**The audio from the NextGen presentation is now available for download on the Strong Towns Podcast.**

This post is a summary of my talk at the CNU's Next Generation of New Urbanists. We should have an audio feed on our podcast by the end of the day on Thursday. Thank you to everyone following along here, both from the conference and abroad (including New Zealand....very cool).

1. Introducing Strong Towns

The mission of Strong Towns is to support a model for growth that allows America's towns to become financially strong and self-sufficient. We have found that the terrible state of budgeting and finance in our cities today is directly related to the incorrect assumptions and dead ideas of our current development pattern.

This pattern - auto-centric at its core - is incredibly expensive to build and even more so to maintain. In purely financial terms, the "prosperity" generated does offset the cost.

More information about Strong Towns and the Strong Towns movement:

We publish the Strong Towns Blog three days a week (typically Monday, Wednesday and a News Digest on Fridays) and deliver a podcast on Thursdays. Strong Towns is quite active on Facebook and Twitter, so follow us there if you use those formats. I am also on Facebook and Twitter, and Jon Commers is a tweeting machine (all good content).

The Strong Towns movement is something the three of us are quite passionate about. We formed Strong Towns, the non-profit organization, last November. We've yet to get our 501(c)3 confirmation (paperwork in, but we were informed it could take six to nine months to process), so understand that everything we do is done without a budget and in our spare time. Ben and I work full time for Community Growth Institute, a planning organization focused on growing Strong Towns in rural America, and Jon is with Donjek, which focuses on the finance of placemaking.

2. Public Opinion, the Pocketbook and New Urbanism

You don't have to be from Greece, Las Vegas or California to know that the state of public finance is dismal. We have budget crisis after budget crisis seemingly everywhere we look. And while it is easy to point to the Great Recession as the cause, it is simply the effect. Structurally, we've grown our way out of prosperity.

For New Urbanism to have a prominent place in the next era of growth - and we believe strongly that it needs that prominent place - it would do well to start communicating how the New Urbanist model is both less costly to build and maintain and creates greater property appreciation over time (true prosperity) than our current pattern of development.

The CNU website currently lists the benefits of New Urbanism as the following (ones relating to finance shown in italics):

  1. Higher quality of life
  2. Better places to live, work, & play
  3. Higher, more stable property values
  4. Less traffic congestion & less driving
  5. Healthier lifestyle with more walking, and less stress
  6. Close proximity to main street retail & services
  7. Close proximity to bike trails, parks, and nature
  8. Pedestrian friendly communities offer more opportunities to get to know others in the neighborhood and town, resulting in meaningful relationships with more people, and a friendlier town
  9. More freedom and independence to children, elderly, and the poor in being able to get to jobs, recreation, and services without the need for a car or someone to drive them
  10. Great savings to residents and school boards in reduced busing costs from children being able to walk or bicycle to neighborhood schools
  11. More diversity and smaller, unique shops and services with local owners who are involved in community
  12. Big savings by driving less, and owning less cars
  13. Less ugly, congested sprawl to deal with daily
  14. Better sense of place and community identity with more unique architecture
  15. More open space to enjoy that will remain open space
  16. More efficient use of tax money with less spent on spread out utilities and roads

This is a great list, but if we want to communicate to a broad population about a seismic shift in our development pattern, we face an uphill battle if we start with quality of life.

A poll by the Gallup organization indicated that Americans believe economic issues to be the most pressing issues we face right now.

I highlight the term "right now" to separate if from the other findings of the same poll, where Americans indicate that twenty five years from now the problems will be different. In the future, issues like the environment and energy start to appear.

We don't interpret this to mean that the environment and energy are not important issues. Clearly, New Urbanists and others have won the argument on that account. People know and understand that our decisions today are a series of tradeoffs that will have long term consequences. But just like the smoker who knows they are likely to someday get cancer, the immediate concerns are always more pressing.

