Stephen Rees's blog

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

Archive for May 16th, 2008

The Affordable City

with 2 comments

Municipal Support for Community Land Trusts and Other Models of Shared Equity Homeownership

John Emmeus DavisPhoto by Jason Vanderhill

John Davis of Burlington Associates introduced himself as a practitioner not an academic. In the small town of Burlington, Vermont he has been one of the pioneers of a way to make home ownership possible for people on low incomes. Through a variety of mechanisms a number of cities in the US have been trying to come up with mechanisms that retain the value of subsidies given to low cost housing, and over the last twenty years the movement has grown rapidly.

He spoke this evening to a small but attentive audience at SFU. He had a lot of slides filled with words and a DVD. Far more than I could take note of. But I hope that this short report will capture the essence of his ideas.

Shared equity ownership is a method used to enable people who would not qualify for a commercial mortgage have a better alternative to renting , which in the US has no security of tenure. There are also tax advantages for home owners in the US. Many municipalities have tried to do something about the provision of affordable housing since the federal government withdrew from public housing in the first Regan administration. Many states have also abrogated their responsibilities in the field of public housing.

The traditional methods of subsidizing home ownership concentrated upon subsidizing poor homeowners. While the source of funding was usually federal or state it was passed through to the home owner as a grant or low cost loan, with the homeowner taking all the risk but also all of the increase in value over time. The devolution to the cities as a result of the federal retreat from housing subsidy meant there were fewer dollars available to the cities, so they turned to regulation. While some used incentives to developers to provide affordable housing – such as bonus density – other required “inclusionary zoning”. That is, of any housing development 10 to 15% of the units would have to be affordable. In other words there is a mandated cross subsidy from market to affordable housing. The private sector in recent years has seen a major collapse in house prices, with rising numbers of foreclosures due to mortgage defaults. Many of these were due to “creative financing” – mortgages with low introductory rates but steep increases to market rates after a year or two.

Most cities are now very concerned about the lack of affordable housing, especially for essential service workers. Mr Davis said there has been “a seismic shift in municipal policy” and most cities now subsidize supply of housing especially through non-profit organizations. The intention is to retain the subsidy even though houses continue to be sold, in order to maintain a stock of affordable housing and provide a social safety net. New forms of tenure have been developed and a new class of “nongovernmental housing”. These are price restricted and are restricted to people excluded from the market. He referred to it as a third sector, which perforce has had to be very innovative.

The idea is that the equity in the home from increasing house prices is shared between the owner and the housing trust or co-op. Owner occupation gives a bundle of rights – and shared equity means that some of these rights are relinquished or reduced to reflect the extent of the assistance the owner has been given to acquire the property. When it comes to be sold it has to be offered back to the trust or resold only to a qualified buyer at a price predetermined by a formula in the original deed of ownership.

While there are a wide variety of not for profit associations organizing co-ops, condominiums and housing trusts, one of the most numerous now is the “community land trust”. The trust is set up to acquire and administer land. To do so it has to raise funds either from governments, or these days charitable organisations. (The US has far higher rates of charitable donations than most other countries , partly reflecting the widening disparity between rich and poor but also the more generous tax treatment of charitable donations.) The land is then used for a housing development – which may be carried out by the trust itself, or private developer or a non profit. The homes are sold but not the land under them. This is leased, usually at nominal rents, with the lease documents containing the restrictive covenants. He remarked that it was essential that there be an activist attitude as covenants have been shown not to be self enforcing.

In general, so far these ventures have succeeded in keeping affordable housing available and at the same time allowing the working poor to move up into the housing market. Generally there is the same pride of ownership, and properties are usually well maintained. The owner is also entitled to keep the value of any improvements made to the property itself. In the event of default, the trust usually manges to intervene early in the process to try and renegotiate or find a way to allow the owner to become a tenant. However, if the home has to be sold by the bank (or other mortgage holder) the restrictive covenants are not then binding on the new owner, but they have to pay a market lease rate. Most prospective buyers are happy to accept the restrictive covenants in return for a much lower lease payment.

The statistics he had indicated that while this is still a small segment of housing in the US, in some places it has become quite significant especially when municipal government has been active to try and promote affordable housing (e.g. San Franscisco and Chicago). The current collapse of house prices, and the uncertainties of the credit crisis mean that many of his analytic charts give no guidance as to what may happen next. Up until recently house prices were rising and equity increasing. This may not be true in future.

He emphasized that there is no one size fits all solution. There are a wide range of applications including traditional, single family homes, condominiums, co-ops, trailer parks and mixed use developments. CLTs have also become landlords to other nonprofit service groups as well as running rental housing, homeless shelters and other related activities. He also said that it is not an easy option and requires a dedicated team of people willing to work hard for little or nothing, and significant financial support. However once the land has been secured, CLTs have been successful in retaining affordability as well as allowing homeowners some ability to increase their wealth and pass it along to their heirs.

