Chuck Marohn interviews Scott Beyer, urban affairs journalist and owner of Market Urbanism Report, who is currently traveling the country on a three-year trip visiting 30 different American cities. Chuck and Scott discuss their overlapping and diverging viewpoints on government regulations, zoning and housing affordability issues. They also compare issues in large cities with smaller towns and consider whether the same policies can apply in both sorts of places.
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Chuck Marohn, Strong Towns (ST): Over the last couple of weeks I've been having some interesting conversations with some “Market Urbanists.” They have a web site Twitter feed and a Facebook group. I'm friends with a bunch of them and we've been having some rather interesting conversations. They nominated, for lack of a better term, a guy named Scott Byer to come on the podcast today and chat with me about some of the things which I'm very excited about. For the benefit of everybody else out here you're the owner of the Market Urbanism Report, which is a media company that advances the market urbanism ideas. You are a journalist currently traveling the country over a three-year period of time working for Forbes and governing and housing dot com reporting on housing and market urbanism type of issues. Scott welcome to the podcast. If I didn't get something right there let me know.
Scott Byer, Market Urbanism (MU): I know it sounds about right. And thank you for having me on.
ST: It's wonderful. Tell me a little bit about being a urban affairs journalist and traveling the country. This sounds kind of fun and exotic.
MU: OK so I'm currently on a cross-country trip and I'm about halfway through where for a three year period I'm living in 30 cities in America for roughly a month each to cover urban issues. So this trip started in the fall of 2015 and I drove from my hometown of Charlottesville Virginia down to Miami and Miami was my first stop and then I'm going clockwise around the country. So I've already been through the south and the Southwest and went up the West Coast and now I'm on the second leg of my journey and moving back east. So I'm currently in Salt Lake City Provo to be exact and I'm moving back east through the Great Plains and the Midwest in the mid-South and the final quarter of the trip I'm going up the East Coast and into New York City in the fall of 2018.
ST: There are a whole bunch of people listening right now that just changed their entire career objectives. Yes but no kidding. Did you come up with this idea and pitch it to somebody or did somebody come to you with this?
MU: I came up with the idea and pitched it to Forbes and they were they were like Yeah we'd love to have street level coverage of different cities.
ST: Tell me one fascinating thing that you've learned that you didn't know they had no clue about. MU: I think that one thing with the big macro level picture of the trip so far would be the mass migration that's going on between from the north part of the country to the southern part of the country which is backed by the demographic trends of many more millions moving into the southern area of the country particularly big metros like Atlanta Houston Dallas Phoenix places like that away from the northern part of the country and the Midwest. It gives you two different images of America. It's like one part of America's kind of declining and struggling to hold on. And then the other part of America is booming and getting mass population woes. And so it presents a very different image of two different kinds of Americas.
ST: A couple of just quick hit questions. I know you're only half way through and you've got a lot of America to curry yet but so far what has been your favorite city.
MU: New York City is always going to be my favorite city.
ST: You haven’t been in New York yet as part of this trip though, right?
MU: Well, I've been to all of America's cities. So I spent a lot of my time before this just kind of traveling around. This is the formal finalization of the trip. But I've actually been to all these cities, so yeah, I've been to New York and actually lived there for a short period. And I'm a huge urban density fanatic. I guess you could say I love what New York represents. So it will always be my favorite American city.
ST: One of the reasons that we wanted to do this podcast is because we had some disagreements. And by we, I don't mean you and me in particular, but me and a large group of the market urbanists. You and I chatted a little bit and thought that it would be a very good way to start this conversation by just talking a little bit about each other, and I would gladly start because when I first heard of “market urbanism,” it was a little bit like hearing about Reese's Peanut Butter Cups. I mean peanut butter and chocolate are two things that I love. You put them together that is beautiful, markets and urbanism are two things that I have a strong passion for. And if there's a group of people out there who are embracing both at the same time the Venn diagram of that conversation and a conversation that I would like to see us having has a huge overlap. I have found over the intervening period of time that I've gotten to know some of you that I really like you guys a lot. We've had many Market Urbanists on our podcast, we've had a number of their works featured on our site. I hung out with a bunch of you, and am using you, the collective you, a bunch of people who identify as Market Urbanists, at the FEE CON [Foundation for Economic Education Convention] conference in Atlanta. And you know we can hardly like you know leave the leave the bar and go back to the hotel room at night because we were all having such a good time conversing. So I feel like our two conversations have a lot of overlap and I think maybe as a starting point I just like to express a level of admiration for the work you guys have done.
MU: Well, thank you. I'll do the same with Strong Towns. I mean I think the interesting thing about the Strong Towns. I don't want to call it a blog either. Do you consider yourself like an institute at this point?
ST: We kind of started as a blog, and it's really grown into a full media site now. So, yeah, we don't we don't refer to as a blog anymore either. We would like to become a Forbes or Governing magazine, or HousingOnline.Com. There are online publications. I think that's where we're moving towards but with a little more advocacy maybe.
