Ten years a blogger: Part 14, Housing and mobility

May 29, 2015 | Blogs, Capital markets, Cities, Essential posts, Evolution, Finance, Global news, Government, Holmes on housing, Mobile homes, Money, Slums, Theory, US News, Value chain | No comments 94 views

[Continued from yesterday’s Part 13 and the preceding Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, and Part 12.]

By: David A. Smith

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Even bloggers can go full-time in an RV

Section 14. Housing and mobility, including mobile housing

“This year we decided to go full-time.”

– Overhead by the Boss, when we were touring the ruins of Palatki in Arizona, by a couple who’d sold their home and possessions and were living entirely in their RV.

If there is housing particularly for travelers, there is also housing that travels, and in the blog I explored at great length, Mobile homes, how they got here (April, 2007), Part 1, Part 2, Part 3, Part 4.  It began innocently enough with Mobile home parks, how they got here: Part 1, before World War II:

The where and how, as chronicled in John Grissim’s Guide to Mobile Homes, Chapter 1, tells us much about the why of mobile homes. Here, extracted liberally (but fairly) from Mr. Grissim’s fascinating story, is the abbreviated history of mobile homes:

 

During the 1920s, following World War I, a great pent-up restlessness created by the war swept the country, finding expression in America’s growing love affair with the automobile, and with traveling. The growth in car ownership in that decade alone was breathtaking-from 9.2 million in 1920 to a staggering 23 million by 1930.

 

mobile_house_1917

Every night, Josephine:

Home with a running board, 1917

 

By the way, it is not only we Americans who love cars; as Europeans have become richer, they too have embraced the car, and its accompanying ‘sprawl’.

 

By the mid-1920s, with family auto camping trips a new and popular pastime, some car campers began building their own tent trailers, little more than folding canvas tents on a wooden platform mounted on a single axle. The idea caught on and within a few years a number of companies were marketing recreational tent trailers.

 

travelers_dream_1930s

The Traveler’s Dream!

 

The great disadvantage of most housing is its immobility — make a bad bet, and you are stuck with it permanently. Conversely, a moveable accommodation, even if little more than the embryonic house, offers that sense of camping out which makes even the most cramped accommodations bearable. Or, in a less affluent time, affordable:

 

The Great Depression in the early 1930s generated enormous population shifts throughout the country as hundreds of thousands of people moved to other regions to escape poverty and to start new lives. From the drought-stricken Dustbowl alone thousands of families headed west to California.

 

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Moving house and home in a Model T

That led to a discussion of Mobile home parks, how they got here: Part 3, the communities mature:

1. Mobile homes are sui generis, an industry that grew up by accident, creating spontaneous communities located and assembled with no thought to long-term property or community value.

2. They have historically represented a large source of supply, twice accounting for one quarter of all new home production, and routinely generating more affordable homes than HUD’s entire production.

3. Affordability is largely unrecognized, in part because of the ‘trailer trash’ stigma, so that it has only been recently communities have woken up to mobile homes’ value as affordable housing for the elderly.

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Evidently stereotypes are okay when applied to poor white people

4. Transferability is impaired because mobile homes are outside the consumer-protection legal infrastructure.  Because they are not legally real property, they have not benefited from advances in disclosure, consumer protection, intermediary professionalism (better brokers), and an interlinked safety net that site-built homeowners take for granted.

5.. They are offered substandard financial products, partly because they are not real estate, partly because they historically have not appreciated (and are therefore seldom worth the financial markets’ time because they cannot scale large enough).  Weak financial products reinforce their second-class economic status.

6. Mobile home owners lack for champions.  Until very recently, mobile home owners have been muted, having their issues carried instead by manufacturers. 

Afterword: Little did I realize that this first post would lead to several score of them, including stories about Paradise Park in New Jersey, Briny Breezes in Florida, Pismo Dunes in Pismo Beach CA, and many more.  Along the way, I came to appreciate what they represent, and why they are valuable (July, 2013):

If mobile homes can and should be a major contributor to addressing the aging of America by providing affordable service-enrichable housing, as implied by Lisa Margonelli’s Pacific Standard Magazine article about the Pismo Dunes mobile home park, then as we saw yesterday the residents’ insecurity of tenure (due to uncontrollable park land rent increases) has to be corrected by using eminent domain power to buy the land into a group ownership such as condominiums or co-operatives. 

 

Even that is not enough, for there’s one other historical injustice that needs correcting:

 

Mobile home parks are needlessly impaired by archaic laws

 

Though a yacht gets a second home mortgage interest deduction, a mobile home does not.

 

The homes are taxed as automobiles, and fees are paid to the DMV.

 

Though this is historical, it is ludicrous.

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Taxed like a car, not mortgageable as a house

I also explored how changing urban land use and economic value put the communities under pressure, and the absence of legal or other protection from that pressure, in Mobile home parks: a tale of two states (January 23, 2007)

Have you noticed the common feature of all three locations?  Once they were rural, exurbs, out of the way and the development path.  Now, with expanding urban areas and rising property values, these places have been engulfed by much higher value neighbors.  (The same holds true, as we have seen, in Paradise Park and Briny Breezes.)  Every single one of these once was a pleasant nowhere and is now a precious somewhere — a somewhere owned (in the main) by someone other than its residents and ostensible homeowners.

 

“The tenants came to my office requesting help because of not only what was going on, but, because they reached out to family and friends, they discovered similar activities at other mobile home parks,” Padilla said. “There’s a trend of drastically and — in some cases — unlawfully raised rents.  Housing is expensive enough in this state, but it’s tougher when you have unscrupulous landlords or are a family on fixed income.”

 

Padilla said he met with Arrigotti but was unable to reach a compromise. The city of Los Angeles is now in the process of annexing a number of the park’s mobile homes that fall within city limits so it can put a rent-control ordinance in place.

 

If you cannot enact a statute, extend its geographic reach!

 

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Maybe I can grab the next community!

 

Padilla is also drafting state legislation to better protect mobile home park residents.

