Justin Horner's Blog: Moving Beyond Oil

The Problem with Parking: A Case Study From LA

2010-05-06T21:35:39Z

In previous posts, I’ve talked about the environmental importance of better parking policy and recent efforts at reform (including SB 728, sponsored by NRDC, to encourage parking cash-out).

Now, when most people think of parking, they think of parking on the street. An aspect of parking that just doesn’t get enough attention is off-street parking. Nearly all local governments require developers and property owners to provide parking spaces on the site of their projects. Initially designed to cut congestion, off-street parking requirements have instead generated a variety of perverse effects. Instead of developing land to be productive for people, we instead require set-asides for cars. Less building and more parking spaces mean less efficient development, pushing up building costs. Vast parking lots also push buildings farther apart, making it difficult to walk and bike around and encouraging driving. Studies have shown that off-street parking requirements drive up the cost of housing.

A recent op-ed in the Los Angeles Business Times provides a great detailed case study on this phenomenon. Josef Bray-Ali’s story of developing a 7000 square foot infill lot in Eagle Rock is worth quoting at length:

[7000 square feet] is not a lot of room to work with. The zoning code allowed for multifamily residential and commercial uses on the same property.

We thought we could do something really nice: ground-floor offices topped by four two-story apartments. Our plans fit in perfectly with the gentrifying neighborhood (area-specific plans called for light commercial that was walkable). Our plans also fit nicely with the mixed-use zoning code ... until it came to parking.

Car parking requirements forced us to shrink everything – the ground-floor commercial was squeezed into a 400-square-foot space; the building had to have an extra story just so we could stuff a bunch of cars underneath. The cost on paper shot up, meaning that our four one-bedroom apartments turned into four studio condominiums – and once you subdivide a property into condos, you have to go through a whole bunch of planning hoops, bumping up costs even more.

This easy $200,000 construction project turned into a super-risky $1.2 million, four-story fiasco.

To make a profit, we’d have to sell 800-square-foot studio units for nearly $400,000 apiece! Even at the height of the boom, that was insane. So, after months of meetings, research and design sessions, the tiny project was scrapped.

In sum: “The car parking requirements killed our project.”

We need to encourage cities to take a new look at how they regulate parking. Last year, Senator Alan Lowenthal put forward SB 518, a sensible, entirely voluntary effort to incentivize localities to be progressive on parking. Let’s hope we see similar efforts from Sacramento and California cities in the near future.

Harvard Business Review: “The Suburbs Have Lost Their Sheen”

2010-05-04T22:01:51Z

From Pricewaterhousecoopers, to the Urban Land Institute to real estate experts throughout the country, the consensus is clear: changes in American demographics and evolving market preferences mean that the clock is ticking on sprawl. Smaller households and a growing affinity for walkability and urbanism give us the chance to turn back decades of environmentally disastrous development. People are catching on, but there’s still a lot of convincing to do.

The latest news comes from a recent article in the Harvard Business Review (“Back to the City”), which details the growing trend of businesses coming back to center cities after years of fleeing to the suburbs. The reason?

These companies are getting a jump on a major cultural and demographic shift away from suburban sprawl. The change is imminent, and businesses that don’t understand and plan for it may suffer in the long run.

To put it simply, the suburbs have lost their sheen: Both young workers and retiring Boomers are actively seeking to live in densely packed, mixed-use communities that don’t require cars—that is, cities or revitalized outskirts in which residences, shops, schools, parks, and other amenities exist close together. [Sound familiar?]

As the article outlines, 64% of college-educated 24-to-35 year olds choose a job after they have chosen a place to live. To attract new talent, major companies are moving back to where the workforce of tomorrow wants to be: walkable, compact communities that are not suburban sprawl.

LEED-Neighborhood Development: It’s Official (and California Already “LEEDs” the Way)

2010-04-29T20:53:18Z

In twin events today in Washington DC and Chicago, the three partners who created LEED-Neighborhood Development (NRDC, the Congress for the New Urbanism and the US Green Building Council) announced the system’s official launch. Nearly a decade in the making, LEED-ND is the first national standard to attempt to describe and quantify what “green” actually is on the neighborhood scale. We all know green buildings; ND gives us green neighborhoods.

As my colleague, Kaid Benfield (NRDC Smart Growth Director and one of the Founding Parents of LEED-ND) says on his blog today:

Our hope is that LEED-ND will prove to be an asset for development projects that meet the standards, separating the worthy from the pretenders and giving the worthy a stamp of approval that can help their case as they make their way through the local entitlement process. We also hope it will help local environmentalists and citizens’ groups evaluate development proposals, and that it will provide templates for governments at all levels to borrow from as they upgrade their policies to support sustainable, green neighborhoods.

