Local government budgets and Smart Growth

For years, research has shown that smart growth development can reduce costs for localities and in some cases can even increase public revenue.  Over the last 10 to 15 years, research about smart growth development strategies has continued to develop.  However, one question in particular still remained: What impact does smart growth development strategies have on municipalities’ bottom lines?  An organization called Smart Growth America sought to answer that very question.

Smart Growth America published a report entitled Building Better Budgets: A National Examination of the Fiscal Benefits of Smart Growth Development.[1]  This report examined 17 case studies of municipalities across the country.  Localities in this study included Afton, MN; Champaign, IL; Charlotte, NC; Fresno, CA and Phoenix, AZ just to name a few.  Specifically, the report compared municipal revenues in two types of development scenarios: smart growth and conventional suburban.  Smart growth development is characterized by buildings located closer to each other, neighborhoods that allow ample walking for residents, streets with better connections among destinations, a greater mix of home types and increased transportation options.  On the other hand, buildings farther away from each other, neighborhoods designed primarily for driving, street systems with longer distances between destinations and fewer public transportation options are characteristics of conventional suburban development.  The report by Smart Growth America focused on three financial aspects of these two strategies: the cost of upfront infrastructure, the cost of providing ongoing services, and the tax base created by additional development.

So, what did this comparison study show?  First, smart growth development costs about one-third less for upfront infrastructure than conventional suburban development.  Some type of infrastructure is of course required to support and supply any development.  Often, the most expensive forms of infrastructure in new developments include roadways, water lines and sewer lines.  The less expensive costs for upfront infrastructure in smart growth development scenarios can be attributed to the fact that smart growth development typically requires fewer infrastructures.  This means that upfront capital costs, maintenance costs, and presumably costs for eventual replacements are lowered.  Additionally, smart growth development scenarios often reuse existing infrastructure, which serves to further lower upfront capital costs.

Secondly, the comparison study showed that smart growth development saves municipalities an average of roughly 10 percent on ongoing delivery of services.  Examples of ongoing delivery of services include the cost of services provided by first responders in emergencies such as police, fire and ambulance.  The way a community is configured has a profound impact on delivery of public services.  Because smart growth development utilizes street systems with better connections among destinations, service vehicles may drive fewer miles, thus allowing a reduction in operating costs.  Further, research showed that the savings on services in rural areas were even higher.

Finally, the survey concluded that smart growth development produces 10 times more tax revenue per acre than conventional suburban development.  Tax revenue typically refers to property and sales taxes, as well as licensing fees and other small sources of revenue in some instances.  This finding is particularly significant because for most communities property taxes are an extremely important source of revenue.  In fact, a 2010 U.S. Census survey of local government budgets nationwide showed that 48 percent of revenue from municipalities’ own sources came from property taxes.[2]

The findings of Smart Growth America are significant for multiple reasons.  The primary reason is because it shows that smart growth strategies create significant revenue for local governments and significant savings for residents! These findings are particularly relevant to local governments given our anemic recovery. Areas that experienced or are experiencing a lot of sprawled “McMansions” development are burdened with high land use and development costs.  Localities across the country have seen that low-density developments fail to pay for their own infrastructure. Transportation costs for families have ballooned, in some cases to more than a quarter of their income. There is a significant correlation between lack of transportation and access to higher paying jobs.[3]  By making the decision to utilize smart growth development strategies, local governments may find that that their public balance sheets AND quality of life for residents can be improved for decades to come.

This is a guest post by Jasmine McKinney. Jasmine is currently a second year student at the University of Richmond School of Law.  She received her Bachelor of Arts degree from Virginia Tech in 2012.  She is currently a legislative/public policy intern at HOME of Va through the Carrico Center for Pro Bono Service.


[1] Smart Growth America, Building Better Budgets: A National Examination of the Fiscal Benefits of Smart Growth Development, available at http://www.smartgrowthamerica.org/documents/building-better-budgets.pdf

[2]  U.S. Census Bureau (2012, September), State and Local Government Finances Summary: 2010, available at http://www2.census.gov/govs/estimate/summary_report.pdf.

[3] Shaila Dewan, Is Suburban Sprawl on Its Way Back?, Sept. 14, 2013, available at http://www.nytimes.com/2013/09/15/sunday-review/is-suburban-sprawl-on-its-way-back.html?_r=0.

