Market Urbanism https://www.marketurbanism.com Liberalizing cities | From the bottom up Tue, 27 Aug 2019 15:38:29 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.1 https://i2.wp.com/www.marketurbanism.com/wp-content/uploads/2017/05/cropped-Market-Urbanism-icon.png?fit=32%2C32&ssl=1 Market Urbanism https://www.marketurbanism.com 32 32 3505127 The Paper of Record Gets Yorkville Wrong https://www.marketurbanism.com/2019/08/27/the-paper-of-record-gets-yorkville-wrong/ https://www.marketurbanism.com/2019/08/27/the-paper-of-record-gets-yorkville-wrong/#respond Tue, 27 Aug 2019 15:38:28 +0000 http://marketurbanism.com/?p=11972 Even the most supposedly reputable mainstream media is often less than careful in its coverage of housing issues. For example, a few weeks ago the New York Times ran an article on the Upper East Side’s Yorkville neighborhood, implying that high-rises are “erasing their community’s character.” The article implies that Yorkville is a quaint little […]

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Even the most supposedly reputable mainstream media is often less than careful in its coverage of housing issues. For example, a few weeks ago the New York Times ran an article on the Upper East Side’s Yorkville neighborhood, implying that high-rises are “erasing their community’s character.”

The article implies that Yorkville is a quaint little brownstone neighborhood. But in fact, even the most casual perusal of real estate websites would show that Yorkville has been a high-rise area for many years. I ran a search on Streeteasy.com showing 259 for sale apartments with doormen (a feature generally found only in high- and mid-rise buildings). Only 27 of these housing units were built after 2010, which means that hundreds of high-rise units were built long ago.* So the entire story is based on falsehood.

Moreover, even if Yorkville’s towers were new, I am not sure that its pre-high-rise character is particularly unique. To me Yorkville’s tenements look just like similar tenements elsewhere in Manhattan.

If you can’t trust what the Times says about the Upper East Side, how can you trust what it says about climate change or Washington politics?

*I did not search for-rent apartments because Streeteasy’s software does not allow users to separate for-rent units by age.

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Why “Move to Boise” Is No Answer https://www.marketurbanism.com/2019/08/13/why-move-to-boise-is-no-answer/ Tue, 13 Aug 2019 15:26:09 +0000 http://marketurbanism.com/?p=11883 One common argument raised by NIMBYs is that zoning is not harmful to humans, because people priced out of expensive cities can always move to a cheaper one. But a recent story illustrates why this argument is misguided: the story discusses increased housing prices in small cities like Boise and Grand Rapids. When people are […]

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One common argument raised by NIMBYs is that zoning is not harmful to humans, because people priced out of expensive cities can always move to a cheaper one.

But a recent story illustrates why this argument is misguided: the story discusses increased housing prices in small cities like Boise and Grand Rapids. When people are priced out of expensive, they move to cheaper ones, thus increasing demand for housing in the cheaper cities. In turn, this causes housing prices to increase in the cheaper cities. In a nation with lots of restrictive zoning, you can’t escape high rents because the high rents will follow you wherever you go.

To take the argument further: some people justify local control over zoning by saying that what city X does is its own business. But when city X does things that harm city Y, its policies become the business of the state and federal governments. If city X has restrictive zoning, its policies raise housing costs in whatever city takes in X’s rent refugees- so at that point, a higher level of government should step in.

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Learning from Astor Street https://www.marketurbanism.com/2019/07/22/learning-from-astor-street/ Mon, 22 Jul 2019 23:56:11 +0000 http://marketurbanism.com/?p=11796 One common argument against mixing housing types and densities is that if housing type A (for example, townhouses or single-family homes) is mixed with housing type B (for example, condos), the neighborhood will somehow be “ruined” for residents of the less dense housing types. Last week, my new wife and I visited Chicago for our […]

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One common argument against mixing housing types and densities is that if housing type A (for example, townhouses or single-family homes) is mixed with housing type B (for example, condos), the neighborhood will somehow be “ruined” for residents of the less dense housing types.

