Traffic Reducing Housing (TRH) Preference - Details

The co-location sensation that's sweeping the nation. Last updated 10/30/06

TRH Impact

Fair Housing / Discrimination

Co-Location Theory

Employee Retention

The Market for TRH

Job/Housing duration match

Proximate Commute

Oct. '06 CCAPA Panel

FAQ - frequent questions

TRH for China

EAH

Thanks

Sample Green Commute Pledge

     

This research was originally advised by Berkeley's Robert Cervero and is now funded by the Environmental Protection Agency as part of the "Transforming Office Parks into Transit Villages" study. 

TRH Impact

TRH helps bring about efficient "human settlement patterns."  For the triangle immediately below, it is most efficient to minimize the distances between a) home and work, b) home and activities (shopping and recreation), and c) work and activities.  For suburbia, if the units of measure can be changed from miles to feet, this will have a big impact.

TRH provides better quality of life for "co-located" resident workers (where the distance between home and job is small): more family time, less stressfull commute, and lower cost of living.  Each TRH dwelling unit reduces typical commute impact by about 6,000 annual vehicle-miles traveled and 6,000 pounds of CO2.  

Rapid Spread: There are three main examples of TRH (Casa de Las Fuentes, Stanford West, Peninsula Park).  There appears to be a good chance to spread this policy innovation widely.  According to a Brookings Study, about 40% of U.S. buildings will be built in the next 25 years.  Thus there will be a very large amount of new housing built.  It may be possible to apply TRH to 1 million new apartments/condos.   1 million dwelling units covered by TRH could produce 6 billion less annual vehicle miles traveled (VMT) and pounds of CO2 than business-as-usual development.  

TRH Fair Housing / Discrimination Law

1) Important Points Concerning Housing Admission Preferences, from Paul Smith, Chief, Intake Branch, Office of Fair Housing and Equal Opportunity, HUD

There is a discriminatory disparate impact where facially-neutral, equally-applied policies have the effect of disfavoring a protected category of persons significantly more than others. To prevail, the defendant must show that the defendant has a compelling reason ("manifest business purpose") for the policies and that there is no lesser discriminatory alternative.
Arlington Heights v. Metropolitan Housing Development Corp. [under 14th Amendment, but the Court did not reach Title VIII; note that all of the Circuit Courts of Appeals have accepted variations of the disparate impact rule under Title VIII].

Preferences for admission to housing are analyzed for discriminatory disparate impact by comparing the racial (or other protected category) composition of those preferred to the composition of the relevant housing market.
Hazelwood School District v. United States, 433 U.S. 299, 308 (1977); Wards Cove Packing Co. v. Atonio 490 U.S. 642, 656 – 658 (1989) [not overruled by the 1991 Civil Rights Act for Title VIII]. For example, housing for SF teachers may be acceptable given the diversity of SF teachers, but housing for West Marin residents may not be acceptable given the much broader diversity of the market area from which that housing draws.

An institution may practice affirmative action only where it is narrowly drawn to address past discrimination; although race may be a factor among many others seeking a "diverse" population.
Grutter v. Bollinger. This principle also applies to socially-conscious, racially-specific housing admission policies. U.S. v. Starrett City Associates.

2) Like the West Marin example above, elite suburbs having less diversity than their metropolitan region as a whole, have to very carefully craft TRH programs.  Preference for local residents may be problematic.  

City Councils may find a "manifest business purpose" in reducing traffic and CO2.  Such finidings make TRH programs more robust legally.   

There have been no legal challenges to "green commute" housing preference programs to date, and it is more likely that other kinds of housing preferences will be challenged.   

3) A terrific reference: Meeting Local Housing Needs: A Practice Guide for Implementing Selection Preferences and Civil Rights Requirements in Affordable Housing Programs, Citizens' Housing and Planning Association (CHAPA) of Massachusetts, September 2004, 101 pages, http://www.chapa.org/LocalHousingNeedsReport.pdf This practice guide is focused on four themes associated with designing and implementing selection preferences, (especially local resident selection preferences), in affordable housing programs, including both rental and homeownership programs. Part I discusses general program eligibility requirement. Part II examines program requirements directly associated with selection preferences. Part III introduces essential fair housing principles and civil rights standards in affordable housing programs. Part IV presents the analytical techniques a housing provider might use to understand the civil rights effect of selection preferences that favor local residents, and discusses methods of designing selection preferences in light of civil rights considerations.