Housing & Transportation Key to Addressing Richmond Region Poverty

The Richmond Mayor’s Anti-Poverty Commission presented its Final Report and Recommendations to Mayor Dwight C. Jones and the City of Richmond. The report represents nearly two years of research, public input sessions, and committee work. The commission’s findings stress the need for a regional rapid transit transportation system and a comprehensive housing policy. Commission Co-Chair Ellen Robertson plans to have the report presented to City Council during their informal session tonight, January 28, 2013.

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Wait, What’s Going on With Transportation?

Va House Speaker Bill Howell introduces Gov. McDonnell's transportation package

Va House Speaker Bill Howell introduces Gov. McDonnell’s transportation package

The Virginia General Assembly moves pretty fast, leaving citizens with many concerns about what is happening with transportation. Despite the extensive media coverage, the details keep changing and many Virginians aren’t quite sure of the details lawmakers are proposing and debating. To help educate everyone about what’s going on, I’m summarizing the most recent developments and policy concerns.

Transportation is deeply connected to housing and we have to ask some serious questions about the current transportation proposal moving through the Virginia legislature. We know that the lack of affordable housing has forced Virginians to live farther away from their jobs which adds more congestion on our roads. We need a 21st century transportation solution.

Gov. Bob McDonnell has put forward a transportation proposal which  basically:

  • Raises the sales tax
  • Permanently diverts more of the sales tax away from the General Fund (which also funds core services like education and health care) toward transportation
  • Eliminates the gas tax
  • Increases some transportation related fees, such as a fee on hybrids

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Important Questions for Virginia’s New Transportation Plan

As the 2013 Virginia General Assembly comes close to passing a significant new transportation package, there are critical questions that must be answered if all Virginians will be paying more taxes for transportation.

Will new transportation developments improve access that low and moderate income Virginians have to areas of high employment growth? Over the past few decades, the spatial mismatch between job creation in the suburbs and low‐income workers in the inner city has become more severe. This imbalance between jobs and housing deprives citizens living in areas where housing is affordable from accessing employment opportunities in high job‐growth areas. New transportation developments must focus on increasing access low income Virginians have to areas of high employment growth. This means not only roads, but also options such as mass transit.

For example, only 53% of the region’s jobs are served by the Greater Richmond Transit Corporation. Very few bus routes even extend into the surrounding counties. Those that do are primarily express lanes serving people coming into the city for jobs, not people going out of the city for jobs. This data was published in a report by HOME in December 2012 entitled Where You Live Makes All The Difference:  An Opportunity Map of the Richmond Region.

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A 21st Century Transportation Solution for Virginia

Problem: Virginia’s transportation system is outdated and inhibits economic growth.
Solution: Connect transportation to housing, education and job growth.

ar130227456105416Understanding and improving the connections among jobs, transportation, and affordable housing needs to be a top priority for decision makers and citizens across the commonwealth. Development in the suburbs has been largely auto‐centric. As such, there is now more demand placed on Virginia’s roadways than ever before as sprawl development has forced people to drive farther to get to work, school, and other activities.

Over the past few decades, the spatial mismatch between job creation in the suburbs and low‐income workers in the inner city has become more severe. This imbalance between jobs and housing deprives citizens living in areas where housing is affordable from accessing employment opportunities in high job‐growth areas. Often, public transit options are non‐existent or severely limited in suburban employment centers. Virginia should move away from subsidizing sprawl and towards promoting mixed income, mixed‐use developments. We should eliminate regulatory barriers to more compact development with a mixture of residential and commercial uses and housing with a mixture of styles, sizes, and prices. We should promote regional planning, incentives to guide new development to designated growth areas, and developments which serve a range of incomes. Virginia should provide greater transportation options by reorienting state and local expenditures to advance alternatives to driving.

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Many Richmond Area Residents are Isolated in Areas with Very Little Opportunity for Them to Succeed

Where you live directly influences your ability to access the opportunity cycle

By 2040 the population of the United States will be predominantly people of color. The evidence put forth in Housing Opportunities Made Equal of Virginia’s new report Where You Live Makes All the Difference: An Opportunity Map of the Richmond Region suggests that if our economic development and housing policies continue to isolate and exploit this population, the future vitality of the region is in trouble.

The Richmond region has long suffered from the repercussions of its past.  Beginning in the 1930s, federal housing policy promoted segregation through incentivizing the growth of white, middle class suburban areas while starving the inner city of credit.  The result has been intergenerational, concentrated poverty in some of the oldest neighborhoods of the region, while increasingly remote neighborhoods, available only to those with the necessary means, continue to blossom and flourish.  Only by understanding the mechanisms that have woven the fabric of opportunity throughout the Richmond region will we be able to move forward.

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