Development Versus Infrastructure

December 3, 2019

The economy is thriving in 2019 and everyone is attempting to make the most of it, including developers.  Land prices are increasing as large tracts are not as readily available near municipalities. Whether commercial or residential, development increases the tax base for municipalities, which helps fund the local and state infrastructure programs.

Infrastructure is defined as the basic physical systems of business that are high-cost investments vital to a country’s economic development and prosperity.  It can include, but is not limited to, transportation, communication, utilities, parks, airports, and public education.  The 2017 Infrastructure Report Card put out by the American Society of Civil Engineering, which focuses on utilities and transportation, states that America’s infrastructure is aging and requires continuous repairs, rehabilitation or replacement.  From water line breaks to at capacity sewer treatment plants, America’s infrastructure is a huge cost burden on everyone from small municipalities up to the Federal government.  The only ways to increase the tax base to fund infrastructure maintenance and improvements is through growth or taxes.

A local county property assessor states that increases on property values are based each year upon the percentage of growth in the entire county.  In other words, if growth is not happening or growth is slow, property values do not increase or may only increase slightly.  In some instances, towns may begin to fall away because of no growth, which leads to decreasing property values.  Property owners prefer for property values to continue to rise.

What causes or influences a growth trend in a city or county?  There are a multitude of things, such as land prices, job market, commute times, and education system.  One area of Hamilton County is among the highest growth areas in the State of Tennessee.  There is a home shortage in this area and homes cannot be built fast enough.  There are two factors that heavily influenced this growth trend.  First, the county invested in an industrial park nearby and jobs are abundant.  Additionally, the schools in this area of the county are newer and have good marks relative to test scores.

Now let’s pose the question: When does development become an “issue” related to infrastructure?

Some will argue that the infrastructure must be in place before development occurs.  Others say development spurs infrastructure installation and improvements.  Everyone has an opinion, but is there a right answer?  This leads to discussions similar to “What came first, the chicken or the egg?”  Each side have valid points, but a combination of ideas may be more useful.

Growth trends are helpful to local and state officials in knowing how to allocate funding for upcoming infrastructure projects.  For example, if the data indicates growth, they can begin the planning stages for road upgrades.  Road projects can take years to progress through planning, right-of-way acquisition, design and construction phases.  Local utility companies look at growth trends and future demand to plan for and implement water and sewer improvements in their systems.  As development occurs, especially in a high-growth area, the infrastructure should be progressing, whether through upgrades or expansion.    Location and available funding will impact the timing of infrastructure improvements specifically related to growth.  As you can see, this is a never-ending discussion.

For more information on the 2017 ASCE Infrastructure Report Card, click the link below: