Greenfields, Brownfields, and Red Ink
State records reveal Michigan’s heavy investment in sprawl
January 29, 2005 | By Keith Schneider
and Mac McClelland
Great Lakes Bulletin News Service
Investments in urban projects, such as the museum currently rising above a former parking lot in downtown Grand Rapids, generates strong economic growth and discourages sprawl.
When someone tells you that sprawl is the free market at work, don’t believe it. Sprawl cannot exist without massive public spending for roads, water, sewers, public buildings, and business development. These taxpayer-financed market intrusions distort the landscape, ruin central cities, harm the environment, and reduce the quality of life.
Young people, the poor, the elderly, and people with disabilities bear the brunt of spread out growth patterns, largely because they can’t drive and public transit in most regions is dismal. These patterns make it difficult for already poorly funded bus systems to offer the kind of convenient and effective service common in well designed cities. Everyone suffers as government deficits balloon, infrastructure crumbles, and global competitiveness fades. Conversely, investments in urban cores often pay handsome dividends.
Michigan, like other states, spends plenty on sprawl. In 2001, the latest year for complete figures, state and local governments invested $10.1 billion for roads, buildings, schools, water, sewer, public safety, and other infrastructure and services without which sprawl cannot proceed. In addition the state spent $507 million for economic development and awarded over $1 billion in tax credits for redeveloping old and contaminated industrial sites. While there is significant public spending in central cities, a growing percentage of such public investment goes to luring jobs, homes, and businesses to the countryside.
For example, the Legislature established the state Transportation Economic Development Fund in 1987 to invest in highways, roads, streets, and other infrastructure that support new jobs. Of the $382 million spent since 1988, 78 percent, or $297 million, went to new suburbs and rural areas; just 22 percent, or $85 million, went to core cities.
The big winner was Auburn Hills, an upscale suburban Oakland County community of 20,000 people. It received more than $25 million, or $1,250 per resident, for streetscape improvements, new roads, a bicycle path, and other amenities. That was $5 million more than Pontiac, which received just $303 for each of its 66,000 residents, and $2 million more than Detroit, which received a miserly $25 for each of its 920,000 residents. Meanwhile, thousands of people in both Detroit and Pontiac have no good way to get to jobs they desperately need.
One Way Out
Because public investment in infrastructure and economic development is the most important engine driving sprawl and the most critical factor in redeveloping cities, the only way that Michigan will ever fix its ruinous land use patterns is to redirect that spending to new, more economically efficient strategies. Pointing public investments inward toward existing communities builds neighborhoods instead of tearing them apart, conserves natural resources, slows the ever-outward spread of expensive infrastructure, and boosts use of existing bus systems.
The need for this change in Michigan is urgent. The tide of red ink inundating government in Michigan is due in large part to the costs associated with how we grow. Adding just one lane to a divided highway can cost $20 million a mile. Maintaining that highway costs thousands of dollars annually. Continuing to grow outward and laying down evermore miles of expensive roads and sewers — and further stretching our under-funded public transportation systems — makes little economic sense. And sprawling patterns of development discourage too many of our talented young people from settling in Michigan. The state's taxpayers are spending a fortune to educate our best and brightest only to see thousands leave; more than 200,000 young adults migrated out of Michigan during the 1990s to build the new economies of Denver, Seattle, Boston, New York, and Chicago.
Reversing Michigan’s half-century of outward-bound investment requires a concerted drive by cities, business leaders, and Smart Growth advocates. The challenge may be great, but so is the need. For example:
- A five-year-old change in the state’s revenue sharing formula, which provides nearly half of the income for communities, penalizes central cities and older suburbs by directing most public funds to encouraging growth in new suburbs. Of the top 20 communities receiving the largest increases in payments from 1998 to 2006, only one is a city.
- Local governments, particularly suburban communities, issue tax abatements each year to industrial employers on roughly $3.3 billion of property in the hope of attracting jobs, according to the state. The payoff during the 1990s was just 14,000 new jobs, a subsidy of over $65,000 per job. Worse, the abatements sharply cut local property tax revenues — almost $100 million a year — worsening county, city, and township budget deficits.
- The state Department of Transportation continues to press for bigger highways to aid the suburbs and rural areas while freezing the budget for public transit, the lifeblood of successful cities. The trend is most apparent in the Detroit region, where the regional planning agency proposes spending more than $60 billion in highway construction, half of it with no apparent source of revenue, while public transit budgets stagnate. Less than $200 million, or 6 percent, of the state’s $3 billion annual transportation budget supports public transit, an amount that only becomes more insufficient as the state continues to sprawl.
- The state directed over 50 percent of its community economic development block grants — $94 million of $185 million — to industrial parks and other business infrastructure in areas outside, and in many cases far outside, existing communities.
Smart Spending, Big Dividends
Meanwhile, public investment programs designed to aid central cities and older suburbs actually accomplish much of what they set out to do:
- The bulk of the $50 million in state funds authorized in 2000 for “core communities” to expand high-tech businesses, promote land assembly and acquisition, and redevelop waterfront property actually went to cities. In addition, since 2000, Michigan cities reinvested $77.5 million in their central business districts through tax increment financing, which captures the extra taxes from the increased property values that improvements in streets, sidewalks, riverfronts, and other public infrastructure generate. The state also issued $235 million in single business tax credits meant to spur more private investments in downtowns.
- Federal and state tax credits for redeveloping abandoned or neglected historic structures have spurred $1.7 billion in private investment, added 20,252 jobs to Michigan’s economy, and returned almost $32 million in once-abandoned properties to local tax rolls since 1971. Most of this activity occurred in older, more urban settings.
- Michigan’s brownfield redevelopment program, intended to hasten redevelopment of old and contaminated industrial sites, has spurred $4 billion in new development since 1995, 70 percent of it in core cities.
In other words, Smart Growth investments offer a far less expensive, more effective approach: Reinvest in what’s already been built. If Michigan did that, instead of investing in new infrastructure that allows developers to scatter homes and businesses across the land, the state would save tremendous amounts of money, conserve its open land, enjoy the rebirthing of its many neglected and downcast cities, dramatically increase the viability of public transportation systems, and attract far more of the innovative companies that are looking for smart places to invest, build, and hire.
Nationally known journalist Keith Schneider is the Institute’s deputy director; reach him at email@example.com. Institute Operations Manager and Policy Specialist Mac McClelland can be reached at firstname.lastname@example.org. This article is from the Institute’s special report, Follow The Money: Uncovering and Reforming Michigan’s Sprawl Subsidies. The entire report is available online in text and PDF formats, and can also be purchased online.