An Urbanist and His Lifestyle

My wife and I live in a neighborhood that is on the fringe of walkability.

The Walk Score folks assign a score of 63 to our home, which is better than average, but not exceptional.  (For comparison, the apartments above Theatre Square in downtown Petaluma have a Walk Score of 94.)  And as much as we enjoy having a deli, tavern, and small grocery store within a couple of blocks, I understand that much of our Walk Score is the result of living within walkable range of elementary, junior high, and high schools.  My wife and I live in great location to raise a family, but that isn’t our time of life so much of walkability value is wasted on us.

Using my own measure of walkability, we’re 0.8 miles from the nearest bookstore, which isn’t bad but somewhat beyond the comfort zone for an after-dark or wintertime book walk.

To make the home location work, I own a car, a Prius that is quickly approaching 11.5 years old, an age that almost exactly matches the 11.4 years of age for the average American car.

The Prius is our only family car and we put a moderate number of miles on it.  A few moments ago, I tallied my miles for the past twelve months.  The result was almost exactly 10,000 miles, a modest amount compared to many, but still more than I would like it to be.  But a major task of the past year was moving a parent from a long-time family home to a senior living facility and then selling the home, with both tasks requiring multiple driving trips around Northern California, so it’s likely that my annual driving mileage will soon decline.

(Plus, the reality is that we live in a world in which a car is virtually required for many daily tasks.  As much as I’d prefer to use my car even less, it isn’t a reasonable option much of the time.  I admire the folks who manage to make do without a car, but that life requires compromises that I’m can’t justify right now.)

Overall, I live a moderately low-impact life.  If I were to give our household a letter grade on an urbanist scale, it’d probably be a B-.  I tried to justify a full B, but just couldn’t do so.  It’s an okay grade, but there is room for improvement.

And yet, I write an urbanist blog.  And there are some who would try to blast me for what they perceive as an inconsistency between the housing and car choices I make and the words I write.

Admittedly, there aren’t many who take that approach, but there are a few.  I had one particular adversary who was frequent in his antagonistic comments, some of which took him into head-scratching illogic, but he seems to have disappeared in last year or so.  I sometimes fear that he succumbed during a fit of apoplexy, but prefer to think that he’s now ensconced at home in his recliner, reading “Suburban Nation” and “Walkable City” and beginning to grasp that I was onto something.

But even in that correspondent’s absence, I still have occasional folks who engage in the strawman exercise of claiming that I believe that we should all drive our cars to the edge of town for a giant bonfire and then move downtown into Soviet-era unadorned concrete apartment houses.  They then castigate me for not living that life myself.

To keep those few folks in place, I occasionally feel moved to debunk their flawed argument.  Today is one of those days.

The debunking is surprisingly easy because, over nearly four years of writing and nearly 600 blog posts, I’ve never once suggested a forced relocation into urban cores or a mandatory confiscation of automobiles.  You can spend my entire oeuvre and you wouldn’t those find those ideas anywhere.

Also, my wife and I have twice considered a move downtown, even going so far as picking homes from the plans for downtown projects for which I was the civil engineer.  But neither project could overcome the institutional biases against urbanism, so both succumbed, leaving us in our semi-walkable location.

Besides, what I believe isn’t that everyone should live downtown, but that people should have the freedom to live wherever they wish as long as they bear the fair costs of their life choices.  It’s a simple model and one that is based on both logic and free choice, but it’s a model from which we have largely strayed in recent years.

Let me apply the model to my own life.  To begin with, it’s likely that my wife and I aren’t paying enough in property taxes to sustain our community.  Even though we live moderately close to downtown, there are still infrastructure costs of single-family neighborhoods that aren’t adequately borne by property taxes under Proposition 13.  Potholes and aging waterlines are only the most evident manifestation of that underfunding.

Because my wife and I bought our home near the peak of the real estate market before the Great Recession, we haven’t benefited from the Proposition 13 cap on annual property tax increases.  However, it’s likely that even the one percent rate at which we’re paying is deficient.  My preferred property tax model is one in which the tax rate gradually increases from the urban core to the urban fringe as the demand on municipal services increases.  I’ll make a guess that 1.2 percent is the sustainable property tax rate for my neighborhood.

In a recent post, I roughly estimated that an overall rate of 1.4 percent was necessary in the North Bay.  However, I think I can safely use a slightly lower rate here because I’m unbundling road costs in my next calculation.

