EXCERPT: Here’s what he means. The way suburban development usually works is that a town lays the pipes, plumbing, and infrastructure for housing development—often getting big loans from the government to do so—and soon after a developer appears and offers to build homes on it. Developers usually fund most of the cost of the infrastructure because they make their money back from the sale of the homes. The short-term cost to the city or town, therefore, is very low: it gets a cash infusion from whichever entity fronted the costs, and the city gets to keep all the revenue from property taxes. The thinking is that either taxes will cover the maintenance costs, or the city will keep growing and generate enough future cash flow to cover the obligations. But the tax revenue at low suburban densities isn’t nearly enough to pay the bills; in Marohn’s estimation, property taxes at suburban densities bring in anywhere from 4 cents to 65 cents for every dollar of liability. Most suburban municipalities, he says, are therefore unable to pay the maintenance costs of their infrastructure, let alone replace things when they inevitably wear out after twenty to twenty-five years. The only way to survive is to keep growing or take on more debt, or both. “It is a ridiculously unproductive system,” he says. Marohn points out that while this has been an issue as long as there have been suburbs, the problem has become more acute with each additional “life cycle” of suburban infrastructure (the point at which the systems need to be replaced—funded by debt, more growth, or both).
Posted on: Fri, 15 Aug 2014 02:56:26 +0000
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