One key factor has been the structure of the board of the trust. He recommends a tripartite structure so that no one group can dominate the trust and divert its ends. Thus the home owners make up one third of the board, the neighbours (the surrounding community) one third with the rest of the seats filled by appointments made by the two groups acting together to select people will relevant skills and standing, such as local bankers or councillors. In this way no one interest can trump the others, but all decisions require some support from at least one other group.

It is clear that the situation in the US has some parallels here but there are some significant differences. For instance, there are no tax advantages from home ownership here, whereas in the US mortgage interest is tax deductible. Municipalities here have generally not been active in housing supply. While there is a non profit housing sector, it has been shrinking, not growing, mainly as a result of government neglect. And there are also fewer sources of charitable funds.

Written by Stephen Rees

May 16, 2008 at 11:17 pm

Traffic congestion at eight-year high

with 8 comments

Silicon Valley MercuryNews

Sorry about the size of that image but that is the “large” version. The red lines indicate congestion and the blobs have numbers indicating rank in the top ten.

Traffic congestion on Bay Area freeways in 2007 hit its highest level since peaking in 2000, transportation officials announced Wednesday, but tie-ups diminished on some of the area’s busiest corridors.

Now higher gas prices and a sliding economy mean that it is not as bad as last year now. But interestingly the response to all this congestion is not to build more freeways

The Bay Area will benefit from $1.3 billion in highway funding from the $20 billion statewide Proposition 1B transportation bond voters approved in 2008.

That funding will mean new car pool lanes on I-580 and major improvements in the way ramp metering, sensors and cameras are used to monitor and control traffic on I-80.

Basically the engineers have decided to go for the TDM tool kit. That’s “Transportation Demand Management” and it has been around for quite a while. It is based on the simple proposition that you should try to get the best out of what you have got before you start building more. So ideas like ramp metering are being applied – and are shown to work. Oddly enough we do have that on the Port Mann Bridge. But not before the Bridge where it would do some good, but after the bridge where it allows the traffic coming off the bridge to keep moving by restricting the rate of cars emerging from the Mary Hill ByPass. I think, and I could be wrong, that is more to do with basic road safety than traffic management.

And the story also has a link to a blog that is new to me that you might enjoy called “The Capricious Commuter”

Written by Stephen Rees

May 16, 2008 at 11:12 am

Posted in Transportation

Paris too opposed BRT initially: French minister

with one comment

Times of India

High Capacity Bus System Corridors for Delhi

Sometimes I feel the need to find a different source of stories – and so far today not one comes from CanWestGlobal.

Delhi has been getting stick for its new BRT lines (form the Times of India among others) but

French transport minister Dominique Bussecreau, who on Wednesday told chief minister Sheila Dikshit that France too faced much opposition when the first BRT corridor came up in Paris. Pointing out that now “all was well” with the project, the French minister revealed that the corridor in Paris stretched over 44 kilometres.

He further offered possible funding assistance to undertake a detailed survey and study for commissioning of tramways in Delhi

initiatives being taken by the French government in curbing pollution. The initiatives included free cycle service, electrical cars and hybrid cars.

The point being of course that what is needed is not a one size fits all solution but appropriate technology for the needs of the service. Anyone who tells you that cablecars or aerial tramways will solve all our problems is a snake oil salesman. It is inevitable that many different modes are needed, but the one we currently rely on – a gasoline driven single occupant vehicle that takes up half of the road space needed for a 40 seater bus – is not going to be around for very much longer. And what we will have to concentrate on is

the need to integrate different modes of Public Transport.

That last comes from Delhi “chief minister Sheila Dikshit”. And she is right.

Written by Stephen Rees

May 16, 2008 at 10:55 am

Posted in transit

Tagged with , ,

TTC’s hybrids a nasty surprise

with 3 comments

The headline from the All Headlines News is actually “Toronto Transit Commission Discovers Belatedly Hybrid Buses Fuel Savings Dependent On Driving Conditions” which suggests they are not very adept at writing snappy headlines.

It turns out that in New York City hybrid buses work more efficiently because they are stuck in worse traffic conditions – lots of stops and starts and not much opportunity to wind up the speed . So they get 20 to 30% better than conventional buses whereas the TTC only gets 10%.

in cities like Toronto where the routes are characterized by high speed, hybrids use more their traditional diesel engines.

Well the term “high speed” is of course relative. Higher than Manhattan certainly. I was unable to get a clean shot of a hybrid bus there as they were always boxed in by yellow cabs and open top double deckers. But as a regular commuter on the Sheppard East bus, I am not at all sure I would apply the term “high speed” to that service. I suspect that the TTC could also do better by allocating the hybrids to the dense Toronto downtown core – perhaps by choosing some of the old trolleybus routes like the Bay Street run, which to me resembles 34th Street quite nicely.

Fifth Avenue from the Empire State Building

Written by Stephen Rees

May 16, 2008 at 10:18 am

Posted in transit, Transportation

Tagged with