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  • Christopher Zurcher’s Profile on NewGeography.com

  • Are Farms the Suburban Future?

    More than fifty years ago, Frances Montgomery and Philip O’Bryan Williams bought a 500-acre stretch of prairie north of Dallas as a horse farm. It was designed to be a place for their children to run wild on weekends, ride horses, a family escape light years from the Frette-linen, Viking-kitchen and fully staffed second and third home palaces enjoyed by today’s junior high net worth set. The main residence was a recycled World War II barracks; the one bathroom was the only luxury.

    In those days Dallas was an upstart city just taking control of the Trinity River that flooded neighborhoods to the south, one reason why everyone moved north. As the post World War II building boom spread the population further north, the Montgomery family knew it would only be a matter of time before the family farm was surrounded by development, if not swallowed.

    Yet now what is left of places like Montgomery Farms could become a major testing ground in the future of suburban development. In the urban development world, there are two camps, says Williams’ son, Philip Jr., a former CPA who spends his days nurturing the changes that have come to his family’s land. If development had to come, Williams sought intellectual control and the lightest load. One group wants to re-populate the cities with higher density condos and more urban living – the Congress of New Urbanism (CNU). The other camp looks towards the Conservation Subdivision Development (CSD), integrating farming and urbanism to add vitality to a community. A recent New Urban News story quoted Miami architect Andres Duany as saying that agriculture is looming large for new urbanism:

    “Agriculture,” he said, “is the new golf.”

    In fact, studies show that property viewing or abutting agricultural lands is as valuable as those overlooking the golf-course, maybe more so if residents can grow fresh, pesticide-free foods and reduce long-distance trucking. (Fresh cow’s milk, children feeding baby goats not on field trips but recess.) Organic farms, says Missouri developer Greg Whittaker, could also be a revenue-generating business with sales of bedding plants, pumpkins and Christmas trees. Unless, of course, you live in Connecticut, where state Representative Rosa DeLauro wants to make growing your own food against the law and punishable by a fine of up to $1,000,000.

    At Montgomery Farm, CNU and CSD have met in the middle, says Williams, blending agriculture with sub urbanism – with an added artistic touch.

    As Philip, his sister, and the Montgomery farm team were masterminding their agricultural suburban development, they laid out firm ground rules. Art and conservation would trump development profits. Builders would not erect cookie cutter, “they-all-look-alike” homes or McMansions. The city was to put a road through the farm from Highway 75, slicing one of the more heavily wooded cross-sections of the acreage. A road is not a road in the Williams’ world. Seeking a highway that would be as unique as the lifestyle they were offering, the team gathered a group of Connemara Conservancy artists who, along with civil engineers, sponsored a road design contest in 1996.

    “It was a road with no intersections, which meant no idling cars and pollution,” says Williams. Signage was kept to a minimum and international Dark Sky requirements reduced light pollution. This was a farm, where you wanted to find stars at night, not spotlights. Berms were added along the side to mask the homes and muffle noise, and the street was curved, not a straight-arrow shot with stoplights. The City of Allen provided a variance and footed thirty percent of the cost for Bethany Road.

    What’s wrong with suburbia, asks Williams? Driving. Look at the new Honda Minivans: every seat has a TV, 3 plugs for a microwave, more than one giant cup-holder and even eating trays. It’s as if automakers were trying to put a kitchen and laundry room in the car – why not get a Winnebago? Montgomery Farm was designed for walking and biking: the 52 acre mixed-use Watters Creek development – a creek really runs through it – is within walking distance of the home developments. Kids can walk to school, and everyone can walk to the subway station that can whisk them to the heart of downtown Dallas.

    Further up Highway 75, the Southern Land Company is building a development some Texans might consider sac-religious. Southern aims to bypass 25 years of traditional suburbia and build the way communities were designed and built one hundred years ago: porch and street-centered neighborhood, not just sprawl. Streets are old-fashioned boulevards lined with huge trees sporting medians and open spaces.

    About the time developers were drooling to slice and dice Montgomery Farm’s Allen terrain, Tim Downey, founder and CEO of Southern, had a vision in Chattanooga, Tennessee. In 1988 he saw that few developers were looking into the future and considering lifestyle and design components, the way residents might be faring ten years after the developers finished their job. Entire neighborhoods were cropping up without conscious design, architectural or horticultural input. Production building was everywhere, it seemed, a mass of rooflines that all looked the same.

    “If we are going to design and build neighborhoods, let’s look at what they did 100 years ago,” says Jim Cheney, Vice President of Communications, Southern Land Company. “Not what they did 25 years ago.”

    In 1996, Southern flew its architecture department from Franklin, Tennessee to one of Dallas’s old, historic neighborhoods with cameras and notebooks, challenged them to find the most charming and enduring architectural styles and re-create them for Tucker Hill, an 800-acre master-planned community about 20 miles north of those homes. The architects were told to design the way their grandparents might have lived, not re-create McMansions.

    They banned repeated elevations and offered expensive landscape packages with each home. And if builders didn’t want to spend $10,000 on trees, they could build elsewhere. It was almost a foreign process to both builders and buyers. Southern had developed three Tennessee communities before Westhaven, outside Nashville, and the Texas property called Tucker Hill.

    “People just have this mindset,” says Cheney. “6000 square feet, large back-yards so I can hide – not be a part of the neighborhood.”

