Why suburbia sucks (Atlanta, Buckhead: tax rates, public transportation, trailer)
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Maybe it's because the majority of humans elsewhere could never dream of owning a single family home on a decent plot of land and a car to get to and from until they came to the US?
Yes, these folks really just pine for a day before modern life , it's quaint.
Maybe it's because the majority of humans elsewhere could never dream of owning a single family home on a decent plot of land and a car to get to and from until they came to the US?
That's a misconception I frequently encounter from Americans: "The only reason they don't live like us is because they can't afford it."
Yes, these folks really just pine for a day before modern life , it's quaint.
What's quaint is the equivalence you draw between "modern life" and this rather provincial approach to land use and development. If you saw modern urban and transportation infrastructure in many global cities, you might change your tune on whether we're the "modern" ones over here.
The future belongs to countries that are going to kick our ass while we sleepwalk into the future with our quaint, half a century out-of-date self-congratulation on our "modern" lifestyles -- supposedly the envy of the world.
China has the world's longest HSR network with over 19,000 km (12,000 mi) of track in service as of January 2016, which is more than the rest of the world's high-speed rail tracks combined, and a network length of 30,000 km (19,000 mi) is planned for 2020.[2]
Since high-speed rail service in China was introduced on April 18, 2007, daily ridership has grown from 237,000 in 2007[3] to 2.49 million in 2014,[4] making the Chinese HSR network the most heavily used in the world.[5][6] Cumulative ridership had reached 2.9 billion by October 2014.[7]
Now, to the true believer in the unfalsifiable / No True Scotsman conviction that American suburbia reigns supreme, this just sounds like a necessary measure for China's large population and high density. If so, there's no empirical evidence which you will not interpret as, "Ah, but those people wish they could live like us."
The real question is whether personal transportation en masse is something they should aspire to. What about the Japanese? A lot of them have cars, and have occasional sensible uses for them.
Developing economies generally go through a phase where a rising middle class engages in imitation of the superficial features of American middle class life; cars become totem objects and signals of affluent social status and so on. The export marketing of this in the peak postwar years has been quite successful and very residual.
However, this phenomenon generally peaks within a decade or two as its waste, absurdity, inefficiency and sociological absudity become increasingly apparent. We've been at it for something like 70 years.
Oh, if only it were some ideological bogeyman like "male privilege".
Unfortunately, subsidies for suburban sprawl are very concrete, real, and gargantuan. They're not cash hand-outs, of course; they're subsidies in a larger, economic sense, in that they make suburban development more profitable for developers and cheaper for buyers, creating incentives on both the supply and demand side to live there.
The salient criterion that makes a subsidy a subsidy and not simply the expression of widespread living preferences is that its market-distorting effect can be quantified. In other words, there is a measurable skew between what people do because of the incentives and what they would otherwise do absent those incentives.
We've already covered a lot of these, but a few:
1) Transportation spending - the first, biggest and most obvious.
The overwhelming majority of state and federal government transportation spending goes toward the building, enlargement and maintenance of roads. This is abundantly discussed elsewhere in this forum, e.g. the recent $100m transit spending bill. Even if that $100m went entirely to transit, that pales in comparison to the nearly $1bn in total transportation spending. And don't forget about huge matching federal funds -- for highways and roads.
There are equivalent matching federal funds for transit.
Atlanta goes a step further than most; although managed and constrained by the state legislature, MARTA is funded solely by the 1% sales tax, farebox recovery, and very paltry federal grants.
Highways don't get a sales tax. They get gas tax, which also helps fund mass transit even though those users don't generate gas tax.
A related problem is that the bureaucratic requirements for transit projects, including things like environmental and land-use impact studies, are many time higher than for merely building more roads.
Total fiction. Requirements are the same.
2) While the mortgage interest tax deduction does not in and of itself conceptually favour suburban homes, since interest can be deducted on any kind of real estate in theory, lenders' underwriting preferences--which flow overwhelmingly from the underwriting guidelines of the GSEs that issue government loan guarantees--greatly favour detached single-family homes.
