It seems to me that this argument has some weak links. The most obvious is that it is not clear that the correlation he points out really exists. Admittedly, northern and midwestern states have fewer HOAs than the rest of the nation. In the Northeast, only 29 percent of new homes are part of HOAs, as opposed to 47 percent in the Midwest, and 2/3 in the South.

But not all southern and western states are the same- and if we go state-by-state, the correlation between HOAs and strict zoning starts to disappear. In particular, California metros are notorious for strict land use regulation and high housing costs. But 64.9% of California homeowners belong to an HOA, well above the national average. In fact, only three states (Vermont, DC and Florida) have higher HOA participation rates than California.

On the other hand, Texas metros tend to be less restrictive, but only 1/3 of Texas homeowners belong to a HOA. Similarly, only 15 percent of Tenneseee homeowners belong to an HOA. So its not quite clear that metros with lower housing costs and/or less zoning have higher HOA participation rates. ( On the other hand, this data would be more useful if we were able to a) distinguish between new subdivisions and the rest of the housing market, b) distinguish between HOA participation rates for owners of houses and of condos, and c) get metro-by-metro data).

But let’s assume for the sake of argument these percentages were reversed: that high-growth, low-regulation Sun Belt metros consistently had higher HOA participation rates than more restrictive metros like those of coastal California. Would this mean that homeowners preferred HOAs as a substitute for weak zoning? Not necessarily, for two reasons.

First, it might be the case that in states with lots of unused suburban land, there are more big new subdivisions, and that developers may have more of an incentive to create HOAs in such subdivisions. (By contrast, I’m not sure a builder would have much incentive to create restrictive HOA rules for a subdivision of five or ten homes, since any positive effect of these rules might be canceled out by whatever happens a block or two away). Thus, the HOAs would be a result of the new housing rather than a result of zoning policies.

Second, HOAs aren’t necessarily a result of pure consumer preference. Municipalities, especially in low-tax states, may have an incentive to favor HOA subdivisions because HOAs might pay some expenses that, in older neighborhoods, are paid for out of tax revenues (e.g. street design).

A final note: even if HOAs a) did increase housing prices in low-regulation metros and b) were more widespread in those metros than in high-regulation metros, the lower hosing costs in the low-regulation metros suggest that HOAs are not as harmful as zoning.

The post Do HOAs justify zoning? appeared first on Market Urbanism.

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.

The post Interview with Onésimo Flores, Founder of Jetty appeared first on Market Urbanism.

At 4:30 am, alarms on my cellphone and tablet start beeping, just enough out of sync to prompt me to get up and turn them off. By 5:00 am, I riding as a passenger along an unusually sedate New Jersey Turnpike, making friendly conversation with my driver and survey partner to make sure he stays awake. At 5:30am, as most of the city sleeps, we find a drab concrete picnic table outside the bus depot and chow down on our cold, prepared breakfasts. Around us, buses are revving up and their drivers are chatting and smoking cigarettes. At 5:50 am, we find our bus and introduce ourselves to our driver for the day. All of the Alliance drivers seem to be Hispanic. Our run begins. You wouldn’t expect it, but the first run is always the sweetest. The riders trickle on, making it easy to approach them, and unlike the typical 8:00 am rush hour rider they are usually friendly and receptive to my request. I approach them and mechanically incant “Good morning Sir/Ma’am. Would you like to take a survey on your commute today for NJ Transit? It will only take a few minutes of your time.” My partner sits in the front, tallying the boardings, exits, and survey refusals. We will spend the next eight hours zigzagging across the New York City metropolitan area, asking harried riders about their commute.

For the past month or so, this has been my part-time job: surveying bus riders about their origins, destinations, and travel preferences for NJ Transit. The job is just engaging enough that I rarely have time for sleeping or class readings, but has enough slow periods that my mind can wander on the question of bus planning. Although I am not authorized to read any of the surveys that I collect, it is clear that many of the people I am surveying have a tough commute. In many cases, they are disabled and/or evidently quite poor, wearing uniforms characteristic of low-wage service positions. Their circumstances leave them dependent on the bus for access to work. Often they mention how this bus ride, which may run more than an hour, is only one chain link in their broader commute. While the average bus rider is receptive once they find out you are not trying to sell them anything, it is more than clear that they are under a fair amount of stress. The general crumminess of their lot, and the incredible importance of making it better for their sake, often leaves me thinking about how we could improve bus service and transit broadly. For this reason, I decided to pick up and read a bus planning book that is a mainstay in market urbanism book recommendations, Curb Rights: A Foundation for Free Enterprise in Urban Transit. With the book turning 20 this year, it seemed worthwhile to draft up this short summary and review along the way.

Curb Rights, by Daniel B. Klein, Adrian T. Moore, and Binyam Reja, is an attempt to develop a market alternative to status quo bus planning. Published in 1997 by the Brookings Institution Press, the book arrived at a time of great enthusiasm for privatization and deregulation, and the authors’ prescriptions reflect this fact. In the following review, I will broadly sketch out their argument and conclude with a few of my broader critiques. This review is broken out into three broad sections: First, the challenge facing transit today as the authors see it (addressed in Section One of the book). Second, recent attempts to address this challenge through new regulation or deregulation (addressed in Section Two of the book). Finally, the solution proposed by the authors, namely a system of urban curb rights (addressed in Section Three of the book), as well their broader recommendations for transit policy (addressed in Section Four of the book). This review concludes with some critiques of their system and reflections on the continuing relevance of their ideas for 2017, 20 years after its publication.

