recent post about how Chicago’s inclusionary zoning (IZ) policy is insufficient at creating enough units to meet Chicago’s affordable housing needs.

Montgomery Ward Complex

Some of the loft condominiums within the former Montgomery Ward Catalog House, where one penthouse unit sold last October for $2.95 million, were set aside as public housing replacement units.

When I was working for the Chicago Rehab Network 11 years ago, I wrote up the broad outlines of what was eventually adopted as Chicago’s IZ policy. I certainly concur that it is not going to solve the affordability crisis in Chicago anytime soon, but I still think it’s a reasonable approach to providing workforce-level affordable housing within the context of how Chicago builds housing — and once it was implemented, IZ multiplied the number of affordable units that Chicago’s Department of Housing could take credit for (primarily through LIHTC).

During the process of drafting this policy, we anticipated and understood that IZ would absolutely not be a cure-all, regardless of how future politicians would try and take credit for it. Furthermore, as Alex Block points out in a comment to the post, IZ absolutely does attempt to do two, contradictory things: (1) integrate gentrifying neighborhoods by creating new, permanently affordable units and (2) creating as many units as possible.

Since CRN is a coalition of CDCs, almost all of whom work exclusively in poor neighborhoods, the CDCs stood to benefit more from approach #2, and so the law probably errs in that favor. Even CRN’s members who worked in fast-gentrifying neighborhoods, though, would rather have served two families in Oakland than one in the South Loop, and the cash-out provision allows them to do so. I certainly don’t blame them, even if the net result does to a small extent perpetuate socioeconomic segregation.

As part of the process of creating this legislation, we conferred with developers of both low-rise and high-rise units, who shared their pro formas with us, and with very extensive research done by groups like MPC and BPI, mostly relying on established policies in primarily low-rise places like Montgomery County, Md. and Burlington, Vt. We saw very few examples of successful policies that worked in a high-rise context. And since a large share of the development in Chicago, then as now, was in downtown high-rises, we needed to find some way to get buy-in from high-rises.

In short, affordable units within high-rises turn out to be very difficult to create and administer. High-rises are costly to build per square foot, and there isn’t much latitude to trim the costs through things like unit sizes and finishes. Most crucially, high-rises are subject to numerous cost thresholds, beyond which the primary incentive of IZ (“free land” in the form of higher density) can become worthless — e.g., a 7-story building is actually far less profitable than a 6-story building. And once a high-rise is completed, it’s difficult to balance the operating costs of luxury amenities (concierge, pool, etc.) across market and affordable units, which has recently been in the news with the “poor door” controversy. (This is somewhat less of a problem in MoCo, since the Washington area’s very high AMI allows for luxury studio apartments to be counted as “moderately priced dwelling units.”)

So, given these difficulties — and given the CDCs’ thirst to capitalize a housing trust fund that could significantly expand their efforts at helping low-income families in neighborhoods (rather than moderate-income singles downtown), we went with the “cash-out” provision that pretty much exempts downtown high-rises.

As for exempting small developments, that’s solely related to the fact that the requirement kicks in based on the number of units, and it’s impossible to deliver a fraction of a housing unit.

It’s not just a phase: urban population dynamics have changed

National Park Seminary new EYA townhouses

EYA townhouses in Forest Glen, Md.

Ben Adler from Grist wrote about a recent NYT trend piece about how suburbia is hollowing out, with few young families to replace the empty nesters. He puts too much emphasis on gross migration and population change, without drilling into how those components have been changing:

A handful of coastal and upper Midwestern cities are attracting more young professionals than before and are retaining them for longer… Even where gentrifiers are moving in at a pace sufficient to reverse outmigration, they’re barely making in a dent in reversing the tide.

Migration population losses from cities paint an unnecessarily dire view of urban prospects. There is a good reason why large metros would tend to lose people to domestic migration — and, for the 20th century, pretty much always did. A statistically significant group of young people move to large cities, get married there, have kids, and then move away in search of more appropriate housing. Two people move in, three move out: presto, population “loss,” even though the same number of people moved in and out. Similarly, for decades a steady flow of retirees southward, away from large cities, was a good thing for society — an indicator that healthier seniors were physically able to move, rather than remaining house-bound.

Yet long-established movements like these (plus shrinking household sizes, plunging overcrowding, the twin crises of deindustrialization and crime, and employment displacing relatively dense central-city residential), may have largely run their course.