Last week, my new wife and I visited Chicago for our honeymoon. The most interesting street we visited, on Chicago’s wealthy Gold Coast, was Astor Street, just a block from high-rise dominated Lake Shore Drive. What is unusual about Astor Street is its mix of housing types. Although this street is dominated by large attached houses, it also has a few tall-ish buildings next to the townhouses, such as the 25-floor condo building at 1300 North Astor, the 20-story Astor Villas at 1430 North Astor, and the 27-story Park Astor condos at 1515 North Astor.

Despite the tall buildings, this street felt like a quiet, beautiful, tree-shaded urban street. And the real estate market seems to agree: recent Zillow ads show a single-family house on Astor Street selling for over $2 million, and another one selling for over $3 million. By contrast, the average house in Astor Street’s zip code (60610) is valued at less than half a million dollars, and only 14.6 percent are worth over $1 million.

Clearly, multifamily housing has not “ruined” Astor Street.

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The Low-Key Housing Politics of Spider-Man https://www.marketurbanism.com/2019/07/17/the-low-key-housing-politics-of-spider-man/ Wed, 17 Jul 2019 16:50:14 +0000 http://marketurbanism.com/?p=11766 With Spider-Man: Far From Home hitting theaters earlier this month, the Marvel Cinematic Universe has taken one of the series’ biggest risks yet: pulling Spider-Man out of New York City. The gravity of this decision is baked into the film’s title — with good reason. More than any other Marvel superhero, Spider-Man is a uniquely […]

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With Spider-Man: Far From Home hitting theaters earlier this month, the Marvel Cinematic Universe has taken one of the series’ biggest risks yet: pulling Spider-Man out of New York City. The gravity of this decision is baked into the film’s title — with good reason. More than any other Marvel superhero, Spider-Man is a uniquely urban superhero. Of course, his iconic powers — web-slinging and wall-crawling — depend on a forest of skyscrapers. But on a deeper level, Parker’s problems are quintessentially urban.

Repeatedly, Peter encounters the issue of housing affordability, a recurring challenge for him and Aunt May in the comics and a key issue in the Sam Rami films from 2002 to 2007. In the Rami trilogy, Uncle Ben’s death pushes the family’s already-precarious financial situation into a monetary melee. We witness Aunt May desperately attempt to refinance, though she ultimately faces foreclosure and eviction. 

Rami’s Spider-Man (2002) stays true to the comics in putting Peter Parker’s family in Forest Hills — a well-heeled Queens neighborhood, depicted in the films as lower-middle class. Their home was assessed this year at approximately $850,000, which would entail a monthly mortgage payment of roughly $3,700 after a hefty downpayment. To make this affordable, Uncle Ben and Aunt May need to somehow make $135,000, a year before property taxes and upkeep. If that’s a stretch for a professional electrician, it’s impossible for a retired homemaker.

The frustrations surrounding Aunt May’s eviction are an important part of Parker’s decision to give up being Spider-Man in the second film, and it’s easy to see why: May’s options post-eviction aren’t pretty. Assuming a standard Social Security check and a payout from Uncle Ben’s death, Aunt May really only has about $1,000 to spend on rent. Rising rents will make it tough to find a decent apartment nearby for that amount. 

With a low-odds lottery for below-market units and a long waiting list for public housing, Aunt May will likely be moving out of the neighborhood, if not out of the city altogether — far from Peter and any social support network she may have had. In the comics, Aunt May dedicates much of her free time after Uncle Ben’s death volunteering full-time with a homeless shelter. It’s a bleak picture, one that adds meaningful weight to Parker’s conflict. Why save a city that won’t even build enough housing for folks like his aunt?

For Peter Parker himself, the situation isn’t much better. While he’s often depicted living in newly posh neighborhoods like Nolita and the East Village, Parker invariably lives in a dump and struggles to make rent in most iterations of the character. In a key moment in last year’s critically-acclaimed PlayStation 4 game Marvel’s Spider-Man,  players navigate Peter’s eviction, experiencing first-hand his desperate struggle to collect his (illegally) trashed belongings.

Most of Parker’s rent woes are less intense. In Spider-Man 2 (2004), he’s depicted living in an old SRO or “single-room occupancy,” which combines a private bedroom with a shared kitchen and bathroom. As Paul Groth documents in Living Downtown, SROs were once a major source of affordable housing, but are now illegal under many local zoning codes. An ongoing tension between Parker and his affable immigrant landlord over late rent and poor maintenance extends through Spider-Man 3 (2007), an awkward relationship that should be familiar to most renters.

