Bacon's Rebellion

Democracy Thrives in Sunlight

TOWARD A SUSTAINABLE TRAJECTORY

—

by

James A. Bacon
in

Today’s events suggest the existing governance structure is skating ever closer to the abyss. On Sunday, 21 September we posted a note titled “Fundamental Transformation” that focused on Fundamental Transformation of governance structure.

As of 28 September there were 37 comments following the post but only one addressed the issue of Fundamental Transformation of governance structure. That one (Anon 7:21) discussed a change that would abrogate a major tenant of the Constitution.

In our view, Fundamental Transformation of governance structure requires NO change in the Constitution.

The Constitution is fine, the problem is that implementation of the intent of the Constitution is thwarted by a failure of governance structure to evolve. This failure to evolve reflects a complete lack of understanding about the economic, social and physical changes that have taken place over the past 220 years.

There has been a failure to respond to changes with a contemporary version of the governance structure that is framed by the Constitution because those in control benefit from Business-As-Usual. For this reason they deny the need for change providing only lame excuses such as “traditional values.”

Groveton made a very important point in the comments:

“America has overspent and/or under-taxed for too long.”

He is absolutely right. Whether by taxes, fees or sweat equity, citizens individually and collectively must contribute more to the good of society and less to the greed and aggrandizement of a few at the top of the Ziggurat. If there is to be a sustainable trajectory for civilization there must be a new metric of citizen well being, a commitment to Balance and less focus on competition. There must also be a fair allocation of costs, especially location-variable costs.

As we note in the post “FROM CNN:”

“Citizens of the US of A cannot continue to expect to live off of natural capital, imported energy and loans from foreign investors.”

We argue that the economy must be restructured so that citizens do not have to rely on Mass OverConsumption – specifically buying more Large, Private Vehicles and buying more Wrong-Size Dwellings in the wrong location as the way to end recessions and create a prosperous, sustainable society.

A sustainable trajectory for civilization requires a steady state economy, not a consumption driven “growth” economy.

In this regard:

Small IS beautiful and Speed does kill.

With respect to Small IS beautiful: The Winner-Take-All / Consumption-Uber-Alles / Supercapitalism trajectory is based on the assumption that big is better and biggest is most competitive. Global organizations may be super-competitive from a price perspective but not from a value / sustainability perspective. There are finite limits to competition.

As we document in “The Shape of the Future,” the first step toward a sustainable trajectory is to evolve functional human settlement patterns. That means a recognition that the New Urban Region is the Fundamental Building Block of contemporary society and that sustainable Regions are made up of Balanced Communities.

Organizations – Enterprises, Agencies and Institutions – that are larger than Region in scope must become the focus of intelligent Transformation. That is impossible to do within the existing governance structure.

At some point in the near future citizens will look at Global / Multi-National and dominate nation-state Enterprises, Agencies and Institutions the way tourists not look at the Pyramids:

“Why did they do that?”

“How did they get all those people to work so hard for the aggrandizement of a few?”

Some have considered mega-Agencies with suspicion for a long time. More and more view mega-Enterprises as a problem, not a solution. Next up are mega-Institutions and MegaRegions.

Credit where credit due: MainStream media is now raising a caution flag: The current bailout proposals will create more mega financial Enterprises, ones that are too big to fail e.g. Enterprise socialism. So far it is only a yellow flag. Why only a yellow flag when it should be obvious? For this answer see THE ESTATES MATRIX.

With respect to Speed kills: The complexity of society and the rate of churn increases the befuddlement of the RHTCs and paralyzes the aging population. Research shows marketers that Forest Gump spends more when he is befuddled. We now have $700 million of befuddlement according to some Agency heads. Without Fundamental Transformation there will be a lot more and nothing with which to cover the debt.

EMR

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106 responses to “TOWARD A SUSTAINABLE TRAJECTORY”

  1. agnes Avatar
    agnes

    In fact, for quite sometime now, the view has been gaining ground that the economy is headed towards a higher growth trajectory where annual real GDP growth rates of 8 per cent and above are both possible and sustainable. In its recent quarterly review of the monetary policy, the Reserve Bank of India has not only been more optimistic than ever before — it has forecast a GDP growth rate of 7.5 to 8 per cent for the year — but expects the momentum to be maintained well into the next year (2006-07). Interestingly, when the original Tenth Five Year Plan document assumed an average annual GDP growth rate of 8 per cent for the whole plan period, it appeared to be in the realm of wishful thinking, a view seemingly corroborated by the figures for the first two years.

    —————

    ages

    Internet Marketing

  2. Groveton Avatar
    Groveton

    “At some point in the near future citizens will look at Global / Multi-National and dominate nation-state Enterprises, Agencies and Institutions the way tourists not look at the Pyramids:

    “Why did they do that?”

    “How did they get all those people to work so hard for the aggrandizement of a few?”

    They convinced the many that it was in their personal and immediate benefit to do what the few wanted. In the case of the pyramids, the many believed that the pharos were gods and building tributes to them (aka the pyramids) would lead them to the spiritual promised land.

    Today, it’s much the same. The many believe that they have a realistic chance of becoming the next Bill GAtes or Warren Buffet. Or, even if they don’t think they have a realistic chance of this – they think their children have a realistic chance. It is the same impulse that drives compulsive gamblers to pump dollars into slot machines or drop their paycheck on lotto. Somebody wins and (maybe) it will be them.

    In the past, this rising tide of “optimism in spite of probability” raised American society’s boats. Even if Mom and Dad never became the next Warren Buffet, they (or their kids) substantially improved their standards of living. The problem with this is two-fold:

    1. Too many people attained a standard of living that really did not need improvement. Certainly not everybody attained this standard of living but many did. And the only way to continue this psychological cycle of gain was to overconsume on a vast scale (in terms of the number of people overconsuming). To be sure – there has long been overconsumption – Gilded Age multi-millionaires building mansions for second homes in Newport, the Kennedys building “compounds” in Hyannisport. Yet these people were few and far between. Their over-consumption was almost a positive. They were too few in number for even their gross over-consumption to hurt much and they set an example that caused others to strive to move from under-consumption to appropriate consumption. But sometime in the 70s too many people met the goal of becoming rich and the cumulative over-consumption became a problem.

    2. The bubble of broad based wealth and over-consumption has burst. Many things caused the burst but globalization and the LaborNet (formerly called the Internet) are two of the most important. The tide of the American economy is no longer raising all boats. While it is catapulting some boats into orbit it is not raising the average boat. Yet the pattern of emulating over-consumption as a basis of personal improvement continues.

    This is a suicidal economic cycle that must end.

  3. Anonymous Avatar
    Anonymous

    “This is a suicidal economic cycle that must end.”

    But it continues! Just look at Dulles Rail, Phase I. The federal share — $900 M; the local share – $450 M, paid by landowners; the balance — unlimited, paid by Toll Road drivers and, ultimately, Fairfax County residents. Who benefits the most? Perhaps, those who are paying $450 M.

    Where is the MSM? Cheering this on.

    TMT

  4. Anonymous Avatar
    Anonymous

    Hold up a second here

    Whatever happened to personal responsibility.

    Nobody is forcing anyone to overconsume. Noone forced anyone to buy inefficient vehicles. Noone forces anyone to stay at a job.

    This country was founded on freedom and choice and people taking responsibility for their actions.

    I will grant you that for the life of me all these executives getting massive bonuses for running companies into the ground makes absolutely no sense. But, at the same time thats the way the contracts were written.

    There is nothing to stop Joe Sixpack from forming his own company and eventually rising up so he can get his golden parachute too.

    It seems those that have commented so far are proposing massive government regulation of everything from housing costs to how much someone should spend to the ratio between the guy on the line and the CEO

    Am I missing something here. That doesn’t sound very conservative to me.

    NMM

  5. Anonymous Avatar
    Anonymous

    “America has overspent and/or under-taxed for too long.”

    I can agree with that.

    “Whether by taxes, fees or sweat equity, citizens individually and collectively must contribute more to the good of society and less to the greed and aggrandizement …”

    I hear the sentiment but I have a problem with the word cotribute, and the use of negative use of greed.

    We should NOT be “contributing” to the good of society, we should be investing in it. And we should be selfish eneough and greedy enough to expect and demand good returns on our “investments”. We should expect and demand that the government to do nothing that does not contribute to our own aggrandizement (collective though it may be).

    “Citizens of the US of A cannot continue to expect to live off of natural capital, imported energy and loans from foreign investors.”

    EMR should stick to settlemet patterns and stay out of economics. I don’t know that there has ever been a steady state economy, certainly we have no idea how to create such a thing.

    But just consider sustainability, depending on who you beleive, and what level of lifestyle we wish to sustain we could be talking about anywhere from five to two hundred acres per person. That means that everyplace that meets EMR’s Sweet spot of ten persons per acre is actually being subsidized by 1000 to 2000 acres someplace else. Sustainable regions are going to take a lot more than just balanced communities.

    Small is beautiful until the big guy takes it away from you. You need a strong economy, just to defend yourself, unless you are so poor you have nothing worth stealing.

    ——————————–

    “How did they get all those people to work so hard for the aggrandizement of a few?”

    They paid them really well compared to the other option.

    ——————————-

    Debt is to society as the bow wave is to a ship. You cannot move without it. On the other hand it absorbs energy, so the faster you move the bigger the bow wave and the more energy you need to put in.

    Like everything else there is a trade-off. In the ship world it is called hull-speed, which is the maximum efficient speed before the bow wave absorbs more energy than you get back in ships velocity. Without some debt, society does not advance as fast as it can, with too much it stalls out in its own turbulence.

    Now, maybe you can run a steady state economy with a velocity of zero: no debt, no bow wave. But then you are going to have to answer the question:

    How will you get people to work so hard? It is pretty hard to argue they will be better off when they have nothing to gain.

    RH

  6. Anonymous Avatar
    Anonymous

    "Vancouver proper has a population (1991) of 472,000 and an area of 114 km2 (11,400 hectares). However, the average Canadian requires over a hectare (ha) of crop and grazing land under current land management practices to produce his/her high meat protein diet and about .6 ha for wood and paper associated with various other consumption items. In addition, each "occupies" about .2 ha of ecologically degraded and built-over (e.g., urban) land. Canadians are also among the world's highest fossil energy consumers with an annual carbon emission rate of 4.2 tonnes carbon (15.4 tonnes CO2) per capita (data corrected for carbon content of trade goods). Therefore, at a carbon sequestering rate of 1.8 tonnes/ha/yr an additional 2.3 ha of middle-aged North temperate forest would be required as a continuous carbon sink to assimilate the average Canadian's carbon emissions (assuming the need to stabilize atmospheric carbon dioxide levels).

    Considering only these data, the terrestrial "personal planetoid" of a typical Vancouverite approaches 4.2 ha, or almost three times his/her "fair Earthshare." [An additional .74 ha of continental shelf "seascape" is appropriated to produce the average Canadian's annual consumption of 24kg of fish.] On this basis, the 472,000 people living in Vancouver require, conservatively, 2.0 million ha of land for their exclusive use to maintain their current consumption patterns (assuming such land is being managed sustainably). However, the area of the city is only about 11,400 ha.

    This means that the city population appropriates the productive output of a land area nearly 174 times larger than its political area to support its present consumer lifestyles."

    "The Netherlands (area: 33,920 sq km) serves to illustrate: We estimate that the people of Holland require a land area more than 14 to 15 times larger than their country to support current domestic consumption of food, forest products, and energy (Figure 2) (Rees & Wackernagel, 1994). The food footprint alone is more than 100,000 square kilometers, based on world average productivities. Indeed, Dutch government data suggest that the Netherlands appropriates 100,000 to 140,000 km2 of agricultural land, mostly from the third world, for food production (including value-added food products produced in the Netherlands for export)"

    "It is worth remembering that the Netherlands, like Japan, is often held up as an economic success story and an example for the developing world to follow. Despite small size, few natural resources, and relatively large populations, both Holland and Japan enjoy high material standards and positive current account and trade balances as measured in monetary terms. However, our analysis of physical flows shows that these and most other so-called "advanced" economies are running massive, unaccounted, ecological deficits with the rest of the planet "

    William E. Rees, The University of British Columbia

    RH

  7. E M Risse Avatar
    E M Risse

    Groveton:

    Very well put!

    The answer re the Pyramids is right on.

    As we have noted, a technologically advanced society with democracy and a market economy depends on educated citizens.

    You are right, citizens have to break the dream / bust cycle.

    That means realistic expectations and enlighted self-interst.

    The first step is functional settlment patterns so that oppertunity is optimized while consumption / growth is held to a level where renewable resouces will support it.

    EMR

  8. Anonymous Avatar
    Anonymous

    Agnes quoted:

    “In its recent quarterly review of the monetary policy, the Reserve Bank of India has not only been more optimistic than ever before — it has forecast a GDP growth rate of 7.5 to 8 per cent for the year — but expects the momentum to be maintained well into the next year (2006-07).”

    I hope everyone noted this was a 2005 comment — next year is 2006 – 2007.

    Dreams and Bubbles.

  9. E M Risse Avatar
    E M Risse

    Nova Middle Man said:

    “Hold up a second here

    “Whatever happened to personal responsibility.

    “Nobody is forcing anyone to overconsume. Noone forced anyone to buy inefficient vehicles. Noone forces anyone to stay at a job.

    Do you read Shankar Vedantam’s columns in WaPo?

    I suspect that we will find that the human brain is not up to resisting the huge impact of powerful, emotion besotted advertising and the urge to consume.

    Second, the consumption of some goods and services like Large, Private Vehicles and Wrong Size House in Wrong location give the RHTCs no choice.

    “This country was founded on freedom and choice and people taking responsibility for their actions.”

    My point exactly it was founded on those principles when 95% were agrarian and could understand the basics of life or they perished — went an built pyramids for the Gods.

    There is now far more to know and no genetic evolution in capacity.

    EMR

  10. Anonymous Avatar
    Anonymous

    We are still agrarian. It is only that urban living has reduced the feedback and increased the subsidies.

    Like you say, it is all about paying full locational costs.

    RH

  11. E M Risse Avatar
    E M Risse

    Too Many Taxes quotes Groveton:

    “This is a suicidal economic cycle that must end.”

    and then notes:

    “But it continues! Just look at Dulles Rail, Phase I. The federal share — $900 M; the local share – $450 M, paid by landowners; the balance — unlimited, paid by Toll Road drivers and, ultimately, Fairfax County residents. Who benefits the most? Perhaps, those who are paying $450 M.”

    For now TMT, for now.

    And how about 11 Billion for mainatinance?

    One of the things that makes understanding the New Urban Region Conceptual Framework so useful is that it enables one to understand what is going on, day after day. :

    On Monday METRO announced it will require $11 Billion in maintenance over the next two decades.

    With resources shrinking, money like that will not be available. The cost of riding will go up, the service level will go down. The cost of doing business and the cost of goods and services will go up. Why?

    It is not possible to run a high capacity shared-vehicle-system that has “most of the trains leaving most of the stations essentially empty most of the time.”

    It is not possible to design a Mobility and Access system – not with Large, Private Vehicles, not with smaller, more efficient private vehicle and not with shared-vehicles that serves two surges a day.

    In other words sustainable Regions must be made up of Balanced Communities not Beta places with lots of “commuters.”

    In the case of METRO, there must be a Balance between station-area ridership demand and system wide capacity. No Mobility and Access system can support “commuters.” See “The Problem with Commuters.”

    TMT closes with:

    “Where is the MSM? Cheering this on.”

    Of course, see THE ESTATES MATRIX. They have no choice.

