Parallels between Zoning and Airline Deregulation

Pacific Southwest Airlines post-deregulation ad (1985), showing their expansion beyond California. Image from Airbus777 on flickr.
Pacific Southwest Airlines post-deregulation ad (1985), showing their expansion beyond California. Image from Airbus777 on flickr.

Last week, Ilya Somin published a piece in the Washington Post’s Volokh Conspiracy blog entitled “the emerging cross-ideological consensus on zoning.” The lede:

In recent years, and especially over the last few months, economists and other public policy experts across the political spectrum have come to realize that zoning rules are a major obstacle to affordable housing and economic opportunity for the poor and lower middle class. By artificially restricting new construction, zoning and other similar land-use restrictions greatly increase the price of housing, and prevents the market from adjusting to increasing demand. This emerging consensus is a good sign, though it may be difficult to translate it into effective policy initiatives.

The issue isn’t zoning per se, but zoning (in practice) as a constraint against matching housing supply with demand. Somin notes that arguments about negative impacts from overly strict zoning come from across the political spectrum, ranging from the kinds of libertarian, free-market scholars you might expect, to Paul Krugman (noted previously here), writing “this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.”

Somin draws the parallel to a past cross-ideological consensus in favor of deregulation: Airlines.

Airline deregulation is a bit of a misnomer. The Airline Deregulation Act of 1978 only removed government regulation of the airline business model; air travel is still highly regulated, particularly for safety purposes.  Here, the parallel with zoning is useful: zoning is just one set of regulations that govern development in cities. Building codes still apply; just as airlines are still subject to safety regulations.

Before deregulation, the Civil Aeronautics Board (CAB) controlled all of the key elements of the airline business: what routes could be flown (and by which airlines), the schedules of those services, and the fares airlines could charge. The market for air travel was completely controlled by the regulators.

Airlines couldn’t compete based on price, nor could they easily add new routes or serve new markets. With this tremendous constraint on capacity, they had no choice but to compete by offering luxurious service. Perhaps this sounds familiar to anyone who’s recently apartment-shopped in a tight housing market.

However, despite the conceptual similarities, there is one key difference: airline regulation was centralized in the federal government. Reforming things was relatively simple. Zoning is ubiquitous in American cities, but control over zoning is decentralized. There’s no national zoning office, no obvious equivalent of the Civil Aeronautics Board.

Because the Federal government can only regulate interstate commerce, the controls of the CAB did not apply within states. In big states that could support commercial air traffic wholly within their boundaries, there was already a preview of deregulation: Pacific Southwest Airlines (within California) and Southwest (within Texas). However, this intra-state experimentation in airline business models didn’t have the large impact on the industry until taken to scale nationwide. Likewise, because of the regional nature of housing markets, there’s not sure to be a benefit to a single city in a region to be the first mover on looser zoning.

Because of the decentralized nature of legal control over zoning, even an emerging consensus among legislators and policy-makers would have to be much deeper than the kind of consensus that deregulated the airlines. And even with a broad and deep consensus, the sheer number of jurisdictions that would need to take action is enormous.

For that reason, it’s hard to imagine action to change zoning on a scale akin to airline deregulation without some kind of intervention from the courts. Charlie Gardner covers the history of the jurisprudence of single-family-only zones and notes how long it’s been since these issues have been before the court – and how some of these issues have never been directly addressed:

Ninety years after the Euclid decision, land use debates in the United States continue to be distorted by this same dichotomy between “single-family zoning” and “multifamily” areas. Rather than talking about housing in terms of units/acre, or total floor area, or some other similar metric, we tend to use purported building types — whether single-family, duplex, triplex, ADU or other such classification. Yet these classifications are in a sense illusory. Whether a builder puts up three detached homes on a lot, three stacked units in a triplex, or three side-by-side units in rowhouse form really shouldn’t matter a great deal to the regulator.

The court’s confusion on this point may have stemmed in part from the lack of a concrete controversy. The respondent, Ambler Realty, was seeking to use its property for industrial purposes, and had no intention of constructing any residential buildings, much less apartments. The dispute was an abstract one which only pertained to the value of the land. Had the court been confronted with a scenario in which an individual builder sought to construct a two-unit building conforming to height and bulk regulations within a single-family zone, it could not have evaded the question so easily.

Charlie also cites Sonia Hirt’s excellent book Zoned in the USA, which documents America’s unique and ubiquitous single-family only zoning and how much of an outlier these regulations are in the world. In other words, outside of the consensus.

Would a challenge in the courts bring the US in alignment with the kinds of regulations used elsewhere in the world? Would posing the question to the courts embrace decades of regulatory momentum – or look to academics and policymakers for a new emerging consensus?

Perimeter rules – DCA, LGA, and the challenges of regulating both airline and passenger behavior

Recently, the Port Authority of New York and New Jersey floated the idea of eliminating LaGuardia Airport’s 1,500 mile perimeter rule. Only two major airports in the United States have perimeter restrictions that ban flights beyond a certain distance: LaGuardia and Washington National.

Both National and LaGuarida airports share a common history: both pre-date the jet age. both were constructed with the assistance of the Works Progress Administration, both later proved too small for jet traffic and the boom in air travel, requiring the construction of newer, larger airports.

Today, there are also several characteristics in common: both National and LaGuardia are governed and operated as a part of an airport system (administered respectively by the Metropolitan Washington Airports Authority, also operating Dulles International; and the Port Authority of NY and NJ, operating Newark and JFK airports), both airports are popular with business travelers, and both airports are subject to perimeter rule restrictions that limit the distance of scheduled flights.

DCAperimeter1
The evolution of DCA perimeter restrictions. Rings around DCA show the 1965 650mi rule, the 1981 1,000mi rule, the 1986 1,250mi rule, and the current beyond-perimeter destinations. Image from the Great Circle Mapper – www.gcmap.com

The rule first appeared with the dawn of the jet age. National Airport had non-stop long-distance airline service via propellor-driven aircraft, prior to the rise of jets in commercial aviation. However, DCA was not equipped to deal with the different geometry required for efficient operations of jet aircraft. Dulles International Airport, purpose-built for the jet age, opened in 1962. Noise from jet aircraft was a large reason behind the perimeter rule, but part of the reasoning for the rule was to drive jet traffic to Dulles as well.

The first version of the rule, put in place in 1965, limited flights to a 650 mile radius of Washington, DC. This range just barely includes Chicago; airports that already had non-stop service into DCA (such as Minneapolis and Denver) were granted exemptions. Long-distance flights, exploiting the rapidly growing capabilities of jet aircraft, were forced to use either Dulles or neighboring BWI airport.

