I've been meaning to comment on this story for quite some time now. Unfortunately, it's taken about 2 weeks to actually find the time to sit and jot the thoughts down. The story, which is split into 2 parts, reports that there is a Prop 2 "resurrection" movement afoot by SOS and the Council to take the best elements of the defeated Prop 2 and try to incorporate those as ordinances. Now, to me, this is certainly a fine idea and I think even the opponents of Props 1 & 2 agreed that something had to be done to protect the Barton Springs area. But, contained in the article is a quote from Council Member Lee Leffingwell (one of the most fervent anti-Proposition opponents) who disagrees with that idea:

"Not so fast, opponents say. On Saturday, 69 percent of voters cast ballots against the measure. So some neighborhood and business leaders say that those ideas have been roundly rejected and that more community input is needed to create a lasting solution to the vexing issue of development in the environmentally sensitive area.

Council Member Lee Leffingwell, who crafted the ordinance, plans to slow the process and allow for a larger community discussion to take place. Input from interested parties as well as the two city bodies now considering the ordinance will provide the springboard for conversation."

Now, some would argue (myself included) that the 69% figure used above is completely misleading. While the propositions may have been defeated by 69% that does not, by association mean that 69% of the people of Austin are against protecting the Barton Springs watershed. Most of the Prop 2 opponents had said that protection of Barton Springs is sorely needed but they just didn't agree with how the propositions sought that protection. The fact that 31% of the people of Austin still voted for the propositions considering the outright misleading ballot language is a strong indicator that the citizens of Austin really do value environmental protection over development in sensitive environmental areas.

So now we come to Council Member Leffingwell's statements. On the one hand:

"These charter amendments were written behind closed doors with no public input, no vetting and no opportunity for changes to correct errors and unintended consequences," says Lee Leffingwell, an Austin City Council member who is former chairman of the city's Environmental Board."

And now the other:

"Will you answer specifically which reforms you support and which you do not?

I AM STILL IN THE DISCUSSION STAGE WITH REGARD TO WRITING THE ORDINANCE, AND SO CAN'T COMMENT ON ANY ASPECT OF YOUR SCORECARD AT THIS TIME."

Pot, may I introduce Kettle... (More on that from a blog post by JS Hatcher).

Also, looking around in Council Member Leffingwell's campaign finance reports, one notices that the only PACs that gave Mr. Leffingwell money during that election cycle all had something to gain by defeat of the propositions (granted, these filings were in the 2005 election cycle and the Open Government/SOS amendment campaigns were ongoing but probably not a campaign issue at the time):

• Austin Apartment Association
• Austin Board of Realtors
• Austin Police Association
• BOMA
• Homebuilders PAC

Now, call me a cynic but a council member whose only PAC contributions came from developers, who is now quoted to want to slow down the environmental protections for Barton Springs and is currently doing what he accused his Proposition opponents of doing, does not instill the greatest confidence in me that he should be the one to lead the effort for protection of one of Austin's most sensitive environmental areas. Anyone else on the Council with a bit more cred care to step up?

Toby Futrell and the "Livable City"

The second part of the article is about a little spat between the City Manager's office and a report released by the City Auditors. In the report, the City Auditors:

"presented an audit that found that Austin does not have an "overarching vision for growth" or anything that ties together a patchwork of smaller city-planning efforts."

To which the City Manager took offense and disagreed with 3 of the 4 study authors by saying:

"In fact, the City has a vision and it is widely recognized. Our vision is for 'Austin to be the most livable city in the country.' "

May I introduce Exhibit A against City Manager Futrell's claim. In the studies cited in the post, Austin ranks as the third highest cost of living in the country. Higher than traditional high cost leaders San Francisco (10th), Boston (9th), Chicago (8th) and Atlanta (4th). Austin has the 4th highest average house cost in Texas (behind Ft. Worth, Dallas and San Antonio) and ranks number 12 nationally for the highest average cost of the typical home in America. These are not exactly the most livable conditions in the country.

Now, does city planning have anything to do with this rise in prices? As cited in this document, my guess is that the 29 now-under-construction-or-planned residential developments and super-condos being built on the shores of Town Lake, throughout downtown and in the ultra-swanky 2nd street area will only further inflate these cost of living indices (most have starting prices in the $200's for a 1/1). One can certainly make the argument that development should take place in downtown (I do support that) but of all the projects listed, from what I can tell, not one project is an affordable housing project.

So I have to agree with City Manager Futrell here. She does have an "overarching vision" of Austin. Under her's and the City Council's leadership, they seek to make Austin unaffordable for most residents. They seek to transform the prime green spaces and park lands of Austin into multi-story, multi-million dollar condominiums, raising the cost of living while attempting to replace the few East Austin parks with nasty infrastructure plants needed to clean the crap out of the water from these lofty, rich residents and the eventual Dallas-like sprawl of SH 130. They seek to keep their vision of Austin planted in future city council elections by raising campaign contributions, creating slush funds and erasing term limits. Yes, Ms. Futrell, you and your Council Member friends have a vision for Austin. Unfortunately, it seeks to replace what some of us have come to believe what Austin is about and replace it with a miserably cloned vision of Dallas.