    Did you see that they just “bought” Foreign Policy a mag that looses $1.3 a year?

    They have no choice…

    Yes they do, they could try understand human settlement patterns and their impact of society.

    EMR

  12. Anonymous Avatar
    Anonymous

    “I suspect that we will find that the human brain is not up to resisting the huge impact of powerful, emotion besotted advertising and the urge to consume.”

    EMR forgot to note that the “urge to consume” is a genetic hardwired proclivity that served humans well to get to 1789 but not to evolve an urban, interdependent society.

  13. Anonymous Avatar
    Anonymous

    It is not possible to run a high capacity shared-vehicle-system that has “most of the trains leaving most of the stations essentially empty most of the time.”

    That is why autos are more efficent: they almost never leave “the station” empty.

    “It is not possible to design a Mobility and Access system – not with Large, Private Vehicles, not with smaller, more efficient private vehicle and not with shared-vehicles that serves two surges a day.”

    Does that mean mobility and access systems are not possible? Doesn’t EVERY system pretty much serve two surges a day? Even if we went to work on escalators and people movers, they would be parked or vacant most of the day.

    Wouldn’t even the most balanced system expect to have two surges a day? Even sections of the Orange line which have substantial bidirectional traffic have two surges a day.

    You will never get to the point of having no commuters, so you will always have surges. Even if you substantially reduce commuters, you still have to deal with the remaining 80% of transportation needs.

    ———————-

    You lost me on the last four sentences. Who, in MSM, bought Foreign Policy? Why do they have no choice, and what difference does it make if Foreign Policy has been losing money?

    Assuming that it was a bad business decision, how would their understanding of settlement patterns make it any better?

    Really, EMR. You should get a grip on the real world before you postulate fabricating a new one built on intellectual, and economic cotton candy.

    RH

  14. Anonymous Avatar
    Anonymous

    "The most influential environmental groups in Washington — the Natural Resources Defense Council and the Environmental Defense Fund — are continuing to bet the farm on … making fossil fuels more expensive in order to encourage conservation, efficiency and renewable energy. But with an economic recession likely, and energy prices sure to remain high for years to come…, any strategy predicated centrally on making fossil fuels more expensive is doomed to failure.

    A better approach is to make clean energy cheap through technology innovation funded directly by the federal government. In contrast to raising energy prices, investing somewhere between $30 billion and $50 billion annually in technology R&D, infrastructure and transmission lines to bring power from windy and sunny places to cities is overwhelmingly popular with voters. Instead of embracing this big investment, greens and Democrats push instead for tiny tax credits for renewable energy — nothing approaching the national commitment that's needed.

    With just six weeks before the election, the bursting of the green bubble is a wake-up call for Democrats. Environmental groups, perpetually certain that a new ecological age is about to dawn in America, have serially overestimated their strength and misread public opinion. Democrats must break once and for all from green orthodoxy that focuses primarily on making dirty energy more expensive and instead embrace a strategy to make clean energy cheap. …"

    The green bubble bursts, by Ted Nordhaus and Michael Shellenberger, Commentary, LA Times

    RH

  15. Groveton Avatar
    Groveton

    NMM:

    The over-consumption in the United States would not as big a problem if we had a corresponding over-saving problem too. But we don’t. We have a mortgage the future to pay for the present that is the underlying reason for serious fear. Let me take a stab at an admittedly doomsday scenario:

    1. The credit crisis remains unresolved and the credit markets stay frozen. In some cases – such as hedge funds being unable to borrow money for leveraged investments – who cares? However, the car dealer down the street borrows money to finance the cars on his lot, the guy who sells Christmas trees between Thanksgiving and December 25 can’t get a short term loan to pay his labor to cut and move the trees, and so on. Multiply this real economic slowdown buy a couple of million situations and you have a general winding down of economic activity.

    2. The credit related slowdown in 1. occasions a consumer spending slowdown as people have less and less money. Luxury goods are early casualties. Cruise lines sink, airlines crash, computer makers shut down factories.

    3. Normally, the drop of economc activity described in 1. and 2. would create a situation when high unemployment creates cheap labor and low demand for money creates cheap credit and the cycle naturally starts to to reverse itself. However, in today’s America, there is a third interloper in out economy. A wolf in sheep’s clothing who really decided between a natural and recurring recession / recovery and a dramatic depression. This interloper is the world credit market and America is up to its eyes in hock to this crowd. Once the frozen credit markets start cutting supply side growth with the corollary effect of lowering comsumer spending which cuts demand based growth – the next shoe drops. The world credit market, Thomas Friedman’s “thundering herd” departs. This starts a rapid devaluation of the currency and hyper-inflation, despite dismal economic growth. Stagflation on seroids destroys much of the intrinsic wealth in America. Your 401(k), savings, checking, retirement accounts are all basically ruined. The government isn’t collecting sufficient taxes for its operations so it does the one thing politicians can do – raise the tax rate. Of course, you don’t have a job so you go into default.

    4. Having failed to succeed by raising taxes the governemnt exercises its remaining core competency – it prints money. This further fuels inflation until it takes a bag of money to buy a bag of food. Prices are rising so fast that merchants are reluctant to take credit (in the form of credit cards) since they will lose real money if the inflation accelerates between the time they pay for the item and the credit card company pays them for your purchase. At least, a two tiered system evolves – one price for cash and a second (much higher) price for credit purchases.

    5. Other countries decide that the weakened US cannot really defend its interests and these countries start making aggressive moves. Russia takes disputed land from Japan. South America gets active. Mexico starts trouble on our southern border. All eyes turn to Saudi Arabia. The world’s policeman is bankrupt and the Miscreant’s Ball has not only started but is going full force.

    6. The US government tires to revalue the currency by issuing a new currency. You turn in 10 old dollars and get one shiny new dollar. This sounds the final death knell for savings accounts, retirement plans, etc. Millions are destitute and the 30 year long effort to rebuild gets underway.

    And somewhere the Republicans who voted against the bailout because they don’t like Nancy Pelosi will be trying to explain how none of this is their fault.

  16. Anonymous Avatar
    Anonymous

    Forgive me I am still trying to understand exactly what is going on

    Groveton from your argument I understand the danger of going into a recession. I also understand the danger of being too reliant on foreign investment.

    I am still confused on how these things are connected to the bad mortgages that were made and then financial companies slicing and dicing them in pursuit of higher profits.

    In the end is it a simply a matter that almost all of the banks made bad bets on these risky mortgages and that there is literally no banks with good balance sheets left and able to make loans. If thats the case a pox on the entire industry.

    The dollar has actually been getting stronger recently so I am a bit confused on that point

    I admit I am in way over my head on all of this Is anyone else still confused :-p

    ___________________________________

    Would it really be a bad thing if more people were forced to live within their means

    Hopefully the moral of this crisis is don’t bite off more than you can chew

    Then again I am less risky than most. For example I don’t think I would ever start my own business too risky. If everyone was like me there would be no more jobs.

    NMM

  17. Anonymous Avatar
    Anonymous

    “Having failed to succeed by raising taxes the governemnt exercises its remaining core competency – it prints money.”

    that’s a classic, nice one.

    RH

  18. Anonymous Avatar
    Anonymous

    “In the end is it a simply a matter that almost all of the banks made bad bets on these risky mortgages and that there is literally no banks with good balance sheets left and able to make loans. “

    Groveton can correct me, but I don;t think this is the case. Only 1.5% of loans went bad.

    The problem is that now no one can tell which mortgage backed securities are good and which are not: the ratings agencies didn;t do their job.

    Now, no one is willing to buy up ANY mortgge backed securities, good or bad. It is a crisis primarily of confidence and not a matter that billions in mortgages went South.

    You cannot move this ship without making that bow wave, and it is called debt. Yes, it is bad to make “everyone live within their means” because businesess don’t operate on a cash basis. If we all had to do that, no one would like the result.

    RH

  19. Groveton Avatar
    Groveton

    It’s less the defaults than the reduction in value – at least, as I understand it. Banks make loans and put collateral on their balance sheets. So long as they have sufficient collateral they can keep making loans. However, once their collateral level drops they need to stop loaning money. Real estate is a form of collateral. As the value of real estate went up, banks were able to loan more and more. Bu then the bubble burst. The value of real estate fell. Some mortages went into foreclosure – which is a form of bad debt. Banks had to recognize higher and higher levels of bad debt. But this wasn’t the killer. The killer is that the mortages on the balance sheet are nased on houses that are worth a lot less than they were. So collateral is shrinking. So, the banks are not making loans. So people are not buying and selling houses because they can’t get loans. And the only way to really know what a house is worth is to sell it or sell a hose very similar in the same area. As home sales stall nobody really knows what homes are worth. And, under the principle of conservatism, if you don’t know what something is worth – you have to assume it’s worthless. So, the collateral shrinks further, no loans are made, the value of real estate remains in doubt, etc. etc. That’s what I mean when I say the credit markets are frozen.

    If the US government buys the worst of the loans, liquidates the real estate behind the loans at a loss it theoretically should start to reset the property values. The banks will be able to define the value of the balance sheets and therefore their collateral. They will start lending agian and the credit markets will be thawed.

    At least that’s my understanding.

  20. Anonymous Avatar
    Anonymous

    “You lost me on…”

    … almost everying that EMR has said in the past two years I have been reading this Blog.

    “Doesn’t EVERY system pretty much serve two surges a day?”

    Not a balanced one, that is what EMR’s “reletive Balance of Jobs / Housing / Services / Recreation / Amenity at the Alpha Community scale is all about.

    That is what system wide station-area Balance is all about.

    Try reading and not just tossing mud.

    “Even if we went to work on escalators and people movers, they would be parked or vacant most of the day.”

    Not with Balance.

    “Wouldn’t even the most balanced system expect to have two surges a day?”

    No

    “Even sections of the Orange line which have substantial bidirectional traffic have two surges a day.”

    Orange Line does not serve a single station with station-area balance.

    “You will never get to the point of having no commuters, so you will always have surges.”

    There will alwasys be some inter-Community commuters but there need not be eough to cause surges like METRO experiences.

    “Even if you substantially reduce commuters, you still have to deal with the remaining 80% of transportation needs.”

    If 80% is non-work travel why does 20% cause surges?

    You again prove you have no idea what EMR is talking about.

    ———————-

    “You lost me on the last four sentences. Who, in MSM, bought Foreign Policy?

    I wondered that too but a quick check turned up The Washington Post — reproted in today’s editions.

    If your main objective was not to just find something to make fun of Mr. Risse, you could have found out too.

    “Why do they have no choice,…”

    You do not know because you have not read The Estates Matrix.

    Until you start reading and understanding you will continue to be lost.

    Tired of RH

  21. Anonymous Avatar
    Anonymous

    “It’s less the defaults than the reduction in value – at least, as I understand it. Banks make loans and put collateral on their balance sheets. So long as they have sufficient collateral they can keep making loans. However, once their collateral level drops they need to stop loaning money. “

    Yes, you are right, of course, the collateral is an issue even on loans that have a good payment history.

    But in this case the collateral is the Mortgage backed securities themselves. So if you have an MBO with 1000 mortgages in it, then what is it worth? Depends on where the mortgages are located – those on the coasts lost more value because they had the biggest run-ups. Depends on how many in your collection are in default. none of this is all that easy to find out: it takes legwork and research.

    So, what are your MBS worth? In the end they are worth what someone will pay you for them, and right now, no one will buy.

    So, you are a mortgage bank and you make loans on homes and businesses. If the valaue of the home goes down, you might have a problem, so you hold it a while (to “prove” the loan) and you sell it, along with the payment history to Fannie Mae.

    Fannie Mae bundles it with 999 other Proven loans and sells a mortgage backed security.

    An investment bank borrows (from someplace, China, pension funds) the money to buy the MBS and they get insurance from AIG. But that lender is watching like a hawk. If it looks like the value of the MBS is dropping, they will call for more collateral.

    To raise money you would sell some of your other property or even MBS’s – except no one is buying. No problem: that’s what you have insurance for……Until AIG goes under.

    It wasn’t only the house value collateral that caused the problem: it was the double leverage at the MBS level, and the fact that suddenly no one knew how to value a derivative squared.

    There wasn’t enough information in the market. There wasn’t enough churn to develop that information, and unlike true commodities, there was no one taking delivery on an actual product, so there was no way to “settle” the contract.

    RH

  22. Anonymous Avatar
    Anonymous

    Look what EMR has proposed is a theory that will never work in practice.

    He is a great philosopher but fails in the real world situations hence why he is a bad economist. No disrepsect its obvious EMR is a very smart individual

    There will always be rush hours

    I was in Europe for the past three weeks on vacation and in every single major metropolitan area there was a morning and evening rush hour. Even in Amsterdam (walking around at 5 trying to not get run down by hundreds of thosands of bicylces was pretty entertaining)

    Thinking that everyone will be able to live on a 1/4 acre lot less than five minutes from work is a utopian pipe dream. (Humm that sounds alot like the 1950s and the original idea of the suburbs)

    In reality there is simply too many people, and too few places, and based on the simple fact of supply and demand the cost of housing would be outrageous.

    Not to mention the fact that people switch jobs frequently and in many cases both parents work.

    Rinse and Repeat the same arguments for the past three years

    Tired of anon troll

    NMM

  23. Anonymous Avatar
    Anonymous

    “Not a balanced one.”

    Nonsense. Total and complete fabrication.

    Balanced or not, people get up and go to work in th morning and go home at night. Whatever system you have will have surges unless you are planning on changing people’s work and sleep habits. Unless you think every two income couple will BOTH be able to walk to work.

    ———————

    “Try reading and not just tossing mud.”

    Try explaining, not just repeating the same garbage as if that will make it true. Better yet, try reading something other than your own fabrications.

    “Orange Line does not serve a single station with station-area balance.”

    And neither does anyplace else. They don’t exist. Except in EMR’s imagination.

    Balance will NOT eliminate surges, but the surge might be more omnidirectional, if you had total control over people’s lives. Balance will NOT eliminate congestion: even with perfect ballance you can still spin only o many plates. Balance will NOT eliminate change, because balance is a dynamic condition, not a static one. Whenever you are correcting the balance, you have surges, whether it is airplane flaps or human behavior.

    ————————–

    “If 80% is non-work travel why does 20% cause surges?”

    I can’t believe you even asked this question, do you really not understand anything? 20% is a major hit, especially when you have no surge capacity. Those are factual measurable numbers, not invented by me. If there is someone who doesn’t understand, it is EMR, primarily because he seems to have a problem with reality.

    It is not that the 80% is non-work travel, lots of those people are out working. But it is also the 80% of travel that Metro and other mass transit is particularly, even excruciatingly ill-adapted to handle.

    Metro does one thing well, and that is handle surges. It still costs a fortune to build in all that excess capacity, but that is no different from any other system.

    If you take away the surges, then you can also save a few billion on mass transit because it is no longer needed. If you could design away the surges, you could design them away for motor vehicle traffic, which is much more efficient for everything but handling surges.

    ————————-

    I have no intention of making fun of Dr. Risse. I just happen to think his juxtaposition of ideas are mostly comical and ludicrous. Especially the ones he espouses in the Estates Matrix.

    I’m sure he is a kindly old professor, trying to make a difference in the world. Unfortunately the world works by its rules, not his. I think it is sad to see him devolve from a useful career into the Don Quixote of Settlement Patterns. He has some good ideas, and some good premises: they just don’t happen to fit his conclusions.

    I ask a question, and get ridicule back. If I had a professor who did that, I would fire him and get another. If he wanted to say that WP bought Foreign Policy, that’s all he had to say. If he had a problem with the purchase, he should just say why. If he thinks his ideas would have brought about a better result, then say why, don’t just make exaggerated and unbelievable statements.

    For a man like him, it should’t be so hard to make logical, reasoned statements, backed up with facts, that don’t go in circles. Hopefully they will result in actionable activities, that pay for themselves.

    Since I am apparently uneducated and unteachable, well, you will have to cut me some slack in the rhetoric department. I don’t make any claim to having answers, let alone the only answer.

    RH

  24. Anonymous Avatar
    Anonymous

    The two-career couple and career change phenomenon are not being addressed.

    Perhaps I have a non-representative set of friends and acquaintances. But most people with whom I regularly associate belong to family groups where both spouses work. Moreover, it is my perception that very few of these couples work in or near each other or have similar flexibilities. For every person I know working in Tysons, their spouse/sig. other works in D.C., Rockville, Chantilly, Alexandria, etc.

    It strikes me that the general pattern is both drive/commute some or one drives/commutes far.

    Further for every person with a flexible schedule, there is one or more without the ability to come and go at the same time.

    Similarly, job turnover is significant and seems to be growing. I worked for one company for 20+ years. In the last 10 years, I’ve worked for four entities, including for myself. And I think that I’ve been pretty stable. A number of my friend in engineering and technology have worked for a lot more entities than me and in many more diverse locations.

    It is simply not realistic to expect people to move as often as they or their spouse change jobs. Moving is expensive, especially if one buys and sells a home. Moreover, anyone with teenagers realizes that announcing a change in high schools is simply inviting a re-fight of the American Civil War.

    Work where you live; live where you work is just too unrealistic in this area.

    TMT

  25. Anonymous Avatar
    Anonymous

    My experience matches TMT’s. More job turnover, more two (or more) job families. Furthermore there is less and less ability to turn over homes (especially now).

    Could we do better? Maybe a little. With enough time. Tysons alone will take decades to redevelop, and when the answer turns out to be not as expected, the planners will be dead and gone. There will have been so many other changes in the meantime, that you won’t be able to tell whether the plan failed or the conditions changed.

    I think we could do a LOT to make home trading easier and cheaper, but then, we wouldn’t want all that speculative churn, now would we?

    But even if there were NO transaction fees or taxes, and no brokerage required, it STILL costs a lot of money to move.

    And because the job centers are STILL far too agglomerated, moving your home may not buy you much: you change one problem for another as TMT points out.

    EMR apparently thinks all travel is a waste, that only the efficiency of settlement patterns matters. We need a much better “unified field theory” than he proposes. It needs to be infinitely and immediately adaptable. It has to contend with chaos, momentum, inertia, entropy, energy, and economy, all at once with a small set of simple rules that are unambiguous, transparent, fair, and predictable, that any moron can see the implicit sensiblity of.

    We can start with the Ten Commandments and the Bill of Rights.

    RH

  26. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Groveton, you’re a pretty smart cookie. What you left out is the part where sub-primes were the first wave.

    Resets were occurring at a rate of 45 billion a month. Starting early next year the second wave hits. All the Alt-A’s and Jumbo option/IOs will begin resetting, through 2012. That reset rate will be around 85 billion a month.

    But that’s not all. As the housing market goes, so goes local and state budgets. This will require either a drastic cut in services when those services are most needed, or a huge increase in taxes to support them. This will cause many more, who didn’t have ARMS, to fall into the ‘taxed out of the home’ disease. And if Congress doesn’t address the Alternative Minimum Tax exemptions, even more will be out in the street.

    Now do you see why I’ve been such a stickler in state and local government budget debates? While the money was good they pissed it away. Now they will need it but there is nothing but a big empty box. This country is headed for an epic downfall. Governmental bodies are in no position to help because they are just as broke as the rest of us. My advice is to have a contingency plan ready to go at a moment’s notice. If this thing goes, you won’t find me anywhere near a city.

  27. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    Oh yeah, RH the leverage of these MBS issues were more like 30 to 50X, not just double. It was a never ending chain of borrowing money as each level of MBS moved through the system. The foreign money guys finally decided they wanted their money back, and started breaking kneecaps.

  28. E M Risse Avatar
    E M Risse

    Too Many Taxes said:

    “The two-career couple and career change phenomenon are not being addressed.

    “Perhaps I have a non-representative set of friends and acquaintances. But most people with whom I regularly associate belong to family groups where both spouses work. Moreover, it is my perception that very few of these couples work in or near each other or have similar flexibilities. For every person I know working in Tysons, their spouse/sig. other works in D.C., Rockville, Chantilly, Alexandria, etc.”

    If you believe that past trends will continue then this is a serious issue.

    We do not think they will continue because the are unsustainable. These trends are huge energy hogs.

    A lot of people may think they what to continue them but:

    Starting from one end of the spectrum:

    There are a growing number who believe it is morally wrong to hog resources even if they can afford it. There have been some of these since the 20 with ups and downs. The market response to “smart growth” and to “new urbanist neighborhoods indicate there is growing interest and not just among those who cannot afford a Too Big House and a Too Big Lifestyle.

    Then there are the much larger group that cannot afford the past trends.

    Behind the unsecured derivitives and gambling chits of the stock market there are millions of Households who will need alternatives that do not require two cars to live. See PROPERTY DYNAMICS.

    There is also the factor of aging families.

    The end of flight as we have known it means reletives will not have the ability to fly to see family for Holidays.

    The list is long. The longer those who hope to profit from Business-As-Usual keep their heads in the sand, the harder the fall.

    “It strikes me that the general pattern is both drive/commute some or one drives/commutes far.”

    Has been with cheap energy, low cost loans and loan only a flipper would write.

    “Further for every person with a flexible schedule, there is one or more without the ability to come and go at the same time.”

    True but if understands how shared-vehicles work it becomes easy to see how a Fundamental Transformation is possible and with shrinking resources inevitable.

    “Similarly, job turnover is significant and seems to be growing.”

    Another unsustainable trend.

    “I worked for one company for 20+ years. In the last 10 years, I’ve worked for four entities, including for myself. And I think that I’ve been pretty stable. A number of my friend in engineering and technology have worked for a lot more entities than me and in many more diverse locations.”

    But would you and others do this if they could not afford to?

    “It is simply not realistic to expect people to move as often as they or their spouse change jobs.”

    Very true.

    “Moving is expensive,…”

    Yes indeed.

    “… especially if one buys and sells a home.

    True again.

    “Moreover, anyone with teenagers realizes that announcing a change in high schools is simply inviting a re-fight of the American Civil War.”

    You are right about that and the data on Household breakup ranks that move at the top of the list.

    But all this is started with a presumption of a move cause by a job change. Will not contiue to happen, only a few could afford it.

    “Work where you live; live where you work is just too unrealistic in this area.”

    All depends on how soon the parameters of the recent lifesytle come to an end.

  29. Larry G Avatar
    Larry G

    re: “If the US government buys the worst of the loans,”

    If the loans are bundled into securities how do they know which ones to buy?

    Isn’t it true that similar loans are what is bundled into securities?

    So.. solid, well-collatoralized loans are bundled and sub-primes are bundled but separately not in the same bundle.

    and like others, I’m not convinced.. not even close… that any of this has anything remotely to do with settlement patterns unless we can see data that demonstrates that loan policies favor dysfunctional settlement patterns at the expense of functional settlement patterns…

  30. Anonymous Avatar
    Anonymous

    A prime, if not root, cause is the Community Reinvestment Act, especially as expanded, that requires financial institutions to make mortgage loans to many people who simply cannot afford to buy homes. It’s a worthy goal to expand home ownership to lower income people, but there reaches a point where some people simply cannot afford a mortgage payment. It is not right to sell them homes.

    Toss in pandering to activists, including Community Organizers. Loan conditions were weakened even more by allowing people to buy homes with down payment assistance.

    Then multiply by the ever-growing segment of unethical businesses that sold homes and issued mortgages that could not be paid for. Make it up on volume. Then figure out how to package and leverage the loans. Privatize the profits, but socialize the losses.

    Then, there are the Washington,D.C. crooks, both those in Congress and on K Street. Put old Barney Frank at the top of this list. Gee, I wonder what went wrong.

    Interestingly, I received a brochure in the mail soliciting my investment in a company that slices and dices insurance policies — the next financial services product. Lots of leverage here too. Maybe this is a future bailout plan.

    Just goes to show that I live near and work in the most corrupt city in the World — Washington, D.C.

    TMT

  31. Groveton Avatar
    Groveton

    Darrell:

    Your points are very well taken regarding the next wave of resets. I had not considered this.

    Larry:

    Bush / Paulson have two major problems (in addition to not being able to get sufficient Republican votes). Those problems are:

    1. Branding: Calling this a “Wall Street Bailout” ir pretty much suicidal. How about an “Economic Bailout” or a “Banking System Bailout”. Sometimes I wonder if any of these guys passed Marketing 101.

    2. Details: Other than the $700B number (which is crystal clear) it’s hard to say what they’ll do. I assume that they will break up the loan packages, forclose on the worst loans, sell the properties that have been foreclosed in sonthing like an RTC2, rebundle the packages and sell the healthier packages back into the market. If so, consider the gravity of the $700B request – it is for loses on non-performing loans. Yikes!

    However, Darrell makes a good point. If future packages / bundles/ collateralized securities are going to keep going south as the resets occur – this may take a while. I wonder if Bush and Paulson considered this in their $700B calculation. Strange as it seems, $700B does not seem like enough money to me.

  32. Larry G Avatar
    Larry G

    re: “Community Reinvestment Act”

    I think this needs some further delving into.

    The mission, as I understand it was to prevent/discourage “redlining” – i.e. refusing loans to QUALIFIED applicants in areas that lenders did not want to lend money – no matter whether the applicants were qualified or not.

    The mission was NOT:

    1. – to force making loans to unqualified applicants

    2. – that in the process of making loans to unqualified applicants that predatory loans be the preferred instrument.

    Here’s the question to ask:

    WHERE are the bad loans, What is the AVERAGE bad loan amount and WHO is the mortgagee?

    Here’s a clue.

    One of the more popular shows of recent vintage on TV is, guess what? FLIP THAT HOUSE.

    When the goal was to eliminate redlining – how did we end up with so many houses NOT in redlined areas made to unqualified applicants NOT for owner-occupied dwellings?

    Loans were made – not for modest, affordable housing – but instead upscale … housing intended to turn a profit…

    think about what the tipping point was that collapsed the house of cards…

    … when the number of available buyers shrunk, the price of the homes dropped – simple supply/demand dynamics…

    when that happened – the folks who had bought those homes intended to resell them at a profit – (instead of staying in them) … started dumping those homes to cut their losses….

    The thing to remember is that the Community Reinvestment Act did NOT REQUIRE loans to unqualified applicants much less that in doing so – that the loans themselves would be predatory in nature.

    Why would any law or policy require loan practices that virtually insured loan requirements that would virtually guarantee eventual default?

    The loan companies were glad to sell these draconian-clause ARMs to get the fees – and the folks who got the loans – their motive was to “flip that house” before the draconian clauses activated – to dump the house – at a profit – before the mortgage payment escalated.

    Why would ANY legislator or regulator support any law or policy that they knew – would implement draconian loan policies that eventually would insure default?

  33. Larry G Avatar
    Larry G

    with regard to the functional settlement/balanced community/fundamental transformation conundrum…

    cutline:

    “Va. Takes Stock of Army’s Decision
    Officials See Ways To Ease Job Site’s Effect on Traffic

    Vehicles enter Fort Belvoir. Jobs now headed to Alexandria would have gone to Belvoir under an earlier plan.

    Virginia officials said yesterday that the Army’s decision to put 6,400 defense workers in Alexandria was a blow to efforts to cluster development around mass transit.

    http://www.washingtonpost.com/wp-dyn/content/article/2008/09/30/AR2008093002613.html

    two questions:

    1. – in terms of fundamental transformation – was there a correct or incorrect decision here?

    In other words, do decisions like this have anything to do with fundamental transformation?

    2. – Where do the 6000 people who will work here – LIVE – and how will they get back and forth to work?

    bonus question – if Fairfax or the Army or a private developer or all 3 .. put together a complementary plan for 6000 new condo’s – would the 6000 employees move to those condos?

    questions. questions.

    Note that I’m assuming EMR’s basic premise – that having people live where they work is a “good” thing –

    but I’m asking… when opportunities present themselves – how does fundamental transformation get implemented?

    …and if it does not.. why not.. and what changes to governance are required in order to effect those changes?

  34. Anonymous Avatar
    Anonymous

    Larry – re BRAC jobs. I’ve been told by Fairfax County officials that most of the BRAC jobs are held by workers who live south of Fairfax County. Obviously, not everyone, but the largest contingent of these workers are from PWC and points south.

    I suspect that a goodly number of these people are your neighbors. Are your neighbors interested in moving to condos near their work site? How many will be working in the same job three or five years from now?

    Isn’t a more important question: “How can we improve computer and network security to the point where many of these workers can telecommute from time to time?”

    TMT

  35. Anonymous Avatar
    Anonymous

    Excellent article on this whole crisis IMHO

    http://www.washingtonpost.com/wp-dyn/content/article/2008/09/30/AR2008093002629.html?hpid=topnews

    My question are banks going to magically start trusting each other and making loans available after the 700 Billion

    Also if I was a bank I wouldn’t be making loans either. The federal government is going to bail me out for approving too many risky loans.
    ___________________________________

    Foreclosures are occuring across all economic sectors and among all types of houses. The main indicator is that the hotter the real estate market was the larger percentage of loans.

    That tells me this whole thing has been caused by greed on banks, investment houses who sliced up loans, and on people who bit off more than they could chew thinking they could flip for a profit.

    ___________________________________

    Larry RE BRAC

    The military like any other business employer should base its location on several factors. A couple off the top of my head are proximity to power centers, cost of building, availability of target worker skillsets. Usually worker commuting patterns are pretty low on the list.

    I think EMR is trying to argue that we are experiencing a change where companies are revaluating their critieria on where to settle. I agree with this

    Where I disagree with EMR is that people ultimately are still going to choose what is in their own personal best interest. I would strongly argue that this does not mean living on a 1/4 acre or less less than five minutes from where you work.

    To your questions

    Point 1 I would argue that where employers decide to locate is one piece of fundamental transformation.

    Governments try to effect fundmental transformation through zoning, tax breaks, and where infrastructure is setup. I can see different arguments about the level of government intervention in these areas on a specturm of a total free market vs total market controls.

    As Jim Bacons says right now we are in a confusing middle ground of some zoning, as EMR says wide influences from multiple sources and as TMT says a corrupt system of pay to play politicans that influences zoning decisions

    Point 2

    I dont think you are going to see 6,400 people suddenly demanding to move to Alexandria. In the real world it just doesn’t make sense. I agree with TMTs points also.

    Your last section

    “but I’m asking… when opportunities present themselves – how does fundamental transformation get implemented?

    …and if it does not.. why not.. and what changes to governance are required in order to effect those changes?”

    I think this is a very interesting and important question to be asking and you will propably find very different viewpoints from everyone on here.

    Here are some ideas off the top of my head

    First subsidizing options

    The federal government already subsidizes mass transit

    How about a subsidy for living within a certain distance for work

    A subsidy for working an alternative schedule

    On the other hand you have the free market people

    I generally fall in this category. I allow people to make decisions and face their own consequences. You can live wherever you want and do whatever you want but don’t come compaining that your area has too much crime, your schools are terrible, your property values are declining, your home utilities are too high, or your gasoline bill is too much. Thats life. We are all adults and we need to be responsible for our actions and face the consequences of our decisions.

