What Types of Urban Development Pay? Part II

This is Part II of a breakdown on recent findings studying Downtown Roanoke, Virginia and the recommendations that resulted.

Last time, we found that surface parking was a good money maker for urban land owners, while development didn't make sense without a government subsidy. Now let's look at how these development choices add up for local government. We compared annual property tax revenues with city spending per acre to find the public return on investment.

1. Surface Parking. This popular downtown land use puts local government in the red, effectively moving money from other uses to land owners, though not as much as other options.

2. Historic Rehabilitation. In urban areas, state and federal income tax credits are not enough for developers to invest. Local tax breaks make the difference, and caused a (re)building boom in the study area. The costs are steep though, with the city's return on investment at -50%, moving tax money to support preservation. 

3. Subsidized Development. When local government holds the entire bag for subsidizing development enough to see results, the costs are staggering. In the case study, land was given for free to a developer. The public return on investment was around -3000%. These projects are few and far between, because they can bankrupt local government.

4. For Profit Development. Of all of the examples identified in this section of the study, this was the only one that produced a favorable rate of return for the city, a handsome 1,240%. No example could be found during the twenty year study period.

Note: These numbers assume an identical development with the same land area (except the surface parking, which lacks a building) and the same 20 year financing.

Next time we'll compare the public and private returns on investment and see if their relationships square with the findings of the study.

What Types of Urban Development Pay?

I recently completed a research project on what rate of return different types of land development will produce as part of a greater project. I looked at the four main types of development observed in an urban study area over a twenty year span: surface parking, historic rehabilitation, subsidized development, and walkable private for-profit development. My interest in profitability stems from conversations with developers last year who reported that they had to make a 30% return on their investment in order to consider a project.

1. Surface Parking. It's cheap, it's profitable, it's the most common type of development in the study area. The return on investment is well beyond 100%, assuming appreciation in land value over twenty years.

2. Historic Rehabilitation. It's expensive, it gets federal, state, and local tax breaks, and there are many examples in the study area. The return on investment ranges between 30% and 40%. Some of the largest empty historic buildings haven't been restored, but it may only be a matter of time, or a problem related to the scale of the costs.

3. Subsidized Development. It's not as expensive as a rehab project and the financing is much simpler. There's only one catch: the government has to foot a major portion of the bill, if not the whole thing. The return on investment is similar to historic rehab, between 30 and 40%. A handful of these were found.

4. For Profit Development. It's expensive, it gets no handouts of any kind, and the return is only about 20%. No surprise, you don't see a lot of this, and none at an urban scale. The only recent for profit development has been low density and auto-oriented.

Note: These numbers assume an identical development with the same land area (except the surface parking, which lacks a building) and the same 20 year financing.

Next up I'll talk about how these development choices work out for local government.

Charlottesville News Through Google News Local

I like reading the news, but dead trees don't do it for me. Not searchable, for one thing. This is why I was excited to figure out how to get local news from my Google Home Page. I found out I could use Google News for local news from the Google News Blog, but hey, I'm lazy, why couldn't it come to me on my home page? So after generating the local news feed by putting my zip code in, I copied the web address of my local news feed. Then I went back to my Google Home Page, clicked "Add stuff", then "Add feed or gadget" and pasted the local news feed web address. And now I enjoy local news automagically delivered to me in real time. Very nice, I think. Sadly, it doesn't appear to have cvillenews.com, but perhaps some day it will.

BEARS!

Local physicist Bob Hirosky documented some visitors to his screened in porch: a mother bear and two baby bears. With the help of local law enforcement, the bears were safely let out.

Kerberized Printing in Leopard

I'm currently working on getting Kerberos to work with our windows printers on our Mac Leopard machines at my job. No success so far, but I did discover one thing. In the CUPS FAQ, this is written: 

"Note: In order to use Kerberos-authenticated shared printers, you must be running a version of MIT Kerberos with the  krb5_cc_new_unique ( ) function or Heimdal Kerberos."

I wondered what that meant. It means it needs MIT Kerberos 1.6 or higher or Heimdal Kerberos, a different program entirely. Mac Leopard ships with MIT Kerberos 1.6 so something else is creating problems.

