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Just How Regressive is America’s Federal Housing Policy?

(ed. note. Please welcome contributor Chris Bradford, author of the economics blog Austin Contrarian.)

As this recent Congressional Budget Office (CBO) report reminds us, the answer is "very regressive."

transit_in_san_francisco_by_jupiter_images.jpgEven in lean economic times, the average rent in San Francisco (above) is close to $2,000/mo. (Photo: BinBin.net)

The disparity between the federal government’s support for homeowners and renters is stark. In fiscal year 2009, according to CBO, Washington spent almost four times as much money ($230 billion) to support homeownership as it did to improve rental affordability ($60 billion).

That spending on homeowners included $80 billion for the tax deduction for  mortgage interest, $16 billion for the state and local property-tax deduction and $16 billion for the capital-gains exclusion.

But it also included temporary commitments, such as the Obama administration's mortgage modification program ($75 billion) and the first-time home buyer tax credit ($14 billion). And let's not forget the continuing federal outlays to subsidize Fannie Mae and Freddie Mac’s credit activities ($43 billion). 

By contrast, Washington devoted just $60 billion to improving rental affordability, mainly through a combination of low-income housing tax credits, Section 8 rental assistance, and public housing.   

Most people, I think, will acknowledge a general uneasiness with this disparity. It seems unfair for the government to spend 80 percent of its housing budget on the 67 percent of its households who own property.

What's more, these federal subsidies flow disproportionately to the most affluent of those households. Homeowners see no benefit from the mortgage interest, property tax or capital-gains deductions unless they itemize -- which means that many homeowners get little or no actual subsidy. The subsidy rises with the value of the home and the tax bracket of the buyer.

In other words, the federal government handsomely rewards the affluent for buying expensive homes and leaves renters (as well as low-income home owners) relatively worse off in the process.

But Washington's housing subsidies, which have continued under both Democratic and Republican administrations, have an even more insidious impact in the nation's most expensive markets. There, they make renters worse off in absolute terms by raising the overall cost of housing.

How does this happen? While federal homeowner subsidies nominally flow to home buyers, the actual beneficiaries depend on the particular housing market.

In markets where it is easy to add new housing -- those with an elastic supply -- rising demand spurs more new housing rather than higher prices. Home buyers do indeed receive the subsidies’ benefits (though they often take an environmental hit from new, often sprawled construction patterns). The federal programs reduce their cost of housing without raising the cost of housing for renters. 

But the story is different in markets with high demand and tight supply, such as the expensive markets on the coasts -- highly desirable, highly productive metropolitan areas constrained both by geography and restrictions on new construction. In these markets, sellers possess a scarce good in high demand and can force buyers to bid away their federal subsidies. The federal subsidies are bundled into the sales price; in the end, home buyers are neither better off nor worse off than without the subsidies.

Renters, however, are unequivocally worse off.

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Compromise In the Air for Downtown Connector, Expo Phase II

Yesterday, transit advocates received a double-dose of good news as the air of compromise blew in and the debate over two light rail projects was changed.  In Santa Monica, the City Council endorsed a "compromise" plan on the location of a light rail yard for Expo Phase II.  Downtown, Metro staff unveiled a new potential design for an entirely below-grade Downtown Connector that could address all of the concerns of the Little Tokyo community.

11_20_09_The_Source_rc.jpgFor the full image, visit The Source.  If the page doesn't load, it's their server, not my link, that's the problem.

First announced at The Source, then covered at Blogdowntown, Metro staff unveiled a draft of what the Downtown Connector would look like if it were entirely below-grade.  Previous drafts, including a plan referred to as "the Underground Emphasis Option" had the train spending a lot of time at-grade in Little Tokyo.  Even the most underground option had The Connector coming above ground near First and Alameda before connecting to an at-grade station.  Blogdowntown explains the new alternative:

The new alternative would instead place a station underneath the Office Depot site, with trains continuing under the intersection as tracks split to emerge via portals along Alameda and in the middle of 1st.

