New Geography

Tag: San Francisco

  • Building the Train to Nowhere

    The California High Speed Rail Authority has approved building its first 54 miles in the San Joaquin Valley. A somewhat longer route, 65 miles, has been indicated in a number of press reports, but Authority documents indicate that only 54 miles of high speed rail track will be built. The route would start in Corcoran, and go through Fresno to Borden, a small, unincorporated community south of Madera. All of this would cost $4.15 billion. The route would include two stations, in Fresno and Hanford/Visalia.

    The segment was adopted under pressure by the United States Department of Transportation, which was interested in ensuring that the line would be usable (have “independent utility”) by Amtrak should the high speed rail project be cancelled due to lack of funds. The first section of the California high speed rail line would instead be a somewhat incongruously high-tech Corcoran to Borden spur, or perhaps more accurately stub to the region’s rather sparse conventional rail services.

    There are appear to have been concerns that growing opposition movements in the San Francisco and Los Angeles areas could have delayed construction, which could have put the federal money at risk. The Sacramento Bee’s Dan Walters, perhaps the leading political columnist in the state implied an ulterior motive:

    “You’d have to be terminally naive not to believe that the splashy announcement, made personally by an Obama administration official in Fresno, was to help an embattled local congressman, Democrat Jim Costa, stave off a very stiff Republican challenge.”

    Officials representing communities – many of them with high levels of unemployment – on the segment itself were elated, as any would be at the prospect of a rush of new construction jobs, regardless of what was being built. But, most everywhere else the reaction to the selection largely has been negative. Walters labeled it the “train to nowhere” in a November 29 commentary. State Senator Alan Lowenthal, who chairs the legislative committee overseeing the high speed rail project said that the Authority “could be creating an ‘orphan’ stretch of track, that will never be used by high-speed trains.”

    Richard Tolmach, president of the California Rail Foundation, an intercity rail advocacy organization, told Authority members ” It’s a crazy idea. He went on to say that “You guys are gonna be a laughingstock in Congress.”

    Already, problems are building in the now more decidedly more conservative Congress. California Republican Congressman Jerry Lewis and 27 colleagues have introduced the “American Recovery and Reinvestment Rescission Act,” which would apply unspent stimulus money to the deficit, including $2 billion that has been promised to the California high speed rail line.

    Batteries (and Trains) Not Included: Even after the $4.15 billion has been spent, the Corcoran to Borden rail stub will be incomplete. The Authority’s plan includes only the building of the rail bed and the necessary viaducts. There is no money for trains. There is no money for the electrical infrastructure necessary to power the trains. Trains and electricity infrastructure would add at least 15 percent to the bill, based upon previous California High Speed Rail reports. Thus, when and if completed, the trains and electrification would lift the cost of the Corcoran to Borden high speed rail stub to at least $4.8 billion.

    Bare Bones Stations: The plan calls for building only “basic” stations, with two tracks (one in each direction). That is fine if the line is serving Amtrak and there are only a few trains per day. But the high speed rail plan assumes frequent trains, including some that stop at all stations, some express trains that skip some stations and some express trains running non-stop from the Transbay Terminal in San Francisco to Union Station in Los Angeles. The only place that an express train can pass a slower train is at a station. That means that passing tracks must be built at virtually all stations. The passing tracks (two interior tracks in addition to the two tracks for stopped trains) required in stations are illustrated in this California High Speed Rail illustration (also above).

    The full system, or (perhaps the more likely outcome) a truncated San Jose to Palmdale line (with slower running lines over the commuter rail tracks into San Francisco and Los Angeles), would require passing tracks at the Fresno and Hanford/Visalia stations. Rebuilding these stations would increase the cost above the $4.8 billion, and that’s before the seemingly inevitable cost escalation.

    Indeed, the Corcoran to Borden stub entails a potentially large cost increase compared to previous California High Speed Rail Authority documents. After making all of the necessary adjustments to update the last available segment costs to the cost accounting method (“year of expenditure” dollars), the cost of the Corcoran to Borden stub could be at least 30 percent higher than would have been expected in the present $43 billion San Francisco to Anaheim cost.

    Applied to the entire line, a 30 percent cost escalation could take the price of the San Francisco to Anaheim line to more than $55 billion. Based upon cost ratios released by the Authority in 2008, the later extensions to Sacramento and San Diego would lift the bill to more than staggering $80 billion. Even that does not pay the entire bill, because promises have been made in state legislation for improvements across Altamont pass from Stockton to the East Bay and Oakland.

    Not that coming up with any of this money will be easy, particularly with a more deficit conscious Congress. Congressman John Mica of Florida, who will likely lead the House of Representatives Transportation and Infrastructure Committee has promised a review of all federal high speed rail grants. The Authority expects to obtain funding from local governments in California, a number of which are teetering toward financial insolvency.

    The Authority expects between $10 and $12 billion from private investors. These potential investors will all be aware of the fact that virtually every dollar of private investment in new high-speed rail lines has been lost or required a government bailout. They will not participate without subsidies, which are prohibited by California law. Finally, all these elements of the financing plan will be made even more problematic if the first phase of the project continues to rise from $43 billion to $55 billion.

    Washington analyst C. Kenneth Orski noted that the Corcoran to Borden stub could “become a huge embarrassment for the Administration” and that by its train to nowhere ”casts doubt on the soundness of the entire federal high-speed rail program and its decision-making process.”

    Then, even if California gets to keep the federal money, there are still formidable financial barriers. A likely result is high speed rail in Amtrak mode which probably won’t make much difference to passengers riding the infrequent San Joaquin service. After the Authority action, Bill Bronte, who heads the rail division of the California Department of Transportation said that “The improvements in performance might be less than one would expect.” But that might not bother contractors and consultants who can feast on what might prove to be the most expensive conventional intercity train project in history.

    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”

  • California’s New Grassroots Movement: High-Speed Rail on the Peninsula

    In 2008, California voters approved Proposition 1A to allocate $9.95 billion of the state’s money to a high-speed rail system. Just two years later, many of these same voters are yelling and screaming at the High-Speed Rail Authority to revise their plans. Why have Californians turned against this project so quickly?

    Initially High Speed Rail seemed like a wise investment. The California High-Speed Rail Authority posts a video on its website of President Obama outlining the benefits of high-speed rail systems. However, by now this video seems a bit dated. In this April 2009 speech, Obama claims that not only would high-speed reduce travel time and emissions, but it would also decrease gridlock and save or create 150,000 jobs. It would be faster, cheaper, and easier. As if that were not enough to convince you, he goes on to say that the project is “on schedule and under budget.”

    Yet today, the California’s high-speed rail system has stalled. Citizens and state officials alike have lost faith in the rail authority to competently plan, fund, and build a rail line from San Francisco to Los Angeles. The project’s developers continue to scramble to secure funding.

    Not surprisingly, the cost of HSR in California has soared well above initial projections. Estimated costs for the first phase alone have risen from $30.7 billion in 2008 to $42.6 billion, adding over $10 billion to the original total of $45 billion. This is a problem. Though it received $9.95 billion in bonds through Proposition 1A, the California Rail Authority still must depend heavily on private business to foot a significant, and likely growing, portion of the bill. California treasurer Bill Lockyer has doubts that the rail authority will be able to sell the deal – due in part to a lack of consistent estimates in ridership or cost – to either potential bond-buyers or California consumers.

    Perhaps an even more serious problem has been caused by the hastiness with which California’s HSR is being developed. There often has been little consideration for local public opinion.

    A case in point lies on the Peninsula just south of San Francisco. The rail authority is hurrying to build on the Peninsula so that it can qualify for federal funding. But they have run into a flurry of complaints from city governments and citizens. Though it initially proposed building a trench system, essentially a shallow box for the train that would be covered at street crossings, it backed off on the idea in an August 6 application for federal monetary support. Instead, the Authority plans to run the line mainly on aerial structures to save money for later construction. “If the trench solution is selected,” it claims, “then less infrastructure could be implemented.” Since then it has switched to erecting aerial structures in Burlingame as well.

    Many cities along the Peninsula have rebelled over these abrupt adjustments. One of the primary arguments for high-speed rail has been to help the environment, but qualms about aerial structures are also rooted in environmental concerns. Menlo Park, Atherton, and later Palo Alto filed a lawsuit against the rail authority in 2008 in a partnership with four environmental groups, complaining that the authority did not conduct a thorough environmental review of the trench system before scrapping the idea. Judges in Sacramento are currently reviewing the authority’s plan to use the southern Pacheco Pass entrance from Merced, which the plaintiffs claim is less ecologically friendly. Decisions like these do not fit with California state environmental laws that require agencies to study several alternatives before approving a project.