I came from Dallas after 17 years of living there to Austin for the last 10, with most of that time in the Barton Hills area so I've seen the pace of change downtown under a close lens. I can't help but think that with the most developer friendly City Council in my memory along with the unification of former Council Members and Mayors against environmental protections for Barton Springs, it won't be long before we'll see the 580-ft towers being grandfathered in overlooking Barton Springs Pool.

Over the last few weeks, the topic du jour for me lately seems to be growth in Austin and specifically the abundance of new luxury condominiums being built downtown. It seems that everyone I know has either been talking about it or have joined in the conversation at some point (well, I guess we "Southies" have never taken kindly to development...). I first got turned on to this topic from a post where I questioned a statement made by Austin's City Manager Toby Futrell in response to a City Auditor's report that was critical of her's and the City Council's development plans. To summarize, in the report, the City Auditors:

"presented an audit that found that Austin does not have an "overarching vision for growth" or anything that ties together a patchwork of smaller city-planning efforts."

To which the Ms. Futrell, who disagreed with 3 of the 4 city auditors who authored the report replied:

"In fact, the City has a vision and it is widely recognized. Our vision is for 'Austin to be the most livable city in the country.' "

I linked to a few indicies that refuted that claim and the post got a few comments, but none seemingly more vocal or condescending than M1EK, but he did put me on the path to research his claims which eventually led me here.

Now, M1EK's been making a claim that by building luxury condominiums downtown, by the mystical force of "trickle down," Austin's housing market will actually become more affordable (btw, he has never linked to anything that would support this point of view). I've seen this comment of his on mine and a few other blogs (actually highlighted here) and I still have serious problems with this assertion.

The vehicle that M1EK is using for this argument is now called supply-side economics. In his example, by adding more supply to the market, no matter what the price, it will eventually bring lower prices long-term to the whole market, not just the luxury segment where the current supply is being increased. While that may be true in general terms, I'll put forth that the supply isn't the greatest determining factor in this "affordable housing" scenario; I feel the demand in this limited market segment will be the more important quality as that will drive up the existing outlying property prices and will not, as M1EK asserts, increase affordability for the general public. Below, I hope to show that while in theory, M1EK's premise is generally correct for most things, there's not enough places (or plans) to build the sheer number of condominiums needed to make his assertion true in this case.

The Parking Lot

In M1EK's example:

"The only thing worse for affordable housing than building a bunch of high-priced condos downtown and continuing business as usual everywhere else is: NOT building high-priced condos downtown and just continuing business as usual everywhere else.

Trickle-down sucks in tax theory but it works like gangbusters in real estate. I own a moderate condo unit near (not in) downtown and I can tell you that it's fairly easy to observe a depressing influence on the rent I can get for it thanks to the indirect influence of those downtown units. Some folks who used to live in high-end housing in that neighborhood (Clarksville) now live downtown; some people who used to bid up the price for moderate housing like mine moved up to previously high-end condos in Clarksville."

So to begin, let's use a thought exercise... My premise is while I agree that we have to start building at some point, we're not going to get affordable housing only building luxury condos. Where I work, there are approximately 200 parking spaces in the parking garage and across the street from the building. If you're a manager, you get a reserved space otherwise, it's first-come, first-served. Out of the 200 total parking spaces, approximately 50 of them are reserved. There are about 300 employees (250 regular employees and 50 managers) in my department so on any given day, probably 250 or so show up for work and require a parking space (not everyone drives a car in; some bus, some ride bikes, some car pool, some are sick, etc). We already have too many people for the available spaces so demand has already outpaced the supply for the freely available spots (much like the overall housing market here in Austin).

Now, let's start adding new employees, say 5 per quarter (20 per year), 4 regular employees and 1 manager. We already have 250 people trying to snag one of the available 150 parking spaces so the demand is already at a premium. Now, when the new employees start, one of the freely available parking spaces becomes assigned for the new manager, decreasing the available supply for the regular workers while at the same time, increasing demand for those freely available spaces. Does this help the available supply for the regular workers? Of course not. The supply of parking spaces for them hasn't increased (this is like the current situation for affordable housing; there's only so much available within the city. And between rising property values and homeowners that are fixing up their current properties, more properties are moving out of "affordable" and into more exclusive markets).

So management decides to do something about it. They authorize redeveloping the small area where the dumpsters are right next to the building (for an additional 3 places) but they're all reserved for the CxOs, as they are ultra-swanky, shaded, cars-washed-by-virgins spots. The spaces are only for the CxOs and no one else. So here's M1EK's premise; the 3 reserved spots that used to be occupied by the CxOs have now been freed up for additional managers (the 1-for-1 property tradeoff) but did building the addtional spaces help the rank-and-file employees by increasing their supply? No. The old parking spaces remained reserved for management. So, in the next 3 quarters it takes to fill the old reserved spots with new managers, my department has now added 12 more people to the first-come, first-served spaces further decreasing the available supply where they can park. The only thing that will help relieve the demand for the rank-and-file employees is new spaces where they can park or new spaces in their segment.

