Meanwhile, U.S. Suburbs Are Still Fiscally Unsustainable

I’ve made this point before, but the financial crisis soon to hit U.S. suburbia is another critical issue that wasn’t discussed at all during the presidential campaign, yet affects about half of all U.S. households (boldface mine):

With infrastructure crumbling, and limited resources to repair and replace it, decisions about which projects have highest priority and how to pay for them loom large for many cities.

For years, experts have been warning that catastrophic failures in roads, bridges, dams, sewers and water mains are inevitable without dramatic increases in capital spending, and many believe the low-density suburban landscapes we’ve created over the past 50 years are rapidly becoming unsustainable as infrastructure repair costs begin to exceed the tax revenue generated by these neighborhoods.

At first glance, a neighborhood with fewer large homes valued at $600,000 to $900,000 might look more fiscally sustainable than a neighborhood with more modestly priced homes.

But Jeff Schug, director of transportation services for McClure Engineering, said a study his firm conducted in Norwalk, Iowa, (a suburb of Des Moines) suggests the opposite is true. In fact, a more expensive, less dense, development will find it much more difficult to generate enough property tax revenue for maintenance and replacement of its infrastructure over time, when compared to a high- or medium-density neighborhood of more modest homes

Schug compared the taxable value and cost of infrastructure in a particular low-density residential development (1.3 units per acre) with that of a medium-density residential development (7.5 units per acre) in Norwalk.

His findings: It will take 100 years to collect enough property tax, currently levied for infrastructure, to replace water mains, sanitary sewers, storm sewers and streets, in the low-density neighborhood.

That’s a problem because “infrastructure doesn’t last that long,” Schug said.

In the medium-density neighborhood, it will take only 50 years to raise the money. “That starts to get into the realm of reasonable,” he said….

The study also found that medium-density neighborhoods were more fiscally sustainable than a “convenience store, corporate headquarters or car dealership on a per acre basis.”

We do have the option of using federal dollars–which we can’t run out of–to fix this. Leaving aside the U.S. political system’s austerity/balanced budget fetish, there is the thornier question of should we fix these suburbs? After all, if they don’t become more dense (thereby generating more tax revenue), this is simply kicking the can down the road for a few decades, when we’ll have to do it all again.

A low-density suburb is not even close to environmentally-friendly. Unlike urban and ‘urban-ish’ areas where you have the economic, cultural, and societal benefits of cities or rural areas which have vital resource extraction and food production roles, the suburb is essentially a massively subsidized housing system. As long as they were growing in size (number of taxable houses) and those houses were increasing in value, the music hadn’t stopped, so they were ‘fiscally sound.’ But now even wealthy suburbs, which aren’t really expanding very much, are coming under a fiscal crunch, and it’s only going to be worse in middle-class and lower-middle class suburbs.

We’re going to have to confront some very difficult choices. Given that half of our political system doesn’t even recognize the existence of man-made global warming, I’m not optimistic.

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One Response to Meanwhile, U.S. Suburbs Are Still Fiscally Unsustainable

  1. Min says:

    “the low-density suburban landscapes we’ve created over the past 50 years are rapidly becoming unsustainable as infrastructure repair costs begin to exceed the tax revenue generated by these neighborhoods.”

    IOW, unustainability means, “we are not willing to pay for repair and maintenance”. This is a cultural thing. America is big on creation and destruction, but not so big on maintenance. On the side of creation we praise invention and innovation, on the side of destruction, the current buzzword is disruption. Maintenance is boring. Why bother? Especially if it costs money.

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