MU: And that in itself would probably be the top of my praise right there. Just the ability to have an idea that began very small and evolve it into something that's more institutional and better known. I mean I look at you as a model what market urbanism should be -- somebody who has grown a concept. And so I think that's really admirable. And also, I mean, that this probably got lost in translation during the social media conversation, but I actually do like a lot of Strong Towns work. I think that you bring really important conversations into the issue and the thing that really woke me up when I was first reading Strong Towns is the way to look at streets. You know I've always been somebody who, as an urbanist, is a complete streets person. But I thought it was really interesting to begin reading Strong Towns and hear directly from a professional engineer that these problems, the reason our roads look the way they do is because of something that's systematic within the engineering profession, that there is this groupthink that causes every street in America, as I've seen, to more or less look the same way. And it was really interesting to have one engineer step outside of the box and say “look my entire profession is doing this completely wrong. The way we design our streets, the way we embrace infrastructure.” So it's been a really interesting perspective to read.
ST: I appreciate that. I wanted to start by and I think this is for us and also for the people who are listening and understanding of how we are perceiving each other because I think sometimes on social media you know there's a lot of passions and people jump in at certain points. And I know one of the frustrations that I've had is that I'll write six thousand words on a topic and someone will take one sentence, and then [distill it to] “He said this!” [ignoring that] “Yeah, I said that, but in the context of all this other stuff. “ What I wanted to do was have each of us explain our understanding of the other, and then give an opportunity for some discussion on that, just to get us on the same page and I can start with that. When I read Market Urbanism and when I interact with people on market urbanism, my understanding of the concept is that, right now, today, our housing prices, our housing market, our urban form, does not reflect a true market, or true market prices, as we have many, many things that are impacting that. Primarily among them, from the Market Urbanists standpoint, would be arbitrary government regulations -- many instituted because of NIMBYism and people not wanting to see growth and development -- in a reactionary way, and that we could solve many of the problems that we face today whether it is housing affordability problems or whether it's government spending problems. You know, parking problems, etc. We could solve a lot of these problems if we just allowed market systems to work and allowed market systems to run their course. Our resistance to that and our inability to allow that market feedback to take place has created a lot of distortions that are harming people. And so the market urbanism approach is to say “let's remove those barriers, let's allow prices to work, let's allow things to be built and constructed in response to market demands” and that will solve a lot of these problems. That's my take. Am I missing something? Am I off on that? Am I overlooking an important aspect?
MU: I think you pretty much hit the nail on the head in the broad sense. Yes, market urbanists think that land use should be deregulated and that that would give a more pure look at how our transportation grid would function under an open market. And I think, more pertinently, how our housing market would function under an open market. And, you know, it would make housing cheaper and more abundant. Where different nuances come about are, are there certain types of regulations that are more important than others when it comes to making housing affordable? And I think there's also an academic question, within people who think of themselves as libertarian and urbanists is how exactly would cities develop under an open market. Would they become denser, would they become more sprawling, would they take on some of the forms that you write about on Strong Towns where they have a lot of missing middle housing and more mid-rise and incremental density? I think those are really fascinating conversations because they try to take a look at what is the consumer demand in America actually, and how cities develop these regulations were taken away? That's a side conversation within the market urbanists as a movement but I think the broader macro point is one that you pretty much summarize which is that, yeah “Just get rid of these regulations and see what happens in cities.”
ST: Your turn. I'm going to be as generous as I can. We have a pretty expansive dialogue going on. So sometimes I have trouble explaining it, but I just you know give you an opportunity to talk about your viewpoint of what Strong Towns is.
MU: OK, well, the thing about Strong Towns that appeals to me personally the most is just the idea that cities in America, and particularly the smaller cities that are in less advantageous regions, need to find a way to achieve fiscal solvency. They need to be really wise about their decisions and not just throw away money the way that they have been before, often after receiving federal money. And so they need to be more fiscally sound and more wise in the way that they spend on infrastructure and basic public services. Now, the wrinkle within the Strong Towns message that first caused me to want to reach out to you is the idea of incrementalism. I won’t try to explain to you what incrementalism is too much, because I'm not sure exactly how you've defined it yet, but as I as I understand it, from having read your articles about incrementalism, it seems to me that you think that governments themselves – and this is probably the part of it that I would be with you on, but you can correct me at any point -- you think that governments themselves should have a more incremental attitude in how they use their money and how they spend on public projects. So rather than making large dumb plans they shouldn't make small incremental plans and then test them to see if they actually work. So, rather than putting shoving a major highway for example through a city, maybe you do the little things that will improve transportation mobility, and see if that works and then expand upon that rather than one big top down project. Am I correct on that?
ST: Yeah, I wouldn't disagree with any of that. Yeah, I think that's certainly part of our conversation.
MU: OK. And then the other angle of incrementalism, that I'm not really sure what you think about and I'll just have you explain is incrementalism as it pertains to private land use decisions and private development. Should the use of land by private developers and private citizens be incremental in the sense that zoning is only loosened incrementally and is not responsive to market processes but has to abide by a certain, more bottom-up approach to growth?
