Opinion

Felix Salmon

How Foursquare improves on coupons

Felix Salmon
Mar 10, 2011 14:05 UTC

There is nothing shameful or embarrassing about saving money, and restaurants wouldn’t pay Groupon lots of money for the privilege of using its service if they didn’t want lots of people to come in and claim a discount. But still, it’s undeniable: there’s a faint whiff of cheap associated with any coupon, to the point at which some restaurants are implementing built-in gratuities to try to stop people from tipping on the discounted amount. And I have friends who are adamant that they’ll never use a groupon or anything like it, for fear of the perceived stigma involved.

Enter Foursquare. The thing I like most about the Foursquare partnership with Amex, as explained by Dan Frommer, is that it’s completely invisible to your server and to your guests — in that respect it’s a bit like iDine, only even easier.

The obvious partner here, of course, is not Amex so much as Groupon itself. You buy your groupon online, and you don’t even need to print it out — the next time you check in to the merchant and pay the full amount for your meal or other service, you automagically find the amount of the refund on your credit card statement.

Technically, this whole system could probably work fine even without Foursquare’s cooperation: so long as you add Groupon as a friend on Foursquare, it’ll be able to see your checkin and take care of the rest of the process itself. But it’s always nice to see a little button come up on Foursquare saying you’ve activated a deal.

Between this and the other new features that Foursquare just announced in time for SXSW, I’m beginning to see how Foursquare could become the vital hyperlocal app. Now we just need them to change the search-results display, so that it shows results in order of distance rather than in order of popularity. That annoys me every time.

COMMENT

Do coupons result in sticky consumer behavior in a system where another coupon is always coming, and for a similar place nearby?
There already are specific discounts for specific consumer purchases. Chase, Bank of America, Visa, any of these might offer an increase to 5% rewards for drug store purchases, gas, etc. Or their online rewards portals might offer an additional 8% for barnes&noble, sears, etc. I like this form of coupon better because it gives me much greater freedom. $5 back on any $100 worth of goods at a supermarket is more valuable (to me) than $10 off a $40 meal at jimmy joe’s bbq shack.

Posted by thispaceforsale | Report as abusive

Slugging in DC

Felix Salmon
Mar 9, 2011 15:23 UTC

Emily Badger’s article on slugging in DC is a really fantastic piece of reporting. She doesn’t just explain not only the interesting phenomenon of people giving lifts to strangers so that they can drive in HOV lanes, she also puts it in its proper broader context, complete with useful hyperlinks:

Americans drive cars everywhere because gas relatively cheap (half what it costs in Europe), because only 6 percent of the interstate highway system requires tolls, because insurance rates are unrelated to how many miles people drive. We pay for the land we live on, but we expect the parking spot out front to come free of charge. The federal government has lately encouraged drivers with tax breaks to buy, variously: a new car, a hybrid or clean-diesel vehicle, a truck or SUV weighing more than 6,000 pounds, or any upgrade from a “clunker.” Then, regardless of what we drive, the IRS invites lucrative tax deductions for work travel, now at 50 cents a mile.

Go ahead, all the signs (and car ads) seem to suggest: Buy your own car — and ride in it alone!

You can embrace this or you can rail against it, but either way it’s a fact of life. And slugging is a Pareto-optimal way of improving it.

What if, instead of one bus with a capacity of 50 that came along every 30 minutes, five cars came along every few minutes, each with a capacity to carry five people? Looked at broadly, Oliphant says, slugging is a kind of public transit, because public subsidies pay to pave and restrict the HOV lanes on which slugging relies.

My favorite part of the piece is the way in which local government is trying to encourage slugging, but is doing so incredibly quietly, so that the sluggers themselves don’t notice.

Chris Hamilton, the Arlington County Commuter Services bureau chief, understands this better than anyone. Sitting in the 11th-floor office where he hosted Oliphant’s symposium two months earlier, he confesses that Arlington has been quietly funding LeBlanc’s website with an annual $10,000 grant. For 10 years. The site doesn’t disclose the connection, and Hamilton seldom does.

“It’s not public knowledge because we don’t want people to know; it works fine the way it is — that people think it’s just this little slugging community,” he says. “The slugging community has always had that idea about themselves, that this is their own thing, and they’ve created it, and they don’t need anybody else to muck it up.”

