Planning for Economic and Fiscal Health 2014 Utah APA & Western Planner Joint Conference Salt Lake...

Planning for Economic and Fiscal Health

2014 Utah APA & Western Planner

Joint Conference

Salt Lake City, Utah

October 3, 2014

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Presentation objectives

• Understand the context within which communities plan

• Shape the future you want– Economic

competitiveness– Community character– Quality of life

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Smart Growth

Smart growth means building urban, suburban and rural communities with housing and transportation choices near jobs, shops and schools.

These strategies support thriving local economies and protect the environment.

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Planning for Economic and Fiscal Health

This is about how the pattern of development

– how we choose to grow –

affects our region’s ability to compete

economically, to be fiscally sustainable, and to

provide efficient and effective public services –

to maintain our high quality of life.

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The way we design and build our communities has enormous consequences

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1. The market is changing, especially for housing

2. The recipe for economic growth is changing

3. We can no longer afford to use tax money to subsidize inefficiency

We must be aware of 3 important factors affecting the future of our

communities

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THE CHANGING MARKET

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Your community is changing

and preferences and the

market are following.

THE CHANGING MARKET

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Your community is changing

• There are two demographic changes that are driving the market and must drive your decision making.– The rise of the Millennials.– The aging of the Baby Boomers.

THE CHANGING MARKET

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Demographic change and the labor force

Greatest Generation Baby Boomers Gen X Millenials0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

POPULATIONLABOR FORCE

PROSPERITY

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American households are changing

In the 1950s roughly half of all households were families with kids.

“Between 1970 and 2012, the share of

households that were married couples with

children under 18 halved from 40 percent

to 20 percent.” US Census Bureau, America’s Families and Living Arrangements: 2012

By Jonathan Vespa, Jamie M. Lewis, and Rose M. Kreider

August 2013

THE CHANGING MARKET

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The market: Housing

THE CHANGING MARKET

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How will your community meets the needs of

millennials and aging boomers in order to improve your

competitiveness?

THE CHANGING MARKET

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PROSPERITY

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The nature of the economy is changing and so is the role of

communities in economic growth.

PROSPERITY

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PROSPERITY

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The Network City(city as network)

PROSPERITY

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The rise of the millennials and the global economy

are driving the economy.

PROSPERITY

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The labor force

• Millenials choose where to live before finding a job.– 64% looked for a job

after they chose the city where to live. (Source:

U.S. Census)

• How people want to work is changing and where they want to work is changing.

PROSPERITY

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Businesses respond to changing preferences

• Across the country corporations are responding to employee preferences and moving to the talent.

• They are choosing to relocate from suburban offices to downtown locations.

PROSPERITY

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Businesses respond to changing preferences

Zappos, Las Vegas, NV

Hillshire, Chicago, IL

PROSPERITY

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“Urban vitality drives innovation

and attracts ‘talent.’” (Freedmen, Tung & Sasaski, 2012)

“Livable cities draw creative people, and

creative people spawn jobs.” (Wired, “Small Cities Feed the Knowledge Economy”,

Adam Davidson, May 31, 2011.)

PROSPERITY

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There is a price/value premium for walkable places

Applies to residential real estate -

• Sources: “Walking the Walk” by Joseph Cortwright, CEOs for Cities and “The Walkability Premium in Commercial Real Estate Investments”

by Gary Pivo and Jeffrey Fisher

Above-average walkability: $4,000 to $34,000 more in home sales price

PROSPERITY

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There is a price/value premium for walkable places

Greater walkability:

1% to 9% increase in commercial property value depending on type; also higher incomes and lower capitalization rates

• Sources: “Walking the Walk” by Joseph Cortwright, CEOs for Cities and “The Walkability Premium in Commercial Real Estate Investments”

by Gary Pivo and Jeffrey Fisher

Applies to commercial real estate -

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Encouraging Job Growth

• Up to 80 percent of job growth is from existing businesses. • In the new era of specialized, network businesses, proximity matters. • Workplace strategies should focus on existing concentrations of

workplaces.

• Target those industries related to existing City assets.

