Search

Thursday, May 22nd, 2014

When Sprawl Hits the Wall

I’ve long argued that the real reason sprawl, or suburban development as we’ve been practicing it, is a problem isn’t because it’s ugly, environmentally damaging, racist, or some other form of evil. The more fundamental problem is that it’s a long term financial loser. The numbers just don’t add up over the long term when you take a lifecycle view of it.

As I outlined in “The Power of Greenfield Economics” and elsewhere, new suburbs look attractive for a number of transitory reasons: everything is new, state of the art, and exactly in line with current market tastes; no legacy costs; no legacy institutions, deals, political dynasties, etc; few low income residents and thus low social service costs; deferred infrastructure development; the efficiency of large lot development; and scale economics in public service provision in a growth environment.

Eventually though, your shiny new suburb fills up and so growth comes to a halt, then often about the same time it gets old. This send all of those positive factors into reverse, triggering a cycle of decline that will ultimately cause major problems in vast tracts of suburban America that aren’t either a) wealthy communities or b) in markets that have tight restrictions on new building (which preserves these communities at the expense of rendering them unaffordable).

The perfect display of this is happening before our eyes in Indianapolis as the Indianapolis Business Journal reported this week in a major story called, “Aging suburbs face long road back” which sadly is likely behind a paywall at this point.

Like many places, the old city of Indianapolis found itself losing population to suburban areas further out in Marion County due to a variety of factors. Their solution to this problem was city-county merger, a system called Unigov. In a sense, it was regional government in which the city annexed its suburbs.

Problem solved, right?

No so fast. The problem is that growth at a rate of 200,000+ people per decade plus further expansion of the urban footprint sent growth out past the boundaries of the merged city and into the surrounding counties. As this happened, the old suburbs of Marion County themselves got old and fell out of favor, and are increasingly zones of suburban blight. The city is now close to being right back where it started. Unigov bought Indianapolis 40 years, but other than using that captured suburban tax base to build up downtown – a legitimately important and impressive accomplishment – it otherwise continued with business as usual. The result is that vast tracts of the city are now behind the 8-ball, with no plan or prospect for near term change. Per the IBJ:

Poverty is encroaching on the outer townships of Marion County, adding to their handicap in the competition with doughnut counties, where houses are newer, and sidewalks, sewer connections and bike paths come standard. Now, Marion County’s suburban neighborhoods also face the flight of national retailers and poverty-driven challenges for their school districts. Spreading poverty makes it even more difficult to market a four-bedroom, two-bath house on a suburban lot in, say, Warren Township on the east side against a similar product over the county line. “That’s a tough nut to crack,” said John Marron, an analyst at the Indiana University Public Policy Institute. “To me, it’s easier to sell the authentic urban experience.”….. For decades after Unigov merged city and county government in 1970, Marion County’s suburban townships propped up the city’s tax base. Now they could become a drag.
….
Wayne Township has the largest low-income area outside of Center Township, with 20 square miles and 62,327 residents. Many of those neighborhoods are inside the I-465 belt. One encompasses a cluster of apartment complexes just south of Ben Davis High School. Marron thinks the changes in Wayne Township stem from its concentration of homes built in the 1970s or earlier—a less desirable housing stock than is available farther west in fast-growing Hendricks County….The median Wayne Township sales price in 2013 was $66,505…“We have not seen any significant economic development here on the west side for some time” [says Wayne Township schools Superintendent Jeffrey Butts].

This was entirely predictable. Given that Wayne Township’s officials, no matter what they might say in this article, are dead set against change (such as merging their independent fire department with IFD), don’t expect much change in the results.

One thing the IBJ didn’t highlight but represents a big overhang in these aging suburbs is the aging in place population. A lot of these places skew older as there are baby boomers and up who bought and have simply stayed put. On the one hand, this is great. On the other, that long term population masks the fact that there’s no next generation moving in, so as the older generations start to die, the situation is going to continue to degrade. We already saw this happen in a lot of the inner city.

But the most telling quote in the entire article was from West Side Chamber of Commerce President Rick Proctor when he said, “There’s probably never going to be enough money to retrofit all of Indianapolis with the amenities all of us would like in our neighborhoods.”

Ladies and gentlemen, we have a winner!

