Category: Economics

A short list of features of the Netherlands that I still try to wrap my head around

January 18, 2023 / / 0 Comments

The Netherlands is the country I’ve visited the most, going there eight times between 2011 and 2022. I’ve obsessively visited 31 cities, the Hoge Veluwe national park, and plenty of other places outside cities.

Here are three land use and infrastructure characteristics that continue to fascinate me.

Transportation systems, obviously

Learning about how the Dutch created the safest network of streets for cycling is what started my near-obsession 15 years ago.

Then I went there in 2011 and I got to experience it for myself (photos from that trip).

I think the quality, capacity, likability, and integration of their transportation systems can be summarized best, for Americans who haven’t been there, by learning the results of a Waze survey: People who primarily drive in the Netherlands are more satisfied with the driving in their country than people in other countries are with driving in theirs.

In other words…if you like driving, then you should also care about what the Netherlands because they happened to also create the most driver-friendly transportation system.

Creating land & living with flooded land

As a novice, it’s probably easier to notice and understand how the Dutch create, move, and live with flooded land from above. There have been moments while I was cycling in the country where I’ve ridden past “polders” and former lakes and seas only to realize it later that I had biked through a massively transformed area that appeared entirely natural.

When I lived in Rotterdam for three months in 2016 I tried to visit as many places across the country as I could. I especially wanted to visit Flevopolder, the larger part of the Flevoland province, built from of the sea in 1986 where 317,000 people live.

I visited both major cities on the Flevopolder in the same day, Almere and Lelystad, the capital. I cycled from Almere (photos) to the seafront of Markermeer, and…get this…had to ride uphill because the land is below sea level.

Reaching the edge of Flevopolder, where it borders the sea called Markermeer
Cycling uphill to meet the sea north of the city of Almere, in the Flevoland province of the Netherlands.

Most Dutchies live below sea level, and the country has massive land and metal engineering works to keep the water in check.

The Dutch, especially in and around Rotterdam, come up with new ways to deal with water and export this knowledge abroad.

While the existing and planned measures should be sufficient until at least 2070, too much uncertainty over the progress of climate change remains afterwards to assess whether the city will truly stay liveable.

Some assessments suggest that if the sea rises by 5m – an estimate in sight within a century, considering the unpredictability of the rate that Greenland and Antarctica’s glacier will melt – Rotterdam will have no other choice but to relocate.

“Rotterdam: A bastion against rising sea, for now”
By Zuza Nazaruk

The country may rely on electricity to survive more than most: it’s needed to keep the pumps working, to keep the water in the sea instead of in and over the land.

How productive their agriculture industry is

By land area, the Netherlands is a very small country; it would be the tenth smallest state in the United States. By population, it would be the fifth largest state (17.6 million, greater than Pennsylvania’s 13 million).

Given that, how is it that the Netherlands is the world’s second largest exporter of agricultural products by value, after the United States?

Simple answer: High-quality, high-value, high-demand foodstuffs; space-efficient farming practices, including a significant amount of food grown vertically and in greenhouses. And, I don’t remember if this was in the article, very good transport connections to trading partners through seaports, canals, railways, and motorways.

I was surprised to see that both brands of canned cold brew coffee sold at the convenience store in my apartment building are produced in the Netherlands.

Shortlist: Four urbanism podcasts I listen to

November 3, 2022 / / 0 Comments

I started listening to podcasts in 2021. I am sharing a list of four that I listen to regularly. Surprising to me, none of them are about Chicago.

Must-listen:

  • UCLA Housing Voice is hosted by four UCLA researchers and teachers. Every week during the season (they’re on season two now) they summarize an academic paper about housing and cities and interview the authors. What I like about this is a few things: the consistent format, summarizing academic papers that I don’t have access to and are sometimes painstaking to read and understand, and getting the authors to expand on what they published.
  • The Livable Low-Carbon City are short, explainer-style episodes about the essentials to designing and redesigning cities and neighborhoods for the low-carbon future that we need. Mike Eliason is well known on “Urbanism Twitter” and “Architecture Twitter” for pushing passive house building techniques, baugruppen (a kind of cooperative housing), and point access blocks. Eliason’s episodes are brief and easy to understand, and are a great outlet to hear about his time working and living with his family in Germany.

Sometimes listen:

Don’t ban apartments on this vacant lot if you want more affordable housing – a case study

August 2, 2018 / / 0 Comments

A vacant lot is for sale near the 606’s Bloomingdale Trail, a popular amenity that’s now known to have an effect in increasing home values. It’s zoned RS-3, which means it bans apartments. If the zoning stays the same, then the vacant lot will only allow a rich family to move in here. If the lot’s zoning is changed to allow apartments or condos, then the vacant lot could welcome families that earn median incomes.

You can build multi-family housing on the lot if you can get a zoning change, but you’ll have to pay the city a fee, convince your future neighbors that they shouldn’t oppose it, convince the alder that he should support it, and you’ll have to hire a lawyer.

Let’s say that zoning changes in Chicago were free and frictionless*. What should be built on this lot?

If the lot would allow multi-family housing, we can build several units for less money per unit than if we built a single-family house. That means that three families (let’s stick with three, which requires a zoning change to RM-4.5) could be housed for less money per family than the cost of one family.

How’s that? The sticker price for this lot is $425,000 right now, and if one family is paying for that plus the cost of building a house, then your minimum investment is pretty massive. (I suspect the lot will sell for something closer to $400,000.)

