Beckman Strikes Back

John R. Beckman, CEO of the Building Industry Association of the Greater Valley, writes:

“It seems you have become the conduit for the sprawl debate. 

“So here are the additional points that need to be considered during the discussion of “sprawl” and its fiscal impacts. 

“Development fees pay for the cost of new infrastructure needed to serve the new development based on the impacts of that development.  It is unconstitutional to force a developer to pay for impacts not related to his project – that would be called a “taking”. 

“If a development creates the need for a new school to be built or a new fire station to be built the developer pays 100% of the cost for the school or fire station along with all the fire trucks inside.  But if a city is not maintaining its current fire trucks or a school district is not maintaining its current classrooms, well, there is no “nexus” between new development and the maintenance of existing infrastructure.  The U.S. Constitution protects property owners from the government forcing them to give up their property without due compensation, the same rules apply to those who already own and live in a single family detached house on a 5,000 square foot lot as to those who wish to build a single family detached house on a 5,000 square foot lot. 

“Ongoing maintenance of streets, parks and all other infrastructure is paid with sales tax, property tax, DMV fees, utility fees, franchise fees, use fees and a multitude of other fees applied to those who use them.  If a city is not properly maintaining its existing infrastructure you have to look to the city budget and see where they are spending their money other than proper maintenance. 

“Proposition 13 was a drastic shift in how government is financed in California.  In other states property mil taxes are used to pay for new infrastructure and the maintenance of that infrastructure after it’s built along with government worker salaries.  We don’t have that here.  Property taxes in California are a fraction of what they are in other states which means developers have to pay for 100% of the infrastructure instead of the general public through property taxes. 

“For this reason, in other states when less infrastructure is required for a project there is a huge tax savings for the local government.  That savings does not exist in California.  This argument works elsewhere but it doesn’t fly here.

“However, the infrastructure argument does have merit when you look at the ongoing maintenance question because if there is more infrastructure it requires more money to maintain.  The financial analysis becomes interesting when you delve into ongoing maintenance, primarily because how the revenue money is spent is a political decision.  If political leaders spend more money than they have, if they do not allocate enough maintenance dollars, there is a city wide problem.  A quick look around America, at the bridges falling down, at dilapidated government buildings at pot hole filled roads and highways, you can clearly see that no level of government is devoting enough resources to infrastructure maintenance.

“With the specific example of Fresno cited recently I direct your attention to the description used in the study about revenue and cost of service.  The study demonstrates that the cost to service a residential unit in a smart growth development is cheaper than it is in a traditional development.  $1,371 per year to service a smart growth unit compared to $1,566 per year to service a traditional housing unit. 

“The study also analyzes the tax revenue generated and demonstrates that more tax revenue is received per acre of smart growth than per acre of traditional development, $2,300 per year of tax revenue off an acre from smart growth and $1,600 per year of tax revenue off an acre from traditional development.

“Oddly enough the financial analysis stops at this point as if a bold conclusion has been made and proven beyond a shadow of a doubt.  Consider that they used two different metrics in their analysis, “per unit” for cost of services and “per acre” for tax revenue.  By using two different metrics the results are not merely skewed they become indefensible.  Using these numbers from the Fresno study and applying them to the real world in fact proves beyond a shadow of a doubt that traditional growth patterns are extremely more advantageous to a city than smart growth patterns – provided that is that the numbers from the Fresno study are accurate.

“Finally, there is the issue of “freedom of choice”.  I believe people should be free to choose where and how they wish to live.  There are some who would like to dictate to others how and where they should live.  The interesting question is how do you know what someone would choose if given the choice?  In America that answer is most often determined by the price someone is willing to pay for a product.  You are willing to pay more for something you want and less for something you don’t want as much.  If more people wanted to live in townhomes or apartments the cost of those would increase due to the increase in demand for the product.  The fact that those products do not command higher prices shows the level of demand for them. 

“To argue that people want to live in townhomes and apartments but choose a single family detached house instead because there are not enough townhomes and apartments is an economically dishonest argument considering the price to live in apartments, townhomes and single family homes.”

I originally wrote a counter-argument to Beckman, but decided to let his response  hold the field for the time being. I commend him, Stockton City Limits and the other sharp cookies who have engaged in this discussion. I can’t help but to wonder how much better Stockton would have grown had such discussions taken place in council chambers before the last boom.

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