Welcome back to Sunday reading. If the weather forecast is accurate, we should be in for a classic Auckland winter day: overcast, a bit damp, and a bit windy (but not too cold). Good weather to justify doing just about anything, from going for a bush walk to sitting inside with a pot of tea.
I’m going to be down in Wellington catching up with some friends. Since Wellington’s on the mind, I’d highly recommend taking a look at Derek Smith and Maclean Barker’s Flickr account, which compiles hundreds of photos they’ve taken of Wellington (and New Zealand towns in general) starting in the 90s. Here’s a Stuff article on the couple’s photography – Smith has apparently worked as a meter reader most of his life, in part to get good opportunities to take street photos.
The photos give a great impression of what a visually interesting city Wellington is – and also a sense of the economic doldrums the country was in back in the early 90s.
Of course, Wellington hasn’t been the only city that’s needed to reinvent itself over the past few decades. In NextCities, Bruce Katz and Luis Noring write about how Copenhagen revitalised itself:
Thirty years ago, the city of Copenhagen was experiencing 17.5 percent unemployment, an out-migration of population, the loss of manufacturing, the decline of taxing capacity, and an annual budget deficit of $750 million. Today, the city has been transformed into one of the wealthiest (and happiest) in the world.
A little known publicly owned corporation — the Copenhagen City & Port Development Corporation (or By & Havn in Danish) — is one of the main reasons for this remarkable turnaround. While cities around world rightly celebrate Copenhagen for its cycling culture and climate change commitments, the real focus should be on institutional innovation, explored here in this first in depth case study.
Like many innovations, the genesis of the Copenhagen model was a product of crisis. The mayor of Copenhagen at the time, Jens Kramer Mikkelsen, put it as follows: “We knew the city was in a desperate situation and we needed to [make large-scale infrastructure investments] to address this situation. However, to pay for the grand infrastructure project we needed serious money. We could not raise taxes. Also, we needed agility and flexibility to operate.”
The solution: transfer vast amounts of public land to a new publicly owned, privately managed corporation. Rezone the land — primarily in the old harbor and an undeveloped area between the airport and the downtown — for residential and commercial use. Then use the revenues projected by smart zoning and asset management — not taxes — to finance cross-city transit infrastructure, thereby spurring the regeneration of core areas of the city.
Pretty good scheme. The problem is – for New Zealand cities in particular – is that a lot of the prime brownfield redevelopment opportunities have already been chewed through, often without careful thinking about how to maximise housing development and public infrastructure benefits.
On to present-day New Zealand. In Bloomberg Week, Ashlee Vance profiles Rocket Lab founder Peter Beck, who’s undertaken an improbable venture in an improbable place and is now ready to begin slinging satellites into orbit from the Mahia Peninsula at a rate of one a week:
For most people, a successful rocket test conducted with home-brewed fuel might have led to an engineering degree. Beck instead took on a series of apprenticeships and jobs. He worked for an aluminum supplier, cleaning toilets and putting together mills and lathes. He built luxury yachts, becoming expert at analyzing their acoustics to dampen engine and propeller noise. He worked for a local appliance maker, where he learned tool and die casting. Finally, he joined a government-backed R&D lab.
At every stop he would complete his required tasks, then stay late into the night fiddling with his rocket engine designs. Co-workers appreciated his pluck, and now and again an expensive bit of material, like a $2,000 hunk of titanium, would mysteriously appear in his workspace.
In 2006, Beck’s wife got a work assignment that brought the couple to the U.S. for a month. He took the opportunity to tour the country’s aerospace research institutes and companies, showing up—sometimes unannounced—at places like NASA’s Ames Research Center and its Jet Propulsion Laboratory, as well as Boeing Co. and Rocketdyne. He was hoping to find a job but came away depressed. “I expected there to be all these startup people running around with high energy and crazy shit everywhere,” he says. “But there was none of that happening.” Companies and labs were still making rockets and talking about missions to Mars, but their approaches seemed stale.
Beck’s theory, which a new guard in the industry increasingly shared, was that space would open up dramatically only if a much cheaper way of getting things into orbit could be found. The rockets available at the time were massive, designed to carry bus-size satellites. Beck understood that cheap electronics and clever software would make it possible to build fleets of smaller, inexpensive satellites. These machines would soon be manufactured by the hundreds and would need rides to space.
At the time, Elon Musk’s Space Exploration Technologies Corp., or SpaceX, had yet to hit its stride. Launches were still run by governments and cost $100 million to $300 million apiece. Official space agencies flew once a month, at most, and their priorities were telecommunication companies and the military. Beck believed humans wouldn’t be able to truly experiment in space unless cheap rockets were going up all the time. “It’s so hard to get to space,” he says. “I knew we had to make it easier and that I was going to build a rocket.” And so, Rocket Lab was born.
