The Galesburg Papers, Part 1: The Diagnosis
This is part one of a two-part essay by Strong Towns member Joe Hicks about his hometown of Galesburg, Illinois. Read part two here. All images for this piece were provided by the author, unless otherwise noted.
Lately at Galesburg city council meetings there have been more people than normal. Lots of longtime citizens are trying to save our public indoor pool from closing and spearhead a renovation of an old middle school into an activity complex for our youth. The people are passionate and the city council is sympathetic to the virtues of the projects. But it all comes down to the central issue: money.
The situation isn’t looking great. Before even starting those two projects, our General and Parks funds have an estimated $5 million deficit over the next five years. So unless we’re willing to take on debt to do these projects, it’s not looking promising.
And why isn’t there money for these? New bridges and football stadiums have gotten built, but we can’t save the pool we already have? While the reason the big projects get built is outside grant money, the question still stands.
Some will say the government is too bloated, corrupt, and inefficient, squandering our money. Others will say we need to stop being greedy and just pay higher taxes to pay for the things we need and want.
I say it’s neither of those.
Galesburg Has Changed in Many Ways
Galesburg, Illinois, is somewhat old for an American city. Founded in 1837, we’ve experienced many ups and downs over the years. But since the 1960s, we’ve been in population decline and have had trouble changing course.
People feel it around town; buildings falling apart, poor road conditions, lead water pipes, a less vibrant downtown, and a general feeling of "why bother?" I don’t feel that, but when we have trouble even keeping the historic public pool open, I can sympathize.
Times weren’t always like this—check out this video of Main Street in 1912. It was a totally different place. The street was bustling, the town was thriving! Now Main Street is mostly a road to get through town that has some old buildings along it. I know it’s a lot more than that, but it’s definitely not like that old video.
Things are different now mainly because we've developed our city to be different. Like most American cities after WWII, Galesburg changed to accommodate increasing car ownership in a way that was unsustainable. We built houses with big yards, box stores, and a mall on the edge of town which required new infrastructure to service and also put downtown out of business. Every city did this, but what makes Galesburg different? Why are we short on money?
The Math as It Currently Stands
The Cost of Our Infrastructure
The common way we look at cities’ financial health is through their budgets: revenues and expenses. But that doesn’t provide a full snapshot of how our city is doing. Let’s take, for instance, our roads and infrastructure. Even if our town has a surplus of funds coming in, a fair number of our roads and sidewalks are in very bad shape. Clearly the amount of funding needed for road maintenance is not what’s getting spent, so how much would it cost us every year to fully fund our infrastructure maintenance?
In our 2022 capital improvement plan, there is a project slated to reconstruct a portion of McClure Street from Monmouth Blvd to Coulter. This is the total project area here:
(Source: Galesburg GIS Division.)
This section of road is approximately 584 feet long and is going to cost around $350,000 to reconstruct. That’s about $600 per foot to reconstruct this section of street.
McClure isn’t our biggest road, and it’s also not our smallest road. It’s about average for most of the roads in the area. For the sake of giving us a jumping off point, I’m going to assume McClure represents the average street in Galesburg.
So it’s been about 30 years since we’ve rebuilt this stretch of road, which is the regular lifespan of a road. If we had a savings account where we saved up the $600 needed for maintenance for each foot for 30 years, we would have needed to put away $20 per foot of road per year to have enough to pay for this project.
Let me say that again: $20 per foot of road per year, just to fully maintain a street. I’m going to use this number to estimate the cost of maintaining all of our roads. I will also say this number is EXTREMELY generalized, so while it may not be exact, it provides us with a starting point.
Now let's take that number and apply it to the whole city. The city has 177 miles of roads that it maintains, more than enough road to go from here to Naperville.
(Source: Google Maps.)
If we convert 177 miles into feet, it’s 934,560 feet of road. At $20 per foot per year, we would need to spend on average $18,691, 200 a year on road maintenance just to keep all of our roads fully maintained.
We are not anywhere close to spending that kind of money on our roads. According to the capital improvement plan from earlier, we are planning to spend an average of $3,220,000 per year. Even if road maintenance only cost a quarter of my rough estimate, we’d still need over a million more than what we are spending. But this isn’t just an issue of budget priorities, this is an issue of the government’s income.
Our City Government's Income Problem
So what would we need in order to pay for all of our road maintenance? The biggest source of tax revenue for the city is property taxes. Here’s a look at the property taxes on my house, as an example.
We see that the school district gets about half of all property taxes, the City gets an eighth, the county gets an eighth, and the rest goes to other entities. Out of all of those eight entities, the City of Galesburg is the only one that funds the road maintenance in Galesburg. The city has other forms of revenues, but property taxes are the most stable as long as buildings are in decent shape.
At current rates, it takes approximately $197 of actual value to produce $1 in property tax revenue for the city. So if we take 18,691,200 x $197 we find that our town would need an actual value of $3,682,166,400 to fully fund full road maintenance. Yes, that is $3.6 Billion. For the year 2020 the whole town had a total property value of $1.29 Billion. Or in other words, we only have about 35% of the actual value that we need in order to fully fund the maintenance of our roads, not even accounting for everything else the city does like police and parks.
