LACMTA Rail Ridership Update – August 2016 Edition

Six months have passed, so it’s time for another LACMTA rail ridership update. Well, actually seven months, so we’ll throw August ridership in as well. As a reminder, bus ridership for the Westside and San Fernando Valley has been broken out into separate posts.

The last few ridership updates were snoozers because they just showed continuations of previous trends – generally, decent performance on the Expo and Gold Lines, and concerning ridership declines on the Red/Purple, Blue, and Green Lines. This time, we have more to talk about with two new LRT extensions; the Gold Line to Azusa opened in March, and the Expo Line to Santa Monica in May.

First, the raw data. Highlighted cells represent the top 10 months for that line (since January 2009).

rawdata-201608

Unsurprisingly, the Gold and Expo Lines both had top 10 months for every month after their extensions open. The Gold Line was already at all-time highs and the Expo Line was close. The Gold Line’s increase in ridership after the extension opened was very modest – about 4,000 riders, or 9%. The Expo Line jumped about 13,000 riders, over 40%.

Ridership declines on the Blue, Green, and Red/Purple Lines have reversed themselves a little recently, perhaps due to the better network effects created by the opening of the Gold and Expo Line Extensions. While ridership has remained well below peaks, it has increased enough to  nudge the 12-month averages up.

Here’s the rolling 12-month average of weekday ridership. Note that the rolling 12-month averages for the Gold and Expo Lines will understate the ridership increases due to sudden jumps occurring when the extensions opened, so we’ll include the raw monthly graphs too. Raw weekday ridership:

wkdy-201608

Rolling 12-month average weekday ridership:

wkdy-12mo-201608

Saturday and Sunday trends largely reflect the weekdays. Here’s the Saturday and Sunday rolling 12-month averages. Again, raw monthly graphs are included to show Gold and Expo changes. Raw Saturday/Sunday ridership:

sa-201608su-201608

Rolling 12-month average Saturday/Sunday ridership:

sa-12mo-201608su-12mo-201608

One very interesting thing about weekend ridership is that the Gold and Expo Line extensions have arguably been even more successful on weekends than on weekdays. The Gold Line has seen Saturday and Sunday ridership jump by about 6,000 riders, or 20% on Saturday and 24% on Sunday. This is a greater ridership gain than weekdays not only in percentage, but in absolute terms, surely an unusual outcome. The Expo Line data is even more remarkable, with ridership increasing by about 13,000 riders (60%) on Saturday and 16,000 riders (100%) on Sunday.

Lastly, here’s the update for the boardings per mile, again both raw monthly graph and rolling 12-month average. Raw weekday boardings per mile:

wkdy-bpm-201608

Rolling 12-month average weekday boardings per mile:

wkdy-bpm-12mo-201608

The Gold and Expo Lines both saw a decrease in productivity, not unusual for lines where extensions just opened. As ridership grows on the extensions, these trend lines will climb back up. The Blue and Red/Purple Lines have ticked back up a little bit, perhaps reminding us that extending the transit network increases ridership on existing lines too.

Gold Line and Expo Line Thoughts

While there’s been both excitement and concern about the Gold and Expo Line extensions, it’s important to remember that it’s very early in the game for these lines. Four months after the opening of Expo Phase 1, ridership was at about 20,000, and continued to rise to over 30,000 by two years after opening. Gold Line ridership was at about 32,000 six months after the Eastside Extension opened, and had risen to over 45,000 by the time the Azusa extension opened. We’re still very much in the adjustment period.

Still, the initial weekday ridership increase for the Gold Line extension of 4,000 is less than I’d hoped for. Traffic on the 210 is very bad during peak periods, and downtown Pasadena is a large enough business district to generate trips in its own right, so demand shouldn’t have to all be people making a long trip to downtown LA. It is especially surprising that the weekday ridership gain was smaller than the weekend ridership gain. Considering the length of the extension (11 miles and 6 stations) and the nature of development in the area, I don’t think it would be unreasonable to hope for around 12,000 riders in the future – about 1,000 boardings per mile or 2,000 per station.

The Expo Line extension opened to even more fanfare, fulfilling the dream of restoring rail transit service between downtown LA and the beach. This created a lot of excursion trips in the first month or so after opening, with people riding just to see the line. The initial ridership increase of 13,000 was respectable and we should expect it to continue growing. The Saturday and Sunday ridership increases were more impressive and are indicative of the strength and variety of travel demand along the corridor. Saturday and Sunday ridership is now at about 75%-80% of weekday ridership. Considering the Expo Line has been running 12 minute headways during the day and 20 minute headways late, there should be considerable gains to be had just by getting enough vehicles to run 6 minute peak headways. In addition, restoring 10 minute headways during evenings and nights would also be helpful.

