Wendell Cox, Urban Policy Expert

Frontier Centre, Housing Affordability, Interview, Manitoba, Uncategorized, Urbanization (historic), Winnipeg (historic)

Frontier Centre: In your recent policy study on “smart growth,” you make the case that restrictive planning protocols intended to prevent urban sprawl are misguided. How have they harmed the city of Portland, Oregon – often touted as the model for their use – and why are they being reversed?

Wendell Cox: It has to do principally with what happens to land values. When you limit the amount of land that can be developed, which is what Portland has done, you inevitably raise housing prices. That has made Portland an unaffordable housing market compared, say, to 1990, when Portland was one of the most affordable housing markets in the United States.

FC: Why is the policy being reversed?

WC: It is being reversed because of a voter revolt, which has basically said that we no longer want the public authorities to force higher densities into our existing neighbourhoods. If you talk to Portlanders they would claim that these policies are not being reversed but in fact, if you look at what’s going on, indeed they are.

FC: Is urban sprawl a real problem at all?

WC: No, not really. We need to be careful about where we develop, we ought not to be developing sensitive areas and all of that kind of thing. But, the fact is that urban sprawl is the result of increased population and increased affluence. So long as urbanization is not creating problems in the long run or short run for us, there is no reason to get in the way of it.

FC: Are there ways in which cities can discourage sprawl without embracing the Portland model?

WC: Yes. First of all, I do not accept the idea that urban sprawl is an inherent evil. However, we need to understand that cities have indeed accelerated sprawl by their policies. Cities that have higher than necessary tax rates drive people to the periphery, as do cities that have lousy education systems. Certainly in the United States our central education systems are worse than our suburban systems. There are any number of ways that cities have accelerated sprawl beyond what the market would have produced by, frankly, unwise policies.

FC: In Winnipeg it could be argued that a major cause of flight to the exurbs is the combination of rent control, high property taxes and Plan Winnipeg itself. Aren’t we in many respects shooting ourselves in the foot?

WC: Oh, there is no question about it. I suspect that history, as it will be written in the 23rd century, will look back and figure that enemies of central cities were involved in administering them in the 20th and 21st century. The fact is that public policies that have been adopted and practices that have sort of fallen into place have been major drivers in making sprawl a larger issue than it would have been if the market had been permitted to operate.

FC: It is impossible to measure what doesn’t happen but perhaps the worst effect of extensive urban planning may be its suppression of new economic growth. Have cities with less aggressive policies prospered more than ones that embrace them?

WC: No question about it. We are only beginning to see this but perhaps the best example is to compare London and Paris. Anti- sprawl planning started really with a vengeance in London before the Second World War and really concluded in the 1950’s with the designation of a green belt about 15 kilometers wide surrounding the Greater London Area. Since that time, of course, the population inside the greenbelt has dropped about 1½ million and all of the growth in southeast England has been outside the green belt. What’s happened is that you have made the labour market of London larger geographically because of all this land you cannot develop. The people who live in the far exurbs can’t get the good jobs in the city because it is too far away. On the other hand if you go to Paris, for example, it is developed more along the American market model. It is probably surprising to think that anything the French might have done in urban development would be market-oriented but in fact the French have followed almost an American or Canadian model where the city has been allowed to expand naturally. And so the sprawl of Paris has not exploded into the hyper-sprawl of London. If you are a low- or middle-income person in the southeastern suburbs of Paris, a community that is almost as large as London, you can get anywhere in the Paris area in a reasonable period of time by car or even by transit to get to work. In London that is simply not true.

FC: Once powerful bureaucracies have emerged to prevent urban sprawl, don’t their activities often just promote their own interests?

WC: No question about it. One of the problems is that much of the anti-sprawl movement is core-oriented. They really don’t care a bit about the urban area, except for the core. A number of my communications with people in the movement have made it very clear that they really don’t see any further than one can see from their 20th story office on the smoggiest day of the year. All they care about is the core. The fact is that urban area begins where the rural area ends and, to the extent that we have urban policies; they need to equally apply and protect the people who live in all parts of the urban area.

FC: Restrictions on land use are only one of the tools used by modern urban planners. What about zoning and building codes? Are they also used too widely?

WC: No question about it. A recent study out of Harvard University indicates that much of the difference in housing costs in the United States has to do with zoning and land-use planning. There is no question that zoning has been too restrictive and it is interesting that zoning actually works against the interests of the anti-sprawl advocates in a lot of ways. Often some of the nicer, denser developments are outlawed by current building codes and by current zoning laws. So, we need a little less zoning but at the same time we have other strategies that don’t have to do necessarily with limited development per se. Additional capital charges are imposed on development that raise the cost of building the housing no matter where you build it. All of this leads to higher housing costs and less economic advancement, especially for people of lower income.