The perimeter expanded to 1,000 miles in 1981, allowing non-stop service to South Florida, Kansas City, Saint Louis, and others. In 1986, the perimeter expanded again, to 1,250 miles, far enough to allow non-stop flights from Dallas and Houston.

In 1999, Senator John McCain of Arizona campaigned to remove the perimeter rule entirely. As a compromise, Senator McCain’s hometown airline, America West (later merged with US Air, and now American Airlines) was granted new beyond-perimeter exemptions to serve Phoenix and Las Vegas.

In 2012, the FAA granted several new beyond-perimeter exemptions for new flights to Portland, San Juan, and Austin. The FAA was directed to allow these exemptions by Congress as a part of the FAA’s reauthorization.

Each successive modification of the perimeter rule involved direction action from Congress. As a quirk of DC’s status as a federal enclave, both DCA and IAD (despite both being located outside of the District of Columbia) were built and operated by the Federal government, acting in its capacity as the local government for the National Capital. Both airports were the only airports directly operated by the Federal Aviation Administration.

Since then, several conditions changed. In 1973, Congress granted limited home rule to the District of Columbia, thereby differentiating local government services from those provided by the Federal government. In 1987, Congress created (in conjunction with DC and Virginia) the Metropolitan Washington Airports Authority to operate both National and Dulles. The federal government retains ownership of both airports.

However, despite the move for increased local control for the region’s airports, much of the regulation surrounding them is still codified in federal laws and regulations.

1500 mile perimeter around LGA, with one beyond-perimeter exception for Denver. Image from the Great Circle Mapper - www.gcmap.com
1500 mile perimeter around LGA, with one beyond-perimeter exception for Denver. Image from the Great Circle Mapper – www.gcmap.com

Unlike National, LaGuardia’s perimeter rule is entirely self-imposed. The Port Authority imposed LaGuardia’s 1500-mile perimeter rule (with an exception for beyond-perimeter flights to Denver) in 1984 as a means to manage congestion at the airport and force some traffic to either EWR or JFK.

When looking into additional perimeter exemptions for DCA, the Government Accountability Office argued that the potential loss of flights from Dulles and BWI wouldn’t be catastrophic, and additional competition at the most central airport (in this case, DCA) would be good for consumers.

However, both MWAA and the Port Authority are tasked with managing an airport system, not just maximizing value at one particular airport. Data from MWAA shows a strong correlation between additional capacity for beyond-perimeter flights at DCA with reduced capacity for those same destinations at Dulles.

DCAperimeter2

Dulles is now caught in a vicious cycle. To deal with growth in the mid-2000s, Dulles began a series of massive capital improvements to increase the airport’s capacity and address some of the inherent flaws in the airport’s design (e.g. replacing the plane-mate ‘moon buggies’ with the Aerotrain APM). Unfortunately, since MWAA took on these costs domestic passenger numbers are down, thanks to the collapse of Independence Air, the Great Recession, and the merger of United and Continental (making Dulles is no longer United’s primary east coast hub). All of these factors are driving up the cost per passenger for each remaining enplanement at Dulles. Add in the increase competition from new slots at DCA, and Dulles is struggling.

In response, MWAA is not only dealing with falling traffic at Dulles, but with DCA’s growing pains. The Authority’s new use and lease agreement with the various airlines that use the airports includes a substantial capital program over the next 10 years at DCA to accommodate additional passengers. Part of the Authority’s response is to argue vociferously against any additional exemptions to the DCA perimeter rule; however, they are at the mercy of Congress.

The Port Authority might not need to protect JFK to the same extent that MWAA would like to protect their investments in Dulles, but MWAA’s current experience should provide a cautionary tale. Removal of the perimeter restrictions at LGA would certainly produce winners and losers among both airline tenants at each airport and for the passengers that use them; it’s certainly unlikely to decrease passenger loads at LGA. In fact, American Airlines’ president argues that any changes should wait until upgrades to LGA’s terminals are complete so that they can handle additional passengers.

First, it’s also worth remembering the reason for the imposition of the perimeter rule in the first place: managing demand for one particular airport. True, it’s a somewhat crude tool to manage demand (many are already predicting that DCA-style exemptions to the rule is where the PA will end up), and even without the perimeter rule, there are still slot rules to contend with (another tricky subject).

A second challenge is addressing uncertainty: with airport funding dependent on revenues from airline traffic, a small change can have a big impact. Dulles’ capital program has been greatly affected by changes in traffic levels and by mergers in the industry that shift the airport’s importance to their main tenant in an instant. The need for several of the projects (as well as Dulles’ unaddressed capital needs, such as a new C/D concourse) stems from the airport’s original design, unable to foresee the changes in security requirements, airline boarding practice (jet bridges instead of plane mates), or airline business models (deregulation, leading to the adoption of the hub and spoke model, requiring large concourses for transferring passengers). Dulles was planned and built for the jet age. The original decisions on runway geometry and airfield characteristics have proven to be very accurate; the decisions based on predictions about the behavior of both passengers and airlines has been less successful.

Finally, there’s the need to manage the behavior of two different kinds of users: passengers and airlines. Look at the comments in just about any thread about DCA’s perimeter rule and you’ll find plenty of frequent flyers arguing against the rule. Yet, MWAA can’t successfully implement any changes to their airports without the cooperation of their tenant airlines, acting based on their own set of incentives and preferences. In asking about DCA’s ideal role in the DC region, David Alpert asks:

Should DCA be a sort of niche airport with smaller planes to many little destinations, or an airport that tries to serve as much of the travel demand, close in to the center of the region, as possible? There’s no obvious answer.

Not only is the answer not obvious, but the question itself is more complicated: an airport’s role is only as good as the service that airlines provide; the economics of the kinds of service airlines can provide at any given airport will depend a great deal on a number of factors: airport capacity, costs per enplanement, demand for travel, location/role in an airline’s network, etc.

Shifting an airport’s role can’t be imposed on the airlines; it takes a partnership.

Airlines: the strengths and weaknesses for corporate transportation governance

CC image from Christian Junker.
CC image from Christian Junker.

David D’Alessandro’s review of the MBTA’s finances came to a stark conclusion: “A private sector firm faced with this mountain of red ink would likely fold or seek bankruptcy.” That red ink is thanks to a systemic operating deficit; yet as a provider of a key public service, the MBTA was also “too big to fail” and therefore cannot simply cease operations. Likewise, though municipalities and public authorities can declare bankruptcy, they seldom do.

