A strong line of critique has been, "City A" knocks down a "blighted" business zone and replaces it with a single business w/ large parking lot & grass everywhere- but when you examine the financials, the new business brings less revenues to the city than the old "blighted" corner mall.
I’ve been reading strongtowns off and on for a few years. You’re correct that they try to have a left-leaning approach (densification) based on right-leaning principles (fiscal responsibility). But I haven’t seen them “asking for a big pile of federal dollars.” They seem so be saying that the pile of federal dollars that the towns and cities are already getting should be spent more responsibly, ie on projects that can be sustained by the tax value they create.
thats why most of US towns are bankrupt or near bankrupt and need federal funds to function, literally a ponzi scheme[0]. Strongtowns is an organization that study better urban policies[1]
sounds like an interesting experiment that these investors want to foot the bill for, so why not? Perhaps ideas could be fruitful for other cities if proven to work.
For those unfamiliar with Strong Towns, here’s a best-effort summary of what they do:
Strong Towns is a non-partisan non-profit that advocates for governments to build financially solvent towns. Many cities are perpetually broke because they owe more money in maintenance burden (fixing roads, pipes, etc) than they bring in through tax revenue.
This happens because towns in North America tend to build out large neighborhoods all at once (think: suburbia). At the start, the developers pay for all the infrastructure, and then “give” it to the city to maintain.
At first, everything seems fine. The city gets plenty of new tax revenue! But come 20 or 30 years later, it turns out that the tax revenue of the new development is not enough to replace the roads, fix the pipes, and so on.
And so to pay for the repairs, the city then builds yet another neighborhood in the same strategy to collect the initial tax revenue and use it to pay for the repairs of the previous neighborhood. It’s effectively a Ponzi scheme (as referenced in the article).
The gist is that many low-density spread-out suburban neighborhoods with expensive infrastructure are a huge cost center for a city. And since most North American cities build this way, we have a lot of cities that are “functionally bankrupt” or will be soon.
If you're a systems thinker who lives in a town that can't seem to fix it's potholes, you may want to check out the book they've published with the same name: "Strong Towns".
Is this what you're referring to: https://www.strongtowns.org/journal/2017/1/9/the-real-reason... ?
"All of the programs and incentives put in place by the federal and state governments to induce higher levels of growth by building more infrastructure has made the city of Lafayette functionally insolvent. Lafayette has collectively made more promises than it can keep and it's not even close. If they operated on accrual accounting -- where you account for your long term liabilities -- instead of a cash basis -- where you don't -- they would have been bankrupt decades ago."
While I agree with the strong towns assesment overrall, I think this analysis may rely on some assumptions on the distribution of wealth and tax revenue within a population. Ultimately the "once per generation expense" in all of these towns was funded once per generation in the past. This money came from the federal government, and not the local tax payer - ultimately with the federal government taking on long-term debt to fund it.
While this seems like a ponzi scheme of perpetual growth, there is nothing that would prevent the federal government ( or the local government ) from repeating this exercise to rebuild the infrastructure. If we can't redo this exercise it means that
- The balance of payments in the economy is not well calibrated on a generational scale, profitable economic activity is not attributed on a local scale with free cash flows diverted elsewhere by rentiers/global financial flows e.g. a factory in annaheim california sees all profits recognized in Delaware/Ireland. The federal government/central bank may have more capability to provide local governments with finances than we would expect in such a scenario by rebalancing payments.
- The current US city landscape has real long-term economic costs that drain capital on unprofitable activities, immediate pivots in city planning are required to avoid economic fallout.
I suspect a little bit of all three options are at play, but I would be curious for more exploration on items 1&2. A great irony of the modern world is that the City of Flynn borders several pipe manufacturers.
The city does seem to be doing what it can to encourage and help providers, but I don't think they are willing to invest capital. Not sure whether or not that is a dealbreaker.
Somehow I found the article missing the solution, the organisation argues that "placemaking" [1] helps. They also argue that "Will this public project generate enough tax revenue to sustain its maintenance over multiple life cycles? Try asking that -- you will be amazed." is the question to successful public projects. But, I don't know if that holds true universally.
There are some small economic kickbacks for local economies, but realistically I would guess that it's probably small-scale bribery.
That or local governments are just really bad at math. Do they really think a business starting in their community is going to give back more than the billions in breaks they're giving?
Not even close (case studies linked below). Their examples only look at individual projects from several cities, instead of whole cities. They convincingly show a few houses paying $252/year in property taxes will only support X sq ft of road. But that's not really surprising-- more dense houses paying $1000/year property taxes in some other part of the city will subsidize the other parts and the city will avoid financial ruin.
