In thinking about urban sprawl, think about this:
Over the past 10 years, cities have pined for conventional, low-density commercial and residential projects as a means to fill their coffers with developer fees, sales taxes and new property taxes. This has been especially true in the Central Valley as cities green lighted any and every subdivision and strip mall proposal put in front of them. At one point, Stockton was approving 3,000 new homes per year.
Today, in the aftermath of the foreclosure crisis, we now know that traditional low-density growth (urban sprawl) only creates the illusion of wealth but does not provide a sustainable source of revenue.
Fortunately, there are better, more economically efficient ways for cities to grow as opposed to this urban sprawl. A shift towards infill and mixed-use development could help Central Valley cities rebuild their budgets while sensibly planning for future growth.
Single-use developments give cities quick cash infusions, but most of those projects do not generate enough revenue to cover their costs over the long haul.
New subdivisions and strip malls require new power lines, roads, sewers, street lights, stop signs and other infrastructure. Often, developers will cover the upfront costs and Mello-Roos taxes can ease some of the financial impacts. However, over time, aging infrastructure requires repair and upkeep, the costs of which are borne by the city as the low-density nature of these developments generates fewer tax dollars per acre.
In addition to infrastructure, new neighborhoods require more police officers and firefighters to cover more ground, as well as new schools. Once all of these costs are taken into account, projects that were intended to bring new wealth to a city instead end up costing more.
On the other hand, projects within city limits that take advantage of existing services are proven to generate more revenue while decreasing long term costs. Infill development spares cities the costs of new infrastructure since these amenities already exist. New schools are generally not necessary. Streets and sidewalks are already there, or at most need upgrades. Police and fire responders have a smaller footprint for providing protection.
Clearly, encouraging growth in existing areas is the way to go. Why would city leaders take on the costs of new infrastructure while continuing to maintain services in areas where infill development is possible?
All over the country, city leaders are rejecting dated development patterns for more cost-effective smart growth plans, even here in the Central Valley. In Fresno, the city adopted a smart growth plan last year as part of its general plan update. The plan calls for 79,000 new housing units over a 25-year period, though unlike traditional development, emphasis is given to infill development while new growth is minimized. As a result, Fresno’s smart growth plan will cost less and bring in more revenue than traditional development patterns would.
In fact, by 2035, Fresno’s smart growth plan is projected to bring in more than $130,000 more per acre than a traditional, low-density project, as well as more revenue per unit. In addition, Fresno’s smart growth plan is expected to reduce transportation costs for residents, improve air quality and require less water, all of which provide economic value to the city as well.
On the commercial side, research in Modesto, Merced and Turlock shows that compact development is a much more efficient revenue generator than traditional strip mall projects.
For example, in Modesto, Vintage Faire Mall appears to generate significant sales tax for the city, but not when you consider how much land the mall occupies. At nearly 100 acres, the mall generates less than $7,000 per acre. In contrast, a modest, three-story mixed-use building at 917 J Street brings in more than $38,000 per acre in tax revenue to Modesto.
In addition to higher revenues per acre, the infrastructure costs of maintaining one downtown block are microscopic compared to the costs of maintaining services along hundreds of acres of strip mall development.
If cities want to generate more revenue while using fewer resources, compact development and reuse of existing buildings in downtown areas should be prioritized and encouraged instead of betting on shopping malls and urban sprawl.
When we shop for cars, we use miles per gallon to measure fuel efficiency, not the size of the gas tank. Why don’t cities think about land use in the same way? The amount of space in the Central Valley is finite and a better approach to land use policy is needed to ensure that our cities develop in an economically sustainable way.