Earlier, I wrote about how the CNT/HUD Housing + Transportation Affordability index (HTA), while a very worthy addition to discussions around whether households can affordably live in suburban vs. urban areas, has a denominator problem at metropolitan boundaries, or even within metros which have severe income inequality. Yet LocationAffordability also has a numerator problem: For housing costs, it relies upon another Census data point which has One Weird Quirk.

Daniel Kay Hertz wrote an excellent “Definitive Field Guide to Median Rent Statistics” for City Observatory recently, noting that ACS-reported rents “Can’t answer: What is the median rental price facing people on the rental market today?”

The tract on the left (in downtown Brooklyn) is public housing, with a reported median monthly rent of $768; the tract on the right $2,467. But for someone just moving to town, the only vacancies are in that fancy new building. 

The rents that people report paying to the Census ACS are probably true, but in a few cities they have very little relationship to what vacant apartments are renting for. In particular, as Michael Lewyn flagged (and as we wrote up in Streetsblog a while ago) cities with rent control can look amazingly cheap:

[B]y looking at average rents, which in some cities include many rent-stabilized units, the calculation doesn’t necessarily capture what someone searching for shelter is likely to pay. If you’re trying to find an apartment in New York now, getting a place for the average rent would probably be extremely difficult.

Unlike the denominator problem, which shows up at a macro level, this discrepancy only really shows up at the micro level. I just noticed it in the recent “WalkUP equity ranking” from GW’s CREUA, which (based on HTA) found suspiciously low rents reported in some very upscale neighborhoods. I suspect the typical rents found are those paid by a small number of long-term residents in subsidized or rent-controlled units (set years ago), rather than those paid by the residents of the new luxury apartments.

HUD’s new Small Area Fair Market Rents are reported down to the ZIP code level (and have the big problem of not being available everywhere), which is a much larger level of analysis than Census tract, but they’re an attempt at figuring out a systematic answer to this problem.

Dan Morales’ proposal to fill the parking crater between Union Station and the Capitol complex.

Dan Morales recently shared some renderings on GGWash of what new buildings fronting Columbus Circle (the plaza in front of Union Station) might look like. The site is now mostly Senate-staffer parking, which has long annoyed the local chattering classes. The Capitol parking lots are, after all, the very last parking crater to mar the otherwise continuous urban fabric of central DC, and they sit right in front of heavily used Union Station.

It’s not that the Architect of the Capitol (AOC) particularly loves its surface parking. After all, they commissioned WRT to do a lovingly rendered plan to eliminate not just all of the surface lots, but even many of the surface roadways (ahem, I-395) on the House side. Instead of surface parking and unlovely parks, the 2050 plan shows more office buildings, with parking relocated to new standalone garages over/next to I-395. (A prime motivation is to eliminate the parking beneath office buildings, now considered a security hazard.) In short, AOC’s been land-banking the entire Hill in the assumption that its space needs will grow in the future.

Yet new planning efforts might identify that offices and support facilities continue to get more space-efficient, and that some of the land may be surplus to even the longest-term planning horizon. And, well, commercial prices are really rich…

@alex_block @paytonchung I’m sure AOC could come up with something to spend $100M on, or whatever the rights to those blocks are worth.

— BeyondDC (@beyonddc) October 20, 2015

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Those numbers piqued my interest. Let’s see, clockwise around Columbus Circle NE, the parking lots are:

• Massachusetts to 1st (square 723, lot 800): 107,436 sq. ft.
• 1st to Delaware (square 682, lot 808): 52,721 sq. ft. (currently park, not parking)
• Louisiana to E (square 680, lot 801): 30,329 sq. ft.
• E to Massachusetts (square 680, lot 805): 40,474 sq. ft.
• I chose not to evaluate six other blocks that Morales proposed to fill in, in the interests of leaving a park between Delaware and Louisiana, and a one-block buffer between C and D.

The blocks to the west are zoned C-3-C, with a maximum FAR of 6.5. That would fit underneath the 80′ height maximum applied to Columbus Circle under the Height of Buildings Act. Thus, a maximum of 1.5 million square feet of office could be built on all four parcels, or 1.16 million on the three parking lots. Based on a land value of $200 per FAR-foot for offices in downtown DC, that’s $300 million for all four parcels, or $231.7 million for just the parking lots.

That value’s substantially higher than the $350 million that Lydia DePillis calculated as the value of all AOC’s surface parking, using tax valuations (which often lag market values).

