How do we know whether development pays for itself?

Local governments across the country have come under increasing fiscal strain in recent years, with several being forced to declare bankruptcy.  The problems range from pension programs and decaying infrastructure to falling revenues from industrial and sales taxes as manufacturing gets offshored and shopping happens online.  In Virginia, cities are further constrained by annexation laws that prevent them from expanding with their metropolitan area and gaining revenue from greenfield development or wealthier suburbs.

Meanwhile, the high mobility of Americans and increasing specialization of metro areas and cities have forced localities to behave like competitors in a market for residents and businesses, rather than as simple political entities administering a group of people.  This makes it more important than ever for localities to understand which investments and spatial configurations create value and which don’t.  The immediate problem is that we lack good ways of approaching the question.

Property value per acre is a good start on the revenue side.  Not only is it influenced by different types of public investments that people want to be near, it’s also heavily influenced by local land use law – namely, how many people are allowed to live on a piece of land.  The assessed value, which is mapped here, determines how much revenue the locality generates via property tax.  That’s important because many of the costs cities have to bear are determined primarily by the amount of land they have to cover (see chart below).  That means that if land is not generating enough tax value per acre, some municipal services will be subsidized by other neighborhoods.  Others will simply have to be less comprehensive.  For instance, fire department and emergency response times are much longer in low-density areas, simply because people are farther away from stations.

Per Capita Expenditures

(vary primarily by number of peopled that must be served)

 

Per Area Expenditures

(vary primarily by amount of area that must be serviced)

  • Schools
  • Judicial systems
  • Health
  • Community Development
 
  • Fire
  • Sewage
  • Other utilities
  • Stormwater Management
  • Sidewalks
  • Streetlights
  • Roads
  • Public Transportation
  • School buses

Continue reading

Metropolitan Cross-Sections: College Graduates

With input from Hamilton, I’ve been looking recently at how metropolitan areas change as one travels from the center to the periphery.  The following charts show the percent of the population 25 and older with bachelor’s degrees.  The graphs are based on concentric rings coming out from the center of downtown.  I’ve included reference maps with distances and put lines on the graphs to correspond to the circles on the map.

It’s important to note that this is for adults who are 25 and older.  While college towns have high numbers of educated residents and that shows up on the graphs, these numbers do not include actual undergraduate students or recent graduates.

Data for 1990 and 2000 comes from the long-form census.  Data for 2012 is from the American Community Survey’s 2008-2012 5-year estimates.  The census long form survey disappeared after the 2000 census, so questions that would have been on the long form (like education level) are now collected as part of the American Community Survey.

Washington, D.C.

DCba Continue reading