The Trouble of Transit in an Automobile Dominated World

The key challenges facing transit, as Klein et al. see it, are the now unquestionable dominance of the automobile and the general mismanagement of public transit. Unusual for a book about transit planning, Curb Rights begins provocatively with a chapter titled “The Triumph of the Automobile.”^[i] Early on, the authors point out that in 1990 over 90% of Americans commuted by private automobile. While these numbers have declined somewhat in the intervening 20 years, there is still little question that Americans prefer private automobiles for commuting and personal trips.^[ii] Whatever your personal predilections about travel are—personally, I commute exclusively by bicycle and don’t own a car—it isn’t hard to see why: private automobiles are great for short trips, don’t involve any waiting or transfers, offer door-to-door service, guaranteed seating, and even storage space. Traffic congestion and car crashes notwithstanding, they are also generally reliable, safe, and comfortable.^[iii] As the authors see it, the main drawbacks of the private automobile—traffic congestion and air pollution—could easily be addressed using congestion pricing and pigouvian emission taxes, respectively.^[iv]

While some of this shift from transit to private automobile was likely inevitable, Klein et al. lay a fair share of the decline of transit at the feet of public mismanagement. Most urban transit systems were, after all, privately managed as heavily regulated monopolies up until the 1950s and 1960s. The deal was simple: municipalities would provide private companies with a portion of the right-of-way and a guaranteed monopoly over transit along a specified route, and in exchange private operators would own and operate the transit line subject to heavy public regulation of fares, stops, and frequencies, among other things. While private automobiles siphoned off some riders, the authors point to deferred capital investment due to rationing during World War II, the inability to cut unprofitable lines or frequencies, and the inability to freely adjust fare as important reasons for the wave of private transit bankruptcies in the post-war era.

While the Urban Mass Transit Act of 1964 provided local governments with funds to take over private transit companies, the situation only worsened in the decades to come.^[v] The share of commuters using transit fell from 12.6% in 1969 to 5.1% in 1990.^[vi] During this same period, operating costs per passenger trip have increased by a startling 175%, largely owing to increases in labor compensation.^[vii] Between 1960 and 1990, transit management transitioned from mild unprofitability to heavy dependence on subsidies, with over 70% of revenue coming from public coffers.^[viii]

Why has public management been so ineffective at turning around the fortunes of transit? Here Klein at al. offer two major critiques of public management: the Hayekian Critique and the Public Choice Critique. The heart of the Hayekian Critique is as follows: it is difficult, if not impossible, to efficiently centrally plan a multi-faceted and constantly changing system like urban transit.^[ix] As the economist F. A. Hayek observed in a different context, relevant knowledge related to consumer route, speed, and comfort preferences, and the price tradeoffs these consumers face, is widely distributed among riders and is not easily accessible to planners.^[x] While the survey project I am involved in is one such attempt to address this issue, a 25-question survey can only gather so much information, and only that information that planners already see as important. Every few surveys, a respondent will tell me something valuable that wasn’t asked about on the survey—often their perceptive ideas about how to improve the service. I nod and listen and promise to pass the information along, but in reality, this information is lost.

There is simply no way that a single agency could collect and integrate such knowledge about unique and changing local conditions. To collect and use this knowledge, as the economist Israel Kirzner explains, we require a process of competitive entrepreneurial discovery.^[xi] That is to say, we need a system in which easy entry and exit and the profit motive allow and incentivize entrepreneurs to collect local knowledge about what commuters need and test this knowledge in a competitive marketplace. While it is easy to observe the lack of incentives facing public transit agencies, these agencies are almost certainly doomed to provide less than optimal service given their inability to exploit the knowledge produced by the discovery process that is a byproduct of trial-and-error entrepreneurial activity.

Even if we assume that public transit agencies could collect perfect knowledge about the needs of consumers and opportunities for optimization, they may face conflicting incentives that lead them to produce suboptimal service. The authors refer to this as the Public Choice Critique.^[xii] Consider: what is the purpose of a public transit agency? To enhance intercity mobility? To renew and maintain certain neighborhoods? To connect suburbs? To minimize environmental impact? Vague comprehensive plans and idealistic transit advocates often muddle these purposes, leading to poor results toward any given end. Compare this situation to the singular incentive of private operators: to turn a profit by efficiently serving customer needs.

Even where policy makers provide their transit agencies with a clear goal, internal and external special interests may further meddle with the operation of the public transit agencies. As William Niskanen observed, the personal goals and poor incentives facing leaders within public agencies often lead to overprovision of the service in question, inflated costs, and reduced efficiency.^[xiii] Then, of course, there are the conflicting purposes of powerful external groups, including public sector unions, manufacturers, and developers, which often conflict with the actual needs of local residents. Together, the Hayek Critique and the Public Choice Critique paint a picture of public transit agencies that are in many cases unable and/or unwilling to efficiently provide riders with the best possible service.

Failed Attempts at Creating a Competitive Transit Market

Before setting out their proposal, Klein et al. turn to failed attempts to address the declining status of transit through expanding markets. The authors examine three alternatives to the status quo: jitneys, edge transit services, and bus privatization.^[xiv] Jitneys, essentially informal taxis, burst onto the scene in 1914, picking up waiting riders from streetcar stops in a process known as interloping.^[xv] During their heyday jitneys functioned as a competitive private transit market, operating along routes but without schedules. This dramatically reduced streetcar revenues, prompting municipal officials to prohibit them. At the time of publication in 1997, jitneys and informal taxis were still common, particularly among low-income migrant communities. The descendants of jitneys live on today as commuter shuttles and carpooling services, although these services are often heavily regulated and strictly limited.^[xvi] Today, ride-sharing services like Uber and Lyft almost certainly fill many of these functions. But any attempt to reintroduce traditional jitneys—following a route but without a schedule—would need to contend with the problem of interloping, which could bankrupt scheduled services, and the threat of jitney cartelization, which would eliminate the benefits of a competitive jitney market.

