Good News, Bad News

A recent article by Issi Romem points toward the importance of historical perspective in urban policy arguments. By which I mean that not only are there historical patterns to the creation of exurban sprawl and its attendant social pathologies, but a useful understanding of how to reverse these effects requires policymakers (starting with the President!) to recognize that the political and cultural contexts of sprawl matter as much as land economics (indeed, are intrinsic to land economics). Romem offers a summary of key takeways that is pretty clear:

  • The link between housing production and outward expansion is unmistakable: cities that expand more produce proportionally more new housing.

  • Throughout the country, housing production is skewed towards low density areas.

  • Densification has slowed down across the board, and especially in expensive cities, undermining their ability to compensate for less outward expansion.

  • Unless they enact fundamental changes that allow for substantially more densification, cities confronting growth pressure face a tradeoff between accommodating growth through outward expansion, or accepting the social implications of failing to build enough new housing.

The good news is that articles like this point to the phenomenon beginning to be treated less as an artifact of “choice” and more as a product of a sequence of political decisions that have left the majority of Americans with suboptimal housing situations, on top of a historical support for racial and economic segregation and drastically different communities of opportunity.

To be sure, though, Romem looks first to the market:

Why has the pace of densification decreased? One reason is national in scope: despite some fluctuations, the total amount of new housing built each decade in the U.S. has remained fairly constant since the 1950s, but because of urban expansion the area absorbing it has grown much larger. Thus, new housing is spread more thinly, which amounts to less densification. Another way of putting it is that the demand for new housing – or growth pressure – per unit of developed land is less intense than it used to be.

But, a better way of putting it might be that the costs in terms of time, driving miles, and traffic-related social alienation have been gradually shifted onto home buyers and that costs in terms of infrastructure expansion have been shifted onto taxpayers. Despite what sprawl apologists argue (for instance, Wendell Cox at Joel Kotkin’s New Geography embraces a futility thesis critique of “forced density”lateral growth controls), this is not a case of housing priorities being set by rational consumers in a free market, or of liberal-urbanist social engineers tilting in futility against sprawl that is both inevitable and beneficial. Rather, a set of politically motivated and administratively maintained subsidies and incentives to banks, builders, and (in a more conflicted sense) buyers has created sprawl (see Dolores Hayden’s classic Field Guide to start), without the consent of the majority of the people whose daily lives are affected by it. Does not “forced” apply as well to a housing market that imposes a hundred driving miles a day on a home buyer? The equity effects of this form of development are severe; though there are exceptions, mobility in highly decentralized metro areas is a severe impediment to economic opportunity for the poor.

Elsewhere, Romem acknowledges the limits of the market as an explanatory scheme for sprawl, noting that in a real-world setting, markets are affected by choices about resource allocation, and whatever the potential preferences of free agents in the marketplace, the claims made on limited transportation and infrastructure funds by exurban highway expansion are at odds with the expansion of mass transit that is necessary to prevent people from simply bringing their cars into denser developments.

It would also require a leap of faith that in the chicken-and-egg conundrum of density and transportation infrastructure, density can come first.

It’s welcome to see discussions of housing that dig beneath the superficially cheaper houses for sale in sprawling metro areas to consider costs to people, the environment, and the quality of social life.

The bad news stems from Romem’s fourth bullet point: the political (and I’m talking about institutional and cultural forms here) difficulty of enacting densification reforms in already-urbanized areas. While there have been a spate of accounts touting The End of the Suburbs as a seeming market-based response–a back-to-the-city movement based on millennials’ distaste for buying and sitting in cars and Generation X’s reaching an upper limit for commuting endurance–is at best a partial solution, because urban housing is increasing in desirability without a concomitant increase in supply because of land use regulations, cultural norms, and uncoordinated planning and development. The prospect of car-free or car-lite living may be attractive, but as a Brookings Institution report from 2014 indicated, the reduction of car commuting by young workers, while significant, represents a small reduction (workers aged 25-54 showed a 0.9 percent reduction in car commuting between 2007 and 2013).

Romem’s conclusions are intriguing, but there are significant political-economic impediments to achieving them. As Richard Florida notes, Romem describes aptly a “trilemma” of development imperatives, in which cities and metros must balance three objectives, where at least one necessarily suffers.

But this view, as apt a description of the forward-looking policy problems of density and affordability as it might be, leaves out the politics of the trilemma, and the ways in which policies that create sprawl are less a sacrifice of the desire to prevent sprawl for the sake of affordability and growth, but an affirmation of the priorities of political interest groups (real estate developers, home builders, automobile manufacturers, oil companies) in a “sprawl lobby.” Where neither Florida nor Romem quite go is to the conclusion that making density more economic effectively means making sprawl more expensive. We’ll keep waiting for that, I guess.

