More and more, I think sprawl is THE underlying problem in American cities, and addressing it as THE solution. It’s not the only problem, nor are solutions that address it a silver bullet to all the other challenges facing cities. But to me, it is more central to solving more urban problems than any other single issue.
Unfortunately, it’s an issue that most Americans don’t grasp very well, if they even think about it at all. There’s a lot of educating, a lot of helping people connect the dots, to be done. So I was excited when I came across (H/T Charlotte blogger Mary Newsom*) an organization called Strong Towns, and an excellent series called “The Growth Ponzi Scheme.”
In the series, Strong Towns Executive Director Charles Marohn demonstrates, through a number of examples, how real estate developers’ upfront contribution toward costs are typically inadequate for long-term maintenance. A generation later, the taxpayer foots the remainder of the bill. Marohn concludes: “Our places do not create wealth, they destroy wealth.”
In the next installment of the series, Marohn provides a graph showing “(t)he cumulative cash flow of multiple projects in succession over two life cycles”:
The results are obvious and devastating. When the private-sector investment does not yield enough tax revenue to maintain the underlying public infrastructure, the balance can be made up in the short term with new growth. Over the long run, however, insolvency is unavoidable… First, this is actually a model of a well-run city, one that puts money away for future improvements. I’ve yet to see one that has such fiscal discipline…
Second, this model shows the impact of continuous and steady growth. In reality, that is not the pattern most cities experience. Most cities have a phase of rapid growth followed by stagnation and then decline, as described by Jane Jacobs in The Economy of Cities. Superimpose the financial underpinnings of the American model of development and the results are even more devastating – a flood of liabilities all coming due right at the time that growth is starting to wane.
In the fourth installment, Marohn ties the growth Ponzi scheme in to the debt fueled national economic disaster of the last 40 years:
The critical insight today is to understand how we reacted to the end of the first life cycle of suburban development, when those maintenance costs started to come due and cut into our growth-generated wealth…. (W)e made a choice to double down on the suburban experiment by taking on debt.
We used debt to drive additional growth and sustain the unsustainable development pattern for a while longer… The first generation of suburbia we built on savings and investment, but we built the second — and maintained the first — using debt. Unprecedented levels of debt.
And in the process, we transformed our industrial economy into one based on consumption.
(W)e’ve tethered our national psyche to the suburban ideal we call the “American Dream”, our auto-based, utopia where everyone gets to live a faux version of European aristocracy on their own mini-estate.
His prognosis for the immediate future is pessimistic:
None of our public officials has ever asked the question: Will this public project generate enough tax revenue to sustain its maintenance over multiple life cycles?…
I’m astonished and more than a little depressed at the shallow nature of the public debate we are having over this crisis. Do we cut the budget or spend more? Do we raise taxes or reduce them? Does raising the debt ceiling signal fiscal responsibility or a lack of restraint? Do we build rail lines or highways? How do we restore housing values? How do we lower unemployment?…
Nobody has acknowledged that a) the bubble economies of tech and housing were not financially real, b) we can not “recover” to a condition that was not financially real in the first place, and therefore c) we need to start focusing on a transition to something close to reality, which is a long ways from where we currently are.
There’s a lot more here. I encourage readers to bookmark the Strong Towns blog in your RSS reader of choice and to read the series in full. I am not sure how novel Marohn’s thesis is, as he builds upon a number of ideas I’ve encountered in previous literature on sprawl and on the housing bubble. But it’s a thorough primer, broken up and presented in a way that should be friendly to time-pressed voters, planners, and elected officials.