Now, you can certainly read all about ND here, here and here, but what I want to add is the California angle. Although the system officially launched today, there’s been a pilot program on since 2007 that includes nearly 240 projects from all over the world. Projects must first register to be evaluated by the program and then, if they qualify, they are certified.

Of the registered projects, 18% are from California (the largest percentage of any state, province or country outside of North America) and of the certified projects, 16% are from California (again, the largest percentage of any state, province or country outside of North America). Now note, California has about 12% of America’s total population, so the number of projects would be disproportionately large for the US even before you included the rest of the planet.

Now it may come as no surprise that California is leading the way (see AB 32 for greenhouse gas emissions, SB 375 for better land use planning, vehicle fuel economy standards for cleaner cars, TV efficiency standards to save energy, the list goes on), but it’s always nice to have pleasant and inspiring truths confirmed.

In fact (just to continue with the theme) the newest LEED-ND certified project (like, certified last week) happens to be in California, in Richmond, right up the BART line from my house. The plan for the Miraflores project was certified LEED-ND Gold.

As you (probably) can see from the site plan, the Miraflores project is dense, walkable and includes plenty of open space. There’s a significant affordable housing component for seniors, a mixture of for-sale and rental units, amenities for kids, creek restoration and a significant component dedicated to urban agriculture. There are universally-accessible units for people with disabilities, new bike paths, and plenty of trees and shade

And there’s a lot that you can’t see: the construction debris will be recycled and diverted, there’s on-site renewable energy generation, innovative storm water management strategies to avoid water pollution, and energy-efficient buildings. It’s close to local schools and will use 100% native plantings for all landscaping.

Oh, and did I mention that it’s also being built on a former brownfield site previously occupied by a commercial nursery (huzzahs to the City of Richmond Redevelopment Agency for the clean up and my friend Ted Bardacke at Global Green USA for the info on their project)?

These are the types of projects LEED-ND encourages: mixed-use, walkable communities with the latest in energy efficiency and other green technologies.

California has LEED-ND certified projects all over the place: from Oakland (the Tassafaronga ND Gold project is opening May 10th) to West Sacramento, from San Diego and the City of Orange (the sold out Depot Walk) to Santa Cruz and Napa.

Now that LEED-ND is officially a go, we’re looking forward to the projects coming down the line. LEED-ND is a great tool for those developers, communities and localities that are looking to encourage investment and building that make sense for the planet.

Could Transit Help Off-Set the “Ghetto Tax”?

2010-03-03T00:27:30Z

The folks putting together the Towards a Just Metropolis Conference turned me on to Debabrata Talukdar’s “Cost of Being Poor: Retail Price and Consumer Price Search Differences across Inner-City and Suburban Neighborhoods.” The study tests, and confirms, the hypothesis that poor, inner city residents pay more for everyday grocery items than those of middle and upper income. This “ghetto tax” has also been shown to apply to auto insurance and, of course, “redlining” of home mortgages.

A little thinking may lead you to say, “Yeah, of course these folks pay more. There are fewer stores in low income communities, and suburban areas have ready access to a number of large, cost-efficient supermarkets.” Say what you want about Wal-Mart, but I’m sure they run a leaner ship than your corner liquor store.

But what the study found was that it was not income alone that determined the difference, but rather income plus mobility:

I again find that while nonpoor and poor households with access to cars have no systematic difference, the poor households without access to cars do, and their likelihood of using the nearest supermarket [Ed. as opposed to the costly, inefficient corner store] is substantially lower after controlling for store distance…What critically affects a consumers price search behavior is not her residential area or the poverty level per se but whether or not she owns a car.

Now, let me say from the outset that this is NOT an argument for expanding car ownership, and Dr Talukdar doesn’t think so, either. Nearly half (48%) of all the poor households in the study did not own a car, and it’s likely not because they didn’t want one.

What he does call for, however, is “appropriate city planning of public transit infrastructure that ensures easy access between between poor inner-city neighborhoods and large, commercial shopping centers.” Good thinking.

I think the author could also have added a number of other planning-related recommendations (permitting/encouraging local food production, easing mixed use development), but little could tip the scales faster than getting folks to where the lower prices are now on transit.

As continued transit cuts further isolate poor Californians from job opportunities and vital social services, we now also know that the resultant decline in mobility raises household costs for even the most basic day-to-day necessities.

So, to summarize, we know that transit creates more jobs, is safer than car travel, helps the environment, improves public health, reduces household transportation costs, reduces housing costs and (thanks to Dr Talukdar) makes many other things cheaper, as well—especially for those who need to avoid high prices the most.

Transit, the Stimulus and Jobs in California: Three Times the Jobs at Half the Price

2010-02-12T21:54:27Z

In an earlier post, I discussed the recent “What We Learned from the Stimulus” report from Smart Growth America, USPIRG and the Center for Neighborhood Technology that examined stimulus spending on roads and transit with respect to job creation. The short story: nationally, transit gives about twice as many jobs per billion spent when compared to roads.

