The Downside of Development

Mar 20, 2013

Every five years, Virginia requires cities and counties to update plans for development – how and where they’ll grow. 

Many communities assume growth is good – and some even offer tax breaks to attract new industries and businesses, but a new report by Charlottesville economist David Shreve and planning consultant Craig Evans suggests that’s not the case if new companies hire people from elsewhere. 

That’s because new residents increase the demand for public services, such as education, road construction and maintenance, public safety, water systems, sewers and so on.

Shreve says Montgomery County, Maryland did an analysis and showed the community got no economic benefits from new businesses. “The costs associated with the new employees that they had to bring in washed out all of the fiscal benefits,” he explains. 

Jack Marshall – president of Advocates for a Sustainable Albemarle Population – plans to tell county supervisors that the time has come to put the brakes on growth.

“Growth is probably good in all communities up to a point, but we should consider the possibility that some American localities have already reached that point.”

At a public hearing this week, Marshall knows some residents will speak against his ideas.  “The decision makers in most communities – the chamber of commerce, the home builders, the realtors are motivated by profit,” he says.  “A stabilized population  doesn’t encourage a lot of new houses and new businesses.”

In fact, he says, single family homes in Albemarle County cost $1.28, on average, in public service spending for each tax dollar generated, while multi-family homes cost $1.96.  That does not consider the environmental cost of more building or the long-term need to maintain public facilities – schools, roads, sewers and water systems, police stations and so on.  Marshall and Shreve say communities should understand that and develop specific population policies while adjusting taxes and fees to make developers pay more for the chance to profit in a city or county.