Next up will be central LA and Westside bus ridership. It won’t be as interesting as rail ridership, but perhaps we’ll see some impact from the Expo Line extension.

Zoning Changes in Los Angeles

In our previous post, we looked at the basic zoning rules that govern development in Los Angeles. In this post, we’ll look at what has to happen to get permission to do something different than what the zoning allows.

Depending on how much the proposed development deviates from what is allowed by the zoning rules, there are different levels of permission needed from the city. For example, a small change, such as a little extra height, requires a relatively small action from the city, while larger changes require larger actions from the city.

By-Right Development

If a project complies with all the zoning requirements and doesn’t require approval by city planning, the project can simply be approved by the city as long as it complies with the building code and other regulations. These projects are called “by right” projects – the owner of the land has the right to do the project without any special permission from the city.

In practice, very few projects are totally by right. Even relatively simple projects like small lot subdivisions, which are small developments of single-family houses, require city approval to subdivide the land (a “parcel map” for 4 or fewer houses, a “tract map” for more). Public hearings must be held for such actions. In addition, most of Los Angeles was zoned decades ago, and the zoning doesn’t reflect the current needs of the city.

Zoning Administrator’s Adjustments

If a project requires only small deviations from the zoning regulations, they can be handled through Zoning Administrator’s Adjustments. The Municipal Code allows this action for deviations of up to 20% from required yards and height, and up to 10% of required lot area. For example, if the zoning requires a 15’ front yard (the lawn between the property line on the street and the front of the building), an adjustment can be granted for front yard of as little as 12’. If a project is in the R3 zone, which requires 800 square feet (SF) of lot area per apartment, and adjustment could be granted to allow a reduction to 720 SF.

The planning department can’t just grant these changes at will. The code requires the city to determine that strictly following the zoning rules would be impractical or impossible, and that the project still conforms to the intent of the zoning rules. In addition, the planner can impose additional conditions on the project as part of granting the adjustment.

Zoning adjustments can be required for minor things most people don’t even notice. For example, if you want to put up a fence higher than 3.5’ (but less than 8’) in the front yard or 8’ in the side yard of a residential zone, you’ll need an adjustment. This observer once attended an appeal hearing where both parties had professional legal representation and hours of city staff time were spent discussing fences and “hedge effects” between two properties.

Zone Variances

Zone Variances are required where the property owner is requesting larger changes from the zoning regulations than permitted by an adjustment. Variances can be given to allow for more height, smaller yards, or more density than can be allowed by and adjustment.

Again, the city cannot grant variances for anything and everything. The planner must find that strict application of the zoning rules is impractical or impossible, and that special circumstances such as lot size, shape, or topography exist. Variances are not intended to grant special privilege or permit uses that are not consistent with other properties in the same zone. In other words, you’re not going to walk into city planning and get a variance to build a 20 story building in a single-family zone.

Zone Changes and General Plan Amendments

If a developer would like to get major changes for a project, they need to ask for a Zone Change or Height District Change, and most likely a General Plan Amendment as well.

A zone change is a request for the city to change the zoning of a property to allow more density or different uses. For example, a developer might ask for a change from RD2 to RD1.5 for a small lot subdivision to be able to build more units, or from R4 to RAS4 to allow a mixed-use project. Likewise, a height district change would be needed to request a significant increase in project height.

The General Plan is a document required by state law, intended to guide city long-term city development. The city of LA is required to have its zoning in conformance with the general plan. Therefore, in many cases, a zone change must be accompanied by a general plan amendment, so that the plan and zoning code match each other.

If the city finds a project to be beneficial, there’s nothing wrong with granting Zone Changes and General Plan Amendments. The city council creates the zoning and the General Plan, and the city council has the authority to change them.

Other Requirements

In addition to the general requirements of the zoning code, a particular piece of property may be subjected to additional regulations. For example, there may be a Specific Plan that applies to the area, which may further restrict development height and FAR. There may be ordinances such as Building Lines, which require larger front yards than the zoning. If a project cannot meet these requirements, relief from them will need to be requested from the city as well.