This is clearly good news for transit advocates. Not only does transit spending give us more jobs bang for the buck, but those jobs are in occupations and industries particularly hard-hit by the recession.

This week, the California Legislature is once again tackling multi-billion dollar budget challenges, and once again, transit is on the chopping block. At the same time, the Legislature is making moves on a jobs bill.

Hopefully, they can put two-and-two together when they take a look, like I did, at the numbers from the House Transportation and Infrastructure Committee on job creation from stimulus spending in California. To wit:

From $1,167,779,789 in road spending, California got 5,305 jobs. That’s about $220,128 per job.

From $585,852,101 in transit spending, we got 15,107 jobs. That’s about $38,780 per job.

So, investments in transit resulted in almost three times the number of jobs for half the price. Or, if you took a look at the rate of job creation per billion dollars, that’s 4,543 road jobs per billion versus 25,786 transit jobs per billion.

Anyway you look at it, investment in transit is a good deal: for the economy and for the environment.

There's No Such Thing as a Free Lunch (Nor a Free Parking Space)

2010-02-02T17:57:20Z

“Dying is easy; parking is hard.” --Art Buchwald, in his last days.

Last week, the California State Senate passed SB 518, authored by Senator Alan Lowenthal (D-Long Beach) and sponsored by NRDC. SB 518 aims to reduce traffic congestion, greenhouse gas emissions, and public costs by creating incentives for local governments to implement policies that reveal the actual cost of parking and reduce governmental or government-required subsidies for parking.

A long understudied aspect of our transportation system, parking nevertheless has a tremendous impact on our travel choices and, therefore, the environment. It’s estimated that each car in America needs at least four parking spaces (home, work, and at least two for shopping, errands and socializing)—with 4.7 billion cars in the United States, we’re talking about 19 billion parking spaces, an area the size of France! And at costs as high as $40,000 a space, we’re also talking a lot of money.

The Financial Costs of Parking

With local governments and everyday Californians navigating the most treacherous economic waters in decades, everything deserves a second look. The financial costs of parking are hard to ignore. In California, upwards of 90% of parking is “free” to the driver. But is anything really “free?” Private parking lots and public parking spaces need to be purchased, constructed, maintained, lit, insured and protected. If a driver uses the space for free, those costs are picked up by customers (in the form of higher prices) and by taxpayers (in the form of higher taxes). Although parking may seem “free,” the reality is that most of us are paying for other people’s parking nearly every day.

The Environmental Costs of Parking

Now, what does parking have to do with the environment? The answer is “plenty.” SB 518 outlines two primary impacts of free or underpriced parking:

Free parking encourages vehicle trips, thereby increasing traffic congestion, pollution, and greenhouse gas emissions. For example, at employment sites, employer-paid parking increases rates of driving by as much as 22%.
Excessive governmental parking requirements to ensure free parking greatly expand the built environment and increase travel distances, thereby increasing per capita vehicle miles traveled and reducing the viability of other transportation modes, such as walking, bicycling, and transit. Indeed, we’ve all spent at least some time in places like this:

Plus, there are other important impacts. The more we pave over, the poorer our water quality becomes, and paving for vast parking lots also contributes to the Urban Heat Island effect, which increases energy consumption and exacerbates local pollution.

Yet despite all of these serious impacts, little real innovation has entered into parking since the first parking meter was introduced in Oklahoma City in 1935.

SB 518: A Reasonable, Voluntary Approach

There is clearly a lot that needs to be done to reform our current approach to parking. SB 518 is a modest step forward and a beginning of the conversation. Carefully crafted to preserve the authority of local governments to control land use, the bill mandates nothing to local governments, yet offers incentives for those localities interested in taking a new look at parking.

Cities and counties can receive a few extra points on applications they submit to the State for infrastructure funding if they enact a minimum number of reforms from a broad menu of over 20 policies included in the legislation. For example, to qualify for the incentives, localities could choose to:

Reduce minimum parking requirements for residents or businesses, or in areas close to transit, bringing down the cost of development.
Permit shared parking, so that spaces provided for offices during the day can be used by restaurants at night.
“Unbundle” parking from property leases, so that renters and lessees can see the cost of the parking they are paying for.
Permit Parking Cash-Out, so that employees have a choice to pay for their parking.
Create parking benefits districts and residential parking districts so that revenues from parking can go directly towards improvements in areas where the parking is actually located (as opposed to the revenue going into a locality’s general fund). Ventura, California finalized just such a plan last week.
Create a parking program that aims to ensure a 15% vacancy rate (one in seven spaces, give or take) so there’s parking available more often than not.

