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The Whole Economy and Values Chapter 1 -- Transportation Pricing Reform: Paying Directly for Driving Carism Definition Specific Transportation Pricing Reforms 12 topics Involving People

Creation Care for Neighborhoods:

The Quest for Bayview VillageSherman Lewis, PhD

Copyright 2013 Sherman Lewis Smashwords Edition

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re-hard work of this author

The Whole Economy and Values

Chapter 1 Transportation Pricing Reform: Paying Directly for Driving

Carism

Definition

Specific Transportation Pricing Reforms

12 topics

Involving People in Parking Policy

Mode diversity and the locational decision

Density details

Suburbia, a wonderful failure

Six goals for neighborhood systems

Affordablity; Sustainablity; Mobility; Health/Saftey/Security; Design; CommunityLow productivity consumption

Smart Growth

Functional density

Grocery Store Trip

Short Corridor Systems

Optimal Building Design

Floor plans

Water and landscaping

Energy

Analysis and assessment

Chapter 3 Going Dense

Old and dense in Europe

New and semi-car free in Europe

Old and dense in America

Relevance for other places

Chapter 4 A Freeway Dies, An Idea Is Born

Chapter 6 Project Description

Site, Properties, Conditions

Geotechnical Engineering

Site Plan

Bayview Village Center

Green Building Specifications

Chapter 8 Green Energy

Green Energy Cost

Green Energy Specifications

Chapter 9 Green Water and LandscapingChapter 10 Green Mobility

Walking and cycling

The Village Bus

Parking

Car share/rental

Other mobility

Travel time and cost budgets

Chapter 11 Green Jobs and Economy

b City of Hayward General Plan and Zoning Ordinance

c C.3 Provisions

d Green Building Code

e Inclusionary Housing Ordinance

f ADA and Fire Requirements

Related Evaluation Systems

LEED and Green Point Rated

International Living Future Institute

Litman

Chapter 16 Markets and Marketing

Supply and Demand

Market Research

The Market

Buyer Profiles

Pricing and Comparables

Rent, Lease to Buy, Buy

Buying Energy

Point of Sale Choices

Transitional Parking

Advertising and Buyer Education

Initial Services Implementation

Chapter 17 Financing

Financing

Chapter 19 Risk Factors

Chapter 20 The LLC Option

The LLC Option

a Investor accreditation

b Investors and the LLC

c The Board of Directors

Bayview Village needs financing Unless an investor takes it seriously, it is not going

to happen The Hayward Area Planning Association, which I lead, has been planning the project for ten years and has spent over a year seeking financing, without success HAPA seeks someone to take over the project and work with us to make it happen

At a few places in this book, I mention what I don’t know––a Beta version comment This eBook is a draft for electronic circulation All this work needs to be made available now, yet also needs more work Further, an auction of an important property within the site is being sold at auction on March 13, and the position of the new owner will be of major importance for whether Bayview Village succeeds or fails

I do not have connections to investors or developers I suspect that the few hundred parties I have sent information to have not responded because they don’t do anything close to what HAPA is proposing, their corporate investment policy is not flexible, they

have a short-term, three to five years, time horizon to get their money out, real estate development is in a major slump, the project is too big for them, the property is not on the market yet, they are not looking for projects, or, if all that were not enough, the proposal has very limited parking, only 100 spaces for 1,000 units

It has been hard to figure out who to ask to invest, given the unusual nature of the project Organizations like Smart Growth America, which has some developer

involvement through its LOCUS program, have not helped, and are not set up to help Many financial firms invest in existing real estate but not development Firms that

develop commercial properties don’t do residential Large residential developers

concentrate on large car-oriented subdivisions; a few are doing smaller condo projects Affordable housing agencies depend on tax subsidies and do not do market-oriented projects Bayview is much bigger than their usual projects

HAPA has tried going outside the development investment network to reach other kinds of investors Most never answer my email, mail, or calls Some have told me they like the project but never invest outside the area they know about A few say, in effect,

“Go away.” I suspect they may see Bayview Village as just another real estate

development, or think it won’t work because of the lack of parking, if they get that far in looking at the idea

I need to do more to get attention, to climb over the wall that seems to make

Bayview invisible to those who should think about it, i.e., green patient investors

Hence, this book You will find the project carefully thought out, but that does not get us all the way there The crucial ingredient for investors is intuition, that extra

entrepreneurial insight that comes after extensive knowledge

The plan of the book starts off with a philosophical non-chapter, The Foundation, discussing creation care, evolution of thinking, and the whole economy and values For

a summary of the proposal, go to Chapter Five

Chapters One and Two have policy analysis that lay out the framework for

sustainable neighborhood development Such development involves six systems and goals, and how they reinforce each other to achieve the goals of each system:—

affordability, sustainability, alternative mobility, health and security, good design, and community

Chapter One covers Transportation Pricing Reform, the biggest missing policy to create a level playing field in the whole economy Chapter Two focuses on

neighborhood systems, short corridors, and functional density Chapter Three covers existing dense neighborhoods, consisting of certain older European neighborhoods, newer European car-free neighborhoods, and certain old American neighborhoods.Chapter Four covers the unusual historical circumstances that stopped an ill-fated freeway and saved a large property near California State University East Bay in

Hayward (CSUEB Hayward) long enough that it may be possible build a new,

progressive neighborhood system

The main part of the book starts with a summary of the Bayview Village plan in Chapter Five, then Chapters Six to Eighteen cover various aspects of the plan These chapters should be of interest to those considering investing in the land or the project, those who are planning a sustainable community and would like specific ideas about how to do it, and those with an interest in the environment and sustainable cities

Chapters Six to Eighteen cover a myriad of details on many subjects relating to Bayview: 6: project description, 7: buildings, 8: energy, 9: water and landscaping, 10: mobility, 11 jobs and economy, 12: design, 13: community, 14: regulations, 15:

evaluation, 16: markets and marketing, 17: financing, and 18: staging

The Foundation

While this book is primarily about how to implement a sustainable neighborhood using a specific example, those ideas result from a framework of supporting ideas This introduction covers ideas fundamental to the whole sustainability movement, using three major topics Creation Care covers the religious or spiritual basis, the deepest, most profound feeling and thinking we can do about life and existence in general This topic is strenuously avoided by secular academics, but I want to make clear that our eventual discussion of details springs from the most important issues of our age or any age Evolution of thinking discusses how our thinking about how we think has been

revolutionized by scientific discoveries about our brains, the biological basis of culture, the power of culture to override facts, and how culture frames policy The whole

economy and values discusses how some cultures value monetized transactions as a

dominant reality, other cultures value non-monetized reality, both sides fail to recognize the arbitrariness of their values, and the need to integrate both values

Creation Care

Creation Care is a term used by religious progressives who care about our

stewardship over the earth which God, or some similar source of meaning, created for our enjoyment and entrusted into our care, with the long term enjoyment depending of the quality of care Secular environmentalists and other progressives use a different kind of language for similar underlying ideas, often creating a gulf between religious and secular progressives

The term “creation care” is not used by secular environmentalists, but their term,

“environmentalism,” does not frame the issue in a compelling way Secularists can be uninformed about, and uneasy with, “religion,” and often can’t tell the difference

between religious progressives who use science, as opposed to doctrinaire ideologues who command the attention of a benighted mass media The media covers the zealots and not the poets, sectarianism and not spirituality, the conflicts that divide us and not poetry than can bring us together

In California, religious progressives have a coalition, California Interfaith Power and Light: “A group of religious groups that seek to respond to global warming through the promotion of energy conservation, energy efficiency, and renewable energy.”