The Alameda portal would be located north of Temple street, while the 1st street tracks would rise just east of Alameda, leveling off just past Hewitt. Some temporary track on 1st would allow the newly-opened Gold Line Eastside Extension to continue operating throughout construction.

Of course, there are still significant barriers before such a design becomes a part of the final plan.  Most importantly, it needs to be included in Metro's environmental review, a step the agency has yet to announce.  Second, the new plan would cost a cool $200 million more than the most expensive of the currently studied options.  Not surprisingly, even the expanded price tag didn't bother the Little Tokyo community that saw the design last night and voted unanimously to encourage further study.

Meanwhile, in Santa Monica, the City Council voted to endorse a location for the maintenance yard that will house Expo's light rail cars when they're not active on the line.  The surrounding community had argued that a residential neighborhood was a poor location for the yard, but as Curbed reports, via the Argonaut, there were some compromises.

Concessions have been made: A city official tells the paper that the "new planned location had been redesigned to eliminate 'wheel squeal' from the train and a car wash and cleaning platform would be relocated north of the Verizon property. A 110-foot sound barrier is also proposed to reduce noise from the train and the light rail yard."

Again, two issues remain before the light rail yard is a done-deal.  First, it's Metro, not the City of Santa Monica that decides where the yard goes.  Second, the station's new neighbors aren't done fighting.  Now they're concerned with a higher-than-originally reported level of methane gas in the area.

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New Study Quantifies High Personal Costs of Building CA Cities for Cars

Household_transpo_costs_small.jpgClick to enlarge: Annual household transportation costs in the Bay Area.

(editor's note: The section with area specific data for Southern California isn't done yet.  When it is, we'll have a post specific to our region.  In the meantime, this statewide article prepared by Matthew Roth in San Francisco is a great read.)

California residents living in sprawling suburban developments could save billions of dollars every year if they lived in denser, urban zones and along transit corridors, according to a study released today by smart growth and transit advocates TransForm. Analyzing four metropolitan areas--Southern California, the San Francisco Bay Area, San Diego, and Sacramento--Windfall for All found that shifting populations in those regions to denser development along transit corridors would save save $31 billion per year, or $3,850 on average per household [Report Summary PDF].

In the Bay Area, where annual car ownership costs on average over $8,000 per person, individuals spend roughly $34 billion every year on personal transportation costs, compared to only $4.6 billion spent by public agencies on transit and roads combined. Households with poor access to public transit not only spend double the amount per year on transportation when compared to those with good access to transit, they produce more than double the amount of CO2, a greenhouse gas.

"The most astounding thing is that agencies pinch their pennies on transit and cut back and we feel like we can't afford not to save that service," said Stuart Cohen, Executive Director of TransForm. "We're already spending more than seven times as much as our agencies spend on public transit and roads just on buying and operating our vehicles."

What's more, the report points out that fuel costs represent a small minority of the cost of owning a car, so the craze for electric and other low-emission vehicles will not dramatically reduce the transportation costs for those living far from their jobs and far from transit. The best solution to combating climate change, the report notes, is to build walkable, vibrant communities where residences are situated close to job centers. 

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Streetsblog.net

Wanted: Your Photos of Kids on Bikes

3532254875_a00c58e597.jpg(Photo: Richard Masoner of Cyclelicious)
Hey, we need your help again for our next slide show. This one is going to make you feel good. We're looking for pictures of kids on bikes -- on their own, with their parents, on trailers and seats and Xtracycles and whatever other kind of rig there is. Show us what you've got.

Send your JPEGs to sarah [@] streetsblog [dot] org, or tag them with "kidbikes" and "streetsblog" in Flickr. Your deadline is next Tuesday, November 24.

Our past slide shows have been on bike traffic, space hogs, work bikes and crummy transit conditions. Check them out if you haven't already.

