New Geography

Category: Small Cities

  • Public Pensions: Reform, Repair, Reboot

    Ill-informed chatter continues to dominate the airwaves when it comes to California public pensions. It’s a big, complex and critical issue for government at all levels in the Golden State. What makes debate so distorted is that public pensions actually differ from agency to agency — and advocates on the issue often talk past each other. Pension critics often point to outrageous abuses as if they were typical. On the other hand, pension defenders often cite current averages that understate long-term costs. All this fuels the typical partisan gridlock that Californians lament yet seem powerless to change in our state.

    Credit Governor Jerry Brown for trying to overcome the polarization. That’s what most California voters want him to do, according to a new Field Poll, one of the leading opinion research firms in California. His 12-point pension package (unveiled in October) is successfully framing the debate — and enjoys encouraging support from voters. I agree with them. While Brown’s plan is far from perfect (as he acknowledged in presenting it as a way to build consensus) it sensibly tackles some of the most challenging areas where reform is needed. Among the key reforms he’s proposed:

    • Increasing the retirement age from 55 to 67 (with a lower age to be spelled out for public safety workers).
    • Replacing the current “defined benefit” pensions with a hybrid program that includes a defined benefit component, but also a 401(k)-like defined contribution component
    • Prohibiting retroactive pension increases.
    • Requiring all employees to contribute at least 50 percent of the cost of their pensions

    These generally follow the surprisingly strong stand taken by the League of California Cities, which was based on recommendations from a committee of City Managers that I served on. Our work was grounded in four core principles:

    1. Public retirement systems are useful in attracting and retaining high-performing public employees to design and deliver vital public services to local communities;
    2. Sustainable and dependable employer-provided defined benefits plans for career employees, supplemented with other retirement options including personal savings, have proven successful over many decades in California;
    3. Public pension costs should be shared by employees and employers (taxpayers) alike; and
    4. Such programs should be portable across all public agencies to sustain a competent cadre of California public servants.

    Our goal was to ensure the public pension system is reformed, instead of destroyed. Our reform package mirrors Brown’s calls for a hybrid system, raising retirement ages and increasing the portion of pension costs borne by employees. We also backed his bid to base retirements on the top three highest years of pay, curbing the abuses that often artificially raise final year salaries to “spike” pension pay-outs.

    Typical of California’s other challenges, the issue faces long odds in the Legislature and uncertain fate at the ballot box. Partisan Democrats are leery of crossing unions by embracing Brown’s package. Partisan Republicans are demanding more far-reaching changes. Brown hopes to bridge the differences to win majority support by drawing on moderates in both parties. “He hasn’t riled up one side or the other,” noted Field Poll director Mark DiCamillo. “He’s managed to strike the middle ground on a very polarizing issue.” Unfortunately, moderates are hard to find in Sacramento.

    That leaves the roll of the dice that comes with ballot initiatives. Since it takes millions to bankroll a successful ballot measure, few sensible measures get far without support from well-heeled interests.

    In the eternal game of chicken that goes on in Sacramento, the Legislature keeps one eye on those special interests. About the only hope for reform is if a majority is worried that failure to act might spur an expensive ballot box war and an even worse outcome.

    This issue might be the exception, however. Public outrage is real. So is the need for reform. In Ventura, we took an early lead on this issue, first with our Compensation Policies Task Force, then union contracts that established a lower benefit and later retirement age for new hires and increased contributions from all employees of at least 4.5% of their pay. But real reform to level the playing field can only come at the State level.

    Before this issue devolves into another ballot box catastrophe that radically oversimplifies the issues to a “yes” or “no” choice on an initiative bankrolled by special interests, legislators in both parties need to come together on sensible reform. The Governor has put such a program on their desks. Reasonable people can differ on the details. But only unreasonable people want all-or-nothing victories. This is an issue that both sides should be willing to compromise on. The only way that will happen is if voters push both parties toward sensible compromise in the year ahead!

    Photo by Randy Bayne

    Rick Cole is city manager of Ventura, California, and recipient of the Municipal Management Association of Southern California’s Excellence in Government Award. He can be reached at RCole@ci.ventura.ca.us

  • California in 2011: Suburbs Up, Exurbs Down?

    I had the fortune recently to stumble on the California Department of Finance’s estimates of population change in California during the period July 1, 2010 – July 1- 2011. This is distinct from the Federal census, which tried to establish the number of people in all localities as of April 1, 2010. These California statistics are for a short period of only one year; they are not as reliable, of course, as a real census.  

    Percentagewise, the county that grew fastest was a Sacramento suburban county called Placer, which grew by 1.45 per cent (or, I suppose, what financial people would call 145 basis points) during that one year. It was also only one of two California counties where more people moved to from within the United States than from outside the United States (the other being Riverside County). It was also  one of three where the number of people moving in over that moving out was greater than the excess of births over deaths, the other two being Napa County, which is suburban in its southern reaches before the grapes begin, and San Francisco County, which is known for, well, for not being big on baby-making. (Nevertheless San Francisco County did have a natural increase of 3,138 persons, whereas, as we shall see later, some rural counties had more deaths than births.)

    But what came as a surprise  was that Placer’s sister county, El Dorado, also a Sacramento suburban county running up into the mountains, gained a mere 26 basis points; and the other foothill counties of the Gold Country actually lost population during the year! This came as a surprise to me, for I have a house in Calaveras County and in the past I had spent time there; the Gold Country seemed to be a haven for the semi-retired and the part-time worker and even the long distance commuter; and Grass Valley had the beginnings of a high tech industry spilling over from Silicon Valley.

    I don’t know what the terms “suburb” and “exurb” mean to New Geography readers, but I have my own definition which seems handy enough to me. A “suburb” has subdivisions and planned communities; developers buy land, subdivide, and build homes or sell lots often with covenants of various kinds.  People still prefer suburbs – even ones quite distant from the urban cores – over the city, in part due to factors like cheaper housing, better schools, and newer amenities.

    Exurbs are different. In an exurb, people split parcels into smaller lots, sell the lots, and then people build custom houses on them with no covenants (except maybe a few easements) and any architectural style the government will allow and perhaps a few they don’t. A good place to see the contrast is in the area just north of Cajon Pass. Victorville, Adelanto, and parts of Hesperia and Apple Valley abound with subdivisions, like the Orange County of my youth. But if you go a little bit to the southwest, around Pinnon Hills and Phelan, there is not a “subdivision” to be seen, and yet houses and, on the road, commercial establishments get thicker and thicker every year. (I have, on occasion for the past 25 years, taken the road to the monastery at Valyermo from Orange County, and I have seen these changes.)

    Overall, it looks like the “suburbs” are growing – far more than the cities –  while the “exurbs” are not. Placer County is an explosion of subdivided suburbs and “planned communities” as far as Newcastle and Lincoln.

    In contrast, El Dorado has some of these in its west end, but they are not expanding much. And the other Gold Country Counties, Nevada, Amador, Calaveras, Tuolumne, and Mariposa, all of which shrank slightly in population, fit my definition of “exurban” – they have exurbs, and they are not very agricultural unless you count backyard wine and marijuana patches.  These areas had been much sought out since the inflationary “survivalist” days of the 1970s. Now, it seems, the economy and gasoline prices are not affecting the prosperity and desirability of organized suburbia, but they are making the areas beyond organized suburbia less desirable than they used to be. I wonder if this is a nationwide trend.

    Another discovery may point to the age of residents in various counties. Of the counties that actually lost population over the year the three on the Redwood Coast  – Del Norte, Humboldt, and Mendocino – did so in spite of having an excess of births over deaths. So did the two in the far northeast, Modoc and Lassen. To read that a county in California lost population is in the “this I have lived to see” category.

    Oddly, did one county in the Central Valley also declined. Kings, which is metropolitan Hanford, declined despite the fact that next door Tulare County was a big gainer; and Inyo County – home of Bishop, Lone Pine, and Death Valley – had an identical number of births and deaths. On the other hand, the Gold Country counties I mentioned – plus Sierra, Plumas, Siskiyou, Trinity, and Lake, outside the Sacramento Valley – had an excess of deaths over births. Perhaps these particular counties, more than the others, had been settled by retirees or empty nesters, who were no longer having children.