ST: Right. It seems a little bit like the place where we had the most vigorous conversation is the idea that there should be some constraints on land use for the private sector, that I've detailed as incremental. What I have suggested is that we should be allowed by right to incrementally build to the next level of intensity everywhere. I think have stated that would make, in 99 percent of America, upzoning. But, and I think that this is also true, it would make a certain percentage of America where you do have demand and there's clear evidence of demand, it would artificially constrain what people want to build in those places. It would be beyond what the next increment would be. That's the thing that's gotten the ire of people over at Market Urbanism. Is that is that a fair statement?
MU: Yeah, I mean, well, I think the incrementalism regarding the public sector makes perfect sense, to me anyway. Especially considering it’s not just highway boondoggles, it's boondoggles for everything. It's metro area Dallas deciding that it wants to build a huge light rail system even though Dallas is not really oriented around public transit and light rail. It's like this big top down mentality that you just got to shove big projects through and throw a lot of money at them just because that's the right way to do it.
ST: It feels like a giant to me, lurching from one thing to the next. Right. Yeah.
MU: So, yeah, the public incrementalism idea certainly makes sense and would be a refreshing breath of fresh air from the current status quo. But I don't I don't see the justification for having incrementalism -- seeing what I see is imposing incrementalism on the private development market, because even if it causes upzoning in most of America, I think it would in fact restrict a lot of land in very key areas. And we're already dealing with that problem, and it's already creating a housing shortage. So I think that's where me and a lot of the market urbanists, I think we just wanted some clarity, “Is that what you're advocating for?”
ST: Yeah, it is, yes. But I'd like to have a deeper conversation of it. Because there's a part of me that feels from the dialogue we've had on line that, if we had the core problem we're trying to solve -- it felt to me like the Market Urbanists are trying to solve the housing affordability problem. We're [Strong Towns] trying to solve is essentially the government's solvency problem. I think acknowledging that those are two different -- and very interrelated problems -- but they're two very different problems is maybe the place to start to, at least, understand the rationale for the other. I don't want to speak for you but you know it seems like the thing that is driving the conversation there is the housing affordability issue.
MU: I would take it a step further than that, actually. I think if you look at the YIMBY [Yes, In My Back Yard] movement, they're an example of a group that really is just about the house affordability problem. They just want more housing. And I'm for and I'm fine with that. I mean I'd more or less totally agree with the YIMBY movement. I think for market urbanism there is there are certain goals beyond just adding more housing. We're as interested in the means as much as in the ends. In the sense that we want a market oriented process to be applied to cities because that reflects the will of the people and of specific individuals. It's like consumer demand is a reflection of what people want in a given area. That's kind of the idea behind market urbanism as much as the actual final goal of having more affordable housing is. Are people able to mobilize within a city the way that they want to with the transportation networks that they choose to pay for? And are they able to buy the type of housing in the locations they want, in the architectural styles that they want because the market has been liberalized and those housing options have been provided. So it's like when we hear something like incremental density, we hear something saying this is a this is somebody else's idea of what the correct answer is. I mean there could be a number of problems with it, but I think, above all else, if it’s limiting certain types of development styles that the private consumer wants, then we look at that as a negative thing.
ST: Right. I used to. I don't say this in a condescending way at all. I used to completely agree with that, and I think if I went back a decade or more, you could have called me a financial libertarian and I would have been in complete agreement. I would not have disputed that at all. Today, I certainly, at a macro level, at the nationwide level, embrace economically libertarian ideals. I mean, I would love to see the simplest form of government applied and the most liberalized markets on a macro level. When we get to the local level, I struggle. And I struggle because I have developed -- right or wrong—an understanding of cities and their pending solvency problems, and just how that impacts our neighborhoods. I'm not going to associate you with Randall O'Toole. But I do want to reflect on a debate that I had with him because it was it was frustrating to me. It also opened my eyes a little bit to the fact that I look at local government -- not necessarily state government and federal government – they’re often too disconnected from people, but I definitely look at local government as being the closest reflection we have to the Massachusetts town hall meeting, where people are getting together and shouting at each other and deciding what we're going to do here. You know, for all its imperfections, I look at local government as a collection of us. And a lot of the things that we have decided to do at the local level, we've in a sense, decided through a process together. When I step back and look at local government today, what I see is a system that has been, in a sense, dominated and, in many ways, perverted by state and federal policies and state and federal incentives. But I see that going in the other direction now. I see the federal government essentially going broke and walking away from a lot of these things. I see the state governments doing the same things, mandating that cities provide certain services but not giving them money to do it. Mandating that cities operate in a certain way but basically being against the local interests. As I become more of a of a localist, more of the idea that, OK we've lived in this thing where we've been able to have huge federal government investments, we've been able to have huge transportation projects, we've been able to have the federal government come in and subsidize our housing, subsidize Wall Street so that we can finance certain projects, if that stuff is going away -- which it feels like it is -- and we're untethered from that, we're on our own where are we? And I feel like we are in, financially, we're in a horrible state. You know, we don't have any money to maintain any of these streets or pipes or sidewalks. We can go to the outliers of San Francisco in New York, and I think, talk about them separately in that regard. But when we look at our cities, we are essentially in a place that we've never been before. We've never taken -- and you can take the city of Detroit is like the early example of this --taking a city that was very dense, very compact, very mature, and essentially denuded it and spread it out over a wide, wide area, with all kinds of costs for the city, the system, and all the people within it. We've never been here before. And how do we figure that out? In the early days, because I come from the planning profession and the engineering profession, my early responses were very technical: You know, do we need to look at Complete Streets? Do we need to think about form-based codes? What can we do from a technical standpoint? And I very quickly got beyond that and said, this is a complex system that we don't really understand. Cities are complex, adaptable places that we don't really get. And the way we go about trying to figure out what to do is by moving incrementally. And so I have kind of become -- and I think it's a fair criticism to say – “[Chuck,] you [have] become stuck on this notion of incrementalism, and it doesn't always work.” I'm sure that that is very true. But I have also come to the conclusion that the downsides of it not working are not going to be that great but the downsides of us going in the other direction and just keeping lurching back and forth are much, much worse. So that's maybe kind of a nuanced attempt to explain how I got to this point and I'd welcome any critique or thought you have, any reaction to that.
