Search results for: “road pricing”

• There is no such thing as a free lunch

  Inclusionary zoning has been on my mind this week and so I thought I would revisit some of my old posts on the topic. I wrote about it here, here, here, here, here, and probably in a bunch of other places that I am forgetting right now. A number of these posts go as far back as 2015-2016.

  As well-intended as inclusionary zoning may be, I have never been able to get my head around it. There are lots of cities with inclusionary zoning polices in place and what history generally tells us is that it tends to reduce overall housing supply and increase market rents/prices.

  This makes intuitive sense when you consider that inclusionary zoning is in effect a tax on new development. And one of the only things I remember from my economics classes is that it’s generally good practice to tax the things we want less of. You know, things like cigarettes and carbon.

  This is why I have also been a strong supporter of road pricing over the years on this blog. Traffic congestion is bad (demand also happens to be relatively inelastic). So tax it and redirect the funds toward transit.

  Housing supply, on the other hand, isn’t bad. It’s pretty good and fairly useful. So in my simple mind, I don’t know why we would want to apply a tax to it instead of figuring out way to simultaneously encourage and incent the supply of new affordable housing. Here’s one idea.

  2021.05.14

• A decentralizing or centralizing force?

  I was on two panel discussions over the last week and, as is the case with all real estate panels, the topic of parking invariably came up, as did the impact of autonomous vehicles.

  There seems to be a general consensus that the advent of driverless cars will result in less demand for parking. Every developer I know is trying to build as little parking as possible and is thinking about how – when the time comes – they might convert their parking into something more productive. I have yet to speak to anyone who is building excess parking in order to prepare for autonomy.

  Where there’s a split, however, is whether autonomous vehicles will represent a decentralizing or a centralizing force for our cities. Historically, new technologies have lowered transportation costs and encouraged decentralization. Before the advent of rail, the US population hugged the coasts, because it was cheaper to navigate across the Atlantic than it was to move inland.

  A similar phenomenon also played out with our streetcar suburbs and with our car-oriented suburbs. These new technologies made it possible for people to travel further distances in order to get to work and other places. So it is not at all surprising that many people today are inferring that autonomous vehicles will produce this same outcome.

  But there is a counterargument. 

  We know that the demand for transportation services is highly elastic. Uber and other ride sharing apps have demonstrated this to us. Lower fares translate into dramatic increases in demand. So the opposing argument is that as the cost per kilometer drops – autonomous electric vehicles are going to be much more cost effective to operate – we’re going to see boatloads of induced demand.

  This induced demand will then force us to look toward road pricing and other demand management tools in order to cope, which then begs the question: How much cheaper and more convenient will autonomous vehicles really be? 

  At the same time, it is important to acknowledge that autonomous vehicles should correct many of the inefficiencies currently caused by humans acting like humans. There is also the opportunity to operate these autonomous vehicles more like public transit than as personal vehicles. And that will have a profound impact on urban mobility.

  Still, it is not yet clear, at least for me, that autonomous vehicles will be the decentralizing force that many assume they will be.

  2018.11.21

• Portland is considering whether to solve traffic congestion

  

  Chris Hagerbaumer is the deputy director of the Oregon Environmental Council. She recently delivered the below testimony on “variable traffic-based tolls”, a form of road pricing. This is something we have talked a lot about here on the blog. 

  Oregon is currently looking at implementing this on two freeways in Portland, which is why Chris delivered this testimony. And as many of you know, I am very much in support of this demand management approach. So here you are: why congestion pricing makes sense for Portland (taken from City Observatory).

  ——————————————————–

  The question in front of you is: how do we actually solve congestion, solve it in a way that is the least cost to the taxpayer, and in a way that doesn’t result in more pollution. When we add more supply (in other words, build more roads) we end up exactly where we started when it comes to congestion (due to induced demand), we spend billions of taxpayer dollars (much of which comes from drivers who aren’t the ones demanding more road space), we harm surrounding communities as highways encroach into neighborhoods, and we pollute the air and heat up the planet.

  Induced demand is the fact that when you add freeway capacity it induces longer trips, more sprawl and more driving. Traffic is like a gas, expanding to fit whatever space there is. In one infamous example, Texas spent nearly $2.8 billion expanding Katy Freeway to 26 lanes and congestion has actually worsened.

  Building new roads is a supply-side solution that simply doesn’t work.

  An effective, least-cost, environmentally sound way to address congestion is the proposal before you: congestion pricing to manage demand. Drivers pay an automated fee to enter highly congested roads at peak hours; in return, they travel smoothly and reliably, getting where they need to go on time. Prices are set at the lowest possible level to free up just enough road space to eliminate bottlenecks.

