LOCATION-VARIABLE COSTS

WHY IS IT SO HARD FOR CITIZENS TO UNDERSTAND THE FACTS ABOUT LOCATION-VARIABLE COSTS?

THE 10X RULE AND ITS APPLICATION TO ACHIEVE FUNCTIONAL HUMAN SETTLEMENT PATTERNS IS A KEY TO UNDERSTANDING WHY LOCATION-VARIABLE COSTS ARE SO IMPORTANT.

In a recent ‘Current Perspectives’ draft (“A Shelter Must Read” 17 May 2010) Groveton, the newest BaconsRebellion Blog Contributor and frequent commentor over the past few years, again demonstrated continuing confusion.

After spinning out details of a hypothetical (aka, ‘typical’) eastern Loudoun County Household (See End Note One) Groveton asks:

“What else do we need to know in order to estimate how much these “scoff societies” are stealing from us?”

The short answer is: “Almost everything because that ‘data’ on the hypothetical Household has no relationship to an understanding of location-variable costs or their allocation.

STIPULATIONS

1. Under current conditions, two Urban Households that:

A. Occupy the same price dwelling (technically ‘two dwellings with the same assessment’ but not necessarily the same VALUE) in the same municipal jurisdiction, and

B. Have the same income and consumption profiles

Will pay about the same amount for most location-variable goods and services REGARDLESS OF THE SETTLEMENT PATTERN IN THE DOORYARD, CLUSTER, NEIGHBORHOOD, OR VILLAGE if their respective Households.

That is THE PROBLEM, it is not an indication that there is NO PROBLEM.

2. Often Urban Households with high disposable incomes choose to live in locations where subsidy of location-variable cost make living in these location DOUBLY attractive.

First they have the privacy and exclusiveness of “the American Dream” AND second, someone else is paying much of the cost of that privilege.

Three major points to remember about this second stipulation:

A. Neither Jim Bacon nor EMR have EVER said that Urban citizens should not have the right to live in these locations – or anywhere else – SO LONG AS THEY PAY THEIR FAIR SHARE OF LOCATION-VARIABLE COSTS.

B. If Urban Households in these ‘exclusive areas’ fall INSIDE the Clear Edge around the core of a New Urban Region (or one of its large SubRegions) this area MAY have a negative impact on the evolution of functional settlement patterns at the Alpha Community or SubRegional scale.

This is due to the fact that the ‘exclusive area’ may insulate, separate or isolate two or more components of the Community or SubRegion that would otherwise have a synergistic economic, social and / or physical impact. (See literature on NIMBYism.)

However, these possible Community, SubRegional or Regional costs are NOT factors in the 10 X Rule derivation because the 10 X Rule only deals with Urban dwellings at the Dooryard, Cluster, and Neighborhood scales. There are obviously cost at larger scales but they are beyond the scope of the 10 X Rule.

C. If Urban Households in ‘exclusive’ areas fall in higher Radius Band locations (beyond the logical location of the Clear Edge as clearly illustrated with census data and air photos in “The New Urban Region Conceptual Framework” a PowerPoint found in Chapter 49 of TRILO-G), the same Radius Band will ALSO include many Households that are in the bottom 90 percent of the Ziggurat. (NB: In this context the ‘Ziggurat’ may also be known as ‘the economic spectrum.’)

It is often suggested that those Urban Households in ‘exclusive areas’ which are at the top of the Ziggurat (both inside AND outside the Clear Edge around the Core of the New Urban Region) pay MORE than their fair share of taxes and fees. In some cases that may be true but these taxes and fees almost never contribute directly to a fair allocation of location-variable costs.

The less well-to-do Urban Households in Outer Radius Band – the bottom 90 percent of the Ziggurat – fall into two categories:

First: Those distributed around the middle of the Ziggurat have fallen for the Myths behind the “drive-til-you-qualify’ ploy to “get more house for the money” and the Myth that buying a bigger dwelling than the Household ‘needs’ is a good investment. (Larry G. articulates the views of these residents in Spotsylvania County and in similar locations on a regular basis.)

The second group are those at the bottom of the Ziggurat who are seeking Affordable Housing but end up with InAccessible Housing. (See discussion of concentrations of foreclosures and underwater mortgages in “A Shelter Must Read,” 17 May 2010 and in “The Importance of Housing Location,” 18 May 2010.)

LOCATION-VARIABLE COSTS AND THE 10 X RULE

With the above stipulations and clarifications that should put Groveton on a more positive track spelled out, EMR repeats yet again:

The Shape of the Future spells out:

1. Why the ‘cost of sprawl’ studies that have been a staple of the settlement pattern debate are tragically flawed.

2. The 10 X Rule and its derivation.

Here again is a brief summary:

During the mid-90s, planning graduate students carefully examined two conditions in several jurisdictional contexts:

In each case the a 10,000 acre area was selected and in each case 1,000 dwellings were located.

In Alternative A the 1,000 dwellings were designed in a Planned Neighborhood Development. See End Note Two.

In Alternative B the 1,000 dwellings were distributed on 10 acre lots.

For both Alternative A and B 40 (+/-) location-variable costs were calculated. The number of categories varied from jurisdiction to jurisdiction depending on the way goods and Services were packaged and delivered but for most situations there were 30 plus goods and Services that were the same in every case.

One bellwether was the cost of the construction of the electrical infrastructure and the cost of delivery of a kilowatt of electric service due to line loss. One of the easiest was the cost of Roadways because of the standards enforced at the time by VDOT.

The result was the 10 X Rule:

In a typical case, the same size dwelling with the same uses in configuration A would have an annualized cost of $6,700. In configuration B the cost would be $67,000, thus “10 X.”

VALIDITY OF 10 X

There has often been disbelief expressed about these results. However, no one with understanding, experience and access to actual land development data has offered a substantive critique or suggested that the 10 X Rule does not present a valid perspective on location-variable cost allocations.

Several factors makes incremental scattered Urban dwellings in the Countryside seem less expensive than they turn out to be:

One is the excess capacity in Countryside serving infrastructure that exited before 1950.

For example farm to market Roadways intended to serve NonUrban land uses can be used for this and that new dwelling and it is only when the total impact of a decades accumulation is considered that the true impact is realized.