 

Of course, there is a role to play for ideas and values in the political arena, and perhaps this seemingly impossible political shift could be enabled by a powerful normative shift around lifestyle. Romem calls, among other things, for an effort to normalize multi-family housing as a child-rearing environment. Again, thinking historically, multi-family, cooperative, and other housing models have been envisioned as not only acceptable, but preferable to the domestic isolation of the single-family house. The problem is, as Dolores Hayden has written, that while the suburban single-family house was a spatial fix for the needs of the real estate, construction, and banking interests of mid-century America as much as those of working families, it met many of those families’ material and emotional needs well enough to become established, and to make alternatives appear impossible.

I’ve shown this 1957 industrial film In the Suburbs to my students for several years in the past, and it always provokes interesting responses. Lizabeth Cohen wrote about it in A Consumer’s Republic, suggesting that it heralded a transformative moment in the public embrace of consumerism. I’m a little less sure of that. The film is only incidentally touting consumer goods; it’s really selling Redbook magazine as a marketing tool to tap the wallets of “young adults” moving to the suburbs. I’ve always been struck by the amount of cultural work needed to normalize what the film subtextually portrays as a new and bewildering lifestyle.

There’s no reason to think that density can’t be as effectively sold, if there is the will to do it.

Advertisements

In Case You Heard Differently, Property Taxes Have Often Helped White People in Atlanta Stay Richer

In my research for an upcoming talk on the 1990s tax revolt in north Fulton County, I’ve had a revelation of sorts about one way in which white privilege is institutionalized and perpetuated (to be clear, this is a personal revelation, not a thought unprecedented in the annals of urban political economy). Ironically, this mechanism, the ad valorem tax on real estate, has been a principal boogeyman in the reactionary politics of privatism, public retrenchment and racial resentments of what George Lipsitz and Barbara Tomlinson describe as

a small cadre of affluent individuals—who comprise what surely must be the most sullen, surly, self-pitying, and sadistic group of “haves” in the history of the world.[1]

How can this be? Aren’t taxes the instrument by which the poor, minorities, liberals, and other members of the 47%  steal from upstanding taxpayers? Let’s do some quick history, drawing first on a Research Atlanta report by David Sjoquist and Drew Warwick [2], whose analysis is the basis for my summary of events below, to frame the conditions of the tax revolt.

In 1989 Fulton County’s tax digest (its list of every assessed property and its assessed taxes) was rejected by the Georgia Revenue Commissioner, who found that the county was

1. Violating state law because its overall tax digest fell nearly 10 percentage points short of the statutory requirement for property to be assessed at 40 percent of fair market value.

2. Assessing property at wildly uneven rates; a few properties were assessed above 40 percent of fair market value, most were assessed less, and some, mostly high-value residences, were assessed at much less than 40 percent.

These determinations were made through a sales ratio study conducted by the state Department of Audits on the order of the Revenue Commissioner. A sales ratio study compares the ratio of tax assessments to the sale price of properties sold in the jurisdiction that year to determine if assessments were in line with market value.

Atlanta and Fulton County’s flunking of this audit precipitated a fateful series of events. Atlanta and Fulton County, and their Joint Board of Tax Assessors, hired the firm of Cole, Layer and Trumble to perform a mass reappraisal of all Fulton County properties (more than 230,000!) based on a comprehensive sales ratio study. Fulton County was forced to acknowledge that it had been breaking state law by underassessing property. New legislation passed in 1988 also forced the two governments and their joint tax board to take swift and decisive action, or face stiff fines from the state. Atlanta and Fulton elected to bite the bullet and impose the assessment hikes all at once, rather than ratcheting up assessments gradually. The results were dramatic; virtually no property owners were spared an upward reassessment, but the most dramatic assessment hikes affected the owners of more valuable properties. It wasn’t unusual for residents of affluent neighborhoods to see their assessments double.

One might think that, since a sales ratio study makes the “free market” the yardstick by which tax assessments are evaluated, political opposition would be minimized, and the right-leaning homeowners who are prone to protest their tax bills would be placated. After all, it wasn’t some county bureaucrat arbitrarily making assessments, but the aggregated wisdom of the “free market”–the same force that was helping them to grow equity.  As Sjoquist and Warwick put it,

Despite the shock that residents face in dealing with the new assessments, the new state procedures should result in more equitable assessments.[2]

