Thursday, July 18th, 2013

The Illusion of Growth Economics: Can Cities Like Charlotte Reinvent Themselves?

My latest post is online at Governing. It is called “The Illusion of Growth Economics: Can Cities Like Charlotte Reinvent Themselves?.” I was prompted to write this by an article out of Charlotte discussing how that city was raising property taxes for the first time in 20 years as it became unable to annex new territory yet continued to have capital needs. I reiterate a number of themes I’ve hit here before. Here’s an excerpt:

The transition from thinking about managing rapid growth to thinking like an operator is a tricky one. Even many companies fail to make it. Retailers, for example, frequently fall on hard times when they reach the point where they can no longer simply open new stores to meet financial targets.

Cities that are benefitting from strong growth have the wind at their backs. But it would be naive to assume that they must be doing something better than everyone else just because of that. Places like Chicago and New York were the Charlottes and Houstons of their day, right down to their laissez-faire economies. But they eventually hit the limits of growth and had to wander in the wilderness while trying to reinvent themselves.

This is the mark of a great city. A London or a New York can sustain and reinvent itself across growth cycles. Too many places, particularly our Rust Belt cities, have not met this challenge. When the economy shifted and growth ended, they went into a decline that has not yet abated.

Charlotte may not be at the peak of its growth cycle, but an uptick in taxes should be a cautionary note reminding leader that for cities heavily dependent on raw growth, the punch bowl eventually runs dry.

8 Comments
Topics: Public Policy, Strategic Planning
Cities: Charlotte

8 Responses to “The Illusion of Growth Economics: Can Cities Like Charlotte Reinvent Themselves?”

  1. It’s very much a message about the “growth ponzi scheme” as analyzed by Strong Towns ( http://www.strongtowns.org ). If a city has to annex new development to stay solvent, then it’s no better than any dot com from the 1990s that lost money on every transaction but somehow expected to “make it up in volume.” These cities (which is nearly all of them in the US, sadly) are building high-cost infrastructure and services for low-density, low-value, low-tax development that simply isn’t sufficient to pay off its construction and upkeep.

  2. John Morris says:

    I agree. I don’t think if one looks back in NYC, history you don’t see a city that had to annex territory just to stay solvent or appear solvent.

  3. Jon Seisa says:

    My observation is that most municipal leader simply lack strategic innovation skills and breakout thinking, politically promising grandeur but then delivering mediocre status quo, and choosing either lackluster solutions or high risk solutions, both either overestimating or underestimating ramifications and unforeseen consequences. They never seem to consider cause and effect, and then later to their horror the menacing monster that devours the city is created, raising its ugly head with fire breathing assault.

  4. Chris Barnett says:

    Municipal elected officials typically have a (short) four year timeline, so they don’t have the time to see an innovation through. So if they can kick the can down the road a term or two, “the next guy can deal with it”.

    This is partly the fruit of term limits.

  5. Jon Seisa says:

    Very self-serving, indeed. That short-sighted mentality has got to change. Long term strategic master plans with periodic milestone adjustments need to be foremost from municipal administration to municipal administration. I’ve witnessed my hometown’s civic center succumb to hodgepodge erratic diffusion where all the key civic components and amenities, including the city hall, are being scattered throughout the entire downtown area with great incomprehensible ill-design and incongruity because the city leaders didn’t think of producing a long term strategic civic center master plan to reflect city growth and expansion.

  6. Paul Lambie says:

    Regardless of whether you have term limits, what’s most important is an educated and engaged electorate that will not put shortsighted, gimmick promoting people in office to begin with, or will quickly throw them out of office. We don’t have any term limits here in Indianapolis and we keep electing politicians who kick the can down the road. We reelected a mayor and many of the same complicit council members who believe in paying for today’s needs by leasing away tomorrow’s revenue streams and sacrificing control of public assets.

  7. David Holmes says:

    I would be interested in any articles or studies on what is the maximum susbtainable growth rate for a major city. A related question would be what is the ideal growth rate – one that is slow enough to discourage speculative sprawl, slow enough to enable quality planning to completed in advance of growth and growth to be directed where possible in forms providing greater long-term benefit to the community, slow enough such that roads and infrastructure can be utilized for their full design life and not have to be replaced solely because they become undersized long before they wear out.

    The ideal growth rate might be higher in some cities with highly effective local leadership, but my gut feeling is it probably around 5% population growth per decade.

    I believe Charlotte’s growth rate has been about 5 times this rate.

  8. AIM says:

    Growth rate matters but so does the nature of the growth. As Chuck Marohn at StrongTowns has so ably demonstrated, the patterns of development drive long-term costs as much as anything else a community may do.

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