Tuesday, August 23, 2016

Building affordable housing, where has the entry-level house gone?

One of the biggest topics of discussion in urbanist circles, and even beyond that, is certainly affordable housing. This debate is very politically fraught, even the term "affordable housing" is up for grab, with some people seeming to define it simply as "below-market price" housing.

Now, much has been written about the planning reforms that we need to achieve more affordable housing. But not much has been said about what affordable housing actually looks like. Sometimes, it feels like some people think that affordable housing is run-of-the-mill housing, just cheaper, and that's not how it works. You wouldn't expect a KIA subcompact to be identical to a Cadillac large sedan.

So let's look at what affordable housing actually is, in a functioning market. OK, sure, any housing can be "affordable" to the resident if it's subsidized, but since housing is such an expensive spending post, subsidizing all housing just isn't really plausible.

Building affordable homes

In this era where planners love to build neighborhoods from scratch to a final state, believing that what is planned is what will be built and what will remain there forever, the idea of adding affordable housing is often first conceived as the idea of building housing that is affordable from the get-go.

Now, theoretically, any housing can be "affordable" if subsidized, either directly or by regulation that forces the price of some units to be maintained lower than market value. But let's ignore that possibility here, let's look at what affordable housing can really be. Without subsidies, developers have to recoup the cost of constructing homes from those who buy the homes, so a look at the actual cost of building a house should provide a glimpse into affordable housing.

Like any project, the first step is to establish a budget. For simplicity's sake, I will suppose that an affordable housing option is 3 times gross household earning, given my sources, all the amounts will be in Canadian dollars, adjust accordingly for American figures.

OK, so in Canada, the median household income is 69 000$. The low-income threshold for an household of 2 people is around 25 000$. So, as a gross estimate, an affordable median housing unit should be about 210 000$, and an affordable housing option for a poor household should be 75 000$.

So, what does that buy you?

I'll use a catalog of housing plans in Québec which provide estimated construction costs for their different plans to find out. You can check out the website at http://www.planimage.com/fr/. First, I'll restrict myself to single-family structures.

So, a 210 000$-house would be something like this 3-bedroom 1 260-square-foot bungalow, with an unfinished basement that offers the possibility of doubling the living space (so total potential living space of 2 520 square feet).

Or a 3-bedroom 2-story house with 1 546 square feet of living space with an unfinished basement of 773 square feet, for a total potential living space of 2 319 square feet.

On the other hand, what does 75 000$ buy you? Well, looking at the catalog, houses don't even go that low, the most affordable house model is a 2-story 910-square-foot house with 3 small bedrooms and an unfinished basement that can increase total living space to about 1 300 square feet.

If we look at bungalows only, then the cheapest bungalow model is a bit pricier and a bit smaller (768 square feet), but with a potential of over 1 500 square feet after the basement is finished.

But all is not lost, because filed under "chalet" or "secondary homes" meant to be only occasionally used homes in the countryside, we can find the following.

These are different from the bungalows above in that they are lacking in basements, meant to be built on concrete slabs. Which means that these do not have expandable living spaces. Note that unlike the previous homes, where the construction cost per square foot was around 100$, the small houses actually have higher construction costs per square foot, around 150$.

Still, this shows that it is theoretically possible to build affordable housing in North America, even in the form of single-family houses, housing that can be affordable even for people at the threshold of poverty. And indeed, such small houses can sometimes be seen in Japan in clusters that seem to indicate public housing developments in

Probable public housing developments in Hokkaido, Japan, note the number on the buildings, typical of Japanese public housing developments

Small 1-story houses in Obihiro

Of course, there is always the option of multi-family developments, and the same site provides a range of low-rise options for multi-family housing.

This triplex offers three 2-bedroom 950-sf units for about 300 000$ (around 100$/sf)

This 4-plex offers four 2-bedroom units, each 910 square feet, for 383 000$, or about 100$ per square foot too.

This 6-plex offers six 2-bedroom units each about 1 000 square-foot big for 604 000$, or about 100$ per square foot.

All of these are low-rise, walk-up buildings, all offer similar construction costs per square foot to the house models. So theoretically, it is certainly possible to build affordable housing for the middle-class and even the poor. Caveat: construction costs do vary from place to place, the biggest variable being the price of labor, as most of a house's building cost is labor, not materials.

Note that all these buildings have common characteristics of being low-rise, of being wooden-framed structures, of having little public areas (for multifamily units) and lacking elevators or any complex mechanical system. From what I've read, this is the most affordable type of housing one can build (at least per square foot). As long as you satisfy these criteria and do not have a tiny building, the construction cost per square foot tends to be roughly the same, around 100$ per square foot.

On the other hand, high-rise constructions that require concrete frames, elevators, sprinklers, plenty of mechanical fan ventilation of inner areas and units, etc... tend, from what I've read, to cost 50 to 100% more to build than the low-rise units. Not only that, but these mechanical systems need to be maintained, which adds to the cost over time. So if an household can afford only a 700 square-foot apartment in a low-rise unit, maybe it could afford only a 350 to 450 square-foot unit in an high-rise.

I know, I know, a building's cost is not limited to construction cost. So let's talk about this.