    This lawsuit only made minor gains in addressing the cities’ complaints. While a Sacramento judge required the rail authority to make some concessions in the 2009 ruling, it sided with them on most of the issues, mainly because the state’s responsibility in this project remains unclear. However, recent developments over aerial structures have stimulated a tsunami of lawsuit threats. In one editorial, Martin Engel, a transportation commissioner for Menlo Park and opponent of California’s high-speed rail, rallies the Bay Area using a mob mentality: “Those towns that have refused to join the PCC out of fear of Atherton, Menlo Park and Palo Alto’s penchant for lawsuits, now have to re-assess their reluctance. Lawsuits are the only genuine legal negotiating tools at our disposal.”

    But, in reality, lawsuits are not the only weapons in the Peninsula’s arsenal. Democratic Assemblyman Jerry Hill of San Mateo has threatened to put high-speed rail back on the ballot if costs start to surpass initial estimates. This puts enormous pressure on the California Rail Authority since every day delayed means a rise in costs. If it does not secure the support of Peninsula cities soon, these extra expenses will push costs over the estimate and push the project back to the voters.

    San Mateo and Burlingame, though not involved in Atherton and Menlo Park’s original lawsuit, have just as much cause to complain. Almost one-third of the track crossings on the Peninsula would be in both cities. Building will certainly disrupt the businesses in the cities’ respective downtowns, many of which have flourished with locally owned boutiques and restaurants. Burlingame, “The City of Trees,” prides itself on the natural beauty of its neighborhoods. Cement walls carrying clamorous trains will undoubtedly disrupt this bucolic reality. If high-speed rail is put back on the ballot, it is likely that these cities will vote it down.

    Communities, not just city governments, are coming together to stop high-speed rail. The Community Coalition on High Speed Rail in Palo Alto, for example, is holding a presentation about the rail authority’s use of eminent domain in this project. The proposed elevated rail structure would displace residents, some permanently, and would lower the value of surrounding homes because of the elevated noise and traffic. The Coalition has been very active throughout the summer and will continue to fight for Peninsula residents.

    The already dire situation with Caltrain, the Peninsula’s current rail system, should provide a warning for city officials about the viability of high-speed rail. It has cut costs recently because of decreased ridership, which now averages 2,000 fewer riders per weekday compared to 2009, a 5% drop. Train stops have already been eliminated from Tamien in San Jose down to Gilroy. Caltrain’s experience has hardly shown the viability of expanded rail service.

    To some, high-speed rail epitomizes a new era of California infrastructure innovation. Yet a less sanguine reality is seeping in. Project costs continue to rise even as ridership estimates decline. The resulting increase in ticket prices creates even less of an incentive to choose rail over air travel. Even worse, the California Rail Authority is beginning to alienate potential riders from the Peninsula down to Los Angeles, many of whom could conceive of more useful ways to employ the state’s slender resources.

    Kirsten Moore is an undergraduate student at Chapman University and native of the Bay Area. She is a double major in history and screenwriting, focusing primarily on US social history.

    Photo of high speed rail station groundbreaking by mayorgavinnewsom

  • California’s Failed Statesmen

    The good news? Like most rock or movie stars, there’s nothing fundamentally wrong with California. It’s still talented, and retains great physical gifts. Our climate, fertility and location remain without parallel. The state remains pre-eminent in a host of critical fields from agriculture to technology, entertainment to Pacific Rim trade.

    California can come back only if it takes a 12-step program to jettison its delusions. This requires, perhaps more than anything, a return to adult supervision. Most legislators, in both parties, appear to be hacks, ideologues and time-servers. This time, when the danger is even greater, we see no such sense of urgency. Instead we have a government that reminds one more of the brutally childish anarchy of William Golding’s 1954 novel “Lord of the Flies.”

    Arnold Schwarzenegger has not turned out to be that supervision. Rather than the “post-partisan” leader hailed by the East Coast press, he has proven to be the political equivalent of the multi-personality Sybil. One day he’s a tough pro-business fiscal conservative; next he’s the Jolly Green Giant who seems determined to push the green agenda to a point of making California ever more uncompetitive.

    Contrast this pathetic performance with what happened after our last giant recession in the early 1990s. At that time, a bipartisan coalition of leaders – Speaker Willie Brown, State Senator John Vasconcellos and Governor Pete Wilson – worked together to address what was perceived as a deep economic crisis. They addressed some key problems and brought the state back from the brink. California recovered smartly between the mid-90s and the new millennium.

    Overall though, things are worse now. California has been flirting for the past year with its highest unemployment rate since the Great Depression. The last time we could blame the end of the Cold War for much of our economic distress; now the problem is a more broadly based, largely self-inflicted secular decline.

    A bloated government is part of the problem: Between 2003 and 2007, California state and local government spending grew 31 percent, even as the state’s population grew just 5 percent. The overall tax burden as a percentage of state income, once middling among the 50 states, has risen to the sixth-highest in the nation, says the Tax Foundation. Even worse, the state is getting ever less benefit from these revenues; since the Pat Brown era the percentage of budget spent on basic infrastructure has dropped from 20 to barely 5 percent.

    Although these taxes are often portrayed as “progressive,” California has continued to become more socially bifurcated. Our ranks of middle-wage earners are dropping faster than the national average even as the numbers of the affluent and poor swell. Overall California’s per capita income, roughly 20 percent above the national average in 1980, now barely stays with the national average. When housing and other costs are factored in, Los Angeles, San Francisco and Fresno rank among the top five major urban areas in America in terms of percentage of people in poverty, according researcher Deborah Reed of the Public Policy Institute of California. Only New York and Washington, D.C. do worse.

    At the root of these problems is an increasing lack of economic competitiveness. An analysis of the economy made for the Manhattan Institute shows California losing its edge in everything from migration, income, jobs and in entertainment industry employment. Tech companies may cluster in Silicon Valley but many are sending their new jobs abroad or to other sites. Recently, several leading Bay Area firms – Twitter, Adobe, eBay, Oracle and Adobe – have established major new operations in the Salt Lake area alone.

    So how do we turn it around? First, let’s find some adults, like former Speaker Robert Hertzberg or GOP financer Gerald Parsky, who know what it is to run a business and comprehend that the economy actually matters, and get them to head up a commission on the economy. Second, our leaders and policy elites must engage the emerging new business leadership of the state, which is increasingly immigrant, Asian and Latino.

    Right now neither party seems focused on the state’s future besides enriching their core constituencies. Lower taxes – the favored strategy of the right – on the already wealthy reflects an understandable desire to preserve one’s asset but is insufficient as a strategy.

    Democrats meanwhile seem determined to defend public sector pensions, Draconian labor, the high-speed rail boondoggle and environmental regulations, no matter what the cost to the economy.

    However contradictory their sound bites, the established parties are each following a script that would assure the next generation of Californians – largely Latino – remain an underclass that will have to move elsewhere to reach their aspirations. The left would do it by killing jobs in such fields as agriculture, manufacturing, construction and warehousing. As Robert Eyler, chairman of the economics department Sonoma State puts it, “the progressives have become the regressives.”

    For their part the GOP would kill the new California by starving it. They have no plan to bolster the basic services – like community colleges, roads, water and power systems – that will allow future working-class Californians to thrive.

    Their interests ignored by the parties, the immigrants and their offspring still represent the very key source of demographic energy and entrepreneurship that can revitalize the state. If you still want to see hopeful stirrings in California, go to places like Plaza Mexico in Lynwood or the new Irvine center recently built by the Diamond Development Group. Appealing to young families and distinct tastes, these retail facilities have thrived as the rest of the state’s overall retail economy has declined.

    More important still are the companies started by immigrant entrepreneurs like John Tu, CEO of Kingston Technology or scores of smaller Asian-owned firms in places like the San Gabriel Valley. Since the 1990s, newcomers have launched roughly one in four Silicon Valley startups.

    Add to this the muscle of the emerging Latino economy, led by food processing companies like the Cardenas Brothers, who now provide Costco with its frozen Mexican food.

    Due to their strong family and cultural ties in California, such ethnic firms appear less likely to move than more Anglo-dominated companies. But if the state keeps eroding public services and adding new regulations, these firms – like their counterparts in Silicon Valley and elsewhere – will place most of their new jobs as well in Utah, Texas or overseas.

