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Downtown Ventura, California. Photo: Sargent Town Planning

Earlier this week, Smart Growth America released an important study that illustrates how walkable development results in huge savings and significantly better returns for municipalities compared to car-centric development.

The analysis of 17 case studies found that walkable, mixed-use development produces 10 times more local tax revenue per acre than sprawl. In addition, SGA found that smart growth reduces infrastructure costs by more than a third, on average, and cuts operating costs like police and trash service by almost 10 percent.

William Fulton, vice president of Smart Growth America and former mayor of Ventura, California. Image: SGA

Streetsblog got in touch with the study’s lead author, William Fulton, Smart Growth America’s vice president for policy development and implementation and the former mayor of Ventura, California, to further discuss the implications for local communities.

Here’s what he had to say.

Angie Schmitt: What is the takeaway for communities that are maybe a little more suburban in nature at this point?

William Fulton: Smart growth is not beneficial just for big, urban cities. A community of any size — even communities that are mostly suburban in nature — can benefit fiscally from smart growth. Smart growth patterns even in small and mid-sized cities can have a tremendous influence on the budget. For example, the study from Champaign, Illinois, we cite in our report suggested that a smart growth approach to future expansion in that mid-sized Illinois city could turn a $19 million deficit into a $33 million surplus.

Even taxpayers who live in single-family homes stand to benefit from smart growth. If their communities approve conventional suburban development that generates a deficit, they will be faced with pressure for increased taxes. Smart growth can alleviate that pressure so that even people who live in single-family homes will be able to keep their taxes low.

Sooner or later if you’re a local government… you have to have the next hit from the next suburban development. Eventually you’re like a crack addict.

AS: Despite the public savings associated with smart growth, many communities offer tax incentives to big box stores and that type of development. What does this study say about that?

WF: All kinds of developments see some type of public investments. Conventional suburban developments depend on highway interchanges and other very, very expensive infrastructure.

These retail projects are attractive to local governments because you put money into it, and you see this immediate sales tax “pop.” But there’s no guarantee you’re not cannibalizing your other retail.

A smart growth development that has a lot of well-connected housing and retail will be a far more reliable source of revenue. Generating property tax is a much more stable source of revenue for local governments.

Some hot new retailer comes in and 10 years later they’re out of business. Depending on sales tax is a very risky proposition compared to the very reliable revenue that will come out of a smart growth development.

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Walkable, mixed-use development provides far more return for Raleigh than Walmart, on a per acre basis. Image: Smart Growth America

Smart growth could increase Fresno’s tax revenue by 45 percent per acre. In Champaign, Illinois, it could save 23 percent per year on city services. Study after study has demonstrated: Walkable, mixed-use development is a much better deal for municipalities than car-oriented suburban development.

Smart Growth America recently conducted an analysis of research examining the impact of efficient development patterns on municipal bottom lines. The authors looked at 17 case studies, from California to Maryland, and, taken together, they say the findings clearly illustrate how walkable development leads to healthier city budgets than drivable sprawl.

For starters, smart growth is cheaper to build. On average, municipalities save about 38 percent on infrastructure costs like roads and sewers when serving compact development instead of large-lot subdivisions. Furthermore, SGA researchers say, “this figure is conservative, and many communities could save even more.” In the case studies, these upfront cost savings ranged from 20 percent to 50 percent.

The public savings don’t stop once projects get built. Mixed-use projects also reduce ongoing costs to municipalities for services like police, fire and trash. Smart Growth America estimates the average savings at almost 10 percent.

“Many services — fire, police, school buses, snow plowing — all require vehicles,” said William Fulton, vice president of policy development and implementation at Smart Growth America. “The fewer miles those vehicles have to travel, the lower the costs will be. If you apply smart growth across the board, you can also reduce the amount of cars and trucks that you need.”

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A study out of Nashville by Smart Growth America provides more evidence that building walkable development in existing communities is best for a city’s bottom line.

Nashville's "The Gulch" -- a mixed-use development downtown -- generates a much greater public return than more suburban developments in the same city. Image: Cumberland Region Tomorrow

SGA recently examined three different developments in the Music City. One was a large-lot, traditional suburban-style development called Bradford Hills built on greenfield site. Another was a “new urban”-style, mixed-use, walkable development also built on a greenfield, called Lennox Village. The third — known as The Gulch — was a mixed-use, compact housing and office development with retail and dining, built on a brownfield between Nashville’s Music Row and downtown.