The authors also turn to the mixed results of bus privatization and deregulation in the United Kingdom. The 1985 Transport Act privatized and deregulated all bus lines in the UK outside of London, allowing bus lines to use any stop they choose so long as they post and adhere to official schedules.^[xvii] While this change lowered operating costs, dramatically scaled back tax expenditure on transit, and expanded service access, it also failed to reduce bus fares as intended. What kept fares from falling? Given that bus lines didn’t have exclusive access to riders at certain stops, new companies could schedule their stops minutes before competitors, stealing their riders in a process known as schedule jockeying. This prompted a tit-for-tat process of schedule changes that undermined the customer experience and led to administrative waste. In response to this threat, bus companies would often temporarily operate high, inefficient frequencies to keep out competitors, a process known as route swamping. This unhealthy competition over riders lead to greater consolidation and waste, which undermined fare reductions. In a prelude to their titular prescription, the authors point out that possessing rights to the riders at certain stops during certain times of day, or curb rights, could have avoided this issue.

Reviving Transit Markets Through Curb Rights

In the final third of the book, Klein et al. turn to the question of how learn from the mistake of the past to stimulate a private competitive bus market. In characterizing the challenges facing bus transit, Klein et al. draw a conclusion that is key to their proposed solution: attempts to create a competitive market of transit entrepreneurs through unsophisticated jitney legalization or bus deregulation can eliminate or seriously hinder the ability of private bus operators to offer scheduled, route-based service. The missing ingredient, as the authors see it, is a system of publicly and privately managed curb rights.

The key investment made by route-based, scheduled bus operators is in their bus stops. Beyond buses and staffing, a major cost for any bus operator is to make prospective riders aware that if they stand at a specified location at a specified time of day, they will receive comfortable and efficient transportation to a designated location. The goal is to create a level of service such that, when a bus comes through, there will be enough customers waiting to make the line profitable. However, in an under-regulated market, jitneys can easily come along and take those waiting riders and their fares, essentially expropriating the returns to the bus operator’s investment. In thick markets, where even with jitneys interloping there are still enough customers for bus lines to break even, this isn’t an issue. But in thin markets, where buses are drawing just enough passengers to break even, jitney interloping can kill scheduled bus routes. This in turns leads to fewer customers waiting at what were once bus stops, in turn killing the jitney market and reducing mobility overall. As in the case of UK bus deregulation, competing private bus lines can also have the same effect.

Once we realize that these the passengers standing at a stop are the results of investments made by bus operators, the need for curb rights becomes clear. Without them, rational bus operators won’t invest in high quality service, information dissemination regarding route schedules and fares, or high quality bus stops, knowing that jitneys or competing bus lines can come in and snag the returns to their investment. In short, the authors envision these curb rights as the exclusive right to pick up passengers at certain locations at certain times of day. These curb rights on public right-of-ways would be administered by public officials and would be auctioned off, encouraging bus operators to do the difficult work of finding the most efficient curbs for their routes and rearranging themselves as local conditions change. Separate “jitney commons” would offer curbs on which jitneys could freely pick up waiting passengers. This would keep competitive pressure on bus operators and provide greater choice for customers, without the standard problems related to interloping.

Beyond this basic framework, the authors are forthright in their agnosticism about the details of how the system would work. How far would curb rights zones need to be from each other? How would public officials prevent bus monopolies? Would bus operators or traffic police enforce curb rights? The authors leave these questions to be resolved by a distributed process of municipal trial-and-error. Klein et al. conclude by suggesting eight further policy suggestions.^[xviii] They include general deregulation of transit services, privatization of public transit agencies, ending federal involvement in transit, keeping transit planning local, creating curb rights systems, instituting highway pricing, using individualized rider vouchers for equity goals, and reforming taxi regulation.

Concluding Thoughts

In some ways, the transportation landscape in 2017 is dramatically different than it was in 1997. The introduction and subsequent explosive growth of ride-sharing companies like Uber and Lyft has led to something of a jitney renaissance. This has in turn led to the relaxation or gradual elimination of twentieth century taxi regulation in many cities, making door-to-door transit easier than ever. Unlike the jitneys of yore, today ride-sharing does not depend on interloping and may in fact support transit by providing “last mile” service.^[xix] Further, unlike in 1997, many more people are living in cities, bicycling, and working from home in 2017.^[xx]

In other ways, the transportation landscape in 2017 still looks very much the same as it was in 1997. Road tolling and emissions taxes remain uncommon in the U.S., and congestion taxes are virtually non-existent, meaning that commuting via private automobile remains underpriced and thus disproportionately popular. While some states and cities are exploring mileage-based fees and congestion taxes, these proposals are still only in their early phases.^[xxi] Transit ridership has effectively remained flat during this entire period and in many cases may be falling.^[xxii] Finally, against the suggestions of Klein et al., many cities continue to heavily regulate and/or prohibit private transit options, including route-based jitneys, private buses, and commuter shuttles.^[xxiii]

I came out of the book feeling like the authors slightly overplay their hand. Yes, proper pricing of private automobiles, a competitive transit market, and vouchers for select groups could obviate the need for public transit services in low- and medium-density cities. But what about the needs of high-density cities? While open to being surprised, I remain skeptical that competitive bus markets alone can service the high job densities seen in many legacy cities. How would this competitive market interact with publicly managed rail? How could rail be integrated into a private transit market? What is the role of bus rapid transit? The authors leave these answers largely answered, beyond calling for the full privatization of all public transit.

On the other hand, I admire the authors’ creative attempt to develop a “property rights” approach to stimulating private transit markets. It is evident that we underprice private automobile use, especially in heavily congested areas. Getting this right could lead to an influx of commuters into transit, an influx that public transit agencies today simply aren’t equipped to handle.^[xxiv] Even without this influx, it is clear to my mind that the riders who I encounter while surveying deserve the greater choice, improved service, and lower fares that are only likely to come from the introduction of a competitive transit market. Toward this end, I appreciate the project of Curb Rights and hope to see more creative, economically literate thinking of this kind among transit planners and entrepreneurs.