Since you’re reading and I’m writing this, you might correctly surmise that many taxpayers focused more on the “tax hike” aspect of the reassessment than on the “bringing assessments into compliance with the law” aspect–let alone any consideration of “paying one’s fair share.” In fact, the reassessments prompted the formation of taxpayers’ rights organizations, and launched the careers of many north Fulton Republicans who capitalized on the convergence of spiking tax bills and the prevailing sentiment that the region’s affluent were being soaked to support welfare recipients. The two most notable of these were Robert Proctor and Mitch Skandalakis, who were joint counsel in a taxpayers’ organization lawsuit against Atlanta, Fulton County, the Joint Board of Tax Assessors, and Cole-Layer-Trumble over the reassessment [3], and who used their new identities as tax warriors as a springboard to further political endeavors. In Skandalakis’s case, this involved a successful run for Chair of the Fulton County Commission and an unsuccessful 1998 run for Lieutenant Governor marred by extensive race-baiting of black Atlanta-area Democratic officials in his Ralph Reed-managed campaign. Proctor continued to sue virtually every government agency in Fulton County over taxes and, significantly, affirmative action, along with representing a Waffle House franchisee accused of discrimination against black customers in a briefly notorious lawsuit. (Ironically, after Skandalakis led a campaign to install a new county tax chief, Proctor served as legal counsel for a realty trust that specialized in buying tax liens at discount from the county and seizing the properties).

Proctor (as a civilian gadfly) and Skandalakis (in county government) were among the leaders of a movement that consolidated taxpayer resentment, white racial grudges about black political power, and a rising base of Republican party strength in Atlanta’s northern suburbs into a force that  transformed the state and has brought political conflict on the congruent axes of race, party, and geography to a head in Fulton County.

The most ironic part of this is that, far from soaking rich northsiders, the property tax system in Fulton County had been actively subsidizing them for decades. The pattern that the CLT study found in 1989 was the same one discovered by an Atlanta Urban League study of tax assessments in 1971, at the height of white flight.[4] A study by Research Atlanta, Inc. in 1975 referenced the Urban League’s study and a similar national investigation carried out by HUD [5], and rather delicately explained how race meshed with the “failure of assessment to keep pace with the rapidly changing property values in the county”:

The geographical distribution of neighborhood assessment-sales ratios mentioned above generally follows the trend of upward and downward transitional property values. Thus, houses in the city’s northern neighborhoods, where property values have been rising, had lower than average assessment-sales ratios. On the other hand, inner city neighborhoods, where property values have either declined or not risen as rapidly as the rest of the city, had higher ratios.[6]

Research Atlanta emphasized that the divergence was an effect of assessments lagging behind changes in the market–assessors devoting limited human resources to assessing newly developed property, for example–rather than deliberate attempts by assessors to favor any racial or ethnic group or any neighborhood area. I would not rule out the possibility that pro-development officials on the Fulton County Commission placed some thumbs on the scales so that rapidly booming northside and north Fulton areas would continue to grow without higher tax assessments, but this kind of malfeasance isn’t necessary to support an argument that tax assessments were racially biased against black Atlantans; the kind of property value instability happening in this era–both in terms of property that fell in value and that rose rapidly–was intrinsically tied to the racial identity of owners and neighbors. Further, if properties were reassessed at long or irregular intervals, that meshed with racial bias in the housing market to structure the tax system in whites’ favor.

In an era when (as David Freund ably argues) white suburbanites crafted a political identity around property ownership and a political agenda of racial exclusion justified by the need to protect property values, those homeowners scored a second windfall when tax assessors, whether through sloth, understaffing, or collusion with development interests, allowed tax bills to lag far behind that rising property value. So, while north Fulton tax revolt leaders like attorney Robert Proctor mounted soapboxes to lament the waste of their tax dollars after reassessment, they were utterly silent about the decades-long diversion of taxes whose collection was mandated by state law from the region’s schools and governments. They certainly didn’t thank any of the residents of low-value neighborhoods, whose relatively high assessments represented both a disproportionate share of the costs of government and public services and an effective subsidy to the underassessed rich.

Put it another way: Every dime of difference between the state-mandated assessment of 40 percent of market value and the actual assessment imposed on homeowners was a theft from the public at large.

Notes:

[1]: Tomlinson, Barbara, and George Lipsitz. “American Studies as Accompaniment.” American Quarterly 65, no. 1 (2013): 1–30. doi:10.1353/aq.2013.0009.

[2]: Sjoquist, Keith R., and Drew A. Warwick. Fulton County’s Mass Reappraisal: Why Was It Necessary? Atlanta, GA: Research Atlanta, Inc., 1993.

[3]: These suits were ultimately decided in favor of the governments. See Lomax v. Lee, 408 SE 2d 788 (GA Supreme Court, 1991).

[4]: Report of the Atlanta Urban League on the Fulton County Property Tax, 1971, cited in [6].