In other words, SB 518 gives communities the choice of reconsidering their approach to parking while enabling them to better compete for vital State revenues. Localities should not be able to impose these reforms on their residents and businesses without public hearings and action by City Councils and Boards of Supervisors. Indeed, supporters of SB 518 include not only environmentalists like NRDC and the Sierra Club, but also city planners at the American Planning Association, air quality advocates at the American Lung Association, affordable housing groups, and Genentech, the biotech firm that itself is a leader in innovative approaches to parking.

It’s true: free parking isn’t really free. It’s high time we look honestly at how parking impacts our lives and our planet. SB 518 is a fair approach: a purely voluntary encouragement to take a second look at something we always take for granted.

No Stomach in Senate Committee for Gas Tax Scheme That Cuts $1.5 Billion From Transit

2010-01-21T23:03:26Z

It’s nice to go to a hearing in Sacramento every once in awhile and find yourself in a cloud of nearly universal agreement. I was able to experience that rare feeling earlier today when the Senate Committee on Budget and Fiscal Review held its hearing on Transportation and Resources Issues.

The first item up was the Administration’s proposal to switch taxes on gasoline to free up money for the general fund. In an earlier post, I explained the scheme and its likely impact on public transit funding in California: a $1.5 billion cut. Indeed, the non-partisan Legislative Analysts Office says the “proposal permanently eliminates state transit funding.” Not good.

Testifying for NRDC this morning, I was pleased to hear the initial comments from many of the Senators. Senator Alan Lowenthal was “appalled” by the proposal’s impact on transit; Senator Mark Leno told of San Francisco’s continued transit funding problems and wondered how this proposal would help things; and Senator Joe Simitian wisely pointed out the likely ridership impacts of further cuts and fare hikes, particularly on those “discretionary” riders who will once again choose their cars, leading to more air pollution and road congestion.

And when it was time for testimony, I was surprised by the breadth of opposition to the proposal. Transit agencies and the California Transit Association were clearly opposed to these cuts, as was the United Transportation Union. Environmentalists like NRDC, EDF and CALPIRG raised obvious objections, as these cuts baldly undermine our commitment to reducing global warming pollution. California’s counties were concerned about the future of their local street and roads money, and CalTrain and Amtrak’s Capitol Corridor raised questions of the future of intercity rail in California. The Sacramento Air Quality Management District and the American Lung Association feared more local air pollution from more driving, and the California Association of General Contractors and the Southern California Contractors Association expressed reservations about a new approach to transportation funding that sacrificed transit and did little to get shovels in the ground.

James Earp, of the California Alliance for Jobs, and Vice Chair of the California Transportation Commission, summed up the general mood when he said the plan was “bad advice” and a “faulty proposal.”

I left a bit early, but didn’t hear a single voice in support all morning.

Clearly, we need solutions, and the hard work of banging one out for transit funding is in the works. But it’s also a rare pleasure to see so many come together to chase a clearly bad idea out of the room. Hopefully, it will stay out.

Another $1.5 Billion Cut?!? Transit Once Again Takes It On the Chin

2010-01-11T19:33:20Z

Governor Schwarzenegger released his 2010-2011 State Budget on Friday, which includes a disastrous $1.5 billion cut to California’s transit agencies.

Everyone knows the story: California’s state government is in the midst of a fiscal nightmare, and Californians themselves are facing high unemployment, housing problems and the whole range of everyday troubles that come with living in a deep, deep recession. Make no mistake: balancing the budget means some serious cuts. The question is whether the cuts are done wisely. We should not be undermining the state’s recovery, frustrating the efforts of Californians to pull themselves out of this mess, or forsaking our environmental goals and responsibilities to the planet.

With these cuts, the proposed Budget manages to do all three. Further cuts to already struggling transit agencies mean 1) more layoffs, as transit agencies can no longer afford drivers and mechanics; 2) less mobility, at a time when access to jobs and social services is crucial; 3) higher transportation costs, as riders pay more for other ways to get around; and 4) more pollution, as transit riders switch to less efficient car and taxi travel, clogging up already congested motorways.

So what’s the Administration’s plan? It's complicated, but most briefly, the Budget proposes to eliminate the sales tax on gasoline and raise the excise tax on gasoline. Since much of the sales tax on gas is set aside for transit, while the excise tax is not, switching and manipulating these two levies allows the Administration to take money set-aside for transit and use it to deal with the General Fund deficit.

Now, if this were the first time transit was kicking in to help with the budget, I’d say we all have to do our share. Unfortunately, despite widespread support for transit among Californians, transit has been hit up early and often, contributing more than $3 billion to budget solutions over the past few years. I think they’ve done their part. The proposal is doubly frustrating because it comes on the heels of a major victory for the California Transit Association earlier this year, when a court ruled that previous efforts to raid transit funds were against state law.

