The Limits of O’Toole-onomics

Update: Randal O’Toole was kind enough to respond via email. I’ve updated the post to reflect those corrections, and added his full comment and my reply at the bottom of the post.

This thought has been kicking around in my head for a while, but this Next City – The Works post by Stephen J. Smith on commute times in cities finally motivated to me to hash it out.

It’s long been noted that, super commuters aside, human beings tend to have a fairly constant travel time budget. This means that increases in the average speeds of transportation facilities often result in people traveling further distances in the same amount of time, rather than the same distances in less time. It also means that, given an average speed for a mode of transportation, there’s a practical limit to the size of city you can serve primarily with that mode.

For example, in a rural town that predates cars, you can access everything in the town by walking. No matter where you are, nothing would be more than a mile or two away. People might bike or drive to save time out of convenience or to avoid unpleasant weather, but functionally, the town can work without cars. For example, if you’re in Lone Pine, you can get to anything else in Lone Pine just by walking.

Biking expands your reach, and in a small city – say the size of Merced or Santa Maria, maybe even Santa Barbara or Ventura – could provide you access to everything the city has to offer. Now, maybe bicycle facilities in some of those places are sadly lacking, but that doesn’t mean the concept is technically unsound. We could make it work if we wanted to.

If your city gets much bigger than that, though, you need some type of higher speed transportation. There are many possible combinations that work. For example, New York and Boston provide rapid transit to move you quickly across parts of the city, depending on you to walk the last bits of your trip. Places with huge bike usage, like Amsterdam and Copenhagen, provide transit and plenty of bike parking. Phoenix and Houston give you freeways and craploads of car parking. Ignoring environmental, aesthetic, and efficiency concerns, the only requirement is that you increase the amount of distance people can cover in the same amount of time.

In very large metro areas, it’s hard for even freeways and rapid transit to overcome the distances, and as a result, new nodes of development start to spring up – places like Irvine and Tysons Corner – to keep commuting times down to what people will tolerate. And in fact, despite the perception of Orange County as a suburb of LA, 85% of people who live there work there as well. Cross county flows are about the same in each direction – 180,000 live in Orange County and work in LA County, with a similar number doing the opposite.

Okay, we have the technology to build lots of freeways, transit, whatever – so why don’t metro areas just sprawl out into infinity to keep land costs down? Well, working in opposition to things that tend to decentralize cities, like quality transportation and communications, we have agglomeration economies. Basically, people and businesses want to be located as close as possible to the people and businesses that they interact with. If you want to start a movie studio, it makes sense to do it in Los Angeles, where there are lots of people you need like actors, grips, gaffers, show runners, and so on. If you know how to write smartphone apps, it makes sense for you to move a place like San Francisco where there are lots of jobs for people with that skill.

And that brings us to today’s question: what is Randal O’Toole’s answer for a place like Los Angeles, that has grown out to the practical limits of presently available transportation technologies?

First, let me define what I see as the essential points of the Randal O’Toole plan:

  • Public transit can’t compete with the car in modern cities. It’s cheaper to build more roads and use things like congestion pricing. Bus transit is cheaper than rail transit.
  • Centralized land use planning is inherently less efficient than the free market.
  • Things like urban growth boundaries drive up the cost of housing by limiting the amount of developable land and forcing multi-family construction that is more expensive per square foot than single-family residential (SFR).

For the sake of argument, let’s accept these points. In this framework, places like the Bay Area and Portland are unquestionably making bad decisions that will cost a lot of money, hurt their economies, and make the regions less affordable.

And hey, he’s got a point. Throwing open West Marin and all of Clackamas County to master planned suburban development like Clark County would enable you to build a lot of housing relatively close to the centers of San Francisco and Portland. You might not like the idea of the Golden Gate National Recreation Area turning into Daly City, but technically, it would work. In his critique of Plan Bay Area (PBA), O’Toole calculates that currently, 21% of the land area is developed, and by increasing it to 44%, growth could be accommodated by SFR development. Again, that might seem like an unacceptable change to a lot of people in the Bay Area – including, ironically, a lot of the NIMBYs who cited O’Toole’s analysis when fighting PBA – but it would work.

But what about LA?

Other than Ventura County, LA doesn’t have any urban growth boundaries. The developable areas that are protected – the Santa Monica Mountains, the Chino Hills, the San Joaquin Hills – are small in the scheme of the region, and would end up being luxury housing anyway. The boundaries we’re pushing up against, like the San Gabriel Mountains, have topography that is simply too insane for development on a meaningful scale, along with having challenges like insufficient water supply.

Meanwhile, on the fringes of the LA region, the suburban development machine is coming back to life in places like Temecula, Beaumont, and Rialto, and the folks up in the Antelope Valley and the Victor Valley are waiting for their turn. They don’t have any urban growth boundaries, and they’re eager to see your subdivision or industrial park get up off the mat and start growing again. Their problem isn’t controls on land use, it’s slow growth in manufacturing, construction, trade, and logistics.

You know what could help those industries? More construction in the Los Angeles Basin. The parts of the LA economy that are doing well are centered in places like the Westside, and due to agglomeration effects, they want to expand on the Westside, not in Palmdale. But the places where suburban development is happening – Porter Ranch, Santa Clarita – are really far from the Westside. Housing isn’t expensive on the Westside because land use controls are preventing construction of SFRs; the problem is that the undeveloped land where you can build SFRs for under $200k is 90 miles away in Beaumont. What we need is construction of more apartment buildings on the Westside, construction that would almost certainly happen if it wasn’t prohibited by zoning laws and discouraged by onerous permitting requirements.*

To his credit, O’Toole is generally against zoning restrictions as a form of central planning. But his substitute, deed covenants, is even worse. Zoning, at least, can be changed by democratically elected officials, for better or worse. A homeowners association with deed covenants seems to me like a horizontal condo – a neighborhood that has no hope of being redeveloped, no matter how high property values go, because it’s just about impossible to get 100% of that many people to agree on anything. If you believe in letting the market guide development of cities, things like deed covenants are right out. Update: Mr. O’Toole corrects me on the issue of deed covenants. In many areas, deed covenants automatically renew unless 51% of owners vote to get rid of them, which is obviously an easier threshold to reach than 100%. If that’s the case, developers could conceivably buy 51% of the lots and vote to eliminate the restrictions. That still seems like a hard way to do things, and it will prevent the market from responding to demand.

So, what would Randal O’Toole suggest that we do?

*Note that if you follow this logic through, I’m saying that allowing more urban development in LA will encourage more suburban residential, commercial, and industrial development on the edges of the region. I think this is true: construction in the LA Basin will cause growth of construction-related industries, which are the kinds of the uses that need a bunch of cheap land. Contrary to the way many people on both sides of land use debates see it, regional growth is not zero-sum.

Update: here’s his full comment.

You raise a lot of issues. First, LA may not have formal urban-growth boundaries. But LAFCos effectively prevent extension of urban development. Under California law, developers cannot create the special districts needed to support development of unincorporated land without approval from the LAFCos. Under CEQA, such approval would almost certainly require an EIR, whose cost of $15 million or more must be paid by the developer. As a result, development is pretty much restricted to existing incorporated areas. Cities can’t annex without LAFCo approval either. This explains why the L.A. urban area has become the densest urbanized area in the U.S.

Congestion can be fixed through congestion pricing. If the toll revenues generated from congestion pricing are more than needed to operate the roads, then that is a signal that more roads should be built. If not, no need to build more roads.

You misunderstand how covenants work, at least in Texas, Kansas, and many other areas. These covenants typically renew periodically unless 51 percent of lot owners in the neighborhood decide not to renew them. It doesn’t take 100 percent. Developers have been known to persuade homeowners in some Houston neighborhoods to change their covenants to allow different kinds of development.

My thoughts: first, I appreciate the correction on deed covenants.