So seeing that their available parking spaces have now shrunk to about 140, the rank-and-file employees submit a protest to the City Council who sympathize and decide to redevelop the field adjacent to the building (cutting down the landmark 300+ year old oak tree, mind you [look for "Rainey" on the page]) and put in an additional 50 parking spaces. But when completed, they decide that the spaces are only for City Council and management and, additionally, they deem that 40% of the spaces are only to be used by their families. No one else can park there which leaves most of the spaces unused most of the time (this is downtown development and the 2nd home thing which I'll get to below). Is this unfair to the rank-and-file employees who are still fighting over the ever decreasing spaces? You bet. Are they upset? Beyond belief. Can they do anything about it? Absolutely not.

So is this experiment wholly accurate? Of course not. In real life, the City Council would open up the new parking to tolling... ;) Actually, the only thing that is really left out of the experiment is some influx of "affordable" housing but it will be in the less desirable areas of Austin (in the situation above, those spaces would be located blocks away from the building) and since M1EK's assertion is that building downtown luxury condos will increase affordability for the average citizen, the model above is accurate enough to get the point across. But, model aside, let's try and determine some real numbers.

The Numbers (with links!)

Using M1EK's example that seemingly the only people looking to move into these downtown condos already live in Austin (a 1-for-1 property tradeoff and I know he's generalizing...), one can make the argument that demand for these downtown luxury condos will be limited to a very small percentage of the current Austin population (the current total Austin population is 690,252) and thus, will not have the effect of lowering the prices of the individual units downtown or the surrounding areas. A quick run of the numbers shows of those that can afford an average downtown property cost of over $300k, based on the 29% rule, the target buyer must be making at a minimum, $65k/yr and would probably have to make a bit more than that for credit card bills, recreational and living expenses, etc. The median income in Austin is $68k/yr so, working in *very* general numbers, we'll say 50% of the current residents in Austin that could afford the property and of those, another smaller percentage would actually be looking to move (even though this logic is a bit flawed -- median income does not evenly correlate to population -- but this is just for fun). I'll just pull a number out of the air here as I haven't been able to find this number anywhere so I'll be generous and say that 2% of the Austin population are looking to move of the 50% that can afford it . So, we have a maximum of 12,580 people in Austin who could currently afford the minimally priced condos and who are currently looking to move (not all of these properties downtown will be available at the $300k level).

Now, based on national statistics, 40% of all housing transactions last year were for 2nd homes. So let's remove from the equation 40% of the available downtown properties because these people already have primary residences somewhere else and generally speaking, the properties won't be available to those looking to move from the periphery (except maybe as rentals at some point but couldn't find a figure for how many 2nd homes become rental properties). The Council wants 20,000 eventual downtown residents so let's average 2.4 people per residency, we need about 8,400 individual properties minus the 40% that are second homes which leaves 3,360 total residential units available on the market. So, this year, we now have 12,580 current Austin residents looking to move into the eventual 3,360 average priced properties downtown.

And this figure does not take into account those people who don't currently live in Austin and are moving down here (based on census data, Austin's population grew 10,000 per year over the last 3, so we can add roughly another 5,000 additional home seekers per year divided by 50% who can afford it = 2,500). So until developers build at least 15,000 individual residences downtown and then add 2,500 additional units per year, the demand for those properties will not go down and the prices will remain where they are and will probably creep up over time.

So where do those people go who want to live downtown but the demand for that prime property has forced them to look elsewhere? They go into the adjoining neighborhoods, like Clarksville and Barton Hills, and drive up the price of the current properties due to the demand and not down by supply as M1EK surmises. Generally speaking, Austin is being influxed with new residents from places other than Austin. These residents, usually coming from places that have higher property prices, don't balk at a $300k downtown condo like some of us long-time Austin residents. I think we'll find that most people who are moving downtown into the luxury condos will generally fall into three groups:

• Professionals from outside of Austin who don't currently own any Austin property
• Professionals that bought the condo for a 2nd property (I would argue that this figure will probably be a bit higher than the national average in this case as we're primarily talking about condominiums in a now cosmopolitan and hip city, further increasing the demand)
• M1EK's scenario of upwardly mobile Austin residents

So while there is some merit to M1EK's premise, I feel it's not the driving factor for greater affordability throughout Austin.

Here's another example. M1EK's premise depends on the total number of available properties in Austin to gain eventual affordability. But just like with Ferraris, unless you add tens of thousands to the supply, they will have a minimal impact on the prices of the rest of the cars on the market. And this exactly what we have here. The developers are adding more Ferraris and relatively few Camrys. Sure, the price will fluctuate a bit for the Ferraris in their own luxury segment (due to demand, exclusivity, etc) but this price will be unaffected by the supply of Camrys as the target consumers are not the same. If the market was suddenly flooded with Camrys (affordable housing), there would have to be a helluva lot of them to have any impact on the Ferrari prices (luxury units) as the buyers of Camrys and Ferraris are in different market segments. People who can afford to live in a $300k condo, generally speaking, are not looking for $150k Clarksville condos or Barton Hills duplexes unless that's all the market has to offer.

