May 20, 2005

Two-Wheel Drive

Bike_rollerblade_sm The first time I celebrated Bike to Work Day, I didn’t have a job (I was a recent college graduate in search of one) so I experienced the event as more of a Bike-to-Free-Food-Booths Day. Luckily, the sponsors only asked for proof of biking, not working, and since my ancient 10-speed was my main form of transportation at the time, I fit right in.

That was in 1988. Since that time, I’ve gained jobs and various commute modes (including hitch-hiking by pickup truck), but biking remains my favorite. I feel lucky that my home, Seattle, has bike racks, bike lanes (the Sammamish trail is a recent victory), and bike advocacy groups. And hey, I’ve only been doored once.

It’s discouraging to note, though, that bike commuting is only slowly catching on in the US, despite that it’s healthy, cheap, and the most energy-efficient form of travel. According to the 2000 Census, while the number of bike commuters increased slightly from 1990, the percentage was still very low--0.4 percent of all commute trips.

Seattle and Portland do rate third and fifth of US cities in their population category, respectively, in percentage of workers who commute by bike. But I have to say I expected Portland—where the Hawthorne Bridge swarms with two-wheeled businesspeople on weekday mornings, I’m told--to beat Seattle; anyone have different or more recent numbers?

According to this VTPI report (pdf, p.21), Canadians pedal to work at a higher rate than Americans (1.2 percent of work trips were by bike in 2001), particularly British Columbians. Victoria ranked highest of any Canadian metropolitan area--4.8 percent in 2001--for share of work trips by bike.

And then there are countries like Denmark and the Netherlands, where “bike modal shares of travel” average 20-30 percent.

How to encourage more folks to hop on their two-wheelers for the short, everyday trips that they don’t really need a car for? Compact urban design obviously plays a big role. Gas price hikes probably aren't hurting.

Bike paths and lanes are also often promoted as a way to get people to pedal more. I’m also intrigued by the “shared streets” model of integrating transportation modes rather than separating them—which would turn streets into public spaces where children, pedestrians, cyclists, and streetcars mix with slow-moving cars.

With destinations closer together and bikes on equal footing with cars, we wouldn't need a Bike to Work Day--or free goodies--to help us choose two wheels over four.

Posted by Elisa Murray | Permalink | Comments (13) | TrackBack

Moss Backwards

I'm trying my best to give a charitable reading of Knute Berger's Mossback column in the Seattle Weekly railing against urban density. But it's hard.

To summarize as best I can:  Berger doesn't like Seattle Mayor Greg Nickels' plan to promote high-rise housing near Seattle's downtown because, well...I guess Knute liked the Seattle skyline just as it was in 1980, thank you very much.

Now, Berger makes at least one really good point -- that Mayor Nickels seems to want to do too much, and that some of his goals conflict.  For example, the mayor supports both massive new transportation spending that could suck life out of downtown, and massive new residential development in the urban core. 

But Berger saves most of his fury for the prospect of residential high-rises near downtown.  He'd prefer that the city follow the example of Copenhagen, Denmark -- which, according to him, means making Seattle's policies family-friendly, so more families with kids can afford to live within the city limits.  Encouraging families with kids to move into the city would increase the number of people per household--accommodating population growth without increasing the need to build more housing. 

And if we do have to increase the housing supply, Berger again prefers the model of Copenhagen and other European cities:  creating small-scale urban villages that are interesting places to live, but aren't dominated by highrises.

I guess I understand his instincts -- building residential high-rises might change the character of the city Berger grew up in.  And, without doubt, Nickels' high-rise plan would forever alter the priceless urban gem that is today's South Lake Union warehouse district (sarcasm intended).

But let's be careful holding Copenhagen up as a model, shall we?

Here are the numbers, from the Jeffrey Kenworthy and Felix Laube's venerable International Sourcebook of Automobile Dependence in Cities and this extremely helpful world city population website.  Between 1960 and 2005, the total population of Copenhagen-Frederiksberg -- basically, the city without its suburbs -- fell from 836,000 to 594,000, a decline of 30 percent.  In Copenhagen's central business district -- the downtown -- population fell faster, from 65,000 in 1960 to 34,000 in 1990.