    But if half the Nashville population thought Downey was insane for Westhaven, Tucker Hill was an even gutsier move to pull off in ranch-mentality Texas. Southern puts a tremendous emphasis on the front of the home and its relation to the street. No front-loading garages; backyards are small and made up for by numerous parks and water features designed to get people out and together – think Hank Hill shooting the breeze with his buddies by the lake, not over the barbecue.

    The concept is similar to the Park Cities, home of Southern Methodist University and one of the most solid communities in the country. Property values in Highland Park and University Park have held strong – even risen – through repeated recessions, thanks in part to the community’s strong school system, low crime, walkability, and perception as a family community with numerous parks and fountains.

    For those who find the lots too small, the houses too congested, Southern’s projects may not be a good fit. But for those who truly want to commune, it’s home. In Nashville, the Westhaven community was barely a year old but 700 people turned out for a block party. The diverse age mix ranges from young families to empty-nest baby boomers to retirees who want to live near their children, but not under the same roof.

    Retirees in the suburbs? Urbanites may cringe, but many Baby Boomers grew up in the suburbs and, when given a choice, do not want to live in the gritty city, says Cheney. Now they can enjoy the ‘burbs and live green. Developers such as Phillip Williams and Tim Downey are offering innovative lifestyles that may help re-define suburban development as living light on the land.

    “America’s land is less than six percent developed,” says Philip Williams. “We are developing without regard for what we left behind, constructing 40 year life homes from trees that take 80 years to grow.”

    Almost like a financial world living on credit, and we’ve now seen where that has led us. But perhaps we can also change our suburbs, and our lives, for the better.

    Candace Evans is the Editor of DallasDirt, a Dallas-based real estate blog for D Magazine Media Partners.

  • Is Germany the Planners’ Valhalla?

    Urban planners and anti-sprawl advocates point to Germany as a wonderland of appropriate land use. It is true that Germany has been better at preserving open space between former villages; the non-stop development that seems continuous throughout most of the United States cannot be found here.

    However, this triumph of planning has also come at a cost, in terms of affordability, and has kept a large percentage of the population from being able to own their own home. Germany is expensive because of forced scarcity of land and an extremely unproductive building industry, with certain peculiarities of German culture creating additional costs.

    The reasons for the lack of productivity in the German housing industry stretch back to land holding patterns in the Middle Ages, when the southern and western provinces of Germany were divided into countless small duchies and bishoprics. These small holdings stayed in the families for generations and prevented the consolidation of plots. The large plots common in America are all but impossible to find, depriving the building industry of the economies of scale possible in most of America. This in turns negatively affects the cost of housing, pushing home prices higher than they need be.

    There are also the vested interests of those who have bought into the German Dream and do not want to see their homes lose value. The German Statistics Agency issued a report stating that the average home in Germany is worth 6.1 times the average income. According to demographia.com anything above 3.0 is expensive.

    Blame can be placed on two factors. The first is that the productivity of German builders is far lower than that of American builders. KB homes can produce a house for about $400 per square meter and the cheapest German builders charge $1,300 per square meter (both prices do not include the price of land). A recent New York Times article stated that a passive house filled with expensive high-tech gadgetry only costs about 9% more than a standard German house. No wonder, when a standard German house costs 300% more than an average American house. Not all European countries have such high building costs; the Dutch are actually able to build housing stock at American prices; the problem in the Netherlands is the enormous costs associated with clawing a country from the North Sea. Nevertheless, Dutch builders are able to more easily assemble large plots of land on the reclaimed islands.

    Choices in building materials also play a role. Germans tend to prefer heavy and expensive concrete and brick construction over wood and steel-framed houses. A lot of Germans travelling to the US invariably will express their shock at how flimsy many American houses seem. Many Germans want to have a basement as well, even though the winters are more than mild enough here to allow for simple concrete slabs. The preference for basements and solid construction have a lot to do with owning a building that will not burn down in an incendiary bomb attack and a basement for the family to hide out in should the apocalypse come again.

    The collective trauma of the twentieth century lives on in the contemporary German psyche. Germans have learned their lesson from history and many of them are genuinely ashamed of it. The threat of imminent destruction was only recently lifted: up until 1989 the allied defense plans put the first line of real resistance on the Rhine, meaning that the entire country would have probably been flattened before the Allies could stop the forward thrust of the Red Army.

    Another factor is the huge mobility tax that the German government slaps on its citizens. The German government charges a punitively high tax for each liter of gasoline sold, equal to 80% of the price paid for fuel. Germans still drive a lot: the country invented the freeway and the ease and opportunity that an automobile offers still trumps the government billions spent on public transit. The German Sueddeutsche Zeitung, (the German equivalent of the New York Times) wrote a lengthy article, stating essentially that the automobile has survived every dire threat that it has faced over the last hundred years and will probably remain the king of the road. At least, they added, until a transit approaches the convenience and flexibility offered by the car. As it is, most new construction still takes place in the outer suburbs.

    Germans love the woods. German identity since the time of Tacitus is closely linked with the woods. Herman the German was able to use the cover of the forest to wipe out the Roman legions in the Teutoburger Forest. The folklore costumes that one occasionally sees here are almost always hunter green. Many Germans do not necessarily see nature as the unscathed landscape made to order by God. The forest is not wild here; it is an almost entirely man-made affair. German forests are essentially tree farms but Germans love them. They use these forest preserves as well. They are a ritualized part of the landscape, every Sunday they fill with locals walking off their Sauerbraten.

