In the last installment we used the redevelopment of the Thomson site to outline a typical case in which the city as Urban Growth Machine channels public funds into specific private real estate sites. We showed how it does this in order to synthetically increase the exchange value, i.e. the amount for which the land can be sold, of the site.
The proof is in the pudding: the 16 cleaned and prepped First Capital acres that received $1 million in public investment are now being marketed at $200,000+ an acre on the private real-estate market. Remember that five years ago the entire site went for just $65,000 an acre. Unfortunately that five-year windfall will go not back into the community chest, which had a center-stage role in creating it, but into the bank accounts of the land's private owners and ultimately into the campaign coffers of tomorrow's Growth Machine mechanics.
Direct investment isn't the only way in which the Urban Growth Machine increases the value of select parcels of land. It also increases land values through indirect investment, typically in the form of road infrastructure.
On Feb. 8, the Herald Times quoted local hyper-developer Eric Stolberg commenting on the business effects that impending and recently completed road improvements would have in the College Mall area. It's important to keep in mind that, for a developer like Stolberg, business and land effects are synonymous:
"You have the College Mall Road project nearly completed and the 45/46 bypass project coming soon … that means when it's all completed, you will be able to drive from Moores Pike on the southeast side of Bloomington to Ellettsville on a four-lane road. That kind of access allows more people to easily drive to the area from farther away."
Translation: "When it's all completed, it will be easier for Ellettsville consumers to get to land which I own or control as well as land under the ownership or control of other developers in the College Mall area." Mechanism: the use of road infrastructure to direct consumers to specific locations. Who pays for that mechanism? Taxpayers. Who profits from that mechanism? Place entrepreneurs such as Stolberg.
You might be tempted to object, and reasonably so, that it is not only the place entrepreneurs who benefit. Doesn't, after all, the taxpayer also benefit due to the increased access to shopping opportunities? Unfortunately, no.
First, it is becoming axiomatic within academic traffic-planning circles that increasing road capacity does not decrease congestion but actually increases it. But, because the mechanisms for the increase typically take a decade or so to play out, there is sufficient time for the place entrepreneur to "cash out" - at a handsome profit of course - before the negative effects of the capacity increase become apparent and begin to depress, or at least slow the rate of growth of, the value of the land.
Unfortunately for us, Bloomington has already had one significant demonstration of the effect as anyone who remembers the level of congestion, and capacity, of either Second or Third Streets across SR37 a decade ago can attest. Today with each street near double its previous capacity, congestion is as bad or worse than it was in 1990. That's with no significant population growth to account for it in the period.
We're about to repeat the same bad mistakes, not only on Stolberg's SR45/46 bypass, but on the W. Third corridor as well. (Those wanting an even more in-depth analysis of the phenomena are encouraged to read the Association of Monroe County Taxpayer's release: Why building more roads relieves your wallet, not congestion, available at ...)
Second, bringing more shopping opportunities by building better (read: quicker) road infrastructure rests on the assumption that it is somehow impossible to simply bring the stores closer to the consumer. That is, of course, an ultimately indefensible position. There's nothing preventing the building of a Circuit City, Best Buy, Marsh, Kroger, etc. conveniently within Ellettsville itself instead of twelve miles away in a segregated ghetto of asphalt, anomie, and anxiety - a ghetto that New Urbanist James Kunstler generically refers to as an "automotive slum" and that we know simply and specifically as "The College Mall Area." Nothing, of course, but the Urban Growth Machine's need to physically segregate land functions in order to guarantee profits by directing where development will occur and thus who will profit from that development.
In the first installation of this series, we cautioned the reader against assuming that any of this takes place through some kind of organized and conscious conspiracy designed to defraud the public so as to featherbed the private, and we'll repeat that caution. Nothing about the Urban Growth Machine requires more than human beings simply operating in their individual and collective best interests. Land speculators don't want to pay for something they could get for free any more than you do, and it's this organic characteristic of the Urban Growth Machine that makes it inevitable, irrespective of its actual socioeconomic costs, unaccountable, and perfectly legal.
“Financial Assistance - The public sector can capture state and local income taxes, and gross retail taxes paid within the district, and pledge these funds to assist in infrastructure, construction build out, site development as well as other incentives.” From First Capital’s website, ..., transparently and honestly describing the private capture of public funds available for those with the right connections.
How does one then counter the Urban Growth Machine, assuming one does want to counter it and that one has bought into our contention that the Machine ultimately dis-serves the public while it serves the private? The easiest way is to ensure a diversity of interests in the public realm, which is just a fancy way of saying don't elect too many bankers, lawyers, and real estate developers to public office.
Unfortunately two of our three County Commissioners depend on real estate transactions for their living. Of our seven County Council members, five are extremely friendly to the interests of real estate developers, with three of them brokering real estate transactions during their day jobs and a fourth married to one of the county's top real-estate purveyors. It shouldn't take much imagination to see that political demographics such as those will be hard-pressed to not make decisions favoring the needs of the Growth Machine over the community. Especially not when that machine spent $115,000, compared to $38,000, to ensure that its three candidates won council seats over their non-machine competitors in the last election.
Staggering though the sum may be, we're sure it was money well spent.
This column is an excerpt from CIVITAS, a weekly column written by Gregory Travis that focuses on the economic and civic dimensions of local issues. It takes its name from a similar format column written by James Howard Kunstler.