On Property Taxes

 The "Allodial Title" crowd will tell you that taxation is theft. Right idea, wrong crime. Taxation is extortion. Rents extracted under the threat of violence. But it's extortion by  an entity that has a local monopoly [1] on violence--once you've paid one tax collector, you don't have to pay another. And if a second tax collector tries to extort you, the first will do violence to them until they stop. 

The constitutional innovation of the Magna Carta was that it enshrined a right of the people being taxed to have a say in how much they were taxed. It became very traditional, so much that when an English King (Charles) figured a (legal) way to do an end-run around it, it fractured the state and caused what we call the English Revolution. (Aforesaid issue also a casus belli for the American revolution.)

“I like to pay taxes. With them I buy civilization” - Oliver Wendell Holmes, Jr., 

The counter-case is what goes in poor Latin American cities, where the state has collapsed and extortion is carried out by a patchwork of local gangs on an ad-hoc basis, without a schedule of how much is due or when it is due. When a gang acquires a territory (even a few blocks), tax collection is rapidly regularized--it's far easier to get money from people who are used to paying it, know how much to pay, and have set aside money for that purpose. Figuring out how much people can pay is always a tricky process--take too much and people go bust and lose the ability to pay in the future. Assessment is a tricky process--discovering the right level for "as much as possible but not too much" requires a lot of trial and error. 

In an inflationary context, ad valorem taxes (on the value) in general are necessary - a share of the value rather than a fixed value, lest taxes be degraded to peppercorn values by inflation over time. But inflation disrupts the local assessment equilibrium, requiring a lot of fresh 'price discovery', with the associated inevitable error. 

The less 'state capacity' exists, the more it relies on tariffs and other imposts. Limited number of locations, limited number of participants, and if the merchant doesn't return, you've overtaxed them, so the feedback loop for discovering the 'assessment equilibrium' is short and simple. Property taxes are the next easiest. Property is worth money; the worth of property is proportion to the income it brings. Real estate is an especially nice to tax--it doesn't go anywhere, and it doesn't change much. In a medieval context, the taxes your grandfather paid on farmland is probably a good rate for you as well. (With some local administration to adjust to circumstances i.e. bad harvests). The value of a house is generally a fixed ratio for the rents charged for it [2]. Hence the value of revenue a state can expect from property is relatively reliable. And for things like houses, comparables are readily obtained. 

An ad valorem tax on other economic activity (sales, VAT) is harder to collect and requires substantially more state capacity. The number of participants is larger, what is being taxed is more heterogenous, and people not cheating on their taxes requires substantial record collection. Income tax has yet higher tier of difficulty-requiring tracking not just corporations, but more numerous persons, and a commensurate level of state capacity required. 

A hierarchy of taxes thus runs:

• "Everyone pays X dollars"
• "Everyone pays X dollars per house"
• "Everyone pays X dollars per chair sold"
• "Everyone pays X dollars per dollar earned per chair sold" [3]

And it becomes a question of what your local unit of governance has the state capacity to administer. And across most of America, that local unit of governance is the county, with one or two people doing the work on a part-time basis. It takes a town (with fixed retailers) to make collecting sales taxes worthwhile, and a state (with fixed citizens) to make collecting income tax worthwhile. So for small urban aggregations, property taxes are the only viable taxation. Raise the sales tax too high, and the differential induces residents to shop elsewhere, and then local retailers close.  Property taxes are also very difficult to escape - real estate can't be moved, and so accidentally setting the exaction rate too high is less problematic. There is also a relative equilibrium - as property rates rise, property values fall, and hence so does the ad valorem revenue. So property taxes are simpler, safer, more resilient, and robust than any alternative. States maintain very large differences in property tax rates. 

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[1] There are, of course, always exceptions. But they represent cases where the state either hasn't noticed or hasn't bothered. Whether that is a rural town in the Old West, or an inner-city ghetto. 

[2] Why assessing owner-occupied housing is harder - there is no monetary rent, and the 'owners equivalent rent' has to be estimated. Owner 'customizations' in terms of improvements and tolerated nuisances also highly personal. 

