It’s that time of year, but it’s no holiday party in most city budget meetings. Cities across the continent are looking for ways to make ends meet. A quick survey turns up some sobering city deficits: New York $4.4 billion, Toronto $225 million, Washington DC $188 million, Houston $120 million, L.A. $87 million, San Diego $72 million, Cleveland $28 million. States are worse still: California $6 billion, Illinois $15 billion, Arizona $1.5 billion. Those are some major gaps to fill, before we make it to the federal level.
We hear the reasons every 24-hours or so, on the nightly news. Recession-related factors such as slashed tax revenues – property, sales, income – lessened state aid, expiring stimulus funds, high unemployment, increased healthcare costs, and pension commitments for baby boomers are draining the coffers. So we’re less able to pay for our infrastructure-intensive, high-octane lifestyle. Which just might have an upside.
While the economy shows some weak signs of recovery, cities lag the market by about 18 months, and are feeling the pain. The usual cadre of solutions – layoffs, furloughs, decreased services, health care cuts – may be short-term fixes. Visionary cities are looking for ways to decrease infrastructure spending and jumpstart economic development via a myriad of placemaking approaches.
How can great placemaking save money and grow the economy?
If we want to be bean counters about it, there is plenty to count. Urban mixed-use midrise is over 200 times as profitable in tax revenue per acre than suburbia. The tax basis adds up. One point of Walk Score increases your home value by up to $3,000. The equity adds up. One point in the urban sprawl index increases your risk for being obese by 0.5%. The health care costs add up. For every 10 minutes you spend in your car, the time you spend in community activities falls by 10%. The social capital costs add up. An average American churns out 24.5 metric tons of CO2 every year, but a New Yorker produces 7.1 metric tons. The global warming costs of suburbia add up.
“It’s hard rations, and it’s tough times with most all city budgets. Any infrastructure has to guarantee a return on investment. Convention center expansions, ballparks, grade separated streets, and wide streets never yield the expected returns. Cities that continue down those paths will exacerbate their fiscal conditions. Neighborhood streets, complete streets, walkable neighborhoods have major returns.”
“Local governments – because they don’t have as much flexibility as state and federal governments – have to be more disciplined. A street with healthy retail and housing is worth more to the tax base – whether property tax, sales tax, or income tax. Giant roads and shopping centers are losing strategies. Infrastructure must add value, and the time for experimentation is over.”
That’s been proven by tax revenue per acre studies, as enumerated here by New Urban Network, which conclude that one of the best fiscal cures for cities is dense, urban development. The top performer is downtown mixed-use/condos that rise six stories or more, when it comes to tax revenue per acre. The logic failure of the past was thinking of tax revenue per lot instead of tax revenue per acre, making big boxes seem much more fetching than they really are.
Norquist continued to say, “Municipal finance officers are looking for returns, and it behooves planners to make the case for the added value of planning. Planners need to be aggressive about sharing their knowledge and helping people understand. If muni officials understand that their planning staff is a key to a bigger tax base, then you won’t see cuts. Cutting your planning staff is like getting rid of your seed corn. Unless, of course, they’re ill directed. Good planning that promotes walkability and complexity are faring better in the market than strip malls and suburbia.”
“You won’t see Portland or Vancouver putting its planning staff on furlough. Vancouver has some of the best real estate appreciation in North America, thanks in large part to great planning. During a recent visit, I noticed the ramps to the bridge to the north of the island. They used to be two-lane, but now it’s one-lane for autos and one-lane for bikes and pedestrians. They realized multi-modal transportation adds to land value. Adds to tax base. Adds to livability. Not long ago, the City passed an ordinance prohibiting arterial lanes over 3 meters. Vancouver prefers streets that add value to neighborhoods over roads that accommodate high speed vehicle movement. The City realizes the street’s value for market and social purposes, not just moving traffic. If you leave the first two out, you get a dead street, and a dead city.”
Infrastructure and transportation value capture
Infrastructure to service compact, dense development costs 32% less than conventional development patterns, says the US EPA (7/09). Denser Calgary will save taxpayers $11.2B versus sprawl over 60 years, according to PlanIt Calgary (4/09) and, according to the Transportation Research Board’s Driving and the Built Environment (11/09), doubling residential density while increasing nearby employment, transit, and mixed use can decrease VMT by 25%.
I took a peek into the bearish outlook this week, and phoned James Howard Kunstler.
