July 26, 2006
Urbanism = Amenity?
Last week's episode of Smart City (mp3, 23.6M) talks about sprawl and urbanism (the segment leads off the show). A few of the key ideas:
- Sprawl has been driven by a combination of zoning (trying to separate uses - keep the slaughterhouse away from my house) and Federal subsidies for things like the Interstate Highway System. Changing Federal funding and the information economy break this paradigm.
- Sprawl is also driven by a rational seeking of elbow room and affordability.
- Urbanism - the ability to live in vibrant urban neighborhoods - is now an amenity that people will pay top dollar for.
- The premium pricing for places like the Pearl may be a function of their relative scarcity - if we had a lot more high density urban neighborhoods, they might be more affordable.
July 26, 2006 8:34 AM
Clay Fouts Says:
The premium pricing for places like the Pearl may be a function of their relative scarcity - if we had a lot more high density urban neighborhoods, they might be more affordable.
I wonder about this when I hear people complain about the development of dense housing being more expensive, thereby excluding occupants with lower incomes. Why not encourage building more in order to increase supply? Density is not expensive because of some intrinsic material cost... it's expensive because it can be. It's attractive and people want more of it.
July 26, 2006 9:37 AM
Terry Parker Says:
If people are willing to pay top dollar for places like the Pearl and the South Waterfront, then taxpayers should not be subsidizing developers and the infrastructure to build such neighborhoods. Instead of urban renewal and property tax abatements, more money could go to schools, city wide government services and to help people truly in need of public assistance.
July 26, 2006 10:01 AM
Chris Smith Says:
Terry, I heard a Metro Councilor recently estimate that the average new suburban tract house has about $30K in government subidies.
I assume you want those eliminated too?
July 26, 2006 10:11 AM
Brad Sigler Says:
I agree with Terry. I have perused real estate listings in The Pearl and I am absolutely shocked when I see ads for million dollar penthouse lofts trumpeting "property tax only $250 / yr. until 2012!". There is a lot of tax revenue for the state / city lost due to developer subsidies and formerly abandoned and dilapidated warehouses that are now very expensive "historic" and tax abated condos.
I would love to live in the city, drive less and bike more but outlying suburbs are all I can afford. As for alternative transportation, my options are:
A. 75' Walk / MAX / Streetcar / Walk commute each way.
B. 75' bicycle ride each way on busy thoroughfares and hilly terrain with weather considerations.
C. 35' drive each way in warm car with nice stereo and a hot cup of coffee to my company subsidized parking space.
Sadly, until planners in this area start factoring affordability, commute times, "express" public transportation options, etc., Portland will continue to sprawl throughout the valley. You simply cannot encourage people and employers to move to Portland with promises of "livability" and then not deliver on those promises. Realistically, any newcomers or existing workers not making $100,000 / yr. are forced to Washington and Clackamas County to find affordable housing and they are likely going to drive into town for their work given the inefficiency of mass transit for those outside Portland's core neighborhoods.
July 26, 2006 5:23 PM
jim karlock Says:
Clay Fouts: Density is not expensive because of some intrinsic material cost... it's expensive because it can be.
JK: It is more expensive to build each higher story because you have to build the lower ones stronger. At some point you have to have an expensive elevator and go to steel which is very expensive. Single/two story is the cheapest per sq foot to build. When you consider the cost of land, then the overall cost will be cheaper for a taller building. That is why you see mostly low buildings on farm country and tall one on the city..
Clay Fouts: It's attractive and people want more of it.
JK: Then why people have been leaving the big, high density city, core areas for almost a century?
Chris Smith Says: Terry, I heard a Metro Councilor recently estimate that the average new suburban tract house has about $30K in government subsidies.
I assume you want those eliminated too?
JK: You bet, however that strikes me as an inflated number out of some group promoting high density living. We certainly didn’t used to subsidize suburbs like Hollywood, Ladds, Sunnyside, Lents, St.Johns, Parkrose - heck many even built their own streetcar lines.
Compare that to the SoWhat:
Original estimates: 5000 living units, $200 million subsidy. Do the math: $40,000 per unit. Double that, to $80.000, if you count the interest on that $200 million.