Yes, this does indicate that “the school problem” remains,* but indications are that cities are attracting more young people, and retaining them for more years. This is occurring both before and after the critical life milestone of marriage: new households are overwhelmingly singles, couples, and unrelated persons. Whereas many of the 1950s pioneers who settled what are now inner-ring suburbs were young families headed by 20-somethings, or maybe 30-somethings, today many married couples (without kids, or with young children) stay in the city for longer.

Here in DC (where the city’s small size and overwhelmingly post-industrial nature makes the demographic transition especially sharp), Carol Morello from the Post observes:

the number of children younger than 5 has grown by almost 20 percent, from 33,000 to 39,000, according to census figures. In the same time span, the number of children ages 5 to 13 rose 7 percent. But there were fewer children 14 and older, suggesting that many parents still choose to leave the city when their children reach high school.

This also shows up anecdotally, as in the NYT’s quote of a Westchester County official (“Parents used to be 35ish, now they’re 45ish. What we’re seeing is not so much an exodus as a later arrival”) and this observation (at a recent ULI conference) by the biggest developer of townhouses inside the Beltway:

Within the DC region, the geographically compact core (about 3% of the region’s area) accounts for a huge share of net growth of 25-34s. (Drawn from 2010-2012 ACS.)

A larger share of households spending more years living in the city is a marginal boon to cities’ residential market share. Few Americans live in one place for life, anyways, but imagine the implication for apartment owners as their tenant pool both grows in size and stays longer.

Meanwhile, population decline hasn’t hurt some urban areas (like my old neighborhood of Bucktown, where densities on some blocks have fallen 90% since their WW1 peaks, and continued falling in recent years). These can feel more lively and active than ever, even with much-reduced populations, because incomes are way up. More disposable income can substitute for a smaller population; retailers look for underserved pockets of spending power, not necessarily people.

Yes, at the end of the day, cities need to provide homes for a growing global population and so should welcome growing populations. However, gross population shifts need to be disaggregated and viewed cautiously.

On another note entirely, I’d like to honor the recent passing of Donald Bogue, 1918-2014, who taught me much of what I know about demographic processes. (My “Relocated Yankees” paper was done as a final project for his class.) Even though he was well into his eighties when I took his class, his approach was the best of UChicago: thoughtful, broadly read, engaging, and kindly critical, and he helped to tie together a lot of loose ends that I’d thought about for many years. He leaves behind a tremendous published legacy — scores of publications in the Library of Congress, for instance — and his work on topics like Skid Row still has strong resonance in planning today, for example in understanding the historical intersections between homelessness and place.

* Don’t look at me for any answers; this isn’t a school policy blog.

Shorts: parking craters, carbon tax, Census tools

toys

Urban renewal in New Haven created a “towers in a parking lot” environment, replacing its lower-scale past.

Several springtime shorts:

1. My Streetsblog post about Chris McCahill’s parking research got a strong reception last week:

Streetsblog recently spoke with Chris McCahill of the State Smart Transportation Initiative in Madison, Wisconsin, to learn about his research into how parking affects small cities’ downtowns. Most recently, McCahill and his co-authors have shown how policy makers’ preoccupation with parking not only hollows out city centers, it also decimates the downtown tax base.

2. In carbon tax news, DC residents Christine Lagarde and Jim Yong Kim (who might know a bit about economics and taxation) both endorsed a carbon tax shift at last week’s IMF/World Bank Spring Meetings, per a report from the Sydney Morning Herald. Meanwhile, revenue-positive carbon tax legislation was introduced in California.

3. Three neat online Census tools for future reference:
Demographics around a point, from Census 2010 (so, alas, limited to the short form, but useful for gross population)
Shift-share analysis, to see how your area’s job creation in various sectors leads/lags its peers
Economic development cluster mapping, identifying geographic concentrations of firms by NAICS code and county

Modernist town founder urges evolution, not stasis, for his jewel

Reston: Lake Anne Village
[Nobody's around to sit with Bob by the shores of Reston's Lake Anne.]

One new fad insists that Modernist urban plans were designed as totalizing works of art, and thus should be frozen in their as-built, “apex” condition. That’s even though such places often were never built to their originally planned capacity, and almost always fail to draw the crowds that were promised. However, most of the auteurs who dreamt up and built these places have passed on, and we thus have no way to ask them whether their plans were truly end-state designs, or whether they were starting points for natural urban evolution — whether the founders hold more sacred either the intent, or the letter, of their plans.

