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MN2020 - Suburban Sprawl: A Ponzi Scheme?
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Suburban Sprawl: A Ponzi Scheme?

October 13, 2011 By Conrad deFiebre, Transportation Fellow

One of the deepest critiques of expansionary American growth patterns comes from a surprising quarter: Minnesota fiscal conservative Charles Marohn. He even blames suburban sprawl for our current financial crisis.

"The great experiment of suburbanization that America embarked on following World War II has no precedent in human history," Marohn writes in his Strong Towns blog. "As it enters its third generation, the flawed assumptions that were overlooked are now coming back to bite us in a cruel way. Like any Ponzi scheme, there is only one way this ends."

As Marohn acknowledges, this is an extremely dark vision of a problem for which there is "no solution," only "rational and irrational responses." And he minces no words in his disdain for an autocentric social order built on "two-ton prosthetic devices" and "snout houses" with garages sticking out the front. Even schools these days are designed with "drive-thru lanes" where motorists can pick up their "McChildren."

The heart of his argument is that our increasingly spread-out built environment, nurtured by flawed government policies and cheap oil, is financially unsustainable because life-cyle maintenance costs of supersized infrastructure far exceed the revenue sprawl can produce. "Our places do not create wealth, they destroy wealth," he writes. "Our development pattern ... creates modest short-term benefits and massive long-term costs."

Proof of this can be seen in official projections of a $50 billion long-term shortfall for Minnesota's trunk highways, most of it for necessary maintenance and reconstruction, or in any city council debate over deteriorating streets. Some policymakers are facing up to the problem. Where Twin Cities planners once envisioned another ring road far beyond the 100-mile Interstate Hwy. 494-694 beltway, the Metropolitan Council now focuses transportation resources inside the suburban freeway system.

Marohn would probably call this a "rational response," albeit one that will be painful for many. At least it attempts to short-circuit a vicious cycle he describes thus:

"Suburban development entices communities to take on long-term liabilities in exchange for near-term cash advantages. But as those liabilities cost the community more than the development creates in overall wealth, the approach ultimately results in insolvency. To forestall the day of reckoning, more growth is induced, setting up a Ponzi scheme scenario where revenue from new development is used to pay liabilities associated with old development. This is unsustainable, but that has not kept us from trying desperately to keep it all going."

Borrowing from author Richard Florida, Marohn also draws economic lessons from America's Long Depression of the 1870s and the Great Depression of the 1930s.

The former he blames on overdevelopment of railroads and corresponding real estate speculation, along with greater access to markets for farmers that led to a crash in commodity prices. The bust ended with what Florida calls a "spacial fix," the growth of industrial cities drawing masses from the agrarian landscape. "For many people of that era, this was a painful transition," Marohn writes.

The Great Depression arose from a financial bubble that tried to compensate for a "lack of fundamental growth in the real economy" and "huge gains in productivity, production-capacity that actually outstripped our consumption-capacity," Marohn writes.

World War II provided "a temporary recovery, but economists at the time were concerned that the end of war spending would send the United States back into depression," he adds. "What happened next was another spacial fix: suburbanization. We ... created the greatest economic advancement the world had ever seen. It was a very painful transition, especially for our major cities."

Marohn was born in 1973 in Brainerd, Minn., and grew up on a farm in adjacent Baxter, now a sprawling, big-box suburb where he lives today. He bemoans what suburbanization has done to both cities. He has illustrated one of his blogs with a picture postcard of Brainerd's West Front Street bustling with pedestrians and horse-drawn wagons in 1894. "Today this street looks like Dresden in 1945, an empty wasteland of parking lots and low-value, partially-abandoned buildings," he writes.

In Baxter, he sees a different wasteland of local, collector, arterial and major arterial roads, large setbacks, excessive parking lots and "separation of uses through a Euclidean zoning model."

Tough times lie ahead for this sort of development, he warns, and it will be "far messier than the urban decline of two generations ago." Abandoned structures in the future Suburgatory will be used for salvage, he predicts, as gasoline prices rise, road maintenance falls further behind and public safety services atrophy.

