Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Tyee on EcoDensity

with 2 comments

I am sure that a lot of you have RSS readers set up for the Tyee’s web page, especially those who have contributed to the longish debate that occurred here last time I picked up something by Erick Villagomez. Well he’s back with more but this time the focus is on affordability.

On the face of it more homes per acres or hectare should be cheaper other things being equal. Land costs are the largest element of most ground oriented houses, so it you can get more people into the same space then you would have thought that the cost per dwelling for high density isa lower than fro low density.  But land values are not the same over time or across space, and the comparisons that Erick produces introduce both dimensions. He also makes statements like

the costs of renting (or buying) such dwellings is still intrinsically tied to the land value of the lot on which it lies. So — similar to the situation described above — if land values continue to rise, so do the costs of rental.

Which seems to be sound theoretically, but runs contrary to actual experience. Landlords acquire property as a store of value, and in the expectation of capital gain. As long as the rent they collect covers their holding costs, and they have good tenants who are problem free and take care of the premises, raising the rent may not be the most important concern. Of course there are corporate landlords who will try to raise rents as much and as often as the law allows, and they often wonder why they have such a hard time getting and retaining good tenants. Or rather their unfortunate building managers do: the corporate executives being above such mundane concerns.

The point of all this of course is just to stress once more that density is not in and of itself the answer to anything. It can reduce costs, both of land and servicing. It can be affordable, if the land use is done properly and people can save on other costs. I was looking recently at new packages of timber frame housing being sold in Britain: the unit cost seemed to me to rather high, until I realized that the occupants would not have any energy costs. So initial capital outlay may be high but life cycle cost should be economical. Above all, the people who distrust politicians who come up with brand names for simplistic solutions are right to be wary.

Written by Stephen Rees

March 3, 2008 at 12:13 pm

Posted in housing, Urban Planning

Tagged with ,

2 Responses

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  1. Density, among other benefits, makes possible the level of public transportation that makes for a city that doesn’t depend on cars.

    One of the best ways to achieve the density that makes public transportation realistic (and by this I mean frequent service that gets people to where they need to go without long waits) is to correct the perverse incentives which currently produce sprawl. Perhaps the most important correction is in the property tax. As most of us know the property tax, it is actually two taxes that are yoked together — and they should never have been yoked. Divorce them! Let them go their separate ways. Lower the millage rate on buildings; consider even eliminating that part of the tax completely. Raise the millage rate on land.

    The result will be one that most of us can heartily endorse. In no particular order,
    the vacant lots and obsolete buildings downtown will disappear, replaced by buildings appropriate to the current decade. New buildings will be technologically current, with good windows, good insulation, modern roofing materials, efficient heating and cooling systems. They’ll be in places where there is demand for living space and commercial space — downtown — where existing transportation systems already converge, not on the sprawling fringe, accessible only to people from one corner of town. The redevelopment process will create construction jobs. The new spaces — residential and commercial — will provide affordable places for people to live and for entrepreneurs to work out their business plans, with access to the foot traffic that makes the difference between success and failure. And because there will be adequate space available, landlords — buildinglords — will be competing for tenants, rather than tenants competing for space. And most entrepreneurs will need employees, so instead of workers chasing jobs and driving wages down, jobs will be chasing workers, driving wages upward.

    Who loses? Land speculators, who sit and wait for their land nest egg to hatch, as a result of the community’s effort and public investment in infrastructure and services.

    Those who regard land speculation as honest work, worthy of reward, should work against this proposal. Those who can’t figure out what the speculator is contributing, or why he should be rewarded for his inactivity should seek the lowering of taxes on buildings and the increase of taxes on land value.

    LVTfan

    March 3, 2008 at 6:54 pm

  2. It’s true that in one sense the value of ground-accessed residential development is in the land. This is not new. Every city that grows experiences the same thing.

    We live in a small detached house on a Vancouver half lot, one of four subdivided from two full lots in 1910 (predating the zoning bylaw by 42 years). The missing half lot represents a value today of about a quarter million dollars and is therefore an important factor in the house buying or selling proess.

    Affordability, being relative to private land value, becomes nonexistant if that land value skyrockets due to market conditions. Then at one poinit non-market solutions will be required to provide social housing, which is a different thing than affordable housing. I believe that subsidized self-managed co-ops (with a higher proportion of low income households and better income testing standards than in current models) and unsubsidized co-housing are excellent choices predominantly because the residents have a large amount of control over their destinies. Most co-ops and co-housing developments are multi-family, which is also a density-related primary determinant of affordability.

    But if someone suggests that public money be used to subsidize detached housing in locations where land value is high — even small lots — therein subsidizing the middle class, or build substandard subsidized housing willy nilly without regard to self-management and the screwed up policies of subsidizing developers, then I’d say that is one big slippery slope.

    Most of us who grew up in Western Canada were raised in detached suburban houses on large lots. But for many of the reasons discussed above and elsewhere in this blog, that model has proven to be completely unsustainable. And the world has changed. Yet some people bemoan that “affordable housing” should still include Dunbar Craftsman houses on 33’x120′ lots. What decade do they they in?

    Affordability in Vancouver now seems to be confined to some market condos in areas with second or third tier desireability rankings, and strata basement suites … not a lot of chopice there. On the former, though, there have been some quite well-designed lofts / flats arising in the geographic centre of the city where waterfront access and views are minimal considerations. Hopefully new housing models like granny flats and small cottages in backyards will be tried soon with or without EcoDensity (they were proposed way before ED). All the rest, it seems to me, are subsidized.

    That is why tax planning, land values and design are key to any development, including planning for subsidized housing, and why innovation and creativity are required to overcome the physical and economic challenges of accommodating the next million people.

    I still maintain that a disservice is performed by confining density to anything but a regional discussion.

    Meredith

    March 4, 2008 at 3:24 pm


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