    For its part, the rain-drenched Redwood Coast and the far northeast were less attractive, apparently, to retirees. In the counties not attractive to retirees, natural increase exceeded even immigration from outside the United States, which was positive in every county except Alpine, where it was exactly zero. Also, only in the aforementioned Placer and Napa Counties, and the City of San Francisco, did inward migration of any kind – from the U.S. or outside – exceed the “natural increase.”

    The “native Californian,” once a slightly exotic phenomenon, seems to be becoming the norm. The days of what Carey McWilliams called, in his book title of 70 years ago, California: The Great Exception, seem to be at an end. We have entered a world we never knew before. California may become, at long less, less exceptional, still sprawling but in a more organized fashion.

    Howard Ahmanson of Fieldstead and Company, a private management firm, has been interested in these issues for many years.

    Photo courtesy of Bigstockphoto.com

  • Rethinking College Towns

    As a practitioner in both consulting and local government, I have observed that in local communities nothing seems to prompt productive action better than a local crisis or strongly felt threat like a factory closure. 

    Unfortunately, we are often inclined to take action to close the barn door only after the horse has escaped.

    That may be why “college town economic development” could be considered the ultimate oxymoron.  Higher education has been a growth industry for half a century. As a result, college towns and university neighborhoods have prospered in good times and bad and typically see little reason to pursue economic growth. 

    New realities in the economy and technology, however, mean their admirable invulnerability is no longer assured.  The paradigm of guaranteed growth in college town USA is coming to an end.

    More Debt, Fewer Jobs

    As this is written, the Occupy movement on campuses is protesting high tuition costs and the $25,000 average debt that comes with the diploma, with even the Secretary of Education in a Democratic administration calling upon colleges in a Las Vegas conference November 29 to cut their prices.

    Increasingly, what doesn’t always come with that diploma these days is a job or even a place to live away from mom and dad. Corporate cost-cutting, offshoring, and white collar automation promise fewer jobs for our graduates even beyond the current slowdown.  And the growth of for-profit universities, fast-track degree programs, and lower-cost distance learning offer strong competition to the traditional economic base of college towns that relies on large numbers of students spending four years in their town.

    In addition, there is likely to be a reduction in the number of future college students, as the millennial or “echo boom” begins to pass through their teens and early twenties.    To survive, college towns have to reinvent themselves in order to “find a new way to prosper and thrive” in future years.

    Additional Roles for College Towns

    These various threats to colleges place the economy of the town or neighborhood outside the campus in even greater jeopardy. Thanks to technology, professors can now deliver their services to customers who have never set foot in town. College town barbers and pizza places cannot.

    But happily, the college town has the potential for even greater growth than the university, not being narrowly tied like the latter to instruction and research nor to serving a single age group.

    The key to that growth lies in marketing. But that’s an activity college towns have seldom done well when they’ve done it at all. Colleges themselves have often mystifyingly underperformed in this pursuit.

    Despite the college town’s current prestige and trendiness, there simply won’t be enough high tech to fill the space in every college town with aspirations for a research park. And tech is unlikely to create jobs in places with only small non-research colleges.

    But colleges’ assets can lend themselves to college town success not only as “A Place to Learn” and “A Place to Research” but also as “A Place to Visit” and “A Place to Live.”

    A Place to Visit or Live

    As detailed in The Third Lifetime Place, college towns have significant opportunities to further develop and market themselves to potential visitors as “A Place for Sports and Entertainment,” “A Place to Heal,” “A Place to Meet,” and even “A Place to Vacation.”  The biggest payoff, however, may be from marketing the college town as “A Place to Come Home To” during working years or “A Place to Retire” thereafter.

    College towns are already taking off as retirement destinations. With the now-beginning retirement of the huge Baby Boom generation, a college town with advantages for retirement that doesn’t develop and market them is simply leaving money on the table.

    But the technology that enables telecommuting and the money it saves both corporations and independent entrepreneurs can also make the college town a great place to live for workers who are not faculty or college staff. The advantages of good schools and small town living that so many families pay top dollar for in metropolitan suburbs can be readily found in many college towns and with a smaller price tag.

    A Unique Competitive Advantage

    As places to market for living or retirement, college towns are blessed with a unique competitive advantage: their status as the Third Lifetime Place (TLP) in the lives of thousands of alumni. 

    Most of us have a special place that joins in lifetime significance the place where we grew up — which will always be “home” — and the place where we’re spending most of our adult lives. This third place is or was a pleasurable temporary refuge from both work and home responsibilities.

    The traditional TLP has been the year-after-year vacation spot. Later becoming the location of the second home, the final validation of its TLP significance was its choice for retirement. The most conspicuous success among traditional TLPs has been Florida, which moved from vacationland status to Retirement Central and also a favored place to locate a business, take a job, or hold a convention.

    But as suggested in The Third Lifetime Place, for the  highly college-educated generations that started with the Boomers, the four or more years spent in the college town may make it a more potent TLP than the place at the lake where they spend two weeks every July. 

    The most enjoyable and often most life-changing years of one’s youth were often those spent in the college town. Lifetime devotion to the football team, return trips to campus for reunions, and gifts to the alma mater testify to the strong feelings graduates have about these years.  And emotional appeals are probably the most potent force in marketing anything.

    Obstacles to Overcome

    But despite the powerful TLP marketing advantage, business as usual on campus, in city hall, or in the chamber of commerce office will not be enough to make the economic payoff happen.

    The most daunting impediment may be an “if-it-ain’t-broke-don’t-fix-it” complacency, the consequence of a seemingly bulletproof prosperity. Another is a left-of-center activist political climate that is characteristically anti-business and anti-growth which commonly results in high local taxes or high levels of regulation.   

    Unfortunately, a long history of dominating the provision of a universally popular product like higher education no longer assures places perpetual prosperity. The poster child for that reality is Detroit.  The Motor City once figured it would keep riding high so long as Americans continued to buy cars. But that’s not what happened.

    Per the Chinese character that designates both “danger” and “opportunity,” the effects of changes in higher education on college towns will depend on how our towns respond to them.  And that will depend to a large degree on the quality of their business, civic, and political leadership.

    John L. Gann, Jr., President of Gann Associates, Glen Ellyn, Illinois–(800) 762-GANN—consults, trains, and writes on marketing places to grow sales, jobs, property values, and tax revenues.  Formerly with Extension at Cornell University, he is the author of How to Evaluate (and Improve) Your Community’s Marketing published by the International City/County Management Association.

    E-mailed information on The Third Lifetime Place: A New Economic Opportunity for College Towns is available from the author at citykid@uwalumni.com.

    New Paltz, NY photo by Flickr user joseph a

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  • California: Codes, Corruption And Consensus

    We Californians like collaboration. Before we do things here, we consult all of the “stakeholders.” We have hearings, studies, reviews, conferences, charrettes, neighborhood meetings, town halls, and who knows what else. Development in some California cities has become such a maze that some people make a fine living guiding developers through the process, helping them through the minefields and identifying the rings that need kissing.

    Here’s an example. This is a (partial?) list of the groups who will have a say on any proposed project in my city, Ventura:

    • City agencies (Planning, Engineering, Flood Control, Traffic, Building & Safety, Utilities, Police, Fire)
    • Historic Preservation Committee
    • Parks and Recreation Committee
    • Design Review Committee
    • Planning Commission
    • City Council
    • School District
    • Neighborhood and Community Councils
    • No-Growth Citizen Groups
    • Chamber of Commerce
    • Ventura Citizens for Hillside Preservation
    • California Department of Fish and Game
    • United States Department of Fish and Wildlife
    • Ventura County Local Agency Formation Committee (discretionary authority regarding annexations)
    • Los Angeles Regional Water Quality Control Board (new MS4 Stormwater Permit issues)
    • Ventura County Environmental Health
    • California Coastal Commission (for some projects within the Coastal Zone)
    • California Native American Heritage Commission and Designated Most Likely Descendant of local tribe
    • United States Army Corps of Engineers
    • Natural Resources Defense Council, Surfrider Foundation, Heal the Bay, other environmental groups
    • And all parties who have requested to be on notice, as well as the general public and other agencies, will be informed of any California Environmental Quality Act (CEQA) document.