M1EK's example may have happened twice (once by his anecdotal evidence of talking to his neighbors and I'll give him another one just because) but, generally speaking, that is not what is going on. If things really did work the way M1EK thought, we'd all just start out living on the periphery of downtown and with no further increase of income, over successive moves inward, we'd have the ability to keep moving centrally until we got to dead-center of town where only the super-rich dwell (as remember, his premise is that by building properties downtown, expanding the total supply, the surrounding properties will fall in price). It's the market in reverse and I just can't see the market working this way. Generally speaking, the market works the opposite way where property values increase dramatically downtown and the property prices increasingly ripple out into the surrounding neighborhoods. In this scenario, no matter how many luxury condominiums you build, it doesn't decrease the affordability of the surrounding areas (Ferraris and Camrys).

Additional Factors

Now, in addition to what I've outlined above, there are other factors which will drive the price of these properties up and in my opinion, will do so even more than the demand. One of those factors, gentrification, would also contribute heavily to an increase in outlying property prices. As I mentioned in my post:

"Yes, M1EK, I did *a lot* of research into your property value claim (the same lame "my Clarksville condo" rant I've now seen on no less than 2 other blogs). Over the last few weeks I've read numerous density articles, affordable housing scenarios, case studies (Portland, Seattle and New York), blogs and comment threads and even the city's development plans (like the City Auditors, I wasn't impressed). I even went so far to talk to 2 MBA's (one in real estate). I couldn't find a *single* sentence or person that supported your "trickle down" assertion (building luxury condos leads to increased supply which leads to more affordable housing citywide). The overwhelming theme I gleaned from those articles and my research is that there is no direct link between building downtown luxury condos and the lowering of property values from previously higher priced properties in outlying areas. In fact, I saw more examples of the opposite; the building of luxury condos downtown increased the housing prices nearby and displaced traditional residential neighborhoods. As shown by this article and from here:

"Gentrification usually increases the property value of an area. This is a positive development for city officials (by raising tax revenue, which is often dependent on property values), the middle class, as well as existing resident owner-occupiers. Unfortunately this same rise in property value can be devastating to those in lower income groups, when children of such residents find they can no longer afford to live in certain neighborhoods. As a result, there tend to be very strongly opposed views on gentrification, with some seeing it leading to healthier, more vibrant cities, and others seeing it as destroying poor communities. Both views would seem to be correct."

What I see happening downtown is an economic segmentation of the super-haves (i.e. - Congress, 2nd street and the new high-rises), the haves (like M1EK and myself; our outlying areas) and the have-nots (the East Austinites that are soon going to be priced out of their neighborhoods through higher property taxes and moved out through infrastructure placement and building). I believe this is counter to Austin's traditional blending of cultures and income levels throughout their neighborhoods. So in the anecdotal spirit M1EK is fond of, I'll use where I live as an example of the "traditional" neighborhood. I live in a duplex in Barton Hills. The surrounding houses in this neighborhood roughly start in the $300's and go up. I couldn't afford to live in this neighborhood otherwise (I live on a city worker salary, for pete's sake!) but because there is "worker affordable" housing in this area, I can enjoy the benefits of living in this neighborhood (the key one being I can ride my mountain bike to work safely on the greenbelt :). What's key to greater affordablity is a supply of housing within the segments that people can generally afford. That's why I've been posting that we need more "affordable housing," and not just addtional inventory in the luxury segment.

While I'm at it, I guess I should define what I mean by "affordable housing." When I talk about "affordable housing," I'm not talking about the traditional political definition of the term. I'm not talking about putting government subsidized housing on 2nd street or the like. What I am talking about is "worker affordable housing," which is generally set at about 70% median income (roughly $1,400/mo rent) versus "affordable housing" which is 50% and below median income (about $700/mo and below) **. As far as my research has been able to produce, there's only one property being built downtown that could fall into that "worker affordable housing" range as their rentals will be starting at $1,400/mo: Red River Flats.

So for me, a long time (11 yrs) Austin resident, it concerns me to see the current pattern of development that excludes the types of developments which will lead to the "unblending" of what I feel is one of the defining characteristics of Austin. Economic segmentation is how places like Dallas developed and I have a bit of firsthand knowledge there as well. I lived in the McKinney Ave. area just before the big redevelopment boom and moved to Austin about 3/4 of the way through it's completed development. I saw the moderately priced area where I lived soar to unaffordable in a mere few years which benefitted the property owners (like my father who owned a few of those condos) but didn't do anything to bring middle-income families to the area (seemingly, the "rocket shot" of property prices hit just after the completion of the driving range. Go figure...). I saw the residents of the low income side (east of Central) displaced in fairly short order as the property values skyrocketed and they were left looking for affordable housing elsewhere. (But give credit where it's due... At least Dallas had the foresight to put in a good mass transit system so at least for those that can't afford to live downtown but need to work there, an inexpensive and efficient people moving system is in place.) In my opinion, Austin needs to stop this segmentation or we risk losing what makes this city so great. We can do this by building (and the City supporting) affordable housing initiatives (like inclusionary zoning) and the building of more "worker affordable" housing like Red River Flats downtown. This really will bring diversity to downtown and will speed the migration of middle-income families to the downtown and surrounding areas.