Parker’s ongoing struggles with making the rent and the gig economy-style work he takes on to make it — from food delivery to freelancing — could explain why he’s so much more likable than the typical billionaire superhero. But as film blogger Cameron Carpenter has pointed out, Peter Parker has conspicuously become richer over time, a phenomenon he calls the “gentrification of Spider-Man.” The Marc Webb films starring Andrew Garfield ignore financial woes altogether, and by Homecoming, Parker reaps the benefits of billionaire patron Tony Stark. Tellingly, Homecoming’s yuppie Aunt May is depicted as having an apartment in Astoria—a gentrifying neighborhood—complete with stainless steel appliances.

Is a Peter Parker who doesn’t struggle with urban problems still Spider-Man? On the one hand, the recent reboot leans heavier into more universal themes like the awkwardness of young love. On the other hand, we’re seeing a smart shift toward greater diversity with characters like Miles Morales in Spider-Man: Into the Spider-Verse (2018), reflecting the changing demographics of urban America.  

The series will undoubtedly survive. But with a mounting housing shortage and rising rents in many of America’s coastal cities, it would still be nice if, like the rest of us, Peter Parker still had to sweat a little on the first of the month. 

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The Truth About “Red Vienna”: Its a YIMBY Paradise! https://www.marketurbanism.com/2019/06/29/the-truth-about-red-vienna-its-a-yimby-paradise/ Sun, 30 Jun 2019 03:18:18 +0000 http://marketurbanism.com/?p=11587 One common leftist argument against new housing is the “Red Vienna” argument: the claim that housing can only be affordable in places where the government dominates the housing market. Supporters of this claim like to mention Vienna, where (according to progressive lore) Big Brother builds lots and lots of super-affordable public housing, while the Big […]

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One common leftist argument against new housing is the “Red Vienna” argument: the claim that housing can only be affordable in places where the government dominates the housing market. Supporters of this claim like to mention Vienna, where (according to progressive lore) Big Brother builds lots and lots of super-affordable public housing, while the Big Bad Market is not involved. But a recent article about Vienna states that
“one-third of the 13,000 new apartments built in Vienna each year are funded by the government and commissioned by the housing associations.” This means that about 8700 apartments are built every year by the private sector. In a city with 1.8 million people, that’s a lot. By contrast, in Manhattan (which has a comparable population) about 3000 housing units were built between 2014 and 2017- far less than Vienna. Even in Houston (which has a slightly bigger population) only 14,653 housing units of all types, or about 3700 per year, were built between 2014 and 2017. In other words, even if not a single unit of public housing had not been built, Vienna would still have built more than twice as many units as high-growth Houston, and about ten times as many as Manhattan. Vienna’s affordability is thus an argument in favor of lots more housing, not an argument in favor of NIMBYism.

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A Desire for Density https://www.marketurbanism.com/2019/06/19/a-desire-for-density/ Wed, 19 Jun 2019 17:00:38 +0000 http://marketurbanism.com/?p=11483 Desire for Density is a new framework explaining how market prices form a desire path showing where the market could deliver more affordable housing than it presently is.?

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Political controversies over building new homes, shops, and offices have long revolved around an axis of “neighborhood vs developer.” Depending on your perspective, the “neighborhood” side was either the feisty underdogs looking to maintain the character of the neighborhood they love or the exclusionary elitists looking to keep newcomers out. But in recent years, a third force has entered the discussion: YIMBYs who don’t say “not in my backyard” but “yes in my backyard.”

YIMBYs are hardly in power across the country but YIMBY influence is growing. In Cambridge, MA and Austin, TX, land use restrictions have been relaxed to allow more subsidized housing. Minneapolis has passed a bold plan to allow triplexes anywhere a single family house can be built. Presidential candidate Elizabeth Warren has identified zoning rules as culprits behind high housing costs. And that’s not even counting the avalanche of YIMBY activity in California.

The same fourplex that could help affordability in an Austin neighborhood would have little effect in downtown San Francisco.