 

“We’re seeking a way to have the parks recognized as viable, affordable housing for seniors and working families,” Padilla said. “We want to put up more obstacles to prevent these out-of-control rent increases, because it seems a lot of mobile home parks are experiencing similar problems. It’s frustrating that city officials have limited jurisdiction in these matters.”

In addition to homes that are mobile, there are homes that are involuntary; even prisons and jails and halfway-houses are housing, and they affect housing demand:

NPR made its story about how the bail-bonds industry exploits poor defendants, and perhaps that is so, but to me the real story is the fragility of some people’s economic existence, once they have fallen through their potential support network.

 

Each defendant’s story is personal to himself, yet among them run two threads:

 

1. Before their tribulations, they were barely hanging on economically.

2. They lack any personal support system.

Afterword: I haven’t yet written about re-entry housing, but it’s a topic I expect to cover some time.

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Counseling a re-entering convict on housing options

Slightly less incarcerating, but operated on the same principles, is student housing, and which the rise of higher education as and its impact on cities and their economies, and how it can result in the closure of a mobile home park that has outlived its social and real estate utility.

At the other end of one’s independent health span, housing encompasses extended or generation-skipping families, not only the high-tech elderly apartment (Grandma in a can) but also in-law apartments and their more formal name accessory dwelling units (ADUs):

To legitimize a thing, give it a more respectable name.  In our modern era, we reinvented the flophouse or rooming house as the SRO (single-room occupancy), and the in-law apartment (or granny flat) as the Accessory Dwelling Unit:

 

connecticut_in_law

In-law apartment, Connecticut suburb: note the connecting passage and apartment over garage

 

In the act of renaming these spaces as ADUs, we crate an opportunity for the state to take judicial cognizance of the informal reality that has crept up on it during the night, as mentioned in passing in a HUD Office of Policy Development & Research primer, Accessory Dwelling Units: Case Study:

 

Although a number of communities still restrict devel­opment of accessory dwelling units, there is a growing awareness and acceptance of ADUs as an inexpensive way to increase the affordable housing supply and address illegal units already in existence.

 

 ‘Illegal units already in existence’?  That sounds like an informal settlement to me – and indeed, the Turkish word for informal housing, gecekondu, means ‘mushroom housing’ for its tendency to crop up at night.  That’s where they came from, fifty years ago, in the Postwar boom of brand-new communities.

In addition to the living, people choose to house their dead – that’s called a cemetery, and it too is an urban land use, though societies have different views whether a cemetery is immutable and a home ‘til death do us part, or even longer than that?

A person who owns property owns the rights upward into the empyrean realms and downward to the center of the earth; that’s English common-law doctrine, dating back at least to the thirteenth century with the magnificently portentous Latin phrase Cuius est solum eius est usque ad coelum et ad inferos – “even unto heaven and hell.”  While the ad coelum doctrine has been modified due to air travel (a deemed easement right of passage), the ad inferos component of those property rights is (or ought to be) sacrosanct – until a stubborn and loving codger decided to use those rights, reported at the story’s end by the New York Times (October 22, 2013):

 

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Not parted even by death: James Davis buried his wife in the front yard to fulfill her dying wish.

 

Giving a Wife Her Front-Yard Grave, No Matter What

 

Stevenson, Ala. — James Davis figures that his first mistake was asking permission.

 

He was right, righter than he knew.

 

If a man promises his wife he will bury her in the front yard, then he should just do so.

In fact, when we look at cities, we realize that every parcel of land could be housing, and if used for something else, even urban fallow, that alternate use prevents people from living on the site, though some such as urban gardens are not growing vegetables but growing communities (August 2012):

“It’s not like Detroit and Baltimore where the land is begging for productive uses,” she said.

 

Ms. Sturm is more optimistic about Newark than I am; but then, she is paid to be.

 

“These were once barren eyesores,” Ms. Dougherty said about the vacant lots. Now, “it’s a good use of public resources.”

 

For Newark’s waste lots, the produce is only the visible talisman of exchange.  The real success is in the reviving job prospects and the reviving urban land use.

 

‘The United States has a long history of community gardens. It becomes in vogue whenever the economy goes down,’ said Jan Zientek, department head for the Rutgers Cooperative Extension in Essex County, who has helped to build community gardens in Newark for years.

 

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Summer intern Tashii Brown, 14, shows off an armful of swiss chard.

On the other hand, more purely leisure pursuits may be less appropriate to a densifying city, though after examining the question of urban golf courses for six parts I concluded they represent the romantic nostalgia for pre-urban society (January 2015; Part 1, Part 2, Part 3, Part 4, Part 5 , Part 6):

Golf courses consume available green space and preserve it as open (if gated), so the higher-density development must flow around the course, like a tide around water.

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Cambridge’s only golf course: the Fresh Pond Golf Course, nine holes

Compare the land use relative to the three baseball diamonds just to the southwest

Over the decades, as America urbanized and the cities grew, the acreage required for golf courses could economically justified only if they were coupled with residential housing, so golf courses were built adjacent to subdivisions, and subdivisions were sculpted around golf courses.

[Continued tomorrow in Part 15.]

 

Ten years a blogger: Part 13, Housing and urban land uses

May 28, 2015 | Blogs, Capital markets, Cities, Essential posts, Evolution, Finance, Global news, Government, Holmes on housing, Mobile homes, Money, Slums, Theory, US News, Value chain | No comments 148 views

[Continued from yesterday’s Part 12 and the preceding Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, and Part 11.]

By: David A. Smith

warning_to_reader

Section 13. Housing tenures and urban land uses

In parallel with my exploration of housing as a technological form, or housing as a node in an infrastructure work, has been a continuous exploration of how housing is a form of land tenure and how it competes with other urban land uses. 

Most of AHI’s work focuses on urban housing, which is a money good – it requires cash payments – rather than a physical good (that one can construct entirely without cash, using found or scavenged materials and one’s own labor), and as I found in this Top-25 post (November 14, 2006), The earliest apartments: Roman insulae:

The oldest apartments — multi-family multi-story dwellings — were built more than two millennia ago, in the Roman republic — and they are spookily modern.  Our best evidence comes from Ostia:

 

ostia_ad_80

Real estate at a premium: time to go up

Back then, cities were bounded by walls.  Land inside them was valuable.  But the workers – shopkeepers, laborers, maids, housekeepers, stevedores – had to live close to their jobs.  Roman law – the first zoning of which I am aware – limited building height to the equivalent of fifty feet.  So floor space was at a premium.  Enter the insulae. 

