Tipping points for housing-deficient areas

In a housing deficient area like here in the San Francisco Bay region, it's wrong to simply say any new house anywhere is a good thing.  This is true economically as well as environmentally - a potential house location 10 miles due east of San Jose might sound like a quick jaunt away from Silicon Valley, but that would actually put it in a place with no roads, no services, no groundwater in reach, and no geologically-safe spot to build on.  It wouldn't sell economically, as well as being bad environmentally.

Alternatively, a potential high-density housing location near a train station might appeal to environmentalists but seem too risky economically.  There are different tipping points for different issues, and there's increased opportunities for cooperation where they overlap.

So here are some ideas:

Transportation:  adding housing in an area that has little future prospect to use public transit is unlikely to help the transit situation.  Transportation goes through a tipping point above a certain level of density that can use transit effectively.  Any increase in that density above that point makes transit even more cost effective.  Proximity to good transit also creates a tipping point, where any increase in density is beneficial.  Inner suburbs might be the tipping point level of density for transportation.

Walkability:  making a low density residential area slightly less low-density isn't going to make the area more walkable, it just puts more cars on the roads.  On the other hand, adding more housing to an area that is already walkable means that more people will be using the local stores, making them more financially viable.  The tipping point is when an area is already walkable, or likely to become walkable.  Urban townhouses and brownstones are the tipping point.

Natural open space:  at first glance, there doesn't seem to be a tipping point:  any increase in density decreases open space and habitat potential.  Even a tiny yard might offer potential habitat that an apartment block wouldn't.  However, dense housing removes pressure to construct less dense housing somewhere else. And habitat values for common wildlife decrease rapidly once roads and structures take up more land than natural habitat.  Low-density suburbia probably constitutes a tipping point for natural open space.

Farming:  farming may be even more sensitive to density than natural open space.  Rural residential levels of density, one house per acre or even less, probably constitute a tipping point for farming.

Financial/economic:  up to a certain point, more is better.  Two homes on 50 acre lots are worth more than one on 100 acres.  A tall apartment building might be more risky and appeal to a smaller market segment than a small condo building, however.

So what's the upshot of all this?  From the environmental perspective, somewhere around low density suburbs, maybe two houses per acre, is the point where almost all environmental incentives are to avoid increases in density - in areas at that level of density or less, environmental groups should oppose efforts to add housing.  Somewhere around the level found in inner suburbs, maybe 10 houses per acre, the environmental incentives are to support increases in density and environmental groups should support policies that increase housing.  

And from the inner suburbs up to city areas where multi-story apartments are possible, the environmental and financial interests are closely aligned.

This is all a simplification, of course.  Dense housing in the wrong place is just a mistake.  Natural open space in an urban area near a stream can also be very beneficial given the importance of stream environments.  But it does point to areas of overlap between environmental and developer interests.

-Brian

"To protect City and minimize fiscal impact, a revenue guarantee should be included in the proposed development agreement"

The headline is from a fiscal analysis presentation to Palo Alto City Council today by the experts it hired to analyze the fiscal impact of the Stanford Medical Center expansion.  The idea is to ensure the risk of insufficient revenues from the expansion is transferred away from taxpayers and to the applicant, Stanford. (Also discussed here.)

This idea is striking because we proposed a similar thing in Coyote Valley, where a ridiculous fiscal analysis assumed steady growth in housing values and therefore rosy revenues.  We suggested the developers bear the risks if things somehow didn't work out.  The whole project broke down before we could see if developers would put their own money where their mouths are, but it's interesting to see someone else come up with a similar idea.

-Brian Schmidt

"...when you look at (home) prices relative to income, it's completely insane."

The quote above is from an economist saying existing home prices have to fall because they're priced out of reach of people's income.

This just further supports our argument that Coyote Valley's Draft Fiscal Analysis was fatally flawed in assuming housing prices (and resulting tax revenues) will go up 2% faster each year than income, every year for 57 years. The economist linked to above says the ratio between housing costs and income is already unsustainable. To think this unsustainable ratio could be made much, much worse, and then sustained at that level for decades is simply ridiculous.

This is why we think it's wrong for San Jose to hire analysts that were already selected and hired by developers to do an analysis of the developers' project.

Coyote Valley at San Jose City Council and in Wikipedia

I was at San Jose City Council late last night, trying to save the riparian zone of Calabazas Creek from a Duckett Way development that was using loopholes to bust the City's 100-foot buffer policy (we were mildly successful).

Since I was there anyway, though, I took advantage of the Open Forum to announce that City staff had informed me that they didn't plan to respond to our criticism of the Draft Fiscal Analysis for Coyote Valley. I said it was critical that the City respond, because the analysis was flawed and the project jeopardizes the City's finances. We'll see what happens, but at least the City Council now knows about it.

And thinking about the subject made me decide to update the Wikipedia entry for Coyote Valley to include the fiscal analysis issues.

We're getting the word out!

-Brian