Presentation Transcript

1. OmahaMarch 21, 2012

2. The mission of Strong Towns is to support a model for growth that allows America's towns to become financially strong and resilient.
3. The current path cities are on is not financially stable. The future for most cities is not going to resemble the recent past. The main determinant of future prosperity for cities will be the ability of local leaders to transform their communities. Curbside Chat BIG Concepts
4. Macro Trends - Housing
5. Macro Trends - Housing
6. Macro Trends - Housing
7. Commercial Real Estate
8. Retail: A glut of excess space Between 1990 and 2005, consumer spending per capita rose 14% (inflation adjusted), yet retail space per capita rose 100%. We have six times the retail space per capita of any European country. Vacant retail space is up 42% since 2006. Source: Redfields to Greenfields Commercial Real Estate
9. Can we grow our way out of this? The “Mechanisms of Growth” we have used during the modern era: Government Transfer Payments Federal/State Transportation Spending Debt, both private and public The Growth Ponzi Scheme Mechanisms of Growth
10. Gov’t Transfer Payments
11. Federal Transportation Spending
12. Federal Transportation Spending
13. Federal Transportation Spending
14. Private Sector Debt
15. Private Sector Debt
16. The “pain free” solution: New Growth …is used to pay for existing liabilities. Revenue from new development….. Growth Ponzi Scheme
17. Investment in the community…. Strong Incentives Initial cost to the public for new growth: minimal Benefit to the public budget for new growth: substantial The catch is that the public agrees to maintain the improvement forever. …creates new growth… …which increases property tax revenue. Growth Ponzi Scheme
18. The critical assumptions to this strategy: Either growth continues at ever accelerating rates, or The pattern of development ultimately generates more revenue than it costs to maintain. Invalid Assumptions Growth Ponzi Scheme
19. Road Improvement Project $6,600 cost per property 50% of costs assessed 37 years to recoup public contribution from adjoining tax base Local Street Project
20. Road Maintenance Project $354,000 total cost 79 years to recoup public expense from tax base To break even requires a 46% increase in property tax rates Local Road Rehabilitation
21. Road Improvement Project Costs to be 100% assessed (no public cost) Long-term maintenance paid by the public $154,000 estimated long-term maintenance cost $79,000 estimated long-term revenue from served properties To break even requires a 25% increase in property tax rates Local Road Project
22. Sewer and Water Extension $1.9 million total cost 25 lots served $76,640 per lot $8 million of new commercial/industrial development needed immediately to break even Industrial Park Investment
23. Industrial Park Development $2.1 million inflation-adjusted total cost $6.6 million in improvements induced Payback from current conditions happens in 29 years if all revenue devoted only to debt Industrial Development
24. Sewer Rehab Project $3.3 million total cost $26,830 per Backus family Median household income: $26,875 Small Town Wastewater System
25. Harbor Rehabilitation Project $9 million dredging and infrastructure project $4.2 million additional for infrastructure rehab Total investment of $45,000 per family Payoff in 71 years – if all $32 million in new development happens immediately Investment in New Growth
26. Growth Ponzi Scheme
27. Growth Ponzi Scheme
28. Growth Ponzi Scheme
29. Private Sector Debt
30. Serious implications for the future The “Mechanisms of Growth” we have become accustomed to are waning. Local governments are going to be forced to absorb the local costs of the current development pattern. This can’t be done in the current pattern of development without large tax increases and/or large cuts in services. Implications
31. Fuel Prices Interest Rates Currency Fluctuation Black Swan Event Future Risks and Volatility
32. 1950’s – 1980’s: Emphasis on growth through savings and investment. 1980’s – 2010: Emphasis on growth through debt accumulation. New Economy: Emphasis on building resiliency. The New Economy
33. What’s the solution?
34. Don’t double down. Strategies
35. Adopt strategies to increase the public’s Return on Investment for infrastructure Low Amenity Area High Amenity Area Strategies
36. High Return Investments
37. $1,136,500 $803,200
38. Within neighborhoods and urban areas, a Strong Town uses complex streets to equally accommodate the full range of transportation options available to residents. Placemaking Principle
39. Del Prado Blvd Cape Coral Length: 2.6 miles Cost: $42 million $3,059/ft
40. A Strong Town utilizes a system of interconnected parks and civic structures to provide value to property owners within the community. Placemaking Principle
41. Parks, greens, squares and civic buildings provide value when they enhance the public realm, create memorable landscapes and provide for spontaneous gatherings. Placemaking Principle
42. A Strong Town requires age diversity in order to sustain itself. Designing neighborhoods for safe, independent living at all stages of life is critical for a Strong Town. Placemaking Principle
43. The current path cities are on is not financially stable. The future for most cities is not going to resemble the recent past. The main determinant of future prosperity for cities will be the ability of local leaders to transform their communities. Curbside Chat BIG Concepts
44. Read, listen and watch our stuff. Put it to work. Pass it on. Sign up and fill out a survey we send you. We are a 501(c)3 funded by donations. Work to build Strong Towns. How you can help us…
45. www.StrongTowns.orgwww.CurbsideChat.orgwww.StrongTowns.net