 

By the end of the 1st century BC, a growing pressure for land in many larger, overpopulated cities gave rise to the insula, or apartment.   The term insula had originally been applied to rectangularly shaped town building plots.  6-8 apartment blocks could occupy one insula, and were usually designed around an open courtyard.  However, with most apartment blocks being three stories high, at least, this simply became a light well.  Shops usually fronted the streets at ground level.

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Up and up and up: and no elevators yet!

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A typical large insula at Ostia


“The immense size of Rome,” wrote Vitruvius, about 1 AD, “makes it needful to have a vast number of habitations, and as the area is not sufficient to contain them all on the ground floor, the nature of the case compels us to raise them in the air.”

 

ostia_from_air

No room to spread out!

 

Built of brick, probably unplastered and little ornamented, they were entered from exterior stairs that led up, over a ground floor of shops, to corridors off which opened single rooms that were numbered.  Each room had its own window of mica or selenite, translucent enough to remind you morning had arrived.  Some rooms had small balconies for taking the evening air (and disposing of garbage and night soil). 

 

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Just add fecal matter and garbage runoff to suit: Ostia street scene

Afterword: Though heaven is often imagined in Greek-city terms, the city as an expandable, functional construct was invented by the Romans, who were the first to lay it out in a grid system with a replicable ‘city building kit’ that they used across all of Europe and much of North Africa.

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Barcino, the Roman fortified town that became Barcelona

From Roman insulae the tale naturally led to pre-governmental charitable forms such as almshouses (April, 2006):

Richard Watts, Esq., by his will dated 22nd August, 1579, founded this charity for six poor travellers, who not being rogues or proctors, may receive gratis for one night, lodging, entertainment, and four pence each.  In testimony of his munificence, in honour of his memory, and inducement to his example, the charitable trustees of this city and borough have caused this stone to be renewed and inscribed: AD 1865.

The Rochester almshouse was essentially a very early single-room occupancy or rooming house, a row of cubicles or insulae with a common outhouse in the rear.

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The Rochester almshouse (bemused wife provided for scale)

 

The almshouse tradition spread all over England (a fine one remains at Wantage), and continued down the centuries.  The trend spread to Holland, and later to America (where they became known principally as poorhouses).  In England, by the late Victorian era, the rooms were apartments, as in this Canterbury example:

and caravanserai:

The connection between faith, home, and charity dates back to nomadic times.  One category was overnight accommodations for pilgrims.  Christians walking the Way of St. James to Santiago de Compostela stopped at abbeys strung along the major routes.

Caravanserai dotted the Arabian peninsula to aid Muslims on hajj.

 

caravanserai_painting

Out of the sun and dust, and with a well or fountain contained within

 

Closely related to pilgrims’ housing were the almshouses, about which I’ve written before, some reserved for the destitute, others for the elderly – and hospitals arose out of the faith-based injunction to care for the sick. 

 

Religion has always been one way people form tribes across cultures, languages, and races, and so the duty to shelter or care for the traveler or the beggar becomes inculcated into practice.  That’s also how cultural or religious minorities make their way in a society that tolerates them without welcoming them.

 

– and the deputy director, Zhou Wenjie, says any new resident must be a Christian or at least open to becoming one. {Couldn’t require that in America! – Ed.]

 

Religious or faith-based charity can also bridge the gap between familial support (the extended family or clan) and government support (the municipality, province, or nation), and as they are private institutions, they have the mission entrepreneurial capacity to experiment.  In fact, a tradition of alms makes experimentation easy, since if the business fails, it was nevertheless charity.  Hence we should not be surprised that they are growing, as evidently they are.

From religious private charitable housing the world evolved, with the rise of modern national governments, to public government housing, as illustrated in my four-part The history of public housing that included this Top-25 post (October 2, 2008) Part 3, the slum-clearance era:

So far in our multi-part history of public housing using MIT Professor Lawrence Vale’s comprehensive study, From the Puritans to the Projects, we’ve covered the pre-urban era (the Puritans and their almshouses, poorhouses, and Houses of Industry), and the Progressive period that ended the nineteenth century and opened the twentieth. 

 

[For more on my views of public housing, see Public housing: the Ghost of Christmas Yet to Come (June, 2006), Public housing’s Gordian’s knot (December, 2006), and The essential housing authority (September, 2007).]

 

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Arizona progressives, circa 1900

 

This was a time of American sunshine, yet both here and in England, prosperity produced what seemed a paradoxical blot: the slums.  Slums, as we’ve seen, arise from the rapid urbanization that accompanies economic growth and technological advance (for city infrastructure).  In general, communities react to slums in predictable stages. 

 

Ignore them and hope they’ll go away.  Sometimes you pay them to go away.  It doesn’t work.

Locate them out of sight and out of mind.  Hope they get better.  They usually don’t.

 

But as the economy grows and the city grows with it, the swarms overwhelm some neighborhoods – often the oldest, because they are the closest-in.  These buildings are old, overcrowded, unsanitary, and decrepit – because those conditions are economically rational in a slum:

 

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Tenement yard, 1926

 

Slums were a-brewing in America, and then came the Great Depression, which swept in Franklin Roosevelt and the New Deal’s vast expansion of the Federal government’s role in just about everything, including affordable housing. 

 

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Homes in Los Angeles, 1935

 

Led by Massachusetts and New York (two states that throughout American history have been in the vanguard of affordable housing developments), governments embarked on dramatic slum-clearance efforts.  The nation’s first public housing property was in Boston – Old Harbor Village, later renamed Mary Ellen McCormack Homes, and still in use.

 

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April, 2008: Double shooting at Mary Ellen McCormack Homes

That’s the domain of the depahted:

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If you know what we did, we wouldn’t be good at our job, now would we?