But, wait - there’s more: the tram alone cost 1/4 of that whole estimate, the pedestrian bridge is doubling or tripling in cost . The UR district is broke, the parks dept is coughing up money, PDOT is neglecting our streets to pump $$ into Homer;’s hole. So you can probably double that $80,000 per unit again.
Then look at some other details of high density:
* Typical TOD construction costs $36,000 more per unit DUE TO DENSITY per government data. They unusually get 10 year tax breaks, sometimes low cost land.
* Public transit costs more than buying a new car.
* People have been leaving high density areas for the better part of a century - all the big core areas are in a long term density decline. (We’re talking Kowloon, Bombay, New York, London, Paris densities here)
* High density areas are more congested and more polluted than low density areas.
* High density areas have longer commute times. Little Hong Kong is one of the worst.
* Families tend to move out of high density to get a back yard, lower costs and better schools. (Think Vancouver WA, not B.C.)
July 26, 2006 5:39 PM
Terry Parker Says:
“I heard a Metro Councilor recently estimate that the average new suburban tract house has about $30K in government subsidies”
Chris, I also heard Metro Councilor Carl Hosticka make that comment. However, he did not specify what he included in the figure. As an example, if he included improvements to the Sunset Highway or the cost of Washington County commuter rail as part of his $30k, I would have to disagree with his assessment. The Sunset Highway and commuter rail both serve/will serve Washington County jobs, and a whole host of businesses, restaurants, etc. in addition to new and existing housing. The Sunset Highway is also a freight route.
Today’s Oregonian pegs the public subsidy just to the South Waterfront at $125 million. This is all infrastructure within the South Waterfront district. If the streetcar is extended to Lake Oswego, I doubt the price tag would be added to the current South Waterfront subsidy just because the route runs through the district.
July 26, 2006 10:11 PM
Ron Swaren Says:
In response to JK:
" It is more expensive to build each higher story because you have to build the lower ones stronger. At some point you have to have an expensive elevator and go to steel which is very expensive. Single/two story is the cheapest per sq foot to build. When you consider the cost of land, then the overall cost will be cheaper for a taller building. That is why you see mostly low buildings on farm country and tall one on the city.."
The cost per square foot, to build, may be more expensive, but condo owners settle for much less sqaure footage, possibly by reducing redundant living areas. Most hirise condos are built with reinforced concrete, not structural steel, so the volume of steel is found in the rebar, which I agree should be large and plentiful given the seismic hazards in this region. There is a lot of extra labor that goes into wood frame houses, e.g. putting together exterior walls and windows, when a hirise has glass units lifted in with a crane, as are large volumes of most other materials, as opposed to being carried up by hand. Land may be expensive in the central city, but is not so expensive in outlying towns, yet still possessed with great views. I could see ten story buildings, (in Troutdale. Hillsboro, Milwaukie, etc.) as realistic. The biggest difference is the labor rate: city buildings are union built( figure budgeting 60-100 dollars per hour per man), suburban tract houses may even be black market rates.
I would agree with Clay Fouts that density is expensive because it can be. The developers have taken a reasonable risk that enough folks will show up with sizable bank accounts to buy in the Pearl or SoWa. This may curtail soon, but it has worked. Some cities have been building projects for years that average folks can live in. The most expensive parts of hirise condo projects: Deep excavation, energy efficient or high quality glass, designer appliances or plumbing fixtures, cast iron waste lines, the construction crane and high scale labor. But this also translates into less maintenance expense. In the Greater Vancouver region you could have found very affordable units in the last two decades; now, however, as the price on central city units escalates it is raising prices on the suburban units at a much higher rate. So it would now appear that they had been expensive to construct, too.
I think the costs could be brought down significantly. They were in the past or we wouldn't have projects such as retirement apartments or low income building built in multi story mode. It would take a government policy and inquiry to accomplish this ( via METRO or City of Portland), so I guess libertarians would oppose it. But, I have never found the construction industry to be highly reasonable.
Ron Swaren, UB of Carpenters Local 247
July 26, 2006 10:47 PM
Why is it that JK is about the only person that understand market economics here?
"It would take a government policy and inquiry to accomplish this ( via METRO or City of Portland), so I guess libertarians would oppose it."