With the community already paying nearly as many property taxes as they are able to, what do we do?
Galesburg Real-Estate Development, Inc.
Galesburg is a city, by that fact we are an incorporated area. Our town is essentially a corporation where the citizens are the investors and stakeholders in the business that is Galesburg, Inc. We are a real-estate development company that also provides services. Not only that, we’re a real-estate company with holdings totalling $1.29 billion—not too shabby for a town that has been through what we have. But that $1.29 billion is not invested in a way that’s going to lead to financial success. There are plenty of towns our size (especially if you look outside the U.S.) that are financially solvent, whereas we struggle.
This isn’t a story about greedy union pensions or how the factories left, this is a story about how we’ve chosen to develop our town over the years. We have mostly chosen to build single family homes with large lots and commercial buildings that are auto dependent. It’s what every town was doing, so I’m not here to shame anyone for what has happened. But the numbers tell us that we can’t keep going down this path.
Take my own house, for example. If I were to pay for my half of the $20 per foot per year for my 60-foot-wide lot (since I’m just on one side of the street), I’d need to pay $600 a year to the city in property taxes. I currently pay $260.17. The smallest residential lot you can have in town is 50 feet, meaning you’d need a $98,500 house to break even, which is an above average house for the market. Is every building going to pay for all its infrastructure? No, but we need to look at maximizing our productive properties.
The Acres are Not Equal
I guess we can look at my house first: I pay in total $1,693.14 on a 0.18-acre lot, which comes to $9,406.33 in property tax revenue per acre. Not great, but not the worst.
Let’s look at our Walmart, which pays massive amounts of property taxes and is a company worth billions of dollars. Surely they pay much more than I do on my house built in the 1950s?
(Source: City of Galesburg GIS.)
And they certainly do pay a lot in taxes, $413,528.26 for the year 2020 alone. They’re built on a 26-acre lot, so it comes to $15,904.93 of property tax revenue per acre for Walmart. Beats my house.
But what about a building downtown? Let’s look at The Kensington.
The Kensington, which was formerly a downtown hotel and is now a supportive living center, pays $82,035.68 in property taxes every year and sits on a 0.44-acre lot. So it has a value of $186,444.72 per acre in property taxes. It absolutely leaves Walmart in the dust!
As a town we are essentially a fixed plot of land cultivating a crop of buildings, which we tax to fund our corporation. As the farmers of this land wouldn’t we much prefer to plant more Kensingtons and fewer Walmarts?
The way a financially solvent city develops itself is by having as much of its commerce built up near its core and to have all the citizens living as closely as it can. You want your buildings to have the highest possible value while needing as little infrastructure as possible to service it. But we’ve redeveloped our city to have relatively low-value buildings using lots of infrastructure. This isn’t a financial model that can sustain itself.
Our “Investments” Barely Earn Returns
Let’s look at the shopping center north of town at a deeper level. Does the city make a return on the investment it makes in maintaining the roads servicing the development?
Here is the area in question:
This development generates $223,939.19 in property taxes for the city every year using the standard suburban layout. To generate that tax revenue, they use 6,988 feet of roads that service almost exclusively this 100-acre area. Running the numbers shows we generate about $32.04 per foot of road per year in city property taxes for this development. While it’s above the $20 needed to maintain repairs, it’s not creating massive returns that can fund the rest of the city. It can’t even support another set of roads the same length.
Now let’s look at a block downtown:
(Source: City of Galesburg GIS.)
This is the block with The Kensington on it. It isn’t completely full and has plenty of parking lots and empty space. This block has certainly seen better days. It generates $64,299.52 in taxes for the city and is surrounded by approximately 1,720 feet of road, which gives us a rate of $37.38 per foot of road. Now that may not seem like a whole lot more, but realize that each of these streets has more buildings on the other side, meaning that this block only needs to generate $10 per foot to pay for itself. So on this development we are making $27.38 profit per foot of road, versus $12 for Seminary Square. The streets downtown also have the added benefit that you can use them to get to other places, not just the buildings that are along them.
Not only is it more valuable, but the downtown block is much more resilient. Most of the buildings on that block have been around for approximately 100 years and are still producing incredible value for the city. Walmart builds their buildings to last only 15 to 20 years, and then builds a new facility. In the meantime, downtown has outlived all of the other developments and can withstand changes.
Joe Hicks writes the newsletter, Inland Nobody, which focuses on the renewal of his hometown, Galesburg, Illinois. Galesburg went through a transition during Joe's youth that shook it to its core when factories, which had been the biggest employers in the area, left town. Galesburg has since had a tough time recovering and finding a positive vision for itself. Joe left his hometown to earn bachelor degrees in economics and political science (University of Illinois at Urbana/Champaign) and returned to Galesburg to be closer to friends and family, reconnect with the community, and do "what he can to help the town be a better place." He combines his interests in economics, politics, public policy, history, and local culture to offer a new perspective on how Galesburg can move forward.