 

As the 1930s opened, slum clearance appeared a panacea – it would improve water and sanitation infrastructure …

 

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Philadelphia, 1930’s: St. Albans Street, street Arabs with open drain

 

… replace overcrowded urban hovels with clean, modern apartments, improving neighborhoods and bringing precious construction jobs.  It would also improve the city’s budget economics:

 

In its 1933-34 report, the State Board justified the  need for slum clearance and new housing by analyzing “the cost to the community of maintaining a substandard area,” using the specific example of Census Tract M-3 in South Boston. 

 

I’ve often thought this exercise to be worth doing, even if I tend not to like the results.  Cities are economic organisms, and municipal government is a sub-organism within the city, and it’s legitimate analysis for a city to deduce which property uses make it money, which cost it money.  I suspect that office buildings make money for cities because they generate both real estate taxes and payroll taxes – plus jobs, which mayors like. 

 


 

Their method of analysis is instructive.  The board itemized land and building values, then compared the income from real estate and water taxes to the district’s share of direct public expenditures needed to support its schools, library, hospital, parks, infrastructure, police and fire stations, and relief roll.  It added to these the less significant pro-rated cost of thirty-five other city departments whose service to the district was more indirect. 

 

Residential property costs money – and I fear family apartments cost a lot of money – because you have to handle all of people’s byproducts, including children who need to be educated in those schools you build.  Even so, city economics has always seemed to me the best argument for formalizing informal communities.  At some point, the volume of humanity and their earning potential is such that the revenue you gain from building the infrastructure to legitimize (and hence to tax) them outweighs the costs you incur by providing them with services (versus the cost you incur by trying to exclude them from your city). 

 

The bottom line was this: Census Tract M-3 brought the city $27,000 in income, while absorbing $275,000 in city expenses, so this slum cost the city $248,000 a year. 

 

The very poor could pay only 10% of the costs of their municipal infrastructure; as we’ve seen elsewhere, municipal infrastructure’s hard costs are usually non-recoverable, and the Basic Model of infrastructure finance requires the very poor to pay only the minimal operating costs.  I’m intrigued that this ratio has persisted for nearly a hundred years.

 

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Slum in downtown Los Angeles, 1930s

Afterword: Finally, after more than two decades of bipartisan underfunding and neglect, the Federal government found its way to a pilot program for public housing ‘privatization’, the Rental Assistance Demonstration, in which the for-profit company I founded in 1989, Recap Advisors, became an enthusiastic early adopter (despite widespread industry skepticism/ hostility) and substantial (and successful!) program participant.  As of now, more than 180,000 public housing apartments, almost 15% of the 1,300,000 such PHA homes nationwide, have applied for the program.

[Continued tomorrow in Part 14.]

 

Ten years a blogger: Part 12, Housing and cities

May 27, 2015 | Blogs, Capital markets, Cities, Essential posts, Evolution, Finance, Global news, Government, Holmes on housing, Mobile homes, Money, Slums, Theory, US News, Value chain | No comments 271 views

[Continued from yesterday’s Part 11 and the preceding Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, and Part 10.]

By: David A. Smith

Section 12. Housing in the context of cities

Housing is what makes cities; without housing, a complex of building is an industrial park and a tangle of highways is a cloverleaf – and cities are an economic and physical organism, which I first highlighted in Cities and scale (August, 2007):

ideal_city_02

Can this get bigger or smaller?

In light of biological scaling optimization, might similar reasoning and imperatives influence the size of cities?  Is there an ideal city size — and if so, what is it?  Do cities reveal any kind of structural relationship similar to biological organisms?

A fascinating new PNAS paper, Growth, innovation, scaling, and the pace of life in cities, by a quintet of authors bookended by Luis M. A. Bettencourt and Geoffrey B. West, says that may be:

 

We predict that the pace of social life in the city increases with population size, in quantitative agreement with data, and we discuss how cities are similar to, and differ from, biological organisms, for which < 1.

 

Finally, we explore possible consequences of these scaling relations by deriving growth equations, which quantify the dramatic difference between growth fueled by innovation versus that driven by economies of scale. 

 

As population grows, major innovation cycles must be generated at a continually accelerating rate to sustain growth and avoid stagnation or collapse.

 

Their policy implication is this: cities succeed only if they are eternal laboratories.

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Cities are laboratories of life

Conversely, urban housing requires utilities, of which the first (as far as I can tell), was running water, which dates back to the Romans, as I discovered when writing about The economics of water infrastructure (March, 2008), in six parts: Part 1, Part 2, Part 3, Part 4, Part 5. Part 6:

If housing is what makes cities, water and sanitation is what makes housing habitable, and hence what controls city scaling.  As Duke law professor Jim Salzman puts it, in his terrific law article Thirst: A Short History of Drinking Water, from which this multipart post will quote extensively:

 

We will find that something as seemingly simple as drinking water washes clear a society’s views toward the role of government, norms, and the market.

 

How we think of water, whether as a sacred gift or a good for sale, both influences and is influenced by how we manage access to drinking water. 

 

Water is a surprisingly difficult resource to manage. 

 

Water’s physical characteristics confound easy management. 

 

Water is heavy – it is difficult to move uphill. 

water_flowing_uphill

It takes high tech to make water flow uphill

Water is unwieldy – it cannot be packed or contained easily. 

 

Indeed, containing water requires both structural strength and a leak-proof seal, so there are very few natural containers that are also remotely portable. 

 

Drinking water is fragile – it easily becomes contaminated and unfit for consumption. 

 

Water is also uncompressable, even as it is infinitely malleable.

 

Management of water presupposes technology.  Moving water thus involves securing a technological construct – a bucket, a can, a bottle – and bringing it to the water source. 

Water utilities have always been a hallmark of benevolent government, from its aqueducts to Caesar’s free running lacus, and then in New York, Alexander Hamilton’s water company and the invention of municipal finance, which is still the principal source of revenue for water infrastructure, as I showed in The gospel of water infrastructure (April, 2010):

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The prophet of water: George Hawkins of Washington DC

“Water is tied into everything we should care about,” said George Hawkins, head of Washington DC’s water utility, who periodically posts with wry practicality, as in Water main breaks:

Sometimes, water mains break because of temperature and age. And sometimes, contractors hit them.