Land cost

You can't just build housing in the air, you have to acquire a plot of land first. Since land is not built, but rather pre-owned, it's all a matter of supply and demand, without construction costs as a yard stick to estimate value in a functional market. However, not all land is worth the same, the desirability of the location varies and creates submarkets. For example, if you have subway lines in a city, land within walking distance of a subway station may well be a submarket for land, and that type of land may well be in shortage even if there's plenty of undeveloped land waiting for buyers all around the city, land that just happens to not be near subways.

Furthermore, a building should have to pay for the municipal infrastructure needed to link it to a city's street grid and public services (drinking water, sewers). I can't find good figures to estimate the cost of these, I've seen the cost of entire street reconstruction of around 5 000$ per linear meter, but construction may actually be cheaper than reconstruction in this case.

So, anyway, to be able to build affordable housing, you also have to find affordable land, which means undesirable land that is in high supply. Usually, such land is found mostly on the edge of built areas, leading to the "drive 'til you qualify" phenomenon. Alternatively, you have to find a way to cut down on the land consumption per unit, have smaller lots or more units on a single lot.

Since the value of land is linked to the supply of it, it would stand to reason that greenbelt regulations or agricultural land protection laws that forbid development on land restrict the supply and thus make land on the fringe more expensive. There is also a matter of speculation, if land appreciates and taxes on land are low, speculators may believe it best to put off putting their land on the market to let their value climb more. If there are lots of speculators, this can artificially constrain the supply of land too, so putting higher taxes on land to force speculators to put their property on the market faster can help land prices go down.

Building affordable housing... a losing approach?

All in all, building housing for the middle-class ought to be possible, if you select an affordable housing type in a low-value location and/or on a small lot, or low-rise apartments in a likewise affordable location. However, it is hard to find a way to do so for the poor, especially once you take into account transport costs in areas that require cars to get around. In general, it would be best to build along existing rapid transit lines, but these are unfortunately too rare in North America, especially lines that extend beyond the urban core. To really find affordable housing without subsidies, we have to find other alternatives than building housing from scratch.

Still, why is affordable housing for the middle-class, so common in the post-WWII era, so rare nowadays?

The case of the post-WWII entry-level house

The decades following WWII in most of North America, and to a lesser extent, Europe, saw the rapid propagation of affordable single-family houses that would become the homes of an entire generation. Even families with just one income-earner could afford single-family homes. What was the recipe for that era? How did they achieve this?

Well, construction cost-wise, the houses built in that era were not particularly expensive to build, they were cookie-cutter wooden-frame small houses which were often only 800 to 1000 square-foot big, generally sold with unfinished basements or attics to cut down on costs while retaining the possibility for expansions.

Levittown, NY houses, the base models were about 10-meter wide and 8-meter deep, for a floor area of 80 square meters, around 880 square feet, without basement (built on concrete slabs) but with an unfinished attic for future expansion. Many houses have been so modified they're barely recognizable nowadays.
These houses were made as affordable as possible, with the idea that once the main house is paid for, the owners could modify it to fit the needs of their growing family.

Houses such as these are still affordable to build today... it's just a matter of finding cheap enough land.

And that is the single most crucial factor of the post-WWII starter home, which is hard to reproduce. Houses built in this era were built in perhaps the single greatest period of land glut in the history of urban development. This oversupply of land for urban development was the result of technological upheaval in the form of mass motorization and of the rapid creation of the interstate/freeway system. Though the freeways were made to help rapid movement from city to city, they were rapidly taken over by commuters who used them to be able to access cheaper land while maintaining access to the jobs and services of the cities, which then still held most of the jobs and businesses.

Before cars, the fastest mode of travel inside cities was transit, which meant that people had to find land within reasonable walking distance of a streetcar line. That limited the amount of land each streetcar line made available to development and encouraged a still somewhat dense development form...
Streetcar suburb of Chicago
... once the middle-class started acquiring cars, their travel speed increased tremendously. Once limited to 10 mph on transit lines, they could now drive at 20 mph on city streets and even faster on rural roads. Towns that used to be self-contained cities became suburbs of bigger cities as cars reduced travel time to mere minutes between towns separated by 5 or 6 miles. People no longer needed to live in the same city they worked, if land was cheaper in the next town over, they could go there.

Land within easy reach of a major city in the streetcar era, with the streetcar lines in black
In the car era, the land within easy reach of the city has been increased significantly, creating a huge glut of land to develop in the suburbs
The construction of the freeways made this even truer. Now, distances that might have taken a day of walking to cross could be done in 30 minutes. This addition of land to develop on the market brought the price of land way down, at the same time that the Green Revolution made farm lands no longer as essential as before, since the productivity of each acre had been multiplied, and freight could easily feed cities from food grown hundreds of kilometers away.

Though there was a huge movement to metropolitan areas in that era, the amount of land was so great that land was dirt-cheap.

So, small cheap houses with unfinished basements and attics, land made nearly worthless due to the glut brought about by cars and freeways, these are the ingredients for the era of the cheap "starter" home of the post-WWII period.

Where did the starter home go?

The era ended simply because the land glut of the post-WWII era turned into a shortage in many metropolitan areas. While land was cheap, people wasted it with big plots and endless parking lots, but at one point, even the large amount of land started running out. Not only that, but congestion started occurring rapidly because of the spatial inefficiency of private vehicles, reducing travel speed and reducing the land supply. Maintaining speed required building larger and larger freeways and highways, increasing public spending on infrastructure significantly without adequate return on investment. Some areas also implemented greenbelt policies, further constraining land supply.