    What we have here, in the end, is a massive disconnect between economics and politics. Does anyone in Sacramento talk to or even know about the largely Middle Eastern-led L.A. fashion industry? Is anyone talking to the hip sportswear mavens of Orange County’s own “Velcro valley”? Or what about agriculture, our traditional ace in the hole, which is largely disdained by the state’s intellectual and media class who see in large farms the work of the corporate devil?

    Somehow these productive voices – essential to our comeback – must be placed at the center of the debate. Sacramento’s leaders need to talk not just to lobbyists but to the key job-creators.

    These are the people who, even in hard times, are showing how we can grow an economy based on our natural advantages of climate, ethnic diversity, entrepreneurship and location.

    Ultimately we must make the creation of new jobs a priority that goes beyond formulaic mantras about lower taxes or illusory, state-supported “green jobs.” With a return to growth, California can still address its basic problems and challenges. But first we must corral the ideological hobbyhorses now running wild through Sacramento and make the needs of job-creators the central issue for our policy-makers.

    This article originally appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by Nate Mandos

  • San Francisco Considers the Country’s First Ban on Pet Sales

    Bay Area businesses beware, San Francisco is once again considering banning a common city commodity. This time it is not environmentalists, but city lawmakers who are howling for change. If San Francisco’s Commission of Animal Control and Welfare approves the proposed ordinance, it will be illegal to sell any pets in the city except for fish.

    Commission Chairwoman Sally Stephens, who seems to be the voice of pet sale opposition, claims that people buy small pets without thinking and end up giving them to shelters where they are euthanized. Those looking for an animal companion would have to buy one from a different city, adopt one from a shelter, or buy one through the classifieds. While this does make it that much harder to buy a pet on impulse, San Francisco residents would still be giving up their pets to shelters in the city. It also seems that many of the animals you would buy on impulse – guinea pigs, birds, and mice – do not typically go to shelters when they become difficult to manage or forgotten.

    Pet store owners around San Francisco are making a fuss as their major attractions are being threatened. Dogs can sell for a few hundred dollars or more at pet stores, and losing this income source would surely strike a blow to pet businesses. The Board of Supervisors has the final say, but pet lovers and owners around the city are piping up.

    As such a compact city, San Francisco seems to want to clear out any waste they set their sights on. Yesterday it was plastic bags, today it is animals. Who knows what San Francisco lawmakers will target next?

    Hat tip: Newsalert

  • Despite Transit’s 2008 Peak, Longer Term Market Trend is Down: A 25 Year Report on Transit Ridership

    In 2008, US transit posted its highest ridership since 1950, a development widely noted and celebrated in the media. Ridership had been increasing for about a decade, however, 2008 coincided with the highest gasoline prices in history, which gave transit a boost.

    Less reported was the fact that despite higher ridership, transit’s market share (of transit and motor vehicles) has fallen since the 1950s. In 1955, transit’s market share was over 10%. By 2005, transit’s share had dropped to 1.5%, but recovered only to 1.6% in 2008. Transit’s all time peak ridership was in 1945, driven up by World War II and gas rationing. It is thus not surprising that national transit ridership (boardings) declined 3.8% in 2009 as gasoline prices moderated.

    Market Share by Major Urban Area

    Demographia has released urban area roadway and transit market share estimates for 2008, based upon Federal Transit Administration and Federal Highway Administration data. The table below compares 2008 with 1983 market share data for 56 urban areas with a corresponding metropolitan area population of more than 900,000 (complete data).

    Urban Areas: Roadway & Transit Market Share: 2008
    Ranked by 2008 Transit Market Share
    With 25 Year (1983) Comparison
        2008 1983 Roadway Share % Change
    Rank Urban Area Roadway Share Transit Share:  Roadway Share Transit Share: 
    1 New York 89.0% 11.0% 87.7% 12.3% 1.5%
    2 San Francisco 95.0% 5.0% 93.7% 6.3% 1.4%
    3 Washington 95.5% 4.5% 96.1% 3.9% -0.6%
    4 Chicago 96.1% 3.9% 94.2% 5.8% 2.0%
    5 Honolulu 96.2% 3.8% 93.2% 6.8% 3.2%
    6 Boston 96.7% 3.3% 97.5% 2.5% -0.8%
    7 Seattle 97.2% 2.8% 97.6% 2.4% -0.4%
    8 Philadelphia 97.3% 2.7% 96.0% 4.0% 1.4%
    9 Portland 97.7% 2.3% 97.6% 2.4% 0.1%
    10 Salt Lake City 97.8% 2.2% 99.1% 0.9% -1.3%
    11 Los Angeles 98.1% 1.9% 98.1% 1.9% 0.0%
    12 Denver 98.2% 1.8% 98.5% 1.5% -0.3%
    13 Baltimore 98.3% 1.7% 97.7% 2.3% 0.6%
    14 Pittsburgh 98.6% 1.4% 97.3% 2.7% 1.3%
    15 Miami-West Palm Beach 98.7% 1.3% 98.8% 1.2% -0.1%
    16 Atlanta 98.8% 1.2% 98.0% 2.0% 0.8%
    16 Cleveland 98.8% 1.2% 98.0% 2.0% 0.8%
    16 Las Vegas 98.8% 1.2% 99.6% 0.4% -0.8%
    16 Minneapolis-St. Paul 98.8% 1.2% 98.8% 1.2% 0.0%
    16 San Diego 98.8% 1.2% 99.3% 0.7% -0.5%
    21 San Jose 99.0% 1.0% 99.0% 1.0% 0.0%
    22 Austin 99.1% 0.9% 99.7% 0.3% -0.6%
    22 Houston 99.1% 0.9% 99.0% 1.0% 0.1%
    22 Milwaukee 99.1% 0.9% 98.3% 1.7% 0.8%
    22 Sacramento 99.1% 0.9% 99.0% 1.0% 0.1%
    22 San Antonio 99.1% 0.9% 98.7% 1.3% 0.4%
    27 St. Louis 99.2% 0.8% 99.0% 1.0% 0.2%
    28 Buffalo 99.3% 0.7% 98.5% 1.5% 0.8%
    28 Providence 99.3% 0.7% 98.9% 1.1% 0.4%
    30 Charlotte 99.4% 0.6% 99.3% 0.7% 0.1%
    30 Cincinnati 99.4% 0.6% 98.7% 1.3% 0.7%
    30 Dallas-Fort Worth 99.4% 0.6% 99.4% 0.6% 0.0%
    30 Hartford 99.4% 0.6% 98.7% 1.3% 0.7%
    30 Orlando 99.4% 0.6% 99.7% 0.3% -0.3%
    30 Phoenix 99.4% 0.6% 99.4% 0.6% 0.0%
    30 Rochester 99.4% 0.6% 98.9% 1.1% 0.5%
    30 Tucson 99.4% 0.6% 98.9% 1.1% 0.5%
    38 Detroit 99.5% 0.5% 98.8% 1.2% 0.7%
    38 Fresno 99.5% 0.5% 99.3% 0.7% 0.2%
    38 New Orleans 99.5% 0.5% 97.4% 2.6% 2.2%
    38 Norfolk-Virginia Beach 99.5% 0.5% 99.2% 0.8% 0.3%
    38 Riverside-San Bernardino 99.5% 0.5% 99.6% 0.4% -0.1%
    43 Columbus 99.6% 0.4% 98.6% 1.4% 1.0%
    43 Louisville 99.6% 0.4% 98.9% 1.1% 0.7%
    43 Memphis 99.6% 0.4% 99.4% 0.6% 0.2%
    43 Tampa-St. Petersburg 99.6% 0.4% 99.5% 0.5% 0.1%
    47 Bridgeport 99.7% 0.3% 99.8% 0.2% -0.1%
    47 Jacksonville 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Kansas City 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Nashville 99.7% 0.3% 99.4% 0.6% 0.3%
    47 Raleigh 99.7% 0.3% 99.9% 0.1% -0.2%
    47 Richmond 99.7% 0.3% 99.1% 0.9% 0.6%
    53 Indianapolis 99.8% 0.2% 99.3% 0.7% 0.5%
    54 Birmingham 99.9% 0.1% 99.5% 0.5% 0.4%
    54 Oklahoma City 99.9% 0.1% 99.9% 0.1% 0.0%
    54 Tulsa 99.9% 0.1% 99.6% 0.4% 0.3%
    Unweighted Average 98.7% 1.3% 98.3% 1.7% 0.4%
    All Urban Areas Combined 98.4% 1.6% 97.5% 2.5% 0.9%
    Based upon passenger miles
    Core urban areas in metropolitan areas with more than 900,000 population in 2009.
    Derived from Federal Transit Administration and Federal Highway Administration data
    Los Angeles and Mission Viejo urban areas combined
    San Francisco, Concord and Livermore urban areas combined
    Historic transit market share data at http://www.publicpurpose.com/ut-usptshare45.pdf
    Maryland commuter rail (MARC) assigned to Washington, DC

    In 1983, transit systems started receiving support from federal taxes on gasoline. This was also the first year that the National Transit Database reported on the same annual basis as it does today. One justification for using funds from road users was the hope of attracting people from cars to transit. The national data above and the urban area below show that the overwhelming share of new travel has, nonetheless, continued to be captured by motor vehicles rather than transit. Among the 56 urban areas, 13 experienced gains in transit market share from 1983 to the peak year of 2008, while 37 posted losses and six had no change. Transit was able to capture only 0.9% of new urban travel between 1983 and 2008, while roadways captured 99.1%. (Note 1).