Although there are legitimate technological and privacy questions depending on implementation approach, I remain committed to a Vehicle Mileage Tax (VMT).  Much as we pay per gallon or per kilowatt-hour for water and electricity, I like the idea of paying per mile for road usage.  Elsewhere in the country, there are VMT trials underway for which rates of one to two cents per mile are being applied.  However, those are only tests.  I suspect that an appropriate VMT is closer to a dime per mile.

And there is the cost of gasoline.  Although we now have a gas tax, it’s only for road construction and maintenance.  The greater costs of gasoline use, addressing the looming threat of climate change and managing the geopolitical burdens of oil-dependence, are borne by the general fund.  And that isn’t right.

Early in the history of this blog, I linked a report that tried to estimate the fully-burdened cost of gas.  Depending on assumptions, of which there were many, the authors estimated that somewhere between $6 and $15 per gallon was the correct price for gas.  At the time, the study was several years old and another three years have passed since I linked the study during which the appropriate rates have climbed.  But to be conservative, I’ll suggest a rate of $10 per gallon.

I won’t show all my calculations, but applying a 1.2 percent property tax rate, a dime per mile VMT, and a $10 per gallon cost of gasoline to the current life of my wife and me would result in an increased household cost of $3,700 per year.  It’s a chunk of money that would likely cause belt-tightening elsewhere in our budget, but it’s a burden I’d gladly bear for a more financially sustainable community that properly incentivizes urban life.   And that makes me a card-carrying urbanist.

Plus I’d expect that applying these new costs to our lives would trigger more urban development, perhaps finally creating the right opportunity for me to move downtown.

I can already hear three objections to my proposal.  First, some will suggest that if I feel so strongly about my conclusion, I should write a check for $3,700 and deliver it to City Hall tomorrow.  But while there are some individual actions that can done in the furtherance of a more responsible lifestyle, such as driving an electric or hybrid car (done), installing solar power (done), and removing grass (done), other actions are only useful if done cooperatively.  Higher property taxes, a VMT, and greater gas taxes are among those.

Second, some will argue that many citizens can’t afford the additional cost burdens.  I agree with them.  That’s why I began suggesting these changes nearly fifteen years ago coupled with a long transition period.  I thought everyone should have a chance to adjust their lifestyles before the cost burdens became too onerous.  But that didn’t happen, so the now the threats of climate change, municipal dysfunction, and infrastructure collapse are more nearly upon us without the same window for a transition.

I still believe that a transitional period is appropriate, but with the need being more urgent, the transition must be more abrupt.  I wish it wasn’t so.  I know there will be pain during the transition, but less pain than if we continue to duck the inevitable.

Lastly, some will argue that they enjoy their acre lots on the urban fringe and their 30-mile drives to their places of work and ask why they should pay for those enjoyments.  To which I can only say that, as much as I like my Prius, I’d rather have a Tesla.  And perhaps also an original Mondrian for my office.  But I’d never suggest that the public subsidize those personal desires.  So why should I be asked to subsidize someone’s personal choice of a home?

Ultimately, none of objections hold water.

And ultimately, my willingness to pay my fair share of my cost of my community, and thereby incentivize further urbanism, makes me an urbanist, even if a less that fully-practicing urbanist.

In my next post, I’ll dig further into VMTs, along with offering some thoughts on how schools are organized in the 21st century.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (davealden53@comcast.net)

The Cost of Doing Municipal Business

It began, as many good stories do, with a conversation over a beer.

During a recent trip to Pittsburgh, a friend, who a short time before had returned to the Steel City after a number of years in the North Bay, offered to give me a tour of his hometown.  (This was the same evening that included a visit to a downtown plaza that I likened to a scene from “The Lord of the Rings.”)

The friend began the evening with a walk about Sewickley, a village near his current home.  He thought that I would find the village charming, an expectation in which he was largely correct.  Tidy streets, interesting storefronts, even a few well-swept alleys for less mainstream businesses.  It was a quite comfortable place.  (All of the photos are of Sewickley.)

Of course, I could still make the criticisms that I would make of most suburban villages in the U.S.  The rail line that had allowed Sewickley to begin life as a summer retreat from the coal and steel fumes of Pittsburgh was long gone, replaced by a reliance on private autos.  Most of the downtown stores were single story, so there were few opportunities for walkable downtown living.  And, with a couple of apartment house exceptions, large lot single-family homes seemed to jarringly abut the downtown.  Middle housing was a largely missing element.

