Something that’s lurking in the background of the U.S. economy, and which will erupt with a fury in ten years or so is the need to replace suburban infrastructure: underground wires, pipes, and so on. This is something new that most suburbs, unlike cities, haven’t had to confront. A suburb that was built in 1970 is long in the tooth today, and time only makes things worse. No suburbs that I’m aware of ever decided to amortize the future cost of repairs over a forty year period–that would require an increase in property taxes. In fact, many suburbs never even covered the expenses of building new subdivisions, never mind worried about expenses decades down the road.
Worse, there’s a tax base problem. That is, the value of property per unit of infrastructure (e.g., the property tax base per square foot of water main) is much lower in the suburbs than it is in cities. Relatives who live in a wealthy suburb close to D.C. (homes go for $900,000 give or take) are in a subdivision with about 40 homes on 25 acres, with a rough property value of $45 million. In D.C., I live in a building assessed at a little over $50 million that covers a quarter of an acre (the population of these two groups is about the same). Once suburbs start having to repair their infrastructure, it’s going to get very expensive to live there (and that doesn’t even include the transportation ‘tax’ of suburban living). Keep in mind, the suburban development I’ve described is definitely on the high end of things–many places will be worse off.
This all brings us to an excellent piece by Daniel Herriges (boldface mine):
The Mission District in San Francisco is a wonderful neighborhood, no doubt one of the most distinctive and delightful in the United States. Reports of its demise have been greatly exaggerated. I was there in late October and took a walk up and down 24th Street, and loved it as much as I have for years.
Yet it’s also home to a community in deep distress. Rents have skyrocketed and residents who have been there for decades have been evicted or priced out, including prominent community members. The Mission, and the 24th Street corridor east of Mission Street in particular, has been the epicenter of San Francisco’s Latin American immigrant population for decades, but last month, a study by the city’s budget and legislative analyst found that, “if current trends continue, the Mission’s Latino population will fall from 60 percent in 2000 to 31 percent in 2025. It is now at 48 percent.”
The Mission is a victim of its success. More precisely, it’s a victim of our collective inability, over more than half a century, to build more places like it.
Joe Cortright at City Observatory wrote last year that we have a “shortage of cities.” He’s right. It’s not simply a shortage of housing units—although San Francisco and the Bay Area certainly have that. It’s a far more drastic shortage of worthwhile urban places. With the result that when a great urban place is “discovered” by the moneyed classes and becomes trendy, the price of real estate tends to shoot through the roof.
…24th Street embodies so much of what we’re talking about when we talk about Strong Towns. The development pattern is fine-grained; no superblock buildings here. The street life is chaotic, with the result that cars move slowly and pedestrians can walk relatively unafraid.
These businesses are almost all locally-owned, small-scale operations. Located somewhere without this kind of bustling pedestrian life, I bet a lot of them would fail to make ends meet.
Here, they’re part of a cluster of businesses that share a community of customers and thus benefit hugely from sharing a geographic location as well. The whole is absolutely greater than the sum of its parts. This area is extraordinarily productive in terms of the economic activity and value it generates in a small space.
It’s even more impressive when you look at all this activity relative to the incomes of the people who have historically lived and shopped there. I single out 24th because it still caters to a largely low-income Hispanic community, unlike some of the Mission District’s other commercial streets. That community’s entirely warranted fear of displacement notwithstanding, for now it’s still thriving in doing so. This is one of the keys to the Strong Towns message: we articulate the distinction between a productive place and a place where wealthy people live. They are far, far from the same thing.
A lot of the places where wealthy people live are not productive; they may even fail to sustain the very cost of the infrastructure that services them. It’s just that the bill hasn’t come due yet. Debt has been used to defer it.
24th Street did not become what it is through massive infusions of public or private debt. It became what it is through a process of thousands of modest improvements over many years. It’s resilient that way. If one business fails, another will replace it, while the street goes on much like it was…
America’s Suburban Experiment is failing. The way we finance development is failing. It is only going to become more and more obvious that in a lot of the places we built, we can’t afford to maintain the infrastructure we already have. And what will worsen the blow is that suburban America is full of whole neighborhoods, massive subdivisions, which were built more or less in one fell swoop by a single developer. When the infrastructure starts to fall apart, guess what? It’s going to fall apart all at once. And we won’t have the money to fix it. Or will balk at the tax increases that would be required.
What keeps me up at night is the fear that the more we realize this, the more capital, and wealthy individuals, will choose to flee places with a failing development pattern, and take their money to places like the Mission District. This train isn’t slowing down.
We have a shortage of cities. A very small portion of our developed landscape in this country is built in ways conducive to generating sustainable wealth. A very small portion of our country is built according to the Strong Towns principles of incrementalism, adaptability, and prioritizing people over cars. WalkScore maps of most American metro areas have a hell of a lot more red (car-dependent) than they do green (walkable).
I’m terrified that when the destructive power of the fiscal time-bomb we’ve set ticking becomes undeniable, cataclysmic money will flood the remaining places that are built for success—not just already-expensive San Francisco and New York, but currently-bargain-priced traditional urban neighborhoods in older Midwestern and Southern cities—and transform them forever, not for the better.
I’m terrified that the poorest and most marginalized members of our society will be increasingly cast to the exurbs, to the most marginal, least accessible and livable, least fiscally-and-environmentally sustainable places we’ve built. Places where the odds are stacked a mile high against a new 24th Street developing.
While Paul Krugman’s recent column about urban inequality and gentrification has been lighting up the internet, to a considerable extent, it’s irrelevant. As I’ve discussed before, cities–not metro areas, but actual cities–will never hold but a fraction of the U.S.’s population (though hopefully an increasing fraction). The problem we will face is how to keep suburbs economically viable, both in terms of infrastructure and quality of life. Part of that will have to involve increasing ‘urbanization’ of the suburbs, while other suburbs will be left to decline. But this, not gentrification (which can be reduced with progressive taxation) is a much more difficult problem. Not only will there be resistance by homeowners to changes, but the very, well, infrastructure of the suburbs doesn’t lend itself to increasing density. Very basic and expensive things like altering the road grid (or, more accurately, turning the suburban knot into a grid) will meet a lot of political resistance, even if the funds to do this can be found.
If you think the politics of resentment are bad today, just wait a decade or two as a bunch of suburban homeowners see their nest eggs turn to shit.