    The Top 10: Still a New York Story

    #1: New York: The nation’s predominant urban area remains New York, with an 11.0% transit market share. In 2008, 41% of the national transit ridership (passenger miles) was in New York, with much of it either in or focused upon New York City. The New York City Transit Authority, and a host of local public and private systems, principally serve New York City destinations and account for a remarkable 38% of the nation’s transit ridership. Even so, transit’s market share dropped from 12.3% in 1983. As a result, the roadway market share in New York increased 1.5% between 1983 and 2008, the fourth largest gain in the nation. Transit attracted 8.7% of the new demand between 1983 and 2008, while roadways attracted 91.3%.

    #2: San Francisco: San Francisco had the nation’s second highest transit market share in 2008, at 5.0%. This is a decline from 6.3% in 1983. Nonetheless, San Francisco moved up from 6th place in 1983. This produced a 1.4% increase in the roadway market share between 1983 and 2008, the fifth largest gain in the nation. Transit accounted for 2.2% of the new demand, while roadways attracted 97.8%.

    #3: Washington: Washington placed third in transit market share in 2008, at 4.5%. This represents a gain from 3.9% in 1983 and an improvement from 6th place. Washington was the only urban area among the top five to experience an increase in transit market share. Much of Washington’s transit increase was on its expanding Metrorail system and the MARC commuter rail system (most of the ridership on this Maryland based system commutes to Washington. Overall, transit in Washington has attracted 5.1% of new travel over the past 25 years, while roadways attracted 94.9% of new demand.

    #4: Chicago: Chicago ranked fourth in transit market share, at 3.9%. In 1983, Chicago had ranked 3rd, with a market share of 5.8. The roadway market share in Chicago increased 2.0% from 1983 to 2008, the third largest road travel gain in the nation. Transit attracted 1.3% of new demand over the period in Chicago, while roadways attracted 98.7%.

    #5: Honolulu: Honolulu ranked fifth in transit market share, at 3.8%. This is a significant drop from 1983, when Honolulu ranked 2nd in the nation, with a transit market share of 6.8%. Honolulu’s roadway market share gain was the largest in the nation between 1983 and 2005, at 3.8%. Transit ridership also dropped in Honolulu from 1983 to 2008, so that roadways accounted for all new travel.

    #6: Boston: Boston ranked sixth in transit market share in 2008, at 3.3%. This is a gain from 2.5% in 1983, when Boston ranked 9th. Much of Boston’s increase is attributable to its commuter rail expansion. Transit captured 4.1% of new demand, while roadways attracted 95.9%.

    #7: Seattle: Seattle’s principally all bus transit system ranked 7th in 2008 with a market share of 2.8%. This is an increase from 2.4% in 1983, when Seattle ranked 10th. Transit captured 3.1% of new travel over the past 25 years, while roadways accounted for 96.9%.

    #8: Philadelphia: Philadelphia slipped from the 5th largest transit market share in 1983 (4.0%) to 8th in 2008, at 2.7%. Philadelphia’s transit system, one of the most comprehensive in the nation, captured just 1.4% of new travel over the last quarter century, while roadways captured 98.6%.

    #9: Portland: Portland ranked 9th in transit market share in 2008, at 2.3%. This is a decline from 2.4% in 1983 and occurred despite opening the most extensive new light rail system in the nation over the period. Transit attracted 2.2% of new travel over the period, while roadways attracted 97.8%.

    #10: Salt Lake City: Salt Lake City, at 10th, is a new entrant to the top 10 transit market share urban areas, with a share of 2.2%. In 1983, Salt Lake City ranked 34th, with a transit market share of 0.9%. Even with this increase, however, roadways captured the bulk of new travel, at 96.2%, while transit attracted 3.8%, due to transit’s small 1983 base.

    Other Urban Areas: There were also notable developments among the urban areas that did not place in the top 10 in 2008 transit market share.

    Las Vegas: Las Vegas improved its ranking more than any other urban area, moving from 49th in 1983 to 16th in 2008 (in a tie with Atlanta, San Diego, Cleveland and Minneapolis-St. Paul). In 1983, Las Vegas had a transit market share of 0.4%, which improved to 1.2% in 2008. This was an especially notable achievement, because Las Vegas experienced substantial population growth over the period. During the period, Las Vegas established a 100% competitively contracted transit system, the only such transit system in the nation and has seen ridership expand by more than 10 times. Nonetheless, as in other gaining urban areas, such as Salt Lake City and Washington, the transit ridership base was so small that roadways captured nearly all the new demand, at 98.6% (transit obtained 1.4%).

    Atlanta: Atlanta both (1) was the fastest growing larger urban area in the developed world between 1983 and 2008 and (2) built the second most new rail capacity in the nation, in its expansion of the MARTA Metro (trailing only Washington’s Metro). Yet, Atlanta’s transit market share fell from 2.0% to 1.2% between 1983 and 2008, with transit attracting only 0.9% of new travel.

    New Rail Urban Areas: Transit market shares generally failed to increase in urban areas opening new light rail or metro systems over the period (excludes urban areas with new rail systems that were not open at the beginning of fiscal year 2008).

    • Six urban areas with new rail systems experienced market share declines, including Portland, Baltimore, Houston, Sacramento, St. Louis and Buffalo.
    • Four urban areas with new rail systems had static transit market shares, including Los Angeles, Minneapolis-St. Paul, San Jose and Dallas-Fort Worth.
    • Three urban areas with new rail systems experienced transit market share increases. The largest increase was in Salt Lake City (and the largest of any urban area). Denver and Miami-West Palm Beach also experienced increases.

    Where from Here? It might have been expected that transit would have attracted far higher ridership numbers when gasoline prices achieved such heights. Yet, nationally, transit market share increase was only from 1.5% to 1.6%, even as roadway demand was declining modestly.

    Transit’s principal marketing problem lies in its problem serving destinations outside downtown. Downtowns typically account for only 10% of urban area employment. Some trips in an urban cannot even be made on transit. For example, Portland’s extensive transit system connects only about two-thirds of the jobs and residences within the (Tri-Met) service area (Note 2). Further Tri-Met’s award deserving internet trip planner shows that some trips to outside downtown destinations can require more than two hours, even when light rail is used.

    Note 1: This data relates only to passenger transportation. Urban roadways, unlike transit, also carry a substantial amount of local and intercity freight, which is not reflected in this data.

    Note 2: According to Metro’s 2004 Regional Transportation Plan, 78% of the residences and 86% of the jobs in the Tri-Met service area were within walking distance (1/4 mile) of a transit stop. This means that approximately 67% of residences and jobs are within 1/4 mile of a transit stop (0.78 * 0.86). Metro’s plans envision this figure dropping to 59% by 2020 (this data does not include Clark County in Washington, part of which is in the urban area).

    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.”

  • Time to Dismantle the American Dream?

    For some time, theorists have been suggesting that it is time to redefine the American Dream of home ownership. Households, we are told, should live in smaller houses, in more crowded neighborhoods and more should rent. This thinking has been heightened by the mortgage crisis in some parts of the country, particularly in areas where prices rose most extravagantly in the past decade. And to be sure, many of the irrational attempts – many of them government sponsored – to expand ownership to those not financially prepared to bear the costs need to curbed.

    But now the anti-homeowner interests have expanded beyond reigning in dodgy practices and expanded into an argument essentially against the very idea of widespread dispersion of property ownership. Social theorist Richard Florida recently took on this argument, in a Wall Street Journal article entitled “Home Ownership is Overvalued.”

    In particular, he notes that:

    The cities and regions with the lowest levels of homeownership—in the range of 55% to 60% like L.A., N.Y., San Francisco and Boulder—had healthier economies and higher incomes. They also had more highly skilled and professional work forces, more high-tech industry, and according to Gallup surveys, higher levels of happiness and well-being. (Note)

    Florida expresses concern that today’s economy requires a more mobile work force and is worried that people may be unable to sell their houses to move to where jobs can be found. Those who would reduce home ownership to ensure mobility need lose little sleep.

