Austin Contrarian

Formula One

Our mayor seems ecstatic as do most of the commenters here.  I don't know anything about the sport.  My first reaction was, "Do they really think they are going to race around downtown Austin like they do in Monaco?"  But the press release says "[t]his . . . will be the first time a facility is constructed from the ground up specifically for Formula One in the US."

Ah.  New infrastructure.  Which means a nice fat capital expense.  According to Wikipedia, the new circuit in Shanghai cost $300 million.   My guess is that Texas and Austin have agreed to pony up lots of dough, but we'll see.   I'll withhold judgment until I see who's paying what.

(Wikipedia already lists Austin as the 2012-2021 host of the United States Grand Prix.)

More on historic landmark tax breaks

Some City Council members evidently recognize that "historic landmark" tax breaks for wealthy West Austinites are an awful deal for the city.  The solution, naturally, is not to eliminate the tax breaks but simply to slow the rate at which the city hands them out:

The City of Austin would limit the number of homes eligible to be historic landmarks and receive tax breaks under new rules proposed by the city's planning department .

The proposal, which the City Council might vote on next month , comes after some council members expressed concern last year that the historic zoning program is too generous and is taking too much property value off the tax rolls. The council approved a spate of historic landmark applications in December for mostly upscale homes in West Austin.

Any property owner can apply to have a home or building designated a landmark, and if the City Council OKs the request, the owner is eligible for a tax break from the city, county, school district and Austin Community College to help defray the cost of keeping up the property's historical character.

The proposed rules would limit the number of homes the city considers for landmark status to three a month, according to a memo that the city's planning director, Greg Guernsey , sent to council members this week .

Guernsey also wants to limit the number of homes designated as landmarks in local or national historic districts to one per month per district. That could slow the flood of requests from West Austin neighborhoods such as Pemberton Heights, Old Enfield and Bryker Woods, he said.

This last is in response to complaints from residents of other neighborhoods who aren't upset about  tax breaks per se, but merely that the boondoggle has been confined mostly to tony West Austin.

These really are massive giveaways.  Consider this application for 1701 Windsor (the "Fitzgerald-Upchurch Wilkerson House") which Council approved at its April 29 meeting.  The homeowners get a $24,000 tax break this year and its value  will doubtless rise each year.   

That got me wondering:  What is the net present value of that tax break?  The feds pick up 35% of the cost, so the after-tax benefit to the homeowners is $16,000.  But this is equivalent to $16,000 in investment income with no credit risk and no inflation risk.  In fact, the home's value and taxes will almost certainly out-pace inflation.  It's a better bet than short-term T-bills, in other words.  But let's just use a very conservative 4% discount rate.  That would make the tax breaks equivalent to a one-time transfer of $400,000.  I do think that's the lower bound.

 The homeowners are giving up something in theory but not much in practice.  Most of these houses are already big and, because of the McMansion ordinance, could not be made much bigger.  The Fitzgerald-Upchurch W'ilkerson House, for example, has 6,2000 sf on a lot that would theoretically allow a tad less than 7,000 sf.  I think it's unlikely that anyone will tear this house down to build a house just a few hundred square feet larger or two houses half as large.  (I frankly don't think this house would be in jeopardy even if there were no McMansion ordinance.)

In fact, an application to demolish a home in Pemberton Heights and other historic districts already triggers Landmark Commission review.  If someone were to decide to bulldoze one of these homes, the Landmark Commission could initiate proceedings to landmark it then.   

Historic Landmark status also limits the changes the homeowners can make to the structure's exterior but, again, this is largely illusory because homeowners can modify these homes to their tastes before applying for landmark status.  Many of these "historic" homes have already received  additions or substantial external modifications such as enclosed balconies or breezeways.  Staff duly notes these changes in its reports but, as best I can tell, gives them no weight in making recommendations.  Because there is nothing really historic about the architecture, being fastidious about authenticity doesn't make much sense.

The truth is that tax breaks do not correspond very well to the benefits or burdens of landmarking properties.  Tax breaks might grossly under-compensate an owner who is forced to restore a dilapidated 1000 sf bungalow surrounded by stately mansions.   But tax breaks grossly overcompensate the West Austin owners who would simply continue to maintain and occupy these homes even regardless of the historic landmark designation. 