In terms of bang for the buck, quiet support of slugging initiatives is surely the cheapest and most effective way that government can improve its citizens’ commuting experience. And it still looks very cost-effective even if reasonably serious amounts of money start getting spent on building new HOV lanes. The big unanswered question though is whether it can be scaled or recreated elsewhere — it’s pretty much nonexistent outside the Bay Area and DC. Badger explains the social forces which make DC slugging work:

The homogeneity of Washington’s work force may play a role in this casual acceptance of strangers in cars. With so many federal employees and military personnel, people here even look alike, sporting uniform haircuts, black briefcases and government IDs. “If you’re a government employee or in the military, you’re taught ‘the group,’ not individualism,” suggests Donald Vankleeck, a civilian on his way to Bolling Air Force Base one morning in September at 80 miles an hour. “So it’s nothing to get in a stranger’s car. You may have been all over the world serving with people whose first names you never knew.”

I’m no expert on the cultural differences between various US metropolitan areas, but in principle I can’t see why this couldn’t work in, say, Charlotte. It clearly can’t work in a sprawling city like LA, since it relies on the existence of central hubs. But there are many US cities with poor public transportation and delineated office zones with parking spaces. It would be hard to get slugging up and running in any of them. But once it’s established, it can become a very popular and powerful force.

COMMENT

As a DC area resident, I think I can tell you the secret sauce.

We have severe traffic, arguably the worst in the nation. A crawl during rush hour is guaranteed on Rt 50, I-270, I-66, I-95 and others. Basically all highways toward/away from the city are like this. The HOV (high occupancy vehicle) lane meanwhile is fast and free.

I think even if every 10th slug was a felon, you’d just have to pack heat keep on slugging, the traffic is so bad.

Posted by DanHess | Report as abusive

John Cassidy vs bipeds

Felix Salmon
Mar 9, 2011 07:00 UTC

Aaron Naparstek has a masterful demolition of John Cassidy’s bizarre anti-bike-lane rant, but he somehow skips over the most wonderful bit of all:

I view the Bloomberg bike-lane policy as a classic case of regulatory capture by a small faddist minority intent on foisting its bipedalist views on a disinterested or actively reluctant populace.

Yes, you read that right: the New York populace, it seems, is basically comprised of cars, to the point at which bipeds are “a small faddist minority”.

Now it so happens that I’ve met Mr Cassidy a few times and he’s always looked perfectly bipedal to me. And for all that he enjoys parking his Jaguar XJ6 on Manhattan streets — he’s just written 1,250 words on the subject, after all — I’m quite sure that he always gets out and saunters happily among the other New York pedestrians as he makes his way to his dinner in the West Village.

It can hardly have escaped Cassidy’s notice, on his regular peregrinations from car to restaurant and back, that New York’s streets are positively bustling with bipedal life. There’s good reason for this: New York is a very dense city, in which 8 million or so bipeds — birds not included — cram themselves into a rather small area. His Jaguar XJ6 takes up about 100 square feet of street space; if everybody in Manhattan was so greedy, we’d turn the city into something more akin to Manhattan, Kansas.

And so New Yorkers turn to other modes of transportation. Primarily, we walk, taking up very little space while doing so. When we don’t walk, we cram lots of people into efficient vehicles like subways or buses. And sometimes we bike, since doing so makes a great deal of sense in a pretty flat city where space is at a premium.

Driving a car, on the other hand, is an enormously expensive thing to do, with most of the costs being borne by people other than the driver. Yet here’s Cassidy, the economics correspondent of the New Yorker:

From an economic perspective I also question whether the blanketing of the city with bike lanes—more than two hundred miles in the past three years—meets an objective cost-benefit criterion. Beyond a certain point, given the limited number of bicyclists in the city, the benefits of extra bike lanes must run into diminishing returns, and the costs to motorists (and pedestrians) of implementing the policies must increase. Have we reached that point? I would say so.

