Atlanta

Is It Game Over for Atlanta?

Aaron M. Renn — Wed, 19 May 2010 01:48:09 -0400

With growth slowing, a lack of infrastructure investment catching up with it, and rising competition in the neighborhood, the Capital of the New South is looking vulnerable.

Atlanta is arguably the greatest American urban growth story of the 20th century. In 1950, it was a sleepy state capital in a region of about a million people, not much different from Indianapolis or Columbus, Ohio. Today, it's a teeming region of 5.5 million, the 9th largest in America, home to the world's busiest airport, a major subway system, and numerous corporations. Critically, it also has established itself as the country's premier African American hub at a time of black empowerment.

Though famous for its sprawl, Atlanta has also quietly become one of America's top urban success stories. The city of Atlanta has added nearly 120,000 new residents since 2000, a population increase of 28% representing fully 10% of the region's growth during that period. None of America's traditional premier urban centers can make that claim. As a Chicago city-dweller who did multiple consulting stints in Atlanta, I can tell you the city is much better than its reputation in urbanists circles suggests, and it is a place I could happily live.

Yet the Great Recession has exposed some troubling cracks in the foundations of Atlanta's success. Though perhaps it is too early to declare “game over” for Atlanta, converging trends point to a possible plateauing of Atlanta remarkable rise, and the end of its great growth phase.

Growth Is Slowing

As with many other boomtowns, in Atlanta growth itself has been among the biggest industries. Construction particularly played a big role in its economy. The housing crisis cut the legs from under Atlanta's real estate machine. Though prices didn't collapse, new home building did. From 2005 to 2009 Atlanta's number of annual building permits fell by 66,352, the biggest decline of any metro area.

Atlanta grew strongly in the 2000s, with growth of over 1.2 million people, a 29% rise that beat peer cities like Dallas and Houston. But look at the recent past and see a very different dynamic. Domestic in-migration has cratered, only reaching 17,479 last year, or 0.32%. While migration did slow nationally last year due to the economy, Dallas and Houston continued to power ahead. Dallas added 45,241 people (0.72%) and Houston added 49,662 (0.87%). Even Indianapolis added 7,034, but that's 0.42% on a smaller base, meaning Atlanta is actually getting beat on net migration by a Midwest city; its in-migration rate is about on par with Columbus, Ohio, another healthy Midwest metropolis..

The collapse in in-migration should be very worrying to Atlanta’s leadership. No new people, no new housing demand, thus no construction jobs. It should come as no surprise that Atlanta's 10.8% unemployment rate is well ahead of the 9.7% national rate.

The Infrastructure Brick Wall

Last July, Judge Paul Magnuson ruled that Atlanta had been illegally taking water from Lake Lanier, the principal source of the region's water supply. The ruling may not stick but it nevertheless has brought into focus the long term insufficiency of the water supply for Atlanta. Lake Lanier almost ran dry during a recent drought, but has since recovered in the recent wet years. The problem is more political than environmental. Atlanta has not appreciably expanded its water sources in 50 years despite all that growth.

Atlanta has a myriad of infrastructure problems. It suffers some of the highest water and sewer rates in the nation, double those of New York City. And these are only going to get worse as the city embarks on a multi-billion dollar Clean Water Act Compliance program. This is an ominous sign for a city whose attractiveness is in large part due to its low costs. As Councilwoman Clair Muller put it, “I’m not sure being No. 1 in the country for water and sewer rates is a good selling feature for Atlanta.”

But the biggest infrastructure issue for Atlanta is transportation. Atlanta is famous for its bad traffic and attendant pollution. Its freeways are among the world's widest, but this disguises the extent to which the roadway infrastructure is woefully insufficient. Atlanta has a simple beltway and spoke system similar akin to Indianapolis and Columbus, much smaller cities. Other big cities like Houston, Dallas, Minneapolis, and Detroit have much more elaborate systems. In particular, rather than relying on a single ring road, these cities have webs of freeway with multiple “crosstown” routes.

