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.

Tag: atc

  • Everything you ever wanted to know about automated vehicles

    Last fall, David Ticoll (who is a research fellow at the Munk School of Global Affairs at the University of Toronto) published a thorough discussion paper called Driving Changes: Automated Vehicles in Toronto

    If you’re interested in driverless cars, and I know that a lot of you are, then it’s definitely worth a weekend read. It’s fairly long. He gets into the various automation levels, the transition period, the implications for policy makers, the benefits, and so on.

    Here’s a quick snippet on the topic of benefits:

    “This report provides bottom-up analysis based on Toronto-specific data. The result is a conservative estimate that were AVs to be at a 90% adoption rate in Toronto today, the result would be annual savings of $6 billion, or 4% of the City’s $150 billion gross
    domestic product. This includes $1.2 billion from reduced collisions, $2.7 billion out of congestion costs, $1.6 billion from insurance, and $0.5 billion from parking fees and fines. AVs will provide other quantifiable social and economic benefits that range from fewer deaths and hospitalizations thanks to lower particle emissions, to productivity gains in many business sectors.”

    But of course there’s the question of: when will this happen? Below is a chart from the paper that was assembled using various consultant/analyst predictions. Based on this, we’re still over a decade away from the consumer adoption of automated vehicles.

    However, these are just estimates and history has shown us that the adoption rate for new technologies has been increasing over time. Below is a chart by Michael Felton, which is also from the paper, that shows this phenomenon. Take a look at the telephone in comparison to the internet.

    Maybe I’m being overly optimistic (it wouldn’t be the first time), but consumer-facing driverless cars, at least to me, feel pretty close to the horizon.

  • Technology x Business x Design

    John Maeda – Design Partner at venture capital firm KPCB – recently
    published the second and 2016 edition of his #DesignInTech
    Report
    . I shared his first one almost exactly a year ago.

    His core thesis is that we are heading towards a world where technology,
    business, and design become closely integrated – in school, in business, and so
    on. Throughout the report he looks at the increasing impact that design and
    designers are having within the startup ecosystem.

    Here are a few verbatim bullet points:

    – Design isn’t just about beauty; it’s about market relevance and meaningful
    results.

    – 36% of the top 25 funded startups are co-founded by
    designers, up from 20% in 2015.

    – The general word “design” will come to mean less as we
    will start to qualify the specific kind of design we mean.

    – Currently design education lags the technology industry’s
    needs for data-oriented, coding enabled graduates with business acumen.

    – We must consciously invest in education to develop a
    more hybrid perspective on creativity in the 21st century:
    Technology x Business x Design.

    – President Obama’s signing of ESSA (Every Student
    Succeeds Act) into law in 2015 is a positive sign: by turning STEM into STEAM (adding Art) in K-12 education as a US priority.

    As somebody who studied design (architecture), business,
    and computer science (briefly, before switching to architecture), I probably
    have a bit of a biased view here. But to the extent that I can be objective, I
    really see this as the future. I am a big supporter of the transformation from STEM to STEAM.

    Below is a quote that Maeda uses to end his report, which I will also use to end this post:

    “Engineers are efficient problem solvers. Business people think short term. Designer want things to be elegant and beautiful. All three need to create collaboration and harmony, and honor the value each other brings. There needs to be a new kind of ‘multi-dimensional’ approach to design that is yet to be invented.” –Linda Holliday

  • A short history of redlining

    In 1933, the United States Congress created the Home Owners’ Loan Corporation (HOLC). With foreclosures rising as a result of The Great Depression, the task of the agency was to provide new low-interest mortgages to both homeowners and private mortgage lenders. Between 1993 and 1936, the agency served about one million households.

    By 1935, the parent company of the agency (the Federal Home Loan Bank Board) decided to initiate something called the “City Survey Program.” The idea was to look at local real estate trends – including the racial and ethnic composition of the country’s largest cities – in order to get a better understanding of how to manage all of these outstanding loans.

    One outcome of this program was the creation of the HOLC’s infamous “residential security maps.” (Philadelphia’s is shown at the top of this post.)

    These were maps that categorized city neighborhoods according to 4 grades. Grade A neighborhoods (green) were the best ones. They were ethnically homogenous and had room to be further developed. Grade B neighborhoods (blue) were the second-best ones. They were already completely developed, but were still considered desirable. Grade C neighborhoods (yellow) were starting to decline and showed an “infiltration of a lower grade population.” And finally, grade D neighborhoods were considered “hazardous” and colored in red. These neighborhoods had low homeownership rates, old crappy housing, and an “undesirable population”, which, at the time, largely referred to Jews and African Americans.

    Some have argued that the HOLC and their “residential security maps” are what kicked off systematic mortgage discrimination in America’s inner city neighborhoods – later referred to as “redlining.” This was the practice of denying credit to people who lived in these undesirable neighborhoods (and even to real estate developers who wanted to build in these undesirable neighborhoods).

    But University of Pennsylvania professor Amy Hillier has argued that these maps simply reflected the ethos of the time period. Using a sampling of HOLC mortgages, she found that 62% of them were issued to grade D (red) neighborhoods. The agency, itself, was not actually redlining in practice.