Co-Location Theory

While Anthony Downs (Brookings Scholar and author: Still Stuck in Traffic) advises commuters to learn to cope with traffic congestion in the short run, he believes that, in the long run, jobs and housing will eventually "co-locate." From an analysis of current research, Berkeley's Robert Cervero questions whether co-location will come about without intervention. He concludes that the natural incentives for people to reduce the distance between work and home have not been working. "Average journey to work distance has been increasing; jobs/housing balance continues to exacerbate." Thus, we conclude that co-location is very important, but we need to implement policy measures to allow the housing market to efficiently motivate co-location.

California Governor Schwarzenegger's housing vision: "each community should house its own."

Increased Employee Retention Economics

TRH provides better quality of life for co-located resident workers: more family time, less stressfull commute, and lower cost of living.  

For every 1,000 TRH employees, each 1% annual reduction in employee turnover is worth $1 million. Turnover is 14% or more per year, and much higher in a hot economy where people are switching jobs every 18 months (or less).

reduced employee turnover

 

Workers

1,000

One percent of workers

10

Cost to replace one worker (headhunter, job training, etc)

$100,000

annual value of one percent reduction in turnover

$1,000,000


Source: HR Magazine and Wisconsin Economic Development Association.

The Market for TRH

As a housing location decision factor, how important is commute? 

Marketing of the TRH concept should emphasize benefits such as auto ownership cost savings and time savings - a "convenient lifestyle." In some cases, people are spending 50% of their budget on housing and transportation. Annual reduced auto use cost savings can easily add up to $4,000 per year. 

Job/Housing duration match

Apartment/condo residential duration and employment duration appear to be reasonably well-matched for TRH:

Residence Duration Details

Employment Duration Details

Employment Duration: Are Workers Disposable?

Proximate Commute

Here is a clever idea to bring about "co-location" by moving interchangeable workers between store locations to minimize commute distance

Oct. '06 CCAPA (California Chapter, APA) TRH Presentation:

Steve Raney: Oct. '06 CCAPA PPT - 1MB

Heather Gould, Goldfarb Lipman, Oakland: FairHousingCCAPA_HeatherGould.PPT

Rob Fredericks, Santa Barbara: casadelasfuentes13MB.ppt 

FAQ - frequently asked questions

1) Won't people cheat these programs, falsely claiming green commutes?

2) Will TRH "handcuff" employees to their jobs?  

3) But two-earner families will have jobs in different cities

4) This smacks of heavy-handed government control.  People should be able to live where they want to live without government interference.  Somehow this seems like socialism.  

The current U.S. housing market is far from the ideal of an efficiently functioning housing market that we would envision under the theory of Capitalism. There are many obstacles and regulations in place that prevent efficient functioning.  TRH is a regulatory tool to improve market efficiency.  When a family selects a residential location that creates high mileage commutes, this creates a "negative economic externality" - the family creates negative traffic, particulate pollution, and greenhouse gas emissions, but does not pay for this impact.  Instead, the impact is borne by society.  TRH is a tool to "internalize" this externality.  

TRH will reduce employee turnover (by providing workers with higher quality of life and reduced cost-of-living). This will increase productivity and reduce hiring/training costs at profit-seeking Capitalistic businesses.   TRH will enable in-fill of congested / built-out places, providing new opportunities for profit-seeking real-estate developers.  Public-sector infrastructure costs are 25% less to support residential in-fill than for suburban sprawl.  This cost reduction results in lower taxes on individuals and corporations.  Traffic reduction from TRH also has significant benefits by reducing the need to build expensive new transportation infrastructure and by reducing unproductive time lost in traffic for workers and for goods movement.   

5) Rent increases for "bad commutes" (such as at Stanford West) will drive residents out, ripping apart the community fabric.  

Concern was expressed that bad commute rent increases would cause households to move away, and neighborhood social networking would be adversely impacted. Counter argument 1: apartment dwellers have relatively short housing tenure. TRH apartment dwellers, via a) labor stickiness, b) "reinforcing labor stickiness", and c) "augmented social networking job seeking assistance" should have longer tenure.  Should a "good versus bad commute price differential" be applied to monthly condo association fees in future programs building upon Peninsula Park's innovation, we can envision a condo owning dweller temporarily taking a job with a bad commute and not moving, and then actively seeking a co-located job to get back into preferred status (or that dweller could move out temporarily and sub-let). 

6) What about traveling salespeople?  It doesn't seem fair that they should qualify for TRH.  