However, there are examples of transportation operators declaring bankruptcy in the face of systemic deficits: airlines. Comparing for-profit airlines to subsidized urban transit might seem like a stretch, but consider the similarities:

  • Both provide a transportation service
  • Both require capital-intensive operations
  • Both are historically a low-margin business; transit has been largely subsidized for generations in the US; historic profitability for airlines is slim-to-nonexistant.
  • Labor is a significant cost for both; both featured highly unionized workforces.
  • Both are sensitive to swings in energy prices
  • Both include a high level of coordination with the government (regulations, funding for facilities, etc)

Reform proposals for the MBTA set goals for reducing operating costs, but didn’t necessarily give the MBTA the tools to reach that goal. Compare that to the major airline reform – the Airline Deregulation Act of 1978. Prior to deregulation, all air routes needed approval from the Civil Aeronautics Board (CAB). Matt Yglesias explains:

Passenger aviation clearly needs some regulation for the sake of passenger safety, pollution control, and the community impacts of airports. But in the early decades of the industry, CAB went far beyond that to regulate what fares airlines were allowed to offer and which routes they were allowed to fly. This became a classic case of regulatory capture. Airlines cared a lot about the actions of CAB while ordinary voters had bigger fish to fry. As a consequence, the board ended up creating a cozy cartel where airlines didn’t compete much and certainly didn’t compete on price. With price competition off the table, airlines invested lavishly in offering a high level of service. Labor unions got in on the act, using their clout to force managers and owners to share with workers some of the excess profits generated by CAB.

Removing regulatory approval for new routes unleashed new competition, dramatically lowering airfares for consumers. Airlines explored new route network concepts, eventually leading to the dominance of today’s hub-and-spoke system. Existing airlines still had to work within their cost structure, based on the old regulated business model. Soon, many airlines also faced a sea of red ink. Faced with the same choice David D’Alessandro saw for the MBTA, many airlines either ceased operations or entered bankruptcy.

Today, airlines use bankruptcy as a tool to lower labor costs by renegotiating contracts. Yglesias, writing about the 2011 bankruptcy of American Airlines, notes “the real aim of the filing, in the words of S&P 500 analyst Philip Baggaley is to ’emerge as a somewhat smaller airline with more competitive labor costs.’ ”

While the MBTA Forward Funding plan set goals to reduce operating costs, it did not include the tools to make those cost reductions happen. Using bankruptcy as a tool to reduce structural costs, as airlines have done, might technically be available to a public authority like the MBTA, political pressure often prevents this course of action.

In a look at sustainable transit funding, Ralph Buehler and John Pucher study the fiscal sustainability of German public transport systems. The abstract:

Over the past two decades, Germany has improved the quality of its public transport services and attracted more passengers while increasing productivity, reducing costs, and cutting subsidies. Public transport systems reduced their costs through organizational restructuring and outsourcing to newly founded subsidiaries; cutting employee benefits and freezing salaries; increasing work hours, using part-time employees, expanding job tasks, and encouraging retirement of older employees; cooperation with other agencies to share employees, vehicles, and facilities; cutting underutilized routes and services; and buying new vehicles with lower maintenance costs and greater passenger capacity per driver. Revenues were increased through fare hikes for single tickets while maintaining deep discounts for monthly, semester, and annual tickets; and raising passenger volumes by improved quality of service, and full regional coordination of timetables, fares, and services. Those efforts by public transport agencies were enhanced by the increasing costs and restrictions on car use in German cities. Although the financial performance of German public transport has greatly improved, there are concerns of inequitable burdens on labor, since many of the cost reduction measures involved reducing wages or benefits of workers.

The outcomes aren’t all that different than those achieved by airlines utilizing bankruptcy. Unlike either US airline deregulation or the MBTA’s Big Dig deal on transit expansion as mitigation for a massive increase in urban highway capacity, German reforms also included policies aimed to shift the market in favor of public transportation. Fares and schedules are coordinated though a verkehrsverbund, or transport association.

Setting fares, coordinating routes and timetables sounds awfully similar to the Civil Aeronautics Board. However, because air transport is expected to operate profitably and urban mass transit is not. The middle ground is a structure that can combine the best elements of a for-profit corporation (“run it like a business”) with the public purpose of a government agency or public authority. Writing at Citylab, David Levinson makes the case for governing transit as a regulated public utility, operating as a business and billing the public for the full cost of services:

Like any other enterprise, transit should be successful and cover its costs. This is entirely feasible if we change the model of transit finance from a branch of government to a regulated public utility, as is done in much of Europe and Asia. A public utility provides a service, and in exchange, it is compensated for that service. The compensation comes from consumers (e.g. users, riders), and from the public for any unprofitable services that it wishes to maintain for other (e.g. political) reasons.

Just as the public sector pays the electric utility for street lights, it should pay the transit utility for services that the government insists on but that the transit provider cannot charge users enough for.

The public utility model provides a more realistic model for mass transit than airlines do. The lack of an inherent profit motive makes the direct comparison for airline governance a mis-match; yet there are elements of the private corporation that would inherently benefit public transit, thanks to the similiar roles for airlines and transit agencies.

Prediction is hard – so why do we make key decisions based on bad information?

Comparison of USDOT predictions for Vehicle Miles Traveled, compared to actual values. Chart from SSTI.
Comparison of USDOT predictions for Vehicle Miles Traveled, compared to actual values. Chart from SSTI.

Back in December, David Levinson put up a wonderful post with graphical representations looking to match predictions to reality. The results aren’t good for the predictors. Lots of official forecasts call for increased vehicle travel, while many places have seen stagnant or declining VMT. It’s not just a problem for traffic engineers, but for a variety of professions (I took note of similar challenges for airport traffic here previously).

Prediction is hard. What’s curious for cities is that despite the inherent challenges of developing an accurate forecast, we nonetheless bet the house on those numbers with expensive regulations (e.g. requiring off-street parking to meet demand) and projects (building more road capacity to relieve congestion) based on bad information and incorrect assumptions.

One of the books I’ve included in the reading list is Nate Silver’s The Signal and the Noise, Silver’s discussion of why most efforts at prediction fail. In Matt Yglesias’s review of the book, he summarizes Silver’s core argument: “For all that modern technology has enhanced our computational abilities, there are still an awful lot of ways for predictions to go wrong thanks to bad incentives and bad methods.”

