Bertaud on City Planning

January 24th, 2014 at 2:00 pm by David Farrar

Alain Bertaud is the former principal urban planner for the World Bank and has written the introduction to the 10th annual Demographia International Housing Affordability Survey. Some extracts:

Are planners in the worst performing cities paying any attention? And are they drawing any conclusions on how to improve the situation? Or do local governments conclude that the best way to increase the supply of affordable housing is to impose new regulations that will mandate developers to build housing units at prices, standards, and in locations selected by the government?

The last approach, under the name of inclusionary zoning is unfortunately the most common response, as recently seen, for instance, in New York and Mexico City.

Urban planners have been inventing all sorts of abstractly worded objectives to justify their plans for our future cities – smart growth, livability, sustainability, are among the most recent fads.

There is nothing wrong, of course, for a city to try to be smart, liveable, or sustainable.

But for some reasons these vague and benign sounding objectives usually become a proxy for imposing planning regulations that severely limit the supply of buildable land and the number of housing units built, resulting in ever higher housing prices. In the name of smart growth or sustainability, planners decide that densities should be lower in some places and higher in others.

Population densities are not a design parameter whose value depends on the whim of planners but are consumption indicators which are set by markets.

Even the Communist Party of China recently declared that resource allocation is best achieved through markets; why can’t urban planners in so-called market economies reach the same conclusions and let markets decide how much land and floor space households and firms will consume in different locations?

It is time for planners to abandon abstract objectives and to focus their efforts on two measurable outcomes that have always mattered since the growth of large cities during the 19th century’s industrial revolution: workers’ spatial mobility and . …

A periodic regulatory audit should weed out obsolete regulations to allow an elastic land supply and to increase households’ ability to consume the amount of land and floor space that would maximize their welfare in the location of their choice. Part of the audit should concern the regulations, taxes, and administrative practices that unnecessarily increase transaction costs when building new housing units or selling or buying existing ones.

The twin objectives of maintaining mobility and housing affordability should drive the design, financing, and construction of trunk infrastructure.

Because the building of trunk infrastructure often requires the use of eminent domain, governments have a monopoly on its design and construction. Here is a new simple job description for urban planners: plan the development of trunk infrastructure to maintain a steady supply of developable land for future development, but leave land and floor consumption per dwelling to the market.

There is no silver bullet to increase the supply of affordable housing. But if planners abandoned abstracts and unmeasurable objectives like smart growth, liveability and sustainability to focus on what really matters – mobility and affordability – we could see a rapidly improving situation in many cities. I am not implying that planners should not be concerned with urban environmental issues. To the contrary, those issues are extremely important, but they should be considered a constraint to be solved not an end in itself.

Urban development should remain the main objective of urban planning.

A lot to agree with there.

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14 Responses to “Bertaud on City Planning”

  1. campit (467 comments) says:

    A periodic regulatory audit should weed out obsolete regulations to allow an elastic land supply and to increase households’ ability to consume the amount of land and floor space that would maximize their welfare in the location of their choice

    The same weeding out process should apply to the regulations in existing urban areas too – height limits, yard setbacks, density controls, car parking requirements, minimum unit sizes. All of these limit development potential and the prospects of economic growth through making better use of inner parts of the city.

    http://transportblog.co.nz/2014/01/22/transports-not-a-leftright-political-issue/

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  2. Fentex (986 comments) says:

    A problem with leaving markets to determine density is the publically funded services to each location – if people spread out they are likely to demand roads to access their homes and business. Someone arguing that markets should delineate population densities is probably going to find themselves logically compelled to argue for private roads, tolls, sewerage, power et al.

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  3. decanker (184 comments) says:

    “leave land and floor consumption per dwelling to the market”

    Good to see that Alain is comfortable having apartment blocks built near his home; that’s what he means by leaving land use up to property owners (the market) isn’t it?

    As campit says this free-up-the-land-and-leave-it-to-the-market-to-determine-what-people-want works only if rules on height limits, yard setbacks, density controls, car parking requirements, minimum unit sizes are also looked at.

