In rebuttal, the HBA/Rocky Scott/Realtor/Developer axis cites numerous studies that purport to prove just the opposite. And as you might expect, the war of words has already begun.
According to developer/philosopher king/voucher guy Steve Schuck (as quoted in the Dec. 12 issue of the Gazette), "It's the duel of the studies ... we all know you can manipulate these kinds of things to produce the outcome you want." So true, Steve, so true!! Kind of like all those studies that prove how well school vouchers work, right?
Meanwhile, the greenies are ready to rumble. Yup, all that growth, and the service demands that it creates, will hit us all in the pocketbook sooner or later, because the system can't accommodate growth without continual tax increases. Our future: steadily worsening municipal services, steadily increasing taxes and fees -- a kind of California without beaches, Democrats or Arnold.
So who's right?
Sadly, they both are. Let's look at, for example, the home-building industry and consider its economic impact.
Every year, builders of new homes in the Pikes Peak region construct and sell several thousand houses. The actual process is extraordinarily beneficial to the economy. A developer acquires raw land and creates buildable lots, home builders build houses, realtors market the houses, and we, the citizens, buy the finished product.
In the months between site preparation and sale, tens, even hundreds, of thousands of dollars per housing unit flow into the economy. Lots of people have jobs, get paid, and spend their money. Builders and developers sell their product, make a profit, and start the next project. It's called capitalism, and it works just fine.
If our local builders erect, say, 4,000 new houses, spending an average of $150,000 per house, that's $600 million flowing into the economy annually, creating and sustaining tens of thousands of jobs. When home building stops/stalls, things go south in a hurry. Lots of folks lose their jobs, foreclosures rise to extraordinary levels, tax collections drop precipitously, property values plummet, and hundreds of businesses close.
Want proof? Ask anybody who was around in the late '80s, when new home building virtually ceased -- we experienced a full-blown depression.
And that's why folks with long memories, like Steve Schuck, snort contemptuously at the notion that development doesn't pay for itself. You may not like developers, or the visible consequences of development, but quality of life starts with your own job -- and a lot of us remember life in the jobless times and don't want a repeat.
So Steve's right.
But listen to the greenies. Once a house is built, it becomes a family's asset, but a community's liability.
Realize that most of the money that poured into the economy to build the house was borrowed and has to be repaid. We call that a mortgage payment, and most of us have to make 'em to the tune of $1,000 per month or more. If the average household pays $12,000 annually in principal, interest and insurance, then those 4,000 new houses are sending $48 million annually out of town to their mortgage holders.
And think of the demands for services that each new home creates, including police, fire, education, infrastructure creation/maintenance -- numerous studies, including the latest one, show that the cost of providing these services is much more than the tax revenue generated by new development.
Hence, our gloomy future: Either we cut services to the barest minimum or we increase taxes frequently and substantially. And since we, the citizens, will accept neither alternative, we're screwed.
So the greenies are right.
But as long as we can maintain a growing and expanding economy, we can keep our little Ponzi scheme of an economy humming right along. A Ponzi scheme, as you may recall, uses money from new investors to pay off earlier investors, creating the illusion of high returns. With growth, and the constant injection of new money, the bills never quite come due.
But to use an overused buzzword, our model is "unsustainable." What happens in 20, 50, 100 years? Can we support a population of 1 million? 5 million? 20 million? Sure we can -- just the way Calcutta and Mexico City support such population levels.
So think of our city as a party boat, floating serenely down the river. We all know that we're going over the falls sooner or later; most of us figure that it'll be later. Don't jump off the boat -- the shores are rocky, the current's swift, and there's money to be made right here.
Party on, dudes ... All the way to the waterfall.
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