But Atlanta's greatest road problem lies in the lack of arterial street capacity. Atlanta's suburban arterial network is mostly former winding country roads, many of which have never been upgraded to handle the traffic demands on them. Most upgraded streets are radial routes, not crosstown ones, which forces even more traffic onto the overloaded freeway network.

For those who prefer transit, Atlanta hasn't invested there either. It built the MARTA heavy rail system as an extremely forward looking transportation investment, mostly in the 1970s and early 80s. This was built before Portland's system and is far better than light rail to boot. But there has been almost no expansion of the network. The state of public transport has been largely frozen for some time. Meanwhile, Dallas, Houston, Phoenix, and others have invested billions.

Competition Is Here

Bad traffic congestion and other infrastructure ills didn't matter much when Atlanta was the only game in town. For a long time, anyone who needed a presence in the Southeast found Atlanta the easy default answer. In many cases it was the only real possibility.

That's no longer true. Atlanta is now surrounded by upstart, much faster growing cities such as Charlotte and Raleigh-Durham in North Carolina, Nashville, Tennessee and Charleston, South Carolina – all in many ways now have the ambitions once characteristic of Atlanta.

Atlanta's problem lies in its insufficient differentiation from these other places. Other than the airport, a clear major asset to Atlanta, what do you actually lose by moving to Charlotte or Nashville? Your commute is likely to be less. Except for certain groups – African Americans or gays – the city seems to be losing allure.

These other cities also have the talent to compete for a lot of the business Atlanta used to pick up without working for it. The new head of the Atlanta Regional Commission declared Atlanta's love affair with the edge city high rises all but over. Planners always talk like this, but it is still a startling sentiment to hear in Atlanta, formerly the most boosterish of cities. That's the sound of a city losing its mojo. Meanwhile, Charlotte chamber of commerce chief Bob Morgan says, “To understand Charlotte, you have to understand our ambition. We have a serious chip on our shoulder. We don’t want to be No. 2 to anybody.” That's the way Atlanta used to talk.

Caught in the Middle

Atlanta does seem to realize it's in a different competitive world. It must elevate its game and upgrade its product. Like Chicago and other growth stories before it, as Atlanta got big and rich, it decided it needed to get classier as well. To go for quality, not just quantity. And to embrace a more urban future for its core.

But it might be too little, too late. Atlanta is urbanizing, but despite the huge influx of people into the city, it's not there yet. Atlantic Station got built and attracted lots of press, but numerous other mixed use projects were killed by the poor economy. Ambitious projects like the Beltline park and transit project lack funding.

Atlanta is left as a sort of “quarter way house” caught between its traditional sprawling self and a more upscale urban metropolis. It offers neither the low traffic quality of life of its upstart competition, nor the sophisticated urban living of a Chicago or Boston.

Here too, Dallas and Houston continue to power ahead of Atlanta. Both are seeing significant urban infill and are also making major investments in cultural infrastructure that far outstrip those of Atlanta. For example, Dallas just opened a showplace performing arts complex, with buildings by the likes of Norman Foster and Rem Koolhaas. Houston has emerged as a dynamic multi-cultural city. Both have a long way to go, but are in a much stronger growth position to pull it off.

Atlanta at Maturity

Cities, like companies, go through a life cycle. There's the youthful founding, the explosive growth phase, then maturity and, for some, decline. Chicago and Detroit were two of the huge growth stories of the industrial era, for example. Atlanta, Houston, and Dallas have been three of the boomtowns of the current age. Like other cities before them, that growth will come to an end one day. It is then that we'll see if, like Chicago and New York, they will succeed as mature regions and truly take their place in the pantheon of great American cities, or, like Detroit or to a lesser extent Philadelphia, will decline or stagnate.

Atlanta is far from dead, but it may be facing the beginning of the end of its growth cycle. If so, this will be the true test and measure of the greatness of that city. Will Atlanta make the grade? And how?

Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

Photo by james.rintamaki

The Myth of the Strong Center

Wendell Cox — Mon, 15 Mar 2010 01:56:30 -0400

At the height of the foreclosure crisis the problems experienced by some so-called “sprawl” markets, like Phoenix and San-Bernardino-Riverside, led some observers to see the largest price declines as largely confined to outer ring suburbs. Some analysts who had long been predicting (even hoping for) the demise of the suburbs skipped right over analysis to concoct theories not supported by the data. The mythology was further enhanced by the notion – never proved – that high gas prices were forcing home buyers closer to the urban core.

Yet a summary of the trends over the past 18 months show only minor disparities between geographies within leading urban regions. Overall house prices escalated similarly in virtually all areas within the same metropolitan areas and the price drops appear to have also been similar. This is in contrast to a theory that suggests that huge price drops occurred in the outer suburbs while central city prices held up well.

Summary of 18 Month Subarea Price Declines: This is indicated by a review of 8 metropolitan areas: Los Angeles, the San Francisco Bay Area, San Diego, Sacramento, Atlanta, Chicago, Portland and Seattle (see end note), for which subarea data is readily available (see table). On average, central area median house prices (all houses, including condominiums), fell 3% in relation to the overall metropolitan area average. Inner suburban areas experienced a 3% gain relative to metropolitan area prices, while outer suburban areas changed at the metropolitan area average. In actual price reduction terms, core areas declined 28.8%, inner suburban areas declined 25.7%, and outer suburban areas declined 27.1%. The overall average metropolitan area decline was 27.2%. There was, however, considerable variation in the figures by metropolitan area (see figure below).

MEDIAN HOUSE PRICE CHANGES BY GEOGRAPHICAL SECTOR
8 Metroplitan Areas

CALIFORNIA MARKETS	Central	Inner Suburbs	Outer Suburbs	Overall
Los Angeles	-45.3%	-30.0%	-41.5%	-37.1%
San Francisco Bay	-38.0%	-39.1%	-38.6%	-38.6%
San Diego	-36.5%	-37.4%	-37.0%	-36.9%
Sacramento	-53.6%	-36.3%	-37.5%	-44.0%

OTHER MARKETS
Atlanta	-11.6%	-17.0%	-15.8%	-15.8%
Chicago	-21.0%	-16.3%	-17.5%	-17.8%
Portland	-10.0%	-14.5%	-15.7%	-13.5%
Seattle	-14.2%	-14.7%	-13.2%	-13.7%

AVERAGE	-28.8%	-25.7%	-27.1%	-27.2%

Estimated from Data Quick information
California Markets: July 2008 to January 2010
Other Markets: 2008-2nd Quarter to 2009-4th Quarter

Where Central Area Losses were Greatest: Over the past 18 months, central areas posted the largest losses in three of the areas. Further, in each of these areas, the smallest price drops were experienced in the inner suburbs.

Sacramento had the steepest central area relative price decline. Central area prices declined 37% relative to inner suburban prices, where the smallest losses occurred. The central area price loss averaged 53.6%, compared to the overall metropolitan area loss of 44.0%. The inner suburbs experienced the smallest loss, at 36.3%.
Los Angeles also had a steep central area relative price decline. Central area prices declined 45.3%, compared to the overall metropolitan area loss of 37.1%. The inner suburbs experienced the smallest loss, at 30.0% while outer suburbs lost 41.5%.
Chicago’s greatest losses also occurred in the central area, but were of a much smaller magnitude. Central area prices declined 21.0%, compared to the overall metropolitan area loss of 17.8%. The inner suburbs experienced the smallest loss, at 16.3%. The outer suburbs lost 17.5%.

Where Suburban Losses were the Greatest: In two areas, the central area price losses were the least, Atlanta and Portland. Yet, the magnitude of these losses was modest. It is interesting to note that the metropolitan areas with the smallest relative losses in the central areas pursued radically different policies with respect to development. Portland’s “smart growth” policies favor central development at the expense of suburban development, while Atlanta’s more liberal policies do not attempt to steer development to the core.

Atlanta’s greatest price declines occurred in the inner suburbs, which experienced a loss of 17.0%, slightly more than that of the outer suburbs (15.8%). In comparison, the central area price drop was the least, at 11.6%, The metropolitan area loss was 15.8%.
Portland’s greatest price declines occurred in the outer suburbs which experienced a 15.7% loss, compared to the inner suburbs, at 14.5. The lowest decline was in the central area at 10.0%. The metropolitan area loss was 13.5%.