-- Michael Freedman

PROSPERITY

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Smart growth is part of an economic development strategy

Economic development is increasingly a

competition over placemaking.

Building a great place to live, work, and play IS an

economic development strategy.

PROSPERITY

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How can your community take advantage of the

changing nature of the economy in order to create

jobs and wealth?

PROSPERITY

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FISCAL HEALTH

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How communities

develop affects

costs and revenue.

FISCAL HEALTH

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Municipal budgets

• Municipal budgets are feeling pressure• State and federal funds are disappearing• Costs are escalating• Tax bases have shrunk

FISCAL HEALTH

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Municipal budgets

• A large portion of municipal budgets go to infrastructure and services. – building and maintaining roads, bridges,

sewer and water lines, etc– providing fire and police services, trash

removal, paratransit, etc

FISCAL HEALTH

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Municipal budgets

• Costs are not just infrastructure related but also operations and maintenance.

• Burden usually falls on taxpayers.

FISCAL HEALTH

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Municipal budgets

• You have to spend on these things.

• You need to ensure that you are spending those funds in the most effective and efficient manner.

• Budgets are not just financial documents – they reveal are goals and what we value.

FISCAL HEALTH

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Development affects costs

• When it comes to infrastructure costs…– Compact development development is the

best deal.– Low-density suburban development rarely

pays for itself.– It makes sense to reuse existing

infrastructure.

FISCAL HEALTH

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FISCAL HEALTH

Building infrastructure to serve new development on the fringe can cost the city up to three times more per acre than urban infill development.

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• Compact development offers efficiencies in regards to services as well.– Police and fire

departments have less area to cover.

– Fewer miles of road to cover for snow removal and trash pickup.

FISCAL HEALTH

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Development affects revenue

FISCAL HEALTH

• When it comes to revenue…– Compact development is the best deal.– Low-density suburban development generates

much less per acre revenue.– You can increase your property tax base

significantly simply by bringing back areas that already exist

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FISCAL HEALTH

• The revenue side of things is affected as well.

Multifamily housing in near an area’s center can generate nine times more revenue per acre than traditional large-lot, single-family housing on the fringe.

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FISCAL HEALTH

Building infrastructure to serve new development on the fringe can cost the city up to three times more per acre than urban infill development.

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FISCAL HEALTH

Courtesy Joe Minicozzi,AICP of Urban 3

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FISCAL HEALTH


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FISCAL HEALTH


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FISCAL HEALTH

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Nashville Case Study

3 development projects Bradford Hills (conventional suburban) Lenox Village (“New Urban suburban”) The Gulch (smart growth)

Operating Costs only No infrastructure cost analysis

General Fund only

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Bradford Hills (conventional suburban)

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Lennox Village (“New Urban suburban”)

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The Gulch (smart growth)

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Project Acreage

Bradford Hills Lenox Village The Gulch0

20

40

60

80

100

120

140

160

180

200

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Housing Units

Bradford Hills Lennox Village The Gulch0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

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Revenue and Cost

Bradford Hills Lennox Village The Gulch$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

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Net Revenue


$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

$10,000,000

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Net Revenue Without The Gulch

Bradford Hills Lennox Village$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

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Net Revenue Per Housing Unit


$500

$1,000

$1,500

$2,000

$2,500

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Net Revenue Per Acre


$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

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Bottom Line

• Downtown and close-in neighborhoods will yield a much

higher return• Village-style suburban development will yield a higher return• These surpluses can be used to offset costs of existing

neighborhoods• When infrastructure is added to the mix, these trends probably

become stronger• As Nashville-Davidson County runs low on developable land,

these considerations become vastly more important.

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Can your community continue to

subsidize inefficiencies ofdevelopment patterns, while not reaping the

potential reward?

FISCAL HEALTH

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We have the freedom to make informed, humane, and intelligent choices about the kind of world we want to leave for our children and grandchildren. We also have the freedom to make uninformed, selfish, and stupid choices. Which will it be? - Greg Pahl

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Thank you!

[email protected]

www.smartgrowthamerica.org

mailto:[email protected]

http://www.smartgrowthamerica.org/

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