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Friday, January 11, 2013

The Ponzi Scheme of Suburban Sprawl

(photo credit: http://kbenglishhlg.wikispaces.com/Gatsby's+mansion)
I can’t recall which book it was, because I was forced to read it well over 30 years ago in my 11th grade English class.  But it was a typical late 19th century rags to riches story, and I recall being amused that the relatively uneducated, newly wealthy protagonist tried to give the impression of sophistication by stocking his home library with blank books.  Blank pages in bindings that sported impressive titles and authors.  This ruse apparently was not uncommon in the 19th century and carried over to the 20th century, at least in literature.  I can recall that one of The Great Gatsby’s party guests was impressed that Gatsby’s library contained real books rather than impressive titles printed on the spines of bound blank pages.

Fast-forward to the 21st century, and now there is a website (http://www.booksbythefoot.com) where you can buy stacks of books with color-coordinated bindings simply to use as decorations.  Presumably, that website is geared toward interior designers rather than posers trying to give the false impression of intelligence.  Yes, they charge by the lineal foot of books rather than based on the merits of each individual book they are selling. So what do color-coordinated bookbindings or literary characters with fake libraries have to do with conservation?  Read on.

Earlier this week, I had the opportunity to attend a lecture by Chuck Marohn, author and executive director of the Minnesota-based non-profit group Smart Towns.  The mission of Strong Towns is to support a model for growth that allows America's towns to become financially strong and resilient (taken from http://www.strongtowns.org).  Chuck stopped in my town as part of his week-long, 11-town lecture tour of Pennsylvania.  Here is a link to a news story about Chuck’s talk in Lancaster, PA, later the same day that I heard him speak.  Drawing on his experience as both a civil engineer and a land planner, Chuck’s message was that the way U.S. municipalities have been growing since World War II has been based on an unsustainable ponzi scheme that funds continually expanding suburban development without considering the long-term costs of that development. 

Strong Town’s website explains that, since the end of World War II, our cities and towns have experienced growth using three primary mechanisms (http://www.strongtowns.org/the-growth-ponzi-scheme/):
1. Transfer payments between governments: where the federal or state government makes a direct investment in growth at the local level, such as funding a water or sewer system expansion.
2. Transportation spending: where transportation infrastructure is used to improve access to a site that can then be developed.
3. Public- and private-sector debt: where cities, developers, companies, and individuals take on debt as part of the development process, whether during construction or through the assumption of a mortgage.
But these developments rarely generate more revenue for the governments that invested in them than the governments must pay in both up-front costs and long-term maintenance costs.  New, short-term gains in public revenue must then be used to offset the long-term costs from the “next big thing” of 20 years ago.  That’s because the costs to these governments in long-term maintenance or added debt service were not accounted for when the politicians were being courted by the developers decades earlier. 

For me, Chuck’s take home message was that any private development project that is seeking public assistance (e.g. utility or transportation subsidies or financing incentives) should present a realistic cost-benefit analysis.  And that includes all long-term costs.

When we allow our municipal officials to cozy up with developers who exploit land development ordinances that fail to recognize Smart Growth principles, we get more and more big box stores and strip malls on the outskirts of developed areas.  In other words, we get more sprawl.  They try to sell it to us with a fairy tale about how many more jobs their big box will create and how much more tax revenue the development will generate if the municipality will “partner” with the developer to extend roads and utilities to the cornfields that they want to pave over.  But widening our local roads to accommodate more sprawling developments only gives the illusion of prosperity in our local communities.

(photo credit: http://www.saveourlandsaveourtowns.org)
This sprawl is nothing more than a library full of books with blank pages.  A whole bunch of style over substance.  But unlike a fake library, the sprawl doesn’t stop when the bookcases are full.  Developers and municipal officials, who may either be naïve or have ulterior motives, will continue the ponzi scheme of getting governments to subsidize the infrastructure for more sprawl until there is a grassroots push to demand cost-benefit analyses for these train wrecks of cinder blocks and asphalt being touted as economic development.

Strong Towns’ mission to help towns become financially strong and resilient by making better-informed decisions is a mission that should appeal to folks of all political stripes.  For tree huggers (or stream huggers) like myself, it means putting the brakes on unchecked development of greenfields, because most developers would have to fund more of the infrastructure improvements themselves.