Tom Jackman from the Post gets a word in with Robert E. Simon, one of the few long-lived Modernist visionaries who still plays an active role in his built creation:

Redevelopment is also in the works for Reston’s original centerpiece [link], the Lake Anne Village Center, including the addition of 800 residential units nearby. That, Simon said, ‘is an answer to a prayer’ because more than anything else, he still wants Reston to one day be a true walkable community… Of the seven village centers that Simon envisioned as creating a sense of community, only Lake Anne resembled that vision of shops, businesses and housing in one place. His hopes for multiple high-rises never materialized, so Lake Anne’s retail shops gradually fell into decline or closed… Simon remains convinced that village centers can create the community that makes Reston distinctive and is thrilled that a developer plans to remake Lake Anne Village Center, where Simon lives. The plan will replace an 180-unit apartment complex with 1,000 townhouse and apartment units, a concept on which Simon was consulted.

If “everyone” were moving back to the city, would you?

“That would depend on what you mean by ‘everyone’ and ‘the city,’ of course.”

Liberties Walk, Philadelphia

Recently, Kaid Benfield linked over to my recent post about “peak sprawl”, tying that phenomenon to broader changes in the housing market. I always have more to say on this particular topic, but this particularly stood out for me: those Boomers who look down their noses and sniff “you’ll undoubtedly grow up and move away (because that’s what I did)” refuse to understand that it really is quantitatively different this time. In an RCLCO market survey, “31 percent of Millennials prefer a ‘core city’… it is twice the portion of the preceding generation when polled at the same age.” As quality of life — crime, traffic, pollution, etc. — has undoubtedly improved markedly in cities and declined in suburbs, the city grows comparatively more attractive.

What’s more, young people aren’t just saying this — they’re acting upon these tastes. Over at Planetizen, Michael Lewyn points to statistics showing that cities are doing a much better job today of attracting young people. Yes, young people have traditionally moved to cities — back in the 1970s, 20-somethings were the only age group with positive net migration into many central cities — but not at anywhere near the rates that we’re seeing today. As a proportion of population, youth in-migration into SF has doubled since the 1970s, into NYC has tripled, and into DC has increased twenty-fold.

A lot of national wags love to dismiss DC as a “ boomtown” overfed by a compliant (if not “tyrannical,” etc. etc. etc.) federal government, but that takes far too reductionist a view of the region’s economy. Population growth in this region was not appreciably different between the shrinking/reinventing-government ’90s and the metastasizing-security-state ’00s: 16.3% in the ’90s and 16.4% in the ’00s. More recently, another shift in government spending has similarly had no effect: in 2013, the city lost 6,000 federal jobs (the region has lost federal jobs every month since October 2011) but continued to see Texas-sized population growth.

The difference is not how much growth, but where that growth happens: DC’s suburbs saw their population growth rate drop by 10.6% from the ’90s to the ’00s, whereas DC’s population growth rate skyrocketed by 6700%. It’s the same number of people, but going to different destinations. The same pattern is true nationally, and in both fast- and slow-growing metros.

Cities are capturing not just a large proportion, but an increasing proportion, of the largest generation in American history (and, Lewyn also points out, limiting their out-migration losses among older generations as well). The result isn’t just a momentary fad, it’s a large-scale migration with far-reaching consequences. The 1970s “back to the city movement” of young urbanites, so familiar from Woody Allen and David Mamet narratives, were so few in number that they could all crowd into the Upper West Side, Lincoln Park, and North Beach — whereas today’s young urbanites now threaten to disrupt entire cities.

What’s more, two other interacting shifts in lifestyles have vastly expanded the market for urban housing catering to younger Americans. Even if one makes the (increasingly tenuous) assumption that urban rental housing is only for those brief years between college and childbirth, and that “everyone” needs to move to distant suburbs for child-rearing purposes:

1. Ever-later marriages: the average age at first marriage has risen 5.5 years since 1960. Whereas 80% of young adults aged 25-34 were married in 1960, today only 46% are. The inherent flexibility of urban areas’ smaller housing units means that they can do a better job of accommodating the growing number of non-family households.

2. The ever-expanding universe of single householders: from 15.1% of households in 1960 to 26.7% today (easily outnumbering married couples with children by about 4:3). Thanks to Eric Klinenberg, this phenomenon has been better documented lately — but discussions around housing still center around the needs of families rather than of all households. (More on that in upcoming posts.)