Zoning Changes and Housing in LA

Opponents of development, such as the NIMBYs behind the so-called “Neighborhood Integrity Initiative”, claim that the city granting adjustments, variances, and zone changes is evidence of the city and developers conspiring against residents.

The truth is that it shows that the current zoning and permitting process is not meeting the needs of the modern city. LA is a region in desperate need of more housing, and the current zoning is designed to prevent housing from being constructed in most places. This is not a negative comment on the hard work being done by city planners trying to follow the zoning code, it’s just the political reality of land use and development in LA and much of California over the last several decades.

If zoning in the region allowed for the construction of the housing we need, developers wouldn’t have to ask for changes nearly as often. LA’s community plans and zoning are badly out of date, and need to be updated. But even so, there’s no reason to not entertain proposals for projects that require zone changes. A developer might come up with an idea for a project that wasn’t considered before, and there’s no reason to not hear them out at a public hearing, which all zone changes get. Cities are constantly evolving and changing, and there’s nothing wrong with changing zoning to reflect that.

A Short Introduction to Zoning in Los Angeles

Zoning that does not allow enough new housing construction is one of the biggest causes of the housing crisis in Los Angeles. So, it’s important to understand what zoning is, how it works, and how it’s been applied across LA. This post provides a summary of what zoning does, what the main zones in LA are, and where these zones are applied in the city. For more detailed information on zoning and parking requirements in LA, see the city’s summary of zoning and summary of parking requirements.

At its most basic, zoning is the idea that there can be different regulations on the built environment in different places within a jurisdiction.  As the name suggests, it divides places into different zones on a map. Depending on what zone a piece of land is located in, there are different rules for what types of structures and activities are allowed on the property. The major things controlled by zoning are:

  • Use type: controls what type of uses can be built on a lot. The main uses are residential (such as houses & apartments), commercial (such as stores & restaurants), and industrial (such as factories).
  • Density: mainly applied to residential uses. Controls how many houses & apartments can be built on the lot.
  • Floor-area ratio: controls how large a building can be, based on how large the property is. The floor-area ratio (FAR) is the size of the building divided by the size of the lot. For example, a 2,500 square foot house on a 5,000 square foot lot has an FAR of 0.50 (2,500 divided by 5,000).
  • Height: controls how tall a building can be. Height is usually controlled in terms of both the number of floors a building can have and its height in feet.
  • Setbacks: controls how much space must be left between the building and the property line. There are usually front setbacks, side setbacks, and rear setbacks. For example, the zoning might specify a minimum of 15 feet from the street to the front of the building, 5 feet from the property line to the sides of the building, and 20 feet from the property line to the back of the building.
  • Parking: controls how many parking spaces the developer must provide as part of the project. For residential uses, it is based on the number of houses or apartments. For commercial and industrial uses, it is based on the size of the building in square feet.

As you can see, zoning controls many aspects of development. Regulation of the type of uses is the least controversial, which is why people who oppose more housing often rely on absurd arguments about uses to make their point. Obviously no one here is arguing to allow new chemical refineries to be built next to schools and apartments. And obviously there is a large difference between that and allowing the construction of 12 apartments where the zoning currently only allows one house.

Zoning in Los Angeles evolved over the past 100 plus years, incorporating a series of societal goals and trends that may or may not make sense in 2016. LA was a pioneer in zoning for uses, adopting the nation’s first citywide zoning code (separating residential uses from other activities) in 1908. LA later borrowed zoning for ‘bulk’ (height, density, etc) from New York City and single family only zones from Berkeley. In 1930, as the region’s streetcar system was giving way to automobiles, LA began requiring some new building to provide off street parking spaces. LA’s current zoning code was last substantially updated in 1946 (though new zones and rules changes have been added in the subsequent 70 years). The City is currently revising the code through the re:code LA process.

Los Angeles began zoning before it had a formal process for urban planning. In 1974, LA adopted its first general plan, with land use and zoning set by 35 community plans. Under state law, zoning in LA is supposed to implement the general and community plans. The current zoning code has almost 2000 uses, everything from frog keeping to phonograph record blank manufacturing to wine bars.

In the city of Los Angeles, the main types of zones are R, C, and M, which correspond to residential, commercial, and industrial uses (the M is for manufacturing). Each zone is also assigned a height district which controls how large and how tall the building can be. For example, a zoning designation of R3-1 indicates that the lot is in the R3 zone and height district 1.

Residential Zones in LA

There are two main types of residential zones in Los Angeles: single-family zones and multi-family zones.