MU: Well I think it depends on, of course, what cities you're talking about. And I know that you focus more on smaller towns and mid-sized cities at least that seems to be the case. And I'm not going to argue with you on those points. I'm not extremely familiar with what's going on in small towns in the Midwest. I think the reason that people probably wanted me to be on this podcast was to ask you “What about, say, in the 10 or 15 cities that are really booming in the United States, and that have massive demand for living there, and that make up a vastly disproportionate share of our GDP, and our energy and our innovation and our population, how is incrementalism supposed to work in those places? And what type of incrementalism specifically do you want to see? Let's take a case study city like Seattle, which strikes me as the ultimate example in the United States of a city that grew around the automobile, like many other cities did, but is now ready to massively diversify and become the next New York or Boston or just a really dense city. What would your incrementalism be for a place like Seattle? Because I think that, if you look at the downtown neighborhoods and the neighborhoods around downtown, many of which are zoned for single family. If you let the market work them in those places you would get 30-40-50 story buildings. Now, admittedly, that's not incrementalism. But what I would want to know is why would incrementalism then be appropriate and what exactly what type of incrementalism would you want to see in a place like Seattle?
ST: Right. I think Seattle is a very interesting case because, as you know, the know the further west you go, the more auto centric the core development pattern is. The solvency issues that I get uptight about just increase in magnitude many many fold the further west you go. It's pretty easy to go to Boston, let's say, and look out at the neighborhood surrounding the core of Boston, and say “OK, you know, if Boston goes completely bankrupt and this doesn't work, these places are going to be OK. It is going to work itself out. It's built on a grid. It will, over time, evolve and change. It's been here a long time. It's going to work.” When you go to Seattle and you look at, not only the city and the immediately surrounding neighborhoods, but you look at this vast expanse that is Seattle and you see the amount of infrastructure in the ground per the amount of tax base, you see the intense amount of effort it takes to keep that all running. It drives me nuts it sets me off, this doesn't work. The only reason it works is because we've done it over this long time horizon and, basically, the due date for this bill is coming and Seattle's not ready for that. So when I look at Seattle it baffles me to no end how you can have all of these single family home neighborhoods within close-in walking distance of high-rise towers where clearly there's demand for this. Yet I look at those single family home neighborhoods, and the only thing making them near financially viable is that the underlying land is priced so high. The buildings on them are not priced high. The buildings on them are not worth all that much. They're single family homes. They're might have nice appointments on the inside, and they might have a whirlpool tub or a theater or whatever, nice wood floors. But you're not getting $10 million valuations out of a home because of the house. You get [it] because of the land, the underlying land. And so to me, I look at that and I say you don't have a problem in this block, you have a problem square miles of space. And the fundamental problem is that the land is demanding way more intense use. I step back and I say well, OK what would happen if we solved this in that way? I would take out of Seattle and go to Austin, where I've spent a lot more time looking at this in a detailed way. And you can see, over and over and over again, where Austin has tried to solve this problem in two ways. Way number one is to build lots more out on the edge, which is a huge subsidized Ponzi scheme, it’s a disaster for the city's budget. But it does build some level of affordable housing. But it's way, way out on the edge. The other way they've tried to deal with it is to allow for market liberalization, as intensive buildings as you can. And when I look at that and I talk to the developers there, we always get back to the fact that the land is priced really, really high. The land is like obscenely high. And so, they’ll say, when I buy this little house and I'm going to build something on here, I have to build 20 stories because that's what the land prices justify. And you get in this, I think, a Catch 22 kind of cycle, where it's “OK, I have to build this intense because that's what the land is priced at.” And then you go and look at the land being priced that high because that's what people can do with it. And I just sat down and ran the numbers. I said “OK if we took every piece of land that is priced this high and we actually ran flat out and said we're going to build at the intensity that would be demanded by that price, [what happens?]” In other words let's assume the market is accurate, is accurately reflecting prices. Let's go out and let's build intensely at that price. What you would find is that a city like Austin [would need] 20 million people. [It] would be so intense a number. That will never ever happen in Austin. And so I step back, and I say that the land is mispriced, there's something stuck in this market. There's something that's not working here in the underlying land values if it actually has this huge supply in relationship to what the potential demand could be. There's something stuck and broken. I can't tell you what it is. I can't figure it out. I've kind of theoretically gone through and said I don't think it's solely this, I don't think it's solely that. I find this aspect that people throw out as being the answer to be lacking, and not a complete explanation. I don't know what it is. The group that got so upset with me on the Market Urbanism site will say, “Well, Chuck, it doesn't matter.” It’s just demand. And, you know, at the end of the day, for me it does matter. Because, as the city, if you're sitting here facing literally, in Seattle, square miles of land that's financially not viable. And that's like an overhang that you have to deal with someday. To me what needs to happen in all those neighborhoods is that they need to become more intense they need to actually grow and see investment and become more viable. And that can't happen when the land prices are stuck and distorted and it can't happen when the regulations make it stuck and distorted. So my solution has been, or my approach has been let's try to figure this out by clearing away those regulations: Allowing people to build, by right, to the next increment. Let's get that going. And my sense is that what that would do is it would – a little bit of development everywhere – would drop the underlying land values down significantly. That in essence is the way I would deal with Seattle.