It is widely agreed that traffic from orphan Dooryards and Clusters were dumped out on VDOT roads by county “pro-growth” land use control processes. This is the root cause of ‘congestion’ in Fairfax, eastern Loudoun and Prince William Counties.

Another ‘excess capacity’ illusion that hid the real impact of scatteration was the subsidized electrical distribution system. When Urban users are added, the rate payers in the entire service area – those with efficient patterns and densities as well as those with inefficient patterns and densities – pay for system capacity expansion.

Another major factor has been the failure to factor in externalities such as the cumulative impact uninspected and unmonitored septic tanks on ground water and the impact of over fertilizing and watering mown grass.

Perhaps most important is the stupendous power of FLAT RATES for goods and Services ranging from mail delivery to electrical service.

Flat rates were justified before computers made it possible to fairly allocate the cost on an individual Household basis.

Understanding the basis for a locational-variable cost bill would be the most powerful way to demonstrate the truth in the overarching reality illuminated by David Owen in Green Metropolis.

Exacerbating the impact of flats rates has been the use of volume discounts to reduce the cost of a good or Service if one uses more of it. This seemed like a good idea when the economy was based on burning through Natural Capital.

IN RETROSPECT

After a decade and a half there have been no substantive questions raised about the 10 X rule – or the other four Natural Laws derived from the settlement patterns that have evolved since 1950.

There are, however, several caveats:

First and most important, the 10 X Rule and the 10 Person Rule were based on settlement patterns that evolved when energy was cheap and the use of Large, Private vehicles was heavily subsidized by burning through Natural Capital.

Those days are gone. As suggested in prior work by SYNERGY, the rising cost of energy as well as the higher cost of ALL goods and Services if the current level of technological activity is to be preserved means that and ‘sweet spot’ of 10 persons per acre at Alpha Community scale will be significantly higher and thus the 10 X rule may become the 20 X Rule.

It is clear that all costs have gone up but that does not mean there has been a fundamental shift in true cost / benefit relationships.

No one has yet figured out a way to:

Transport children from scattered location to school except by bus.

Mix clean water with human waste and Household waste (that now includes a range of chemical and biological pathogens) and then treat / dispose of it in a way that is easy, cheap and has not significant externalities.

Propel Large, Private vehicles (directly via petrochemicals or indirectly via carbon generated electricity) that is cheap and free of environmental externalities.

Grow mown grass in the Mid-Atlantic MegaRegion without extensive use of fertilizer and water

Perhaps the best illustration of location-variable costs is electricity. No one has figured out how to deliver electricity without transmission lines, substations, distribution networks and transformers AND no one has figured out a cost effective way to reduce line-loss, especially at low voltages.

With these notes, it is hoped that bright folks like Groveton can articulate ways to inform citizens about the importance of fairly allocating location-variable costs. In addition this post will give Larry G. enough information so he does not ask yet again for the “list.”

EMR

……………….

END NOTES

1. From Groveton’s comment: “Oh yeah … the house is in Loudoun County, required a $40,000 proffer to build and generates 1% real estate tax on its assessed value. The working couple who live in the house have a combined income of $250,000 and are raising 2 children (ages 10 and 12) who attend public school. Their average state income tax is 5.4% and their average federal income tax is 34%. They spend @75,000 per year on various things paying an average sales tax of 5%. The husband commutes to Tyson’s – which is 17 miles away. The wife commutes just 8 miles. Hubby uses a combination of the Greenway and Dulles Toll Road. Wifey uses surface streets (i.e. no tolls).”

2. (Actually, Alternative A was more complex. The plans evolved in stages. First, the 1,000 Units were distributed in compact Dooryards, in the next iteration, the Dooryards were collected into compact Clusters and finally the Clusters were located in a single Neighborhood. The X factor was calculated for each step up toward functionality.


Share this article



ADVERTISEMENT

(comments below)



ADVERTISEMENT

(comments below)


Comments

33 responses to “LOCATION-VARIABLE COSTS”

  1. Larry G Avatar
    Larry G

    I thank EMR for "the" list. He's right, I'll probably ask for it again but this time I'm going to try harder to keep it in mind.

    I had some different thoughts but I'm going to limit it to one theme on this comment.

    EMR alludes to the "flat" rate concept that is exemplified in various commodities that we purchase ranging from electricity to postage to common items we purchase in stores but I'd like to add in a concept that I think tends to mitigate the location costs in ways that really do undermine some of EMR's thesis on locational costs.

    And that is the modern day function called Distribution.

    Dominion Power accommodates "scatterization" in their concept of electrical distribution.

    They have a very advanced distribution network to include paradigms to determine just where the idea place for a New Plant should be ( or not).

    Beyond that – if not mistaken, every electric bill is now broken into two parts – the distribution cost and the generation costs – right?

    Similar deal with the post office and UPS/Fed Ex. If you look it up- they are different rates for different distances and if you live in rural Montana or SW Va, the cost of delivering certain packages IS higher. but because they already have a grid distribution system – one truck is already going to be on a route and instead of it being half empty, it id designed to be 3/4 full or better and so packages below a certain weight are "easy' carries … and the price is set low so as to maximize the use of the trucks.

    Anyone who has ever purchased something with some weight on it in EBAY knows this.

    If you buy an item that is shipped by FED EX or UPS coming from a distribution location to your home – it's a LOT cheaper than having it shipped from one home to another.

    so that rowing machine that you bought from Amazon ships via UPS/FedEx/USPS pretty cheap whereas that same exact rowing machine – also shipped from one home to another is expensive.

    I call this the "distribution" effect.

    Amazon has a partner agreement with a company that makes rowing machines – and every day – UPS sends a truck to their loading doc to load it up with rowing machines destined for homes all over the US but instead of trying to deliver those machines from that truck, that truck goes to a regional distribution hub where automated conveyors "read" the bar codes and kick various packages into trucks full of other similarly process packages – that truck destined for another hub.. etc.. until that machine ends up in a truck destined for a home with a bunch of other packages going to that same general location.

    WalMart does the same thing, as does CVS, Home Depot, McDonalds, etc.

    So the point here.. is that all of these companies – including electricity and petroleum, etc have explicitly designed their distribution systems to accommodate how our settlement patterns have evolved (in ways that are not optimal as demonstrated by EMR).