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Are You Paying Attention City Hall?: Chicago Ripped Off in Parking Privatization

City parking meters are a gold mine, and in Chicago, Morgan Stanley is rolling in parking riches. Secret company documents leaked to reporters show the company will rake in a 70 percent profit margin this year from its $1.15 billion, 75-year lease of Chicago's parking meters. This profit is on top of the millions Morgan paid to buy new, high-tech meters. The good times will keep on rolling for investors: In 2010, after another meter price hike, Morgan expects to make monthly profits of $4.8 million, roughly 55 percent higher than in 2009.

Last December, Streetsblog estimated that the Chicago deal would cost taxpayers "several hundred million to even a billion dollars in foregone parking revenue." Using the latest Morgan numbers, privatization expert Roger Skurski told reporters his "conservative estimate" -- Chicago could have earned about $670 million more by holding on to its meters. Back in June, before Morgan's revenue was known, Chicago's inspector general estimated the city could have gotten $2 billion in revenue, or $850 million more than it did from Morgan, had it raised rates and kept meter revenue to itself.

Streetsblog has been following the Chicago parking privatization closely because it is the poster child for all that can go wrong with Public Private Partnerships, or PPPs. The basic idea behind a PPP is that the government leases public transportation infrastructure -- say a bridge, highway, airport, or parking meters -- that can generate user fees. In exchange for the fees, a private investor pays the government a large upfront fee or assumes the cost of improving the infrastructure. PPPs are popular in Europe, especially at airports.

Sustainable transportation advocates should care about PPPs for a number of reasons. First, politicians and bureaucrats are captivated by the fantasy that PPPs are the ultimate free lunch, generating billions in transportation investment at no cost to the taxpayer. President Obama's euphemism for PPPs is "creative financing." Here in New York, state officials have repeatedly presented a PPP as the way to raise billions for the astronomical cost of replacing the Tappan Zee Bridge. This is dangerous thinking. PPPs do inflict a cost, and it's a big one. Huge amounts of revenue that could be directed to public transit, or crucial road and bridge repair, is instead going to Wall Street.

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Streetsblog.net

To Thrive, Suburbs Might Become More Urban

A very interesting article in USA Today on the future viability of suburbs came up in our Twitter feed this morning, via Community Research Partners of Columbus, Ohio.

The piece, by Haya el Nasser, starts out talking about how population is falling in many of the suburbs that grew most quickly over the last few decades -- places like Bellevue, Washington. These communities have become known as "boomburbs." But their boom days are past -- for now. Some have begun losing population.

Texas_parking.jpgWill light rail pave the way to a different future in Irving, Texax? Photo: pinecone.
The most interesting angle in the article, however, isn't the decline of suburban fortunes and the real estate market that fueled them. It's what municipal leaders and researchers are saying will be necessary to make those places economically viable in the future. Which is this: they'll have to become more like cities. Denser. More walkable. Not bedroom communities, but self-contained communities.

Robert Lang, a professor of sociology at the University of Nevada, Las Vegas who coined the term "boomburbs," put it this way: "The irony is that if they want to keep growing, they must grow as cities, which is diametrically opposite of how they got so big in the first place."

And transit will be key to that transformation:

Population has declined since 2006 in Irving, Texas, but the city is prepared for healthy growth as soon as a light-rail line to Dallas/Fort Worth International Airport is completed. "Eventually, you have to shift your focus to not just booming growth but redevelopment," Mayor Herbert Gears says. "That (rail) line is what's given us the opportunity to create an urban center."

Condominiums, apartments and retail are planned along the transit line. The city projects a 240,000 population by 2015, an 11% jump.

Growth in Henderson, Nev., near Las Vegas, has slowed but not stopped. "With the slowdown we've seen, it gives us an opportunity to take a breath," says city spokesman Bud Cranor. Henderson is focused on creating "green" jobs and a more sustainable urban environment, he says.

The article highlights what is emerging as a powerful unifying argument for smarter development: economics. It's an approach that could bring conservatives and liberals together. And it will certainly be part of Transportation for America's upcoming discussion on conservatives and public transportation.