  When you eliminate bottlenecks and get traffic flowing freely, you have—in essence—added capacity. You no longer need to add new lanes, you save taxpayers a bundle, and you reduce dangerous auto and truck exhaust.

  Congestion pricing is a demand management solution that’s proven to work and does so in cities around the world. Drivers opposed congestion pricing at first: no one wants to pay more. But that opposition of 60% or more turned into support of 60% or more after congestion pricing was implemented. People’s opposition turned to support because they now get that it works—they experience the value.

  Equitable application of congestion pricing absolutely requires mitigating diversion to local streets. But note that congestion pricing actually pulls many drivers who were already cutting through local roads back to the highway because those drivers who were stuck in traffic now have an option to get where they need to go, on time, for a small price.

  Equitable application of congestion pricing also requires significantly increasing transit service and other travel options in the corridor and considering other means to make the system work for low-income commuters who must drive during peak hours, such as targeted discounts or exemptions.

  We think of highways as free and we think of driving as freedom, but by investing almost solely in infrastructure for cars over most of the 20th century and into the 21st century, we created a transportation system that is costly not only for our pocketbooks, but for our very health and wellbeing and our region’s economic prosperity, a transportation system that contributes to the existential risk of runaway climate change.

  You have an opportunity to make a decision that will lead to less time stuck in traffic, healthier air, and more economic prosperity for the region and state. We hope you embrace that opportunity.

  Photo by Zach Savinar on Unsplash
  

  2018.07.31

• Lessons in transit success

  

  Dylan Reid of Spacing was recently at the International Transport Forum in Leipzig, Germany and has been publishing some interesting posts related to transit. Here is one about what makes transit systems succeed and fail.

  I really like the point that we too often think about transit projects as culminating with a big opening, while overlooking the importance of operations. It’s a bit like focusing on the wedding ceremony and forgetting that the ceremony is only really there to (hopefully) mark the beginning of a lifelong union.

  One of the reasons why this is important is because, as Reid points out, “fares need to provide a strong and consistent proportion of the agency’s funding.” So you need bums in seats, which means you need to build the right transit in the right locations. In other words, a new subway line through a low density suburb will probably result in an abysmal farebox recovery ratio.

  At the same time:

  “…fares will rarely cover all of an agency’s costs. Hong Kong’s Kam noted that, to be truly autonomous, an operator needs an additional dedicated, independent source of revenue. This cannot be based on additional transit-related non-fare revenue (e.g. advertising) – such revenue is helpful but never significant. It needs to be an external source. In Hong Kong, it is based on the agency’s extensive property ownership, but in other cities it could be a congestion charge, a dedicated sales or income tax, or other mechanism. Only with such a source can the agency have the independence to make its own choices for reinvestment and improvements.”

  This is one of the reasons why I am such a strong supporter of road pricing.

  Another point that Reid makes is that transit agencies should always have a consistent pipeline of new projects, rather than erratic periods of expansion. This makes a lot of sense given what it takes to ramp up for a large infrastructure project. But it’s obviously contingent on having sustainable funding sources.

  Click here if you’d like to read the rest of Dylan Reid’s post.

  2017.06.13

• Technology and the city

  Embedded at the bottom of this post is a great rapid-fire talk by Edward Glaeser about technology and the city. 

  Technology has always been a fundamental driver of change within our cities and I like how Glaeser starts by referring to these forces as either centripetal and centrifugal. The car was an example of the latter. It spread us out.

  At the same time, Glaeser points out that the car was really the first time that urban mobility patterns shifted from hub-and-spoke to point-to-point. Transit systems rely on hubs and some walking, which in a world of cars has led to something we call the last mile problem.

  Also worth noting is the fact that Glaeser is terrified about what autonomous vehicles will do to our cities. His point is that the fundamental law of highway traffic has shown that vehicle miles traveled increases basically 1:1 with highway miles built.

  So if all of a sudden AVs are able to decrease the cost of mobility, provide capacity benefits, and increase rider enjoyment (because you’re no longer a driver), vehicle miles traveled are going to go through the roof. This makes a strong case for some form of road pricing.

  But it also means that unlike traditional cars, which were a centrifugal force, AVs could in fact turn out to be a force that further centralizes us within dense urban centers.

  When you listen to Glaeser’s talk, you will quickly understand why so much attention (this blog included) is being paid to autonomous vehicles. They are one of – if not the – next great technology bound to reshape our cities.

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

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

  2017.04.29

• Free ice cream

  I was out for dinner this evening and the topic of road tolls (road pricing) came up. All of us at the table agreed that this was a missed opportunity for Toronto. Yes we proposed it, but then we got cold feet and backed away.