The Federal Housing Administration, a major source of loan guarantees in the post-Great Recession environment, is especially known for its hostility to urban condos. Historically, it would not guarantee loans for condo buildings that were more than 25% commercial and/or rented. Recently, that limit was raised to 35%, but it remains stubbornly low. They are also not big enthusiasts of mixed-use development.
You are confusing NYC with the rest of the country. Even Los Angeles has a mass of single family homes and townhomes. Condos dominate only in NYC. And its sound loan practices as demonstrated by the market over time.
Because of this, what the mortgage interest deduction does do is put a huge thumb on the scale of buying vs. renting. And since the GSEs provide ample loan guarantee support for buying suburban houses and harshly oppose condos, that amounts to a strong incentive not only to buy, but to buy in suburbia.
Land prices are higher in the city, so there is a clear benefit of the mortgage deduction to city dwellers over suburbanites who own.
3) Zoning rules mandate suburban-style rules, some of which carry over into the inner city, and which are expensive and difficult to comply with in urban infill projects. Accordingly, it's much more profitable to throw up a ticky-tacky greenfield development.
The same people who want urbanism generate and support the complex zoning rules which drive up prices.
4) Parking minimums are related to #3, but also bake the aggregate cost of parking into the economy while creating the illusion that it's free. In fact, in terms of unit economics, it can cost $10,000 - $30,000 (in some cases, twice that, depending on land value) to develop a single parking spot. This is priced into what Walmart, Target and everyone else charge you for their products, and it works because everyone has to pay for it regardless of whether they want to own a car and whether they use parking.
The vast majority of developers would add spaces anyway or they couldn't rent their space. Those who wouldn't drive parking to surrounding neighborhoods complicating those residents' lives. Its that group of people, in the city, who are strongest proponents of the parking minimums.
5) More generally, the minor taxes motorists pay (property taxes, gasoline taxes, vehicle registration taxes -- collectively, user fees) do not come anywhere close to covering even a tiny fraction of the cost of building and maintaining the road network. The difference comes from the state and federal purse.
Gas taxes, state and federal generated locally, as recently as 10 years ago, paid for all the highway network after you factored out the portion taken for mass transit. 20 years ago it paid for mass transit as well. Now local roads were often primarily supported by property taxes. Inflation has eroded the purchasing power of the gas tax which has remained static on a federal level since the early 90s. Mass transit users only pay about 25% at the fare box. A general sales tax and auto users gas tax subsidizes the rest. Mass transit receives more of a preference.
While there's nothing inherently wrong with this, public transportation does not benefit from the same kind of economic alchemy, creating a playing field that is very, very far from level.
Unsurprisingly, the result is that public transport is limited, slow, inconvenient, and generally thought impractical and unpleasant compared to driving.
6) The considerable negative externalities of driving are not taxed, but rather the opposite: more driving is encouraged by adding additional traffic lanes and other tasks with which the state DOTs occupy themselves (and receive federal block grants in so doing).
And auto users have traditionally paid for these highways through the gas tax. And now most new lanes in the top metro areas are becoming toll.
But have you been to China? Beijing just added a subway. People are rapidly moving away from bicycles to cars.
Or Moscow? Total disaster. Despite an extensive totalitarian funded subway system, it still doesn't go everywhere and its gridlock makes LA's look good.
But have you been to China? Beijing just added a subway. People are rapidly moving away from bicycles to cars.
Yep, I have. Even their "suburbs" are more walkable than in town Atlanta.
But yes, China is making some bad decisions in planning by closing bike lanes and trying to make more room for cars and supporting people buying cars by the millions.
Reality is, no major city can function with 90%+ of people driving personal vehicles.
There are equivalent matching federal funds for transit.
I wouldn't say equivalent -- at least, not quantitatively! Not anywhere near.