The YIMBY movement initially centered on supporting individual development projects counteracting NIMBYs’ influence at City Hall. The movement has grown more ambitious and now includes elected officials capable of actually changing the rules. But how do we know what we want? When the question is “do we allow this particular building to be built,” the YIMBY answer is easy. But when a Council Member asks you “what’s your one biggest ask for this year?” Do we suggest upzoning corridors to ten stories or allowing more ADUs on side streets (or both)? How do we advocate for triplexes in Minneapolis and skyscrapers in Manhattan, for ADUs in California and mid-rise mixed use buildings in Austin, beyond simply urging that more is better?

A desire path in Tottenham, England.
Desire path in Tottenham, England. Photo credit Alan StantonCC-by-SA 2.0

Today we introduce Desire for Density, a website featuring a simple new framework for answering these questions and more, produced by two Austin bloggers searching for the answers ourselves. We are not trained economists and our analysis is not the stuff of PhD courses. Nevertheless, we have found that tried and true basic economics yields valuable insights beyond the simplistic notion that more housing supply always leads to lower housing prices. The core of our answer is that even within a regulated market, market prices are a sort of desire path, revealing where the market could deliver more affordable housing than it presently is.?

The website is organized into two main sections: first, a “Learn” category which explains our take on hous?ing economics, including our attempt to answer the question, “Where should a city allow more density?” We examine a collection of solutions toward achieving that density, both others’ proposals as well as some novel proposals of our own. This section includes a collection of maps based on the metrics we establish. Second is this blog, on which we’ll tease out thoughts on ideas that are not quite ready for the “Learn” section, talk about how our ideas relate to current events, and introduce updates to the site.

So, please, check out our site. Let us know what you think, whether it’s positive or negative. If you want to make maps for your own city, let us know! If there are subjects you want to see covered, let us know! 🙂 And even if there’s nothing you have to say to us, follow the blog and our twitter because we have much more coming!

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Interview with Onésimo Flores, Founder of Jetty https://www.marketurbanism.com/2019/06/03/interview-onesimo-flores-jetty/ Mon, 03 Jun 2019 13:00:57 +0000 http://marketurbanism.com/?p=11283 In this interview I talk to Onésimo Flores, Founder of Jetty, a (sort-of) microtransit company from Mexico City. Marcos Schlickmann: Thank you for participating in this interview. Please introduce yourself and talk a little bit about how Jetty came to life and what is your idea behind this project. Onésimo Flores: I’m Onésimo Flores, the […]

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In this interview I talk to Onésimo Flores, Founder of Jetty, a (sort-of) microtransit company from Mexico City.

Marcos Schlickmann: Thank you for participating in this interview. Please introduce yourself and talk a little bit about how Jetty came to life and what is your idea behind this project.

Onésimo Flores: I’m Onésimo Flores, the founder of Jetty.  I have a PhD in urban planning from MIT and a master’s in public policy from Harvard. I graduated in Law from the Universidad Iberoamericana, Mexico. The idea of Jetty came about by contrasting a conflicting approach to regulation in public transportation in a place like Mexico. On one end of the spectrum, a you have a very tightly-regulated, low-quality, scarce public transport service, most of it operated by private, informal, artisanal, minibus operators, and on the other hand, ride-hailing apps, taxi apps, that had emerged not only Uber but several others, that enjoy a lot of regulatory leeway in terms of freedom to set their fares, to operate anywhere, to open the market to private individuals with spare time and spare vehicles. So, in that context, the hypothesis was that, in a way applications like Uber have made it possible to standardize a level of service: people can know what to expect, know that somebody will be held accountable if something goes wrong, know the basics of the trip, the fare and the rated quality of the driver. The level of information the passengers will get is standardized no matter who the supplier of the services is. So, the hypothesis in Jetty is that we can do something similar for collective transportation without relinquishing the economies of scale of using larger vehicles, but we do give the public access to the service improvements made possible by technology.

MS: Talk a little bit about the urban mobility scenario in Mexico City: what are the main challenges and how and why did you think Jetty was a necessary option for the citizens of this great metropolis?