FC: A key component of the ”smart growth” agenda is increased subsidies for mass transit. Are they a useful method for enhancing city life?

WC: No, not at all. The problem we have to recognize is that mass transit is capable only of serving only the downtown area and sometime, depending upon densities, the very core area of the city. Other than that, to get around the community, you need a car and that is as true in the suburbs of Paris as it is in the suburbs of Phoenix or the suburbs of Winnipeg. The basic problem is that for transit to provide an alternative to the automobile, it must be competitive with the automobile. There is no system that has been conceived or planned by any planning agencies in the world that would create a transit system that provides auto-competitive service throughout the urban area. All it can do is take people downtown and to the core.

FC: One of the unintended consequences of ”smart growth” policies is their effect on housing prices and availability. You claim that they hurt the poor the most. How?

WC: By raising the price of housing. What you do when you ration land is raise its price. You reduce competition in the home building industry because, with less land to deal with, fewer people can compete. When builders and developers have less land to work with they actually go “up market” in their development of properties which, of course, raises prices. It is as if you were to say to GM Canada, next year you may only produce 5,000 cars. GM Canada would probably be inclined to produce Cadillac, Esplanades or whatever happens to be their most expensive, profitable model as opposed to building a bunch of Chevy Cavaliers. The problem is that there are a number of processes you set in place when you ration land, as the ”smart growth” movement would do, and that inevitably ends up raising prices. You see in Portland, where these policies have been implemented with a vengeance, the largest loss of housing affordability in the United States among major urban areas of the last ten years.

FC: You have written eloquently about urban amalgamations – can you summarize your views on that subject?

WC: Virtually all urban amalgamations have been justified on the basis that we are going to obtain economies of scale and lower costs in the long run, and everything will be better because things will be better coordinated. I don’t see any evidence whatsoever that places that are amalgamated, whether we talk about Toronto or Montreal or Indianapolis or Miami, are better governed than places like Paris, for example, that has 1,300 local governments. Or Chicago that has about 200 local governments or more, depending upon the special districts you might include. The basic problem with amalgamation is that the last thing it does is reduce costs. What ends up happening is you need more bureaucracy. You have conflicting labour contracts of the previous organizations. The previous municipalities get merged in such a way that the worst provisions and the most expensive provisions become the controlling provisions for all of the labour contracts. Again. if you look at the real experience on the ground in the United States where we have marvelous data, you find that the larger municipalities tend to have higher costs per capita than medium-sized municipalities. The smallest municipalities also have high costs, but probably the optimal size for a municipality is somewhere in the 50-100,000 population range, which says that Winnipeg ought to be six cities – not one.

FC: You have written that some of the most successful cities are the ones with the most municipal government units. Why is local or neighbourhood control so crucial?

WC: It is crucial because we tend to treat people we know and walk by on the streets more reasonably than people we don’t know. It just so happens that we are much more responsible in how we treat our neighbours and our friends and our relatives than those we don’t know. That is just human nature. The closer we can have City Hall to the people who live there, the more responsible the public policies are going to be and the more in-tune the interests of the residents are going to be with public policies.

FC: Canadian mayors are pressing our federal government to expand their revenues by giving them more access to other tax levers. Their point is that most important government services are delivered at the level most starved for cash. Do they have a point?

WC: Generally speaking, taxation ought to occur at the lowest level and where the money is spent. If I had my way, we wouldn’t have any provincial support of municipal governments and certainly no federal support of either provincial or municipal governments. But that is all theoretical. The basic problem, I think, is stated quite well in a line that Milton Friedman has used, that “people are more careful with their own money than other people’s money.” The basic problem is that the municipal government is not going to be as careful with money that it obtains from the provincial legislature or from Ottawa as it is going to be with money it obtains from the blood, sweat and tears of its local taxpayers.

FC: In The Voluntary City, a recent book from the Independence Institute, some essayists have described successful cities in Europe and North America that grew quickly even though municipal services were entirely delivered in the marketplace without any political or bureaucratic involvement. Do we rely too much on government?