For arch conservatives, it means that anyone looking for public dollars to subsidize a private development land development would have to show a careful cost-benefit analysis proving that the return on investment from the public dollars will be greater than the short-term and long-term dollars going into the project.  And if that cost-benefit analysis shows that developing 60 acres of fallow farm field on the edge of town is not going to return as much of the public investment as that same development on a shuttered industrial site (a brownfield) that already has the transportation and utility infrastructure, then the municipal leaders should pass on participating in that greenfield project.
(Photo credit: http://lowermacungie.patch.com)

In my next blog post, I’ll talk about the two factors that I think work symbiotically to discourage brownfield development in favor of greenfield development.  They are haste to start building and inflexible, outdated zoning and land development ordinances. Check back in a couple of days to read more.


  1. Cities exploited my township for decades by extracting our natural resouces for cement and steel manufacturing. Company towns grew up around these jobs and eventually these small villages expanded to become our Township. These core villages built American and our Cities. You cannot change history. Families live here all their lives.

    To suggest that if your not a 3rd class city, you are part of a ponzi scheme is not entirely accurate. How about a return of some tax dollars to the communities that paid.

    I suspect we agree thay wehave many brownfileds site and it is unfortunate o ur Valley leadership has encouraged development of openspace in Center Valley and Macungie.

  2. This is an interesting view point. I am looking forward to your next blog regarding brownfield vs. greenfield development. I look at the Lehigh Valley Dairy property and wonder why this Brownfield Site has sat dormant for so long without any State of Federal assistance. The former Lehigh Valley Dairy sits on ~10 acres and has been dormant for ~22+ years. It is located in the heart of the Valley and is a stone throw from LV’s busiest intersection of Route 145/MacArthur Road and Route 22. The property is within a ¼ mile of 18,000 residents. For decades, this property provided to walkable, family sustaining jobs. You can say it was one iconic structure that put Allentown on the map. That’s why it was a a surprise that when HUD dished out grants this year to promote redevelopment of Brownfield properties to provided walkable jobs, the only municipal stakeholders that benefited financially were Allentown Bethlehem and Easton. What is the problem with the LV Dairy property? It is located one block outside a 3rd Class City and is actually in Whitehall, a First Class Township.

  3. Good question about the LV Dairy property. My only guess is that the area surrounding it has gotten so congested with traffic that developers are reluctant to try anything significant there for fear of being hindered by the carrying capacity of MacArthur Road. I find it very ironic that Lehigh Valley Dairy's headquarters is in Lansdale (where I grew up) rather than anywhere actually in the Lehigh Valley.

  4. Good point. So you have to really ask why the smart growth advocates wanted to treat Route22 like a rurual road and opposed proper investment to widen the heaviest travelled section. The net result is sprawl alomg the margins of the Valley.

  5. Smart growth advocates, like myself, do not think of Route 22 as some rural road. I think it needs to be widened ASAP. We also need passenger rail development, no matter what the local planning agencies say about not enough demand for passenger rail.

    The ponzi schmeme of development is very true. Every growing township eventually has to raise its tax rates. The only local exception to this ponzi rule is Lower Macungie, because it has grown so rapidly that earned income taxes have been able to pay for existing services which have not yet begun to rise. Once the miles of new housing development roads start needing repair, and recreation needs keep increasing and a police force is created, tax rates will escalate. The ponzi affect is even more pronounced for the cost of schooling all the new kids. It is impossible, under existing development models, for any community to grow without raising its tax rates.

    1. A great as the Rails to Trails movement of the past 25 years has been for outdoor recreation, I've always regretted losing the transportation infrastructure (albeit unused and likely in severe disrepair). Although lots of local trail opportunities have been realized on defunct short-line freight right of ways, we've also lost the ability to restore passenger train service that parallels significant commuter highways. For example, in our part of eastern PA, the former Reading RR passenger line from Bethlehem to Lansdale (and thus connecting to Philadelphia) has been completely dismantled north of Quakertown from what I've been able to see, and I think some of the dismantled segments have been deeded to some of the respective municipalities for recreational purposes.

      I think there would still be a demand for passenger rail service between Philadelphia and the Lehigh Valley if the work destinations were still clustered along the rail lines like they were until the 1970s rather than spread out among office parks that are no where near where anyone lives or can even safely ride to on a bicycle.