Little Difference in Some Markets: There was little difference in the price declines among geographic sectors in three of the metropolitan areas. In the San Francisco Bay area, San Diego and Seattle, the differences between central, inner suburban and outer suburban price declines were all within a 2% range.

Core Condominium Market Crisis

However, core area markets where condominiums predominate indicate substantial difficulties in some of the metropolitan areas. These markets are generally only a small part of central cities, principally around downtown areas or major centers. For example, in the Portland area, the core condominium areas ring the downtown area and include the Pearl District and the South Waterfront District. The central area, which encompasses the entire city of Portland, however, is much larger and has a much larger share of detached housing.

Demand has been so weak in the core condominium markets that substantial price reductions have occurred and a number of buildings have been forced to sell units at auction. Other buildings have given up altogether on selling and have rented condominiums. Some of the price drops, especially in Atlanta, Portland and Seattle are far greater than occurred overall in the respective metropolitan markets. The condominium implosion has not received nearly the level of attention in the national or local media that was accorded the housing bubble and collapse itself.

Portland: A local television station video indicates that Portland’s condominium market is in crisis. A report in The Oregonian indicates that the downtown area has a “glut” of condominiums and that February sales prices averaged 30% below list. A luxury new 15-story building in the Pearl District (The Wyatt) is now being leased instead. Units at The Atwater in the South Waterfront district were auctioned, with minimum bid prices more than 50% lower than list. The John Ross, also in the South Waterfront District, is Portland’s largest condominium project and will be auctioning its units. Minimum bid prices average 70% below the previous top list prices. The smallest units have a minimum bid price of $110,000. By comparison, over the past year, the median house price in the Portland metropolitan area has dropped approximately 10%.

Atlanta: Atlanta has a “vast oversupply” of condominiums. The uptown (including Atlantic Station) and Buckhead markets of Atlanta appear to be experiencing some of the worst market conditions in the nation. The prestigious Mansion on Peachtree, a combination hotel and condominium development, was unable to sell 75% of its residences and was recently sold in foreclosure at approximately $0.30 on the dollar. The winning auction bids at The Aqua condominium in Uptown averaged 50% below the last asking price. In Atlantic Station, units at The Element were auctioned at substantial discounts. Among conventional sales, condominium price reductions of up to 40% have been reported. One building has offered discounts of $100,000 per bedroom. Some new buildings have been converted to rentals, while planned projects have been placed upon hold.

Seattle: Things are little better in Seattle. The overbuilt downtown area condominium market has experienced a median price decline of 35% over the past year. Units at The Gallery in tony Belltown were auctioned off at minimum prices 50% below the last list prices (which had already been discounted). Units at The Brix, on Capitol Hill, attracted bids at auction averaging 30% below previous list prices. Later this month, unsold units at 5th & Madison will be auctioned, at minimum prices below 50% of previous list. For comparison, median house prices in the Seattle metropolitan area declined 6% over the past year.

Chicago: The downtown area of Chicago has been among the most vibrant condominium markets for more than a decade. However, in 2009, condominium sales fell to the lowest level since 1997. At current sales rates, the downtown area has a supply of more than five years, with annual sales of less than 600 and more than 3,000 units available or under construction.

Los Angeles: Few markets have seen as many condominium buildings planned as downtown Los Angeles, and few have seen so many put on hold. A recent issue of the Los Angeles Downtown News lists approximately 50 downtown condominium projects. More than three-quarters of the projects have been scaled back, have had construction slowed or are on “hold.” The market has been so weak that a number of developers have taken losses by auctioning condominium units that they have not been able to sell conventionally.

San Diego: The downtown San Diego condominium is substantially overbuilt. Developers have leased units that were to have been sold and there is virtually no construction of new units.

Rental Conversions: Even these grim reports, however, may mask an even bigger problem. It is estimated that more than 20,000 condominiums units are completed or nearly completed, but are not listed for sale in Miami. In what is by far the nation’s strongest condominium market, Manhattan, more than 6,000 condominium units are completed or nearly completed, but not listed for sale.