The bottom line is that the type of development that’s been ongoing in Indy and most American communities can’t ever generate enough tax revenue to pay to provide the infrastructure, amenities, and services necessary to support it. To show you what I mean, I’ll show you a picture from the old city, the supposed “urban core”. This is my block:

As you can see, the infrastructure here is minimal. Not even curbs much less sidewalks. Spend any time in Indy as you’ll immediately get it that this place has always been cheap. Even the old city was never built right to begin with.

What would it cost to retrofit this street with real infrastructure? What would it cost to perform routine maintenance and basic services like street lighting (currently provided at minimalistic levels), street sweeping (not performed) or snow plowing/salting (not performed either, unless there’s over six inches of snow)? Let’s just say it would be a huge amount of money. Now ask yourself how much in property and income taxes these mostly 2-3 bedroom, one bath worker cottages are likely to produce in taxes. It’s clear the math will never work. And this is in a neighborhood that still has a lot of pull to younger families thanks to its proximity to the urban commercial districts in the area.

I wrote an entire series on building suburbs that last, but one thing is clear. You have to at least build the infrastructure up front if you wait to have any hope. Because if you want to provide basic streets and arterials, etc. until later, then you’re not going to be able to afford it. If your development can’t support the cost of full infrastructure, that’s a powerful market signal that it’s not viable. This is a government concern because it’s the government that’s forced to come in after the collapse and pick up the pieces – or try to anyway. Of course, that would be the same government that got us into this mess in the first place.

The most tragic thing about all this? Despite the ample evidence of the catastrophe that awaits, Indianapolis is still doing more of the same. Right now in Franklin Township, one of the few places inside the city limits that is still a greenfield from a development perspective, the city is approving and permitting out vast tracts of low-grade sprawl there. We are building tomorrow’s addition to our pile of problems right now. And nowhere in any city initiative that’s currently ongoing is there any hint of changing that. The same is true all over America. I might suggest the old adage applies: if you’re in a hole, first stop digging.

67 Comments
Topics: Demographic Analysis, Economic Development, Public Policy, Regionalism, Strategic Planning
Cities: Indianapolis

67 Responses to “When Sprawl Hits the Wall”

  1. MichaelSchwartz says:

    @curtis: while maybe heartfelt, your post was perhaps the most rambling unfocused post I have ever read. I am still trying to figure out what you are trying to say. Cut it down to at most a paragraph next time.

  2. Martin says:

    I moved to Indy about 25 years ago and the very first thing I noticed about it is the lack of sidewalks. I know of no other large city in America with this issue. And don’t give me that “it’s a Hoosier thing, you wouldn’t understand” argument. It’s unsafe, cheap and Podunk.

  3. Tyrone says:

    It’s not pc to state the true reason, wherever black people go, destruction and crime follow.

  4. ironwood says:

    @ tyrone:

    trolls not indulged on this site. go float your turds in somebody else’s punchbowl

  5. Matthew hall says:

    you’ve got it backwards , Tyrone, the destruction and crime come first. Poor blacks and others are then pushed into these areas after they have list mist of their property value.

  6. AIM says:

    I’m not sure which suburbs Derek Rutherford is referring to in the Detroit area but there are a number of the larger suburbs that developed during the 1970s and 80s like Farmington Hills, Livonia and Southfield that are facing the challenges of paying for the cost of their low-density development. Housing values in these communities have been stagnant while the bill for improving or replacing infrastructure is coming due. You can see that even as the outer suburbs that still have land available for new development, a number of these large second-ring suburbs haven’t seen a bounceback in property values.

    http://www.semcog.org/blog.aspx?id=91232

  7. Derek Rutherford says:

    @AIM- Are the suburbs you list doing better or worse than Detroit city at maintaining their infrastructure? I am quite confident they are doing better.

    The entire Detroit metro has struggled due to Auto Industry issues for decades. The big city is in bankruptcy and its infrastructure is notoriously falling apart. The suburbs are doing a varying-quality job of maintaining/upgrading their infrastructure. This would appear to be another example where the suburbs are better able to maintain their infrastructure than the city, which is the context I mentioned Detroit.

    My point is that, while I do not know Indianapolis and the specific example Aaron cites, I think urban areas have a bigger challenge than suburbs do at maintaining/upgrading their infrastructure over time. Among urban areas, only the very wealthiest manage it; among modest, middle class suburbs, many do.