But Sewickley was still a charming, if imperfect place.  (To tie it back to the North Bay, I’d say it’s like Healdsburg without the recent growth spurt or Sonoma without the weekend throngs of tourists.   Looking at the entire Bay Area, Orinda seems a reasonable comparison.)

Our initial amble complete, my friend steered us to a small restaurant a short block from the main street.  We sat at the bar, ordered beverages, and began to chat with the owner and bartender about Sewickley.

The conversation eventually turned to property taxes.  The barkeep told a story of friends who had recently moved from Sewickley because of the tax burden.  As he told the story, the family had retired the mortgage on a home assessed at $800,000, but were still facing a monthly property tax bill of $1,300.  With college expenses for their children nearing, they decided that they couldn’t afford to stay in town, so sold the house and relocated outside of the city limits.

As my friend and I walked back to his car, it dawned on me that the facts added up to an interesting data point.  Long-time readers know that I have a theory about California’s 1978 Proposition 13.  I’ve argued that the “tax revolt”, although generally described as a campaign against government waste, was more accurately a rejection of the costs of maintaining the sprawling land-use pattern that we had adopted.

I’ve argued that, had Howard Jarvis been less judgmental, this reality could have been obvious and we could have begun remediation.  Instead, we capped property taxes, continued sprawling, and moved onward to a world of potholes and failing waterlines, with no municipal funds to address the problems.

So the bar chat gave me a data point to see what it costs to run a small city where there was no arbitrary cap on property taxes, where the only cost constraint was what the citizens were willing to tax themselves annually, as expressed through their elected representatives.  

Luckily, the numbers were easy to calculate while walking.  $1,300 per month times 12 months equals $15,600 per year.  For an $800,000 assessment, that would be a tax rate of 1.95 percent, a startling difference from the 1 percent cap under Proposition 13.

I could stop here, having made what many might find a sound point.  But I trust that the more discerning readers would have been capable of poking several holes in my simple analysis.

I’m not going to try to plug every hole.  After all, this is a blog post, not a master’s thesis.  But I can plug a few.

Who trusts a barkeep?:  To be a successful bartender requires a number of skills, but storytelling veracity isn’t one of them.  A story may have already have already been enhanced before it reaches the barkeep’s ears and then edging the facts up even further makes for better bar conversation, which leads to better tips.

Luckily, Sewickley property tax rates can be confirmed on-line.  (Rather than the percentages usually noted in California, Pennsylvania uses millage, or tenths of cents per dollars of assessed value.  But millage can be converted to a percentage by moving a decimal point.)

The most recently updated Sewickley tax rates are 4.73 mills for Allegheny County (2015), 6.5 mills for the Borough of Sewickley (2015), and 17.1548 mills for the Quaker Valley School District (2014).  Adding these gives 28.3848 mills, or 2.8348 percent.  Unexpectedly, the story told by the bartender actually understated the tax rate.

Don’t property values also matter?: Vendors and public employees don’t get paid in millage rates; they get paid in dollars, which are millage rates times assessed value.  So home values matter just as much as millage.

To avoid the bias of a single realty firm which might focus on a particular segment of the market, I checked the Zillow webpage for Sewickley.  The median home value for Sewickley seems to be about $250,000, which is perhaps half of the North Bay median value of close to $500,000.  (It seems the barkeep’s friends, with their $800,000 home, were in the upper echelon of the Sewickley’s demographics.)

So the combined Sewickley tax rate, which is applied to homes of half the value, would be equivalent to a tax rate of perhaps 1.4 percent on the more expensive North Bay homes, closer to the 1 percent cap in Propostion 13, but still a significant difference.

Does a cap rate equal an average rate?: That’s the last hole to patch.  Proposition calls for a 1 percent cap on the total property bills, except for a few incremental taxes that are allowed to exceed the cap, but it also sets a maximum rate at which taxes can increase year to year.  With the rapid run-ups in California real estate values, many homes are taxed well below the 1 percent cap.

(The variance from the cap is specifically true of businesses, where a business that owns a building can be sold without triggering a Proposition 13 adjustment because the building continues to be owned by the business.  If the political will is ever built to change Proposition 13, the drafting error in how businesses are treated is likely where the revisions would begin.)