Silver rose to prominence by successfully forecasting US elections based on available polling data. In the process, he argued the spin of pundits added nothing to the discussion; political analysts were seldom held accountable for their bad analysis. Yet, because of the incentives for punditry, these analysts with poor track records continued to get work and airtime.

Traffic forecasts have a lot in common with political punditry – many of the projects are woefully incorrect; the methods for predicting are based more on ideology than observation and analysis.

More troubling, for city planning, is the tendency to take these kinds of projections and enshrine them in our regulations, such as the way that the ITE (Institute of Transportation Engineers) projections for parking demand are translated into zoning code requirements for on-site parking. Levinson again:

But this requirement itself is odd, and leads to the construction of excess off-street parking, since at least some of that parking is vacant 300, 350, 360, or even 364 days per year depending on how tight you set the threshold and how flat the peak demand is seasonally. Is it really worth vacant paved impervious surface 364 days so that 1 day there is no spillover to nearby streets?

In other words, the ideology behind the requirement wants to maximize parking.

It’s not just the ideology behind these projections that is suspect; the methods are also questionable at best. In the fall 2014 issue of Access, Adam Millard-Ball discusses the methodological flaws of ITE’s parking generation estimates. (Streetsblog has a summary available) Millard-Ball notes that the “seemingly mundane” work of traffic analysis has enormous consequences for the shape of our built environment, due to the associated requirements for new development. Indeed, the trip generation estimates for any given project appear to massively overestimate the actual impact on traffic.

There are three big problems with the ITE estimates: first, they massively overestimate the actual traffic generated by a new development, due to non-representative samples and small sample sizes. Second, the estimates confuse marginal and average trip generation. Build a replacement court house, Millard-Bell notes, and you won’t generate new trips to the court – you’ll just move them. Third, the rates have a big issue with scale. Are we concerned about the trips generated to determine the impact on a local street, or on a neighborhood, or the city, or the region?

What is clear is that these estimates aren’t accurate. Why do we continue to use them as the basis of important policy decisions? Why continue to make decisions based on bad information? A few hypotheses:

  • Path dependence and sticky regulations: Once these kinds of regulations and procedures are in place, they are hard to change. Altering parking requirements in a zoning code can seem simple, but could take a long time. In DC, the 2006 Comprehensive Plan recommended a review and re-write of the zoning code. That process started in earnest in 2007. Final action didn’t come until late in 2014, with implementation still to come – and even then, only after some serious alterations of the initial proposals.
  • Leverage: Even if everyone knows these estimates are garbage, the forecasts of large traffic impacts provide useful leverage for cities and citizens to leverage improvements and other contributions from developers. As Let’s Go LA notes, “traffic forecasting works that way because politicians want it to work that way.”
  • Rent seeking: There’s money to be made from consultants and others in developing these inaccurate estimates and then proposing remedies to them.

Decreasing opportunities for incremental development in American neighborhoods

Several months ago, Charlie Gardner had an excellent, thought-provoking post asking why have American cities seen the demise of the duplex? In a time when growing cities are bursting at the seams and facing severe affordability challenges, an incremental kind of development might be welcome in many cities, offering new housing while allowing an evolutionary pace of change to a neighborhood’s physical fabric, instead of the abrupt transition of large-scale redevelopment. So why don’t we see more of it?

Consider international comparisons of small-scale incremental development: Charlie Gardner compares the built form on both sides of the US-Mexico border, noting how on the Mexican side houses grow incrementally over time, often adding new uses along the street. The net result is a slow transformation of the entire neighborhood, evolving towards denser development patterns. Gardner speculates on reasons for the difference with standard American development patterns (including finance and regulation), noting that the small-scale development open the door to homeownership at a much lower price threshold.

Conversely, there are examples of American neighborhoods adding units on a relatively small scale. Let’s Go LA has been tweeting highlights from Wallace Frances Smith’s “The Low-Rise Speculative Apartment,” published in 1964. The book documents the replacement of single-family homes with low-rise speculative apartments (often in the form of dingbats), concluding that this small-scale, relatively low-cost form of construction plays an important role in adding housing supply to the market. Without requiring challenging lot consolidation or more-expensive construction methods, this kind of incremental, small-scale development allowed neighborhoods of single-family homes to evolve into denser places – even without large incomes in the neighborhoods to afford expensive new construction.

Despite the small scale of each individual building, the net result was a substantial increase in housing production overall.

So, why don’t we see more of this today? While various New Urbanists might not like the specific dingbat product, the idea of small-scale urban density is still appealing. The so-called ‘missing middle’ forms, such as townhouses, flats, and small apartment buildings are all lauded as contextually-friendly ways to add housing and increase density in already developed areas. So, why are these housing types missing?

As Let’s Go LA points out, much of this kind of development has been regulated out of existence. In LA, large portions of the city have been downzoned; the newer zoning no longer allows for by-right development of dingbats and other small-scale apartment buildings. In aggregate, the result is a huge decrease in the potential development allowed in LA.

Much of that LA zoning potential would’ve been in the hands of small-scale landowners rather than large real estate development firms. One consequence of removing that development potential is to erode the ‘franchise’ for incremental development. Let’s Go LA notes thatby zoning small developments out of existence, we’ve made land development a much less democratic process, in the sense that far fewer individuals in the community are able to participate economically.” Instead, 20% of LA’s recent growth has been absorbed in the relatively small confines of downtown. While this is good for downtown (thanks to regulatory changes such as LA’s adaptive re-use ordinance and relaxation of off-street parking requirements – discussed previously here), limiting growth to such a small area of the city has consequences: “when growth is restricted across so much of the rest of the city, there will still be pressure on regional housing prices, and gentrification will continue.”

The phenomenon isn’t limited to LA or to dingbats. Stephen Smith, writing at New York YIMBY, looks at the demise of small-scale development (buildings smaller than five units) in New York: “Put simply: New York City’s small builders have been nearly eradicated. The segment of the market that normally produces about half the city’s new building stock has all but vanished.”

New York City building permits, by number of units. Chart from New York YIMBY, data from the US Census Bureau.
New York City building permits, by number of units. Chart from New York YIMBY, data from the US Census Bureau.

Smith considers several hypotheses for this decline in small-scale development, including the end of some tax abatement programs and weak markets in some parts of the city. Smith also hypothesizes that New York’s recent ‘contextual rezonings’ removed development potential from areas ripe for small-scale development:

The result is that many neighborhoods that were once full of redevelopment opportunities are now closed off to anything but the smallest of one- or two-family projects on vacant lots. This sort of redevelopment was largely banned after the implementation of the 1961 zoning code, but throughout her tenure Amanda Burden closed off the last few areas where it was still allowed.