Yeah, they would because it would in the end backfire, not serve it's purpose, or screw somebody out of their rightfully worked for ends.
This whole, the Government can fix it mentallity with a little subsidy here and a little one there, and then oh wait we'll need to cut school funds, then oh wait we need to add some more taxes now. Oh wait we can borrow against future money that isn't gauranteed and use it. That's like free money.
Seriously... this is as bad as Bush's budgeting skills.
The urban density that urbanist/new urbanist want will never be acheived because the urban environments they long after are the free-market capitalist, streetcar/entrepenuer built, non-subsidized urban environment of an industrial and unrestrained America.
Long dead, long gone, and we're fortunate enough to be living on that old wealth created by those great men of the day.
I love urban environments but I do dread the illogic of certain things, especially the socialist "we'll just forcefully create" the urban environments we dream of mentallity.
As for the 60-100 per hour construction worker cost?! Are you serious Ron?
That is sickly sad. People wonder why GM and Ford are getting wholed in the !@#$ when Union workers are raping them for that much money!
I was also amazed how fast a recent non-Union job went up. No one got hurt, no one bitched about cruelty at work, no one really bitched about being underpaid. Strange how that happens so often.
What's the excuse for that one? Is it shoddy?
July 27, 2006 3:04 PM
Ron Swaren Says:
I've worked in construction since buying a "fixer" house in 1972. Been a UBC member since 1979. A commercial cabinet installer (who hires union carpenters) told me two months ago he must bill 62.50 per hour for each worker. Since some other trades are paid even higher I think 100.00 per hour--gross billable rates-- is realistic. A union plumber might make thirty -eight dollars an hour, but all of the overhead, plus higher rates for overtime work, add up. So yes, that is realistic. OTOH subdivision type contractors might pay someone 10-12 dollars per hour off the books. Or the work is done by small time contractors who budget for all of their overhead from highly competitive bids..if they don't have to pay for workers comp, health and welfare, vacation pay they can do business at, let's say, 30-50 per hour.
In our current urban expansion most of the big buildings are being built with local union labor, but there have been some Canadian developers, expereinced with hirise condos, working in Portland who have brought their own non union crews. Our union has had a lower residential rate...I don't know if hirises could fall in that category since numerous safety issues come into play.
If I suggested affordable hi rise condos, people would either say that I meant "market rate" housing (i.e subsidized) or there would be a chorus of "It can't be done!" I just know that it was done in the past--and I don't think it was only because people settled for much smaller units. I recently looked at the round glass faced tower just across the river in Vancouver. It is retirement apartments for AFL CIO and very affordable--although I didn't care for the pie-shaped floor plans. So is it subsidized by union money? Maybe, somewhat, but unions are pretty tight with their funds. I just think that it was built at a reasonable cost. Having worked on any of these buildings I just can't see extraordinarily expensive sytems or materials that would make the sq. ft. cost ten times more.
I hear what you are saying about the tax and spend policy...of big government--it is starting to really irk me, too. I fear, though, that if housing is simply left to the market that only rather wealthy people will be able to afford the low maintenance, close to services, w/nice views, condominiums--because those who can develop them will go where the most profit is--unless they are forced, if only by policy, to do otherwise. Is there a free market option? Perhaps, the Canadian developers would take a chance at building in Troutdale--if the locals agree to it.
So I'm wondering if the goal of TOD will result in niches or enclaves of no one but high income people living in the towers, assuming thay are built farther out in the Metro region.
Shoddy construction in the cheaper high rise? I have seen some awfully cheap materials going into very expensive units, too. That is why I say there are only a few things in both the materials or the construction process that are abnormally expensive.
July 28, 2006 11:22 AM
People wonder why GM and Ford are getting wholed in the !@#$ when Union workers are raping them for that much money!
Offtopic, but I hope rage against union workers making a solid family wage (the cost of which includes luxuries like health care and retirement) also extends to the corporate executives who reap seven-figure salaries, millions in bonuses, full health care and golden parachute retirements.
Is the autoworker with a comfortable home, a nice car, a fun vacation and a safe (?) retirement a rapist? Or the guy with the estate, the private jet, a condo in Vail and millions in stock options?