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Sharing is Caring (About Economic Efficiency)

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Sharing is Caring (About Economic Efficiency)

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Alana Brasier recently wrote two excellent posts about bike sharing and car sharing, which (with some gentle prodding by a colleague) got me thinking a bit about some of the broader economic implications of what has become known as “the sharing economy.” This convergence of mobile apps, ubiquitous smart phones and the blurring boundaries between people’s private and public lives has produced an increasing number of things that you can share with others, depending on your particular preference and need. Lyft Map

I don’t think I could sum up the issues and implications of all this sharing much better than this post by Aaron Renn. He does a great job of tracking the emergence of the sharing economy all the way back to the emergence of less-structured corporate office environments in the 1990s. I witnessed this indirectly through my wife, who works for a large global consulting firm. When she wasn’t working at a client site, her workplace options were to either show up at the office in downtown Chicago to pick up her plastic tub of personal effects and grab a non-assigned desk for the day, or work from home. (I think you can guess which option she usually chose.) Now she works from home full time at an internal position with the company, as does every single one of her immediate co-workers.

A spokesman for her company was quoted saying that it has reduced its real estate portfolio from 3 million square feet to 900,000 square feet even as its headcount increased, which saves it considerable money on overhead. Because the trend of working remotely conflicts with the trend of increasing workplace collaboration (remember the Yahoo work-from-home change?), there are differing opinions out there about the future of office space. Not every company has the business model, means and desire to be as aggressive as my wife’s employer, but an increasing number of companies are taking the opportunity that technological and societal shifts are giving them to be more efficient in how they use space.

Sharing in Transportation

Sharing can help us use our transportation facilities more efficiently too, as Renn astutely points out in his post. (See the part where he talks about “deadweight loss,” which is a classic economics term.) We all know that single-occupancy vehicles are inherently inefficient because there are empty seats going unused in most cars on the road. David Levinson delves even deeper into the waste built into our current transportation system in a recent post. So it turns out that a car-dominated transportation system is a pretty inefficient use of space, which makes sense to anyone who has seen the famous visualization of cars versus transit on a single city block. Space means land, which must be purchased, paved, and otherwise constructed upon, not to mention maintained over the long term. From an economic perspective, the more people we can transport using the same amount of space (or less), the more productive the system will be.

So if we want to improve the productivity of our transportation system, we can start by making non-automobile modes more available, convenient, and comfortable if necessary (so people will actually use them). And we can allow people to make more productive use of those empty seats next to them and behind them in their cars. There’s a lot more we can do, which Levinson outlines in his post, from road diets to congestion pricing to driverless cars. It will probably take an assortment of strategies working simultaneously to make our transportation system more productive, but we need to make the effort. For a part of our physical world and economy that is both so important to daily life and so expensive to build and maintain, we are not doing a very good job in getting the most bang for our buck out of it. But it looks like there are a lot of ideas out there on how to improve that.

–Dave Stamm, Cities That Work Blog

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Minding Your Money - Should Planners Care About Revenue Per Acre?

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Minding Your Money - Should Planners Care About Revenue Per Acre?

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Some revenue-strapped local governments and smart growth advocates are finding common ground on the subject of how new development can be more fiscally productive for the city or county budget. Planners are being advised to pay more attention to the revenue per acre (property tax primarily) of a property rather than its total revenue generated, because that signals a project that produces more revenue for every acre of land consumed. Studies from places as diverse as Asheville, North Carolina; Sarasota County, FL; and nine towns in four western states show mixed-use, higher density development in compact, walkable places like downtowns dramatically outperforming typical suburban development types like malls, big box stores and single-family housing. Source: Joe Minicozzi

What planner or budget director wouldn’t want more of the stuff on the right hand side of this chart? (Click on it to read the labels.) As a wake-up call to communities about the fiscal value of their downtowns, this sort of research and analysis is invaluable. It has similar value as additional support for developing new walkable, mixed-use places with higher densities than might be typical for a suburban locale. The financial crisis, recession and debates about government spending and debt have put financial issues to the forefront in public discussions, so being able to marshal such data to make the case for smart growth (or whatever you want to call it) is a good thing.

But as a planner with an undergraduate degree in economics who has spent much of his career dealing with the financial and real estate aspects of planning, I have a few observations about the substance and implications of this sort of analysis. Now that it is gaining national attention and being proposed as a tool for evaluating proposed development projects, the revenue-per-acre concept deserves some critical review.

