Tag Archives: smart growth for conservatives

Smart Growth is about long term financial strength

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Over on www.smartgrowthforconservatives.com the conversation continues about how to build stronger communities that remain fiscally solvent over the long term. This conversation has been spearheaded by folks such as Joe Minicozzi and Charles Marohn of urban3 and Strongtowns.

I’ve said often that if you want to address smart growth issues in your community you have to first be willing to STOP what you are currently doing. Then you have to proactively evaluate your status quo. It begins with asking the right questions:

These questions center around simple accounting concepts.

1. What are your communities total assets. What is the value of the tax base. How does a community pay it’s bills? An accounting of the money coming (revenue) in vs. the money going out. (liabilities)

2. What are the long term obligations for infrastructure maintenance associated with sustaining those assets? What’s the money going out.

Next, communities need to ask the more complex questions. These should be used to frame a smart growth strategy.

1. In terms of geography, what parts and land uses of your community have a positive Net Present Value. (Positive ROI – Cash from long term assets minus the cost of long term liabilities) and which have a negative Net Present Value? This is largely determined by the types of land uses present. This process looks something like this: Here is a look at the efficiency of some Lower Macungie projects. 

2. How does the tax base change in response to certain policy decisions? Is your community considering a rezoning? If so what are the LONG TERM fiscal impacts? It’s critical to look beyond the windfall which often skews the longterm picture. Is a project greenfield or infill? Will it require new infrastructure? What are the jobs/acre being generated vs. land lost? Have you quantified this? How much will it cost down the line to “improve” roads to handle new traffic if traffic forecasts are incorrect? (As they often are) What’s the cost to pay for new students in the classroom? To provide increased services? Police, Fire, amenities?

Positive vs. negative ROI is one of the main factors differentiating smart growth and dumb growth. 

2. What types of land use patterns create the most wealth for the community? Are decisions creating high value land uses that create wealth or low value land uses that suck up more resources than revenue it generates? Remember, elected officials have a responsibility to taxpayers to show that zoning changes make financial sense.

3. With a goal being a stable predictable income stream, what types of land use patterns experience the greatest degree of volatility?

4. How do items that increase property value such as parks impact net present value? How far from the park does that effect extend?

5. How do items that hurt property values such as STROADS impact Net Present Value? How far from the STROAD does that effect extend?

Lastly and most importantly where can you best deploy limited resources to have the greatest overall impact? 

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Smart Growth for Conservatives

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Proud to be a contributor at a new blog called “Smart Growth for Conservatives“. 

“Smart Growth for Conservatives provides analysis of transportation and land use issues from a center-right perspective, with an emphasis on fiscal conservatism and market-based solutions.”

Smart growth is an issue conservatives should rally around. At it’s core it’s a blueprint for building long term fiscally sustainable places. So why has it gotten such a bad rap from some in the conservative movement? I’m going to borrow heavily from some of Jim Bacon’s writing here. It’s largely Jim and Strongtowns Chuck Marohn who really hooked me on the underlying conservative rationale. Conservatives mistakenly equate smart growth with intrusive government intervention in the economy, with regulations, subsidies and  boondoggles. Unfortunately, nothing could be further from the truth.

First, while conservative intellectuals are spot-on in their critique of mass transit subsidies, they are blind to subsidies for roads and highways. While they hit the bulls-eye in their critique of land use restrictions, they ignore the systemic subsidies for green-field development. Their critique runs only one way. – Why Conservatives (mistakenly) hate smart growth – Bacons Rebellion

Bacon identifies 4 broad propositions. Here are the problems and reasons conservatives should be concerned. 

(1) The pattern and density of development has tremendous impacts on the prosperity, livability and fiscal sustainability of our places.

(2) The post-World War II pattern of disconnected, low-density, suburban-oriented development was largely the result of government interventions in the marketplace at the federal, state and local levels. 