“Shrinking city budgets have obvious implications for infrastructure. We’ve had warnings from professional engineer associations that the water systems of American cities are dangerously old and in need of replacement. Which applies to our entire infrastructure, except for recent light rail lines. We’ve elaborated a road and street system that is so enormous – and we’ve done it incrementally over 90 years – that we will have a very tough time keeping it up, as we become a less affluent nation. Without necessary funds for repair, we’re going to keep on deferring maintenance, even though the results are obvious roadway, water, power and infrastructure problems.”
“Larger picture is that our cities have become over-scaled to the resource realities of the future: oil, coal, electricity, natural gas, but also the fiscal realities. The bottom line is that all cities will find themselves contracting. City planning may become less institutionalized, with more self-organizing, emergent task forces. It is becoming self-evident that we have to plan in a certain way, to build more densely, compactly, and flexibly. I have this fantasy that all of the great underemployed planners out there at the moment will become their own developers, doing great incremental infill, sprawl repair, and redevelopment.”
So what’s standing in our way?
Most of our current laws make the economic losers – from the city’s perspective – easy to build, while mixed-use walkable neighborhoods are generally illegal. Particularly at a time when incremental, small-scale infill is more supportable than vast greenfields, tools like form-based codes and zoning reform allow flexibility in a changing marketplace, along with the walkable environments that people value and that generate the most optimal tax base.
Places like Montgomery, Alabama, are taking things into their own hands. The SmartCode Montgomery adopted in 2006 is enough of an economic development driver that the City is putting its own funds into the local development market. The City has a developer RFP out now for Lower Dexter Avenue, in a move to speed redevelopment of perhaps the State’s most important street. The City purchased and aggregated the properties, which they could sell at a loss, realizing the long term tax revenue of the redevelopment will likely dwarf their investment. It helps that the Mayor is a former state economic development director, and that the SmartCode has a proven local track record.
San Diego’s Uptown District, a mixed-use infill project on 14-acres of formally city-owned land, was executed in 1987 by then City Architect, Michael Stepner. The project includes a healthy mix of residential and commercial units types, townhouses, flats over retail, live-work over retail, office over retail and two-story retail. The city invested its land into the project to promote the “City of Villages” concept to private developers, and its numerous award have resonated over time as the definitive model for redevelopment in the region. Its success led the way for Peter Calthorpe’s innovative 1992 Transit-Oriented Development Guidelines as well as informing the recently updated General Plan Strategic Framework. The $14 million dollar public investment in buying the land is still paying dividends today as this site has the lowest vacancy rate and highest rents per square foot in the mid-cities region.
Where some of the funds are still flowing
DOT-HUD-EPA Interagency Partnership for Sustainable Communities awarded almost $700 million in October, which is in the early stages of being disbursed via Tiger II and other grants. Other sources at the top of the list for funding placemaking efforts are US Department of Housing and Urban Development Community Development Block Grants and US EPA Smart Growth Implementation Assistance Program. A plethora of other options are available, including the following sources:
American Farmland Trust Community Farmland Protection. American Institute of Architects Sustainable Design Assessment Teams. American Recovery and Reinvestment Act of 2009. City and State Civic Art Commissions such as Seattle Art Resource Network. EDA Economic Adjustment Assistance Program | Global Climate Change Mitigation Incentive Fund | Planning Program | Public Works and Economic Development | Research and National Technical Assistance Program | Revolving Loan Fund Program. Environmental Protection Agency Clean Waters Act | Coastal Zone Act Reauthorization Amendments | Brownfield Grants | Revolving Loan Fund Grants | Cleanup Grants | Job Training Grants | Targeted Brownfields Assessments | Sustainability Pilots. FHWA Transportation Enhancements | Transportation Planning Capacity Building | Transportation, Community and Systems. Gateway Communities Technical Assistance. HUBZone Program. LGC Customized Technical Assistance. NAR Smart Growth Grants. NEA Citizens Institute for Rural Design. NTHP Main Street Center. National Vacant Properties Campaign. Project for Public Spaces. Rural Community Development Initiative. Scenic Highways . Smart Growth America. Smart Growth Leadership Institute. Sustainable Agriculture Research and Education. Urban Land Institute Advisory Services. US Dept Veterans Affairs Business Development Program. USDA Rural Development. USDA Value-Added Producer Grants. Workforce Investment Boards.
So what’s it all mean?
The economics are undeniable. The historical lessons are there. The modern-day case studies are growing. The question that remains is not “how?” but “who?”
Some will choose to heed the writing on the wall and some will not, which is how cities have thrived or withered for as long as there have been cities.
Is your city working towards the cure?