Strong Towns Presentation for CommunityMatters in Newport Vermont

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Strong Towns Presentation for CommunityMatters in Newport Vermont

  1. 1. The mission of Strong Towns is to support amodel for growth that allows Americas towns to become financially strong and resilient.
  2. 2. 3 Questions• Why are our cities and towns so short of resources despite decades of robust growth?• Why do we struggle at the local level just to maintain our basic infrastructure?• What do we do now that the economy has changed so dramatically?
  3. 3. BIG Concepts1. The current path cities are are on is not financially stable.2. The future for most cities is not going to resemble the recent past.3. The main determinant of future prosperity for cities will be the ability of local leaders to transform their communities.
  4. 4. Macro Trends - HousingEven if it market returns, we can’t grow our way out of it
  5. 5. Macro Trends - Housing
  6. 6. Macro Trends - Housing
  7. 7. Commercial Real Estate
  8. 8. Commercial Real EstateRetail: A glut of excess space• Between 1990 and 2005, consumer spending per capita rose 14% (inflation adjusted), yet retail space per capita rose 100%.• We have six times the retail space per capita of any European country.• Vacant retail space is up 42% since 2006.Source: Redfields to Greenfields
  9. 9. 4 Mechanisms of Growth Can we grow our way out of this?The “Mechanisms of Growth” we have used during the modern era:1. Government Transfer Payments2. Federal/State Transportation Spending3. Debt, both private and public4. The Growth Ponzi Scheme
  10. 10. 1. Gov’t Transfer Payments
  11. 11. 2. Federal Transportation Spending
  12. 12. 2. State Transportation SpendingMn/DOT Statewide Transportation PlanAugust 2009• $65 billion in projected needs• $15 billion in projected revenue• $50 billion 20-year shortfall ($2.5 billion/year)*Shortfall equates to an $0.83/gal gas tax increase
  13. 13. 3. Private & Public Sector Debt
  14. 14. 4. Growth Ponzi Scheme The “pain free” solution … New GrowthRevenue from new …is used to pay fordevelopment….. existing liabilities.
  15. 15. 4. Growth Ponzi Scheme Investment in the community….Strong Incentives• Initial cost to the public for new growth: minimal• Benefit to the public budget for new growth: substantialThe catch is that the public agrees to maintain theimprovement forever. growth… …creates new …which increases property tax revenue.
  16. 16. 4. Growth Ponzi SchemeThe critical assumptions to this strategy:1. Either growth continues at ever accelerating rates, or2. The pattern of development ultimately generates more revenue than it costs to maintain.
  17. 17. 4. Growth Ponzi Scheme Cumulative Cash Flow - One Life Cycle$100,000 $80,000 $60,000 $40,000 $20,000 $- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $(20,000) $(40,000) $(60,000) $(80,000)$(100,000)
  18. 18. Afton Hills Road RehabilitationRoad Maintenance Project• $354,000 total cost• 79 years to recoup public expensefrom tax base• To break even requires a 46%increase in property tax rates
  19. 19. North Sleuter Road Project Road Improvement Project • Costs to be 100% assessed (no public cost) • Long-term maintenance paid by the public • $154,000 estimated long-term maintenance cost • $79,000 estimated long-term revenue from served properties • To break even requires a 25% increase in property tax rates
  20. 20. Industrial Park InvestmentSewer and Water Extension• $1.9 million total cost• 25 lots served• $76,640 per lot• $8 million of new commercial/industrialdevelopment needed immediately tobreak even
  21. 21. Backus Wastewater SystemSewer Rehab Project• $3.3 million total cost• $26,830 per Backus family• Median household income: $26,875
  22. 22. Tower Historic HarborHarbor Rehabilitation Project• $9 million dredging and infrastructureproject• $4.2 million additional for infrastructurerehab• Total investment of $45,000 per family• Payoff in 71 years – if all $32 million in newdevelopment happens immediately
  23. 23. Bemidji Convention CenterConvention Center & Hockey Rink• $75 million clean-up, & infrastructure(State, TIF, local sales tax & debt)• Total investment of $5,500 per family• After 2 years of missed projections,bailed out by local businesses
  24. 24. Elk Run @ Pine IslandBio Business Park in a Small Town• $34 million for DDI intersection todevelopment• $600k local infrastructure in the ground• Total investment of $11,500 per family• Payoff in 12 years – if they droppedeverything & dedicated to infrastructure
  25. 25. ImplicationsSerious implications for the future• The “Mechanisms of Growth” we have become accustomed to are waning.• Local governments are going to be forced to absorb the local costs of the current development pattern.• This can’t be done in the current pattern of development without large tax increases and/or large cuts in service.
  26. 26. Future Risks and VolatilityFuel Prices Interest RatesCurrency Fluctuation Black Swan Event
  27. 27. Dead Ideas• We can continue the current development pattern and not care about the Return on Investment (ROI). Cumulative Cash Flow - One Life Cycle $100,000 $80,000 $60,000 $40,000 $20,000 $- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $(20,000) $(40,000) $(60,000) $(80,000) $(100,000)
  28. 28. Dead Ideas• Our local financial problems can be solved by bringing in more growth.
  29. 29. Dead Ideas• A large employer, particularly a manufacturer, will solve our financial problems.
  30. 30. Dead Ideas• Property owners have a right to develop their property and the public then has an obligation to maintain the infrastructure.
  31. 31. What does a resilient community look like?
  32. 32. The New Economy• 1950’s – 1980’s: Emphasis on growth through savings and investment.• 1980’s – 2010: Emphasis on growth through debt accumulation.• New Economy: Emphasis on building resiliency.
  33. 33. STEP 1:Building an environment that captures a positive ROI
  34. 34. $1,136,500$803,200
  35. 35. $317,992Total$23,284Per acre
  36. 36. $28,744 Total $82,125 Per acreYou can fit 40 Pub500s in Target footprint
  37. 37. Mankato - 1870
  38. 38. STEP 2:Leveraging Public Infrastructure
  39. 39. • New “Justice Center” • $X million• County Gov’t & DOT Offices• $X Million
  40. 40. STEP 3: Revitalizing is aboutIncremental Urbanism
  41. 41. STEP 3: Revitalizing is aboutIncremental Urbanism
  42. 42. What is incremental urbanism?• Small is beautiful – Little Projects have a Big Impact• Many Projects & Experiments – Some will succeed. Some will fail
  43. 43. What we’ve been doing …
  44. 44. What we’ve been doing …
  45. 45. What we’ve been doing …
  46. 46. This is what we should be doing …
  47. 47. This is what we should be doing …
  48. 48. This is what we should be doing …
  49. 49. This is what we should be doing …
  50. 50. This is what we should be doing …
  51. 51. Learn how to DIY.These are great, but …It needs to goes beyond yoga & bike lanes …
  52. 52. This is what we should be doing …
  53. 53. This is what we should be doing …
  54. 54. This is what we should be doing …
  55. 55. This is what we should be doing …
  56. 56. STEP 4:Connect
  57. 57. Strong Towns Network
  58. 58. Peer collaboration
  59. 59. Expert advice
  60. 60. Strong Towns University
  61. 61. Strong Towns University
  62. 62. BIG Concepts1. The current path cities are are on is not financially stable.2. The future for most cities is not going to resemble the recent past.3. The main determinant of future prosperity for cities will be the ability of local leaders to transform their communities.

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