Monday, August 15, 2016

Houston vs. NYC, Austin's rail fail, Tokyo's free market in land use, CA zoning impacts, and more

A few items this week:
"During my time there, I figured out a lot—about Houston. My hometown, I realized, is easy. The mail comes on time. You don’t have to wait for an hour, crammed in a small space with dozens of other people, just to get a prescription. You can use a full-size grocery cart at the grocery store. You don’t have to ask an employee to use his hook to pull down a package of toilet paper for you. You don’t have to lug your heavy groceries six blocks home. You don’t reach the end of May and find yourself trudging through sludgy gray ice, incredulous that it can still be so…darn…cold. You don’t find yourself freezing, needing a restroom, waiting for a train that never comes, before giving up and spending money you don’t have on a cab. Instead, you get to drive. 
That’s what I learned about Houston during my time in New York. What did I learn about New York? It’s a great place to visit. In the very late springtime.
"This new evidence adds to the extensive body of work demonstrating that land-use regulations reduce the stock of housing relative to what we would see in a free market. It’s particularly important in California, home to some of the country’s most regulated cities and the cities where land-use liberalization could have huge potential benefits in terms of allowing more people to live in high-productivity places."
"In the 1980s, Japanese cities were experiencing the same inflated housing bubbles that U.S. cities are today. Their planning methods, moreover, were rooted in Western notions about separating uses and limiting density. The federal government recognized that these regulations were the problem, so in 2002, it passed the Urban Renaissance Law. The law stripped municipalities of the ability to control private property. As a result, owners can build a variety of uses on their land, regardless of resistance from local bureaucrats or neighbors."
Who would have guessed that the Japanese could be more free market than America? Could you imagine if states or the federal government did something similar here?! 
"The line accounts for 2.6% of Austin’s transit ridership, while using 8.5% of the annual operating expenses for transit. 
Each trip taken on the rail costs taxpayers dearly, according to data provided by Capitol Metro. In 2014, the rail line had an operating deficit of $12.6 million. The upfront capital costs of $140 million, when amortized at 2% over 30 years, creates an additional $6.2 million annual cost to taxpayers. Add these two sums up, and then divide them by the line’s number of annual unlinked trips—763,551—and the per-trip subsidy works out to $24.62. Another commentator estimated that this figure is $18, compared to $3 for every bus boarding. Jim Skaggs, the retired CEO of Tracor and a local rail skeptic, wrote on his blog that “each average daily, week-day, round trip rider is subsidized an average of about $10,000 per year.”"
"Their causes for success are multi-faceted, and refute some of the received wisdom, but mostly boil down to their open economies. According to Site Selection magazine, Houston and Dallas were second and third, respectively, among the nation’s 10 largest metro areas in economic development in 2015. Texas was the leading state for economic development, and the two metros accounted for 70% of this...The recent growth has bolstered two metros that already have among the strongest corporate presences in America, and a state that has become famous for poaching companies and people from California, Illinois and New York. Much of it can be attributed to their good business climates at both state and local levels.

This begins with taxes. Texas is one of seven states that currently have no income tax, and has the fifth-lowest overall state tax burden, according to Forbes data. Texas and its various localities, including Houston and Dallas, also have light regulations regarding land use, labor rules, business permitting and compliance costs. Together, these two factors—light taxes and regulations—explain why Dallas, for example, was named America’s best business climate by MarketWatch.com, and why Texas routinely ranks near the top in economic freedom, recently improving its score even as economic freedom declines nationwide.
...
While NIMBYs often get road projects canceled around the nation (not to mention housing, offices and other aforementioned projects), this hasn’t stopped Houston and Dallas from building them. Both metros are among the leaders in per capita highway miles, sporting a large network of tolled and untolled highways. This has enabled multiple corporate job clusters to develop throughout both metros.
...
Indeed, Dallas and Houston reaffirm the notion that corporations and their workforces seek out places less for the generic lifestyle reasons, than for reasons that are simple, even blunt. They want reduced costs, whether that means low taxes, subsidies, or cheaper labor. They want ample space to expand, and a regulatory climate that allows this expansion. And they want infrastructure that will efficiently tie it all together. Texas’ two biggest metros are providing these conditions for economic development, and that is why they’re getting so much of it."

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3 Comments:

At 7:16 PM, August 15, 2016, Blogger Max Concrete said...

It is worth noting that a proposed regional rail line from San Antonio to Austin and north to Georgetown has recently been effectively killed when the Austin planning organization voted to end support. Lack of cooperation from Union Pacific was the main reason, but it is a fortuitous outcome since the project would have been a huge waste of money, and resources are far better spent on improving I-35.

http://www.bizjournals.com/austin/news/2016/08/12/who-mourns-for-lone-star-rail-cities-chime-in-on.html

 
At 7:38 PM, August 15, 2016, Blogger Tory Gattis said...

Good catch. Thanks for the heads up. Total agreement.

 
At 1:52 PM, August 16, 2016, Blogger dkastner said...

The Forbes post, stating "The law stripped municipalities of the ability to control private property," is just a tad bit misleading.

A bit of googling of "japan urban renaissance law" reveals a couple of insightful studies: http://siteresources.worldbank.org/INTURBANDEVELOPMENT/Resources/336387-1270074782769/6925944-1288991290394/Japanese_Experiences_Sustainable_Urban_Development.pdf and http://www.metropolitiques.eu/The-burst-bubble-and-the.html

Basically, all Japanese metros were seeing the same sort of sprawl and hollowing out of core urban areas that we see here. The new law was in part motivated by the recent ratification of the Kyoto Protocol and the desire to reduce pollution from automobiles.

The central government did not enact a blanket ban on development regulations. What it did was allow cities (with the help of oligarchic real estate concerns) to designate certain zones for relaxed zoning rules.

Another interesting observation is that the law seemed to mainly focus on office construction. The FT article acknowledges that many of the overbuilt office buildings were converted to residential.

 

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