Investing in high-density, mixed-use areas is by far the best deal
American local governments are broke. Even though most cities and towns won’t go bankrupt like Harrisburg, PA they will have a hard time maintaining their infrastructure after years of splurging on costly sprawl when maintenance costs are finally catching up with them (see Strong Town’s “Curbside Chat”).
The American Society of Civil Engineers is predicting that the US has to spend about $ 2,2 trillion just to keep the major infrastructure (and not minor streets, sidewalks and pipes) that already exists in shape. This will not happen. Both because the US lacks that kind of money and because it would be a bad investment to spend that much on a lot of infrastructure that is highly unproductive.
This has major implications for low-density areas. Local governments will have to choose where to spend their limited funds on maintenance and will spend it on areas where more people live, work and shop in close proximity to each other, because these are the most valuable and productive parts of town. And with the money going to high-density areas, the road quality elsewhere will decline.
At the same time, gas prices are likely to increase. If the US government wants people to drive less, research has shown that neither densifying nor supplying more transit has a major effect. According to David Heres del Valle of UC, Davis, Californian cities would have to increase their density by 25 % just to lower VMT (vehicle miles travelled) by 4 % – something which also can be achieved by simply increasing the gas tax by 20 %. As for transit, Gilles Duranton and Matthew A. Turner in their recent paper “The Fundamental Law of Road Congestion” shows that it has close to zero effect on driving, leaving only congestion-pricing as a remedy.
This combination, worsening road quality, higher gas taxes and congestion-pricing, will put a high cost on commuters from low-density suburbs and exurbs which will have to be offset by lower housing prices that make up for the inconvenience and high price of living far away from where the action is. Thus, making high-density mixed-use areas look increasingly more appealing to buyers and developers who are eager to fetch a high reward on their housing and construction investments.
Smart growth, a solid investment