DC is seeing similar conversations. Demand for additional housing often leads to ‘pop-up’ development, often in the form of vertical additions to existing rowhouses. The term even gets used as a catch-all for any kind of smaller scale infill development. Many existing residents are concerned about the changes (though others are supportive).

Responding to political pressure and resident requests, the Office of Planning proposed their own version of a contextual rezoning.However, during a hearing on the measure, one of the zoning commissioners expressed deep concern about the overall impact of reducing this development potential in a city with a growing population and decreasing housing affordability. Greater Greater Washington’s summary of the exchange captures the concern: “I just don’t think we have a comprehensive housing policy in this city and I’m worried about all the unintended consequences of [this proposal].”

While Charlie Gardner contrasted American urbanism to Mexico, there are other options as well. This paper from Sonia Hirt looks at German land use regulations. German zoning is guided by federal standards, localities have some flexibility within those standards but cannot add restrictions to the basic zoning classifications. One end result is that there is no such thing as a residential zone devoted solely to single-family homes. Likewise, even residential zones must accommodate commerce to meet the “daily needs” of the neighborhood.

In outlining potential routes for zoning reform in the United States building off of lessons learned from Germany, Hirt suggests that instead of relatively small areas of mixed-use zoning, planners could focus on a wider area of limited flexibility for residential development – something that might not look that different from the small, speculative apartment developments of the 50s and 60s; or of duplex development.

What would happen without parking requirements?

Downtown Los Angeles. CC image from Nadia Kovacs.

The paper of the day, from Michael Manville: “Parking requirements as a barrier to housing development: regulation and reform in Los Angeles

Abstract: Using a partial deregulation of residential parking in downtown Los Angeles, I examine the impact of minimum parking requirements on housing development. I find that when parking requirements are removed, developers provide more housing and less parking, and also that developers provide different types of housing: housing in older buildings, in previously disinvested areas, and housing marketed toward non-drivers. This latter category of housing tends to sell for less than housing with parking spaces. The research also highlights the importance of removing not just quantity mandates but locational mandates as well. Developers in dense inner cities are often willing to provide parking, but ordinances that require parking to be on the same site as housing can be prohibitively expensive.

Background: Los Angeles had a lot of underutilized office buildings that were not competitive in the office market any longer. The city passed an adaptive reuse ordinance to encourage the re-use of these buildings by offering flexibility on zoning requirements, including use and parking.

The paper shows how developers for these conversions, given flexibility from the code by right, to build less parking than would otherwise be required (new construction in the area is still subject to the parking requirements of the code).  But, unlike the cases in Portland, all of the developers still provided some parking – this is Los Angeles after all (and yet another case for letting the market prevail based on local and regional conditions).

The second key area of flexibility is in parking location – developers wishing to re-use properties downtown could provide parking for tenants off-site, often allowing for shared use parking in under-utilized office garages nearby. Traditional requirements not only arbitrarily set the level of parking to be built, but also demand it be provided on site, even if off-site options may be more feasible and cost-effective.

In terms of the housing stock, this code flexibility allowed developers more flexibility in their target market. Those targeting the higher end provided more parking, but the lack of a hard requirement allows devleopers flexibility in which markets they target.  Parking has a great market value, of course, so the units built with fewer or no parking spaces would rent for a lower price, allowing the market to create a wider range of products.

The end result is more housing, a wider range of housing price points, a smaller supply of off-street parking spaces, and re-use of under-utilized buildings.

While this paper focuses on LA’s adaptive re-use ordinance, the same pricinples apply to zoning and parking requirements in general.

Height and zoning links

DC Zoning Map - CC image from Payton Chung

Every so often (just as we’re seeing right now), someone will suggest changing DC’s height limit and a flurry of articles/blog posts/tweets/etc will go up, arguing for or against.  This past week has been no exception.

Zoning and process: At the Atlantic, Josh Barro argues that the height limit isn’t the real villain:

But the real crisis of land use in Washington goes way beyond the height limit. It’s that the District’s planning and zoning apparatus is overall hostile to new development, usually allowing far less building that would be permitted by the Heights of Buildings Act of 1910. And while D.C.’s planning rules are restrictive, they are also arbitrary and unevenly enforced, making it a difficult market to enter.

I hinted at this in my post on the limit as well, but Barro really highlights two distinct issues.  One is a matter of the content of the regulations – how much density is allowed, what kind of uses, etc.  Barro highlights some DC examples of rather low densities allowed by right in otherwise obvious areas for denser development.  The other is a matter of process. Barro notes that many developments don’t take advantage of by right zoning, but rather look to the Planned Unit Development process, which adds flexibility at the expense of certainty.

The proposed project is not out-of-character for its surroundings. But even though Wisconsin Avenue in the area is characterized by six- and eight-story apartment buildings, this parcel happened to be zoned for a “floor-area ratio” of 1.0. That mans only one square foot of building area per square foot of lot area.

So, the owners of the property filed a Planned Unit Development application that would have allowed a FAR of 2.0. This was hardly an earth-shattering level of density. Permitted FARs in D.C.’s main business district go as high as 12.0. Yet the neighbors fought the project tooth and nail, suing to block Zoning Commission decisions and even trying to get the old supermarket named a historic landmark. Don’t laugh. The “Park and Stop” strip mall on Connecticut Avenue in Cleveland Park, right next to a subway station, is a protected historic landmark, on the grounds that it is one of the oldest strip malls in the country.

In practice, these two constraints (content and process) work hand in hand. The unfortunate outcome is that good projects have to jump over more procedural hurdles, while inferior projects are often approved by right.   The by-right density on such a parcel should be higher than 1.0 (and probably higher than 2.0, too), but the process could also stand to be improved.  Process matters, as does the regulation content.

Zoning is killing America: No, I don’t think that overstates what Jonathan Rothwell argues in The New Republic. Taking a cue from discussions about Why Nations Fail, Rothwell posits a thesis about why regions fail, and the answer is zoning:

Specifically, they contrast “extractive institutions” that concentrate power and hamper development, such as slavery (at the extreme) and limited voting, civil, or property rights, with open institutions that diffuse power and opportunity, providing universal incentives to invest and innovate.

Urban scholars and policymakers have much to learn from such institutional analysis. While most political economists think of institutions operating at the national or even state level, there is one essential but overlooked institution operating at and within the metro scale: zoning.

