Beckman: “A two-front war”

John Beckman,  CEO of the Building Industry Association of the Greater Valley, continues his debate with Stockton City Limits over sprawl and the cost of living here.

Because of the length of Beckman’s post, I am not going to put it in quotes. Here we go.

*     *     *

I now have a two front war on my hands; The Financial Cost of Sprawl on Cities, and The Financial Cost of Sprawl on Residents.  Along with a little skirmish about what valley residents actually want.

Allow me to start with the easy one.  What do valley residents want? 

From the often cited, quoted and ballyhooed Council of Infill Builders Study, January 2013:

Central Valley residents want mixed-use, walkable neighborhoods just as much as the rest of the state: The notion that valley residents simply prefer sprawl more than their peers in other parts of the state is unfounded. 37% of valley residents would prefer to rent or own an apartment or townhome with amenities within walking distance and a shorter commute. The average for the rest of the state was 39%, virtually the same.

If only 37% would prefer the ultimate in smart growth what about the rest of us?  That question is smartly answered in the Stockton City Limits blog of January 24, 2013:

Yet even as residents begin to show greater affinity for a mixture of housing types, most respondents ultimately still aspire to the big house with the sprawling yard. In fact, 84% said they would live in a large-lot house (though this number is unchanged from 2008 while all other housing types increased in popularity). However, saying you would live in a big house doesn’t necessarily mean that you can. Because mortgages will never be recklessly handed out as they were in the mid 2000s, the report estimates that 45,992 households that may want big houses won’t actually be able to afford them, meaning they will instead require less expensive attached or small lot housing.

Without relying on the hundreds of market surveys and consumer analysis reports commissioned by land developers when determining what to build based on consumer demand, I will simply rely on the words off the anti-sprawl website.  “84% said they would live in a large-lot house”.

If only large lot houses were more affordable more people would live in them.  However due to a wide range of government policies the type of housing most people want remains out of reach for them.  When people had the ability, through fake mortgages, to pick any type of housing they did not choose to buy up all the condos they could find.  There was no mass rush to bid up the price of townhomes or garden homes, no, they all wanted big large-lot houses.  If people really wanted condos or townhomes or anything along those lines they would have opted for that type when given the freedom to choose without the cost being a factor.  That’s okay because consumer choice is not really what the sprawl debate is all about.  It seems to be more about showing people how they should live as opposed to how they have chosen to live.  On to the two-front war.

The Financial Cost of Sprawl on Cities

On this front of the war we seemed to be bogged down in the semantics of how to decipher a study done in Fresno.  The anti-sprawl position is that I am fundamentally incorrect, misinterpreting the study and coming to erroneous conclusions.  The errors assigned to me are not understanding the difference between a “city-wide development” and a “specific development project” and focusing on the difference between the use of “per acre” and “per unit” calculations.  Allegedly because the Fresno study was a “straight one-to-one comparison between different city-wide scenarios of future growth” there is no need to calculate the number of units per acre which happens to be the cornerstone of my argument.

As a refresher here is the complete text from the Smart Growth America study regarding Fresno.  With my emphasis added. 

City of Fresno, CA

In preparing a new General Plan, the City of Fresno, CA, compared four different future development scenarios—one heavily weighted toward smart growth development, two weighted

toward conventional suburban development and one “hybrid” approach.  The smart growth alternative called for 43 percent of new residential development and 71 percent of non-residential development in smart growth locations. This alternative increased the geographical size of the city by 27 percent.  The most conventional suburban alternative called for 25 percent of all new residential development and between 42 percent of non-residential development in smart growth locations. This alternative increased the geographical size of the city by 36 percent.  The conclusions included the following: • The revenue per acre for the smart growth scenario is 45 percent higher than the revenue per acre for the most conventional suburban scenario—$2,300 versus $1,600 per acre. • The cost of providing services in the smart growth alternative was about 9 percent less on a per-capita basis than the cost of providing services in the conventional suburban alternative. • The smart growth scenario produced a bigger surplus for the city’s general fund—$24 million per year using current levels of service. The smart growth scenario also performed better than the conventional suburban scenario using a higher, preferred level of service called for in the city’s new General Plan.

In the appendix of the SGA study the only financial figures cited for the Fresno study are the following:

  Cost of Services Cost of Services Tax Revenue Tax Revenue
  Smart Growth Conventional Smart Growth Conventional
  Per Unit Per Unit Per Acre Per Acre
         
Fresno, CA

$1,371

$1,566

$2,300

$1,600

The lead argument that the Fresno study is a city-wide development and not project specific seems to be only a matter of scale.  Oddly enough the SGA study used both city-wide and project specific in its comparison and saw no noteworthy distinction.  If there is more to this argument please enlighten me.