(http://interfaithpower.org) Their leaders:

Let me also introduce Richard Cizik and his New Evangelical Partnership for the Common Good He says, [I believe] “that ultimately evangelicals will themselves be persuaded by the evidence of the argument, and people change their minds I changed

my mind, and I used to be part of the group of people that are advocating for cutting Title X funding I changed my mind because the evidence indicated that I needed to change my mind.” Title X funds services like Planned Parenthood Cizik was an early advocate for creation care, which, for him, is of one piece with science, climate change, population stabilization, status of women, health care, reproductive services, synergy among progressive policies, and Christianity (http://grist.org/climate-

energy/evangelical-leader-says-we-need-family-planning-to-help-fight-climate-change, Grist, Dec 10, 2012)

With the human habitability of the earth at stake, how we talk about sustainability needs to embody its emotional centrality, not just its rational pragmatism, in order to inspire the deepest motivations of a rising generation with a transforming purpose Hence, I use the term creation care to frame the issue in stronger spiritual language Framing is important Poetic language, secular or religious, reaches other people outside the choir Poetic language educates and persuades others using words that are meaningful to them Too often, environmentalists and secularists use a language of facts, analysis, and pragmatism that fails to inspire Lots of facts are, in fact, my

personal predilection, as most of this book will prove (We can’t all be John Muir.)

The challenges of creation care cover a wide range of policies, a number of which come together in neighborhoods Neighborhoods as social places get a lot of attention, but hardly any attention as systems needing a lot of creation care This needs to

change Neighborhoods are the major missing ingredient in the debate on creation care and sustainability Changing how neighborhoods work is essential for slowing and reversing the environmental devastation of the earth, for gross domestic happiness (also known as the economy), and for social equity

HAPA is looking for investors who want to invest carefully but also want to make a difference on one of the most important challenges facing humanity Bayview Village is not just about a real estate investment; it is about entrepreneurship

Evolution of Thinking

Humanity is in a bit of a bind Our lop-sided skill set is really good at analysis and tool use, which has allowed us to revolutionize technology On the other hand, our brains as evolved to date are not really good at moving beyond tribalism, broadly

defined as the us-versus-them mentality Tribes here include corporations, nations, sects, and other reasons for dehumanizing, hating, robbing and killing other people This genetic predisposition, which is as natural as cooperation, makes people compete with each other in “tribal” groups, in ways often devastating to the tribes Their

competition in today’s world is devastating to nations, and, with atomic weapons,

possibly huge parts of the earth The path away from nuclear war, climate change, and other environmental devastation must be to reduce tribalism or, much the same idea, to expand the tribe

Tribes in the old-fashioned sense still-exist off in isolated rural and wild areas, are politically weak, and suffer at the hands of the big tribes, with their nationalisms,

corporate power, agribusiness, mining, ethnic cleansing, mega-capital mega-projects, and various kinds of oppressive dictatorships Those little tribes, which are sustainable

by nature, and those of us in the modern world who are trying to get there, are being overwhelmed

The thinking styles of our species naturally spread along a spectrum from

doctrinaire ideological thinking concerned with narrow values at one end, to pragmatic, scientific, tolerant, complicated thinking concerned with many values at the other

Doctrinaire ideological thinking as used here does not refer to various philosophies of government, opinions, and values, but to asserting one’s own facts unsupported by the rules of evidence and science The Pope once had more power than Galileo, and today Grover Norquist has more power than pragmatic moderates Historically, the Age of Enlightenment did not achieve much in society as a whole The enlightenment went only

a little bit forward, with too few people and just the start of science

Ideological thinking is not related to intelligence or information There seems to be some period of adolescence and early adulthood when individuals acquire the interests that shape their careers and social action Some individuals internalize an ideology of some kind, grab the information that reinforces their ideas, and ignore the rest, often with some, if selective, intelligence Ideologues by nature can out-yell the pragmatists Their advocacy can pull the uninformed into their camp along the fault lines of ignorance and fear in our culture

In current American culture there seem to be three ideologies creating big

problems: 1) an anti-science, religious fundamentalism intolerant of personal freedom; 2) anti-government feelings, from the Tea Party to Wall Street, opposing regulation protective of workers, consumers, and the environment, opposing to fair or adequate taxes, and using magical thinking about fiscal deficits; and 3) neo-conservatism,

proclaiming American exceptionalism, supporting militarism and aggression, and

claiming to advance democracy while advancing American political and corporate

power

Research by Dan Kahan and others finds that for some personalities, ideological commitment funnels thinking into highly selective use of facts and non-facts to support a point of view, with intelligence tending to make the distortions more severe This focus

on highly selective facts blinds people to the pressing environmental crises taking place today Ideologues are more interested their own “facts,” not the facts that will create a long-term environmental benefit to the community We do not yet have much useful scientific understanding of the social and physiological bases for this kind of thinking (It also exists on the left.)

Speaking for the pragmatists, we try to understand science When the vast majority

of hundreds of scientists from all over the world tell us much the same thing for about 20

or 30 years, we tend to believe them When all the evidence from the earth confirms the science, we tend to believe it It is hard for us to deal with the ignorance of the many and the bias of the ideologues A few skeptics are jeopardizing the future, not of the planet, but of its human habitability for their own children Unfortunately, so far, science understands the earth better than it understands why we think the way we do about it.The human genome has inertia and is not going to evolve much, if at all, in a time frame we can understand The human historical trajectory, however, has been more defined by culture than by genes, and that culture is evolving rapidly The challenge we face today is to have the quality of social thinking catch up with the advancement of technological thinking, to reduce extreme ideological thinking, and to enlarge the tribe Some of the answer is probably in how we raise our kids before they get to grade

school, because so much of culture has been created by then, in billions of growing and

connecting brain cells, and may relate to some predisposition to later ideological and tribal thinking vs pragmatic and empathetic thinking

While ideological thinking characterizes much of our politics, mainstream culture is equally important, long on habits and short on knowledge American culture gets in the way of achieving the more important American values embodied in Bayview Village

A prime example is global warming James Hansen’s testimony to Congress in violation of White House orders in 1988, the creation of the International Panel on

Climate Change also in 1988, and Al Gore’s Earth in the Balance of 1992 mark a period

when wide spread policy concerns among scientists and environmentalists broke into the mainstream of policy debate There is no scientific debate on major issues, but effective policy has been blocked by vested fossil fuel interests, anti-science ideology, media complicity, Republican party partisanship, and public ignorance Forests burn, droughts get longer, storms increase, the oceans warm, rise, and acidify, and most Americans still don’t get it Internationally, given the failure of the Earth Summit in Rio in

2012, things are not getting any better worldwide

As the political situation deteriorates, the earth does likewise Most recently, an

article in Nature stated “Localized ecological systems are known to shift abruptly and

irreversibly; from one state to another when they are forced across critical thresholds Here we review evidence that the global ecosystem as a whole can react in the same way and is approaching a planetary critical transition as a result of human influence.” Human “ ‘forcings’ far exceed, in both rate and magnitude, the forcing evident at the most recent global scale state shift, the last glacial-interglacial transition.” (David

Roberts, “We’re about to push the Earth over the brink, new study finds,” Grist.org, June

7, 2012, David Perlman, “Close to ‘tipping point’ of warming,” S.F Chronicle, June 7,

2012)

The scientific consensus is way ahead of the policy consensus, yet often behind the actual pace of climate change For the first time in geological history, a species by its own conscious decisions is ending one epoch, the Holocene, and starting another, the Anthropocene It doesn’t look like it’s going to work

