Toll Impact
The Urban Land Institute and Earnst & Young recently released their annual infrastructure report. Infrastructure 2009 featured some really fascinating analysis of our national infrastructure, and made some strong recommendations. Chief among these is to shift the cost of infrastructure to users as much as possible.
They explored a lot of ideas, but the two that are most relevant are the idea of raising the gas tax and converting more freeways to tollways.
Toll-way Conversion
Now, I’ve said before, I personally think that Texas, at a state level, should convert all its limited-access highways to congestion-priced tollways. Require the TxTAG to drive on the freeways, period. A relatively simple upgrade to TxTAG could fix the issues with rental cars, trucks, and/or carpools: redesign the transponder so that it operates when a card (like a driver’s license) is inserted into it, and so it displays the balance remaining. All Texas Driver’s Licenses could be linked into the TxTAG system, and out of state visitors, rental car users, or anyone who was worried about privacy could use pre-paid cards. With 100% electronic tolling we could implement this system for next to nothing.
With all limited-access expressways paid for by the users, existing gas taxes could be diverted exclusively to fund surface streets. The rate should be set each year at TxDOT’s maintenance budget plus whatever is budgeted for new construction. An annual review provides the opportunity to increase citizen oversight which should result in less waste.
Opposition to the Idea
Now, there are plenty of people in the world who are opposed to toll roads. A particularly well-written arguement against the idea recently appeared in the Wall Street Journal, titled: Who Should Pay to Fix the Roads? Columnist June Fletcher had this to say about the idea:
I have a big problem with that idea, since land prices—and therefore housing prices—are usually much cheaper in exurbia than in close-in areas. So developers put projects targeted to young families, low-paid public servants like police, firefighters and teachers, and retirees on fixed incomes, on the fringe of suburbia. Why should these people, who are already paying impact fees and higher taxes because they live in newly developed areas, have to shoulder even more of the burden to maintain our roads?
A more equitable solution may be to have developers take on more of the infrastructure costs. More than half of the developers surveyed in ULI and Ernst & Young’s report said that less than 10% of development costs go for infrastructure. If officials increased the amount that developers had to pay for the privilege to build on the fringe, builders might do more with the urbanized core. And they might even start building affordable housing suitable for a variety of age groups—and not just the singles and empty-nesters who are attracted to high-rise living.
Sure, it’s more time-consuming and problematic for developers to acquire old houses and tear them down or rehab them, but by doing so, we can all take better advantage of roads and other infrastructure that’s already in place—and at a lower cost to both our pocketbooks and psyches.
I agree with one point Fletcher makes: developers should bear a higher proportion of the cost to install new infrastructure. Tax deals like MUDs and TIRZes out on the edge of the city do nothing but accelerate the outward growth. They are supposed to pay their own cost, but because they create and pay for PUBLIC infrastructure only within a small area, they do not generate the funding needed to CONNECT all the seperate pools of private development activity. Providing basic infrastructure connections and municipal services is the entire original purpose of local taxes. There’s a reason this is supposed to be pooled from an entire county and/or city: it costs money to connect the gaps! If developers were not able to get their internal, private infrastructure subsidized by the government, prices for developing on the fringe would increase, outward expansion would slow down, and more funds would be available to counties that have to deal with connecting the gaps in infrastructure.
The Real Impact of Tolling
That said, Fletcher is totally missing the boat with her other point. It’s true that housing prices tend to be cheaper on the fringe, than closer in, but this is usually only true in the direction of a City’s favored quarter (illustrations here, and here).
In Houston this means the West and the very far north. The favored quarter recieves an unbelievable bias in our subconsious thought patterns. Everything about how we consider the city is weighted to the west, and our concept of ‘affordable housing’ is as well. Since the goal is to live on the west side of Houston, the best way to do that (if you don’t have a lot of money) is to live in Katy or Fulshear where the city hasn’t fully grown up and out of your price-range yet. That means a very long commute to the rest of the region, so naturally the idea of needing to pay tolls for every trip really changes the ‘affordability’ of the place.
But the idea that affordable housing exists only at the fringe is BLATANTLY false. In fact, very affordable housing exists very close to the center city, if only one is brave enough to go EAST.
