Wednesday, December 10, 2014

Tax code uber alles

A recent piece in Smithsonian magazine, The Death and Rebirth of the Mall, points to a 1996 article by Tom Hanchett, staff historian at the Levine Museum of the New South, that I read almost 20 years ago. As always, Hanchett's thinking and research were impressive. But this article opened my eyes to a reality: Our cities and our neighborhoods are shaped less by city planners or the wishes of the people than by intricacies in tax laws and financing strategies.

It's like the time I realized (because David Walters told me) that the reason suburban sprawl didn't happen in Britain and Europe the way it does in the U.S. is because the laws there don't allow developers to build outside of the urban growth boundary. Until then I thought it was because Europeans were somehow more in tune with the beauties of nature and the importance of farms. Nope. It's what their laws say.

Hanchett's 1996 article, "U.S. Tax Policy and the Shopping-Center Boom," in the American Historical Review, describes how a small change in the U.S. tax code in 1954 – creating something called accelerated depreciation – "fundamentally altered the economics of real-estate development in the United States."

If you read the whole article you'll get a clear explanation of things like 200 percent declining balance and sum-of-the-years'-digits accelerated depreciation. If you're a real estate finance expert, you already know that stuff.  But here's the key information: This tax incentive applied fully only to new construction, not to renovating existing buildings.

"Suddenly, all over the United States, shopping plazas sprouted like well-fertilized weeds," Hanchett wrote. The

Thursday, November 20, 2014

Exurban living can exacerbate joblessness, study finds

The general belief that people living in American suburbs are better off economically than those in cities has been shaken in recent years, as desirable downtown neighborhoods have risen in price and have pushed poverty out into first- and second-ring suburbs. Here's another crack in that once monolithic belief.

Writer F. Kaid Benfield reports in Huffington Post on a new U.S. Census study that found recently laid-off workers who live far from job centers take longer to find replacement employment than do residents of neighborhoods more convenient to jobs by public transit or car.

The study itself is from the US Census bureau. Read it here. 

Benfield, who writes for the Natural Resources Defense Council, explains how exurban living can hurt, not help, household and government financial health:

"More hidden [than the problems of auto emissions contributing to carbon emissions], though, are the economic consequences of sprawl, such as rising costs for the construction and maintenance of extended infrastructure and the burdens of increased transportation costs on household budgets.

"More hidden still are the economic consequences of households being located at long distances, inadequately served by public transit, from job centers. For the employed, it means longer and more inconvenient commutes. But, for the unemployed, in too many cases it means you can't get to the job you need at all because you can't afford the costs of car ownership and inadequate public transit simply doesn't connect you to where you need to go."

Fact many Americans are unaware of: For the average U.S. household, the second-biggest chunk of the household budget, after housing, is not health care or food. It's transportation.

Benfield links to an article in The Economist about the jobs-housing spatial mismatch, which notes: "The typical American city dweller can reach just 30 percent of jobs in their city within 90 minutes on public transport. That is a recipe for unemployment."

Read Benfield's full article here.


Yet another way the feds promote sprawl

Another new subdivision for Union County, N.C., just south of Charlotte. Photo: Nancy Pierce

Feds promoting sprawl? That might surprise people who believe (wrongly, let me state) that the government is trying to push everyone, kicking and screaming, into high-rise apartments. But this article from Governing magazine last month shows that, in fact, the feds incentivize single-family housing at the expense of more dense development. The result is that some multifamily and mixed-use developments are pricier than they should be to buyers.

"Since its 1934 inception," writes Scott Beyer, "the FHA [Federal Housing Administration] has insured mortgages for more than 34 million properties, facilitating mass homeownership over several generations. But only 47,205 of these plans have been for multifamily projects. This is due to longtime provisions that make it harder for condos to get FHA certification. As late as 2012, 90 percent of a condo’s units had to be owner-occupied and only 25 percent of its space could be for businesses."

The FHA has eased that rule a bit in the past two years, Beyer reports, but even so: "These policies mean that, although practically every single-family home can be FHA-insured, only 10 percent of condo projects nationwide qualify. This makes condos less affordable, since prospective buyers seeking private financing without FHA backing face higher borrowing costs and typically must make 20 percent down payments rather than the 3.5 percent typically required of FHA-backed mortgages."