OF: In Mexico City, what you have is precarious public transit. You have a relatively small publicly operated and subsidized service which, combined, move approximately 5.5 million trips daily. You have another network of transit, which is essentially privatized, run by thousands and thousands of small-scale entrepreneurs that face a tightly regulated fare: they cannot charge whatever they want. Anything beyond the set fare is constantly renegotiated with the government. The colectivos, the peseros, the microbuses, these guys are really the workforce of mobility in Mexico City. They move almost 12 million trips every day, more than double the publicly subsidized network.

Over the years this network of minibus operators has really saved the city from gridlock. They run without requiring government money. They charge a very low fare – approximately US$0.30 without fare integration. Despite the low fare, they are able to make a profit because they’ve learned to skimp on everything that matters to passengers: they have insurance with questionable coverage, they overwork their drivers, they undermaintain their vehicles, they continuously postpon the renewal of their fleets and they cram their vehicles to sometimes inhumane levels. So you have a sort of like a microeconomic problem, in which you have the very low prices and very high demand, but the quality of service is very low. Anyone that’s able to afford an alternative abandons public transit forever: they buy a motorcycle, they pay a taxi, they purchase a car. So, you have this terrible equilibrium, in which you have low-quality transit and you have a small minority of people clogging the street with cars. The question is – and this is the hypothesis on which Jetty is operating – to what extent would we be able to create another mode of service, a high-quality public bus, a high-quality public van that really cares about safety and comfort, but that’s still more cheaper than a taxi and Uber.

MS: Are the minibuses and colectivos legal in Mexico City?

OF: In Mexico City you can operate dollar vans. The colectivos and the minibuses are not only legal, they are a vital part of the public mobility system.

In the case of Mexico, you have some rules that give these minibus companies some level of monopolistic power over service areas or corridors, but really the only thing that the government has really focused on regulating is the fare. There’s this big commitment to having affordable ubiquitous service and the government has been willing to compromise on other features of service, like safety, accountability, regularity of service and so on, in order to maintain a non-subsidized cheap fare. So those guys are regulated but in a very lax, very artisanal way.

MS: And they can stop everywhere in the city?

OF: The minibuses get a concession from the government to operate, and they must get their bus routes approved, so they can essentially stop anywhere along an approved bus route. Efforts to force and determine specific stops in the past have failed, because of the business model in which drivers have a very strong incentives to maximize revenues. So, if the minibus has to race against other minibuses running along the same route, they will do so in order to maximize the number of passengers onboard. So, in Latin America, you have something that’s been called the pennywar: drivers fighting for passengers.

MS: A little bit about Jetty now: how does it work? what type of vehicles do you operate? everything is done by the app through the cellphone?

OF: Jetty is a system in which the passenger tells us where he is and where he wants to go. We match that request to a nearby pick-up and drop-off point and the passenger would reserve a seat on that vehicle. He receives trip information via cellphone and gets a notification when the van or bus is approaching. Once he boards, the driver will check the ticket and allow him to enter the bus. Once he gets off, he’ll get the opportunity to rate the service of both the driver and the overall experience. That information gets processed by us and is discussed with our bus operators. We work with fleet owners, so we do not own the vehicles nor hire the drivers. We are, however, quite hands-on in the sense that we establish the standards: what insurance policy; what type of vehicle; what type of salary and benefits the driver should have; what type of training and so on.

All the searches that passengers make in the Jetty App get aggregated and we use them to determine whether to launch new bus routes, to adjust the location of our pickup points, to increase the frequency of service and so on. Even though we’re not really an on-demand service, we are certainly a much more demand responsive service than traditional public transit.

We started off with 13, 14 and 19-seat vans, but since we’ve expanded the unit of analysis is the seat, not the type of vehicle. We don’t really care if it’s a bus, a van or taxi. In fact, we currently have 4-seaters sedans, vans as well as very large 41- seater buses in our network.

MS: Is Jetty similar to microtransit companies like Bridj from Boston or Chariot from San Francisco? What are the differences and similarities? In terms of operations, Jetty works with optimized or fixed stops and routes?

OF: We are similar to Bridj or Chariot inasmuch as having an App, using technology, having digital payments, but the context makes a tremendous difference in terms of what we’re achieving. If you look at any of the published documentation from Bridj or Chariot, you’ll very quickly realize that they never achieved scale: their buses run empty most of the time and they were really struggling to get economically viable bus routes. That’s because the context matters!

