Planning for Economic and Fiscal Health
2014 Utah APA & Western Planner
Joint Conference
Salt Lake City, Utah
October 3, 2014
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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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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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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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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The nature of the economy is changing and so is the role of
communities in economic growth.
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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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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Development affects costs
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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Development affects costs
• 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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Development affects revenue
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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Development affects costs
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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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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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
Bradford Hills Lennox Village The Gulch$0
$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
Bradford Hills Lennox Village The Gulch$0
$500
$1,000
$1,500
$2,000
$2,500
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Net Revenue Per Acre
Bradford Hills Lennox Village The Gulch$0
$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!
www.smartgrowthamerica.org