If we can focus the New Urbanist message on the finance of growth, it will be a gateway to a broader, more immediate, discussion. Consider an approach that helps cities close their budget gaps by building neighborhoods that are more affordable, appreciate property values more rapidly and provide an overall higher return on the public investment. Very popular. Oh yeah....and did I mention that it also provides a higher quality of life, is healthier, less environmentally destructive, more energy efficient....

You get the picture. It's all good. It is just tough to talk about quality of live investments when the budget needs to be cut by 25%. 

3. Mechanisms of Growth

To start this conversation, we need to help people understand how their towns have grown and, in doing so, why those methods can't continue. At Strong Towns, we have identified four mechanisms of growth. They are: 

  1. Transfer payments between governments
  2. Demand-driven transportation spending
  3. Debt, both public and private
  4. The Growth Ponzi Scheme

All of these mechanisms share a common feature that has made them attractive: they provide a near-term gain in exchange for greater, long-term liabilities.

The United States is nearly done with these mechanisms of growth. With transfer payments between governments, it is hard to see how we continue to fund local projects, especially maintenance, through federal funding. It is not a partisan observation to state that we are broke (by the way, Strong Towns is a non-partisan organization). The following graph shows our current budget deficit, which is of monumental proportions. 

It is not a very sound strategy for a modern town to rely on state and federal monies for basic maintenance of infrastructure or expansion of existing systems. Yet, amazingly, most do. It is hard to see, given all of the constraints on our finances at the state and federal levels, that significant money starts flowing to cities any time soon.

The same goes for those great transportation projects we have long built - the highway expansions, the new interchanges, the signals, the bridges.... These projects have spurned growth in the form of new residential subdivisions and commercial investment at key intersections. The highway trust fund - the source of revenue for nearly all these transportation projects - is overextended. Infusions from the general fund - more borrowed money - have been necessary to keep it solvent. Insolvency is projected to continue.

In my home state of Minnesota, the DOT released a report indicating it had $65 billion in needed improvements over the next two decades but only $10 billion in revenue. This is not a revenue problem but a sign that we have built a system too large to maintain on the limited "prosperity" it has produced. Cities waiting for that big transportation enhancement to kick start their growth may be waiting a long, long time.

(Note: From a revenue standpoint, we calculated that it would take $1.00 per gallon of additional state gas tax to make up the difference, assuming nobody reduced their driving as a result. Obviously, that is not going to happen any time soon.)

As for increasing debt, there is not much more that needs to be said about it. It is clear that, whether it is the federal government or individuals with their home mortgages, we are dramatically overleveraged. The extension of further credit, especially when interest rates go back up to more normal levels, is going to be increasingly difficult. Towns can not reasonably count on large amounts of people being able to borrow money to fuel local growth through development.

4. The Growth Ponzi Scheme

In America we are quite familiar with the Ponzi scheme, both the illegal and the officially sanctioned kind.

The Growth Ponzi Scheme is simple. When a city or town is planning for its future and anticipating the need for more revenue, what is always the plan? More growth. The idea is that new revenue from the additional growth will make up for the revenue deficiency in the rest of the system.

Ah....yes....

The assumption that is never questioned is why there is a revenue deficiency in the first place. If the current development pattern is not producing a surplus of revenue, why is doing more of that same development pattern going to produce a surplus? 

The reality is that it will not. One of the things we do on the Strong Towns Blog is to financially analyze projects - not in the way that government officials and engineers do - but in terms of the community, the tax base and the public return on investment. Time and time again, it does not matter if it is a big project or a small one, the numbers do not add up.

  • Routine road maintenance (Afton, MN) - 79 year payback time
  • Bridge over St. Croix River (Stillwater, MN) - $41,750/car trip
  • Routine sewer maintenance (Backus, MN) - $26,800/household
  • Routine road maintenance (East Gull Lake, MN) - 74 year payback time
  • 1-mile road expansion project (Brainerd, MN) - $21,600/family of four
  • Harbor dredging and town expansion (Tower, MN)Routine sewer maintenance (Tower, MN)Sewer system expansion (Tower, MN) - $45,000/household
  • Industrial park expansion (Walker, MN), Necessary private sector investment to reach a break even point - 25 industrial lots at $500,000 each. Existing private sector investment - 2 industrial lots at less than $250,000 each

So, why do communities do these projects? Because the short-term enhancement in revenue allows an exchange of near-term gain for long-term liability. A classic Ponzi scheme. And it works so long as the town can continue to grow at ever accelerating rates. Unfortunately, like all Ponzi schemes, once the growth stops the entire system collapses pretty quickly.