More from the network: Bike Portland on results from an ad campaign that asked, "Should cyclists pay road tax?" Dotage St. Louis on an attractive replacement for a parking lot. And Rights of Way in Portland, Maine, on what a difference a four-foot narrowing of a street can make.
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Today’s Headlines

  • Annenberg's Neon Tommy Blog Destroys Metro's Turnstile Experiment
  • Biggest Obstacle to HSR in CA?  Land Use (CAHSR Blog)
  • Don't Take Our Chargers!  S.D. Contemplating Building a New Stadium (SanDiego.com)
  • Eastside Extension Getting a Speed Boost (The Source)
  • Where Is Transit Ridership Increasing the Most in America? (Planetizen)
  • Pay-As-You-Go Insurance Coming to CA (Treehugger)
  • Opera About How 110 Affected Surrounding Communities Over Last Half Century Opens (LA Now)
  • Philly Cyclists Look to L.A. for Inspiration Fighting Bike Licensing (Philly Inquirer

More headlines at Streetsblog Capitol Hill

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“Cartoon Thursday:” Eastside Blog Punks Metro on Gold Line Safety

11_19_09_el_tren.jpgNot a real sign. Image: LA Eastside

Last week, LA Eastside decided to take a poke at Metro and posted a series of fake signs in "local lingo" to help keep Eastsiders safe from the Gold Line Extension trains.  One look at the above example, and you can probably guess that the signs at LA Eastside are a parody.  However, not everyone got the joke, as evidenced by commenters at LA Eastside and the lecture posted today at The Source.

After explaining the situation, and before showing what real Metro safety signs look like, Fred Camino delivers Metro's stance:

Here’s the thing, Metro actually does takes safety very seriously and safety signage is there to inform and educate people about the risks around train tracks. You’ll find safety signage everywhere on the system, from the street running Gold Line to the underground Red Line.

The bloggers over at L.A. Eastside would do right by their readers and community by informing them that the signs are indeed a hoax. No one at Metro thinks we’re above criticism — but we would like to be criticized for things we’ve actually done.

Personally, I can see Metro's point if they're getting complaints about these fake signs.  But LA Eastside's point, that Metro didn't take every precaution for the communities through which the train now runs, is certainly fair game.

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Help D.A. Mary Stone Keep the Road Rage Doc Behind Bars

11_3_09_ct.jpgHe's behind bars now, but should he stay there? Photo: Los Angeles Times
Next Monday, District Attorney Mary Stone will file her motion recommending a prison sentence for Dr. Christopher Thompson, the "Road Rage Doctor" who intentionally used his car as a weapon against recreational cyclists on Mandeville Canyon on July 4, 2008. With her motion she'll also hand over a packet of letters of support for stricter sentencing from a community that has been effected by Thompson's aggressive act.

So here's the deal, you can email a letter of support to Stone at mstone@da.lacounty.gov. She stressed that the best letters open with a description of who you are and why you care before going in to other details. For example, you could say, "I'm a writer who focuses on transportation issues and I spend too much time writing about the tragedies created by unsafe driving."

Stephen Box also writes that this provides an opportunity to incorporate two planks of the Cyclists' Bill of Rights. Article one states that cyclists have the right to "travel safely and free of fear." Article Four states that cyclists "have the right to the full support of our judicial system and the right to expect that those who endanger, injure or kill cyclists be dealt with to the full extent of the law."

If you need more inspiration, you can read my letter after the jump.

A major hat tip to Ross Hirsch who did the majority of the legwork on this article.

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A Warning From America’s Cities: The Recession Has Only Just Begun to Hit

President Obama may be optimistic about continued U.S. economic growth as 2009 ends, but the reality on the ground in urban America -- which an estimated two-thirds of the population calls home -- is undeniably, disturbingly bleak.

