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My company, New City America has been involved in working with thousands of business owners, property owners and residents throughout the country over the past 10 years. We have successfully created 46 Business Improvement Districts, Community Benefit Districts and Neighborhood Improvement Districts from California to Pennsylvania.
Our company has worked in small towns of less than 30,000 such as El Centro, California, (35,000) Del Mar, California (4,000), Wheatridge Colorado (25,000) and also in very large cities of over 1 million people including San Diego, Los Angeles, Chicago and New York City. Throughout this exposure to small and large cities alike, a few major challenges are brewing on the horizon.
According to Arthur Nelson, writing for the Brookings Institute, in 2030, about a third of the buildings in which Americans live, work and shop will have been built after 2000. In 2000, the nation had about 300 billion square feet of built space. By 2030, the nation will need about 427 billion square feet of built space to accommodate growth projections and upgrade existing building stock. Most of the new buildings will be residential. This tremendous growth translates into tremendous financial burdens for local governments, both big and small, because of new infrastructure needs and new services requirements of higher density populations.
In observing the relationship between city governments and communities, it is apparent that new challenges are forcing the reevaluation of how cities run:
- Outside of recent increases in transfer taxes related to urban market-rate housing and real estate transactions, the urban property and sales tax base is relatively stagnant. The lack of annual increases will negatively impact city budgets when the real estate bubble pops and property values return to normal cycles;
- Cities are increasingly facing failing and deteriorating transportation and water/sewer related infrastructure. Money that should have been allocated to upgrade and replace infrastructure has instead gone to operating cities;
- Uncontrolled costs of local and state employee pension fund obligations and health care costs have put cities in a contractual bind which will not easily be resolved.
Later on, I’ll discuss how these challenges are affecting us here in San Diego.
— MARCO LI MANDRI