In the case of Mexico City (and cities similar to Mexico City) what you have is a very low-quality transit system compared to the US. So rather than calling ourselves a microtransit company I would perhaps make the argument that we are a microregulator, in the sense that we are establishing the standards that justify passengers willing to pay a higher fare. So we are, in a sense, a planner, a regulator of service, rather than a direct operator. Running a higher-cost fancy bus in Silicon Valley doesn’t even begin to portray what we’re trying to do in Mexico City.

The closest reference to what we’re doing is in India: there are few companies in Delhi trying to do something like us. The largest one is called Shuttl and they call themselves a bus aggregator. We need to figure out a new label for what we’re doing and microtransit it certainly does not cut it.

MS: What is your typical fare? How did you decide the areas to start operating?

OF: Our cheapest fare right now is 25 pesos, which would be slightly over a dollar. Our average fare is around 40 pesos, which is roughly US$2.00, and the most expensive fare is now a little bit over US$4.00, which is service that runs on a tolled highway. That ride would probably be US$15 on an Uber.

Jetty is currently mostly a commuter service, meaning that we operate at peak hours, covering mainly home-to-work trip. We have very clear destination points in the city’s 3 business districts: Santa Fe, Polanco and the Reforma Corridor.

MS: Is Jetty an independent company or is it part of a public operator or private operator? In legal terms, what is the position of the company?

OF: Jetty is not a bus operator company. It is a technological layer. The public transit industry in Mexico City is very territorial and very hesitant to try new things. They are on the defensive, especially after observing what happened to the taxi industry after Uber. So, rather than positioning ourselves as a company that displaces the existing bus company, we’re trying to position ourselves as the solution for bus companies that might be worried that Uber will come in and work with buses and minivans in the next few years.

MS: Do you think the private automobile is your main competitor?

OF: We poll our passengers roughly once a month and a key question that we consistently ask is: if Jetty were not available, how would you complete your last trip? About 50% answer that they would have taken a taxi, a private car or an Uber.

MS: What is your opinion on autonomous driving?

OF: Specialists talk about three revolutions: the autonomous driving revolution, the electric vehicle revolution and the shared trips revolution. So, most likely you will use autonomous vehicles more intensely than you use cars now. You may send it to pick up a pizza or to pick up your kids after dropping you off in your office. Potentially, you could live two hours from your office and use your two hours commute as the first two hours of your day. So, if you have autonomous vehicles alone, the net outcome for cities would very likely be a net negative of a more car dependent, more congested, more sprawled out city.

The hopeful alternative is that both electric and autonomous happen at the same time as shared transportation. If we’re able to have autonomous electric buses and those become the main ways to move around the city, in which you click on a phone and a vehicle comes but it doesn’t only pick you up it takes everybody that’s on the way and you have some level of shared transportation service enabled by technology, then you have an outcome that is much more positive, that’s denser cities, mixed-use cities, more environmentally friendly cities and so on.

Right now in Mexico we have close to 70,000 people that have downloaded the Jetty App. Our network is growing but still small relative to the needs of the city. Only when we have millions of people sharing trips – with Jetty or other platforms- will the real positive potential of the autonomous, electric and shared revolutions be truly unlocked..

MS: What is the future of Jetty?

OF: We’re trying to prove that people who can afford a taxi or a private car would actually prefer to commute on a bus or a van if they were safe and comfortable. We also want to survive as a small startup. We intend to prove to our passengers, our operators and to our investors that we can run a financially sustainable service. Once we do that, we will start thinking about expansion.

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The Carnegie Library Apple Store is Fine https://www.marketurbanism.com/2019/05/12/the-carnegie-library-apple-store-is-fine/ Mon, 13 May 2019 01:55:56 +0000 http://marketurbanism.com/?p=11212 The Carnegie Library in Washington, D.C. is now home to the world’s newest Apple Store following an expensive rehabilitation funded by the retailer. Originally built as a public library in 1903, it reopened its doors to the public on May 11, 2019 following decades of disuse, neglect, and a slew of failed attempts to repurpose […]

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The Carnegie Library in Washington, D.C. is now home to the world’s newest Apple Store following an expensive rehabilitation funded by the retailer. Originally built as a public library in 1903, it reopened its doors to the public on May 11, 2019 following decades of disuse, neglect, and a slew of failed attempts to repurpose the building as a museum. While some are fretting that a historic building owned by the city has been turned over to commercial use, we can rest assured that the Historical Society of Washington, D.C., the current leaseholder to the building, made the right decision.