[3] Right now, states are dealing with 'tax exiles'; people working remote in places with income taxes, and so we are seeing a shift to taxing people at 'place of employment', to which employers are responding to shifting the legal domicile to their employees to low-tax locations. To which states are adjusting by requiring additional 'local labor' requirements in procurement. 

Right-Sizing Roadways in Urban Locations is a Financial Necessity

Like an old person with a big yard, we own more than we can maintain. And once we let the weeds in, it's twice the work to remove them. And the longer we wait, the bigger the problem gets - weeds, then bushes, then small trees then big trees for a yard. 

Fifty years ago, when we designed most of our roads, asphalt cost a nickel and it was cheaper to pave space than to landscape it. That's no longer the case. Worse yet, patching potholes is a mugs game - they are forming faster than we can afford to patch them. And that is because we've deferred maintenance on roads, so what would have been a pothole fix has caused other problems. A car-suitable roadway is a complex structure of compacted soil, 'roadbase' (rocks, gravel, sand) all topped with as asphalt 'roof' that keeps the water off. When we let that roof fail water gets into the roadbase, freezes, and wedges it apart, causing larger cracks at the asphalt surface, letting more water in, until the soil underneath washes away and you get sinkholes that undermine the road. Lacking the money to fix everything, our best strategy is to limit what we fix.

And that means removing pavement. Leaving something unpaved seems reasonable, but that just opens the door to accusations of poor maintenance. Making the problem worse is past fecklessness - we've slopped asphalt on things that look like city streets but aren't. And no one likes to learn that the 'street' behind their house is actually an alley, and the city isn't ever going to repave it. 

The nightmare of reducing paving is that a roadway is a system--the asphalt hat carries water to the curb, which channels it to the gutter, which runs to the stormwater sewer, which is a huge network of pipes most people barely know exists. So reducing pavement by moving a curb is a non-starter. So either  reduce the paved area by converting the edge of the road into non-car uses (bi-directional cycle lane with a floating curb) or  take it from the center and add a median - either a bio-swale to contain water, or an elevated island with trees. 

 

Applying suburban SFD parking standards to urban rentals is stupid

Parking requirements are a pseudoscience, and most engineers mis-apply suburban standards to urban contexts when actual research is explicitly clear that vehicle ownership for urban renters (lower income, smaller households, shorter trips) is less than the '1 stall per bedroom'-ish metric most municipalities have fecklessly adopted.

On car-brain and respect

There are two very different types of respect; respect for a person as a human being, and respect for a person as an authority. But because we use the same word for these two different things, people often talk as if they were the same thing. So for example, when someone in authority says “If you don’t respect me, I won’t respect you.” What they’re actually saying (and justifying) is “If you don’t respect me as an authority, I won’t respect you as a human being.”

-Heather von Stackelberg, "Mugging the Muse", Medium, Oct 24, 2017

This came to mind when I was thinking about motonormativity. Auto-centric design and motor-normity is when the car says: "If you don't respect me as an authority, I won't respect you as a human being". When a car kills a pedestrian, people shrug and say: "must have been in the wrong place, or in the right place at the wrong time". Automobiles have no respect for anything that isn't an automobile. And that's the root of the enormous driver hostility toward bike lanes (especially protected ones) -- it's not just a denial of authority, but one backed up with consequences - enough reinforced concrete to damage a car. The use of flex posts and swale curbs rather than bollards and parking curbs is emblematic. It's nominally pedestrian-oriented design that does too little to challenge automotive authority. It's certainly better than nothing - like a crosswalk or a bike lane, it at least makes a claim that something other than a car has a right to the right of way. But data on sharrows (worthless, more dangerous than nothing) makes clear how much that is worth. 

Ground floor retail isn't vacant by accident

Lot of developers are happy to treat the required ground floor retail as a deadweight loss, much like they do required parking. So income from rents on that space doesn't enter into the proforma, and it's easier to just not deal with it. Compounding the issue is that for new builds, the leasing agent is looking for a stable corporate tenant who can afford to pay the high lease rates. And rather than simply accept lower rents, they are willing to wait. Waiting five years to rent for $100/sf for five years is better than renting for $50/sf for ten year - no buildout or depreciation.