Thoughts on the Theory

First off, some thoughts about the basic math and economics involved. If the focus is on revenue per acre, then obviously the more building space you construct on a parcel the more property taxes that parcel will generate. That means taller buildings and denser development. But there are natural limits to how tall and how dense you can build, and where you can build in such fashion. Just as trees don’t grow upwards forever, buildings can only go so high and downtowns can only expand so far according to a variety of factors determined by the local context. Tall buildings cost more to build, and thus must command higher prices in the market to be economically feasible. Downtowns, major employment centers, and other locations where people and businesses really want to be are going to be more valuable places to build, and thus able to support more-intense development and a greater range of uses (see Central Place Theory). Development that is farther out from these places uses more land and spreads out more for a reason: the land is cheap enough to do so. This is why a Target store on the Near North Side of Chicago can have three stories when the typical suburban store will only have one, and the one-story store has a big parking lot while the three-story store has a three-story attached parking garage. The density, intensity, and construction type reflects the land value and market demand.

Image Source:  Walsh Construction

So revenue per acre is a useful observation, but only up to a point. There are places where higher revenue per acre can be achieved, and those are the places we should protect, reinforce, and potentially expand using appropriate planning policies, and guide development toward using economic development tools. And there are places that are not as valuable, which host less-intense development and provide particular characteristics that are demanded in the market. Single-family neighborhoods are a good example of such places, as are the retail centers that serve those neighborhoods. These places may not produce as much revenue as a five-story mixed-use building on a per-acre basis, but they can produce as much revenue as the market will bear and are valuable components of a community’s tax base.

Turning the Diagnosis into a Prescription

The fiscal problem of suburban sprawl, as outlined in compelling fashion by the folks at Strong Towns, is that we have spent several decades building primarily lower-valued places, neglecting our existing higher-valued places, and not building enough new higher-valued places. And the infrastructure required to serve these lower-valued places is expensive enough that we are not getting enough return on our public investment. A community that consists mainly of single-family homes and strip shopping centers may not have enough revenue coming in to cover its capital costs when the time comes to replace its roads and utility infrastructure – and some towns are starting to have trouble already.

Looking at revenue per acre has helped us to diagnose the fiscal problem with our growth patterns, but we need to be cautious and thoughtful in how we turn that diagnosis into a prescription for better fiscal health. A deliberate policy to maximize the value of new development risks pricing out people who can’t afford it, because more-valuable property translates into higher home prices and commercial lease rates. A well-intentioned revenue strategy risks becoming a new form of the fiscal zoning policies that some communities have used to keep out low- and moderate-cost housing, rental apartments, and other uses deemed fiscally undesirable.

Planning for Fiscal Health

This is a new area of planning that is still developing its theoretical foundation and analytical tools, so it will be interesting to watch it evolve. The fact that we are having this discussion at all is a good sign of progress. My initial thinking is that broad-based, rigorous, and integrated planning that incorporates these fiscal and economic issues will be the best way to go. Calculating the public ROI of individual projects and reviewing them on that basis seems too close to fiscal zoning, and ignores the cross-subsidization between places in a community and the value that they create collectively. In a healthy community, downtown supports the outlying neighborhoods and vice versa – it’s not every property for itself. I’m more inclined to the approach laid out in this white paper that uses property value as an indicator for measuring neighborhood quality of life, and then directs financial resources to neighborhoods on a competitive basis. That way you are prioritizing your capital projects and other spending where it is most needed and most effective to improve the quality of life, which increases property values and ultimately revenue generation. Rather than prioritizing expensive development projects, let’s build better places where every property becomes more valuable.

–Dave Stamm, Cities That Work Blog

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Talk Planner to Me

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Talk Planner to Me

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Millenium Park in Chicago Last week I had the pleasure of attending my first American Planning Association National Planning Conference in Chicago. The experience was invaluable and inspiring; with 5,000+ planners packed into one place, I felt right at home. It was a great opportunity to network, learn about the latest trends in planning, and listen to the renowned speakers who reaffirmed my passion for planning. Between all of the interesting session options and mobile workshops, not to mention the multitude of activities Chicago has to offer, my only regret is that I was unable to be in 10 places at once. In my free time I visited Millennium Park, The Art Institute of Chicago, and biked along the Chicago Lakefront Trail.