In addition to businesses, it’s likely that any home that has been held since 2003 or before is taxed below the 1 percent cap.  I don’t know of any analysis that computes the average California property tax rate, but I’ll guess something around 0.8 percent.

And that’s where I’ll call a halt.  I haven’t fully rectified all the apples versus oranges possibilities, but I’ve moved in that direction.  A place that continues to fund the actual municipal costs required for a tidy, well-maintained community needs the California equivalent of a 1.4 percent tax rate, while California taxes itself at about 0.8 percent.  If you want to measure that depth of the pothole in front of your house, that’s one good measuring stick.

And where does urbanism fit into this story?  Very simply, a walkable urban community is less expensive to service per dollar of assessed value.  An urban community wouldn’t solve the property tax shortfall, but it’d be a step in the right direction.

It’s fun to see where a casual conversation over a beer can lead.

I have one more insight to share from my evening tour of Pittsburgh.  It’s about how some neighborhoods age differently from others.  I’ll share in my next post.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (davealden53@comcast.net)

The Google Bus Issue Triggers Insightful Urbanist Talk

One of the great things about the urbanist community is that high-profile social issues will always elicit cogent and insightful comments from active urbanists.  It’s partly that a cohort of good critical thinkers has become attached to urbanism and partly that urbanism is a good solution to many contemporary social ills.

To be clear, urbanism isn’t a panacea to every issue that might need improvement, but it’s one of a half-dozen building blocks that can make the world a better and more sustainable place in the 21st century.

So I’ll return to the Google bus issue and sample some of the best thinking that has bubbled up around it.

Of course, the North Bay doesn’t yet have its equivalent of the Google bus issue.  Because of the historical happenstance of Silicon Valley continuing to burgeon while the North Bay’s equivalent, Telecom Valley, stagnated, the North Bay doesn’t yet have as much of the young demographic segment looking for an urban lifestyle.

But the North Bay is a good place to live that is eager to remain economically vital, so will soon attract the young and affluent who are roiling other areas of the Bay Area.  The Google bus issue should be studied in the North Bay so we can be smarter when our time comes.

On the Google bus issue, several commenters have noted that San Francisco and Oakland aren’t alone in their failure to anticipate and to prepare for the coming flood of young adults looking for an urban lifestyle.  Fingers are being pointed at Peninsula and South Bay communities for failing to facilitate the type of development that would have been attractive to techies.

I agree with the finger-pointing.  A more far-sighted residential program around the Silicon Valley would have defused much of the Google bus issue.  In an odd coincidence, I found myself in conversation over the weekend with someone who owns a large chunk of land in the South Bay which now has a low-density land use.  The landowner is intrigued by the possibility of creating a higher-density, urbanist use, but finds daunting the prospect of tackling the public, city, regional, and state issues that would be raised.

Others have concurred with me that blaming the tech buses is akin to blaming the messenger.  As Michael Coyote noted on Twitter, “I can totally understand why people are mad, but who does it help of you are mad at a tech worker versus some NIMBY?”  While NIMBYism certainly had a role, I'd also add CEQA and ponderous land-use processes to the list of wrongdoers.

But perhaps the most interesting thinking was put forth by Noah Smith in an article published on Quartz.  Dusting off the work of Henry George, a long-dead economist from San Francisco, Smith suggests that a property tax that focuses more on the land, especially the land that has an increased value because of public facilities such as street and sewer, is more fair than the current system which focuses on appraised value.

Early in my urbanist reading, I came across a suggestion that property taxes should use a sliding scale, with taxes in the urban core based solely on the value of land, taxes in surrounding rural land based solely on the value of the improvements, and taxes in between based on a combination.  My memory is that it was James Howard Kunstler who put forth the concept, but I haven’t yet come across it in my rereading of his work.

 The Henry George and the sliding scale concepts are largely similar.  And I see value in both.  But I also see points of discomfort in both.

As currently constructed, property taxes are intended to ensure that a uniform standard of public facilities and services are available across the community, while also keeping cities solvent.  Those are valid goals that must be preserved.  Modifying the property tax system to encourage urbanism while maintaining the first two goals would be a tricky endeavor.