Michael_Nutter51308.jpgPhiladelphia Mayor Michael Nutter (Photo: PennLive)

That was the message delivered today by two economists and a bipartisan quartet of U.S. mayors at the Brookings Institution in Washington. Michael Nutter, Philadelphia's Democratic mayor, seemed to sum up the mood as he mused aloud that the federal government had seen fit to deliver no-strings-attached cash to financial and auto companies deemed "too big to fail."

"Cities and metro areas are too important to fail," Nutter said, adding that successful urban government is "equally or, I'd suggest, more important than anything that's going on in industries."

Unfortunately, economic data suggests that cities are only just beginning to bear the brunt of what some have christened "The Great Recession." Steve Cochrane, managing director of Moody's Analytics, showed today's Brookings audience a map of the nation with states where employment could be expected to rebound the quickest.

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Welcome to the Blogroll: CicLAvia and City of Lights

There are two projects of the Los Angeles County Bike Coalition that haven't received as much attention on Streetsblog as they should, although CicLAvia did get a belated review last week after reviews in the Times and television.

11_19_09_col.jpgPhoto: LACBC

But first, the Bike Coalition has been pushing a unique outreach program to immigrants and day-laborers to encourage cycling that is safer and more enjoyable.  While these communities make up a large portion of Los Angeles' bike community, they are under-represented in policy discussions, the bike culture scene and with the organizations that represent cyclists interests both locally and nationally.

The City of Lights program's outreach model has been to provide day laborers and others in less-affluent communities the items and information that they need to bike safely.  Coalition staff and volunteers have handed out lights and helmets, sometimes with the support of City Councilman Ed Reyes and others, and information and tips on safe cycling.  In order to promote a sense of community, they have also programmed rides to celebrate cycling such as September's Latinos and L.A. History Ride.  The rides and equipment aren't the end of the campaign; the goal of City of Lights is to help empower some of these veteran riders to become the next wave of bicycle advocates.

11_19_09_ciclavia.jpgCicLAvia in Los Feliz?

CicLAvia is also using a blog to update interested parties on their work.  Following their star-turn in the Times and on television, CicLAvia posted a "what is CicLAvia" post to make sure anyone interested knew who and what the campaign is.  They also have picked up a Streetsblog theme by looking at major street parties, in this instance the Gold Line Eastside Extension Opening, and asking why we need excuses to have street parties.  Isn't living in Los Angeles enough?

If you'd like to help either of these groups out, you can contact Allison Mannos for the City of Lights Campaign at allison@la-bike.org, and Adonia Lugo for CicLAvia at adonia.lugo@gmail.com.

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‘This Needs Attention’: Senators Seek Shot in the Arm on Transportation

Senate environment committee chairman Barbara Boxer (D-CA) and fellow lawmakers today pressed the Obama administration to take a more active role in ending the current political stalemate over federal transportation funding, but the sense of urgency they sought emerged only intermittently during an 80-minute session on infrastructure.

610x.jpgDeputy U.S. Transportation Secretary John Porcari (Photo: DayLife.com)

Roy Kienitz, U.S. DOT's undersecretary for policy, told Boxer that the cancellation of $8.7 billion in contracting authority -- which took effect when Congress passed the first of two stopgap federal transport law extensions in September -- is forcing a 30 percent cut in local spending power, although each state will feel the effects at a different pace.

"It's pretty important when we see that we're giving the states 30 percent less than they should be getting," Boxer replied, asking the administration for help in marshaling support for a six-month extension of the 2005 transport law.

She added that senators would appreciate White House assistance in ending "the standoff" with the House, where transportation committee chairman Jim Oberstar (D-MN) continues to call for passage of his new six-year transport bill.

Boxer described the House approach as: "Let's just bring it to a crisis point, then we'll go double the gas tax and solve the whole problem." She noted that Democrats lack the votes for that strategy in the Senate (and likely the House as well).

But the administration gave a fairly lukewarm answer to Boxer's urging. Deputy Transportation Secretary John Porcari restated the White House's endorsement of an 18-month extension before conceding that a six-month window is "better than a 30-day."