In single-family zones, you can only build one house on the lot, no matter how big the lot is. If you have a very large lot, you may be able to subdivide it into smaller pieces and build a house on each, so long as each lot meets the minimum lot size required in that zone. This is how the suburban areas of LA were developed, by taking large pieces of property, dividing them, and putting one house on each piece – this is why new housing developments are called subdivisions.

Single-family zoning is by far the most common zone of any kind in Los Angeles. The most common single-family zone is R1, which requires a minimum lot size of 5,000 square feet (SF). Almost all of the single-family neighborhoods in LA that are not in the hills are zoned R1.

The other two common single-family zones in LA are RA (residential agriculture) and RE (residential estate). The RA zone requires 17,500 SF lots and allows limited agriculture – this is often called “horse property”. There are 5 RE zones, RE9, RE11, RE15, RE20, and RE40, with the number corresponding to the minimum lot size in thousands of square feet. For example, RE11 requires 11,000 SF minimum lots. All of the single-family zones in LA require a minimum of 2 covered parking spaces.

The map below shows generalized zoning in Los Angeles – click to embiggen. Anything in yellow is an R1 or an RE zone, and anything in light green is an RA zone.

LAzones-small

As you can see, the map is dominated by single-family zones, especially on the Westside, in the Valley, and in Northeast LA. The fight about development and displacement is being fought entirely outside these zones. There’s practically no rent stabilized housing anywhere in the yellow and light green areas. These neighborhoods have been let off the hook for their role in causing the housing crisis, despite the fact that they occupy most of the city’s land. If we are going to fix LA’s housing shortage, these neighborhoods should do their part.

Now, let’s turn our attention to the multi-family zones in LA, shown in orange on the map. These are the zones where you can build apartments. The main multi-family zones are RD, R3, R4, and R5, in order of increasing density. For these zones, density is controlled by requiring a minimum lot area per apartment. There are six levels of RD, which stands for restricted density, RD6, RD5, RD4, RD3, RD2, and RD1.5, with the number corresponding to the minimum lot area per apartment in thousands of square feet. For example, RD2 requires 2,000 SF of lot area per apartment. R3 requires 800 SF per apartment, R4 requires 400 SF, and R5 requires 200 SF.

The RD zones are the most common multi-family zones in LA, followed by R3. That’s mostly what you’re seeing in orange on the map. R4 is found mainly in places like Koreatown, Hollywood, North Hollywood, and Palms. R5 is found almost exclusively downtown and along Condo Canyon on Wilshire. All multi-family zones require parking at a rate of 1 space per studio, 1.5 spaces per 1 bedroom unit, and 2 spaces per 2+ bedroom unit.

To help visualize what these zones look like, RD zones usually look like very small apartment buildings or small lot subdivisions. R3 zones look like dingbats. R4 zones look like podiums. R5 allows for high-rises.

The lack of developable R3 and R4 zones in LA is one of the biggest roadblocks to constructing new apartments for ordinary people. Looking back at the map with that in mind, you can see why the large area of the city devoted to single-family zoning is such a problem.

Most of the residential zones in the city are in height districts 1, 1L, 1VL, and 1XL, where L stands for low, VL for very low, and XL for extra low (see a pattern?). For all zones, this means a maximum FAR of 3. For the single family zones, RD, and R3, these areas allow heights varying from 30’ in height district 1XL to 45’ in height district 1. R4 and R5 vary from 30’ in 1XL to unlimited in 1.

Height districts 2, 3, and 4 allow more height and more FAR, but not more density in terms of the number of apartments. These districts are generally restricted to places like Downtown and Hollywood.

For different places, different factors will limit the amount of development. For example, a 5,000 SF lot in an R4-1 zone theoretically has no limit on how tall the building can be. However, it’s only possible to put 12 apartments on this lot, and with a maximum FAR of 3.0. Therefore, the maximum size of the building would be 15,000 SF, equal to twelve 1,250 SF apartments. It would be impractical to build anything taller than about 5 stories on such a lot. This lot would be constrained by FAR and density, but not height.

On the other hand, a 6,000 SF lot in the RD2-1 zone can have an FAR of 3.0, which would allow up to 18,000 SF of building space. However, only 3 apartments would be allowed on such a lot, and you don’t see many 6,000 SF apartments. If the lot were 50’ wide by 120’ deep, the building footprint available after removing setbacks would be only about 3,000 SF. To get an 18,000 SF building, you’d have to build 6 stories tall, but the maximum height allowed is 45’ – only enough for about 4 stories. This lot is constrained by density and height, but not by FAR.