    The Relationship Between Household Incomes and House Prices

    It is true, as Florida indicates, that house prices are generally higher where household incomes are higher. But, all things being equal, there are limits to that relationship, as a comparison of median house prices to median house prices (the Median Multiple) indicates. From 1950 to 1970 the Median Multiple averaged three times median household incomes in the nation’s largest metropolitan areas. In the 1950, 1960 and 1970 censuses, the most unaffordable major metropolitan areas reached no higher than a multiple of 3.6 (Figure).

    This changed, however, in some areas after 1970, spurred by higher Median Multiples occuring in California.

    William Fischel of Dartmouth has shown how the implementation of land use controls in California metropolitan areas coincided with the rise of house prices beyond historic national levels. The more restrictive land use regulations rationed land for development, placed substantial fees on new housing, lengthened the time required for project approval and made the approval process more expensive. At the same time, smaller developers and house builders were forced out of the market. All of these factors (generally associated with “smart growth”) propelled housing costs higher in California and in the areas that subsequently adopted more restrictive regulations (see summary of economic research).

    During the bubble years, house prices rose far more strongly in the more highly regulated metropolitan areas than in those with more traditional land use regulation. Ironically many of the more regulated regions experienced both slower job and income growth compared to more liberally regulated areas, notably in the Midwest, the southeast, and Texas.

    Home Ownership and Metropolitan Economies

    The major metropolitan areas Florida uses to demonstrate a relationship between higher house prices and “healthier economies” are, in fact, reflective of the opposite. Between August 2001 and August 2008 (chosen as the last month before 911 and the last month before the Lehman Brothers collapse), Bureau of Labor Statistics data indicates that in the New York and Los Angeles metropolitan areas, the net job creation rate trailed the national average by one percent. The San Francisco area did even worse, trailing the national net job creation rate by 6 percent, and losing jobs faster than Rust Belt Pittsburgh, St. Louis, and Milwaukee.

    Further, pre-housing bubble Bureau of Economic Analysis data from the 1990s suggests little or no relationship between stronger economies and housing affordability as measured by net job creation. The bottom 10 out of the 50 largest metropolitan areas had slightly less than average home ownership (this bottom 10 included “healthy” New York and Los Angeles). The highest growth 10 had slightly above average home ownership (measured by net job creation). Incidentally, “healthy” San Francisco also experienced below average net job creation, ranking in the fourth 10.

    Moreover, housing affordability varied little across the categories of economic growth (Table).

    Net Job Creation, Housing Affordability & Home Ownership
    Pre-Housing Bubble Decade: Top 50 Metropolitan Areas (2000)
    Net Job Creation: 1990-2000 Housing Affordability: Median Multiple (2000) Home Ownership: Rate 2000
    Lowest Growth 10  7.4%                                2.8 62%
    Lower Growth 10 14.9%                                3.1 63%
    Middle 10 22.8%                                3.2 64%
    Higher Growth 10 30.9%                                2.6 61%
    Highest Growth 10 46.9%                                2.9 63%
    Average 24.7%                                2.9 62%
    Calculated from Bureau of the Census, Bureau of Economic Analysis and Harvard Joint Housing Center data.
    Metropolitan areas as defined in 2003
    Home ownership from urbanized areas within the metropolitan areas.

    Home Ownership and Happiness

    If Gallup Polls on happiness were reliable, it would be expected that the metropolitan areas with happier people would be attracting people from elsewhere. In fact, people are fleeing with a vengeance. During this decade alone, approximately one in every 10 residents have left for other areas.

    • The New York metropolitan area lost nearly 2,000,000 domestic migrants (people who moved out of the metropolitan area to other parts of the nation). This is nearly as many people as live in the city of Paris.
    • The Los Angeles metropolitan area has lost a net 1.35 million domestic migrants. This is more people than live in the city of Dallas.
    • The San Francisco metropolitan area lost 350,000 domestic migrants. Overall, the Bay Area (including San Jose) lost 650,000, more people than live in the cities of Portland or Seattle.

    Why have all of these happy people left these “healthy economies?” One reason may be that so many middle income people find home ownership unattainable is due to the house prices that rose so much during the bubble and still remain well above the historic Median Multiple. People have been moving away from the more costly metropolitan areas. Between 2000 and 2007:

    • 2.6 million net domestic migrants left the major metropolitan areas (over 1,000,000 population) with higher housing costs (Median Multiple over 4.0).
    • 1.1 net domestic migrants moved to the major metropolitan areas with lower house prices (Median Multiple of 4.0 or below).
    • 1.6 million domestic migrants moved to small metropolitan areas and non-metropolitan areas (where house prices are generally lower).

    An Immobile Society?

    Florida’s perceived immobility of metropolitan residents is curious. Home ownership was not a material barrier to moving when tens of millions of households moved from the Frost Belt to the Sun Belt in the last half of the 20th century. During the 2000s, as shown above, millions of people moved to more affordable areas, at least in part to afford their own homes.

    Under normal circumstances (which will return), virtually any well-kept house can be sold in a reasonable period of time. More than 750,000 realtors stand ready to assist in that regard.

    Of course, one of the enduring legacies of the bubble is that many households owe more on their houses than they are worth (“under water”). This situation, fully the result of “drunken sailor” lending policies, is most severe in the overly regulated housing markets in which prices were driven up the most. Federal Reserve Bank of New York research indicates that the extent of home owners “under water” is far greater in the metropolitan markets that are more highly restricted (such as San Diego and Miami) and is generally modest where there is more traditional regulation, such as Charlotte and Dallas (the exception is Detroit, caught up in a virtual local recession, and where housing prices never rose above historic norms, even in the height of the housing bubble). Doubtless many of these home owners will find it difficult to move to other areas and buy homes, especially where excessive land use regulations drove prices to astronomical levels.

    Restoring the Dream

    There is no need to convince people that they should settle for less in the future, or that the American Dream should be redefined downward. Housing affordability has remained generally within historic norms in places that still welcome growth and foster aspiration, like Atlanta, Dallas-Fort Worth, Houston, Indianapolis, Kansas City, Columbus and elsewhere for the last 60 years, including every year of the housing bubble. Rather than taking away the dream, it would be more appropriate to roll back the regulations that are diluting the purchasing power and which promise a less livable and less affluent future for altogether too many households.

    —

    Note. Among these examples, New York is the largest metropolitan area in the nation. Los Angeles ranks number 2 and San Francisco ranks number 13. The inclusion of Boulder, ranked 151st in 2009 seems a bit curious, not only because of its small size, but also because its advantage of being home to the main campus of the University of Colorado. Smaller metropolitan areas that host their principal state university campuses (such as Boulder, Eugene, Madison or Champaign-Urbana) will generally do well economically.

    Photograph: New house currently priced at $138,990 in suburban Indianapolis (4 bedroom, 2,760 square feet). From http://www.newhomesource.com/homedetail/market-112/planid-823343

    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 Myth of the Strong Center

    At the height of the foreclosure crisis the problems experienced by some so-called “sprawl” markets, like Phoenix and San-Bernardino-Riverside, led some observers to see the largest price declines as largely confined to outer ring suburbs. Some analysts who had long been predicting (even hoping for) the demise of the suburbs skipped right over analysis to concoct theories not supported by the data. The mythology was further enhanced by the notion – never proved – that high gas prices were forcing home buyers closer to the urban core.

    Yet a summary of the trends over the past 18 months show only minor disparities between geographies within leading urban regions. Overall house prices escalated similarly in virtually all areas within the same metropolitan areas and the price drops appear to have also been similar. This is in contrast to a theory that suggests that huge price drops occurred in the outer suburbs while central city prices held up well.

    Summary of 18 Month Subarea Price Declines: This is indicated by a review of 8 metropolitan areas: Los Angeles, the San Francisco Bay Area, San Diego, Sacramento, Atlanta, Chicago, Portland and Seattle (see end note), for which subarea data is readily available (see table). On average, central area median house prices (all houses, including condominiums), fell 3% in relation to the overall metropolitan area average. Inner suburban areas experienced a 3% gain relative to metropolitan area prices, while outer suburban areas changed at the metropolitan area average. In actual price reduction terms, core areas declined 28.8%, inner suburban areas declined 25.7%, and outer suburban areas declined 27.1%. The overall average metropolitan area decline was 27.2%. There was, however, considerable variation in the figures by metropolitan area (see figure below).