The dream of a cheap house also came at exponentially higher transport costs, making people depend more and more on oil imported from unsavory overseas regimes. What one didn't spend on housing, one started spending on cars.

It's important to point out that starter homes are still around in second-tier cities that have not maxed their land or which still support the ever-growing freeway system to keep adding land to develop.

Starter home built in 2014 in the suburbs of Indianapolis, still affordable for a one-income family
But what about the existing starter homes built after WWII, aren't they still affordable?

Well, no. The big problem of a starter home is that it's only cheap when it is first built, because it is barebone. Once the owners start making the house theirs to accommodate the growing needs of the family, the house gets bigger and more luxurious. Every addition to the house results in higher market value because of increased desirability. So once the original owners are ready to move out, the house is no longer a starter home, but a big, well-furnished home from which the owner will expect to recover the costs of remodeling.

That is the issue of the "starter home" or "grow home" idea. That home is only affordable once, for its first owners. So for every generation to get its "starter home", every generation has to build entirely new neighborhoods in greenfield areas, where land is cheap. When a metropolitan area matures, this ideal no longer works, the greenfield areas are just too far and are disconnected from the city. So, what can be done?

This is long enough...

I initially wanted to talk about the alternatives for affordable housing in this article, but it's clear it's best if I stop here and write another article. This article only looked at one way of obtaining affordable housing, namely the one way that people tend to obsess about: building housing that is affordable from day one, because of the current supposition that neighborhoods are essentially pieces of art to preserve over the years rather than living and evolving human ecosystems.

Sunday, July 24, 2016

City taxes as urban growth policies: choosing the taxes that get you the city you want

Let's talk about taxes. Sure, nobody likes paying taxes, and the discussion about them tends to be about their amount, and not how that amount is raised. But that is a wasted opportunity, both as a matter of fairness and as an opportunity to do efficient urban regulation.

The issue of fairness is simple: a city raises taxes because it provides certain services and to support public infrastructure. Therefore, a city should make sure it raises its taxes on people who use these services most or that require more of it by design, to avoid subsidizing one lifestyle over others.

On an urban planning level, people, whether they be homeowners, speculators or developers, make economic decisions all the time. Whether to buy, whether to sell, renovate or not, etc... A city is the result of a vast number of economic decisions. Tax policies, by increasing the cost of some options over others, thus influence the final decision people will make, and will change how the city will evolve and look.

These effects shouldn't be considered necessary evils, they need to be analyzed so that tax policies can be fashioned to obtain desired results. Which is exactly what urban regulations usually seek to achieve, in fact, I think that well-thought-out tax policies can replace a lot of regulations, can achieve roughly the same objectives while requiring a lot less bureaucracy and red tape.

Let's do a simple thought experiment, there are two paths from A to B, one red path and one green path, though the red path is much more affordable than the green path for the user, the green path is preferable for the community.
Because the planner wants people to take the green path, it adds a regulatory hurdle that  prevents the straight red path to happen...

But people just do a detour to do the red path again, since its cost is still lower than the green path, so the planner sees this and adds another hurdle...

...and another...

...and another...

 ... and so on. But each hurdle means that the planning authority needs people to review things to ensure compliance, which means bureaucratic costs and red tape. So you can end up with a big bureaucracy and complicated regulations, all of which could have been avoided by putting a higher cost to the red path without forbidding it.

So, let's take a few steps and analyze a few of the common practices and the result they may have on how cities grow and develop.

Property taxes

By far the most common municipal tax is a yearly tax on the value of one's property. This is often seen as a fairer way than a lump sum all have to pay because people who own richer, bigger buildings will pay more than people with smaller, cheaper housing, making it kind of a progressive tax.

Most cities tend to evaluate a property's value as the sum of the land value and the improvement value, then the same tax rate applies to both. (As an aside, I think this is not entirely correct, or at least calling it "land value" leads to confusion, because it supposes that this is the value of the land on its own, which it isn't. But that's for another day...)

Anyway, the big problem with this approach is that it rewards people who lower the value of their property and punishes people who invest in their property. Who would want to lower the value of their property? Well, speculators would, because they are holding the property to sell to a developer down the line, so they don't care about the improvement value, just the land value, which is what the developer will pay.

So speculators will pay very low taxes versus property owners who use their property either directly or by renting it out. This allows speculators to be more patient and keep their property off the market for longer, because as long as the value increases faster each year than they pay in property tax, they are better off waiting rather than selling.

Another problem can occur if there is a wide area with the same property tax, including walkable inner suburbs and car-centric outer suburbs. In such a situation, people choosing between the two have to balance out housing and transport costs, the inner suburb having more expensive housing but more affordable transport options, the outer suburb having cheaper housing but more expensive transport.

Inner suburb: expensive housing but affordable transport

Outer suburb: affordable housing but expensive transport
The issue here is that an inner suburb household may have to pay 50% more in property tax than one in the outer suburb with the same purchasing power and wealth level. This is an issue in Montréal, where following amalgamation, property taxes fall ever more heavily on old streetcar suburbs which have more expensive housing rather than more recent and car-centric suburbs.

This is one case where having a fragmented metro area can be useful, because if the two suburbs are split into separate cities, then property tax levels may vary between the two.