In Minnesota we had a major bridge collapse during rush hour. People died. Those of you from Boston that have had to boil your water recently understand what havoc failing infrastructure can create. We have to maintain this stuff, but how do we do it when it costs us more to do than it creates in surplus wealth?

5. Solution is a Higher ROI (Higher Density)

When we talk to communities and get them thinking about how they are going to pay to maintain their infrastructure if a) they are not going to get free money from the federal and state governments, b) nobody is going to come along and make a huge investment that will induce all kinds of new growth, c) they really can't borrow all that much more money and d) they really should not anticipate a lot of new growth, we typically get the same response....

We have no idea.

The Strong Towns answer is that we have to get more out of our current investments. We can't have that mile of road with two houses, that block of pipe with just one connection, that treatment facility running at half capacity. No business could operate with so much waste. Neither can our towns.

6. Resistance to Density

Then it starts to sink in....this guy is talking about higher density. That is when the resistance starts, along with the insults and name-calling. And we really can't blame people for this reaction.

Our pattern of development today is largely based on the concept of buffers. The more affluent you are, or the more you are willing to drive, the larger buffer you can have. And with the harsh nature of the public realm, you definitely want a buffer.

When we talk about increasing density, people naturally imagine taking the existing development pattern and simply squishing it down. People in rural areas envision something like this:

The suburban-dweller will envision something like this:

And those living in urban areas envision our great urban density failures:

Since the dawn of the automobile era, planners have schemed up ways to add density and, for the most part, they have been abysmal failures. 

7. New Urbanism

This is where New Urbanism comes to the rescue. Yes, a Strong Towns approach demands that we be more efficient. And yes, that is going to mean higher density. But no, it does not mean that we have to live in terrible places.

Remember, New Urbanism costs less to build and creates greater appreciation in property values, but it also creates great places to live, provides a higher quality of life, is a healthier lifestyle, etc, etc, etc....

New Urbanists: Now you have them. Make your pitch.

8. One example: The Local Street

For example, apply this approach to a street project. This picture shows a street in one of the communities we have worked with.

We all agree that this is horrible urbanism, but analyze it from a Strong Towns perspective. This is a low-volume, neighborhood street, yet it is wide enough for four lanes of traffic traveling in opposite directions at highway speeds, along with parallel parking on each side. That is just a wasteful overdesign of a street that measures its daily traffic in the hundreds. There is at least 30 feet of extra pavement here.

Add to that this fact: this highway design completely destroys any sense-of-place for this neighborhood. Who wants to live on a highway? The reality is that nobody does, which is why the investments along this street have declined and the property values have stagnated.

Contrast this now with a properly-scaled neighborhood street.

Here you have half the pavement. That is an immense amount of savings that more than makes up for the added cost of the sidewalk. This street is cheaper to build and costs less to maintain than the other. But that is just the immediate benefit.

This street is also properly-scaled to the neighborhood. Not only does it tame the automobile in a way that allows for safe, comfortable pedestrian activity, but it allows the homes to move closer to the street and properly frame the public realm. There is a great sense-of-place here created by the scale.

This street is cheaper to build and maintain while at the same time it attracts more investment, allows for higher density (thrives on it, in fact) and results in higher rates of property appreciation. That is a Strong Towns approach.

9. Conclusion

For more Strong Towns content, be sure and check out our website at www.strongtowns.org

We appreciate the opportunity to speak to our fellow NextGen participants here at CNU. Please do what you can to build Strong Towns.