Copenhagen, in other words, has been emptying out.

Now, to be fair, the population of central Copenhagen rebounded slightly since 1990; central Copenhagen's population is now at about the same place it was in 1980.  But in the meanwhile, the population of the Copenhagen suburbs grew from 772,000 in 1960 to about 1.2 million in 2005, an increase of more than 50%.  In greater Copenhagen, as in greater Seattle, suburban living is now the norm. (Though, doubtless, Copenhagen's suburbs are denser and less sprawling than ours.)

But still, let's say we really should hold Copenhagen up as a model for promoting density by creating urban villages.  That's fair enough -- urban villages can be really pleasant places to live, and we really don't have to accomodate new growth with skyscrapers if there are other viable models. 

But remember, in 1990, after 30 years of population decline, Copenhagen was still two and a half times as dense, on average, as Seattle is today.  Two and a half times.  Now, I'm not suggesting that just because Copenhagen is dense, that Seattle should be too.  But I am suggesting that the European-style low-rise density that Mr. Berger supports would mean changes every bit as momentous, and far more widespread throughout the city, than a strategy of concentrating growth in the middle of downtown.  Urban villages certainly have their charms, but it's hard to see how the politics of that kind of change would work in a neighborhood-focused city such as Seattle.

And that goes to the heart of the matter.  It seems to me that  you just can't prohibit people from moving into greater Seattle.  Legal and moral problems would abound.  There are smart ways to slow population growth -- such as reducing the hidden subsidies for domestic & international migration, discouraging unwanted pregnancies, and the like.  But ultimately, we can't stop people from coming here.  (Moreover, the family-friendly policies that Knute advocates would turn Seattle into a giant population magnet, which would, in turn send housing demand & prices that much higher.)

So if we don't accomodate new residents by accepting higher density within city limits, greater Seattle is going to continue to sprawl at the outskirts, overrunning farmland and rural land at the urban fringe.  This kind of low-density sprawl locks its residents into an auto-dependent lifestyle -- which worsens residents' health, decimates salmon habitat, and increases the region's spending on oil, among other ills.

If the alternative to sprawl is to accept greater density -- whether in urban-style villages, or in skyscrapers, a la downtown Vancouver, BC -- I'm all for it.  And concentrating some of that growth downtown -- where people can drive less -- makes a lot of sense for a bunch of reasons, not the least of which is that there are a lot of people who really want to live in a pedestrian friendly neighborhood near where they work.  Which is exactly what happened in Vancouver, BC, the city that the mayor's "tall and skinny" strategy is modeled after:  the city cleared the way for lots of development in the urban center, which allowed the city to accept many new residents without fundamentally changing the character of all of the city's neighborhoods.

And Vancouver, by the way, has almost exactly the opposite trends from Copenhagen -- an inner city that has grown substantially since 1960, not depopulated -- coupled with a farmland-protection policy that is simply unequalled in the US, and, on net, far less loss of farmland and rural land than in any of the 20 cities we've studied to date.

Now, that's a model I'm in favor of.

Posted by ClarkWD | Permalink | Comments (8) | TrackBack

May 11, 2005

Burnt CAFE

It's a rare treat to read a dry, technical report and--almost by accident--learn something surprising, counterintuitive, useful and (at least to me) genuinely new. 

Which is exactly what happened when I read this paper (beware, pdf) by Todd Litman at the Victoria Transportation Policy Institute.  The upshot:  raising vehicle fuel-economy standards, which always seemed to me like a good idea, may actually be counterproductive, even if they're truly successful at reducing the amount of gasoline the average vehicle consumes per mile.

Now, I'd long heard the argument that current fuel economy standards (also known as Corporate Average Fuel Economy or "CAFE" standards) were ineffective in practice, because of a big loophole:  current CAFE rules hold big pickups and SUVs to a lower standard than cars.  This has let manufacturers skirt CAFE standards by shifting production away from cars to big trucks, which in turn has led to a gradual decline of the overall fuel efficiency of the US vehicle fleet -- thwarting the purpose of the CAFE standards.