    The location "penalty" is very real – as I said.. just try buying something that weights 50 lbs from EBay and you'll find out quick.

    But the supply chain logistics network created by suppliers has essentially become so distributed and so efficient at distribution that they can knock that delivery cost down by 1/2 or even 3/4 … because a truck is "already headed to that location anyhow carrying other packages".

    ON one level EMR should love this.

    Instead of 20 or 30 separate delivery trucks cruising through your neighborhood everyday carrying packages with very expensive location-variable delivery costs – there is one truck.. superbly loaded to maximum efficiency.. and the location variable costs are effectively reduced by the explicit design of the distribution logistics system.

  2. Larry G Avatar
    Larry G

    Most Package shipments now days provide the ability to "track" them – which I find fascinating at times – like this one that started in New Jersey but went through Durham, NC on the way to Spotsylvania.

    Not only that, it started on UPS and then got transferred to USPS – an interoperability function that UPS calls USPS "Innovations":

    May 07 2010 Origin RPF Logan Township, NJ

    May 08 2010 Transferred to UPS Mail Durham, NC

    May 11 2010 Entered USPS Facility RICHMOND, VA

    May 12 2010 DELIVERED SPOTSYLVANIA,VA

    think for a moment what this means to anyone who might be attempting to allocate a location cost to this delivery.

    You're going to have to know a LOT MORE than you know right now before you'll understand how the path above is more efficient than a more direct path much less tell UPS how to alter their business model.

    As I stated above – UPS and just about everyone in the transportation business has figured out how to optimize deliveries – IN SPITE OF scatterization.

    Good luck in trying to figure it out much less get the govt involved in telling UPS how to operate.

  3. Anonymous Avatar
    Anonymous

    If I understand EMR's thesis correctly, infrastructure costs are the lowest when they are deployed to serve people at ten persons per acre. Presumably the cost curve deceases sharply from lower densities, but then begins to increase as densities increase. Do I understand you correctly, EMR?

    I have no data or studies that would prove or disprove this thesis, but intuitively the shape of the cost curve seems logical (even if the sweet spot were located at some other exact point). It is very expensive for telephone and electric utilities to serve remote rural areas. But serving high-rise buildings is also very costly. Riser and distribution cables, especially when deployed on a "home run" basis, are also quite expensive. On the other hand, long haul transport for both telecom and electricity is not a big cost component.

    If EMR's thesis is correct, it should be provable by studying Reston. By law, Reston's density is capped at 13 people per acre. Since Reston is not fully developed, the actual density is probably slightly less than the cap. Of course, there are parts of Reston that exceed 13 persons per acre (Reston Town Center) and other that are less, but all in all, Reston might be a good test bed. EMR, what do you say?

    TMT

  4. Groveton Avatar
    Groveton

    Wow. Lots of words. Few numbers.

    The contention is that some people are not paying their fully allocated variable costs.

    That contention can only be proven true if you know the fully allocated variable costs and what people are paying toward those location variable costs.

    We seem to know neither.

    The 10X rule was interesting because it actually had a few numbers.

    One house costs $67,000 in annual location variable costs (at least I think it was annual although building out the electrical grid calls that into question). The other house cost $6,700 in annual location variable costs. That's a difference of $61,300 per year.

    How does that $61,300 per year break down? What are the major cost categories which drive that $61,300 per year? This is the missing thinking in the argument. Until this question is answered the entire argument is purely theoretical and unactionable.

    But … let's make some assumptions. At least in NoVa, a house on a 10 acre lot is going to cost a lot more than a house, townhouse or condo in a planned community. If you could even find a house on 10 acres in, let's say, Great Falls you'd have to pay $5M or so to buy it. A modest home just down the street in the planned community of Reston might cost $500,000. So, there's a $4.5M difference in valuation. That's about a $45,000 per year difference in real estate taxes in Fairfax County. So, we now have a discrepancy of $61,300 – $45,000 = $16,300. And that's just the real estate taxes. Let's move to state income taxes (some of which go to pay for location variable costs).

    The resident of Reston, living in a $500,000 home, might make $200,000 per year. That means he or she pays $11,500 per year in state income taxes. The resident in the $5M home must make at least $1M per year. Which means that he/she pays $57,500 per year in state income taxes. That's a difference of $46,000. If even 25% of that difference pays for location variable costs then the person living in the $5M home on a 10 acre lot is paying for MORE of his or her location variable costs than the person living in the planned community.

    All of which assumes that the seemingly exagerated 10X rule is true.

    All of which ignores the even larger discrepancy in federal taxes paid between the two homeowners (some of which also go to pay for location variable costs like cleaning up the Chesapeake Bay due to runoff).

    All of which ignores differences in assorted other taxes like sales tax, inheritance tax, etc.

    Sorry, EMR but your qualitative analysis just doesn't hold quantitative water.

    In fact, the few numbers you provide indicate that scatterization generates a tax revenue surplus which is used to subsidize the under-payments from people living in functional human settlement enclaves.

  5. Anonymous Avatar
    Anonymous

    Groveton: You are too kind. When I first came to Bacons Rebellion EMR published a similar "explanation" of the 10X rule which I found so outrageous that I published a paragraph by paragraph response. Shortly afterwards Bacon's Rebellion turned off the comments feature.

    RH

  6. Larry G Avatar
    Larry G

    " Another major factor has been the failure to factor in externalities such as the cumulative impact uninspected and unmonitored septic tanks on ground water "

    you want externalities?

    how about sewage sludge from municipal wastewater treatment systems that comes in two flavors – Class A and Class B.

    Class A is processed to the point where it can be used as regular fertilizer. Class B, on the other hand, is full of nasties and is relegated to farm fields that cannot be used to grow human food – with good cause and which, even done "properly" has been shown to pollute groundwater as well as surface water

    whereas your humble septic tank/drainfield has in 99% of cases proven to be a safe method of waste disposal and the proof of this is found in the phrase "well & septic" where BOTH systems are located on the same property – and if septic tanks did not work as advertised, the owners would literally be drinking their own sewage.

    There is a big added benefit – hormones, prescription drugs, etc are sequestered – not dumped in waterways and as far as I know gradually broken down.

    The big question is what would you do with sludge that …would not create a significant externalality?

    Here's the other externalality that is ignored by the settlement pattern fru frus… stormwater….