WC: Oh, there is no question about it that we have relied too much on government. You look at all of the services that a city, whether Winnipeg or Detroit, provides and you say, “Well how many of these services could be provided by the private sector?” The reason we want to provide services through the private or competitive sector is because competition lowers costs and, if it is rightly administered, it is also going to improve service. In the long run, the lower the public cost, the more money left in the private economy to grow and to make us all more affluent. As we become more affluent, so also do lower-income people become more affluent. A wise policy, I think, for any city would be to sit down and say, “OK, first of all, among the things we are dealing with, what don’t we need to deal with?” For example, it would be enough for the City of Winnipeg to require that garbage be picked up. For the City of Winnipeg to provide that garbage service or even to franchise it may not be necessary. On the other hand, there are some services that probably need to be provided through the public sector. Public transit is a good example of that. If you are going to have a public transit system, it is not going to make a profit in a North American city with the high use of automobiles, yet we need it at the same time for low-income people who do not have cars. Well, the fact is it would make all the sense in the world to contract out that service. There are other services delivered by government that it might not be appropriate to go to the private sector for. But if you sort out those levels of involvement, if you come up with the right answers, you are going to minimize public revenues and public expenditures at the same time as maximizing the potential growth of the private economy which creates wealth in this society.

FC: Is technological change, i.e., the death of distance implicit in the information revolution, making cities and their downtowns irrelevant?

WC: The death of downtown has been predicted for years and indeed it has been happening. Downtowns are changing. In some places they are becoming entertainment centres, in some cases they are surviving, but in no place do we see downtowns maintaining their employment market share or increasing their importance in the overall community. I think downtowns are greatly challenged in the long run. Indeed, the real reason for their existence as they exist now is as office centres and they may not continue in the long run. What that suggests, in the long run, is that cities need to be doing all sorts of things to make their downtowns more competitive. They need to be reducing taxes where appropriate and doing other things to encourage downtowns. If, with everything we know today, we were sitting here inventing the city, we wouldn’t invent downtowns.

FC: If you were to provide your ten cents worth of wisdom to the provincial legislature here on ”smart growth,” a policy model looming on our local horizon, what is it?

WC: It would be not to do it. The principle issue we need to be dealing with in urban policy is bringing low-income people up to a good standard of living. Unless we are able to move such populations into home ownership, we are not going to do that. So we ought to completely reorient this. The issue is not urban form, the issue is not bricks and mortar and monuments, it is people. ”Smart growth” is not about people, it is about making the city an unlived-in living room which has no regard to the economic well-being of the people. Now ”smart growth” advocates would argue strongly with that. But I say, look at what they have accomplished in Portland. Look what they have accomplished in the San Francisco Bay area. Look at the fact that low-income people in Milton Kane’s England, forty miles outside London, because of the greenbelt can’t get the good jobs. Look at the result of their policies.

The reason why it doesn’t make the least bit of sense for Ottawa to be providing more money to municipalities goes back to the Milton Friedman thing that cities are going to spend their own money more carefully than Ottawa’s money. We have had in the United States, for many years at this point, a program of federal assistance to cities. Transit is a good example. In transit perhaps a quarter at most of the money is provided by the federal government. The net effect of that has been to drive costs through the roof. In the last 30 years, we have seen transit ridership going up perhaps 15% and transit expenditures, after adjustment for inflation, go up well over 200%. The last thing you need to do is Americanize Ottawa. The problem with a federal cities program, with a program to send money to the cities from Ottawa, is that the money isn’t as valuable once it gets to Winnipeg as it was when it left Ottawa. Ottawa will also be needing its own pound of flesh. There will be special interests in Ottawa that will laden parliamentary bills with requirements and regulations that make it impossible for municipalities to do things cost-effectively. We have seen this in transit and in other fields in the United States, where cities routinely say, ”Well if you just get rid of all the federal mandates we could do much better.” Well, the fact is that federal mandates are a part of federal money. You are not going to get Ottawa giving you money without requirements and those requirements in the long run, I guarantee you, are just about going to completely wipe out or neutralize any good that could be achieved by such infusions of money.

FC: Winnipeg is a “low-growth” or “no-growth” city. What is your view of a low-growth city worrying about sprawl?

WC: It sounds like some local bureaucrats are buying into some ideology that doesn’t make any sense at all. I mean, first of all the whole anti-sprawl movement is completely misled around the world. Among the places that anti-sprawl policies are most inappropriate would be place like Winnipeg. Too much growth is not the problem in Winnipeg. This metropolitan area has gone from being the fourth-largest in Canada in 1951 to the eighth-largest today. From 1951 to 1976, it was the slowest growing among the top ten metropolitan areas in the country. From 1976 to 2001, it had the slowest growth, so I don’t see growth as being the problem in Winnipeg. The problem is that if you go forward with these kinds of policies, they will inevitably raise housing prices and make this city even less affordable. It is already a city with great affordability problems because of the fact that you are so low that your low housing prices don’t help you a whole lot. In the long run, ”Smart growth” in Winnipeg is good for Calgary and it is good for a whole lot of other places in this country where people will move to, especially young people, as they realize that this is not a place of opportunity.