  8. Derek, Detroit’s population and built environment has been so devastated that the overall city now has a population density similar to its close-in suburbs. At the same time, it still has to maintain big-city infrastructure to service those neighborhoods that have been depopulated. That doesn’t mean the suburbs are “better able” to maintain their infrastructure, it just means they haven’t yet had to deal with the kinds of unrelated problems the city of Detroit has. If Detroit itself was all low-density sprawl AND it suffered the same depopulation and de-industrialization, then it would be in a much worse position than it is now.

  9. aim says:

    “Are the suburbs you list doing better or worse than Detroit city at maintaining their infrastructure? I am quite confident they are doing better.”

    If your benchmark is a bankrupt city, it’s pretty easy to clear that bar. But if the goal is to have a sustainable model of development that can be maintained over the long-term, it’s unclear whether those communities will be able to accomplish that. That was Aaron’s original point. The better comparison is more urban suburbs like Birmingham or the Grosse Pointes or Ferndale or Royal Oak as compared to their more suburban neighbors. Which have the staying power and which are facing a long slide into declining property values and fiscal distress?

  10. Mr Focus says:

    “I know of no other large city in America with this issue. And don’t give me that “it’s a Hoosier thing, you wouldn’t understand” argument. It’s unsafe, cheap and Podunk.”

    We’re having a large debate about this in Portland currently. I think you’ll find that alot of these areas were outside city limits when they were built. Areas that were attractive to developers then for the same reasons that we hear them complain about now. Regulations! It’s cheap to build a house when you don’t have to put in a sewer or sidewalks.

  11. Paul Lambie says:

    @Mr. Focus – You are correct that many areas that are now part of Indianapolis were unincorporated when developed with a great lack of typical urban infrastructure, but that doesn’t mean they were immune from regulations. Marion County government had a zoning ordinance in place in 1948, but of course, they obviously had little infrastructure requirements, or they routinely waived them.

    But as Aaron pointed out previously, many neighborhoods such as his, were within the Indianapolis city limits when they were initially developed, and yet still, developers were routinely permitted to develop vast areas of the city without curbs, sidewalks, storm sewers, and street lights. It’s very unfortunate because, while there are also challenges with the housing stock from the ’40s through the ’70s being in need of updates, young people typically choose inner-city neighborhoods in part because of the presence of infrastructure that encourages pleasant walking, bicycling, and public transportation experiences.

    Aaron’s neighborhood is not that pleasant for such a lifestyle, but as he mentioned, it is better off than many Indy neighborhoods, mostly because it is very close to more desirable neighborhoods (in the favored development quarter) that do have what passes for adequate infrastructure here. But I can only imagine how much better maintained and updated the housing stock would be, if there were decent public infrastructure in place.

    It would be interesting to see whether providing that infrastructure, paid for through assessments to the adjacent properties, could result in greater private investment in updating the properties, or whether it would result in greater disinvestment because of the high taxes/assessments. I think it could be sustainable if selectively applied in neighborhoods, such as Aaron’s, with relatively high development density and property values (by Indy’s standards of course), adjacent to higher value neighborhoods with more adequate infrastructure in place. In the interest of disclosure, I live in the same neighborhood as Aaron, however, I’m lucky to have curbs (albeit fairly deteriorated), storm sewers, and some street lights on my block. But par for the course here
    , no sidewalks. :-(

  12. Anonymous says:

    So from AIM’s link, the Metro Detroit communities that are doing worst (>10% decrease in taxable value 2 years straight):
    -Hazel Park
    -Pontiac
    -Redford Charter Township

    Next worst (5-10% loss one year, >10% the other year)
    -Lincoln Park
    -Oak Park
    -Royal Oak Charter Township
    -Center Line
    -Madison Heights
    -Harper Woods
    -Eastpointe
    -Roseville
    -Luna Pier

    After that, communities that experienced 5-10% loss two years in a row
    -Romulus
    -Inkster
    -Wayne
    -Flat Rock
    -Marine City
    -Port Huron
    -Memphis
    -Ferndale
    -Detroit

    And 0-5% loss one year, >10% loss another year
    -Capac
    -Mussey Township
    -Warren
    -Garden City
    -Westland
    -Melvindale
    -River Rouge

    That’s quite a lot of communities that have fared about as bad or worse than Detroit from 2011-2013. They add up to more than Detroit’s total population, and close to 20% of the Metro population. The communities are diverse, from more urban inner suburbs, to more suburban outer suburbs, small towns, satellite cities and quasi-rural areas.