    EMR bemoans the lack of geographic literacy on the part of those who do not understand functional settlement patterns.

    I would assert that what is even more geographically illiterate is thinking that functional settlement patterns can build anywhere with regard to the impacts of impervious surfaces and the attendant runoff problems.

    Indeed if one looks at the sewage and stormwater disposal issues associated with urban enclaves, they are, in fact, the 600 lb gorillas in the externalality department.

    and as yet – no solutions offered by the functional settlement pattern folks who blithely continue their advocacies premised on what else – location imposed externalities – which they ignore when totally up the pros and cons of density verses scatterization.

  7. Anonymous Avatar
    Anonymous

    A sewage treatment plant does indeed concentrate all your problem materials, which then need to be sequestered or used, somehow.

    As for septic systems, think of them as I described previously: they are nothing more than a giant chromatograph. Bad stuff is conentrated in the tank, same as in the treatment plant. Once it gets to the leaching field it is adsorbed and desorbed as it moves through the soil. Some of it may degrade into other materials, which may or may not be less harmful or dangerous stuff.

    How fast that happens and how far it travels depends on many things, but make no mistake, it is out there and it is moving throught the environment, in this case the subsurface environment. For the ost part the movement is glacially slow, and that is for water solouble compounds.

    The big diference is that you do not dump your stormwater in your septic tank, so you don't get runoff motor oil and whatever else.

    Your car sits in the driveway and drips oil, which goes right into the soil under your lawn.

    In the end, the only real difference is dilution. This is where we come unglued: how clean is clean?

    On the one hand Larry thinks zero pollution is allowed, but we look the other way or grant permits if the damage is low enough.

    On the other hand, some people are highly alarmed about ANY amount of trace material of ANY kind, and they believe it is a primary source of environmental related cancers.

    In any case these things exist and they are not going away. There is no such thing as zero externality. On the other hand, just because you get paid for damage you incur, doesn't mean that the damage went away, somehow.

    An externality is damage to someone who is not party to the original transaction. I argue that by virtue of the golden rule you must allow others to have what you demand for yourself. Since everyone contributes to sewage, everyone is part of the sewage transaction, and no one has the right to claim unfair externalities: we let other people have septic fields in order that we can be allowed to have one – even if we know they are not perfect.

    Arguing this kind of trade as an externality dispays a lack of understanding of the concept. This is similar to another false claim, that drivers do not pay the full cost of congestion they impose on others.

    I maintain this is ridiculous because those others are imposing on you exactly the same congestion you impose on them. It is a classic case of the golden rule in action, rather than an example of a real externality.

    RH

  8. Anonymous Avatar
    Anonymous

    The big question is what would you do with sludge that …would not create a significant externality?

    Well, we already spent the money on Yucca Mountain.

    Of course the residents out there will claim they were never a party to this transaction and it is an externality to them, just as nuclear waste is.

    And you have to ship all that stuff, creating differnent externalities.

    I guess youare right: there is no way to ever achieve zero externalites, uless yu sit and do nothing.

    RH

  9. Larry G Avatar
    Larry G

    re: zero pollution. Never said that. Always have said that the polluter does not get to decide how much is the right amount and that obviously we do not subscribe to zero pollution – look around you.

    What's different about a home septic tank is only an idiot would put stuff in it that is poisonous and will not bio-degrade – unlike the stuff that goes into municipal sewage systems.

    In other words, most folks know that what goes into their septic tank – may some time end up in their well .. in fact, WILL end up in their well – which we could accomplish just as easily for municipal systems with one easy law.

    And that law would simply say that your wastewater treatment discharge pipe must be ….UPSTREAM of your raw water intake pipe.

    This is not as wacko as it may sound as it's almost that way right now on many streams, especially in areas where there are reservoirs and even more so out west where water is scarce to start with.

    But if septic systems were the problem that some say they might be – we have 200-300 years worth of experience with wells and outhouses – which are sort of like septic "pods" cause they usually just topped them off with dirt when full and moved the shack to a new location.

    If we were REALLY serious about find out – we could – by doing just what we do right now for landfills and superfund sites by putting in monitoring wells and have them tested on a regular basis.

    Just require them to be placed on the downhill side of septic fields ..and for that matter – fields with sludge applied.

    The septic tanks would require once a year monitoring by a certified tester and could well be part of a contract that included periodic pump-outs that also would test the septic tank.

    And don't you find it curious that there apparently is little or no data on how much of the septic field pollutants are biodegraded and what are not.

    One more.. where do they take the pump-out material and how do they know that it does not contain hormones and prescription drugs in concentrated form …or did they break down into safe(r) byproducts as a result of being sequestered for a few years?

    We do know this – NONE of what is dumped into a modern urban sewage system is …sequestered for any appreciable length of time. If it's water-soluble, it's into the river usually within 24 hrs… if it's a solid, then much of it is applied to a farm field within a few days .. awaiting the next rainfall… to either do…exactly what a septic field does … or.. runoff directly into streams and rivers – depending..

    As far as I know.. there is no regulation that requires the sludge to be plowed under – much less put into a giant septic tank to be slowly drained like a traditional drainfield.

    so I ask.. is this a legitimate externalality of dense urban areas?

    and the answer is – " do bears do it in the woods"?

    my scout campfire memories are flooding back..

    " beans, beans, the musical fruit"

    " the more you eat the more you poot".

  10. Anonymous Avatar
    Anonymous

    The situation with sewage is similar to the problem with the gulf oil spill.

    I have seen photos of relatively small areas of oil corralled and being burned off. this results in less oil in the wate and truly huge clouds of black oily smoke polluting the air. Which will of course go right back into the water when it rains.

    Likewise, the dispersant being uses is one of th more toxic of the approved dispersants, and it is not particularly effective against the type oil spilled in the gulf.

    However, a lot of it was avaialble quickly at the time it was needed.

    Everythig is a tradeoff, and everything cuases externalities.

    RH

  11. E M Risse Avatar
    E M Risse

    A number of good comments!!

    First Larry:

    You are absolutely right about the private sector and USPS moving in the right direction!!

    We started the 10 X work a nearly two decades ago. At some point we noted FedEx changing the way they billed. It has spread since then and we have noted this in our discussions of Flat Rate.