Finally, I see gentrification being the larger threat to long-term property values and see little merit to M1EK's "trickle down" scenario to stem the upward trending property values. We currently have a very developer friendly City Council and Mayor, seemingly offering tax breaks and incentives to any of their PAC supporters that come within breathing distance (see the above mentioned post for some details). I suppose time will tell if gentrification is truly going on downtown as the growth starts to spread eastward but the seeds certainly seem to have been planted. I'm all in support of development downtown and certainly support NuPro's ideas for new urbanization (I hope she'll post about the importance of bringing middle-income families to downtown) but I feel there must be greater support from our City Council to provide affordable as well as luxury housing downtown with a coherent development plan if they truly want to meet their goal of 20,000 people living downtown while preserving cultural and economic diversity that is so much a part of Austin.

** - Ed. note -- Argh, lost my link here. Will post it when I find it in my history file...

Addendum: Since I'm no longer allowing M1EK to comment on my entries (and I will remove them if you do comment, M1EK), I will, however, give him the space to put a complete response. I will post his entry unchanged and unedited and will leave open the comments for responses. I know I don't have to do it but someone has to be the bigger person here and I'm genuinely interested in his response. I will put no qualifiers on the post for publishing other than any points made must be backed using facts and linked to the authorative data provider (which means you can put as much bile in the post as you want).

Update: In M1EK's reply on his site, he mischaracterizes the above addendum as a "demand," which it was not meant to be. Since I was using one of his comments as the basis of my entry, I was merely offering M1EK the opportunity to post a reply in the same forum if he felt the need. I'd like to make clear that nowhere in my post did I ask for a response or at at any time thereafter was I looking for a response from M1EK. I would be just as happy if he didn't want to post about the subject. I'd also like to add that the post was not supposed to be a "hit piece" or anything of the sort on M1EK. I just thought that he said something interesting and simply used that as a basis for a post.

Now, for a quick response to his... First off, I can see that the bile started right from the title (why so defensive?). His example of a "typical comment" is misleading. What he quoted is just a portion of a comment, not the full comment and not representative of what he left on my blog. I still have the comments he left on my blog; I just didn't make them visible. I won't say that they are the worst comments I've ever seen nor is there any abusive language contained within them. But, much like many of his blog entries and comments on other sites, they are condescending to those who don't agree with his view. There were no links, citations nor quotations contained within them. Just pure opinion. And while M1EK is entitled to his opinion, because I felt he was moderating out comments on his blog that he didn't like, I did the same on mine (another person also submitted a comment to his blog post that did not get posted as well to which M1EK responded back with the same "the software ate the comment" reply (which could very well be true). In my experience with MT (I used it before CoreBlog) and leaving numerous other comments on MT-based sites (some moderated), the comment I left on his blog post seems to be the first I've seen "lost." No biggie, I'll move on..

Also, it appears that I don't have a complete misunderstanding of economics because he at least afforded me one point:

"Well, his first assertion is true - the markets are 'segmented', but individual complexes can, and do, migrate from luxury to moderate segments."

So the premise I took in my post may not be what's going on but at least it's not a "complete" misunderstanding of economics.

Finally, someone else did take the time to look into the issue and sent me a great link (h/t Jen). This link to the National Housing Council shows how much money it takes to "survive" in various cities using 63 jobs as a metric. In Austin, just to "get by," it takes $61,840 / yr with a median priced home at $195,000. Looking at the 5 pre-selected jobs (School Teacher, Nurse, Police Officer, Retail Sales Rep and Janitor), none of them make enough money to "afford" to live in Austin (which goes along with this editorial that shows that most Austin police officers and fire fighters live outside of Austin). The type of "affordable housing" I'm talking about would allow people in these jobs to live in the city where they serve. That just seems like the right thing to do.

Update II: Whilst searching my history for the lost "worker affordable housing" classification link, I found this great comment attached to this article:

[...] As someone once said, the notion that all growth is intrinsically good is the mindset of a cancer cell.

Well, I figured I'd try a new thing on the blog and try to add something regular so I came up with Friday Bike Trail Blogging. Every Friday, I'll post some pictures of some of the more untraveled and hidden places on the various Austin bike trails that I'm privileged to commute to work on.