    In Germany, the natural world is something already conquered; it is viewed as something useful, a garden that the Germans themselves are stewards to. It is not the vast pristine wilderness of America. It is more like a vast public garden. German farmers and foresters have to allow pedestrians the right to walk on their land. Open space is also public space. The positive side is that the livability in many of these communities is much higher for those who can afford it. There is always a forest or a bike path/jogging path somewhere nearby.

    Germany is still rather affordable compared to other European countries, especially those that were caught up in the real estate bubble of the last decade. France, The Netherlands, Switzerland and Ireland have all experienced housing booms that have pushed the median multiple for housing affordability well above 6 to 7 or 8 and in places like Ireland and the greater London area to well above 10. Prices are also shrinking in the East, which is losing people every year.

    The East is actually one of the more interesting markets due to its loss of people and resulting housing price slumps. Government infrastructure investments could turn the Leipzig and Jena areas as well as Dresden into potential growth markets. Certain areas like the east and the Ruhr Valley, where cities like Bochum and Monchengladbach are worse off than some parts of the East.

    Germany, along with most of Europe, cannot be transposed to the US. The sundry factors contributing to its present-day appearance are not replicable in the US. Germany is a place of small plots and inefficient builders with prices severely limiting home ownership. It is not all bad, especially for those already in place. However, it limits Germans ability to improve their quality of life. Germans, like the vast majority of citizens in industrialized countries, prefer the speed, convenience and comfort of the automobile. Germans, for better or worse, saw how the conquerors from the US lived and tried to emulate it in their own lifestyles. Many still see America as a role model, even though that will not stop the cognoscenti here from writing sanctimonious articles condemning America and trying to stop cities from “sprawling”.

    Kirk Rogers resides in Bubenreuth on the outer edges of Nuremberg and teaches languages and Amercan culture at the University of Erlangen-Nuremberg’s Institut für Fremdsprachen und Auslandskunde. He has been living in Germany for about ten years now due to an inexplicable fascination with German culture.

  • Layout for the Bailout: $3.8 Trillion and Counting

    Bloomberg.com reporters Mark Pittman and Bob Ivry are reporting a running total of the money the U.S. government has pledged and spent for bailouts and economic stimulus payments. The total disbursed through February 24, 2009 stands at $3.8 trillion; the total commitment is $11.6 trillion. The Federal Reserve is providing the largest share at $7.6 billion, followed by the U.S. Treasury $2.2 trillion and FDIC $1.6 trillion. The Department of Housing and Urban Development (HUD) and support for Fannie Mae and Freddie Mac, combined with purchases of student loans – bailout money that comes closest to directly bailing out Main Street – total only $760 billion – less than 7 percent of the total.

    The national debt currently stands at $10.8 trillion — versus an authorized limit of $12.1 trillion.

    Last week, U.S. Treasury Secretary Timothy Geithner got into a tiff with the rest of the world (denied by President Obama) by telling them that they should spend at least 2 percent of their GDP on their own stimulus packages.

    The U.S. commitment of $11.6 trillion equals 81 percent of U.S. 2008 gross domestic product (GDP). The $787 billion fiscal stimulus is 5.4 percent of GDP. Just the two-thirds of the stimulus that represents new spending (one-third is tax cuts) is 3.6 percent of GDP. Here’s what financial institutions in various countries got from U.S. taxpayers by way of the AIG bailout:

    Country

    Bailout Benefit

    US

     $   31.1

    France

     $   19.1

    German

     $   16.7

    UK

     $   12.8

    Switzerland

     $     5.4

    Netherlands

     $     2.3

    Canada

     $     1.1

    Spain

     $     0.3

    Denmark

     $     0.2

    Italy

     $     0.2

    Serbia

     $     0.2

  • Nuts for ACORN

    In about a year, the next U.S. Census will be upon us. However, one group participating in the survey is already driving some lawmakers nuts.

    In February, The Association of Community Organizations for Reform Now (ACORN) signed a partnership with the Census Bureau to “assist with the recruitment of the 1.4 million temporary workers needed to go door-to-door to count every person in the United States.”

    While the bureau currently has partnerships with more than 250 national organizations from the NAACP to TARGET, ACORN’s past allegations of fraud have raised the most concern.

    The organization – a non-partisan group of low-and moderate-income people – came under fire in 2007, when several paid employees were alleged to have created more than 1,700 fraudulent voter registrations. In 2008, another worker in Pennsylvania was sentenced for creating 29 phony registration forms.

    The census is used to “determine distribution of taxpayer money through grants and appropriations and the appointment of the 435 seats in the House of Representatives” and lawmakers do not want any fraudulent computing.

    Spokespeople for both ACORN and the Census Bureau have refuted any suggestion that “any group will fraudulently and unduly influence the results of the census.”

    Though doubts still remain, the bureau is now focusing on the more than 1 million applicants for 140,000 census taker positions, which is where assistance from organizations such as ACORN becomes needed.

    Government accountability is under attack – as it was during the Bush administration, so shall it be under Obama. Given ACORN’s past reputation, confidence in the census itself could come up for question.