Commercial Zones in LA

Commercial zones are where businesses like restaurants, shops, and offices are located. They are shown in pink on the above map. As you can see, commercial zoning is located in strips along LA’s major boulevards, and in larger areas of business districts such as Downtown, Hollywood, Century City, and Playa Vista.

There are seven commercial zones in LA (CR, C1, C1.5, C2, C4, C5, and CM), but C2 is by far the most common. In addition to allowing commercial uses, C2 allows R4 uses by default, meaning that on LA’s commercial boulevards, you can build apartments at a density of 400 SF of lot area per apartment.

This was a great way to allow denser residential development along commercial boulevards, which are also often good transit corridors. However, in the 1980s, a ballot initiative known as Prop U cut the allowable FAR in the C2 zone from 3.0 to 1.5. Since many of these properties are already developed with commercial uses and FAR between 0.5 and 1.0, it is not profitable to build apartments in the C2 zone anymore. Thus, these lots are constrained by FAR.

The city has created two new zones, RAS3 and RAS4, that can be applied on commercial boulevards and help solve the problems caused by Prop U. These zones correspond to the same density allowed by R3 and R4, and have maximum FAR 3.0, but allow for mixed-use development by permitting commercial uses on the first floor. However, the RAS3 and RAS4 zones are very rare.

Manufacturing Zones in LA

Manufacturing zones are where industry is located. They are shown in grey on the above map, and are mainly located in the industrial district near downtown and along freight rail lines. As heavy industry has become less important to LA, these zones have become occupied by light industrial uses and commercial uses. The common M zones, M1 and M2, allow for C2 uses, meaning that offices and shops can be constructed there. However, residential uses are prohibited in M zones. For example, the Warner Center is in an M zone.

Occasionally, some people have expressed concern that allowing commercial development in M zones is going to erode the city’s industrial job base. This gets the analysis backwards; the existence of M zones does not create industrial jobs. Many M zone uses, such as warehouses, have low job density compared to commercial uses. In addition, it is worth remembering that because most of the city is zoned residential, commercial and industrial uses are competing for a very small portion of the city’s land. Allowing commercial development in more areas would decrease the development pressure on M zones.

More to Come

This post has hopefully provided an understandable overview of the main zoning regulations in LA. In a future post, we’ll look at the process that developers must go through if they want to get permission to do something differently. Since the housing crisis is a regional problem, future posts will also look at the zoning in other cities in the region.

Who Are Cities For?

Cities are for everyone.

That sounds simple enough, but unfortunately, it gets lost in the conversation sometimes. There’s been a lot of talk lately about allowing more development in cities like New York and San Francisco to allow more growth in industries like Silicon Valley. Others have pushed back, noting that San Francisco’s loss will be Portland’s and Atlanta’s gain, and questioning the benefits of and need for allowing more growth of the tech industry in top-tier cities.

On the merits, this is really a pretty silly debate. It seems pretty obvious that there’s nothing magical about San Francisco or New York. Human ingenuity can, and does, flourish all over the world in many different types of communities. Many kinds of business can be conducted by e-mail, phone calls, and video conferences. On the other hand, it’s abundantly clear that agglomeration effects are real, from both economic research and the simple observation that cities continue to exist and grow. There is naturally a constant back-and-forth between the desire to improve efficiency by centralizing business activities in high-cost locations and the desire to save money by decentralizing to low-cost locations. It is not apparent, at least to this observer, why the government should tilt the scales towards decentralization through punishingly high housing costs in some cities.

However, the focus on professionals in high-income industries like tech is detrimental to the discussion on cities for several reasons:

For one, it causes people come up with regressive policy ideas, like getting high-income industries to move to second-tier cities through high housing costs that constitute regressive wealth transfers in top-tier cities. The buffoons behind LA’s Neighborhood Integrity Initiative have suggested that “massive tax subsidies” should be provided to people who work from home, a demographic that is hugely skewed towards high-income professionals who already benefit from not having to spend time or money commuting.

For another, it creates a false hope that a city’s problems can be “fixed” by waiting for things to get so expensive elsewhere that higher-income industry and people are forced to locate there. This is practically the same logic and policy that generates enormous real estate booms and busts in places like the Inland Empire, which are “fixed” during every upswing by very high housing costs in LA & OC only to be eviscerated by the following downswing. Cities need, and residents deserve, an economy beyond being the next one into a first-in-first-out party.