I cannot speak to the proportion of federal funding involved in other municipal public transit systems. In the case of MARTA, it's almost entirely funded by the sales tax and farebox recovery (which, in MARTA's case, is around 33%).
Quote:
Originally Posted by bu2
They get gas tax, which also helps fund mass transit even though those users don't generate gas tax.
Yeah, all 16%, in the national aggregate. The remaining 84% goes to highways. Cry me a river.
Legislation passed in 1993 increased the motor fuels tax rates to their current levels of 18.3 cents per gallon for gasoline and 24.3 cents per gallon for diesel. The highway account receives 84 percent of the gasoline tax revenue, and the mass transit account receives the remaining 16 percent.
And in the case of MARTA, I'm not aware of any instances where it's been > 0%.
More importantly, the gas tax doesn't come close to covering the cost of maintaining all of these roads. We borrow to cover the difference. That bond issuance happens thoughtlessly, while every dollar borrowed for transit - on the infrequent occasion it happens - is relentlessly scrutinised.
Quote:
Originally Posted by bu2
A related problem is that the bureaucratic requirements for transit projects, including things like environmental and land-use impact studies, are many time higher than for merely building more roads.
Total fiction. Requirements are the same.
They are not the same at all. Some of that is unsurprising; one is not the same as another. But all in all, they add up to a substantial fiscal burden for transit projects to even clear preliminary approval.
Quote:
Originally Posted by bu2
You are confusing NYC with the rest of the country. Even Los Angeles has a mass of single family homes and townhomes. Condos dominate only in NYC. And its sound loan practices as demonstrated by the market over time.
I never said condos dominate anywhere else. I don't imagine they do. It would be strange if they did, given the obstacles to buying them because of the lending preferences.
I myself bought a 1 BR unit in Midtown back in 2007 and ended up with a 6.625% APR / 8.25% APR fixed-rate loan. While this was at the peak of the prime rate prior to the bubble bursting, and so these aren't completely terrible rates for the time (though they seem quite ludicrous in light of interest rate trends since the beginning of the Great Recession), they were significantly higher than they could have been if the property had been "conforming". And all but the most exclusive properties in largely owner-occupied buildings aren't.
As to the idea that these are "sound loan practices" ... well, lots of things can be justified with recourse to that circular reasoning. Condos are a minority real estate product, often in neglected inner cities, etc. There are also good reasons, from a strictly actuarial point of view, for all kinds of redlining that we decry as racist and discriminatory, for example.
In any case, the policy here is driven by the GSEs, which distort the "free" market in a variety of ways that make the issue of accurately pricing risk a red herring. Some of those policy objectives are in line with standing federal initiatives make home ownership more accessible to more people than it otherwise would be. However, those initiatives are biased strongly in favour of detached SFHs.
Quote:
Originally Posted by bu2
Land prices are higher in the city, so there is a clear benefit of the mortgage deduction to city dwellers over suburbanites who own.
If suburbanites lived in square footages and on lot sizes more similar to those of city dwellers, that would be true.
More importantly, city dwellers also face higher taxes and user fees to pay for things like transit, whose equivalents suburbanites receive for "free", like roads, highways and parking.
Quote:
Originally Posted by bu2
The same people who want urbanism generate and support the complex zoning rules which drive up prices.
I've not met a person who "wants urbanism" but supports comically exaggerated modernist building setbacks and large parking to surface area & occupancy ratios.
Quote:
Originally Posted by bu2
The vast majority of developers would add spaces anyway or they couldn't rent their space. Those who wouldn't drive parking to surrounding neighborhoods complicating those residents' lives. Its that group of people, in the city, who are strongest proponents of the parking minimums.
That's actually true. A lot of the support for free and ample city parking comes from folk who fear that not-from-downtown visitors would otherwise park next to their houses.
There are good solutions to these problems that don't require filling the streets with surface lots and parking garages, however: in-lieu fees for common municipal parking garages, etc.
Last edited by abalashov; 07-02-2016 at 09:37 AM..
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funny.