When it comes to transit, there is no 'mode'.

BRT makes a mockery of the 'best for' typology, largely because BRT is such a heterogenous category - quality varies from being heavy-rail competitive to being a bus with slightly nicer stops. (FTA labels aside, most 'BRT' isn't actually 'Rapid'--it lacks exclusive guideway).

American light rail hardly a 'clean' category either - tram-train is the norm, resulting in things like poor Portland (and formerly LA), where a through-corridor suffers a tram section in the middle. All are 'light rail' because they can't share track with 'heavy' rail - metros and commuter rail roads. Light rail is a vehicle crashworthiness standard. 

Having tried to identify all light rail stations (prior to the Transit Politic getting it done) actually transit is bafflingly heterogenous. Even with the 'New Starts' light rail systems, there are three distinct tropes: 1) tram-trains, 2) diesel, and 3) streetcars. 

1) German tram-trains (stadtbahn) are the trope definer for most American light rail - rapid transit service in the suburbs by using a former freight rail corridor, street-running in the central city (to avoid tunneling costs)*. In America, when we lack a freight rail corridor, we've built in freeway medians. 

2) New Jersey River Rail line is the trope definer, but Texas has built a lot of it. Save yourself the costs of electrification (and unsightly catenary) by keeping power generation onboard the vehicle. But that same fix makes stopping and starting both slower and more expensive, so stop spacing is much wider than for electrified traction**. 

3) Portland Streetcar is the trope definer for American streetcars. Portland's modern streetcar uses standard European trams, but that wasn't what got America excited about streetcars--rather, it was Portland's historic streetcars that were the original 'Development-oriented transit'. Supported by a local option tax along the corridor (American transit owes a huge debt to Powell's city of books). The whole concept of a 'pedestrian extender' and using a streetcar as a catalyst for real estate development in a proximate but inaccessible area (Pearl district). All of it street running from go. Over time, Portland has taken streetcar to the next tier, with a streetcar-only bridge, applying the same logic to places across a river. 

*If you put your city center light rail in a tunnel, so it's all rapid transit, it's evolved into a light metro.

** Battery technology may be a game-changer for diesel light rail, permitting both low-cost installation and electric traction levels of acceleration. Getting the brakes right is going to be the sticking point - batteries weigh a lot, so regenerate breaking practically necessary, and the 'trucks' (wheels) on rail vehicles are already complex and putting that much potentially explosive silicon near track is a bit perilous. 

Doubtful battery will be as relevant for trams/streetcars - anyplace that already has transmission lines will keep extending them, so the use-case is marginal--places without systems, for which the competition is BRT, which has a far lower initial investment cost and far better capability for incremental upgrades. 

If you are developer, the things that matter

If you are developer, the things that matter are: 1) financing costs, 2) land costs, 3) construction costs) 4) regulatory costs, and 5) time. 1, 2 and 3 aren't generally in the local remit. 4 absolutely is--regulatory costs (height limits, setbacks, parking requirements, tree coverage) are. Time somewhat is (public process, design review). Right now, land costs too much, because landowners are still pricing it as if we still enjoyed the near zero interest rates of 2020.

Commercial Vehicle Electrification

Commercial vehicles like buses are one of the places where vehicle electrification is spreading like wildfire. Climate ideology may have driven the political mandate for developing electric buses, but their adoption is being driven by cold hard dollars. Fuel costs savings were always going to be greatest for the vehicles that spent the most time in motion. But I suspect once we get data on long-term maintenance costs, production of Internal Combustion Engine buses is done. 

"For-profit developers won’t build it because the ROI doesn’t match their pro forma"

The first time a developer returns a negative ROI on capital, and fails to repay their loans, they cease being a developer. Developers don't have any money of their own. They borrow it from banks or equity partners. And if those partners don't like the ROI, they don't lend the money. Developers watch interest rates (and hence their cost of capital) like it's the world cup, because it's key to their business model - it determines what 'pencils', what can feasible be built with and ROI that covers their cost of capital, their costs, and the risk they undertake borrowing money in the face of appreciating construction cost and uncertain regulatory delay.