MU: My response to that will be broken up into different things. I don't necessarily agree that the land values in hot places like Seattle and Austin are inflated in any way or are somehow unsustainable based on what the population growth will be. I think the population growth, in a place like Austin especially, one of the fastest growing metro areas by population in the United States. I think that the land values are a reflection of that. I don't think they're a distortion. I don't think it's inflation. I think it is. This is a city that is ready to grow up and grow vertically and become the next New Yorker L.A.
ST: To me, when I think of a supply demand curve, and I look at the supply of land in the core of Austin, or in the core of Seattle, and I look at the demand for building, even if you poured it on, [you] could not possibly, if you were building towers, suck up all that demand. Am I off on that?
MU: I think the nuanced look that a market urbanist would take to a situation like this is, “no, you won't address all the demand just by building up. You probably will need some missing middle. You might even need some sprawl in those land plots specifically that you were talking about, like let's talk about the land around University of Texas. I mean University of Texas is a huge school. It employs a lot of people. It has I think it's one of the biggest public universities in the country. So it has there is a lot of demands for living around the UT campus in Austin. And so for those land plots specifically, it's really not hard to see why the land would be so valuable and why development would be so vertical if it were allowed to actually grow. That doesn't mean it's going to it's going to deal with all of Austin's demand issues. I mean there's probably some demand for living on the north side, there's probably some demand for living in different areas of the metro area, and not all the development would be high rise. I'm not saying that.
ST: If you look at UT, and I think that's a really good example, and agree with the market urbanism that we could drive down prices by building more. If we provide more supply to meet the demand, prices will go down. And that's like a fundamental tenet of economics I think that we agree on. But I think if you take that though, and you look at the land values, that the thing that is actually driving [prices] -- When you talk to developers they'll say “I have to build at this level of intensity because that's what the land values demand, if I’m gonna pay this much for this land, here's what I gotta do.” If you do that just around UT and say here's how many new units we need every year, let's build double that, at some point you will reach a saturation point and then what is the land worth?
MU: Well the land is probably worth more. Like right now, the land values around the central Austin area are probably being constrained because the zoning doesn't allow a lot of development on them. So I'm in agreement with you that if you if you deregulate those areas the land values will go up.
ST: Actually I'm saying the opposite though. Not completely the opposite. But I'm saying that, right now you look at Austin and the land values are really, really high. They're really high. The buildings on them are not worth all that much in comparison. I mean the value is in the land. They're pretty deregulated now. I mean, in a lot of places, you can build a lot of intensity. It's a long drawn out process, and you've got to have Wall Street backing, and you've got to have a lot of money, and you've got to hire a team of people to get you through the bureaucracy. But you can get stuff built there, right?
MU: It depends on what parts Austin. I mean there are literally parts of Austin around campus that are zoned for single family residential.
ST: That's true. True.
MU: So yeah, I think those land values are certainly being constrained. But I guess I don't really see the point in obsessing over land values, or I don't really see why it's what larger point about development you're trying to make.
