Smart Growth and Economic Success
Learn about the webinar on Smart Growth and Economic Success held on September 18, 2013.
- Smart Growth and Economic Success: Benefits for Real Estate Developers, Investors, Businesses, and Local Governments
- Smart Growth and Economic Success: The Business Case
- Smart Growth and Economic Success: Investing in Infill Development
- Smart Growth and Economic Success: Strategies for Local Governments
EPA has developed a series of reports exploring the economic advantages of smart growth for businesses, real estate developers, investors, and local governments. Smart growth development is compact and walkable and provides a diverse range of choices in land uses, building types, transportation, homes, workplace locations, and stores. Businesses, real estate developers, investors, and local governments that understand how smart growth can affect them financially will be better prepared to make development decisions?decisions that are likely to benefit the environment as well.
(Click here to learn more about the environmental benefits of smart growth strategies.)
EPA held a one-day workshop in December 2011 when business leaders, real estate developers, and economic development professionals came together to share their thoughts and make suggestions about how to expand on work in this area. Discussions from that workshop helped shape these reports.
Smart Growth and Economic Success: Benefits for Real Estate Developers, Investors, Businesses, and Local Governments
Smart growth projects are attractive to private-sector interests because they can find a ready market and compete financially. They appeal to local governments because they can be the building blocks of a growing economy and high-quality, economically sustainable neighborhoods and communities while also helping to create a cleaner, healthier environment. Some of the advantages for developers, communities, and local governments associated with smart growth include:
- Compact development: Compact development can reduce the costs of land and infrastructure for individual projects, generate more revenue per acre, and reduce the costs of providing services. By locating companies closer together, compact development can create a density of employment that increases economic productivity and attracts additional investment.
- Walkability: Projects in walkable neighborhoods command a price premium, earning real estate developers and investors a higher return on investment. Improvements to streets and sidewalks to make them more appealing to pedestrians can attract more customers for businesses. In turn, local governments benefit through additional property and sales tax revenue.
- Range of choices: People and businesses value places that bring together a variety of activities to create vibrant environments. The demand for such places exceeds the supply, and changing demographics will likely further this trend. Developers, investors, businesses, and local governments who respond to these market preferences could reap economic advantages.
Smart Growth and Economic Success: The Business Case
Many companies representing diverse business types have recognized that compact, walkable downtowns are good for business and are choosing their operating locations accordingly. This report discusses how locations with housing and transportation options, a mix of uses close together, and a high quality of life can improve environmental outcomes while providing economic advantages for businesses, including:
- Increased productivity and innovation: Easier access to labor, suppliers, and supporting businesses improves productivity. An environment that enables and encourages social interaction both within and among firms leads to more idea exchange, innovation, and collaboration. Making it easy for employees to incorporate physical activity into their daily commutes improves their health and well-being, reducing absenteeism and health care costs.
- Improved ability to compete for labor: Many professionals and recent college graduates prefer to live near where they work and to be able to walk to shops, restaurants, and entertainment. Low-wage workers need access to affordable housing near jobs and transportation options. Businesses in walkable central business districts near transit can meet the needs of both these groups, making it easier to recruit employees.
- Stronger retail sales: Stores find it easier to attract customers when they are in locations that can be reached in multiple ways and provide a diverse, vibrant environment.
Smart Growth and Economic Success: Investing in Infill Development
Developers of all sizes?from independent, small-scale developers to large, publicly traded development companies?are building infill projects throughout the country, and are doing so profitably. Nevertheless, infill development can present challenges that can discourage developers, particularly those without infill experience. This report discusses how these barriers are often surmountable and are beginning to diminish as infill development becomes more common.
New trends point to a sustained increase in demand for infill development, creating a market opportunity for developers:
- Changing demographics and preferences: In the next 20 years, the needs and preferences of aging baby boomers, new households, and one-person households will drive real estate market trends?and infill locations are likely to attract many of these people.
- Employer behavior: As more people choose to live in infill neighborhoods, employers are following, and vice versa. Many corporations are moving to infill locations, in part because they recognize the competitive advantages of being closer to the central city.
These trends in the residential and commercial sectors give developers economic incentives to find solutions to the potential barriers to infill, and local governments are helping as well. By changing the regulatory environment to encourage infill, local governments are supporting development that uses existing infrastructure, cleans up and repurposes contaminated and neglected sites, helps reduce transportation-related pollution, and reduces development pressure on outlying areas. Lower infrastructure costs and higher rent and sales prices for infill projects can help make these projects profitable for developers, supporting neighborhoods that are better for the environment and improve quality of life.
Smart Growth and Economic Success: Strategies for Local Governments
Many local governments are struggling financially as municipal revenues have failed to keep pace with rising costs of local government operations. To avoid cuts to basic services, many municipalities seek to improve their fiscal health while maintaining a high quality of life for residents. Smart growth strategies can help local governments build on existing assets and maximize the return on investment while helping to protect the environment and human health. This paper reviews the latest evidence of the connection between smart growth approaches and the fiscal strength of local governments to help them make decisions about where and how to grow. Strategies for local governments to lower costs and/or increase revenue include:
- Compact development in established town and city centers: Water, sewer, and road infrastructure cost less in compact development than in more dispersed development. In addition, ongoing expenses, including those for police, fire, and emergency services; street maintenance; and trash removal, are higher per capita when development is dispersed and infrastructure must serve people across a larger geographic area.
- Transit connecting homes and jobs: Smart growth development can help communities maximize property tax revenue without raising tax rates because properties near transit and compact, walkable, mixed-use development in established town and city centers are associated with higher property values.
- Neighborhoods and streets that make walking and biking safe, convenient, and enjoyable: Investing in making retail districts more walkable and bikable helps businesses and restaurants fill empty storefronts and increase sales, raising sales tax revenue for local governments.