    The main point is that you have this outward rolling decline as housing stock ages. It started out in Detroit’s inner core neighbourhoods like Poletown. It then spread out into the next ring of Detroit neighbourhoods, including the inner suburb of Highland Park. Now the decline is hitting many outer neighbourhoods of Detroit quite hard, which were built in the 20s, 40s and 50s (while most inner areas continue to decline, except the greater downtown). And you’re starting to see significant decline in inner suburbs now too. There’s nothing to say it won’t continue into the outer suburbs.

    The first thing that happens typically is the housing ages and becomes less desirable, and starts to lose value, or at least doesn’t increase in value as fast as elsewhere. Eventually, the values drop enough that low income residents can afford to move in, which brings associated social problems like crime and declining schools. The decline in property values and increasing costs to the city to deal with the social problems strains city budgets, making it difficult to maintain the quality of services. The decline in city services, declining schools, increasing crime make the community even less desirable, causing remaining middle class residents to leave, and property values to decline further. Eventually, property values decline to the point where maintaining the homes becomes a money loser, causing property values and city services to decline further. At this point, the neighbourhood is affordable to even the most low income residents. Eventually, the lack of maintenance gets so bad the homes become uninhabitable and abandonned, and at that point you’re getting classic Detroit style bombed out neighbourhoods.

    All of this takes a while, most built out suburbs are still in the early stages, dropping one rung on the economic ladder, whether that’s from upper middle class to middle class or middle class to worker class (but usually not yet poor/lower class). It certainly seems to parallel what was happening in much of Detroit 30-50 years ago though. There are relatively few exceptions, mainly very wealthy suburbs (ex Birmingham).

    Suburban decline has been happening a bit differently elsewhere. For instance, in nearby Toronto, housing values are pretty high throughout, which allows communities to avoid too much disinvestment (at least for now) and avoid abandonmnent completely. Still, gentrification has been occuring at a solid pace in the core neighbourhoods. There’s still a few small hold-outs of poverty like Parkdale and Chinatown, but most of Toronto’s inner city is working class to upper middle class, with North Toronto (the equivalent to Grosse Pointe, but larger) being wealthy.

    A lot of the low income population has been pushed out from the core. The majority of low income neighbourhoods are in the northwest (Malton, Jane-Finch, Rexdale, Mt. Dennis) or east (Scarborough) of the city. So mostly 40s-70s vintage neighbourhoods, with a few early 20th century neighbourhoods too. They’re fairly dense compared to typical suburbs from that time, but still quite autocentric. Even outer suburbs like Brampton are seeing their low income population increase.

  13. So from AIM’s link, the Metro Detroit communities that are doing worst (>10% decrease in taxable value 2 years straight):
    -Hazel Park
    -Pontiac
    -Redford Charter Township

    Next worst (5-10% loss one year, >10% the other year)
    -Lincoln Park
    -Oak Park
    -Royal Oak Charter Township
    -Center Line
    -Madison Heights
    -Harper Woods
    -Eastpointe
    -Roseville
    -Luna Pier

    After that, communities that experienced 5-10% loss two years in a row
    -Romulus
    -Inkster
    -Wayne
    -Flat Rock
    -Marine City
    -Port Huron
    -Memphis
    -Ferndale
    -Detroit

    And 0-5% loss one year, >10% loss another year
    -Capac
    -Mussey Township
    -Warren
    -Garden City
    -Westland
    -Melvindale
    -River Rouge

    That’s quite a lot of communities that have fared about as bad or worse than Detroit from 2011-2013. They add up to more than Detroit’s total population, and close to 20% of the Metro population. The communities are diverse, from more urban inner suburbs, to more suburban outer suburbs, small towns, satellite cities and quasi-rural areas.

    The main point is that you have this outward rolling decline as housing stock ages. It started out in Detroit’s inner core neighbourhoods like Poletown. It then spread out into the next ring of Detroit neighbourhoods, including the inner suburb of Highland Park. Now the decline is hitting many outer neighbourhoods of Detroit quite hard, which were built in the 20s, 40s and 50s (while most inner areas continue to decline, except the greater downtown). And you’re starting to see significant decline in inner suburbs now too. There’s nothing to say it won’t continue into the outer suburbs.

