The Small Town Project

Sometimes they tell lies
and put ‘em in a truthful disguise. — Gil Scott-Heron

We’ve all heard it: “This town must grow to thrive!” or “We have to grow or die!” This is the major tenet the “growth machine” — that network of people in every community which profits from residential development — repeats constantly as a large part of its justification for ceaseless residential expansion.

Sprawl in Marion. Does this have to be MV/Lisbon’s Future?

There’s just one problem with it: It’s a myth. It’s propaganda spread by an industry which needs to justify itself to continue reaping the enormous profits generated by subdivision construction and suburban sprawl, regardless of what happens to existing towns as a result.

There’s no question that many of those who spread this notion actually believe it. They’ve heard it from those before them and everyone around them. A would-be developer, for instance, hears it from established developers, lenders, builders, and others who profit from subdivision development. They, in turn, heard the same tenet from others around them. (This is one reason I don’t question their character or intentions as much as one might expect.) Because they haven’t actually researched the issue few attempt to offer evidence to back up the assertion.

In fact, a little digging reveals a great deal of evidence which reveals exactly why the “grow or die” tenet is just wrong. Look closely and you’ll see it rests on a number of smaller myths, sub-myths if you will. Eben Fodor debunks many of these in Better NOT Bigger. In future installments we’ll cover a bit of the same ground, and touch on a couple of myths not dealt with by Fodor. To pursue this topic in more depth I refer you to Fodor.

Let’s begin with one of the most commonly heard smaller myths.

Myth #1 — “Residential growth brings in needed tax dollars.”
Fodor provides all sorts of evidence to dispel this myth. (pp. 39-42) But his book’s most recent copyright is 1999. Since then, much additional evidence has accumulated. It now includes well over 100 studies from around the country which have shown that residential development nearly always costs the community more than the tax revenues it brings in.

Beginning in the late ’80s, the American Farmland Trust (AFT) began developing “cost of community services” (COCS) studies to compare residential development to farmland, open land, and commercial/industrial property with regard to how much they generate in tax revenue versus the costs of public services they require. The latter involve things like road maintenance, police and fire service, educational expenses, traffic control, and various forms of infrastructure maintenance.

If completed, Stonebrook will cover nearly one third as much land as the whole of older Mount Vernon.

Other organizations, from community groups to local governments, followed AFT’s lead, conducting their own COCS studies of the revenues versus costs of residential development versus undeveloped land, farmland, and commercial/industrial land. The results could hardly be clearer. In nearly every case studied, for every dollar in tax revenue generated by undeveloped land or farmland or commercial/industrial property, considerably less than a dollar is required to provide necessary community services to the property. That is, these forms of property pay for themselves. They are a net plus to a city.

On the other hand, precisely the opposite is true of residential development! In nearly every case, for every dollar in tax revenue generated by residential development, something more than a dollar is spent on community services. Residential development fails to pay for itself and is a net loss to a city.

The Ratio’s the Thing
The methodology of a COCS study is procedurally burdensome, involving sifting through and organizing a great deal of financial and budgetary data from a particular town or county. The idea, though, is conceptually simple. In the end, a simple ratio of revenue to cost of services tells the tale. As a typical example, a 2002 COCS study of Saguache County Colorado was sponsored by Saguache County, the Sonoran Institute, the National Association of Counties, and AFT. It found that for residential development in Saguache County the ratio was 1 : 1.17. That means that for every dollar of revenue generated by residential development in Saguache County, $1.17 was spent on community services.

Unlike residential development, farmland and open land pay their own way.

Looking across studies, the median ratio of revenue dollars to cost of community services is about 1 : 1.15. (See AFT’s summary report, Cost of Community Services Studies: Making the Case for Conservation) That means that half the communities studied have ratios worse than that. Frequently it’s around 1 : 1.40 and even worse. Virtually all the communities with ratios better than 1 : 1.15 bunch between there and break-even. It’s extremely difficult, in other words, to find a town where residential development actually brings in more revenue than it costs.

Pockets Feeling a Little Empty?
While not perfect, COCS studies provide clear evidence that residential development is rarely the economic boon to a community that developers and the government officials they’ve lobbied so successfully would have you believe. Indeed, it is typically a financial drain, creating a deficit which has to be made up somehow. How is it made up? To the extent possible, it has to be made up by the revenues from commercial and farm/open land. Clearly, without the increasing deficit created by ongoing residential development and its demand for services, our towns would have a much larger pool of funds to put toward beneficial community projects. Ultimately, while the costs to service such development reflect a wide range of services funded by a number of sources, the money comes out of our pockets as taxpayers.

In upcoming posts we’ll look at other growth myths. Some take only superficial examination to see where they’re false. Stay tuned…

(For a completely different, compelling collection of evidence offered to dispel the same myth examined above, please see Fodor.)