Thanks to meantheory for making this a little easier.

It isn't as elegant a solution as Wordpress has, but you should be able to get to the Picasa Web Album that stores this blog's images here:

Lyle Solla-Yates

Then hover your mouse pointer over an image and click the little blue play button that appears. That is of course, if you have already added the PicLens extension, which is amazing, and is available in other browsers.

Virtual Gallery Experiment

I am posting some images of my graduate work to see how well Blogger works with the Firefox PicLens plugin, which is amazing.This was a quick Andy Warhol homage I put together from an existing color photo of the Lawn at the University of Virginia. I removed the color information, then added translucent layers of color and cut them to fit the images. Used in the U.Va. School of Architecture photoshop tutorial.
This is an image from the Green Streets plan I worked on for the Ix site with Keyur Shah. This is the northern end facing Monticello Avenue. The concept for this section was to create a strong pedestrian connection to the Charlottesville Downtown Mall, increase tree cover, and store and treat water runoff. This includes a pedestrian island, curb extensions with cuts to allow water inside and plants to treat the water. The tree graphics were recycled from one of Keyur's previous projects. You should be hearing more about Green Streets in the near future.

Today in Future Shock

Here's where four-legged robots are at now. They can handle ice, and I think you'll agree that you feel bad for them when they are kicked. A little bit disturbing.



Thanks to Gizmodo for the link.

Majora Carter was in Charlottesville recently. My apologies for not mentioning it sooner. She's doing some amazing work in South Bronx working to transform one of the least green places in urban America to a model of sustainability and environmental justice. Here is a moving presentation she gave a few years ago on Sustainable South Bronx, much of which she gave in Cville:

What It Will Take
For We the People to Vote for and Value the Environment

“We cannot solve the challenges of our time unless we solve them together,” Barack Obama stated this morning. I was stunned by what he had to say about our country and its disastrous divides that make We the People a difficult idea to grasp, holding too many disparate parts with contradictory and antagonistic beliefs and desires.

When the colonists sought independence, the Union nearly failed in its conception because the practice of slavery was so divisive, making it difficult for Northerners and Southerners to see a common cause and identity. An ugly compromise was made then that Thomas Jefferson described as having "…the wolf by the ears; and we can neither hold him, nor safely let him go. Justice is in one scale, and self-preservation in the other."

Our disastrous reliance on a way of life that our best science shows will make it difficult for our species and many others to survive is another wolf, what appears to be another ugly compromise between justice and self-preservation. Yet really, justice and self-preservation both call for change when we pause to examine the situation with a clear head. Yet clear heads are a luxury many cannot afford in America, as we are menaced by wolves more immediately pressing.

“We all want to move in the same direction – towards a better future for our children and our grandchildren,” stated Mr. Obama. This better future must be a bright green future where everyone contributes to the health and vitality of the human and greater biological community. Our science tells us this and our hearts tell us this. And yet no one on the national stage, including Barack Obama, will talk about climate disruption and the challenge of peak oil in anything more than half-steps and empty gestures.

I agree with Obama that we all want fundamentally the same thing, as Americans, as humans, and as living things on Earth: we want to live well and we want that better future for the next generations. This certainly includes dealing with threats like global warming, food scarcity, and other ills, but most individuals I know seem especially focused on taking care of themselves, managing their debt, getting or keeping a job, health care, making sure their children are safe, healthy, and educated. This is a lot of work, especially in a flattened world where the middle class are disappearing, pay is dropping, and costs are going up. And climate change is not the only large-scale threat we face. Obama again:

“We need to come together to solve a set of monumental problems – two wars, a terrorist threat, a falling economy, a chronic health care crisis and potentially devastating climate change; problems that are neither black or white or Latino or Asian, but rather problems that confront us all.”

The placement of climate change at the end and the complete omission of other pressing issues like peak oil are no accident. Real change towards a sustainable future requires much more than greater agreement and support between environmental stakeholders, or even between environmental stakeholders and industry or labor. What is required is a true effort towards unity and fairness, a recognizable We the People to act together in our own interest rather than the interest of one faction over another. I use this word faction in the sense that James Madison used it, as “a number of citizens, whether amounting to a majority or minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens or to the permanent and aggregate interests of the community.” The factionalization of America is so taken for granted now that environmentalism and labor are considered interest groups, factions that must act in their own interest against the interest of We the People.

