By Donella Meadows

–June 5, 1997–

The myth persists.  Growth is good for us.  Development will bring in more tax money.  The only way to get our property taxes down is to bring more people and houses and businesses to town.

If you’re one of the many who still believe this, look around at cities and towns more populous or more rapidly growing than yours.  Are their taxes lower?

Around here they’re not.

If your own community has been growing, have your taxes gone down?

Mine haven’t.

So how big do we have to get to reach that magical, mystical place where growth will finally start lowering taxes?  Or maybe it would be better to ask: how much more evidence do we need before we stop believing that myth?

If evidence will do the trick, there’s plenty of it in a March 1997 article in the journal Population and Environment.  The author, Eben Fodor, a planner from Eugene, Oregon, performs two useful services.  First he summarizes previous studies of the relationship between growth and taxes.  Second, he does his own calculation of how much a typical new house costs a typical community in Oregon.

Studies over 25 years from all parts of the nation are unanimous.  Growth raises taxes.  A 1991 survey of towns in DuPage County, Illinois, showed a clear relationship between new development and rising property taxes.  Amazingly, commercial development was even more expensive to the towns, and thus the taxpayers, than residential development.  (More than three times as expensive!).

Another study in Springfield, Oregon, showed that after a decade of rapid growth, the city budget had quadrupled, bond indebtedness had quadrupled, and city spending PER PERSON had tripled!

Many of these studies demonstrate another point — sprawl costs more than clustering.  As settlement density thins out from 30 houses per acre on one end of the scale to four acres per house on the other end, the cost per house of providing and maintaining roads, sewer, water, storm drains, and schools zooms upward.  (It’s not clear to me why school costs go up with decreasing density, unless more widely spaced houses tend to be bigger houses with more children.)

Fodor’s own study shows why growth raises taxes.  He assumes a development of three-bedroom single-family houses on 6,000-square-foot lots — a density of six houses per acre.  He assumes that the houses must be supplied with municipal water and sewage treatment and that every three houses bring two kids into the public school system.

Then he calculates what the town has to provide in CAPITAL costs to serve that development.  That doesn’t mean schoolteachers’ salaries or gas for the road grader or paint for the fire station — those are operational costs.  Fodor includes only the costs of building schools and roads and buying fire engines and graders.

He comes out with $24,500 per house.  More than $11,000 of that comes from the need for more school facilities.  Another $5,000 comes from the sewer system, $4,000 from roads, $2,000 from water supply, and the rest from parks and recreation facilities, storm water drainage systems, and fire protection.

Because of these costs, many towns are getting smart enough to charge “impact fees,” one-time levies on new developments, so existing residents don’t end up subsidizing newcomers.  The trouble is, developers hate impact fees and apply such steady political pressure against them that they are usually way too low.  Fodor says that in Oregon they range from $1,000 to $6,500 per new house.  That means, on average, every new house effectively costs the taxpayers in town something like $20,000.

That’s probably a conservative number.  Fodor assumes in his calculation that the added property taxes from the new development cover its ongoing operational costs — which may or may not be true.  And he does not include any capital expansions for police facilities, libraries, town administration, or garbage collection.

Nor, as he admits, did he try to calculate the imponderable but very real costs to everyone in the community of decreased air and water quality, lost wildlife habitat, lost beauty, or more traffic, noise, or crime.

Is it any wonder that the more we grow, the more property taxes keep rising?  And quality of community life keeps falling?

The wonder is that after years and years of watching the consequences of growth in our own towns and every town around us, we still swallow the idea that if we just keep this Ponzi scheme going a little longer, somehow it will start working in our favor.

Copyright Sustainability Institute 1997