by James A. Bacon
Compared to conventional suburban development, smart growth development can save 38% in up-front infrastructure costs and 10% of the cost of supporting police, ambulance, fire and other public services, according to a new report by Smart Growth America (SGA). At the same time, concludes “Building Better Budgets,” smart growth generates 10 times more tax revenue per acre.
In 2010, state and local governments spent $1.6 trillion, including $525 billion on projects and activities heavily influenced by human settlement patterns and another $250 billion on capital projects. Apply the SGA findings to those numbers and the implication is that adopting smart-growth strategies could save state and local governments $100 billion or more per year while simultaneously bolstering revenues.
Smart growth advocates have long claimed that compact, walkable, mixed-use neighborhoods are more fiscally efficient for local government than conventional suburban development characterized by low-density and segregated land uses. While anecdotal evidence is abundant, it has been difficult to back up smart growth claims with comprehensive data. For this report, the SGA conducted a meta-analysis of 17 case studies comparing smart-growth to conventional surburban scenarios over the past 10 to 15 years.
“In case after case, localities determined that smart growth reduces costs,” the report concludes. “In some cases the savings were modest, in some cases the savings were significant.”
The reason for the savings in capital cost is straightforward, explained Bill Fulton, SGA vice president and director of policy, in a Tuesday conference call. Smart growth consumes less land. Because smart growth is more compact, it requires fewer lane-miles of roads and fewer linear-feet of water and sewer line.
The savings in operating costs are almost as direct. The cost of delivering services such as fire, police, rescue, snow plowing and school busing varies in proportion to how much driving is required. The fewer the number of miles that vehicles drive, the lower the cost of services, Fulton says. There is a second layer of savings as well. More compact development can reduce the number of cars, trucks and even the number of stations needed to serve a given population.
For instance, a Charlotte, N.C., study found that fire stations could maintain their five-minute response times for more households in areas with compact development and strong street connectivity than in low-density suburbs with cul de sacs. The initial cost of building a fire station is about $6.5 million and the annual cost to operate it is about $2.5 million. The number of households served by each of the city’s fire stations ranged from 6,000 to 27,000 and the annual operating cost varied from $159 to $750 per household. If Charlotte were built out according to smart growth standards, the city could eliminate the need for two fire stations at a savings of $13 million per year and $8.4 million in annual operating expenses.
Chris Zimmerman, a member of the Arlington County board, credited the county’s steady pursuit of smart growth (even before it was called smart growth) over the past 40 years for the lowest property tax rate of any Northern Virginia county. Eleven percent of the land built around Metro stations contributes about half the county’s tax revenue. The resulting revenue gusher since the 1990s has allowed Arlington to spend more freely than its neighbors on public services.
“In tax terms,” said Zimmerman, “we’re eating their lunch. We’re known as the People’s Republic of Arlington — not shy about spending public dollars. We spend more on our schools than anyone in sight, pay more for teachers and principals, and yet we have the lowest tax rate in Northern Virginia.”
A Nashville, Tenn., study conducted for the “Building Better Budgets” report compared three developments in Davidson County: Lenox Village, a greenfield New Urbanist project; Bradford Hills, a conventional suburban development; and The Gulch, a downtown infill development. The New Urbanist development was the most cost efficient at $1,300 per year per unit to provide government services, followed closely by The Gulch at $1,400 per unit. Bradford Hills, the suburban project, cost $1,600 per year.
A fiscal analysis conducted by the Strategic Economics consulting firm determined that at full build-out, The Gulch would have a net positive impact on the Nashville-Davidson metropolitan general fund of $116,000 per acre. Lenox Village would have a positive impact of only $780 per acre, and Bradford Hills was essentially break-even at $100 per acre.
To facilitate walkable, mixed-use development, Nashville has implemented form-based zoning codes downtown and along major corridors, said Rick Bernhardt, executive director of the Metro Nashville Planning Department. “If you compare over the last eight years, the value of appraised property in Davidson County is up 30% — 115% in areas where we put new codes in place.”
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