“Segregated schools were, and are, inferior schools; we still haven’t fixed them, fifty years after Brown v. Board of Education,” stated Mr. Obama. The divide in quality between schools and opportunities for Americans is staggering. Americans who didn’t go to the right school and didn’t have access to opportunities do not become involved in moving towards a bright green future. They try to survive. They live low on Maslow’s Hierarchy of Needs. People like Majora Carter from Sustainable South Bronx are rare and amazing. Ms. Carter has achieved in South Bronx in a comparable way to how Mr. Obama has achieved. She is from a disadvantaged environmental justice challenged community where opportunities were and are few. She still managed to grab some however, receiving her MFA from New York University in 1997. In addition to her education and civic ties, Ms. Carter benefited from a neighborhood where the connections between social justice and environmental justice were transparent. Ms. Carter and her community connected the dots and started working for a bright green future. We need a world of people who can do that. It only works if we all play.

”Most working- and middle-class white Americans don’t feel that they have been particularly privileged by their race. Their experience is the immigrant experience – as far as they’re concerned, no one’s handed them anything, they’ve built it from scratch. They’ve worked hard all their lives, many times only to see their jobs shipped overseas or their pension dumped after a lifetime of labor. They are anxious about their futures, and feel their dreams slipping away,” noted Barack Obama this morning. This hit me especially hard as the descendent of immigrants. I take enormous pride in the stories of my family’s struggle to come to America and succeed there, facing prejudice against Jews, Hispanics, and women in general, and finally achieving a measure of security in the middle class. I certainly feel that anxiety as I search for the job that will pay for my rent and other expenses. And though I understand as well as anyone the need for a bright green future, I will take a job that doesn’t help me work towards it if I can’t find one that will. Times may well get tougher and I feel like I should be paying off my debt as soon as I can.

Barack Obama argued that becoming We the People once more can be done “by investing in our schools and our communities; by enforcing our civil rights laws and ensuring fairness in our criminal justice system; by providing this generation with ladders of opportunity that were unavailable for previous generations. It requires all Americans to realize that your dreams do not have to come at the expense of my dreams; that investing in the health, welfare, and education of black and brown and white children will ultimately help all of America prosper.” Moving to a bright green future together means starting with what we need to succeed together. Personal and environmental health, welfare, education, and safety are all the same agenda, not that of any one faction, but that of We the People. And we have already started.

See and read Barack Obama's speech I reference here. It is inspiring.

I'm excited to report that my blogging students are teaching other people how to blog. Welcome to the web Lisa Parker Hyatt Ehrlich! Lisa is an amazing artist in Maryland. She has some interesting things up now and there's more to come.

A Sustainability Gap

This semester, I'm taking two courses with Australian sustainability guru Peter Newman, who famously coined the phrase "automobile dependency." I've found out about a number of exciting developments internationally that show how much progress toward real sustainability has been made. It's wonderful, but it's also distressing to me that the U.S. has given up the lead on these issues. We invented solar and wind power, and yet we lag far behind in those industries now. The integration of Japan's transit and mobile phone technology is astonishing. Australia's innovations are equally amazing. The national political dialogue has moved far past the conflict between the environment and jobs, where the U.S. dwelled for years, and even past the opportunities of environmental economics which are only just now percolating into the American political consciousness, and into a serious exploration of how a nation can achieve true lasting sustainability, with all the social responsibilities that implies.
America has been left far behind.
We have far more nuclear weapons than any other nation, along with numerous other military gadgets, and we are still on the cutting edge in some technologies, but in the critical area of how we are to continue to thrive together on this planet, America is coming up short.
I'm not worried about Japan, Australia, Denmark, Switzerland, Brazil, the UK, Canada, or even China. They get it, they're making huge progress. I'm worried about us.

