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A study out of Nashville by Smart Growth America provides more evidence that building walkable development in existing communities is best for a city’s bottom line.

Nashville's "The Gulch" -- a mixed-use development downtown -- generates a much greater public return than more suburban developments in the same city. Image: Cumberland Region Tomorrow

SGA recently examined three different developments in the Music City. One was a large-lot, traditional suburban-style development called Bradford Hills built on a greenfield site. Another was a “new urban”-style, mixed-use, walkable development also built on a greenfield, called Lennox Village. The third — known as The Gulch — was a mixed-use, compact housing and office development with retail and dining, built on a brownfield between Nashville’s Music Row and downtown.

The study compared the costs of local services to each new development with the revenues returned. Overall, the urban, infill development was far and away the best value for municipalities.

The Gulch — a 76-acre project, including 4,500 housing units and 6 million square feet of office space — yielded the highest returns in the form of “property taxes, sales taxes, and other recurring revenues,” according to SGA. Per unit, the development produced a total of $3,370 in public revenue annually, while costing the local government about $1,400 per year in infrastructure maintenance, policing, fire response, and other general fund obligations. In comparison, the traditional suburban development Bradford Hills generated only half the revenue — $1,620 per year — and cost more to service — $1,600 — making it basically a wash for local taxpayers.

Per unit, the performance of new-urbanist Lennox Village barely beat out the large-lot suburban development, generating $1,340 for the municipality annually while costing about $1,300.

When you factor in density, the differences between the three models really crystallize. The Gulch, filled with condo towers, generated $115,720 in net revenue per acre annually. That’s an astounding 1,150 times greater than Bradford Hills, which generated a total of just $100 per acre. The downtown development also performed 148 times better for the local government’s bottom line than new urbanist development Lennox Village, which yielded $780 per acre.

Developers often shy away from urban brownfield sites, fearing the cost of cleaning them up. Given the incredible benefits to the city of that kind of development, there should be better incentives for developers to look to infill, rather than greenfields, for their next project.

Since being cleared for redevelopment in 1967, several city blocks at the base of the Williamsburg Bridge on the Lower East Side — known as the Seward Park Urban Renewal Area, or SPURA — have lain fallow. For decades, the largest undeveloped, city-owned land below 96th Street was used only for surface parking lots. After years of planning work, this afternoon marked the deadline for developers to submit bids for the site to the New York City Economic Development Corporation.

This afternoon was the deadline for developers to submit bids for a huge Lower East Side redevelopment project. Per EDC's request, developers will be allowed to build up to 500 parking spaces. Image: EDC

With today’s milestone, it’s worth remembering how EDC’s plan to transform the SPURA parking lots still encourages developers to build more parking than would otherwise be allowed.

The SPURA project, sitting atop four subway lines, includes 1,000 new housing units, half of which would be designated as “permanently affordable,” new commercial uses, and an expansion of the Essex Street Market. Under the city’s parking maximums, which have limited the addition of parking in much of Manhattan since 1982, no more than 345 parking spaces would be allowed. Those “accessory” spaces are meant for use by building tenants. The project’s own environmental impact statement estimates that the project’s maximum demand for parking would be only 257 spaces.

But EDC has received a special permit enabling up to 500 public parking spots at the SPURA development. And the agency told Streetsblog last year that it wants to replace every one of the approximately 400 parking spaces currently on site. As with its other development projects, EDC is apparently unwilling to let this site become a more urban place with less parking than exists today.

“The worst thing we could do,” EDC President Seth Pinsky told Streetsblog in 2010, “is create projects that create a parking need and then not provide that parking.”

Meanwhile, the Department of City Planning is approaching the finish line with its proposal to amend the rules governing off-street parking in Manhattan below East 96th Street and West 110th Street.

The plan, which contains many positive changes, such as eliminating parking requirements for affordable housing and retroactively applying stricter parking regulations to pre-1982 development, also contains some potential pitfalls. For example, it may make it easier for developers to obtain special permits to build public parking garages that exceed parking maximums – the process that EDC has exploited to cram up to 500 parking spots into the SPURA project.

The Manhattan Core parking policy change was approved by the City Council’s Land Use Committee last week, 16-0, with one abstention (Jessica Lappin). Next it goes before the full City Council, followed by a signature from Mayor Michael Bloomberg.

