fedgazette

Sprawl steals more than urban residents, it undermines business and regional health

Lyle Wray

Published January 1, 1996  |  January 1996 issue

Growth—a word hard to define in anything but positive terms. At an early age, we equate "growth" with much that is good—and justifiably so. Business growth means more jobs, better wages and a higher standard of living. Personal growth implies maturation of both mind and body.

Yet increasingly, in the area of land use, "growth" has become a bit of an anomaly, almost a dirty word, secretly synonymous with "urban sprawl." Urban growth has become an oxymoron, as today's growth occurs in predominantly suburban and rural areas--and usually at the expense of urban centers. And while we abandon our urban centers, we are simultaneously making huge and wasteful investments to expand infrastructure serving an increasingly diluted population.

The urban sprawl debate usually pits farmers and other landowners against environmentalists or preservationists—a brawl that is mediated by small-town municipal boards looking for some compromise and hopefully a little tax base to boot.

But lost in the debate is the plight of the urban core, and lost is the impact that sprawl has on an entire region's economic livelihood, whose very foundation is grounded in urban downtowns. Even in the midst of built-up "edge cities," urban downtowns still are recognized as the business engine of any region. Traditionally, sprawl moved people and homes to suburban or rural areas. But with greater frequency, jobs are moving as well, and with it the economic machine that drives the larger metropolitan vehicle.

Ironically, urban flight itself has been the source of "growth" for many years. New subdivisions represent significant economic activity in and of themselves, and often are followed quickly by commercial growth in bedroom communities.

But those growth tables may soon turn downward. A report out of California entitled "Beyond Sprawl" noted that "unchecked sprawl has shifted from an engine (fueling) California's growth to a force that now threatens to inhibit growth and degrade the quality of life." The report enlisted a diverse coalition, including the largest bank in California—the Bank of America—and three other environmental or social agencies.

If, indeed, we believe urban centers are the regional lifeline for economic vitality and general prosperity, we must recognize that the current course of sprawl will undermine that vitality. Most noticeably, our urban centers have been badly neglected, even abandoned. Urban residential areas are being hollowed out except for pockets of low-income areas. Along with residential flight, other signs of this urban neglect include:

Job decentralization

An increasing number of jobs are fleeing to suburbs, as companies look for undeveloped land to build new facilities or expand in a nearby market, taking advantage of cheaper land prices and overall tax rates. Many high-paying manufacturing jobs in big cities also have been lost to a changing economy, and the new wave of technology and service companies are setting up shop in suburban job centers. To make matters worse, new or remaining jobs in urban centers are predominantly low-wage.

Many suburban CEOs, tired of the daily commute, are moving companies closer to home. The trend in company relocations is fueled by increasing competition among suburbs and nearby towns for industrial and commercial tax base. Office and industrial developments are a considerable tax windfall for cities and towns, especially compared to single-family residential development. As a result, cities literally bid for business developments with financial incentives, and in doing so, they steal the urban core's economic foundation.

Abandoned investments and lack of redevelopment

When businesses leave for suburban sites, many are not replaced. Old buildings become obsolete and expensive to remodel or demolish. Tough environmental laws make "brownfields"—contaminated urban sites—difficult and costly to remediate. As a result, lending institutions and businesses become wary of the liability in holding title to these parcels, and decrepit buildings and vacant lots are left as physical reminders of urban blight.

Instead of reinvestment, public and private money flows to suburban areas, to build anew where nothing but grass and trees existed before, often because the up-front cost is considerably smaller and the taxes are lower. Tax increment financing (TIF) districts are particularly guilty of creating a glut of nonurban infrastructure. While urban areas are equipped with the infrastructure necessary to service all industries, smaller communities armed with TIFs can leverage profit-enhancing packets for businesses to relocate.

A wise investment for business? Only in a very narrow, short-term context. A study at the University of Minnesota last year determined that for every $1 billion invested in public works in the Twin Cities and fully developed suburbs, there was a return investment of $6.5 billion of residential and commercial-industrial development. By contrast, the same $1 billion invested in the urban fringe returned $2.4 billion from the private sector. From this simple financial perspective, sprawl has become a critical business climate issue.

Basic infrastructure is already in place in our urban centers. It is simply underutilized. So instead of funding new curb-and-gutter projects for industrial parks in the suburbs, tax revenues could expand the infrastructure needed for tomorrow's business market, such as fiber optics and other information-age needs. Without such improvements, businesses will fall farther behind the global competition.

There are other problems as well. Continued physical expansion of infrastructure often comes at the expense of maintaining what is already in place. It also creates an ever-increasing inventory that must be maintained with shrinking government resources at all levels. Already, the federal government has estimated that current infrastructure repairs will run in the hundreds of billions of dollars.

So where to from here?

We need to better understand that business and community "growth" does not mandate outward expansion. Unrestrained physical growth has persisted simply because it could, with little regard as to whether this was healthy in a broader, metropolitan context. Certainly, current development patterns have benefited some people, and some growth must take place in outlying areas simply because urban areas have limited vacant land. The question is whether we are making good long-term investments. The initial answer seems to be no.

Economic prosperity is but a piece of the pie, but a vitally important one. Urban sprawl is about more than the loss of green space--it is about the business climate necessary to sustain a healthy metropolitan area. Unfortunately, we are swayed too easily by short-term cost and expenses, and too many business decisions today are penny-wise and dollar-foolish. Sprawl may save a few dollars today; but tomorrow, and the day after, it will cost many more dollars to support an overbearing and unnecessary system--dollars that would be better spent on new technology, or new anything to help businesses compete.

For this reason government, business and residents must recognize the importance of reinvesting in urban areas--for the sake of big cities and their citizens, as well as for those enjoying a 30-minute commute from a nearby enclave. Certainly curing urban sprawl will not solve all regional problems. But once the economic foundation of a region has been reinforced, answers for long-term metropolitan health will likely be easier to identify and address.

Ron Wirtz, Citizens League research associate, assisted in the writing of this column.

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