Well yes. If indeed the limited number of bicyclists in the city was a given, then Cassidy might have a point here. But it’s not. Bike lanes attract bikes no less effectively than roads attract cars and the number of cyclists in New York has been growing just as fast as the city can create new lanes for them. See if you can follow Cassidy’s logic here, because I can’t:

From San Francisco to London, local governments are introducing bike lanes, bike parks, bike-rental schemes, and other policies designed to encourage two-wheel motion. Generally speaking, I don’t have a problem with this movement: indeed, I support it. But the way it has been implemented, particularly in New York, irks me to no end…

Thanks to these four-wheel friends, I have discovered virtually every neighborhood of the city and its environs, and I would put my knowledge of New York’s geography and topography up against most native residents…

Let us have some bike lanes on heavily used and clearly defined routes to and from the city—and on popular biking routes within the city and the boroughs. But until and unless there is a referendum on the subject—or a much more expansive public debate, at least—it is time to call a halt to Sadik-Khan and her faceless road swipers.

The message here is that cars can and should be able to go anywhere in the city they like — that’s part of what makes them so great. Bikes, on the other hand, should be confined to a few “heavily used and clearly defined routes”, which would probably run parallel to existing subway lines. If you want to use a bicycle to explore the city, then you’re just going to have to take your chances in traffic, like Cassidy did in the 1980s.

In those days, there were few cyclists on the roads, and part of the thrill was avoiding cabs and other vehicles that would suddenly swing into your lane, apparently oblivious to your presence. When I got back to my apartment on East 12th Street, I was sometimes shaking.

Sorry, John, but the purpose of biking is not to “thrill” you so much that you end up shaking. And you surely know, even if you’re loathe to admit it, that traffic expands to fill the roads available: if you build more road space, you don’t reduce congestion, you just increase the number of cars. And similarly, if you reduce the amount of road space, you don’t increase congestion so much as you reduce the number of private cars. Which is a feature, not a bug.

Cassidy is convinced that the addition of bike lanes has increased the time he spends stuck in traffic, or looking for his beloved free on-street parking. (As Naparstek notes, his argument can basically be boiled down to “Street space should not be set aside for bike lanes. It should be set aside for free parking for my Jaguar XJ6″.) But the fact is that impatient motorists will always want to blame someone else for traffic, when, clearly, they themselves are the main culprit in that regard.

Cassidy has no problem with the vast number of parked cars which take up precious road space in New York because he regularly aspires to transcending his bipedal nature and becoming one of them himself. But if you replace those parked cars with a healthy, efficient and effective means of getting New Yorkers safely around town, then watch him roar. Jaguars — whether they have four wheels or four paws — are good at that.

Update: Adam Sternbergh piles on too, and Cassidy responds to us all.

COMMENT

Love this! Can’t believe I haven’t read this till now…

Posted by sammydavisjrjr | Report as abusive

Labor vs capital datapoint of the day, NYC taxi edition

Felix Salmon
Jan 22, 2011 18:29 UTC

taxi.jpgNew York taxis are a textbook example of gains going to capital rather than to labor. They’re generally owned by one person — the person with the capital — and driven by another — the person with the labor. And the person with the capital has made out very well of late. When the stock market peaked in October 2007, medallions were trading at $425,000 apiece. (All data from this page.) By the time the market had plunged by more than half in February 2009, medallions had risen in value to $552,000. And they’ve only gone up in value since: in December 2010, the average medallion changed hands for $624,000; last Wednesday, a new all-time record was set for a corporate medallion which sold for $880,000.

Meanwhile, drivers earn nothing like that kind of money. Getting reliable statistics for taxi-driver income is not easy, but it seems to average out somewhere around $130 per shift — which is actually less than the the amount the drivers pay to lease the taxi. And remember that the owner leases out the car for two shifts per day, while the driver can only work one shift.

It’s pretty clear to me what’s happening here. The medallion owners hold the power, and will charge whatever they can to drivers. If anything happens (a fare hike, say) which improves drivers’ income, then the rents just get jacked up: there’s a lot of demand for taxi-driving jobs, and so essentially the owners just rent out their taxis to the drivers willing to pay the highest shift fee and therefore take home the lowest income.

When someone like Melissa Plaut, then, starts complaining about a proposed rule change on the grounds that it will reduce drivers’ income, I think that she’s missing the bigger picture. It’s the owners who reduce drivers’ income, by charging them as much money for the privilege of driving a cab as they can possibly get away with.

Meanwhile, it’s the mayor’s job to try to create a system where yellow cabs and livery cabs coexist to maximize the welfare of New Yorkers — the general population first, and the drivers second. The medallion owners come a distant third.