ST: To me, the land values, they signal to me that there is something beyond supply and demand that is distorting this. There's something beyond simple supply and demand because the underlying relationship between the land and what's built on it is way out of whack. What I am, at the end of the day, I'm most concerned with is less the affordability issue and more the government's solvency issue. Because, right now, if you're local government, you benefit from this distortion. You benefit from having the land prices artificially high, because that's your tax base. You're getting money from that. But you're also going to get creamed when the opposite happens. When we reach that saturation point and the land values drop. That's the antithesis that is going to destroy your tax base and the wealth on which you're drawing from to actually make good on all those promises you've made to fix all those roads and sidewalks, maintain all that pipe. All that comes from the wealth that’s generated there. If that wealth isn't real, if it's a distortion, you're going to make really bad decisions in the interim, and everybody is going to suffer at the end of the day. And so my obsession on the land values is because . . . if you went to Austin and the land values were a tenth of what they were, and the market was more liberalized in terms of what you could build, I think you would see a lot of people going in and converting single family homes duplexes and building smaller apartments and four units and six units and eight units. I think what you have [now instead] is you have this huge upward distortion in land values. And so what you see is you see people, in a sense, building the only thing they can justify with those land values and then turning around and saying you know I have to do it because of this. And here look at the demand. It's this reinforcing mental echo chamber in my mind.
MU: I think a lot of where we are not seeing eye to eye -- and it's not necessarily that I'm looking at all of this through the prism of land values -- but I am looking at through the prism of fiscal solvency though. So if you were to deregulate a place like Austin and to have rapid high rise development around the Austin campus and around the downtown area, it sounds like you are saying that ultimately that's going to be fiscally unsustainable because eventually the land values will drop.
MU: But I don't understand. How would how would a allowing high rise development in an area and allowing a massive agglomeration economy in a place like central Austin, why would land values and why would economic productivity drop? I usually associate it quite the opposite. It's like the second that you will allow a lot of people in a lot of development to go into a set area, that's when wages go up. That's when the land values go up. That's when tax revenue goes up. That's when job growth goes up. That's when income goes up, innovation. It's like that is the recipe allowing all that density in an area is precisely the recipe that enables governments to grow totally flush and enables economic prosperity.
ST: I agree with you. But when we look at Austin, or we look at Seattle, which I think are two prime examples of this, I think that that is true in a relatively small area. And when you look at Austin, the overhang of Austin right now, the death-knell fatal problem that they have, is that they have a small, measured-in-square-blocks area, that is really financially productive and successful. And then there is surrounded by this massive, massive, dead weight of land that is essentially being propped up and subsidized in the short term and is going to sink the whole ship in the long term. So the challenge that Austin has is not to take the fire that is burning [well] and pour a bunch of gasoline on that, and make that into an inferno right here. The challenge that a city like Austin has is to say “How do we get that [same productivity] out into these other places that are ultimately going to be the drag on what is working?”
MU: I think what we agree on is that a downtown area, quote unquote, that's vertical is massively economically productive. And actually you showed this in Lafayette. So it does apply to to small cities as well, but it really applies to big cities, which is, the downtown area is massively economically productive and it subsidizes, basically, the rest of the region.
ST: That is an absolute fact of American develop patterns that we have recognized every single place we put numbers down. I mean we can prove that mathematically Yes.
MU: OK but so what you're saying is that if you allow incremental density in the areas around that the wealth that is produced by density will spread more to the less productive areas because it's not all being concentrated in one place. Is that what you're saying?
ST: In a way, yes. I think there's a double side of it I think. One, you’re in a sense, you're flaming out the one, while ignoring and allowing the other to kind of decompose. And I think that, from a city strategy [perspective], and a city being a collection of us that live in a place, a better strategy -- to try to not have a huge [price] distortion in one and not have the other one go dark -- is to actually build incrementally in a way that would “thicken up that rug” is the way that I've kind of put it.
MU: Let me present another case study for you because I actually I actually published an article on the Market Urbanism Report today about. It. And that is, and this is the ultimate market urbanist case study in my opinion. And that is the Miami neighborhood of Brickel, where that is an overnight skyscraper neighborhood that was, essentially, some combination of a low-rise district in single-family residential neighborhood as recently as the mid 90s. Within a 20-year period, it became a mini Manhattan because there was a lot of there was a lot of immigration coming into Miami. There's a lot of very wealthy immigrants who are escaping various countries in Latin America. And they embrace urban living. And they moved into Miami and Miami allowed at least one place where they were going to allow all these new these new found immigrants to go. And it was called Brickel. So they took away the parking regulations. They deregulated parking. They deregulated building heights and basically just let just let developers build up the sky. The analysis that I provide in the article is that Brickel is overwhelmingly subsidizing the greater part of Miami. When you look at overall tax revenue, when you look at job growth, the types of jobs that are being created, you know Brickel has become basically like a Latin-American banking capital. I would begin by saying this is not only a good thing. This is an extremely good thing for Miami, and it demonstrates why other cities that have pent-up demand should be building neighborhoods like Brickel. Do you think there's anything wrong with this neighborhood model?
ST: The way you describe it. No, no not at all. I've not been there so I can't speak firsthand. But I think it's important to point out that an incremental development pattern would not preclude towers and big buildings, and there’s large parts of Austin and Miami and Seattle that should have towers and should have huge buildings. That is a natural outcome, and it is a natural kind of ending point for urban development.