Real estate in the United States, it turns out, isn’t really guided by “the invisible hand” of the free market.

Federal housing subsidies flow disproportionately to single family homes over multi-family -- distorting the housing market. Image: Smart Growth America

In truth, federal policy puts a finger on the scale in a major way. Even apart from the quasi-governmental Freddie Mac and Fanny Mae, the federal government is the single largest investor in the American real estate market. And according to a new report from Smart Growth America, each year an assortment of subsidies, tax credits, and deductions exerts $450 billion worth of influence on the location and character of American residences and commercial spaces.

That massive influence can distort the market in significant, and insidious, ways.

“Viewed as whole, federal funds are not targeted to those most in need, are not targeted to strengthen existing communities and are not targeted to places where people have economic opportunities,” says Smart Growth America’s research team.

For starters, according to SGA, not a single federal program is primarily focused on support for existing neighborhoods. Government priorities are often contradictory on this front, with subsidies operating at cross-purposes. One program may subsidize new housing in undeveloped locations, for instance, while another attempts to shore up the city neighborhoods left behind. These programs also fail to factor in what it costs to support real estate development: There is no preference for projects with lower long-term infrastructure costs, leading to higher spending on things like roads and sewers at the local and state levels.

Overall, the report suggests, federal real estate interventions undermine market trends toward the development of more walkable places. About 85 percent of federal housing subsidies flow to single-family housing over multi-family, although only 65 percent of American households are homeowners and the majority of renters live in multi-family buildings. This has hampered the market for rental housing even as demand for multi-family rental housing has soared following the housing bust.

“Federal real estate spending is stuck in the past,” said smart growth-focused real estate developer Chris Leinberger in an SGA-sponsored call with reporters yesterday. “It’s not what the market wants today, it’s what the market wanted in the ’70s and ’80s and into the ’90s.”

Leinberger added that while consumers are demanding walkable urbanism, federal policy stands in the way of that kind of development — to the detriment of the economy.

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Eschewing the faddish steps local governments sometimes take to retain and attract young professionals, Massachusetts has cut to the chase with a common-sense plan. Governor Deval Patrick is catalyzing walkable residential development as an official state policy in hopes of retaining young people by appealing to their needs and preferences.

Massachusetts is hoping to jumpstart walkable, transit-accessible residential development with a new set of incentives. Photo: Boston.com

Yesterday, Patrick announced a program called Compact Neighborhoods, which will provide incentives for the development of multi-family housing near transit centers. The Boston Globe reported that state officials hope the program will spur the creation of 10,000 new housing units annually. To be eligible for the incentive, developers will need to plan on at least eight units per acre for multi-family homes and four units per acre for single-family homes.

The announcement came after researchers and housing experts publicly made the case for a shift in housing to reflect changing demographic realities.

Barry Bluestone, director of the Kitty and Michael Dukakis Center for Urban and Regional Policy at Northeastern University, told the Globe that over the next eight years housing demand will be dominated by young families with significant debt and older people looking to downsize.

The new program is a step forward but may be just the beginning of what Massachusetts needs to meet demand for walkable neighborhoods. Harvard economist Ed Glaeser, an urbanist, said that he doubted 10,000 homes a year would be enough to meet demand.

“I think it is going to take stronger medicine,’’ he told the Globe.

During the latest recession, housing prices were more resilient in Philadelphia's walkable neighborhoods. That is a reversal of the pattern that occurred in the previous housing downturn. Image: Congress for the New Urbanism

It’s been a bad few years for homeowners around the country, and those in greater Philadelphia are no different. But people who owned houses in Philadelphia’s center city or suburban areas near a walkable town center fared better than others.

According to a new report from the Congress for the New Urbanism, the homes in greater Philadelphia that suffered the steepest losses of the housing crisis were those in the most car-centric, sprawling neighborhoods. That was exactly the opposite of what occurred in the last housing downturn, when larger, single-family housing in disconnected, far-flung neighborhoods retained more of its value, researchers found:

During the first housing downturn of 1989-1995, housing prices declined the greatest in the urban core center (-33.7% in the center city), second-most in the central city of Philadelphia as a whole (-17.6%) and least in the lower-density areas of the suburban counties (-14.3%). But during the most-recent housing downturn of 2007-2012, home price declines have been the greatest in the low-density suburbs (-32.7%), second-most in Philadelphia County (-26.7%) and the smallest in the urban core of the center city (-20.2%).