We are moving backwards if we think that making it harder and more expensive to get to work or school, throwing more people onto unemployment, and putting more pollution into the air are the ways to get California on its way to recovery. Public transit is an investment that pays dividends: better jobs, more freedom of movement, and a cleaner, safer transportation system.

We need to be putting more into transit, not cutting through the bone. Fortunately, Assemblymember Michael Eng, Chair of the Assembly’s Transportation Committee, told Streetsblog San Francisco that it was "absolutely incredulous" to cut transit at a time when it's needed "to get working families to their jobs and stimulate the economy."

So, at least someone seems to get it in Sacramento. The Governor needs to seriously reevaluate these cuts.

Public Transit: More Jobs Bang for the Stimulus Buck!

2010-01-05T23:09:33Z

Now, we already know that taking public transit is good for the environment, safer than car travel and even better for your health. But now we know something else: as far as putting people to work, investing in transit easily beats spending more on roads.

To wit: today, our friends at Smart Growth America, USPIRG and the Center for Neighborhood Technology released a new report, What We Learned from the Stimulus. The report looks at job numbers from the House’s Transportation and Infrastructure Committee for the first 10 months after the American Recovery and Reinvestment Act (ARRA) was signed, comparing jobs from transit to those from road building.

The main finding is this: Every billion invested in transit produced 16,419 job-months, while every billion spent on more roads got us just 8,781 job-months. In other words, transit produces nearly twice the jobs per billion spent.

Why is this so? Well, the report lists three primary reasons why transit investment ends up creating jobs so much more efficiently: 1) far less money is spent on the acquisition of land than in road building; 2) transit jobs tend to be more complex, requiring varied expertise; and 3) transit investments goes towards the purchase and maintenance of vehicles. Or, as the report says, “public transportation creates more jobs by spending less on land and more on people.”

For any upcoming jobs bill in DC, this report provides great guidance. Do you want to create more jobs, quickly, while investing in the transportation system we need for the future? If so, the authors say, divide the investment equally between public transportation and road projects. You could see as much as 71,000 more job-months, the equivalent of year-round employment for more than 5,000 people.

And on top of all this, we know that transit investment creates jobs for just those sectors of the workforce that are being hit the hardest by the economy.

That’s right: more jobs for less money; building the transportation system of the future; putting the unemployed back to work. Oh, and we can help the planet, too. Not bad, if you ask me. Hopefully, DC will get the message.

Drive Less, Pay Less: The New Pay As You Drive Insurance Performance Standard Shows How!

2009-12-15T22:47:52Z

I’ve been touting the environmental benefits of Pay As You Drive (PAYD) insurance for months now (see here, here, and here). A simple transportation reform that saves people money, is more fair than current practice and helps the environment? What’s not to love?

Nevertheless, the wheels of reform sometimes turn slowly, and auto insurance, a competitive and regulated industry whose very bread and butter is evaluating risk, is sometimes slow to change. That’s why we need to push regulators and policymakers to open doors to PAYD while working with insurance companies to encourage them to bring better products to market.

A vital first step is getting everyone on the same page: what does PAYD mean, and how would we know a PAYD product if we saw it? After literally decades of PAYD as a subject of policy debate and speculation, when we’re actually getting closer to implementation, we learn that a consensus definition of PAYD doesn’t even exist!

Fortunately, last week, that changed.

NRDC, Ceres and a coalition of environmental and transportation groups* released a Pay As You Drive Standard last week. The Standard will act as guidance to regulators, policymakers, insurers and even consumers who are interested in proposing, evaluating and encouraging PAYD-type insurance products. It’s the first concerted effort I know of to standardize a definition of PAYD for the purposes of really implementing policy.

Our goal was to boil down the essential elements of PAYD and provide metrics by which to measure performance. The goal was how to correlate miles driven to the cost of insurance as directly as possible. We want drivers to really know (and feel) the cost of each mile they’re driving. Here’s what we came up with:

Per Mile Pricing or Narrow Mileage Bands: drivers know the price of travel instinctively when they, say, watch a taxi meter. The price goes up every 1/8 or 1/10 of a mile, and sometimes we jump out at the corner to avoid that extra distance we just don’t care enough to pay for. Insurance should be the same way, although such small units are not always practical. Ideally, we’d be paying insurance by the mile, but even changing the price every 100, 250 or even 500 miles can send a clear enough signal to drivers to know how to save money. Insurance policies that can tie premium price, and increased costs, as closely to mileage as possible will do it with per mile pricing or relatively narrow “mileage bands.”
Minimum up-front costs. We know insurers have certain costs that are constant among customers no matter how much they drive, so asking drivers to buy some miles up-front makes sense. However, an ideal PAYD policy would keep those costs to a minimum and maximize the share of the total premium cost that can be influenced by how much you drive.
Direct relationship between mileage and premiums: On the simplest level, if a customer drives 50% less, they should pay 50% less for insurance. Few, if any, policies these days give such a direct savings opportunity. A true PAYD product would show clear savings with mileage reductions.
Small differences between costs for each mileage band: We know that some miles are riskier than others. In most cases, the first 15,000 miles someone drives will be more risky than, say, the 15,000 miles between 30,000 and 45,000 miles. The price should be more for riskier miles, but not too much more, lest the price signal be weakened and the impact on driving lessened. We recommend that the difference be no more than a factor of 2 or 3 between different mileage bands.