The state capitol complex

Two years ago, the Texas Facilities Commission proposed consolidating thousands of state employees in a suburban "town center" east of Austin.  The goal was threefold:  (1) the state would cut its lease expenses by consolidating employees from offices scattered around town in state-owned facilities; (2) the state workers would serve as the kernel for a new "town center" by SH 130, prodding other development in Austin's desired development zone;  and (3) the move would put lots of valuable land in downtown Austin.  

I thought this was a horrible idea, though:

As the Commission correctly notes, the area surrounding the Capitol is cluttered with low-rise state office buildings and parking garages; as an urban environment, it's a wasteland. The plan also would put valuable downtown Austin properties on the tax rolls for the city, county and school district.

But emptying thousands of employees out of downtown Austin is no solution. A vibrant downtown needs lots of people. Quality buildings matter, of course, but they are useless if they are empty. And while easing congestion is laudable, turning a large chunk of downtown into a ghost town is too steep a price to pay. Indeed, some congestion is healthy; roads are lightly traveled when no one wants to go where they lead.

The Commission has a legitimate interest in reducing the rent it pays for downtown office space. Putting valuable state property back on the tax rolls would be great for the city, county and schools. Anyone who cares about the urban environment would like to see us redevelop the clunky office buildings and street-killing garages surrounding the Capitol. But Austin simply does not have enough demand for downtown office space to replace thousands of government employees.   

I'm delighted then that the Commission's staff has done an about-face and is now proposing to redevelop the state capitol complex -- essentially, doubling down on downtown Austin:

A state commission is re-imagining the future of state government's physical presence in the heart of Austin a concept that would triple the amount of space at the Capitol complex, including joint development with private interests where there are parking lots or garages now.

The proposal, being crafted by the Texas Facilities Commission staff under the direction of new Executive Director Terry Keel, goes well beyond moving state employees from 2 million square feet of leased space across Austin to new state-owned buildings near the Capitol.

The concept, carried out over several decades, would remake downtown, potentially adding 7 million square feet of space, or the equivalent of 13 Frost Bank towers.

Of that, 1 million square feet would be in three new state office buildings. The proposal envisions the rest as joint development of underused state land with private interests.

The planners anticipate that the undertaking would comply with City of Austin development rules and respect the so-called Capitol view corridors. The plan is "parking neutral" — replacing lost spaces with underground parking — but anticipates that the Capitol complex eventually would be served by light rail and urban rail.

We are talking about a massive chunk of downtown land.  The state owns almost all of the roughly 20 city blocks sandwiched between the Capitol and the University of Texas and another eight blocks flanking the Capitol.   It's hard to convey the bleakness of the development there now -- it's all parking lots, parking garages and modernist bunkers set back from the street.  As this survey prepared by Jana McCann and Jim Adams, the consultants developing the Downtown Austin Plan, shows, most of these 20 blocks are devoted to low-value uses like parking lots or parking garages:  

 

 A.  Northwest corner of Congress & MLK

 B.  Southeast corner of 17th & Congress

 C.  Southwest corner of 18th & Congress

D.  Southwest corner of 16th & Congress 

I would love to see this wasteland transformed into a vibrant urban district within my lifetime.  There actually were a fair number of pedestrians out when I took these photos, despite the bleak environment and complete absence of ground-floor uses.  The reason is that the area already houses thousands of state employees and draws who knows how many visitors each day.  It's already got the population base that a good urban neighborhood needs, in other words.   It just needs the right buildings.

Train ride

I rode the commuter rail last week.  Here are my random impressions.  (If you want critical analysis, just google M1EK.)

My son and I took the 4:40 from the Convention Center north to the Howard Lane station and rode back.  It was about an hour and a half round trip.

You haven't ridden a train unless you've ridden one with a four-year old obsessed with trains.  I was treated (or subjected) to constant questions and observations.  "There is an old track; why aren't trains running on it?"  "Is that where they repair the trains?"  "What's that green paint doing on the train track?"  You get the idea.