Take a few minutes to search the maps on HAR. You’ll soon find that older homes, large and small, and plenty of vacant lots just waiting to be rebuilt are abundant in East Houston. In fact, there are a lot of houses priced under $100,000! These homes are located within 5-10 miles of nearly all the employment opportunities in the region, so why are they so cheap?
Over time these areas have become poor, and as a result the properties that are there are not generally well maintained or attractive. The school systems are either not as good, or not percieved to be as good, as those on the west side of town. The areas are home to large concentrations of minorities. But these areas are very well served with existing infrastructure that everyone in the city bears the cost of mainentance for.
If the price of commuting from the far west fringes increased signficiantly due to congestion tolling, two things would happen. Development in the west would densify (which lowers the per-capita cost of infrastructure and services), but a lot of people would rather not live densely. Some of those people might decide to just pay the cost to live on the fringe and drive in, and that’s fine. Many of those people would find that East Houston suddenly held a lot more appeal than it had before.
Just as has been occuring for the last 15-20 years, the younger and older populations without children would be the first of the middle class to move back into these older and more run-down areas. These new people would invest in the community, and things would start to get better, and then middle class families with kids start to show up.
This already is happening, and will continue to happen, because the commute times and distances are not getting any shorter, and more and more people are deciding they don’t want to deal with it anymore. But if a major price-shift occured, this trend would dramatically accelerate, potentially sparking a massive restoration and revitalization of Houston’s entire eastern half.
Nearly every city in the US has a district analagous to East Houston, full of centrally located but under-developed neighborhoods. These areas are begging for a mass infusion of middle class population to revitalize and stabilize them. The fastest possible way to trigger a massive private-sector reinvestment in these areas is to charge freeway users the full price of their trip. That’s a sound, free-market policy, and one we should embrace as soon as possible.
Categories: featured, move
Tags: congestion-pricing, favored quarter, fees, housing, impacts, prices, progressive, regional, regressive, sustainability, Tolls
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I’m not sure I like the idea of all limited access highways in Texas being tolled. I can see the logic (sort of) for the crowded municipalities but that statement also would include the highways connecting Houston, Dallas, San Antonio, Austin, El Paso and many other large and small cities, wouldn’t it?
Besides that, though, wouldn’t this also displace many of the poor who depend on the public infrastructure that Houston affords? As middle class folks move back in from the suburbs the neighborhoods will gentrify and the poor will be priced out. Wouldn’t they then be pushed out to the cheaper areas further from the city core? I’m not sure if that is a good or bad thing, but if transportation costs are fully priced in (either via tolls or higher gas prices) the cost of housing closer to the center will rise more uniformly the closer in you get with the lower income scales pushed out further.
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Theres a critical difference between people’s reaction to a trend, and people’s reaction to a price signal.
Where there has been a turnover in inner city neighborhoods so far it’s been in small, centralized areas (like Neartown). Those areas attracted a critical mass of first movers who were trying to live a certain lifestyle, so they concentrated naturally in a small area. Then as the neighborhood stabilized a major rush of ‘money’ came in behind the first-movers in that single, concentrated area, which caused that specific area to price-out some of the people who were there before. That’s trend-driven gentrification.
There are two major differences with a price signal shift.
1. The motivation is to find affordable, middle class living. Therefore the tendency to concentrate in such a small area would be less, and there would be a lot more people coming in. It’s most likely this would mean a more even ‘filling in’ of the vacant and underdeveloped areas, starting from near the 59/288 line and drifting east over time.
2. Because the area we’re talking about is so large, it would take an unbelievable amount of movement to fill it all in. Simple supply and demand logic is at work here, the supply of housing and vacant land is so high on the East side of Houston that it would take a generation worth of steady population influx to make a dent.
I think your concern over the fate of the poor is very well justified, but the best thing that could happen would be for a major uptick in economic activity to come their direction. There would be people who complained about the change, for certain. But for most people it would mean stabilized neighborhoods, better schools, and more job opportunities.
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There are a couple of issues with going east.
1. Closer to refineries
2. Closer to hurricanes
Houston has a pretty efficient housing market. Desirable, ready-made stock is no steal. An example of this is Idylwood.