MU: Ok then can I can I ask you a follow-up. The question that I wanted to ask you all along was -- I read your articles about incrementalism, and I saw you -- not to take one line out of the article, but I did see one line about you thinking that 1.5 times [existing] density is the appropriate metric in many places. But I think, overall, when I'm reading your articles about incrementalism, I'm not getting a clear message from you about what you think of these major cities – How do you think incrementalism should work in these major cities? And I think that's where a lot of the uncertainty and un-clarity between you and the market urbanists are taking place. Because if you do have a place like Miami that basically became high rise overnight in this one neighborhood, and if you do have places like downtown Seattle that could do the exact same thing if they were allowed to be deregulated, I don't see what the point of an increment of incrementalism would be in those contexts. Like I was just tempted to say “Well, build to the sky.” What exactly is going to be bad about it? Because that high rise building this sky mentality has proven to be a very economically productive way to build a city. So -- is your definition of incrementalism -- that should be allowed to happen in major cities or that it should not?
ST: I will say I don't know. I don't know. I know that that's frustrating sometimes. People get frustrated with me because I will say often that I don't know. Part of my embrace of the incremental concept is that I don't know I really don't. And I think the you know the case study that you're pointing out is great. You've also said it's 20 years old. I think the you know the measure of a city is certainly not the first generation. It’s always the second, third, fourth generation. How do these places renew themselves. How do they continue on over time. How do they hold their productivity and become better places. I was last we spent the whole week in Washington D.C. which is a place where there's huge artificial constraints on height limits, and I get that. But I also find it to be, many times, very confusing. I find a lot of our major cities very confusing as well, because I will get to a place -- and there are a couple of times when I got off the Metro in Washington D.C., and I'm surrounded by parking lots or single, one and two story buildings. And I'm looking at this going [on], this is a city where, people are telling me, [people pay] five thousand six thousand dollars a month for an apartment. Yet I'm sitting here looking at a parking lot. How can this possibly be? And I would then take it to the next step and say, so you're telling me that the solution to this problem is to go way over there and build a tower? That seems to me like, to use the old adage, putting all your eggs in one basket. I'm reflexively reluctant to go for simple solutions like that. And I see places like that. Austin is a very good example of where they've tried to beat their affordability problem down by just, you know, building tall. I think that that has taken, in a sense, the entire rest of the community off the hook in dealing with this problem. I think it's going to have long range implications that we really don't understand today.
MU: OK, well let's talk about Washington D.C. because that would be another. So if Washington D.C. went Miami on itself, I think we have the exact same thing would happen. And I'm not saying wipe out the historic neighborhoods. I'm not saying that, but there are parts of the city where it would be totally appropriate to have high rises and it would start to resemble the type of high rise growth that you're seeing in Miami. And so you're defining that as putting all your eggs in one basket because it means that most of the financial wealth is going into one spot?
ST: I'm less concerned about that than I am about the long-term viability of those buildings. I've heard once and I thought this is very compelling and I've certainly experienced this in older high rise buildings that I've been in. Some are built magnificently, and you may be in them 60 years later and you're just you know in awe, this is incredible. Some you know neighborhoods of sprawl, if we want to use that term, you can go in when they're 60 years old and they look great. But the predominant way that things develop is that they have a certain -- they're built, they have a certain period of time where they're new and shiny, and then they start to show their age. If it’s in a horizontal subdivision, where you've got the garages attached to the houses and what you can see as you can see a very clear lifecycle where things look shiny and new and then they start to go bad. And then you know people start to move out to the next shiny and new place. And over time there's a there's a downward trend in the quality of the building and the quality in the neighborhood and, really, in the productivity of the place. Without a way to renew that, in a sense. Without a mechanism to go in and buy those and make them something new, they just stagnate. When you build a tower especially if it's in isolation, like, not in a Manhattan, where you're like literally surrounded by them. In Manhattan, the towers were the next logical increment for what was around it. If you go to a place like Austin or Seattle and put a tower in next to a residential neighborhood, to me, you just built the same thing that people are building horizontally. You built it vertically. You built a one-lifecycle thing. And the question I have is “How does that thing renew itself. What happens when it starts to show it's where 30 years from now and there isn't a next increment of intensity that makes any sense?”
MU: I was getting the sense that that was your criticism of high-rise neighborhoods when I was reading your articles. I was getting a sense that you were saying “Are they sustainable? Is it not just all a bubble, you know, that is eventually going to implode?”
ST: So it feels very much like that to me. Yes. And this relates to that land value thing. I feel like we are we are responding to a false signal by hyperaggressively building something that is even distorting things more.
MU: Well, here would be my response to that, because that's what I was getting: the sense that that was your position. And my response to that would be it probably is the case. Well I know it's that it is the case in various foreign areas but I have not found a high-rise neighborhood to be a bubble in any part of America. In Miami again will be the big test, because it grew relatively overnight, and it is the newer version of this type of model. But if you look at the old models of high rise neighborhoods I don't know any of them that have really seen decline. I don't know any that have become a bubble. They seem to only become more and more financially productive with time. I think that the only example of a city that has a really high that has really high rise density that is still struggling and declining might be a place like Chicago. But I would argue that Chicago, the fact that it allowed, that it had this mentality of allowing so much high rise development has given it an economic advantage over other cities in that region. But overall, if you look at the areas of extremely high density in the United States, I don't know any of them that have become a bubble. You can't say that about New York. You can't say that about Boston, you can't say that about San Francisco, or L.A.. Their economic productivity, which was first created in the first place because they didn't provide is only feeding and perpetuating upon itself.