The study evaluated the urban character of each zip code in the region, using criteria like housing density, transit accessibility, mix of land uses and other indicators. This method was employed to examine the relationship between urban form and the housing market, instead of using crude measurements like the political boundaries between suburbs and the city.

The authors attribute the new dynamic to rising energy prices, as well as the revitalization of central city Philadelphia and shifting housing preferences, especially among seniors and young people. The findings are consistent with other studies that have found walkable, transit-accessible places have bounced back stronger from this housing downturn than more car-centric areas.

So, how did Washington, D.C. — widely perceived as one of the most expensive cities in the country — end up topping a “most affordable” housing list?

First and most importantly, adjust for average income levels. Then, factor in transportation costs. Using that formula, the D.C. region is tops among 25 American metro areas in a new study from the Center for Housing Policy and the Center for Neighborhood Technology that looks at the ability of moderate-income households to shoulder the burden of housing and transportation costs [PDF]. The notoriously pricey Boston and San Francisco also make it into the top six.

The joint study came up with some other surprising findings. For example, it turns out it’s more affordable to live in New York City than it is to live in Cincinnati, based on the metrics used. And in general, renters fare better than homeowners in covering their costs of living.

In all 25 cities, middle-class households spent more than half of their incomes on combined housing and transportation costs between 2000 and 2010. Miami had it worst, with housing and transportation eating up 72 percent of the average income.

The study, titled “Losing Ground,” focuses on the disparity between income levels and steadily rising housing and transportation costs. Over the decade, researchers found, for every $1 in income gains, combined housing and transportation costs rose $1.75.

“Losing Ground” follows a 2006 study from the same organizations that took the novel approach of factoring in transportation costs to gauge the affordability of different metro areas. Measuring affordable living by looking strictly at housing costs, without including transportation, “tends to mislead people,” said Scott Bernstein, president of the Center for Neighborhood Technology, in a teleconference yesterday. Gathering this information comprehensively, he said, “has profound implications for a set of policy choices.”

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Over the last five years America has seen an historic housing downturn, but the prevailing trend hasn’t sapped demand for walkable, urban development, especially in many larger metros.

This walkable development in Atlanta was denied FHA funding, under antiquated restrictions, because plans contained too much retail. Photo: Congress for the New Urbanism

Until recently, however, Federal Housing Administration regulations made it difficult for developers to provide the kind of housing consumers are demanding. Now, thanks in large part to the efforts of groups like Congress for the New Urbanism and the National Association of Realtors, the feds are revising outdated regulations that have hampered the growth of mixed-use housing.

Last month, FHA loosened a restriction that forbade government-backed loans from supporting condominium projects that contained more than 25 percent commercial space. New rules will allow credit to flow to projects with up to 35 percent commercial space — or 50 percent in certain cases where the developer applies for an exemption.

“This is one indication that FHA is making big strides,” said CNU spokesperson Benjamin Schulman. “We view this as the first step in this long process to reform the regulation.”

Next CNU would like to see the commercial share threshold raised for multi-family housing projects administered by HUD, he said.

Better Cities and Towns reports that the restrictions on commercial space were grandfathered in from the 1930s, when mixed-use buildings were placed in a higher-risk category. Since then, a “form follows finance” phenomenon, led by federal agencies like FHA, helped turn America into a nation of  suburban, single-family-housing dwellers.

According to the LA Times, the new rules could be a big boost for the nation’s condo market, which has been performing well below expectations.

The developer of this Boerum Hill property with an entire ground floor devoted to parking says it's good for the neighborhood. Image: ODA Architecture via Crain's

An 85-unit residential building proposed for the corner of Bergen Street and Third Avenue in Boerum Hill sits just blocks from Atlantic Terminal, with access to nine subway lines and the Long Island Rail Road. But the city’s zoning requirements mandate at least 43 parking spaces for its 85 units, and the entire first floor of the building will be a giant parking garage, facing both the street and the avenue. According to a report in the Observer, the project’s developer says construction is scheduled begin within 10 days and take approximately 18 months.

The project's latest rendering adds streaking lights from passing cars to activate the first floor. Image: ODA Architecture via Commercial Observer

“We are bringing to the neighborhood what we think will be a nice, cool and chic new building,” developer Miki Naftali told the Observer.

