Assuming the infrastructure is there to support it. Developers are more than happy to pass costs onto the government/taxpayer while keeping the profit, such as by building enormous neighborhoods with a single access road or in high risk flood zones. My brother's neighborhood is right now dealing with a developer who is building a 500-unit housing project whose only entrance and exist is the two lane road in front of his house. They'd have direct access to the highway except for the fact they're too cheap to bridge a five foot wide creek.
Yes, but in addition to that are impact fees for development. That's specifically designed to cover the build up of additional infrastructure necessary to support the buildings being added. But there are loopholes that developers like to use to avoid them, and cities willing to look the other way. I don't blame the developers for wanting to avoid the fees, that's just good business sense.
I do blame the city for being willing to look the other way and enabling it.
There's varying levels, though, when it comes to infrastructure—at an extreme end, you might need to expand the road network to deal with increased traffic, and if that's building a new, parallel road, or doubling an existing one, that can get pricy fast.
Of course, this is unlikely to affect anyone building a single property, but at least here if you're a developer building a large number of homes you can be expected to make a contribution towards to the cost of the infrastructure associated with the development.
You can get developers to build the infrastructure and finance it on their future taxes. You wouldn't believe the incremental tax from building real buildings in the Bay Area. In one particularly egregious case a single apartment building replaced several detached homes that were paying a total of $1200/year in the city of Berkeley. The apartment building pays over a million dollars per year.
Summary: infrastructure costs to maintain spread out exurb style development end up being more than the incremental tax revenue, especially when you consider replacement costs and the potential for future higher borrowing costs.
Property developers (along with car dealerships) are by far the strongest advocacy groups in many areas. It's not totally surprising that they've managed to capture the local government and push them towards counterproductive development that ends up being a massive subsidy from the taxpayers.
Easy: people require infrastructure and many land developers ignore it. More lanes on roads being a big one. In my former neck of the woods, a developer is putting in 1 or 2 thousands homes. They will connect right onto the two lane highway, miles from the freeway that already has too much traffic causing chaos in the rush hours. The developers will make a bundle if they don't go bankrupt first, and the community will be worse off.
If developers build out suburban neighborhoods creating an integrated plan like this make sense, but what developers are building now is individual infill properties. nimbys that ask for infill developers to should infrastructure costs for a neighborhood is either not up to date on what is being build which by effect means that they living in the past or are intentially stalling development. Both has the same outcome, and with our dire housing situation this deserves a negative reaction if the person refuse to cooperate in creating workable solutions that add significant housing supply.
With regards to who should build infrastructure developer fees and property taxes are there to fund public construction of infrastructure; roads, schools, hospitals, etc. Why do you think requiring developers of individual buildings to build these is reasonable or even a workable solution?
Development requires demand. You can't just build houses willy nilly and then have them sit empty, because then nobody is paying the property taxes and the infrastructure that was built for those empty houses requires maintenance.
So, while there may be plenty of land on which _to_ develop, they can only develop at a certain rate commensurate with demand, otherwise they'll build too much, property values will fall, and subsequently tax receipts will fall.
So, they need to build just enough to keep up with demand, and ahead of their infrastructure costs, but not too much.
Uh, yeah, they have to cost-share the burden of upsetting the current infrastructure. Say you owned a piece of property adjacent to where all this new building is going on. Is it your responsibility to chip in? Is it your responsibility to shoulder the cost burden of what is effectively a zoning-related issue? I mean, god, when do you really own the property you're standing on? You didn't even ask for all this development, but now you've got to pay for expanding the infrastructure because a new developer wants to reap financial reward by developing up his land?
Yeah. It's not a property freedom issue, it's a cost ecosystem issue. As time goes on and life changes, owning property is going to have fluid costs, and tax assessments on people who come in to develop land is one way to defray those costs from disproportionately hitting people who have lived in an area for a long time. Frankly, those people would never really plan for that kind of thing to happen, so you're avoiding a lot of nasty repercussions by taxing the person upsetting the ecosystem, rather than the members of the ecosystem itself.