The study compared the costs of local services to each new development with the revenues returned. Overall, the urban, infill development was far and away the best value for municipalities.

The Gulch — a 76-acre project, including 4,500 housing units and 6 million square feet of office space — yielded the highest returns in the form of “property taxes, sales taxes, and other recurring revenues,” according to SGA. Per unit, the development produced a total of $3,370 in public revenue annually, while costing the local government about $1,400 per year in infrastructure maintenance, policing, fire response, and other general fund obligations. In comparison, the traditional suburban development Bradford Hills generated only half the revenue — $1,620 per year — and cost more to service — $1,600 — making it basically a wash for local taxpayers.

Per unit, the performance of new-urbanist Lennox Village barely beat out the large-lot suburban development, generating $1,340 for the municipality annually while costing about $1,300.

When you factor in density, the differences between the three models really crystallize. The Gulch, filled with condo towers, generated $115,720 in net revenue per acre annually. That’s an astounding 1,150 times greater than Bradford Hills, which generated a total of just $100 per acre. The downtown development also performed 148 times better for the local government’s bottom line than new urbanist development Lennox Village, which yielded $780 per acre.

Developers often shy away from urban brownfield sites, fearing the cost of cleaning them up. Given the incredible benefits to the city of that kind of development, there should be better incentives for developers to look to infill, rather than greenfields, for their next project.

About seven years ago, when Mayor Mark Mallory came on the scene, Cincinnati was at a low point. To convince the crowd at the New Partners for Smart Growth conference in Kansas City last week of the gravity of the situation, Mallory started off with a story about livestock.

Cincinnati Mayor Mark Mallory helped turn around his city's downtown by getting more eyes on the street. Image: Indianapolis Recorder

A little before Mallory was elected, a cow escaped from a city slaughterhouse. (Cincinnati, a historic meat-packing city, was once known informally as Porkopolis.) A search was launched, with police helicopters scouring the city. “They looked for the cow for 11 days,” Mallory said. “This was a sad period of Cincinnati. We just couldn’t do things right.”

The cow anecdote (which Cincinnati officials assure us is true) was actually a gentle way of putting it.

In 2001, four years before Mallory took office, incidents of police brutality led to upheaval in the streets on the city’s north side. The Cincinnati riots, which continued for four days, were reportedly the largest in the United States since the 1992 Los Angeles riots following the Rodney King verdict.

For a long time that period clouded the city’s national reputation. But more and more, Cincinnati is seen as a promising urban comeback story. And Mallory — a strong proponent of walkable development — credits smart growth principles for the turnaround.

“Cincinnati’s like a lot of cities around the country,” he told the conference. “We saw our best times from around the turn of the century to the 1960s. Then, like a lot of cities, we saw a period of decline. We languished for decades. Our biggest problem in Cincinnati is that we had lost our way. We had forgotten what it was like to be a progressive city. We’d forgotten what it was like to be on the cutting edge.”

“I set out to change the way we did business in Cincinnati,” he said. “You have to have dynamic leadership.”

As mayor, Mallory began by addressing the real and perceived crime problem. He added police officers to the street, and he also tried to get more regular people, not just cops, back on the sidewalks. One thing Mallory has done during his two terms is to tear down the city’s enclosed skywalks, one by one.

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This 75-acre golf course in San Jose, California, is considered a small course. Even so, it's a colossal public expense. Photo: Dave Polaschek/Flickr

The 15,753 golf courses in the United States take up more space than half the state of New Jersey. And though they devour so much land, much of it in suburbia, the sport is foundering — in part because of the enormous amount of time and distance it requires. Some real estate professionals and experts on aging have come together to suggest a solution both for the decline of the game and the land use problems posed by these massive courses: Build mixed-use development inside them.

“The simultaneous collapse in the value of homes and golf courses may make such suburban redevelopment, retrofitting, and regreening possible on an unprecedented scale,” wrote Jane Hickie of the Stanford Center on Longevity and James F. Dausch and Edward Bennett Vinson of Resolutions Real Estate Advisors in an article last month for the American Artchitectural Foundation. “Redevelopment could provide solutions for the financial problems that many homeowners associations and golf course operators are struggling to address through infill housing and retail more suitable for an older population.”