So, overall a property tax tends to be useful to tax wealthier households by using housing value as a proxy for wealth, but it tends to encourage speculation and it may result in punishing taxes on the more walkable areas of a city, where housing is more expensive because transport costs are lower.

There is also an issue of taxing different land uses at different tax rates. Frequently, non-residential uses tend to be taxed at much higher rates than residential uses, because residential property owners are much more numerous than commercial property owners, many of whom don't even live in the city and are not voters. In Montréal for instance, the central city's residential tax rate is 0,66% (0,68% for buildings with 6 units or more) but the commercial rate is 3,19%. This can hurt a city's economy, especially small businesses who struggle more to pay taxes or rents, and this can push commercial and industrial developments to suburbs.

Land value taxation

This is the tax that Monopoly was made to promote. I'm not kidding. The most famous promoter of this idea was Henry George, an economist who thought that communities prospered when the land is optimally used. It is very similar to a property tax, but in this case, rather than taxing both land and improvement at the same rate, land value is either taxed significantly higher or improvement is just not taxed at all.

Though this results in very similar tax rates for the average owner than the regular property tax, it impacts owners at the extremes. Notably, it falls with full strength on speculators and parking lot owners who keep the value of the improvement on their lots low, waiting for a good offer for their property, which forces them to sell off their lots much faster because the price of holding on to these unproductive vacant lots is much, much higher than it is with a simple property tax. In extreme cases, where there is no improvement tax, this would mean that a vacant lot downtown would pay as much in tax as the lot next door on which there is a 50-story skyscraper.

This tax doesn't punish people who improve their property either. Adding value to your property will not result in a much higher tax bill.

LVT have actually been used a lot in the State of Pennsylvania, where it is notably credited with encouraging the formation of dynamic downtown areas in many cities like Pittsburgh and Harrisburg, despite bad economic conditions.

Harrisburg's downtown is notably densely built with few surface parking lots for a mid-size American city at the center of a half-million metro area

This is Lansing, Michigan, to provide a contrast

A LVT may also create pressure for developers to build higher density in order to consume less land and thus lower the tax bill. This is not only a good idea for urbanists, but it is also a sign of fairness, as that way big properties that require a lot of public infrastructure to serve will pay more, so that people fund public services more proportionally to how they use them.

Frontage tax

A frontage tax is a tax on the street-fronting width of the property, which is generally defined as a fixed amount to pay per year per meter or foot of frontage of a property.

This tax is mainly justified by an user-payer system, the street is where the public infrastructure is, including the street itself, the watermain and the sewers. The frontage of a property is thus almost directly proportional to the amount of public infrastructure the city has to build and maintain to service that property. So it stands to reason that the city should levy a tax that is proportional to the frontage of the property.

Think about it, if your property is 20 meters wide, that means you have 20 meters of street in front of it, 20 meters of watermain pipe, 20 meters of sewers, etc... These are things the city built to service your property, so it's fair to ask you to pay for them.

Some might say that this is independent of the wealth of the household who owns the lot, so the tax is regressive. But in reality, it's a tax that becomes progressive over time as owners and developers adapt to this new price signal and so attempt to conserve width as much as possible. It also rewards multi-family housing and townhouses, housing types that the poor live in more often than the rich.

Of course, this tax shouldn't be the only tax a city relies on, but it has an added advantage that it can actually be estimated in an objective manner as the cost required to replace the city's infrastructure every 30 to 50 years. For example, I've seen many cases here that indicates that reconstructing a street and its underground water pipes cost about 5 million dollars canadian per km, or 6 million dollars US per mile. If this is an accurate estimate, then you can estimate that every property which fronts a paved public street and connected to a public watermain and sewers should pay about 60 $ per linear meter of frontage per year, or 18$ per foot.

5 000 000$/km equals 5 000$ per meter, divided by 2 because there are properties on either side of the street means 2 500$ per meter per side, divided by 40 years (reconstruction of the infrastructure every 40 years), that is 62,50$ per meter per year.

If you have a regular single-family lot that is 15 to 20 meters wide (50 to 70 feet), that means paying 900 to 1200$ per year in taxes, 100$ per month, ONLY in order to rebuild the street at the end of its useful life expectancy. Not cheap, eh?

An added bonus to such a tax is a matter of fairness for certain developments that have private streets and infrastructure. For example, there was a condo cluster that was built in Boucherville a few years back:

This condo cluster actually had private streets as there was no public street in the middle of the lot, which would have precluded development of part of it. This also allowed them to make a street that was narrower than the city would allow, being only 20 feet wide. But right now, the condo owners are demanding that the city take over these private streets. Why? Because they know they will have to repair it someday, and that since they're private, the condo owners will be on hook for 100% of the cost... MEANWHILE, since Boucherville has no frontage tax and funds itself primarily through a property tax, the condo owners pay 100% of the taxes that every other owner in Boucherville who has a public-street-fronted lot pays.

This is evidently unfair, either the private streets' maintenance and reconstruction must be assumed by the city because the owners already pay for them through their taxes OR the city should lower the owners' taxes to take into account that they are not connected directly to a public street.

With a frontage tax, there is no issue, the condo owners in this case would have to collectively assume only the tax for the public street that fronts the condo cluster, and they would then have lower taxes which allows them to put money aside towards maintaining and rebuilding their own private streets. If they still don't... well, that's on them.

