Jun 25, 2020

Axios Cities

It's officially summer — which in my house just means that the kids' complaints about schoolwork have been replaced by complaints about being bored.

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Today's edition is 1,919 words, a 7-minute read.

1 big thing: Exclusive — What could help cities rebound

Illustration: Aïda Amer/Axios

Cities should ease rigid permitting and zoning rules to help businesses and residents recover during the coronavirus pandemic, according to a trio of policy briefs out today by researchers at the Mercatus Center at George Mason University.

Why it matters: They are among the dullest City Hall tasks, but these decisions determine significant outcomes such as where housing can be built and whether restaurants are allowed to open in a particular neighborhood.

  • Flexibility will be key to boost chances of rebounding, which may lead to solutions to problems that have long plagued urban centers, argue researchers Emily Hamilton, Nolan Gray and Salim Furth.

1. Housing: Restrictions on the amount and type of housing allowed to be built are contributing to the public health crisis by causing overcrowding in some places and unsustainable rents in others.

  • Easing permitting restrictions on accessory dwelling units — or secondary units placed on the same lot as single-family housing, above a garage or in a basement — would help seniors wanting alternatives to nursing homes where COVID-19 has run rampant.
  • Relaxing building codes to allow for temporary homeless shelters would let homeless individuals safely physically distance from others.
  • Allowing low-cost housing like modern-day boarding houses or residential hotels could allow solo-living rather than with roommates, supporting public health now while providing affordable housing options in the future.

2. Commuting: Localities should take steps to prevent cars from clogging the roads when people slowly return to offices while likely avoiding public transit.

  • Zoning rule changes could allow entrepreneurs to start home-based businesses.
  • Congestion pricing schemes require drivers to pay for road use to reduce rush-hour bottlenecks and keep traffic circulating throughout the day. The paper argues that tolls should be allowed on urban interstates where they are currently banned.
  • Easing restrictions on e-bikes and e-scooters, such as no longer requiring a driver's license to operate them in some states, could help spur demand for non-car transportation — as would installing wider sidewalks and separate bike lanes, or keeping permanent the "slow streets" some cities established during the height of COVID-19.

3. Permits and zoning: "Regulatory wiggle room" can go a long way to letting businesses and restaurants open in new locations or allowing residential development in commercial zones, the researchers argue:

"[U]rban storefronts are often in prime locations and will be better off residentially occupied than vacantly waiting out a long economic downturn."
  • Speeding up permitting would allow pop-up businesses or simply give existing business owners leeway in shifting business plans to stay open — such as alcohol takeout or additional outdoor seating space at restaurants.
  • Temporary tax incentives on small investments to properties could help cities prevent vacant and run-down buildings.

The bottom line: "As state and local policymakers deal with a huge budget crisis in the coming months, they may be more focused on more urgent problems than longer-term issues of land-use regulation," said Emily Hamilton, Mercatus Center research fellow and one of the authors of the papers.

  • "But as business owners in general are struggling to stay solvent, we may see longer-term reform efforts."
2. Cities put major projects on hold

Construction workers wearing masks work on a road in New York City in May. Photo: Alexi Rosenfeld/Getty Images

Major infrastructure projects have been put on ice, economic development programs are getting the ax, and workers are losing their jobs.

  • These are the realities for localities dealing with multimillion-dollar budget holes while also continuing to pour money into COVID-19 response as cases spike.

By the numbers, per a survey of 1,100 municipalities by the National League of Cities:

  • 65% of cities are delaying or canceling capital expenditures and infrastructure projects, with 61% of cities delaying or canceling equipment purchases.
  • 24% of cities are slashing community and economic development programs.
  • 33% of cities say they will have to furlough or lay off employees.
  • 20% said cuts are happening across the board, 54% said they are more targeted.

Job losses are mounting at the local level, with more than 1.3 million jobs lost since March, according to numbers from the National Association of Counties.

  • Most job losses were related to education, but more than 523,000 job losses included social workers, law enforcement, maintenance crews and construction workers.

"There will be a lot of cuts to parks and recreation and economic development programs — things that are important but maybe not essential," said Michael Belsky, executive director of the Center for Municipal Finance at the University of Chicago’s Harris School of Public Policy.

  • A number of local officials have said they don't plan to raise taxes to fill funding gaps, but the option may soon be on the table as the pandemic drags on and rainy day funds and borrowing capacities are exhausted.
"The worst time you can tax people is when their incomes are down. Many places are furloughing people, property values will be depressed. You don't have enough income and demand for housing so prices will go down, and property taxes will go down. All these things point to very difficult decisions."
— Michael Belsky
3. Startup positions hourly home-sharing service as a pandemic boon

Photo: Melanie Stetson Freeman/The Christian Science Monitor via Getty Images

With people largely stuck at home during the coronavirus pandemic, startup Globe says it's been able to provide customers with a space away from home to get some work done or have quiet time by renting someone else's empty home by the hour.

Driving the news: In a letter to San Francisco Mayor London Breed and California Gov. Gavin Newsom, Globe co-founder and CEO Manny Bamfo argues that his company’s business is helping alleviate challenges residents are facing during the current pandemic.

Background: In late May, the San Francisco City Attorney’s office informed Globe that its business is violating the ongoing shelter-in-place order as well as the city's short-term rental rules.

  • "Globe’s operations not only violate San Francisco’s current health order, but also the City’s short-term rental rules," city attorney deputy press secretary Meiling Bedard said in a statement to Axios. "In the midst of a global pandemic it’s crucial to ensure that companies are operating safely and in accordance with the law."