In core cities, few issues have been as divisive as the conversion of rental units to condominiums. But, now the opposite is now occurring – condominiums are being converted into apartments for rent: This is trend that undermines markets in a way that cannot be measured by median prices, since it replaces generally high-paying condo owners for generally less flush renters. This puts those who bought at higher prices in these markets at a particular disadvantage.

Conclusion: Overall, contrary to the mythology developed early in the bubble, suburbs and even exurbs have generally performed about as well as closer in markets. The big imponderable will be the future of the core condominium market, which is experiencing significant financial reverses largely ignored by the national media.

Note: As used in this article, the Los Angeles metropolitan area is the Los Angeles-Riverside Combined Statistical Area, the San Francisco area is the San Francisco-San Jose Combined Statistical Area and all other metropolitan areas are the corresponding metropolitan statistical areas. http://demographia.com/db-prdistr2010.pdf>Subareas defined.

Photograph: Condominium construction, Atlanta, weekend of the Lehman Brothers collapse.

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

New Traffic Scorecard Reinforces Density-Traffic Congestion Nexus

Wendell Cox — Wed, 03 Mar 2010 23:37:50 -0500

Inrix, an industry provider of traffic information, has just published its third annual Traffic Scorecard, which ranks the nation’s 100 largest metropolitan areas based upon the intensity of their peak hour traffic congestion in 2009. The results provide further evidence of the association between higher urban population densities and more intense traffic congestion.

Los Angeles, Again: Not surprisingly, Los Angeles is again the most congested metropolitan area over 1,000,000 population. In Los Angeles, roadway travel takes nearly 34.7% more in peak periods than when there is no congestion. This means that a trip that would take 30 minutes without congestion would take, on average 40.5 minutes during peak periods.

The principal measure used by Inrix is the Travel Time Index, which was developed by the Texas Transportation Institute (TTI), for its congestion reports that started in 1982. TTI’s latest Urban Mobility Report is for 2007. The Inrix measures are developed from actual GPS vehicle readings. This information is also provided to TTI to assist in preparation of its annual Urban Mobility Report.

Measuring Delay: In the new edition, Inrix switches from using the Travel Time Index to what it calls the Travel Time Tax. The difference between the two measures is that the Travel Time Tax measures the percentage of delay, such as 35% in Los Angeles, while the Travel Time Index would state the figure as 1.35. The new method is preferable because differences in traffic congestion are more readily apparent. . For example, a metropolitan area having a Travel Time Tax of 15% would have 50% worse traffic congestion than a metropolitan area having a Travel Time Tax of 10%. This large difference is not as obvious when comparing the Travel Time Index values of 1.15 and 1.10. The “Travel Time Tax” parlance, however, is less than optimal and this article will use “average congestion delay” instead.

Ranking the Metropolitan Areas: The average congestion delay in Los Angeles was much worse than in the other largest metropolitan areas, just as its core urban area density is well above that of anywhere else in the US, including New York (where far less dense suburbs more than negate the density advantage in the core city). It also doesn’t help that a number of planned freeways were cancelled in Los Angeles over the last 50 years.

Among the large metropolitan areas, Washington, DC had the second worst Average congestion delay, at 22.4%, followed by San Francisco, at 21.5%, Austin at 20.7% and New York at 19.7%. Austin may seem to have placed surprisingly high, however this was the nation’s last large metropolitan area to open a full freeway to freeway interchange and has only recently begun to develop a comprehensive freeway system, through the addition of toll roads. Austin’s late roadway development is the result of two factors. Austin was too small in 1956 to receive a beltway under the interstate highway system and an anti-freeway movement delayed construction for decades.

Inrix also develops an average congestion delay for the worst commuting hour. Los Angeles also has the most congested worst hour, with an average congestion delay of 69%. Austin ranked second worst at 55%, while San Francisco was third at 46%, Washington, DC fourth at 45% and New York fifth at 44%.