Mr. Hawkins is working under three handicaps: water is cheap in America, water supply is invisible, and the real problem isn’t water but the unmentionable – the sewer.  “Someday, people are going to talk about our sewers with a real sense of pride.”

 

A hundred years ago, people did – bringing running water and flush toilet sewerage to America‘s major cities was the great achievement of nineteenth-century civic commitment – but we’ve become far too complacent.  Out of sight, out of mind – fixing an antiquated and aging sewer system is nobody’s idea of glamour.

If water grows cities, what about other utilities: do highways create cities?  A few years after the previous post, stimulated by Farouk El-Baz’s vision of a city that grows once highways are laid to it (don’t tell him about Ordos), which he posted in a conceptual paper that the Boston Globe picked up uncritically, and which I dissected in City of mirages (August, 2013): Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8:

dubai_sheikh_zayed_road_aerial

The most remarkable street in the world: Dubai’s Sheikh Zayed Road

Time travel, the fountain of youth, the reversibility of death – no amount of disproof can kill them.  So it is with Dr. Farouk El-Baz, an Egyptian expatriate, who directs Boston University’s Center for Remote Sensing, whose vision was recently reported in a fluffy and credulous article in the Boston Globe (July 27, 2013). 

Dr. El-Baz has a grand and inspiring vision, once which for a brief interval appeared on its way to development, and yet, as a public service, I’m going to dissect it in great detail, as if channeling a doctoral dissertation committee, to show where the vision is either not sketched at all (making it unexecutable without further work) or sketched in ways that contradict what I and others know about economics, urban development, infrastructure costs, and financing.

 

According to a [2007] scientific paper by al-Baz, entitled Use of a Desert Strip of the Nile Valley for Sustainable Development in Egypt, the Corridor of Development will open new land for urban development, commerce, agriculture and tourism, and create hundreds of thousands of job opportunities by installing new infrastructure along its route.

 

The paper is listed on Professor El-Baz’s Web site (Number 637), though not available for download; however, I emailed him asking for a copy, which he supplied with exemplary promptness.  I’m going to quote from it, using a green font to reflect his vision of making the desert bloom.

 

Egypt is presently facing insurmountable problems that require innovation and bold measures; small-scale projects and small reform steps are no longer sufficient. 

Transportation networks and their linkages to neighborhoods and hence to housing, as in my discovery of San Francisco’s network of Google buses (before they became a hipster anti-something rallying cry) and Nairobi’s self-organizing bus network of matatus.

nairobi_matatu_x2

Anywhere you want to go, as long as it’s on the route

All this thinking about spontaneous communities and how cities grow culminated in a rationally angry post about Zaatari, the instant unloved city (July, 2013), which became a course of research leading to a book, available for free download, that curated the state of Zaatari, even as Syria collapsed into a microcosm of the warlord state of barbarity.

zaatari_book_cover

The essential role of housing as continuous nutrient for and renewal of cities are unearthed in this Top-25 post (April 21, 2011) Economic nitrogen fixing: Part 1, import and recycle nutrients:

In farming, the difference between good and bad land lies in its soil’s ability to retain nutrients in the ground, where plant roots can get at them and form complex organic compounds.  Key is nitrogen, which though it comprises 78% of the atmosphere is useless in a gaseous state because the plants cannot break it down – just like electronic money is useless to slum dwellers if they cannot access it for their communities.  Nitrogen fixation is when gaseous nitrogen (N2) is broken apart and converted into ammonia (NH3) which is a chemical building block whose hydrogens can be knocked off and attached to carbons to create longer organic-compound molecular chains.  Some nitrogen fixation is biological, some is abiotic, but either way, if nutrients don’t get fixed in the soil, the soil cannot grow anything.

 

ecosystem_cycle

Any vector works, as long as it puts nutrients into the ground

 

The same thing happens in informal and economically deprived urban areas.  As I posted in A slum is a wealth-extraction machine, in a slum, money flows out but not in.

Housing as technology and city as built-environment organism came together in this Top-25 post (September 23, 2011), The city that will never sleep:

Because infrastructure is neither free nor readily replaceable, the most efficient and profitable cities may be the newest – if they are developed properly, with infrastructure that is both state-of-the-art and forward-looking.  As we envision the ultimate future city, our real-world Trantor, such is the $35 billion bet now rising on the Incheon coast of South Korea near Seoul, in Songdo City.  As reported in the Mercury News:

 

songdo_going_up

Songdo going up

 

It’s a product like no other — a complete city for a million people.

 

As tens of millions of people across the developing world migrate from the countryside to new cities, Cisco Systems is helping build a prototype here for what one developer describes as an instant “city in a box.” Cisco is wiring every tech nook and cranny of the new city, making it one of the most technologically sophisticated urban centers on the planet.

 

songdo_from_space

From the airport (Yeongjong) to Songdo via a gleaming bridge

 

Delegations of Chinese government officials looking to purchase their own cities of the future are descending on New Songdo City, a soon-to-be-completed metropolis about the size of downtown Boston that serves as a showroom model for what is expected to be the first of many assembly-line cities.

 

Cities involve overlapping networks:

 

The first network is the road system, and we developed the grid city, using as our template the Roman fort with its cardo and decumanus.

 

roman_cardo_decumanos

From Rome to Indianapolis: the pattern of the grid

 

The second network is water and sewer piping, piloted by the Romans but really established only in the nineteenth century, in New York and Chicago.

 

house_utility_pipes

Inflow and outflow under your streets

[Continued tomorrow in Part 13.]

 

Ten years a blogger: Part 11, Evolving building technology

May 26, 2015 | Blogs, Capital markets, Cities, Essential posts, Evolution, Finance, Global news, Government, Holmes on housing, Mobile homes, Money, Slums, Theory, US News, Value chain | No comments 218 views

[Continued from March’s Part 10 and the preceding Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, and Part 9.]