Development charges

Development charges are often a big part of cities' budgets, despite their "once-in-a-lifetime" occurrence. These are charges levied on new developments, often justified because of the need to provide new infrastructure for new developments.

On the issue of fairness, it is reasonable to ask greenfield developments to pay for the new infrastructure needs they create. However, in many cases such development charges are often levied even on brownfield redevelopments who reuse existing infrastructure. Development charges, to be effectively fair, need to be modulated based on how much infrastructure new developments actually required. Redevelopment in existing areas should pay next to no charges, while greenfield developments should pay a lot.

With regards to the impacts on city developments, it really depends on how the charges are determined. If each new unit has to pay the same charges regardless of size or location, then of course this falls much more heavily on smaller units and affordable housing. A proper development charge should probably be mainly based on street frontage.

That being said, it is important for cities not to grow dependent on such taxes to fund their current budgets or repairs to their current infrastructure. When a city starts relying one one-time development charges to balance the books, it is setting itself up to fail in the future when development stops. Again, I highly recommend reading about the organization called "Strong Towns" which makes that argument over and over and argues for financial sustainability of cities.

Property transfer taxes

This is a tax that is a bit like development charges, but instead of being charged only once upon construction of a building, it is charged every time a property is sold. This is a widely used tax, but I honestly don't know why it is so popular. The most obvious effect of the tax would be to reduce the number of property transfers, which can hurt cities by locking down some lots that would be sold otherwise.

This tax is especially stupid when condos have started replacing apartments in certain housing markets. In the past, since job security was higher and housing options were basically apartments and single-family houses, the average citizen would probably pay it just once. He would rent apartments until meeting a spouse, then buy a house in which he would raise his family. Today, with jobs being less stable and the lack of recent apartments for the middle-class, the new generation may buy many condos before going into a house, and they may also move a few times even after buying a house. So the new generation is probably going to pay that tax more than once.

The thing with this tax however is that it is great politically. The people who pay the tax are newcomers without the right to vote, they become residents only after paying it, at which point they pay that tax only if they move. So that's a revenue for cities that they can levy without protest from long-term citizens who are more involved politically.

Overall, this is a stupid tax, there's no point to it and it should be abolished wherever it may be found. Considering the extraordinary growth in condos, which are often replacing middle-class and high-end apartments and the greater mobility of households due to the modern economy, this tax is nothing short of a disaster.

Conclusion: my take on taxes

Personally, I think that provincial/State governments should mandate cities levy a frontage tax on all properties, based upon the reconstruction cost of the infrastructure of the street that fronts a property, and the funds of that levy should be earmarked only for maintenance and construction of a city's public infrastructure. That way, we can make sure that all cities levy enough taxes for the long-term sustainability of its public infrastructure and avoid entire cities going to seed due to neglect and deferred maintenance. If this results in taxes increasing a lot on certain property types, that's a good thing, because the tax will signal how wasteful that type of development is and result in more financially sustainable developments from now on. It would also hurt speculators maintaining vacant lots or decrepit buildings.

As to funding the rest of municipal budgets, I think this should fall upon a land value tax and an improvement/building value tax, and the land tax should be much higher than the improvement tax in order to further discourage speculation. The tax on improvement is still there to modulate taxes based on one's wealth. However, it's important that this property tax is modulated on a relatively local area, so as to avoid having urban areas subsidize suburbs, where housing value is low but transport costs are high.

Wednesday, June 22, 2016

Observations on Chinese cities

OK, so for the last two weeks, I've been traveling around China, just for fun. As far as urbanism go, China is one of the biggest stories around. Like in every other country that developed economically, China is living through extremely rapid urbanization of its population. Also, unlike most other developing countries, the Chinese government is strong, stable and willing to take the lead in investing tons of money into public infrastructure.

30 years ago, Shanghai had no subway, today its 588 km of tracks make it the most extensive metro system in the world and one of the most used, with 3 billion passengers per year
So let's talk about about Chinese urbanism, shall we? Again, I'm no expert, this is my own personal experience and my conclusions from what I have noticed. I make no claim of omniscience or infallibility.

The Chinese street

Streets in China are a mixed bag. Some of them seemed to be extremely well-designed, with narrow store fronts all along it, relatively wide sidewalks with good design (including tactile guidelines for the blind) and plenty of trees.

A common Chinese street: tons of streets, nice sidewalk with guidelines for the blind and tons of tiny shops lining it
Many Chinese cities also often separate wide streets with grassy medians on both sides, leaving travel lanes in the center of the street and either bike/scooter lanes on the side, parking lanes and/or bus lanes.
This street leaves 4 travel lanes for cars in the center, with bike/scooter lanes and parking lanes on the side, separated from travel lanes by medians covered with bushes and trees
One thing I can say for sure is that the Chinese don't give a damn about "fixed object clearance", they are keen to put trees bordering travel lanes or other fixed obstacles. Kudos to them for it.

However, there's a problem, a very big problem. Chinese drivers, whether of cars, buses or scooters, are terrible at actually following the rules of the road. Drivers next to never give right of way to pedestrians or scooters. Instead, they slow down and honk to force them to let them pass. After a few days, I had started to be used to it, I was tolerating the incessant honking of Chinese streets by thinking back on the idiom "chien qui aboie ne mord pas", "barking dogs never bite".... maybe "honking driver never hit", it's the ones who don't honk who are the most dangerous.