On the issue of LAFCos (Local Agency Formation Commissions): In California, counties have LAFCos, which can approve or deny applications to incorporate new cities or annex territory to existing cities. For example, not long ago, the LA County LAFCo turned down an application to incorporate East Los Angeles, on the grounds that the city would not be able to raise sufficient revenue to fund its operations. LAFCos also approve or deny applications to add territory to service districts like water and sanitation.

While you theoretically could use a LAFCo to stymie suburban growth by denying all incorporations, annexations, service districts, and so on, that doesn’t seem to happen in practice. LALAFCo recently approved annexations to Santa Clarita and Glendora. Riverside LAFCo has approved four incorporations in the last five years (Wildomar, Eastvale, Menifee, & Jurupa Valley). LAFCOs will naturally reflect the development climate of the county; I’d guess that no one at San Bernardino LAFCo or Riverside LAFCo is that worried about confining development to existing urbanized areas. On top of that, the cities in the Antelope Valley and Victor Valley have already annexed huge swaths of undeveloped desert.

Antelope Valley:

AntelopeValley

Victor Valley:

VictorValley

Also, let’s not forget that sometimes cities incorporate to prevent more development, like say Malibu or Rolling Hills.

You could write a book about California municipal finances, and I’m no fan of CEQA requiring people to analyze things that can’t be predicted anyway, but that’s a topic for another time!

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8 thoughts on “The Limits of O’Toole-onomics

  1. Alon Levy

    Ad your footnote, I actually think that ultimately, development is zero-sum, just not within each metro area. Imagine that New York and Los Angeles both liberalize land use tomorrow. Los Angeles County makes it easy to build medium-size apartment buildings anywhere with the demand for them, New York makes it easy to build taller throughout the city while its inner suburbs redevelop parking lots around train stations. In both metro areas there will be a boom in construction, as there’s room for more people. Because this won’t increase birth rates, we need to ask where the extra population will come from. There are two answers:

    1. More people living in the newly developed areas, fewer supercommuters. If an increase in housing supply makes it affordable to live an hour out of LA, people won’t live an hour and a half out.

    2. More people in those two metro areas, fewer people in currently cheaper areas. If it’s cheaper to live in LA, fewer people will be priced out to Arizona, Nevada, and the Central Valley.

    The agglomeration economics here works by letting people move out of peripheral metro areas and back into core areas.

    Reply
    1. letsgola Post author

      At that larger scale, development is probably closer to zero sum, though lower cost of living should have some impact on birth rates (people tend to have more kids when they feel more optimistic about the future, and the cost of raising children is a deterrent).

      Reply
  2. keaswaran

    The link to the commute time discussion raises a question in my mind – what is the methodology the census uses to compute average commute time? If they are just asking the people, then any systematic mis-reportage people have of their commute time will be replicated in the data. For instance, anecdotally, it seems to me that people systematically underestimate drive times (because they ignore time involved in parking and getting to and from parking, as well as the average effect of unusual traffic circumstances), while they are more accurate in estimating public transit times (including the walk to and from stations). If that’s right, then some of these 5 minute differences in average reported travel times could really just be due to differences in how people estimate drive time vs. transit time.

    (Of course, I could be wrong – it could be that the census actually chooses some random sample of people and times their travel, or gets them to report the actual time they leave home and the actual time they start work, or something like that.)

    Reply
    1. letsgola Post author

      I assume it’s just self-reported commute times through the American Community Survey, but you’d have to read the methodology to see exactly what they ask and how people are supposed to report it.

      Reply
  3. Zmapper

    The housing data (presumably) O’toole is using is available here, and well worth a look: http://www.demographia.com/dhi.pdf

    Large cities like Los Angeles pose a conundrum to the single-family household mindset. In broad-level terms, households can either:
    a. Live in an apartment/condo in the city, and sacrifice space
    b. Live in a single-family home in Palmdale or Riverside, and sacrifice time
    c. Live in a single-family home in the city, and sacrifice money

    Tough choice. Many households prefer the fourth option of moving to other cities, where they can enjoy 95% of urban social and economical benefits at half the cost.

    Reply
  4. Pingback: What Defines LA? | Let's Go LA

  5. Pingback: What Are City Planning’s Goals? | Let's Go LA

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