The Building Industry Association of the Delta doesn’t understand smart growth

Last week, Mike Fitzgerald wrote a column extolling the virtues of smart growth, citing a new study by Smart Growth America (SGA) showing how compact development costs less and pays more than traditional sprawling development. Of course, smart growth is not without detractors. In the column, Fitzgerald quotes the head of the Building Industry Association of the Delta John Beckman who feels that Smart Growth America is wrong, at least in California. Mr. Beckman dismisses the work done by SGA, disputing the notion that smart growth is more fiscally prudent than typical suburban developments.

Mr. Beckman is wrong on every level. Let’s take a look at all of his points to see why.  

The Building and Industry Association of the Delta doesn’t take Smart Growth America’s new report on infill development seriously

“Here in California as you know we are required to mitigate our impacts and pay $55,000 per unit to cover our costs of the infrastructure.  So please tear up all sections of the report covering the cost vs. savings of infrastructure for smart growth – we pay that costs not the City!”

This is true: developers are required to pay much of the initial costs for new infrastructure. However, once you consider maintenance needed over the life of the infrastructure as well as external costs associated with sprawling developments, these fees do not come close to covering the impacts of sprawl. For example, the costs to install new roads may be covered by developers and even mello-roos taxes on homes, but what happens when these roads need to be repaved? By that time, mello-roos taxes have expired and the developers are not required to kick in a penny more. Moreover, these fees do not cover schools, police, fire, and all other services provided by the city.

Externally, developer fees don’t begin to cover the gargantuan external costs of sprawl. For example, it will cost $72 million to upgrade the on and off ramps at Eight Mile Road and I-5 to handle more residents and over $500 million to widen and repave I-5 and Highway 99. These massive projects are the products of a growing population on the fringes of the city that require more lanes to travel. These costs are completely picked up by state, federal and county governments, not the developers.

“California has Proposition 13.  To the best of my knowledge other than Fresno, every study in the report discussing property tax revenue comes from states with mil taxes on the property that are assessed and recalculated annually.  We do not.”

I am not sure what the argument is here because Prop 13 makes paying for sprawl even more difficult by keeping property taxes lower. As costs of services rise, revenue from sprawl stays the same thanks to Prop 13, meaning that California has a more difficult time paying for sprawl than other states.

New research shows demand for sprawling subdivisions has peaked, while support for other housing types has increased

Sprawling development patterns cost the city more in services and brings in less revenue that smart growth patterns, according to the city of Fresno

“Looking at Fresno… they show $2,300 per acre in tax revenue for smart growth and $1,600 per acre in revenue for conventional growth.  Then when they list the costs its $1,371 per unit for smart growth and $1,566 for conventional growth – PER UNIT.  Okay, Mike, let’s do some math.  Conventional development produces about 6 units per acre so the costs per acre are $9,396 for conventional growth per acre.  Compared to the tax revenue Fresno loses $7,796 per acre on conventional development until you throw in the DMV fees, user fees, utility fees, etc. etc.  However, for “smart growth” which, in order for it to be smart it has to be denser, at a only mildly smart 10 units to the acre the service costs is $13,710 per acre.  With per acre revenue of $2,300 the City of Fresno loses $11,410 per acre of Smart Growth.  They are going to need a lot of utility and DMV fees to make up that loss!”

This is where Mr. Beckman shows that he did not do his homework as the calculations he devises have nothing to do with what the Fresno study actually entails. In the other cities cited, SGA reported the costs and revenues of specific infill projects to conventional suburban developments. For example, in Nashville, SGA compared a typical suburban project called “Bradford Hills” to a downtown infill development known as “The Gulch.” SGA found that The Gulch resulted in over $200,000 per acre in revenue compared to only $4,000 in revenue per acre for Bradford Hills.

This is not the same analysis conducted in Fresno. For Fresno, SGA reported a comparison between two different city-wide development alternatives, not specific development projects. Therefore, there is no need to calculate units per acre as Mr. Beckman has done because this is a straight one-to-one comparison between different city-wide scenarios of future growth. Here is how SGA explained the two alternatives:

“The smart growth alternative (in Fresno) called for 43 percent of new residential development and 71 percent of non-residential development in smart growth locations. This alternative increased the geographical size of the city by 27 percent.

The most conventional suburban alternative called for 25 percent of all new residential development and between 42 percent of non-residential development in smart growth locations. This alternative increased the geographical size of the city by 36 percent.”

We are not comparing one project to another, instead we are comparing development patterns. That’s why Fresno’s smart growth estimates appear paltry in comparison to other cities such as Nashville. In reality, smart growth in Fresno, as defined by SGA and the city itself, will generate 45% more revenue per acre than sprawl while costing nine percent less on a per-capita basis. Smart Growth is the clear winner, even in Fresno. Admittedly, SGA does us all a huge disservice by throwing all the numbers into the same comparative table (page 23, appendix B), so it’s understandable that Mr. Beckman would misread the data. That does not change the fact that he is wrong, however.