By: David A. Smith

Section 11. Housing as evolving technology, not just construction

Primitive houses were little more than ramshackle assemblies, but over time houses became technological, starting with the indoor fireplace (the breakthrough innovation of the thirteenth century), and accelerating dramatically with the industrial revolutions.  The consequences of technology on housing I explored in many posts, including Elevators, the vertical utility (April, 2014):

Cities are where strangers live companionably side by side, and where you share a wall, floor, or ceiling with an unrelated household.  None of this would be possible without the vertical utility we unthinkingly use, many of us multiple times a day.

Windows and the ‘biological thermostat’ (October, 2008):

Throughout history, people have craved windows in their dwellings – for air, for light, and for view.  Windows let in bugs and water.  They also leak heat out and cold in, or vice versa. 

That’s why, for the last fifty years, the trend in evolving modern buildings (homes and otherwise) has been to seal the building’s airflow even as we increase its overall transparency. 

 

Is that wise? 

 

Windows are the bane of a homeowner’s existence – and even more the bane of a landlord’s existence.  They’re surprisingly expensive to make, assemble, and install.  If movable, they’re a fairly complicated installation that rattles and usually leaks.  Painting the window trim is a bitch. 

In April, 2006, I wrote about the evolving modern house, which has more than doubled in size over the last fifty years, as well as adding appliances and smart systems almost unimaginable back then.  The increase in house technology coincides with a move to more vertical living, as that entails building bigger, multi-unit structures.  And as structures became larger, with more people living in one building, their systems have likewise become more complex, and they have required continuous attention and servicing, as I covered in The high-rise’s mahout (April, 2011):

elephant_mahout

Love your building.  Love your mahout.

Large residential buildings are like brick or cement elephants: as they have become larger and more technological, they become more complex, their care and feeding becomes progressively more important – and more professionally handled, as revealed in this New York Times article:

A superintendent is to a high-rise as a resident manager is to a multifamily garden apartment complex – the person in whose brain resides a holistic, comprehensive view of the full building’s needs, everything from the smallest and most personalized to the largest scale.

 

Mr. Capizzi is part of the new breed of superintendents who have exchanged coveralls for business suits, boiler rooms for lobbies and overflowing key rings for BlackBerrys. Many have the title of resident manager, and in large new buildings they oversee dozens of staff members, supervise complex infrastructure and concentrate on customer service.

 

“I wear a suit every day,” he said. “But I’m not afraid to put on a sweatshirt and get dirty. I don’t run the building like a dictator.”

 

In smaller condos many still pull on coveralls and answer to “super,” but they are taking on many of the tasks once reserved for doormen or concierges.

 

In short, they own their building’s health as a mahout owns his elephant’s health.

 

mahout_cleaning_elephants_teeth

Each of us is better with the other

 

“The role of the superintendent has evolved,” said Dan Wurtzel, the president of Cooper Square Realty, which manages the condos at the Plaza and other buildings. “It used to be considered a blue-collar job, a fix-it person, but now if I was given the choice between hiring the best mechanic out there who had no people skills, versus someone with exceptional communication and customer service skills for a luxury building, I would choose the latter every time.”

 

As consumers become more sophisticated the buildings they inhabit become more sophisticated as well, and the interaction between residents and buildings systems requires a more personal touch.  It also requires a willingness to accept that you do whatever the elephant needs done.

That smart technology, which once was reserved solely for big structures, has gone single-family, with smart meters and even remote-controlled in-law apartments, where you can house grandma in a can (January, 2013):

Old age, the silent thief, can imperceptibly steal each of these from us, and as all of us are reluctant pioneers in our senescence, the day may come when we wake and ask ourselves, why am I still doing this?  For many elderly, that moment comes when we live alone, surrounded not by friends or loved ones but strangers, and when that happens, we will vehemently resist:

The semi-aware house as surround for a fragile person is only an extreme case of a large experimental trend, that of Urban micro-living experiments (December, 2009) such as Micro-homes (April, 2013), which can get real small:


As America urbanizes, and as cities gain ever greater importance in wealth creation, they must become more dense: more people living atop each square foot of urban space.  Aside from congestion, that means both verticality (going higher into the sky) and compactness (each person consuming fewer square feet).  Naturally enough, fewer square feet of living space per person also means greater affordability, and that is the driver:

 

The San Francisco Board of Supervisors voted Tuesday to give pint-size apartments a try, approving legislation that would allow for the construction of hundreds of 220-square-foot residential units.

 

San Francisco and New York – what do these cities have in common?

Another post that explore housing as a physical form, and highlighted the importance of retrofitting and adaptability, as this Top-25 post (November 22, 2011), Coming for a couch potato near you?:

 

As the economy (if not still shrinking, certainly not expanding) continues to compress America’s total households, extended families that once scattered are recombining, and with the economic starlings coming home to roost – let’s call them the boomerang generation – we see the rise of newer variants of multi-household housing, innovated by private developers, as illustrated in this Arizona Republic story:

 

Nearly a third of American adults are “doubled up,” with two or more adult generations living in the same home, according to the U.S. Census Bureau.

 

couch_potato

The next growth market?

 

And you can be sure their parents are thrilled about it.

 

baby_baby_doll

I’m tired of supporting you, grow up already!

 

That’s good news for Lennar Homes, which last month unveiled its “NextGen” home, designed specifically to allow more than one generation to share a house while maximizing privacy and independence.

 

In extended families, it’s natural that the highest-earning generation is the homeowner, with lower-earning generations fore and aft as renters.  So the Accessory Dwelling Unit or in-law apartment has a long and respectable history as a means of balancing the desire to have loved ones close enough to care for, and far enough not to have to experience incessantly. 

 

“I’ve been in homebuilding for 20 years and I’m asking myself why we didn’t do this before,” said Alan Jones, division president for Lennar Arizona.

 

You weren’t doing it before because it’s more complicated, you were making money hand over fist on single-family subdivisions, and until the market tanked homebuyers would not have been ready to buy homes that will accommodate boomerang children.

 

boomerang_flight

Child leaves home

Goes to college, swerves to political left

Rises up inordinate college debt

Glides back to starting point (home)

 

“This home has so much flexibility, it’s exciting.”