My aim is to try and show some of the reasons why some of us love this city. The greenbelt trail system seems to be pretty overlooked by most who live here as it requires people to actually get out of their cars and walk out in the heat a bit. Compared to Dallas where, for the most part, the "nature trail" system downtown is basically White Rock Lake and the associated paved "trails," Austin's greenbelt is truly a rarity in urban, downtown areas. There are some really great nature areas on the trail system but I figured I would start with one of the smaller and possibly, most overlooked and maligned areas on the trail. It's a tiny bit of nature dead-smack in the middle of downtown Austin and one that I've seen quite a bit of wildlife running around.

Since I mentioned this area in my previous post, I figured the kickoff entry would be this quick look north up Waller Creek just under the 8th Street Bridge (right next to the Stubb's outdoor stage). Sorry that I only took this one snap but I was running late getting out of work and I had other places to get to (you can see my parking garage in the upper right of the photo) but in the next installment, I'll take some more detailed and (hopefully) artistic photos. This is a nice little area for assorted wildlife as I've seen both Great Blue Herons as well as, I think, their white morphs hanging out in the small pool fishing for the various shad above the small breakwater as well as turtles and various snakes. This area is just downstream from the old Reddy Ice brownsite that is now the new home of the Red River Flats development. For those that have read some of my development screeds, you'll know that I'm a big fan of the Red River Flats development as it seems to be the only "worker affordable" development being built downtown (with rents starting at $1400/mo). This is also part of the area that some on the City Council (Brewster McCracken and his ilk) are wanting to teardown and put in an Austin clone of San Antonio's Riverwalk (do these guys have any original ideas or do they only talk to Trammell Crow?).

Anyway, next week I'll have some more photos from a different area on the bike trail.

First, I'd like to say "Welcome!" to my new domain/website, PoliticalSuicide.org. It was born out of my frustration with most of the current political websites pretty much covering just one extreme side or the other of the political issues of the day. I've got some pretty good ideas that I hope to launch here for furthering the political discussion (and to keep me out of trouble... :) so please bear with me as I hope to start launching the new features as soon as I complete them (I'm teaching myself Python along the way)...

Anyway, a few weeks ago, I went out on a limb and against conventional wisdom to explain why I felt the "trickle down" theory just wasn't going to help with lowering property prices in Austin anytime soon. The background of my post in a nutshell (as I heard from more than a few people that it was a bit on the long side... Glenn Greenwald is my h-e-e-r-o... ;) would be that a commenter left a comment on my blog saying that "trickle down" worked "like gangbusters" in the real estate market, to which I felt the statement was a bit odd. After reading articles, opinions, comments and talking to friends I trusted and people in the business, I put forth the following thesis:

"The vehicle that M1EK is using for this argument is now called supply-side economics. In his example, by adding more supply to the market, no matter what the price, it will eventually bring lower prices long-term to the whole market, not just the luxury segment where the current supply is being increased. While that may be true in general terms, I'll put forth that the supply isn't the greatest determining factor in this "affordable housing" scenario; I feel the demand in this limited market segment will be the more important quality as that will drive up the existing outlying property prices and will not, as M1EK asserts, increase affordability for the general public. Below, I hope to show that while in theory, M1EK's premise is generally correct for most things, there's not enough places (or plans) to build the sheer number of condominiums needed to make his assertion true in this case."

I then followed that thesis with a few examples (a parking lot and a Ferrari / Camry metaphor) and links to authoritative sources to explain how I got there.

So, a few days ago, a reader emails me the following article from the Austin Business Journal (h/t Clayton) in which Austin's current downtown city planner, Michael Knox, makes a statement that nearly perfectly matches what I wrote in my post:

"But with so little space left, demand may end up forcing development into adjoining areas, perhaps along Shoal Creek on the west side or along Waller Creek to the east.

"That's going to cause a lot of friction when you start talking to these abutting neighborhoods," he says."

Now I know that Mr. Knox is talking about demand for developable property and not the demand for actual completed residential units but the demand for land is complimentary to and actually bolsters my thesis by bringing yet another "X-factor" to the housing supply market that will increase prices. Currently, the Mayor and Council want to move 20,000 more people into the downtown area over the next few years. But as I mentioned in my post, there aren't currently enough places for these people to move so demand will force these people into looking for the most desirable property left on the market. If these more affluent buyers don't want to live in the "Hills" on the periphery of town or out at the lake (as they are looking for properties $300k+), they will undoubtably will be looking in the adjoining neighborhoods (Barton Hills, Clarksville, etc), which increases the demand for the available homes on the market. From the Austin Real Estate Blog (my emphasis):

Austin Residential Home Sales continue to be very strong. The number of homes sold increased 21% from 2,462 last June to 2,980 June 2006. At the same time, the number of active listings fell 2% from 8,637 to 8,477. The number of Pending Sales in June is up 31% from a year ago, from 2,506 to 3,286. This continued increase in demand along with reduced inventory is driving healthy value appreciation despite rising interest rates.

Average Sales Price is up 12% from a year ago, from $219,196 in June 2005 to $245,655 June 2006.
Median Sales Price is up 8% from a year ago from $168,500 to $182,000 (a new Austin record high)
note: the graph below has the wrong median amount on the chart, it’s $168,500 not $165,800.