  • Anger Could Make Us Stronger

    The notion of a populist outburst raises an archaic vision of soot-covered industrial workers waving placards. Yet populism is far from dead, and represents a force that could shape our political future in unpredictable ways.

    People have reasons to be mad, from declining real incomes to mythic levels of greed and excess among the financial elite. Confidence in political and economic institutions remains at low levels, as does belief in the future.

    The critical issue facing the new administration is finding useful ways to channel this disenchantment. We know popular anger can also be channeled in unproductive ways. It can serve to further a narrow political agenda – for example, Karl Rove’s cynical exploitation of the “culture wars” – or stir up a witch hunt against both real and perceived “threats,” as occurred during the McCarthy era. If this were Russia, there would be show trials and executions. We do not and should not do that – but we can still use populist anger to reshape our nation and make it stronger.

    In this respect, the Obama administration, criticized justifiably as too radical on some issues, has been far too timid. It has squandered much of the stimulus effort on maintaining fundamentally corrupt, even sociopathic, institutions like AIG or Citigroup. By taking direction from establishmentarians like Treasury Secretary Timothy Geithner, one of the original architects of the Bush financial bailouts, the current administration has seemed as complicit in condoning and even rewarding Wall Street’s transgressions as the last one.

    Populist rage creates the political support for taking far bolder steps against Wall Street. A good first step would be to allow the TARP-backed giant banks to come under some sort of federal control, or bankruptcy process, effectively wiping out the holdings of the financial malefactors and decimating any hopes for future bonuses. The public could then sell the remaining assets to the many well-run community and regional banks that invest in local businesses as opposed to the arcane paper favored by the Masters of the Universe.

    Radical financial reforms represent only part of the opportunity. China is using its stimulus to increase its competitiveness globally. So far, the Obama administration’s economic strategy, if it has one, has been selling the public on the chimera that highly subsidized “green jobs” and good intentions will save the economy. It has also rewarded what my old teacher Michael Harrington called “the social-industrial complex,” the massively growing education, health and social-service bureaucracy. President Obama needs to spend less time in photo ops at “green” factories and figure out how to drive the transformation of whole industries, like autos, steel, electronics and aerospace.

    In this sense, of course, the New Deal – particularly the Works Progress Administration and the Civilian Conservation Corps – provides some models. These programs used the unemployed to create new dams, electrical-transmission systems and bridges that boosted the nation’s productive power. Critically, such a program would target blue-collar workers – mostly male and heavily minority – hardest hit in the recession. As conservatives rightly note, the New Deal construction projects did not end the Depression, but they did give people purpose and skills as well as hope, while leaving us with a remarkable legacy of productive structures that inspire us with their affirmation of our national destiny.

    Sadly, the political operatives running the White House today may prefer to use the popular mood primarily to service their key political constituencies and boost their poll ratings. If they do so, they will have squandered a unique opportunity to implement changes that would benefit both the country and the middle class for decades to come. Public outrage is a terrible thing to waste.

    This article originally appeared at Newsweek.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Enough “Cowboy” Greenhouse Gas Reduction Policies

    The world has embarked upon a campaign to reduce greenhouse gas (GHG) emissions. This is a serious challenge that will require focused policies rooted in reality. Regrettably, the political process sometimes falls far short of that objective. This is particularly so in the states of California and Washington, where ideology has crowded out rational analysis and the adoption of what can only be seen as reckless “cowboy” policies.

    Last year, California enacted Senate Bill 375, which seeks to reduce future GHG emissions by encouraging higher urban population densities and forcing more development to be near transit stations. Yet there is no objective analysis to suggest that such an approach will work. Of course, there are the usual slogans about people giving up their cars for transit and walking to work, but this occurs only in the minds of the ideologues. The forecasting models have been unable to predict any substantial reduction in automobile use, and, more importantly, such policies have never produced such a result.

    In fact, higher densities are likely to worsen the quality of life in California, while doing little, if anything to reduce GHG emissions. California already has the densest urban areas (which includes core cities and surrounding suburbs) in the United States. The Los Angeles urban area is 30 percent more dense than the New York urban area. The San Francisco and San Jose urban areas are also denser than the New York urban area. Sacramento stands as the 10th most dense among the 38 urban areas over 1,000,000 population, while Riverside-San Bernardino ranks 12th and San Diego ranks 13th.

    This high density creates the worst traffic congestion in the nation. The slower stop and go operation of cars in traffic congestion materially intensifies local air pollution and increases health hazards. It also consumes more gasoline, which increases GHG emissions. Finally, California’s prescriptive land use regulations have destroyed housing affordability. By the early 1990s, land use regulation had driven prices up well beyond national levels relative to incomes, according to Dartmouth’s William Fischell. Over the next decade the rationing effect of California’s excessive land use restrictions tripled house prices relative to incomes, setting up the mortgage meltdown and all that has followed in its wake.

    The implementation of Senate Bill 375’s provisions seems likely to make things worse. California’s urban areas already have plenty of dense “luxury” housing, much of which is now empty or is now converted from condos to rentals. Wherever they are clustered, particularly outside traditional urban centers like San Francisco, such areas experience intense traffic congestion, with all the resultant negative impact on both people and the environment.