To me, that seemed to be an argument for fixing the big-truck loophole, rather than scrapping the standards outright.  Clearly, the techonology exists to produce more efficient vehicles; and our economy would be better off, and our roads safer, if there weren't as many huge gas guzzlers on the road.  So ratcheting up fuel economy standards for SUVs and pickups--though currently a political non-starter at the federal level--certainly seemed like it would be a wise move over the long term.

Or so I thought.  But Litman's article argues, fairly convincingly, that CAFE standards suffer from the law of unintended consequences.  Improving vehicle fuel economy would reduce the amount of gas a vehicle consumes per mile--which, as a consequence, makes driving cheaper.  And according to Econ. 101 (which I never took, sadly) if something's cheaper, we do more of it.  So, all else being equal, the cheaper it is to drive, the more driving we do.

Here are the numbers: a 10 percent improvement in fuel economy reduces fuel consumption by 6 to 8 percent (a good thing), but also increases driving by 2 to 4 percent.  The increase in driving increases congestion, parking costs, noise pollution, and traffic accidents.  Plus, making driving cheaper fosters sprawl, while an increase in vehicle traffic makes walking and biking more dangerous and less convenient.  Assigning a rough dollar value to these competing effects, it looks as though an increase in fuel economy standards is actually a net economic loss for society, because the costs of increased driving outweigh the benefits of fuel and pollution savings.  Not at all what I expected.

LItman gets similar results for alternative fuel subsidies -- by  reducing the cost of fuel, alternative fuel subsidies encourage driving.  The costs of increased driving largely offset any benefits in petroleum savings.

Fuel taxes are another matter.  On equity grounds, they don't do so well, since fuel taxes tend fall more heavily on the poor than on the well-off.  But otherwise they appear to do a fairly good job of reducing both fuel consumption and driving -- and all the associated costs for pollution, parking, etc.

But even better than fuel taxes, Litman finds, are strategies such as pay-as-you-drive car insurance (PAYD), which turn some of the fixed costs of driving (such as car insurance) into mileage-based fees.  Under PAYD people who drive less would pay less, which is a pretty good deal on equity grounds, and certainly gives people more control over their driving expenses.  But by discouraging low-value car trips, PAYD does well on just about any other measure one can think of.

I'm not quite to the point of thinking that improved CAFE standards are a waste of time.  But Litman's analysis certainly makes me a bigger fan of PAYD than I used to be.

Posted by ClarkWD | Permalink | Comments (20)

April 28, 2005

Bush's Latest Energy "Plan"

Approaching the summer "driving season" when gas prices often spike, President Bush has pumped up a new set of energy proposals. Even the mainstream media regard them as window dressing. (Witness the Washington Post.) But I'll take the proposals as serious and comment.

1. The Bush administration proposes to allow oil refineries on abandoned military bases, claiming that limited refinery capacity is driving up gas prices and that it's hard to get permission to build new refineries. Military bases, as federal property, are exempt from most local regulations.

The overwhelming cause of high motor fuel prices is high world oil prices. World oil prices are high because of lots of demand, especially from the United States and China, and -- especially -- because the oil markets have built a big "risk premium" into prices. "Risk premium" is Wall Street talk for cold sweats. Oil traders are afraid that world oil supply will be disrupted dramatically by violence in the Middle East, such as by crippling the main Saudi oil port. These fears are thoroughly justified. The Bush Administration's military policy in the Middle East is behind this "risk premium."

World oil prices are especially high for the United States because the dollar is down. The dollar is down mostly because of massive federal deficits, created by tax cuts without corresponding spending cuts. The Bush Administration is the cause of this fiscal policy.

Some observers also think the world is already close to "peak oil"--the highest annual rate of production we'll ever reach. At peak oil, most analysts believe, prices go up and become more volatile. This is bad. It may even be very, very bad. According to some few analysts, peak oil also hearkens all manner of other terrible things--pretty much the end of life as we know it. It's the veritable apocalypse. (Excuse my sarcasm. It's just that some of the peak oil folks strike me as scary: they seem positively enthusiastic about dreaming up worst case scenarios. These people, possessed not by reasonable concerns about peak oil but instead gripped with a cult-like obsession about it, remind me a lot of the Y2K cult that held sway in the late 1990s. They also remind me of fringe fundamentalist Christians who believe the end is near, that Armageddon is upon us, and that the Rapture is imminent.)