    I didn’t pick Ventura because it is the most difficult. It’s not. I think Ventura is pretty typical for a coastal California city, actually.

    The result of having all these stakeholders is that, in many California communities, particularly those in coastal and upscale locations, everyone has a veto on everything. At the beginning of a project the developer faces a huge amount of uncertainty about what the project will look like once it gets past the gauntlet and about the cost of the development process. Add to that uncertainty about who will demand what, how long the approval process will take, market conditions and the regulatory environment when the project is completed, if it is completed.

    This is where the corruption connection comes in.

    In economics, we teach that there are two types of corruption, centralized and decentralized. Decentralized corruption is the more pernicious of the two.

    Think of a city where organized crime has a successful protection racket. This would be centralized corruption. The mob is going to collect from everyone, but it has an incentive not to collect too much. It doesn’t want to draw too much attention to itself or chase the business out of town.

    By contrast, decentralized corruption consists of a bunch of independent gangs, each trying to collect all they can before the next group of thugs comes along. Each gang of thugs will demand and collect too much, and chase the business out of town.

    Of course, if you want to develop a property in California no one will hold a gun to your head and demand money, and everyone is way too polite to call it extortion. Certainly, no group thinks of itself as a mob of corrupt gangsters. Instead, the members think of themselves as stakeholders, and they hold delays, lawsuits, or project denial to your head. The results are the same.

    First, you have to meet everyone, and everyone wants something in return for support, or for refraining from opposition. Groups will demand “mitigation fees,” delays, studies and more studies, and changes in the project. You will meet their demands, or you will be sued, or the project will be denied.

    Time spent on meetings, studies, and negotiations is expensive. The cost of the local “guide,” necessary to get through the local maze, is expensive. The “mitigation fees” are expensive. Delays are expensive. Studies are expensive. Changes in the project are expensive. Lawsuits are expensive. And risk is expensive.

    Eventually, the project is no longer profitable. No wonder California’s unemployment rate is 30 percent above the United States unemployment rate.

    The current climate provides California’s local governments with their best economic development opportunity: Eliminate the legal extortion by guaranteeing a project’s prompt approval if it meets existing general plans, specific plans, zoning, building codes, and adopted design criteria. Any community that did this would see immediate increased economic activity. To steal a phrase from a famous economist, it is the closest thing to a free lunch.

    A city does outreach before it develops its zoning and community design plans. It only adds to the cost of development to require builders to go through the entire process again, fighting the same battles, every time a project is proposed.

    The best thing about this idea is that it has been tried, and it works. The City of San Diego has seen an amazing-for-California energy since its redevelopment agency implemented such a plan several years ago. In the worst economy in 50 years, San Diego has been building and providing commercial and housing projects for all economic levels in its downtown area. It is time for the rest of California to get on with it.

    Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org

    Photo: Two Tree Hill, Ventura California by Joseph Liao (Chowee).

  • Iowa: Not Just the Elderly Waiting to Die

    Stephen Bloom, a journalism professor at the University of Iowa, created quite a stir in Iowa this week with a piece in The Atlantic describing his unique observations on rural Iowa as evidence that it doesn’t deserve its decidedly powerful hand in the vote for the president. After the article appeared last Friday both his colleagues and the massive student body of the state he so harshly criticizes are returning the favor.

    Mr. Bloom’s writing is not offensive because it contains no truths, but because has over-generalized our collective character as unfalteringly Christian, complacent, ignorant, and uncultured.  He continually describes a sense of delusion that is rampant in the Iowa populace. And, of course, since we’re from Iowa we must have met a meth head before, right?

    When I was a four year old, my parents picked up everything they had and transplanted their lives from Phoenix all the way to Northwest Iowa. I was young, but I can still remember the farm that we originally settled in– it was the kind of farm you see in a painting: a one-level home, a big red barn, two silos for storage, a small thicket grove with a number of deer, and even a fenced-in area for hogs. I was living the rural Iowa dream.

    Eventually, when I was around seven, our next settlement of choice was a (very) small town only a couple of miles from the farmhouse. The city’s population had around 200 people, the vast majority of them at least 50 years old, and a main street littered with old buildings and storefronts of yesterday that had been abandoned over the years since their mid-century inceptions. People didn’t move to this town; instead those living in it would die from old age, or, in my case, move away in hopes of seeing something bigger.

    I’m well aware of the stereotypes of Iowans: we’re wannabe hicks, we’re uncultured, we hunt, we tend to our rolling hills of corn and beans, we all drive Ford trucks because they “ride better” than anything else. I’ve grown up with people that fulfill these stereotypes here and there and I am no stranger to small town life, but not every soul that I have met in this state fits the profile as Professor Bloom posits. Far from it.

    Expectedly, Bloom’s portrayal of Iowans hasn’t exactly had a warm reception. On Tuesday, the Daily Iowan’s front page had perhaps the most outrageous quote that Bloom’s article included, labeling rural Iowans as nothing more than “the elderly waiting to die, those too timid (or lacking in educated [sic]) to peer around the bend for better opportunities, an assortment of waste-toids and meth addicts with pale skin and rotted teeth, or those who quixotically believe, like Little Orphan Annie, that ‘The sun’ll come out tomorrow.’”

    Yesterday, Sally Mason, the president of the University of Iowa, sent out a campus-wide letter reminding the students that she “disagrees strongly with and was offended by Professor Bloom’s portrayal of Iowa and Iowans”. She reminds us of the generosity that Iowans famously possess and of our “pragmatic and balanced” lifestyles. She also goes on to speak about Dubuque’s recent revitalization, the kinds of companies Iowa has attracted (namely Rockwell Collins in Cedar Rapids and Google in Council Bluffs), and the fact that Iowa City, at times called the “Athens of the Midwest”, is designated as the only “City of Literature” in the United States. It seems like Bloom forgot to take any of this into account.

    He even goes so far as to berate and categorize Iowa’s Mississippi River cities as “some of the skuzziest cities” that he’s ever visited. Cities such as Burlington, Keokuk, Muscatine, and Davenport all seem to be more degraded, violent, and worse-off than some of the cities he’s used to having seen growing up in New Jersey, a place with cities that are labeled time and time again for their overall “skuzziness.” Has he ever driven to Newark?

    It seems that Bloom’s laughable interpretation of his years in Iowa have a few rings of truth that I’ve definitely witnessed, but to completely overgeneralize a people into one category assuming it’s only an “Iowa thing” is inappropriate and crude. Is he correct about anything at all? The numbers show that he is off base about the state as a whole.

    The Mississippi River cities’ so-called blight is similar to many other hard hit industrial cities in the Midwest, perhaps on a similar scale to areas in Michigan (which was the only state in the past Census to actually lose population) where Bloom has holed up most recently as a visiting professor for the University of Michigan. Even so, Iowa has the 11th lowest household poverty rate in the nation. So much for widespread blight.

    The state’s brain drain is always a topic of discussion. There has been a very noticeable population shift of rural to urban in the past half-century which was especially fueled by the farming crisis in the 80s, but this trend holds out empirically for all Midwestern states. The problem is that a look at the numbers doesn’t confirm major outmigration. Iowa saw a net gain from other states according to IRS tax return data from 2008-2010. In fact, the net gain from the top 12 source states ­­– states like Illinois, California, and Michigan – in the last three years is 40% higher than the net loss to the top destinations. If Iowans are “fleeing” anywhere, it’s to places like Texas, the largest gainer, and second placed South Dakota which the professor would no doubt like even less.