    Yet despite the problems seen in California, the ideological plague has spread to Washington state. Last year the Washington legislature enacted a measure (House Bill 2815) that requires reductions in driving per capita, for the purpose of GHG emission reduction. By 2050, driving per capita is supposed to be halved. This year there was a legislative proposal, House Bill 1490, that would have mandated planning for 50 housing units to the acre within one-half mile of light rail stations. This would have amounted to a density of nearly 50,000 per square mile, 3 times the city of San Francisco, 7 times the density of the city of Seattle and more than that of any of more than 700 census tracts (small districts) in the three-county Seattle area. Areas around stations would be two-thirds as dense as Hong Kong, the world’s most dense urban area.
    The density requirement has since been amended out of the bill, but the fact that it made it so far in the legislature indicates how far the density mania has gone. The bill appears unlikely to pass this year.

    Extending the density planning regime is not likely to help the people on the ground, much less reduce GHGs. Seattle already has a housing affordability problem, which is not surprising given its prescriptive planning policies (called growth management or smart growth). Theo Eicher of the University of Washington has documented the close connection between Seattle’s regulatory structures and its house price increases.

    As in California, Seattle house prices rose dramatically during the housing bubble, nearly doubling relative to incomes. At the same time, much of the debate on House Bill 1490 has been over affordable housing. Yet there has been virtually no recognition of connection between Seattle’s low level of housing affordability and its destructive land use regulations. House Bill 1490 would have only made things worse, and still could. Proponents have indicated that they have not given up.

    The theory behind House Bill 1490 parallels that of California’s SB 375. It assumes high densities would significantly reduce driving and attract people to transit. As in California, however, this is based upon wishful thinking, and has no basis in reality. No urban area in the developed world has produced a material decline in automobile use through such policies.

    Regrettably, the special interest groups behind the California and Washington initiatives appear more interested in forcing people to change their lifestyles than in reducing GHG emissions. This is demonstrated by the Washington driving reduction requirement.

    A good faith attempt to reduce GHG emissions from cars would have targeted GHG emissions from cars, not the use of cars. The issue is GHG emission reduction, not behavior modification, and the more the special interests target people’s behavior, the clearer it becomes how facetious they are about reducing GHG emissions.

    Technology offers the most promise. Already the technology is available to substantially reduce GHG emissions by cars, without requiring people to change their lifestyles. Hybrids currently being sold obtain nearly three times the miles per gallon of the average personal vehicle (cars, personal trucks and sport utility vehicles) fleet. And that is before the promising developments in decades to come in alternative fuels and improved vehicle technology. In addition, the rapid increase in people working at home – a number on track to pass that of transit users by 2015 – would also represent a clear way to reduce GHG emissions.

    Finally it is not certain that suburban housing produces higher GHG emissions per capita than high rise urban development. The only comprehensive research on the subject was conducted in Australia and found that, generally, when all GHG emissions are considered, suburban areas emitted less per capita than higher density areas. This is partially because dense urbanites tend to live a high consumption lifestyle, by eating out at restaurants serving exotic foods, having summer homes and extensive travel. It is also because high density living requires energy consumption that does not occur in lower density suburbs, such as electricity for elevators, common area lighting, and highly consumptive central air conditioning, heating, water heating and ventilation, as Energy Australia research indicates.

    Further, tomorrow’s housing will be more carbon friendly than today’s. Japan has already developed a prototype 2,150 square foot, single story suburban carbon neutral house.

    Much of the anti-suburban and anti-car sloganeering ignores these developments and generally assumes a static world. If the world were static, we would still be living in caves.

    The California and Washington initiatives were not based upon any comprehensive research. There were no reports estimating the tons of GHG emissions that were to be reduced. There was no cost analysis of how much each ton removed would cost. United Nations Intergovernmental Panel on Climate Change (IPCC) has said that the maximum amount necessary to accomplish deep reversal of GHG concentrations is between $20 and $50 per ton. Responsible policy making would have evaluated these issues. (It seems highly improbable that Seattle’s currently under-construction University light rail extension remotely matches this standard, with is capital and operating costs per annual patron of more than $10,000.)

    The price that society can afford to pay for GHG emission reduction is considerably less today than it was just six months ago. The history of the now departed communist world demonstrates that poorer societies simply do not place a high priority on environmental protection. That is not surprising, since people address their basic human needs before broader objectives, such as a better environment. That may not comport with the doctrines of political correctness, but it is reality.

    In such times, communities should be careful not to undertake policies based on assumptions or the preferences of those planners, architects and ideologues who seem to hold suburbs and personal mobility in such contempt that they would not be satisfied even if they emitted no GHGs. These radical motives are inappropriate. “Cowboy” policies enacted ad hoc at the bequest of ideologues openly disdainful of our basic lifestyles threaten not only the future prosperity of a society but our most reasonable path to long-term environmental improvement including reducing GHG emissions.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • The Chevy Chase Club: Real Estate And Racism

    A website that focuses on land use, and on urban and suburban design is a particularly appropriate forum in which to discuss country clubs – those large occupiers of choice real estate – and how the social structure of country club membership fosters, institutionalizes and perpetuates racial attitudes that are decades behind the attitudes reflected in all other elite American institutions.

