Report: Colorado Local Governments, Crippled By Budget Shortfalls, Could Save Billions By Curbing Sprawling Development Projects

Environment Colorado

DENVER—”The Fiscal Cost of Sprawl: How Sprawl Contributes to Local Governments’ Budget Woes,” a report released today by Environment Colorado Research & Policy Center, found that the high cost of providing and maintaining infrastructure for sprawling development hurts taxpayers and contributes to the fiscal crises facing many Colorado local governments. Research from around the state shows that Colorado communities could save billions of dollars in infrastructure costs by promoting smart growth.

“Sprawl is putting a financial choke hold on our cash-strapped cities and counties,” said report author, Will Coyne, land use advocate for Environment Colorado.

The cost to provide public infrastructure and services for a specific population in new sprawling development is higher than to service that same population in a smart growth or infill development. Sprawling and “leapfrog” developments (those built far away from the current urban area) tend to be dispersed across the land, requiring longer public roads and water and sewer lines to provide service. Such developments often impose increased costs on police and fire departments and schools.

At the same time, sprawling development does not generate enough tax revenue to cover the costs it incurs on communities to provide new infrastructure and public services. Research by Colorado State University found that in Colorado, “dispersed rural residential development costs county governments and schools $1.65 in service expenditures for every dollar of tax revenue generated.”

“In this fiscal climate, cities and counties have to look for ways to reduce the costs of servicing new development without lowering quality to existing residents,” said Dr. Daphne Greenwood, an economist with the Center for Colorado Policy Studies at the University of Colorado at Colorado Springs. “A growing body of evidence points to smart growth as a way to do that.”

Key findings of “The Fiscal Cost of Sprawl: How Sprawl Contributes To Local Governments’ Budget Woes,” included the following:

• A Federal Transit Administration report conducted by the Transit Cooperative Research Program estimates that smart growth would save the Denver-Boulder-Greeley area $4 billion in road and highway construction over 25 years—a savings of 21 percent.

• Denver Regional Council of Governments (DRCOG) research conducted in the planning process for the Metro Vision 2020 update found that sprawling development would cost Denver regional governments $4.3 billion more in infrastructure costs than compact smart growth through 2020.

• Similarly, DRCOG found that a 12 square mile expansion of the Urban Growth Boundary around Denver to accommodate additional sprawling growth would cost taxpayers $293 million dollars, $30 million of which would be subsidized by the region as a whole.

• University of Colorado at Denver researchers determined that future sprawling development in Delta, Mesa, Montrose and Ouray counties would cost taxpayers and local governments $80 million more than smart growth development between 2000 and 2025.

• New research from the Center for Colorado Policy at the University of Colorado Springs points to infill development and increased residential densities as an important factor contributing to the substantial savings in infrastructure costs in Colorado Springs between 1980 and 2000.

Environment Colorado’s research also found that most local governments do not know the true cost of development decisions. Most local governments, including the cities of Denver and Arapahoe, Douglas, and Jefferson Counties, do not regularly conduct comprehensive fiscal impact analysis of proposed development projects.

Expensive infrastructure projects associated with sprawling developments are approved in part because the costs are hidden in a variety of state and federal subsidies. Federal and state incentives, such as federal highway dollars or federal Community Development Block Grants for new infrastructure, promote expensive growth related infrastructure projects, by effectively reducing the price of providing public services.

The report recommends that Colorado decision makers support smart growth to ease future budget shortfalls and protect taxpayers’ wallets. The report encourages local communities to 1) conduct fiscal impact analysis when considering development projects, 2) make growth pay its own way through impact fees and graduated utility rates, and 3) end taxpayer subsidies for sprawling development.

“Smart growth is not just a solution to protect open space and wildlife habitat,” said Coyne. “It’s the key to our financial future. Smart growth is smart money.”