The train was comfortable.  The ride was smooth.  It was on time to the minute.  But it was only a third full or so when it left downtown.  We picked up passengers as we headed north.  By the time we got to the Howard station, the train was packed.  And we picked up a bunch more passengers there before we headed back.  I suspect the train was at its standing-room capacity on the return trip.  It was obvious that most of the passengers were just checking it out; I doubt many commuters were heading south in the late afternoon.

The car is comfortable, of course.  The windows are large, perfect for viewing the neighborhoods as we rode by.  Austin's neighborhoods are frankly not that interesting, though -- just one suburban-style neighborhood after another, segregated by streets lined with strip malls.  Urban neighborhoods are more interesting to look at it; there's just more going on visually.  The most interesting neighborhood by far was East Austin between Cesar Chavez and MLK.  (I really like Saltillo Plaza, by the way.)

Buses were queued at each stop,ready to take passengers to their ultimate destinations.  They looked to be mostly empty.  In the rain, they looked a little forlorn.

The Cap Metro folks were handing out cardboard replicas of the train.  William plans to take his to show-and-tell next week.

That's about it.  Nothing terribly deep here.  I imagine that if I lived close to one of the stations, I'd use the train.  But the stations in north Austin have no place to park, so getting there by bus is the only option.  If I lived a bus ride from the station, I probably wouldn't take the train.  Having to hop on a bus once I got to downtown frankly wouldn't bug me, though.

We'll ride it again sometime.  William has a list of friends to take.  I don't think Cap Metro's would counts us as its core riders, though. 

Did Sao Paulo get what it wanted?

This doesn't have any relevance to Austin, but it's still interesting.

A few years ago, Sao Paulo banned essentially all outdoor advertising.  Not just billboards but virtually any kind of sign.  The Golden Arches are gone.  So are signs painted on the sides of buildings.  Neon signs, too.  Even storefront signs.

The ban was widely lauded at the time.  A blow against "visual pollution" and corporate manipulation of virtuous but sadly suggestible consumers.

The advertising is now gone.   This is a strictly subjective opinion, of course, but the result isn't pretty.  "Cleansing" the city of advertising did indeed focus attention on the underlying architecture.  But, judging from the pictures and videos,  the city's architecture doesn't warrant attention.  It looks drab, blandly utilitarian.  Even seedy.

I wonder what impact this has had on commerce in the city.  Outdoor advertising is actually useful.  All those signs served a purpose.  They provided information, mainly by cutting search costs.  But the ban was motivated in part by anti-commercial sentiments, so I suppose the city's residents got what they wanted.  (Maybe I'm wrong, but Latin American and South American countries seem to have an abiding dislike of markets.)

Judge for yourself.  A few Flickr photos.  Video.  Video.  And a few other photos here and here.  

East Riverside Corridor Master Plan

City Council is scheduled to vote today on the East Riverside Corridor Master Plan.  Let's hope Council ignores the Planning Commission.

The Plan envisions the redevelopment of East Riverside as a New Urbanist corridor, built around four major transit hubs.  The hope, of course, is that the "transit" will someday be a light rail line connecting downtown and the airport.  But East Riverside is a natural place for redevelopment of this kind, with or without rail.  East Riverside is close to downtown.  It is already fairly dense yet (paradoxically) has many low-density or undeveloped tracts suitable for redevelopment.  There is proven market demand, as demonstrated by the redevelopment underway on the western end.  While there are single family neighborhoods along the route, there are fewer than along, say, Burnett or Lamar.  And, finally, the existing development consists largely of decaying strip malls; everyone (including area residents) would like to see a better use of the land.  

The Plan basically proposes four types of districts.  "Corridor Mixed Use" (brown in the map below) would contain the major retail and office and provide the highest density.  "Neighborhood Mixed use" would contain less intensive commercial and retail while the "Urban Residential" and "Neighborhood Residential" districts would provide multi-family (exclusively) and single-family housing.