What to do? "The answer is another spacial shift, a change in the pattern of development moving away from mass-suburbanization," he writes. This includes a focus on walkability in city and suburban neighborhoods alike scaled for people, not for cars. For example, he says, a small part of Baxter could accommodate 10 times its current population "without significant investments in additional infrastructure."

Strip malls can be redeveloped with extra stories and broader footprints for neighborhood-focused uses, he suggests, reducing "the vast amount of wasted space between structures ... These things can be built into each neighborhood incrementally over time."

Not every Wisteria Lane, especially those on the far edges of development, will survive this shift, Marohn says. But many can if they downsize roads to neighborhood standards, prioritize maintenance of existing infrastructure and build transit connections with other neighborhoods.

"This will certainly be much more cost-efficient for everyone than the ridiculous dial-a-ride system currently being used," he writes. "Maturing neighborhoods will create demand for more frequent and reliable transit service, which will build more demand for neighborhood life, which will build more transit demand, and on and on in a virtuous self-reinforcing loop.

"The neighborhood approach requires no oversizing, no large up-front bet, no stifling congestion if the system doesn't respond as predicted, no more building multimillion-dollar industrial parks to gamble on attracting offices and churches. Instead of looking for one business with 50 jobs, Baxter can now find success adding one job to [each of] 50 businesses.

"This is the true essence of a Strong Town. A local economy that is resilient in the face of outside shocks. A place that has built-in vibrancy, sense of place and community cohesion. A town that is designed to grow stronger, incrementally over time. And a people not dependent on what happens in St. Paul, Washington, D.C., or Saudi Arabia but fully in control of their own destiny."

Right-wing sprawl apologists will fight this blueprint at every step. But when the money runs out to keep propping up the great suburban experiment, Minnesotans will again gather together in Strong Towns scaled to people, not cars.

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5 Comments:

  • Bill Glahn says:

    October 14, 2011 at 10:43 am

    Conrad,

    How are these points not equally valid of core cities?  If you look at what is happening in places like Detroit and Flint, Michigan, cities are bulldozing whole neighborhoods because they no longer can support the infrastructure as the cities decay and depopulate.

  • Mark Ostgarden says:

    October 18, 2011 at 2:08 pm

    First let me say that as a planner I agree with most of Mr. Marohn positions.  With that said isn’t hind sight great!  He refers to West Front Street in the City of Brainerd as “Today this street looks like Dresden in 1945…”  However what Mr. Marohn doesn’t mention is the many positives that occurred in this area. 
    •Redevelopment of the area occurred that kept the County seat in Downtown Brainerd.  There was talk of moving it outside the city.
    •It was a reinvestment in Brainerd and has become an anchor for our Downtown.   
    •It retained several hundred jobs in the city.
    •It eliminated some urban blight.
    •City offices, County offices and the post office are all in walking distance of one another. 
    •The redevelopment was a stimulus for several million dollars more of Downtown public infrastructure and aesthetic improvements. 
    •Keeping the County offices Downtown created other private business opportunities.
    •The redevelopment used existing public infrastructure.

    Perhaps the architecture and scale of the development he says looks like Dresden could have been different, however I think the many positive outcomes resulting from the redevelopment in our community core should be talked about rather being critical of the design and scale.  Mr. Marohn is obviously much smarter than I as he has become independent consultant and I only work for the City of Brainerd ….the city that he calls home.

    Mark Ostgarden AICP
    Brainerd City Planner

  • Andrew Reinhardt says:

    October 20, 2011 at 8:50 am

    Interesting piece, but taking a shot at “right-wing sprawl apologists” at the end is misguided. In matters like suburban sprawl, the far-right is at best indifferent, letting people choose in the free market, while the left is active in trying to control lives and force behavior when it comes to housing, transportation, etc. Apathy is not apology.