—

^[i] Klein, Daniel B., Adrian T. Moore, and Binyam Reja. Curb Rights: a foundation for free enterprise in urban transit. Washington, D.C.: Brookings Institution Press, 1997. p. 7

^[ii] Passenger Travel Facts and Figures 2016. Report. Bureau of Transportation Statistics, U.S. Department of Transportation. 2016. 20.

^[iii]  Klein et al., Curb Rights, 9.

^[iv] Ibid., 8.

^[v] Ibid, 11.

^[vi] National Transportation Statistics. Report. Bureau of Transportation Statistics, U.S. Department of Transportation. 1995.

^[vii] Baumol, William J. “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.” American Economic Review. 57 (June). 415-426.

^[viii] Office of Management and Budget. “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs.” Circular A-94. 1992.

^[ix]  Klein et al., Curb Rights, 17-21.

^[x] Hayek, F. A. “The Use of Knowledge in Society.” American Economic Review, XXXV, No. 4; September, 1945. 519–30.

^[xi] Kirzner, Israel M., Peter J. Boettke, and Fre?de?ric E. Sautet. Competition and Entrepreneurship. Indianapolis, IN: Liberty Fund, 2013.

^[xii] Klein et al., Curb Rights, 22-29.

^[xiii] Niskanen, William. Bureaucracy and Representative Government. Chicago; Aldine-Atherton. 1971.

^[xiv] Contracting out bus service is also very briefly discussed.

^[xv] Klein et al., Curb Rights, 33-46.

^[xvi] Klein et al., Curb Rights, 47-61.

^[xvii] Ibid., 62-72.

^[xviii] Ibid., 119-125.

^[xix] “Last Mile (Transportation).” Wikipedia. September 16, 2017. Accessed October 21, 2017. https://en.wikipedia.org/wiki/Last_mile_(transportation).

^[xx] US Census Bureau. “Biking to Work Increases 60 Percent Over Last Decade.” May 08, 2014. Accessed October 21, 2017. https://www.census.gov/newsroom/press-releases/2014/cb14-86.html.

^[xxi] Pevto, Mary, Bob Sallinger, and Adriana Voss-Andreae. “Portland Leaders Have a Choice: Increased Congestion or Courageous Leadership (Guest opinion).” OregonLive.com. September 15, 2017. Accessed October 21, 2017. http://www.oregonlive.com/opinion/index.ssf/2017/09/portland_leaders_have_a_choice.html.

^[xxii] Walker, Jarrett. “Researchers! Why is US Transit Ridership Falling? — Human Transit.” Human Transit. March 18, 2017. Accessed October 21, 2017. http://humantransit.org/2017/03/researchers-why-is-us-transit-ridership-falling.html.

^[xxiii] Berliner, Dana. “How Detroit Drives Out Motor City Entrepreneurs.” Institute for Justice. January 1997. Accessed October 21, 2017. http://ij.org/report/how-detroit-drives-out-motor-city-entrepreneurs/.

^[xxiv] Smith, Max. “Metro Ridership Drops 12 Percent; $125 million Revenue Shortfall Projected.” WTOP. February 21, 2017. Accessed October 21, 2017. https://wtop.com/tracking-metro-24-7/2017/02/metro-ridership-drops-12-percent-125-million-revenue-shortfall-projected/.

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For the time being, the book is only available in Portuguese, but after giving it a read through, I decided it deserved an english language review all the same. The following are some of the key ideas and recommendations. I hope you enjoy.

GGU sets the stage with a broad overview of the challenges facing Brazilian cities. Rapid urbanization has put pressure on housing prices in the highest productivity areas of the fastest growing cities and car centric transportation systems are unable to scale along with the pace of urban growth. After setting the stage, GGU splits into two sections. The first makes recommendations for the regulation of private spaces, the second for the development and administration of public areas.

Reforming Regulation

Section one will be familiar territory for any regular MU reader. GGU advocates for letting uses intermingle wherever individuals think is best. Criticism of minimum parking requirements gets its own chapter. And there’s a section a piece dedicated to streamlining permitting processes and abolishing height limits. One interesting idea is a proposal to let developers pay municipalities for the right to reduce FAR restrictions. This would allow a wider range of uses to be priced into property values and create the institutional incentives to gradually allow more intensive use of land over time.

Meeting People Where They Are

Particular to the Brazilian experience is a section dedicated to formalizing informal settlements, or favelas. These communities are found in every major urban center in the country and often face persistent, intergenerational poverty along with high rates of crime. GGU frames the challenge as legally and socially reintegrating these marginalized communities into the larger urban fabric. There are a slew of recommendations here, but some of the highlights include formal recognition of land titles and the extension of basic infrastructure into previously unserviced communities. The book citesProject Cantagalo as an example of a successful integration project carried out in Rio de Janeiro.

To provide more context for readers less acquainted with Brazil, favelas can have populations as large as 50,000 people living on what’s technically public land. Some have existed for well over a century. And through that time have received little to no investment in public infrastructure while experiencing near complete exclusion from the formal economy. These communities are in a world apart from the rest of the cities that surround them and the ultimate challenge is bridging that divide.

Brazil’s challenges in this area are somewhat beyond what we face in the U.S. in terms of scale, but the lessons learned are highly instructive as a we think about political enfranchisement and economic development in marginalized communities in our own cities.

Understanding Public Space

The first half of GGU is good, the second half is great. There are a few topics that will be old hat for market urbanists (e.g. congestion pricing, criticism of free parking, and a warning against mega projects), but there are plenty of other topics we don’t cover on a regular basis. Much of it has to do with systems design and thinking about how different elements of urban space interrelate, but the first thing that stood out to me was how the book thinks of  ‘public’ space as a concept.