    In the end noone is forcing you to live or work anywhere. If its really that bad move or change jobs.

    NMM

  36. Larry G Avatar
    Larry G

    more questions:

    Should Fairfax county – rezone the area around the new fed jobs to solicit/encourage condo proposals?

    If they do that, should they also require ped/bike facilities between the condos and the new Fed complex?

    Should Fairfax do the above AND discourage auto facilities?

    Less parking… more expensive parking.. one car per condo rule, etc…??

    What role should Fairfax County play in the planning of this (and for that matter the Fort Belvoir jobs also.. same questions)?

    Bonus Question – what happens if they do this and then 5 years down the pike the govt does another BRAC (don’t Laugh!) and pull out?

    Is what is left behind – being ped/bike.. live where you work – a desireable vestige that will attract other companies that like the idea of having their workers close to their jobs ..or will it turn into a white elephant …useless until the condo’s are converted to more employment center for commuters – ala Tysons?

    the last question is a GIFT for TMT!

    🙂

  37. Anonymous Avatar
    Anonymous

    Larry you just described Arlington County pretty much

    Arlington County has high taxes and an extremely active government and is increasingly becoming anti-car. It also propably has the best multi-modal network in this area and certain people really like living there (mainly young singles)

    I would strongly note that outside of young singles most people live in houses with yards

    The cost of these houses is very expensive.

    My question is once these young singles have families are they still going to prefer an Arlington type environment or afford an Arlington environment

    From my personal experience the answer is no. Many of my friends once they get married are moving out to Loudoun county

    Likewise the likelyhood of the BRAC workers being able to afford to live close to Alexandria is equally laughable
    ___________________________________

    Another related point. Much of the debate about Tysons corner and to a greater extent in Farifax County as a whole is whether or not its politically or practically feasible to Arlingtonize Fairfax.

    So far we are at a middle ground. Taxes and government spending are going up but redevelopment is not occuring as much.

    Larry I am pretty sure you met Alexandria instead of Fairfax. Seeing that Alexandria is already a city urban environment I think it is much more likely for what you are proposing to occur.

    If you tried to add 6400 condos in Fairfax the BoS would be lit on fire buy the NIMBY and enviromental mobs.

    This is what Fairfax would have done. We really wanted the jobs but we would have never built the housing.

    It makes sense logically. Businesses are a net tax benefit and housing is a net tax loss because of all the services associated with housing (mainly schools on a local level) Fairfax has been practicing this strategy for years now.

    We would have gotten the suckers out in Loudoun to take in even more people and not have any business to show for it. In Loudoun the school budget is over 70% of the budget!!!!! and they have had double digit increases in county government spending for years because of it.

    http://loudounextra.washingtonpost.com/news/2008/sep/29/school-chief-hopes-avoid-budget-desctruction/

    NMM

  38. Anonymous Avatar
    Anonymous

    One last point

    the bonus question for TMT

    Take a look at Crystal City and whats going to happen there

    As the jobs leave all the resturants and mom and pop shops are going to fail and then you will be left with Lafant Plaza or a concrete ghost town with a metro station.

    Of course Arlington is spending even more money to try and bribe other companies to take over the spaces

    NMM

  39. Anonymous Avatar
    Anonymous

    “”It strikes me that the general pattern is both drive/commute some or one drives/commutes far.”

    Has been with cheap energy, low cost loans and loan only a flipper would write. “

    Nonsense. The issue is whether you do without the extra $40, $60, $100K in order to save $15 or 20K in travel and auto costs.

    Or do you spend and extra $50 to 100k for a different home IF that buys you the same income increment without the travel costs (and you still have to wonder how long that job lasts).

    You might think it is morally wrong to hog resources, but as long as they are being paid for in a free market, it isn’t hogging.

    ——————————-

    But would you and others do this if they could not afford to?

    Idiocy. Of course, you don’t do anything tht you really cannot afford. But if you can’t afford to go to work, no amount of balance will cure the problem. If this really becomes an issue, then the economy will shut down.

    The real issue is how do design an area to accept continual change, that operates efficiently and supports a wide range of destinations at various distances from housing and from each other. it may be that trends and economics will change: all the more reason to design for change rather than to design for one persons view of the inevitable.

    Increasing many kinds of inefficiencies just to reduce (percieved) transportation inefficiencies is simply foolish.

    RH

  40. Anonymous Avatar
    Anonymous

    “If the loans are bundled into securities how do they know which ones to buy?”

    My suggestion would be this: if an institution wants to participate in the buy out they must put all their assets in the pot.

    The govenment would then assign them numbers and draw the numbers at random to decide what to buy.

    That way the institutions cannot shuck all their really bad apples, and the government would get som good assets to help cover the bad ones.

    RH

  41. Anonymous Avatar
    Anonymous

    “The mission, as I understand it was to prevent/discourage “redlining” – i.e. refusing loans to QUALIFIED applicants in areas that lenders did not want to lend money – no matter whether the applicants were qualified or not.”

    That was the original mission, but it soon got distorted through political correctness into arm twisting to (more or less) force the banks to operate under bad practices.

    The banks willingly went along because they thought they were insured.

    Like I said, there is plenty of blame to go around. Saying there is one proximate cause is probably incorrect. This is a system failure.

    RH

  42. Anonymous Avatar
    Anonymous

    “Jobs now headed to Alexandria would have gone to Belvoir under an earlier plan. “

    The value of my house in Alexandria just went up. Too bad no one will be able to afford it.

    Here is my question. If half the jobs go to people who live in PW and half to people who live in Stafford, then what were the army morons thinking?

    Wouldn’t the logical place e someplace halfway between, like southwest of Manassas or even Warrenton or Culpeper? The old Vint Hill station (now under redevelopment and already home to an FAA station)?

    RH

  43. Anonymous Avatar
    Anonymous

    “Where do the 6000 people who will work here – LIVE – and how will they get back and forth to work?”

    According to the article half live in PW and half in Stafford.

    RH

  44. Anonymous Avatar
    Anonymous

    “how does fundamental transformation get implemented?”

    It gets implemented pretty fast if you discover a new continent that you can steal from the incumbents.

    Otherwise it takes a few hundred years.

    Now what do you do in the meantime?

    RH

  45. Anonymous Avatar
    Anonymous

    “I would strongly argue that this does not mean living on a 1/4 acre or less less than five minutes from where you work.”

    Even if it is available at a reasonable price. Which it won’t be.

    ——————————–

    “I would argue that where employers decide to locate is one piece of fundamental transformation.”

    And those jobs are increasingly not in the city centers, and now nt even in the ring city centers. Booze Allen is buildin its new offices NOT in Tyson’s corner where the headquarters are, but even farther out.

    ——————————–

    “Larry I am pretty sure you met Alexandria instead of Fairfax.”

    The part of Alexandria near the Mark Center is more like a Fairfax environment than an urban center environment.

    ——————————-

    “It makes sense logically. Businesses are a net tax benefit and housing is a net tax loss because of all the services associated with housing (mainly schools on a local level) Fairfax has been practicing this strategy for years now.”

    This isn’t true except for the tax and accounting structures we use to measure them. It is also a matter of political boundaries not matching the economic boundaries, as EMR has said.

    Fairfax has been exporting their housing problems, and therefore they are not paying their full locational costs. They should be subsidizing the outer jurisdicitions. Then, building their own housing would look a lot more attractive.

    ————————–

    RH

  46. Anonymous Avatar
    Anonymous

    “WASHINGTON (AP) — U.S. aviation officials have no legal authority to auction off takeoff and landing slots at airports, a scheme the government devised to try to curb crippling traffic jams at major airports, congressional investigators say.

    Transportation Secretary Mary Peters proposed the auction plan after widespread complaints last year about rampant flight delays across the country. The government says two out of three flights delayed 15 minutes or more were due to cascading backups beginning at one of the New York metropolitan area’s three airports: Newark, John F. Kennedy, and LaGuardia.

    Trying to fix the problem, the government imposed new limits on the airports and announced plans to auction off some takeoff and landing slots to control the crushing demand for time and space. By auctioning slots, the government reasons, market forces will help restrain such demand and make the system operate more efficiently.”

    ————————-

    Now, if FAA officials have no authority to auction off slots at teh ariports, what does that say about the authority DOT officials have for auctioning off HOT lane slots?

    RH

  47. Larry G Avatar
    Larry G

    re: “I am pretty sure you met Alexandria instead of Fairfax.”

    yes, I mis-read the article since they quoted Fairfax (about the traffic) – which is pretty ironic to have Fairfax complaining about development-induced traffic – but in another jurisdiction.

    re: “The banks willingly went along because they thought they were insured.”

    the banks did not “go along”. The banks saw this as an opportunity to USE the act in ways not intended to maximize their profits and further line their pockets.

    If you went back and asked the folks who passed the original act if they INTENDED for banks to make loans OUTSIDE of redline areas to folks who did not intend to live in the homes but instead flip them for giggles and grins and profit – they would have said no..

    This is just another example of legislators not being smart enough to realize what loopholes exist when they write laws – and for the very predictable outcome of folks gaming the system…

  48. Anonymous Avatar
    Anonymous

    “the banks did not “go along”. The banks saw this as an opportunity to USE the act in ways not intended to maximize their profits and further line their pockets.”

    There was some of that, but I think there was also some significant arm twisting. At least at first.

    RH

  49. Larry G Avatar
    Larry G

    re: ” I would strongly note that outside of young singles most people live in houses with yards
    …
    My question is once these young singles have families are they still going to prefer an Arlington type environment or afford an Arlington environment

    From my personal experience the answer is no. Many of my friends once they get married are moving out to Loudoun county”

    I agree but this is where I disagree with Ray and with EMR with respect to commuting.

    If someone can afford a single family home in the exurbs – what is it about that decision that means that the ONLY commute option they have is SOLO vehicle at daily rush hour instead of commuter van, bus or rail?

    If someone moves to Loudoun but they take a 40-passenger bus to Alexandria – why is that not conceivable?

    If 40 people decide to NOT each one drive a car – does it not mean that 39 vehicles are taken off the road?

    If someone who moves to Loudoun has the option of $30 a day in tolls or $20 dollars a day on a bus AND they save an hour a day in commute time – will they inevitably choose the tolls anyhow?

  50. Larry G Avatar
    Larry G

    re: ” There was some of that, but I think there was also some significant arm twisting. At least at first.”

    Let’s say you’re a Democrat/Liberal who wants to see more home ownership.

    What good would it do to have loans made to people who could not afford to pay the loan?

    Why would those who support the idea of affordable homes for those who marginally qualify (if at all) ..support policies that ultimately mean that the folks intended to be helped – default and lose their homes anyhow?

    The banks used predatory practices to boost the interest rates so high that default was virtually inevitable… for folks who did not live in redlined areas and for folks who basically were gambling on flipping the house – for a profit – before the accelerated interest rates kicked in.

    This was never about trying to “help” those who normally would have been denied loans because of redlining – this was all about using that act to make money off of lucrative ARM mortgages.

    If you look at how many of the defaults were actually in previously redlined areas – the numbers are miniscule compared to the vast majority of loans – for homes NOT in redlined areas – across the region in neighborhoods that did not even know what a “redline” was…

    this was all about gaming the system…

    and that should give us all great pause because the same bunch of idiots who did the original poorly-written laws are promising to write NEW, better regs to keep the same folks “honest”.

    What a joke.

    All the speculators are waiting for is to see what the new laws look like – so they can start figuring out how to get around them….

    Mark my words. The “bailout”, in a couple of years or less will result in more abuses and more gaming… for fun and profit by the same folks who figured out how to see the community development law to their benefit.

  51. Anonymous Avatar
    Anonymous

    A little sidenote first I actually work very near to the BRAC location. I will try and drive over about once a week and then talk about whats going on. My initial question is where is the space and parking for the new buildings. There isn’t alot of real estate left because of the nature preserve area.

    ___________________________________

    “If someone moves to Loudoun but they take a 40-passenger bus to Alexandria – why is that not conceivable?

    If 40 people decide to NOT each one drive a car – does it not mean that 39 vehicles are taken off the road?

    If someone who moves to Loudoun has the option of $30 a day in tolls or $20 dollars a day on a bus AND they save an hour a day in commute time – will they inevitably choose the tolls anyhow?”

    In less than five years we will have a realworld example and data with the HOT lanes on the beltway.

    People will have a choice between normal free backed up lanes solo driving, paying for freemoving solo driving, or using a bus

    For now I have found that most people still want to be in control. Also, people want the ability to do errands attend happy hour or go home early or later if necessary.

    This is why the buses aren’t more popular. Metro works because it runs constatnly.

    With VRE and the commuter buses on the other hand you are stuck to a certain narrow timetable.

    ___________________________________

    “Fairfax has been exporting their housing problems, and therefore they are not paying their full locational costs. They should be subsidizing the outer jurisdicitions. Then, building their own housing would look a lot more attractive.”

    Snarky reply is Fairfax will start doing that when the state starts subsidizing us for being a major economic engine for the rest of the commomwealth.

    I agree with you it goes with your more places argument. More housing closer in more business farther out. Everyone wins and shorter commutes to boot.

    NMM

  52. Anonymous Avatar
    Anonymous

    “If someone can afford a single family home in the exurbs – what is it about that decision that means that the ONLY commute option they have is SOLO vehicle at daily rush hour instead of commuter van, bus or rail?”

    Generally that option is cheaper and faster. It isn’t the only option, it is only the BEST option.
    Especially if you have kids at home, or that might suddenly be at home.

    RH

  53. Anonymous Avatar
    Anonymous

    “If someone moves to Loudoun but they take a 40-passenger bus to Alexandria – why is that not conceivable?”

    Because there is no bus. If there isone,it is expensive, and subsidized.

    “If 40 people decide to NOT each one drive a car – does it not mean that 39 vehicles are taken off the road?”

    No. Practically speaking the buses don’t run full. For those that do take the bus it those vehicles vehicles will still drive to the park and ride, which is subsidized. Some of them will miss the bus, or have some other reason to drive, so hey don;t take the bus every day.

    Then you have this lumbering behemoth on the road, and it might be 20 years old. When those lumbering behemoths on on the HOT lane, it matters not so much, but when they have to navigate in town, they tend to slow everything down, which detracts from their supposed efficiency.

    Last I looked, several years ago Loudoun Transit cost per passenger mile was $0.85. I’m sure it is higher with today’s fuel costs.

    For some people it might work, if they have a regular office job. for anyone else, those with irregular hours, overtime, or management responsibilities, it doesn’t.

    Otherwise we would have buses, and they would be full and profitable.

    RH

  54. Anonymous Avatar
    Anonymous

    “Snarky reply is Fairfax will start doing that when the state starts subsidizing us for being a major economic engine for the rest of the commomwealth.”

    I don’t think that is snarky. It is an excellent point. How DO you rationalize all of our interbreeding subsidies?

    The rest of the state, outside the nearby jurisdictions doesn’t get stuck with Fairfax housing costs.

    RH

  55. Anonymous Avatar
    Anonymous

    “Everyone wins and shorter commutes to boot.”

    Not necessarily.

    But if you have four directions to choose from you have more real options as to which job is worth going after, compared to having one direction.

    Your commute might be longer, but faster and less congested.

    You still have all the other problems – two jobs etc. But now you have more options, maybe less travel time, and a lot less waste and environmental damage from congestion.