Questioning King Coal

I drove by some U.Va. students in Student Environmental Action protesting on the Corner yesterday. They were criticizing Bank of America for funding the construction of new coal plants. They are also encouraging people to sign a petition on the subject. Not this one or this one, but this one. Wow, Bank of America ticks a lot of different people off. And who knew March of Dimes did animal testing?

I'm thinking a lot about coal these days too. Here's a nice little service that tells if you are paying for mountain top removal with pictures of the sites and where the coal is being burned with Google Maps and Google Earth.

And here's a service that tells how much your energy company contributes to global warming and how carbon efficient it is (set to Dominion, but you can change it).

If you want to buy renewable energy, you can look here.

Or just contact Dominion and ask why they still aren't offering a green power option for green-savvy consumers.

Great job SEA, I hope you heard me honk when I went by.

The picture is copywrited by the Hook, used here strictly for educational purposes. Please don't sue me, I'm a student.

Is Range Right?

A few months ago, I commented that our voting system is flawed and that proportional representation or instant runoff voting may be superior. I believe now that I was incorrect, thanks to some help from Clay Shentrup and the information over at RangeVoting.org.
My main concern with the winner-takes-all style of voting currently dominant in the US is its tendency to establish unbeatable incumbent politicians and parties. Government is only effective if it is legitimate, and its legitimacy is based on responsiveness to voters. The security blanket offered to incumbents by the winner-takes-all system eliminates that responsiveness in many cases and thus the legitimacy and effectiveness of government itself.
That seems like a bad idea.
I studied runoff voting as one potential alternative. This remedy was pushed hard by the Green Party a few years ago as a way to eliminate the "wasted vote" concept. The idea is that you prioritize each candidate running, giving each a number. If your number one choice gets the fewest votes in the first round, that candidate is eliminated and your vote turns to your number two.
As it turns out though, in Ireland and Australia, where it's used, Instant Runoff Voting produces the same two party dominance as winner-takes-all.
And fundamentally, the problem isn't how many important parties there are, it's how responsive government is to the needs of the governed, and IRV doesn't offer solutions here and can actually increase problems, such as situations where a candidate is selected where a majority of voters prefer another because of arbitrary cutoffs.
I thought perhaps Proportional Representation might solve this problem. In this system, voters vote for a party, and then however many votes that party gets is how many seats they get in a government body. The party selects who goes in those seats.
The evidence is unclear that this system is better, except that there is some evidence that countries with more PR like Ireland and Switzerland have a superior quality of life than per capita GNP would suggest. I don't like that this system prevents voting directly for candidates. I think that people are more important than parties.
This other option, range voting seems more promising. In range voting, voters rank each candidate from 0 to 100 based on their personal preference. Then the numbers are all added and whoever has the highers numbers wins.
Mathematically, this system comes closest to a state where God comes down and personally selects the candidate that best represents the people, which everyone immediately agrees with. In one analysis, the switch from a plurality winner-takes all system to a range voting system produced a superior improvement in democracy than the difference between the plurality system and picking candidate's names randomly out of a hat. This suggests that a global switch from plurality to range voting might usher in a Renaissance of good government and associated economic boom as better decisions lead to less waste and greater opportunity.

Can it happen in Charlottesville?