    If Alain and his ilk don’t want planning rules loosened on existing urban areas, you have to wonder if they’re just nimby’s.

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  4. PhilBest (5,125 comments) says:

    The reality that you guys above don’t understand, is that it is always cheaper to built “out” than “up”. This even includes infrastructure. No-one has ever proven otherwise, and the studies that do look into it are ignored.

    It is even more costly to “intensify” an urban area that is already not dense – the costs of disruption and working around existing activity, and the cost of acquiring land, are massive. It is cheaper to just spread out on greenfields, and then there is the matter of the effects one way or the other on land prices.

    There is no evidence at all in real life cities, that there is any claw-back of other living costs from “planned” inflation of housing costs.

    http://www.comparebloomington.us/include/reportsmedia_157_2541343573.pdf

    Contrary to the myths, transport costs are actually cheaper in the cities where housing is cheaper. So are the costs of utilities and the costs of groceries.

    So if it is left to the market, there is very little risk of apartments being plonked down anywhere other than where they make sense, which is near the city centre.

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  5. PhilBest (5,125 comments) says:

    The graph of Portland’s “Spatial Distribution of Density” on page 12 in this paper by Alain Bertaud, should have the “planners” asking what result they really want? Increased density at the fringe but NOT nearer the CBD?

    http://alain-bertaud.com/images/AB_The%20Costs%20of%20Utopia_BJM4b.pdf

    This is because lower income households have been forced by higher land values, to accept smaller homes further away from the CBD; as Bertaud says:

    “…….instead of being able to make a trade-off between distance and land consumption. …….”

    “……..the practical outcome of a positive density gradient is longer trips for more people…..”

    “…… As predicted, land prices are going up because of the supply constraint imposed by the UGB, developers respond by developing higher density housing in the vacant areas between the limits of the current built-up area and the UGB. This of course has a tendency to reverse the slope of the gradient…. …..In the long run, the higher density which will built-up on the vacant land along the UGB will increase the accessibility of suburban shopping malls at the expense of the relative accessibility of the CBD. This is not the outcome that the planners intended…. …”

    Another useful quote on the same subject, is from Jan Breuckner, “Urban Growth Boundaries: An Effective Second-Best Remedy For Unpriced Traffic Congestion?”

    “…….failure of the Urban Growth Boundary to appreciably raise densities near employment centers is the main reason for its poor performance, and this failure will persist regardless of whether the city has one or many such centers….. .”

    http://www.socsci.uci.edu/~jkbrueck/course%20readings/ugb.pdf

    And Patrick Troy in “The Perils of Urban Consolidation” (1996):

    “……..The present policy has had the perverse result of increasing density of dwellings at the fringe……”

    And later in the book:

    “……A high proportion of the new high density housing is now occurring on the fringes of the city. This is a direct outcome of government policy and produces the perverse doughnut effect of an annulus of high density housing ringing the lower density middle suburbs. The greater accessibility claimed for inner suburban consolidation does not occur….”

    Besides this, the inflated housing costs also deflect development to beyond the fringe, to exurbs and nearby towns. Every city with a UGB or a proxy for it, and hence inflated housing costs, suffers an increased incidence of ultra-long commutes. Anthony Downs; “Can Transit Tame Sprawl?” Jan 2002:

    “…..In “The Costs of Sprawl 2000″, a recent study conducted by Rutgers University, the Brookings Institution and several other organizations, part of the research examined how housing prices vary with distance from the regional downtown of each metropolitan area. Although only a few areas were analyzed, the study showed consistently that prices of similar homes tended to decline about 1.2 to 1.5 percent per additional mile from the regional downtown, except where proximity to the ocean had more influence on prices—as in Southern California.

    Meanwhile, longer-distance commutes added to fuel and travel-time costs by about the same amount per mile in every region. The study also found that per-mile housing-cost savings from added commuting distance were much larger in regions with absolutely very high housing costs than in those with absolutely low housing costs. Therefore, it was more likely to be economically worthwhile for households to move further out to gain cheaper housing in high-housing-cost regions such as the San Francisco Bay and Boston areas, than in low-housing-cost areas…….”