    The racial bias pervading elite country clubs is back in the news today, as rumors grow that the country club set is angling to assert its power in the Republican party by dumping newly-elected RNC chief Michael Steele. Katon Dawson, the South Carolina Republican party leader, made a pro-forma “effort” (one letter in August 2008) to reform the racial bias of members of his own country club, which should fool no-one about whether he really cares enough about racial integration. Dawson is at the center of rumors reported in National Review On-line (which Dawson denies) that Steele may be dumped if Republicans fail in the March 31st special election to take the New York congressional seat vacated by Democrat Kirsten Gillibrand, appointed to fill Hillary Clinton’s US Senate seat.

    Fifty-five years after Brown v. Board of Education (1954), it seems that every private school, university, major law firm, and corporate board room in Washington, D.C., has made a genuine (though by no means complete) effort at racial integration. In our working lives, and our children’s school lives, we are more and more within an integrated environment that has moved beyond tokenism. So it is unsettling to set foot on the grounds of an elite country club, and enter a world that is as white as it would have been in the 1950s or, indeed, in the 1910s.

    I speak from experience. For four generations, my family have been members of the Chevy Chase Club, established in the late 1890s in Maryland just over the District line. As the club that sitting Chief Justice John Roberts chose to join (effective Sept. 2007), it has not only historical significance, it has current significance today, both in Washington, D.C. and in the nation as a whole.

    As described in The American Country Club, Its Origins and Development by James M. Mayo, the idea of the country club arose in connection with the development of the street-car systems that made possible the development of “street-car suburbs” in the late 1890s. Including a country club in connection with a housing development is a successful pattern that’s still used today to make new housing developments more attractive, by offering a center for golf and tennis, formal rooms in the clubhouse for wedding receptions and other gatherings, and restaurants for casual or formal dining.

    The problem arises because the suburbs, as conceived and developed in the 1890s, institutionalized racial segregation. At the time, successful efforts were underway — not just in the South, but in the North — to end the integrationist effects of Reconstruction and to enforce “Jim Crow.” The developer and first President of Chevy Chase Club was the noted virulently and openly racist U.S. Senator, Francis G. Newlands of Nevada, and there can be no doubt that Newlands, in choosing the others who would serve on the Board of his Club, chose only those who shared his racist prejudices.

    The initial Board was the body vested with the power to admit members: applicants who were “one of us”; people with whom the Board members socialized and knew well, and who no doubt shared these prejudices.

    Americans accustomed to the rapid pace of change in the US don’t realize the institutionalized resistance to change, extending over decades, that characterizes country clubs. Each one is a local “House of Lords” of heredity privilege and conservatism. Because membership in such a club is central to the sense of prestige and superiority that members cherish, once someone became a member, he (it was always “he” until a few decades ago when women were allowed to join in their own right) would never resign. Indeed, perpetuation of ancient attitudes is reinforced by policies in which persons who have been members for, say, 50 years, are released from the obligation to pay dues. Retired from their board rooms and law firms, for them, the club becomes their focus of attention, a place where they can preserve the kind of world they grew up in; a world where African-Americans exist to deliver drinks and meals to the tables.

    There was no need for bylaws to state a bar against African-Americans. Rules that required letters of support from a certain number of current members (today at Chevy Chase Club, 14 different members) to bring prospective new members forward provided a defacto exclusionary rule. The current members simply were not the sort of people who would ever get to know any African-Americans well enough to want to sponsor one.

    The racial attitudes of the older generation in power in the 1950s did not change when the Supreme Court said that the Constitution required integrated schools. Some of the private schools attended at that time by the children and grandchildren of members undertook efforts to integrate. St. Albans, in Washington D.C., my school (1973), which was also my father’s school (1950), admitted its first African-American student the same year as Brown; Sidwell Friends, my mother’s school (1952), did the same about a decade later.

    The leadership on racial matters was provided by the headmasters of these schools, who were education professionals and religious leaders who came from outside the clubby world of alumni-dominated boards, and who pushed their boards to integrate. It did not find a counterpart in the leadership of the clubs.

    By the early 1970s, when my own class at St. Albans was about 10% African-American, and when the president of the student body, Randall Kennedy (now a noted professor at the Harvard Law School) was African-American, the membership of the Club was still lily-white. It was impossible to know if there might be one or two African-American members. Certainly none of the photos in the club bulletins of the children who played in the tennis or golf tournaments included anyone other than whites.

    Almost 40 years later, nothing has really changed. And if left to themselves, these clubs will never change. The reactionary “House of Lords” mentality of the older generation filters out dissenters of the younger generations, and ensures that only those members of the new generation who accept the attitudes of the old rise to positions of power.

    The progressive integration of more and more institutions of society signals an increasingly great disconnect between the clubs and the rest of society. It tells our children that in school they are in an integrated environment, but when they cross the boundary line onto the grounds of a club, they enter a whites-only environment. For their parents to be members, and yet condone this, tells the next generation that we, their parents, feel a segregated environment is OK.

    For governments to permit golf courses that are, in effect, segregated plantations in the midst of fancy neighborhoods, sends an unacceptable signal to everyone who drives past these large reserved tracts of racially-exclusive land. When I see Tiger Woods take a swing on the course of one of these clubs, I wonder: Does he realize the symbolic sense of what he is doing?

    Country clubs such as Chevy Chase Club are institutions of exclusion and segregation whose time has passed. No longer do they serve as magnets to increase the value of newly-developed land. Instead, now they are obstacles to the integration of society as a whole. The leaders of these clubs, through their political donations and social positions, wield tremendous power in county and state politics. So meaningful change is unlikely to come about without federal action.

