Tuesday, December 12, 2006

What do Impact Fees Do?

As the LJW editor (12/12/2006) indicates, impact fees are, indeed, an issue for all residents of Lawrence.

Who pays for the costs of new infrastructure?

Developers pass impact fees along into higher house prices because buyers of homes in new subdivisions cannot hop across the city limit into a competing town, as is true in a larger metropolitan context. However, homebuyers do have alternatives; they can buy homes in existing neighborhoods. In the absence of impact fees, the costs of development are passed along to all residents of the city, including those far from the new infrastructure.

Contrary to the claim in the editorial, impact fees do not inflate the real estate market. Only in the most extreme cases—where the most severe shortages exist—would the substitute existing homes experience a price increase. For Lawrence, prices in the existing market will be unaffected by the impact fees.

Should we continue to favor sprawl or wise reuse?

As the editorial stated, “Providing and maintaining the city’s infrastructure is a communitywide responsibility” but that does not say who should pay for it. At issue is the share paid by the new homebuyer and the share paid by the residents who live elsewhere in the City.

The developers have built new subdivisions faster than the city’s population needs them. This sprawl adds to the tax burden of all taxpayers as we have been paying for the new infrastructure. This sprawl also accelerates the decline of older neighborhoods as homebuyers are siphoned away from older neighborhoods. We must pay for their redevelopment. It is not unreasonable, at a time of overbuilt housing and declining older neighborhoods, to ask the buyers of the homes in the new, sprawling subdivisions to pay a greater share of the costs of that sprawl. This may cause some homebuyers to opt for an existing home in an older neighborhood, bringing much needed investment to these areas. This will also free scarce City resources to address the pressing needs for the City’s older infrastructure. This is what impact fees do.

Saturday, December 02, 2006

What is a sure formula for a "Lesser Lawrence"?

The Lawrence Journal World criticizes those who are concerned with excessive growth by stating, "Unfortunately, there are some in Lawrence who belong to the "Lesser Lawrence" fraternity when, in fact, the city needs dreamers, entrepreneurs and residents with the vision and enthusiasm to build Lawrence into an even finer and stronger city."

What is a "finer and stronger city"?

Many visions of the future of Lawrence exist, but it is doubtful that any of these visions included deteriorating older neighborhoods, blighted shopping strips, and a decaying downtown. It is equally likely that all of the visions seek strong older neighborhoods, vibrant shopping strips, and a downtown that attracts shoppers not only from Lawrence but from beyond. A "finer and stronger city" means development that serves to maintain and enhance our older neighborhoods, ensures the economic feasibility of our existing shopping centers, and preserves and improves our downtown.

Unfortunately, not all development leads Lawrence to a finer and stronger city. Some development leads to a weaker city that is more vulnerable to blight and decay. The city's leadership needs to know the difference.

How do we know good development from bad development?

The city needs to seek balance between the growth in demand for real estate, new as well as old, and the growth in the supply of new real estate.

The growth in demand for real estate is a function of the growth in the city's population and the growth in that population's income. If Lawrence remains an attractive city with good homes in viable neighborhoods, with good schools, and with good jobs with competitive wages, it will attract new residents. If Lawrence allows its older neighborhoods to deteriorate, its shopping centers to fall empty, its downtown to decay, and its base of jobs to pay sub-par wages, it will not attract new residents. This growth in demand can only be influenced by the city's actions; it cannot be controlled.

The growth in supply is under the city's control. Too many people, including the editors of the Journal World, equate all growth in supply with progress. History shows that this approach to development leads to overbuilt cities. When cities build more supply than their growth in demand can absorb, bad things result. We need only to look at nearby Topeka to confirm this. The new neighborhoods prosper, but older ones decline because there is insufficient demand to attract investment. The new retail centers succeed, but the older ones decay because there is insufficient demand to fill their stores. Older downtowns deteriorate because the shopping moves to the centers at the perimeter of the cities.

Overbuilding our supply of housing and retail space is the path that Lawrence has taken for too long. This is a sure formula that will lead to a "lesser Lawrence."

It is the job of the city's leadership to gauge the growth in demand and to find a way to match the growth in supply with the growth in demand. This will help preserve older neighborhoods by directing sufficient investment into these older areas to keep them viable. This will help to maintain older shopping strips by keeping them occupied with retail vendors who will attract sufficient business to remain economically feasible. This will help to protect the downtown as the unique place that identifies and defines Lawrence and that attracts visitors from outside the city. This will lead to a much greater Lawrence.