Grow because you want to, not because you think it’s going to create jobs or shore up the tax base.
That was the message Wednesday night from David Shreve, president of Advocates for a Sustainable Albemarle Population and a former professor of economic policy at the University of Virginia.
If residents want, say, a Costco, or more shops and restaurants, the community should go after those, Shreve told about 50 people at the Chapel Hill Public Library.
Pursuing growth to meet broader goals – improve the tax base, create jobs and affordable housing – is a lot harder to achieve, he said. In many cases, meeting those goals may be outside a community’s control.
There are benefits to growth, such as a diversity of cultures and opinions, shops, restaurants and entertainment options that come with a larger population, Shreve said.
“It’s easy to see those benefits,” he said. “It’s harder to see the point of diminishing returns.”
Shreve’s talk was sponsored by the Chapel Hill Alliance for a Livable Town, a group that has criticized the Town Council’s recent development decisions and plans to back candidates who share its views in the coming election.
Shreve said several myths and “pixie dust” perpetuate the belief that growth is good.
▪ The myth of full employment. A community needs to ask whether a development is truly adding jobs or “cannibalizing” jobs that already exist, he said. If a new business shuts down competing businesses, it may not add any jobs to the community. In some cases, a business may require skills that local unemployed and under-employed people lack and will have to hire from outside, he added.
▪ The myth of an expanded tax base. Easing the tax burden on homeowners has been a big goal in Chapel Hill, Shreve noted. But aside from new businesses cannibalizing existing ones, there are costs associated with new development. “It’s easy to ignore because it’s hard to figure out,” he said. Some costs are easy to see: a housing project that brings new school-age children, for example. Others are harder: increased traffic or stormwater runoff that the community may not end up paying for until years later.
▪ The myth of housing affordability. Growth proponents often tout how a new development will create more housing choices. The problem here, Shreve said, is that national and regional employment patterns help dictate a community’s desirability. Add in a heavy reliance on property taxes, like Chapel Hill has, and you increase not only the cost of buying a home but living in it.
Shreve has studied Charlottesville, a college town like Chapel Hill, and Albemarle County. He said commercial and industrial growth make money for a community, while residential growth costs money.
For every dollar spent on a new commercial project, it only costs Albemarle County 51 cents to provide services related to it, Shreve said.
For every dollar spent on a new apartment complex, it costs the county $1.96, he said. That’s mostly related to new school children. In Chapel Hill, small luxury apartments would be closer to the net cost of new single-family homes, he said: $1.28.
The tax base
Dwight Bassett, Chapel Hill’s economic development officer, said he spent six months looking at cost/benefit studies and “could not find one case where commercial (development) did not cover its costs of services.”
Chapel Hill is pursuing growth – at the Edge in northern Chapel Hill, Obey Creek to the south and the Ephesus-Fordham district to the east – for several good reasons, he said.
“You can’t be a sustainable place when you force people to drive 10 or 15 minutes for a lot of goods,” Bassett said Thursday. He said all three development areas will generate net income for the town and help create jobs and meet other town goals.
“We need to add to the tax base,” he said.
Chapel Hill’s tax base is 18 percent commercial, according to the town’s website.
In Raleigh, commercial property is 25 percent of the tax base; in Cary, 35 percent; and in Durham, 40 percent, Bassett said.
At the same time, Chapel Hill has become older and wealthier, he said.
“If we’re going to be the diverse place we think we are, we’re going to have to change and have some density and have some options for millennials,” he said.
But Shreve cautioned against seeing growth as a panacea.
Many growth advocates believe “the market will take care of things,” he told the library crowd. If a community builds too much new housing, for example, prices will come down.
That wishful thinking, he said, is an “economic delusion.”
And none of what he talked about looked at how growth affects the natural environment, he added.
“We live in a finite world with finite resources,” he said, citing Herman Daly, one of the founders of the field of ecological economics.
“If the whole world converted to the American middle-class lifestyle, we would need seven planets to feed them,” he said.
Town Council member Jim Ward was one of three members who voted against rezoning the Ephesus-Fordham district. He thought the town was losing its leverage to bargain with developers for things it needs like affordable housing.
He attended Shreve’s talk and said it prompted him to ask for a closer look at the projected fiscal impact of Obey Creek, the project that East West Partners wants to build across from Southern Village.
“These things are part art and part science,” Ward said. “There’s always room for disagreement on how it’s done.”
Ward, the director of horticulture at the N.C. Botanical Garden, said council members have to rely on professional planners when evaluating a project’s costs and benefits.
“I know I am a council member who has been led to believe we’ll be making money on some of these projects,” he said. The town can use that money to provide the services residents want, he said.
“If that is not the case, then I’ve got a much different perspective on bringing development to Chapel Hill.”