Reinforcing the need to reduce greenhouse gases (GHG) is the ambiguous,

complicated emergence of peak oil (http://crudeoilpeak.info/global-peak has excellent

data on the past, less certain projections for the future) The ratcheting upward of oil prices increases efforts to extract even dirtier oil, to risk the oceans even more, to mine more coal, and to fracture substrates for relatively cleaner natural gas, none of which really works long term as well as non-fossil alternatives Newly and rapidly growing economies demand more oil, and conventional oil seems likely to have peaked

Alternative energy like wind, photovoltaic, and thermal are expanding, and energy

efficiency, also known as “nega-watts,” has increasing policy maker, if not popular, recognition What is missing is the role of land use, transportation, transportation pricing reform, and urban systems

In 2010 the International Energy Association announced that peak oil may have occurred in 2006 The price of gasoline has been, and is likely to continue to, ratchet up Most Americans, they will continue to buy gas as if there were no tomorrow and blame politics, oil companies, and speculators for a problem inherent in the earth’s crust The timing of the action of the ratchet is unpredictable, but it is likely that some price spike will occur during the build-out of Bayview Village and that it will increase sales

The most effective policy to reduce GHG would be to put a price on a “bad,” carbon emission, reflecting its true cost The carbon tax swap should start at a moderate level, enough to change markets but not excessively disrupt the economy The disruption should not be worse than the disruption now being caused by the lack of a tax swap The policy has to be durable enough to affect long-term planning by investors, or, in other words, strong enough to deter them from using political contributions to try to reverse the policy Taxes on “goods,” such as labor (social security taxes and benefits), should be correspondingly reduced Government should not try to pick winning

technologies, but pay attention to sectorial impediments to emerging businesses The swap level can increase as alternatives take hold A major result would be to change neighborhood systems Economists concerned with climate change and whole economy productivity support a carbon swap; the average American, not so much, even though the puts and takes of the swap have no net impact on the family budget

A carbon swap would affect one of the most important and politically sensitive

prices in the country, gasoline We don’t just give our cars secure, free places to sleep

at night, close to our own bedrooms; we don’t just use our cars a lot without thinking

about it–––we have a culture of car dependency, car subsidy, and degradation by car This kind of thinking, which can be called “carism,” automatically leaps to the conclusion that something like Bayview Village is against cars Not so Bayview accommodates much car use, yet provides comparable mobility using a fundamentally different

In the US, the Blue Green Alliance (http://www.bluegreenalliance.org/) is bringing blue collar workers and green environmentalists together to increase the economic success of reform Van Jones has started his own group, Rebuild the Dream, as have

Al Gore with The Climate Reality Project http://climaterealityproject.org and Bill

McKibben with 350.org at http://www.350.org/en These new efforts add to the new web-based groups like MoveOn.org, older environmental groups like the Sierra Club, Greenpeace, Ocean Conservancy, Population Connection, and the Democratic wing of the Democratic Party, all creating a solid base for, hopefully, more political influence (More of my musings are at http://www20.csueastbay.edu/class/files/docs/Emeritus

%20faculty/sherman-lewis-2.pdf.)

The costs extreme ideology and carist culture are already high and are likely to climb higher Human thinking so far is not evolving fast enough The creation care movement has not yet incorporated neighborhood systems, and needs to Progressives focus too much on cars and electricity, and too little understanding of the role of

neighborhood systems

The Whole Economy and Values

“Whole economy” is a way of measuring the economy using both money and the things that money doesn’t measure Better economic analysis can provide a unifying frame of reference for many problems Most of the time, when we say we are talking

about the economy, we are really talking only about the money economy We leave out social and environmental costs

The whole economy includes values not monetized in market exchanges, and uses more than money to measure welfare The obvious problem is quantification To get started, whole economy analysis has to make heroic assumptions, but they are really no more heroic than money thinking Money economists make assumptions that they are generally unwilling to admit or examine, such as using money to measure value Money accounting has value judgments; it is not objective For example, when spending on insurance and crime go up, the GDP goes up When a parent stays at home, raising self-confident, educated, well-behaved, curious children, the GDP does not go up

Which is more important?

Still, the money economy is a good place to start for defining the whole economy Then we need to add in the rest Already, analyses of nature services, pollution costs, and cost-benefit have often found interesting ways to quantify some of the whole

economy Similarly, the Genuine Progress Indicator (GPI) applies puts and takes to Gross Domestic Product (GDP) to estimate welfare See

http://en.wikipedia.org/wiki/Genuine_progress_indicator

Micro-economic analysis and business accounting use an elegant system of income statements, assets and liabilities, and changes in financial position, but I’ve not seen this system applied to GDP thinking, let alone asset values based on value judgments about welfare in the whole economy An input–output models and other GDP models, while hugely complex, are not yet good enough They need to be developed so that money economists and whole economists can get on the same page, or at least in the same book

Value judgments, hidden in GDP thinking, become obvious in whole economy

analysis because non-monetary values must be quantified, necessarily a subjective process Understanding the whole economy requires environmental and social values to

be translated into monetary equivalents There could be two or more versions of the whole economy reflecting differences in values For example, those who value

biodiversity and wilderness would give it much more weight than those who don’t Value judgments are applied according to science and fact, so climate skeptics and

creationists cannot be part of the debate Science does not have to be perfect to be the best referee.

The non-monetary economy needs to be integrated into complex macro-economic models Such models will do better than GDP in measuring where we stand, and also help estimate price changes that could convert some non-monetized values into a price They could even test how the market would respond to whole economy prices, shifting the economy towards real growth by replacing fossil-based, waste-based, and other systems that cost more than they benefit

The whole economy can decline while the money economy grows Sustainability requires “growth without growth”: there is no reason the money economy cannot

continue to grow in ways that grow the whole economy, while the negatives decline It is not a question of reducing consumption, but changing consumption to be sustainable It

is not a question of the money economy versus the environment, but of integrating the two It is not a question of choosing between human needs and the environment, but of saving the environment that supports humanity, materially and spiritually

Life in general on earth is not threatened, just human life, which is already seeing lives lost to environmental degradation Looming, unknown tipping points of reduced carrying capacity lie in the future A tipping point is when an accumulation of small changes causes a larger system to change even faster Carrying capacity is how much life a given ecosystem can support Sometimes, if that capacity is exceeded, there are mechanisms, like die-offs of an excessively high population, that can restore a balance, but also carrying capacity itself can be degraded in ways for which there is no practical recovery

We need a Dow Jones for the whole economy Quantification involves balancing a value on nature, biodiversity, and wilderness, with a value on the human economy, and balancing the goods and services of public and private sectors, with a value on social justice Similarly, quantitative estimates are needed for judging a range of policies to achieve our values—education, regulation, services, taxes, and market pricing Our ability to make estimates is enhanced by computer modeling, so long as it is continually trying to reflect the whole economy

Environmental and social costs need to be quantified, involving the uncomfortable process of revealing the value we, unconsciously and covertly, place on human life All the apples need to be compared with all the oranges, expanding how the money system does it already

Let’s take the example of auto dependency to transition to the next chapter What whole economy factors could be added to those already monetized? Much has already been written on this issue, on the underpricing of auto use Todd Litman’s figure on the issue has 15 columns of costs, of which only two are paid directly—vehicle ownership and vehicle operation

Source: Todd Litman, If Health Matters Integrating Public Health Objectives in Transportation Planning, Victoria Transport Policy Institute, 26 July 2012, p.24, http://www.vtpi.org/health.pdf

The major policy for getting markets to consider non-monetized value is to change prices, to be discussed Chapter Two, Transportation Pricing Reforms This topic and dense neighborhoods are the analytical basis for the details of Bayview Village