    If you plan it right. Otherwise you have Atlanta or Dallas, with all the jobs downtown – and no Metro.

    RH

  56. Anonymous Avatar
    Anonymous

    Put in a parking garage and put the nature preserve on the top deck. Can’t be any crazier than building housing over the Metro stations.

    RH

  57. Anonymous Avatar
    Anonymous

    Let’s say you’re a Conservative who wants to see more home ownership.

    What good would it do to have loans made to people who could not afford to pay the loan?

    Some people thought that once the bums had homes of their own, they would stop acting like bums.

    There was plenty of blame to go around. When you put in a “system”, someone will try to game it.

  58. Groveton Avatar
    Groveton

    “Fairfax has been exporting their housing problems, and therefore they are not paying their full locational costs. They should be subsidizing the outer jurisdicitions. Then, building their own housing would look a lot more attractive.”.

    By definition, Fairfax does not have a housing problem. Why? Because the mythical “Fairfax” is simply the sum of all the residents of Fairfax County. And, since we are residents of Fairfax, we (by definition) have housing in Fairfax. I’ll grant that there are a handful of homeless people living in Fairfax but even they refuse to relocate to the outer suburbs.

    There is no affordable housing problem in Fairfax County. Apartments in Reston start at $1,000 per month. A pretty nice place costs about $1,500 per month. And that’s Reston. There’s cheaper housing available in Annandale, Springfield or along Rt 1. A teacher in Fairfax County with no experience makes $45,000 per year (plus anything he/she can make in the summer). So, a brand new teacher could live in Reston for 26% – 40% of pre-tax income. Experienced teachers make about $75,000 per year. That teacher would have to pay between 16% and 24% of pre-tax income for the apartment. And that’s a single salary, no apartment sharing, etc. I made just over $8/hour when I started working out of college. I lived in Arlington in a house with 3 of my friends. Why? Because I chose not to live way out in the middle of nowhere with a 90 minute commute each way. Repeat, I chose. Nobody held a gun to my head either way.

    Could the teachers live better in Loudoun or PWC or Spotsylvania? Sure. No doubt. So can accountants, bankers, doctors or multi-millionaires. And I know some people in each of these categories who have decided to move further out and commute into Fairfax County rather than living in smaller places within Fairfax.

    But it’s their choice – not some “housing problem” that forces them to do what they do. And when they live in your county – it’s your citizens exercising that choice. These people are, by definition, not part of that mythical entity called “Fairfax”. And if there’s a housing problem – it’s your neighbors exercising their choice to “live larger” further from their jobs that is the source of that problem.

  59. Anonymous Avatar
    Anonymous

    Groveton,

    Your argument works for single people. I am a prime example my mortgage plus condo fees is $1300 for a one bedroom. This was Spring of 2005 close to the top of the market. 2006 was the height where I live.

    The problem is once you start talking about people my age getting married and wanting to start a family.

    I live in Annandale. Before the correction even the tiny starter homes were 450k+

    This real estate crisis is actually good longterm since I have seen the same homes around 300k. We wont talk about how much I have lost on my condo :-p.

    So I think the free market actually worked again. Now families can actually live in Fairfax even in the good school districts.

    It sucks for the people that bought in the 2003-2007 range but hopefully most people aren’t going to sell soon. If you were going to sell it doesn’t make sense to buy if you are moving in five years.

    NMM

  60. Groveton Avatar
    Groveton

    NMM –

    I agree with your point but not your perspective. If you worked in Manhattan you would never consider owning a single family home near work. As far as I know, only the mayor of NY owns a single family home within walking distance of the business district – and his home is actually owned by the city.

    So, when you say that tiny starter homes were $450K+ you’ve already made a value judgement. You’ve decided that you need a single family residence to raise a family. But people in Manhattan, Queens, Brooklyn, etc. raise familes and never own a single family residence. Or, they commute a long, long way.

    I also agree with you about the bubble bursting. By definition, bubbles have overblown prices. That’s why they are bubbles. But in contradiction to the “Fairfax housing problem” hallucination argument, I don’t see people from the outer suburbs rushing in to buy foreclosed properties in Fairfax County (or, in relatively nearby Sterling in Loudoun County). Why not? If the “Fairfax housing crisis” were true – people would quickly abandon the liong commutes they have been “forced to endure” now that there are much cheaper houses in Fairfax County.

  61. Anonymous Avatar
    Anonymous

    Now we are getting to the sticky parts

    Much of the areas you were talking about are either diverse, have lower performing schools, or have higher crime rates.

    To give people the benefit of the doubt however I still think it is too soon to analyze what people are doing.

    Most people aren’t buying yet because they have to

    1. Either sell their place first

    or

    2. Are waiting to see if the market drops even further

    or

    3. Can’t get approved for credit

    Once the market hits bottom and the credit market opens back up the issue can be studied further

    I still stand by my claim that from 2003-2006 you had alot of people moving to Loudoun or Manassas because they wanted a four bedroom house with a yard and great schools and thats the first area where they could afford it

    NMM

  62. Larry G Avatar
    Larry G

    re: snarky comment about Fairfax – the king of economic engines…

    .. when said vaunted Fed-supercharged economic engine does not pay many employees enough salary for them to be able to afford a place to live in said economic engine and therefor must commute to the outer burbs for affordable housing…..

    .. which the burbs would gladly forgo the “largess” of road/school intensive affordable housing – refugees…

    Are there economic engines that “do this “right”?

    well ..yes.. NYC comes to mind – where businesses are expected to help pay the cost of public transit and other transportation infrastructure to provide “choices” for commuting.

    RH calls these facilities – “subsidized”.

    I would ask – are they really subsidized if they are paid for the the employers and the employees that need them for folks to get from their “affordable” exurb homes to their economic-engine urban jobs?

    Does Fairfax county bear a similar responsibility or should the exurbs be grateful to receive their workers/housing refugees?

  63. E M Risse Avatar
    E M Risse

    Several good points in this string but again no one addressed the imperative of Fundamental Transformation as a core issue. No one wants to consider the alternatives to Business-As-Usual.

    We selected one post by Nova Middle Man (NMM) to illustrate why settlement patterns grow ever more dysfunctional.

    “Look what EMR has proposed is a theory that will never work in practice.”

    Actually, it has worked in the real world for decades if one knows what to look for.

    “He is a great philosopher but fails in the real world situations…”

    Actually, what differentiates our work from others in this field is the fact we have actually planned, built and managed the places that provide a window on functional human settlement patterns and they have done very well in the market.

    “… hence why he is a bad economist.”

    See above.

    “No disrespect its obvious EMR is a very smart individual.”

    Thank you.

    “There will always be rush hours.”

    NMM did you ever see EMR say there would not be periods of higher volume movement?

    You have been reading filibusters who like to second guess what I might think from a platform of Geographic Ignorance.

    What I have said is with a Balance between settlement pattern trip generation and Mobility and Access system capacity, there can be higher volume periods and lower volume periods but there will be capacity to meet the higher volume demand.

    What I have also said is that there can never be a sustainable system with a Regional or Subregional scale surge twice a day. A primary fault of METRO was that this was the nature of the demand METRO was designed to serve. It is impossible to serve this demand as we have been arguing since 1984. See Backgrounder “Time to Fundamentally Rethink METRO.”

    (When METRO was conceived there was much more Balance in and near the Centroid of the National Capital Subregion but not enough. As the decades have rolled on it has become ever less Balanced.)

    “I was in Europe for the past three weeks on vacation and in every single major metropolitan area there was a morning and evening rush hour.”

    Where have you seen me say that any urban agglomeration of Regional scale in the EU has a balance. Where have you seen me say that EU New Urban Regions are without problems?

    What I have said is that you can determine from EU settlement patterns – if you know where to look – that New Urban Regions consisting of Balanced at the Alpha Communities are sustainable.

    “Even in Amsterdam (walking around at 5 trying to not get run down by hundreds of thousands of bicycles was pretty entertaining)”

    And enlightening if you understand what to look for.

    “Thinking that everyone will be able to live on a 1/4 acre lot less than five minutes from work is a utopian pipe dream.”

    You are absolutely right! I would never say such a thing. In fact that is exactly what I say – “a pipe dream.”

    What I will say is that at there WAS (before $100 a barrel oil) a sweetspot at 10 persons per acre at the Alpha Community Scale.

    I have also said that in the places I have designed, built, managed and lived, it has been shown beyond a shadow of a doubt that a mix of SHD (25%) / SHA (50%) and MH (25%) can yield a Balance of J / H / S / R / A with 40% Openspace, etc.

    Since less than 25% of the Households are raising children, in these Balanced Communities everyone of the Households COULD have a SHD dwelling – if that was the best for raising children. However, based on the experience of millions and the market, a SHD is not necessarily the best place to raise children, especially if all the location variable costs are fairly allocated.

    By failing to understand the Five Natural Laws of Human Settlement Pattern and the difference between density at the Alpha Community scale and pattern at the Alpha Dooryard scale you came to the wrong conclusion and then blame me for being unrealistic. Sorry.

    By the way the sweetspot for a Village-scale station area served by a high capacity shared-vehicle system is around 100 persons per acre. The sweetspot for an Alpha Community given high energy costs and less reliance on Autonomobiles is somewhere in between what it WAS and the 100 person number.

    “(Humm that sounds a lot like the 1950s and the original idea of the suburbs.)”

    Right you are!

    Actually this was the ideal of “suburban” living circa 1925 when no one dreamed that “everyone’ would have a car and most would walk or rely on shared vehicles for Mobility and Access. The smart ones were saying in the 1920 exactly what EMR is saying now. Actually if you look at the “commuter suburbs served by rail only a small percentage of the work trips were taken by rail and the agglomeration had high level of Balance.

    The growth of “suburban” foolishness was based on the Geographic Illiteracy of Frank Lloyd Wright – see the quotes in “The Shape of the Future” – and is not helped by the silliness of many, including some New Urbanists to this day.

    “In reality there is simply too many people, …”

    There is a lot of truth in that statement given the level of per capita consumption. Join ASAP in Cville and see what you can do to help.

    “… and too few places,…”

    This few places mantra is a myth that we address in TRILO-G.

    “… and based on the simple fact of supply and demand the cost of housing would be outrageous.”

    I am not sure what you mean but suspect that this refers to everyone having a SHD dwelling. In that case you are right.

    Without massive, massive ($700-Billion would be a drop in the bucket) wealth redistribution, less than half the Households could afford the cost of SHD dwellings because of the inherent inefficiencies of the SHD settlement pattern at the Dooryard, Cluster, Neighborhood, Village or Community scales.

    “Not to mention the fact that people switch jobs frequently and in many cases both parents work.”

    A lot more of this could go on in a Balanced Community of say 300,000 population than the nay sayers admit but on the other hand there will be far less in the future than there has been in the past for the reasons we and Groveton have noted.

    “Rinse and Repeat the same arguments for the past three years.”

    If you are frustrated, imagine how we feel!

    We have been laying out reality for years and those who want to avoid reality keep distorting it with non sequiturs and failures to understand the basics – like the difference between an average density of 10 persons per acre for an Alpha Community of 100,000 to 300,000 (depending on the scale of the New Urban Region, the distance from the Centroid and the Mobility and Access system) the and the average density for a few Clusters with 40 to 60 dwellings.

    Getting a grip on settlement pattern reality is the first step to helping create a sustainable future.

    “Larry asked two questions:

    “1. – in terms of Fundamental Transformation – was there a correct or incorrect decision here?
    “In other words, do decisions like this have anything to do with Fundamental Transformation?”

    These “decisions” have everything to do with why Fundamental Transformation is not happening.

    What is the alternative? First identify the Centroid of the Beta Communities in the Virginia portion of the National Capital Subregion. (Larry, you know from carefully reading our prior work that we have identified 18. There may be from 16 to 20 depending on the decisions made Greater Tysons Corner is one.)

    Next allocate Jobs / Housing / Services / Recreation / Amenity to create Balance. Those 6,800 jobs would be a real plus if put in the right place.

    Mark Center floats between three we identified – Greater Alexandria, Greater Baile
    ys Crossroads and Greater Springfield and so putting a 6,400 jobs there and trying to achieve relative Balance at the Alpha Village scale is problematic unless a lot of other commitments and infrastructure is changed.

    2. – Where do the 6,000 people who will work here – LIVE – and how will they get back and forth to work?

    See above.

    bonus question – if Fairfax or the Army or a private developer or all 3 .. put together a complementary plan for 6,000 new condo’s – would the 6,000 employees move to those condos?

    Why “condos?” There is plenty of room for a mix of dwelling types as noted above. Do the numbers, do not jump to false conclusions. There is plenty of land. We explored this very area in one of the Appendices to the Backgrounder “Quantification of Land Resources” and revisit this issue in TRILO-G.

    “Larry also said:

    “I’m not convinced.. not even close… that any of this has anything remotely to do with settlement patterns unless we can see data that demonstrates that loan policies favor dysfunctional settlement patterns at the expense of functional settlement patterns.”

    You can lead a horse to water…

    It is a matter of cheap money and unsound loans that enabled the addiction to The Wrong Size House in the Wrong Location.

    Take a look at the front page of the 27 Sept WaPo Real Estate section. “Tight Squeeze …”

    But for Fannie and Freddie there would never have been the gross inflation of the housing market that supported bad locations, patterns and design decisions.

    Finally, as we see it the biggest problem with any Bailout – which folks wanted to talk about rather than Fundamental Transformation – is the public investment in and protection of speculative derivatives that have no real basis.

    EMR

  64. Larry G Avatar
    Larry G

    re: ….”sweetspot for a Village-scale station area served by a high capacity shared-vehicle system is around 100 persons per acre”

    there are 640 acres in a square mile which is the standard for measuring density.

    so ..unless my math is wrong, isn’t that a density of 64,000 per square mile?

    some (WIKI) examples:

    NYC – Density 27,147/sq mi
    phila Density 10,882/sq mi
    Houston Density 3,828/sq mi
    Cairo Density 8,179.2/sq mi
    Bejing Density 2200/sq mi

    can you explain further EMR?

  65. Larry G Avatar
    Larry G

    re: “It is a matter of cheap money and unsound loans that enabled the addiction to The Wrong Size House in the Wrong Location”

    EMR – how did cheap money induce people to NOT buy a place to live in Fairfax if they could not afford what was available?

    Wouldn’t “un-cheap” money only make that situation even worse?

    that’s why I don’t understand your thesis…

    Are you saying that if money got expensive that folks no longer could afford “affordable” homes in exurbia – and would move back to the urban core or are you saying that they just not take a job where there was no affordable housing available locally?

    I know you’re a smart guy but you’ve got to take into account a lot of folks who read this blog who would very much benefit from a baby-step approach from you – even though it would require some patience on your part.

    Give it a shot.

  66. Jim Bacon Avatar
    Jim Bacon

    Larry, Interesting numbers. But here’s where you’ve gone astray. You’re projecting your density of 100 persons per acres out to an entire square mile. As EMR has said repeatedly, development around shared-vehicle stations should follow a “ziggurat” pattern that steps down densities the further you are from the station. Beyond a 1/4 mile radius (I believe he would say), densities would return to “normal.”

  67. Anonymous Avatar
    Anonymous

    Jim & EMR – I suspect that most people in Fairfax would support higher densities within 1/4 mile of a transit station. Fairfax County's TOD policy supports that around rail stations. It does not do so around a bus stop.

    However, the Tysons plan would extend these high densities to 1/2 mile of a rail station. Call it urban sprawl. Why? Because the goal was to enrich people, not to improve Tysons. Following county policy would mean that some landowners wouldn't receive a land use windfall. Not following county policy puts high density development to about 80% of the landowners. Spread the windfalls as far as possible. Toss in the various bonuses and we get to the potential for 220 M sq. ft. of development at Tysons.