ST: I think, from a historical standpoint, here's where I kind of struggle because I'm not a very old guy. I'm also realizing that I'm not that young anymore either. I'm in my mid-40s. I remember when there were large parts of our major cities that that were in decline. I loved Buffalo. I've spent a lot of time in Buffalo, and I've been in some of the old buildings in Buffalo that were, in a sense, the apex of their development pattern back 100 years ago. And you go in there and they're gorgeous. Even though their in decline and even though they've been neglected. And even though a lot of them were walked away from, they made sense at the time they were built and they still kind of retain their value in a way. And my hope would be that over time, Buffalo would grow up around it, and those buildings become viable again. I've gotten to see some of these in Dallas, more than any other city. When I go in some of the new high rise buildings that are built in Dallas they look really nice. Right. They're brand new. They look great. They've got nice like laminate hardwood floor and laminate elevators, and you go to like the common rooms and there's a swimming pool and all this. I know what that stuff takes to maintain. I know what 20 years from now it's going to look like. It's going to need a lot of work. These places have really high burn rates, much in the same way that if you buy a house built in 1910, it's a more resilient kind of building than a single family home built in 2015. They're just different, and they wear differently, and they have different long-term maintenance needs. My concern about the -- I was just going to use the word mindless -- it's not mindless but the kind of rush to embrace “let's build a bunch of towers” is that we're going down a course that it has a binary outcome. It either works perfectly, it works really well, or it's a catastrophe at some point in the future. I reflexively recoil from that type of approach. I reflexively say, as a city, as a collection of us working in a place, I am more inclined to want to hedge my bets in as many ways possible than I am to want to embrace that. Now take me to Manhattan, you're not going to find me arguing that we shouldn't be building 20 stories, right? Take me to the core of Seattle and I'm not going to argue with you. But let's go four blocks out of the core to all these single-family-home neighborhoods. Those places need to grow. They need to change, and they need to evolve. I just wouldn't do it with towers. I think you've got to do it in an incremental, a more incremental way.
MU: I will look at the act of building vertically as -- you know, you talk about this binary outcome, cities are either going to do really well or they're going to decline. I agree. But I mean, to me, the way to be on the right side about binary outcome is to build vertically because building vertically has been shown to be an extremely efficient use of land patterns. It's the type of thing that attracts people to a city and that makes that. I mean it has all kinds of economic benefits as far as being able to attract certain companies, being able to attract certain people. So it's like, to me, allowing the market to allow vertical construction is precisely the way that a city is going to be able to maintain its economy, and get good use out of its land, and have high tax revenues. As opposed to the sprawling light density cities that are really going to struggle in the future because they're not going places that people want to be at, and they're not building a long-term vision.
ST: By the way, I agree with everything you just said. I just don't think there's a shortcut to doing it. I think that by having the very light constraint -- and I know you don't think it's a light constraint -- with a very light constraint of saying . . . . And so you know, I'm not enamored with 1.5. I threw that out as a way to think about it. I think that that is something that would need to be tried in different places and tweaked and worked with. But the idea is that you take what's there, and you renew it to the next level of intensity. It's everything that you said. You know cities that grow dense should be more vibrant, they're more successful. Yes, yes, yes. I agree with you. I just think that doesn't mean density is the answer if you just do it at scale. I think there's more nuance to it than that. I think there's more to the graph than just two axes.
MU: OK, what I mean this is the this is the final point I'll make, I guess, about this so I don't look at incremental. I don't look at the height limits and the impositions of incremental density that are already going on in cities. I don't view that as a light constraint Height limits are not a light constraint. To me height limits are the worst like a regulation.
ST: Right. Yeah I respect that. Yeah.
MU: So (A) there's two different types of cities. There are already dense cities like New York and San Francisco that could become a lot denser, and height limits are the things that are stopping them from doing that. And then there are another, there are a second tier of cities that grew around the automobile and grew around sprawl. And I'm talking about places like San Diego in Seattle in Miami and Denver, and in places like that, and height limits are stopping them too. So we have we have 10 or 15 cities that that could, if regulations allow it, they could emerge into these great metropolises that are extremely economically productive, far more productive than what they are now. And I look at height limits as the uniform regulation that is stopping all of it.
ST: I'll say just in closing, Scott might be right. I'm certainly not pretending that he's not, or that he doesn't have a lot of really smart things to say about this. And I am thankful for him taking the time and being generous with his thoughts and certainly generous with allowing me to express mine.
So check out Market Urbanism Report. We’ll post all the links on the site for that. Check out and follow Scott as he travels around the country on what is one of the most exciting projects that I've ever heard of. It's like travels with Charley in reverse. I love it. Thanks everybody for listening. Take care and keep doing what you can to build Strong Towns.