    Iowa does have high concentrations of people over age 70, but that group makes up about 10% of the total population, not enough to skew the other age groups much from the national average. Iowa has an average number of children, and it lags the most in 35-44 year olds: about 10%. This older group skews the state’s educational attainment numbers as well. Iowa’s young workforce is well educated, ranking 11th of all states in residents with at least an associate’s degree. Bloom’s claim that the state is uneducated is simply not true.

    The median age of those living in rural areas is 41.2 while urbanites are relatively young at 35.8. To further add to these negative trends, rural areas have a job growth rate of -6% in the past three years, these numbers mainly fueled by the recession. But overall state jobs are is down 2.8% since January 2008, better than 35 other states. Clearly Iowans are not lazy and giving up.

    Four Iowa cities were even included on CNN Money’s Best Cities to Live in 2011. (This includes the Mississippi River city of Bettendorf.) The state and its cities are also a great place to do business, according to Forbes. In 2010, Des Moines was ranked first, with Cedar Rapids at 13th beating out even a few Texan heavyweights, including Houston, Dallas, and Fort Worth that have been lauded for having a plethora of jobs. The 2011 list puts Des Moines in second place and Cedar Rapids in 11th. It seems Iowa isn’t as economically distraught as Bloom leads us to believe.

    Bloom comes off as nothing more than an ignorant, smug “city-slicker” (a word that Iowans apparently use to describe Obama) who sees the state through an apparently very blurry window. He claims to have seen all 99 counties of Iowa, but how can he possibly paint a portrait of the state that is so absurdly misguided after living here for so long?  If this is what they teach in journalism school, perhaps our skepticism of the media may be better placed than even we suspect.

    Jacob Langenfeld is a senior undergraduate at the University of Iowa studying economics and geography.

    Mark Schill contributed demographic analysis to this piece.

    Des Moines photo courtesty of BigStockPhoto.com.

     

  • Will You Still House Me When I’m 64?

    In the song by the Beatles, the worry was about being fed and needed at 64. Things have changed. If the Beatles wrote those lyrics today, the worry instead might be about housing.

    Australia’s aging population is an inevitability. As our replacement rate falls (we’re having fewer children per family) and life expectancy extends, the proportion of over 65s will double in 40 years. In raw numbers, there were 2.5 million over 65s in 2002, and this will rise by 6.2 million in 2042. That’s an extra 4 million in this demographic. Have we given enough thought to where they’re going to live, and what styles of housing they might prefer?

    There have been a number of developers who have understood the looming significance of Australia’s aging population, and who have sought to supply the ‘retirement living’ market with product that suits. At one end have been the glitzy apartment style residences in inner city locations, while at the other have been the aged care ‘homes’ provided for those in need of access to nursing care or medical assistance, or at least the reassurance of it being present.

    Running parallel with the provision of retirement living or seniors living projects has been an assumption that, once ready to abandon the family home of many years, seniors will be happy to move across town and relocate to the facilities that are available. Perhaps this is hangover from the days when retirement or aged care living was provided on Stalinist lines: our oldies were forcibly shuffled off to some retirement centre well away from the rest of the community they grew up in. A sort of gulag for grumpies?

    But what if seniors simply want a change of housing style within their community? What if they don’t want to move across town to the only available accommodation because they would prefer to continue to live in the neighbourhood and community they have spent a large part of their lives living in? They may want to continue to shop with ‘their’ local butcher, visit their local supermarket, newsagent, bank branch (if it still exists) and generally remain connected to the people and places that they’re familiar with – including (quite possibly) members of their family, children and grandchildren.

    Meeting that need in the future is going to be close to impossible unless planning schemes (old fashioned zoning laws) adopt a more flexible approach. Flexibility will be needed because most of the existing suburbs of our major population centres are largely built out and will require retrofits and redevelopment of existing stock to accommodate senior’s housing preferences. Generally, the only tracts of undeveloped land capable of meeting seniors housing needs tend to be on the outskirts and while there’s nothing wrong with fringe development, it seems unfair to expect seniors to relocate across town to regions they’re unfamiliar with and to alienate themselves from their community simply because supply side mechanisms (controlled by planning schemes) don’t permit choice.

    Further, the built out status of our ‘established’ suburbs – as they now stand – is something that much planning law seems to want to preserve for time immemorial. It’s a little bit like imagining that someone has declared the existing housing mix and styles a fixture of permanency: let’s put a giant glass dome over it all and call the city a museum – because we don’t (it seems) want anything to change.

    But if we are to allow Australia’s seniors to ‘age in place’ and to ensure our markets provide choice, it’s going to mean some things will need to change, given the likely levels of future demand. The fastest growth of aging populations will be around our ‘middle ring’ suburbs and given the overwhelming preference to ‘age in place’, it is these suburbs that are going to have to change if those needs are to be met.

    What will that change look like? The psychology of seniors in years to come – even today – is going to be different to those of previous generations. They’ll likely be more active rather than sedentary. The family home that’s served them to this point may now be simply too big for their needs, or contain too many stairs (the artificial hip or knee doesn’t like too many stairs). Their future housing needs will vary widely – some will be happy with apartments in high to medium density developments (elevators to their level of living means no stairs) while others (generally the majority) will prefer smaller, detached or semi-detached, single level dwellings. Many may want a small yard or garden (or at least a large balcony or terrace if in a unit), and perhaps want to keep a small pet dog or cat. They may want a spare bedroom for visitors or for babysitting grandchildren. They will probably prefer to be close to shops and near to public transport. And the majority will want to find something of that nature generally within the same community they’ve been living in. It is unlikely they’ll be searching for the ‘retirement home’ style of assisted care living until they’re well into their later years when their choices will be more limited.

    Their problem will be that developers will struggle under current planning schemes to get approval for semi-detached housing designed with seniors in mind, if it means amalgamating some detached residential dwellings near local shops, because that land use is highly protected. They will struggle to gain approval to convert a large single site into medium or high rise in areas near local shops or transport, because the community will likely object – particularly if it’s in a neighbourhood where low density prevails (typical of most of suburban Brisbane). Advocates of Transit Oriented Development (TOD) style development might now be shouting at this article that ‘TODs are the answer.’ That might be so, if only one single TOD had been delivered during the past 15 years we’ve been talking about them.

    Plus, the majority of proposed ‘TOD’ style development areas largely surround inner city transport nodes. Not much use if you’re in Aspley and want to stay there. And of course there’s the reality that multi level apartments are much more costly to develop and construct than the cottage building industry’s approach to single level, small detached housing.

    The changes needed need not be dramatic, and subtle changes to land use surrounding existing retail or service centres in middle ring suburbs ought to be able to be achieved with minimal planning fuss. It is still possible to imagine something being done with minimal planning fuss, but very difficult to point to any actual examples. Still, hope springs eternal.

    The changes could allow (for example) for some amalgamations of larger lot, detached post war homes into higher density cottage-style dwellings on a group title, still single level and with low construction costs. A 2000 square metre amalgamation could in theory provide 10 such cottages, with private garden space and minimal likelihood of community objection. The key would be to keep regulatory costs down, so punitive development levies would be out of order. After all, the infrastructure already exists and seniors tend to be much less demanding on utilities or services than young households. (Have a think about how little garbage they generate, or how little water they use as an illustration. It would surely be unfair to tax seniors in this type of housing for infrastructure upgrades under the circumstances?).

    The traditional ‘retirement home’ or ‘aged care’ model of seniors housing is still going to be needed, especially as people require more frequent or acute care in their later years, and become less and less independent. But there will be a good 10 to 15 year period for people for whom the family home no longer suits, and who aren’t yet ready for ‘God’s waiting room.’ How we accommodate this coming bubble of seniors who want to age in place and continue to live independently, and how planning schemes will allow markets to provide choice and diversity, is something that perhaps should be a policy focus now.