GGU defines ‘public space’ as “…an open space that permits free and unrestricted access to whosoever would like to use it. In this sense, public spaces can be public property, private property, or even jointly owned”. This is significant because it gets us away from more abstract definitions of ownership and focuses us on questions of function. Ultimately, public space is what we all can and must pass through to get from one private space to another. And from that starting point we can begin thinking of how this public sphere stitches together the urban environment as a whole.

Small is Beautiful: Parks, Squares, and Plazas

GGU goes on to advocate for a large number of small parks, squares, or other public spaces throughout an urban environment and recommends a couple considerations for design. It points out the benefits of allowing a wide range of uses (street vendors, ground floor commercial, residential, etc) in terms of public safety. And it offers suggestions for sustainable financing strategies as well (park adoption programs, specifically).

But beyond the specific design recommendations for individual parks or squares, GGU suggests these spaces should be small in size, large in number, and dispersed throughout a city. It points out that one large park or plaza is accessible to fewer people because it becomes a space you have to go to to utilize rather than one of a number spaces you naturally pass through without extra effort in the case of many small parks or plazas.

Cars: Not Everything Is About You

In a similar vein, GGU introduces the concept of ‘shared spaces’. Think of this as placemaking for multi-modal transportation. Recommendations here revolve around rethinking roads such that we create spaces that can be better used by multiple transit modes including walking and biking.

One specific policy example is to level the grade and reduce speed limits for motorized vehicles down to 30km (where the rate of fatal accidents declines dramatically). Importantly, GGU points out design decisions such as using cobblestones instead of asphalt can get drivers to actually reduce their speed instead of relying on updated signage or constant enforcement. Thinking about how individuals will actually interact with the physical environment is an important concept and GGU calls it out well in in this section on rethinking how we relate to roadways.

An example of a shared space from GGU (Brighton, England)

Bike Infrastructure

Moving from the general concept of shared spaces, GGU shifts to talking about bike friendly infrastructure. There’s a detailed discussion regarding different ways to implement bike lanes, even mentioning my favorite implementation (which we have it here in Oakland) where street parking is set away from the sidewalk with bike lanes sitting between the parking spaces and the curb. This keeps cars from having to cross bike traffic to reach street parking and ends up leveraging parked cars as a protective barrier between cyclists and moving traffic.

A protected bike lane in Oakland — Thanks Teresa

GGU also calls out the need for bike racks or lockers as well as space for bikes on mass transit. The text points out, and I tend to agree, that supporting bicycling is a low cost / high impact way for a municipality to support mobility. It requires a holistic view of how all bike related infrastructure works together across an entire urban area, but doesn’t entail the kinds of capital expenditures that come with other types of transit investment.

Measuring Success

The final chapter I’ll mention is in fact the last one in the book. GGU closes with a list of metrics which it suggests municipalities should be tracking. Data is important as policy makers go about making policy, but deciding what’s even important to measure has to come first and I think this list is a good place to start:

• Housing availability for different income groups
• The number of residents living in informal communities (favelas or slums in the Brazilian context, we might think of this as a measure of the houseless population in the states)
• The vacancy rate for both publicly and privately owned real estate
• The number of jobs that can be reached by mass transit or bicycle from any given point in a city
• Land prices, housing prices, and household income
• Land and housing supply: how much land is developed each year and how many new buildings receive permits for construction
• The length of time it takes to obtain building permits
• Levels of air pollution
• The number of traffic accidents, broken down by the specific modes of transit involved
• Average travel time for commutes
• Percentage of trips made by each mode of transportation (e.g. car, bike, walking, etc)
• Average travel times for commutes
• A walkability index, a measurement of pedestrian street accessibility,  and a measurement of pedestrian traffic down to the individual street level
• Average number of transfers per trip (changing buses, switching modes)
• Population growth with separate figures for immigration and reproduction

I’m all for tracking specific metrics to monitor the health of a system and these seem like a great place to start for understanding what’s going on and what needs to change within a city.

…

Overall, a Guide to Urban Development was a great read. It explained a lot of important concepts, it made a lot of great points (many of which I couldn’t even fit into this review), and I only wish there was already an English language version. If specific topics in this review sound interesting, it may be worth your time to copy / paste some text into Google translate to get at some of the meat of the text. Barring that, MU readers will have to live with my second hand account of the book, that is, unless we can get a translation commissioned sometime soon (looking at you, Anthony Ling).

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In Private Neighborhoods and the Transformation of Local Government, Robert H. Nelson effectively frames the discussion of what minimal government might look like in terms of personal choices based on local knowledge. He looks at the issue from the ground up rather than the top down.

Nelson argues that while all levels of American government have been expanding since World War II, people have responded with a spontaneous and massive movement toward local governance. This has taken two main forms.

The first is what he calls the “privatization of municipal zoning,” in which city zoning boards grant changes or exemptions to developers in exchange for cash payments or infrastructure improvements. “Zoning has steadily evolved in practice toward a collective private property right. Many municipalities now make zoning a saleable item by imposing large fees for approving zoning changes,” Nelson writes.

In one sense, of course, this is simply developers openly buying back property rights that government had previously taken from the free market, and “privatization” may be the wrong word for it. For Nelson, however, it is superior to rigid land-use controls that would prevent investors from using property in the most productive way. Following Ronald Coase, Nelson evidently believes it is more important that a tradable property right exists than who owns it initially.

The second spontaneous force toward local governance has been the expansion of private neighborhood associations and the like. According to the author, “By 2004, 18 percent—about 52 million Americans—lived in housing within a homeowner’s association, a condominium, or a cooperative, and very often these private communities were of neighborhood size.”