    MEDIAN HOUSE PRICE CHANGES BY GEOGRAPHICAL SECTOR
    8 Metroplitan Areas
    CALIFORNIA MARKETS Central Inner Suburbs Outer Suburbs Overall
    Los Angeles -45.3% -30.0% -41.5% -37.1%
    San Francisco Bay -38.0% -39.1% -38.6% -38.6%
    San Diego -36.5% -37.4% -37.0% -36.9%
    Sacramento -53.6% -36.3% -37.5% -44.0%
    OTHER MARKETS
    Atlanta -11.6% -17.0% -15.8% -15.8%
    Chicago -21.0% -16.3% -17.5% -17.8%
    Portland -10.0% -14.5% -15.7% -13.5%
    Seattle -14.2% -14.7% -13.2% -13.7%
    AVERAGE -28.8% -25.7% -27.1% -27.2%
    Estimated from Data Quick information
    California Markets: July 2008 to January 2010
    Other Markets: 2008-2nd Quarter to 2009-4th Quarter

    Where Central Area Losses were Greatest: Over the past 18 months, central areas posted the largest losses in three of the areas. Further, in each of these areas, the smallest price drops were experienced in the inner suburbs.

    • Sacramento had the steepest central area relative price decline. Central area prices declined 37% relative to inner suburban prices, where the smallest losses occurred. The central area price loss averaged 53.6%, compared to the overall metropolitan area loss of 44.0%. The inner suburbs experienced the smallest loss, at 36.3%.
    • Los Angeles also had a steep central area relative price decline. Central area prices declined 45.3%, compared to the overall metropolitan area loss of 37.1%. The inner suburbs experienced the smallest loss, at 30.0% while outer suburbs lost 41.5%.
    • Chicago’s greatest losses also occurred in the central area, but were of a much smaller magnitude. Central area prices declined 21.0%, compared to the overall metropolitan area loss of 17.8%. The inner suburbs experienced the smallest loss, at 16.3%. The outer suburbs lost 17.5%.

    Where Suburban Losses were the Greatest: In two areas, the central area price losses were the least, Atlanta and Portland. Yet, the magnitude of these losses was modest. It is interesting to note that the metropolitan areas with the smallest relative losses in the central areas pursued radically different policies with respect to development. Portland’s “smart growth” policies favor central development at the expense of suburban development, while Atlanta’s more liberal policies do not attempt to steer development to the core.

    • Atlanta’s greatest price declines occurred in the inner suburbs, which experienced a loss of 17.0%, slightly more than that of the outer suburbs (15.8%). In comparison, the central area price drop was the least, at 11.6%, The metropolitan area loss was 15.8%.
    • Portland’s greatest price declines occurred in the outer suburbs which experienced a 15.7% loss, compared to the inner suburbs, at 14.5. The lowest decline was in the central area at 10.0%. The metropolitan area loss was 13.5%.

    Little Difference in Some Markets: There was little difference in the price declines among geographic sectors in three of the metropolitan areas. In the San Francisco Bay area, San Diego and Seattle, the differences between central, inner suburban and outer suburban price declines were all within a 2% range.

    Core Condominium Market Crisis

    However, core area markets where condominiums predominate indicate substantial difficulties in some of the metropolitan areas. These markets are generally only a small part of central cities, principally around downtown areas or major centers. For example, in the Portland area, the core condominium areas ring the downtown area and include the Pearl District and the South Waterfront District. The central area, which encompasses the entire city of Portland, however, is much larger and has a much larger share of detached housing.

    Demand has been so weak in the core condominium markets that substantial price reductions have occurred and a number of buildings have been forced to sell units at auction. Other buildings have given up altogether on selling and have rented condominiums. Some of the price drops, especially in Atlanta, Portland and Seattle are far greater than occurred overall in the respective metropolitan markets. The condominium implosion has not received nearly the level of attention in the national or local media that was accorded the housing bubble and collapse itself.

    Portland: A local television station video indicates that Portland’s condominium market is in crisis. A report in The Oregonian indicates that the downtown area has a “glut” of condominiums and that February sales prices averaged 30% below list. A luxury new 15-story building in the Pearl District (The Wyatt) is now being leased instead. Units at The Atwater in the South Waterfront district were auctioned, with minimum bid prices more than 50% lower than list. The John Ross, also in the South Waterfront District, is Portland’s largest condominium project and will be auctioning its units. Minimum bid prices average 70% below the previous top list prices. The smallest units have a minimum bid price of $110,000. By comparison, over the past year, the median house price in the Portland metropolitan area has dropped approximately 10%.

    Atlanta: Atlanta has a “vast oversupply” of condominiums. The uptown (including Atlantic Station) and Buckhead markets of Atlanta appear to be experiencing some of the worst market conditions in the nation. The prestigious Mansion on Peachtree, a combination hotel and condominium development, was unable to sell 75% of its residences and was recently sold in foreclosure at approximately $0.30 on the dollar. The winning auction bids at The Aqua condominium in Uptown averaged 50% below the last asking price. In Atlantic Station, units at The Element were auctioned at substantial discounts. Among conventional sales, condominium price reductions of up to 40% have been reported. One building has offered discounts of $100,000 per bedroom. Some new buildings have been converted to rentals, while planned projects have been placed upon hold.

    Seattle: Things are little better in Seattle. The overbuilt downtown area condominium market has experienced a median price decline of 35% over the past year. Units at The Gallery in tony Belltown were auctioned off at minimum prices 50% below the last list prices (which had already been discounted). Units at The Brix, on Capitol Hill, attracted bids at auction averaging 30% below previous list prices. Later this month, unsold units at 5th & Madison will be auctioned, at minimum prices below 50% of previous list. For comparison, median house prices in the Seattle metropolitan area declined 6% over the past year.

    Chicago: The downtown area of Chicago has been among the most vibrant condominium markets for more than a decade. However, in 2009, condominium sales fell to the lowest level since 1997. At current sales rates, the downtown area has a supply of more than five years, with annual sales of less than 600 and more than 3,000 units available or under construction.

    Los Angeles: Few markets have seen as many condominium buildings planned as downtown Los Angeles, and few have seen so many put on hold. A recent issue of the Los Angeles Downtown News lists approximately 50 downtown condominium projects. More than three-quarters of the projects have been scaled back, have had construction slowed or are on “hold.” The market has been so weak that a number of developers have taken losses by auctioning condominium units that they have not been able to sell conventionally.

    San Diego: The downtown San Diego condominium is substantially overbuilt. Developers have leased units that were to have been sold and there is virtually no construction of new units.

    Rental Conversions: Even these grim reports, however, may mask an even bigger problem. It is estimated that more than 20,000 condominiums units are completed or nearly completed, but are not listed for sale in Miami. In what is by far the nation’s strongest condominium market, Manhattan, more than 6,000 condominium units are completed or nearly completed, but not listed for sale.

    In core cities, few issues have been as divisive as the conversion of rental units to condominiums. But, now the opposite is now occurring – condominiums are being converted into apartments for rent: This is trend that undermines markets in a way that cannot be measured by median prices, since it replaces generally high-paying condo owners for generally less flush renters. This puts those who bought at higher prices in these markets at a particular disadvantage.

    Conclusion: Overall, contrary to the mythology developed early in the bubble, suburbs and even exurbs have generally performed about as well as closer in markets. The big imponderable will be the future of the core condominium market, which is experiencing significant financial reverses largely ignored by the national media.

    Note: As used in this article, the Los Angeles metropolitan area is the Los Angeles-Riverside Combined Statistical Area, the San Francisco area is the San Francisco-San Jose Combined Statistical Area and all other metropolitan areas are the corresponding metropolitan statistical areas. http://demographia.com/db-prdistr2010.pdf>Subareas defined.

    Photograph: Condominium construction, Atlanta, weekend of the Lehman Brothers collapse.

    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.”

  • Transit Oriented Development: If Not San Francisco, Where?

    “The Great Transit Oriented Development Swindle?” reads the headline in the Fog City Journal, one of the growing number of internet newspapers providing serious, professional web-based journalism as an alternative to declining print newspapers (and their often less than effective web sites).

    The article does not directly answer the question in the headline, but certainly provides enough ammunition to what has become a commonly accepted mantra among planners and urban boosters. It reveals how transit oriented development (TOD) is often based upon fragile foundations that amount to an ideological swindle. It is important to recognize that the Fog City Journal is no right wing or libertarian organ. There is little market for that in the city of San Francisco. The leftish bent of the Fog City Journal, combined with author Marc Salomon’s unusually incisive (and footnoted) analysis makes this article noteworthy. It also seems clear that the author is a proponent of more transit service and funding, not less – even though he is highly skeptical about the current TOD craze.