    Furthermore, she also looked at private mortgages issued in Philadelphia between 1937 and 1950 and found that security grade rating actually had no impact on the total number of loans issued. She did, however, discover slightly higher interest rates for properties located near and in the bottom security grades.

    All of this is to say that “redlining” is likely not the only culprit for inner city decay. There are other factors at play.

    To that end, the National Bureau of Economic Research recently published a working paper, which I discovered through CityLab, called, “Racial Sorting and the Emergence of Segregation in American Cities.” The key finding here is as follows:

    “Our preferred estimates suggest that white flight was responsible for 34 percent of the increase in segregation over the 1910s and 50 percent over the 1920s. Our analysis suggests that segregation would likely have arisen in American cities even without the presence of discriminatory institutions as a direct consequence of the widespread and decentralized relocation decisions of white urban residents.”

    In other words, it wasn’t just mortgage discrimination; it was also just general discrimination. That actually makes a lot of sense, because, if you think about it, the former couldn’t have occurred without the latter being present.

    Here’s how the research paper puts it (via CityLab):

    “Policies that reduce barriers faced by blacks in the housing market may thus not prevent or reverse segregation as long as white households have the ability and desire to avoid black neighbors.”

    (Note: Most of the information and data used in this post was sourced from the work and research of Amy Hillier.)

  • Medellín wins 2016 Lee Kuan Yew World City Prize

    image

    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

  • Fun Friday: Saltz, Zurich

    Earlier this month a new restaurant – called Saltz – opened up in Zurich’s historic Dolder Grand Hotel. (The building was originally built in the late 19th century, but an extension was added in 2008 by architecture firm Foster + Partners.) 

    Designed by artist Rolf Sachs, the 280 square meter restaurant is fitted out with an eclectic mix of unusual materials: neon, salt, rock, climbing rope, felt, and so on. And everything is intended to relate back to Swiss culture in some way.

    The interiors caught my attention as I was browsing through the press release this morning, so I have decided to post a few photos. All of the photography is by Nico Schaerer, courtesy of The Dolder Grand and artist Rolf Sachs.

  • Thoughts on inclusionary zoning

    Ontario is looking to pass legislation that would allow municipalities in the province to implement something known as inclusionary zoning. If passed and should municipalities decide to use this tool (Toronto almost certainly would), developers would then be required and/or incentivized to include some percentage of affordable housing in their new market rate developments. 

    Politically, inclusionary zoning tends to be popular. It’s believed to be a way for governments to create new affordable housing using relatively small public subsidies. Not surprisingly though, the development industry generally hates IZ. It’s another cost that needs to be added to the development pro forma – though some municipalities rightly offset these additional costs with additional density, breaks on levies, and so on.

    What I always think about when this topic comes up is the broader economic impact of the land use policy. Because I’m suspect that it’s as simple as: mandate affordable housing; get more affordable housing for free. Generally there are always trade-offs.

    So here’s some reading material for you all this morning.

    In a classic paper (1981) by Yale Professor Robert C. Ellickson – called The Irony of Inclusionary Zoning – he argues that these practices can actually increase general house prices:

    image

    As a counterargument Owen Pickford over at The Urbanist argues that IZ simply reduces land prices as a result of the new tax. Land, after all, is the residual claimant. Therefore, he believes it’s an effective affordable housing policy. (I’m not so sure I believe that land prices would decrease in practice.)

    There’s also debate about the effectiveness of inclusionary zoning to actually deliver affordable housing at a meaningful scale. City Observatory wrote a post that looked at the total number of units produced (through IZ) across a number of American cities and the results were spotty. It should, however, be noted that not all inclusionary zoning policies are mandatory.

    Finally, the Furman Center for Real Estate & Urban Policy at New York University published a housing policy brief back in 2008 that looked at this exact topic. While they admit that the data is scarce, they come to the conclusion that IZ had no meaningful impact on the prices and production of single-family housing in San Francisco, but that IZ seems to have slightly decreased production and slightly increased pricing in the suburbs of Boston.

    What this last point suggests is that inclusionary zoning policies are not all created equal. So like all difficult questions, the answer to this one is likely: it depends. If anyone can point me to better data on inclusionary zoning, I would love to see it.

  • Toronto exploring road pricing on downtown highways

    Road pricing is on the table in Toronto. (Somebody has to fund the expensive Gardiner Expressway East rebuild.) On March 11, 2016, the City issued a Request for Proposal for: “Options for Establishment of Toll Facilities on F.G. Gardiner Expressway/Don Valley Parkway.”

    As a vocal supporter of road pricing, I am happy to see us headed in this direction. And I bet that today’s post will just be the beginning of my ruminations on this topic.

    Because naturally, it raises a lot of questions:

    Should the pricing be fixed or variable? Similar to how Uber’s surge pricing model is intended to ensure that there are always enough drivers on the road, should our road pricing model strive to eliminate traffic congestion by increasing the price of the road as demand rises beyond road capacity? I like the idea of a “congestion charge” rather than just a road toll. There’s something very efficient about it.