Previously, my work has found that zoning laws inflate metro-wide housing costs, limit housing supply, and exacerbate segregation by income and race. Other work faults these laws for their damaging effect on the environment, since they make public transportation infeasible and extend commuting times. With a few possible exceptions (see Michelle Alexander), it’s hard to think of an existing political institution in the United States that is more destructive of human and social capital.

Emphasis mine.

And it’s not just zoning: Will Doig at Salon writes about the practical impacts of historic preservation:

When Jacobs’ neighborhood was protected in 1969, it was no tony enclave. In fact, the justification for the urban-renewal project was that Greenwich Village was allegedly a slum. But now that the Village is wealthy, suddenly there are three expansions of its protective boundaries in six years. The timing invites cynical conclusions, bluntly summed up by urbanist Alon Levy on his blog last year: “Let us remember what historic districts are, in practice: They are districts where wealthy people own property that they want to prop up the price of.”

This isn’t to say that zoning or historic preservation are bad for cities – far from it.  However, the very nature of cities is dynamic.  It’s inherent to their economic purpose, as agglomerations of human and social capital.  Zoning, if it isn’t forced to evolve (via a zoning budget or other potential solutions), constrains the city.  Historic preservation also faces the challenge of dealing with dynamic, growing places, as that movement gained traction in an era of divestment in urban places.  To the extent that preservation is about more than just edifices, you have to confront these questions. (Aside: See Benjamin Schwarz discussing the economic moment behind the Village of Jane Jacobs’ era, and also this video on the techno culture of Berlin and how it evolved out of a fleeting and unique circumstance, hat tip to Aaron Renn)

Random factoids about height: Shilpi Paul at UrbanTurf highlights an inforgraphic that aims to quantify the price premium in New York for height.

Random factoids about density: BeyondDC pulls some travel mode statistics from COG’s travel survey at the neighborhood level, and the impact of density on travel behavior is quite obvious.

In less dense areas (and I’m judging density solely on my own impressions from other research), walking plummets as a work commute mode.  In almost all areas, the commute trip is biased towards modes better at covering longer distances (cars, transit) and less to walking and biking.

What would land use regulatory reform look like?

Law Library. CC image from Janet Lindenmuth

Via the always interesting Land Use Law Professors blog, I came across this summary from interfluidity (written by Steve Waldman) of the main points of Avent, Glaeser, and Yglesias.  Dubbed the econourbanists, Waldman summarizes their arguments:

In a nutshell, the econourbanists’ case is pretty simple: Cities are really important, as engines of the broad economy via industrial clustering, as enablers of efficiency-enhancing specialization and trade, as sources of customers to whom each of us might sell services. Contrary to many predictions, technological change seems to be making human density more rather than less important to prosperity in the developed world… The value of human work is increasingly in collaborative information production and direct personal services, all of which benefit from the proximity of diverse multitudes. Unfortunately, in the United States at least, actual patterns of demographic change have involved people moving away from high density, high productivity cities and towards the suburbanized sunbelt, where the weather is nice and the housing is cheap. This “moving to stagnation”, in Avent’s memorable phrase, constitutes a macroeconomic problem whose microeconomic cause can be found in regulatory barriers that keep dense and productive cities prohibitively expensive for most people to live in. It is not that people are “voting with their feet” because they dislike New York living. If people didn’t want to live in New York, housing would be cheap there. It isn’t cheap. Housing costs are stratospheric, despite the chilly winters. People are voting with their pocketbooks when they flee to the sun. (“The rent is too damned high!”) Exurban refugees would rush back, and our general prosperity would increase, if the clear demand for high-density urban living could be met with an inexpensive supply of housing and transportation. The technology to provide inexpensive, high quality urban housing is readily available. If “the market” were not frustrated by regulatory barriers and “NIMBY” politics, profit-seeking housing developers would build to sell into expensive markets, and this problem would solve itself.

Waldman, however, is skeptical of how effective these solutions would be:

One should always be careful of claims that problems could be solved if only we “let the market do its work”. I don’t mean to go all PoMo, but to the degree that there exists an institution we might refer to as “the market”, it is doing its work and it is not doing the work Ygesias and Avent ask of it.

Far be it from me to play down the role of unintended consequences.  However, what would ‘letting the market do its work’ actually look like?  Letting the market work isn’t a binary choice, either – our housing and real estate markets “work” now in one fashion under a certain regulatory regime, and they would continue to do so in a changed regulatory environment – perhaps with wild changes in outcomes, or perhaps not.

The most likely outcomes, however, would be via incremental changes to the regulatory process – not fundamental ones. In The Atlantic Cities, Charles Wolfe discusses proposed land use reforms in Seattle, such as:

  • Allow Small Commercial Uses in Multifamily Zones and Bring Back the Corner Store
  • Concentrate Street-Level Commercial Uses in Core Pedestrian Zones Near Transit and Allow Residential, Live-Work or Commercial Uses in Other Areas Based on Market Demand
  • Enhance the Flexibility of Parking Requirements
  • Change Environmental Review Thresholds
  • Encourage Home Entrepreneurship
  • Expand Options for Accessory Dwelling Units and Rental Incomes
  • Expand Allowance of Temporary Uses

These are the kinds of reforms that stand realistic chances of approval.  They are marginal changes, tweaks to regulations that loosen some aspects and tighten others.  Allowing small-scale commercial uses and home entrepreneurship in residential zones is a minor change in the allowed uses; legalizing accessory dwelling units is a minor change to allowed unit densities (and not necessarily a change in built space); adjusting thresholds for environmental review is a matter of process.

Waldman argues that the “thicket” of zoning and process is a de facto property right for a landowner, ensuring controlled change under certain parameters for the surrounding land – and that changing these de facto rights is not easy, nor should it be:

If we reform away urban zoning restrictions, are we going to invalidate the restrictive covenants of suburban developments? Affluent urban property owners would have almost certainly evolved institutions that perform the functions of community associations if they were not able to rely upon the good offices of municipal government for the same. If restrictions on higher-density development are illegitimate, then should the state refuse to enforce such restrictions when they are embedded in private contracts? Perhaps the answer is an enthuastic “Yes!” After all, over the last 60 years, the state intervened very nobly to eliminate a “property right” enshrined in restrictive covenants and designed to exclude people of certain races from their neighborhoods. Three-thousand cheers for that! But state refusal to enforce previously legal contracts sounds a lot less like “letting the market work” and a lot more like deliberate government action.