    Ross Elliott has more than 20 years experience in property and public policy. His past roles have included stints in urban economics, national and state roles with the Property Council, and in destination marketing. He has written extensively on a range of public policy issues centering around urban issues, and continues to maintain his recreational interest in public policy through ongoing contributions such as this or via his monthly blog The Pulse.

    Photo by BigStockPhoto.com

  • Mass Transit: Could Raising Fares Increase Ridership?

    Conventional wisdom dictates that keeping transit fares as low as possible will promote high ridership levels. That isn’t entirely incorrect. Holding all else constant, raising fares would have a negative impact on ridership. But allowing the market to set transit fares, when coupled with a number of key reforms could actually increase transit ridership, even if prices increase. In order to implement these reforms, we would need to purge from our minds the idea that public transit is a welfare service that ought to be virtually free in order to accommodate the poor. Concern about poverty should drive welfare policy, not transit policy. Persistent efforts to keep public transit fares as low as possible are a big part of the reason that public transit ridership in North America has hit record lows. To increase ridership, transit agencies have to convince people who can afford to drive that transit is a better option. Convenience, and not lower prices, is the key.

    There are three basic reasons that private automobiles have virtually crowded out transit. First, private automobiles are inherently more convenient for a large segment of the population. Transit routes are naturally limited to well-traveled corridors, which are often slower because of wait and stop times. On the other hand, you can get into your car and immediately take the most efficient route to your destination.

    The second factor is free roads. While people do pay for roads, they don’t pay for using specific roads at specific times. Gas taxes go into general revenues, and road construction and repair isn’t directly connected to usage. As a result, a large percentage of roads are subsidized by travelers who use a small percentage of highly traveled routes. Similarly, drivers don’t pay more during peak times than non-peak times. They instead pay with their time, by waiting in traffic.

    The third factor is that the market dictates private automobile sales. This is important because automobile companies and dealerships have an incentive to keep prices competitive while selling a high quality product. It also ensures that there are a multitude of different types of automobiles, and differing finance schemes and secondary markets tailored to a range of needs. The private sector is great at marketing things to people; government isn’t.

    While public transit can never be as flexible as private automobiles, some of the automobile’s advantages can be reduced. Road tolls and congestion pricing ought to be implemented where practical. Ironically, offsetting these new fees by reducing the gas tax would actually also be beneficial for transit services. After all, the only reason many impractical roads are built is that they are financed out of general revenue. If roads were primarily financed by those who used them, more funding would go to highly traveled urban roads, and less would go toward subsidizing sprawl.

    Here’s the controversial aspect of the solution: Transit should operate on a for profit basis and its prices should closely reflect market forces — even if it means that transit fares increase.

    Mass transit has one major advantage: where there is sufficient demand, transit is inherently cheaper than private automobile usage because the costs are spread over many people, making the per person cost lower. That’s why most people fly with commercial airlines instead of chartering private jets, for example. But keeping the price too low reduces the ability of transit service to provide more routes. And this is important. While there is a segment of the population who are stuck with public transit no matter how inconvenient it is, most people won’t ditch their cars unless they can get to their destinations relatively quickly. And it may not be economical for a transit system to get them to many of those places for $2.25.

    A flat price structure subsidizes inefficient routes with efficient ones. But what if transit services charged the full cost for less efficient routes? While charging more for less popular routes may seem like it would reduce ridership, it wouldn’t. If people knew that there were many additional routes going to out-of-the-way locations that they don’t ordinarily frequent, they would still positively factor it into their calculation of whether or not they need a car. After all, paying $5 to get to an out of the way destination occasionally is still cheaper than getting a cab, and can often be cheaper than the cost of driving. Transit systems have higher ridership in major centres than in small centres, even when the fares are high. Transit is not only cheaper than driving in dense cities, it’s also equally or more convenient.

    But just allowing prices to fluctuate isn’t enough. For a price system to function properly there needs to be an incentive to keep prices as low as possible. Public monopolies don’t have this incentive. Furthermore, there needs to be competition to ensure high levels of service. The reason that air travel service is so high quality and cheap is because it is private, not public.

    The thought of privately delivered public transit will no doubt turn some people off, especially public sector employees. And simply removing government from the transit business isn’t necessarily the best solution. Instead, municipal transit services should be turned into transit commissions that coordinate and contract for transit from competing companies. Transit companies would bid on routes, and pay the city a fixed cost for the right to service each route based on a competitive auction.

    For less cost efficient routes, a city could even offer a small subsidy per rider, should no transit company enter a bid. Whichever company would be willing to service that route at the lowest subsidy level would win. This would maintain downward pressure on costs. But it would be important that the transit commission use this as a last resort. Otherwise it could undermine the competitive market process by creating the incentive for companies not to bid on many marginal routes until a subsidy was offered.

    Collecting variable rates for trains is simple, but it would be more difficult for buses. One method would be to have buses classified as local, express, or commuter, for instance. Each would charge a different rate. An automated payment system could be installed where riders swiped their cards on the way in and out, as they do on the Washington DC Metro, to calculate the rate.

    Changing the operating and pricing structure wouldn’t alter the way that people use transit services. Transit vehicles would still work on a coordinated schedule, and collect fees from riders as they always have. What would change is that the competing companies would have an incentive to keep operating costs lower, and to provide more routes. They also would have to meet performance guidelines monitored by the city, or face fines. What would change is the philosophy of transit companies. They would be out to make a profit.

    This may seem like a radical departure, but consider that London, England, contracts out its bus service. If one of the world’s busiest cities can co-ordinate a public-private partnership of this magnitude, there is no reason smaller cities couldn’t do the same. The key is to create the right incentives and institutions. The current model of treating transit as a welfare service has failed. It is time to make transit the first choice for commuters, not the last.

    Steve Lafleur is a Policy Analyst with the Frontier Centre for Public Policy.

    Image from BigStockPhoto.com: A metro bus in Madison, Wisconsin.

  • Toyota: How Mississippi Engineered the Blue Springs Deal

    A big crowd gathered earlier today to welcome the first Corolla that rolled off the assembly line at Toyota’s tenth U.S. plant in the tiny hamlet of Blue Springs, Mississippi. Situated in Union County, just 17 miles from Elvis’ hometown of Tupelo, the new plant is the latest new automobile manufacturing facility to fly the flag of a foreign manufacturer in the Deep South.

    The opening culminates a year of project announcements in the area. Mercedes-Benz will invest $350 million to add capacity to its plant just outside of Tuscaloosa, joining Navistar, the nation’s top manufacturer of school buses and medium-duty trucks, which also announced plans to expand in Alabama. In neighboring Tennessee, eleven automotive related projects totaling $300 million have been announced since June. A commissioner from the state’s economic development office recently said that one third of the manufacturing jobs in the Volunteer State now relate to the automotive sector.

    But the growth of the auto industry in the area is not a stroke of fate. “It was a deliberate strategy, a regional strategy,” said David Rumbarger, President and CEO of the Community Development Foundation for Tupelo/Lee County. In 2001, three northeast Mississippi counties, Pontotoc, Union, and Lee, formed the PUL Alliance with the goal of luring a major automobile manufacturer to the area. Two years later, they identified the Blue Springs site, began looking for a tenant, and named the endeavor the Wellspring Project.

    “At the time, North Mississippi said, ‘We’ve got to diversity our economy here’ and we narrowed it down to automotive,’” said Josh West, Economic Developer for Pontotoc and Union counties. Nissan’s announcement in 2000 that it would open the state’s first assembly line plant in Canton proved it could be done.

    Furniture manufacturers, anchored by Ashley Furniture, Lane Furniture and Southern Motion, had long provided the region’s economic backbone (as recently as the 2007 Economic Census, more workers were employed in the state manufacturing furniture than automobiles). But, as with the textile industry, the industry slowly declined through downsizing and outsourcing, forcing locals to explore how to best capitalize on the area’s skilled labor force. The members of the PUL Alliance also probably couldn’t help but notice that the annual compensation cost for workers making automobiles is three times higher nationwide than for those manufacturing furniture.

