For those of who were following Architect This City during the Gardiner Expressway East debate here in Toronto, you might remember that Darren Davis (transport planner with Auckland Transport) wrote a guest post called, Three minutes that rule the world – Will demolishing the Gardiner East actually make traffic worse?
It was an incredibly popular post at the time, so I’m thrilled that Darren volunteered to do another one on road tolls. This is a topic that I’m very interested in and have written about a few times. Road pricing, as you’ll see below, puts us in a bit of a chicken-and-egg situation. But sooner or later I think we will need to get our head around it, as will many other cities.
I hope you enjoy today’s post. Thanks again Darren.
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A recent post on Architect This City, The Tragedy of the Commons, raised a fundamental but all too often forgotten point about transportation: That in networks where the price of use doesn’t change when demand changes, there is no effective mechanism to manage that demand.
Because there is no incentive to act in the public good, we often act in what we perceive to be our own personal interest, which is often the antithesis of the public interest. And remember that if we are driving, we are traffic. So often people will sit fuming in their cars in the midst of congestion with thoughts like in this cartoon. But of course with unpriced roads, there is no real price signal to these drivers to consider taking the bus.
In a world where time is money, we are constantly berated about the economic costs of congestion. In 2011, the Toronto Board of Trade estimated that congestion in the Toronto region alone cost the regional economy $6 billion a year, rising to an estimated $15 billion in 2031 should no action be taken. More recent research by the CD Howe Institute pegs this figure at up to $11 billion.
Given these sorts of eye-watering figures, one might be tempted to think that car drivers, and in particular the goods industry, would be flinging their wallets open at the chance to buy their way out of congestion. And in fact Toronto has the 407 Express Toll Route which has elements of variable road pricing. However, while the 407 ETR carries around 350,000 vehicles per day, price increases have been matters of controversy. It provides some ability for those who can afford it to bypass Toronto’s notorious traffic congestion, but its fundamental weakness is that it’s just one road in one of North America’s largest city-regions.
Similar stand-alone efforts to address congestion in Metro Vancouver with tolled routes, such as the Port Mann Bridge on the Trans-Canada Highway and the Golden Ears Bridge, have fallen well short of their projected traffic volumes, while nearby untolled bridges such as the Patullo Bridge are heavily congested. We have a similar experience in New Zealand where our two tolls roads, with car tolls of $2 and $2.20 respectively, experience diversion rates of up to 30% to the alternative but substantially longer and slower free routes.
This brings up a fundamental paradox: Congestion costs the economy a fortune and congestion is a top-of-mind frustration, yet people seem reluctant to pay even comparatively small amounts to bypass congestion.
For example, the City of Toronto’s Roundtable on Gridlock & Traffic Congestion in February 2014 came up with the usual shopping list of “transportation systems management” responses – improved management of curbside space and construction projects; synchronized traffic signal phasing; better traveller information and improved incident response. While these are all worthwhile responses, they only improve system operation at the margins. Encouraging greater use of public transit was the very last recommendation and there was not a single mention of charging or pricing as a tool to address congestion. And the feverish activity continues with a hackathon called TrafficJam on October 2 - 4, 2015 with the goal of fixing Toronto’s traffic woes.
The very few cities that have actually had significant success at reducing traffic congestion – notably Singapore, London and Stockholm – have done this through cordon-based congestion pricing wherein if you pass the cordon, you pay the congestion charge. Entering central London on a weekday between 7am and 6pm will set you back a cool £11.50 ($C23.30). From 2003 to 2013, about £1.2 billion ($C2.42 billion) of congestion charge revenue has been invested in public transport, road and bridge improvements and walking and cycling, of which £960 million ($C1.94 billion) was for bus improvements. These measures have included significant road space reallocation to improve conditions for pedestrians, cyclists, public transit and the urban realm.
The latest Travel in London report states that “Over the 10-year period from 2003, total trips have increased by 11.4 per cent, with particularly notable increases of 52.3 per cent in rail trips and 32.0 per cent in Underground and DLR [Docklands Light Railway] trips, with cycle trips (as main mode) increasing by 53.9 per cent. Car driver trips decreased by 12.7 per cent over the same period” (my emphasis).
One interesting insight is that Stockholm trialed congestion charging and then reverted to business as usual of unpriced roads in advance of a referendum on congestion pricing. This gave Stockholmers a clear sense of the difference in traffic congestion and was crucial in supporting a yes vote in the referendum.
Stockholm has experienced a permanent reduction in traffic of about 20% across the toll cordon and congestion decreased by 30 – 50% - which demonstrates that traffic volume reductions have a disproportionately positive impact on congestion. About half of the “disappearing” drivers changed to transit, the rest to other alternatives such as different departure times and destinations and taking fewer trips.
For more on Stockholm, I suggest reading the Tools of Change case study on Stockholm Congestion Pricing.
Before and after congestion charge photos of traffic levels in Stockholm
While this sounds very promising, congestion charging has significant equity implications and requires upfront investment to provide people who either choose to or can no longer afford to drive with transportation alternatives. Both Stockholm and London invested very heavily in public transit in advance of implementing congestion charging.
And this brings up a big issue for Toronto.
For congestion charging to have a meaningful impact on congestion without stifling economic activity or impeding people’s ability to move around, the core capacity of Toronto’s transit system would need to be addressed first. In particular the Yonge Line capacity enhancements, Metrolinx’s Regional Express Rail and most likely the Downtown Relief Line would need to be in place to provide both capacity and choice for people who either needed or wanted a travel alternative to any congestion charge. This would mean that Metrolinx’s Big Move might need to get even bigger.
Disclaimer: The author of the above post is an employee of Auckland Transport, however, the views, or opinions expressed in this post are personal to the author and do not necessarily represent the views of Auckland Transport, its management or employees. Auckland Transport is not responsible for, and disclaims any and all liability for the content of the article.
I was recently talking to my good friend Jeremiah Shamess about the current state of development land sales in Toronto (he does this for a living) and he said something to me that I found really interesting.
He said that because the market is so competitive, you can really only win development sites in one of two ways. Either you’re willing to spend the most money or you see something and have a vision that nobody else sees.
And it was this second piece that really stood out to me because it reminds me of one of my favorite investing frameworks.
Warren Buffet is famous for saying that you should be fearful when others are greedy and you should be greedy when others are fearful. And what I’m about to talk about is really that same core philosophy.
Here’s how venture capitalist Fred Wilson put it (reiterating something that Bill Gurley said):
I saw Bill Gurley say that you can only make money by being right about something that most people think is wrong. His logic was that you can’t make money by being wrong. And you can’t make money by being right about something everyone else knows. So you have to be right about something that most people think is wrong. I really like that framework.
But this doesn’t just apply to technology companies or stocks. It applies to city building, most industries, and probably most things in life if you think about it.
If all you’re doing are things that everyone else is doing, then how can you expect to outperform? You’re going to revert to the mean.
Take, for example, billionaire Dan Gilbert and Detroit. Not everyone believes that Detroit will come back. In fact, I suspect there are probably more people who think it won’t come back, than people who think it will. Otherwise, it would already be back.
But Gilbert is unquestionably long on Detroit (via Forbes):
As you’ve likely heard, over the past four years Gilbert has become one of Detroit’s single-largest commercial landowners, renovating the city with the energy and impact of a modern-day Robert Moses, albeit bankrolled with his own money. He’s purchased and updated more than 60 properties downtown, at a total cost of $1.3 billion. He moved his own employees into many of them–12,000 in all, including 6,500 new hires–and cajoled other companies such as Chrysler, Microsoft and Twitter to follow.
If/when Gilbert proves to be right about Detroit, then he will have been right about something that most people thought was wrong. And because of that, he will no doubt make a lot of money.
Last month, Curated Properties submitted a rezoning and site plan application for a 6-storey, 25-unit building at 45 Dovercourt Road in Toronto. The project is known to the market as Cabin and you can register for it now.
The project immediately caught my attention (because of its design, because of its branding, and because I like the work of Curated), so I decided to dig in further and get a copy of their architectural drawings. Development applications and their supporting documents are all public. Anyone can request a copy. But the city isn’t great at making this known.
Since I’m excited to see more of these small scale urban infill projects in the city, today I thought I would highlight some of its key features and some of the things that are being proposed in order to make a project like this work.
The Homes
First of all, 100% of the suites are 2-storey. 76% of the suites are also 2 bedroom or larger.
The result is that the project is essentially a series of townhomes stacked on top of each other. I suspect that this will appeal to more end-users as opposed to investors. Hopefully, it will also attract more families to the area.
Here’s the third floor plan:
You probably can’t see it, but all of the suites are marked as “Level 1”, obviously indicating that there’s more than one level.
Also worth mentioning is the notch or cut out on the north side of the building. This is what makes the 2 suites in the middle of the floor plate possible. In order for them to have windows, they need to be setback from the (north) property line. It also means those suites get terraces.
The Parking
Turning to the ground floor plan, it’s interesting to see that they are proposing 8 triple car stackers that will be accessible off the rear laneway (right side on the plan below). That equates to 24 parking spaces in the building (8 bays x 3 cars per stacker).
On small urban sites like this one, it can be very difficult to accommodate parking. So it’s inevitable that we will see more parking stackers in the city and a continual reduction in parking minimums.
The Construction
Finally, I have been told that this project is expected to be framed in wood, as opposed to reinforced concrete, which is more typical of condominiums in Toronto.
As of the beginning of this year (2015), the Ontario Building Code was modified to allow wood-frame buildings up to 6 storeys. Before this change, the highest you could go was 4 storeys.
This change was done with the intent of reducing construction costs so that it becomes more feasible to develop smaller infill sites such as this one. So expect to see more of this.
I know that a lot of people would like to remain in the city even when they start having children. But it’s becoming increasingly difficult to find affordable low-rise homes. And not everyone wants to live in a high-rise tower.
That’s why I think we will see more, not less, low-rise and mid-rise infill projects like Cabin. If you’re interested in this topic, also check out a post I wrote called 3 stages of intensification.
The rendering at the top of this post is from Curated Properties and the drawings are by RAW Design.