Downtown Stockton's large, historic buildings offer an economic opportunity for the city

Compact development brings in more revenue per acre than sprawl

Mr. Beckman also forgets that an analysis comparing sprawling development to compact development has actually been done recently in Modesto, Merced, and Turlock. In Modesto, Vintage Fair Mall brings in just $7,000 in property tax revenue per acre while a modest three story building downtown can generate $38,000 per acre. These numbers hold true for Turlock and Merced as well.

“I didn’t see any discussion about how people want to live.  No discussion about allowing people the freedom to choose if they want to live in a low rise, townhouse, common wall setting or if they want their own private backyard?  Mike, do you have a backyard?  Do you enjoy it?  Should other people be allowed to choose if they want a back yard or not?”

I am glad Mr. Beckman made this point, because he is right: Valley residents’ freedom to choose how to live is ignored, but not in the way that Mr. Beckman articulates. The people whose freedoms are being curtailed are those who want to live in walkable communities, not those who want backyards.

Currently, if I want a new home in Stockton, I have to live in sprawl. I don’t have a choice. And I am not alone, as I have written before, there is pent up demand for walkable development that is not being met by current supply. A recent study of survey data by the Council of Infill Builders found that 35 percent of Central Valley residents would prefer to live in some type of attached housing, though the Valley’s housing stock includes just 29 percent of such housing, a large portion of which includes duplexes in areas of high poverty (Here is a good summary of all of these findings). Clearly, the “freedom to choose” does not extend to those of us who would prefer downtown apartments or town homes.

To recap: sprawl doesn’t pay its costs anywhere and smart growth is always the more economically efficient option. The data is clear. There is no arguing these points.

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Categories: Smart Growth

Author:David A. Garcia

David A. Garcia founded SCL in March of 2012. He holds degrees from UCLA as well as Johns Hopkins University and currently works as the Chief Operating Officer at Ten Space in Downtown Stockton, and previously worked as a researcher/analyst for a congressional agency in Washington DC. The views expressed here are solely of the author.

6 Comments on “The Building Industry Association of the Delta doesn’t understand smart growth”

  1. Bill Fuhs
    June 6, 2013 at 10:49 am #

    What did you expect from Mr Spanos. Mr. Beckman, and his BIA front is a wholly owned lobbying group for Alex Spanos—– the sprawl king.

  2. Jon Seisa
    June 6, 2013 at 4:49 pm #

    You unmasked Beckman’s incongruent nonsense very well. Definitely, there needs to be more of a balance having equal residential and living options across the board—-variety is the spice of life, even urbanicity for those desiring an urban cosmopolitan lifestyle having more cultural energy and business opportunities, like the youth desire. Nothing wrong with that. Right now there is a severe imbalance between suburban vs urban development, and the core of Stockton does need desperate attention via the new urbanicity for its rejuvenation and renewal.

    I saw a great video once on how a community of artists and associates in Dallas conducted a prototype “SGA model” of the multiplicity affect of urban SGA/walkability in which they invited key municipal leaders to experience the engaging affair in their effort to change outdated zoning laws that actually helped to degenerate neighborhoods and prevent the dynamics of cultural and business interaction. The participants, all volunteers, got permits to take over an abandoned block section of a depressed district for several days and replicated their goal of a SGA/walkability through sheer ingenuity and creativity with a limited budget and borrowed donated items, fresh paint, props, lighting, etc. It was a VERY successful experiment as a tool to communicate the positive end results of SGA/walkability/infill for urban cores to give new life to neglected city districts that lead to the desired zoning changes. Perhaps something like this might be orchestrated in Stockton to win over the support of key leaders.

    • David Garcia
      June 17, 2013 at 4:15 pm #

      Jon,

      I have seen the same demonstration. Some refer to that as “tactical urbanism,” where people who want changes simply make them themselves by doing things such as using duct tape for bike lanes or hosting “pop up” restaurants or store fronts in blighted areas.

Trackbacks/Pingbacks

  1. Stockton City Limits vs. Beckman - June 7, 2013

    […] blog Stockton City Limits takes strong exception to the counter-argument to smart growth made by building industry spokesman John Beckman in my […]

  2. Beckman Strikes Back - June 12, 2013

    […] to Beckman, but decided to let his response  hold the field for the time being. I commend him, Stockton City Limits and the other sharp cookies who have engaged in this discussion. I can’t help but to wonder […]

  3. SCL responds to the Building Industry Association of the Greater Valley | Stockton City Limits - July 17, 2013

    […] housing costs. Regular readers of SCL will remember Mr. Beckman from my post in early June where I challenged his argument against smart growth. Mr. Beckman countered in a subsequent letter to Fitzgerald, which I decided not to respond to. […]

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