re:Build (May 2020)
The Resilient City
Hi everyone! Having been in self-isolation for two months and counting, I’ve run out of excuses to delay another edition of re:Build. So let’s get to it.
Here are three thoughts and a new post…
Inherent Risk in Land Development
The last two months have been a crash course in the risks of land development. A new project might take 18 months to get from land acquisition to building permits and then we actually have to build the homes. It could be two years before any revenue is generated from home closings. Since we also build the supporting infrastructure, costs during this period are enormous. Servicing alone (roads, sewer, water, street lights) might add $30,000 per home. Plus the cost of construction, carrying the land, permits and fees, consultants, employees, rent, and more. You don’t need an MBA to see that the business model is risky in the best of times.
Things get really interesting when a pandemic hits the same month as the first of 100 home closings are scheduled after two years of work! New construction stopped, so no new permits. Luckily we had a few permits in hand, but there were a lot of unanswered questions. Would banks keep lending? Would trades keep working? Would materials be available? Would our buyers be able to close on their home? Affordable housing is often pitched as “recession proof”, but low and middle income households have been hit hardest during Covid-19.
Thankfully, the wheels have kept on turning and slowly, surely, and safely - we’re still building! This picture is from my site visit in Bracebridge last week.
Cities as Creative Catalysts
For centuries, we've understood that the intense interactions that cities allow creates something special. This 19th century essay describes the network effects of great communities.
Covid-19 is changing our cities, but I'd never bet against them. Cities will need new norms that reduce the spread of viruses without dismantling the creative catalyst of human interaction that makes cities great. For example, a 17 year old Biggie freestyling in front of a Bed-Stuy bodega could only happen in a city like New York.
Order without Design: How Markets Shape Cities
Order without Design by Alain Bertaud is my favourite book on urban planning. So when I heard Devon Zuegel was doing a podcast series with Alain and Marie-Agnes Bertaud, I was happy to give feedback on an early version - check out the first episode here.
Alain and Marie-Agnes are the Indiana Joneses of urban planning. They combine economics and planning with decades of experience in cities around the world. Below is a picture of Alain tracing new streets in Yemen with the help of two young assistants in 1970.
New Post: Housing Affordability - Why Vouchers Work Better Than Public Housing
After listening to Devon's podcast, I revisited Alain's ideas on housing affordability. In Order without Design, he lays out a data driven approach to designing and evaluating housing policy. He relates income distribution to housing consumption to identify which households need assistance and to test different policy options.
He argues that demand side subsidies, like vouchers provided directly to households, are more effective than supply side subsidies like public housing. In short, they're more efficient, flexible, transparent, and responsive.
So, if the shortcomings of supply side subsidies are so evident, why do so many governments seem to prefer them to demand site subsidies? Bertaud believes that politicians like to cut ribbons in from of tangible brick and mortar projects; they do not have this opportunity for demand side subsidies like vouchers.
Here are my takeaways and a short overview of Bertaud’s data driven approach - https://angusknowles.com/longform/owd-affordability
Photo of the Month
It’s possible (and sometimes necessary) to enjoy parks and green spaces responsibly during the pandemic. Here I am with Billie, hanging out on Geary Street near home.
Thanks for reading, I hope you enjoyed it.
Until next month!
Angus