I looked at new construction costs on Chicago Cityscape, as indicated on building permits issued within 1 mile of the vacant lot, took the average, and added it to the cost of land per unit.

Construction costs

The average new construction single-family house, from the 10 most recent permits, is $304,052.78.

The average new construction multi-family housing, from the 10 most recent permits, is $230,192.13 per unit.

Total cost per unit (land + construction)

Add in the land cost per unit ($425,000 for the single-family house and $141,666.67 per unit for the 3-flat) and you end up with the total costs of:

  • $729,052.78 for the single-family house
  • $371,858.80 per unit in the 3-flat

Add in the profit or “cap rate” that a builder wants to make and the price is even higher, but the people who would buy in the multi-family house would be paying much less for their homes.

Takeaways

The city can generate more affordable housing if it “upzones” vacant land and stops banning multi-family housing. (Much of the city’s parcels have been “downzoned” to ban multi-family housing in a process that creates “exclusionary zoning” and allows only – expensive – single-family housing.)

The city and the Chicago Transit Authority will earn more real estate transfer taxes (RPTT) from the sales of the units as condos than from a single-family house.

Three families instead of one would enjoy living to the wonderful amenity that the Bloomingdale Trail and the parks that the 606 offers.

Want this kind of analysis for a property in Chicago? You can order a zoning report from me.

* The City of Chicago charges a zoning change fee of $1,025, and you will most likely have to hire a lawyer, and it will take about 3-6 months, depending on the complexity of the proposal that requires the zoning change. You can use Chicago Cityscape to see actual approval times (excluding the time meeting the alder for the ward of the proposed project).

Inclusionary zoning calculator will tell you how many units a developer can afford to make “affordable”

July 28, 2017 / / 0 Comments

An “inclusionary zoning” calculator can help you determine how much affordable housing your town should require that developers build in their new construction residential buildings.

I learned about Grounded Solutions Network’s Inclusionary Housing Calculator at the second-ever YIMBYtown conference in Oakland, California, two weeks ago.

YIMBY (yes in my back yard) is a movement to reduce barriers to building more housing in order to be able to house everyone at a level they can afford. It’s a movement for other things, and it means a lot of different things to a lot of different people but the end result is that more housing needs to be built.

An interested person inputs a lot of values relevant to their local housing market into the IHC and it will calculate the cost of construction per unit and the rental income from those units, and then will figure the profit margin for the developer. What makes this “inclusionary” is that one also needs to enter the desired portion of units that are set aside as “affordable” (to people making a certain income) and subsidized by the developer’s rental income.

I put the IHC through a real world exercise by inputting as much data as I knew about a rejected proposal in Pilsen.

The first proposal from Property Markets Group had 500 units, and 16 percent of them were set aside (news on this and their subsequent proposals) [I cannot find the source of the “16 percent on-site” factor]. Chicago’s Affordable Requirements Ordinance, or ARO, requires that 10 percent of the units are affordable, and that 25 percent of those 10 percent must be built on site. The other 75 percent can be built on site, or the developer can pay an in-lieu fee per unit.

Needless to say, 16 percent on-site is much, much higher than 25 percent of 10 percent. A neighborhood organization, the Pilsen Land Use Committee, however, requires 21 percent in the area, and the city council member, Danny Solis, 25th Ward, adheres to.

PMG said they couldn’t go that high, and that’s what I wanted to test.

According to this Inclusionary Housing Calculator, could the developer make enough profit (considered as 10 percent) if the building had 21 percent of units as affordable?

In this exercise, the answer was “no, PMG could not make a profit if they had to set aside 21 percent of the units as affordable.”

But the calculator showed that they could earn a 12 percent profit if 16 percent of the units were affordable. 

Some of the inputs are actual, like the sale price of the land (found in the Illinois Department of Revenue’s transactions database), but I had to make up some inputs, including the apartments’ bedroom mix, and the future rental prices of those apartments.

Further reading

  • It’s tough for people to move into one of these set-aside apartments in Chicago (DNAinfo Chicago, July 28, 2017)
  • Inclusionary zoning cannot create enough affordable units (City Observatory, February 11, 2016)
  • Other housing cost calculators like this one (City Observatory, July 26, 2016)

Links between Emanuel’s campaign donors and their building projects

February 1, 2015 / / 1 Comment

The Tribune called out Emanuel’s appearance at a press conference as an endorsement of a locally-designed skyscraper (Studio Gang and bKL Architecture) to be built by Wanda, a Chinese development company – it has yet to receive any approval. Photo: Ted Cox, DNAinfo.

The Chicago Tribune reviewed the campaign contributions of Mayor Rahm Emanuel’s top donors and linked each donor to how it does business with Emanuel or the city. The article overall discussed how easy it is for Rahm to raise more money than what’s probably necessary to be elected a second time.

The Tribune graciously provided this data as a simple table which I’ve republished here in order to add links to building permit information from Chicago Cityscape. The website I’ve developed lists company and person names in an immediately searchable form. Currently there are over 90,000 companies, architects, and property owners that have received a building permit since 2010. Use the Illinois Sunshine database to find out who’s contributing to whom in the Chicago election.

Note: You’ll see “listed under [many] names” for several companies; this indicates that the Chicago building permit database uses different spellings, or the company has changed their name.

[table id=1 /]

Neither the article nor this table are meant to indicate any wrongdoing – campaign donations are public and it’s common to receive them from companies that do business in Chicago. It’s the extent that the donation appears to pay for favors or favoritism over other donors (which may be competing companies), or what’s right, that determines when immorality becomes an issue (a connection that’s hard to demonstrate).