    The first thing that happens typically is the housing ages and becomes less desirable, and starts to lose value, or at least doesn’t increase in value as fast as elsewhere. Eventually, the values drop enough that low income residents can afford to move in, which brings associated social problems like crime and declining schools. The decline in property values and increasing costs to the city to deal with the social problems strains city budgets, making it difficult to maintain the quality of services. The decline in city services, declining schools, increasing crime make the community even less desirable, causing remaining middle class residents to leave, and property values to decline further. Eventually, property values decline to the point where maintaining the homes becomes a money loser, causing property values and city services to decline further. At this point, the neighbourhood is affordable to even the most low income residents. Eventually, the lack of maintenance gets so bad the homes become uninhabitable and abandonned, and at that point you’re getting classic Detroit style bombed out neighbourhoods.

    All of this takes a while, most built out suburbs are still in the early stages, dropping one rung on the economic ladder, whether that’s from upper middle class to middle class or middle class to worker class (but usually not yet poor/lower class). It certainly seems to parallel what was happening in much of Detroit 30-50 years ago though. There are relatively few exceptions, mainly very wealthy suburbs (ex Birmingham).

    Suburban decline has been happening a bit differently elsewhere. For instance, in nearby Toronto, housing values are pretty high throughout, which allows communities to avoid too much disinvestment (at least for now) and avoid abandonmnent completely. Still, gentrification has been occuring at a solid pace in the core neighbourhoods. There’s still a few small hold-outs of poverty like Parkdale and Chinatown, but most of Toronto’s inner city is working class to upper middle class, with North Toronto (the equivalent to Grosse Pointe, but larger) being wealthy.

    A lot of the low income population has been pushed out from the core. The majority of low income neighbourhoods are in the northwest (Malton, Jane-Finch, Rexdale, Mt. Dennis) or east (Scarborough) of the city. So mostly 40s-70s vintage neighbourhoods, with a few early 20th century neighbourhoods too. They’re fairly dense compared to typical suburbs from that time, but still quite autocentric. Even outer suburbs like Brampton are seeing their low income population increase.

  14. Bob Cook says:

    What always strikes me when I return to visit my hometown of Carmel (an Indianapolis suburb) is how well it seems to learn from the mistakes of the city and other suburbs. Despite the protestations of many (including my late father), the investment under Mayor James Blanchard has given the suburb a sense of place and identity. Blanchard has taken advantage of the city’s desirability to ensure that there are long-haul investments made that don’t consign Carmel into a future vinyl village cemetery. I’m not sure you could say the same thing for, say, Fishers.

  15. Bob Cook says:

    I mean James Brainard, not Blanchard.

  16. Pat Shea says:

    Another problem Indianapolis has is how the state income taxes are structured with taxes flowing back to the county of residence and not the county of employment. This allows Hamilton (Carmel, Fishers and Noblesville) and Boone (zionsville) Counties to act as the bedroom communities for Indianapolis capturing taxes on high incomes. As an Indianapolis resident, I would like to see some sort of commuter tax put in place to help pay for the infrastructure commuters use to pass through Marion county to places of employment or cultural destinations.

  17. chris says:

    In the first ring suburbs of Minneapolis & St. Paul, a major effort has been made to modernize the houses & build new town centers. The University of MN Center for Urban & Regional affairs has done a lot to help. There is a pattern book called “Cape Cods and Ramblers” to help people see the potential of upgrading these post-war homes. Old commercial strips have been redeveloped with apts, condos, parks & sidewalks. This is easier to do when there’s some proximity to downtown because that’s an attraction to commuters.

The Urban State of Mind: Meditations on the City is the first Urbanophile e-book, featuring provocative essays on the key issues facing our cities, including innovation, talent attraction and brain drain, global soft power, sustainability, economic development, and localism. Included are 28 carefully curated essays out of nearly 1,200 posts in the first seven years of the Urbanophile, plus 9 original pieces. It's great for anyone who cares about our cities.

Telestrian Data Terminal

about

A production of the Urbanophile, Telestrian is the fastest, easiest, and best way to access public data about cities and regions, with totally unique features like the ability to create thematic maps with no technical knowledge and easy to use place to place migration data. It's a great way to support the Urbanophile, but more importantly it can save you tons of time and deliver huge value and capabilities to you and your organization.

Try It For 30 Days Free!

About the Urbanophile

about

Aaron M. Renn is an opinion-leading urban analyst, consultant, speaker, and writer on a mission to help America’s cities thrive and find sustainable success in the 21st century.

Full Bio

Contact

Please email before connecting with me on LinkedIn if we don't already know each other.

 

Copyright © 2006-2014 Urbanophile, LLC, All Rights Reserved - Copyright Information