 

Flexibility is a marketing word that means, in this context, you can house them now in isolation, and reclaim the rooms in a few years when they get jobs.

 

The NextGen home consists of two complete living spaces under one roof. The main house has three bedrooms, two baths, a great room with a dining nook and kitchen, a den, two-bay garage and covered patio.

 

Ground floor:

 

nextgen_floor_plan

NextGen floor plan, one of several.

Similar interest in home technology, including unlikely green building materials, featured in this Top-25 post (October 14, 2011), Doing something concrete about green construction:

As poverty is not green, a world of over six billion people can accommodate them greenly only if we both increase global wealth and find new building and construction forms, preferably those that will accommodate multi-story and multi-unit structures.  Out of today’s welter of possible new technologies, a few will emerge as market leaders, and the jostling for visibility may be the ulterior or even overt motivation for this bold attempt to put a new form of concrete literally on the map, and on the Google Earth imagery, as reported in this Springfield (MO) News-Leader article:

 

pensmore

An acre and a half under one extended roof

 

Highlandville — At 72,000 square feet, a gigantic private residence being built south of Ozark is stirring plenty of talk — at home and far way.

 

That is 1½ acres of house floor area, bigger than many people’s lots.

[Continued tomorrow in Part 12.]

 

Month in Review: April, 2015

May 22, 2015 | Bankruptcy, CDSs, Chicago, Cities, Contract rights, Detroit, Diego Rivera, Epictetus, Month in review, Municipal bankruptcy, Museums, Philanthropy, R. A. Lafferty, Speculation, US News | No comments 162 views

By: David A. Smith

“The site is now known as the Great Blue Island Swamp.”

– R. A. Lafferty, What’s the Name of that Town?, 1964

r_a_lafferty

R. A. Lafferty

In 1964, the mad genius of science fiction R. A. Lafferty wrote a short story in which not only had the City of Chicago been vaporized, but the very idea of such a city had been expunged from every crevice of human consciousness or record-keeping, a concept that haunted me throughout April as I wrote my mega-exposition of such an event, the looming bankruptcy and possible breakup of Chicago:

“Chicago was a great city.  The heart of her downtown was known as the Loop, and one of her baseball teams was named the Cubs.  For that reason those two words were forced out of use.  They might be evocative.”

– R. A. Lafferty, What’s the Name of that Town?, 1964

As I’ve written in Ten Years a Blogger, a post is a mixture of commonplace book, stream-of-consciousness exposition of an ecosystemic interconnected topic, and journey of intellectual discovery.

If you wish to be a writer, write.

Epictetus the Stoic

During April, I consumed half the month writing a pre-bankruptcy (which is by now inevitable) pre-obituary for a city on the lake currently known as Chicago, in A tale of two cities: Part 1, The epicenter of America’s transportation system:

Within a year, two at the most, Chicago will be the next ‘biggest US municipal bankruptcy ever,’ overtaking Detroit for that dubious honor.

chicago_deficits

Yes, that’s bankruptcy looming

Unlike Detroit, which relied on the automotive industry to the exclusion of everything else, Chicago has a diverse economy, including major financial centers, a tremendous natural position as a distribution powerhouse, the world’s busiest airport, from which you can fly non-stop basically anywhere in the world, and enough cultural and activity diversity to be a tourist destination.  Despite all of this, somehow Chicago has so botched its urban model that bankruptcy is inescapable … and even bankruptcy may not be enough, as the pension funds are protected by a contested (and if upheld [Which it was – Ed.], suicidal) clause in the Illinois state constitution:

[For the last several years, Chicago’s] pension funds [have been using] their assets to pay off immediate benefits. That meant the total funds were being steadily reduced, which meant the investment income was also going down.

As I’ve already dismantled doublethink pension fund management at length (10 parts), I’ll touch on it only lightly in this essay; for now it’s enough to know that Chicago’s pension fund situation is fiscally worse than Detroit’s.

The pension funds were in a death spiral—and they still are.

Bankruptcy is inescapable – but should it be less like a Chapter 11 corporate reorganization and more like a Chapter 7 corporate liquidation and asset sale?  When Chicago goes bankrupt, should it break up?

breakup_text

Should we begin the end of Chicago-as-we-know-it?

2. History: Why was Chicago assembled?

Unlike the East Coast cities – Boston, New York, Philadelphia – Chicago was consciously founded; not settled by Europeans until the 1780s, then properly established in the 1830s out of a real estate bubble based on speculation of its potential as a distribution center:

chicago_1830

America’s own ‘Panama Canal’?  Chicago in 1830

Chicago was thus an economic proposition before it was an urban proposition, which invites the question whether the loss of its evolved economic proposition means the collapse of its current urban proposition.

“The destruction of a metropolitan area of seven million persons in much less than seven seconds was a great horror from the human viewpoint – come to think of it I now recall being a little disturbed by it myself,” said Epiktistes.  “The thing was so fearful it was decided to suppress the whole business and blissfully forget about it.”

– R. A. Lafferty, What’s the Name of that Town?, 1964

Swiftly the post turned, as likewise did my long post about Harbor Towers, into a discursion into the formation of Chicago by expanding, ever expanding, outward from a commercial proposition into opportunity-generating grid system radiating from the Loop, as covered in Part 2, Most suburbs looked to Chicago, Part 3, Either change the constitution or discover oil, Part 4, Either illegal or impossible, Part 5, Very difficult to persuade businesses to set up shop:

As we’ve seen so far, somewhere between 1945 and 1965, Chicago lost its value-proposition mojo:

mojo_extract

Extracted just before

The expansion mojo vanished first in the city’s inability to make a case that outlying unincorporated areas should join into the expanding city, despite compelling geographic and infrastructure logic; second from its uber-urbanization, whereby the city’s growth are has compressed back to its original core, the Loop District around the Chicago River and Lake Michigan, where it is far more profitable to create white-collar job space in the sky than to pioneer blue-collar ground-level jobs in the periphery.