Hickie has written a book on independent living for seniors, and she knows that most seniors live in suburbia and want to stay in their own communities as they age. So here’s the challenge she laid out: “How do you transform suburbia quickly enough to deal with the coming tsunami of population change?” Repurposing golf courses, she says, could play an important role.

Many residential developments, often targeted at retirees, have grown up around golf courses, charging a premium to be near the course. But with the collapse of housing prices, especially in the drivable suburbs, and the decline in the game, homeowners’ associations are often left holding the bag for astronomical maintenance costs. By bringing retail, dining, office space, and other recreational opportunities to golf courses, Hickie suggests, developers could buoy home values and help pay for the costs of the land. These amenities could also attract a different demographic, whether or not they’re interested in golf, and the new residents could be accommodated in denser housing in the town center.

Separately, Hall of Fame golfer Tom Kite has also entertained the idea of shrinking golf courses. He’s speculated that the size of the courses may have become the sport’s Achilles heel. It can take upwards of five hours to finish 18 holes, and fewer and fewer people have that much time on their hands.

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Real estate in the United States, it turns out, isn’t really guided by “the invisible hand” of the free market.

Federal housing subsidies flow disproportionately to single family homes over multi-family -- distorting the housing market. Image: Smart Growth America

In truth, federal policy puts a finger on the scale in a major way. Even apart from the quasi-governmental Freddie Mac and Fanny Mae, the federal government is the single largest investor in the American real estate market. And according to a new report from Smart Growth America, each year an assortment of subsidies, tax credits, and deductions exerts $450 billion worth of influence on the location and character of American residences and commercial spaces.

That massive influence can distort the market in significant, and insidious, ways.

“Viewed as whole, federal funds are not targeted to those most in need, are not targeted to strengthen existing communities and are not targeted to places where people have economic opportunities,” says Smart Growth America’s research team.

For starters, according to SGA, not a single federal program is primarily focused on support for existing neighborhoods. Government priorities are often contradictory on this front, with subsidies operating at cross-purposes. One program may subsidize new housing in undeveloped locations, for instance, while another attempts to shore up the city neighborhoods left behind. These programs also fail to factor in what it costs to support real estate development: There is no preference for projects with lower long-term infrastructure costs, leading to higher spending on things like roads and sewers at the local and state levels.

Overall, the report suggests, federal real estate interventions undermine market trends toward the development of more walkable places. About 85 percent of federal housing subsidies flow to single-family housing over multi-family, although only 65 percent of American households are homeowners and the majority of renters live in multi-family buildings. This has hampered the market for rental housing even as demand for multi-family rental housing has soared following the housing bust.

“Federal real estate spending is stuck in the past,” said smart growth-focused real estate developer Chris Leinberger in an SGA-sponsored call with reporters yesterday. “It’s not what the market wants today, it’s what the market wanted in the ’70s and ’80s and into the ’90s.”

Leinberger added that while consumers are demanding walkable urbanism, federal policy stands in the way of that kind of development — to the detriment of the economy.

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A professor at San Francisco State University recently developed an econometric model to study how smart growth affects travel behavior. His finding: quite a bit.

If Bakersfield, California enjoyed the same density and transit amenities as the San Francisco Bay Area, households would drive 55 percent less, according to a recent study. Photo: Bakersfieldcarealestate.com

Dr. Sudip Chattopadhyay measured the impact of certain smart growth indicators on 18 metro areas across the U.S. He found that a 10 percent increase in smart growth amenities — measured by residential and job density and per-capita transit spending — leads to a 20 percent reduction in miles driven.

“This is a huge impact,” said Chattopadhyay. “Success is gradual and long lasting.”

The study, published in the B.E. Journal of Economic Analysis and Policy, set out to determine if smart growth or taxation strategies like increasing the fuel tax has a bigger impact on driving behavior. His finding was that smart growth produced a bigger return: 18 percent reduction for taxing versus 20 percent for smart growth.

Further, the study found that if mid-sized California cities like Modesto, Fresno and Bakersfield had similar density and transit amenities as some of the state’s larger cities — the Bay Area and Los Angeles — they could expect to see a 55 percent reduction in per household driving activity, or about 5,238 miles per year.

Chattopadhyay said his findings lend support to California’s State Bill 375 and Assembly Bill 32. Both laws promote efficient land use to help curb global warming. The study did not examine other benefits of smart growth, such as better health and environmental outcomes.

