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

Virginia’s Changing Economy

Recently, the Bureau of Labor Statistics published a map of industry sectors with the highest employment by state over the past couple of decades.  The map shows clearly America’s shift from manufacturing to retail to healthcare.  Retail trade has led in Virginia since 1996, even as the rest of the states have been taken over by healthcare.

BLS2013 Continue reading

Home Building: Now for something completely different

During the past decade major changes in population growth patterns were evident in Virginia. In contrast to what happened in the early 2000s housing boom, when many counties on the edges of urban areas became some of the fastest growing in the country, when the boom ended, these same “exurban” counties declined in population. At the same time, after decades of stagnation and decline, urban centers began to grow again during the early 2000s.

One way to understand these dramatic changes in where Virginia’s population grew is to analyze home construction activity because it is often one of the most reliable indicators of population and economic change.

During the early 2000s, Virginia underwent a real estate boom that mirrored what was occurring nationally in the wake of broadening access to mortgages. In Virginia, home prices rose in many parts of the state during this time, but particularly in larger metro areas. In Fairfax County, for example, the median home sale price more than doubled from $220,000 in 2000 to $545,000 in 2005. Rising home prices forced many home buyers to move farther out from urban areas for affordable homes in the exurbs.

Change in the Number of Homes Constructed 2000 to 2005

Before 2005 2

Continue reading

We Need to Talk About Debt

Pre-recession, the major narrative was that American households were spending too much and saving too little. Now, we’re saving again, and household debt burdens have declined to their lowest rates in over a decade. Well, pat ourselves on the back; we’re finally getting our fiscal cards in order and setting ourselves on the path to recovery, right?

Unfortunately, it’s not that simple. Our increased thriftiness is not necessarily a sign of changed attitudes and behaviors (although rising frugality has played a role), as much as changed circumstances. Defaults on mortgages and other loans in the aftermath of the recession have removed many debts from household balance sheets. The easy credit of the early 2000s—offering 18 year-olds free t-shirts and pizza in exchange for opening a credit card account, for example—has ended. And, unemployment and declining wages have reduced the creditworthiness of many households. While overspending used to draw calls for concern, now economists worry about consumer spending being too low to successfully spur a recovery.

Continue reading

Update: First derivative Virginians

Quinnipiac University released its latest poll of Virginia’s registered voters and the news is not good for Obama.  Since 2011, Obama has led Romney in all trial heat match-ups that Quinnipiac released for the commonwealth, sometimes with leads well outside of polls’ margins of error.  This month’s release, however, shows that Romney has closed the gap with Obama and is tied with him 44 – 44 in a hypothetical match-up.

Quinnipiac Poll of Virginia Registered Voters:

If the election for President were being held today, and the candidates were Barack Obama the Democrat and Mitt Romney the Republican, for whom would you vote?

  July 2012 June 2012 March 2012 Feb. 2012
Obama 44% 47% 50%  47%
Romney 44% 42% 42%  43%

Continue reading

Employment is up, wages are down

Employment rose nationwide in 2011, but the average weekly wage fell 1.7 percent according to data just released by the Bureau of Labor Statistics. Only five periods have seen declining wages since the series began in 1978 and fourth Quarter 2010-2011 is the only period to have seen declining wages occur with rising employment.

Virginia’s twelve largest localities, the only ones covered in this report, mirror the national trend. All twelve experienced employment growth, and all but one, Alexandria City, simultaneously experienced wage declines. We need to wait for more details on industry and occupational employment patterns in order to work out just why employment has risen without also driving up wages. And we need employment data for a few more quarters to see whether this divergence of employment and wages is a blip or the beginning of a trend.

Employment and Wage Change, Virginia’s largest Localities, 2010-2011

Employment
Percent Change
Average Weekly Wage Wages
Percent
Change
December
2010-11
4th Quarter 2011 4th Quarter 2010-11
Arlington, VA 0.3 $1,591 -5
Chesterfield, VA. 1.6 $852 -2.5
Fairfax, VA 1.7 $1,519 -1.5
Henrico, VA 1 $939 -2
Loudoun, VA 2.5 $1,136 -5
Prince William, VA. 3.2 $848 -2.8
Alexandria City, VA 0.6 $1,434 0.4
Chesapeake City, VA 0.2 $751 -0.7
Newport News City, VA 1.9 $876 -1.7
Norfolk City, VA. 0.8 $933 -2.6
Richmond City, VA 1.6 $1,027 -3.3
Virginia Beach City, VA 0.5 $763 -0.8

Source: US Bureau of Labor Statistics, County Employment and Wages Summary

Job Gains and Losses, 2007-2012

The Pew Center on the States recently published an interactive graphic on job gains and losses among the states.  Using Bureau of Labor Statistics data, they examine annual percent changes (April to April) in the number of employed persons in each state between 2007 and 2012.

This interactive graphic is conceptually very similar to the state-by-state infographic on gay rights. There are six concentric circles, each representing one year. For example, 2007 captures the percent change in employment between April 2006 and 2007. A white band represents the official beginning of the recession in December 2007. The states are organized into five regions, although the separation between the regions is not well defined. Continue reading

Update: Romney’s economic advantage in Virginia?

Quinnipiac University released it’s latest poll of Virginia’s registered voters with President Obama holding a 47 to 42 percent lead over Republican challenger Mitt Romney in a match-up.  Obama has maintained a consistent lead over Romney in all Quinnipiac polls since the beginning of the year, but there is one question that I, and many other analysts, are looking at just as closely in trying to predict which way Virginia will turn this election…

Continue reading