Chapter 1 Transportation Pricing Reform: Paying Directly for

Driving

Car users pay for some of their costs directly, out of pocket, but many, perhaps most, of their costs, are paid indirectly The most exact term for this is “indirect pricing,” but this discussion will use the term “subsidy,” which is not strictly accurate but is more commonly understood Cars in the US are subsidized, billions if not trillions of dollars’ worth, in many ways: in prices, wasted time, and non-monetized values

More honest market prices would improve productivity and the economy, reduce non-monetized costs and thus increase welfare, and change over time the way the urban system works An urban system is land use, transportation, and relevant pricing combined Land use and transportation are two sides of the same coin, and largely controlled by transportation pricing In general, urban systems range from dispersed

auto-dependent systems to dense systems that mostly use non-auto modes

Transportation Pricing Reform is an essential policy for the gradual conversion of

subsidized, high-cost, low-quality car neighborhoods into low-cost, high-quality, transit and walking neighborhoods Transportation Pricing Reform over time would reduce traffic and parking, speed up transit, and allow redevelopment for social uses, all of which move a neighborhood toward functional density Portland and New York City, for example, seem to have the most willingness to restrict parking in favor of social uses The most aggressive parking reduction in Portland is at the micro-scale downtown New York City tries to hold parking down for congestion reasons, especially on Manhattan Pricing reforms also increase free markets and economic freedom using market choice rather than government directive Pricing reform is, then, both a tool to achieve policy goals and a value in and of itself

Personal choice, education, and regulation can play a role, but pricing reform is more important

If transportation pricing reform were in place, developments like Bayview Village would be the norm However, under current pricing, it is still uncertain if Bayview will even be possible

Efforts to deal with car dependency range from relatively small but politically

feasible steps to policies that would be effective but are not yet feasible politically

Transportation Demand Management (TDM) includes a range of small steps and,

sometimes, bigger steps that show what can be accomplished, examples of which will

be mentioned below The cause of the political problems is the way Americans

understand cars, aka carism

Carism

A major cultural problem is automobile dependency and the thinking that supports it Carism is the ideology that supports auto dependency Carism is largely unconscious, a cultural assumption that much car use should be treated as a public good, not a market good

Carism is an unspoken part of the fabric of everyday life American culture stands in the way of seeing the problem as a whole We are inured to its many and diverse costs, and practical alternatives are hard to find The media generally do not report on costs

already sustained, nor on what can be done Auto accidents, for example, are just accidents, not part of a system that needs further change Too many people see

droughts, floods, and storm damage as human-interest events unconnected with

lifestyle and our economic system

Pricing reforms go against the grain of American culture of “freeways” and “free parking.” In theory, Americans favor free enterprise and limited government, but in practice, for their cars, they support big government, socialism, and “tax and spend.” Even environmentalists, who lean to regulation more than markets, and businesses, who claim to support markets, tend to oppose, or be unaware, of pricing reforms Yet such reforms remain the most cost-effective solutions to the many costs of car

dependency, oil dependency, and market distortion The perception that such reforms have more costs than benefits is directly opposite from the truth Politically,

Transportation Pricing Reforms are seen as increased costs, while the costs of lack of reform, and benefits from reform, go unnoticed

Most transportation professionals understand the efficacy of pricing, yet for political reasons and to keep their jobs, continue to administer a failed system

Definition

Transportation Pricing Reform in general means adjusting a monetary price to reflect its cost to the whole economy and create a market incentive to change behavior gradually, with no significant economic disruption Drivers pay more directly for the costs of their driving; other costs are proportionately reduced, and incentives for

efficiency and welfare are created “Adjusting a price” should be interpreted broadly; it can include a tax that affects a price, or reduction of a subsidy, or a time delay for inefficient vehicles to speed up efficient vehicles

Pricing reform can be compared to regulation for influencing behavior Regulation exists when there is a strong social consensus to sanction certain kinds of behavior Other kinds of behavior may be considered undesirable, but lack enough consensus to

be regulated Undesirable behavior can be reduced by increasing its price, that is, pricing reform

Pricing reform is often more difficult than regulation Pricing reform may involve a small price, but it affects a large number of people at once, mobilizing hostile opinion

that focuses on the price and not the benefit Regulation can be easier because it

usually affects a single industry that has been demonized for its pollution or other harm, and the immediate impact of the regulation is on the industry The public can pretend bad guys are being punished and that the cost is not being passed on, but has to be paid out of profits, that is, by magic Regulation approximate pricing reform by

encouraging innovation to avoid the harm and competing industries to meet the need Government has a hard time raising and lowering a price based on demand, which comes second nature to business A government price, like an excise tax, is more likely imposed to discourage behavior widely perceived as bad or taxable, like smoking and drinking Government also has some success with fees for services, but since the

1970s this has not been increased to keep pace with inflation and fuel efficiency The gas tax, in fact, seems to have acquired some toxicity for politicians

Regulation, however, is often less economically efficient than market incentives created by pricing reform A reformed price reduces consumption of an item and thus its external costs; it helps alternatives compete on price, which in turn usually increases the use of the alternative, improves the alternative, and lowers the price of the

alternative The new price encourages innovation to find alternatives with lower costs to the whole economy Sometimes, regulation can achieve the same result by imposing a cost on externalities

Pricing reform is often perceived just as a price increase Too often, people look only at the elasticity of a given item, and believe that, if it costs more, it will sell less, reducing economic activity Certainly, that is the point of view of a company facing a regulation or pricing reform Similarly, some alternative that costs more may also be seen as an economic loss in the monetary economy A real understanding requires quantifying for the whole economy and looking at dual elasticities, that is, at the ability of

an alternative to compete better over time when it is more in demand

Specific Transportation Pricing Reforms

The many different specific transportation pricing reforms need to be linked as tightly as possible to the particular cost being internalized Some studies have lumped all the costs into a tax on gasoline, but this grossly oversimplifies the complexity of the situation, and in many cases a gas tax wouldn't work These subsidies and reforms

tailored for each are discussed here Then, we will look at some ideas most relevant for neighborhoods, such as zoning reform, unbundling, shared parking, market parking charges, mode diversity, and the shuttle and its financing Grocery store trip, discussed above, is part of TPR Grocery store trip is an odd label for a pricing reform, but has to

do with the conditions for functional density to support the walk trip in lieu of driving to a grocery store Transportation Pricing Reforms in Bayview Village will be discussed in more detail under Green Transportation and Mobility Beta version comment: I did this research several years ago and have not updated for new data

The major categories of subsidy, or indirect cost, and reforms tailored to the

a Vehicle and road pollutants

i Air pollution: hydrocarbons (HCs), nitrous oxides (NOx) (HCs and NOx when cooked by sunlight form ozone [O3] or smog, which damages organic matter), carbon monoxide (CO), sulfur oxides (SOx), particulate matter (PM10, PM2.5), air toxins

ii Stratospheric ozone: chlorofluorocarbons (CFCs), used in car air conditioning fluid and air bags, escape into the atmosphere, rise into the stratosphere, and catalyze useful ozone into O2, which allows more ultraviolet radiation to reach the earth’s

surface, causing sunburn and skin cancer

iii Global warming/Climate change: CO2, water vapor, CFCs, NOx, and pavement increase the already significant warming of the earth’s climate.

