Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 580

Paris just announced plans to become a "100% cycling city." A follow-up to plan vélo 2015-2020, which saw a doubling of the city's bike lanes, plan vélo 2021-2026 includes 130 km of new bike lanes and 52 km of pandemic bike lanes that will now be made permanent.

In addition to cycling lanes, the plans include new bike parking, new transit integrations, and a bunch of other things that are meant to strengthen the overall ecosystem in the city. The total budget for this second plan is about €100 million, which will bring the total cycling investment over the last 10-11 years to about €250 million. This is a serious commitment to cycling.

It's also a good example of one of the things that we have been talking about on this blog. This pandemic forced us to rethink how we allocate urban space -- everything from outdoor restaurant patios to bike lanes. And as we can see here, many of the positive changes are not surprisingly starting to stick.

Most of us have felt the effects of supply chain disruption during this pandemic. When we were building Mackay Laneway House this past winter, it was right when lumber prices were peaking . We had no choice but to just absorb the cost premiums and move forward with the job. On bigger projects with longer construction schedules, I know that a lot of us are trying to time what they can with the expectation that things will eventually sort themselves out.

When things are working as they should, this is the sort of thing that you can take for granted. But now you really need to consider lead times and cost premiums. I was reading this morning that the average number of wait days from anchorage to berth in a port in Los Angeles is now 13 days. What that means is that vessels are sitting out in the water, on average, for almost 2 weeks waiting a spot. This costs money.

As of last week, this translated into 79 container ships sitting in front of Los Angeles and Long Beach waiting to berth (see above chart). If you do the math, which Freight Waves tried to do over here , you get to a value of somewhere around $26 billion worth of stuff sitting out in the water. As I understand it, a big part of the problem is a lack of trucks and drivers to pick up the cargo once these ships have berthed. So you can run the ports 24/7, but you still have a bottleneck.

Logistics clearly matter.

Chart: American Shipper with data from Marine Exchange of Southern California, via Freight Waves

https://twitter.com/donnelly_b/status/1451744401923973121?s=20

It upsets me when I read things like this ( click here if you can't see the embedded tweet above). I think it creates a false sense of a free lunch and ignores all of the nuances and complexities associated with inclusionary zoning.

IZ is an obligation to provide a certain number of affordable units in new housing developments. There's a lot of detail and debate around where this should apply, how much needs to be provided, and at what degree of affordability.

But at the end of the day, it's important to keep in mind that at meaningful levels of affordability, these IZ homes are going to be built at steep losses. More info on the economic impacts of IZ can be found here .

The simple math is that the costs to build these homes are going to be greater than the revenues that they bring in. Which is why developers aren't out building affordable housing everywhere. There's no margin.

In order to build, somebody or something needs to provide a subsidy so that this revenue-expense shortfall can be made up. How this works its way through the market is where I have tried to focus the discussion when writing about IZ. There are complexities. Some lessons from Portland, here .

But to just assume that these costs will get magically absorbed by housing developers, with no other knock-on effects or distortions to the market, is incorrect.