Our Bankrupt Suburbs

One of the two big reasons suburbs need to be rebuilt are that they are not economically sustainable. The suburban built environment invariably leads to long-term economic decline and bankruptcy unless it’s redeveloped. Suburbs do not support vibrant economic activity, and they are expensive to maintain.

Suburbs, as they are being built, create substantial economic activity. The jobs and purchase of raw goods required to build roads and homes and shopping centers creates a huge infusion of money into a community. For some suburban communities, this development can last for decades. However, once construction stops, the economic activity that those communities can sustain is limited.

The majority of economic activity found in suburban communities is chain retail and restaurants, which provides some sales tax revenue for cities but limited opportunities for jobs for residents. A statistic that is used to justify suburban development is that every 100 homes built creates 93 new jobs. While additional jobs are a good benefit for a community, suburban development does not create enough new jobs for there to be even one new job per new household. Suburbs, without the benefit of a neighboring urban core, create structural unemployment.

One reason suburbs don’t create more new jobs is that newly constructed, large regional shopping centers don’t provide an opportunity for local businesses to find footing and grow. Rents are just too high. As shopping centers age, and rents decrease, local businesses can start to afford the rent, but the opportunities for success are still limited since nearly everything in a suburban retail center must be a destination in itself. Cars are the primary mode of transportation within suburbs and it’s often not possible for businesses to rely upon serendipitous sales when potential customers walk by their storefront. There simply aren’t that many customers walking by.

Instead of entitling large, regional shopping centers that don’t support the local economy, cities must find ways to entitle and finance smaller neighborhood centers designed with supporting local businesses in mind.

On top of the limited economic activity the suburbs generate, there is a high cost to maintain infrastructure. More precisely, there is a high cost per household to maintain the infrastructure. Low density housing does not provide enough homes to support the maintenance of the roads and utilities that service those homes. A traditional suburban tract home on a 7,200 square foot lot, with a 72 foot frontage on a 36 foot wide local road has approximately 1,300 square feet of roadway it must pay to maintain. On top of that are the collector and arterial roads that feed the local road, which that home must pay its share of maintaining. The property taxes from that home are not sufficient to maintain those roads and utilities. This is a big reason why so many older suburban roads are in disrepair.

In order to try to maintain those roads, and other city services expected by suburban residents, cities try to find other sources of funds or run deficits to pay for basic city services. This has lead some cities and counties, including Orange County, CA, to default on their financial obligations and declare bankruptcy.

The alternative to deficit spending is to increase the number of households those roads and utilities serve. Even in utility maintenance there are economies of scale and most suburban roads are used nowhere near capacity. There are numerous ways, both big and small, to enable higher densities within suburban neighborhoods and reduce the costs to maintain the roads and utilities that serve those neighborhoods.

By rebuilding our suburban neighborhoods, we can create communities that are financially sustainable and generate substantial economic activity.

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