iv Water pollution of surface and ground water by cars from tire dust, brake dust, fluid leakage, oil dumping, and litter Old lead from before removal from gasoline Motor vehicles: Nitrous oxides and zinc from catalytic converters; metal particles and other toxics from grease, anti-freeze, coolant, other leaking motor fluids; rust particles and paint particles from auto bodies; rubber, steel, and zinc dust from tire wear; asbestos from old brake pads, and copper, lead, and zinc dust from brake pad pollute rain water Waste motor oil is illegally dumped into storm water inlets

v Solid waste: waste tires, batteries, car parts, junked and abandoned cars, and car-based litter and dumping

vi Noise pollution: monetary damage and quality of life costs

vii Vibration damage to nearby buildings from ground shaking by traffic, heavier vehicles in denser areas

viii Pavement damage: increased storm water runoff causing soil erosion, local heat pollution, reduced groundwater recharge, land contamination for future reuse

b Externalities by car-related industrial, commercial, and construction

activities supporting car use

i Vehicle and auto parts manufacture and related mining and transport

ii Petroleum industry operations: exploration, extraction, transport (oil spills),

v Other road maintenance

vi Abandoned land (bases, brown fields) contaminated by vehicles and vehicle support activities by military, industrial, and other users

c Damage from pollution:

i Damage to human health and mortality, especially to those with respiratory

problems and children, e.g., asthma, those close to heavy traffic, those inside vehicles, and by the general population on polluted air days (4.5 percent of health care costs -Devra Davis, When Smoke Ran Like Water (Basic Books, 2002, p 103; $55B for US -Mark Delucchi 1999 in Tamminen p 250; $3B/year smog costs San Joaquin Valley -Janet Wilson, “A Valley’s Smog Toll Tallied,” Los Angeles Times, March 30, 2006)

ii Occupational health and safety issues for oil, auto, road, and other workers and their families

iii Corrosion of building surfaces and materials, e.g paint, by smog, acidic

deposition, and particulates (grime)

iv Agriculture: crop damage, lower crops yields from air pollution and global

warming

v Forests: forest damage, slower forest growth or forest death, forest fires due to global warming and ozone

vi Aesthetics: visibility

vii Wildlife: road kill, direct car impacts through collisions with cars or cars running over small animals, and fragmenting habitat and facilitating land development also reducing habitat

viii Polluted water damages, cost of water treatment, adverse effect on fish,

recreation

ix Reduced water supply due to global warming

x Coastal erosion due to global warming

Many of these costs should be dealt with (and often are) on an ad hoc basis through improved design, specific regulations, and changes in practices, as appropriate for the externality

Carbon tax swap and ratchet

The major idea for most environmental externalities is a tax swap The swap idea is

to increase taxes on fossil carbons to reflect their real costs, and lower some other tax

to offset the increase and to prevent any windfall gain to government At the federal level, the swap could be with some combination of income tax and social security tax At the state level, it might be a reduction of the sales tax The tax on something harmful

would be matched by a reduction on something good, like income or goods For the average family, the extra spent on gasoline tax is offset by less spent on the reduced tax The only thing that changes is the price incentive to conserve on gas use and have more for other things (See details in my “elasticity illustration.”) Those who use more gasoline than average face a higher net tax unless they change their behavior; those who use less are rewarded Most low income persons are rewarded by a lower net tax

Of major importance is popular expectation of higher gas prices in the long term,

leading to locational decisions which restructure the urban system The locational

decision merits some discussion of its own, which will come below

The amount of price change should be strong enough to change behavior at a moderate pace but not so strong as to disrupt the economy more than business as usual The ratchet idea does this; it starts with a low swap level to get the institutions in place, get some acceptance, and avoid more than average disruption to the economy The tax would increase gradually to avoid disruption, like a ratchet The institutions to implement the price changes are easy to establish because the sources are easy to locate: coal mines, oil wells and refineries, and natural gas wells The swap would increase to affect the economy moderately, based on elasticities allowing competitive alternatives to grow Over time, the swap would reduce carbon emissions and

externalities related to car use to a level proportionate to the increased carbon cost Car impacts are correlated with gasoline use, with the exception of a small number of

electric vehicles

As a result, we can expect most drivers to make many changes Some are

relatively easy, like changing trips to closer destinations, chaining more trips together instead of taking separate trips, reducing optional trips, buying more fuel-efficient, less polluting cars like the new hybrids, and more renting or car-sharing Lighter weight materials, more aerodynamic design, and new propulsion based on biofuels, hydrogen, and fuel cells would reduce carbon emissions Some changes would take more time, such as owning fewer cars and changing mode to car pools, transit, walking, and

bicycles

Restructuring the urban system is not possible in the short run, but over time can change at about the same pace that created car-dependent suburbia Workers can

relocate where they live or change jobs; employers can relocate jobs closer to workers The ABC News poll of February 2005 found that 20 percent of respondents moved closer to work and 14 percent changed or left a job because of difficult commutes, just under normal circumstances

Some changes will take place over decades, such as the development of "car free" housing in walking neighborhoods closer to work and other destinations Developers can build closer to transit, closer to work and other destinations, and higher densities with less parking and more mixed use As transit demand increases, transit supply can increase, serving shorter distances with more riders As car traffic decreases, transit become more efficient, attracts more riders, and traffic decreases more These changes increase urban system efficiency and reduce external costs The economy is not

adversely affected; in fact, it becomes more efficient for the whole economy

There are, however, some ironies Conservation of gasoline would reduce

consumption, lowering revenues and requiring some increase in the gas tax to maintain steady revenues The tax could eventually reach the external cost, after which any increase would no longer be economically justified These are not problems, however; the reform is still a market-based solution which creates responsible but still free market choice based on honest prices

Other ideas might work better for other kinds of externalities Junked cars, for

example, are created at the rate of 35 million per year Many are exported to low

income countries where, being older technologies, they cause more air pollution If recycled, three-fourths of a typical old car can be reused, saving 1,134 kilograms of iron ore and 636 kilograms of coal The one-fourth that cannot yet be reused, called

Automotive Shredder Residue, consists of glass, rubber, plastics, non-ferrous metals, and fluids, and is usually dumped in a land fill Waste reduction can be increased

through internal company goals, industry discussions, moral suasion, regulation, and pricing incentives based on the cost of disposal Since 1990, Saab has reduced its use

of painting solvents by 80 percent The European Union requires car makers to pay for recycling of the hazardous waste from old cars Japan charges new car buyers $175 to dispose of the residue and recover CFCs Japan plans to raise the car recycling rate from 80 to 95 percent, and the European Union, from 80 to 85 percent

On a smaller scale but still important is the direct relationship between paved area and increased storm run-off and increased pollution of storm water The loss of

groundwater recharge and amount of pollution can be quantified and the monetary cost can be estimated A pollution tax could be levied by regional water quality agencies on land owners based on paved area Public owners like cities would also pay, using the property tax and the gas tax The tax could be used to build storm retention ponds to hold surges of rain water for treatment in wastewater plants Such a tax could also be

an incentive to make pavement more permeable, to keep it cleaner, and to reduce the paved area, with measurable gains in water quality Reduced storm pollution would be the basis for adjusting the tax The tax could also include a summer heat-generation element because pavement can significantly increase hot air and air conditioning costs The problem can be measured well by satellites using infra-red cameras The tax would deal with one aspect of the heat-island effect of large cities Narrowing streets and using shade trees would reduce the external cost and, thus, the tax

Wildlife protection

Road kill is a small part of the much larger issue of subsidy People drive fast to save time, but often impose a cost to wildlife and even themselves Many people are injured or killed by collisions with deer or cattle

The problem does not benefit from a carbon swap, except indirectly from less traffic The problem does not lend itself in any simple way to market reform The victims can’t

be identified before the fact, and the culprits cannot be identified after the fact

The road kill problem is highly localized For the most part, nature just regenerates enough wildlife to maintain populations, with a dip in the census along the road, except for vultures and maggots The problem is found along only a few stretches of road and involves creatures of special significance like eagles and deer and wilderness areas My own experience was when I was a kid going to college My mom was driving me across Sardine Pass in Utah when a deer crashed down from an embankment on our right, hit the back right car door, and spun off the road on to the other side, down and out of sight, to an unknown fate, leaving some fur in a crack in the back door It took less than

a second, but it was memorable, and I carried the tuft of fur in my overcoat pocket for many years