Here’s the summary chart, for ease of viewing:

Rating Factors	Gold	Silver	Bronze
Maximum Mileage Bands Used for Pricing	1	250	500
Maximum Annual Miles That Must Be Purchased	2000	3000	5000
Percentage Premium Reduction from 50% Mileage Reduction	50%	40%	25%
Maximum Difference Between Lowest and Highest Priced Unit	2	2.5	3

There are currently some products that may meet the Bronze standard, but there are none that we know of (yet!) that would hit Gold or Silver. We hope the Standard can function like LEED or Energy Star: systems that push the market towards exceptional performance.

The Standard is still a work-in-progress. We welcome questions, comments, complaints and all manner of feedback. Drop me a line, or leave a comment below!

We timed the release with my presentation on PAYD before the National Association of Insurance Commissioners Climate Change and Global Warming Task Force (thanks to Pennsylvania Insurance Commissioner Joel Ario for heading up the group!). I’ll cover the basics of my presentation in a later post.

(* Endorsers include NRDC, Ceres, Environmental Defense Fund, Victoria Transport Policy Institute, the Institute for Transportation and Development Policy, the Conservation Law Foundation and CALSTART.)

Windfall or Burden? Two New Reports Focus on "Location Efficiency" and the Real Cost of Housing

2009-11-20T23:09:53Z

Both Transform and the Urban Land Institute have recently released reports that look at the Bay Area from a perspective NRDC has been pushing in the public arena for some time: “location efficiency.” Just as appliances can be more or less energy efficient, homes and businesses can be more or less location efficient, depending on where they are. If you need to drive 10 miles for a gallon of mile, you’re not location efficient. If you can walk down the block for your milk and hop on a bus to get to work, you are.

We know that location efficiency has tremendous environmental benefits (if you’re interested in more, check out this post), but what these two reports tell us is that the way we develop has serious economic implications for American families.

In most people’s minds, what makes housing affordable is how much it costs. What the reports reemphasize is that we need to not only look at the cost of the housing, but the cost of everyday transportation to and from the house, when determining whether a home is affordable enough.

Transform’s Windfall for All: How Connected, Convenient Neighborhoods Can Protect Our Climate and Safeguard California’s Economy covers the basics: Transportation expenses tend to be highest for Bay Area households in areas without transit, while neighborhoods with very good access to transit spend significantly less (39% less, in fact) on transportation each year. These households not only drive fewer miles (which saves money), but they own fewer cars, which is where I imagine the bulk of the savings comes from. If we can expand transit service or create more compact communities near existing transit, there’s a huge potential to save households money.

ULI’s Bay Area Burden, Examining the Costs and Impacts of Housing Transportation on Bay Area Residents, Their Neighborhoods and the Environment, provides even more information, offering detailed analysis of the Bay Area with respect not only to housing and transportation costs, but to area median incomes. Some interesting bits:

On average, Bay Area household spend 59% of their income on housing and transportation (H + T), but this percentage varies by what county people live in, and accordingly the contribution of each element varies. For example, Alameda County residents pay 61% of their income in H + T, while San Franciscans pay 58%. Sure, housing is more expensive in San Francisco, but transportation is more expensive in Alameda County.

When H + T costs are compared to median incomes, some staggering facts come to light. For example, even with relatively low housing and transportation costs, Oakland residents pay 69% of their income on H + T, due to their lower median income. In Berkeley? 77%. East Palo Alto? 75% In the small East Bay town of San Pablo? 81%!!

Both reports encourage better regional planning and more coordination between land use and transportation planning. SB 375, the bill NRDC co-sponsored last year, is pointed to by both reports as the best vehicle for so doing.

SB 375 is known primarily as America’s first legislative effort to link land use, transportation, and greenhouse gas emissions. What’s perhaps less well known is that it puts housing affordability into the equation as well (which was why it was supported by affordable housing advocates). These reports contribute to the already large body of study telling us that this is the way we need to go. The stakes are high not just for the environment, but for the economic livelihood of American families.

Is Leaving It All Up to Insurance Companies the Best Way Forward on PAYD?