    Furniture manufacturing provided a good labor basis for the region, West said, “but the computer technology and robotics needed to be taught.” To that end, the PUL Alliance formed a consortium of four area community colleges to offer the skills needed at the Blue Springs facility.

    “Each (college) couldn’t teach all the needed courses by themselves,” Rumbarger said, referring to courses on working with sheet metal, tool and dye technology and robotics, among others. “When we put the four institutions together, it helped spread the education of the workforce. It allowed the whole region to upgrade their skills.”

    After approaching Ford and other domestic manufacturers (“I spent a lot of time in Detroit,” Rumbarger said), Toyota announced in 2007 that it would break ground in Blue Springs, originally to make the Prius; Toyota later announced the plant will make only Corollas. Automakers have generally avoided opening up new plants in states where the United Auto Workers have a long history, choosing instead sites in the South with right-to-work laws that prohibit workers from being forced to join unions if their co-workers do so.

    “It’s definitely a benefit to us to be a right-to-work state,” West said, estimating that less than two percent of private employees in the northern Mississippi area belong to unions.

    The plant received 35,000 applications for 1,300 available spots, hiring mostly locals, with plans to hire more next year. Of course, a spin-off of every new auto plant is the wealth of suppliers who move into the area, producing seat bumpers, plastics, metals and other auto parts that add an estimated 1,000 jobs to the area. With Nissan’s Canton plant a four-hour drive south, suppliers have additional incentive to set up shop.

    According to Rumbarger, economic development officials in the area had a wage target of 15 to 28 dollars an hour for the jobs at the Blue Springs plant, an increase from the average hourly manufacturing wage in the area of $13.50. With the median home value in Union County at $79,200 and a per capita average under $18,000, the wages paid by Toyota should make home ownership easily attainable to its plant employees. The area has also seen an increase of 200 home starts this year compared to last.

    “I would speak to community groups and ask if anyone knew somebody who worked for Toyota. A couple of hands would go up,” Rumbarger said. “Now when I pose the question, nearly half of people know somebody who worked for Toyota. That’s the difference over the last 18 months.”

    Andy Sywak is the former publisher of the Castro Courier newspaper in San Francisco. He now lives in Los Angeles.

    Photo: Toyota Corolla by Paulo Keller

  • More Americans Move to Detached Houses

    In defiance of the conventional wisdom in the national media and among most planning professionals, Americans continue not only to prefer, but to move into single family detached houses. Data from the 2010 American Community Survey indicates that such housing attracted 79.2% of the new households in the 51 major metropolitan areas (over 1,000,000 population) over the past decade.

    In contrast households in multi-unit buildings (apartments and condominiums) represented 11.8% of the new housing, while two-unit attached housing represented 11.3% of the increase. There was a 2.3% decline in the "other" category of new housing, which includes mobile homes and boats. A total of 4 million net new occupied detached houses were added in the largest metropolitan areas, while there were 590,000 additional apartments and condominiums and 570,000 attached houses (Figure 1).

    Detached Vacancy Rate Rises Less than Multi-Unit: Another conventional assumption is that single family homes have been disproportionately abandoned by their occupants, particularly since the collapse of the housing bubble. This is also not true. In 2010 detached housing enjoyed a 92.4% occupancy rate in 2010 which is higher than the 89.4% occupancy rate in attached housing and 84.2% occupancy rate in multi-unit buildings. Because a more of the multi-unit housing is rental, it is to be expected that the vacancies would be the highest in this category. However, at the national level, overall vacancy rates rose the most in multi-unit housing, with an increase of 61%, from 10.7% in 2000 to 17.1% in 2010. The vacancy rate in detached housing rose at a slower rate, from 7.3% in 2000 to 10.7% in 2010, an increase of 48%. Attached housing – such as townshouses – have the slowest rise in vacancy rate, from 8.4% in 2000 to 11.0% in 2010, an increase of 32% (Figure 2).

    Detached and Attached Up in Most Markets, Apartments and Condominiums Down in Most: The move to detached housing was pervasive at the major metropolitan area level. Among the 51 largest metropolitan areas, the share of detached housing rose in 44 and declined in seven. The share of attached housing rose in 32 of the metropolitan areas, while declining in 19. Multi-unit housing experienced an increase in its market share in only three markets, while declining in 48.

    Largest Metropolitan Areas: Detached housing also increased more than attached housing and multi-unit housing in each of the nation’s five largest metropolitan areas.

    • In the largest metropolitan area, New York, 51.9% of the new housing was detached. This is considerably more than the 36.9% detached market share in 2000. Multi-unit housing accounted for 24.1% of the increase in the market. This is a far smaller share than the 55.7% that multi-unit housing represented in 2000. Attached housing was 19.9% of the increase, nearly 3 times its 2000 share of 6.7%. This movement of New Yorkers to less dense housing forms is particularly significant, in view of the fact that New York has historically had the lowest share of lower density housing (detached and attached) and the highest share of multi-unit houses.
    • In the second largest metropolitan area, Los Angeles, 96.0% of the new housing was detached. This is nearly double the 49.7% that detached housing represented of the market in 2000. The balance of the new housing was split between a share of 18.6% for multi-unit housing and a loss of 11.8% in the attached housing. The share of new units represented by multi-unit houses was less one-half than its percentage of the market in 2000 (39.0%).
    • In the third largest metropolitan area, Chicago, 95.9% of the new housing was detached, well above the 52.5% share in 2000. There was a huge loss in apartment and condominium share, at 31% of the market, while attached housing captured 40.4% of the market.
    • In the fourth largest metropolitan area, Dallas Fort Worth, 84.3% of the new housing was detached, well above the 62.0% share in 2000. Multi-unit housing accounted for 13.5% of the increase, approximately one-half the 2000 market share. Attached housing represented 3.2% of the increase.
    • In the fifth largest metropolitan area, Philadelphia, 77.6% of new housing was detached, well above the 45.3% market share for detached housing in 2000. Apartments and condominiums accounted for 27.7% of the increase between 2000 and 2010, slightly more than the 2000 market share 23.7%. Attached housing represented a minus 4.3% of the new housing.

    Despite being only the fourth largest metropolitan area, Dallas-Fort Worth accounted for 46% of the new housing in the five largest metropolitan areas (Figure 3).

    The three largest metropolitan markets where there was an increase in multi-unit housing share were San Jose, New Orleans and Denver. In San Jose, 55.5% of new housing was multi-unit, while only 10.3 percent was detached. New Orleans had a similar 10.5% detached new housing share, while 65.8% of the new housing was multi unit. In Denver, 31.3% of the new housing was multi-unit, while 60.2% was detached.

    The share of detached housing also declined between 2000 and 2010 in Boston, Kansas City, Minneapolis-St. Paul and Portland. In each of these metropolitan areas, the share of attached housing increased, while the share of multi-unit housing decreased. Nonetheless, detached housing continued to attract a majority of new housing in Kansas City (70.8 percent) and Portland (56.6 percent). Despite Portland’s strong planning emphasis on high density housing, its share of multi-unit housing, and 26.8% between 2000 and 2010 was less than its 2000 market share of 27.5%, with a strong 20.6 percent share in attached housing. Attached housing also accounted for a comparatively large share of new housing in Boston (45.7 percent), Minneapolis-St. Paul (39.7 percent) and Kansas City (25.8 percent). The stronger densification policies that existed in Minneapolis-St. Paul until the middle of the decade may have artificially raised the share of attached new housing.

    Share by housing type data is provided for the major metropolitan areas in Tables 1 and 2.