Perhaps in an effort to boost the “nice, cool and chic” factor, the latest rendering of the building tries to disguise the first floor parking lot with some streaking lights from cars on the street.

In the surrounding Census tract, 74 percent of households are car-free. The intersection falls just outside the area of downtown Brooklyn slated for parking requirement reductions, which must still be approved by the City Planning Commission. With projects like this being built under current zoning, parking reform for the rest of the city’s “inner ring” beyond downtown Brooklyn can’t come soon enough.

The Midtown skyline could look very different, with new buildings (an example is shown in white) reaching taller than the Chrysler Building. Such height would only be allowed in return for funding pedestrian improvements in the area. Image: DCP via the Observer

Transit-oriented development is a virtuous circle. New transit infrastructure makes it easier and faster to get to a place, and then that place grows. New development in turn leads to demand to justify better infrastructure, and more tax dollars to pay for it. That, in a nutshell, is the story of how Manhattan grew into what it is today, first around streetcars, then els, and eventually the subways.

In its new proposal for a major rezoning of Midtown East, the commercial capital of the country, the Bloomberg administration is embracing this virtuous circle. Due in part to the billions of dollars being invested in the Second Avenue Subway and the East Side Access project linking the LIRR to Grand Central Terminal, the administration wants to allow a crop of new skyscrapers, some nearly as big as the Empire State Building. To build tall, though, developers will have to kick in funds to improve Midtown’s cramped pedestrian environment, above ground and below.

For a detailed look at how the zoning proposal will work, check out Matt Chaban’s write-up in the New York Observer. In short, though, the city plans to allow developers in the area — roughly from Madison Avenue to Third, and from 39th Street to 57th Street — to proceed with fewer procedural hurdles and to build bigger.

Along Park Avenue, new projects could be as large as Goldman Sachs’ new downtown headquarters, which is 43 stories tall. Around Grand Central, the transportation heart of the area, buildings could be roughly as big as the 51-story 1 Bryant Park. And if developers come up with something near Grand Central that exhibits “superior design relative to the sidewalk and the skyline,” said Frank Ruchala, the project manager for the Department of City Planning, it could reach taller than the Chrysler Building. The goal is to spark development in an area that only saw two new office buildings constructed in the last decade.

More office space around Grand Central would, on its own, promote a more sustainable regional transportation system. Almost every new Midtown commuter will take transit or walk to work. According to a separate DCP study, 86 percent of commuters entering the central business district during rush hour took transit in 2009.

DCP has structured the upzoning to improve the quality of those trips on train and on foot as well. To build taller than current zoning allows, developers will have to contribute to a new “District Improvement Fund” dedicated to public space and pedestrian improvements.

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Image: Arizona Department of Transportation

Does walkable development really lead to worse traffic congestion? Opponents of urbanism often say so, citing impending traffic disaster to rally people against, say, a new mixed-use project proposed in their backyards. But new research provides some excellent evidence to counter those claims.

A recent study by the Arizona Department of Transportation [PDF] found that neighborhoods where houses are closer together actually have freer-flowing traffic.

Researchers compared some of greater Phoenix’s denser neighborhoods – South Scottsdale, Tempe, and East Phoenix — with a few of its more sprawling ones – Glendale, Gilbert, and North Scottsdale. Some interesting patterns emerged.

In the more compact neighborhoods, the average household owned 1.55 cars, compared to 1.92 in more suburban areas. Residents of higher-density neighborhoods also traveled shorter distances both to get to work and to run errands, the study found.

The average work trip was a little longer than seven miles for higher-density neighborhoods; in the more suburban neighborhoods, it was almost 11 miles. Residents of the three compact neighborhoods traveled just less than three miles to shop, while residents of sprawling locations traveled an average of more than four miles. All of this led the more urban dwellers to travel an average of nearly five fewer miles per day than their suburban counterparts.

The density divide also played an important role in transit use. Rates varied from as high as eight percent transit ridership in high-density neighborhoods to as low as one percent in the more sprawling areas.

All of this translated into a reduced strain on roadways in the places that had more people — running counter to one of the strongest objections to mixed-use development. Comparing one suburban corridor to two of the streets in the more dense neighborhoods, the study found that on the more urban streets, traffic congestion was “much lower,” or about half as high (measured by the ratio of the capacity of the roadway to the actual volume of cars on it).

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