Honolulu: Almost as Bad as Los Angeles: Smaller metropolitan areas also exhibited intense traffic congestion. Honolulu had an average congestion delay nearly as bad as Los Angeles, at 32.4% and a worst hour average congestion delay of 64%. The core urban area of Honolulu has the highest density of any metropolitan area between 500,000 and 1,000,000 population. New York exurb Bridgeport-Stamford had a worst hour average congestion delay of 63%, with a peak period average congestion delay of 18.0%.

Inrix: Density and Traffic Congestion: Virtually all of the congestion and most of the analyzed road mileage is in the urban areas, rather than in the rural areas that make up the balance of the metropolitan areas. The metropolitan areas with more dense urban areas tend to have worse traffic congestion, as the table below indicates.

• Metropolitan areas with core urban densities (see Note 1) of more than 4,000 per square mile had peak period average congestion delays of 18.4%, which is more than three times that of metropolitan areas with core urban densities of less than 2,000 (5.9%).

• Metropolitan areas with core urban densities of more than 4,000 per square mile had worst peak hour average congestion delays of 37.5%, which is nearly 2.4 times that of metropolitan areas with core urban densities of less than 2,000 (15.9%).

These relationships are similar to those indicated in the Texas Transportation Institute data for 2007.

Traffic Congestion & Urban Density in the United States: 2009

Core Urban Area Density (2000)	Peak Period Average Congestion Delay: 2009	Compared to Least Dense Category	Worst Hour Average Congestion Delay: 2009	Compared to Least Dense Category
Over 4,000	18.4%	3.26	37.5%	2.36
3,000-3,999	10.0%	1.76	22.3%	1.41
2,000-2,999	7.3%	1.30	17.7%	1.12
Under 2,000	5.6%	1.00	15.9%	1.00
Density: Population per square mile
Travel Time Tax: Additional travel time required due to traffic congestion
2000 population density is the latest reliable data
Calculated from INRIX & 2000 Census data

Sierra Club Data Also Shows Nexus: Moreover, the association between higher densities and greater traffic congestion is indicated by the ICLEI-Local Governments for Sustainability Density-VMT Calculator, which is based upon Sierra Club research. According to the Calculator, under the “smart growth” scenario, residential housing would be 15 units per acre, as opposed to its “business as usual” scenario at a typical density of four housing units per acre. The density of traffic (vehicle miles per square mile) under the higher density “smart growth” strategy would be 2.5 times as high as under the “business as usual” scenario (Figure).

The Inevitable Comparisons: Invariably, analysts (smart growth advocates and me) like to point out relationships between Portland, with its “smart growth” policies and Atlanta, the least dense major urban area in the world. The Inrix data shows Portland to have an average peak hour delay of 12.2%, which is 15% worse than Atlanta (10.6%). Portland is nearly twice as dense as Atlanta, while Atlanta’s traffic congestion is made worse by one of the most decrepit freeway and arterial systems in the nation.

A National Vision: Inrix has also developed a monthly national congestion delay factor. Inrix notes that traffic congestion had been improving as driving declined due to the Great Recession. However, Inrix refers to reduction in driving as “lucky,” and notes that without a “national vision” that “includes addressing congestion as a national priority,” greater traffic congestion will result.

There is indeed good reason to address traffic congestion. As David Hartgen and M. David Fields have shown, there is a strong relationship between the higher levels of mobility that occur with less congestion and greater economic growth. Obviously that relationship extends to higher urban densities, which are associated with economically counter-productive levels of traffic congestion.

But there is more than jobs and the economy. More intense traffic congestion produces more intense air pollution as well as more greenhouse gas emissions. It is well to remember that public health was the rationale for air pollution regulation. Air pollution’s negative impacts are so local that they are measured in the quality of life of individual people, especially those in close proximity to unnecessarily overcrowded roads. It is ironic that the higher density promoted by smart growth advocates exposes urban residents to more intense air pollution.

