The Road Ahead for Cobb County
On December 11th, 2008, two federal agents entered a New York apartment and arrested Bernie Madoff, the mastermind of the largest investment fraud in history. Through a hedge fund he ran as a Ponzi scheme, Madoff had defrauded investors of nearly $65 billion. We're all well acquainted, too, with other stories of catastrophic business collapse amid fraud and mismanagement. Enron. Theranos.
At Strong Towns, we have referred to the dominant model of suburban growth since the mid-20th century as effectively a Ponzi scheme. But this does not imply a tight-knit conspiracy. There's no ringleader to handcuff and drag away. Rather, the Growth Ponzi Scheme is an interlocking system of perverse incentives, institutions, and assumptions that have set many seemingly successful places on the road to fiscal ruin.
Unlike when a business collapses, when a deeply unsustainable place starts to fail, it looks very different. The earth doesn't open up and roads collapse into its yawning chasm. A plague of locusts doesn't swarm o'er the land. People still need to live there, need to travel on the streets, need to go to their jobs and drop their children off at school. So life goes on, pretty close to normal in many ways. Very comfortably, perhaps, for people with enough personal resources.
The story of Cobb County, Georgia, which we've been covering all week, is the story of a soft default by an outwardly affluent and successful place. Not only has Cobb County not literally defaulted on its debt (yet), it maintains a AAA bond rating, and boasts of it in the County's annual budget document. But Cobb County is in more trouble than it admits.
The signs of soft default look like a gradually growing dysfunction, which hits residents of the least means the hardest. It means closing libraries and parks. It means abysmal public transportation, and life-threatening conditions for people trying to get around on foot. It means cities that react to some of the fastest-growing suburban poverty rates in the U.S. by treating poverty as a cancer to be removed from the community, instead of investing in strategies to actually help people climb into the middle class.
A soft default, coupled with a hearty portion of denial, looks like doubling down on hail-Mary attempts to attract growth and investment. $400 million in public financing for a new baseball stadium, despite considerable evidence that such "investments" never pay off for the public? Despite that the best it will do is likely shift some economic activity around from other parts of the county or the Atlanta metro area? Cobb County is all in.
If this were simply a story about crony capitalism—if it were only about the shockingly undemocratic stadium deal—that would be one thing. The way you'd fix it would be to put better people in office with better priorities.
If this were simply a story about a government uninterested in its own residents' needs, then again, the solution would be one sentence: vote the bastards out.
This isn't that story, though. The stadium deal is egregious, and the cutbacks to public services are painful, but these things are symptoms of Cobb County's entire growth model. The problem goes deeper.
Chuck Marohn expertly dissected the budgetary sleight-of-hand that Cobb County uses to cover up much of its on-paper debt. That article spent less time on the debt that's not on paper: the unfunded mandates the County accrues every time it builds a new road, water or sewer pipe, or pump station.
Private corporations are required by law to do accrual accounting: that is, future obligations to maintain or replace something are recorded as long-term fiscal liabilities from the day they are incurred. Local governments virtually never do this. By building a road, we make our citizens a promise that when that road starts to crumble, we will repair or replace it. But that promise is not on any balance sheet. No funds are set aside for the repair, at least not until it makes its way into a 5-year Capital Improvement Plan.
As a nearly universal rule, our local governments don't know what the cost will be of replacing all the stuff they've built. No one does that math.
Well, almost no one. We've actually done some good estimates over the years. Strong Towns and our friends at the Geoanalytics firm Urban3 did a deep dive into the finances of Lafayette, Louisiana. We found that just to break even—to maintain existing infrastructure without building anything new—the median Lafayette household's property taxes would have to increase by anywhere from 220% to 533% —or $3,330 to $8,000 per year.
Data from Lafayette, typical of most postwar American development, show a dramatic explosion in the amount of infrastructure per capita. (Source: Urban3)
One representative data point illustrates the crux of the problem. In 1950, Lafayette had 5 feet of water pipe per resident. Today, with a per capita income only 1.6 times higher, it has 50 feet. Ten times as much infrastructure.
In Cobb County, based on water system statistics and Census population estimates, that number is 38 feet per person. Not too far off from 50. How much do you think Cobb County taxes would have to rise to break even on long-term maintenance of the roads, bridges, pipes, and all the other infrastructure that makes the place run?
Cobb County's development pattern of the past few decades has no future. The County won't ever be able to pay to maintain all of its infrastructure. No budgetary gimmicks can make the necessary private wealth—that is, tax base—materialize out of nothing.
Cobb County is deep in the Growth Ponzi Scheme, and its pathological behavior—close parks and libraries while handing out incentives for pro sports—is like that of a desperate pyramid scheme participant who realizes the jig is almost up, and doesn't want to be the sucker left all the way at the bottom of the pyramid.
This isn't about culture or lifestyle.