    Keep in mind that the traffic modeling for the much smaller Prototype B showed it would produce 1.1 million auto trips per day in Tysons and traffic congestion far worse than Tysons’ current congestion.

    If this is the alternative to today, I'll stick with suburban sprawl. Save Fairfax, pave the Piedmont!

    TMT

  68. E M Risse Avatar
    E M Risse

    Larry:

    Jim’s numbers on the station-area are right on. A few other notes:

    The .25 mile radius contains 125 acres. The impact area may be out to .5 miles but this is where the SFDs are located and the Openspace is located.

    If you have a system like Paris with two overlapping high capacity shared-vehicle systems then the numbers can be much higher.

    If there is Balance in the station area, the density can be much higher or if several lines serve the same area.

    I am sure you now realized you made the inverse of the NMM error — thinking that the density of a staion-area related to the density of a municiplaity. You know that most of NYC is not within .25 miles of a platform so the comparisons are not relevant.

    On the issue of Fannie and Freddie:

    It is a matter of cheap money and unsound loans that enabled the addiction to The Wrong Size House in the Wrong Location

    “EMR – how did cheap money induce people to NOT buy a place to live in Fairfax if they could not afford what was available?”

    I think if you take out the double negative the question is meaningless.

    However, the money was not THAT cheap. They did not buy in Fairfax. The overheated housing market and the overheated advertising — it is still to this day — convinced them they deserved to buy a house and they found they could buy a house with the cheap (for a while) money they could not otherwise afford in a dysfunctional location.

    See our note above re the precentage who can afford to buy a house without a massive redistribution of wealth.

    Sorry, those at the bottom of the Ziggurat cannot afford to buy, especailly a SHD in a place they have to spend 30% of their income on transport to job and services.

    Same for some who could buy a modest place close to their job but wanted to purchased a bigger home that they could not afford so they bought in a LOCATION where, even if they did not pay all the costs, they were over their heads.

    “Wouldn’t “un-cheap” money only make that situation even worse?”

    No, the cheap money created unrealistic expectations from top to bottom in the housing market.

    “Are you saying that if money got expensive that folks no longer could afford “affordable” homes in exurbia…”

    ‘Exurbia’ is a term that has no meaning and no locational relevance because the citizens who are buying those houses are urban citizens but if you use “dysfunctional locations” then the answer is “yes.”

    “… – and would move back to the urban core ..”

    Some workers may not be able to move near the location of existing jobs, the job goes begging and so the employer raised the pay to the point a worker can afford to live near or afford the transpost.

    That is not a “good” solution because a sound economy requires is based on a range of jobs, not just high paying ones.

    Both ends have to move.

    Workers have to have realistic expectaions about housing and employees have realistic expectaion about pay scales.

    If Agencies, Enterprises and Institutions recognize the need for, and work to achieve Balance at the Alpha Community scale,

    and there is movement (over NYMBY’s dead bodies) to create of a range of Affordable and Accessible Housing then the problem can be solved.

    But everyone, including NYMBYs need to understand the context and the alternatives.

    The first step is recognizing that cheaper housing a long ways from jobs and services makes the problem worse, not better.

    What brings this point home is to fairly allocate all location-variable costs.

    “… or are you saying that they just (do) not take a job where there was no affordable housing available locally?”

    “Local is another Core Confusing Word but if you mean in the Community or via a shared vehicle system — but not so many that there is a “commuter” problem that is the way the market works.

    EMR

  69. Larry G Avatar
    Larry G

    I fine it amusing…no preposterous that the explanation for the mortgage meltdown is that it all began with an attempt to outlaw the practice of redlinning.

    back in 2007, articles were written about the phrase “liar loan” – see:

    Housing Boom Tied To Sham Mortgages
    Lax Lending Aided Real Estate Fraud
    By David Cho
    Washington Post Staff Writer
    Tuesday, April 10, 2007; A01

    http://www.washingtonpost.com/wp-dyn/content/article/2007/04/09/AR2007040901463.html

    in that article you’ll find things like:

    “By the time the scam unraveled, the credit of those participants had been ruined, hundreds of upscale properties had fallen into foreclosure and real estate prices had plummeted in some of this city’s most exclusive neighborhoods.”

    upscale properties?

    “most exclusive neighborhoods”?

    If you believe some folks – the meltdown was caused because “someone” told mortgage companies to stop denying mortgages to people who lived in “redlinned” areas.

    this does not sound like affluent neighborhoods to me.

    The article continues:

    “Many experts have concluded that the nation’s real estate boom of recent years was fueled in part by weakened lending standards that sparked excessive demand and drove up prices. “

    remember – this article was written over a year ago….

    “No one knows exactly how extensive the crime has become, but new data from the federal government suggest that it has jumped tenfold since 2000. Prosecutors are finding cases all over the country in which sham transactions, based on fraudulent appraisals, led to homes changing hands at far above their real value. Mortgage lenders failed to carry out the most elementary safeguards.”

    Again.. why do we have some folks saying that this trainwreck was the merely the result of mortgage companies attempting to follow the mandate of making more loans available to modest income buyers?

    “In some neighborhoods, mortgage fraud became so extensive that it drove up overall home prices. That is what happened in Atlanta. Hill, 50, was convicted last month in what authorities call one of the biggest mortgage-fraud cases in U.S. history. It involved 400 fraudulent loan applications; nearly $100 million in mortgages; and 120 closing attorneys, appraisers, mortgage brokers and others who prosecutors say were in on the scam.”

    Does this sound like a bunch of people at the economic margins trying to get into their first home?

    “Mortgage lenders later acknowledged that they failed to perform basic checks into hundreds of Hill loans. They estimated their losses at $41 million. Some of that will be absorbed by Fannie Mae and Freddie Mac, the huge government-created housing corporations in Washington that help package home loans into bonds for sale on Wall Street.”

    41 million dollars for homes in affluent, up-scale Atlanta suburbs?

    what does this have to do with redlinning?

    and why was Freddie/Fannie buying “LIAR LOANS” loans for affluent Atlanta suburbs – in the first place?

    Why is all of this important now – that the house of cards has collapsed and we’re all going to pay for it?

    For two reasons:

    1. – a refusal to understand what really happened and why will do little to stop it from happening again – with the same bad actors – rescued and given bailout money to go right back and continue their activities.

    2. – for the life of me, I cannot understand EMR’s basis thesis about this.

    I do appreciate his recent explanations of balanced communities but forgive me, I’ve not yet seen how mortgage scams favor dysfunctional settlement patterns result from the policies that loosened mortgage standards … i.e. “liar loans” – that resulted from policies intended to ..essentially encourage more mortgages for geographies that can be termed urban in nature rather than suburban.

    I don’t think less money available for mortgages in general or reverting back to tougher qualification standards will lead to more balanced communities either because as long as some people who work in areas where there is a lack of affordable housing – those same folks will continue to commute – even if just to find more affordable places to RENT.

    The fundamental problem that drives commuting is twofold:

    1. – trying to find a place for a dollar amount that the worker can afford – i.e. 1/4 to 1/3 of their income.

    2. – per NNM’s observations – young marrieds having kids who want a safe place to raise their kids…

    TMT and others have advocated “more places” where jobs are available and more affordable places to live – near those jobs – as opposed to denser and denser urban landscapes a.k.a. Tyson’s

    … but forget for a moment Tysons – which is for all intents and purposes more a developer’s wet dream than an honest attempt of creating a place where affordable places to live will actually be part of the plan…

    ..instead look at the Army’s BRAC decision to ….

    NOT re-locate where many of their workers already live – in Prince William, Stafford and the Fredericksburg Area.

    EMR seems to not have an answer for this.

    If the Army locates in Alexandria – we KNOW that the folks who work there WILL CONTINUE to commute rather than move into condo’s adjacent to the 6000 jobs.

    If the Army had decided to locate the 6000 jobs in Fredericksburg, we WOULD have had not only “more places” but we would have had a community with much more balance than it has right now – as right now – it is the obverse of NoVa – it has all the workers and their affordable homes and no jobs.

    So… what exactly do mortgage policies have to do with this?

    I cannot see a link; it appears to me that the two issues of mortgages and balanced communities are not connected.

    What exactly about previous or current mortgage lending practices would have convinced the Army to NOT locate in Alexandria and instead to locate in Fredericksburg?

    It would seem clear – that by deciding to locate in Alexandria – that act – assured, more than any other thing, that it’s workers would continue to seek housing in the exurbs…..

    sorry for the extended blather on this…

  70. Anonymous Avatar
    Anonymous

    EMR,

    Let me try and summarize to make sure I get it.

    I think what you are proposing is having a sea of Reston/Columbia type communities within a circular radius of around 25 miles from DC.

    I think after all of the professor rhetorical language thats basically what it boils down to right?

    __________________________________

    Here is why this is a pipe dream

    In order for this to occur in the real world you would have to completely start over.

    We have just seen how much time effort and cost it will take to transform Tysons towards a type of your vision. This is one small area that will end up costing hundreds of millions or even billions of dollars

    Also, I still say not everyone even wants to live in a Reston/Columbia type of environment. Some people love cities, some people love rural.

    And I hate to repeat myself but its completely unrealistic to expect everyone to work in their balanced community. For example, what percentage of people who live in Reston actually work in Reston. What happens when they change jobs, two person households etc.

    And finally how would the transportation system work for all of this. I imagine a radial design with several beltways/public transportation circles. Then you would need spokes coming out from the center to connect each of the rings. The cost of this would be enormous.

    I will close on this I think you and TMT/RH/myself are actually alot closer than it might appear.

    The whole more places argument is very similar to your whole balanced community expect we aren’t cramming everyone inside an area less than 25 miles from DC.

    Its more realistic IMHO because instead of forcing people to live in a certain area in a certain way we put jobs where people ALREADY are.

    NMM

  71. Larry G Avatar
    Larry G

    the thing about jobs is clear:

    1. – where the jobs are – or are not – plays a huge role in what the settlement pattern looks like (or not).

    2. – in a modern world, neither companies …nor the people that work for them – stay in one place.

    Companies move… as they themselves evolve and the market they serve, changes.

    People themselves no longer align themselves with one company but rather a career based on where jobs are (and are not) – and they go where the jobs are – even if those jobs move and/or change.

    Let’s take an example.

    The Navy signs an agreement with a company to develop ship-based unmanned aerial vehicles.

    A relatively new field .. that itself in based on rapidly evolving and diverse technologies.

    That company can decide where they physically want to do business.

    If you are a company that needs a highly-educated, diverse workforce – you are not likely to think seriously about locating in an exurban location but rather in an urban, a New Urban Region location – so you can have access to the workforce that you need.

    On the same track – if you are a person with an education/career in technology, and this new company offers you a much better job – but it is 35 miles from where you live right now – you are not going to sell your house and find a new one especially if your spouse has a job in the opposite direction.

    So you sign up for the commute.

    Your ONLY option for that commute is NOT solo rush-hour driving in an SUV that gets 12 mpg.

    So, if gasoline goes to $8 a gallon or even higher, that husband and wife are still not going to move or one of them quit their job so they both can move closer to work.

    Instead, they’ll do one of more of the following:

    1. – buy a more fuel efficient car

    2. – carpool/vanpool

    3. – commuter bus/rail

    4. – light rail transit

    5. – tele-commute some days

    … any of these options will be more easily achievable and practical – than selling their home .. to go live where their job is – and then to sell it again if they take another/different job.

    and this takes us to the concept of location variable costs – the underpinning of the balance community/more efficient settlement pattern theology.

    Location variable costs – are real costs that involve real money – like gasoline for commuting.

    But the theory seems to assume that these costs are fixed and unchanging – unchangeable – and that is a major flaw.

    Someone can commute from a place 50 miles away in Fredericksburg for no more in location variable costs for commuting than someone from Tysons Corner (who commutes to a new job in Greenbelt)- 25 miles away but solo in car – twice a day – pays.

    So these two people, one living only 25 miles from work and the other one living 50 miles from work – have the same location variable costs for commuting.

    So.. the guy in Fredericksburg IS paying his full location variable costs – in full – by choosing a bus or rail.. not using his car.. and .. the proof is – he is not paying any more – in time or money than his counterpart that commutes from Tysons to Greenbelt.

    So…. if EMR were KING and could enact whatever rules and laws that he deemed necessary for fundamental transformation and balanced communities – what exactly would he decree for both of these commuters and on what performance data would he rely on to justify his decree?

    He could not say that one of them uses more than his share of resources since they both are using about the same….

    Both of them do use more resources than the guy that lives two miles from his job but is the rule going to be that you must live close to where you work no matter what?

    So.. if you get offered a new job – you must move or not take it?

    EMR says that fundamental transformation depends on citizens demanding changes in governance.

    Exactly what changes in Governance, short of prohibiting commuting would actually result in more balanced communities?

    Sometimes I feel like EMR missed his calling.

    He would have been an absolutely fantastic fan dancer.

    For those unfamiliar with the phase – google it.

    It seems that every time we think we’re going to get a view of what EMR thinks we need to do to implement fundamental transformation – that dratted fan swings around ….

    🙂

  72. Anonymous Avatar
    Anonymous

    Groveton, just because there are afew apartments available at reasonable prices doesn’t mean that Fairfax could actually provide housing for all the jobs it has in place.

    EMR would say that they could if they tried – there is plenty of room.

    But it isn’t to their financial advantage to do so – better to keep the jobs and export the costs for supporting as much housing and transit/tranportation as you can.

    I’d agree that Fairfax is still paying for more than its citizens get back, overall. Just not on this particular item. And probably also not on a lot of other items, simply because they are not paid for: the environmental footprint of Fairfax is much larger than Farifax, and this too corresponds to EMR’s idea that our boundaries are incorrect.

    He’s got som right ideas, he just manages to draw the wrong conclusions from them.

    RH

  73. Groveton Avatar
    Groveton

    “well ..yes.. NYC comes to mind – where businesses are expected to help pay the cost of public transit and other transportation infrastructure to provide “choices” for commuting.”.

    Not true during the two years I lived in NYC. Where do you get this idea? Jobs in NYC pay very well so people want to work there and are willing to bear high commuting costs in order to get high salaries. Kind of like Fairfax County. And commuting options are very limited from Manhattan – you either live nearby (in an apartment /condo) and walk or you live in an adjacent borough (in an apartment or townhouse) and take the subway – perhaps with a bus route too. Or, you live far, far away (and live in a single family home) and take the train – probably to a subway.

    I’d love to see a list of employers who pay people living further away more money to subsidize their commute. Real names of real companies.

  74. Anonymous Avatar
    Anonymous

    “people would quickly abandon the liong commutes they have been “forced to endure” now that there are much cheaper houses in Fairfax County.”

    If they could unload their Loudoun homes without a huge loss, and if they didn’t mind the downsizing.

    Higher fuel prices will change the ratios of the dynamics, but not the direction.

    RH

  75. Anonymous Avatar
    Anonymous

    “RH calls these facilities – “subsidized”.

    I would ask – are they really subsidized if they are paid for the the employers and the employees that need them for folks to get from their “affordable” exurb homes to their economic-engine urban jobs?”

    Nah, I’d agree with you on this. If they are paid for by those thet benefit from the service – and according to the benefits they receive – then it isn’t a subsidy.