    Anthony Downs is one of the few people who has been pointing out the essential flaw with “smart growth” – for example: “A Growth Strategy for the Greater Vancouver Region”, 2007:

    “……The cost of land poses a key dilemma for urban planners everywhere who want to concentrate jobs together so they can be best served by public transit. Such concentration raises the costs of land near centers; in fact, it would confer a monopoly advantage on landowners who owned such land and could exploit firms trying to locate there. Now firms want to locate elsewhere to cut their land costs.

    Planned concentration of jobs in a few centers is not consistent with private ownership and control of land. Some type of collective control over that land would be necessary to prevent monopolistic exploitation of land values. In theory, this could be done with high land taxes in such areas and special zoning rules. But adopting those devices is politically difficult in a free enterprise economy…….

    “……A similar but less intensive dilemma concerns land near transit stops, where it would be most efficient to concentrate high-density housing and jobs. That also creates ownership monopolies over such land unless it is specially controlled or taxed. Yet focusing development near transit stops is a key to using more transit…..”

    Perversely, intensification and redevelopment at the intended, efficient locations, is slowed down by the owners of the lucky sites “holding out” for the maximum possible gain. It is disgraceful that public subsidies often end up as the impasse-breaker; this is straight-out wealth transfer and might as well be deliberate corruption. It also adds to the public cost of the whole utopian experiment. If “T.O.D.” is not going to be done by way of compulsory acquisition/eminent domain, it should be outlawed by legislation.

    Traffic congestion has increased in Portland. I would point to New Zealand’s cities of Auckland and Wellington, as international laughing-stock examples of what “smart growth” type ideology does to cities. Auckland, population 1 million, and Wellington, population 500,000, have worse congestion delays than all US cities including LA. This is the legacy of decades of deliberate neglect of road expenditure, diversion of spending to wasteful public transport and fringe growth containment and intensification. Underpopulated New Zealand also has some of the first world’s least affordable housing.

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  6. PhilBest (5,125 comments) says:

    It is also a lie that Auckland is “low density”.

    It is second only to Toronto in density in the Anglo New World, and Toronto has 6.5 million people.

    It is also close to the average for Europe and quite close to Amsterdam in density.

    Every city in France outside of Paris is less dense than Auckland.

    The UK has the densest cities in the OECD and also the worst traffic congestion and the longest commute to work times.

    http://news.bbc.co.uk/2/hi/uk_news/3085647.stm

    “British commuters have the longest journeys to work in Europe with the average trip taking 45 minutes, according to a study. That is almost twice as long as the commute faced by Italians and seven minutes more than the European Union average…..”

    The US average is 26 minutes……and they have the lowest average urban density.

    Another analysis corroborating this, here:

    http://economix.blogs.nytimes.com/2011/10/14/world-of-commuters/

    Low commute times in Spain is due to 25% unemployment.

    Planners and activists are pursuing a bunch of myths and shallow assumptions that are the exact opposite of real life outcomes. It is all pain for no gain. Even the alleged gains are not even true. Not transport efficiency, not energy efficiency, not infrastructure cost savings, not social capital, not economic productivity, not health, not anything. And the increased costs of housing are tangible, quantifiable, and massive. Not to mention the social injustice of these costs falling inequitably on younger generations.

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  7. leftyliberal (651 comments) says:

    @PhilBest: Re your first comment above, I believe the other posters are largely in agreement: The point is that removing any regulation on where one can build should go hand in hand with removing any regulation on what one may build. That way you do indeed get apartments where they make sense and large houses on palatial grounds where they make sense. No point doing one without the other though, right?

    Regarding your second comment: One presumes that this:

    “This is the legacy of decades of deliberate neglect of road expenditure, diversion of spending to wasteful public transport and fringe growth containment and intensification.”

    does not refer to Auckland, where the vast majority of spending for decades has been more and more expensive roads, with public transit initiatives receiving very little funding. Indeed, the small amount of public transport spending has been hugely beneficial (Britomart and the Northern Busway as some of the more expensive examples). Unfortunately the balance has been a little too road-heavy (it will always be road-heavy as roads are inherently more expensive, however that doesn’t mean that it needs to be completely road-heavy). Transportblog’s congestion free network supports both new and improved roads in addition to the new public transit initiatives.