We could do with a few more left-field businesses like Rocket Labs. That’s the real economic opportunity for New Zealand – not just shipping off more milk powder but incubating a whole host of weird and wonderful ideas that we can take to the rest of the world.
Speaking of disruptive technology (and Elon Musk) Brent Goldfarb has an interesting and skeptical take on Tesla Motors in Vox. Like Uber, which I highlighted in last week’s Sunday reading, Tesla’s electric car manufacturing plans have been tipped to shake up the conventional car industry. The company’s been valued accordingly by the sharemarket. But will that happen in practice? Good question.
Recently, Tesla’s valuation surpassed both Ford’s and General Motors’. BMW is among the other major carmakers in the rearview mirror. The logic of this is intriguing, given that Ford, for example, is coming off its second-best year in its 112-year history, earning $4.6 billion while selling more than 5.5 million cars worldwide. General Motors earned $9.4 billion selling 9.8 million vehicles.
Tesla, meanwhile, sold 76,000 cars while losing near $1 billion. Judged by the valuation, anyway, Tesla appears to be the first successful American entrant into the automobile industry since Chrysler in 1922.
Everyone likes to root for the underdog. David beat Goliath with his new slingshot technology and neutralized the advantages of a giant. The hapless, and slightly naughty, Bad News Bears win the championship. Disruption is fundamentally an underdog story, propelling entrepreneurs and infusing fear into incumbents. Much money has been made, and lost, on this storyline. And it’s a narrative that Tesla founder Elon Musk has cultivated well as he has jumped from one underdog-disruption scenario to the next, ditching various subplots as they become more and more implausible: Electric cars! Batteries! Solar! Self-driving cars! Recently he tweeted that Tesla is about to unveil a new semi and pickups. Truck companies beware!
By conventional measures, Tesla is a small concern, but investors are placing their bets that it is a disruptor, a concept that has near-magical qualities in some business circles. The term comes from the work of the Harvard Business School professor Clay Christensen’s Innovators’ Dilemma.
While the term is often used loosely to describe any exciting new company, disruption is actually defined fairly precisely in Christensen’s work (if with plenty of wiggle room). In theory, an existing firm can be disrupted if it complacently ignores the needs of its customers — or at least technological trends that threaten to make its market and technology positions obsolete.
Read the whole article – there’s some interesting history in there. And it’s got broader relevance beyond Tesla’s future. A lot of economists think that our ability to achieve higher productivity growth in the future depends upon our ability to develop transformational new innovations and scale them up across the economy. Kind of like how assembly line production and cheap electric motors fed the productivity boom of the first half of the 20th century. But it’s a bit unclear, at this stage, what those innovations may be.
Personally, I think there’s a lot more we can squeeze out of existing technologies and techniques. Take housing. We’d have a lot more homes, for cheaper, if we took full advantage of existing technologies like elevators and rapid transit. That’s what Tokyo’s been doing. Here’s a few remarkable statistics:
Been looking at Tokyo housing stats and I think this is the most amazing thing I've found – a doubling of space per person in <50 years pic.twitter.com/CgLFkDL0k2
— Jim (@geographyjim) June 25, 2017
Importantly, Tokyo’s increased housing space per person primarily by consistently building up (although they’ve built out too):
One key factor in Tokyo's growth is rapid densification: buildings of 6+ floors now account for 29% of Tokyo's homes vs ~9% in London pic.twitter.com/XhnvHR22uk
— Jim (@geographyjim) June 25, 2017
On the other end of the urban spectrum from Tokyo, Yonah Freemark (Streetsblog) explores prospects for public transport in Indianapolis, one of America’s most sprawling cities:
Indianapolis’s downtown extends out in a walkable grid from Monument Circle, around which stand the city’s tallest buildings and the Indiana State House. The city’s transit center, completed last year, is two blocks away.
Because of the city’s rather limited bus network, all IndyGo routes radiate from the transit center, meaning that people who want to get from the south side of the city to the north have to transfer. With service so limited, the wait to transfer between buses can be very long — yet another disincentive to use the system.
But most transit trips are headed downtown, so theoretically people don’t have to transfer to get to their jobs, right?
It turns out that’s not the case, because Indianapolis’s downtown is too big for a service pattern where routes all terminate at the same point. Walking from the transit center to many major destinations is quite difficult. As shown on the following map, several major destinations, such as the central library, football stadium, and the headquarters of Eli Lilly, one of the city’s largest corporations, are more than half a mile from the transit center, essentially putting them outside of walking distance.