    I would agree, for example, that auto drivers get some relief due to the existence of Metro, but ai’m not conviced that the relief they get is anything like what it costs. I’m not convinced that there are not other ways to achieve the same result (some relief from congestion) without metro, that wouldn’t be cheaper.

    It’s like the arguments on the current bailout. One argument is that the conditions absent the bailout (Metro) would be horrific. The other argument is that the bailout (Metro) is merely distorting natural market balance that would evenetually be more efficient.

    RH

  76. Anonymous Avatar
    Anonymous

    “No one wants to consider the alternatives to Business-As-Usual.”

    Not as EMR describes them because without a sound business base, they are unsustainable. Sustainability requires a nexus between environmental values, economic values, and social values.

    EMR’s rants agains short term profits, speculation, insufficient contributions to the public benefit, etc. show that his ideas are no more sustainable than those he opposes.

    We need a certain amount of business as usual – quite a bit, in fact.

    RH

  77. Anonymous Avatar
    Anonymous

    NMM did you ever see EMR say there would not be periods of higher volume movement?

    ———————–

    “Doesn’t EVERY system pretty much serve two surges a day?”

    Not a balanced one, that is what EMR’s “reletive Balance of Jobs / Housing / Services / Recreation / Amenity at the Alpha Community scale is all about.
    …………..

    “Even if we went to work on escalators and people movers, they would be parked or vacant most of the day.”

    Not with Balance.

    “Wouldn’t even the most balanced system expect to have two surges a day?”

    No

    —————————-

    QED.

    Sometimes you can’t believe anything EMR says, and it undermines his credibility when he does have a good idea. If you put enough grease on an idea, no one can pin it to the ground.

    RH

  78. Anonymous Avatar
    Anonymous

    This is too good to pass up

    "Sometimes you can't believe anything OBAMA says, and it undermines his credibility when he does have a good idea. If you put enough grease on an idea, no one can pin it to the ground."

    EMR & OBAMA very intelligent both great professors but that quote fits them to a T

    ok back to your regular blogging

    no hard feelings just an interesting observation

    I know this tries to be a non-partisan blog

    NMM

  79. Anonymous Avatar
    Anonymous

    I have also said that in the places I have designed, built, managed and lived, it has been shown beyond a shadow of a doubt that a mix of SHD (25%) / SHA (50%) and MH (25%) can yield a Balance of J / H / S / R / A with 40% Openspace, etc.

    That’s one balance, and one version of beyond a shadow of a doubt.

    —————————-

    “(Humm that sounds a lot like the 1950s and the original idea of the suburbs.)”

    Right you are!

    Actually this was the ideal of “suburban” living circa 1925 when no one dreamed that “everyone’ would have a car and most would walk or rely on shared vehicles for Mobility and Access. The smart ones were saying in the 1920 exactly what EMR is saying now. “

    There you have it: EMR is a reactionary. Those commuter suburbs had surges, just as Metro has and the streetcars served the samr purpose and had the same economic problems as Metro has today.

    He claims those places had balance in the aggregate, without proof.

    What we do know is that they had a much lower standard of living.

    ——————————-

    “Next allocate Jobs / Housing “

    Who is going to do this allocation, or how do you expect the free market you claim to support to provide it in a balanced way?

    Oops, I forgot, it will happen when an educated populace that is not greedy, makes the right decisions.

    In other words, never. Which gets us back to who is going to do the “allocation”?

    ——————————-

    “I am sure you now realized you made the inverse of the NMM error — thinking that the density of a staion-area related to the density of a municiplaity. You know that most of NYC is not within .25 miles of a platform so the comparisons are not relevant.”

    Great, all we need is a platform every quarter mile, or else balance goes down and commute distance goes up.

    And never mind that the platform and commuter rail is heavily subsidized now. Adding more of that adds to economic imbalance.

    —————————-

    “Both ends have to move.

    Workers have to have realistic expectaions about housing and employees have realistic expectaion about pay scales.”

    Goody, both the employees and the workers have to give up something.

    ——————————

    “The first step is recognizing that cheaper housing a long ways from jobs and services makes the problem worse, not better. “

    So we recognize that. The economics don’t change: housing in less dense areas is less expensive.

    You cannot add more homes in the most expensive and dense areas to make them cheaper: they are still expensive. And probbly less desireable.

    The only remaining option is to move the jobs.

    ———————————

    Cheap money. Another greased idea.

    Presumably you can afford to buy more with cheap money, but doesn’t that just mean the goods are cheaper?

    One hamburger worth of money is one hamburger worth of money, whether that is $2 or forty pesos.

    The question is how many hours per hamburger. In pesos, that’s a lot more hours than it is in dollars.

    ———————————

    “In order for this to occur in the real world you would have to completely start over.

    We have just seen how much time effort and cost it will take to transform Tysons towards a type of your vision. This is one small area that will end up costing hundreds of millions or even billions of dollars”

    Yep billions, and fifty years or more. By the time we get through with the experiment there will be no way to validate whether the results were as predicted. EMR is preaching an idea that can never be proven.

    Therefore he can never be wrong, and everyone else is an idiot.

    ——————————

    “The whole more places argument is very similar to your whole balanced community expect we aren’t cramming everyone inside an area less than 25 miles from DC.”

    Bingo. Cramming will always result in more expense, more congestion, more waste, and more (environmental) subsidy to the crammed area from the uncrammed area. At the same time you have more (economic) subsidy from the crammed area to the uncrammed. My assessment is that the economic subsidy is unbalanced with the environmental one. Failure to recognize this is a major fault in EMR’s theory.

    ——————————

    RH

  80. Anonymous Avatar
    Anonymous

    “Sometimes you can’t believe anything OBAMA says, and it undermines his credibility when he does have a good idea. If you put enough grease on an idea, no one can pin it to the ground.”

    Agreed. I have nothing against Obama or EMR but I really detest slimy ideas.

    RH

  81. Groveton Avatar
    Groveton

    RH:

    “Groveton, just because there are afew apartments available at reasonable prices doesn’t mean that Fairfax could actually provide housing for all the jobs it has in place.”.

    First, you claim that there are “a few” apartments available. Nonsense. There are many.

    Second, if there was overwhelming demand for apartments – there would be no cheap apartments. The market for real estate rentals is very efficient and demand pushes prices. The reason the apartments are cheap is because there is a lack of demand. It really is just that simple.

    What some on this board don’t like to hear is that people who live in the ex-urbs do so because they want to live in a bigger home than they could afford closer in. And it’s true in every growing city in America.

    It has nothing to do with housing stock and everything to do with people’s preference. People don’t want to live in apartments or condos – so, they don’t. And since they don’t want these habitations the market doesn’t build them.

    It’s frustrating for some people to live in a sort-of free market democracy where people can buy what they want and spend their time doing what they’d like. This freedom prevents the human settlement elites from forcing people to do things they don’t want to do. This frustrates the human settlement elites who fall back on conspiracy theories to help prop up their desire to tell others what to do and how to live.

    “But it isn’t to their financial advantage to do so – better to keep the jobs and export the costs for supporting as much housing and transit/tranportation as you can.”.

    That would be true of people didn’t pay taxes. But they do. They pay sales taxes and personal property taxes and real estate taxes. So, when you “export the costs” you also export the revenues. And the question of exporting the costs is very suspect. A person who commutes from West Virginia to Tyson’s drives ovr a lot of Fairfax County roads. Compare that to someone who lives in McLean and drives 4 miles to Tyson’s. Have the transportation costs actually been exported? Of course not. So, is it the educational costs? That’s one area where Fairfax County residents clearly pay more than they they get. So, it’s not the locational cost of education. What costs are these? I’ll tell you? They are imaginary costs.

    Finally, the exurbs can always decide not to build housing. That’s basically what West Loudoun and Fauquier have decided with their anti-development policies. These ex-urbs can also refuse to build the roadway infrastructure needs to get people from their locale to the edge of Fairfax County. Or, they could implement commuter taxes which serve to charge people moving from their locale to another. This can be as simple as putting tolls after the last exit in their county on the roads leading to Fairfax. So, why don’t they? Because they know that attracting citizens with good jobs (regardless where the jobs are located) is in their best interest.

  82. Anonymous Avatar
    Anonymous

    “Groveton, just because there are afew apartments available at reasonable prices doesn’t mean that Fairfax could actually provide housing for all the jobs it has in place.”.

    First, you claim that there are “a few” apartments available. Nonsense. There are many.

    Second, if there was overwhelming demand for apartments – there would be no cheap apartments. The market for real estate rentals is very efficient and demand pushes prices. The reason the apartments are cheap is because there is a lack of demand. It really is just that simple.

    What some on this board don’t like to hear is that people who live in the ex-urbs do so because they want to live in a bigger home than they could afford closer in. And it’s true in every growing city in America.”

    I don’t disagree with any of that. people don’t want to live in cheap apartments, because they are cheap. They also don’t want to live in them because they are expensive, by the square foot.

    But the concept of many is relative. How much housing does Fairfax provide, compared to the jobs they have to provide?

    I still maintain that it is to the advantage of Fairfax to hog the jobs and distribute the housing. At the same time, because of their infrastructure overhead, they could never compete with the outer jurisdictions on housing costs – they don’t have the space to provide what is desired, so the outer jurisdictions provide an environmental and a housing subsidy to Fairfax, which enjoys all the revenue from the jobs.

    With all that job revenue, why aren’t Fairfax taxes lower, and homes cheaper?

    Because EMR’s “10x rule” and “five natural laws” are fundamentally wrong.

    RH

  83. Anonymous Avatar
    Anonymous

    “Finally, the exurbs can always decide not to build housing. That’s basically what West Loudoun and Fauquier have decided with their anti-development policies.”

    They haven’t decided not to build housing. They have decided to provide housing that only the ultra rich can buy. Bedcause only a reletive handful can compete for those kinds of proerties, the rich get a subsidy at the expense of others, who might have afforded only a more modest home – even if that would have been a McMansion!

    RH

    RH

  84. Anonymous Avatar
    Anonymous

    “That would be true of people didn’t pay taxes. But they do. They pay sales taxes and personal property taxes and real estate taxes.”

    But the (I believe false) argument is that they don’t pay enough: new housing is a net loss to the existing community. Full locational costs are not being paid, and all that crap.

    I claim it balances out because all those people that own and operate the businesses that pay the most taxes – all live in homes.

    But as EMR points out, it does not balance out if the boundaries are wrong.

    RH

  85. Anonymous Avatar
    Anonymous

    “All the revenue from the jobs.” Ray, I disagree. Under the existing tax system, the biggest tax revenue is from the state income taxes, which is sucked to Richmond both to operate state government and to subsidize RoVA both rich and poor alike. Fairfax County gets a cent on the sales tax, I believe, along BPOL and commercial real estate taxes.

    But even commercial real estate taxes have not prevented huge increases in residential real estate taxes. Fairfax has a goal of 25% of its real estate taxes coming from commercial sources, but hasn’t seen that figure in many years.

    At the same time, we see the pro-development crowd clambering for higher taxes on Fairfax residents to keep the golden goose alive. Development is no golden goose; it’s a rabies-infected buzzard. The only golden goose in Fairfax County sits in Arlington County — the Pentagon. That is Virginia’s strategic advantage. National defense and security spending.

    I have a friend who is a professional real estate appraiser. He thinks that rezoning at Tysons, as proposed by the Task Force’s vision, could result in somewhere around $5 billion in profits — all without breaking ground to start a single building. And, of course, the effort is underway to minimize the amount of this that would go to infrastructure. Development in Fairfax County, residential or commercial really doesn’t do much for existing residents.

    The social contract needs to be changed.

    TMT

  86. Larry G Avatar
    Larry G

    re: availability of “affordable” housing in Fairfax, NoVa, et al.

    let’s not confuse “reasonably-priced” apartments with the strict definition of “affordable” which would be the 1/4 to 1/3 of one’s income – regardless of what kind of housing it might be – even an apartment.

    Does NoVa/Fairfax have ample available housing for median income earners?

    Quick Facts sez that Fairfax County looks like this:

    median household income = $83,890

    median individual income =
    $36,888

    Looks like ..using the 1/4 to 1/3 measure:

    $2300 month for household

    $1024 month for individual

    I’m not very familiar with rental prices in Fairfax/NoVa.

    Are there ample rentals available in NoVa/Fairfax for between one and two thousand a month?

    Could a single entry level Fairfax county teacher find affordable housing in Fairfax?

  87. Anonymous Avatar
    Anonymous

    Yeah, as far as the county is concerned, we are talking commercial real estate taxes.

    And, as I pointed out, I just said that is the argument, not that I agree with the argument.

    If the argument is true, then outlying counties are subsidizing Fairfax becuase they have to pay for all the services Fairfax would have to provide if the outlying commuters live in Fairfax.

    Beyond that first ring of outlying counties, the rest of ROVA gets a free ride off of Fairfax.

    Relative to the first tier outlying communities, Fairfax has more jobs, more commercial property, and (bad as it is) a more favorable situation for its residents.

    So, why isn’t it better? Because everything is more complicated and more expensive in Fairfax.

    The “10X rule” is just wrong.

    If the argument isn’t correct, then the “10X rule” is irrelevant.

    Either way, the social contract needs to be changed.

    RH

  88. Anonymous Avatar
    Anonymous

    My Alexandria home rents for slightly more than that, but it is a very nice 4 BR 3Ba home with a huge detached garage, in a very private setting.

    It would be substantially more if you wanted to buy it, and you would need over $100k down. And you would probably need two incomes.

    It will be available in Dec. if anyone wants to live near the new BRAC site.

    RH

  89. Larry G Avatar
    Larry G

    Ray. Who knows.. somebody might come along and want it for condos for a balanced community.

    🙂

  90. Groveton Avatar
    Groveton

    Larry G:

    I am confused by your math. Let's put individuals aside since they can always share housing with other individuals. Let's look at median income per family (rather than households which include individuals). That number is $92,146.

    With $92,136 as the median annual family income you get $7,678 per month. One third of that is $2559 per month. I believe that would secure a mortgage of around $400,000 at 6% with a 30 year fixed loan. Let's harken back to the days of yore and assume that the family actually makes a downpayment on the loan of 10%. That $440,000. I think my math is right but will take corrections if not. Does acceptable housing exist in Fairfax County for $440,000?

    Let's go to the internet.

    I used Alexandria, VA and then selected Alexandria, Fairfax VA on weichert.com. That's only a fraction of Fairfax County. There are 1,236 total properties that match my search criteria. That's over 1,200 places to choose – condos, townhomes, single family dwellings.

    http://www.weichert.com/search/realestate/SearchResults.aspx?cityid=591&maxpr=440&mls=18&cmg=1

    Just for kicks, I lowered the number to $300,000 and got 764 properties.

    http://www.weichert.com/search/realestate/SearchResults.aspx?cityid=591&maxpr=300&mls=18&cmg=1

    Your arguments live in a fantasy world. There are plenty of places to live in Fairfax County. And Alexandria. And Arlington. And Eastern Loudoun.

    But … if you want 5 bedrooms on 3 acres for $400,000 – you may have to move further out.

    People who make long commutes to jobs in Fairfax County have made a personal decision. They are your neighbors, not mine. And the consequences of their personal decisions are yours to solve.

  91. Larry G Avatar
    Larry G

    re: commercial taxes that keep residential taxes low.

    This is yet another scam.

    Commercial businesses do not pay taxes.

    they pass them on – incorporated into the price of the goods and services that they sell to – guess who? – the folks who pay residential taxes.

    The only Commercial businesses that actually generate extra taxes are the ones that sell goods and services to folks OUTSIDE of the taxing jurisdiction – and of course – that comes at the expense of the jurisdictions whose own residents don’t shop local.

