Hong Kong-Macau Bridge Usage Projections Dropped One-Quarter

Hong Kong's Transport and Housing Bureau expressed concern that the soon to open Hong Kong to Macao Bridge will fall far short of its usage projections, according to the South China Morning Post (see: "Estimates for traffic on Hong Kong mega bridge cut by up to 26 per cent because of competition, government admits"). The bridge is expected to reduce automobile travel times from four hours to 45 minutes between the two terminals, one of which (Macau) is adjacent to the large city of Zhuhai. The article did not indicate the financial impact on the project.

Officials blamed the competitive impact of a Shenzhen to Zhongshan bridge, planned to open in 2024, which will be upriver from the Hong Kong to Macau span, require only 20 minutes to cross, and will be more centrally located in the Pearl River Delta mega-agglomeration. The transport infrastructure development industry has been plagued by optimistic projections, with project sponsors often citing unforseen developments as the cause. This has been documented in research by Oxford University Professor Bengt Flyvbjerg and others.

Ontario Moves Rightward, toward Populism

After a nearly 15 year lock on Ontario’s provincial parliament (“Queen’s Park”), the Liberal Party suffered the strong rejection of voters in the June 6, 2018 election. Triumphant in the last two elections, the Liberals won so few seats that they lost official party status.

Early on, it was clear that the Liberals were in trouble, and it appeared that the Progressive Conservatives (PC’s) would regain a majority at Queen’s Park, under the leadership of Doug Ford. The Globe and Mail had characterized Ford as having led a populist takeover of the Party. But Ontario voters have not always been predictable, and by the eve of the election many were predicting that the PC’s would not win a majority, and that the more likely outcome was a government led either by the PC’s or the New Democratic Party (NDP). The NDP has usually been the third strongest party in the province in recent decades, though held power from 1990 to 1995.

Liberal prospects had become so dim that incumbent Premier and leader Kathleen Wynne conceded defeat days before the election, but called for Liberal support sufficient to deny a majority government for either of the two other parties.

So, it was a surprise as the votes were reported, when the PC’s emerged with a strong victory, taking 76 seats. The NDP became the official opposition, with 40 seats. The Liberals took only seven seats, while the Greens won one. The popular vote rejection of the Liberals was stunning. Voters gave 40.5 percent of their votes to the PC’s, and 33.6 percent to the NDP. The Liberal vote was less than one-half that of the PCs (19.6 percent).

Ford, and his government are will move policy in not only a rightward direction, but also one that is more populist. The National Post said that: “Doug Ford positioned himself during the campaign as a defender of 'the little guy,' promising to lower taxes, cut hydro rates and eliminate the province’s cap-and-trade-system.”

Toronto Sun columnist Antonella Artuso provides an interesting day-after-the-election commentary summarizing reactions from the three party leaders, Canada’s Prime Minister Justin Trudeau and others.

Malaysia to Drop Singapore to Kuala Lumpur High Speed Rail Project

Fresh from his recent national election victory, Prime Minister Tun Dr Mahathir Mohamad announced that a planned high-speed rail project from Kuala Lumpur to Singapore will be cancelled. Kuala Lumpur is Malaysia’s largest urban area, with approximately 7.8 million residents, while Singapore has nearly 6 million residents. The Prime Minister told a press conference: “We need to do away with some of the unnecessary projects, for example the high-speed rail, which is going to cost us RM110 billion (S$37 billion) and will not earn us a single cent.”

Read more at the Straits Times (Singapore):

“Fix Our Damn Roads” Campaign Launched in Colorado

Radio host, television personality and President of Denver’s Independence Institute Jon Caldara has announced progress toward placing the “Fix Our Damn Roads” initiative on the Colorado ballot.

Caldara provided an update to the campaign in a recent email:

Since the Colorado State Legislature refuses to address our crumbling road system in Colorado, we are proud to bring the issue directly to the voters. I’m thrilled to let you know our Fix Our Damn Roads initiative is one step closer to reality.

The Title Board has approved our title, and the Colorado Secretary of State has approved our petition forms. Thousands of blank petitions are being printed as you read this and tomorrow we hit the streets to get the signatures we need to get this question on the fall ballot.

We’re told the only way to Fix Our Damn Roads is to raise taxes and raise fees. We’re told the only way to Fix Our Damn Roads is to pay ransom to ineffective transit schemes and pay off cities with slush funds. I’m here to say HELL NO! We’re not going to be played again!

We expect our lawmakers to Do Their Damn Jobs and fund this core function of state government. We expect lawmakers to STOP holding our roads and bridges hostage as a way to pay for their skyrocketing Obamacare Medicaid increases. If they wanted a tax increase for Obamacare, they should have asked for one instead on squeezing road funding so that 1 out of 4 Coloradans could be on Medicaid.