    There is another step to take, however: No where on the McDonalds menu does it say “because of the cost of delivery to this location, this burger costs 35 cents more than you will find at a location inside the Clear Edge in this Region.”

    All of these Enterprise activities are designed not to foster more efficient settlement pattern but to lower the price of goods. That is not bad, but cheaper burgers are not what society needs to achieve a sustainable trajectory.

    One other thing: Recall the Commonwealth subsidizes Wal*Marts distribution system in many ways and if they had to pay the full cost, they would have to raise their prices to the point that a Regional, SubRegional or Community Enterprise could compete with them.

    You bring something new to the table with the Dominion Electric bill!!

    My beautiful wife handles the finances and I had not seen an actual utility bill for over a decade .

    You are right about there being a breakdown on the Dominion Electric bill. Columbia Gas has similar set of breakdowns on the back of their bills. Verizon and Comcast do not.

    This is really a GREAT step forward about which EMR was not aware. Thank You.

    It would take a lot of research to find out if these categories have ANYTHING to do with location efficiencies or if they just reflect arcane deals Utilities have worked out with utility regulators to charge extra for fuel surcharges, etc.

    With rising energy costs and if Agencies demand REAL competition to be the supplier of energy, more sophisticated (and hopefully more fair) billing will evolve.

    While it is a step in the right direction, I note that Columbia Gas still charges more for the first 50 Ccf and less for subsequent Ccf. All big users cut deals with all utilities. Note the story of boxite shipped thousands of miles on rail, sea and rail again to Columbia Falls, Montana to be near the power generated at Hungry Horse Dam.

    The more you burn the more you save :>)

    This would be a great area to investigate BUT

    EMR is 15 years on toward the frontier of understanding human settlement patterns. SYNERGY has no contracts to investigate this issue and no staff to assign and EMR no longer teaches graduate courses.

    This will be for someone else to look into along with the other issues raised IN RETROSPECT above and issues raised by TMT and others below.

    EMR

  12. E M Risse Avatar
    E M Risse

    One additional note that should have been in the original post:

    The reason EMR originally started looking into the facts that resulted in the 10 X Rule is that when he looked at air photos and took pictures of settlement patterns from small planes for clients he was amazed at the patterns.

    Based on EMRs experience in actually planning, building and managing Cluster, Neighborhood, Village and Community scale components of human settlement he realized:

    No developer in his right mind with 10,000 acres and a market for 1,000 dwellings would build the patterns he observed. She could not afford the costs.

    It turns out both the market and municipal and state regulations make such patterns insane from and economic perspective. Someone was paying to subsidize the patterns EMR saw.

    It turns out it was ALL CITIZENS directly and indirectly to the tune of 10 X.

    EMR

  13. E M Risse Avatar
    E M Risse

    TMT:

    You are smarter than the average attorney concerned about how much taxes citizens pay and how some Enterprises operate with subsidies from Agencies and citizens.

    And / or you have peeked at the text.

    You are very correct about the cost curve and the sweet spot. In fact there is a curve in Chapter 2 Box 2 The Shape of the Future that lays out the basic premise and by searching ‘Cost of Service Curve’ in the PDF file you can fine many details.

    Turns out that every transport system has a sweet spot and, as you suggest every service. We first discovered this U shaped curve in Wien when discussing the design of the new Ubahn in Austria’s capital and station area planning while working on Virginia Center (on the other side of I-66 from METRO West.)

    For Autonomobile dependent patterns (Reston and every other large Planned New Community in the US of A and in every other nation-state, even the new ones in China) the number is around 10 at the Alpha Community scale.

    For the station areas of high capacity shared-vehicle systems the number WAS 100 in the mid 90s. Since then SYNERGY has explored the impact of Balance in the station-area and that number would be higher. See Column “All Aboard.”

    There are a lot of services that have a long flat spot from around 10 to around 200, then they start to climb. But, as you suggest every one of the 40 +/- location-variable costs vary. This is a problem with David Owen’s blanket endorsement of ‘high density’ in Green Metropolis.

    You have some reading to do but you are on the right track.

    EMR

  14. Anonymous Avatar
    Anonymous

    That is not bad, but cheaper burgers are not what society needs to achieve a sustainable trajectory.

    Burgers (and anything else) are sold cheaper when we find ways that use less resources to produce them.

    Unfortunatley that also means we produce a lot more of them (Jevon's Paradox), so cheaper does not necessarily meand less total use.

  15. E M Risse Avatar
    E M Risse

    Groveton:

    You need to read the words more carefully.

    Then you can match numbers to the words and prove for your self that it is now the 19.7 X Rule.

    Good luck with your calculations.

    EMR

  16. E M Risse Avatar
    E M Risse

    Ok, here is another idea that might appeal to Groveton and TMT:

    Fairly allocate location-variable costs and then we can lower the federal income (soon to be VAT?) the other taxes that are not used to mask the true cost of dysfunctional settlement pattens.

    And Larry:

    You are right about Class A and Class B waste disposal systems.

    It will be interesting to see if EPA ‘really’ does crack down.

    If more citizens understood the basics, there would be more support for doing something about The Bay and other indicators of dysfunction.

    Right now we have The Anger of Ignorance moving to the center of the political stage.

    And then there is the Club of Growth (aka, the Club of Consumption)…

    EMR

  17. Anonymous Avatar
    Anonymous

    Fairly allocate location-variable costs and then we can lower the federal income (soon to be VAT?) the other taxes that are not used to mask the true cost of dysfunctional settlement pattens.

    Maybe.

    If the issue is that the costs are being paid, but unfairly, then redistribution won't leave any money left over to reduce income taxes.

    More likely, if we ever figure out (and agree ) on what a fairl allocation is, then we find out we have not been paying near enough (EMR's usual claim) and taxes go up. Again, nothing left over to reduce income taxes with.

    But, if EMR is right, and soem kind of new settlement pattern eventually results, over time you might make some savings. I doubt it because there will always be some new urgent priority.

    RH

  18. Anonymous Avatar
    Anonymous

    No developer in his right mind with 10,000 acres and a market for 1,000 dwellings would build the patterns he observed. She could not afford the costs.

    What are the costs of doing nothing?