Chinese drivers also have no qualm about using the sidewalk for parking when convenient. This reminds me of my articles about how tolerating street parking can cripple emerging parking markets by providing a free publicly-provided alternative.

A wide sidewalk being used as supplementary parking despite parking being allowed on the street

This bozo parked his car right on the guidelines for the blind

Other example of formal parking on the sidewalk, taking almost all of it
In areas under construction, sometimes streets were an utter disaster, with pedestrians walking along what were essentially highways, with no sidewalk to speak of. I also saw people walking in an highway interchange while I was in a bus, the planners in the area having made the mistake of providing infrastructure requiring cars to be properly used, in a country where most people still cannot afford cars.

People walking on the shoulder of an extremely wide urban road, almost highway-like
The Chinese who spoke English I talked to who were aware of Japanese streets and their highly respectful drivers were largely envious of Japan in that regard. A sentiment I feel is pretty widely shared, however, in a context of tolerated aggressive driving, even people who are tempted to follow the law are forced to become aggressive drivers too. Overall, what China indicates to me is that you can have the best infrastructure possible, but you still need to make sure people follow the rules. And if you tolerate deviant behavior too much, then at some point, you force even people who want to be law-abiding to adopt deviant behavior not to be shoved out of traffic by other drivers.

"I haven't ridden a bike in ten years!" - testimony from a Chinese

As a side effect of this free-for-all, bikes are being shoved out of public streets, often despite the presence of bike lanes, which are taken over by scooters and e-bikes that can more easily keep up with cars. Most people have been scared into abandoning even the mere idea of biking, despite biking being extremely appropriate for the dense Chinese cities and their megablocs.

The Chinese street grid, or the megabloc

There is a clear pattern I found in recent developments in China, which I call the commie megabloc. Essentially, in a way reminiscent of Soviet urbanism, developments in China, rather than having a dense network of streets like Japan or Korea, have enormous blocs that are often half a kilometer in width and length, with streets only on the periphery.

Example of megabloc, a very big residential bloc-sized development is bordered by straight streets
However, this form of development is actually even worse than the Soviet-style one for a simple reason: the traditional Chinese approach of surrounding one's residence by walls.

"Why wouldn't you want a wall there? It's your property!" -response from a Chinese when I said that houses in North America have unwalled front yards open to the street

This can be seen in traditional Chinese hutongs (or alleys) and the Siheyuan courtyard house that made up much of the urban residential housing stock in Imperial China.

A Chinese hutong in Beijing, doors in the walls often open on small courtyards, with houses built inside walls located at the property line
This tradition has actually been ported over to multifamily developments, but instead of each household having its own walled off property, the apartment bloc, or even the apartment cluster, is surrounded by a wall with only one access path, often one with a barrier and a security guard.

A high metal fence surrounds this cluster of residential high-rises, cutting off pedestrian traffic between it and the street

Here, they use an unbroken wall of 3-story buildings at the edge of the cluster to wall it off from the street
In this case, they have a wall of narrow store-fronts all around the apartment cluster

An older neighborhood with residential walls around mid-rise residential blocs
This isn't a military base, it's just a regular entry point into an apartment cluster in one of China' megablocs
The effect of this obsession with walling off residential areas is that it severely cuts down on side streets that can serve as alternative straighter paths for pedestrians and cyclists rather than going on the main through streets that surround the megablocs. This imposes detours on residents who must first get to the one point that allows entry and exit of their community before going where they want to go. That's not how the Soviets did it, nor how the Swedes do it (for they also have things inspired by that design, I talked about it here).

In effect, a lot of Chinese developments are basically like gated communities. It's just that instead of being isolated geographically, they are built deep inside urban areas. This mode of development has some advantages and some disadvantages.


  • It avoids having traffic running through residential areas, as they have no through street within them, which makes areas safer and quieter (considering the constant melody of cars honking in China, that is not to be neglected).
  • It channels stores and offices onto the periphery road, all these roads forming a regular grid that are highly conducive to surface transit. Indeed, buses have no alternative but to simply travel on these roads in straight lines, without detours, which also makes it easy for people to navigate the bus system: just go to the major road and take buses in the direction you want to go to.
  • It limits the number of intersections pedestrians walking along the major roads will face, since there tends to be only one of them every 300 to 500 meters.

  • It creates a street grid with a very low number of through streets, which results in a dilemma where you can either have small streets that face near constant congestion (terrible for buses too) or very wide streets that act as barriers to non-motorized travel.
  • Without footpaths and bikepaths through the megablocs, this can also impose detours for short-distance trips, which makes ownership of cars and scooters much more attractive.
  • Though the low number of streets makes for better transit lines that are easier to understand, they also can create bus bunching and congestion because bus lines have relatively low capacities. In China, most buses tend to be midibuses, which are shorter and narrower than the usual North American bus, and I never saw any articulated bus (though I did see and rode a double-decker, which was bouncy as all hell). So it's not unusual to have 4 or 5 buses following each other, each being of a different overlapping line.
4 buses bunched up together
In recent years, the Chinese government has started pressuring developers to build more streets in their megablocs, but will it change this pattern?