    Many lefties personally move out to places like Albertville and beyond to take advantage of large lots and low crime rates, although like true hypocrites, many of them publicly advocate for “everyone else” to stay back in live in a matchbox downtown. Or more commonly, they move out to suburbs, get active politically, and instinctively start advocating for policies that drove them out to the suburbs in the first place.

    Let’s be honest. The real problem comes when the Met Council and others reach into suburbs and practice social engineering by forcing affordable housing numbers and other mandates, then turn around and demand that now we need public transportation options to shuttle people back towards downtown (Northstar, SW Metro light rail, etc). The “transit demand” mentioned in the article is unbelievably over manufactured by government.

    Once existing homeowners start to see their neighborhoods turn into the ones they previously escaped 5-10 years ago, they jump out to the next ring. Eden Prairie and Maple Grove are prime examples. The EP School Board got taken over by social engineering lefties who wanted to redraw boundries, and “for sale” signs went up all over the city immediately. All those taxpayers are not looking to get any closer to the Metro!

    Going “hands-off” and letting these communities develop as organically as possible is actually a key component to stopping sprawl, as is flat-out refusing to build ANY more transit lines outside the beltway.

     

  • JulieCochrane says:

    November 19, 2013 at 1:59 pm

    Okay, this story has aged and my comment is late, but the truth is that people who can afford to pay significant taxes—-able-bodied, able-minded, good earners—-do not want to live in high population density environments. You can try to redevelop downtowns to be pedestrian-oriented, but what will happen is that the company executives for the various industries will move their plants to cities that have the kinds of places their employees want to live. They will locate where the critical labor supply is easiest to recruit. So you won’t have tax base to maintain the high-density pedestrian-friendly environment, and it will decay, inviting crime, further driving off tax base, and become slums in further deficit.

    His “conservative” solution takes the “liberal” approach of expecting people to want what he thinks they ought to want, and to choose to buy what he thinks they ought to buy. The only guy who ever got rich preaching to his customers is the guy whose sermons tell them they’re far better human beings than their neighbors—-not telling them how rotten they are, themselves, to want what they want. Adultery is a sin the married can frequently do without—-so it’s popular for bashing the heathen “other.” Gluttony? Gluttony is not that popular as a sin for people to congratulate themselves for avoiding. We demonize most harshly the “sins” we can most easily do without.

    People are auto-centric whenever they can afford to be because a two-ton wheeled suit of armor is a good defense against mugging, rape, or murder on the street. People will mortgage theirs and anyone else’s future to any degree to protect themselves and their families from crime. Person on person crime gravitates to pedestrian-rich areas. How safe they think they are and how safe some wonk in an ivory tower thinks they should feel doesn’t mesh.

    A more fiscally sound solution would be for cities to upgrade the required engineering of these “free” roads. Roman roads lasted for millennia. There is a breakpoint somewhere where life of the road balances with the cost of building it and the taxes that can be attained from doing so. It’s an engineering problem. The first step in improving the breakpoint is for cities to set higher standards for “free” roads, and to require an up-front cash deposit into an escrowed investment account (something with a regular dividend like a utility holding company, with the dividends set to reinvest), to grow until maintenance and replacement are needed and offset the tax cost.

    • Conrad deFiebre says:

      November 19, 2013 at 3:47 pm

      Julie Cochrane’s belated comment is thoughtful but relies on some wrongheaded or at least doubtful assumptions. In fact, many people who can afford to pay significant taxes do prefer living in dense environments. If not, Manhattan Island would be devoid of millionaires. Even in Minneapolis, high-end housing is proliferating in and around downtown.

      Her explanation of autocentrism also misses the mark by a wide margin. I doubt many people’s first reason for driving is personal safety. As a matter of fact, more than 30,000 people a year die in this country because they drive. That’s not to say autocentrism isn’t a rational, although expensive, strategy for convenient personal mobility, which surely is its No. 1 motivation in our current context. This, however, is a function of urban planning and sparse provision of alternatives—government functions that encouraged sprawl for the past half-century—so it’s not necessarily set in stone forever.