    There is little hope that these clubs can ever meaningfully reform themselves from within, without significant outside pressure. The larger community can and should take action. I propose an increase in real estate taxes commensurate with the value of the land if it were turned into de-segregated residential or commercial use. The Department of Housing and Urban Development should institute a program whereby it calculates the total taxes from real estate value, sales revenue, and other sources that a city or county would generate if a private club or golf-course were instead developed similarly to the land-use patterns around it, such as residential or retail use. The amount of various federal grants and subsidies to the relevant city, county, or state could then be reduced by that amount. Federal aid to local government could then be freed to aid neighborhoods that need it far more.

    And those communities that condone the continued operation of defacto segregated leisure plantations would have to face the financial implications of allowing prejudiced institutions to continue to operate as if still in the world of a racially-prejudiced past.

    Edward Sisson is a Washington, D.C., lawyer and cultural commentator.

  • Story of the Financial Crisis: Burnin’ Down the House with Good Intentions and Lots of Greed

    Last week, the Chairman of the Federal Reserve, Ben Bernanke, told Congress that he didn’t know what to do about the economy and the repeated need for bailouts. This week, the Oracle of Omaha Warren Buffett, Chairman of Berkshire-Hathaway told the press that he couldn’t understand the financial statements of the banks getting the bailout money.

    This made it a daunting challenge the other day, when the Program Director for the Bellevue (Nebraska) Kiwanis Club asked me to talk to his group about the current state of the economy. Despite the many often outrageous examples of excessive greed and even criminality, the current debacle began with good intentions: provide opportunities for homeownership to a segment of the population that was historically left out.

    New credit rating systems had to be developed to take into consideration the fact that some immigrant groups prefer to live in extended families (multiple generations in one household). The individual income of any one may not qualify for a loan, but they would all be paying the mortgage. Yet, their family patterns meant assets are only held by the male head of household. That’s just one example, and there are many more. It’s just that banks and others came to realize that the existing systems were excluding people who would actually be very good borrowers. The original “subprime” borrowers were like the original “junk bond” companies – they didn’t fit the mold of a model credit customer. But among them were MCI and Turner Broadcasting – plus Enron and Worldcom, of course.

    Like junk bonds, the new mortgage product came to be abused by borrowers and lenders alike. This was made worse by developments that blurred the line between banks and brokers. Both parties participated in actions that allowed banks to have their in-house brokers sell off their mortgage loans to Wall Street in the form of bonds. This is called “originate and distribute”. The same bank wrote the mortgages, packaged the loans for sale and distributed the bonds to their clients – collecting fees at every stage.

    And here’s where greed entered the picture. The demand for these bonds completely outstripped the supply: senior management put pressure on the troops to write more mortgages and sell more bonds. The fees were pouring in from everywhere. The demand was so great that an average of 40% of the trades failed for lack of delivery – broker-dealers were selling more bonds than were issued. Each bond trade, whether or not there was a failure to deliver, resulted in a commission for the buying and selling broker-dealers. They didn’t have to tell the buyers that there was no delivery – the broker-dealers figured they could fix it later. This was the initial breakdown in regulatory oversight.

    The next one came when no one was watching over the credit rating agencies. According to a story on PBS (originally aired November 21, 2008), managers at Standard & Poor’s credit rating agency were pressured to give the bonds triple-A ratings in the pursuit of ever higher fees. (We’ve yet to learn all the details of the potential collusion between banks, brokers, rating agencies, etc., but more news is coming out all the time – stay tuned!)

    Along the way, it became clear that these investments in mortgage bonds were, in fact, risky – despite their triple-A credit ratings. That’s where the credit default swaps came in – credit default swaps (or CDS) are simply contracts akin to insurance policies. The bond holder pays a small premium up-front and they get all their money back if the bond goes into default which could happen, for example, if the homeowner owing the mortgage in the mortgage bond ends up in foreclosure. This was another idea with good intentions – it made the bonds more popular and sent more money back to the bank for more mortgages.

    The way the theory on structured securities was developed, if a bank can sell the mortgages they can use that cash to write more mortgages and so support local communities that need to expand housing opportunities. It should also disperse the risk, spread it around, so that some economic problem in one town, like a factory closing, won’t cause the local bank to go out of business. Losses on local mortgages would be spread out geographically, spread out over a large number of investors and over different types of investors (individuals, companies, pension plans, etc.) so that no one of them should suffer all the damage.

    Greed enters the picture again: instead of the CDS derivatives being sold only to the people who owned the bonds and only in a quantity equal to the value of the bonds that were issued, an unlimited number of swaps were sold. This is as if you have a $1 million home and someone sold you $20 million worth of insurance. The temptation to burn down the house was just too much. What you see now is arson. They are burning down “the house” to collect on the insurance. Except if it were your typical insurance it would be regulated and you would have to have “an insurable interest” in hand to buy the policy at all. This insures that there would be no more derivatives issued than there are assets. No, these CDS derivative contracts are completely unregulated and unmonitored.

    Sadly there were no video surveillance cameras in place when Wall Street was spreading around the gasoline and striking the match. Yet now we are stuck watching the house – and the economy – burn down.

    Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Her training in finance and economics began with editing briefing documents for the Economic Research Department of the Federal Reserve Bank of San Francisco. She worked in operations at depository trust and clearing corporations in San Francisco and New York, including Depository Trust Company, a subsidiary of DTCC; formerly, she was a Senior Research Economist studying capital markets at the Milken Institute. Her PhD in economics is from New York University. In addition to teaching economics and finance at New York University and University of Southern California (Marshall School of Business), Trimbath is co-author of Beyond Junk Bonds: Expanding High Yield Markets.

  • Cash, Not Pretense: An Entrepreneur’s Guide to the Credit Crisis.

    Compared with most businessmen, 41-year-old Charlie Wilson has some reason to like the economic downturn. President of Salvex, a Houston-based salvage firm he founded in 2002, Wilson has seen huge growth in the bankruptcy business over the past year. It is keeping his 10-person staff, and his 55 agents around the world, busy.

    But the credit crunch still creates headaches for Wilson. With loans hard to secure, many would-be customers cannot bid on the merchandise in his inventory. “We are booming with more deals because people are defaulting,” Wilson notes, “but the buyers are gun-shy because they can’t get the money to pay.”

    So what do you do in these circumstances? Charlie Wilson is taking a back-to-basics approach. Rule No. 1: Stay away from people who rely on credit, not cash. This means private companies – including many outside the U.S. – are often better customers than larger, but now cash-strapped, public ones. “The further away I get from Wall Street, the better I feel,” Wilson says.

    Cheap is the new hip. Focus on cutting costs and streamlining operations. Don’t spend money on unnecessary employees or hard infrastructure; use the Internet wherever possible. It helps, Wilson says, to be located in an affordable building and in a place, like Houston, where taxes, regulatory costs and rents are generally cheap. “I work out of a Class C building,” he says, “and now everyone thinks it’s sexy.”

    Expand your range of customers. Look for new customers who have cash resources and access to markets that are still growing. This has led Wilson to look outside the U.S, to places like India or China, where many companies still have cash and see the current crisis as a great opportunity for bargain hunting.

    These three trends – the growing importance of cash, cost cutting and expanding one’s customer base – are defining entrepreneurial response to the credit crash. All three trends can be seen in the strategies of entrepreneurs who are focusing on burgeoning, often cash-oriented immigrant markets.

    Consider the success of La Gran Plaza, a massive Latino-themed shopping center on the outskirts of Ft. Worth, Texas. Not so long ago, La Gran Plaza was a failing suburban shopping center. Now it’s thriving, but only after being regeared to service the cash economy of the local Latino community. Similar success can be seen elsewhere in the country, even in Southern California, which has been hard-hit by the recession but where ethnic malls and supermarkets continue to thrive.

    Some urbanists, like scholar Richard Florida, maintain that the post-crash environment favors densely populated (and very expensive) cities like New York. But in fact, it may make more sense for entrepreneurs concerned with costs to work out of places like Houston, or even the Great Plains states, where local governments are more business-friendly. And everything, from housing to energy, tends to be less expensive.

    Indeed, over the past few recessions, the basic pattern has been that cities come into the downturns late and stay in them longer. In the last decade, many big cities have become very dependent on Wall Street and asset inflation. In 2006, for instance, financial services accounted for a remarkable 35% of all of New York City’s wages and salaries, compared with less than 20% 30 years earlier.

    So it seems likely that the credit crisis will hit pretty hard in those places most addicted to credit – places like New York, San Francisco and Chicago. This occurred early 1980s, the early 1990s and will occur again now. It might even be worse this time around. The federal takeover of the banks will mean lower salaries and bonuses, which will make such places less attractive to ambitious young people. If you are limited to $250,000 a year, it’s much easier to “get by” in Charlotte or Des Moines than it is in Manhattan.

    The biggest hope for New York, Los Angeles and other big cities lies with immigrants and the fact that lower property prices could keep some talented individuals from migrating elsewhere. But the one expensive big city really well-positioned for the credit crunch may be Washington, D.C., since it “creates” its own credit. As key financial decision making shifts to the capital, we can expect to see some financial-industry titans (and their retainers) spending more time in, or even moving to, the capitol. Washington, it’s time for your close-up.

    Beyond the beltway, the credit crunch will eventually benefit places with lower costs of living – including Houston. High rents, strong regulatory restraints and prestige spending make little sense in a cash-short environment. Now, fancy high-rise offices in elite areas are an albatross for even the strongest business.

    The remade economy may hold some much-needed good news for hard-hit sun-belt markets. Some places, like Phoenix, may be poised for a comeback. “Phoenix is paying for being overbuilt, but [lower] prices will attract people back,” explains local economist Elliot Pollack. “The fundamentals that drove the growth are still here with the return of lower costs – the ease of doing business, lower taxes and the attractiveness of the area.”

    But the real winners may be the people now leaving big companies to start new firms. Unburdened by bad habits developed in the bubble, they will be able to fit their business models in lean times. Many won’t mind being in an un-fancy building or neighborhood. Whether they are forming new banks, energy companies or design firms, they will need to do it more efficiently – with less overhead, smarter use of the Web and less pretension.

    “People are watching their companies go under. You get three vice-presidents who get laid off but know their business,” Wilson says. “They start a new company somewhere cheap that is more efficient and streamlined. These are the companies that will survive and grow the next economy.”

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.