Dear Representative Kucinich,

I was proud to support you in 2004 and am appreciative of your good work for our country, but I have a few concerns this time that I would like to share. I was shaken when a colleague told me that on environmental issues, Edwards is offering a better platform. I have grown to expect you to be well ahead of the curve on these issues, as I still believe you are on other critical topics. MoveOn's embracing of Edwards on his excellent (though still insufficient) climate change plan was a wake-up call for me, as I hope it was for you.
I think all of this is pointing to what I see as a cleavage in the environmental community, what some call dark green and bright green. Dark green is traditional environmentalism, with an emphasis on pollution prevention and cleanup. This is where I started as an environmental activist, and I believe this is roughly where you are, based on your platform. Bright green is the next step, which people like Bill McDonough in Cradle to Cradle and Alex Steffen at Worldchanging.com are promoting. I see this philosophy as essential to our future success as individuals, as Americans, and as a species.
I understand that you're absurdly busy right now, but is there someone in the campaign I can speak with about updating your green platform? I think you'll agree that green democrats and independents are essential to your base, and if you spin it right, a new green platform could be a very positive media event.
Related: Your veganism. It comes up all the time, and it's very dark green. It says that you think that meat and dairy are bad. In the main, you're correct, but there are ethical alternatives: local, organic, humane. I was vegan too, I understand where you're coming from, but you'll win a lot more support by advocating best practices and local farming than by dismissing a massive industry and the majority of Americans. Also, local organic is much tastier, healthier, much greener, and more enjoyable in every way. I had the good fortune of studying this recently with Tim Beatley, reading Michael Pollan's book The Omnivore's Dilemma, and meeting with Joel Salatin of Polyface Farm. This is a fundamental issue, and it points to the difference between dark green and light green. Dark green says that to be sustainable, we need to make do with less. Sacrifice. Bright green says that to be sustainable, we need to live better. We have work to do.
I hope that you'll agree that you want to position yourself as a bright green, competitive candidate.
Thank you so much for your good work and the hope you have given me and many others. I hope you will take this message with an open heart.

Best Regards,

Lyle Solla-Yates
Planning Graduate Student '08
University of Virginia

P.S. I would love to see you start that blog you have on the site.

The Public Health Bit

One major government priority, public health, has been giving me trouble. Seeing Sicko (excellent film) convinced me that publicly funded health care was potentially superior to the U.S.'s existing profit-maximizing system. I was convinced of the improved equity (an essential government priority), public health improvements, and economic efficiency of the systems employed in France, England, Canada, and Cuba.
So transitioning to publicly funded health care well would create a public benefit and create savings. Good, the policy makes sense, but how to pay for it?
One idea I had immediately was a Pigouvian tax on pollution. This would focus on major public health hazards like cigarettes, mercury, auto exhaust, lead, and trans fats. This health tax would not ban health hazards, but would price them at their true cost. This would cut pollution and pay for its effects on people, a double benefit.
Still, I didn't have a good sense of how to pay for the majority of health costs not directly attributable to pollution.
Katherine Mason, my girlfriend, gave me the solution. People could pay a flat amount for insurance, which would then come down based on positive steps they took for their own health. Instead of costing money, regular checkups and exams would save money off the insurance. Overweight people who lost weight in a healthy way or people who quit smoking would enjoy an insurance break. In this way, people would be rewarded for making the right decisions, and pay a fair (instead of devastating) economic price otherwise. People already making smart decisions like maintaining a healthy weight and not smoking would enjoy the same low rate, similar to some existing insurance programs. There would still be a nominal fee to discourage excessive visits, like a dollar or two.
I would be curious to see a mixed system where private insurers and hospitals would compete with and complement a publicly funded system. I suspect that there are places where private industry could introduce efficiencies into a system geared towards public health and safety over profit.
I suspect that a system like this might also cut down the cost of Medicare, though extended lifespans might eat up those efficiencies. Still, not a bad trade at all.
I should also point out that this system would offer a significant rise in overall lifespans, quality of life, productivity, and general wellbeing and happiness. It would also increase the productivity of land, causing a small boost in land prices to make up the difference. A land tax would capture that additional value and, if significant, it could be used to help cover the health system or go into general revenue.
After reading some Thomas Jefferson: Also, the baseline cost to premium holders would vary according to income level. Someone with little or no income but doing everything to maintain good health would pay very little, while others would pay up to market rate. Low income premium holders would be assisted with revenue from land taxes on value drawn from the program's improvements and profits from market rate premium holders.

The Money Solution BETA
(at least for government, but maybe it will help you too)

Some interesting discussion over at Bacon's Rebellion got me thinking about a couple of new ideas, and I felt like reprinting my comments here.