The Audubon Society and Defenders of Wildlife care about this problem The dead include porcupines, armadillos, Florida panthers, deer, and caribou Cows probably don’t count as wildlife, but have the heft to impose a price on a careless driver The human costs include livestock, auto body damage, human injury, and even death A two year program compiling results of citizen observations of road kill in California and

Maine found 20,000 bodies

~~~~~

October has been a brutal month for Florida panthers

In just four days three of these critically endangered animals have been struck and killed by motorists The most recent death occurred October 9, when a three-month-old panther kitten became the 11th panther to be killed by a vehicle this year, and the 19th fatality overall

Florida panthers are some of the most endangered animals in the world

However, their fight against extinction is only becoming more difficult as housing and highway projects continue to slash and shrink precious habitat Collisions with motor vehicles are the leading human cause of panther deaths

As few as 100 adult panthers are left in the wild [10/16/2012 email]

~~~~~

The pricing reform may be a gas tax The use of the funds can be based on

statistics, wildlife science, and highway engineering Car-wildlife collisions cluster in hot spots The wildlife bridge in Banff National Park caused ungulate fatalities to drop by 80 percent New, high tech systems can detect large animals near roads and flash an LED light to warn drivers Properly designed fences and underpasses can help as well (p 18 Audubon, July- August 2012)

There is a small connection between road kill and neighborhood systems Mode shift in rural areas where wildlife is most threatened would reduce car traffic and road kill More demand for long distance rail and bus transport, revitalizing once dominant modes, would serve vacation areas and tourism Often, the rail head was not close to the hotel, and the lodge would provide a van to complete the trip I feel nostalgia for the old, great railway hotels and even stayed at one of the greatest, in Glacier National Park The success of the cruise industry shows that very slow movement in a high

density vehicle can be very successful commercially There may be some sea kill

parallel here, comparing cruise ships to thousands of small boats Once a year my family travels from the Bay Area to the Black Hills, and there is simply no rail or bus alternative despite the huge visitorship to Mount Rushmore It's too cheap to drive Incorrect market prices deny me the market choice I want

2 Congestion

Excessive congestion delay is a result of a poorly structured market that seemingly makes it worthwhile to waste time The average US adult spends an estimated 46 hours per year in congestion In congestion, drive-alones impose a cost in wasted time on those in higher occupancy vehicles, such as car pools and buses, which are using the road space more efficiently A car pool with three riders causes two-thirds less

congestion, and a bus with 20 passengers causes one twentieth less congestion

Capacity and Demand

The usual response to congestion is more highway capacity In any high demand corridor, widening the road usually does little lasting good The term “demand” is used here with its political definition, the number of people who want to drive a road without paying for it directly The other definition is what people want that they are willing to pay for This framing, part of carism, makes it more difficult to solve the problem

Traffic increases more than predicted by planners and computer models The

models do not consider land use changes induced by the increased capacity: the faster road brings undeveloped land further out into a commutable distance Developers get local zoning changed, sometimes before the highway is built, changing the assumptions used by the traffic planners and their models Traffic increases as home buyers go further out to optimize the value of the house versus the length of the commute,

resulting in longer, higher-speed commutes of about the same duration: the new road allows a commute of about the same elapsed time at a higher speed over a longer distance than the old road at a slower speed over a shorter distance

As employees move farther from their jobs, retail follows them, and then basic jobs, because, over time, the commute by car to a commercial center become too onerous and chokes off its agglomeration economies Employers need employees New highway

capacity supports car-dependent development further out, a process called

sub-centering It is all very logical, and all based on subsidizing car travel

congestion reduction strategies Current evaluation methods tend to exaggerate

congestion costs and roadway expansion benefits, and underestimate the overall term impacts and benefits of pricing reforms, public transit improvements and land use policy reforms The results indicate that more comprehensive evaluation can help