Just FWIW, the Strong Towns team would mostly agree with what you're saying.[1]
Chuck would liken spending public money on things that don't have a measurable return on investment to "ice cream." There's room for ice cream in life. The problem is when its your entire diet.
What we're more worried about is that cities are losing so much money on bad investments that they're increasingly unable to afford "bread and butter," let alone ice cream.
And to be clear, as a response to this problem Strong Towns doesn't advocate stopping all spending/investment, but rather to take a careful approach that seeks to invest in things that produce a return, so the city will have more resources over time, so that there's money to pay for ice cream :)
I understand why you might get your impression though. Strong Towns content mostly is a blog stream and you can read a lot of it without getting the entire picture. Chuck's book is coming out pretty soon [2], and I think that'll help. The book boils down the entire Strong Towns "philosophy" (if you will) into something you can read in a day.
Given that your counter-argument is a trivially obvious one, a little further thought would have led to the conclusion that the StrongTowns bloggers might have thought of it too.
Since you just read until you thought of an objection to their thesis & then stopped, you failed to find the articles where they do the lifetime cost analysis over a whole town (i.e., both "suburban" and "business" districts) and find that this pattern of development means that the profits from the high tax business districts fail to make up for the costs from exurban / US style suburban development.
Strong Towns is talking about tax income vs tax expenditure efficiency (dollars received vs benefits realized). It is easily possible that receiving more money does not necessarily correspond to improved quality of life, if those funds are spent on projects that don't enable local prosperity.
If city officials bothered with a little research (assuming they don't already know), they'd find several examples of Big Co. entering and leaving small cities and towns without creating economic value equivalent to the huge incentives used to lure them in. Very similar to how officials chase Olympic hosting bids, even when history clearly shows that the legacy is additional debt and underutilized facilities (e.g. purpose-built stadiums/villages that only get used during the occasion).
Everytime I read of such schemes, I can't help but wonder how much lasting value could have been created by using just a minute fraction of the money wasted to foster the local startup/small business scene instead.
> A small, rural road is paved, with the costs of the surfacing project split evenly between the property owners and the city. We asked a simple question: Based on the taxes being paid by the property owners along this road, how long will it take the city to recoup its 50% contribution. The answer: 37 years. Of course, the road is only expected to last 20 to 25 years.
I’m not an expert here so I’d be interested in evidence to the contrary. But this sounds like a more nuanced point than the GPs TLDR.
(Author here). I've been surprised that that's generally not the case.
Cities spend money on all sorts of things -- their own tax revenues, as well as grants from higher levels of govenment (state and local). If you look at the incentive structures of most local governments, their leadership wants to be seen as "doing something". This usually translates into big, tangible projects, particularly "infrastructure", that's "large" and that ordinary people can understand: bridges, malls, stadiums, etc.
Coming from venture tech, these projects are mind-bogglingly expensive. Even a mid-size office building costs millions to construct. 10-20 stories, big underground garages, easily into $xx or even $100 million, or more. These aren't pie-in-the-sky numbers, my wife is a practicing San Francisco architect. It costs $60-70 million to build a 200-unit "affordable" apartment building with ground-floor retail. That's like 5-10 mid-sized series As. Just to build a damn building.
Point being, in my conversations with the city government, they all sort of know there's something going pretty right in these coastal cities -- many places would kill to have the tax base and jobs of a place like Austin, or San Francisco -- they really just don't know _how_ to facilitate that. So much city government is wrapped up in tangible infrastructure like business parks, highways, and shopping centers when the things I most need, as someone building a technology company, is a nice, walkable downtown, easy-to-lease commercial real estate (not landlords that require 10-year terms, 20 years of operating history, and AAA credit), a reasonably responsive government, fast broadband, a few decent coffeeshops and restaurants, and nice people. None of these things are especially expensive and given how dysfunctional a lot of the coastal cities have become, it's not hard for a lot of places to provide. They just need to know _how_.
No, not really. They focus a lot on "try things out" at small scale, see what works, and improving a city's cash inflow vs outflow.
https://www.strongtowns.org/journal/2019/9/19/the-strong-tow...
https://www.pnj.com/story/news/2020/04/29/coronavirus-studer...
A strong line of critique has been, "City A" knocks down a "blighted" business zone and replaces it with a single business w/ large parking lot & grass everywhere- but when you examine the financials, the new business brings less revenues to the city than the old "blighted" corner mall.
https://www.strongtowns.org/journal/2012/1/2/the-cost-of-aut...
https://www.strongtowns.org/journal/2018/8/22/the-more-we-gr...
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