Problem

Perhaps the most widely held misconception about growth is that it always brings economic benefits to the community. But the reality is that poorly planned growth often brings a variety of economic burdens that are borne by taxpayers and existing residents. For example, big-box commercial developments have been proven to weaken local businesses and traditional downtown economies, resulting in a net loss of jobs and tax revenue for communities.

Residential developments on the edge of town appear cheaper only because they are often subsidized with tax dollars. For many of these new developments existing residents pay for expanded police and fire services, road expansion and maintenance, increased demand on schools, and extension of sewer and water lines.

Despite expectations of economic prosperity, many of the fastest growing cities and counties in Colorado have asked taxpayers to pay more money for schools, roads, and public services in recent years – a price tag often in the millions of dollars.

“Governments subsidize sprawl through a number of means, including taxes, zoning practices, infrastructure investment and regulations. Massive public investment in roads, highways, bridges and other traffic management practices accounts for one of the largest subsidies to sprawl.” (from LaRochelle, B., “Economic Incentives,” The Smart Growth Toolkit, Smart Growth BC, 2001)

Solution

Sprawling developments should reflect the true costs and impacts associated with those developments and should pay their own way rather than be supported by increased economic burdens on existing residents.

One of the most important tools local governments can use to address the hidden costs of sprawl is the appropriate application of impact fees to cover the expenses for the infrastructure (such as sewers and roads) and public services (such as fire and police protection) that the new development will require.

Simple formulas created by planners to calculate the projected impacts and costs of new development will generally show that developments in urban areas have less impacts and lower associated infrastructure and service costs than their far removed “greenfield" cousins on the outside of town. In short, by creating a framework whereby new developments bear the actual costs associated with those developments, opportunities in or near existing developed areas will become more attractive.

Likewise, retail projects located in town rather than at the edge where they generate increased traffic will save the community on roads and traffic mitigation expenses. Impact fees also help level the playing field between big-box developers and local merchants, the taxes from whom often are used to lure their direct big-box competitors.

"Since local governments spend a considerable amount of money on infrastructure, and because how they choose to invest these tax dollars has a significant impact on the livability of communities, the economics of local government can be used as a key investment tool…Smart growth supporters can lobby local government to use full-cost accounting practices, so that hidden subsidies and cost are made more apparent." (From LaRochelle, B., “Economic Incentives,” The Smart Growth Toolkit, Smart Growth BC, 2001)

From: Colorado Sprawl Action Center's
Growth Management Toolkit