    That’s why most localities want all the commercial development that they can attract…

  92. Anonymous Avatar
    Anonymous

    “Ray. Who knows.. somebody might come along and want it for condos for a balanced community.”

    Not a chance. If I tried to build tht home today, under rules put in place since I built it in 1989, it would not be allowed, let alone townhomes.

    As far as balance goes, there used to be an industrial and office site at the other end of the street, where I worked when I bought the original property. That has since been torn down – for townhouses.

    Why are the rules different at one end of the street vs the other?

    Political influence of the owners. But if you ask, county planning will tell you it has to do with environmental regulations.

    RH

  93. Anonymous Avatar
    Anonymous

    “Commercial businesses do not pay taxes.

    they pass them on – incorporated into the price of the goods and services that they sell to – guess who? – the folks who pay residential taxes.”

    Which is why I say it is NOT TRUE that residential development does not pay its own way.

    Glad you finally agree with me.

    RH

  94. Groveton Avatar
    Groveton

    I think the commercial businesses don’t pay taxes argument is a slippery slope. I’d counter that employed residential homeowners don’t pay taxes either because they incorporate the costs of taxes into the salaries they demand from businesses who then pass those additional salary demands on to consumers in the form of higher prices. Why do you recognize commercial taxes as an input to prices but not labor?

    The problem with all these arguments is that taxes have been going up faster than prices. The core problem isn’t the division of taxes between commercial and residential interests but, rather, the insatiable demand for more money from government.

    I think VDOT’s budget is $3B per year and I believe Virginia spends $36B or so per year at the state level. So, VDOT is 8% of state spending? Is that right?

  95. Larry G Avatar
    Larry G

    Why do you recognize commercial taxes as an input to prices but not labor?

    I’m not quite sure how you reason this.

    Are you saying that the cost of labor would be different if the business taxes were different (or vice versa?).

    VDOT’s budget is about 4 billion but a billion of it is from the Feds…

    also.. we need to distinguish the various kinds of business taxes…

    Sales, local option sales, BPOL, local option meals, local option lodging, etc…

    I think the point is that they are all taxes… and if you take away some of them – the locality will usually find another way to substitute the taxes…

    and Ray is partially correct.

    If you add up the local property taxes plus the taxes derived from local businesses plus include State aid (which is just giving back locally collected sales taxes)… then some level of budgetary equilibrium is … possible.

    But if you have a whole bunch of houses and not enough business generators of taxes – the oft-cited 70-30 ratio…then the locality has to make up the difference.. with property taxes….

    and if you have a bedroom community growing by leaps and bounds – and the commercial is in an adjacent locality – it boils down to lowered level of services levels combined with higher taxes – a condition that often results in the local elected getting tossed out of office.

    That’s at least part of Loudoun’s problem..they got all the houses but they lose a lot of taxable goods and services to Fairfax….

    Let’s face it — Fairfax is an economic black-hole sucking the life out of adjacent jurisdictions…. (I thought I’d just throw that in to see if it caused a ruckus).

  96. Anonymous Avatar
    Anonymous

    “then the locality has to make up the difference”

    So either one locality is not paying its true costs, or the boundaries are wrong, just as EMR says.

    RH

  97. Anonymous Avatar
    Anonymous

    Larry 70-30 If Fairfax County had a 70-30 split, both the BoS and the average citizen would be dancing in the streets. The goal of the BoS is 25% of the revenue from commercial real estate taxes. Due to the major downturn in residential assessments, the percentage commercial went from 19.23 percent to 21.06 percent for fiscal 2009.

    I recall that the percentage has been as low as about 17%. So much for the free ride. Development just doesn’t pay for itself in Fairfax County.

    TMT

  98. Larry G Avatar
    Larry G

    from a tax policy point of view, I wish I knew where 70-30 came from… why not 80-20 or 60-40?

    Is it just something plucked out of thin air or is there some relevance to the ideal/desired mix of business/residential.

    Bonus question – in EMR’s balanced communities New Urban Regions – is there a similar concept of what the ideal mixture might be?

  99. Anonymous Avatar
    Anonymous

    Groveton,

    Of course housing is fine now

    Before the bubble burst it was a much different story.

    I think we agree that this was a much needed correction.

    It will be interesting to see where people decide to settle in the coming years.

    ___________________________________

    This is somewhat older but regarding the western Loudoun//Fauquier decision to limit growth I totally agree that this is another part of the problem.

    People have to live somewhere.

    Culpepper and West Virginia were growing as a direct result of there not beging any new development approved in Fauquier and Western Loudoun.

    ___________________________________

    So in summary let’s review.

    This all started with Fairfax which providied incentives for business growth and then refused to build the associated housing.

    Due to a supply and demand problem housing prices skyrocketed.

    Many had no choice but to move further out to Eastern Loudoun

    As a result the population in Loudoun skyrocketed. County budgets and tax rates increased dramatically.
    Commutes increased, jobs and housing became increasingly unbalanced.

    Then the bubble burst which is actually a good thing long term.

    In Fairfax supervisors spent like drunken sailors due to increased revenue from real estate taxes. The new reality is finally forcing government to evaluate programs. Hopefully things will be cut or reduced but I fear due to our one party system taxes will be increased to offset lost revenue instead.

    In Loudoun massive residential growth has caused double digit budget and tax rate increase. Will people begin to move because of the higher taxes or is Loudoun the new Fairfax and people don’t mind paying for services. Hopefully continued business development along the Dulles corridor will provide a greater commercial tax base and relief to residents.

    NMM

  100. Anonymous Avatar
    Anonymous

    RE this whole debate about commerical and reisdential taxes

    I strongly disagree.

    County budgets are over 50% school related.

    Residential is the only thing that uses schools.

    Look at Loudoun County their budget is over 70% school related.

    Lets keep going. Residents are the only people that use parks, libraries, hospitals

    Residents put a greater strain on the transportation network than commercial does due to the majority of trips that aren’t work related

    To be generous let’s say police and fire are 50/50 residential and commercial

    Based on all of this Residential does not pay for itself by a longshot.

    NMM

  101. Groveton Avatar
    Groveton

    NMM and TMT (albiet through the side door) have gotten it right. RH and Larry G have gotten it wrong. So, here’s “the Groveton Gripe”:

    1. Residential does not pay for itself. As NMM correctly points out, the vast majority of services are for residents not commercial enterprises. TMT correctly says that developers don’t pay their fair share. Again correct. Given that the majority of development is for residential vs commercial, the discrepancy is once again redidential – related.

    2. Larry G and RH say that Fairfax is “exporting its housing problem”. We’ll leave aside the fact that Firfax has somehow managed to provide housing for more people than the next 3 or 4 jurisdictions combined. We’ll also leave aside the number of people who commute from exurbs to Arlington and DC or even the NIH complex in Montgomery County. No, we’ll leave aside the facts and go back to the qualitative arguments. If residential really has a bigger gap between what’s paid and what’s received and the exurbs have a higher percentage of residential then the exurbs are exporting their “residential deficit problem”. Or at least, they are trying to. And if you look at all the flows of capital (including the river of capital processed by the robber barons in Richmond) – that is exactly what is happening.

    3. The final argument pushes both the boundaries of economics and reason. Under this argument, employers are liable for the residential costs of their employees – no matter where they live and no matter that they can’t dictate where the employees live. Of course, this argument is convienient for the “pay the exurbs more” plan but inconvienient with regard to the truth. Why? Because the direct labor costs of direct employees are only one input to business. There are many more. For example, many businesses in Fairfax County rely on susbstantal computing power. These computers contain chips and the chips are largely made outside of Virginia. Presumably, the businesses in Fairfax County should be liable for the roads in the places where these chips are made since these busineses are creating the demad for these chips just like they are creating the demand for the direct labor. This would create some odd results. Many of Intel’s chips are manufatcured in San Jose. San Jose, Costa Rica that is. Intel represents over 4% of Costa Rica’s GDP. So, this is not a nit. And the chip plants in Costa Rica have employees and those employees have to get to work. They drive on Costa Rican roads and increase the location specific costs in Costa Rica. Now, most people would say that the City of San Jose, the province of San Jose and the country of Costa Rica should “price in” the locational costs of having those Intel jobs. This “pricing in” is accomplished by imposing local taxes sufficient to pay for the locational costs caused by the labor required to make the chips. It is not accomplished by trying to get the businesses (all over the world) who use the output (i.e. chips) as input to pay special taxes to cover San Jose, Costa Rica’s locational costs. Nor is it accomplished by trying to force the localities where the chips are used to zone differently in the rather absurd hope that zoning changes will shift the locational costs of business inputs.

    4. The corrollary is obvious. If exurbs want to permit housing for people who work elsewhere, they are essentially creating an input for the distant businesses to use. They need to tax that input sufficient to pay for that input’s social costs. But they don’t. They have decided to tax too little to cover the full costs of their residents. Thus, they have created a “residential deficit problem” which they now hope to export. In the same way that no American community would agree to change behavior or institute new taxes for the costs of Intel’s personnel in San Jose, COsta Rica – neither will they do the same for the “residential deficit problem” in Spotsylvania County. And, instead of raising their taxes to meet the costs (at which point they would be ambivelent about increasing or decreasing the supply of input) they decry the fact that they themselves have created a deficit environment for an input they gladly created (when they zoned to allow development).

    Just like Costa Rica – the exurbs have all the power they need to tax the costs of business input sufficient to pay for the “full locational costs” of that input. In Costa Rica’s case, they can implement an export tax on the chips. In Spotsylvania’s case, they can impose a commuter tax. Of course, if they go too far, they will price the inputs out of the market and both Intel and the residents of Spotsy working in Fairfax will move elsewhere.

    5. Having fully disposed of the Fairfax is “exporting its housing problem” fallacy let me move to another, thornier subject – the social costs of the voluntarily retired and underemployed. I notice in Fairfax County and elsewhere a lot of people who have voluntarily decided to reduce or eliminate their incomes in favor of a more sedate lifestyle. These are people who retire at 45 or 50 years old. These are people who leave their high paying jobs to work as golf course marshals or part time university professors. Why should I subsidze their lifestyle decisions? I believe that every citizen should be chared a fixed amount of money as a “base tax” until they are 62 years old. This “base tax” would be computed as a percentage of their highest income level in the last 10 years adjusted for inflation. Let’s be brutally honest – those who have enjoyed the educational and social lagrasse of the United States over their lives have a responsibility to help pay back that lagrasse. And when those people make a lifestyle decision to relax at a young age, stop or significanly curtail their earnings yet continue to create all of their former social costs – that’s just unfair to the rest of us who keep working, keep earning and keep paying all of our taxes (including the biggie – income taxes). So, I propose a slacker’s tax to cover the social costs of those who could work and earn but refuse to do so (or refuse to work and earn at a reasonable level). For it is these early retirees, lifestyle slackers and “I’m finding myself in middle age” non-contributors who are really receiving an unfair bonus from those of us who continue to work and continue to pay our full share of taxes.

    Given the number of people I know who have voluntarily decided to either stop working or to voultarily reduce their incomes for personal convienience – I am convinced that my proposed Slackers’ Tax would more than make up for both the Virginia and US deficits.

  102. Anonymous Avatar
    Anonymous

    Not sure I'm totally on board with Groveton's latest, but let's work with it. How about adding a tax for hiring undocumented employees that cover the added social costs for providing social and other governmental services to these people and their families?

    How much added costs do Pete's Landscaping & Ed's Drywall put into the state and local governments' budgets because they operate their businesses as attractive nuisances?

    TMT

  103. Larry G Avatar
    Larry G

    re:” In Spotsylvania’s case, they can impose a commuter tax. Of course, if they go too far, they will price the inputs out of the market and both Intel and the residents of Spotsy working in Fairfax will move elsewhere.”

    such bather.

    this is rich.. actually Groveton they cannot impose a commuter tax and you know why?

    The Dillon Rule.., the same rule you rail against…ha ha ha…

    but if HOT Lanes come to be – it will function as a commuter tax.

    also… with respect to charging for infrastructure…

    again.. in Dillon Rule Va, if the developers get their way in the GA – proffers will be outlawed…

    .. and I can tell you what the net result of that will be – and that will be that future rezone requests will be denied unless of course the developers also get a law passed that says localities cannot deny rezones either.

    The influx of commuters to Spotsylvania has been a disaster to the folks who DO live and work in the local area.

    The commuters have effectively tripled the price of housing.. driving local folks to the rural margins to find affordable homes…

    .. and then the BOS ., because of fears of more and more land being converted to subdivisions – downzoned much of the country so that only the fairly well off could afford to buy a lot and that meant that folks who lived and worked locally – now lost the option to find a lot to build on in the rural areas.

    This is why there is vehement opposition to the country joining VRE – which would mean putting additional taxes on gasoline that locals would have to pay – so that the NoVa commuters who earn 3 times as much money as the locals – can received a $1000 per commuter subsidy….

    The only reason Spotsylvania originally did not do what Facquier has done – was they had some folks like they have in Loudoun who stood to make money off of land-development – even if in the end the financial fallout of that development would eventually fall to the county to pay for all the infrastructure that the new development would need.

    If the developers succeed in the GA, Sposylvania might well end up like Facquier… “just say no”.

    So.. Groveton. the only reason why Spotsy takes Fairfax/NoVa commuters is that the folks who make money off of development got control of the County Government – the same way they do in Fairfax .. and are trying to get control in the GA.

  104. Groveton Avatar
    Groveton

    TMT:

    I have no problem with the illegal alien tax. Seems like a good idea given that the government will not enforce the existing laws.

    Larry G:

    Great to hear that you have finally seen the light on Dillon’s Rule. I assume that TMT also likes the fact that you have seen the light on developer based sloth and greed. Very good. Of course, we can all complain about the GA and the RoVA types who elect many of them. However, the BoS in Fairfax, Loudoun, Spotsy, etc are all our problem. We elect the BoS and we let them kowtow to the developers. They do this by avoiding the MSM and hiding under the radar. Shine the light on the litchen of local discontent and the cockroaches will disappear.

  105. Anonymous Avatar
    Anonymous

    “But they don’t. They have decided to tax too little to cover the full costs of their residents. Thus, they have created a “residential deficit problem” which they now hope to export.”

    Bingo.

    The reason residential doesn’t cover its own costs is that it doesn’t pay enough. They make up the difference thorugh taxes on business if they have any or open space when they don’t.

    Anyway you slice it it isn’t that resiential doesn’t pay, it is that residential has enough votes so that they don’t have to.

    Then they “blame” the problem on the new guys.

    Note: after years and decades even of claiming that their no growth policies would save money on taxes, Fauquier is now facing huge budget deficits – same as everybody else.

    Only now, there will be fewer people to share the pain with.

    RH

  106. Anonymous Avatar
    Anonymous

    As long as we are talking about alternative tax schemes how about a school pupil tax. A user pays system for education.

    I know it would be very unpopular but let face the facts

    When over 50% of a local budget is going to a certain area something needs to be reformed/changed.

    In most cases the average student costs 10k. What would happen if residents say had to pay 1/3 of that to send their kids to school. Since public education is a useful benefit to society.

    Maybe this would finally place more scrutiny on the school budgets since parents of school age children would feel the costs of schools directly in their wallets.

    Two other components to this.

    1. The state of Virginia would distribute education funding based on population only

    2. A minimum income threshold would be set by localities based on cost of living where the pupil tax would be waived and then perhaps a sliding scale would continue up to a certain threshold income. I envision a system similar to the free and reduced lunch program.

    NMM

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