 

 For this to work, the Plan must allow a critical mass of density.  Rail won't have a chance to succeed without lots of people within walking distance of each stop.  And property owners will need an incentive to demolish income-generating (if unglamorous) strip malls.  A plan is not worth anything if no one builds anything.

The planners recognized this.  The solid ovals above represent a five-minute walk from the projected rail stops.  The planners generally filled the ovals with the densest district.

But this is a master plan -- a conceptual plan -- rather than a regulating plan, which would contain all the nitty-gritty regulations.  The plan does not specify the allowable density in the base districts.  It contemplates that districts will retain the existing height limitations, but anticipates a density bonus program that would allow greater height in exchange for "community benefits."   It leaves the details of the density bonus program for the regulating plan.

The plan likewise leaves (or left) the issue of compatibility for the regulating plan.  A single-family home in Austin imposes height restrictions on all properties within 540 feet.  A building can be no taller than 30 feet if it is within 50 feet of the single-family property line.  The height limit rises to 40 feet at 100 feet from the property line; 60 feet at 300 feet from the property line; and 120 feet at 540 feet from the property line.  Most districts have a base zoning height of 60 feet.  A property in one of these districts cannot develop to its full height unless the nearest single-family home is at least a football field away.  

Although East Riverside has fewer single-family homes than other transit corridors, it still has a few subdivisions, including one abutting the western transit hub.  The Plan does not purport to resolve compatibility.  The planners acknowledged that some type of compatibility regulation will be necessary, but did not endorse the existing standards.  It left for the regulating plan the difficult task of negotiating a compromise that leaves neighboring homeowners satisfied while allowing  enough density to keep this from being a merely academic exercise.  That was to be a conversation for another day.

But the Planning Commission concluded that there really is no reason to have that conversation at all.  It approved the plan, but only after insisting on an amendment that would retain all existing compatibility standards.   As this map presented by staff at Council's last briefing shows, insisting on rigid compliance with existing compatibility standards would gut three of the four proposed transit hubs: 

This graphic understates the damage, I think.  Much of the property shaded orange would be held to 30- or 40-foot height limits, which is too short to make mixed-use feasible.  And although each of the transit hubs has plenty of white -- unregulated -- space, the orange and yellow are concentrated on East Riverside itself.  It is silly to believe that we will see walkable, mixed-use neighborhoods spring up around these transit hubs if we hold development on East Riverside itself to 30- or 40-feet.

The Planning Commission in this case actively undercut the planning process.  It should have given a simple "aye," recognizing that compatibility is something that must be worked out in the future by the consultants, staff, neighbors and property owners.  Instead, it has tried to take compatibility off the table completely, to eliminate any flexibility.   And if that dooms the plan?  Shrug, I guess.

Update:  Last night, City Council approved the Master Plan without the Planning Commission's amendments.

Parking bombs

The Overhead Wire on the destruction wrought by downtown parking.  The Houston photo is stunning.  

I don't believe, though, that the interstate highways share equal blame with parking for the destruction of American downtowns.

I suppose I should be careful with my definition here:  I mean "Given the construction of a large, nationwide network of interstate highways, the decision to route them through downtowns did not have a material impact on the health of downtowns."  

The typical large American downtown before the 1930s or so developed around a rail, harbor or port.  Manufacturing clumped together near the transportation hub to save the hefty cost of moving heavy things.  Service and government workers -- the only inhabitants of today's downtowns -- located downtown because that's where their customers were.

This model was doomed once the country decided to build a national network of high-speed highways.  It was just a matter of time before manufacturing decamped to cheaper, less congested greenfields.  It didn't matter whether the highways ran around, through or under downtown -- manufacturers weren't going to pay a premium to be down the street from a rail terminal they no longer used.  Downtowns were in for a radical restructuring.

Now downtowns are occupied mainly by service and government workers.  More to the point, they are occupied by service and government workers who purport to service the entire metropolitan area.  A downtown Houston law firm with a large oil-and-gas practice doesn't market itself just to downtown energy firms; it sells itself to firms in the Energy Corridor, too, even though they are a 10-mile drive down the Katy Freeway.  It is easy to run a metropolitan-wide law practice from downtown Houston if it is easy to get to downtown Houston from any point in the metropolis.  A rich network of highways (or of light rail or commuter rail lines -- nothing in this argument depends on the mode of trip) makes the central location more attractive, not less.