And now that the state has a MASSIVE budget surplus, thanks to the tax increase sell-out called the Hospital Provider Fee, we are going directly to the people. I am convinced voters will do what law makers refuse to do – Fix Our Damn Roads without raising taxes or fees, without siphoning off payola money to trolley cars and bike paths.

Commentary: Build on the Toronto Urban Fringe

On May 3, Canada’s Financial Post, the nation’s leading business daily, published my commentary entitled: “Doug Ford was right: Toronto housing won’t be affordable unless we develop the Greenbelt: The PCs could have a once-in-a-generation opportunity to effectively deal with the housing-affordability crisis.”

For those unfamiliar with Ontario politics, Doug Ford is the leader of the Progressive Conservatives in the Ontario Provincial Parliament and the PC’s are the Progressive Conservatives.

As the commentary indicates, Toronto has a severe housing affordability crisis, traceable to adoption of a urban containment policy in the middle 2000s. The commentary concludes: “Doug Ford and the PCs could have a once-in-a-generation opportunity to effectively deal with the housing-affordability crisis. It is time for a serious rethink of the Toronto-area housing policy, with a focus on putting the right priorities first. People are more important than place.”

The article is available here….

Why Young Talent Is Leaving Silicon Valley

Perhaps no region in the world is more associated with talent than the once-booming San Francisco Bay Area and Silicon Valley. In the first four years of the decade, the area netted an average of 10,000 domestic migrants annually. But by 2016, the tide had turned. About 12,000 residents fled San Francisco that year, and the net outflow for 2017 climbed to 25,000. Nor is the future prognosis particularly great. Seventy-four percent of millennials in the Bay Area are currently considering an exit, according to the Urban Land Institute.

No surprise. San Francisco has devolved in recent years, with streets in some areas marred by the presence of homeless people, excrement and needles. Yet, housing prices are such that the California Association of Realtors now suggests a $181,000 income is necessary to purchase a home, more than 3.5 times the national average.

Expect Bay Area prices to rise further— even if Valley economic expansion continues to slow due to planning policies that block the peripheral growth required to improve affordability. Meanwhile, the outflow of households from the Bay Area could be accelerated by the new federal income tax provisions.

To date, the Bay Area’s job market has survived largely by hiring foreign workers; immigrants account for virtually all the region’s population growth. Many of these are essentially indentured servants on H-1B visas; the Bay Area accounts for a disproportionate share of these contract laborers and depends on non-citizens almost twice as much as other tech-oriented metropolitan areas. If the Trump administration follows through on promises to cut this program, the Bay Area may face even greater talent challenges in the years ahead

The complete listing for the Best and Worst States for Business can be found here.

This piece originally appeared on Chief Executive.

Vancouver: Speculators Market for Real Estate Agents

It has long been known by economists, but ignored by planners, that urban containment policies create speculators markets. This has been especially evident in Vancouver, the third most unaffordable market in the Demographia International Housing Affordability Survey, and Toronto, which has experienced record breaking house cost escalation relative to incomes since enacting its “Places to Grow” urban containment policy in the middle 2000s.

Evidence continues to mount to support the relationship between urban containment policy and speculative profits. Now the Globe and Mail, one of Canada’s national newspapers, reports that realtors in Vancouver “are working with developers to obtain preferential access to condos in the Vancouver area.” The Globe and Mail also found that “ Many realtors also purchased one or more presale units for themselves and then resold them for six-figure profits.” Further, “A look at six buildings found flips for insiders and foreign investors brought a windfall of $10.6-million.”

Reprehensible as this is, it is to be expected. Vancouver has not only increased poverty by its urban containment policies that profoundly increase house prices, but also provided heretofore unavailable “get-rich-quick” schemes to make life even worse for those whose choice is a lower standard of living in Vancouver, or an unwanted move elsewhere just to enjoy the average lifestyle of other Canadians.

The Urban Consolidation Effect (Zoning Effect) on Australian House Prices

As George Bernard Shaw is reported to have said, Britain and America are two countries separated by a common language. So too, America and Australia, not to mention America and Canada, New Zealand, and elsewhere.

That was brought home to me with respect to my recent article (The Urban Containment Effect (Zoning Effect) on Australian House Prices) which detailed the extent to which land use strategies that destroy the competitive market for land on urban fringes also destroys housing affordability. This is a malady evident virtually everywhere in Australia.

For Australian readers, a better title would have been “The Urban Consolidation Effect (Zoning Effect) on Australian House Prices,” since “urban consolidation” is the most used term for urban containment in Australia. “Urban containment” is the more widely used international term.

Figures 2 and 3, from the original article, are reproduced below, substituting “urban consolidation” for “urban containment.” The core findings are revised to substitute “urban consolidation” for “urban containment” below:

The Urban Containment Effect in Major Australian Cities (2016)

Houses are more costly as a result of urban consolidation. Assuming typical mortgage provisions, (Note) the urban containment effect adds from $150,000 to nearly $500,000 to house prices in major Australian metropolitan areas --- this is not the house price, but the additional impact of urban containment (Figure 2). The urban containment effect adds up to $29,000 to annual payments on the average house in Australia’s major metropolitan areas (Figure 3).