    Transit Oriented Development: The idea behind transit oriented development is that, in new, higher density developments, people use transit more and cars less. Transit oriented development has become a first principle of some, who seem to believe that cities can become vibrant in part by strangling new suburbs out of existence. Transit oriented development is at the very heart of the Obama Administration’s “livability agenda,” and is frequently cited admiringly by Secretary of Transportation Ray LaHood.

    Eastern Neighborhoods: Salomon’s subject is San Francisco’s Eastern Neighborhoods, where transit oriented development is proposed. From the beginning Salomon identifies a fundamental problem: “Transit Oriented Development is predicated upon the notion that existing transit infrastructure is attractive enough such that residents of new units will take transit to work instead of drive. He continues: “The existing transit system, both regional and local, is not capable of handling existing demand.”

    Salomon correctly notes that “San Francisco is not the regional employment center.” In fact, nearly 90% of employment in the San Francisco-San Jose area is not in downtown San Francisco. Indeed, Silicon Valley, not downtown San Francisco, has long been the largest employment center in the area and there are also major job concentrations in the suburban belt east of Oakland.

    No Better Place for Transit Oriented Development: Yet, there are few places in the world better served by transit than the Eastern Neighborhood transit oriented development. The project is no more than a long walk from downtown San Francisco (Figure 1). Residents will be able to access frequent “Muni” bus services. The development would be well served by BART (the regional metro), midway between two stations, both of which access four routes. There are few places in the world where a non-transfer station serves that many routes. Salomon analyzes transit from the center of the development, the corner of Mission and 20th Streets.

    Transit Oriented Development: Forcing Longer Commutes: Salomon’s concern starts with the recognition that these systems are already overcrowded. However there is more. Even with their heavy (and highly subsidized) loads, the virtually unparalleled level of transit service available from Mission and 20th cannot compete with the automobile. Salomon’s analysis shows that, on average, transit oriented development residents working at jobs at the 30 largest firms in the San Francisco Bay area would spend nearly 3.5 as much time traveling to work by transit than if they drove themselves. The best transit travel time would be more than double the auto travel time, while the worst would near five times (Figure 2).

    Transit Oriented Development: Making Traffic Congestion Worse: Mirroring the research on the association between higher densities and greater traffic congestion, Salomon suggests that without substantial additional transit spending, transit oriented development “in San Francisco will most likely diminish transit reliability by increasing auto trips–the precise opposite of transit oriented development’s stated goals.” On this point, however, it is well to remember that no transit system has ever been seriously conceived, much less proposed or implemented that could provide competitive mobility between Mission and 20th and the dispersed employment throughout the San Francisco Bay Area. A transit system that reaches all of the dispersed employment in a modern American or European urban area at travel times competitive with the car could require annual expenditures that approach or even exceed the gross domestic product of the area.

    Unaffordable Transit Oriented Development: But Salomon is not through. Insufficient transit service is only part of the problem. There is a fundamental problem with the thesis that “cities need to densify their urban cores to support greater densities of development.” But, he says, “this is predicated upon the assumption that housing in the urban core and periphery are fungible, that the core and periphery compete interchangeably for buyers.”

    Unlike most urban advocates and the Secretary of Transportation, it is apparent that Salomon understands the first principle of “livability.” Livability requires affordability. In San Francisco suburb of Brentwood, for example, Salomon notes that the median house price is $298,000. Brentwood is located in eastern Contra Costa County, approximately 50 miles from downtown San Francisco. But there is no need to travel that far, since there is an abundance of jobs much closer.

    This compares to a median price of $627,000 for an apartment/condominium near the proposed transit oriented development in San Francisco. Further, the house in Brentwood will be more than double the size of condo in the transit oriented development, as data from zillow.com indicates. Thus, the new home buyer will pay less than one-fourth the cost per square foot in Brentwood compared to the transit oriented development (Figure 3). The Brentwood household will also enjoy a backyard that would not come with a 23rd floor flat.

    Lifestyles of the Few: None of this is to suggest that transit oriented development cannot be attractive. The mistake, however, is the outsized enthusiasm of its proponents. Like a Mini Cooper or sportscar, transit oriented development serves the needs and wants of a narrow niche market, but by no means anything close to the majority.

    Salomon concludes:

    In order for transit oriented development to check sprawl, prospective home buyers would be expected to make the choice between purchasing a $300K unit in Brentwood or a unit costing twice that much in San Francisco. Further, in order to check motor vehicle commutes, the assumption would be that someone paying that urban location premium would more than double their commute time by taking transit.

    Simply stated, many of the claims of transit oriented development proponents simply do not “pencil out.” TOD residents will have to drive, unless their jobs are within walking distance. Further, in the dynamic economy that has developed in US urban areas, few can assume that they will always work in the same place. Most importantly, however, very few suburbanites could afford the tony TODs. That’s not a problem, however, since most of them are probably not sorely tempted.

    Photograph: Market Street Toward the Ferry Building, San Francisco

    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.”

  • Welcome to Ecotopia

    In this era of tea-partying revolutionary-era dress-ups, one usually associates secessionism with the far right. But if things turn sour for the present majority in Washington, you should expect a whole new wave of separatism to emerge on the greenish left coast.

    In 1975 Ernest Callenbach, an author based in Berkeley, Calif., published a sci-fi novel about enviro-secessionists called Ecotopia; a prequel, Ecotopia Rising, came out in 1981. These two books, which have acquired something of a cult following, chronicle–largely approvingly–the emergence of a future green nation along the country’s northwest coast.

    Aptly described by Callenbach as “an empire apart,” this region is, in real life, among the world’s most scenic and blessed by nature. Many in this part of America have long been more enthusiastic about their ties to Asia than those with the rest of the country. It is also home to many fervent ecological, cultural and political activists, who often feel at odds with the less enlightened country that lies beyond their soaring mountains.

    Until the election of Barack Obama, the Pacific Northwest certainly was separating from the rest of America–at least in attitude. After George W. Bush’s victory the 2004 presidential election, the Seattle weekly The Stranger published an angry editorial about how coastal urbanites needed to reject “heartland values like xenophobia, sexism, racism and homophobia” and places where “people are fatter and dumber and slower.”

    Such a narrow, cynical view of the rest of the country is in line with Callenbach’s Ecotopia novels, in which the bad guys–representatives of American government and corporations–are almost always male, overweight and clueless about everything from technology to tending to the earth.

    Of course, would-be Ecotopians have much of which to be proud. The three great cities of the region–San Francisco, Portland and Seattle–easily rank among the most attractive on the continent. They all boast higher-than-average levels of education and–at least around San Francisco and Seattle–some of the world’s deepest concentrations of high-tech companies.

    Yet for all their promise, the Ecotopian regions cannot claim to have missed the current recession. Downtown Seattle currently suffers a vacancy rate in excess of 20%, the highest in decades; last year apartment rental rates dropped 13.8%, the steepest decline among American metros. Meanwhile vacancies in the Silicon Valley area south of San Francisco have soared to above 20%. By early this year, there was enough unoccupied office space in the Valley to fill 15 Empire State Buildings.

    This may seem a bit counter-intuitive for a region that boasts the headquarters of Microsoft, Costco, Amazon, Intel and Apple. But while such companies provide lots of high-wage employment, they are no longer enough to spark much growth across the region’s economy. The San Francisco area has actually lost jobs over the past decade and shows little sign of recovering its once prodigious growth rates.

    But easily the weakest of the economies has been Portland, which lacks the presence of major anchor firms like those in greater Seattle or the Bay Area. Portland’s unemployment rate has been well over 10% since late last year.

    A wave of youthful migration has made the city a slacker haven for the past decade and, in turn, exacerbated unemployment figures. Homeless kids now crowd the downtown area, which, although far from destitute, does appear pretty grungy in places.

    Yet, like the Ecotopians in the Callenbach novels, Portland residents and politicians seem nonplussed about their anemic economic performance. After all, the city voted heavily–despite solid opposition from the rest of the state–to raise Oregon’s taxes on wealthy individuals and corporations, a move likely to deter new in-bound investment.

    “You don’t have a big focus here on economic development,” observes Stephen B. Braun, dean of the School of Management at Portland’s Concordia University. “There’s much more emphasis on quality of life than on making a living.”

    The proof: Portland may have high unemployment, but the big idea around city hall is not how to promote jobs but about investing an additional $600 million in bike lanes.