A lot of Cobb County residents, and a lot of Americans, would recoil at the assertion that Cobb County’s current development model has no future. They would likely see us as fighting a culture war. "What do you have against the suburbs?" is a refrain I've heard dozens of times. “I live here because I chose this lifestyle.” “Americans prefer yards and big lots because they make for a better place to raise kids.” "Why are you trying to socially engineer a different way of life?" “What do you have against me and my choices?”
Traditional development: small-scale buildings, mixed-use, oriented toward people on foot rather than in cars. (Source: Gracen Johnson)
But this isn’t a culture war at all. It’s about your ability to keep affording to live in a place you like, in a way you like living, at the end of the day.
If you live in a place like Cobb County, you probably have a lot of good reasons for choosing to reside there. But the bad news for you is that the place you live in is a ticking time bomb of debt and unfunded liabilities. And that's eventually going to be painful for you.
The good news, though, is that humankind has a better model. We know what it looks like. It’s the traditional development pattern, and it delivers fiscal productivity, resilience, local character, and a high quality of life. It's been tried and tested over many centuries.
But very little of Cobb County has been developed according to this pattern, and there's no turning back that clock. What's been built has been built. Where people live now, people will (mostly) continue to live. So given that we are far, far down this path, what would it look like, starting now, for Cobb County to do the right thing by its residents?
The first step is admitting you have a problem.
It's scary, but what if Cobb County released, as Chuck suggested, a single number showing its total debt? Then what if it went a step further, and adopted accrual accounting?
Come clean, no matter how painful the initial revelation. "Here's all the infrastructure we've built. Here's what we expect it to cost to maintain over the next few decades. Here's the revenue we expect to have." (Spoiler alert: That revenue almost certainly won't be nearly enough.)
Once they've done the math and faced up to hard truths, then what? Cobb County's fiscal black hole is not a problem that is solvable. It's a predicament. Its outcomes can be, at best, managed through rational responses.
Here are five such responses, from a Strong Towns perspective:
1. If you’re in a hole, stop digging!
Let's be direct about why Cobb County's liabilities so far exceed its ability to pay for them with the revenue coming in.
It's because so much of Cobb County looks like these images:
Architect and longtime Strong Towns supporter Steve Mouzon made some waves a few years ago with this side-by-side size comparison of a Cobb County freeway interchange (not so incidentally, right next to the Atlanta Braves stadium) with the entire Medieval core of Florence, Italy. The juxtaposition makes evident the real opportunity cost of expansive (and expensive) automobile infrastructure, and of the auto-oriented development pattern it serves.
Two "stop digging" policies should be put in place as soon as possible.
First: No New Roads. Focus on maintaining the infrastructure that already exists. And use land-use policy to channel new development to infill areas, where it can take advantage of infrastructure that already exists and is not being employed to full capacity.
Second: Adopt a clear set of policies that commit the county to measuring the fiscal impact of new development. Will it bring in more revenue than it costs to service? Great; fire up the bulldozers. Will it be a money-loser for the public? Be deeply skeptical.
The small suburban city of Fate, Texas, has brilliantly devised and implemented a system to ask exactly these questions as part of its development approval process. We should all be learning from Fate.
2. Make Cobb County a real place.
The data wizards at Urban3 have demonstrated that in city after city, a hugely disproportionate amount of the privately-created property value exists in traditional, pre-automobile downtown areas. Mixed-use, fine-grained development aligned to a walkable street network far outperforms every other development pattern—car-oriented subdivisions, suburban big-box stores, shopping malls—in producing real wealth. The traditional development pattern results in mighty economic engines.
A large part of it is that these places are places. They have an identity, a character, a gravitational pull. As a result, they have a critical mass of productive human activity—people interacting with and getting things done with other people.
Much of Cobb County, on the other hand, feels like nowhere. It has no center of gravity. It has no thriving urban core to serve as a tax-revenue cash cow.
A small enclave of productive, human-scale development in downtown Marietta. (Source: Wikimedia Commons)
Cobb County is suburban, yes, but it does have a historic core in downtown Marietta. Unfortunately, that core is walled off by busy stroads, preventing it from growing its population and physical footprint and expanding as a center of productive economic activity the way it should.
Cobb County lacks complete neighborhoods, where people can live much of their lives close to home. Instead, it is largely the land of the congested freeway commute. It is long past its bedroom-community days: more people actually work in Cobb County than live in it. But according to the Census Bureau's OnTheMap tool for analyzing commuter flow data, about 63% of those workers live in another county. And about 60% of employed Cobb County residents work in another county.
That's about 228,000 people commuting into Cobb County every weekday. And 202,000 commuting out. Maintaining all that pavement to shuttle all those people around the Atlanta metropolitan area is the heavy cost of designing a place around high-speed roads and strictly separated land uses.