Now, maybe M1EK can see the "depressing influence on the rent I can get for it [his Clarksville condo] thanks to the indirect influence of those downtown units," but I'm not seeing that "trickle down" effect from those downtown condos in these numbers... Maybe I'm not squinting hard enough...

Now add the "X-factor" of developers looking to "spill out" into the peripheral neighborhoods where they will be competing for the more affordable tracts of land (with homes or not already on them) as well as the resulting rise in property values as the downtown luxury units are completed. This scenario is much like the Turtle Creek area of Dallas (hehe, where I also lived in an 24-story condo tower for awhile. But I'll save those stories for another time [I can hear that sigh of relief from here...] :)

In Mr. Knox's statement about needing more residential space downtown, he said there wasn't going to be enough property that could be developed to house all those future residents and the demand for that property would have to spread into the outlying neighborhoods to accomodate the Mayor's goal. So, in that scenario, we now have 2 sources of demand in the adjoining neighborhoods:

• demand from developers for the limited developable land in the adjoining neighborhoods (see quote above)
• the influx of residents (both from Austin and recently arrived) that would like to live downtown but there are no units available downtown because of the high demand

  "It's clear that demand is high for units. One need only look at projects like The Shore, a 22-story residential tower that recently broke ground with 80 percent of its units already committed. And more than a dozen other projects are already in the works."

So, as M1EK would be quick to point out, basic market-driven economics states where there's demand there's... what...? Wait for it... Wait for it... Everybody now! Higher prices... *Applause* It seems someone wasn't so far off in their assessment even if they do possess a "complete misunderstanding of economics." :)

(BTW, I'm still waiting for anyone to send me an article, link, or informed opinion that shows building these downtown luxury condos will lower general housing prices across the city. I've seen a few comments that have said "I agree w/M1EK..." but no links to something that actually shows a correlation. All I've seen so far has been opinion (and I've *really* looked over the last month). I've never been one to agree with conventional wisdom just because someone says it's so; I've always needed the facts to back the contention (that's why I was such a lousy Catholic...). This "trickle down" scenario just seems too damn convenient, dumbed-down, buzz-wordy and Reagan-esque to me to explain such a complex situation. And, in what I've seen so far, just about every economic incarnation of "trickle down" seems to have failed pretty miserably as a guiding philosophy as the markets are just too complex to say "add more something = prices go down." As John Kenneth Galbraith said about this concept, "if you feed enough oats to the horse, some will pass through to feed the sparrows."

And I don't think I need to mention that all bets are off if the housing market busts or some unforeseen catastrophe hits. There certainly seems to be some interesting things happening economically (interest rates creeping up, general malaise and waivering confidence in the overall economy, etc) which might quell demand enough that could lead to more affordable housing in the near-term (next few years) but I guess we'll just have to see...)

Photograph: It's the sign facing the Town Lake Hike/Bike trail at the Milago luxury condominiums. I think the graffiti artist captured a sentiment held by many others here in Austin.

Correction: Wikipedia's John Kenneth Galbraith's quote for trickle down is incorrect so I updated it (I had "If you feed enough oats to the horse, the sparrow will survive on the highway." and replaced it with "if you feed enough oats to the horse, some will pass through to feed the sparrows."). It's the only link I can find that actually cites the book.

Photo album from this week is located here.

Well, I apologize that I didn't have a chance to do a "position" blog entry this week or get this up on time. It's been a long couple of weeks personally but things seem to be getting back to normal so I had some time to take a few snaps of a couple more of my favorite places on some of Austin's bike trails. Unfortunately, part of the problems of the last few weeks has been an intermittent Road Runner connection and so while the connection is up, I'm working on the blog. I guess I could always go to some coffee shop somewhere...

Anyhoo, the first picture is a follow-up from last week's post. On Friday morning, there was one of the Great Blue Herons hanging out in the area that I took a photo of last week (most of the Herons I've seen seem to hang out in this one little area and just north next to the Waller Creek building). This guy started out in the creek but when I tried to move in to get a closer shot, he flew up into the tree. I guess it would help to have a decent camera with a good telephoto lens (this camera is just a barebones 2Mpixel Kodak).

This week, I decided to highlight 2 areas: a small single-track trail in the middle of Pease Park and a bend of Bull Creek directly underneath MoPac.

These next few shots are the single-track trail that runs next to the main trail through Pease park. These shots are facing north and Lamar is about 1000ft to the right of the pictures. The camera really doesn't do the grade of the trail much justice but when the trail is wet, the limestone "boulders" become quite slick and can be a bit of a challenge going up (somebody recently blocked off the left side of the trail where it was a bit more challenging). There's a frisbee golf hole just south of where this trail pops out.

