It Could Happen Here

The Cost of Unmanaged Growth

This article was originally published on May 10, 2006.

James Sheldon addressing the crowd.

James Sheldon, a financial analyst and financial journalist, spoke to a crowd of 80 people in Greenwich on May 3 on the high costs of unmanaged growth in small communities and how small towns can use the legal system to successfully manage growth. Mr Sheldon writes a monthly column about local land use and related fiscal matters for “Views From Gallatin” for The Independent and The Millerton News.

Tracy Frisch, the event organizer and farm advocate, addressed the audience prior to Mr Sheldon. A long time resident of suburban Philadelphia and New Jersey, Ms Frisch stated “It’s comfortable to think suburbanization won’t happen here, but experience elsewhere shows that development often happens suddenly and quickly. Or it occurs as a slow but insidious creep, and before we realize it and take action, there is not a lot left to defend and protect, because new houses are sprinkled everywhere.”

Most of the examples cited by Mr. Sheldon in his talk were about towns in Columbia and Duchess Counties where he lives, but he stated that they are applicable to Washington and Saratoga Counties.

Many people seem to think that “development means lower taxes. That is a fraudulent notion” said Mr Sheldon. Large scale housing developments bring huge profits to developers, profits that are “subsidized by taxpayers”. The subsidies come in the form of additional road construction and maintenance, public utilities, increased school taxes to accommodate the increased school population and, should the developments be large enough, increased fire and police protection.

While some would argue that attempting to control growth would adversely affect individual property rights, Mr Sheldon argues that increased taxes devalue property values. Mr. Sheldon’s expressed his attitude towards development as “I’m not anti-growth. I’m for the right to raise my family in a small town”.

A Town Board, in conjunction with the Zoning Board, can, for fiscal reasons, decide that a proposed development “will overwhelm the town” . The Town can then set limits on growth based on what the Town can fiscally afford. “The Zoning Board must lay the groundwork for limiting large scale developments for fiscal reasons” said Mr. Sheldon. As an example, he cited Amherst Massachusetts, which in the 1990’s did a financial impact of future development and used the results to plan and manage growth. While they were sued in court by developers, because the town had a well-developed study in place before the developers arrived, they were able to consistently win in court. However, surrounding towns took a different approach. They waited until developments were proposed, then set limits without a financial impact study. When sued, the developers consistently won.

While the impact of large scale, residential development is felt most acutely in school taxes, it is extremely rare for a school board to get involved in growth issues, despite the fact that in some areas of New York State, two thirds of taxes are school taxes. School boards “have to be involved in all steps” of the planning process. Mr Sheldon addressed how a proposed 300 home development planned for Rt 197 will affect local school taxes. With an average of 1.3 students per home, the development would increase school taxes $4600 in Hudson Falls and $5500 in Ft Edward.

Fighting growth does not come without it’s own costs. A citizen group in Red Hook, Duchess County raised the issue of runaway growth with the Town Board. As a result a measure was put before the public to raise Town taxes 3.5 million dollars for payments to farmers not to develop “the prime agricultural assests of the town”. The measure passed by a margin of 4 to 1.

Some towns in Long Island are pioneering the use of a 2% transfer tax on all real estate transactions, with the proceeds going to historic preservation, public parks and purchasing development rights to preserve open space. Vermont is using a similar system to develop affordable housing.

Impact fees can also be imposed upon developers to help mitigate increased taxes.

Mr Sheldon briefly addressed the impact of commercial development, such as big box stores. “If a property is fully taxed, it can provide a small net gain in taxes to a town. But such stores are rarely fully taxed”. For instance, a new Hannaford Supermarket in the town of Red Hook generated enough new taxes to pay for the education of 12 students.

Mr Sheldon closed by urging those in attendance make their views know to their elected officials, to run for office or volunteer to serve on local zoning boards.

Additional information about Mr Sheldon, along with news articles and essays can be found at his web site, http://www.littletownviews.com.