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Streetsblog.net

Blaming the Pedestrian, Again

Despite the growing national attention to the dangers posed by distracted driving, full accountability for drivers who kill or maim pedestrians while fiddling with electronic devices is likely a long way off. As today's post from Streetsblog Network member Sustainable Savannah notes, law enforcement officials too often seem to see things from the perspective of the person behind the windshield:

dont-walk_1.jpgPhoto: hebedesign via Flickr
While researching a recent pedestrian death in Savannah, I ran across this television news report, which I think deserves to be examined on its own. If I’m hearing him correctly, this is the message delivered by a Savannah Chatham Metropolitan Police officer:

"Someone could be looking down at their cellphone. Next thing they know they look up and there’s a kid in the road or a person in the road where they are not supposed to be at. And they don’t have time to stop. And like I said, pedestrians will lose that battle every time."

Perhaps this short comment from the officer was taken from a longer segment in which he railed against distracted driving. I hope that’s the case and if so, I commend him for it. But if not, it suggests a terribly casual attitude toward an awfully dangerous practice.

Sustainable Savannah links to Tom Vanderbilt's recent excellent essay on Slate, "In Defense of Jaywalking." Read it if you haven't already. It is a concise and well-researched examination of the biases against pedestrians -- biases that are reflected in media coverage and law enforcement, but most importantly, in street design.

More from around the network: Transportation for America will be hosting an online discussion December 7 on conservatives and public transportation. Biker Chicks of West Chester decries the push to register bikes in Philadelphia. And Mobilizing the Region talks about how transit operating aid is the best route to job creation.
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Today’s Headlines

  • But His Environmental Review Was Good Enough for the Governor...DA Looking Into Rampant Conflict of Interest in Industry (Times)
  • Bloomberg News on Mayor's "Creative" Plan to Extend the Subway
  • State Needs $20.7 Billion to Balance Budget (SacBee)
  • Leahy on 405 Controversy: both O.C. and L.A. Outgrowing Freeways (ABC7)
  • Green Line Extension, Crenshaw Light Rail Line Move Forward (The Source)
  • Eastside Extension Getting Positive Reviews (Rafu Shimpo)
  • Intercity Bus Service: Recession-Proof (Globe)
  • Someone Stole No Impact Man's Bike! ...Now It's Back!

More headlines at Streetsblog Cap Hill

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Echo Park Community Warns Metro: Hybrid Plan for Route 2 Terminus Untested, Illegal

Screen_shot_2009_11_11_at_9.28.05_AM.pngThe LADOT's favored alternative. Of course, they're willing to "compromise."

At 1:00 P.M. down at Metro Headquarters Board Room, the Metro Board Planning and Programming Committee will vote on a staff proposal to accept a "hybrid alternative" to the Route 2 Terminus project.  Last week, Streetsblog discussed the broken process that led to the "hybrid" where the community proposed a design that would have calmed traffic and added open space to the road but LADOT rejected that proposal because it didn't do anything to add capacity to the road.  Basically, all three agencies had to agree on a design, and despite Metro's approval of the local design, it had to "compromise" with the LADOT on what is now being called the "hybrid option."

There's just one small problem.  The "hybrid option" has never been studied, yet Metro now seems determined to push this option as the "locally preferred alternative."  Not only was this option not included in any environmental documents, it doesn't appear on Metro's project website and doesn't even appear on a documents on the alternatives that are being considered on the project website.

Unfortunately, Metro isn't just violating its contract with the community to have an open and transparent process by pushing an alternative that hasn't been studied; it's also possibly violating state law concerning environmental review.  After all, if agencies can just add an alternative at the end of the environmental review without studying it and declaring it the "preferred alternative;" then what is the point of the review in the first place?

The local community, which had worked hard on its own alternative that increased open space and viewed the road as a public resource, not a sewer to flush cars through, isn't going to give up without a fight.  The following excerpt is from a letter they sent to Metro staff and board members in advance of today's meeting.

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