But more than anything, focusing on high-income industries with relatively mobile production ignores the needs of many, many people – often the people who need the city the most.

The people who work at fast food restaurants and are fighting for $15/hr can’t move their jobs to a cheaper city. The janitors, landscapers, construction workers, health care givers, and housekeepers can’t move their jobs to another city or telecommute. The actors, artists, set designers, gaffers, and millions of other people who make LA what it is can’t all leave or telecommute. Every city is always going to have many low-income and service jobs that by their nature can’t be moved elsewhere. The people who work those jobs don’t deserve to have their wages and quality of life eroded by needlessly high housing costs. Being pro-housing in top-tier cities isn’t about people who have a choice to live elsewhere; it’s about everyone’s right to have choice to live here.

Businesses will always be making choices about where to locate, and different cities will experience growth and contraction at different times. The role of policy should be to help people take advantage of opportunities wherever they arise, not punish them with high housing costs for trying to do so. Everybody and anybody should have the right to the city.

Luxury Housing Isn’t the Problem

Indignation at luxury housing construction is one of the few things that unite NIMBYs and renters advocates concerned about gentrification and displacement. Since luxury construction is the only thing that pencils out in many places under existing zoning, this alliance is much more beneficial to NIMBYs, who get to thwart all new construction, than to renters advocates, whose meager gains from avoiding rent increases due to amenity effects are at least partially wiped out by rent increases due to the regional housing supply shortage. Politically, breaking the alliance between NIMBYs and renters advocates is prerequisite to taking any meaningful action on the housing crisis, as these are the two of the largest advocacy groups active in land use policy.

The trick that NIMBY con artists pull is to convince people that luxury construction is crowding out low-income & middle class construction – that every luxury unit built represents a missed opportunity to build a low-income or middle class unit. Of course, NIMBYs would oppose the construction of low-income & middle class housing or subsidized affordable units even more than they oppose luxury construction; that’s why it’s a trick.

For this story to be accurate, you’d have to believe that the economy is churning out housing as fast as possible. This is extremely unlikely. To see why, let’s look at a few graphs from the always excellent Calculated Risk and from FRED, the excellent data service of the St Louis Federal Reserve Bank.

First, here is the level of housing starts in the US.

01-StartsJune2016

Nine years after the bottom fell out of subprime lending, both total housing starts and single-family housing starts remain at levels that, since 1968, were previously only seen during recessions. When you adjust for population growth, the level of housing construction is even worse. The graph below shows the number of new housing starts per year for each person of population growth. For decades, we constructed 0.6 to 0.8 housing units for every additional person. That number dropped to almost 0.2 during the crash and has barely recovered to 0.4. (Note that this ignores demolitions, so it systematically overstates the amount of construction per person, but it’s fine for purposes of comparison.)

02-startsperperson

Now, it could be possible that developers have decided to spend the same amount of money, but build a smaller number of bigger, more luxurious units instead of a larger number of smaller, more affordable units. If this were the case, we’d expect to see housing investment remain at the same level as in the past, despite declining numbers of units.

This isn’t the case either. The graph below shows total real private investment in multi-family and single-family structures. Residential construction spending remains about a third below what it was before the housing boom of the 2000s started, and half of what it was at the peak.

03-totalinvestment

We can adjust this for the number of units by dividing total investment by the number of units constructed. The next graph shows total real private investment in residential structures divided by the number of units started. In real terms, investment per housing unit remains around $210,000-$230,000, similar to what it was in the 2000s.

04-investmentperstructure

So, developers are not substituting luxury construction for low-income and middle class construction. It’s just that the total volume of housing investment and construction remains low.

Labor shortages and material costs have been suggested as reasons that housing construction is not higher. However, construction employment is still well below what it was during the last boom.

05-constrjobs

In addition, employment per housing unit constructed is still above historical averages. Through the 1980s and 1990s, each housing unit built every year supported between 0.4 and 0.5 jobs. This level rose dramatically during the recession, as builders tried to keep their employees despite reduced volume, and has only declined to just over 0.6 jobs per unit. It seems that builders may not be using the labor they have to its full productivity.

06-constrjobsperunit

Prices for materials like framing lumber are up, but still below what they were during the last housing boom.

07-LumberJuly2016

Simply put, luxury construction is not behind the housing crisis. It is the low overall volume of construction. Indeed, even if developers switched to building the same number of middle class units, we shouldn’t expect any impact on the regional price level, because the housing shortage would persist. Rich people don’t disappear because you stopped an upscale tower. Luxury construction doesn’t induce rich people into existence.