Refinery capacity is a tiny bit limited in a very few places--the Northwest not one of them--because the nation's fuel appetite is bloated by falling fuel economy (aka, trucks supplanting cars). But mostly, Bush's proposal is irrelevant. Rescuing the dollar by showing serious intent to end deficit spending would have more short-term and long-term benefit to US oil purchasing power. Fully inflating car tires would have far more benefit. And, of course, finding some way out of the quagmire in Iraq would help lower oil prices.

As WaPo notes:

Industry leaders said it is not clear that companies would want to build new refineries because the business historically has not been highly profitable. While demand and profit margins are high now, companies are not convinced those margins will remain high enough to justify new refineries.

2. Bush's plan includes "renewing tax credits for hybrid vehicles and adding them for efficient "clean diesel" vehicles."

That's a good idea. It's just a tiny idea. Hybrids and clean diesel together make up such a tiny share of the vehicle fleet--well under one percent--that they have hardly any effect on total fuel demand. Why not extend the idea to the entire fleet through feebates?

3. Bush also proposes to override state and local government and make the federal government the ultimate arbiters of proposals to build liquid-natural-gas terminals. At least five of these risky facilities are proposed in Cascadia. Such federal intrusion on state and local land-use regulations is wholly unwarranted. If LNG facilities are worth building, the communities that accept them should have a say.

P.S. Oh, and the Bush "plan" also tries to create new incentives for building nuclear power plants. As if nuclear power needs more subsidy than it already has. Even with these subsidies, though, it's unlikely anyone will build any.

Posted by Alan Durning | Permalink | Comments (47) | TrackBack

April 26, 2005

Traffic Jam

I've been putting off commenting on Washington State's recently-passed $8 billion transportation package -- funded by a 9.5 cent per gallon increase and new weight-based vehicle fees -- until I could figure out exactly how I feel about it. I still can't. It's complicated.

In general, I like taxes on gasoline.  Gasoline carries many costs -- security, air and water pollution, climate-warming emissions, and the like -- that aren't captured by the market price.  Which means that, no matter how high the market price for gasoline goes, it's still not high enough to account for all the externalities. So in theory I should be in favor of a gas tax increase.

In practice, though, it matters a lot how the money raised through a gas tax is used.  In Washington state, gas taxes are dedicated to roads and car ferries.  As a consequence, gas taxes in the state have tended to accelerate sprawling development at the ever-receding urban fringe -- in precisely the places where residents have to drive most.  So even though gas taxes increase the cost of gasoline, they've also, in effect, increased its consumption.

This time, however, some anti-sprawl advocates in Washington seem genuinely pleased with the transportation package, touting it as a "win."  They give three reasons:  the package focuses on fixing existing highways, rather than building new ones; it provides nearly half a billion in funding for non-car-centered projects such as bike and pedestrian investments, special-needs transit, and a safe routes to school program; and, while it does provide nearly a billion dollars to I-405, the money is flagged for managed (i.e., tolled) lanes that encourage carpooling and transit.

I'm a little less sanguine, though.  And not just because increasing highway capacity on I-405 may foster sprawl, but more because the package provides $2 billion for my pet peeve: rebuilding the Alaskan Way Viaduct.

I think that the city's preferred option for replacing the Viaduct with a tunnel -- which would cost $4.5 billion to replace 2.2 miles of highway, plus some work to reconnect the street grid -- is wildly expensive, especially given that transportation planners think that they could raise at most $100 million by tolling the facility.  (In other words, the tunnel's supporters think that it's worth 45 times as much as drivers themselves would be willing to pay for it.)  Construction is likely to cause serious disruptions from 2009 through at least 2016, and according to the Seattle P-I, during construction itself...

traffic will likely be shifted off the old structure onto downtown surface streets and onto Alaskan Way past waterfront businesses. A temporary bypass may be built between Broad and Pike streets.

