Financial Incentives Distort Smart Growth Debates

Smart Growth advocates tell the public that their policies will reduce driving, lower infrastructure costs, protect the environment, and cure social isolation in the suburbs. The actual results have been less than satisfactory, yet Smart Growth continues, in part because city officials and private actors have found it’s a way to access state and federal funds. Randal O’Toole joins us again from Reason magazine (January 1999):

“Dense Thinkers”

A recent Sierra Club study, “The Dark Side of the American Dream,” is representative of New Urbanist thinking. “The automobile way of life is unhealthy, anti-social, and unsustainable,” claims the report, which was partly funded by the U.S. Environmental Protection Agency. The New Urbanism, in contrast, seeks to create neighborhoods “where jobs, shopping, services, and recreation are all nearby” so that people can get around without cars. Low-density suburban development–pejoratively termed “sprawl”–leads to “increased congestion, longer commutes, increased dependence on fossil fuels, crowded schools, worsening air and water pollution, lost open space and wetlands, increased flooding, destroyed habitat, higher taxes and dying city centers.”

None of these claims is documented, which isn’t surprising, because none of them is true….

Consider the fate of Laguna West, a widely touted Sacramento suburb designed by California architect and New Urban guru Peter Calthorpe. Calthorpe thinks suburbanites suffer from a “sense of frustration and placelessness.” To fix this, he designs what he calls “pedestrian pockets” or “transit-oriented developments” that plug people into where they live.

As envisioned by Calthorpe, Laguna West would have consisted of a “transit center” surrounded by high-density apartments and condominiums. A ring of single-family homes on small lots would surround the high-density core. Scattered throughout would be stores, offices, and other commercial uses. Most people would be able to walk to shopping, and many would be able to walk to work or the transit center.

But Laguna West was a financial failure. No one wanted to live in the high-density area, and as a result its developer went bankrupt…

…while higher population density may slightly reduce per capita driving, it vastly increases congestion and pollution…

Real-world experience suggests that 10 percent less per capita driving with a doubling of density is about the best that can be expected [resulting in 180 percent more cars]…

…though they rarely talk about it in public, a major short-term New Urbanist goal is to increase, not reduce, congestion. After all, clogged, slow-moving traffic might encourage a few people to get out of their cars, while punishing those who do not…

“As traffic congestion builds,” says [Minnesota’s Twin Cities Metropolitan Council’s] Transportation Plan, “alternative travel modes will become more attractive.” Of course, as congestion builds, alternative places to live will become more attractive too…

…most auto pollution is a function of congestion and density: Cars use more energy and pollute more when they drive slowly or in stop-and-go traffic than when they drive fast in free-flowing traffic. The best prescription for reducing air pollution, then, is to reduce congestion by adding highway capacity or making other improvements to speed up traffic.

Dirty air is also a function of density, which promotes the concentration of dangerous levels of pollutants. The EPA rates urban air pollution as extreme, serious, moderate, marginal, and none. Not surprisingly, the worst pollution is found in the urban areas with the densest populations…

… taxes and urban service costs are actually higher in high-density areas.

A 1992 Duke University study, for example, analyzed data from 247 counties that contain well over half the population of the United States. The researchers found that, above a density of 250 people per square mile (which is a rural density), costs rose as densities increased. In fact, urban service costs in areas of 24,000 people per square mile–a density typical of the core of older cities such as Philadelphia and Boston–were nearly 50 percent greater than in areas of 250 people per square mile…

Residents of San Diego know all about that. In 1980, the city adopted a New Urban plan that discouraged development outside of an urban ring and promoted “infill” development in the core area (“infill” is the development of vacant lots and redevelopment of existing residential areas to higher densities.) Ten years later, the sewage system was regularly breaking down, traffic congestion had significantly increased, and the city estimated that it needed $1 billion to bring urban infrastructure up to its 1980 levels…

Despite its theoretical and practical failings, the New Urbanism is quietly sweeping the nation…

New Urbanist supporters include planners, environmentalists, federal bureaucrats, central city officials, downtown businesses, and construction companies. Their motivations range from idealism to economic self-interest, but all have a stake in maintaining or rebuilding tightly packed urban cores. Together, they also have the clout to get things done…

A number of friendly federal agencies directly finance the New Urbanist agenda. For instance, as part of its Transportation Partners program, the EPA gives several hundred nonprofit organizations money to lobby for transit and pedestrian ways and against highways…

New Urbanism is also supported by DOT and Department of Housing and Urban Development requirements that urban areas have metropolitan planning organizations (MPOs) representing most or all local governments…