2009-11-06T23:10:27Z

Last month, the California Department of Insurance finalized and released new regulations permitting California insurance companies to offer their customers the option of verifying the miles they drive. This has been called “Pay As You Drive Insurance,” even though there is nothing in the regulations that more directly ties how much you drive to the premiums you pay. We were disappointed. As I’ve written previously, it’s not just verifying your miles that will get you the savings and help the planet. To quote from a recent Op-Ed I co-authored in the San Jose Mercury News:

Verifying your miles is key to any Pay As You Drive program, but it's not enough to make an insurance policy benefit the environment — or your wallet.

On top of verifying how far you drive, your insurer needs to price mileage clearly to give you more power to control your insurance premium. Imagine how you could save if you knew the cost of your insurance by the mile.

We also had concerns about requiring drivers to install devices in their cars to track mileage.

Our biggest criticism, though, was the entirely voluntary nature of the regulations: it is the insurers’ choice alone whether to go this route or not, and we’re not sure that’s the best approach to environmental policy in California. As we told the Department of Insurance, we are unaware of any instance anywhere in the country where merely permitting PAYD has resulted in the significant availability of PAYD policies. Apparently, the Department of Insurance didn't even perform any market analysis to determine the likelihood of companies’ offering these policies. While intending to not force consumers into PAYD, the Department’s regulations do little, if anything, to actually provide consumers the choice of PAYD.

An editorial in yesterday’s San Mateo Times, however, sees it differently. Clearly supportive of PAYD as both an environmental and consumer benefit, the Times supported an entirely voluntary approach, opining “[Insurance Commissioner] Poizner did not mandate any insurance policy terms…he believes that the best way to motivate change is through competition and innovation. We agree”

Now, few disagree that competition can lead to innovation, but even fewer would then conclude that public officials therefore have no role in steering companies in the right direction, as the Times concludes. Examples abound of regulation leading to innovation, particularly here in California. How does the Times think California's per capita energy consumption has basically stayed flat over the past four decades, while the country’s as a whole has soared?

Reasons for Optimism?

There would be more to be optimistic about if we had clear indications from the insurance industry that PAYD is something they’re exploring. Unfortunately, the response seems to be lukewarm. In covering the new regulations, the Insurance Journal itself reported “it is not exactly clear how many companies are going to be interested in offering pay-as-you-drive policies.” When asked, Mercury Insurance, for one, had “no concrete plans to offer a pay-as-you-drive policy at present,” despite the fact that the regulations have been under discussion for nearly two years.

And we also know that many California insurers are already missing existing opportunities to reward customers who drive less with lower premiums. Earlier this year, NRDC joined Consumer Watchdog in releasing a report card grading California’s top 10 insurers on how many opportunities they gave their customers to save. The best grade? C.

This is how well we’re doing leaving it to insurers.

It’s not regulations, per se: it’s bad regulations we should be concerned about. PAYD regulations that would require insurance companies to offer a real, environmentally-friendly product to their customers would preserve consumer choice while meeting our commitment to fighting global warming. That’s why we called for a requirement that California insurers at least offer a PAYD product to their customers. The choice, then, is up to consumers, not insurance companies.

According to a recent report on KTVU in San Francisco, Commissioner Poizner has seen a lot of interest in PAYD among insurance companies and expects them to begin submitting plans to him “by the end of the year.” Like the San Mateo Times, we’ll wait and see how well the insurance companies treat consumers, and the environment.

California Governor Signs New Parking Cash-Out Law!

2009-10-21T20:27:30Z

Last April, I wrote about SB 728, a bill from Long Beach State Senator Alan Lowenthal to expand compliance with California’s Parking Cash-Out program. I’m happy to report that the bill, co-sponsored by NRDC and Environmental Defense Fund, was signed by Governor Schwarzenegger early last week!

Starting on January 1, 2010, cities, counties and air districts will have the option of enforcing Parking Cash-Out. Permitting these entities to enforce the program is just one example of how Sacramento can give localities the tools they need to craft their own approaches to fighting global warming (as well as comply with SB 375).

What’s Parking Cash-Out? It’s simple: an employer who offers free or subsidized parking for employees must also offer a cash allowance equivalent to the subsidy in lieu of the parking space. So, if your free parking space at Justin Horner Pet Supplies & Satellite Repair Company costs me $200 per month, I can offer you either the space or a $200 monthly payment.

Where employers provide it, Parking Cash-Out reduces single-occupancy vehicle trips and increases carpooling and transit use. A survey of eight Southern California businesses using the Program found a 12% decline in annual vehicle miles travelled and global warming pollution per employee per year, and a nearly 10% increase in employees carpooling or using transit. All this, while putting more money in workers’ pockets and saving money for participating employers.

It’s also more fair: if you choose not to take my cash-out offer, you’re effectively paying $200 for your space, which removes the unfair subsidy you would normally get, but that your carpooling, transit-riding, walking and biking co-workers do not.

