If you build it, they may not come

Speakers share views on urban debt, growth
Jun. 25, 2013 @ 06:00 PM

A pair of experts who advise cities on how to achieve financial strength shared some of their views with a group of High Point officials and elected leaders Tuesday.
Charles Marohn and Joe Minicozzi spoke on the “true costs of downtown development choices” at the String & Splinter Club in High Point. They were presented by The City Project, the city-funded nonprofit that works to revitalize older High Point neighborhoods.
Marohn, an engineer and planner who operates Strong Towns, a Minnesota nonprofit that works with local governments to help them achieve financial strength, said cities have taken on increasing amounts of debt since World War II, which has facilitated growth, but at a cost.
“The growth creates what we call the illusion of prosperity,” Marohn said.
Cities have poured too much money into developing speculative business parks and building roads and utilities for subdivisions, and it is taking them decades to recoup the investments, as the costs to maintain the projects climb higher over time.
“‘If you build it, they will come’ has become the default development strategy for all local governments,” he said. “We feel we have to make things happen to try to induce development.”
Private sector debt has skyrocketed, as has deficit spending in the public sector, in particular the federal government, which has a national debt of about $16.7 trillion.
“I took seven quarters of calculus, and that is an unfathomable amount of money,” Marohn said. “We have gradually switched to an economy that operates through debt accumulation rather than savings and investment.”
High Point’s outstanding debt totalled $543.2 million as of the end of 2012, according to the city.
About half of it is in the form of general fund and water and sewer bond debt. The other half stems from the city’s share of the debt of ElectriCities, the public power provider of which High Point is a member.
Tuesday’s speakers touched on themes from last month’s Ignite High Point charrettes, such as the need to lighten regulations.
Marohn said “illiterate lumberjacks” built his hometown of Brainerd, Minn. into a functioning city in the early 20th century by simply replicating what they had seen done elsewhere.
He showed a picture of the town from that era and contrasted it with a current photo, which he said “looks like a wasteland of parking lots and half-vacant buildings. If you want to see in one photo why we are going broke at the local level, this is it. A half-million dollars of public infrastructure have been put in that street and what is the public return on that investment? It’s nothing.”
Minicozzi, principal of the Asheville-based consulting company Urban3, told the audience how that city’s downtown has become a far more valuable tax base than big-box stores and sprawled development.
“When you start stacking stories, you start stacking dollars,” he said. “We’re trying to change the paradigm with how we talk about land efficiency.”
Property values are high in High Point’s downtown, due largely to the presence of furniture showrooms.
“Your downtown has great wealth. You have $535 million worth of value downtown,” Minicozzi said. “Greensboro is $495 million, so downtown High Point is worth more than downtown Greensboro. That was pretty interesting to see.”