    RH

  19. Anonymous Avatar
    Anonymous

    No where on the McDonalds menu does it say “because of the cost of delivery to this location, this burger costs 35 cents more than you will find at a location inside the Clear Edge in this Region.”

    Considering the burger probably starts in Argentina, one end location over another machts nicht.

    What I observe is that locations I assume are inside the clear edge have higher costs and higher overhead, so the burgers and other food cost more, not less.

    This isn't helped by a predilection for authorities to tax prepared food, thinking it is a way to tax mostly outsiders.

    RH

  20. Anonymous Avatar
    Anonymous

    "It would take a lot of research to find out if these categories have ANYTHING to do with location efficiencies or if they just reflect arcane deals Utilities have worked out with utility regulators to charge extra for fuel surcharges, etc. ",

    Well, I know that my brother in New England got advertising from VEPCO who wanted to become his power supplier. This was around the time of the power line approval.

    Separating the bills allows pwoplw who want to "buy" solar or wind power to do so. They pay extra to get power that probably comes from a coal plant and the difference in cost is forwarded to a wind turbine operator, somewhere.

    The electrical grid is turning into a bank.

    But notice that separating the bills allows for a new kind of property to be bought and sold: more property rights.

    RH

  21. Anonymous Avatar
    Anonymous

    More on Reston. If Reston's density is something less than 13 persons per acre, it should follow, therefore, that it would be generally cheaper to provide services to Reston residents than to most other communities in NoVA that have lower (e.g., Great Falls) or higher (e.g., Old Town Alexandria) densities. Do I understand the cost curve correctly?

    TMT

  22. E M Risse Avatar
    E M Risse

    Very good question, TMT. However, your are quickly moving into deep water.

    The 10 X Rule applied to new construction.

    When it comes to existing areas, the calculations and the costs become far more complex so one cannot say that Neighborhood (or Village) scale areas cost more or less just because they have higher or lower density.

    Also with smaller personal vehicles and more flexible shared-vehicles (either ‘shared’ sequentially or contemporaneously) which will be the mode of the future, the sweetspot will move up in density at the Neighborhood, Village (station-area) and Community scales.

    When one is dealing with revitalizing existing Urban fabric – e.g. the Zentrum of Greater Alexandria (aka, Old Town with no METRO stop) or Greater North Arlington (includes the R-B Corridor with five METRO station-areas) there will be different Cost of Service Curves and different sweetspots to achieve Balance. Converting Pimmit Hills to a Village scale Balanced entity would still another variable.

    The first step – as laid out in HANDBOOK (PART TWELVE of TRILO-G) – is to do a sketch that identifies the Zentra of all the potential Alpha Communities in the SubRegion and then the potential Alpha Villages etc. When one takes a component of a Community and begins to work to achieve Balance, then the parameters will start to fall into place.

    (One other thing to recall. The 10 X Rule applied (past tense) to all of Greater Reston, not just the part that is in the PRC zone. Introducing two METRO station areas ‘changes everything’ but the key remains achieving Balance at the Village scale in the old AND new areas.)

    Hope that helps.

    EMR

  23. Anonymous Avatar
    Anonymous

    Wait a minute.

    Most of those 40+ services are private services. I don't know why EMR cares how they bill. These are businesses tat provide a service at a profit which means that they are paying all their costs, and charging their customers for them.

    EMR has said that people should be allowed to live as they please as long as they pay their full locational costs. In this case a business is paying its full locational cost.

    It is only that for business reasons it has elected some kind of averaging in how it charges for its services. It does that to maximize the number of customers it has and to maximize its revenues and profits.

    In other words the business has an incentive to do things as efficiently as possible. What Larry calls the Distribution function. I don't see why EMR has a problem with this.

    But now we learn that locational costs for those (40+ ????) services only apply to new construction.

    How can that possibly be? No matter when a structure was put up, the cost of services it receives must depend somewhat on its location. if the service venfors have their own method of averaing those costs out, it makes no difference as long as the goal is to achieve the lowest overall cost, with no customer being particularly screwed in order to serve another. Anyone can see that would be bad business.

    If the 10X rule applies only to new construction, then it appears that what we have here is yet another example of trying to stick it to the new guy.

    I have never believed there were 40+ services that contribute to the 10X rule. I doi;t believe there is a 10X rule than can be derived from actaul data, or that it would hold, generally. And now we learn that it only applies to certain situations, it changes over time, and it is so complex to calculate as to be useless.

    RH

  24. Larry G Avatar
    Larry G

    Let's take one of those services – i.e. Cable TV.

    I would submit that Cable TV – does ADDRESS location variable costs and we know this – because how many times have each of us heard – " I cannot get cable"?

    or " I cannot get FIOS or DSL"?

    there are folks who cannot get telephone or electricity either unless they pay for extending the service.

    or water/sewer or trash service or degraded police and rescue service, transit, libraries, etc?

    all of these things are location variables services and infrastructure that are either not offered or cost more that such services/infrastructure made available are more dense settlement patterns.

    one more thought –

    anyone ever thought that farm-to-market roads were not also used as market-to-farm roads once they got built?

    Would those who favor function settlement patterns essentially be in favor of signs on these roads that says "No deliveries – only farm products to market allowed".

  25. Anonymous Avatar
    Anonymous

    Not to mention satellite service which is not location dependent, orwireless service which is largely so.

  26. Anonymous Avatar
    Anonymous

    We tell EMR over and over that he should NEVER write and immediately post a comment late in the day.

    If he were to rewrite the 9:13 PM comment this is what he might say with amplifications / corrections in ALL CAPS

    Very good question, TMT. However, your are quickly moving into deep water.

    The 10 X Rule AS ORIGINALLY DRAFTED applied to new construction.

    THAT IS:

    THE 10 X RULE DOCUMENTS THE ANNUALIZED LIFE CYCLE COST OF INFRASTRUCTURE NOT COVERED IN A ‘NORMAL’ BUILDER / HOME BUYER TRANSACTION AND THE ANNUAL COST OF DELIVERING ALL THE LOCATION-VARIABLE GOODS SERVICES EACH YEAR FOR COMPARABLE DWELLINGS IN TWO DIFFERENT CONFIGURATIONS PLUS THE COST OF EXTERNALITIES.

