There are a number of broad concepts that small towns can apply right now that will allow them to survive during this difficult economic shift/correction, concept that will set them up to thrive once a new equilibrium has been reached.This post follows up on two prior posts:
- Why do Small Towns Exist?, which delved into a premise offered by Andres Duany at the Congress of the New Urbanism that small towns exist primarily for agricultural production. I explained that many small towns were once viable, but no longer are, and continue to exist today due to large subsidies they have received from state and federal governments.
- Why do Big Cities Exist?, which followed up on a comment from the small town posting questioning why the analysis would not also apply to big cities. I explained that, essence, big cities are centers of innovation and have been able to generate other exports as well as propagate import-replacements (which is why they are big).
If you have not read those posts, I recommend that you do.
In regards to the new equilibrium, while nobody really knows what this will be, there are strong reasons to believe that your local association of realtors and their "will return to normal soon" wishful prognostication may be off base. Some base concepts to understand regarding the new equilibrium, once it arrives:
- It will be one that has to deal with aging infrastructure. We built much of our small-town infrastructure a generation ago, and it is in need of maintenance. While the original investment might have created tax base, maintenance will not. In real dollars, it costs just the same, however, if not more.
- It will be one where we are burdened with high debt. We once paid for infrastructure with cash, then established funds, then through debt. As a nation, we are bordering on insolvency at almost every level (federal, state, local, personal). Our debt will constrain our options in the future.
- It will be one that needs to handle an aging population. Our post-WW II incarnation of the small town (based on the suburban model of sprawling development) does not accommodate the elderly well. Sequestering them in retirement homes is a losing proposition for a small town, where their experience and character are vital to the community. Their financial sensitivity to increasing public investment in schools and parks (due to their fixed-income status) is an obstacle to creating the necessary age diversity.
- It will be one in which the primary dwelling unit available in the small town - the single family detached - is either not broadly desired by the market with money to buy (retirees) and not affordable by the market best suited to it (young families). This will inevitably created a housing value drop and/or persistent stagnation in home values. For those small towns reliant on property taxes and growth fees, this will be devastating.
- It will be one in which small towns have less political clout than at any time in American history. For a further explanation of this, read our post from last week on this subject.
- It will be one that dwells in a global market in a post-American world. Regardless of what you believe of America's prospects for the future, our population is 300 million compared to nearly 2.5 billion Indians and Chinese. These countries do not have the legacy costs we have and are growing rapidly. Just in terms of energy consumption, if the inevitable rise of these powers means $4.00 gasoline for us (which it must, if not more, in a free market), then the current development model of small town America is beyond unaffordable.
Whatever the equilibrium is, it is not going to bring robust growth for most of our small towns. As we have been saying on this blog, we should aspire to stagnation right now as an alternative to decline. Growth is going to come later, once we get our house in order.
So what can small towns do to survive, and even thrive? We have many specific practical strategies, but in a big picture sense, here are some concepts to consider.
- Hibernate. When an animal hibernates, it is not sleeping so much as it is slowing itself down to preserve resources - dramatically lowering the burn rate, in essence. Right now, we would recommend that small towns put nearly every expansion project on hold. Maintenance and rehabilitation is another thing, but it is a rare case that an expansion project of any type would make sense today.
- Prune. Friend of TPB.com Jon Commers presented the analogy of pruning a rose bush to allow it to grow better. Every small town has infrastructure that is underutilized, roads that are overbuilt, areas that can not ever be efficiently served. With government, we assume that the public obligation in these areas is absolute and endless. That assumption needs to be challenged. Planning for the abandonment or conversion of some of these areas is necessary.
- Retool. Step back and consider the things that got your community overextended in the first place. An inappropriate road standard? A policy to extend utilities, regardless of the tax base served? The Small Town Ponzi Scheme? Surburban-style ordinance standards? Subsidies? Questionable professional advice? Bureaucracy? If you want to avoid going right back to where you started, you need to throw away these tools and get new ones.
- Plan. You need a true community-based comprehensive plan. Not an Infrastructure Plan or a 5-Year Capital Improvements Plan or a Transportation Plan or some wish list that includes building a community center in order to create a sense of community. You need an actual plan to strengthen the core of your town, physically connect it to your neighborhoods and surround it by an intensely planned transition zone to your (economically viable) rural areas. Oh yeah, and you need to intimately involve the public because this plan involves rethinking the model, which is difficult (as opposed to pursuing a grant for a new industrial park, which is easy in comparison in addition to being ineffective at solving the actual problem).
- Look Inside. The idea of import-replacement is a strong one, even in a small town. In small towns, people often argue that everyone should buy locally and support the local businesses. While admirable, this doesn't make sense to if the local good is not competitively priced. That being said, understanding why that good is not competitively priced is a first step to fixing it. I have seen towns where all kinds of business could be happening locally, but people just don't know what is available or, more importantly, what is needed (what is imported). Connecting the parts of your economic engine, creating communication and establishing an internal feedback mechanism will identify opportunities for import replacement products and services.
In an overly simplistic example, if everyone in town needs to get their hair cut but there is no barber or beautician and the population is not big enough to support one, perhaps find a person who would cut hair on Mondays only. That trip to the barber in the neighboring town not only brings the cost of haircut to another community but often the person getting the service takes the opportunity of the trip to buy those other needed goods. Keep that business local (import replacement) and the dollars that trail it will have a greater opportunity to stay local.
- Look Outside. What can you export? With eBay, Craigslist and eBay, the costs of entry for exporting is minimal. For a tourist town trying to extend the shoulder season, try online. Is there something generated locally, perhaps an import replacement that has cropped up, that has a market beyond the community? Understand your neighboring towns, especially the regional center. Is there something that is imported there that could be provided locally in your town more efficiently?
- Take Small Steps (No Hail Mary). Is your town searching for that large manufacturing operation? Paying for a 60-second video to promote the community? Bought that billboard on a high-traffic corridor under the guise that: if people only knew about us? Are you building an industrial park, at massive expense, and then offering Tax Increment Financing so as to land that big fish? Giving that out-of-town developer whatever they want without checking into their finances? Understand, there are 40,000 small towns in the United States and all of them are waiting for a sugar daddy to roll in. The longer you wait for yours, the harder it is going to be for you to climb out of the hole once you are forced to. Save your money and fire your grants writer. The Hail Mary is a large reason why you are in the mess you are in today.
All of these strategies could be multiple posts in and of themselves, and perhaps they will be some day - the ideas of "retooling" and "planning" in particular. Building a Strong Town, one that is economically and socally viable, is going to mean throwing out the current development model that has been imported from suburban America and reestablishing the original town model of planning that served us well for hundreds of years (and thousands of years, when you look beyond our country). If we layer today's technology onto this model, we can create towns that are not only economically strong and self-sufficient, but contain all those small-town concepts of community, sense-of-place and character that we idealize.