What should be done about TRH criteria for traveling sales people and home health care workers? How should these "high mileage" workers be treated? They might only live 1 mile from work, but might log 25,000 miles on their car in a year.  Clark Blasdell of Novato Community Partners suggests that Housing Preference Program Rules can never envision every possible situation.  Clark recommends that the Board or other responsible organization solve these issues as they come up.  It is also advisable to bring in an experienced advisor such as Clark when defining the preference program.  It might be that a particular home health care worker would log much less mileage (though still logging high miles) from living in TRH.  And that health care worker might drive a Prius.  

7) Is this a "company town?"

No it is not.  There were good company towns, such as Corning, NY, where Corning was a great corporate citizen that helped the community and built the library.  Bad company town examples include Pullman, Ford's company towns, mining towns, textile mill towns.

But, there is a place for companies to help with our housing and quality of life issues.  William Fulton advocates forming local coalitions of employers to help bring about workforce housing, but there is no need for employers to build and operate housing.  In his APA '99 paper, Microsoft's Senior Director of Community Affairs, Akhtar Badshah, claims "employers are realizing that they are a stakeholder in the success or failure of urban regions" and some are becoming "equal partners and contributors in efforts to create sustainable urban environments." He sites examples including: A) The Atlanta Project, that matched 20 "cluster" neighborhoods with corporate partners within a supportive central structure. B) NYC's Williams-Brooklyn Broadway Triangle Urban Renewal Project, where Pfizer ($50M), Brooklyn Union Gas Company, AmEx, and Fannie Mae all contributed.

8) Why did you claim, "It is reasonable to assume that traffic reducing housing will spread to cover one million new condos and apartments in the U.S. over the next 20 years?”

1) Zimmerman / Volk. "The home industry is now led by a few lumbering giants that provide housing 'value' measured by size and novelty. Genuine housing innovations have been mostly limited to the areas of production efficiency and risk management, rather than any meaningful improvement of the product offered to the consumer." 2) Smart Growth America: "Homes are treated as generic commodities like pork bellies, which are all essentially the same, rather than as consumer products like cars or clothing, which vary greatly according to people's preferences. This tired approach tends to determine how many homes people want, but not what kind of homes or what type of residential neighborhoods people would select if given a choice." - Fannie Mae's Housing Policy Debate (Volume 12, Issue 4. 2001)

9) Why only condos and apartments and not single family detached homes?

The average residential duration in single family homes is significantly longer than average employment duration.  Hence, there is not a good residential/employement duration match for TRH.  For apartments and condos, residential duration has a closer match with average employment duration.   Townhomes have longer residential duration than condos and shorter duration than single family homes, thus are good candidates for TRH as well.  

10) Isn't this discriminatory?

First, housing preferences are best implemented under the guidance of expert legal advice, where the attorneys are skilled in municipal law.  Such attorneys will be able to most creatively meet traffic-reduction (or other) objectives while observing applicable fair housing laws.  Note that each state has its own set of laws in addition to federal Fair Housing and non-discrimination laws.  In additional to expert legal advice, expert demographic analysis is also required.   

Second, housing preference and discrimination is not a "cut and dried" legal area.  Case law has been described by experts as an "inconsistent mess."  The results you get in a discrimination trial may vary depending on the judge you get.   

Third, discrimination issues may be illustrated providing a range of examples, from more discriminatory to less discriminatory:

A) Housing preference for residents of elite (non-diverse) suburbs, such as Novato, that participate in the Bay Area real-estate market (with it's diverse population) can be problematic, because such housing preferences serve to prevent protected groups (Latinos and African Americans, in the Novato case) from access to housing.  Thus, in the Novato case, the housing preference was limited to 1/3 of the housing units.  

B) Teacher preference housing.  First off, teacher housing preference creates a "lottery" where a few teachers "win" by obtaining desirable housing, and the rest of the teachers do not benefit.  If teachers are special and deserve special treatment, then the best policy remedy is to pay them more.  For teacher preference, it is hard to argue that there is "no lesser discriminatory alternative."  Why wouldn't other public sector workers qualify for such housing?  

From HUD's Paul Smith (see above): "Preferences are analyzed for discriminatory disparate impact by comparing the racial composition of those preferred (teachers) to the composition of the relevant (larger) housing market." Thus, preferences for "San Francisco teachers may be acceptable given the diversity of San Francisco teachers," but, if Novato's teacher population is not diverse, preferences for Novato teachers may not be acceptable.  