Note that this has nothing to do with the impact of highways on housing patterns.  Highways of course have facilitated sprawl.  By lowering the cost (in time) of commuting from land on the periphery of the metropolis, they make that land more attractive for residential development.  But this isn't the dynamic that causes businesses to disperse.  Service firms like to cluster near similar businesses, near their customers, and near their suppliers.  They will do all three if they can.  When they can't do all three, they must choose.  The trade offs are more acute when a downtown has poor access to the rest of the metropolitan area.  In the long run, downtown Austin will suffer for its inaccessibility.

Don't take any of this as an unqualified endorsement of slashing interstate highways through downtowns.  They hurt property values in their immediate vicinity.  They wreck the neighborhoods that are plowed under, barricaded or sundered to make room for them.   But American downtowns would have experienced wrenching change even if highways hadn't been run right through them.  And American downtowns would be more desolate than they are today without the highways.

Parking is another story . . . .

A contrary view on density bonuses

Frequent (if involuntary) guest-poster Miggy responds to my criticism of density bonuses.  (Let this be a lesson to those who leave long comments.)

I, too, have a lot of misgivings on this policy, and yet, while I would agree that this is a marginal tax, so is the ad-hoc system….the unwritten rules that you mention here. Preference therefore cannot be given to the status quo on that basis alone. As you suggest, one way to compare the two systems is by the relative ‘bite’ – have past developments paid more for increased entitlements than they would under this proposal? The monetary value is not an easy comparison to make in most cases, but my layman’s research would indicate that some have paid less but some have definitely paid more and that’s without other factors such as attorney costs for taking it through the exception process or the value reflected back in sales prices from the investment. If this is indeed the case, it also raises a question of equitable treatment – why should one project pay more tax than another on that last square foot based simply on the political winds or the political stroke of their lawyers? We do not leave it to people to hire attorneys to individually negotiate their property, sales or income tax bill on an ad-hoc basis because we punted on creating a systemic, equitable approach to revenue generation. There’s an argument to be made, too, that this situation is not terribly unique – there is a marginal benefit of income, sales, capital gains and the improved value of real property. “Sin taxes” or levies on marginal negatives are great for behavioral modification but also unreliable for public funding which is why they make up relatively little of the overall revenue pie at any level of government.

I cannot speak to anyone else’s motives, but my best supposition for why the development community is objecting to these rules is not necessarily for the cost of what’s proposed. As you say, is not that onerous or, on average, dramatically different than the cost of the status quo… but there is a threat of the unknown. In other words, a failure to object at this juncture will increase the risk of more onerous fees being institutionalized. There is also a very real potential threat of tweaking ROMA’s proposal in the political process to where it definitively falls in the bad policy column.

I would further concur with your assessment that the arguments against the policy that use utility infrastructure costs are a red herring and are likely being used as a mask for other motives. Those infrastructure costs are significant and I realize that they’re paid for in real dollars not relative ones, but a long-term plan should not be bogged down by such obvious short-sightedness.

Bringing this back on topic – I personally believe that the current proposal is an improvement on both the status quo and the interim density bonus (which sends money to a city-wide affordable housing slush fund rather than having the same flexibility to reinvest in the project or immediate area of downtown).  Now…that being said, the proposal is also far from ideal. Density is a necessary component to a vibrant and valuable downtown, but it is also an insufficient quality on its own. While it’s tempting to simply say that the laws should be loosed and no restrictions be placed on a marginal positive, that’s also taking away an important point of leverage for achieving those other qualities that make for a successful downtown. That little bit of leverage is important in a state, that, as I am frequently reminded, has taken away a lot of sticks and leaves municipalities only to dangle their few remaining carrots.