    Table 1
    Occupied Housing by Major Metropolitan Area: 2000
    Metropolitan Area Detached Attached Multi-Unit Other
    Atlanta, GA 66.6% 3.5% 25.5% 4.4%
    Austin, TX 57.7% 3.7% 32.1% 6.6%
    Baltimore, MD 46.0% 28.5% 24.2% 1.3%
    Birmingham, AL 68.3% 2.6% 17.9% 11.2%
    Boston, MA-NH 48.9% 4.4% 45.4% 1.3%
    Buffalo, NY 60.0% 2.8% 35.1% 2.1%
    Charlotte, NC-SC 67.5% 3.4% 21.8% 7.3%
    Chicago, IL-IN-WI 52.5% 6.3% 40.1% 1.1%
    Cincinnati, OH-KY-IN 64.7% 3.6% 27.8% 3.9%
    Cleveland, OH 65.7% 5.5% 27.7% 1.2%
    Columbus, OH 62.8% 5.5% 29.1% 2.6%
    Dallas-Fort Worth, TX 62.0% 3.1% 30.3% 4.6%
    Denver, CO 60.9% 7.8% 29.0% 2.3%
    Detroit,  MI 70.5% 5.5% 20.7% 3.3%
    Hartford, CT 60.0% 5.2% 34.1% 0.8%
    Houston, TX 61.4% 3.6% 29.1% 6.0%
    Indianapolis. IN 68.4% 5.2% 23.2% 3.3%
    Jacksonville, FL 63.5% 3.9% 22.3% 10.3%
    Kansas City, MO-KS 71.3% 4.6% 21.4% 2.6%
    Las Vegas, NV 53.4% 6.0% 34.7% 5.9%
    Los Angeles, CA 49.7% 8.6% 39.6% 2.0%
    Louisville, KY-IN 70.7% 2.1% 22.2% 5.0%
    Memphis, TN-MS-AR 69.1% 3.8% 22.8% 4.2%
    Miami, FL 45.4% 9.9% 42.1% 2.6%
    Milwaukee,WI 55.7% 5.3% 38.3% 0.7%
    Minneapolis-St. Paul, MN-WI 62.8% 7.7% 27.4% 2.0%
    Nashville, TN 64.9% 4.4% 24.4% 6.2%
    New Orleans. LA 59.9% 7.7% 28.5% 3.9%
    New York, NY-NJ-PA 36.9% 6.5% 56.3% 0.4%
    Oklahoma City, OK 71.6% 3.1% 19.2% 6.0%
    Orlando, FL 61.5% 4.5% 25.1% 8.9%
    Philadelphia, PA-NJ-DE-MD 45.3% 29.8% 23.5% 1.4%
    Phoenix, AZ 61.6% 6.1% 24.9% 7.4%
    Pittsburgh, PA 68.8% 6.5% 20.4% 4.4%
    Portland, OR-WA 63.8% 3.3% 27.5% 5.5%
    Providence, RI-MA 54.3% 2.9% 41.6% 1.2%
    Raleigh, NC 63.6% 5.2% 21.5% 9.8%
    Richmond, VA 71.3% 4.9% 20.4% 3.4%
    Riverside-San Bernardino, CA 67.0% 5.1% 18.6% 9.3%
    Rochester, NY 65.7% 4.3% 26.5% 3.5%
    Sacramento, CA 66.1% 6.0% 24.0% 3.9%
    Salt Lake City, UT 67.0% 4.8% 25.4% 2.8%
    San Antonio, TX 67.4% 2.9% 22.2% 7.5%
    San Diego, CA 51.7% 9.4% 34.5% 4.4%
    San Francisco-Oakland, CA 50.3% 9.3% 39.1% 1.3%
    San Jose, CA 57.0% 9.1% 30.5% 3.4%
    Seattle, WA 60.2% 3.5% 31.6% 4.8%
    St. Louis,, MO-IL 70.2% 3.1% 21.9% 4.8%
    Tampa-St. Petersburg, FL 58.4% 4.6% 25.7% 11.4%
    Virginia Beach-Norfolk, VA-NC 61.4% 10.4% 25.2% 3.0%
    Washington, DC-VA-MD-WV 47.6% 19.4% 32.1% 0.8%
    Average (Weighted) 55.9% 7.5% 33.3% 3.3%
    Data from 2000 Census
    Metropolitan areas over 1,000,000 population as defined in 2010

     

    Table 2
    Occupied Housing by Major Metropolitan Area: 2010
    Metropolitan Area Detached Attached Multi-Unit Other
    Atlanta, GA 69.2% 5.3% 22.7% 2.7%
    Austin, TX 60.4% 2.6% 31.8% 5.1%
    Baltimore, MD 47.4% 27.3% 24.2% 1.1%
    Birmingham, AL 70.8% 2.4% 16.8% 10.0%
    Boston, MA-NH 48.7% 5.9% 44.2% 1.2%
    Buffalo, NY 62.3% 2.9% 33.0% 1.8%
    Charlotte, NC-SC 68.9% 5.1% 20.4% 5.6%
    Chicago, IL-IN-WI 54.2% 7.6% 37.1% 1.1%
    Cincinnati, OH-KY-IN 68.9% 4.8% 23.2% 3.1%
    Cleveland, OH 68.7% 5.1% 25.1% 1.1%
    Columbus, OH 64.1% 7.3% 26.6% 2.1%
    Dallas-Fort Worth, TX 65.9% 3.1% 27.4% 3.6%
    Denver, CO 60.8% 7.9% 29.4% 1.9%
    Detroit,  MI 71.6% 6.3% 19.1% 2.9%
    Hartford, CT 60.9% 5.3% 33.1% 0.7%
    Houston, TX 65.1% 3.5% 26.0% 5.3%
    Indianapolis. IN 71.3% 5.0% 21.1% 2.6%
    Jacksonville, FL 66.3% 4.8% 21.3% 7.6%
    Kansas City, MO-KS 71.3% 6.4% 20.1% 2.2%
    Las Vegas, NV 60.9% 5.4% 29.9% 3.8%
    Los Angeles, CA 51.0% 8.0% 39.0% 1.9%
    Louisville, KY-IN 71.6% 3.6% 20.9% 4.0%
    Memphis, TN-MS-AR 72.5% 3.3% 20.4% 3.7%
    Miami, FL 47.0% 10.8% 40.0% 2.1%
    Milwaukee,WI 56.2% 6.5% 36.5% 0.8%
    Minneapolis-St. Paul, MN-WI 61.5% 11.0% 25.9% 1.6%
    Nashville, TN 67.2% 5.6% 22.3% 4.9%
    New Orleans. LA 65.1% 6.1% 24.6% 4.2%
    New York, NY-NJ-PA 37.2% 6.7% 55.7% 0.4%
    Oklahoma City, OK 74.3% 3.0% 17.1% 5.6%
    Orlando, FL 64.1% 5.5% 23.4% 6.9%
    Philadelphia, PA-NJ-DE-MD 46.6% 28.5% 23.7% 1.3%
    Phoenix, AZ 67.2% 4.8% 22.2% 5.8%
    Pittsburgh, PA 69.4% 7.5% 19.1% 4.0%
    Portland, OR-WA 62.8% 5.5% 27.4% 4.3%
    Providence, RI-MA 55.7% 3.7% 39.6% 1.0%
    Raleigh, NC 65.4% 8.0% 20.5% 6.2%
    Richmond, VA 73.2% 4.9% 19.0% 3.0%
    Riverside-San Bernardino, CA 70.7% 4.3% 17.1% 7.9%
    Rochester, NY 66.9% 4.8% 25.3% 2.9%
    Sacramento, CA 68.8% 5.6% 22.6% 3.0%
    Salt Lake City, UT 67.8% 6.1% 23.9% 2.2%
    San Antonio, TX 70.8% 2.2% 21.1% 5.9%
    San Diego, CA 53.0% 9.0% 34.5% 3.5%
    San Francisco-Oakland, CA 50.7% 9.4% 38.8% 1.1%
    San Jose, CA 54.3% 10.7% 32.0% 3.0%
    Seattle, WA 60.5% 4.2% 31.5% 3.8%
    St. Louis,, MO-IL 70.8% 4.2% 21.1% 3.9%
    Tampa-St. Petersburg, FL 59.6% 5.6% 24.7% 10.1%
    Virginia Beach-Norfolk, VA-NC 62.5% 11.1% 24.0% 2.5%
    Washington, DC-VA-MD-WV 48.1% 19.6% 31.7% 0.7%
    Average (Weighted) 57.8% 7.9% 31.5% 2.8%
    Data from 2010 American Community Survey
    Metropolitan areas over 1,000,000 population as defined in 2010

     

    In Housing, Preference Trumps Policy: The trend of the last decade is evidence of a continued preference of American households for detached housing. The results are remarkable for at least two reasons:

    • The first is that there have been unprecedented policy initiatives to discourage, if not to prohibit the building of new detached houses. It seems likely that the miniscule new detached housing share in San Jose, for example, is a direct result of that metropolitan area’s virtual prohibition of new detached housing, rather than any evidence that households have begun to prefer higher density housing. A small detached housing share in the face of a strong public policy bias toward higher density housing says nothing about preferences.
    • Second; the media and wishful advocates of denser settlement patterns have continuously referred to detached housing as having been severely overbuilt during the housing bubble, while suggesting an imperative for households to move into multiunit, often rented housing. The new data, with the larger increase in multi-unit vacancy rates, indicates that there was at least as much overbuilding in more dense housing types as there was in detached housing.