C) For a "commute distance" based preferences (such as: incoming households with one adult member with a 4.0 mile or shorter commute) the test is complicated.

First, we have to examine the "qualified population" for this housing.  There are no discrimination implications for private sector developers as far as selling condos for $2,000,000 or for $15,000.  Market forces control pricing.  Thus, for $600,000 market rate condos, we examine the universe of buyers with sufficient assets for the downpayment and sufficient income to meet mortgage payments.  The fact that there may be disproportionately more wealthy white folks who may buy these condos is not the problem of the housing market.  The Supreme Court has ruled that this is a problem of our educational system in not producing enough well-educated minorities.  Educational achievement is generally required for sufficient wealth accumulation to purchase expensive housing.   

Given the wealthy universe of folks who can afford $600,000 condos, we compare the racial composition of these wealthy folks within the 4.0 mile commute radius, and compare against the entire Bay Area population of wealthy folks.  If there is a statistically significant difference in the wrong direction, then there could be discrimination.

This analysis is not readily created for public data sources.   Inexact approximations are required.  Detailed "per worker" data by place of work, race/ethnicity, and earnings/income are only available down to the county or to a geography that lumps a few cities together (such as Palo Alto , Mt View, Los Altos , and part of Sunnyvale) .  Depending on where the preference commute radius is applied, you might find a good or bad geographic match.  From this inexact data, you might decide that workers making $150,000 per year or more would qualify for $600,000 condos.  This is inexact because: a) there is no test of wealth to cover a down payment, and b) this data is for workers and does not comprehend two earner families that would also qualify for mortgages, c) the increments in higher annual incomes are provided at too coarse of a grain to be matched for "expensive" housing ($600,000 condos, etc).  

Hypothetically, for an ideal, very accurate analysis, you would need to work with one of the three credit rating companies (Equifax, etc) to find families that qualify for a $600,000 mortgage, then you would somehow need to ascertain the racial distribution of those families.  It is not possible to conduct this hypothetical analysis. 

For Below Market Rate (BMR) housing, the qualified population is those with incomes below a certain level.  Thus the TRH preference analysis for BMR housing flips the income universe upside down.  From there, the analysis is the same.  

D) For some preferences, there is no difference between the composition of the preferred market and the relevant housing market:

In this example, any individual or family can live anywhere and work anywhere up to the point of obtaining TRH.  Then, when they move into TRH, they have a green commute, though it might only be a "slightly green, very long" carpool commute. Thus, this preference example is very robust legally.  

*********** 

A city may adopt a formal finding of a compelling reason ("manifest business purpose") to reduce traffic and greenhouse gas emissions.  Such findings make preferences more robust in the face of legal challenge.   A related example: in the face of natural disasters such as Katrina, housing preference for first responders might be racially discriminatory, but could still be allowed because of a municipal finding of a compelling reason in support of natural disaster preparation.  

In the face of potential legal challenge, thorough bookkeeping for each resident selected is important.  

How likely is it that a well-crafted TRH preference policy will be challenged?  Not likely.  There is a high burden/cost for litigants to challenge such preferences and to undertake the necessary demographic/geographic analysis.  It is far more likely that examples #A (residents) and #B (teachers) above will be challenged.  

To further complicate matters, the "whole enchilada" theory of TRH can be a great catalyst for upward mobility for protected groups, but that topic is saved for another day.  

TRH for China

A Tianjin (Dadang District) delegation visited the Cal State East Bay China America Business Center March 14-17, 2006. I had a chance to meet with the delegation and discuss TRH.

First, some background: (Thanks to grad student Wei Zhu of Berkeley, published scholar Jiawen Yang of Georgia Tech, and the Dadang delegation).

From a TRB 2006 paper by Jiawen Yang ("Transportation Implications of Land Development in a Transitional Economy: Evidence from Housing Relocation in Beijing, China" -TRB paper 06-0670), Jiawen finds the same increase in auto commute distance is occurring in China:

"This research reveals and quantifies the transportation impacts of the changing workplace-residence relationship stemming from land and housing reforms in Chinese cities, using Beijing as the study case. Evidences from a 1996 housing relocation survey indicate that commuting time increases by 30% as households move away from previous housing location and from the central districts to the suburban districts. This partially explains the demand for motorized transportation and congestion in today's Chinese cities. The research also reveals the importance of urban growth strategies to prevent congestion from worsening as urban growth continues."