Nelson views both as positive developments on the whole. They are, he argues, a manifestation of a growing disenchantment with the “scientific management” of the Progressive Era. He thinks the devolution of governance below the municipal level to the neighborhood should be supported through statutory and state constitutional changes.

Although about one-third of all new housing since 1970 has been built within some form of neighborhood association, the majority of older neighborhoods fall outside this trend. Establishing neighborhood associations in these areas is difficult because the requirement for a homeowner to join is typically written into the deed, and this would be extremely costly to do for every home in an older neighborhood.

Nelson proposes a six-step solution that involves (1) a petition by property owners in a neighborhood to form an association, (2) state review of the proposal, (3) negotiations between the city and the neighborhood, (4) a neighborhood vote on the proposal, (5) a required supermajority, perhaps 70 percent, for passage, and (6) a transfer from the municipality of legal responsibility for regulating land use in the neighborhood to the unit owners of the association.

The sticky point from a classical-liberal perspective, of course, is what happens to the rights of the minority of residents who might oppose the proposal. For Nelson this would be a cost of creating a more liberal society in the long run. But many will object to his advocacy of political means to transform established neighborhoods into private ones.

Others may find overstated his claim that “the rise of private neighborhood associations in the United States has probably resulted in a greater reduction in individual freedom of action than any other social development of the second half of the 20th century,” calling it “private socialism.” Nelson’s point, however, is that these trends have tended to constrain the daily choices of Americans even as they have decentralized governance. On the other hand, he correctly points out, invoking F. A. Hayek, that local governance is apt to be more responsive to local concerns than traditional centralized municipal government.

Nelson’s vision extends far beyond a nation in which all residences are part of a homeowners association. First, private governance will not be limited to residential communities, but will extend to business and community-improvement districts as well. Second, he sees these private neighborhoods as mostly self-financing—with the city and county rebating taxes for those services funded and provided by the associations themselves—and empowered to decide the mix of land uses that accord with their own residents’ demands.

There is some concern that private neighborhoods would permit objectionable discriminatory practices. Nelson responds that this not only reveals a tendency to regard ordinary people as bigots, but more important, it also ignores the role of “exit,” or competition among communities, in constraining the powers of local authorities. “Other things equal, citizens will prefer more and smaller local governments to fewer and larger governments,” he says. Widespread and effective local governance will, on the whole, offer a wider range of choice to individuals, as the lower cost of moving from one private neighborhood to another increases any inhabitant’s threat of competitive exit. Nelson further argues that imposing a uniform ideology or moral code is no solution, except for the broadest strictures against aggression and fraud, because this would make the attempt to form individualized neighborhood governance pointless.

Nelson seems to be proposing a kind of minimalist polyarchy—the Greek polis in modern form. With the exception of certain macro-services such as regional defense, governance would consist mostly of choices made by the inhabitants of one’s own neighborhood. Governance and centralized government are not the same thing.

Sandy Ikeda

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism. He is a member of the FEE Faculty Network.

This article was originally published on FEE.org. Read the original article.

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(Donald Shoup, then and now / facebook)

Every so often during his tenure as mayor of New York, Michael Bloomberg tried to push through congestion pricing, in which drivers would have to pay to use city streets in Midtown and Lower Manhattan. That’s a popular solution to chronic overcrowding but, like drinking coffee to try to cure a hang over, it doesn’t really get to the heart of the matter. More intervention usually doesn’t solve the problems that were themselves the result of a prior intervention. Let me explain.

In 2011, I had the opportunity to participate in an online discussion over at Cato Unbound. It focused on Donald Shoup’s book The High Cost of Free Parking, which looks at the consequences of not charging for curbside parking.

If you’ve ever tried to find a parking spot on the street in a big city, especially on weekdays, you know how irritating and time-consuming it can be. It may not top your list of major social problems, except perhaps when you’re actually trying to do it. In fact, according to Shoup about 30 percent of all cars in congested traffic are just looking for a place to park. The problem though is not so much that there are too many cars, but that street parking is “free.”

Except, of course, it isn’t free. What people mean when they say that some scarce commodity is free is that it’s priced at zero. Some cities, such as London, Mayor Bloomberg’s inspiration, charge for entering certain zones during business hours — with some success. (As well as unintended consequences: People living in priced zones pay much less for parking and higher demand has driven central London’s real-estate prices, already sky high, even higher). But this doesn’t really address what may be the main source of the problem: the price doesn’t reflect supply and demand. The same kind of chronic congestion will occur with any fixed resource in high demand if the market doesn’t set its price.

Free Football

If seats at New York Giants home football games were priced at zero or something much lower than market levels, the same situation would arise: chronic shortages of seating. You’d see hundreds, probably thousands of people “cruising” around the stadium hours before and during the game hoping to jump into a seat should someone get up to buy a beer or whatever. Now, when prices better reflect market conditions, there might still be some people waiting outside the gate hoping to buy game-day tickets or, if the game is a sell-out, to perhaps pay a very high price for seats from scalpers. But it wouldn’t be anything near the chaos of the zero-price situation, nor as dangerous.

Thousands of disappointed fans, especially big and aggressive ones, might try to use force to get a seat, and a large number of “accidents” would probably occur as a matter of course. Moreover, it would be sheer luck if those who are actually the most ardent fans, able and willing to pay the market price of admission, would be the ones who get in. Now, if only there were some way people could signal their demand for tickets – but of course there is!

Under such circumstances I wouldn’t be surprised if fans as a group demanded that teams charge higher prices for tickets in order to minimize conflict.

Shoup to the Rescue?

Similarly, as things stand in most cities, curbside parking is acquired according to chance by those who have the time to drive around and look. Fortunately, Donald Shoup’s ideas about market-like pricing are having an impact on public policy. A 2012 article in the New York Times, “A Meter So Expensive, It Creates Parking Spots,” reported on how San Francisco has begun implementing some of them.

