Tag: Suburb

Weak Illinois Towns

On September 10, 2012

So I will admit: I am out of my league when it comes to municipal finance. As a transportation planner for a major transit agency in Chicago, I am not expected to know much about municipal finance in my professional line of work. But I do know a bit about Strong Towns. And after recently purchasing Charles Marohn’s guidebook, Thoughts on Building Strong Towns, I feel educated enough to point out what makes a strong town and what does not. Which brings me to the point at hand.

The Chicago Tribune (behind free registration and/or paywall) ran a rather insightful, if completely depressing, article on the ability of towns in Illinois to borrow incredible amounts of money with very little state (or even local) oversight:

That’s because Illinois law allows even the smallest of towns to tax, spend and borrow like the biggest of cities. Municipal advocates insist that home-rule power has largely improved towns, but the Tribune found suburb after suburb has gone deep in the hole over projects ranging from buying a roller rink to building condos — ventures far beyond the basics of building roads and sewers…

Critics say Illinois’ loose rules invite those dangerous conditions by eliminating fundamental checks and balances: Those borrowing the money — residents — may have little chance to vet the plans. And those lending the money — investors — may care little about the details, so long as the town leaders agree to boost taxes as high as needed to pay off the debt.

The ability of Illinois towns to borrow unseemly amounts of money is given to them via “home rule”. Home rule shifts many decision-making powers assumed by the State to the municipal corporation. In Illinois, it is triggered in one of two ways: either the municipality has grown to a population of 25,000 or greater in which home rule status is automatically acquired OR a municipality assumes home rule powers through public assent via referendum. Currently, over 70% of Illinois’ population lives under home rule status.

The issue with home rule status in this case is that the municipality has the ability to borrow large sums of money without a cap, without direct voter approval, and without state oversight. While local control is seen by many as a wonderful thing, when there is no oversight, these powers can lead to abuse. And they have:

Officials in south suburban Markham raised sales and property taxes while borrowing $20 million mostly to buy a roller rink and build a senior apartment building — the latter named after the mayor.

Northlake borrowed $14.5 million to build a 60-unit condo building that opened in 2009. The town cut prices and even helped finance mortgages, but about 20 units remain unsold.

Country Club Hills built an amphitheater that doesn’t make enough to cover debt payments and typically loses $300,000 to $1 million a year, depending on what expenses are counted.

These are the things that make weak towns. In terms of the “Growth Ponzi Scheme” that Marohn has described, this is it.

I see the suburban experiment failing all around. From municipalities that cannot afford their poor development investments to crumbling infrastructure to raising the ability to borrow ever more amounts of money for no productive use, it is clear that our society cannot function like we once did. Sadly, it is articles like this that are only the beginning of our fiscal woes.

Infrastructure #fail

By Ryan Richter

On April 4, 2012

In Infrastructure, The Suburban Experiment

Flooded I-10/I-610 interchange and surrounding area of northwest New Orleans and Metairie, Louisiana (Photo credit: Wikipedia)

Building off of my previous post on suburban poverty, I briefly touched on the aspect of infrastructure. I mentioned that municipalities and transit agencies (really all government agencies) will be hard pressed to keep up their existing infrastructure, let alone create new infrastructure in a financially sustainable way. Much has been written on this topic, and I don’t have much new to add. Yet, I’m astonished to learn how much this country can tolerate when it comes to poor infrastructure. In urban planning and transportation circles, it has been common to note that it would take a major accident or catastrophe to get this country to embark on a program for infrastructure renewal. And yet, we’ve had two catastrophic incidents just in less than 10 years: Hurricane Katrina and the New Orleans levee breaches in 2005 and the Minneapolis bridge collapse in 2007. Even today, with $5.00 a gallon gas a distinct possibility this year and with record transit ridership, we refuse to invest in infrastructure that will make our cities fundamentally better and more sustainable places.

So how does this sorry state of affairs affect us?

According to the Urban Land Institute’s recent report, Infrastructure 2011: A Strategic Priority, we may see the following:

Tax Increases: User fees are likely as tolls and transit fares increase to meet operating costs. Additional utility fees and traffic fines too.
Deterioration: Local governments will fund essential capital projects but may be forced to abandon others. We already are seeing this with states allowing paved roads to revert to gravel.
Deterioration will result in service interruption and will affect mobility. This is exactly what happened with the Minneapolis bridge collapse.
I-35W Mississippi River bridge in Minneapolis, Minnesota, before and after its collapse. (Photo credit: Wikipedia)

Put simply: we are unwilling or unable to fund infrastructure investment in this country and are willing to watch infrastructure fail with predictably catastrophic results. In terms of the suburban experiment, the inefficiencies of the transportation and utility infrastructure have become apparent as the life cycles on the infrastructure comes to an end. Communities and transportation agencies are discovering that they cannot afford to replace or even maintain what they have. My own employer recently raised transit fares on average by 30% to end the practice of diverting scarce capital resources to cover operating expenses.