Ironically, the decline of American northern urban manufacturing coincided with the Great Migration of blacks from the south to the north.

great_migration_x_2

Northern, urban, and black: the Great Migration

However it happened, the jobs that today’s Chicagoans’ parents and grandparents immigrated to work no longer exist, though the mayor has taken actions to create jobs:

That in turn revealed the collapse of Chicago’s original annexation value proposition – access to an expanded and valuable infrastructure network – and in fact the proposition’s reversal, that some of the outer neighborhoods (especially on the north side) would clearly be better off if they could secede from Chicago. 

It’s not what happens to you, but how you react to it that matters.

Epictetus the Stoic

That led to Part 6, Didn’t even put the money back, Part 7, A contributing part of the city’:

Characteristic of all these dis-integrating collapses (AOL-Time Warner, Soviet Union, Yugoslavia) were:

1. High internal Gini coefficient.  Huge gaps between rich and poor within the conglomerate.

2. Cultural and historical differences.  Longstanding distinctions of language, religion, ethnicity, not easily mixed and melded into a unified new whole.

3. Unrealized value proposition that expected synergy and efficiency that either was false at the time or played itself out.

Of the three, Chicago like many other American cities can and to some degree has overcome the second point – cultural/ historical differences – but the internal Gini coefficient has become breathtakingly high.  Take a look at this sequence of maps:

chicago_1970

A middle-class city

chicago_1990

Spatial separation by income

chicago_2007

Spatial separation increases

chicago_2012

Two cities: one rich, one poor

Visually, that is an extremely grim tale, as it invites the north side – the Gold Coast and beyond – to ask itself the question, what is the benefit to us of remaining in Chicago?

In 1970 it was possible to say, at least economically – access to affordable housing, a middle-income workforce, and excellent quality of life.  As the neighborhoods economically separate, is that still true?  The synergy value proposition (which in Detroit worked for decades) seems never really to have established itself in Chicago.

The post ground remorselessly onward, through Part 8, Nothing resembling a viable alternative, Part 9, Grievances would be addressed, and Part 10, Division of public property, debts, town paupers, and taxes. 

Ever since I posted about Fannie Mae’s possible demise, and then ignored the direct implications of my own post, I’ve become wary of disregarding my speculations no matter how fanciful they seemed, so I wrote my way to the end, a post-bankruptcy, post-fission city, Part 11, Only Detroit has a lower bond rating, and Part 12, A beautiful city rising from this abyss:

chicago_findings_of_fact

Wobbly conglomerates may last longer than observers expect, but they can crumble when hit by an external shock. 

The Enron debacle led to the implosion of Arthur Andersen, and the management buyout spinoff of its management consulting division, which wasted no time rebranding itself Accenture.

The fall of the Berlin Wall led swiftly to the collapse of the Soviet Union, because suddenly it was possible for the long-yearning Baltics to envision how they too could escape.

World War I put paid to the Austro-Hungarian Empire.  World War II brought independence to India and two Pakistans.

Perhaps Rahm Emanuel will discover, via bankruptcy, that the best thing he can do for the city is to be the last mayor of mega-Chicago.

I see a beautiful city and a brilliant people rising from this abyss, and, in their struggles to be truly free, in their triumphs and defeats, through long long to come, I see the evil of this time and of the previous time of which this is the natural birth, gradually making expiation for itself and wearing out.” 

Charles Dickens, A Tale of Two Cities

After all that philosophical gloom, I needed to lighten things up, which included finishing my series on non-profit’s overhead and executive compensation with There’s big money in charity: Part 6, High fees and handsome compensation, Part 7, Sacrifice in turning down the other job, and Part 8, Whatever they want?:

high_overhead_non_profits

In the end, Mr. Pallotta’s argument smacks far too much of confusing talent with its indulgences, like the aspiring opera singer who, observing that many opera singers were fat, decided that to improve her singing, all she needed was to gain weight.

Morris called [Thompson of Mass MoCA] an excellent leader who also is concerned about pay equity for other museum staffers. “That separates him from some of the other arts leaders,’’ Morris said.

An honest man can justify anything.

So can a thief.

Vade retro me satana.

pallotta_overhead

Yes, you are

In a similar vein, I observed that museums, though considered civic amenities (at least by those museum-goers who are also newspaper publishers) are really Theme parks for the upper crust:

Because people value only what they pay for, things that are free the same people devalue … until those things are threatened, whereupon the same observant herd that was indifferent and whose pockets were claimed empty suddenly discover newfound reserves, a point mentioned only in passing by an article in The Economist (March 23, 2015) that was actually going somewhere else.

[Snip]

Diego Rivera: Undone by the proletariat, rescued by the plutocracy.  I’m sure the old rascal would have smiled at that.

diego_rivera_self_portrait

A little paradox is good for the character

Finally, I completed the month by exploring the rules-in-a-knife-fight logic that underlies collateral-taking and partial recovery when those who bought bad paper at a deep discount tussle over who gets one from the bankruptcy estate, in Rien ne va plus: Part 1, One key glitch, Part 2, Boycott the new standard, Part 3, Not the protection you need, and Part 4, Use the product again:

With the windup of our story from this esoteric but vital segment of global capital finance, we’ve now earned the right to apply the case to other contexts – say, housing policy and program development and evolution, and the emergence or breakdown of international agreements.

[Snip; read it for yourself!]

6. Convention collapse takes only one veto so big it cannot be ignored.  Mr. Singer’s Elliott Management was big enough that its boycott represented ecosystem disruption.  No one big enough has yet challenged the Eurozone – Spain had an opportunity but the situation wasn’t desperate enough then – but this still seems inevitable.

7. Any change in convention rules must have grandfathering up through some date.  At some point you play out the pending games according to their rules … if not, you have no conventions, you simply have power politics.

Tspiras_merkel

Yes, she’s agreed to change the rules for us – haven’t you, Angela?

“Epiktistes, you top yourself, if anything could top an invention as funny as Chicago.”

– R. A. Lafferty, What’s the Name of that Town?, 1964


Epictetus_writing_1715

What do you mean I’m whining?

 

First say to yourself what you would be; and then do what you have to do.

Epictetus the Stoic