What has happened is that job growth has been concentrated in large cities in this economic cycle, more so than in previous expansions. These are places like LA, where geography has made it impractical for new single-family construction on the edges of the region, like the IE, to relieve housing demand generated by job growth in the core, like the Westside.

So if we want to understand the housing crisis, we have to look at why the volume of construction in places like LA is so low – lower than at times in the past like the 1960s and 1980s, despite much stronger price support.

The biggest reason at the local level is zoning. Through downzonings that have restricted how many units can be built on a lot and costly regulatory requirements like parking minimums and impact fees, we have made it impossible to build things like dingbats and courtyard apartments, the types of new housing that were immediately affordable to the middle class and even many low-income residents. Filtering is real, but we should make it possible again to build new construction that’s affordable to low-income and middle class people.

Other policy changes besides zoning reform could work to serve this goal. For example, it’s easy to get a highly-leveraged federally guaranteed loan to buy a single-family house, but not to build a small apartment building or mixed-use project. This is true despite the fact that apartments in centrally located parts of the region are much safer investments than single-family houses on the fringe. If policy had not been oriented this way in the 2000s, perhaps the housing boom would have produced a large number of conveniently located apartments instead of empty subdivisions in the desert. As another example, the much-maligned investment of foreign money in US real estate could be guided towards building apartments rather than pied-a-terre purchases.

NIMBYs, of course, don’t want to see any of this. It’s easy to get mad about rich people buying big houses and luxury condos, and NIMBYs exploit that to their advantage in trying to stop all new construction. To solve the housing crisis, though, we need to realize that luxury construction is a distraction from what we need to do – figure out why housing construction is at such historically low levels, and changing policy to fix it.

Autonomous Vehicles and Human Factors

Over in VC-land, we are told that autonomy will change traffic in cities from circuit switched to packet switched and from TDMA to CDMA. We will take this to mean that (a) riders may use several vehicles over the course of a trip and (b) several riders and several uses (passenger, freight) may use a vehicle for portions of a trip as the vehicle travels between two points. The alternative interpretation, that different portions of vehicles will be sent via different routes and different vehicles will simultaneously occupy the same space on the road, would be a bit too fantastical.

Astute readers have no doubt noted that we already have packet-switched CDMA transportation in cities: fixed-route transit service, where people board and alight at many points along the vehicle’s route, and users may be forced to transfer one or more times between different vehicles to reach their destination.

Looking past the annoyance of everything being turned into tech jargon, this is worrying because it is nothing more than a tech industry reframing of the mistaken “water through a pipe” philosophy of early traffic engineers. The idea that human users can be routed through a transportation network like packets of data across a communications network is akin to the idea that drivers move through a transportation network like water through a pipe. Understanding the human factor is one of the hardest learned lessons of traffic engineering, indeed, something many engineers still struggle to do.

People do not act like water in a pipe or packets of information on a network. Transfer penalties are real and vary with the person, the weather, the trip purpose, and other factors. Many people are not willing to share a ride with one anonymous person – note that the practice of “slugging” arose where HOV restrictions required three people rather than just two.

It is also not certain that ride sharing will replace single occupancy vehicles as autonomous vehicles become more prevalent. None other than Randal O’Toole provides some reasons why: people like having their own car with their own stuff in it, people don’t like the idea of a stranger using their personal property, and if autonomous vehicles reduce the cost and annoyance of car ownership, more people may choose to own. You’d be crazy to pay to keep a car in Manhattan & drive it around, but what if you could have the car drive you around and then go park itself in New Jersey when you don’t need it?

Another example of ignoring human factors is some presentations of automated intersections. For this to work, if pedestrians and bikes are to be permitted at all, they would have to behave in a perfectly predictable manner. Of course, we don’t – we stop to take out our phones, we stop to look at things, bike chains slip off gears. If full automation and vehicle-to-infrastructure communication are achieved, these intersections could prove useful for junctions of limited access facilities, but they won’t be popping up in cities. (And they will likely be more conservative than presented in these simulations, due to the need to allow for mechanical failures, unexpected pavement conditions, and so on, but that’s another issue.)

I don’t mean to suggest that autonomous cars won’t have any impact on cities. The improvements to safety alone from eliminating human error, inattention, and bad behavior will be well worth it. But if you’re waiting for the paradigm shift of changes being hyped in some of the press, I wouldn’t hold my breath.