[5]: Arthur D. Little, Inc, and United States. A Study of Property Taxes and Urban Blight; Report to U.S. Dept. of Housing & Urban Development. Washington: U.S. Dept. of Housing and Urban Development; for sale by the Supt. of Docs., U.S. Govt. Print. Off, 1973.

[6]: Holmes, Donald E., and Robert W. Pinner. Assessment-sales Ratios in Fulton County and the City of Atlanta. Atlanta: Research Atlanta, 1975.

Walkable Places? Let’s Have some Caution about the Market

It’s slipped my mind and schedule to comment on this May 25 Times op-ed by Christopher Leinberger, which summarizes the results of his Brookings-supported study of the Washington D.C. metropolitan real estate market.

I’ve got little to quibble with in Leinberger’s description of the trend toward walkable neighborhoods fetching a premium in the housing market, and, having recently moved to a new place where a supermarket, veterinarian, post office, gym, Thai/Sushi fusion restaurant, pizza parlor, and liquor store are within a 500 foot radius of my front door, I’m not personally pleased to be paying a premium on my rent each month.

But I’ve got the premium to spend, which explains the problem I do have with the article. Here’s Leinberger’s closing:

Building walkable urban places is more complex and riskier than following decades-long patterns of suburban construction. But the market gets what it wants, and the market signals are flashing pretty brightly: build more walkable, and bikable, places.

I may be taking an uncharitable view of what is necessarily a distillation of a more complex project, but Leinberger writes as though the benefits that flow to people from walkable neighborhoods are important components of social provision only insofar as the market validates them.We’ve been here before, and though Leinberger is probably right that we can expect the market pendulum to swing back from the extremes of urban renewal, highway building, and the 1990s vogue for exurbia, we’re still left at the whim of big investors to get more walkable communities built, and in the meantime, we can expect the market to distribute other people to the places that are left over.

This problem is even reflected in some odd choices in subjects and verbs. Describing the correlation between neighborhood walkability and land values, he writes:

As a neighborhood moves up each step of the five-step walkability ladder, the average household income of those who live there increases some $10,000.

Maybe this is just a careless mistake, but in actually existing social space, neighborhoods don’t move up the scale of walkability, they pretty much stay the same, because the way they are is the way they were built. Small leaps, one rung upward, might be accounted for by the addition of bike lanes or altered traffic patterns or other modifications of a neighborhood’s infrastructure, or by new businesses moving in to meet basic needs. But even in this case, the driving factor certainly isn’t the neighborhood itself, it’s the influx of capital–financial, social, or cultural–that moves governments and developers to build more walkable infrastructure. We could make this statement more accurate by saying that wealthier people are moving to walkable neighborhoods. We could make it still more accurate by saying that wealthy people are moving to the limited supply of walkable neighborhoods that exist in the United States because of decades of heedless expansion and support for automobile-centered transportation, and often realizing a substantial financial gain through gentrification in the process.

If we assume the market will eventually get around to reorganizing the exurban sprawl of America after a long spell of sorting by income and purchasing power, then we will have the poor inhabiting what Atrios perceptively describes as decidedly disadvantaged places:

It’s as if instead of ruining cities by building urban highways, you’re starting with the cities being pre-ruined by the ribbons of roadways running through them

Indeed, this process is already visible, as a 2010 report from Brookings’s Metropolitan Policy Program shows (can we pause to ask if the right hand knows what the centrist hand is doing down at Brookings?). The suburbs are now home to the largest share of the nation’s poor and the highest concentrations of poverty in most metropolitan areas are now in older suburbs. People with more power in the marketplace are now choosing to live elsewhere, and the evidence doesn’t show that the process is leading where Leinberger thinks it’s leading.

To think about process in a serious way, addressing how metropolitan communities that exist today are shaped by past policy choices, cultural values, and financial incentives (e.g. the interconnections of highway  construction, federally subsidized mortgages, and redlining practices between the 1930s and the 1970s, or the explosion of exurbs driven by the 1990s and 2000s real estate bubble) would force us to focus on a less attractive side of the market–the banks, lenders, securitizers, speculators, and other guys in suits moving paper, plus the government bureaucrats, bank executives, and homeowners associations that actively or by indifference aided and abetted the production of a national landscape of economic and racial segregation–as opposed to the carpenters, plumbers, civil engineers, and other guys in hard hats building stuff and the honest hardworking Americans paying to live in places where they can walk to pick up a gallon of milk or see The Dark Knight Rises.

It’s worth noting as well that there has never been a “free market” in housing development in the modern United States, only various incarnations of state-supported subsidies for lenders, buyers, and (usually white) homeowners, but there we go with the history again.