Note 1: 2000 core urban area (urbanized area) population densities are used in this analysis because there is no later reliable information. The next reliable urban area density data will be a product of the 2010 census. The Federal Highway Administration (FHWA) produces later urban area density figures, many of which are substantially inconsistent with those of the United States Bureau of the Census, which is the primary source of such information. For example, as late as 2005, FHWA reported the Houston urban area to have 1.3 million fewer people than the Bureau of the Census, while reporting a land area nearly 250 square miles larger than the census had measured. Of course, this is a physical impossibility. The result was that Houston’s density was overstated by 45%.

Note 2: Inrix also ranks metropolitan areas using an “overall congestion” measure, which is simply all congestion added up. As a result, the overall congestion measure is heavily weighted by population. This is illustrated by comparing Los Angeles and Honolulu. These metropolitan areas have very similar average congestion delays, as noted above. This means that drivers encounter similar traffic delays during peak in Los Angeles and Honolulu. However, Honolulu’s overall congestion measure is 95% less than that of Los Angeles, principally driven by the fact that Honolulu’s population is 93% less. As such, the overall congestion measure is of little relevance to people in their day to day commute or as a comparative measure of the intensity of congestion between areas.

Photograph: Los Angeles City Hall.

Atlanta: Ground Zero for the American Dream

Wendell Cox — Fri, 12 Feb 2010 00:24:31 -0500

The Atlanta area has much to be proud of, though it might not be obvious from the attitudes exhibited by many of its most prominent citizens. For years, local planners and business leaders have regularly trekked to planning’s Holy City (Portland) in hopes of replicating its principles in Atlanta. They would be better saving their air fares.

Money Better Spent by Government than People? Most recently, Jay Bookman of the Atlanta Journal Constitution wonders whether taxes are high enough in Georgia and seems envious of the fact that Oregon’s voters approved tax increases in a recession, despite months of having one of the highest unemployment rates in the nation. Perhaps they were naïve enough to believe that the higher taxes would not stand in the way of attracting new business to the state. Or, perhaps the voters believed that, as a neighbor to basket case California, Golden State businesses might still flee to Oregon as an expensive but less congested environment (Note 1).

Portland Transit: Nothing to Emulate: Bookman is also envious of Portland’s transit system with its light rail and commuter rail. Perhaps he is unaware of the “pecking order” of transit. Atlanta’s MARTA is superior to Portland’s MAX light rail in virtually every respect. MARTA a world class Metro. It is fully grade separated and averages about 70% faster than MAX, which is a revival of abandoned streetcar technology. It is thus not surprising that MARTA carries three times as much passenger demand as MAX, despite a total route length approximately the same as in Portland. Despite MARTA’s superiority to MAX, both the Atlanta and Portland transit systems share the transit curse of excessive costs. Atlantans are paying far less to subsidize their transit system than if they had unwisely, like Portland, extended it and taxed residents throughout the suburbs.

Portland’s Embarrassing Commuter Rail Line: And, commuter rail does not appear to be a matter of pride in Portland at this point. Portland’s one commuter rail line celebrated its first year anniversary recently. Before the line opened, Tri-Met transit officials estimated that the line would “have 2,400 riders a day as soon as service begins.” The Wilsonville to Beaverton WES commuter rail line, however, never came close to that number. Daily ridership has been under 1,200. But the relative paucity of riders did not interfere with the transit agency’s spin and the media’s general sheepish agreement. At the one year anniversary a Tri-Met spokeswoman commented that “When you think about having 55,000 jobs lost in the region, that translates into fewer transit riders throughout the system and particularly during rush hour.” However, nowhere near the half of riders that failed to show for WES cannot be blamed on Portland’s high unemployment rate. If Portland were to return to unemployment levels of a year ago, WES would likely add no more than 50 daily riders.

So, recession-ravaged Portland has built a commuter rail line that carries, at best, 0.5% of the capacity of adjacent freeways when it operates. Moreover, it has been costly. The line costs about $60 per passenger, only $2.50 of which is collected in fares. This means that the annual subsidy per passenger is nearly $15,000, almost enough to pay the annual mortgage cost on two median priced Atlanta homes.

