Is local growth a Ponzi Scheme?
An article posted on Revisioning Point discusses Marohn’s description of community growth as a Ponzi Scheme. The article starts with “Many local government leaders portray new development as the lifeblood necessary to maintain or improve the economic and fiscal health of a community. They argue that the proposed new subdivision, apartment complex, or shopping mall out on the edge of town is not only desirable, but is practically a requirement if the entire community is to stay alive. Chuck Marohn sees things differently. He argues that most new development is instead part of a Ponzi scheme. . .”
While there is some truth to the Ponzi description on a macro scale, especially when new retail growth hollows out the existing core, decision makers face a more nuanced question. There is also truth to the revenue imperative of growth. In Stevens Point the 4 major areas of annexation and growth over the last few decades are the residential areas along Torun Rd., east of McDill Pond and the Fire Station, the commercial area on Highway 10 East, and the Portage County Business Park. These areas together represent 28% of the total equalized value of Stevens Point. They contribute over $3,300,000 in taxes to the city budget. Without that growth the city budget would need to be cut by that amount or the city-only tax levy raised by 28%. That would be a sizeable increase to bear for a population that is already the highest taxed in the County. This growth has been serviced without the need for additional staff. The City’s current fiscal situation would be dramatically different without this development.
The other issue facing local decision makers is they don’t control the whole playing board. Crossroads development, including Lowes and WalMart, located outside the City limits. Even if the City were to adopt restrictive policies, suburban growth can and will take place outside the city limits. Commercial, residential and industrial development outside the city limits would have all the impacts on the city without paying taxes to the city.
The city has the most low income residents, the oldest population, the oldest housing, the highest rate of absentee ownership, the oldest infrastructure and the highest tax rate. Decision makers need to take all these factors into account when making growth decisions. Growth is necessary. The form that growth takes and the market acceptance of new/old designs is the smarter component of “Smart Growth”.
—John GardnerTags: growth, local, Ponzi Scheme