Making America’s towns stronger

The mission of the Strong Towns movement is to support a model for growth that allows America’s towns to become financially strong and resilient, as Charles Marohn explains

prosperity sign web dreamstimeWe often forget that the post-Second World War American pattern of development is an experiment. We assume it is the natural order because it is what we see all around us, but our own history — let alone a tour of other parts of the world — tells a different story.

Across cultures, over thousands of years, people have built places scaled to the individual. It is only the last two generations here in the United States that we have scaled places around the automobile. This dramatically changed the way we built cities and towns, creating a dominant horizontal component to post-Second World War growth. It also changed the underlying economic relationship between public infrastructure and private sector investment, between local governments and growth.

While the US has sustained economic prosperity for two generations, today the economy is stalled. A housing bubble is in the process of correcting along with a corresponding bubble in commercial real estate. The traditional ways we’ve stimulated the economy in down times, low interest rates and public works spending, have failed to create sustained growth. More drastic measures, such as the Federal Reserve’s quantitative easing programme, have also proven ineffective.

It is time to ask whether this experiment is really working.

What we have found is the underlying financing mechanisms of the ‘suburban era’ — our post-Second World War pattern of development — operate like a classic Ponzi scheme, with ever-increasing rates of growth required to sustain long-term liabilities. Cities and towns benefit from a growing tax base associated with new growth, however they also typically assume the long-term liability for maintaining new infrastructure. This exchange — a near-term cash advantage for a long-term financial obligation — is one element of a Ponzi scheme.

The other is that the revenue collected does not come close to covering the costs of maintaining the infrastructure. In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance. The American Society of Civil Engineers (ASCE) estimates the cost at $2.2 trillion —but that’s just for major infrastructure, not the minor streets, curbs, sidewalks, and pipes that serve our homes.

The reason for the gap is the public yield from our development pattern — the amount of tax revenue obtained per increment of liability assumed — is ridiculously low. Over a life cycle, a city frequently receives just a dime or two of revenue for each dollar of liability. The engineering profession will argue, as ASCE does, that we’re simply not making the investments necessary to maintain this infrastructure. This is nonsense. We’ve simply built in a way that is not financially productive.

We’ve done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations – which are not counted on the public balance sheet – are a generation away.

We completed one life cycle of the suburban experiment using a pay-as-you-go approach. As we reached this point – around the mid-1970s – growth in America slowed. Although multiple factors were involved, one significant cause was our suburban cities were now seeing cash outflows for infrastructure maintenance. We’d reached the ‘long term’ and the end of commitment-free money.

It took us a while to work through what to do, but we ultimately decided to go ‘all in’ using debt. In the second life cycle of the suburban experiment, the US financed new growth by borrowing staggering sums of money. By the time we crossed into the third life cycle and flamed out in the foreclosure crisis, our financing mechanisms had, out of necessity, become exotic, even predatory.

Our problem was not, and is not, a lack of growth. Our problem is 60 years of unproductive growth. The American pattern of development does not create real wealth; it creates the illusion of wealth. Today we are in the process of seeing that illusion destroyed and with it the prosperity we have come to take for granted.

This illusion is our greatest immediate challenge. We’ve embedded the prosperity of the suburban experiment into our collective psyche as the ‘American dream’, a non-negotiable way of life that must be maintained at all costs. What will we throw away trying to sustain the unsustainable? How much of our wealth will be poured into propping up this experiment?

The mission of the Strong Towns movement is to support a model for growth that allows America’s towns to become financially strong and resilient. The inefficiencies of the current approach have left American towns financially insolvent, unable to pay even the maintenance costs of their basic infrastructure. A new approach that accounts for the full cost of growth is needed to make our towns strong again.

The Strong Towns approach ultimately requires a reorientation of emphasis and a renewed understanding of what it takes to build a town or a neighbourhood. The current approach to growth emphasises investments in new infrastructure to serve or induce new development. This approach uses public dollars inefficiently, destructively subsidises one type of development over another and leaves massive maintenance liabilities to future generations.

A Strong Town approach emphasises obtaining a higher return on existing infrastructure investments. We can no longer disregard old investments in favour of new, but instead we need to focus on making better use of that which we are already committed to publicly maintain.

At Strong Towns, we do not have all the answers to the questions raised above. What we can offer is a set of strategies to get your community started on the path to local resiliency:

1. Stop. Don’t double down – cities and towns should freeze all planned projects and re-evaluate their capital improvement efforts through the prism of creating a higher rate of return. Continuing to do projects that have long-term obligations exceeding locally-generated revenue potential simply makes the problem worse

2. Develop a real capital improvements plan – this is a complete inventory of all infrastructures the community is currently obligated to maintain, essentially a balance sheet of the public’s future obligations rather than what tends to happen which is a wish list of future projects

3. Adopt strategies to increase the public return on investment on infrastructure – such a strategy would aim to reduce public spend by focusing on investments that will be the most productive

4. Adopt a form-based code throughout high amenity areas – this would make it easier for those wanting to invest in existing neighbourhoods

5. Adopt new road and street standards that maximise value – creating productive places in a new economy requires changes in our standard approach to roads and streets, a standard that is focused on the needs of cars rather than creating value by enhancing the neighbourhood. High speed traffic is an expensive luxury

6. Prioritise walkability in areas where it creates value – all cities need to perform a walkability study and to use walkability as the primary design criteria of places

7. Coordinate investments in parks and public buildings with economic development and value-creation strategies – placemaking is something our ancestors inherently understood. Properly designed and placed public buildings and parks enhance the public realm and create value that is captured by neighbouring properties

8. Implement a resilient economic development strategy – instead of a strategy that seeks one business with 50 new jobs, a resilient strategy is one that adds one new job to 50 existing businesses. The city of Littlejohn, Colorado has pioneered an approach called ‘economic gardening’ that should be the standard approach for cities and towns in the New Economy

9. Establish a platform for community supported agriculture – a resilient community is one that has the ability to feed itself locally. Particularly in a time when we are short of jobs community supported agriculture is a great way to grow a local economy, build resiliency and eat better in the process

10. Engage your neighbours online and off – in an age where ideas are the capital of industry, successful communities will be places designed to facilitate spontaneous human interaction. A community built for idea transmission is an incubator of prosperity.


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