Also, one of the greatest benefits conveyed to land isn’t public improvements, but zoning.  If we’re to tax the property owner for having a public street across the front of his land, taxing him for higher zoning seems reasonable.  Indeed it seems only fair.  Changing zoning from rural to residential can be a windfall of a million dollars or more per acre to the property owner. 

But what if a city does rezoning on its own initiative, perhaps as the result of a new General Plan, and not at the request of the land owner?  And what if it’s likely to be a decade or more before the land is developed?  Is the property owner liable for the higher tax burden over that decade, even if it pushes him toward bankruptcy?

Lastly, I’ve often argued that many of our current institutions, including property taxes, lending practices, judicial rules, etc. have been inadvertently slanted toward drivable suburban development and that urbanism would do fine if we could just rebalance the rules to be closer to a free market.  To now argue that we instead must bias the rules toward urbanism is philosophically uncomfortable to me.

None of this is intended to reject the Henry George concept, only to note that it would be a deep pool with tricky currents that should entered only after careful thinking and planning, neither of which are strong points of our political system.

I’ll look at more Google bus thinking in my next post.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (davealden53@comcast.net)

Did Rain Follow the Plow?

As Americans spread into the Midwest in the 19th century, the belief grew that “rain follows the plow”.  The settlers had faith that sufficient rain would fall onto their new farmsteads for their crops to succeed.

For some, the belief was that divinity would show beneficence toward American expansion.  Others of a more scientific bent believed that the increased dust from plowing would bring rain.  (There was valid science to the latter expectation, although the effect wasn’t nearly as big as needed.)

Both types of believers were soon disappointed.  After a period of above normal precipitation, long-term norms were reestablished.  Wells became necessary for many farms and marginal farms were abandoned.

To the extent that any of us remember the 19th century belief that rain would follow the plow, it’s with a condescending acknowledgement of the gullibility of our forbearers.  We’re sure that in our time we aren’t nearly as susceptible to wishful thinking detached from reality.

Except that we’re just as susceptible and perhaps more so.  And we’re doing it on a subject that may be more critical to our future than a false belief in rainfall.  Furthermore, we’re clinging to the belief even as the facts pile up in opposition.  At least our forbearers had the common sense to surrender the farmsteads when the rainclouds didn’t gather.

For the past seventy years, we’ve built our cities and towns in the belief that property tax revenue from new development would be sufficient to service and to maintain the new development.  That incremental property taxes would be adequate to pay for police and fire services, to provide the other services of civilization such as parks and court systems, and to maintain and periodically to replace the infrastructure.

There was no particular reason to believe that this would be true.  We had 4,000 years of history in which we generally allowed cities to disappear if they couldn’t meet that standard.  There were exceptions to the rule, such as capital cities relying on support from the countryside in exchange for governance, but most cities had to comply with the rules of Darwinism, to successfully adapt or to succumb.  A great many cities did the latter.

But then we made a mass commitment to an alternative and experimental model in which we encouraged a vast spreading of our cities and towns.   The experiment assumed that the growth would be financially sustainable.  And as StrongTowns points out with tongue in cheek, we didn’t just try this experiment in New Jersey, we rolled it out nationwide.

Furthermore, we took an unscientific approach to the experiment.  There are two critical elements of a good experiment.  First, the experiment should be constructed such that the results are clear and unequivocal.  Second, if results begin to show that the experiment is doing harm, the experiment should be ended and remediation begun.

We did neither.  At the same time we embarked on the drivable suburban experiment, we increased the transfer of funds from state and federals governments to local government, masking the results of the experiment.  In many ways, we separated the financial sustainability of cities from their financial viability.

And when the citizenry began to chafe under the tax burden that was required to sustain the experiment, embarking on the taxpayer revolts of the late 1970s and 1980s that reduced property tax revenues, we allowed ourselves to go further into the hole rather than ending the experiment.

And now we’ve reached 2013.  It’s clear that we can’t sustain the experiment.  Our public amenities are badly underfunded.  We have a backlog of infrastructure maintenance and replacement that we can’t begin to tackle.  But the cost to repair the damage done by the experiment is more than we want to pay.  So we engage in a frenzied attempt to attract more development, using the impact fees to remedy the worst of the budget shortfalls.  StrongTowns is correct in calling it a Ponzi scheme.

It makes the whole rain/plow thing look like a warm-up exercise in self-delusion.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (davealden53@comcast.net)