Up to 20 years ago in China, there was more central control by the government in telling people: "here is where your job is, and you'll live 2 blocks away in this apartment." Now, there is more choice in housing location selection, and this is increasing commuting time.

"Yes, this is true, but the Chinese government still has a very strong influence on location choice compared to USA city governments, but not the in the old style of command and control." From Jiawen Yang in e-mail correspondence.

Cities21 has put out a very rough brainstorm for TRH in China. Only upper income Chinese workers can afford cars to commute to work in. "Have the Chinese government motivate workers to select housing close to jobs. Have the government restrict access to housing units to only workers who have short commute distance. The government can check prospective new resident work address to calculate commute distance. The government could apply a tax to workers based on their commute distance. For example, a commute of less than 6 km would not be taxed, a commute of between 6 and 12 km would be taxed at 10 RMB per month (about $1.20). A commute of more than 12 km would be taxed at 20 RMB per month (about $2.40). Such government programs to reduce commute distance could only be applied to "wealthy workers" earning 20,000 RMB per year or more. Lower income workers cannot afford automobiles, so do not contribute to automobile congestion. (Note: Jiawen Yang suspects that lower income workers actually have longer commutes than wealthy workers.)

When exposed to the TRH concept, the Tianjin Delegation said the following: "There have been academic discussions of Walk to Work housing in China. It is very possible for the government to implement such a program."

Employer Assisted Housing (EAH)

1) Employer Assisted Housing (EAH) (see: http://www.fanniemaefoundation.org/programs/hff/v2i2-company_town.shtml) is very interesting, but has not been proven as a tool to produce a large quantity of dwelling units (more than 5,000) . With EAH, employers typically subsidize employer housing purchase. TRH may represent an improvement upon some EAH programs. For marketing purposes, some EAH programs are entitled "Walk to Work" and "Live Near Work."

2) Samantha DeKoven describes the Chicago Metropolitan Planning Council's employer-assisted housing (EAH) program. MPC's EAH web site: www.reachillinois.org. 2.5MB PowerPoint slides. Paraphrased highlights "Our EAH program promotes home ownership, typically an employer provides $5,000 to an employee to buy a house, in the form of a forgiveable loan. We target moderate incomes, 80-120 percent of median income. EAH increases workforce stability. We surveyed suburban employers and found support for EAH. Senator Clinton introduced the Housing America's Workforce Act into Congress on 6/29/05. Please support it. The bill provides federal grants for NGOs that facilitate EAH. We have to fight the image of bad Chicago public housing - our EAH program is very different. Allstate, BankOne, and local cities participate in our program. We have 30 companies in the program with 281 home purchases subsidized. Employers receive great tax benefit. $100K of employee benefit only costs the employer $31K (see PPT for math). Cost of employee turnover is generally the cost of one year's salary. One employer participant subsidized the purchase of 60 homes within 15 miles of work."

3) Shiloh Ballard's first job at SVLG was to chair an EAH task force. There was a great deal of employer interest, but the economy took a nose dive. For employers to spend hard cash for a $5K subsidy for an employee to buy a house is difficult these days. Instead, SVLG went a separate direction with their very successful workforce housing program.

Additional reading

Thanks to:  

Draft Version: Classic Communities Green Commute Pledge

Nov 16, 2007

 

Green Commute Priority Levels.  Please check the level of green commute you are able to sustain.  New entrants with Level 1 will be given precedence over Level 2, etc.  Once you are a resident of Classic Communities you may switch levels.  Residents who switch jobs so that they are forced to become solo driving commuters will not be penalized.  However, there is an expectation that Classic Community residents will make best efforts to find green commute alternatives.  Please check your green commute level below:

1)       Our household will have no adult members who commute.  We are either retired or do not travel to work or we telecommute / work from home. 

2)       All employed adults (21 years old and above) will to commute to work via commute alternatives 80% of the time (4 out of 5 weekdays). Commute alternatives include transit, carpool/vanpool, telecommuting, biking, and walking.  Our household will happily provide progress reports and or evidence of our commuting every other month.  We will provide "action" photos of our commute once per year if requested.     

3)       One employed adult will commute to work via commute alternatives 80% of the time.

4)       One employed adult will have a short and green commute, where the Google Maps one-way driving distance is 4.0 miles or less.  This driving distance will be verified twice per year, via proof of work location provided by the employer. 

Signature: ____________________________ , Date: ______________________

Classic Communities Signature: ________________________, Date: ___________