The National Association of Realtors Says #DoTheMath

The National Association of Realtors (NAR) is America's largest trade organization, representing 1.3 million members in all aspects of the real-estate industry. The NAR is a potent platform for professional development and information exchange in these fields. And, thus, the Spring 2019 of the NAR's free magazine, On Common Ground, is a potent platform for the mainstreaming of the kind of thinking about the financial implications of growth and development that Strong Towns has been pioneering for a decade.

The Spring 2019 issue is titled Smart Growth is Smart Finance and the experts quoted in several articles come across as a Strong-Towns-and-friends who's who—our staff are extensively quoted, as well as many of the people we admire and cite constantly including Donald Shoup, Joe Minicozzi, and organizations like Smart Growth America. The issue’s 11 articles make a powerful case that cities need to consider the financial productivity and long-term solvency of the patterns of real-estate development that they zone for and cultivate. 

The leading essay on zoning by David Goldberg introduces a key tenet of Strong Towns thinking: suburban, automobile-oriented zoning is robbing our cities of wealth. And, right off the bat, it puts that observation in historical context:

Today, however, a growing cadre of experts makes a compelling case that zoning, as it is typically practiced these days, threatens to rob current and future generations of prosperity. And more and more localities are pursuing the fiscal and economic benefits of an approach to zoning and development that looks more like that of 100 years ago.

By the prosperous period of rapid suburbanization following World War II, cars were becoming ubiquitous. In the burgeoning suburbs, zoning evolved toward a radical separation of uses — houses from apartments from shops from offices from industry — that could only function if most people could drive from one to the other and park their cars at each stop.

To the average American who grew up amid suburban homes on cul-de-sacs and drive-to strip malls and shopping centers, it may not be intuitive that this familiar way of arranging our communities is "radical." Let alone to a realtor who helps sell property in such places. But that's exactly what it is—a profound, radical departure from the way we used to organize our cities for thousands of years, in which homes and businesses were interspersed in such a way that you could meet many daily needs by walking.

Goldberg speaks with Christopher Zimmerman, vice president for economic development at Smart Growth America, who calls this development pattern a "fiscal time bomb":

First, the spread-out nature of it means longer water and sewer pipes, more roads and other infrastructure. And while some — but certainly not all — of the installation costs may be paid by developers, the long-term maintenance and replacement fall squarely on local taxpayers. “Very few places do the up-front accounting for that life cycle,” Zimmerman said. 

To see Smart Growth America placing these financial arguments front and center represents an evolution from the way that organization and other "smart growth" advocates (a term Strong Towns deliberately doesn’t use to describe ourselves, despite a lot of overlap) understood suburban land-use issues 10 or 20 years ago.

“To the average American who grew up amid suburban homes, strip malls and shopping centers, it may not be intuitive that this familiar way of arranging our communities is “radical.” Let alone to a realtor who helps sell property in such places. But that’s exactly what it is—a profound, radical departure from the way we used to organize our cities for thousands of years.”

Environmental arguments against rapid suburban expansion have been around for a long time, as have observations about the heavy costs of car dependence for individuals and families. In 2011, though, when Strong Towns first published the five-part essay "The Growth Ponzi Scheme", it was uncommon to see critics of the suburban experiment frame their arguments in financial terms.

That the prevailing suburban land-use pattern is not only ecologically damaging and wasteful of resources, but also fundamentally insolvent—failing to generate enough revenue to pay for its own infrastructure—is a revelation that has reached more and more corners over the past decade. And it's of clear interest to professionals who make their living buying and selling real estate, and want insight into how properties and neighborhoods do—or don't—hold their value in the long term. Like a neighborhood commercial corridor that has hosted a rotating array of small businesses for generations, versus a Walmart store building designed to have, as Urban3's Joe Minicozzi put it to Goldberg, "the lifespan of a cat."

Goldberg also delves into how these insights are beginning to be applied in practice. He devotes significant page space to the example of Fate, Texas, which we have featured extensively. In Fate, a small Dallas suburb, city staff now evaluate how long any proposed development will take to generate sufficient tax revenue to cover its own infrastructure:

Administrators developed a key tool, described in a 2017 webinar: Calculating the expected annual tax revenue for various densities of development and then looking at the number of years it would take to earn enough from those properties to replace associated infrastructure. In one analysis, downtown mixed-use retail with apartments above and townhouses produced enough revenue to replace the infrastructure in 9.5 years. For an existing local subdivision, the figure was 32.4 years.

A follow-up article tackles the subject of parking minimums, and clearly explains how they harm urban land-use productivity. Another article describes the financial case for walkable communities.

The NAR's issue-long spotlight just not on the harms of car-centric suburban expansion and the case for traditional development, but specifically on the financial case for these things, is evidence of Strong Towns thinking's greater influence on the mainstream of professions that deal with land use, planning and development.

Eight years since “The Growth Ponzi Scheme”, we're heartened to see other publications—ever bigger and more mainstream—making observations that could have come straight out of that seminal Strong Towns essay. This is how you change a culture: one audience at a time.

(Cover photo by John-Mark Smith on Unsplash)