    THE 10 X RULE DOES NOT FACTOR IN THE VALUE OF EXCESS CAPACITY OF EXISTING INFRASTRUCTURE. EACH SITE WAS TREATED A BLANK SLATE SO THAT THE DATA PROVIDES AN APPLES TO APPLES COMPARISON.

    COMPARING A NEW “ONE X” NEIGHBORHOOD WITH AN EXISTING NEIGHBORHOOD OF HIGHER OR LOWER DENSITY REQUIRES FAR MORE INFORMATION ON THE EXISTING NEIGHBORHOOD TO COME TO ANY CONCLUSIONS. UP GRADING AN EXISTING LOWER DENSITY NEIGHBORHOOD TO “ONE X” (ALPHA) STATUS ALSO INTRODUCES A NEW SET OF VARIABLES.

    When it comes to existing areas, the calculations and the costs become far more complex so one cannot say that a SPECIFIC Neighborhood (or Village) scale area cost more or less TO SUPPORT WITH LOCATION-VARIABLE GOODS AND SERVICES just because THE EXISTING COMPONENT HAS SOMEWHAT higher or lower density.

    Smaller personal vehicles and more flexible shared-vehicles (either ‘shared’ sequentially or contemporaneously) will be the mode of the future. FOR THIS REASON, the sweetspot will move up in density at the Neighborhood, Village (station-area) and Community scales.

    When one is dealing with revitalizing existing Urban fabric – e.g. the Zentrum of Greater Alexandria (aka, Old Town with no METRO stop), THE NEW ‘UPTOWN METRO STATION-AREA VILLAGE AROUND THE KING STREET METRO or Greater North Arlington (includes the R-B Corridor with five METRO station-areas) there will be different Cost of Service Curves and different sweetspots to achieve Balance.

    Converting Pimmit Hills to a Village scale Balanced entity would INTRODUCE A RANGE OF NEW variableS.

    The first step IN EVOLVING FUNCTIONAL COMPONENTS OF HUMAN SETTLEMENT – as ARTICULATED in HANDBOOK (PART TWELVE of TRILO-G) – is to TAKE STEP ONE, A sketch that identifies the Zentra of all the potential Alpha Communities in the SubRegion and then LOCATES the potential Alpha Villages ZENTRA AND SO FORTH. When one takes a component of a Community and begins to work to achieve Balance, then the parameters will BECOME APPARENT.

    (One other thing to recall. The 10 X Rule applied (past tense) to all of Greater Reston, not just the part that is in the PRC zone. Introducing two METRO station areas ‘changes everything’ but the key remains achieving Balance at the Village scale in the old AND new areas.)

    WE HOPE THAT HELPS CLARIFY THE POST AND SHORT CIRCUITS THOSE WHO ONLY WANTS TO CONFUSE THE ISSUES RAISED.

    On other point: The research that resulted in articulation of the 10 X Rule only included those goods and Services that were deemed essential to achieve a quality Urban life. Many of those services are “public utilities.” While some are provided by ‘private’ Enterprises, they are regulated for the general health, safety and welfare of the general population by Agencies. The remaining goods and Services included among the 40 +/- ALL enjoy a public subsidy – direct or indirect – which results in a negative impact on the general health, safety and welfare of citizens.

    AZA
    for CCSSSE

  27. Anonymous Avatar
    Anonymous

    Larry:

    Lets take a careful look at your comments. There are several good points, however, several are confusing with respect to regional location and timing – in what Radius Band are the unserved sites located and at what time were the statements made makes all the difference:

    “Let's take one of those services – i.e. Cable TV.

    “I would submit that Cable TV – does ADDRESS location variable costs and we know this – because how many times have each of us heard – " I cannot get cable"?

    or " I cannot get FIOS or DSL"?

    Those statement are often heard. All are due to the fact that under the public utility rate structure /county charter, the service provider cannot afford to extend the service.

    Three points:

    These comments are typically heard in R=40 to 50 but are no longer heard in most of R=25 to R=40. Twenty five years ago they were heard in R=25 to R=40.

    When the flux of potential customers gets high enough to make it economically feasible, then the service is extended BUT it is subsidized by those already getting the service in R=0 to R=25.

    In the case of telephone service there is a remote area service charge to subsidize the service to scattered sites. This well intended policy has had unfortunate unintended consequences on human settlement patterns just as the Interstate Highway program has – the patterns supported have significant negative cumulative impacts INCLUDING AN UNFAIR ALLOCATION OF LOCATION-VARIABLE COSTS.

    In the case of cable TV, frequently the charter to offer the cable service is granted upon the condition that every user in the jurisdiction will have the opportunity to get the service. This forces the cable operator to push for rate increases for all users to provide service to dysfunctional, scattered locations. With on-going regional consolidation swaps in process, the dysfunctional location are subsidized by more compact older rate payers in the region.

    “there are folks who cannot get telephone or electricity either unless they pay for extending the service.”

    True and that is a good thing but the service is already subsidized by those in the inner Radius Bands.

    “or water/sewer or trash service or degraded police and rescue service, transit, libraries, etc?”

    All true in outer Radius Bands. From the Business-As-Usual illusion of continuous Urban expansion in the future, bad things happen. The Business-As-Usual Myth is: “this area will ‘eventually’ have the flux of users to ‘support’ service so we will run the service now.” The Myth is perpetuated by a failure to understand the A= BR2 Rule (The A=Pi x Radius Squared Rule if the Greek and superscript does not post as a comment.)

    The reality is that there is already far too much land devoted to Urban land uses. But for the subsidies, the land would still be devoted to NonUrban uses. Extending the service only makes the problem worse.

    “all of these things are location variables services and infrastructure that are either not offered or cost more that such services/infrastructure made available are more dense settlement patterns.”

    You have a point, however, in the context of failure to understand the parameters for evolving functional settlement patterns. these facts have little impact on the Myth. Both pandering politicians and those who want to sell dwellings without including all the costs assure buyers that the services will be available “soon.”

    AZA

  28. Anonymous Avatar
    Anonymous

    PART 2

    Recall that there may still be public utilities (a good example was the Fairfax County Water Authority) which believed it was great to extend the service area, even where the fees did not cover cost of expansion because “the expansion would put them in a position to sell more and more water in the future.” ‘Conservation?’ What has that have to do with growing our Agency?