"What really prompted this was the customers — we had several customers reach out to us and say, 'I don't want to be cooped up with my husband,'" Bamfo tells Axios.

  • "Yeah there’s the COVID-19 crisis, but there was also another crisis, which is that we as humans are not designed to be cooped up this way."
  • Bamfo also says that the company has been following the same public health guidelines as home-sharing and hotel businesses, along with the CDC's guidelines for disinfecting community facilities, requiring hosts to clean their homes for each booking.
  • The company also believes that it's exempt from short-term rental regulations because guests do not stay overnight, and city officials have explicitly affirmed this exemption in the past.

By the numbers: Globe operates in 12 markets in California.

  • 150 new hosts sign up every day nationwide, and 95% of current hosts are property managers. It's also working with some employers who want to help their workers while they're working from home.
  • 85% of bookings are for a location within four blocks (so guests are picking homes near where they are).

The bottom line: Globe is far from the first startup to face challenges from city officials who aren't keen on seeing companies offer new ways for people to live and move that may not fit current regulations. It likely won't be the last.

4. End of broadband pledge could cut lifelines for families

Illustration: Annelise Capossela/Axios

Internet service providers' pledges to waive fees and forgive missed payments end on June 30, likely cutting off service for some families who can't pay their bills due to the economic impact of the pandemic.

  • In mid-March, FCC chair Ajit Pai asked ISPs to commit to not cutting off service to consumers and businesses who were unable to pay service bills or data overage or late fees during the height of the pandemic. That pledge ends June 30.

Where it stands: Starting July 1, major national providers will end fee forgiveness and set up payment plans to collect outstanding balances, while following the FCC's lead in saying it's now Congress' responsibility to help close the digital divide.

  • AT&T said 156,000 customers used the pledge, and they'll have until the end of June, or 90 days from their initial past-due date, to pay off past-due balances or make other payment arrangements.
  • Comcast is offering extended payment plans of up to 12 months for customers unable to pay their bills as part of its Xfinity Assistance Program.
  • Verizon said the hundreds of thousands of customers who enrolled in the pledge will automatically be enrolled in a repayment program beginning in July.
  • Charter said it will forgive a portion of delinquent outstanding balances for customers who sought suspension of collection due to the pandemic.
  • T-Mobile said it will look at "individualized options, including payment plans" to work with consumers who are unable to pay.

Between the lines: With the FCC declining to extend the voluntary commitment, ISPs have political cover to start collecting broadband-related charges they had been forgoing for more than three months.

Our thought bubble: Congress hasn't included funding to pay for broadband bills in its previous COVID-19 packages. Senate and House Republicans last week announced principles for a legislative framework to expand broadband access, but that's a long way from providing immediate funding.

Go deeper: Students face summer without devices or WiFi

5. Pic du jour: Bubble yoga

Photo: Cole Burston/Getty Images

Megan Weatherston participates in an outdoor fitness class at Hotel X, inside domes to comply with social distancing measures to control the spread of COVID-19, on Tuesday in Toronto.

  • As Canada begins to reopen its economy following COVID-19 shutdowns, gyms and fitness centers still remain closed as they determine how to comply with social distancing measures.
6. Atlanta small businesses saw steepest cash balance drops
Data: JPMorgan Chase Institute; Chart: Axios Visuals

Small businesses are powerful engines of local economies, and they've been hit hard since the onset of COVID-19, according to a JPMorgan Chase Institute analysis of nearly 1.3 million de-identified small firms nationwide.

Why it matters: Cash balances provide liquidity that businesses need to get through a financial shock.

By the numbers: Overall, typical small business cash balances dropped 12.7% after the onset of COVID-19 and declined in every city and across industries.

  • During the second half of April, some balances rebounded, likely due to CARES Act stimulus payments and declines in expenses. But revenues still lagged.
  • By the end of March, the typical small firm saw revenues 50% less than the same period in 2019.

The steep drops seen in Las Vegas, Orlando and New York may be partly due to the sudden disappearance of tourists. In Atlanta, small businesses were already 10% lower than in 2019 before the national emergency declaration.

  • Small businesses in Seattle, Indianapolis, Denver, Phoenix and Chicago saw smaller-than-average cash balance declines.

There are striking disparities: Cash balances for Black-owned firms decreased by 26%, compared to 10% declines for white-owned businesses.

  • Revenues of Asian American-owned firms declined by more than 60%, possibly due to discrimination as well as the concentration in hard-hit industries such as restaurants and personal services.

Go deeper: Small businesses face post-lockdown cash crunch

7. Urban files
Reproduced from CivicScience; Chart: Axios Visuals

Americans would rather return to lockdown if coronavirus cases spike (Axios)

Some cities have a simple solution to mass unemployment: Hire workers directly. (New York Times)

Why public health officials are quitting during a pandemic (Governing)

The porch puzzle (Curbed)

College students want tuition discount for online courses (Axios)

8. 1 💥 thing: Fireworks invade city nights

People are setting off fireworks in neighborhoods far earlier than the usual Fourth of July celebrations, causing firework complaints to spike in cities from Boston to Baltimore.

What's happening: While personal fireworks shows typically start in the days leading up to July 4, people have a lot more time on their hands this year with nothing to do, Slate writes.

  • Fireworks companies that put on huge Fourth of July displays have been devastated by canceled shows this year and have turned to online retail sales to make up some of the lost revenue, making some pretty noisy firecrackers available directly to consumers.
  • Atlas Fireworks started online sales during the pandemic and retail sales are up 28% from 2019, per Slate.

The bottom line: You're going to be hearing a lot more fireworks this summer.

Thanks for reading!