(3) That pattern is increasingly dysfunctional, creating congestion and driving up the costs and liabilities of government. (Esp local gov’t!) When up front costs for new development are paid for with transfers of state and federal dollars down to local governments this leads to an illusion of wealth. The problem is when one time windfalls lead to long term liabilities for maintaining the new infrastructure. This exchange — a near-term cash advantage for a long-term financial obligation — is one element of a Ponzi scheme and is the centerpiece of the Strongtowns message. There is no denying we have a ticking time bomb of unfunded liabilities in our communities. We are dealing with this issue in Lower Macungie today.

(4) While many people do prefer auto-oriented communities, there is a pent-up demand for walkable urbanism with access to mass transit. 

Two patterns of Commercial development. 1. Strip Mall, 2. Traditional Main St. One efficiently capitalizes on public infrastructure and public investments, the other is a resource hog, consuming large amount of of land usually in a towns most precious areas.

Two patterns of Commercial development. 1. Strip Mall, 2. Traditional Main St.
The traditional Main St. efficiently capitalizes on public investments in while the other is a resource hog consuming a large amount of of land in what should be a  towns most financially productive area but what ends up being the least efficient.

So we identified the problems and acknowledge why they are of concern to conservatives. What are the conservative solutions? Here are a few: (and relevance to Lower Macungie in gray)

1. Use the market. Market based open space preservation as a mechanism to keep taxes low. Programs such as Transferable Development Rights. Currently, in LMT we preserve open space primarily with agriculture protected zoning. This is fundamentally unfair to landowners and has failed catastrophically in LMT since it can be overturned by politicians. A TDR program pays landowners for voluntarily severing their development rights by creating a market for density. In a market, the community preserves valuable farmland which in turn keeps taxes low, land owners are fairly compensated for their property and lastly developers are able to purchase density to build in appropriate locations where the gov’t doesn’t need to subsidize their project.

2. Deregulate zoning codes and encourage value capture. We’ve largely regulated ourselves into the our current problems with Euclidean Zoning Codes. The opposite would be a form based zoning code. There will always be a need to separate certain uses. Warehousing is one that comes to mind. Unfortunately here in LMT we’ve allowed a proliferation to an extreme. Warehousing is one example where it’s in the public interest to mitigate impacts with regulations, buffers and costly super-sized infrastructure. But many of the uses we separate with unnecessary regulations don’t have to be if we allow developers to build in the traditional pattern. Think of Main St. Macungie. Here we have residents who live next store to banks, accountants and Doctors.  That’s the traditional pattern that worked for hundreds of years. It’s only recently that we steered away from it when we started building isolated pods. 

3. Do the math. Perform lifecycle cost and benefit analysis to see if development projects are being subsidized by taxpayers or if they “pay their own way” and indeed generate more revenue then liabilities they create. We’re currently considering subsidizing a massive strip mall project. We assume that it will be a tax benefit. Has anyone actually done the math over multiple life cycles? Sure looks great up front. Shiny new boxes and traffic signals. But what happens when the township has to pay for future improvements and maintenance of infrastructure when the bypass is inevitably so congested that it needs to be widened or we have to build a bypass of the bypass. Shouldn’t we be squeezing every bit of revenue out of our most valuable spaces rather then subsidizing the least efficient pattern? (see photo above)

4. Bottom up government. Build only what we can afford to maintain. As mentioned above top down gov’t distorts what a local municipality can actually afford to build with one time subsidies and windfalls. We need incremental economic development grown organically rather then artificially. We must ensure we can afford to pay for new infrastructure over the long run. (Do the math beyond the windfall) Here in LMT we’ve done a great job of securing millions of dollars in Gov’t grants over the years. I’m not arguing that was bad strategy. We’d be foolish not to seek top down money. But over the years we’ve avoided tough conversations about what happens when that money dries up. This conversation came to a boiling point this past Nov. during the tough tax conversations. We came to the realization that we must account for the long term fiscal sustainability of our township if we want to avoid lump sum huge tax increases in the future.  

Interested in learning more? Add www.smartgrowthforconservatives.com to your RSS feed.

About SGFC: Editor Jim Bacon publishes with financial support from Smart Growth America. A life-long journalist, Jim was editor of Virginia Business magazine before launching Bacon’s Rebellion, a blog dedicated to building more prosperous, livable and sustainable communities in Virginia.