How could a deal be structured? GSA, under the leadership of Dan Tangherlini, started dealing in “swap-construct exchanges” for sites like Federal Triangle South. In that arrangement, a developer builds a new building for GSA, which in turn “pays” the developer by granting title to surplus property. Maybe AOC could pay for further renovations, for removing its existing subterranean garages, or for new standalone parking garages (perhaps on the block between 1/2/C/D that houses the Monocle and the Capitol Police) with the revenue.

All of those sums sound like a lot of money. However, AOC projects do tend to be pricey: even $300 million is only half of the unfunded cost of Cannon House Office Building renovations. At least AOC would be able to get the money without enduring the wrath of its occupants, who sometimes point fingers at AOC’s spending.

So, Dan, now that you’re in the private sector, how about an unsolicited proposal to AOC?

I-670 hides below this building in Columbus, Ohio.

Whether I’m biking down F Street and running headlong into it, or dodging its construction equipment on the infrequent occasions when I have to drive through the I-395 tunnel, it’s hard to miss Capitol Crossing — now the largest development underway within downtown Washington, DC. I knew that this was an unusual project, but it turns out that it’s incredibly unusual: the only instance of a privately financed freeway deck anywhere in the country.

The “Ponte Vecchio” example that everyone points to is The Cap at Union Station: two narrow retail buildings alongside the principal spine of Columbus, Ohio, all built on a bridge over a freeway. It is a marvelous example of a place connector, one that seamlessly unites two emerging neighborhoods to one another.

However, these caps aren’t exactly something that can be replicated everywhere, since it’s an incredibly expensive way to fix a place. The Columbus example was funded by the federal government, as a mitigation measure for widening the freeway below. Most other recent cap proposals resulted from similar mitigation measures — and thus most are parks, both because that’s what the government builds and because their relatively light weight keeps the cost of building a deck down. Klyde Warren Park in Dallas is one example; 70% of the money came from the federal and state governments.

Three things to keep in mind when evaluating a freeway cap:

The future site of Capitol Crossing, on a rare car-free day (Inauguration Day 2009). Photo by Bossi, via Flickr.

1. The price of the structure is only justifiable if you’re surrounded by very high-value land — namely, a high-rise, high-rent CBD of a high-cost city. This limits the situations where these caps make economic sense to premier sites. For instance, a few blocks of air rights over the Massachusetts Turnpike in Boston’s Back Bay are currently in the planning/proposal phase, having seen prior plans fall apart during the Great Recession.

Capitol Crossing’s developers paid the District $60 million for air rights and are sinking another $400 million into constructing a platform over I-395 just east of Union Station, yielding a cost per “FAR-foot” (square foot of potential development) of around $150-200. That’s substantially higher than the $75 per FAR-foot seen in recent transactions for development sites at the periphery of downtown — but comparable to the $190 per FAR-foot paid for “dirt” within downtown DC, which is pretty much extinct. The net result of this scarcity and high prices is that only the very highest value land uses, namely office and retail, are economically feasible at this development — residential just doesn’t pay enough.

(Calculation based on pre-construction cost figures and final buildout of 2.2 million square feet. Post building calculation doesn’t include demolition costs.)

The economic feasibility line might also be teased out from the RFI responses that Virginia DOT received regarding two sites over I-66 in Arlington — one at the edge of Rosslyn’s high-rise core, and another in low-rise East Falls Church (actually within Arlington County). Almost none of the responses deemed the EFC parcel economically feasible, but many of the responses indicated that the effective “land cost” for the Rosslyn parcels, including cost of construction, at nearly $100 per square foot of FAR.

Unlike private development, a park’s feasible land value is set off-market and is thus completely subjective. In a neighborhood in dire need of a park, or on an irreplaceable waterfront site, the value of a new park may indeed justify the cost of construction.

2. It’ll be much easier, and cheaper, to build a cap if the freeway is completely closed for a while — say, for a major reconstruction. Staging construction over an operating freeway is risky, dangerous, and ultimately costly. Hence, many existing freeway-lid projects, like the Prudential Center and Copley Place in Boston, were constructed before the road underneath them opened to the public. Columbus’ lid was built during an 18-month closure of I-670, for example.

Even at Capitol Crossing, the developer realized the folly of trying to keep the freeway open during construction, and proposed to close 395 entirely for 15-18 months. The closure eventually came to naught due to politics, but would have “cut in half the construction time,” according to the Post: “Building the deck requires installing about 150 caissons along the median to support a network of steel girders… installing the caissons while the highway is in use would be hazardous and disturb nearby residents.”