It should be pointed out, too, that not all ‘community benefits’ are budget patches or crutches for poor general fund support from the city that could be made up by the taxable value of the new building. TDRs from the Warehouse district are not possible under an ad-hoc system and other benefits, such as green building or the burying of parking garages, are strictly the preserve of the private developer where incentives need to be in place to move projects in that direction at the time of construction. Moreover, what remains largely un-discussed are the market and construction variables at play and why ‘the sweetspot’ square footage for development is where it is (where density bonuses likely play a minor role). An ideal policy would seek to mitigate those variable costs or market limitations and move that sweetspot higher, but I’ve never heard that approach discussed seriously. There is only the assumption that the developer demand for greater density is insatiable (when we have a lot of empirical evidence of underbuilding and not a lot of empirical evidence of burj dubai’s passing on Austin because of its density bonus program).

In an attempt to wrap up this rambling comment on this wide-ranging topic, let me say that I look forward to hearing the completion of your thoughts on this. From your post here your argument would seem to condemn both the status quo and the density bonus proposal but it leaves open to suggestion what regime could replace both. I mean this more in an inquisitive than a challenging way, but: what is your proposal? What is the third way? Feel free to be ambitious and perhaps make it applicable to TODs / future town center nodes… but keep in mind that a proposal that is great urban planning but so audacious as to be politically DOA is also of little use. Again, I look forward to hearing your ideas on this topic…and thank you, as always, for raising important questions on public policy in Austin. 

I'll respond in a separate entry.

Texas is studying a tax on the number of miles you drive

News to me:  Texas will study a tax on miles driven:

If you don't like gasoline taxes, here's an alternative: a tax on the number of miles you drive in a year.

The Texas Transportation Commission has directed a fresh study of the idea, and it is not alone.  There are pilot projects in other states and nationally to gauge how such a tax would work.

Texas transportation officials say the study is meant to help give lawmakers information on options ahead of their next regular session in 2011, when they confront a funding squeeze that is expected to drain the highway fund of money for new construction contracts by 2012.  “We need to think differently about how we fund transportation,” Texas Transportation Commission Chairwoman Deirdre Delisi said at a Texas Taxpayers and Research Association forum in November.

Delisi said the vehicle-miles-traveled tax idea is controversial, but should be discussed because revenue from the state's main source of transportation funding, the motor fuels tax, is declining.  The gasoline tax has not been raised since 1991.

The commission asked the Texas Transportation Institute, which is part of the Texas A&M University System, to take the lead on the study.  Commissioner Fred Underwood has emphasized that the commission's goal is to give lawmakers alternatives.

There are good arguments that a gasoline tax is a more efficient tax on externalities.  Heavier vehicles do more damage to roads; heavier vehicles use more gasoline.  Emissions vary with the amount of gasoline used (ignoring vehicle technology).  A miles-traveled tax perhaps better reflects a driver's accident risk to others, but larger vehicles impose a higher risk on other drivers, bicyclists and pedestrians than smaller vehicles.  (Neither accounts for congestion externalities.)

But two drivers who "consume" the same number of miles enjoy equal benefits.  It's fair in that sense to require them to pay the same amount.   A gas tax and miles-traveled tax thus serve different purposes:  a gas tax is a tax on externalities; a miles-traveled tax is a tax on consumer surplus.

A boneheaded proposal from Cap Metro

I missed this at the time, but it deserves comment.

Cap Metro is developing its long-range plan, which it calls "ServicePlan2020."   It has hired a consultant from Washington state to prepare the plan  (13.1 MB pdf).

I doubt the consultants have set foot in Austin because the draft plan contains a simply horrendous proposal, a proposal that could only be made by someone who doesn't know the facts on the ground.   That is to switch key local bus routes from Congress, Colorado and Brazos to Lavaca and Guadalupe.  Most significantly, the 1L/1M, which runs down Congress, and the No. 3, which runs up Brazos on its northern route and down Colorado on its southern route.  These are Austin's two most important north-south bus routes, linking the southern fringe of town with the northern fringe; they have lots and lots of riders.

The consultant offers a couple of rationales.  One is to relieve bus congestion on Congress.   The consultant accurately observes that Congress is beset by a "wall" of buses creeping ever so solely down Congress's twelve blocks.

I won't even paraphrase the other -- it is so bizarrely wrong, I would feel obliged to understate it: