Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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  • Dear City Council

    Kate Downing was formerly a planning commissioner in the City of Palo Alto. She recently resigned from her position and, about about a day ago, she posted her resignation letter on Medium. It has since gone viral.

    The reason it has spread so quickly, I think, is because it addresses the very same issues that so many cities around the world are facing: a lack of housing supply and eroding affordability.

    As a developer, I obviously have a vested interest in this matter. But to the extent that I can put that aside, I really do believe that our goal should be to build inclusive, rather than exclusive, cities.

    For instance, when I think of great cities such as New York and Toronto, I think of their history of taking in a large number of immigrants and then empowering them to climb the socioeconomic ladder. There’s something magical about that. One of my best friends likes to talk about this potential as “immigrant hustle.”

    But when we sterilize our cities by allowing only the incumbents to survive, I believe we place that socioeconomic potential in jeopardy. So for that reason, I am reposting Kate’s entire letter. I have bolded the points that stood out for me. Let me know what you think in the comments.

    ———————————————————

    Dear City Council Members and Palo Alto Residents,

    This letter serves as my official resignation from the Planning and Transportation Commission. My family has decided to move to Santa Cruz. After many years of trying to make it work in Palo Alto, my husband and I cannot see a way to stay in Palo Alto and raise a family here. We rent our current home with another couple for $6200 a month; if we wanted to buy the same home and share it with children and not roommates, it would cost $2.7M and our monthly payment would be $12,177 a month in mortgage, taxes, and insurance. That’s $146,127 per year — an entire professional’s income before taxes. This is unaffordable even for an attorney and a software engineer.

    It’s clear that if professionals like me cannot raise a family here, then all of our teachers, first responders, and service workers are in dire straits. We already see openings at our police department that we can’t fill and numerous teacher contracts that we can’t renew because the cost of housing is astronomical not just in Palo Alto but many miles in each direction. I have repeatedly made recommendations to the Council to expand the housing supply in Palo Alto so that together with our neighboring cities who are already adding housing, we can start to make a dent in the jobs-housing imbalance that causes housing prices throughout the Bay Area to spiral out of control. Small steps like allowing 2 floors of housing instead of 1 in mixed use developments, enforcing minimum density requirements so that developers build apartments instead of penthouses, legalizing duplexes, easing restrictions on granny units, leveraging the residential parking permit program to experiment with housing for people who don’t want or need two cars, and allowing single-use areas like the Stanford shopping center to add housing on top of shops (or offices), would go a long way in adding desperately needed housing units while maintaining the character of our neighborhoods and preserving historic structures throughout.

    Time and again, I’ve seen dozens of people come to both Commission meetings and Council meetings asking Council to make housing its top priority. The City Council received over 1000 signatures from Palo Alto residents asking for the same. In the annual Our Palo Alto survey, it is the top issue cited by residents. This Council has ignored the majority of residents and has chartered a course for the next 15 years of this city’s development which substantially continues the same job-housing imbalance this community has been suffering from for some time now: more offices, a nominal amount of housing which the Council is already laying the groundwork to tax out of existence, lip service to preserving retail that simply has no reason to keep serving the average Joe when the city is only affordable to Joe Millionaires.

    Over the last 5 years I’ve seen dozens of my friends leave Palo Alto and often leave the Bay Area entirely. I’ve seen friends from other states get job offers here and then turn them down when they started to look at the price of housing. I struggle to think what Palo Alto will become and what it will represent when young families have no hope of ever putting down roots here, and meanwhile the community is engulfed with middle-aged jet-setting executives and investors who are hardly the sort to be personally volunteering for neighborhood block parties, earthquake preparedness responsibilities, or neighborhood watch. If things keep going as they are, yes, Palo Alto’s streets will look just as they did decades ago, but its inhabitants, spirit, and sense of community will be unrecognizable. A once thriving city will turn into a hollowed out museum. We should take care to remember that Palo Alto is famous the world over for its residents’ accomplishments, but none of those people would be able to live in Palo Alto were they starting out today.

    Sincerely,

    Kate Downing

  • Should the Olympic Games be held in the same place every 4 years?

    I have argued before that hosting major events, such as the Olympics, can serve as a catalyst for completing meaningful public projects. But there is also an argument to be made that it’s not entirely worth it. The economic legacy is weak. The ROI simply isn’t there.

    Recently Harvard Business Review interviewed a gentleman named Chris Dempsey. Dempsey was a former Bain & Company consultant and the cofounder of the No Boston Olympics organization. He played a big part in Boston withdrawing their bid to host the 2024 Summer Games. Los Angeles ending up taking its place.

    His rationale is as follows.

    The International Olympic Committee was founded on June 23, 1894 by a Frenchman by the name of Pierre de Coubertin. At the time of its creation, the World’s Fair had already pioneered the rotational model of traveling to different cities.

    The most famous of these exhibitions was arguably “The Great Exhibition” held in London in 1851. Indeed, the plate-glass Crystal Palace structure which actually hosted the event was later seen as an important turning point in the history of architecture. It was designed by Joseph Paxton, who was an English gardener and architect.

    Of course, the world was a different place at the end of the 19th century.

    The events weren’t being broadcasted around the world in HD. We didn’t have social media. And transportation costs were high (economist Edward Glaeser reminds us of this in the talk I posted yesterday). So rather than ask people to spend weeks traveling the world by boat, it was decided that the show should travel to them. It should rotate places.

    This made sense then, but does it make sense now? I would love to hear your thoughts on this in the comment section below.

  • Knowledge is more important than space

    I don’t always agree with economist Edward Glaeser, but I really enjoyed the talk that he gave at the Vancouver Urban Forum back in 2012 (at least part 2 of it). I came across it on Twitter today and, since it only has about 300 views, I figured that some of you also haven’t seen it.

    The argument he makes is that knowledge and education are the bedrock of cities. And since we continue to cluster in cities, despite all of our technological advances, knowledge is clearly more important than space. One of the ways he defines cities is by their lack of space and the closeness of the people.

    Of course, this isn’t anything new. If you’ve read his book Triumph of the City, you’ve heard all of this before. But that didn’t stop me from enjoying his talk. It’s a great overview of declining transportation costs, locational advantages, agglomeration economies, the importance of urban density, the impact of small and large firms in a city, and so on.

    I also really liked this idea that knowledge is worth more than space. So if you have 20 minutes and you want to get geared up about cities, have a watch.

    Click here if you can’t see the video below.

    [youtube https://www.youtube.com/watch?v=zg7aITkTNe8?rel=0&w=560&h=315]

  • Where the world’s billionaires live

    The Martin Prosperity Institute here in Toronto recently published an interesting report called The Geography of the Global Super-Rich.

    What they did was use the Forbes 2015 Billionaire List to chart billionaires and billionaire wealth by location and by industry. They also looked at the wealth gap in each location and whether the wealth was self-made or inherited.

    A correlation analysis was also done to see what key variables – such as population, density, economic output, global city standing, VC investment, and so on – were positively correlated with a greater concentration of super rich people.

    There are 1,826 billionaires across the world according to Forbes. The researchers were able to match 99% of them to a specific metro area / primary residence.

    Here are the top 20 metro areas in terms of the number of billionaires:

    image

    Look at Miami at #9. 

    I suspect that this may surprise some of you. But Miami has grown into a significant global city. As one of my friends from Miami likes to tell me: “The best thing about Miami is that it’s a Latin American city that’s so close to the United States.”

    Here are the top 20 metro areas in terms of total billionaire wealth: 

    image

    A bunch of changes on this list because of extremely wealthly people and families in places like Bentonville (Arkansas) and Omaha.

    One of the conclusions of the report is that the size of the city generally matters:

    “The geography of the super-rich is a function of larger cities. Both the number of billionaires and their net worth are positively associated with the population of global cities, with correlations of 0.56 for the number of billionaires and 0.44 to their net worth.”

    Here is a chart comparing population to the number of billionaires:

    image

    Cities such as New York, Moscow, and Hong kong, which sit far above the blue line, have more billionaires than their population size would predict.

    Here is a similar chart comparing venture capital investment to the number of billionaires:

    image

    Once again, there is a positive association.

    Finally, here are a two charts that show which industries have produced the most billionaires:

    imageimage

    If you’re interested in this study, you can download the full report here. All of the charts were sourced from the report.

  • Should we love bubbles?

    There’s no shortage of talk about a Canadian housing bubble:

    image

    In Vancouver, the price of a single-family home (as of June of this year) increased 39% to C$1.6 million from the year prior. Does that constitute bubble territory?

    In an effort to stop prices from running away even further, I am sure you all know that the BC government has recently imposed an additional 15% transfer tax on Metro Vancouver homes purchased by foreign buyers (people who are not Canadian citizens or permanent residents).

    The data that I have seen (here and here) suggests that foreign buyers could make up somewhere around 5-10% of the market. Given that many will now get creative in terms of hiding their foreignness, I am not so sure this new tax will have a dramatic impact on affordability. But it certainly sounds nice if you’ve been grouchy about home prices and thinking “those damn foreigners.” We’ll have to see how it plays out.

    Having said all of this, if Vancouver is in fact in bubble territory, would that be so bad? Are we thinking about this the right way?

    Here’s an alternative viewpoint.

    I recently stumbled upon an old blog post by Tom Evslin (2005) called: Why we need bubbles. I discovered it via it Fred Wilson. Tom’s argument is that we need irrational exuberance because it provides the capital that allows for dramatic overbuilding. The overbuilding of things like rail infrastructure, internet infrastructure and – I’m adding this – housing infrastructure. And once this happens, it dethrones the incumbents and paves the way for future economic progress.

    Tom’s focus is on technology, but I couldn’t help but think of the parallels with city building. Is the proposed Rail Deck Park in Toronto so bold that it’s only possible during a period of irrational exuberance? Should Vancouver instead be working to dramatically expand its housing supply instead of trying to tax away a portion of demand? Is a period of irrational exuberance precisely the moment where we lay the ground work for our future successes?

    I’m not saying we’re in a bubble. I don’t believe in or know how to time markets. But I am asking whether the bubble headlines are missing the greater opportunity.

  • 70 years of LA

    The New Yorker recently published an interesting split-screen video tour of the same streets in downtown LA in the 1940s and today. 

    They have done a great job pairing up the same views and also panning in such a way that the middle divider seems to magically transport you 70 years.

    Here it is:

    [youtube https://www.youtube.com/watch?v=WIHfmisMLOY?rel=0&w=560&h=315]

    If you can’t see the video above, click here.

    In some cases (okay, many cases), I couldn’t help but feel like 1940s LA was far more urban and engaging. What did you think?

  • Rail Deck Park – will it happen?

    Everybody
    in Toronto is talking about one thing right now.

    This:

    image

    When I got into the office this morning, someone asked what I thought about Rail Deck Park and whether or not I thought it would happen.

    When I went for lunch this afternoon, someone asked what I thought about Rail Deck Park and whether or not I thought it would happen.

    And
    I’m fully expecting that somebody else will ask me these same questions before the day is done.

    For those of you who haven’t been following or aren’t from Toronto, it is a 21-acre park that is proposed to be built by decking over the rail corridor that runs from Bathurst Street in the west to the Rogers Centre in the east. See top image.

    Of course, the reason everyone is asking me these questions is because it’s a wonderful idea and everyone wants it to happen. But we’re all thinking the same thing: will it and who is going to pay for it?

    Here are my thoughts.

