Finding the bottom

The impact of the financial crisis and the economic downturn is dizzying on a number of fronts: housing, community development, tax policy, revitalizing cities, climate change, energy policy, transportation infrastructure. There’s a new context for all the nation’s most pressing issues. Developers, planners, and public officials gathered in Miami this week at the Urban Land Institute’s annual fall meeting to try to prepare for the challenges ahead, and the venue was somewhat darkly fitting. Miami engaged in what might be characterized as an overly optimistic building spree, adding 25,000 residential units in midtown and downtown since 2005. The high-rise towers are dark and lifeless at night, adorned with banners reading “for sale or for rent.” Paul Volcker, chairman of the US Federal Reserve from 1979 to 1987, kicked off the ULI meeting by telling participants that the financial crisis was indeed historic, and that a revival of trust was necessary to begin the slow process of recovery.
     The stock market has dropped – but so have gasoline prices, and suddenly some housing is more affordable than it was just six months ago. With that in mind, two scholars long affiliated with the Lincoln Institute delivered the second in the Lincoln Lecture series Oct. 24 on the subject of inclusionary housing in the US and Europe. Nico Calavita, a city planning professor at San Diego State University, and Alan Mallach, nonresident senior fellow at the Metropolitan Policy Program at The Brookings Institution, noted that inclusionary housing (also known as inclusionary zoning) has been successful in maintaining a level of affordability by requiring new residential development to include 15 or 20 percent of the housing below market-rate. Now that there will be a pause in the economic cycle, Calavita and Mallach said, it may be a good time for US municipalities to consider a new twist on the inclusionary housing model: tying affordability requirements to zoning changes that open up land to residential development. The concept of “land value capture” goes back to Henry George and the notion that government action (a zoning change, for example) creates value for landowners. Ireland has experimented with an affordable housing policy on this basis, as has Washington state and New Jersey, which requires that in cases where zoning is changed from non-residential to residential, any development within two years must include a set-aside for low- and moderate-income families. “This is the time when developers are acquiring land and looking for re-zoning,” Calavita said.

Aging in place

The housing and financial crisis has homeowners on edge more than ever, and the elderly and those on fixed incomes often have extra cause for worry. Hui Shan, a Lincoln Institute dissertation fellow who studied under MIT economics professor James Poterba, who is now president of the National Bureau of Economic Research, has examined the question of whether rising property taxes cause some seniors to move -- or in some cases, in states with tax relief programs, keep them in place. Using household-level panel data from the Health and Retirement Study and a newly collected data set on state-provided property tax relief programs, Shan, who made a presentation at Lincoln House Oct. 3, found that for every $100 increase in property taxes there is an 8 percent increase in mobility within two years. Many factors are present when it comes to elderly homeowner mobility, she said. The 2004 Survey of Consumer Finances data suggest that 16 percent of elderly homeowners have a house value to income ratio of at least 10. Some seniors have paid off mortgages, and thus are more likely to take the standard deduction for their federal income taxes. That means that tax increases would cost them more than if they itemized and could take advantage of the property tax deduction. In terms of local services, they care more about parks and public works than schools. A health shock or the death of a spouse can prompt a move. Still, property tax relief for seniors is an important focus for policymakers, and will be even more so as the growing number of baby boomers join the ranks of the retired. The generosity of property tax relief programs varies significantly across states. For example, as of 2005, a low-income 65-year-old homeowner could receive a property tax credit of up to $1200 in Idaho, but only up to $250 in Rhode Island.
   The next presentation in the Fall Lincoln Lecture series is Oct. 24: Inclusionary Housing: A North American/European Comparative Perspective, featuring Nico Calavita, professor in the Graduate Program in City Planning at San Diego State University, and Alan Mallach, nonresident senior fellow at the Metropolitan Policy Program at The Brookings Institution.

The next city

It was clear to Haya El Nasser, the veteran development and demographics reporter for USA Today, that a turning point was at hand when she traveled to suburban locations like Plano, Texas and heard planners there throwing around the term "TOD" (transit-oriented development). For El Nasser, who delivered the first of the fall Lincoln Lecture series Oct. 1 at Lincoln House, that was one indication of an American landscape that is being re-engineered -- a process that is likely to intensify given soaring energy and transportation costs, land use regulation related to carbon emissions such as California's recently passed SB375, and the long-lasting effects of the mortgage and financial crisis. In her talk, El Nasser recalled a recent visit to the Phoenix area after gasoline prices rose sharply this year, the downtown revitalization efforts there, "TOD without the transit" in such places as Rancho Cucamonga in California, and how older, smaller cities are also attempting to reinvent themselves by working with a shrinking population and business tax base. The talk comes as the future of cities and suburbs, given the turmoil of the day, is a subject of extensive discussion; other perspectives are offered in this New York Times "Freakonomics" forum here.