San Francisco is trying to shorten the hunt with an ambitious experiment that aims to make sure that there is always at least one empty spot available on every block with meters. The program, which uses new technology and the law of supply and demand, raises the price of parking on the city’s most crowded blocks and lowers it on its emptiest blocks. While the new prices are still being phased in — the most expensive spots have risen to $4.50 an hour but could reach $6 — preliminary data suggest that the change may be having a positive effect in some areas.

(San Francisco earlier tried a different system that signals via cell phone when a space opens up. I’m not sure how that worked out.)

As I said before, to do market pricing correctly, well, you need markets. What the San Francisco approach does is to try to mimic what it is thought a private market would do. But the standard of “at least one empty parking spot” is arbitrary – like mandating that every ice-cream cone have two and only two scoops of ice cream. The Shoup-inspired San Francisco solution is I think a step in the right direction, but only a step.

Street parking is zero-priced because those streets, and the curbs and sidewalks that abut them, are not privately owned.

The Dynamics of Interventionism Again

And that’s really the source of the congestion problem as well as other transport problems. Take mass transit. Most cities have gotten on the light-rail bandwagon, especially in recent years with federal “stimulus” funds available, despite the dismal economic record of such undertakings.

Professor Dan Klein has long advocated private jitneys – usually small buses or vans that “follow a route but not a schedule” – which are far less costly to implement and cheaper to run. The problem, however, is that because urban curbsides are not privately owned, it’s possible for rival jitney X to swoop in just before another and take away the customer base of jitney Y, which makes the whole enterprise much riskier than necessary. (You can read more about Dan’s analysis here and here.) If the curbsides and the streets they abut were privately owned – perhaps by the owner of the adjacent property or more practicably by the local neighborhood or business association – the jitney/transit problem, as well as the problem of pricing curbside parking, could be solved privately. Private owners would set the prices of parking or of curbside pick-up by selling (or not) those rights at whatever the market would bear. Modern technology would make this relatively easy, as the Times article indicates. The problem, of course, is political.

The curbside parking problems have gotten so bad in some places that many cities have off-street parking minimums that effectively mandate parking garages: an intervention occasioned by a prior intervention. The solution is not more regulation. The solution is to remove the nonmarket conditions that produced the parking problem, and a host of others, in the first place.

Sandy Ikeda

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism. He is a member of the FEE Faculty Network.

This article was originally published on FEE.org. Read the original article.

The post Donald Shoup Takes San Francisco appeared first on Market Urbanism.

Decentralized, voluntary, and smart.

Cities, for most of human history, were dumb. At least, that’s what the “smart cities” movement might lead you to believe. Over the past few years, a chorus of acquisitive multinational tech corporations, trend-savvy politicians, and optimistic developers­­—an odd mixture of former SimCity players, in all likelihood—has come to sing of technology’s potential to solve urban problems. Through implementation of technologies like augmented physical infrastructure, central command centers, and information exchange, proponents of smart cities argue that information technology offers new solutions to old problems like trash collection, public health, and traffic congestion. While the movement’s ideological variations are many and varied, a focus on top-down smart city solutions has ultimately distracted urban observers from the bottom-up smart city revolution that’s already underway.

In his 2014 book Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, scholar Anthony M. Townsend paints a troubling picture of the former in Rio de Janeiro’s modestly titled Center for Intelligent Operations. Developed by IBM, the center acts as a hub for hundreds of surveillance cameras and sensors. At best, the center achieves little more than, in Townsend’s words, “looking smart.” At worst, the center seems to be a regression back to twentieth century centralization. Townsend’s explorations of Songdo, South Korea, a city purported to be both centrally-planned and smart, hardly quells these concerns. The discussion leaves the reader with a healthy skepticism of top-down smart city solutions.

Other criticisms have made the top-down smart city feel less like something out of 1984 and more like something out of Terry Gilliam’s Brazil. In a couple of recent posts, Emily points out the roadblocks presented by poor incentives and a lack of market signals, both for politicians and high-ranking public servants. For similar reasons, both parties lack the incentives to implement smart city solutions that create long-term value for urban residents. Operating outside of a system of profit and loss, both groups are all too often working for the next job, whether that means the next election or a cushiony private sector position. Without hard prices to discipline spending and communicate value created, would-be smart city planners bump into the same problems as economic planners of the twentieth century, building complex, rigid plans that rapidly decline in efficiency. As Emily puts it, public officials “transact to win public support, gain power, or improve their financial opportunities after leaving office,” rather than to create actual value for the purported beneficiaries of their projects. Often, merely “looking smart” is more than enough for public officials to secure these rewards. The result is repeated infrastructure boondoggles, minimal innovation in public services, and a generally dumb state of city management.

For all the focus on top-down solutions, however, too much of the conversation has missed the urban revolution that’s already underway. In fact, it’s likely happening right now in your pocket. Enabled by the platform offered by smartphones, a growing ecosystem of apps is solving major urban issues as we speak. Can’t find a cab? There are multiple apps for that. Not sure of the best route to work? Same story, and it’ll even take into account current traffic conditions. Trying to meet new people in your community? The real question is: would you prefer a hookup or a Star Wars enthusiast group? Those two purposes require separate apps­—for now—but they’re both there.

By combining the open institution of app markets with the technology of smartphones, apps allow solutions to urban problems to develop from the ground up. Rather than flowing from dusty city halls and uncomfortably clean corporate offices, the true smart city revolution up to this point has emerged from the efforts of millions of app developers and app users working together in a largely free, voluntary environment. Understanding how this happens might reveal how urban governments could be brought into the process of creating smart cities.