    All these places, of course, avidly endorse green jobs even if there’s little prospect they could replace the jobs being lost in the fading blue-collar sectors. A growing green job sector needs a vibrant economy that produces things and builds new buildings, notions that have little currency across much of the region.

    This anti-growth attitude reflects that of Callenbach’s Ecotopia, which favors a “stable state” economy over job or wealth creation. Ecotopian politics explicitly ban both population increases and the private automobile.

    While the mayors of Portland, San Francisco and Seattle are hardly that extreme, they could propose policies that would make driving more burdensome. And they certainly seem to do wonders in chasing would-be baby-makers out of the city. All three cities have among the lowest percentages of children of any in the U.S.

    Perhaps the toughest issue facing the Ecotopian political economy lies with the issue of class. Callenbach’s Ecotopia adopts something of an anarchic socialism; the cities of the real ecotopia have tended toward ever greater class bifurcation.

    San Francisco, for example, boasts one of the highest per capita incomes in the nation and remains a favorite destination for inherited wealth, whether among individuals or nested in nonprofits. Yet according to the Public Policy Institute of California, if the cost of living is applied, San Francisco ranks high among urban counties in terms of its concentration of poverty.

    It doesn’t help that the city’s economy has been hemorrhaging corporate headquarters and mid-range middle-class jobs for decades. High-end workers commute to Google and other Valley companies, and others work in the financial or media sectors, but many mid-range jobs have been lost, many of them to more affordable business-friendly locales in places like Colorado.

    As middle-class jobs disappear, Ecotopia’s cities increasingly resemble restrictive communities that are anything but diverse. As analyst Aaron Renn has pointed out, Portland and Seattle stand as among the whitest big cities in the nation. And San Francisco’s once vibrant African-American population has been dropping for decades.

    In the coming years this pattern will likely become more pronounced in Seattle and Portland as well. These cities continue to attract many well-educated people, particularly from California, who in turn bring with them both significant accumulated wealth and anti-growth attitudes.

    Strict “green” planning regimes are also accelerating the decline of the local middle class by driving housing prices up, greatly diminishing the once wide affordability for the middle class. Seattle’s regulatory environment, according to one recent study, has bolstered housing prices in the region by $200,000 since 1989. The percentage of families who could afford a median price home in the area has fallen by more than half.

    Many observers see a similar outcome from Portland’s widely ballyhooed planning regime. Despite the massive acceptance by planners as something of a model for the restored city, the vast majority of all job and population growth in the region has occurred at the less pricey fringes, including across the river in Vancouver, Wash., which lies outside the fearsome Portland planning regime.

    So what is the future for the region, and particularly the eco-cities? If the country starts moving toward the center, and even the right, you can expect Ecotopian sentiment to rise again, perhaps not to the point of secession but expressed in attitude.

    But this may not be all bad. As America’s population grows and other regions rise, perhaps it’s helpful for the various parts of the country to experiment with different systems. Short of civil war, there’s something to be said for relentless, even if sometimes daft, experimentation at the local level. The rest of country may not follow all their strictures, but our would-be Ecotopians could produce some interesting and even usable ideas.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

  • How California Went From Top of the Class to the Bottom

    California was once the world’s leading economy. People came here even during the depression and in the recession after World War II. In bad times, California’s economy provided a safe haven, hope, more opportunity than anywhere else. In good times, California was spectacular. Its economy was vibrant and growing. Opportunity was abundant. Housing was affordable. The state’s schools, K through Ph.D., were the envy of the world. A family could thrive for generations.

    Californians did big things back then. The Golden State built the world’s most productive agricultural sector. It built unprecedented highway systems. It built universities that nurtured technologies that have changed the way people interact and created entire new industries. It built a water system on a scale never before attempted. It built magnificent cities. California had the audacity to build a subway under San Francisco Bay, one of the world’s most active earthquake zones. The Golden State was a fount of opportunities.

    Things are different today.

    Today, California’s economy is not vibrant and growing. Housing is not affordable. There is little opportunity. Inequality is increasing. The state’s schools, including the once-mighty University of California, are declining. The agricultural sector is threatened by water shortages and regulation. Its aging, cracking, highways are unable to handle today’s demands. California’s power system is archaic and expensive. The entire state infrastructure is out of date, in decline, and unable to meet the demands of a 21st century economy.

    Indications of California’s decline are everywhere. California’s share of United States jobs peaked at 11.4 percent in 1990. Today, it is down to 10.9 percent. In this recession, California has been losing jobs at a faster pace than most of the United States. Domestic migration has been negative in 10 of the past 15 years. People are leaving California for places like Texas, places with opportunity and affordable family housing.

    California’s economy is declining. Those of us who live here can all see it. Yet, Californians don’t have the will to make the necessary changes. Like a punch-drunk fighter, sitting helpless in the corner, California is unable to answer the bell for a new round.

    Pat Brown’s California – between 1958 and 1966 – crafted the Master Plan for Higher Education, guaranteeing every Californian the right to a college education, a plan that has served the state very well. That system is threatened by today’s budget crisis and may be on the verge of a long-term secular decline. California was a state where people said yes, a state where businesses could be created, grow, and prosper. Some of these businesses were run by Democrats, others Republicans but all celebrated a culture of growth and achievement.

    Today’s California is a state where building a home requires charrettes with the neighbors, years in the planning department, architects, engineers, and environmental impact studies – we built the transcontinental railroad in three years, faster than a builder can get a building permit in many California communities. People here dream of a green future but plan and build nothing. There’s big talk about the future, but California now turns more and more of our children away from college, and too many of our least advantaged children don’t even make it through high school.

    Once, California was a political model of enlightened government. Now it’s a chaotic place where everyone has a veto on everything; a state where people say no; a state where business is wrapped up in bureaucracy and red tape; a state our children leave, searching for opportunity; a state with more of a past than a future.

    Some things have not changed. California’s physical endowment is still wonderful. The state is blessed with broad oak-studded valleys, incredible deserts, magnificent mountains, hundreds of miles of seashore, and an optimal climate. California’s location on the Pacific Rim situates the state to profit from growing international trade with the dynamic Asian economies. California didn’t change, Californians changed. Californians have forgotten basics that Pat Brown knew instinctively.

    How did California get to this point? How did it move from Pat Brown’s aspirational California to today’s sad-sack version? What did Pat Brown know in 1960 that Californians now forget?

    First thing: Pat Brown knew that quality of life begins with a job, opportunity, and an affordable home. Other Californians in Pat Brown’s time knew that too. His achievements weren’t his alone. They were California’s achievements.

    It seems that California has forgotten the fundamentals of quality of life. Instead, the state has embraced a cynical philosophy of consumption and denial. The state’s affluent citizens celebrate their enjoyment of California’s pleasures while denying access to those less fortunate, denying not only the ticket, but the opportunity to earn the ticket. At best California offers elaborate social services in place of opportunity.

    Today, too many Californians don’t rely on the local economy for their income. For them, quality of life has nothing to do with jobs, opportunity, or affordable homes. Many see the creation of new jobs as bad, something to be avoided. They see no virtue in opportunity. They have theirs, after all. It is their attitude that if someone else needs a job, let them go to Texas; if people are leaving California, so much the better.

    They see someone else’s opportunity as a threat to them. Perhaps the upstarts will want a house, which might obstruct their view. They see economic growth as a zero sum game. Someone wins. Someone loses.

    This type of thinking is unsustainable. Opportunity is not a zero sum game. It may be a cliché, but it is true, that if something is not growing it is dying. Many of the things that make California the place it is are not part of our natural endowment. The Yosemite Valley is part of the state’s natural endowment, but the Ahwahnee Hotel is not. Monterey, Santa Barbara, San Francisco, the wine countries, and California’s many other destinations were made possible and built because of economic growth. Will California add to this impressive list in the 21st century?

    Not likely. Today, we are not even maintaining our infrastructure. Infrastructure investment’s share of California’s budget has declined for decades. In Pat Brown’s day California often spent over 20 percent of its budget on capital items. Today, that number is less than seven percent. It shows.

    Pat Brown also knew that with California’s natural endowment, all he had to do was build the public infrastructure and welcome business, business will come. Too many today act as if they believe that business will come, even without the infrastructure or a welcoming business climate. Indeed, many Californians – particularly in the leadership in Sacramento – seem to think that business will come no matter how difficult or expensive the state makes doing business in California. This is just not true.

    California needs to embrace opportunity and economic growth. It is necessary if California is to achieve its potential. It is necessary if California is to avoid a stagnant future characterized by a bi-modal population of consuming haves and an underclass with little hope or opportunity and few choices, except to leave.

    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.