Somehow, annoyingly, the medallion owners always end up the winners here, and that doesn’t seem fair to me. None of them were hurting when medallions were fluctuating in value between $200,000 and $250,000 in the years from 1998 through 2003. And for the past eight years or so they’ve been laughing all the way to the bank.

If drivers have an issue with their income, then, they should take up their beef with the medallion owners. But instead, every time that the city proposes something to improve the taxi system more generally — like issuing more medallions, or putting credit-card readers in cabs, or putting meters in livery cars — the drivers reflexively side with the owners. Anything which might hurt medallion owners, they assume, will automatically hurt drivers as well.

Which I’d agree with, if it weren’t for the fact that drivers have signally failed to participate in the good fortune of the owners over the past decade. It’s time I think for the mayor to start putting in protections for cab drivers, which might get an important constituency on his side when it comes to making these kind of changes. Even if doing so annoys a handful of politically-powerful medallion owners.

Update: Plaut responds in the comments.

COMMENT

“I am a medallion owner, I own half of a corporation of two medallions. I bought it in 1977″

what did you pay for your medallion, 5k ? 10k ? 20k ?

I am surprised you did not sell it in the last year for a million or two and retire, ;)

Posted by sam234566 | Report as abusive

New Jersey’s stupid parking-privatization plan

Felix Salmon
Dec 13, 2010 01:48 UTC

In cases like that of the Chicago parking meters, I have a certain amount of sympathy for the privatization argument. But New Jersey Transit parking spaces aren’t Chicago parking meters, and so I’m entirely in agreement with Yonah Freemark that privatizing NJ Transit’s parking lots is a very bad idea.

Frankly, all you need to know about the plan in order to hate it is its name — it’s called the System Parking Amenity and Capacity Enhancement Strategy. But there are three more substantive reasons to dislike it.

Firstly, press coverage of the scheme has revealed nothing about the state’s willingness to cap or guide the amount charged for parking in these lots. Indeed, the official RFQ states that “it is currently contemplated that this transaction will include an opportunity to adjust parking rates in accordance with market demand” — and the stated aim of the privatization is to raise as much money as possible. As a result, the successful bidder is likely to give themselves a lot of freedom to hike parking rates in the future.

The problem is that right now no one knows what the revenue-maximizing market rates might be. If New Jersey thinks that a revenue-maximizing strategy is the way to go, it should try to implement such a strategy itself first, just to get an idea of how much revenue it could generate that way. Otherwise, there’s a serious risk that it will sell of the lots for a fraction of their actual worth.

Secondly, the plan comes on the heels of the price of rail tickets being hiked by 25% in May. If the cost of traveling by train and the price of parking at train stations both rise substantially, it’s pretty obvious what’s going to happen to the number of people taking mass transit as opposed to simply driving to their final destination. While the headline revenues from the privatization contract might look attractive, no one seems to be thinking about the hidden costs to both the state and its citizens in terms of extra congestion.

New Jersey Future’s Jay Corbalis makes this point another way, saying that privatizing NJ Transit’s parking lots only makes sense in the context of broader congestion pricing, where the cost of the driving-only alternative rises commensurately:

“By privatizing parking facilities, this proposal will have the effect of further raising costs for many NJ Transit riders,” Corbalis said. “If New Jersey wants to move toward a user fee-based system to pay for transportation, it should apply the same approach to roads and bridges as it does for mass transit.”

Finally, there’s the likelihood that the best and highest value for all that land currently being given over to parking spaces is probably not parking at all. Instead, it’s new residential and commercial development, centered on the transit services already there. (See San Francisco for an example of this in work.) The term of art for this is transit-oriented development, or TOD, and the RFQ is well aware of it:

Many of NJ TRANSIT’s parking facilities are key properties that have the potential for TOD and certain Concession Assets are currently under active consideration for TOD. Consequently, Prospective Proposers are advised that NJ TRANSIT is strongly interested in ensuring that TOD opportunities are not negatively impacted by the award of this Concession. To that end, Prospective Proposers will be encouraged in the RFP stage to submit TOD proposals as an option in their responses…

The selection of a Concessionaire will be based entirely on the proposals for the Concession Assets submitted pursuant to the RFP; however if the selected Concessionaire has submitted a TOD proposal that is deemed advantageous to NJ TRANSIT, NJ TRANSIT may, but shall not be obligated to, negotiate an independent and exclusive development agreement with the Concessionaire.