Apps have solved so many urban problems because their developers operate in a market. As in any functioning market, users have needs, and developers are itching to solve those problems, whether to earn some money or develop a reputation. Developers have strong immediate incentives to develop useful fixes to common problems—namely, profit and loss. When a developer comes up with a smart way of, say, identifying the best restaurants your neighborhood, they create value for urban residents and immediately receive the benefits of offering this new service.

Along with incentives, the public sector lacks another key component of the app market: trial and error. The first apps to allow real time information exchange among urban residents weren’t Facebook and Twitter. Rather, the two emerged triumphant out of a long series of failed and on going experiments in connecting people, from Friendster to SixDegrees. Even now despite the dominance of a few apps, heavyweights like Facebook and Twitter still compete in a dynamic marketplace of new and emerging social networking apps that offer new services to users. Apps like Instagram and Snapchat arose from the hypothesis that users might prefer to share photos rather than text. Apps like WhatsApp and Line revolutionized texting by offering minor tweaks to the old SMS system. By permitting trial and error the app market allows not only for constant innovation, but also real-time responses to the changing needs of connected urbanites.

Where some kinds of incentives can be found in government, the services offered are still, by their very nature, monopolistic. Let’s say you lose your license: if you’re lucky, there may be multiple DMV offices around town, but the same bureaucracy runs all of them. As with all monopolies, the DMV is typically remarkably inefficient, offering service so awful that the name of the office is synonymous with frustrating bureaucracy. Given the lack of competition and experimentation, there’s little chance of DMVs improving the quality or efficiency of their services in a substantial way.

Even with seemingly straightforward services, like communicating information about titles and public hearings, public monopolies generally underperform. The evidence of this problem is revealed when trying to accomplish even the most rudimentary task, such as retrieving documents from a county clerk. Without an open market in which service providers can compete and innovate, the services offered by the public sector inevitably underperform.

One possible ground-up smart city solution to these problems, discussed in detail by Samuel Hammond, comes in the form of “government as a platform.” Rather than offering specific services in-house, city governments could open up and standardize data in order to allow for a dynamic marketplace of apps that offer public services. By providing developers with application programming interfaces (APIs), governments could allow for innovators with the right incentives to try new ways offering services to urban residents. Not sure which public schools your child is eligible for? There are three apps for that. Need straightforward information about how to get the permits needed for your business? Check out any number of zoning apps that work for your city. As the smartphone functions as a platform for an app market that provides services, urban governments could function as a platform for entrepreneurs to compete to address urban concerns.

There’s no need for technological utopianism: the smart city is being constructed from the ground-up, through the spontaneous efforts of app developers and users. The past 10 years have seen urban life transform in multiple ways. The next 10 years may be just as transformative, with a few overdue policy changes. Where app markets—specifically in the form of sharing economy apps—are butting up against antiquated regulations, city governments must embrace permissionless innovation and develop smarter rules for ensuring public safety. Where the public sector still has an important role to play, it must learn from the success of app markets. By transitioning from service provider to platform provider, local governments could potentially unleash the creative energies of millions of urban residents in developing solutions to local challenges.

Cities are growing, and as they grow, they’ll need to have the capacity to adapt and innovate in offering services to residents. Between now and 2050, 2.5 billion more humans will move into cities. If we’re already struggling to solve basic problems like traffic congestion and public health, it’s unlikely things will get any easier. Cities will surely need to integrate emerging technologies into their top-down plans; congestion tolling and ending the use of paper stand out as overdue fixes. Yet these top-down innovations must be complimented by an institutional shift toward enabling bottom-up innovation. By taking a hard look at what has enabled app markets to transform urban life, public officials might be able to make the changes needed to ensure the continuing improvement of urban life. The dumb city is dying. The question now becomes, will public officials allow the smart city to fully emerge in its place?

Follow me on Twitter at @mnolangray.

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Texas Central Railway wants to begin construction on a high-speed line from Dallas to Houston as early as 2017. The current plan is to go from downtown to downtown, with possibly one stop along the way in College Station. An environmental impact assessment is under way and the hope is to be operational by 2021.

Vancouver’s driverless Sky Train

The company claims that the price per ticket will be competitive with airfare and that the run will take a mere 90 minutes. To give that some context, current travel time from Houston to Dallas by car is about 3.5 hours according to Google (but closer to 4.5 according to my prior experience).

While there’s a lot to be skeptical about here, the impact of connecting the nation’s 4th and 6th largest urban economies could be significant. If a high-speed line does get built and if it does manage to deliver on its specs (two major “ifs” already), it would be the equivalent of a magic portal…or a stargate…or a warp pipe…or a tesseract…or…well…the point being it would make the two places functionally much closer together, and that’s a big deal.

Cities become economically vibrant through agglomeration. Bringing people closer together lowers search costs for both employers and employees. It also increases the likelihood of “creative collisions”. What high-speed rail could do is combine the benefits of agglomeration that each of these two cities already enjoy.

And, as early in the day as it is, there’s already speculation that a line connecting Dallas and Houston would be a precursor to additional lines connecting all four of the state’s pillars of civilization: Dallas, Houston, San Antonio, and Austin. The unbridled optimist in me imagines high-speed rail as the embryonic bones of a future mega-city encompassing the entire Texas Triangle.

…but…I’m still skeptical.

Texas Central Railway is backed by private investors. It claims it can pull off the project without resorting to either government subsidies or land development. This means total reliance on fares to cover operational costs as well as recoup capital investment. To my knowledge, no mass transit system in the U.S. covers operational costs on fares, let alone operational and capital costs combined.

That said, it’s a cool project and I’d love to see my home state get a little more diverse in terms of transportation infrastructure, especially if it’s being paid for out of private pockets. And hopefully, if there’s a bait and switch, it’ll turn into a land play rather than politicking for subsidies. Combining transit and land development works pretty well in Hong Kong, so I wouldn’t mind seeing the same approach tried back home.

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