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Last Wednesday, the Lancaster County Planning Commission hosted strongtowns.org’s “Curbside Chat” presented by Charles Marohn at the Manheim Township Public Library.

“Curbside Chat” is strongtowns.org’s program to discuss the financial realities facing our cities, towns, boroughs, and townships.  The Chat started with the history of what Marohn called the “Suburban Experiment” of new development that shifted homes and businesses outside of towns and into outlying areas.

[sws_blockquote_endquote align=”left” cite=”” quotestyle=”style02″] We often forget that the post-World War II American pattern of development is an experiment.  We assume it is the natural order because it is what we see all around us, but our own history – let alone a tour of other parts of the world – tells a different story. -Charles Marohn[/sws_blockquote_endquote]

How New Development is Financially and Economically Unsustainable

Marohn noted that the financial viability of the  “Suburban Experiment” is based on two assumptions that have not proven to be true:

1: New growth encouraged by suburban development will continue to be ever-accelerating.
2: New growth will create enough revenue to pay off debt incurred to create the infrastructure needed to support suburbanization and pay for the maintenance of that infrastructure.

He went on to present multiple case studies that established a pattern of suburban development (through the creation of infrastructure by local governments) that would take 50 to nearly 100 years to pay off – NOT including the cost of maintenance.    These case studies were not just focused on a particular neighborhood demographic, they included examples from low-density neighborhoods, medium-density neighborhoods, high-value properties, traditional neighborhoods, industrial parks, and commercial districts set in both rural and suburban areas.

Marohn followed the growth studies with a sobering chart on the long-term financial ramifications for local governments using this type of development: after just 20-25 years, the income created by suburbanization (after the expense of maintaining the infrastructure) begins to plummet much more rapidly than it increased during the initial years.  After just 35 years, the expenses of maintaining the development becomes greater than the income it produces and never again returns to a positive cash flow.

Note: The following chart is based on new growth models that include the assumption that new development will be implemented every two years.  If new development is not implemented every two years, the results look even worse than the chart below.

Cumulative Cash Flow - MP2LC

Sobering indeed, isn’t it?

Read more about this “Growth Ponzi Scheme”, including five articles delving into the details of Marohn’s presentation.

 

How Preservation is Financially and Economically Sustainable

It’s not as thought most of us didn’t already know that historic preservation supports financial and economic growth and stability, but the second part of Marohn’s “Curbside Chat” did include solid, and sometimes surprising, evidence for how that happens.

Marohn once again had a wealth of case studies to make the case that the preservation of existing development (even when its at its worst of transient occupancy and rundown buildings, in a state he called “Old & Blighted”) has consistently demonstrated a higher assessed value (that will produce more tax revenues) than what he called the “Shiny & New” big-box model of development that typically includes a single businesses on the same size development lot that traditional development houses multiple businesses and even residences on.

Using an ROI (Return on Investment) based on property taxes and the revenue stream those taxes produce, Marohn’s case studies show that even “Old & Blighted” vernacular downtown areas are valued significantly higher, almost doubled when looking at an overall average, than the “Shiny & New” big box development.

[sws_blockquote_endquote align=”” cite=”” quotestyle=”style02″] “Our problem was not, and is not, a lack of growth. Our problem is sixty years of unproductive growth. The American pattern of development does not create real wealth; it creates the illusion of wealth. Today we are in the process of seeing that illusion destroyed and with it the prosperity we have come to take for granted.” – Curbside Chat Companion Booklet, page 5 [/sws_blockquote_endquote]

Not only that, Marohn pointed out that “Old & Blighted” development can be stimulated and improved (adding value which would increase the revenue stream) with a much lower investment than those plots that new development sits on.

Perhaps the most interesting example he gave here was an avant-garde approach used by a group of citizens in Memphis, Tennessee.  After repeatedly, and unsuccessfully, petitioning the city to paint parking spots, crosswalks, and bike lanes into a particular downtown area of small, storefront businesses to encourage the community to support those businesses – the citizens decided to take matters into their own hands.  Spending $500 on paint, they painted the parking spots, crosswalks, and bike lanes themselves. Within six months the storefronts were filled, the businesses were doing well, and one landlord reported being able to collect twice the rental fee he has previously been able to charge.  

Marohn then outlined the strategies he suggests for turning unsustainable development models into thriving economic centers that will stand up to the test of time and create a method of placemaking that yield a higher return on public investments:

STOP: Do no more “if you build it they will come” develop and instead focus on small, incremental investments in places that are already productive

TAKE STOCK: What and where is already productive?  Where is the revenue stream coming from?  What is the tax base that produces that revenue stream?  What are the tax subsidies that reduce that revenue stream?  What are the debts that impact revenue?

START TRIAGE: Ease the suffering of “most broke” development that won’t make it and isn’t sustainable and move on to treat and improve the already productive “somewhat broke” that can be sustained, saving the “least broke” development for last.

COMMIT TO ALWAYS ADDING VALUE: Adding value with placemaking strategies encourages the kind of growth that produces positive revenue streams that can be sustained, without debt.

REORIENT SYSTEMS & APPROACH TO GROWTH: Develop a capital improvements plan that takes a hard look at the scale of infrastructure inventory, maintenance obligations, when that maintenance will come due, what that maintenance will cost, and what funding sources they rely on, to create a realistic “balance sheet” of the public’s future obligations.

The “Curbside Chat” chat companion booklet is available online, and is absolutely a must-read.  As is the information, statistics, websites, and strategies for more productive growth and placemaking preservation approaches available on the strongtowns.org website.  You can also view Marohn’s presentation schedule, as well as sign up to schedule a “Curbside Chat” presentation in your town.

 

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THINGS TO THINK ABOUT

Why have we not been implementing growth based on ROI (Return on Investment)?

How can we get our cities and towns to start thinking about growth in terms of ROI (Return on Investment)?

What kinds of inexpensive changes and improvements can be made to our neighborhoods and downtowns to add value?

What “high amenity” areas offer the potential for an increased level of public investment and engagement?

How can we add value to those “high amenity” areas?

What are incremental strategies that can add value to existing development in cities and towns?

How can we articulate the ways that historic preservation continues to that value?

How can we communicate that to our towns and cities?

How does creating a sense of place with historic preservation contribute to the placemaking principles that Strong Towns advocates?

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About Danielle Keperling

Danielle Groshong-Keperling has worked full-time in the restoration industry since 2001, but her education in the traditional trades, construction industry, and historical preservation was built from an early age through her Father's work in the traditional trades and her Mother's love of historic architecture. Now, with Jonathan (an artisan craftsman in his own right), her partner in business and life, they work together to help historic building owners restore and preserve their piece of our built history.