Trolley Problems

The New York Times has the latest in a long series of pop think pieces that wonder how driverless cars will deal with variations on the so-called “trolley problem”: is it ethical to make a decision that saves some people’s lives at the expense of another person’s life? This article asks whether your driverless car should hit a pedestrian to save your life. Not surprisingly, most people in the studies chose to save their own lives over that of a hypothetical pedestrian.

Should driverless cars be programmed to serve the greater good, even at the expense of the passenger?

How would you even know what the greater good is? What if the passenger has children in the car? What if the passenger is the only person in the car, but is the sole breadwinner for a large family and is taking care of disabled relatives? What if the passenger is 70 years old and the pedestrian is 35 years old? What if the passenger is 70 but in excellent health and the pedestrian is 35 with a terminal illness? What if the passenger in the car was on their way to commit a crime? Even if we, as a society, could agree on what the greater good might be, there would not be enough time to determine all the relevant information in time for anyone – human or machine – to make an ethical decision.

Quite simply, I do not think humanity is about to take the extraordinary step of allowing a fully automated system to decide who dies and who lives.

Instead, driverless cars will be expected to perform the same way we expect almost all other machines to perform: with an extreme deference to preserving human life. Think about the machines you interact with on a daily basis. You have to be negligent in the extreme to get killed by a machine because of something the machine couldn’t avoid doing (as opposed to something idiotic that the machine’s human operator might make it do). And even if you do something incredibly negligent, like step in front of a train or stick your arm inside rotating machinery, the machine’s owner might still end up with significant liability for your injury.

Many people view autonomous vehicles as incremental improvements to automobiles. And it’s true that there will be great improvements in safety from “driver assist” technologies like systems that help keep you in the lane and keep you from hitting the car or pedestrian in front of you. These technologies will save lives without a doubt.

However, full automation is not an incremental improvement. It’s a shift to a much different level of social/cultural expectations and liability. Drivers are held to extremely low levels of liability for damage they cause; in California, the state minimum is $15,000 for death to one person and $30,000 for death to multiple persons. In contrast, Metrolink paid out $4,200,000 for each death in the 2008 Chatsworth crash, and the number was only that low because of federal law that caps railroad liability at $200,000,000 per incident.

The reason railroads have much higher liability limits than drivers is that most people in the public identify as or with drivers, while very few people identify as railroads. If the state tried to raise the auto insurance minimums to $4 million per death, insurance premiums would skyrocket and there’d be a political revolt.

In other words, if you maim someone with your car, but you have the state minimum auto insurance and few assets, that person is shit out of luck. Google, on the other hand, is not going to have its liability capped at $15,000 per death. It has the financial wherewithal to pay for insurance that actually covers the damages caused by auto accidents, it has the assets to pay damages in excess of its insurance limits, and it’s not going to get any sympathy from the public if a driverless car runs over someone’s kid, someone’s mom, or someone’s grandpa.

It seems to me, then, that fully autonomous vehicles will by necessity take a very large discrete step towards eliminating deaths from automobiles. They will be programmed to do so by having very conservative software. The large corporations – and their insurers – responsible for the software, and maybe for owning and operating the vehicles as well, will demand it. No one is going to accept an incremental improvement in safety in exchange for a hundredfold increase in liability. Fully autonomous vehicles will only kill someone in cases where the victim is grossly negligent, and even then, there will likely be out of court settlements.

The nature of Silicon Valley frequently rewards entrepreneurs for being the first to the market with a product, even it means frequent incremental updates to fix bugs. As long as they don’t deal with the security of private data, software problems usually have minor consequences. Apps freeze and crash; Google Maps has its share of erroneous data; formatting in Word is still frustrating as hell. But as Theranos shows, other industries don’t work that way.

Railroad signaling may offer clues as to what will be expected of fully autonomous vehicles. Braking performance assumptions are very conservative. Automatic train control is not expected to be marginally safer than human drivers; it’s expected to completely eliminate train to train collisions. The system is designed to assume it’s not safe to move unless otherwise directed, not to assume that it’s okay to move unless informed otherwise. Railroads were just forced to spend billions on Positive Train Control, one function of which is to help protect railway workers against the trolley problem by insuring it never comes up in the first place.

It’s not that incremental improvements aren’t good. It’s just that cultural expectations change when we turn a task over to a machine. We don’t expect machines to make ethical decisions, we expect them to be safe enough that they never have to.