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That’s true if you’re going all the way to Pasadena or LaPorte. The areas that are currently the most underdeveloped that I’m talking about are principally the areas inside the loop from 59/288 east, the areas around 45, Hardy Toll Road, and 59 north of town, and the area between the loop and the beltway on 288.
The last area, south on 288, has patchy development here and there but thousands upon thousands of acres of empty land. You could comfortably fit another 500,000 – 1,000,000 people between US-90A, Beltway 8, 288, and the loop!
As you get farther southeast there are more issues with flooding, yes. But in reality the flooding and hurricane issue is a design challenge: every place in Houston has to face it, we have to put flood control systems in place to deal with it or none of us will be spared.
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You know, I’ve read this about 5 times; in the process I’ve read a great deal of other posts and other parts of your web site. As a word of background, it sounds as though you visited Italy; I lived for three years there. Beautiful place, beautiful people. My three years in Rome were the best of my life. Frankly, it’s all been downhill since then and i returned in 1974. Now I’m 55 years old so I’m pretty much irrelevant in terms of the “future” of Houston, Harris County, Texas or the U.S. as far as that’s concerned. Houston’s future isn’t mine to dictate; I don’t belong to the future demographic of Houston. But as far as turning all the “freeways” into toll roads I see two major problems I don’t think you’ve adequate addressed. First, I don’t think you’ve sufficiently considered the impact of such a scheme on the most vulnerable segment of society, i.e., the grey collar lower to middle income group that Fletcher refers to in noting: “projects targeted to young families, low-paid public servants like police, firefighters and teachers, and retirees on fixed incomes, on the fringe of suburbia”. I suppose it’s beleived that at some point, if the costs of suburbia get too high, they’ll be forced to move closer in. Until then of course, an ever greater percentage of their disposable income will be directed toward transportation which will have the effect of taking more bucks out of the private, “consumption” market and redirecting those bucks to government enterprise. Ah, but there’s always the problem of unintended consequences. I’d suggest you study up on what’s been happening around about places like Chicago, St. Louis, and Cincinnati. As the cost, both economic, physical and emotional of living in or near these cities became too great, Employers found it ever more difficult to hire and retain quality, well educated, Young, (youth being all important) people to work for them. As a result……they moved, out, typically to small towns near, or directly adjacent to a major arterial Interstate Freeway and set up what have become near “company” towns.
I’ve read with increased interest the idea of turning the Interstates into toll roads such as those you mention in Italy. In Texas, the unintended consequence would be that those who are least able to afford the tolls would find themselves ever more tied to, (trapped?) in on locale. The dream of the driving vacation would slowly die. Unlike Italy, we don’t have a modern passenger rail system. Perhaps one day we will and that would be great especially if people could “rail” their cars with them. If they couldn’t they’d find themselves in San Antonio, Dallas, or perhaps New Orleans with no ground transportation. Maybe that could happen as well.
To examine first hand the problem of developing/re-developing the east end of Houston, I’d suggest perhaps you take the Navigation bus out east at say, 8:00 or 9:00 p.m. More realistically, the Urbanist dream is becoming more a reality in the Galleria area and it would make an interesting study. In fact my wife and I have contemplated moving from our home in Spring to the Galleria area, however, with only a few “work” years left to me, I’ve scotched that idea because of horribly high property tax problem. This weekend, we spent time with a friend who lives in what I’d call West Houston, i.e. Kirkwood south of I-10. That area points up another problem with the Houston area and the East end in particular, i.e. subsidence. The subsidence problem in West Houston we found quite shocking and surprising. I lived in the Memorial area while attending UST and really don’t recall the subsidence issue having been a problem.
I don’t know what the future holds, but I’d suggest that Tory is probably more spot on in his analysis in that Houston/Harris and surrounding counties are more likely, at least in the near term, (100 years) to develop business/residential pods out the spokes from BW8, much like the Woodlands or the Energy Corridor in Katy. The deal is of course, the “deal” and the deal of the day is cheap land. Texas is simply several hundred years from being built out. Until that happens, I don’t think Houston will ever come to resemble Rome, nor Texas, Italy.
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Agreed. East & northeast of downtown has extremely high potential. If I had the money for real estate investments, I would buy property just east of Downtown or in East End and rent it out for 5+ years before unloading or moving in the area. Lack of retail and basic conveniences is what’s keeping me from living there right now.