Which of course makes me wonder -- if the Viaduct is so darn crucial that we have to spend $4.5 billion to fix it, how is it that the city thinks it can survive during constrction, with all of the Viaduct traffic forced onto city streets?

Now, really, a tunnel isn't the worst thing in the world.  By 2016 or so, Seattle might have a reasonably attractive waterfront -- though a high-speed highway nearby, coupled with a decade of neglect, may mean that not too many people will be inclined to live there. 

But what really gets me is this:  the $2 billion in state funding will disappear within two years if the region can't find the rest of the money to build the tunnel.  The state's just going to take it away, and spend it somewhere else.  So the region (mostly Seattle) is going to have to commit another $2 billion, at least, to lock in the state funds.  Seattle residents are already taxing themselves for the monorail; we're helping to pay for light rail; the state is phasing in a 14.5 cent per gallon gas tax; we're facing expenses for repaving I-5 and rebuilding the 520 bridge; and on top of that, Seattle is still going to have to come up with a couple of billion extra to pay for the rest of the Viaduct.

Here's the risk: with all of the expensive transportation mega-projects underway right now, there's a distinct chance that Seattle residents will balk at the cost of the tunnel -- which was the most expensive of the proposed designs for replacing the Viaduct.  But with $2 billion in construction money already on the table, the city may opt for one of the lower-priced options:  a surface highway, or simply rebuilding the existing structure.  Which would mean that Seattle would be saddled with a waterfront highway for the next 50 years, just as it had one for the preceding 50.

One hundred years of highway. Ugh.  I'd much rather have nothing than that.  It would be much better to use the $2 billion to replace the seawall, tear down the Viaduct, and invest in a plan to move people into and through downtown without a gold-plated highway. 

Any takers, Seattle?

Posted by ClarkWD | Permalink | Comments (9)

April 19, 2005

Lessons on Sprawl and Transit...from Los Angeles?

Well, from the LA Times, at least. 

The paper's had a series of guest editorials about traffic, transit and urban planning -- specifically, how sprawling, congested LA can get itself out of the fix it's put itself into over the last 60 years or so.  The LA area is surprisingly dense, but the population is spread out fairly uniformly over a large area -- which makes it very hard to service the region cost-effectively using transit.  At the same time, building new roads has become both exhorbitantly expensive and politically unpalatable.

Sounds a little like some parts of the Northwest, no?

To summarize...

  • Jonathan Richmond argues that the city should forget about expensive transportation megaprojects--both highways and rail--because they're simply too costly and not effective in a dispersed urban environment.  Instead, he says, "the only way to dramatically improve traffic flow in Los Angeles is to charge tolls."  A pay-as-you-drive system would keep streets and highways clearer; when coupled with a first-rate bus system, it could improve mobility for everyone, not just the well-off.
  • UCLA professor Donald Shoup, author of The High Cost of Free Parking, argues that free parking clogs the roads and undermines transit:  "Even if Southern California spends billions of dollars to build a larger rail system, a big problem will remain: Few commuters will ride the train if their employers continue to offer them free parking."
  • USC prof. James Moore thinks that the government should let the private sector enter the transit business: "If we want transportation services — jitneys, private buses, cabs — that can compete effectively with automobiles, we are going to have to bring transportation entrepreneurs out of the shadows."
  • USC professor William Fulton writes a sprawling and disorganized piece that makes a number of points, among which that LA's new mayor should "make it cool to get around town without driving."  (How a mayor can do that, I don't know.  Mayors aren't cool.) He also argues that the real task is to shape development patterns over the next 30 years: "Most importantly, the new mayor must aggressively use his power over the development process to promote dense new projects around rail and bus rapid transit stops."

Obviously, I don't agree with everything these folks have written, and haven't thought a lot of it through. But it's interesting to see the US city with the worst traffic problems in the country trying to figure out some solutions -- the nuggets are revealing.