A layman reading this study may come to the simple conclusion that revenue per acre is higher in a Smart Growth Scenario and services provided cost less in a Smart Growth Scenario, either per capita as described in the text or per unit as described in the appendix, is the end of the debate.  The anti-sprawl proponent claims this is where the analysis should stop because “services are measured per unit because a city provides services to each house or apartment not each acre”.

Mike, if I am confused on this issue help me out here.  A city’s revenue primarily comes from sales tax, property tax, DMV fees and utility fees.  I am pretty certain all of these are collected on a per house, car, utility connection, per capita type basis.  They are not collected on a per acre basis.  So why does the study only look at per acre revenue at not per unit/capita revenue? Services are provided per unit and they are studied per unit.  Revenue is collected per unit but not studied that way.

My contention is they use a per unit or per capita basis for one metric and a per acre unit for the second metric in order to skew the data.  A Smart Growth Scenario will include more units and fewer acres whereas a traditional scenario will include fewer units and more acres.  Am I wrong on this?  Traditional development has roughly 5 units to the acre.  Smart Growth developments push for an average of around 8 or more.  Someone with a calculator tell me the cost of providing services to an acre of Smart Growth and an acre of traditional growth under the Fresno study.  How does that compare to the revenue per acre in both situations?

Clearly we need more mathematical analysis on this issue.

The Financial Cost of Sprawl on Residents

On the second war front in order to keep the focus narrow the sprawl opponents would like us to only look at the percentage cost of transportation as compared to those in the Bay Area.  In that narrow field, yes, a resident of Stockton pays 26% of their income to transportation expenses whereas a Bay Area resident only pays 18% of their income towards transportation.

Mike, I can concede a point when it’s made.  Valley residents pay a higher percentage of their income on transportation costs compared to those who live in the Bay Area. 

Consider this though, what is the cost of dinner in the Bay Area, a movie ticket, a gallon of milk, loaf of bread, dry cleaning, what does your plumber charge per hour here compared to there?  All of these factors contribute to the cost of living in one place vs. another.  When you compare the totality of all costs of living in one place versus another where is it more expensive?  I will defer to the Mike Fitzgerald blog of July 17, 2013 for the answer. 

‘Go inland, young Californians.’

By MICHAEL FITZGERALD | Published: JULY 17, 2013 | 3 Comments

“The cost of living is low; traffic is mild by coastal standards; and the physical beauty of the Valley is underappreciated.”

– See more at: http://blogs.esanjoaquin.com/stockton-metro-columnist/#sthash.P1cL8Ynb.dpuf

Regarding the cost of living for residents I’ll take a stalemate on this front for now.  Yes, the percentage of income cost of transportation is higher in the valley than the Bay Area however it is widely recognized that the Bay Area is a more expensive place to live than the valley.

Finally, I will comment on several of the little quips that have been thrown into the mix.

1)      Compact development in Turlock, Modesto and Merced yields higher revenue per acre.  This was alleged in a study.  I refer back to the discussion of cost of service per unit and revenue per acre.

2)      The market is not providing adequate apartments, condos and townhomes and if more of them were built more people would choose that lifestyle.  I refer back to economics 101, the “market” is determined by supply and demand and when a product is in high demand the price of that product goes up.  If people wanted condos etc. the price for those would go up and when the price goes up the market would supply more of that product.  It hasn’t happened.

3)      Single family housing is subsidized by the Federal Government which skews the pricing. Well, yes the Federal Government does provide funding for highways and with the creation of Fannie Mae and Freddie Mac has entered the mortgage business.  Government also subsidizes mass transit, BART, the ACE train, local and regional bus services all subsidized.  Without government handouts mass transit would not exist.  Stockton has eliminated almost all fees for infill development.  The Federal Government subsidizes multifamily housing through a variety of low income housing programs.  Government subsidies can be found around every corner and under every rock.

4)      Cities that sprawl the most suffer the worst.  Consider Detroit which hasn’t sprawled at all and in fact has shrunk in size.  It is suffering the same fate as Stockton.  There are just as many examples of a suffering city that sprawled as a suffering city that hasn’t grown or even shrank in size.

The Building Industry Association of the Greater Valley is participating in local and regional programs to reduce Greenhouse Gases, reduce Vehicle Miles Traveled, protect endangered habitat and preserve farmland.  However, we also vigorously defend the consumer’s freedom of choice to decide what type of lifestyle/environment she wants to live in and we oppose those who want to remove or restrict that choice.

 

This entry was posted in Uncategorized. Bookmark the permalink. Post a comment

Post a Comment

You must be logged in to post a comment.

We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Rules. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or fill out this form.
  • Categories

  • Archives

  • RSS Related Content