  Why might this be a good idea?

  City Observatory did a good job explaining this with their post about free ice cream day at Ben & Jerry’s. They argued that this sort of promotion actually provides a great crash course in transportation economics. Nobody is paying, but the lines are real long.

  Here’s an excerpt:

  Substitute “freeway” for “free cone” and you’ve got a pretty good description of how transportation economics works. When it comes to our road system, every rush hour is like free cone day at Ben and Jerry’s.  The customers (drivers) are paying zero for their use of the limited capacity of the road system, and we’re rationing this valuable product based on people’s willingness to tolerate delays (with the result that lot’s of people who don’t attach a particularly high value to their time are slowing down things for everyone).

  What we are talking about is simple, but apparently it’s not easy to execute on.

  2017.04.07

• Is Toronto a world-class city?

  

  Earlier this week I was on a panel discussion called Building Toronto Tomorrow. One of the questions was about whether or not Toronto is world-class city. It elicited a good discussion, so I thought I would talk about that today on the blog.

  Shamez Virani, President of CentreCourt Developments, responded by saying that he thinks Toronto is the greatest city in the world and that he wishes more people would just accept how incredible this city is. I agreed with him.

  I also responded by saying that I hate this question. I think it reeks of insecurity and I think it’s a bit of a red herring. It distracts from more direct and meaningful questions – questions such as our livability and our position as a global city.

  Because the reality is that Toronto is one of the most livable cities in the world and, in my view, we are the only true global city in Canada. We are an important node in the global economy for the flow of goods, people (we’re particularly good at this), capital, and now information. There’s a lot to be proud of.

  But that’s not to say that we’re perfect. Everyone knows we need better transit. And to name a few others (non-exhaustive list), I also think we need to:

  • Get a move on road pricing.
  • Loosen up our archaic alcohol laws and start using nightlife as a competitive advantage for attracting talent.
  • Acknowledge through our governance structures that cities are what drive today’s information economy.
  • Stop thinking about the Canadian/Toronto value proposition as being about cost savings. That is, buy this from us because our currency is weaker than yours. This is anti-innovation and there are much better ways to create sustainable value. (Innovation is still a weak spot.)
  • Focus on developing an information economy that leverages the unique talent and knowledge base of Toronto. For example, I think we’re in a great position for real estate + tech innovation.
  • Do everything we can to encourage big tech IPOs in this city. They are critical to developing the ecosystem.

  There’s a saying in Silicon Valley that you “make what you measure.” It means that whatever you decide to focus your attention on, is invariably what you end up making – regardless of whether or not you happen to be focusing on the right metric.

  In the context of Toronto, I think we’d be better served if we focused on and quantified our position in the global economy, as opposed to chasing some idea of “world-class.” The latter will grow as the former grows.

  I also think that this needs to be balanced against our livability. Sometimes there’s a tension. But there are cities – the best example is perhaps Tokyo – who have managed to pair a high quality of life with one of the strongest positions in the global economy.

  Is there anything else you think we should be doing? We can talk about it in the comments below.

  Image: Building T.O Toronto (BuzzBuzzHome Event)

  2016.05.07

• Medellín wins 2016 Lee Kuan Yew World City Prize

  

  Thanks to my friend Darren Davis, I just recently learned about something called The Lee Kuan Yew World City Prize.

  Named after Singapore’s first Prime Minister, the prize is a biennial award that honors cities who have made, “outstanding achievements and contributions to the creation of liveable, vibrant and sustainable urban communities around the world.” Along with the prize comes $300,000 (Singapore Dollars), which is about $287,000 Canadian as of today.

  The 2016 Prize Laureate is Medellín, Colombia.

  Over the past two decades, the city has transformed itself from one of the most dangerous cities in the world to one that has become a model for social inclusion and urban innovation. Here is a video that talks about the transformation. It’s a bit cheesy, but it does provide a high-level overview of their urban initiatives. A lot of them will serve as a reminder about the importance of urban connectivity.

  If you’re a regular reader of this blog, you may also remember that my good friend Alex Feldman (VP at U3 Advisors) wrote a guest post about Medellín after he visited the city for the World Urban Forum almost two years ago. That post was called, What cities could learn from Medellín.

  It’s worth mentioning that the runners-up for this year’s World City Prize were Auckland, Sydney, Toronto, and Vienna. In the case of Toronto, our “far-from-ideal transit” was specifically called out as a negative. Thankfully we are now working on road pricing, which will provide additional funding for transit. 😉

  Image by Jorge Gobbi

  2016.03.19

• 10 city building predictions for 2016

  

  https://500px.com/embed.js

  Few things are better than waking up in the mountains and seeing a notification on your phone that 9″ of fresh snow have fallen overnight, bringing the 48 hour snowfall total to 16″.