Posted by ClarkWD | Permalink | Comments (20)

April 15, 2005

Bus Rapid Transit

In the great Seattle transit wars (light rail--monorail--buses), I have no ideological attachment to any particular technology. I'm interested in real quantitative analysis of long-term benefits per dollar spent. So, in today's two long articles on Sound Transit in the Seattle Post-Intelligencer and the Seattle Times, the nugget that stood out to me as important was this one, from the PI:

"A study by Sound Transit staff showed that rail [in the state route 522 corridor] would cost about $1.6 billion in 2005 dollars to build and attract only 6,700 daily riders in the year 2030. Bus rapid transit would attract significantly fewer riders -- 2,700 a day -- but would cost only about $110 million to build."

My calculator tells me that investing in bus rapid transit in this corridor yields one new rider (presumably, daily, for many, many years) for every $41,000. Investing in light rail in this corridor yields one new rider for every $239,000. Buses win!

Posted by Alan Durning | Permalink | Comments (20)

April 12, 2005

Home Off the Range, II

As we argued before, an elegant approach to resolving grazing disputes, regenerating dryland ecology, saving taxpayer dollars, and aiding the rural economy, is to allow ranchers to accept money in exchange for retiring their permits to graze livestock on public lands. (Our description is here [download pdf, see page 26].)

The esteemable High Country News devotes its current cover story to this proposal and its slow progress across the American West. It's got special traction in central Oregon.

But the best part of the story package is an interview with Andy Kerr (which is convenient, because its the only part of the package available for free to nonsubscribers on the website).

The crux of Andy's pitch:

The market for cattle ranchers has changed; today, there is intense international competition in the beef industry that makes grazing on vast acreages in the arid West uneconomical. Plus, we’ve changed the rules. Ranchers have to deal with federal laws protecting water and endangered species, and also with more recreational users who don’t understand or respect ranching.

The public-lands ranching industry is going extinct; not as fast as the sage grouse or the grizzly, but it is going extinct. And the buyout is a fair way to address this inevitability. It’s a politically elegant solution: The golden saddle.

Posted by Alan Durning | Permalink | Comments (10)

April 07, 2005

The Cost of Growth Management?

Home prices are still booming, at least in Puget Sound: they jumped 13 percent in the region last year, at least 4 times as fast as inflation. A Seattle Times article reporting on the trend explains it using Economics 101 logic: many buyers and few sellers. Makes sense. Scarce supply plus high demand usually brings about rising prices.

But then the article hints at a common explanation for restricted supply (and hence higher prices), "lack of buildable land." Something seemed fishy about this explanation, so I did some poking around. First, I compared trends in growth around the region (sprawling versus density-increasing). Then, I took a look at where home prices increased fastest, over the last year, within the region.

What I discovered was a little surprising to conventional wisdom.

A few years ago, NEW compared growth trends (pdf) in King, Snohomish, and Pierce Counties from 1990 to 2000. King was the clear leader: 66 percent of its population growth was accounted for by growth in dense neighborhoods (places with more than 12 people per acre). Pierce was the clear laggard: 28 percent of its growth occurred in the lowest density suburbs (with only 1 to 5 people per acre). By contrast, both Snohomish County and King County had fewer people in low density suburbs in 2000 than in 1990, primarily because places that were once low density added people and became medium density (5 to 12 people per acre).

Moreover, of the three counties, Pierce County is by far the least stringent enforcer of the growth management boundaries. In 2000, less than three-quarters of new housing permits went inside the growth boundaries (versus 84 percent in Snohomish County and 95 percent in King County).

But despite Pierce County's predilection for low density suburban growth and rural land consumption, housing prices rose faster there last year (19 percent) than they did in King County (15 percent) or Snohomish County (14 percent). So, at least last year, housing prices rose substantially faster in the most sprawling county.

In fairness, housing prices are still lowest in Pierce--and I suppose someone could argue that's because of the county's limited limits on suburban growth. The Seattle Times didn't report on price increases by city in Pierce County, but it did break down price increases by region within King County. And that was interesting too.

Consider the two regions of King County with the most buildable land, the Eastside and southeast King County. On the Eastside, prices are the highest in the county; in southeast King County, prices are the lowest. On the Eastside, prices rose almost exactly as fast, in percentage terms, as the city of Seattle where there's virtually no new buildable land at all. Southeast King County had the slowest growth in prices. North King County, which has a lot of medium density suburbs, had by far the fastest growth in prices--25 percent in one year.