• In Sydney, the urban consolidation effect adds $489,000 to the house price making the annual mortgage payments $29,000 higher. Figure 4 shows the components of the average house price in Sydney.

• In Melbourne, the urban consolidation effect adds $324,000 to the house price, making the annual mortgage payments $19,000 higher.

• In Brisbane, the urban consolidation effect adds $159,000 to the house price, making the annual mortgage payments $9,000 higher.

• In Perth, the urban consolidation effect adds $206,000 to the house price, making the annual mortgage payments $12,000 higher.

• No data is available for Adelaide, but the present median multiple (median house price divided by median household income) suggests that the urban consolidation effect adds at least $13,000 to the mortgage.

These are significant amounts, especially to families starting out and renters who would like to participate in the proverbial “Great Australian Dream” of home ownership.

Multi-Millionaire Golfers Flocking to Cities?

For years, wishing thinking planners and others have imagined a “return to the city.” Of course, one cannot return to where they have never lived, so the whole concept was flawed from the beginning. While the suburbs did less well than before a few years of the Great Financial Crisis and its aftermath, they have experienced a steady increase in net domestic migration in more recent years. In 2017, suburban counties of the major metropolitan areas gained nearly 700,000 more net domestic migrants than core counties, up from a low of 120,000 in 2012. Overall, domestic migration to the suburbs was 2.8 million more to the suburban counties than the core counties between 2010 and 2017. William Frey, writing in The Avenue for the Brookings Institution, effectively analyses the trends (see: “US population disperses to suburbs, exurbs, rural areas, and ‘middle of the country’ metros”).

But not everyone is moving to the suburbs. The Wall Street Journal reports that rich golfers in Charlotte are moving from their houses adjacent to suburban golf courses to “thriving urban neighborhoods” (See: “In Charlotte, Golfers Are Leaving Gated Communities for Hipper Urban Neighborhoods: Many homeowners in the North Carolina city are fleeing developments built around courses for thriving urban areas that are close enough to links”). The article indicates similar trends elsewhere, but its anecdotes relate only to Charlotte. Moreover, the houses discussed are a bit pricey, from $1.5 to $3 million, well above the median house price of under $250,000.

But lest any should think that the pack and stack densities sought by planners will be achieved by attracting multi-millionaire golfers, there are two reasons for caution. (1) There are not enough of them. (2) The number of golfers in the nation is declining --- down seven percent in just five years.

Autonomous Cars: How Rushing Things Could Slow Things Down

The recent Uber fatality of bicyclist Elaine Herzberg, struck by an autonomous car fatality in Tempe (Phoenix, Arizona area) raises serious concerns. Bern Grush, an expert in autonomous vehicles, offers a sobering analysis of the situation.

The Tempe police video of the accident is here (warning: graphic). Grush comments that: “Several viewers of the crash video have suggested there was time for the Uber vehicle to brake and/or sufficient lane space behind Herzberg to avoid a collision.” It looks that way to me. That there was no evasive action or apparently no slowing should raise the most serious of concerns.

Grush also indicates the obvious, that cases like the Herzberg fatality will accelerate negative publicity about autonomous cars. This is not at all surprising, given the aggressive implementation narrative that has been adopted by so many. For example, a Stanford University study (according to one report) suggests that car dealerships will be a thing of the past before 2025 and 95 percent of cars will be autonomous by 2030.

There is a (not perfect) parallel. San Francisco’s BART, the Bay Area Rapid Transit system, was to have operated driverless as well. But then, a train ran off the end of the line at Fremont and landed in a parking lot shortly after service began (the “Fremont Flyer”). Autonomous operation of the BART system has never resumed. There have been substantial advances in automated rapid transit. The first systems were within airports. Eventually, Lille, France opened an automated rapid transit system. Now, even the busiest Metro route in Paris (Line 1, La Defense to Vincennes) is fully automated. But there is a big difference between autonomous cars and automated transit systems. The transit systems are designed (or redesigned) from the “ground up” for driverless operation. Autonomous vehicles will not have the luxury of such a controlled environment in the foreseeable future.

At the same time, the public seems to be increasingly concerned about both the operation and conduct of the broader information technology industry. This has been fueled by cases like the Equifax data breach, to the Facebook (and other) privacy concerns and the hacking of international intelligence systems. Many of us have had the unhappy experience of not-ready-for-prime-time PC operating systems, so flawed that they were quickly replaced by entirely new systems. In short, despite the transformative effects of automated technology, premature implementation is more likely to lead to delay than sustainable implementation.

Autonomous cars will doubtless replace self-driving cars. However, people will be enticed, not forced into a driverless future --- when the technologies are ready. The tragic death of Ms. Herzberg suggests that this is later rather than sooner.