The rest of the photos are from Bull Creek directly under the MoPac bridges. From the satellite map, this area looks pretty small an unimpressive but it's quite pretty and serene once you get underneath the roadways. From the bottom of the creek to the roadway, it's probably about 80 or so feet. When you're driving on MoPac, it really just doesn't seem like you're that high up but it's a fair distance down. This part of the trail has a few pedestrian bridges that cross roughly at 5th and 1st streets. Again, this camera really doesn't show the scale of the surrounding hills and how straight up they seem to go. There's a few limestone outcrops that would be ok for some bouldering.

Sorry for the lateness of the post. Hopefully, we'll have the Internet connection figured out and back to normal for an on-time post next week.

This week's photo album is located here

Well, I've decided to change the Friday feature to Saturday as it's now been 2 straight weeks that I haven't been able to leave work, take pictures, upload and annotate and then put the blog entry out. I didn't get out of work last night until 7:30pm or so and add the 35 minute bike ride and pictures, I didn't get home until almost 9pm. But I still took some pictures of another not-as-used area on the trail system so I hope they still give you a feeling what the trails are like.

This week I highlighted part of the Barton Creek Greenbelt but one that isn't used as much as some of the other areas. It's kinda separated from the rest of the trail system as it has a point of crossing across Barton Creek but usually, there's water in the creek so you have to get wet to get on that side if you come from the main BCG trail. The only other "official" entrance is off Homedale Dr. just behind Barton Creek Elementary (there are a few other trailheads on St. Mark's Church property). From the "official" trailhead, it goes up quite steeply over some loose limestone rocks and it can be a fair challenge getting started up the trail. The trail actually splits right behind the trail signs, one going west the other going north. If you head down the north trail, you will eventually wind up at Barton Creek (I highlighted that part of the trail in pictures 15 - 25). Yesterday, though, I went west to try and catch a few pictures of the setting Sun so I hit the parts of the trail that might offer a view first.

Overall, I would rate these trails as good for novices but there are some tricky (and fun) areas. You can pretty much cover the whole upper trail system in 30 mins to an hour (It's pretty small but there's some nice native scrub areas in it) and if you cross the creek to the main BCG trail, you could easily go all day.

The design standards can be found here or I've mirrored them on the bottom of this entry.

Well, this week saw the release of the new design standards and with it our chance to see, at least in the Council Member's eyes, how Austin will try to handle it's explosive growth. I haven't gone through the document with a fine-tooth comb yet but I have read the document thoroughly (by that I mean I didn't follow any of the references to external ordinances and the like but have read the document in its entirety). But before I get into my take on the design standards, I'd like to make a quick follow-up on a few posts I've made previously.

My last few posts have centered on the "trickle down" theory of housing which was started by a fellow blogger, M1EK, when he made a few comments on my blog and then made a similar comment on another blog. I wrote up a rather lengthy couple of posts on why I felt that the "trickle down" effect was not at work in M1EK's anecdotal example he put forth. For that, I got a few guffs from M1EK as well as some generally constructive comments from others. What I attempted to show could be summed up by the following: "The markets are segmented and demand will outpace supply for the forseeable future." I then attempted to explain through metaphor and links to outside sources that, at least for the forseeable future, it wouldn't matter how much supply in any market will be added, demand will still be greater and overall affordability would not move down. Now, I also said in a follow-up comment that I didn't plan on bringing up this topic again but as fate would have it, someone in a position of authority weighed in and so I'm making this brief mention of it.

Now I've had my differences with Council Member McCracken in the past about his seemingly overzealous tilt towards pro-growth and development and to be fair, I was seriously questioning his motives behind the Prop 1 & 2 voting run-up. But one thing that can be said about Council Member McCracken is that he is always at the forefront when it comes to development within Austin and is very clear about his vision. Which is what surprised me when I ran across this quote (my emphasis):

Rather than exasperating chic development and steep prices, McCracken contends the ordinance strives to balance density goals with affordability. By focusing growth along major corridors and away from neighborhoods, the hope is to keep taxes affordable on single-family homes. But, "affordability doesn't happen organically," McCracken says. "It is untrue that the market produces affordability due to supply." Therefore, 10% of VMU rental properties must be set at 80% median family income. Ten percent might not sound like much, but McCracken says the neighbors can set lower MFI if they wish, and the 10% reserve can double with city assistance, if the developer desires. "As density comes," he says, "we don't want to turn into San Francisco – a great urban environment for rich people."

In this one quote, Council Member McCracken has addressed the core issues I've been posting about over the last few months. First off, he upholds my view that affordability will not come through supply alone; there must be other ways to that goal and it appears, from the design standards, they want to mandate a way through ordinance. He also seems to be echoing my fears of losing the economic and hence, the cultural diversity of Austin through gentrification and thus, has tried to promote some sort of control mechanism through the new standards (using mandated median income levels and neighborhood association input). As an example, the design standards, starting on page 72 under Section E. Affordability Requirements for the new VMUs (Vertical Mixed Use), states the following (I'm quoting the full section in its entirety):

5. Affordability Requirements
   To be eligible for the dimensional standards exemptions in subsection D.2. above, the residential units in a VMU building shall meet the following requirements.
   1. Affordability Requirements for Owner-Occup