Chris Leinberger wears too many hats to count – real estate developer, George Washington University professor, Brookings fellow – but he has one message: “Walkable urbanism is the future.”

Capital Bikeshare riders under DC's Chinatown arch. Photo: DC: The WalkUP Wake-Up Call

For years now, Leinberger has been preaching the gospel that the postwar era of automobile-oriented “drivable suburbanism” is over – and urbanism is the new wave. He’s even developed his own lingo for it: He now refers to walkable urban places as WalkUPs.

In a report released this week called DC: The WalkUP Wake-Up Call [PDF], Leinberger explores the six different kinds of “regionally significant” WalkUPs, using Washington, DC as the model. Indeed, he claims DC is the model of walkable urbanism, a pioneer of the trend.

Of the six types of WalkUPs in Leinberger’s framework, three are urban and three are suburban. Cities have the traditional downtown, “downtown adjacent” neighborhoods like Dupont Circle or Capitol Hill, and “urban commercial” areas like Adams Morgan or H Street. Suburbs have their own town centers like Bethesda, strip commercial redevelopment like White Flint, and greenfield development, like Reston.

Most growth over next 30 years will happen in strip commercial redevelopments, according to Leinberger, and at the vanguard is Tysons Corner – “the world’s largest drivable sub-urban concentration of commercial enterprises” — now on its way toward walkable, transit-oriented urbanism.

Indeed, Leinberger’s brand of urbanism largely looks outside central cities. It’s Washington’s suburbs that have really caught his attention. Of the 43 WalkUPs he identifies in the DC area, “a surprising 58 percent are in the suburbs,” comprising 51 percent of the square footage.

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Massachusetts Governor Deval Patrick got wild applause last night when he told the Democratic Convention audience:

Massachusetts Gov. Deval Patrick slammed Romney's infrastructure record at the Democratic Convention last night. But should he be throwing stones? Photo: Tannen Maury / European Pressphoto Agency

In Massachusetts, we know Mitt Romney. By the time he left office, Massachusetts was 47th in the nation in job creation—during better economic times—and household income in our state was declining. He cut education deeper than anywhere else in America. Roads and bridges were crumbling… Mitt Romney talks a lot about all the things he’s fixed. I can tell you that Massachusetts wasn’t one of them.

Fact-checking has been a booming business in this election cycle, and the Washington Post was all over Patrick’s speech. It labeled the “crumbling” claim “debatable,” noting that it’s a subjective area. The Post referenced Matt Dellinger’s analysis of Romney’s time as governor of Massachusetts for Transportation Nation:

In 2005, mid-term, he unveiled a twenty-year, $31-billion state transportation plan that re-emphasized his “fix-it-first” convictions, directing “seventy-five percent of all new capital spending toward maintaining and improving the Commonwealth’s existing transportation network.” Hailing the “post-Big-Dig world,” Romney’s plan was modally balanced. Twelve billion went to “reconstructing, decongesting and expanding roadways across the Commonwealth, including all major choke points,” while nine billion went to “achieving a state of good repair on the MBTA’s aging assets.”

Those are funding priorities the federal government would do well to emulate.

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In the late eighties and nineties, every traffic issue the Tennessee Department of Transportation faced was assigned the same solution: a bypass. But over the years, the department has come around to a new way of doing things, according to 40-year TDOT veteran Ralph Comer. Comer says the current commissioner, John Schroer, wants to become known as the “no-bypass commissioner.” He simply believes there are usually more cost-effective ways of solving transportation problems.

"Context sensitive solutions" preserve main streets like this one in Franklin, Tennessee instead of turning them into high-speed thoroughfares. Photo: Westhaven

This way of thinking led Schroer, Comer, and the department into a conversation with Smart Growth America. They teamed up to examine the state of Tennessee’s transportation system and devise a path forward, bringing together an impressively diverse coalition, from the Tennessee Disability Coalition to the Sierra Club, the public transit association to the road builders association. One irrefutable fact brought them together: The TDOT project pipeline would cost nine times more to construct than available funding would permit. Something had to change.

Tennessee is in better fiscal shape than most states and is one of a small handful of states with zero debt – meaning it pays zero percent of its budget toward debt service, leaving a lot more for infrastructure. That’s a luxurious position in today’s economic context. So if a close examination of cost-effective transportation strategies can be transformative for Tennessee, just imagine what it can do for states even more desperate to get costs under control.

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