So-called free parking is never free. There’s the cost to construct it, operate it, maintain it, even light it and secure it. But more than 95% of all parking in California is free for drivers. The costs of this “free” parking are passed through to all of us in higher prices, higher rents, higher taxes and lower wages. Any effort to better match the real cost of parking to the decision to park will be both environmentally beneficial and more fair. SB 728 is just such an effort.

California Misses a Big Chance with Pay-As-You-Drive

2009-09-28T21:56:11Z

(Update: Monday, October 13th: the Regulations have been finalized by the Insurance Commissioner. Follow this link to view them)

Last week, regulations proposed earlier this month by California Insurance Commissioner Steve Poizner that purport to incentivize Pay As You Drive insurance were finalized.

As readers of this blog may remember, Pay As You Drive insurance directly ties the amount you pay for auto insurance with the number of miles you drive. This incentivizes and rewards less driving, which is good for the environment, and offers drivers an easy way to save money, which is great in these economic times. In fact, it’s such a good environmental idea that 13 states have included it in their Climate Action Plans, their blueprints for cutting global warming pollution.

Now, you would think states would jump all over a policy that helps the environment and saves people money. And you would think California, the nation’s environmental leader, would be the first in line.

However, as Carmen Balber, the Washington DC Director of Consumer Watchdog and I discuss in an opinion piece in the San Jose Mercury News, this is, unfortunately, not the case. In fact, California’s Department of Insurance has put forward regulations that likely will not do anything to promote PAYD.

To really break it down to it’s fundamentals, PAYD needs two basic elements: 1) a method to record and verify a driver’s mileage; and 2) a clear price per mile. The clearest image is to think of a taxi cab’s meter: you’re paying a set amount of money per mile you’re driven. A short cab ride with a bunch of friends may be worth it; a solo cab ride to Quebec probably wouldn’t be. In either case, you are able to make an informed decision about how much you want to pay for the distance you travel. That’s the key.

The problem is, California’s new regs only get us half-way there: they permit your insurer to verify your mileage. They do nothing to set a clear price. They neither require a PAYD price structure nor even offer guidance on how to make one. Setting up mileage verification programs is not the same as offering PAYD insurance.

Instead of requiring insurance companies to offer PAYD insurance policies, the final regulations appear to merely allow insurers to offer a voluntary mileage verification program. In return, insurers are permitted to offer discounts to drivers to have them enter such a program and, importantly, charge drivers based on new additional factors that may cloud the relationship to mileage even more. The regulations also allow insurance companies to require drivers, as a condition of their participation in a mileage verification program, to install a mileage tracking device in their vehicles.

Because mileage verification in the regulations is entirely voluntary, there is no evidence that any insurance companies will offer PAYD insurance. The regulations weaken driver privacy and make insurance pricing less transparent – changes the insurance industry lobbied for – but still offer no timeline or proposal for when, or if, drivers will see any PAYD policies in California.

NRDC will continue to work with the Department of Insurance, individual insurers and our consumer allies to move California towards a true PAYD approach. I don’t think anyone is completely satisfied with what’s been issued. We’ve asked the Department to convene a working group to get everyone at the table. We hope the Department extends the invitation.

State Transit Cuts: The Aftermath

2009-09-04T19:00:28Z

As Sacramento’s nearly $3.4 billion in cuts to California transit agencies over the past three years begin to take their toll, the California Transit Association has created an interactive “Aftermath” map of what’s happening on the ground. Despite overwhelming support for public transit among Californians, our leaders in Sacramento have taken no noticeable action to address this crisis.

The map outlines how agencies have responded to cuts in the State Transportation Assistance (STA) Program:

Since its creation in the early 1970s, the STA program had been the only ongoing source of state funding dedicated specifically for day-to-day transit operations (although, STA funds were also available for capital expenditures). California is now one of only 13 states that does not provide any state program funding specifically for transit operations.

Over the past three fiscal years, STA cuts alone have totaled $1.97 billion.

View STA Program Aftermath in a larger map

The map lays out in painful detail what readers of this blog already know: fare hikes and service cuts are the order of the day. Zoom in and click on the pins to find out what’s happening in your neck of the woods.

This just in: the Regional Targets Advisory Committee, a body of planners, environmentalists, and other experts convened to recommend the framework for implementing California’s groundbreaking land use and climate bill, SB 375, has also spoken to the importance of transit in a recent report. To wit, they recommend action to

Address the discontinuity between the elimination transit funding in the budget and mandates of SB 375. Public transit is a key tool in reducing greenhouse gas emissions. The state of California has approved mandates to reduce greenhouse gas emissions but has eliminated funding for public transit in the state budget. The state should ensure that its budgets are consistent with its policies on greenhouse gas reductions.

I couldn’t have said it better myself.