And not only does it mean that people's daily destinations are far from each other (the Atlanta metropolitan area has one of the longest average commute times in the nation); it also means that residents are less likely to identify strongly with Marietta or Cobb County than with Atlanta and the metro as a whole. This has implications for the place's future prospects. When libraries and parks are closing, and poverty has doubled, the writing is already on the wall. Those who can afford to live somewhere more up-and-coming will likely, increasingly, do so. The result is a vicious cycle of declining revenues and growing expenses. We know how this story goes.
3. Know when to get out of the way.
Too often, places in the decline phase of the suburban experiment fall into a trap: panicked over the symptoms of decline, they try to lock in the past, instead of looking to the future. They try to eradicate the symptoms instead of grappling with the causes.
Marietta's response to rising poverty was to imitate the absolute worst of 1950s urban renewal practices, condemning and demolishing 1,300 affordable homes in order to replace them with a practice facility for a soccer team. None of that, of course, made Marietta back into the high-end destination suburb it may have been back when these same 1,300 homes were new and shiny and marketed to upwardly mobile professionals in the 1960s.
Such reactions are profoundly counterproductive. Having lower-income residents is not the problem for Marietta's, or Cobb County's finances. In fact, our research shows that poorer neighborhoods are often more productive for their city or region's tax base than wealthy ones. Cobb County's financial problems stem from a dispersed, car-dependent development pattern, not from the existence of aging, inexpensive apartments.
Cobb County would actually be well served to do an assessment of where local government regulations or practices are the problem. That is, what laws are in place that would prevent individual citizens from doing things that would increase the tax base, revitalize neighborhoods, and bring in new business activity or vitality?
The next step is to stop putting up those barriers.
Some of the rational ways local residents might adapt to tight economic circumstances—to use their own resources more, well, resourcefully—are prohibited in many suburban communities. Here's a list of questions Cobb County staff and officials might start by asking:
- If you want to build a backyard accessory dwelling unit in Cobb County, where can you?
- If you want to convert a single-family home into a duplex in Cobb County, where can you?
- If you want to start a small business in Cobb County, how easy is it?
- If you want to do it on a shoestring budget—for example, as a food truck—where can you?
- If you want to start a community garden, or plant vegetables in your own yard, where can you?
- If you're a small-scale developer, and you want to save money by providing only as much parking as you actually need—even if that amount is zero—are you free to do that?
I don't know the answers. And this list is not a be-all, end-all. It's a starting point toward a place that is less prescriptive and more adaptable in how land and infrastructure are used.
4. Prioritize helping people, not places.
Suburban areas designed around driving, where even crossing the street can become a death-defying act, are particularly difficult places to be poor. Can we allow fiscally unsustainable places to fail without imposing hardship on the people who live in them? (Image source: Transportation for America via Flickr. Creative Commons license.)
If you can’t maintain every mile of road and foot of pipe in your county, then it’s not all going to be maintained. Period. There's going to come a point where we do triage. A street that serves 200 people on a single urban block might be repaved, for example, while one that serves 20 in a remote subdivision is left to revert to gravel.
One of the greatest challenges of our generation will be preventing the residents of unsustainable suburban places from experiencing what the residents of urban cores went through in the brutal depopulation of inner cities in the late twentieth-century.
How do we not leave people behind in places that will almost inevitably be left behind? There are no easy answers, but Cobb County needs to be having this conversation. Yesterday.
5. Promote the tough conversations.
If Cobb County went out tomorrow and tried to make the policy changes that would set it on the path to being fiscally strong, there would be massive political pushback.
Many suburban residents are deeply concerned about their own property values, narrowly, and the quality of life they feel they bought into in their neighborhoods, more broadly.
Many will react with anger at the suggestion, "The place you live needs to change. The status quo is unsustainable." They will say, "I made my home in this neighborhood because I liked it exactly how it was. It's government's job to make sure the neighborhood stays exactly how we like it—oh, yeah, and keep those roads paved and those streetlights on."
Local leaders who understand the dire straits facing Cobb County—and hundreds of suburban communities like it across the country—must be the adults in the room. They must not only be receptive to tough conversations, but be the ones to start initiating them.
There's a way to do this with compassion. You don't say, "Things have got to change" because you hate the place you live and you think it’s a disaster. You do it because you love the place you live.
If you love the place you live, and yet you've grappled with the information we and others have presented about its likely future, then you have no other option.
Daniel Herriges has been a regular contributor to Strong Towns since 2015 and is also a founding member of the organization. His work at Strong Towns focuses on housing issues, small-scale and incremental development, urban design, and lowering the barriers to entry for people to participate in creating resilient and prosperous neighborhoods. Daniel has a Masters in Urban and Regional Planning from the University of Minnesota, with a concentration in Housing and Community Development.
Daniel’s work with Strong Towns reflects a lifelong fascination with cities and how they work. When he’s not perusing maps (for work or pleasure), he can be found exploring out-of-the-way neighborhoods on foot or bicycle. Daniel has lived in Northern California and Southwest Florida, and he now resides back in his hometown of St. Paul, Minnesota, along with his wife and two children.