This passage raises two issues.  First, as seen in the Seattle example, no reformer is realistically proposing to reform away all zoning restrictions.  Indeed, many of the proposed solutions actually involve changing the processes involved in making those decisions (and adjusting them over time) to allow for more incremental changes over time.

In other cases, legitimate concerns are often mis-matched with the available regulatory tools.  Zoning can easily regulate form, and more broadly, use – but is it the proper mechanism to regulate the locations of yoga studios (bonus points for headline puns)?  Historic preservation processes can easily be co-opted out of a broader desire for some kind of design review, as another example.

Second, the idea of some ideal, free-market outcome is misplaced. There’s no doubt that the forms of our cities are shaped by all kinds of regulation and legal structure.  Rather than pushing the result of reform as a move towards some free(r) market ideal, I think these attempts at reform instead reflect a growing understanding of how markets work and how market forces can be used in public policy (see Chris Bradford on the role of economics education in urban planning and other public policy professions).

Likewise, the move towards using market forces to better allocate scarce parking resources in San Francisco is perfectly valid, if not economically pure.  At Market Urbanism, Emily Washington summarizes this disconnect:

He points out that assigning prices to spots is not equivalent to allowing a market to determine a price. For a real price to emerge capital (the parking space) cannot be state-owned.

Sandy points out that the “shortage” of parking arises because no one owns street parking, so the appropriate incentives are not in place for someone to charge an equilibrium price for parking. While the San Francisco program may be a step in the right direction, he explains that “more intervention usually doesn’t solve the problems that were themselves the result of a prior intervention.” In this case, the city is trying to set a price for something that it could instead auction off to eliminate the original intervention.

I’d reject that view.  As ‘Danny’ notes in the comments, the government can be (and is) an economic actor.  The goal with SF Park isn’t to “eliminate the original intervention,” but rather to better manage on-street parking.  The goal is inherently about incremental change, and that’s what any realistic regulatory reform will also look like.

The difficulty of unintended consequences – airlines, HSR, and deregulation

Pittsburgh International Airport - CC image from Fred

Philip Longman and Lina Khan make the case for re-regulating America’s airlines, claiming that deregulation is killing air travel and taking de-hubbed cities like St. Louis with it (hat tip to Matt Yglesias).  The authors do indeed present compelling evidence that airline deregulation has indeed shifted the economic geography of many cities in the US – but as Matt Yglesias notes (channeling the aerotropolis thesis), in many cases this is merely an example of the air travel network’s ability to emphasize agglomeration economies:

They observe that… once the imposition of market competition caused some medium-sized midwestern cities to lose flights, the per flight cost of the remaining ones went up. That tends to produce a death spiral. Eventually the market reaches a new equilibrium with fewer, but more expensive flights. Except that equilibrium tends to drive businesses out of town. And once Chiquita leaves town, Cincinnati will have even fewer aviation opportunities which will further impair the business climate for the remaining large companies in the city.

This is a great concrete and usefully non-mystical illustration of agglomeration externalities.

Yglesias argues that fighting these agglomeration economies is counter-productive, but that’s not the only flaw in Longman and Khan’s thinking. Using the example of Pittsburgh, where the America West-US Air merger meant PIT losing hub status, they cite examples of the problems this represents for business travel:

K&L Gates, one of the country’s largest law firms, used to hold its firm-wide management meeting near its Pittsburgh headquarters, but after flying in and out of the city became too much trouble, the firm began hosting its meetings outside of New York City and Washington, D.C. The University of Pittsburgh Medical Center, the biggest employer in the region, reports that its researchers and physicians are increasingly choosing to drive to professional conferences whenever they can. Flying between Pittsburgh and New York or Washington can now easily take a whole day, since most flights have to route through Philadelphia or Charlotte. A recent check on Travelocity showed just two direct flights from Pittsburgh to D.C., each leaving shortly before six in the morning and costing (one week in advance) $498 each way, or approximately $2.62 per mile.

The problem is that Pittsburgh to New York and Pittsburgh to DC aren’t all that long as the crow flies.  Longman and Khan explain why that’s problematic, thanks to those pesky laws of physics:

One reason this business model doesn’t work is that it’s at odds with the basic physics of flying. It requires a tremendous amount of energy just to get a plane in the air. If the plane lands just a short time later, it’s hard to earn the fares necessary to cover the cost. This means the per-mile cost to the airlines of short-haul service is always going to be much higher than that of long-haul service, regardless of how the industry is organized.

Indeed, part of the economic logic of the airline hub was to ferry passengers to the hub via loss leader (or, hopefully, less profitable) short-haul routes so that they can then use the more profitable long-haul services – transcontinental and international flights, and the like.  The problem is that Longman and Khan can’t see beyond the end of the runway.  We have a transportation technology that has a different economic calculus, one that works well for those shorter trips up to about 500 miles – high speed rail.

This isn’t to counteract Matt’s first point – just because HSR can make travel time competitive with air travel over such distances does not mean building it will be cost-effective, but the broader point is about the need to think beyond the modal silos.  Current rail service from Pittsburgh to DC and New York isn’t time-competitive with flying, even with those connecting flights.  But HSR could be. Indeed, given the current economics of the aviation industry, HSR ought to have a larger role in key corridors.

Indeed, Longman and Khan do consider rail in their article, but they pick out the history of railroad regulation instead:

 By the 1880s, the fortunes of such major cities as Philadelphia, Baltimore, St. Louis, and Cincinnati rose and fell according to how various railroad financiers or “robber barons” combined and conspired to fix rates. Just as Americans scream today about the high cost of flying to a city like Cincinnati, where service is dominated by a single carrier, Americans of yesteryear faced impossible price discrimination when traveling or shipping to places dominated by a single railroad “trust” or “pool.”

This, more than any other factor, is what led previous generations of Americans to let go of the idea that government should have no role in regulating railroads and other emerging networked industries that were essential to the working of the economy as whole.

The problem with applying this logic to the current airline situation is that the railroads of the turn of the century didn’t just have a monopoly over a given town as the sole operator of service along the line, but they had a monopoly on the very technology that could offer such increases in mobility.

That technological mobility is no longer the case.  The excellent Mark Reutter article The Lost Promise of the American Railroad (now behind a paywall) documents the many reasons for the decline of American rail, including new competing technologies (both air travel and cars taking away long distance travelers as well as commuters), outdated regulations (such as WWII era taxes meant to reduce unnecessary travel during the war – and were quite successful at doing so – that remained in place until the mid 1960s), direct subsidization of competitors by the government (see taxpayer funded highways and airports, in the face of largely privately financed and taxed rail assets), and differing regulatory regimes.