    Section 42 of the Ontario Planning Act stipulates that cities may ask developers for either land or cash in order to create new parkland. 

    To give you an example of how significant this can be, Spacing reported that 1 Bloor East alone – which is a single tower under construction right now – contributed $10 million into the city’s parkland reserves.

    Zooming out, between 2011 and 2014 alone, developers paid almost $300 million in park levies across
    the city    . It’s worth noting that most of the funds collected
    were from development projects in the core of the city. During this same time period, wards 20, 27, and 28 alone produced over $140 million.

    Here is a chart from a Spacing investigation published last year that corresponds to the above stats:

    image

    The problem with all of this is that it’s becoming increasingly difficult to actually deploy this capital. I mean, think about how difficult it is to buy a single family home or find a development site in this city. Now go out and try and find a piece of land in which to build a park. And do it as a cash-starved public entity that can’t engage in a bidding war.

    As of September 30, 2013, the city’s uncommitted parkland reserve fund balance was $234,995,348. This includes Parkland Acquisition, Parkland Development, Alternative Parkland Dedication, and Other Reserve Funds. If anyone has a more recent figure, please share it in the comments below.

    Also, the irony of this situation is that the neighborhoods producing all of the
    parkland funds (i.e. downtown) are precisely the areas where it’s exceptionally difficult to actually create new parks. So what I think is happening is that Mayor Tory and the rest of the city see Rail Deck Park as a perfect opportunity to turn this reserve fund money into a meaningful urban park in the core of the city.

    We
    don’t yet know how much this park will cost and I don’t know what’s sitting in the reserve funds today. But this is my read on the situation. I doubt the reserve funds will be able to pay for it all, but that shouldn’t be a deal breaker. It’s worth getting creative and fighting for something as significant as Rail Deck Park. 

    This
    is an opportunity to reinforce Toronto’s status as one of the most liveable global cities in the world. This is an opportunity I believe we are going to take.

  • 3 thoughts from Rem Koolhaas

    Earlier this year, architect Rem Koolhaas of OMA spoke with Mohsen Mostafavi (dean of the Harvard Graduate School of Design) to close out the 2016 AIA convention. 

    I still remember my first architectural theory class where the professor told us all that Koolhaas was the most important living architect of our time. And today, if you think about all of the stars that have grown out from his firm – such as Bjarke Ingels and Joshua Prince-Ramus – it is certainly a defensible argument.

    Koolhaas is generally very critical of globalization and the market economy when it comes to creating good architecture. His view is that “pure profit motives” are leading to cities that are basically not designed.

    This is a fairly common belief within architectural circles, which is why many celebrated names would rather work on a museum over a residential condo project. The latter is too motivated by profit. It’s not architecturally interesting.

    I, on the other hand, have always believed in working within the confines of the market to try and promote great architecture and city building. I’m not saying that the market is perfect, but profitability is a constraint that every industry deals with. Architecture is no exception.

    That said, there are other things that I agree with Koolhaas on. Below are 3 verbatim highlights taken from a Fast Company article summarizing his talk with Mostafavi: 

    Communication needs an overhaul.

    “Architecture has a serious problem today in that people who are not alike don’t communicate. I’m actually more interested in communicating with people I disagree with than people I agree with.”

    "To have a certain virtuosity of interpretation of every phenomenon is crucial. We’re working in a world where so many different cultures are operating at the same time, each with their own value system. If you want to be relevant, you need to be open to an enormous multiplicity of values, interpretations, and readings. The old-fashioned Western ‘this is’ ‘that is’ is no longer tenable. We need to be intellectual and rigorous, but at the same time relativist.”

    Architecture’s greatest value in the future might not even be architecture.

    “Architecture and the language of architecture—platform, blueprint, structure—became almost the preferred language for indicating a lot of phenomenon that we’re facing from Silicon Valley. They took over our metaphors, and it made me think that regardless of our speed, which is too slow for Silicon Valley, we can perhaps think of the modern world maybe not always in the form of buildings but in the form of knowledge or organization and structure and society that we can offer and provide.”