long-identify more efficient and equitable congestion

~~~~~

Research shows that non-auto modes can make a difference for maintaining the

competitive agglomeration economies of central areas Such centers can keep growing

by developing other, more efficient means of access using mass transit, buses, and bicycles In general, European cities have been more successful at this than American cities

Basically, increased highway capacity itself, in a situation of previous congestion,

induces more traffic by being underpriced to the users The increase in traffic over the projected increase is called induced demand It results from giving something away for

free, having a lot of people “demand” it, then giving more away, and people “demand” even more, resulting in even more congestion in the name of reducing it There are good reasons for having highways free to users, going back to the abolition of toll roads

in late medieval England, but in modern America there are reasons of economic

productivity and markets to shift high capacity highways from a public good policy to a market good policy

Induced restraint is the flip side of induced demand: closing roads does not just

divert traffic; it reduces traffic by increasing the price of congestion delay Very

interesting research has looked at road closings, and measured the reduction in traffic Typically, only a modest amount of traffic shifts to alternative routes, and most of it

simply disappears, similar to how increased capacity increases traffic with little change

in land use

However, it makes as little sense to keep closing roads as it does to keep building them Endless expansion eventually would have sparse traffic on new capacity, and continual closings would eventually have severe congestion costs Induced demand and induced restraint operate within a context of ample and sometimes congested capacity These concepts do not deal with how much capacity is enough, which requires

economics, balancing costs and benefits, which is turn is best done by properly

structured markets

Congestion as a price

Congestion delay can be seen as its own price, that is, as a substitute for a

monetary price If people endure the delay, it is a price they are willing to pay, the right price given the choices available Some congestion can, in fact, be more efficient than expanding a road Up to a point, congestion causes many sensible adjustments that prevent more traffic We see the congestion; we don’t see the would-be trips that are avoiding it People avoid congestion in many ways: a) changing routes; b) changing times of travel; c) choosing a closer location for the same purpose; d) aggregating trips

to get a bunch of errands done in one trip; e) changing mode to walk, bike, or transit; f) getting more done while in congestion, such as talking on the cell, texting, eating,

listening, getting dressed, grooming, and so on; g) carpooling to do business while traveling with the people in the car; h) carpooling to quality as a car pool in an HOV (High Occupancy Vehicle) lane; h) paying to drive in a HOT (High Occupancy Toll) lane; i)simply not making less necessary trips; and j) making locational decisions, discussed below

However, as congestion increases systematically and predictably, wasting time is just not an efficient method of resource allocation

Value of Time, Willingness to Pay

Increased capacity where there was congestion does have some benefit, but the question is whether it is worth the cost That question leads to another, compared to what? A cost can be assigned to congestion delay, and the cost compared to policies of doing nothing, building more capacity, having some congestion charge, and investing in

alternative modes The cost of more capacity needs to include not only the cost of the project, but also the cost of congestion delay created by construction of congestion delay caused by increases in traffic that restore the congestion at a higher volume of traffic

The cost of congestion delay depends on determining the monetary value of time, which can be estimated based on some estimated willingness to pay Surveys can ask

people what they think is the value, but the results are problematic Time wasted in congestion is hard to value because drivers are semi-voluntarily willing to spend their time that way Commuters accept uncompensated time as worth it to reach

compensated work For example, the Bay Area commute duration is longer than other metro areas because people are willing to spend more uncompensated time getting to higher paid work, and the region has above-average incomes

A more accurate estimate of the value of time can be derived from congestion

pricing schemes in Singapore, London, Stockholm, and Norwegian cities, which

typically charge for entering a congested central area Some estimate can be made from the Bay Bridge into San Francisco when the toll goes up and bridge use goes down Comparing driving time and transit time and comparative use can also give an idea

By far the most accurate measure of the value of time, however, is not an estimate, but what drivers do in fact pay to save time There is only one good case of such a

system, which uses dynamic tolling that varies the toll based on the level of demand

On Interstate 15 north of San Diego is an 8.5 mile stretch where the toll goes up and down based on real-time demand, with parallel lanes that are free The toll varies from

$.50 to $4.00 (David Brownstone et al., “Drivers' Willingness-to-Pay to Reduce Travel Time” for Transportation Research Part A, May 2002, www.uctc.net/papers/581.pdf)

Even here, though, it is complicated The many on the free lanes pay nothing, so

perhaps the value of time is some average for the whole corridor, those who pay and those who don’t

Some drivers may pay only occasionally to avoid being late to work or to avoid a

high cost of being late to pick up a child in day care, so the value of time varies for the

same driver, who sometimes will pay, and sometimes not The value of time does not

even correlate well with income, because low incomes cannot afford long commutes, middle incomes can afford the toll, and upper incomes may choose not to pay or can afford to live in quality housing closer to work

Congestion Pricing: HOV Lanes, HOT Lanes, Ramp Meters, Tolls

What is the best way to structure congestion pricing? Major polities include HOV lands, HOT lanes, ramp meters, and tolls

A freeway lane can be restricted, usually during rush hours, to HOVs, defined as

two or three persons per vehicle HOV lanes, however, reduce traffic on adjacent

mixed-flow lanes, initially speeding them up, reducing drive alone travel times, attracting more traffic to the mixed flow lanes, and over time increasing traffic volumes without reducing congestion HOV lanes also have a perception problem when used

inefficiently, greatly aggravating drivers in stop and go traffic who see an HOV lane with light traffic HOV lanes are really just another form of non-economic highway expansion

HOT lanes are different A HOT lane is an HOV which additionally allows single

drivers who pay a toll The HOT lane usually has a variable toll, although the charge may not be changed frequently in response to demand Like HOV lanes, HOT lanes can also reduce congestion on adjacent mixed flow lanes, but they tend not to be

underused, because the price, based on willingness to pay, is always low enough The revenues can be used for HOV and transit alternatives, with efficiency and equity gains Technologically, HOT lanes are now easy to implement The toll should be dynamic, that is, variable based on the level of demand moment to moment, as implemented on Interstate 15 in San Diego, mentioned above HOT lanes are still a second-best policy because congestion remains on the mixed flow lanes

Ramp meters are also a second-best answer Delay by a ramp meter is a

congestion charge in time instead of money, but tolls are more efficient Ramp meters are traffic lights on each lane of an on ramp or freeway that momentarily hold up traffic They can hold back extra traffic to prevent overloading a freeway and thus maintain higher speed for more throughput on the freeway itself Because the capacity of the freeway increases with less congestion, the wait time plus driving time may be less than the driving time on a congested freeway without meters On-ramp meters and main line meters are needed at points where congestion begins The San Francisco Bay Bridge is

a main line meter that works well to discourage drive-alones and increase car pools and buses Its success, however, should not be judged by the cars waiting at the toll booths, but by the invisible cars that are not there Ramp meters should have undelayed access lanes for buses and HOVs, which create an incentive for more car pools

Tolls Tolls do not apply to local streets and arterials Even with advanced

technology, there is no good way to charge, the overhead cost would be high, the

amount per trip would be very low, the volume of trips would be very high, and, unlike freeways, there is no way to deal with social equity problems Tolls would apply to

freeways, which have the major problems of long distance and congested travel

Demand-based tolls are the most efficient reform as they directly affect the problem Tolls and related measures can be calibrated to produce an optimal level of fluidity, balancing between occasional slowdowns and an under-used road Congestion pricing would be an efficient market to allocate resources: it eliminates serious time delay, uses road capacity efficiently, indicates if demand is high enough to justify more capacity, and provides the funds to expand capacity if really justified

Freeway trips can be tolled efficiently with modern electronic tolling technology which would charge based on level of congestion The technology is already in place in the Bay Area in the form of FasTrak, an electronic charging system on toll bridges The problem is political, not technical Congestion pricing would end major

congestion and, in fact, reveal the excess capacity on highways Congestion pricing, with some revenues used to fix equity problems, would reduce driving alone and

increase higher occupancy vehicles that use road space more efficiently Congestion is not so much a result of a mystical commitment to the auto, but an indirect result of a lack of understanding of congestion economics People know that time is money, but don’t apply it to the high cost of driving “for free” on freeways

Tolls raise equity questions In first instance, the wealthy can price the poor off the

road But there are countervailing considerations The vast majority of poor do not use freeways for commuting, or much else Many can’t afford cars to begin with, and they can’t afford to spend much time or expense getting to work The toll removes traffic from the free lanes, which speed up transit for everyone The tolled lanes typically are used for free by carpools serving all incomes, and the tolls can subsidize bus service in the

tolled lanes, which allows buses to go faster, use road way efficiently, and serve lower incomes In practice, equity would depend on the details of specific applications

Other Policies

Congestion delay costs can also be reduced indirectly using policies which will also get discussed later on: fiscal zoning, smart growth housing, land use regulation, and long distance alternatives

One of the causes of congestion is fiscal zoning, that is, cities that zone for

revenue producing development and restrict most housing If a job-rich city refuses to supply adequate housing, it externalizes the housing cost and forces long commutes that create congestion Similar problems are created by cities that don’t build enough housing for their population growth, and which provide too little affordable housing for their local, moderate income workforce Fiscal zoning will come up once more below

Smart growth housing is denser and less car-oriented, located in a job surplus

city, makes sense If the city is unwilling to build enough housing, regional controls could at least restrain the errant city from making land use decisions that would

increase the costs it is already imposing on the region Similarly, if a major

job-generating proposal does not have adequate housing, it should be delayed and be required to have transit and to increase housing enough to take care of the problem Otherwise, the locational externality costs offset some of the benefits of job increases The job-rich city benefits at the cost of other cities Unfortunately, cities value local power more than their economic self-interest, so anarchy, or least locational