Those who discount the second point ignore, at their peril, the rise of pluralism within the worldview of the first generation raised after “the death of the meta-narrative.” The mass market, epitomized by giant corporations like Sears or the Big Three TV networks, has splintered into myriad fragments. Increased acceptance of diversity and globalization mean that there’s no longer one right way of doing something, or living one’s life; instead, multiple viewpoints are equally valid. Even in religious matters, young Americans are much more likely than older Americans to say that there are multiple valid perspectives. “It’s all good” carries a more profound meaning than “I’m alright;” it also means “I’m good, you’re good.”

Some of society’s fragments may find the good life in cities, others may prefer suburbs, but to posit that “everyone” eventually will choose the same suburban nuclear-family lifestyle is a dangerously simplistic (and, in my eyes, almost offensively heteronormative) characterization. And in the meantime, the physical form that can best adapt to fragmentation and change is walkable urbanism.

As often happens in these discussions, the definitional problem of where to draw “the city line” also rears its head. Yesterday’s delineation between “suburb and city” makes little difference in today’s metro-centric discussions, where the real distinction is between sprawl and urbane, or “drivable suburbia” and “walkable urban places.”

Pictured: Philadelphia is one of many central cities where young people are not just a large proportion, but also a growing proportion, of central city residents. Its increase in attractiveness to young people is incalculable, since it went from net outmigration in the 1970s to substantial net inmigration in the 2000s.

The city itself acts as a platform for entrepreneurial ecosystems

Off the Grid: Proxy Hayes Valley

A recent Economist report by Ludwig Siegele examines how the business model, and culture, of the new entrepreneurial culture radically differs from the Fordist, all-under-one-roof mode of production that immediately preceded it:

[T]he world of startups today offers a preview of how large swathes of the economy will be organised tomorrow. The prevailing model will be platforms with small, innovative firms operating on top of them… In some ways, [entrepreneurial] ecosystems can be seen as exploded corporations. Finance departments have been replaced by venture-capital funds, legal ones by law firms, research by universities, communications by PR agencies, and so on. All are nodes in a loose-knit support network for startups that does what in-house product-development teams used to do.

This combinatorial approach to business is fundamentally well suited to dense urban fabric, which relies upon smaller increments of development — and thus intrinsically offers the choice and flexibility demanded by both contemporary consumers and the experimental businesses that serve them. In a sense, both the urban grid and the urban fabric are just platforms for business growth: an urban business district has higher costs — but compared to an insular suburban corporate campus, it’s an “exploded” ecosystem of firms that each do their own thing well, and thus maximize their own productivity. Instead of a single mediocre cafeteria, we demand — and increasingly get — more and better choices. The urban collage has found its counterpart as a business model, and naturally the two get along swimmingly:

[S]tartups are doing what humans have always done: apply known techniques to new problems. The late Claude Lévi-Strauss, a French anthropologist, described the process as bricolage (tinkering)… [S]tartups are a big part of a new movement back to the city. Young people increasingly turn away from suburbia and move to hip urban districts, which become breeding grounds for new firms.

In turn, each of these specialist firms needs to generate its own economies of scale:

Tom Eisenmann of Harvard Business School explains that startup colonies are platforms with strong network effects, a bit like Windows and Facebook: the more members they have and the more activity they generate, the more attractive they become.

In researching the AIA’s Cities as a Lab report last year, I chanced upon a single image that I thought encapsulated the possibilities of how the startup mentality has fundamentally altered business and cities: the Off the Grid food court, seen at the top of this post visiting proxy in Hayes Valley. (Photo by Niall Kennedy.)

Sure, back in 1993, I would have expected that by 2013 someone in San Francisco would have a renewable-energy restaurant. Individually, all of the ingredients in this scene existed in 1993: the Hayes Valley neighborhood, left-behind spaces by freeway overpasses (this was a segment of the Central Freeway), roadside flea markets, architects as developers (think John Portman), shipping containers, food carts/trucks, photovoltaics, LEDs, point-of-sale systems, etc.

What’s changed since then is that each of these have evolved, thanks more to regulatory than technological innovation,* into ready-made, easy-to-use, off-the-shelf platforms that can be “recombined” into an endless set of novel experiences — the very essence of what makes urban life so exciting.

* Read the full report for more! Even more telling is the chapter outlining how different districts around the Research Triangle were shaped by how different planned districts have flourished by matching their respective eras of innovation — beginning with corporate campuses in 1960s Research Triangle Park, moving on to the university-led model planned in the 1990s at Centennial Campus, and finally coming full circle to new entrepreneurial ecosystems in downtown Durham (and a future “downtown RTP”).