    Preservation is a path forward.

    "We’ve tried to discover domains and areas in architecture which are not a simple vulgar multiplication of uninspired global projects. Recently, we have looked at preservation. The beautiful thing about preservation is you begin with something that already exists and therefore is already local. By definition, a preservation project is an homage to earlier cultures and mentalities to which you can add a new dimension, a new function, a new beauty or appeal. Almost every impulse signals that globalization needs rethinking or adjustment.”

  • Journeys by walking

    Arup, the global consulting firm, has an interesting publication out called Cities Alive: Towards a walking world. The report highlights 50 benefits of walking and then 40 actions that city leaders can take today to transform their cities. The entire study was informed by examining 80 international case studies.

    As I was going through the report, the following diagram caught my attention. It compares journeys on foot vs. journeys by car for a collection of global cities.

    The turquoise circles represent % of journeys by walking. On the left is Los Angeles at 4%. And on the right is Istanbul at 48%.

    The red circles represent % of journeys by car. On the left is Miami at 79% (with Los Angeles right beside it). And on the right is Kolkata at 2%.

    The map in the middle of the circles represents pedestrians killed in traffic crashes per 100,000 people.

    I’m not sure where the data was drawn from, but it’s not all that surprising to see a few North American cities clustered towards the left (less walking; more driving). Still, I wonder how “journey” is defined.

    To view the full report, click here. Arup also produces a lot of other great content that you can download for free, here.

  • Slot-based intersections

    If you don’t follow the work of MIT’s Senseable City Lab, I highly recommend that you start. 

    Earlier this year, researchers from the Massachusetts Institute of Technology, the Swiss Institute of Technology, and the Italian National Research Council developed something that they call “slot-based intersections.” In a world where cars have sensors and drive themselves, it is intended as a more efficient alternative to traditional intersections. Goodbye traffic lights.

    Much like air-traffic control, the way the system works is by assigning individualized time slots to each car for when they may enter an intersection. For example, in the diagram below (Sequence 01) the car approaching from the bottom left (#10) has a “stop distance slot” in front of it reserved for 3 of the cars that are currently in the intersection. The two that are traveling perpendicular to it and the car currently turning left into the same lane as #10 (on the other side of the intersection). The car in the midst of turning right (#5) is exempt because there’s no possibility of collision. 

    image

    In Sequence 02 (below) you can see that car #10 is now turning left, which means it has its own time slot in the intersection. Other approaching cars now have a “stop distance slot” dependent on car #10.

    image

    In all cases, cars making a right turn are able to move freely, provided they will not interfere with any other cars.

    image

    The researchers estimate that real-time slot allocation might double the number of vehicles that a traditional traffic-light intersection can handle today and, in some cases, it might completely eliminate stop and go traffic.

    Often when I write about self-driving vehicles I hear people tell me that cars are still cars. It doesn’t matter whether they are self-driving or not. The same inefficiencies apply. They are not the solution to urban gridlock. Elon Musk was also criticized (following his Master Plan) for not properly understanding urban geography.

    But self-driving cars will create new efficiencies. I am not saying that they are a silver bullet, but I am saying that they will help a great deal. I don’t think that anyone truly understands the extent of these efficiencies, but there are a myriad of possibilities. This Senseable City Lab project is a perfect example.

    What I am grappling with right now is the relationship between self-driving vehicles and traditional forms of public transit. Until we get a handle on the efficiencies and overall impact, it’s hard to ascertain how these different forms of mobility will work together. My gut tells me that the lines are bound to get blurry and that self-driving “cars” will feel less and less like the cars we know today.

    Below is a video that was published along with the research. If you can’t see it, click here.

    [youtube https://www.youtube.com/watch?v=4CZc3erc_l4?rel=0&w=560&h=315]