One effect of this way of building cities is that I had the opposite problem while reading maps than I had in Japan. In Japan, while reading maps, I would continually be confused by the dense grid of small residential streets into overestimating distances. In China, it was the opposite, I kept underestimating distances due to the lack of streets.

The economics of transport

The first thing I can say about public transport is that it is exceptionally cheap. The typical bus has a fare between 1,0 and 2,0 yuans, which is about 20-40 Canadian cents. Taxis are much more affordable too, with the fare per distance being of about 2,3 to 2,5 RMB per km from what I've seen, or about 50 Canadian cents per km (which comes out to about 0,60 USD per mile) with a minimum fare of 10-15 RMB. So yes, taxis are affordable for foreign tourists, but public transit is much, much cheaper than them. Metros have distance-based fares, but rarely go above 5 RMB (1 CAD).

However, what hurts trains and metros is that following a mass suicide knife attack on a train station by Uyghurs (three guesses as to their religion, the first two don't count), China has installed X-ray baggage scanners in EVERY train and metro station. Train stations even have guards with assault rifles at the doors, just in case. Unlike the Japanese, they do not allow train passengers to access train boarding platforms, people have to wait in an overpopulated and way too hot waiting room and line up 30-45 minutes before the train leaves, to allow staff to control tickets. This is like what VIA Rail does in Canada and is a disaster in terms of customer experience, taking the airplane experience, and making it worse.

China also has tolls on its highways, but since I never drove (you couldn't pay me to drive there!) I cannot say how high the tolls are. These tolls may help limit car travel in the long run, but there doesn't seem to be all that many of them.

Then, there is the issue of parking. Talking with my guide, it appears that underground parking spaces in China are about as expensive as over here, and the government has started to mandate minimum parking rules for new developments. However, the continued tolerance of sidewalk parking remains a thorn in the growth of a healthy parking market that forces drivers to pay the full cost of their parking. Parking costs are a great incentive for urban residents to avoid using their cars for short trips, cutting down significantly on local traffic. As long as people can avoid paying for parking by parking haphazardly on sidewalks, it will likely remain a difficult situation for all involved, even drivers as they are likely to have less parking options than they would if they were paying for their parking and thus attracting developers to build more parking.

What is interesting is the lack of commercial parking. Commercial areas rarely have more parking than street parking, though I'm sure big malls have underground parking or the like. This is radically different from North America, where the high parking requirements for commercial developments is the main reason why towns and suburbs remain largely unwalkable, since commercial density is more important to walkability than residential density.

Overall, my impressions

China has great density, and there is a lot of green spaces and trees inside their cities. Their government invests massively to provide the public infrastructure on which their mega-cities are running. Chinese urbanism, as far as developing countries go, is decent enough, but I couldn't call it great. The use of megablocs with gated communities severely hurts non-motorized transport, and it somehow echoes some suburban practices in North America (dead-end residential streets, subdivision-level development of clusters of similar buildings, few through roads that are often wide with difficult intersections to cross, gated communities, etc...).

The first measure I would like to see is an opening of the megablocs to pedestrian traffic, then an enforcement of traffic rules that is severely lacking. Surface transit could be made better through use of larger vehicles and eliminating some lines to increase capacity while reducing bunching.

Despite its faults, the system works decently enough and allows Chinese cities to expand in a way that doesn't preclude non-motorized transport or public transport. It was an interesting experience, though not the greatest of my life.

Sunday, May 22, 2016

Land supply, the onion layer theory of sprawl and the crucial need for incremental density

One of the first articles I wrote for this blog illustrated the theory at the basis of my understanding of urban dynamics, that transport defined how a city grew and how it functioned. That the faster people travel around, the more developments will sprawl, because distance is measured in minutes, not miles, and proximity to a city's jobs and services is the reason why people live in the city in the first place.

A conclusion that I draw from this theory is that the size of a city is dependent on the speed of the main transport mode of residents. Hence why old cities tend to have clearly defined edges at roughly 5 kilometers from the center, which is the equivalent of one hour of walking.
Traditional Paris city has a diameter of 10 km, meaning people on the limits of the city can reach the center in one hour on foot
In effect, transport speed imposes an urban growth boundary on cities, if the area grows too large, the fringes become decoupled from the center of the region because it takes too much time to access the rest of the region. So, in a way, supposing a certain transport speed, you can imagine that there is a limited supply of land of varying quality in an urban area, depending on proximity to the center of economic activities and services, always remembering that proximity is measured in minutes, not miles.

So let's come up with an example of a city in a given area that looks like this:

OK, so you have a river that cuts the area in three, there is only one bridge that allows to cross one branch of it, and the red dot represents the downtown of the urban area. Next, I'll divide the area between green, yellow and red areas, with the green representing the most desirable land due to proximity to downtown's jobs and services, the yellow representing lesser desirable locations and red representing marginal locations that stretch people's tolerance of distance.

So this represents roughly the city's "land supply". It roughly resembles three concentric circles, but the river is an obstacle to land supply, the only desirable locations north of the river is near the bridge to the east.

Note that this supposes that everyone travels at the same speed, which is not correct. People who expect to drive everywhere will tolerate much greater distances, land that is undesirable for a non-driver may yet be desirable for a driver.