One of the sessions I attended was called “Fast, Funny and Passionate,” in which presenters were given seven minutes to present on a topic of choice, usually in a humorous way. Interestingly, three of the presenters discussed the misconceptions the general public has about the planning profession. I couldn’t help but laugh because when people ask me what I do and I inform them I am an urban planner, 90 percent of the time I receive the following response: a smile and head nod, followed by “So what exactly is that?”

As defined by the APA, planning “is a dynamic profession that works to improve the welfare of people and their communities by creating more convenient, equitable, healthful, efficient, and attractive places for present and future generations.” Great definition, but how does that translate into real life? One of the presenters in the Fast, Funny and Passionate session described planning as often intangible, then challenged us to make planning more tangible by spreading knowledge about what planning is and what it stands for. The following is a tiny snapshot of what planners do using brief examples of some of the interesting planning efforts and emerging trends I learned about while attending the conference.

What Do Planners Do?

Planners research and evaluate trends in demographics to determine the potential impacts on communities. A growing concern is the aging population and their ability to “age in place.” Renaissance’s Whit Blanton authored a White Paper on the subject that was presented during the Delegate Assembly, which addressed potential policy responses for the impact “Graying of America” will have on communities.

Planners develop design guidelines for transportation infrastructure. Renaissance’s Vlad Gavrilovic presented the Multimodal System Design Guidelines developed for the Virginia Department of Rail and Public Transportation. The guidelines provide a framework for multimodal projects at the regional, community and corridor level, with a step-by-step process for implementing the guidelines.

Planners perform technical analyses to assess the possible impacts different plans and growth trends will have on the community, city, or region. Scenario planning is becoming a preferred method of this type of analysis, with nearly two-thirds of planning agencies having used scenario planning, as noted by Renaissance’s Kate Ange. That statistic comes from a survey Renaissance conducted for FHWA to assess the state of scenario planning as a tool for planning agencies. Additionally, more than 50 percent of respondents noted the need to engage stakeholders and citizens in long range planning as their main purpose for using scenario planning. The Cape Cod Commission embarked on a scenario planning effort called the Regional Wastewater Management Plan (RWMP) to alleviate wastewater problems occurring from septic tanks leaking into the watersheds of Cape Cod. The Commission used scenario planning in real-time at public workshops to quickly show the public the impact different wastewater treatment options will have on their communities and to allow them to decide what treatments their communities would receive.

Planners develop innovative funding strategies to improve their communities. To comply with California Senate Bill 375 to reduce Greenhouse Gas emissions by 15 percent per capita by 2035, San Francisco implemented a grant program to tie transportation funding to focused development. The One Bay Area Grant (OBAG) is an incentive-based program that encourages compact growth by awarding transportation grant funds for projects located in Priority Development Areas (PDAs).

Planners address sustainability issues. Sustainable Jersey is a sustainability certification program for municipalities in New Jersey. Launched in 2009, the non-profit organization certifies communities that have taken specific actions to become more sustainable. Some of these actions include conducting energy audits for all municipal buildings, assessing the municipal carbon footprint, and adopting a water conservation ordinance. Points are awarded per each action and are added up to determine the level of certification achieved: gold, silver or bronze. The program also provides training workshops and priority access to grant funds.

Design Concept for Stormwater Management in Philadelphia Photo Credit: Philadelphia Water Department

Planners work to mitigate stormwater runoff that can harm lakes, rivers and streams. To address stormwater issues, the City of Philadelphia Water Department developed a 25-year plan to convert 9,564 impervious surface acres into greenland acres. The plan, called Green City, Clean Waters, implements green infrastructure systems that will reduce flooding risks, improve water quality, and enhance the aesthetics of Philadelphia by greening the city.

Why Planning Matters

The world is ever-changing. We have limited resources and limited space with a continuously growing population. A large portion of this population is aging and we must anticipate and plan for their changing needs. The sea-level is rising, forcing many communities to consider the impact this will have on their residents and economy. Lack of affordable housing in downtown areas has contributed to the reliance on the car; the reliance on the car has contributed to America’s obesity epidemic and dependence on unsustainable energy sources.

There are many interconnected issues that planning addresses, and those mentioned in this post only scratch the surface. To sum it all up, I leave you with a quote from APA President Mitchell Silver during his opening conference speech, which I think succinctly gets to the heart of planning: “We are the profession that addresses the uncertainty of the future.”