This type of construction is only so profitable because it's usually illegal, and therefore a critically undersupplied segment of the market. Developers are therefore eager to do it every chance they get. If it were legal to build this way everywhere, they would only do it in the places it made sense. Developers wouldn't be building 4-story condos in Contra Costa county for people to commute 50 miles into SF and Mountain View if they were alowed to build enough to meet demand in SF and Mountain View.
Where people want to build, the power-hungry folks in charge put restrictions in place and demand a troll toll to let a few projects through. And the folks in charge where nobody wants to build see the opportunity and seize it. It's just human nature, and it's the reason local government shouldn't be put in charge of density regulation.
If it were just developers, there wouldn't be the political constituency for it. Also, developers make money whatever kind of market-rate construction they're doing, in a decent market.
If you're interested in the subject, some good takes on it are the books I list here (Zoned in the USA and Zoning Rules!):
Or, if you want to get a very real sense, the next time some apartments get proposed in your town, go to the public hearings and listen to the neighbors rant, rave, froth at the mouth and otherwise raise a hue and cry that life as they know it will not go on if the poor peop...errr, I mean apartments get built anywhere near them.
Why are developers expected to solve these problems? With more people living there, there will be a larger tax base to support services and infrastructure in the area. The city is the entity that should be building bridges and the residents (present and future) are the ones who should be funding it. By all means, the developers should pay market value for the land, but expecting them to fund bridge maintenance nearby just doesn't make sense to me.
There are plenty of examples in NYC of forcing the developer to build infrastructure in order to get more building rights. In the suburbs developers are often required to build the underlying infrastructure for their subdivisions.
It's simple math. If the cost of building the development + required infrastructure is less than the price can sell it for then things will get built. It's the responsibility of the city to bundle the infrastructure requirements onto the building permit.
In my corner of Michigan, there seems to be a very clear dichotomy on this:
- Private developer builds a sprawling subdivision with plenty of nice wide roads and lots. (So a very large area of pavement per tax-paying property.) And turns the whole thing over to the city/village/township, to be their public road budget black hole forever more.
- Private developer builds a very compact little development, with houses (or condo's) packed in like sardines along a rather narrow and minimalist Private Road.
Agreed, which is why we need to let developers build freely. They'll build and build and build until property is completely commoditized and anyone can afford it
The government will incentivize the kind of homebuilding that profits developers most (which currently seems to be townhomes in the 300k range and mcmansions in the 650k+ range in the suburban US).
Developers are prolific political donors. Developers and unionized public sector workers split the pie, and your average citizen has little to no say in local politics.
Seems like an easy enough solution, though in an environment of plunging rents developers very quickly seem to put projects on hold and shift gears to other sorts of things. I've witnessed this first hand in my city whenever there's bumps in the road (eg. global financial crisis, recent introduction of various foreign buyer/speculation taxes).
This should intrinsically make sense. Private developers don't have to build and there's other ways for them to invest their money.
Now if the developer was a public entity with a mandate that they had to build now that would be different.
Infrastructure costs scale approximately linearly with road frontage. 1000 feet of road with associated water lines, power lines, street lights, etc, costs roughly the same whether it serves ten households or fifty.
A sustainable development will necessarily have a high number of households per foot of road frontage. This will not have the suburban look and feel of single-family homes with yards. At best it's going to be medium-density townhomes and row-houses to eliminate wasting infrastructure on the space between houses.
It's economical for new developments. I lived some years about a mile outside the Washington Beltway, in a rowhouse development built in the mid-80s. Everything had been done on the cheap, but the utility lines were underground.
Note that developers pay very large development fees to cities. In many cities, those fees are their primary source of revenue. These fees are supposed to pay for infrastructure: water, sewer, roads, schools, parks, et cetera.
The biggest problem with these fees is that they are "local". Bedroom communities use these fees for local infrastructure, whereas a portion should be paid towards metro infrastructure.
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