Smarth Growth Has Fiscal and Competitive Advantages

Fiscal issues are popping up right and left in my strategic planning work for economic development. For those of you looking for ways to cope with the hard-nosed fiscal and competitive realities facing communities, you may find this Brookings Institute article on smart growth policy impacts to be of interest. Here is a summary.

With the collapse of the 1990s stock market bubble and several years of national economic slowdown, a tense new climate of austerity has sharpened debates over government spending, economic development, and the physical growth of states and metropolitan areas.

Leaders in this environment are eager for fiscally prudent ways to simultaneously support their communities and stimulate their economies.

This paper makes the case that more compact development patterns and investing in projects to improve urban cores would save taxpayers' money and improve regions' overall economic performance. To that end, it relies on a review of the best academic empirical literature to weigh the extent to which a new way of thinking about growth and development can benefit governments, businesses, and regions during these fiscally stressed times.

Overall, the review finds that:

The cost of providing public infrastructure and delivering services can be reduced through thoughtful design and planning. Several studies suggest that rational use of more compact development patterns from 2000 to 2025 promise the following sorts of savings for governments nationwide: 11 percent, or $110 billion, from 25-year road-building costs; 6 percent, or $12.6 billion, from 25-year water and sewer costs; and roughly 3 percent, or $4 billion, for annual operations and service delivery. School-construction savings are somewhat less.

Regional economic performance is enhanced when areas are developed with community benefits and the promotion of vital urban centers in mind. Studies show that productivity and overall economic performance may be improved to the extent compact, mixed-use development fosters dense labor markets, vibrant urban centers, efficient transportation systems, and a high "quality-of-place." Productivity increases with county employment density. Communities that practice growth management realize improved personal income shares over time.

Suburbs also benefit from investment in healthy urban cores. Finally, studies suggest that to the extent these smarter development patterns foster equity in regions by improving center-city incomes and vitality, they will also enhance the economic well-being of the suburbs as well as the city. City income growth has been shown to increase suburban income, house prices, and population. Reduced city poverty rates have also been associated with metropolitan income growth.

In the end, this paper makes the case that during times of tight budgets, more efficient and beneficial growth strategies make more sense than ever.

As these strategies become more widespread, the challenge for the research community will be to move beyond the obvious fiscal savings and continue to quantify the profound effects on economic competitiveness, equity, and quality of life available through better planning and community design. In the end, these issues are at the crux of what better development is really all about.

Download brief here.