CMAP experience in the LTA program, feedback from communities on training needs, and interviews with local developers indicate that many plans do not reflect market and fiscal realities over the short and long-term. Lack of market understanding draws out and even halts development processes, leading to potential conflict when community change does not meet residents’ expectations. Lack of understanding of long-term expenses leads many communities to a mismatch between needs and costs, resulting in increased taxes or fees or declining services and infrastructure. These issues compound at the regional scale, leading to overbuilding and a backlog of local infrastructure needs. Underpinning plans with market and fiscal analyses is necessary when the state and region increasingly face limited fiscal resources, and it can help the region continue to thrive with prioritized investment in infrastructure and development.
The types of places that residents and businesses want changes over time, such as the current growing preference for walkable places spurring more housing in suburban downtowns, growth of service industries, and the resulting shift in employment types, or the decline in large-format retail due to changing consumer patterns. Major demographic shifts also change market demand; as the region’s population ages, demand for varied housing types to support aging in community will continue to grow. Planning for current market understanding as well as these major shifts in the context of local and regional goals can help local governments create successful plans.
Markets transcend jurisdictional boundaries, which means that thriving municipalities and counties take a subregional and regional perspective when planning for their ability to support various types of development. Market support for development types such as commercial, office, and residential is closely aligned with population and employment densities, regional and national economic trends, and the major infrastructure, workforce, and built environment assets of a subregion.
[GRAPHIC TO COME: Bird’s eye view illustration of various market types, infrastructure networks, and local boundaries.]
As with market potential, lack of a full understanding of the mid- and long-term fiscal implications of cumulative development decisions can limit local governments' ability to implement community goals. Planning for development must strongly incorporate planning for both local fiscal impact as well as costs to supporting jurisdictions. This is a particularly important consideration for communities at the developing edge of the region, who must align expansion proposals with the immediate and long-term cost of the new infrastructure required to support that development. Communities often recoup the costs of near-term needs, like new stoplights or water main extensions. Some communities, such as Romeoville, recoup costs of infrastructure investment through exactions from new development. However, these same communities may not have the data and expertise to properly assess cumulative infrastructure costs of development. When a disconnect occurs between near-term development approvals, tax and fee schedules, and long-term maintenance and replacement costs, local decision makers may face challenges in maintaining or upgrading their infrastructure without substantively and disruptively increasing taxes and fees. Built-out communities face different challenges than growing communities, with the former able to leverage a stock of existing infrastructure to support development, even if that infrastructure must eventually be reconstructed. Increased use of fiscal impact analysis as well as asset management programs can help communities better link goals to costs, improving planning processes and outcomes.
[GRAPHIC TO COME: Informational graphic on asset management.]
Assessing the potential public costs of and market for planned development is critical for each phase of planning, from site-specific initiatives to comprehensive plans. Basing plans purely on potential fiscal outcomes without tying those outcomes to market realities can lead to overbuilding of some development types and construction of underutilized public infrastructure, leaving communities with the costs of supporting development without revenues to match. In particular, the state distribution of retail taxes to municipalities based on sales made within their jurisdictions may lead some municipalities to promote excessive retail construction, which results in high vacancy rates. Among the broad local and regional impacts, metropolitan Chicago is home to 4.1 percent of all U.S. retail square footage, and 5.8 percent of vacant retail. By balancing fiscal and market considerations development can be resilient.
The following describes strategies and associated actions to implement this recommendation.