Click here to read his full report, "FHA Policies Discourage Density."

Wednesday, October 29, 2014

Transit chief: P3s help but won't solve transit funding woes

Sharon Road West station on Charlotte's light rail line. Photo: Nancy Pierce
The idea of using public-private partnerships to help fund transportation systems, including mass transit, is one of today's hottest topics in transportation policy circles. But the head of Atlanta's MARTA cautions that P3s, as they're known, aren't a silver bullet for transit systems.

Keith Parker, who headed Charlotte's transit system 2007-2009 and since 2012 has been MARTA CEO, was in town Tuesday, as a rail conference was kicking off. Parker spoke at a small event organized by the Transit Funding Working Group, a Metropolitan Transit Commission committee that's been pondering how CATS can move forward despite huge gaps between the 2030 plan and available money to built it out.

The working group has studied P3s, and a P3 conference was held here in March. In transportation, public-private partnerships are being used for bridges, tunnels, toll roads and High-Occupancy-Toll lanes such as the new HOT lane planned for Interstate 77 north of Charlotte. A private company, Cintra, has contracted with the N.C. Department of Transportation to build the lane and use the toll revenue to operate it. In Vancouver, a P3 built one of the region's rail lines.

P3s are touted as a way to get around a growing national problem of too many transportation needs and too little tax revenue to pay for them. With cars' gas mileage increasing, a decrease in driving among young people, and a national gas tax that's not been raised since 1993 and isn't indexed for inflation, trend lines for transportation funding are heading down.

In Atlanta, Parker has won praise for helping improve MARTA's relationships with the Georgia legislature and for bringing efficiencies to MARTA operations. And next week may see the first expansion of the system since it was launched 42 years ago in Fulton and DeKalb counties. A referendum is set for Nov. 4 in Clayton County, Ga., asking voters there whether to approve a 1-cent sales tax to expand MARTA into their county.

Parker, who described how MARTA is partnering with developers for transit-oriented developments on MARTA-owned land, cautioned the audience about the limitations of P3s, especially for transit programs. "They don't solve your revenue issues," he pointed out. And continuing revenues are needed, as well as capital expenses for building the transit lines and stations.

He quoted a popular misconception: "If you just go to the private sector they'll build all your trains for you."  That thinking? "It's just a myth," he said.

The Atlanta system is funded with a 1-cent sales tax in two counties. It receives no funding from the state of Georgia.  Mecklenburg County's system is funded with a half-cent sales tax in only one county.

For more on the recent transit funding challenges facing Charlotte, see "Mayor: Transit sales tax funding may be at risk" from

Wednesday, October 22, 2014

Clearing the air on the Liz Hair Greenway

Liz Hair Greenway, near Carolinas Medical Center. Photo courtesy Mecklenburg Park and Recreation Department
The cloud of cigarette smoke on the Liz Hair Greenway just below Carolinas Medical Center should be clearing up shortly. If you've walked or biked the narrow pavement of that greenway between Morehead Street and East Boulevard, you've probably gone past the smokers. They're mostly visitors or staff from the hospital, which forbids smoking on its property. The greenway is handy, and sometimes the hospital security guards even point it out to smokers.

But Tuesday, Mecklenburg County commissioners passed a new ordinance that makes most government buildings and most parks in Charlotte and Mecklenburg smoke-free. (In Charlotte, the Park and Recreation Department is a county, not a city, agency.)

As a compromise from the original proposal, six county-run golf courses and 18 parks that are considered "regional parks" are exempted. So you'll still have to choke on second-hand smoke in Freedom Park, Reedy Creek Park and other regional parks.  (A list of those parks is at the end of this post.)

The problem on the Liz Hair greenway stems from both the location of the hospital and the narrowness of the greenway between Morehead Street and East Boulevard. That section was built in 1988, back when many people here considered greenways risky spending. Today, it's one of the most popular greenways as it connects Freedom Park to the new, wider and more generously landscaped Little Sugar Creek Greenway near the Metropolitan development. It's narrow and crowded, and that means greenway pedestrians and cyclists are pretty much eyeball to eyeball, and lung to lung, with smokers.