    Who should pay? Should anyone and everyone who uses the road pay? Or should it just be be non-Toronto residents who aren’t already paying property taxes in the city? I would imagine that this latter scenario would be easier for Toronto politicians to get behind, since there will obviously be a segment of people who flat out don’t want road tolls/pricing. But if we stick with the principle that it’s a “congestion charge”, then everyone should pay. It doesn’t matter where you live when you are demand trying to exceed the available supply of road.

    (I’m running a Twitter poll right now with this exact question. At the time of writing this post, “everyone should pay” is winning.)

    Should electric vehicles be exempt from the road tolls or congestion charges in order to help accelerate our transition away from fossil fuels? With Tesla getting ready to announce its mass market Model 3 (price $35,000), I’ve been thinking lately that the car I currently own may very well be the last gasoline car I ever own.

    It’s still early days for road pricing and our mayor doesn’t seem to be a fan. So who knows how far we’ll get with this RFP. But I for one hope that we find the courage to make the difficult decisions and that this new revenue stream is leveraged for the purpose of building more sustainable forms of urban transport in this city. 

    Let’s make a 50 year decision and not an election cycle decision.

  • The value of a millisecond

    I’m reading a book right now called Flash Boys: A Wall Street Revolt

    One of my graduate school buddies recommended it to me on one of our annual ski/snowboard trips and I’m finally getting around to reading it. I’m only about half way through it, but I’m enjoying it so much that I have decided to write about it today.

    One of the protagonists in the book is a Toronto-native by the name of Brad Katsuyama. That’s probably one of the reasons I like it – although Michael Lewis makes all Canadians out to be overly polite and well-behaved. Is that what we’re like?

    The other reason I like the book is that a lot of it actually has to do with geography. Technology and the internet were supposed to make cities and location irrelevant. But as Flash Boys argues, location and physical connectivity matter a great deal in the world of high-frequency trading. Each millisecond matters.

    To illustrate this point, the book starts by describing the construction of a $300 million, 827-mile cable running as straight as humanly possible from Chicago to New Jersey in order to reduce data travel times from 17 to 13 milliseconds. That’s how much the milliseconds matter.

    This is also not a topic that I know a lot about and so it’s eye opening (and a bit disappointing) to learn about the sorts of things that happen in our financial markets. If any of you would like to borrow the book after I’m done (and are located in Toronto), leave me a comment below.

  • Developer Profile: The Adir Group

    In 2010, Gal and Tania Adir, aged 23 and 24, respectively, began renovating high-value apartments in central London.

    Today, they are known as The Adir Group and have about £50m in development under way.

    But more than just a developer, the group has grown to become “the parent company of a quickly expanding collection of complementary brands bound together by a desire to enhance people’s lifestyle through quality and beauty.”

    In addition to G&T (their residential development arm), they also founded Net.Works (a co-working space) and Nuper (a co-op living scheme). This last focus isn’t up on their website yet, but I read about it on Michael Mortensen’s blog. The goal of Nuper is to create affordable living solutions for young talent in London.

    I wanted to profile The Adir Group because I think it’s incredible how young they were when they got started (I was just starting graduate school at 23) and because I like their approach of creating a collection of complementary companies.

    I am excited to see where the next generation of developers (myself included) take this business. Already we are seeing some new approaches emerge.

  • A new era of (digital) globalization

    McKinsey recently published a report called Digital globalization: The new era of global flows.

    The overarching thesis is that we are transitioning to a data-driven global economy:

    “Flows of physical goods and finance were the hallmarks of the 20th-century global economy, but today those flows have flattened or declined. Twenty-first-century globalization is increasingly defined by flows of data and information. This phenomenon now underpins virtually all cross-border transactions within traditional flows while simultaneously transmitting a valuable stream of ideas and innovation around the world.”

    One of the benefits of this shift is that it has become easier for emerging economies and individuals from all around the world to participate.

    Of course, not all countries and cities are participating equally. In their report, McKinsey ranks the top cities according to five global flows. In each case a proxy was used:

    “Unfortunately, data on global flows are not available at the city level. However, we have obtained data that serve as proxies for each of our five global flows. Container port volumes approximate goods flows; airport passenger volumes serve as a proxy for goods, service, and people flows; the ranking of cities in the Global Financial Centers Index by the Z/Yen Group provides an indication of financial flows; the number of foreign-born residents in a city measures people flows; and Internet bandwidth approximates data flows.” 

    Using this methodology, they believe that the world only has 8 truly global cities right now: New York, Los Angeles, San Francisco, London, Singapore, Shanghai, Hong Kong, and Dubai. They are the colored cities listed below:

    I always take these city rankings with a grain of salt. This stuff is not easy to quantify and a lot depends on the methodology that you use. 

    For instance, Atlanta sits on the top of “goods, services, and people” because it has the busiest airport in the world according to passenger volume. (It’s the primary hub of Delta Air Lines.) But is that enough to assert that Atlanta is #1? Maybe. Maybe not.

    In any case, the report is packed full of information. If you’d like to take a look, click here.