(In response to criticism of the concept of infrastructure that pays for itself, instead of being subsidized by people who do not benefit from it equally or at all)

Is self-funding infrastructure possible? Absolutely, we're doing it every day. When government builds infrastructure, two kinds of benefits are created with two different revenue streams. The first is the actual service of the infrastructure, like better schools or fast transit. We can put a user fee on that and get some revenue, but collecting it is often expensive and with deadweight loss can actively erode the benefits sought by the project in the first place. Still, user fees like congestion pricing can create enormous value by regulating supply and demand for services, creating a double benefit.
The second source of value created by infrastructure is improved productivity of nearby land. A piece of farmland is a much better place to live after the school and transit station go up next door. That land becomes much more valuable, regardless of whether the owner or lessees actually use the services or not. We can put a user fee on that land and harness some of that increase in value. Just like other user fees, the land fee can create enormous value by regulating supply and demand for land, creating a double benefit. Affordable housing and a clear edge are part of that created value.
By putting smart fees on government services, we can pay our fair share for what we need, what we want, have some extra left over if we apply ROI, and don't need taxes, meaning no deadweight loss on consumption and employment.
How's that for self-funding infrastructure?"

I missed some points:
1. Government services can also create efficiencies. For example, free neighborhood medical care would encourage preventative treatment and catch illness early on, before health and economic risks grow. This creates efficiencies such as lower medical costs, fewer sick days, and longer lifespan. This is a critical part of why policies like brownfields redevelopment and energy efficiency make economic sense, by reducing costs.
Some programs, such as brownfields redevelopment, create all three types of value, by providing services (risk abatement), raising land value (safe land is more productive), and creating efficiencies (medical costs avoided). A Return on Investment (ROI) analysis can show the total benefit of a program like this or others, quantifying costs and projected revenue, allowing people to make the best decisions on what to do with their collective political power.

2. There is still room for Pigouvian tax ideas, where the cost of an activity is raised to meet its social cost. Carbon taxes and Virginia's recently enacted abuser fees for drivers are good examples. This strategy is an enormously effective use of police power to address market externalities, as well as a nice source of extra revenue, laying down a nice double benefit. There is not a triple benefit like government services offer, so ROI on these may be lower, but still excellent.

3. As citizens push government in this direction, revenues from services and Pigouvian taxes will replace all taxes and their deadweight costs on earnings and employment, jump starting the economy in a green direction. As efficiencies and productivity accelerate, revenues will outpace spending, creating the delightful problem of what to do with this largess. Alaska addressed this issue with its Permanent Fund. This is an investment fund fed by revenues from oil rights, a government service. The fund forms a cushion to help the state transition as the oil runs out, and in the meantime the interest is used to subsidize other government services and to share with the citizens of Alaska. Governments experiencing revenue beyond useful spending needs would do well with a similar approach, creating a cushion against risk and sharing with citizens.

4. As communities succeed in establishing truly green (profitable) governments, they will have to decide what to do with their individual surpluses. Personal investment (time with family, new businesses, education, stocks and bonds, capital acquisition) and cultural consumption (play, theater, music, film, television, other arts) will dominate over increased family size given high levels of female education (an excellent government service). In this way, the challenges of unsustainable population growth can be avoided, and we can have communities that, as architect Bill McDonough says, "love all children, of all species, for all time."

5. In case of absolute disaster, government can still (ick) put traditional taxes on consumption or (uck) even employment to meet its debt obligations. I note this only because it makes government debt enormously low risk compared with other investments.

Simple, right?

Exciting News!

As part of a package of Earth Day proposals to green the city of New York, Mayor Bloomberg has announced a proposal to introduce congestion pricing in New York City, based on London's successful model.

The New York Observer offers the map above showing the proposal.

I believe that this sort of solution would be enormously beneficial to dealing effectively with Charlottesville traffic. As Governor Tim Kaine pointed out, we can't pave our way out of our transportation problems. Instead, we should be taxing our problems to pay for our solutions. We should tax congestion and we should tax wasteful land use. This makes sure that if people are contributing to common problems, they are paying their fair share for it.

I strongly encourage you, dear reader, to look further into this and to tell your elected representatives about it.

Charlottesville City Council meets tonight to discuss shifting two thirds of a $1 million tax windfall slated for repaving to new sidewalks, bike lanes, and trails. I hope you'll join me in e-mailing council@charlottesville.org to encourage this exciting step.

A fellow Green Drinks attendee is interested in a housemate for her apartment near downtown Charlottesville. If you or someone you know is looking for a good place in town, check it out.