Add it all up and what do you get?

Right. It's a head-scratcher. There's no obvious correlation between trends in sprawl and trends in prices, at least in the Puget Sound region last year.

Surely, price increases are driven by a combination of factors--supply, current prices, and desirability. But it is not at all clear to me that new buildable land is a driving force in how home prices increased last year. If it did, how could you explain Pierce County having the fastest price increases? Or how could you explain the Eastside and Seattle growing at the same pace? (These are not rhetorical questions, by the way. I would love to hear a cogent explanation.)

The problem with the buildable land theory, it seems to me, is that it doesn't account for the large potential for in-fill and increased density in already built-up areas. Supply is not necessarily restricted by growth boundaries because there is ample opportunity for townhouses, apartment buildings, condos, duplexes, mother-in-law apartments and the rest. And in the Northwest's comparatively low density cities (compared to cities in the East or in Europe), there is plenty of room for in-fill.

Posted by Eric de Place | Permalink | Comments (12)

April 06, 2005

Flight of the Condo

I'm a little late picking this up, but both the New York Times and the Seattle Times have now run stories on what's supposedly a hot new trend in Seattle:  adding luxury condo units to downtown hotels.  Condo-owners get the benefits of hotel amenities, such as room service, room cleaners, valet parking, and a concierge. 20nati Plus, at least one of the proposed hotel/condo plans would be bundled with a mix of stores and services, such as a grocery and a bank.  But residents pay a pretty penny for all the amenities, as the properties are largely aimed at the very high end of the real estate market.

I don't quite know what to make of the hoopla, since I don't imagine that this is really a major housing trend.  There are just four hotel/condo projects underway in downtown Seattle, and one in Bellevue, which makes this kind of development more of a niche than a major market segment.  But the condo units are apparently selling like hotcakes, which does signal something positive:  that the market for an active and vibrant downtown lifestyle seems to be taking off. 

And in terms of curbing suburban sprawl, high-end downtown development is a good thing.  To some extent, the folks to whom this sort of development is marketed are the same folks who'd have the money for big McMansions.  Providing attractive opportunities for them downtown helps pull development inward, thereby reducing development pressure on farmland and open space on the urban fringe. 

Plus, people who live downtown, and within walking distance of services and jobs, tend to drive a lot less -- which is good for the climate, the economy, public safety, etc. etc.

The only problem, though, is the optics.  One of the big raps against downtown development is that it's all about gentrification--and that it raises the cost of downtown housing for the poor and middle class.  To the extent that there's a lot of press attention focused on a few developments that cater to the ultra-rich, it can help foster the impression that ordinary people are being priced out of the market.

Of course, all things being equal, increasing the supply of downtown housing should make housing more affordable, not less.  (At least, that's what my high school economics teacher would have said.)  But all else isn't equal -- if you create a hip, livable neighborhood, more people are going to want to live there.  And if you don't have to drive as much to live there -- and maybe don't even need a car at all -- you can put some of your transportation costs towards your rent or mortgage.  Those forces tend to increase the demand for downtown housing. And higher demand means higher prices.

Which points to the real challenge:  if you make a neighborhood a better, more attractive place to live, then people are willing to pay more to live there.  That's what the developers are counting on -- and rightly so. But it does create some financial strains. 

In the end, though, it seems that there are only two long-term solutions to maintaining some affordable housing options near downtown.  The first is to make downtown living really, really unattractive:  don't add stores, schools, or amenities, let the infrastructure degrade, and encourage what few residents are left to move out of downtown. (Think of this as "The Detroit Option" -- where a once vibrant city has turned, over time, into a hollowed out core.) People won't want to live downtown, which keeps real estate surprisingly affordable.

And the second option is to increase the supply of downtown housing to the point that supply meets demand at a price point that lots of people can afford.  Someday, I hope we can call that The Seattle Option.

Posted by ClarkWD | Permalink | Comments (12)