Examining the fiscal benefits of smart growth.

• Position: Solutions

A number of local governments across the country have done studies comparing development strategies to understand their impact on municipal finances. These studies generally compare development scenarios and help local leaders make informed decisions about new development, based on the associated costs or revenues. Many found that a smart growth approach would improve their financial picture, whether by saving money in upfront infrastructure construction costs; reducing the cost of ongoing services like fire, police, and ambulance; or by generating greater tax revenues in years to come. This article excerpts Building Better Budgets. A National Examination of the Fiscal Benefits of Smart Growth Development, the first report to aggregate those comparisons and quantify how much other communities can expect to save, on average, by using smart growth strategies. development. The information comes from 17 case studies at varying levels of government. (1)

UPFRONT INFRASTRUCTURE

In general, smart growth development costs one-third less for upfront infrastructure. The Smart Growth America report concluded that smart growth development would cost an average of 38 percent less than conventional suburban development for upfront infrastructure. Some studies have put this number as high as 50 percent.

All development requires infrastructure to support and supply it. The studies included in this article primarily refer to roads, water lines, and sewer lines, which account for most of the infrastructure cost associated with new development. Smart growth development patterns require less infrastructure, meaning upfront capital costs, operations, maintenance, and, presumably, cost for eventual replacement are all lower. Smart growth development also often reuses existing infrastructure, lowering upfront capital costs even more.

* In the City of Champaign, Illinois, a smart growth approach to future city development could cut the upfront cost of infrastructure from $123 million to $71 million--a savings of $52 million, or 42 percent, over 20 years. (2)

* In the City of Mount Pleasant, South Carolina, and Phoenix, Arizona, a smart growth approach for specific development projects could save between 32 percent and 47 percent in upfront infrastructure costs. (3)

* The State of Maryland found that following a smart growth approach would save approximately $1.5 billion per year statewide on new road construction through 2030, reducing overall costs by 28 percent and the costs to local governments by 60 percent. (4)

* In the State of California, a smart growth approach could reduce infrastructure costs by $32 billion, or 20 percent, statewide through 2050. (5) The same study conducted a more detailed analysis of small-lot single-family developments and found that locating such a development in a smart growth location would cut the cost of infrastructure in half. (6)

* In rural areas with 10- to 40-acre ranchettes, the infrastructure savings associated with smart growth patterns are likely much higher, perhaps as much as 65-75 percent. (7,8)

The survey determined one-third savings in upfront infrastructure costs by compiling the estimated savings from case studies considering infrastructure costs. (9) The upfront savings figure is a conservative average reflective of available data on the matter. The case studies compared urban and suburban growth between a smart growth and a conventional suburban development. Case studies examining fiscal impacts of rural development scenarios were excluded because their geographic differences produced significantly different savings, as noted in the final point above.

ONGOING DELIVERY OF SERVICES

Smart growth development saves municipalities an average of 10 percent on ongoing delivery of services. The survey concluded that smart growth development saves municipalities an average of 10 percent on ongoing public services such as police, ambulance, and fire service.

Many public services are extremely sensitive to a community's pattern of development because the geographical configuration of a...