Portland Traffic Congestion Worse than Atlanta: Atlanta is renowned for its traffic congestion, which is a direct result of its failure to invest in the type of arterial grid that could provide substantial relief for its less than robust freeway system. Yet, based upon the latest Inrix National Traffic Scorecard, (GPS collected data for 2009), there is less peak period travel delay (as measured by the Travel Time Index) in Atlanta than in Portland, which is a reversal from data earlier in the decade (see note).

Atlanta: Adding a New Zealand: Atlanta has no reason to look to Portland as a model, or anywhere else, for that matter. Coming out of World War II, the Portland metropolitan area was larger than the Atlanta metropolitan area (1950). Since that time, Portland has grown strongly, adding 1.5 million people. Atlanta has added more than three times as many people. The result is an economy that produces at least $150 billion more in wealth every year than Portland. Thus, the difference between Atlanta and Portland is more than the gross domestic product of New Zealand. For at least the last two decades, Atlanta has been the fastest growing large metropolitan area in the high-income world.

Atlanta: Land of Opportunity: But perhaps the biggest draw about Portland for Atlanta leaders is its “growth management” (so-called “smart growth”) land use policies. Portland has drawn an urban growth boundary around its urbanization. Its land regulators commission “sun rises in the West” studies to deny the fact that this rationing of land increases house prices. There is, however, no question of the impact of more restrictive land use policies, from the World Bank to members of central bank boards to decorated economists such as Kat Barker of the Bank of England and Donald Brash, former governor of the Reserve Bank of New Zealand.

The result is superior housing affordability. Late in the year, the median house price in Atlanta was 2.1 times median household incomes (the Median Multiple). By comparison, the Median Multiple in Portland was 4.2, indicating that house prices are twice as high relatively speaking in Portland. In 1990, before Portland implemented its more stringent smart growth policies, housing affordability in Portland was about equal to Atlanta.

But there is more to the story. Portland’s heavy handed planning policies are distorting product offerings so much that only the richest can afford more than a miniature back yard. This is illustrated by the images of new housing developments below in the suburbs of Portland and Atlanta (below). Both pictures are taken from approximately 1,500 feet above the ground.

In the Portland example, virtually on the fringe of the urban area (the next urbanization is at least 10 miles away); houses are stacked in at more than 15 to the acre, with just a few feet between the roof-lines - vaguely reminiscent of third world shantytowns (Note 2). The more traditional suburban development that characterizes most of Portland is also shown on three sides of the overly dense new development.

In the Atlanta example, houses have been recently built at about 4 to the acre, which has been the American suburban norm (except where land use regulations have required larger lots). The emerging sameness of Portland’s housing gives new meaning to the “ticky tack” criticism of suburbanization.

Our 6th Annual Demographia International Housing Affordability Survey found Atlanta to be the second most affordable metropolitan area with more than 1,000,000 residents and the 17th most affordable metropolitan area out of 272 markets in six nations. Portland ranked 180th. Atlanta is truly a land of opportunity for young households and lower middle income households that can never hope of owning their own home in Portland’s pricey, growth management driven market.

Rather than being a shameful example of metropolitan disaster, Atlanta remains one of the diminishing number of American urban areas where the American Dream can still be offered at a price that middle income households can afford. Atlanta has also emerged as one of the world’s best examples of ethnic diversity, not only in the core but also in the suburbs. More than half of the new residents in the suburbs have been non-Anglo since 1990 in Atlanta, about which it can proud. Atlanta is inferior only in the quality of is public relations and self-understanding. It should be a required stop for planners from Portland and beyond, for remedial education on injecting humanity and aspiration back into urbanization.

Note 1: Bookman also notes in his column that Portland’s traffic congestion has not worsened at the rate I predicted in a 1999 Atlanta Constitution oped. I had not anticipated the huge gasoline price increases, which have materially reduced the rate of traffic growth virtually everywhere and made previous congestion increase rates unreliable as predictors of future growth.

Note 2: For example, see the similar rooflines in a Dhaka shantytown near Gulshan at 23:47 North and 90:24 East in Google Earth. The principal difference in roof lines is the Dhaka slum’s lack of streets and cars, both of which seem consistent with the anti-mobility stance of “smart growth” planning.

Photo: hyku