If NJ Transit will pick the winning bidder entirely on the basis of what they want to do in terms of parking, then it’s almost certainly not going to pick someone who’s ideally qualified to build new development on those parking spaces. More to the point, if NJ Transit does not negotiate an independent development agreement with the concessionaire, then the chances are that the land will simply remain a parking lot for decades to come, since the concessionaire at that point has the right and indeed the obligation to continue to run that land in exactly that manner. While it’s possible that NJ Transit might be able to team up with a third-party developer to buy out the concessionaire’s parking rights, that’s a very expensive and complicated way of doing things.

Writes Stephen Smith:

Rather than taking on entrenched suburban interests, we’re just adding another layer of government dependents, this time of the monied corporate variety (bidders include KKR, Morgan Stanley, Carlyle, and JP Morgan). The land on which transit parking lots sit is uniquely positioned to be converted into dense development, and the only thing worse than sitting on the land would be for the agencies to sign away their rights to change that within the foreseeable future.

None of this is particularly surprising, coming from the government of tunnel-killer Chris Christie. But it’s very depressing, all the same.

COMMENT

can someone tell me how to get the little avatars to appear in my comments section? thanks!

Posted by register124 | Report as abusive

How much carbon does bike-sharing save?

Felix Salmon
Dec 2, 2010 13:56 UTC

How should bike-share services pay for themselves? Up until now, the main model has been sponsorship and advertising. But CityRyde has a bright idea: why not sell carbon offsets?

The idea’s pretty simple: as bike-share use rises, the amount of carbon-emitting vehicle use falls. So bike shares save carbon; CityRyde even has a methodology to determine exactly how much. (One thing I’d like to see, though: virtually all bike-share programs involve trucking bikes from the center of town back into the periphery, not to mention transporting broken bikes to be fixed. So somewhere in the methodology there should be an accounting for the amount of carbon emitted by the bike-share program itself.)

In any case, if the bike-share program sold carbon offsets to companies which want to claim to be carbon-neutral and to individuals wanting to offset their carbon emissions, that could raise some revenue: CityRyde co-founder Jason Meinzer told me his rule of thumb is that you could bring in between $25 and $100 per bike per year that way. For a scheme with 50,000 bikes in New York City, that would equate to between $1.25 million and $5 million per year: hardly chump change.

Meinzer didn’t share with me exactly how he got his numbers, though, so I ran a smell test. Let’s say each bike travels 15 miles per day, 350 days per year: that’s 5,250 miles per year. A lot of bike rides are simply for pleasure, and others—especially in a city like New York—replace walking or taking mass transport. Those are activities with negligible marginal carbon emissions.

But let’s say that 1/3 of bike journeys would otherwise have been taken in a car of some description. That means that each bike saves 1,750 passenger-miles in cars. If one car carries the same number of people as two bikes, on average, then that’s 875 car miles saved. At 1.2 pounds of CO2 per mile, that’s basically half a ton of CO2 emissions saved per bike per year. And while the market in carbon offsets is far from transparent, my feeling is that you’d be lucky to get $5 per ton, which would equate to $2.50 per bike per year. That’s a full order of magnitude lower than Meinzer’s lower estimate.

Meinzer’s methodology is a lot more sophisticated than that, and I’ll update this post if he wants to share his own math. But at $5 per ton, selling carbon offsets would gross only about $125,000 a year—which, by the time you subtract the cost of measuring the carbon saved and administering the sales, leaves you with little or nothing in net revenue. So while it’s an intriguing idea, I’m not yet convinced it’s a practical one.

Update: Meinzer says that he does account for the carbon costs of the program, in the “Project Emissions” and “Leakage” sections of his methodology; I don’t see it myself. And he explains that he gets his much higher estimate for total revenues from selling carbon offsets at a much higher price:

Our credits most certainly will be sold at a premium due to the novel co-benefits associated with their generation even outside of the carbon mitigated; e.g. health and social (and remember some credits sold for as high as $111 last year). This has been validated by the carbon brokers we’ve been working with over the years. Moreover, outside of the “price-point” per carbon a key angle we are taking to obtain an even higher premium on our credits is via creative bundling; by lumping the carbon credits w/ the sponsorship and advertising. Case in point – Blue Cross Blue Shield donated $1.5 million to have their name tied to the existing 1,000-bike Minneapolisbike share. Had they been able to purchase the offsets stemming from that program the donation would have been MUCH higher. This argument is reinforced by the fact that this donor in particular clearly has a key interest in health, and so the aforementioned co-benefits of our credits would prove even more attractive given the health-benefits of biking. Most big names companies are already offsetting their carbon emissions each year anyways for a variety of reasons, even outside of a regulatory mandate.

COMMENT

To the guy who said “CityRyde is going to sell carbon offsets to generate revenue for its business eh?” — No.

CityRyde is going to sell the methodology to generate carbon offsets to sustainable transportation initiatives in order to help them generate revenue to support the construction of sustainable infrastructure. As someone who’s actually followed the company, I can tell you that generating funding for green transportation is precisely what they’re trying to do.

Posted by istealllamas | Report as abusive

Does more economic activity mean more driving?

Felix Salmon
Nov 30, 2010 22:07 UTC

Mark Perry is convinced that the recent uptick in vehicle miles is a good sign, economically speaking; Calculated Risk is not as convinced. Both, however, are working on the assumption that vehicle miles are an excellent proxy for economic activity as a whole, and that the more they rise, the better the economy is doing.

Perry’s chart, in particular, would seem to back that up:

saupload_miles.jpg

The way in which vehicle miles fell steadily over the course of the recession is startling. But look at CR’s chart:

VehicleMilesSept2010.jpg

And suddenly recessions don’t seem as big of a deal: vehicle miles simply tend to rise over time, except for during oil spikes.

It’s worth remembering here that the recession started in December 2007, while oil prices were still rising; they didn’t reach their all-time (nominal) high until July 2008. Given that gas prices lag oil prices, a large part of the fall in miles can probably simply be attributed to high gas prices, rather than to the recession — especially since, as Nate Silver notes, “the cost of gas twelve months ago has historically been a much better predictor of driving behavior than the cost of gas today.”

More generally, vehicle miles are a cost of economic activity, and to the extent that they can be minimized through various kinds of efficiency gains, they should be. Things which are good for a vibrant economy — mass transit systems, telecommuting, e-commerce, walkable neighborhoods — tend to mitigate against driving, while — to take the extreme counterexample — I’d guess that people who have been foreclosed upon tend to spend a lot more time in their cars.

My feeling is that what we’re seeing in the latest driving numbers is no more than the fact that gas prices were low a year ago. I do hold out some hope that we’re decreasing our national reliance on autos, if only a little bit; it would be sad if any economic recovery had to be associated with a concomitant rise in driving. As America moves back into the cities from the crumbling suburbs, is that really too much to hope?

(HT: AR)

COMMENT

How are Miles Driven calculated exactly?

Posted by Skarum | Report as abusive

More bikes means slower bikes

Felix Salmon
Sep 23, 2010 17:16 UTC

Rachel Brown has a fantastic little 5-minute film about biking up First Avenue to work:

I love the way that she’s caught on camera all of the annoyances which drive bike commuters mad: the cars cutting across the bike lane to make left turns; the pedestrians blithely stepping out into the lane in front of you; the trucks using the lane as a parking spot; the taxis driving up it. And, of course, the Evil Bike Salmon.

At the same time, there’s more than a hint of tension, in this film, between relatively serious bike commuters, on the one hand, and slow hobbyists, on the other. And this tension, I think, is likely to get worse rather than better, even as the other problems might alleviate themselves somewhat as the number of cyclists in New York grows.

There’s safety in numbers, when it comes to cycling, and a similar phenomenon is likely to happen with regard to pedestrians and car drivers being increasingly conscious of bicyclists in their midst. Already, the First Avenue bike lane has reportedly cut injuries to all street users by 50%. But as the number of cyclists rises, the average speed of cyclists necessarily falls. Everybody thinks of northern European cities like Copenhagen as bicycling paradises — and they are. But if you’re biking around Copenhagen, you’re going to go a lot more slowly than if you’re biking the same distance in NYC.

A slow cyclist can cope with most of the dangers and obstructions that Brown complains about much more easily than a fast cyclist — and the fast cyclists, as Brown’s film shows, are now shunning the lane entirely, moving over to the right-hand side of the street, where they’re much less likely to get cut off by a car. (Cars often turn left off First Avenue, which runs up the east side of Manhattan, but much more rarely turn right.)

It’s going to be very interesting to see how fast cyclists cope with an influx of slower cyclists in Manhattan, as bike lanes continue to get built and average bike speeds continue to decline. I love to zoom down avenues at high speed, but I also love being safe. Maybe that means I’m just going to have to start going a little slower.

COMMENT

CycleartNY is dead on. I’ve ridden these paths multiple times at rush hour, and they support up to 15 MPH bike traffic safely. That’s faster than the subway, and plenty fast for many, probably most “serious” bike communters.

Folks who want to ride more like 20 MPH can ride with the motor vehicle traffic, although they should not ride illegally in the bus lane as the video seems to suggest they consider doing. But these faster riders certainly shouldn’t expect to be free from all the same things found on a bike path–slow cyclists, pedestrians, counterflow riders–OR from double-parked and dangerously operated motor vehicles and opening car doors, which you find only occasionally in a bike path.

These bike paths have been in place just a couple of months. It’s a little early to declare them unsuitable for “serious commuters.”

Posted by BicyclesOnly | Report as abusive

The economics of One World Trade Center

Felix Salmon
Sep 19, 2010 17:59 UTC

Many thanks to Joe Nocera for raising the issue of One World Trade Center’s finances. It’s by far the tallest and most expensive building that New York has ever seen, and it’s no thing of beauty, either. Plus, there’s not nearly enough demand for new top-grade office space to justify building so much of it at this location and at this time. So what exactly is the Port Authority thinking?

All that said, the issue is much more complicated than Nocera makes out. For one thing, the 1,776-foot tower is really the last vestige of the once-lauded Daniel Libeskind master plan for the World Trade Center site; for another, the deal that gave it to the Port Authority was a highly complex one, done with developer Larry Silverstein, and so it’s a little bit simplistic to try to view One World Trade in a vacuum, as Nocera does.

Plus, Nocera’s very vague about sourcing his numbers: he says only that “my real estate sources say they believe that the Port Authority will need to charge $130 a square foot to break even on the building”, and then adds a pro-forma Port Authority denial.

It would be very useful to learn where that number comes from. Looking at the figures in the piece, the cost of the building is $3.3 billion, with $1 billion of that coming from insurance proceeds. I’m not sure exactly what Nocera means by “break even”, but he does talk earlier on in the piece about “any shortfall between the building’s annual rental income and its carrying costs”, so let’s think about it that way.

The building will end up with 2.6 million square feet; if the breakeven rate is $130 a square foot, then that implies its carrying costs will be $338 million a year. But it doesn’t cost anything like that for the Port Authority to borrow $2.3 billion. After all, the last time the Port Authority issued bonds, it paid an average interest rate of less than 4.5%. And 4.5% of $2.3 billion is barely more than $100 million a year — less than a third of the number implied by Nocera.

Or think about it in terms of a standard residential mortgage. Let’s say you wanted to take out a 30-year fixed-rate loan on a $3.3 billion home, putting $1 billion down. Right now, mortgage rates are 4.5%, which implies a monthly repayment of $11.65 million per month, or $140 million a year. OK, you’re not going to be able to borrow that kind of money from your local credit union, and I’m pretty sure that the note would be non-conforming in the eyes of Fannie and Freddie. But still, if you want to get $140 million a year from renting out a 2.6 million square foot building, then you only need to charge $54 a square foot: a far cry from Nocera’s $130 figure.

Yes, there will be high maintenance costs, especially given all the extra security. But at the same time, the Port Authority owns the land underneath the building outright, so there are no costs associated with that. And in the early years of the project, when the building isn’t fully rented out, the Port Authority will have to carry some of the costs of the empty space.

On the other hand, there are less quantifiable costs to having empty space in that part of the New York skyline which used to be home to the Twin Towers. One World Trade Center might never be as iconic as they were, but it will still be an instant landmark, and a vast improvement on the gaping hole that we’ve been living with these past nine years. If Nocera wants to make the case that its costs will end up being borne by commuters crossing the George Washington Bridge, he’s going to have to be a lot more specific about exactly how he’s calculating them.

COMMENT

24 minutes ago Freedom tower is much better than twin towers,because there are four towers

,also Freedom tower is taller than twin towers.People should be excited.

WE LOVE FREEDOM TOWER AND NEW WORLD TRADE CENTER

Posted by Beeeeeed | Report as abusive
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