More than fifteen years ago, Niskanen Center founder Jerry Taylor and his then-colleague at the Cato Institute, Peter Van Doren, had a novel proposal to solve an intractable political dispute about the Arctic National Wildlife Refuge (ANWR), a wilderness area in northeast Alaska that is home to large populations of wildlife and vast, untapped petroleum deposits.

In the early 2000s, the Bush Administration proposed opening the refuge to oil drilling in the wake of rising crude oil prices. Naturally, the usual suspects came out in favor or against the proposal.

Environmentalist detractors worried that a pristine wildlife area could be ruined by any drilling and the possibility of leaky pipelines. Advocates, on the other hand, claimed only a tiny sliver of land was needed to extract billions of dollars of oil and the refuge would remain largely untouched. The benefits of oil drilling, proponents argued, would be widely shared because oil is used in so many parts of economy.

Taylor and Van Doren’s proposal was simple: the federal government should give ANWR, in its entirety, to the Sierra Club or some other environmentalist group, including full rights to use or transfer the land as they see fit. While the Sierra Club lobbied for zero drilling when the issue was decided through the political process, assigning the group transferable property rights to ANWR might have led them to reconsider.

Since they would receive most of the revenue generated by oil drilling in ANWR, the Sierra Club would be in a position to carefully weigh the potential costs of drilling against the billions of dollars of oil revenue they could use to support environmental causes worldwide. To boot, they would also have the ability to personally oversee oil production to ensure that it would be handled in an environmentally sensitive manner. Drilling might have some environmental costs, but would they really allow none whatsoever?

The economic issue at stake in the ANWR debate was whether or not the oil was made available to the market. In terms of efficiency, it didn’t really matter who profited from the oil, just that it was made available for sale in global markets. By assigning ownership to a group concerned with protecting ANWR and who also had global environmental interests, the federal government could be assured that the right decision would be made.

Congress unwittingly tried out a version of Taylor and Van Doren’s proposal with the Carnegie Library when, in 1999, it appropriated $2 million to create the City Museum of Washington, conditioned on the District of Columbia leasing the building to the Historical Society of Washington, D.C. for 99 years for $1 per year. While the money Congress authorized was tied directly to creating a specific museum, the Society was essentially given the historic building for at zero price and, eventually, free to use it as they saw fit.

The Historical Society was never able to successfully convert the library into a functional museum open to the general public despite multiple attempts and tens millions of dollars spent. Their efforts never attracted nearly enough visitors to support a budget sufficient to maintain the large and expensive building, and, for most of the past two decades, the building has primarily been empty save for a few private events and the Society’s offices. Despite operating rent-free from the library, the Society itself has been hemorrhaging cash in the last few years.

In the wake of their continued difficulties, the Society decided to partner with a business to revive the building and fund their educational mission. Apple agreed to spend more than $30 million to refurbish the building and signed a lease for the first floor that will provide the Society with $7 million of revenue over the next ten years. The basement and second floor of the library are now home to historical exhibits, and the building will receive hundreds of thousands of visitors per year.

This outcome is almost certainly better than any feasible alternative. Even if the local government found a way to fund the rehabilitation and operations of a museum centered on Washington’s history, the Society knows that, despite their best efforts, they could only expect a handful of visitors. Given their long tenure in the building, their strong interest in promoting education, and their multiple attempts to open a museum on the site, the Society is in a unique position to determine whether the public is best served by devoting the entire building to historical exhibits.

By partnering with Apple, the Historical Society of Washington, D.C. was able to successfully leverage the first floor of their building in a way that will allow a much larger share of the public to use one of the city’s great buildings and simultaneously increase the number of patrons that will be able to enjoy their collection of artifacts and photographs. Historical buildings need not be cleansed of all commercial activity to be great, and the Carnegie Library is a prime example.

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