The regulations present a compelling story.  The original regulations, as noted by Longman and Khan, were devised in an era before heavier-than-air human flight had even occurred – yet alone before the rise of commercial aviation.  Yet, the regulations devised by the Interstate Commerce Commission (formed in 1887) were the basis for a portion of the blame for the decline of American rail less than a century later.  Longman and Khan defend the need to regulate, despite these shortcomings:

To be sure, any regulatory regime can degenerate and wind up stifling competition, and the CAB of the late 1970s did become too procedure bound, ruled, as it came to be, by contending private lawyers rather than technocrats. It would have helped, too, if the country had not largely abandoned antitrust action after the Reagan administration. But even strong antitrust enforcement wouldn’t have helped that much, because airlines— just like railroads, waterworks, electrical utilities, and most other networked systems—require concentration both to achieve economies of scale and to enable the cross-subsidization between low- and high-cost service necessary to preserve their value as networks. And when it comes to such natural monopolies that are essential to the public, there is no equitable or efficient alternative to having the government regulate or coordinate entry, prices, and service levels—no matter how messy the process may be.

While this can be a compelling case for the need for regulation in the abstract, it doesn’t present a compelling case for the content of those regulations.  How can these regulations possibly change to reflect changing economic realities, such as the rise of new technology?

Chris Bradford put forth an interesting idea regarding land use regulation: give all zoning codes an expiration date (a similar idea to the zoning budget).  If the anti-trust and equity concerns are so great as to require this kind of regulation, requiring some sort of periodic review is an interesting idea for simulating some of the innovation and competition that a freer market might provide.

The extreme positions aren’t that illuminating.  Likewise, merely promoting the idea of regulation in the abstract (without speaking to the content and effects of those regulations) isn’t helpful, either.  The specifics matter. Regulation for the sake of regulation is pointless, and we must have mechanisms for continual re-evaluation of the regulations we do have to ensure they actually work towards our stated policy goals.  All too often, this re-evaluation falls short.

This isn’t meant to be a broadside against regulation – far from it.  There’s clearly a role for it.  Instead, I ask for periodic review to ensure the regulations are helping achieve our objectives rather than hindering them. Likewise, the inevitable reality is that whatever regulations we impose now will have unforseen, unintended consequences.

The rent is too damn high

I just finished a nice, quick read of Matt Yglesias’ new e-book The Rent is too Damn High.  Following in the same vein as Ryan Avent’s The Gated City, Yglesias documents the perverse economic impacts of development regulations and restrictions on urban areas. Though not as well sourced and without the in-depth discussion of Avent’s e-book, Yglesias nonetheless offers an accessible and understandable narrative to understanding the same array of urban economic issues.

Yglesias’ self summary is available at his blog:

 It’s about the high cost of housing in America’s coastal metropolises and downtowns everywhere, but more broadly it’s about the crucial role that dense urban development and barriers to its creation matter in a service economy. If you’ve ever read me on housing and wondered “why does this guy think this is so important” or read me on manufacturing and thought “yeah, but what’s his answer” then you will find the answers herein. Andrew Chesley has been reading his copy and liked this line:

Lots of people buy RVs, but nobody “invests” in them. And what’s a house but a giant RV with no wheels?

As I said before, one of my key goals with this book was to write something that would not only be cheap to buy (just $3.99!) but also short. That means I didn’t pad it out with a lot of to-be-sures and efforts to guess what objections people will have. Better, I thought, to release a detailed-but-not-tedious version of my ideas into the world and then see what people see. So if anyone reads it and has questions, objections, thoughts, ideas, etc. please do email me about them or send links to your own blog where you’ve written about it. I’d love to continue the discussion and follow whatever points people think are interesting or flat-out wrong or in need of elaboration.

In the spirit of that discussion, I have a few thoughts.

First, a video interlude for the book’s namesake.

Perhaps the most interesting part to me is Matt’s claim in the book that the final chapter of any public policy book (the chapter that actually gets at potential solutions) is often the most disappointing.  I won’t hold that against this e-book, since the educational component about the issue (as opposed to, say, healthcare or climate change) often isn’t even regarded as a problem.

That said, who is the audience for this kind of material? Convincing the general public, one development project and one upzoning at a time isn’t a sustainable solution. Likewise, too much of the NIMBY opposition discourse is of the shotgun, everything including the kitchen sink approach: throw out all possible objections and see what works.  That kind of approach isn’t likely to buy into a reasoned argument.

Tyler Cowen assumes most of America won’t pay attention to Matt’s point – but maybe they don’t have to. Perhaps with some procedural modifications (see thoughts here and here) you could make progress, and in that case the audience in need of convincing would be elected officials – either by convincing current officials or by electing new ones who understand the issue.  Good news: as Matt points out, Mitt Romney was all over this back in 2006.

Josh Barro at Forbes looks at Chicago and wonders how that city manages to keep prices in line with construction costs:

Yet Chicago has a planning process that looks, at first, like it ought to be a nightmare. The city is divided into 50 wards, each of which elects an Alderman to the City Council. In practice, the Alderman has enormous control over what developments get approved within his ward. Yet, despite these fiefdoms, projects tend to get approved.

This is partly because Chicago also liberally uses Tax Increment Financing districts, which now cover huge swathes of the city. When a TIF district is created, the amount of property tax revenue that the district sends to the city is frozen for 23 years. Increases in property tax receipts are instead directed into a special fund that can only be used for projects within the TIF district boundaries—and new developments tend to mean significant increases in property tax collections. When you create a TIF, you create an incentive for residents and their Aldermen to approve new development, as that means more money for local goodies.

I’d expect nothing less from the City that Works. However, it’s not as if Chicago’s system (or that of Houston) produces quality results all the time. Chicago still has plenty of those subtle barriers to development that often produce unintended consequences, even if the overall price levels are reasonable. Also, Chicago isn’t seeing the same kind of intense demand as other coastal cities are, perhaps confounding the city’s apparent success in keeping costs reasonable.

David Schleicher, in an interview with Mark Bergen at Forbes (Part 1, Part 2) discusses some potential legislative solutions.

It’s great to see these issues front and center in the discourse, even if only in this small corner of the internet. I’d highly recommend Matt’s e-book for a quick, concise summary of the basic issues of over-regulation and the benefits of density and cities with a little more freedom to operate.

[EDIT: 3/9, 7:52 am – Yglesias responds here]