    In flush times past, once the number of residents living in an unserved area organize and become a squeaking wheel, they get subsidized service without paying the full price.

    In the future, the need to cut costs will force Agencies and Enterprises to more fairly allocate costs.

    “one more thought –

    “anyone ever thought that farm-to-market roads were not also used as market-to-farm roads once they got built?”

    ‘Market-To-Farm’ is NOT the problem. ‘Market (aka, Core)-to-scattered-Urban dwelling’ is the problem.

    You know that Larry, why do you keep hoping that someone beside you will believe it?

    “Would those who favor function settlement patterns essentially be in favor of signs on these roads that says "No deliveries – only farm products to market allowed".

    Of course not, what Dr. Risse advocates is consistent policies and programs that result in everyone paying their fair share.

    AZA

  29. Larry G Avatar
    Larry G

    " COMPARING A NEW “ONE X” NEIGHBORHOOD WITH AN EXISTING NEIGHBORHOOD OF HIGHER OR LOWER DENSITY REQUIRES FAR MORE INFORMATION ON THE EXISTING NEIGHBORHOOD TO COME TO ANY CONCLUSIONS."

    which means what in terms of any potential govt policy?

    we have the same problem with public utilities as alluded to in your other posts.

    I'm not sure exactly how much they subsidize but consider this – if the total amount of said subsidy is LESS that the amount of new customers that will bring in more revenues then why would a company not increase it's service areas especially if other companies will if they don't?

    Wouldn't you have to end up with the govt essentially saying that some areas could not be served unless the price was set higher than the company itself was willing to charge?

    I understand the theory of the location variable costs but I just don't see how you can get a handle of them without the government making decisions that the private sector should be making.

    In your view – we'd simply not have gas stations on some parts of the interstate because they could not be justified because they're not in the zentroid….

    right?

    your approach would essentially outlaw all the WalMart, CVS, UPS, FedEx operations as unfair subsidies – right?

    farm-to-market roads would be considered subsidies – right?

  30. Anonymous Avatar
    Anonymous

    "Right?"

    "Right?"

    Not even close. And you know it.

    AZA

  31. Anonymous Avatar
    Anonymous

    "Right?"

    Not even close. And you know it.

    I'd tend to agree with Larry on this. All you have done with this remark is confirm my suspicion that you are not actually interested in a fair allocation of ALL location variable costs.

    Of course the esay way to do this is just define the rights and ownerships, and let people trade to find the position that most consider "fair".

    Then all this nonsense goes away. If UPS wants to charge a flat rate for their services, well, it is their property, they can sell it for whatever they think is best.

    RH

  32. Larry G Avatar
    Larry G

    there is at least one significant point of confusion here on shipping costs.

    Shipping costs for most single item point to point ( as opposed to a distribution point for a mass shipment) ARE keyed to DISTANCE from point A to point B – which has ZERO to do with the stuff that EMR and company are dithering about.

    If you want to ship something from Facquier, Va to Glendale, Arizona – the fee is based on the distance – not whether or not it's going from one zentrum to another. or any combination thereof.

    Now why is that?

    Why would UPS ship a package from Fairfax County to Norton Va for less than it might cost to send it from Fairfax to Seattle, Washington?

    well it has to do a lot with how much resource is needed.

    It does not matter to UPS whether or not the density of a geographic location is within the desired limits as defined by EMR and group.

    So the obvious question is does EMR and company have any idea at all whether or not any subsidy is involved or not – to start with.

    I don't think they honestly know.

    but let's assume they did but UPS Business Model accommodates that in their price structure because at the end of the day the subsidy brings them more business than if there was not a subsidy.

    You can agree or disagree with their business model – fair enough – but on whose authority would you begin to tell them how to change their business model?

    this is where AZA and company begin their fan dance – slip sliding away from the issue and going back to more fuzzy ideas and concepts.

    It's fine to have a different view ..everyone is entitled to one but when you presume to tell others how they are "part of the problem", you take on a boatload of additional responsibility.

    And like Rand Paul – either you do your thing or you get off the pot…

    If you came to play the game – play the game.

    This stuff about running onto and then off of the field is tedious but then I strongly suspect that most sports games that we are familiar with today would be playing with radically changed rules if AZA were commissioner, eh?

  33. Anonymous Avatar
    Anonymous

    "The Calaveras County Taxpayers Association (CCTA) continues to urge support for Alternative D in the General Plan Update process. In addition, the group wants property owners to be notified in writing when the county seeks to change their land use designation, according to Al Segalla, CCTA President. He said his group will continue to seek public support for General Plan property rights protection.

    He commented on several positive features of taxpayer supported Alternative D: …

    · Public Safety: There would be no immediate change in response times. As the dispersed population grows the cost per capita and average response times will fall.

    · Public Infrastructure: There is no basis upon which to limit development based on infrastructure requirements. Public infrastructure at the county level includes: Roads, Water, and Sewer. Alternative D calls for Water and Sewer services to be the responsibility of the property owner. As for roads, there are already programs on the books such as RIM fees that recoup public costs from those that develop.

    · Economic Prosperity: Given the flexibility of a market based (not plan based) approach to development – entrepreneurs both large and small will find better, more efficient ways to provide goods and services where and when the public (market) actually needs them. Industries will have more choices to locate and expand in the county. Alternate D does not support the county trying to manipulate growth by providing taxpayer subsidies to proffered businesses and locations. This encourages cronyism.

    – Sprawl: About half of the land considered unimproved is currently designated for 5- to 40-acre single family residential uses, the majority of which is undeveloped but has significant potential for low density residential development. This is hardly a prophecy for "unlimited" sprawl. Many, if not most, of the people moving to the County are not looking to exchange one urban center for another. Alternative B & C's low rural growth policy takes property rights from current property owners and infringes on the dreams (rights) of future families.

    · Natural Hazards: Risks such as wildfires and flooding are the responsibility of the property owner. Such risks are currently disclosed in the real estate documents. The County is not responsible to property owners for Acts of God.

    – Sustainability: Alternative D is friendly to the US Constitution and the concept that human beings have natural rights to life, liberty and property. When these rights are exercised, a market economy is created which seeks to balance supply and demand for our wants and needs. Thusly, our market economy seeks to sustain prosperity and human happiness far into the future.

Leave a Reply