externalities, prevail

Congestion can be reduced by land use regulation stopping low density,

car-dependent development The total costs of sprawl in externalities, congestion, and loss

of greenbelt are higher than the public benefit from the distant housing Assuming some housing is justified by moderate growth, smart growth can always provide it more cost-effectively than sprawl Land use regulation can also improve job-housing balances, getting more housing close to jobs and using non-auto modes to commute

While these ideas apply primarily to commutes in big cities, they can apply equally

well to long distance alternatives to driving Chronic congestion on for recreational

travel on week-ends is not as important week-day urban freeway congestion, but when

you are caught in it, it become very important Solutions include high speed rail and access to recreational accommodations by bus High speed rail can generally serve major cities less than 400 miles apart better than air or auto, especially if well-linked to local transit As mentioned under road kill above, rail and bus could serve vacation areas if well-linked into local transit or van transport provided by lodging businesses

3 Parking

The initial monetary cost of “free” parking is borne by whoever initially pays for it and does not pass the cost on as a parking charge, and is restricted to certain users It may also be borne by a renter whose rent includes parking Examples:

a Employer-paid parking paid by employers, restricted to employees,

b Private commercial parking, paid by businesses, only for shoppers,

c Government, education, health, non-profit institutions paid by taxes or donations,

d Public on-street parking, parking lots, and parking structures paid by taxes,

e Transit and rail access parking paid by transit agencies, restricted to riders,

f Post office parking only for patrons,

g Church parking only for congregants,

h School parking only for teachers,

i University parking only for faculty, staff, and students,

j Visitor parking only for visitors, and

k Residential parking paid by renters in rent, restricted to residents (see

market imperfections below)

Traffic costs, circling, spillover parking, poaching Free parking can have

additional costs It subsidizes parking and thus increases traffic, congestion, pollution, and energy consumption, particularly employer-paid parking causing congestion during peak hour Free parking can lead to significant traffic increases by drivers going in circles looking for space, typical of public street parking in high attraction areas

Oversupply of subsidized “free” parking relative to market demand and simple

economics wastes land and lowers economic productivity Poaching is a common concern and occurs when free parking intended for one purpose is used by another It

can happen if free parking is near paid parking; the free parking will fill up before the paid gets used

Second best Second best solutions are those that fall short of a market charge but

are still effective in dealing with some parking problems They include signage, time limits, and free neighborhood parking permits When BART commuters were parking in front of stores, the owners posted signs limiting the length of time one could park The signs are largely self-enforcing, since commuters hate to come home from work and find their cars missing Then the real punishment begins: the cost, time, and paperwork needed to recover the car from very profitable towing and storage businesses In

another example, in Hayward a neighborhood near the main post office and another neighborhood near the community college had problems with outside people using their personal streets Neighborhood residents got parking permits and others were not

allowed to park The system seems to work mostly with signage

First best methods broadly divide among no parking, hourly or event charges, and leases for a month or more

No parking at all If there are alternative modes of access and a place worth going

to, people will go there No parking or very expensive parking works in many

downtowns, campuses, amusement parks, pedestrian streets, resorts, large buildings, and inside shopping malls In some cases, a large parking lot provides access to a car-free area; in other places, transit and density supporting walking provide access In these cases, the whole system has to support pedestrian movement, which then gains more pedestrian amenity due to lack of cars and traffic

Existing parking charges We do in fact have many places that charge for parking:

downtown parking structures, airports, governments, educational institutions, health facilities, and major venues with public events Public institutions can charge more effectively for parking as they are less driven by competitive forces The charge is

usually paid to a collector on the way in to an event, or the driver gets a tag from a gate

on the way in and pays at a kiosk on the way out In some cases the charge is based on some economic cost, e.g., to pay off bonds; in some cases it seems to be a market-like charge, and in other cases, like BART, arbitrary How can these policies be improved and expanded?

Hourly charges and shared parking For hourly charges, anyone should be able

to park in any parking Shared parking means anyone could use any space for any purpose for any duration if they pay a market price Owners of parking would manage it

as a market commodity rather than as a single-purpose resource to be subsidized The market price means that spaces can always be found; If parking is used efficiently, there

is never any parking shortage; time is saved not driving around

An hourly rate should be periodically adjusted over time to average 15 percent

vacancy or about one spot per side of an average city block (Don Shoup, The High Cost of Free Parking, on this and many other parking issues.) The rate should vary by

time of day, day of week, special events, and seasons, all based on historic demand Hourly charge systems can use computerized management to determine the rate and to collect the charge, as done by SFPark, discussed below There should be no time limits and no parking tickets The charge should be collected using advanced technology and easy pay systems When a car is parked for a long time, clearly inconsistent with the general pattern of use, it should be towed

Attraction zone congestion parking charge The typical pricing approach to

congestion is to charge for road use directly, with a toll, HOV lanes, or ramp meters However, congestion can also be reduced by charging more for parking Increased parking costs in a job center could be created by a tax on parking spaces Revenues can be used to support car pools and transit, which use road space more efficiently Attraction zones are easy to define: the place where people in congestion are going The appropriate charges, in principal, are those sufficient to reduce congestion to a tolerable level A charge in practice should start low for acceptance and to work out kinks, and rise gradually to a level that causes moderate change

Cashout Cashout is when employees may opt to receive cash instead of a free

parking space Cashing out employer-paid free parking for employees can encourage and subsidize more use of car pools and transit Shoup, Willson, and Wachs found significant decreases in drive alone to work from cashout Notice that cashout is helpful for congestion as well as equity for employees

Suburbia Parking in suburbia is generally so abundant that it has no market value,

and its cost is paid by other land uses There is a surplus at the price of free to the user

The business pays for the parking and recovers the cost in the price of goods sold If some small area were to charge even 50 cents, few would pay because they could park free nearby and walk A large area, like a regional shopping center, would lose

customers to other shopping centers

A business that charged for parking could lower its in-store prices accordingly, but the overhead and inconvenience to customers of collecting the charge, the relatively small cost of the parking relative to the total business, the minimal in-store price

reduction relative to competitors, and loss of business to competitors with “free” parking all make commercial parking charges problematic in suburban areas

Having dug so deep a hole, it is hard to get out, but we can speculate As the area for charging for parking gets larger and larger, drivers wanting free parking have

increased cost from increased driving distances to alternatives, or from the need to use some additional mode of travel like walking or transit to reach a destination inside the charging area The willingness to pay for parking increases, the need to incorporate the cost of parking in the price of goods decreases, and commerce become more efficient.The revenue from the charge could be used to cover costs, and if demand rises and creates surplus revenue, the funds could be used to improve transit access, reducing congestion and increasing patronage up to some equilibrium among modes of access Politically, no one wants to pay to park until it is established that one must pay to park, and then it is alright People can plan accordingly and either be willing to pay or use an alternative mode It is the change in systems and the change in thinking that is hard

The results of market parking charges combined with other pricing reforms and alternative access by walking and transit could be surprising The amount of vacant parking could gradually increase Unneeded parking could be built on and could support increased transit service The parking charge could even reach the cost to the whole economy, at which point it really pays its own way and is important for supporting more efficient alternatives The problem is not the parking as such, but its economic nature

Denser areas The above describes American suburbia at its most subsidized,

dispersed, inefficient, and hard to change More leverage for reform exists in older, denser areas where parking demand exceeds the “free” supply, defined as under 10

percent of parking spaces vacant and drivers circling looking for spaces Such places could easily charge for parking and function better “Free” parking means that the walk-ins pay a higher price on goods to cover the cost of providing parking for drivers

Parking charges for streets and businesses become more feasible where demand is high and there are both car-based and walk-in customers A system covering both private and public parking would work better Depending on competitive conditions, a store could charge for parking, lower its prices a bit, and out-compete its rivals—a small edge, perhaps, and hard to know how important

The quasi-parking lot For public parking in higher density areas, like the Mission

in San Francisco or along crowded small streets like Natoma that serve dense housing,

a quasi-parking lot could work Such an area could function like a parking lot without an attendant A clearly posted the area would have several gates where drivers would pick

up a tag through their window To get the tag they would punch in their car license plate number, swipe a cash-value chip card, or swipe a credit card The tag would be placed

on the dashboard for enforcement purposes Gates would also be used when leaving to charge for time used

BART At rapid transit stations, parking charges could be based on what the market

is willing to pay, and thus would not lose riders When I was on the BART Board, I explained this with great patience and erudition to my fellow board members, to no avail, and, in fact, to some consternation

A few years later, BART adopted parking charges due to a huge financial crisis BART now collects at most stations, but still not based on market economics At West Oakland the charge is $5 per day and the lot fills up at 6:30 AM, while a parking lot further from the entrance charges $7 per day At this point, please write your own little editorial

In 1996, when I ran for reelection, developers financed a hit piece against me and ended my electoral career, which I’m afraid was fairly dubious to begin with It was not a good use of my time, with only one other Board member, Roy Nakadegawa, sharing my views on a nine member board

Neighborhoods There is a problem of how to charge for parking in small shopping

centers, small parking lots, and public streets in neighborhoods Neighborhood parking