    Despite the expressed preferences of planners, academics and even many builders, American households continue to make their own decisions about housing.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

    Lead photo: Houses in Los Angeles. Photograph by author.

  • HELP WANTED: The North Dakota Boom

    The nation’s unemployment rate has been hovering at nearly nine percent since 2009. But not every state is suffering an employment crisis. In the remote, windswept state of North Dakota, job fairs often bustle with more recruiters than potential workers. The North Dakota unemployment rate hasn’t risen above five percent since 1987.  In the state’s oil country, unemployment hovers at around two percent, and pretty much everyone who wants a job—as long as they are old enough and not incarcerated—is employed.  North Dakota has either tied for or had the lowest unemployment in the country since 2008.   

    The job base of the state (population 672,500) has grown five percent in the past two years. Even more astonishing, there are over 16,000 unfilled jobs, and projections indicate that 45,000 more workers will be needed in the next two years.  Of those jobs, one out of three will be in oil and gas.

    The Booming West

    If you are willing to endure the blazing hot summers and bitterly cold winters, come to western North Dakota, young (or not) man (or woman) and you can get a job. Michael Ziesch has worked with Job Service of North Dakota for the past 15 years and is currently a manager in the Labor Market Information Center. “The average wage in oil and gas is $80,000 plus overtime, and there will likely be plenty of that,” said Ziesch.  Development of the massive Bakken oil field in the western part of the state has tapped out the local workforce.

     If you are not interested in an energy job, consider retail. Employers are paying $15 an hour for convenience store employees and fast food workers. Drive through any community in the area and you will be hard pressed to find a store front devoid of a sign shouting “Help Wanted, Now!” It seems that everything in the state these days ends with an exclamation mark, and for a state filled with unassuming, hardworking, family-centered kind of folks, it’s a little disconcerting.

    New North Dakotans

    Job seekers from outside the state are flocking to Williston, the unofficial capital of the oil boom, located in the remote northwestern corner of North Dakota. The population here has grown from 12,500 to an estimated 22,000 in the past five years.

    Williston is home to 350 oil service companies. Willistonlife.com, an employment and informational website built with the objective of attracting workers to the area, boasts that at any given time, over 1,200 job openings are available in the Williston area alone. On its home page, the website beckons to the nation’s unemployed in large white letters brightly juxtaposed against a black background, “Make Your Move!”

    The wildcat oil culture that the newly arrived encounter, though, is distinctly different than the risk-averse culture of the state. One “New North Dakotan” noted that although long-time residents of the state are pleasant (we smile a lot), helpful (there’s no better place to have a flat tire), kind (we’ll bring you a hot dish if you are sick), and polite (we almost always hold the door open for the person behind us), we are not quite “friendly.” We are a little guarded with folks we didn’t grow up with. Ethnic to us means Norwegian or German. We’re not used to accents other than our own. (And, no, we don’t talk like the actors in the movie Fargo.) One more thing — and this is important — we talk about the weather a lot.

    What should you know before you throw your last $100 in your gas tank and head up to Williston to make cold calls for jobs? Don’t come without a housing plan, or you may find yourself among the hundreds of parking lot denizens, living out of your car.

    New North Dakotans need places to live, creating an enormous construction boom. Williston formerly saw about five new homes a year. So far this year, 2,000 new homes have sprouted up. In 2012, the expectation is for 4,000 more along with apartments, hotels and, outside of town, dormitory-style housing facilities known as ‘man camps’. According to the Williston Herald, since the boom began, the market price of rental housing in Williston has jumped from $300 to $2,000 per month for a modest apartment. Hotels are full and booked for months, charging $170 to $200 a night.  

    Service is hard to come by. Waits of 45 minutes or more are not uncommon at fast-food restaurants. The Dairy Queen closes at 5:00 pm because they can’t retain enough staff to stay open any later, and many small businesses have simply closed their doors for lack of employees. The town’s Wal-Mart doesn’t have enough employees to stock the shelves, so boxes are simply laid open in the middle of the aisles for customers to grab what they need. Locals have discovered a “secret route” into the store to avoid the worst of the incoming traffic, and even the local Luddites have managed to learn how to use the self-checkout lanes as a matter of self-preservation. A professor at Williston State College complained recently that she had to text her husband with a request to pick up clothes hangers while he was out of town visiting relatives because local stores were completely sold out. It’s not only hangers; long lines and low inventory have made running everyday errands a vexing challenge. “It sounds crazy,” this same professor says, “but I order laundry detergent online and have it delivered by UPS to my front door.”

    At Williston State College, faculty often take out their own garbage to help out the strapped maintenance staff.  The school is seeing lower enrollments as students are drawn away from post-secondary education by the lure of instant cash.

    The law of supply and demand has kicked in across all sectors of the community. A severe shortage of contractors, plumbers and electricians means that homeowners wait weeks or even months for simple home projects. The local community college is putting out a second bid for a parking lot because, the first time, they didn’t get any bids at all.

    Even more disturbing in Williston are rumors of impending electricity shortages. Worried about brownouts and blackouts during the long North Dakota winter, many townspeople have picked up generators in Fargo, where they sell for $700, compared to the “sale” price of $1300 in Williston.

    Officials are quick to point out that the state’s larger cities, Bismarck and Fargo, are also thriving. In the Governor’s most recent State of the State address, he posited his explanation of ‘The North Dakota Miracle’: “It is about an educated workforce, low taxation, a friendly regulatory climate.” And if your state happens to be sitting atop 400 billion barrels of oil … hey, it can’t hurt.

    Energy Economics: Boom and Bust

    Oilmen have known for fifty years that beneath North Dakota’s surface lay billions of barrels of oil, perhaps as much as 4 million barrels per square mile.

    In 1952, The Wall Street Journal reported that Williston was receiving a “cornucopia of riches.” Banks were setting new deposit records weekly, and the population had jumped from 7,500 to 10,000.  In the early 1980s, oil prices skyrocketed and the region again became an exploration target as its vast deposits became economically feasible to drill. When prices began to slip, hitting a low of $9 a barrel by 1986, the boom faltered and, even more quickly than it began, it was over. The state spent the later part of the 1990s trying to recover from a brutal bust.

    Today, a perfect storm of two 21st century technologies, hydraulic fracturing and horizontal drilling, along with high prices and unprecedented demand, have come together to make drilling profitable, triggering a new boom that some experts say will be the biggest and longest lasting in the cycle of boom and bust. Conventional wisdom is that this time around the oil boom will be steadier and longer, because oil prices are no longer being defined by the cartels that once controlled the world’s oil prices and, therefore, the economics of energy. In the meantime, the oil pump jacks that dot the skyline are nodding their heads in greeting. Welcome to North Dakota.

    Debora Dragseth, Ph.D. is professor of business at Dickinson State University in Dickinson, North Dakota.

    Photo of Williston, ND traffic jam courtesy of Williston Department of Economic Development.