Friday, July 17, 2015

Growing Quickly into Decline

By Alex Pearlstein, Vice President

I was in a community this week that is experiencing an interesting phenomenon: too much success. More specifically, too many small-lot, low-to-mid price point single-family homes being constructed than are fiscally sustainable. As can be imagined, this community is a fast-growing suburb of a fast-growing metro area. Schools are good, crime is low, retail is plentiful, so the steady march of new residents heading for this community shows no sign of abating. 

Unfortunately, government staff now estimates that for every newly constructed housing unit the community runs an $80,000 deficit for provision and maintenance of infrastructure and services. On top of that, some of the area’s older subdivisions (circa the 1960s and 70s) are starting to see their infrastructure fail. Strong Towns has written extensively and convincingly about this phenomenon, but it is striking to see it play out so clearly in reality. As could also be predicted – and is far from unique in commuter suburbs – the general public and elected officials are vehemently opposed to new multi-family development; in fact, there’s a moratorium on this type of product. Transit is also a dirty word here. Moreover, investing public dollars for talent-attracting/retaining amenities such as parks, paths, arts, beautification, event spaces, festivals, etc., gets short shrift when needs are so great for new roads, schools, water and wastewater infrastructure, police and fire personnel, etc. 

Despite increasingly dire fiscal projections, elected officials continue to show distaste for raising taxes; meanwhile, local government has been cut almost to the bone to remain solvent. Unsurprisingly, the community is thinking about strategies to become more fiscally sustainable. One way to accomplish this is to attract and create better jobs. Another is to engineer the development of higher-value housing. Backroom discussions on increasing minimum lot sizes for new development are starting to creep into the open. 

Some in the community are dubious that even downzoning properties reserved for residential will have the desired effect of luring investment in higher-priced housing. “We’ve already gone too far down that path and established a reputation as an entry-level community,” some argue. If developers thought there was a market for higher-cost homes they would have built them already. Others note that lot and/or home size is no guarantee that a desired price point will be realized. Value is largely determined by (wait for it…) location, location, location. In fact, one local developer of a higher-end subdivision was reportedly disappointed in the average sales price he received for his larger units. 

The situation in this community is being played out in hundreds if not thousands of similar suburbs in fast-growing metro areas. There is no guarantee that they’ll one day go the way of Ferguson, Missouri, but the likelihood of this scenario is greater if unsustainable development trends are not reversed. Unfortunately, the longer a community grows unsustainably, the harder it is to change minds and policies to pivot in new directions. Especially if we’re talking about increased density, mixed-use development, transit, road diets, and other bugaboos foisted on populations that self-selected suburban environments. 

Above all, making smart and sustainable choices comes down to leadership and vision; often, they go hand in hand. Realistically, however, leaders represent the values and viewpoints of the population that elects them, so you get situations where the blind are leading the blind. In other words, we’ve got some trainwrecks coming – and fast. Strong Towns is battling hard, but growth patterns are so established and mentalities so steadfast in their certitude, that it might not be a fair fight.