It seems like Indianapolis’s land use-transport integration problems are fractal: they recur at various spatial scales. Not only is the city as a whole too low-density to sustain strong bus routes (let alone rail), key employment destinations are too spread out to allow people to easily get to where they’re going at the end of the route. However, as Freemark observes, the city’s putting some policy reforms in place to allow it to evolve in a more public transport-friendly direction:
The city of Indianapolis has worked closely with the region’s metropolitan planning organization (MPO) on a strategic plan to encourage transit-oriented development. The document, released in 2015, forecasts 35,000 new units of housing in mixed-use, walkable neighborhoods in the region over the next few decades. If one person from each of those households commuted by transit each day, ridership would double.
A separate long-term plan from the city calls for more mixed-use development along frequent transit routes. According to Sean Northup, assistant director of the MPO, “the zoning downtown is all ready to go — no parking requirements, no height limits.” In other words, the city is adjusting its regulations to support transit.
Both plans identify key areas along future rapid transit routes (which we’ll get to in a future post) where walkable, mixed-use development would be encouraged, mostly concentrated around downtown…
Will be interesting to watch how that goes.
Speaking of public transport, some clever folks have developed a real-time map of public transport services all over the world. You can see it here. Hours of fun, if that’s how you get your fun!
To conclude on housing and urban planning, Liam Dillon from the LA Times has a fantastic expose on attempts by the California state government to prod along local governments to allow enough homes to be built. The title says it all: “California lawmakers have tried for 50 years to fix the state’s housing crisis. Here’s why they’ve failed.”
Home construction depends on complex factors including the cost of land, materials and labor, the availability of financing for developers and interest rates on mortgages for homeowners. But decisions made by California’s cities and counties are important, too, and many of those local governments have made it even more difficult to build new housing.
More than two-thirds of California’s coastal communities have adopted measures — such as caps on population or housing growth, or building height limits — aimed at limiting residential development, according to the Legislative Analyst’s Office. A UC Berkeley study of California’s local land-use regulations found that every growth-control policy a city puts in place raises housing costs by as much as 5% there.
The housing supply law, known formally as the “housing element,” is supposed to help knock down local barriers to development by requiring cities to plan for new housing that would accommodate children born in California and people expected to relocate to the state. Over an eight-year period, state officials send estimates of housing needed to meet projected population growth to 19 regional agencies, including the Southern California Assn. of Governments in the Los Angeles area.
These agencies outline how many new homes are needed across four income levels: very low, low, moderate and above-moderate. So, in theory, all cities and counties would receive their fair share of growth. Local governments must show they’ve zoned enough land for the new housing — and the state must sign off on those plans. But the state doesn’t hold cities accountable for the goals they set, and the plans are often ignored.
Even so, city and county officials resent the law, arguing it unfairly takes away their power over development in their communities. To avoid complying, local governments have over the years asked state lawmakers to, among other things, count prison beds and student dormitories as low-income housing and allow cities that place foster children in their communities to reduce the number of low-income homes they need to plan for.
In one case, La Habra Heights, in Los Angeles County, asked that it be exempted from the law because the city was too hilly for apartment complexes.
At the base of the San Gabriel Mountains, the affluent bedroom community of La Cañada Flintridge has few apartment or condominium complexes — and many of the city’s 20,000 residents and public officials want to keep it that way.
Four years ago, city leaders wrote a plan to make room for multifamily housing in several sections of the city. But, to discourage developers, they chose areas already occupied by single-family homes and, in one case, a big-box retailer. As a result, developers would have needed to buy up the homes one by one or, in the case of the retailer, purchase the commercial real estate and force the store out. In devising the plan, city officials assured concerned residents that it would be prohibitively expensive for developers.
Counting prison beds as low income housing has to be one of the most Orwellian things I’ve ever heard.
What I find interesting is that public officials are willing to go on the record and state outright that the aim of their urban planning policies is to keep the ‘wrong type of people’ out:
Herand Der Sarkissian, a former La Cañada Flintridge planning commissioner who approved the city’s housing plan, said in an interview it didn’t make sense for the state to try to force low-income housing into La Cañada Flintridge because the city’s high land costs made it fiscally irresponsible. He added that any state efforts to integrate housing of all income levels into wealthy communities are doomed.
“People like people of their own tribe,” Der Sarkissian said. “I think the attempt to change it is ludicrous. Be it black, be it white. People want to be with people who are like them. To force people through legislation to change in that way is impractical.”
None of the multifamily housing called for in the La Cañada Flintridge housing plan has been built.
But one might observe that it has always been thus:
That’s it for the week! Enjoy the weather!