An October 2012 article in the Charlotte Observer, by Michael Gordon, described the scene this way:

"For about 20 paces of shade beneath Medical Center Drive, Charlotte's health-conscious and not-so-muches squeeze into the same county-owned space. Neither is particularly happy with the arrangement. 'Generally, I hold my breath when I come through there,' says Collette Nagy, a Charlotte writer who biked under the bridge late Sunday morning, her dog Pepper riding in a knapsack on her back. 'But I feel sorry for them. I wish they'd get unhooked. I don't think verbal abuse will help.' "

Here's how Gordon described the scene: “At times, there's very little room for all the humanity to squeeze through. Around noon, about 10 smokers and their children were sitting or standing around the bridge, as a surge of greenway users – many with their children – dodged and weaved around them. There were near-collisions and some frowns. Even in the open air, the smoke under the bridge can be thick.”

The problem of smokers even drew a mention from a Portland, Ore., visitor, on the website Trip Advisor: “Hold your breath if you cruise past Carolina Medical Center at lunch time - the staff is out smoking on the greenway.”

Regional parks where smoking will still be allowed:

Wednesday, October 1, 2014

Detroit: 'Failed city' or urban upswing?

A lush urban garden in downtown Detroit.
DETROIT—Since I've been thinking of things in dualities (see "Two North Carolinas"), this trip to Detroit fits neatly into that pattern. As I was heading out of the office about 8 p.m. Monday, I ran into a high-ranking academic and civic leader returning from a reception on campus. (No, I'm not naming him because he had no idea I'd be writing about what he said.)

"What are you up to so late?" he asked. "I had things to finish 'cause I'm going out of town." "Where you going?" "Don't laugh cause I think it will be really interesting. I'm going to Detroit." "Wow, what a failed city."


That's one way to look at it, for sure. But there's another Detroit, the one where 50,000 residents took part in creating the Detroit Future City plan. The one where young entrepreneurs are creating a network of nonprofit and business startups and art projects. The one where a local foundation has brought 60 talented young innovators to town to work solving problems. Of the first class of 30, Kresge Foundation CEO Rip Rapson told us, 28 are staying in Detroit.

Rapson was the kick-off speaker at the Meeting of the Minds conference. While part of his talk was about the way Kresge and other foundations have stepped in to get Detroit on the path to survival, he was also clear that financially the city is a mess. And the problems can't be solved simply by smarter city budgeting. There are insurmountable structural problems, having to do with the tax base and some specific-to-Michigan-state-constitution realities.

(Warning, myth-busting paragraph ahead.) In case you're thinking, right about now, well it's those lavish pensions, think again. Rapson said the average pension for city police and firefighters is $31,000 and the average pension for other city employees is $19,000. Drastic cuts to those were not an option, he said.

The hotel for the conference is just around the corner from the federal courthouse in downtown Detroit. And a federal bankruptcy trial is going on this week, to determine the future of Detroit's finances.

Is Detroit a failed city? Or is it a city on the rebound? It'll take years, decades really, to learn the answer. My bet is on the rebound.  (More posts to come from Detroit, as I get time.)

Few sunbathers on a cool, cloudy September day at Detroit's Campus Martius park.

Tuesday, September 30, 2014

Two North Carolinas

You hear not so infrequently that there are two North Carolinas. What those two North Carolinas are, though, is not necessarily precise. Is it Republican / Democrat? Rural / urban? Prosperity / poverty? Newcomer / old-timer?

Last Sunday I drove up to Pilot Mountain State Park for a day hike with a friend. I zipped north on Interstate 77 in my new blue Prius, exiting at N.C. 268 near Elkin and heading east. As I drove through a rural area of Yadkin and Surry counties, I was listening to WFAE, the Charlotte NPR station, particularly to a report on the fiscal problems of the Atlanta Symphony – you know, standard public radio fare.

But as I drove down into some low-lying areas, the signal faded and instead my radio was picking up a Sunday morning religious broadcast, quoting Bible scripture and urging prayer. Then I'd drive up a hill and NPR and its learned, muted voices would re-emerge from the radio. Religion. NPR. Religion. NPR.

As I looked out the car window, I could see the standard views of foothills Appalachia - some well-tended brick ranch