3. A more entrepreneurial approach that governments can take to such a project is suggested by Matthew Kiefer, who worked on an earlier iteration of the MassPike deal:

MassDOT should adjust its expectations about the revenue potential of these difficult sites to reflect economic reality. It should rely more on rent derived from the net profit of a stabilized real estate asset – percentage rent or a share of proceeds of future sales or refinancings – and less on initial land value, which can be illusory. The Commonwealth will be around for a long time to realize patient returns.

In this PPP structure, the state “speculatively” builds the platform, then executes a “ground lease” for the air rights while keeping the property under state control. This may require a more entrepreneurial attitude towards monetization than most state DOTs are willing to take, but well-located center-city land is a great long term investment. If you really believe in the quality and long-term value of the place that you’re creating, a percentage-rent ground lease is a great way to discount the rent up front but to participate in the long-term gains.

Interestingly, Brandywine Realty Trust also suggested the same net-lease arrangement in its response to VDOT.

4. There are lower-cost alternative to a full bridging project while minimizing the freeway’s footprint and impact. In many cases, the most expensive bit will be bridging the through-traffic lanes — but even sunken urban freeways usually have lots of other spaces. Embankments are usually excessive, and building platforms can be cantilevered out over their edges. Lower-traffic ramps and shoulders are easier to close temporarily for construction. Skybridges can be assembled off-site rather than in-situ, providing more connectivity across the site while minimizing closures of through lanes.

ULI sponsored a governors’ advisory panel study about another downtown Boston air rights parcel in 2012; it recommended a lighter approach than a full-on deck, with buildings surrounding the interchange and bridges over it. (Ironically, the parcel was created through the Big Dig project!)

5. Railroad air rights have also seen active development in recent years, e.g., Hudson Yards in NYC, River Point in Chicago, and 30th Street Yards in Philadelphia. However, the costs aren’t truly comparable to freeway decks: the column spacing can be much closer for railroads than for freeways, and the vehicle movements are rather more predictable.

“Can Our Cities Survive,” Jose Luis Sert’s provocative 1942 treatise on the future of Western cities, posed this set of “embarrassing” questions to residents of the era’s cities. Those who claim that rowhouses are uniquely well-suited for families might recall that, not that long ago, they were widely seen as “gloomy” and unfit for family habitation unless extensively modified — and that most of America still thinks so.

Of course, Sert was largely wrong — in particular, the automotive menace should be solved by restricting the cars, not the children — and the Modernists were never quite successful at convincing families that high-rises were worthwhile.

Attitudes had softened just a bit by 1950, when the regional chapter of the AIA issued a report called “Of Plans and People.” Washington was then in a frenzy over the need to house its exploding population. Rowhouses were merely “disreputable,” rather than intrinsically awful:

Home owners have insisted on increasingly severe restrictions against apartment buildings and row-houses–this despite the fact that for many families they are the most suitable forms of housing. Part of this opposition results from the crude design of these buildings. The ugliness of the typical Washington row-house with its two-story back porches has done more than anything else to bring the row-house into disrepute. If builders were more concerned about good design, the public might feel less need for “protection” against apartments and row-houses.

Monument Avenue at Belmont, Richmond, Virginia: one, two, and six-family houses, side by side, on one of America’s most famous residential boulevards

Many of America’s most celebrated urban neighborhoods, like the Fan in Richmond, have a fine grain of different residential densities. Neighbors might live in buildings of broadly similar sizes, but at substantially different densities. But the entire premise of American zoning, as established in Euclid vs. Ambler, was to maintain uniformly single-family districts — uniquely among any country, as Sonia Hirt as shown.

The world’s best loved cities are the way they are not because of zoning bylaws but in spite of whatever zoning may now be in place… Serendipity, complexity, conjunction, anticipation, surprise and delight: these very human experiences are what great cities offer. But zoning is a blunt, inflexible tool. Zoning is by definition exclusionary, limiting things to a preordained set of possibilities. It determines what cannot be done, rather than what can be It does not anticipate nor nurture new, untried forms of city-building or habitation. It does not, in short, encourage the city of desire.

So little of the [American] city was built before zoning was introduced that its more deleterious effects are much magnified. There is very little evidence of the organic city, the intricate web of urban spaces and built forms that rose before the heavy hand of zoning was applied. There is no “old town” core of narrow lanes and multiple layers of use. And there is very little unpredictability, no edge. At the risk of sounding simplistic, it is boring.

— Lance Berelowitz, “Dream City” (Douglas & McIntyre, 2005), pg. 223.

Bonus: down the street, an illegal mix of uses. Orchid shops and churches, oh my!