If I were to ask where you would expect higher densities of construction, I'd wager most would say that the highest densities should be in the green area, the yellow should be lower density and the red should be low density. After all, cities can't and shouldn't be of uniform density everywhere, different people have different desires and needs, and higher densities should ideally be near jobs and services to allow as many people to access them in a short time as possible, that way you reduce transport needs for the entire city, while preserving people's ability to choose low-density housing if they so wish.

Well, that makes a lot of sense... if you were to build the entire city from a master plan in one shot. But that's not how cities are built, cities are built in stages over decades. Every year, the city's planners and developers make decisions that make sense for them at that moment in time.

Understanding this leads me to what I call the "onion layer theory of sprawl".

The onion layer theory of sprawl

The theory is based on the idea that low-density housing is actually the proper kind of development to expect from building on the fringe. The fringe is where land is most abundant and less desirable, so that it is cheaper. When a product is cheap, people tend to use more of it than absolutely necessary, that's true for gas, that's true for human labor and that's true for land. So having a bigger plot of land is affordable on the fringe.

For the planner, low-density housing is also more tolerable on the fringe. If you have a given amount of land on the fringe, since the location results in higher transport needs (people driving more often and longer distances), it's better to have fewer people there.

To use the earlier example, let's imagine we're only looking at a small town here, with the following urban area already built:
In this case, the green, desirable, land is still not fully built, the yellow, less desirable, land is still completely empty. If the city grows 1% each year, there's still plenty of land to go around, even green land, so the value of land will be very low. As a result, building low-density is affordable, and so it will likely be what ends up getting built.

Now, after a few years, the built area keeps growing and growing and you may get the following:

At this point, the desirable land is almost all gone, which will drive the value of land up in that area. However, on the fringe, there's still plenty of yellow land to go around, so the land value over there will be much cheaper, again, the new layer of construction will likely be low-density too, with a smattering of higher density housing in the remaining green area to develop.

And so it goes on :

Again, you are running out of yellow land, and now only the marginal land remains largely undeveloped. Again, lots in the green and yellow areas will see their value increase significantly, but there are few of them left. Meanwhile, land in the red area will remain largely affordable, inciting the new layer of development to again be of low-density.

So the resulting urban density looks a bit like this:

This is how the city starts, in red, the dense downtown, in orange the mid-density neighborhoods close to downtown, in green, the low-density suburbs

The first layer after development begins, since land is cheap on the fringe, it's likely to result in low-density developments

Another new layer of low-density developments

And on and on it goes...
So is there a way out? Well, the traditional answer was incremental construction, with progressive densification of the core even as the fringe was still being built. But with the advent of strict zoning rules, this way is too often closed, resulting in an almost uniform low-density sprawling city.

Ironically, at one point the city's sprawl may make it run out of land withing tolerable distance from the city's core. At that point, the planners and developers may both agree to start building higher density as land gets more expensive. This is not that uncommon, many metro areas have higher density developments in farther suburbs than inner suburbs because of that, since farther suburbs are more recent.

For example, here is a Google Earth image from the fringe of Calgary's urban area:
Recent developments on Calgary's fringe, dense single-family housing and 4-story apartment buildings
And here is an image from a neighborhood within 30-minute walk of downtown:
This leafy, low-density area is 30 minutes on foot from downtown Calgary

Location of previous images

Yes, you can build more land...

"Buy land, they're not making it anymore" is a common saying, attributed to Mark Twain. However, that is not true on an urban level. You CAN build land, or rather increase the supply of land of a given desirability. If you build transport infrastructure to increase travel speed, you are expanding the distance people will be willing to travel, which effectively increases land supply for urban development.

For example, let's return to the example before:

In this particular case, there is an obvious problem in that the river keeps land to the north of it from being desirable, as they're disconnected from the downtown area. But if you build new bridges, then...
...you can significantly expand the amount of desirable land for development. And if that's not enough, you can also speed up travel significantly in a given corridor by building an expressway passing near downtown:

This realization is important to understand the role freeways have in North American sprawl. Freeways, that are funded by Federal and State/provincial governments, are built in urban areas, which allows the supply of land to be significantly increased, yet those who benefit from this infrastructure largely do not have to pay for them. In effect, the DOTs/transport ministries are deeply involved in urban development because of this, yet they pretend ignorance and innocence in order not to get sucked in such debate.

Sprawl in North America is thus dependent on the construction of new roads all the time in order to increase the supply of land, and thus keep land prices low enough that low-density developments remain financially viable. This is in fact a great subsidy for sprawling cities and their suburbs. When that scheme fails due to geographical limits, like in Vancouver for example, then sprawl crashes and prices explode.

In recent years, some governments have started talking of the possibility of taxing land around transit as a "value capture" option... which is absolutely stupid since transit is largely funded by users and the people who reside near it already. If there is a reason to do this kind of "value capture", it would be to do it for freeways, not transit, since freeways are currently funded through indirect taxes on everyone and not through fees on users.


So I know a lot of things I wrote here may seem almost self-evident, but it's important to keep in mind that they have consequences. For one, since it makes sense to build every layer of a city's expanding border as low-density when it is built, it's important to make sure that our zoning and planning rules allow these areas to later densify organically to accommodate a rarefaction of land in the city, otherwise, prices may well explode. Likewise, since transport infrastructure spending increases the supply of land, it's important to take this effect into consideration, and ideally to charge those who benefit from them rather than simply fund such spending through general revenues.