In terms of the transport nexus between land use and transportation given the

Blight may sometimes cause communities to cons...

Now arriving in a suburb near you. (Photo credit: Wikipedia)

economic and political climate around infrastructure, I believe we need to focus any future growth in built up areas where infrastructure is already in place. Developing on greenfield sites without and transportation and/or utility infrastructure is absolutely idiotic given the realities. We need to see land use densities and mixed use types increase around transit stations to leverage the existing transportation infrastructure already in place. We also need to see infill development on brownfield sites where there is existing transportation and utility infrastructure. And, as difficult to fathom as this may be, we need to reconsider the utility of maintaining the infrastructure of much of the suburban experiment. Much of it, I suspect, is simply not sustainable.

Suburban Poverty

By Ryan Richter

On April 3, 2012

In The Suburban Experiment, Urban Design

Suburban development in Colorado Springs, Colorado (Photo credit: Wikipedia)

Veering off a little from previous topics, I’d like to discuss the issue of suburban poverty, which has been in the news lately, and what it means for metropolitan regions and transit service providers.

The impact of the Great Recession will be felt for decades and some of the long-term problems are only now just beginning to be understood. The foreclosure crisis, high unemployment, and a collapse in government revenues have had quite an impact on the built environment. This has serious ramifications, particularly for suburban areas. To wit:

The largest and fastest growing population of poor people are in the suburbs.
The social safety net of the suburbs was weak to begin with and is now in tatters.
Transit service is a function of population density and urban form, of which the former is low in the suburbs and the latter generally does not encourage pedestrian activity of any kind in the suburbs.

Thus, we have the makings of a development pattern similar to continental European cities where the wealthy inhabit the inner core and the poor inhabit the outer areas of the metropolitan region. This is somewhat hyperbolic, but not beyond the realm of possibility. As we are observing, the millennial generation prefer cities, abhor cars and are attracted to the metropolitan regions where transit and rental apartments are in abundance. It may be that low density suburbs are the “loser” in the aftermath of the Great Recession.

: Twilight of the suburban experiment? (Photo credit: maureen_sill @ flickr)

As this trend plays out, we’re already seeing what has been happening to the suburbs and how to grapple with this issue will be a profound one for my generation. Because the suburban environment was built on the assumption of never-ending growth, it cannot cope when that growth stops. Thus we see over-saturated retail commercial vacancies, massive subdivision foreclosures and an overbuilt infrastructure that small taxing bodies can never afford to maintain, not to mention replace.

How transit will survive and adapt to this market is a good question. Because suburban poverty is rising and the social safety net of the suburbs was never firmly in place (including transit), it remains to be seen what can be done. The inherent difficulties of providing frequent transit service in low density areas was obvious when times were good and is compounded now because, sadly, a population that needs transit most lives in an area where transit is most difficult to provide. Even in cities, transit services are cutting back on budgets, adjusting to the economic climate in which they operate. And most transit services have state of good repair issues so great that adding additional service in areas poorly served or not at all is a low priority at best.

We’re at the tip of the iceberg here in regards to the suburban experiment and suburban poverty is only the beginning. We’re looking at a future where this population becomes increasingly cut off from the world as jobs and people relocate and reorient themselves to a living pattern based on existing transit systems where the car and house with a picket fence is an option, not a necessity. Municipal governments, particularly small suburban ones not connected to larger cities by transit will likely fail under their enormous debt obligations and their infrastructure will really begin to crumble. And the tract houses in the subdivisions named “Orchard Hills” and “Lakewood”? Well, according to Brookings:

those house prices are now below replacement value, meaning the land under the house has no value and the sticks and bricks are worth less than they would cost to replace. This means there is no financial incentive to maintain the house; the next dollar invested will not be recouped upon resale. Many of these houses will be converted to rentals, which are rarely as well maintained as owner-occupied housing. Add the fact that the houses were built with cheap materials and methods to begin with, and you see why many fringe suburbs are turning into slums, with abandoned housing and rising crime.