  This is what people in mountain towns live for. They ski in the morning and then head to work in the afternoon. I heard a number of people on the mountain today saying that they, “want to be in the office after lunch.” It’s a lifestyle thing.

  On that note, today I’d like to focus on 10 city building predictions for 2016. I’ve been assembling this list over the past few weeks and now that I have had my fill of Utah powder for the day, I’m dedicating the rest of the afternoon to writing.

  These are never easy to put together. But here are my thoughts:

  1. We will see increased migration to secondary cities – outside of the alpha global cities – which offer a higher quality of life, more affordable housing, and the ability to live a particular lifestyle. This includes cities like Austin (creative startup hub) and Denver (outdoor recreation).
  2. As more and more cities wake up to the importance of lifestyle in attracting top talent, I think we will see a lot of cities follow the lead of Amsterdam and create “night mayors” or some other equivalent. These cities will begin to see nightlife as a competitive urban advantage.
  3. Global cities will start experimenting with different land use and property tax reform strategies to try and deal with rising income inequality and eroding housing affordability.
  4. We will see a barbell of residential unit sizes. We’ll see more well-designed small units as a way to try and promote housing affordability and we’ll see larger urban infill units for families and baby boomers who want to live/remain in walkable urban communities.
  5. In line with above, I think we will see a further rethinking of urban spaces. Flexible spaces, unique program mixes, and a continued blurring of public/private spaces. One example of this is the trend towards small private spaces surrounded by generous public/communal spaces.
  6. The Toronto and Vancouver real estate markets will continue to chug along because of low interest rates, a weak Canadian dollar, and increased foreign investment. That said, I think we will see more restraint when it comes to over-the-top luxury product.
  7. We will finally see a disruptive technology product that starts to get people in the real estate industry thinking that change is on the way. This will not be a product that ports an offline experience online; it will a new way of thinking about the industry.
  8. This will be the year that cities stop fighting Uber (and other similar marketplaces). Cities (and lobbyists) will finally accept that this is a new reality and then work to figure out the best way to create policy around it. Edmonton, Alberta has already become the first Canadian city to regulate Uber.
  9. Road pricing will get the attention it deserves in North America. Things will start out slow, but we will finally get ourselves on a path which recognizes that we can’t build our way out of traffic congestion in most major cities.
  10. I will publish a book on becoming a real estate developer.

  Many city building trends and shifts seem to happen in a global way. But I think it’s worth noting that a lot of these predictions were likely written with my North American lens on, and in some cases my Toronto lens on.

  It’s not easy sitting down and thinking about what will happen in the future. But it’s a worthwhile exercise. It forces you to take a stance and then, when the future does come, you can see how well you did. I saw Fred Wilson do this on his blog and I thought it was a great idea.

  Now I would love to hear what you think about my predictions and what yours are for this year. Please let us know in the comment section below.

  2016.02.01

• How to encourage traffic congestion in your city

  City
  Observatory recently republished their
  commentary on a report (released earlier this year) called Who Pays
  for Roads. I missed their original post, so this is new to me.

  The report
  and commentary are all about the mispricing of roads/driving and the fallacy
  that “user fees” (gas taxes, tolls, and so on) are enough to completely cover
  the costs associated with driving.

  I have been
  a vocal supporter of road pricing and/or congestion charges here in Toronto, and
  so I’d like to share two pieces from their commentary.

  The first
  is this paragraph, which talks about how mispricing leads to demand issues
  (i.e. traffic congestion):  

  The conventional
  wisdom of road finance is that we have a shortfall of revenue: we “need” more
  money to pay for maintenance and repair and for new construction. But the huge
  subsidy to car use has another equally important implication: because user fees
  are set too low, and because, in essence, we are paying people to drive more,
  we have excess demand for the road system. If we priced the use of our roads to
  recover even the cost of maintenance, driving would be noticeably more
  expensive, and people would have much stronger incentives to drive less, and to
  use other forms of transportation, like transit and cycling. The fact that user
  fees are too low not only means that there isn’t enough revenue, but that there
  is too much demand. One value of user fees would be that they would discourage
  excessive use of the roads, lessen wear and tear, and in many cases obviate the
  need for costly new capacity.

  And the second is this chart, which shows the cumulative net
  subsidy to highways in the US from the late 1940’s:

  

  The point of all this is that when you subsidize something
  it’s because you’d like to see more, not less of it. So why then are we even surprised by the crippling traffic that plagues our
  cities? We are doing a lot to encourage exactly that.

  2015.10.26