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  8. hj (7,033 comments) says:

    So if it is left to the market, there is very little risk of apartments being plonked down anywhere other than where they make sense, which is near the city centre.
    ……….
    What about that famous Houston case?

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  9. hj (7,033 comments) says:

    New China The Way They Want It:
    “Bricks are flying at 1717 Bissonnett as demolition crews make way for the ever-controversial Ashby high rise . . . And when we say “flying,” we mean it.

    Workers have been caught taking down a brick wall of the former Maryland Manor in a less than careful manner.

    Like the new 21-story tower that will replace it, the old apartment building sits just feet from neighboring homes. While crews attempted to keep debris inside the property line, one gentle push of the old apartment building’s brick wall caused it to collapse — and destroy the fence of an adjacent residence.

    That homeowner, Scott Reamer, caught the entire incident on camera (see the video above).

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  10. hj (7,033 comments) says:

    http://houston.culturemap.com/news/real-estate/05-29-13-oops-controversial-ashby-high-rise-build-smashes-a-neighbors-fence-bricks-are-flying/

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  11. hj (7,033 comments) says:

    evelopers Buckhead Investment Partners managed to beat back a six-year grassroots effort to stop construction from beginning on the the high rise, area residents remain committed to keeping close tabs on the project. The smashed fence video is now being used by the Stop the Ashby High Rise group.

    “The Stop Ashby task force main concern right now is safety,” Kathryn McNiel, a volunteer with the group, tells CultureMap. “This is a huge building on a very small space and just doesn’t belong in a residential neighborhood like this. We plan to hold them accountable for every step along the way.”

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  12. hj (7,033 comments) says:

    People just shouldn’t get in the way of “the market”.

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  13. Kimbo (934 comments) says:

    People ARE “the market”.

    They create it, and cause it to function as it does.

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  14. PhilBest (5,125 comments) says:

    To the various commenters above:”Lefty liberal”:

    “No point doing one without the other though, right?”

    Agree. No problem with that.

    Auckland’s road spending has had far more point than any public transport spending, which is a waste of money in the current form in which it is run. It is all a matter of the cost to the ratepayer/taxpayer of every person km of travel done. For public transport, this is easily around 30 cents. For roads, this is possibly under 1 cent in the long run. Once the road is built, that is it. Much of the cost of construction and maintenance is due to the heavy vehicles that use them, not cars at all.

    The difference is because the taxpayer/ratepayer pays for most of the cost of running the entire public transport system; they don’t just pay for rails, or only for roads and busways, and leave the PT rider to cover the rest in fare costs. This cost mounts up in perpetuity, in contrast with road spending that is virtually all payback.

    I would just leave public transport” to private para-transit and dollar vans. Small level playing field subsidies are justified. The result would be superior on all measures, to any cumbersome monopoly unionised system. It might even save energy and emissions compared to cars, which many public transport routes do not under the status quo.

    HJ, you are well informed indeed if you can pull up isolated incidents where an apartment building has been built in a seemingly illogical location to the dismay of neighbours, in Houston.

    But do you support “save the planet” urban planning or not? Do you support the Akl Spatial Plan or not? It is all very well to be against an apartment in Houston, but if you support Len Brown, you are a hypocrite. And neighbourhoods that voted for Len Brown should forfeit their right of protest against any intensification in their neighbourhoods. I bet they would stop voting for Len pretty quick if they had to bear the cost of their stupidity.

    And if I had the choice of being able to buy a first house for between $100,000 and $300,000 with a small risk of apartments being built next door (Houston) versus the same or inferior houses having to cost me $500,000 to $1,000,000 (Auckland) I would opt for the former. And in Auckland the Plan fully intends for apartments to be everywhere anyway…….!

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