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Talkin' 'Bout My Highly Mobile Generation

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Talkin' 'Bout My Highly Mobile Generation

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There’s an old saying that “demographics are destiny,” and I was reminded of this while reading a recent report from the AARP Public Policy Institute about the impact of the baby boomers on travel in the U.S. over past 40 years. Using data from the National Household Travel Survey (NHTS), the researchers demonstrate how this enormous (and thus enormously significant) generation has been driving – pun intended – transportation patterns for decades and will continue to do so in the future.

Mobile Boomers

You probably know the basic story line already: the baby boomers, born between 1946 and 1964, were the first suburban generation. They grew up in a land of tract houses, backyards, strip shopping centers, and busy roads filled with cars. This post-WWII period also was an era of unrivaled prosperity in America, when new household devices like the washing machine and other household appliances made housework easier and faster, just as changing social norms and economic growth led to more women entering the workforce. So how did this prosperity change how people get around, especially the baby boomers growing up in it?

Baby boomers started driving at a young age, and both young men and women entered the workforce with more education than previous generations. When the baby boomers started building families, they acquired “his” and “hers” cars, spread a housing boom to the suburban fringes, and, with the advent of dual-earner families, exhibited a strong reliance on “outsourced” household support, such as day care and eating out, that required travel. As a result, during the past four decades, the number of vehicles nearly tripled, travel rates more than doubled, and total vehicle miles of travel grew at more than twice the rate of population growth. Since 1977, travel for household maintenance trips (nonwork) grew fivefold.

The baby boomers haven’t just traveled more than other generations at a particular point in their adult lives; they've traveled more at every point. Every year of the NHTS data since 1983 (when they were ages 19-37) shows that boomers traveled more miles per day than everyone else. So far the trend has persisted even as the baby boomers have increasingly become empty nesters, so it’s not just because of driving their kids around.

New Ways of Getting to the Doctor’s Office

Baby boomers have used cars to become the most mobile generation, but the NHTS shows that they may be shifting modes as they get older. Their vehicle travel (in terms of trips per person) increased throughout the 1980s and early 1990s, but started declining after 1995. Meanwhile, transit travel increased steadily over the years, with a notable jump in 2009 when gas prices were spiking (and transit travel increased among all age groups).

And transit is not the only mode of transportation getting more attention from baby boomers. The AARP researchers cite several interesting (though unfortunate) statistics that suggest that an increasing number of older people are using other means to get around. A study by the National Highway Transportation Safety Administration concluded that a surge in motorcycle fatalities is related in part to an increase in the number of riders over the age of 40. And another study showed that the average age of bicyclists killed in traffic crashes has risen from 32 in 1998 to 41 in 2008. The NHTS data show that baby boomers’ share of all trips by bike increased 64 percent between 2001 and 2009.

The baby boomers have spent the past decades wielding their enormous influence on housing and consumer market trends, but these days you probably hear the most about their future impact on health care. While the complexities of health care costs and practices is a subject for a different blog post, a chart in the AARP report stood out for me as a clear demonstration of how transportation is going to be a quality of life factor for the boomers as they age – and all of us for that matter. Check out the red line in this chart:

Medical appointments: more trips, same distance

We’re not traveling any farther to get to the doctor’s office than we did 26 years ago, but we sure are going there (and labs, imaging centers, therapists, pharmacies, etc.) a lot more often. As planners we spend a lot of time thinking about how to make employment centers, retail districts, and civic/cultural destinations more accessible by multiple travel modes. Medical “places” are just as important to our quality of life, and an extremely large cohort of people who are used to driving a lot are beginning to enter the phase of their lives where they (1) will need more medical care and (2) may eventually be unable, unwilling, or less likely to drive themselves.

A New Generation of Challenges and Priorities

Reshaping and redeveloping our communities to better integrate travel by transit, bikes, and walking is of course one way to tackle the issue. But retrofitting places and increasing accessibility is a long term evolutionary process and won’t reach everyone who needs it. Paratransit and similar human services transportation options are a vital piece of the puzzle, but challenges in coordination, funding, and service availability already exist – before the baby boomer retirement wave has hit. Whit Blanton of Renaissance wrote in the recent issue of the APA Florida newsletter about how local governments, agencies, and service providers are working to overcome these challenges. As they have been throughout their lives, the baby boomers are the vanguard of a new trend, but linking accessibility, wellness, and quality of life is a goal that every generation can appreciate.

--Dave Stamm, Cities That Work Blog

 

Slideshow Photo Pictometry

 

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