2019 saw Amazon pick New York City has the center for its HQ2 after spending almost 2 years making America’s cities bend over backward to woo the new location. Ultimately, after local protests lead by Alexandria Ocasio-Cortez and others, Amazon decided to dump the HQ2 idea and build a new facility in Northern Virginia and open an NYC office with fewer people. Cities have been begging major companies to move in for decades and they have spent lavishly on infrastructure to make it happen but is that really a good investment?
Wal-Marts, Malls, and Employers
Municipalities spend a great deal of their time focusing on city planning and growth. Successful towns have a variety of jobs, amenities, and opportunities that ensure that they will be attractive places to live for years to come. Cities and towns that lack these things tend to see population flight as younger people move away to better places that provide all those things. Even politics are beginning to factor in where people move. To get the amenities and opportunities, cities frequently offer tax incentives to major employers, major stores and shopping malls all to get the juicy sales and property tax revenues that cities rely on to survive. This growth mindset often finds cities sacrificing needed revenues to make this growth happen. Rather than focus on creating a sustainable city that can pay for itself over the long-term many cities plow themselves into debt in the hopes that they will be able to grow themselves into paying for the expenses in the future. This does not usually end well for them.
The story is a familiar one across the country. A city or town did well for decades but the collapse of an industry or town has left the city reeling with no way to raise the revenue to pay for its services. Major cuts begin to try and stop the bleeding but ultimately, the municipality has to make a variety of tough decisions in order to stay afloat or go bankrupt. It’s like a bad version of Cities: Skylines. This often happens because, in order to get a Wal-Mart or even a major employer, cities offer tax incentives or build expensive infrastructure that they can’t afford to maintain. This has created what is essentially an unsustainable model for most towns.
The Sustainable Town
Here at Rouges, we love the Strong Towns project. One of the strategies that they advocate for is the creation of a strong and diverse portfolio of businesses of a medium to small variety in a town. None of them may be big names or have much acclaim but the failure of one will not be fatal to the entire area or region. This strategy makes quite a bit of sense, it is what makes super cities so successful over the long term. The reason New York, San Francisco, Dallas, Denver, and Seattle do so well is that they provide a diversity of employment opportunities. The failure of one large business will not damage a super city economically. There might be some short-term pain but ultimately, the city will recover and move on. For smaller cities, the loss of a major employer can be a blow from which the area may never recover. This model is less prestigious but it is sustainable and there is no need to hand out over more exotic tax incentives to get these businesses to stay. They can and will employ people and even attract new talent.
Super Cities are Here to Stay
Because big cities are attracting the big-name companies, towns need to focus on sustainable tax bases, not short-term growth with a hopeful future gain. If stores want to move into an area, then they need to pay normal taxes or at least some tax. The days of large stores getting a free ride on taxes with the promise of jobs (that don’t even pay that well) needs to end. If towns and cities can attract new business that is willing to set up shop and also contribute to the local economy than the town will be able to have the vibrancy and economic success without the expensive infrastructure that big employers or big retailers might require. Is it glamorous? Probably not, but it is a far better and more sustainable system than the current one in place. The best part is that state governments and even the Federal government can use grant dollars that currently support the old model to support the new model. To learn more about this we strongly suggest you visit Strong Towns. They are a wonderful project that is working to redesign America’s towns in a sustainable way that improves the lives of everyone.