Since 1950, nearly all urban growth has been outside big cities. That massive population shift toward suburbs and mid-size cities has made it tougher for traditional central cities to generate tax revenue and to qualify for pork-barrel spending tied to population. The MPOs change all that. Because of its relative size, the strongest player in any MPO is invariably the largest city in the region. The MPO gives such cities an instrument to redirect development dollars their way and to get revenge on the suburbs (tellingly characterized as “godawful trash” by one Portland City Council member). The same holds true for downtown business interests: Like their public-sector counterparts, they resent the shopping malls, office campuses, and modern factories that have grown up in the suburbs. For central city officials and businesses, then, the New Urbanism represents the latest ploy to maintain their way of life…

Light rail not only restores to downtown some of its former centrality, it represents a huge pork-barrel project for the fifth member of the congestion coalition: the civil construction industry…

…rail adds up to huge profits for a wide variety of consulting, engineering, and building firms.

Light rail does nothing to reduce congestion; in fact, because most transit systems sacrifice more-popular bus routes once they introduce less-popular trains, it typically increases congestion. But that is not the construction industry’s concern. So long as New Urban interests can channel money toward rail, the construction industry will be only too happy to finance the political campaigns of New Urbanist city officials and any ballot measures that might be required to obtain local rail funding…

See also:

Randal O’Toole: “The Folly of ‘Smart Growth'” (Regulation magazine, Fall 2001, PDF)
Another argument that smart growth advocates often use is that cities cannot afford to subsidize the sewers, water, and other infrastructure needed to support low-density suburbs. In fact, as noted by Harvard researchers Alan Altshuler and José Gómez-Ibáñez, it costs far less to provide infrastructure to new developments than it does to augment the infrastructure of existing areas to support the higher densities demanded by smart growth. Older studies that purported to demonstrate the “costs of sprawl”–which were based entirely on hypothetical data–seem to have gotten it backwards: An analysis of actual urban service costs by Duke University researcher Helen Ladd found that the costs are higher in higher densities.

Metro Portland’s Long Experience with Smart Growth: A Cautionary Tale
It is certainly the case that suburban-type development requires infrastructure development. But so does in-fill development. The important difference is that infrastructure development in the suburban context occurs in a green-field development setting; that is, infrastructure development costs are favored by the relative ease with which right-of-way can be obtained, and the fact that there is not much need to acquire and demolish existing development. For example, Portland is currently laboring to finance a multi-billion dollar consolidated sewer outflow system to accommodate the effects that dense (and impervious) development is having on surface water accumulations in the region.

“Sprawl and Congestion—is Light Rail and Transit-Oriented Development the Answer?”
I believe in choices, and in markets. But markets work effectively only when there’s a reasonable relationship between cost and price. Unfortunately, the cost of automobiles to society largely is borne by taxpayers and residents, rather than by automobile owners and drivers…

What is true for automobile drivers is in considerable degree true for transit patrons. In Seattle bus riders pay only 25% ($1.25) of the cost of a one-way trip, while the remainder ($3.75) is borne by taxpayers. The buses get considerably worse per-passenger miles per gallon of fuel than autos do, with prodigious externalized costs…

It is sheer fantasy to spend billions of dollars on a few rail lines, in the belief that such expenditures will cause a massively dispersed metropolitan region to revert its settlement patterns to those of the pre-automotive era…

Every US community that instigated rail lines in the past quarter-century experienced burgeoning transit costs and falling transit marketshare. Every one. The report of Seattle’s Interim Monorail Committee described the reasons:

The very factors that drive congestion—dispersed neighborhoods and business centers, increased population, higher ratio of employed adults, high automobile ownership—undercut the viability of conventional public transit technologies. The bus is a flexible technology, and its capital cost is fairly modest. But it does not offer a reasonable alternative for most commuters in a dispersed metropolitan area, and it is poorly equipped to serve the “chain-linked” trips common to today’s travelers. Its high operating costs (especially labor) severely encapsulates its ability to serve mobility needs. Metro’s bus operations are 75% subsidized, underwritten by a hefty 6/10ths percent sales tax plus a share of the Motor Vehicle Excise Tax equivalent to 3/10ths percent sales tax—yet it struggles to maintain a mere three percent marketshare of trips…

Consider the civic leadership in the central Puget Sound area, including leading political figures and institutions, the Chamber of Commerce, Boeing, and various good government and environmental associations. They have led the public to believe, in spite of compelling evidence to the contrary, that its salvation from congestion lies in a multi-billion dollar investment in a “starter-rail” project, to be followed by a sequence of additional multi-billion dollar rail projects. Since these projects cannot possibly catch up with the growing population, the approach also is supposed to “drive” the wholesale adoption of compact, pedestrian-friendly, environmentally-correct, rail transit-oriented communities, similar to those of the pre-automotive era. The unreality of these pretensions is self-evident, and the experiences of every American city that has preceded Seattle along this course demonstrates that the outcome isn’t going to be pretty: higher taxes, burgeoning debt, loss of transit marketshare, intensifying congestion…

The Portland City Council wants to make another try at a north extension of Portland MAX. The estimated cost, $350 million for 5.6 miles of rail—$62.5 million per mile—is crazy. The benefits can’t possibly approach the cost: even in Chicago they couldn’t justify a $60 million per mile light rail system to serve so dense an area as The Loop. But Portland is counting on a 70% federal subsidy, $240 million. So, with that premise, it’s less than $20 million per mile for local folks, they hope to get lots of free money sloshing around in their economy compliments of the American taxpayer, and if they don’t worry now about increased operating and maintenance costs later, and if they don’t imagine that they’ll be expected to reciprocate and help underwrite similarly dubious projects in other jurisdictions—well, yes, in those conditions, there’s a certain logic to do what the Portland City Council, in its wisdom, supported by the “transit-oriented development” group, wants to do.

It’s predictable that public bureaucrats, the construction industry and unions, certain professional service providers, and even business associations would promote such projects, each reaching for a chance to cash in on some piece of the action. It’s also predictable such a powerful constituency would gain the support of pliable local politicians.

NY Times Magazine: “The Autonomist Manifesto (Or, How I Learned to Stop Worrying and Love the Road)”
Smart-growth advocates say that suburbs have flourished at the expense of cities because of government policies promoting cheap gasoline, Interstate highways and new-home construction. What if the government, instead of devastating urban neighborhoods by running expressways through them, instead lavished money on mass transit and imposed high gasoline taxes to discourage driving?

As it happens, that experiment has already been conducted in Europe with surprisingly little effect. To American tourists who ride the subways in the carefully preserved old cities, the policies seem to have worked. But it turns out that the people who live there aren’t so different from Americans. Even with $5-per-gallon gasoline, the number of cars per capita in Europe has been growing faster than in America in recent decades, while the percentage of commuters using mass transit has been falling. As the suburbs expand, Europe’s cities have been losing people, too. Paris is a great place to visit, but in the past half-century it has lost one-quarter of its population…

…for most Americans, mass transit is impractical and irrelevant. Since 1970, transit systems have received more than $500 billion in subsidies (in today’s dollars), but people have kept voting with their wheels. Transit has been losing market share to the car and now carries just 3 percent of urban commuters outside New York City. It’s easy to see why from one statistic: the average commute by public transportation takes twice as long as the average commute by car…

If you add u
p the costs of driving — the car owner’s costs as well as the public cost of building and maintaining highways and local streets, the salaries of police patrolling the roads — it works out to about 20 cents per passenger mile, and drivers pay more than 19 of those cents, according to Cox. A trip on a local bus or commuter train costs nearly four times as much, and taxpayers subsidize three-quarters of that cost…

…when you take population growth into account, traffic congestion has been increasing more rapidly in the cities that haven’t been building roads…

The Republican: “‘Hamp highest in state report” (11/25/07)
For the fourth consecutive year, Northampton has earned the highest score on a state report card that measures community commitment to sustainability and smart growth…

Wayne M. Feiden, the city’s planning director, said Northampton’s high achievement on the test has the practical benefit of pushing it to the front of the line for state funding…

In a letter to the state’s communities sent last June, Gov. Deval L. Patrick touted the Commonwealth Capital program as a way to achieve “smart growth”…

Sustainable Northampton Plan (PDF)
[Page 50:] “Traffic congestion problems should generally be addressed by providing and enhancing alternatives to single-occupancy vehicles, rather than by adding roads or road lanes. The long-term effect on ‘induced traffic’ (individuals’ decision to drive on a particular road or route encouraged by perceived low congestion) should be carefully considered whenever roadways are reconfigured or widened in an attempt to relieve congestion.”

Sustainable Northampton Plan: The December 2007 Changes (PDF)
Added new objective 7 [to page 54]:
Participate in regional efforts to consider the expansion of passenger rail service along the North-South rail links with service to Northampton.