Dallas' Pursuit of Endless Growth Is a Pyramid Scheme Bound to Collapse

Smart chaos beats dumb but orderly.
Smart chaos beats dumb but orderly.
Zeber

Recently I came across a great term of art I think aptly describes the contrast between the way the Bishop Arts/North Oak Cliff district of the city is growing and the way West Dallas is developing. It's, "Orderly but dumb versus chaotic but smart."

A tight fit.

In a conversation with Charles Marohn of "Strong Towns," a national nonprofit promoting financial resilience for communities and cities, I described the way I saw the recent history of these two neighboring domains across the Trinity River from downtown Dallas.

In North Oak Cliff in what was once a down-at-the-heels early 20th century low-rise brick commercial district originally laid out on trolley lines, you have all kinds of piecemeal development put together by little guys, male and female, using money they scraped together themselves to salvage and repurpose old buildings.

Sometimes they get some grudging help from City Hall. Most of the time they have to hide from City Hall in order to get their deals done.

In West Dallas, a disused industrial district, City Hall rolled in several years ago like Eisenhower at Normandy Beach and put a quarter billion dollars in infrastructure in the ground to lure big institutional investors. Those investors are now busy putting up the same kind of massive, auto-dependent, low and mid-density apartment blocks we see around the rest of the city.

Marohn, who describes himself as a "recovering engineer," says that the North Oak Cliff model of development has a decent chance of paying its own way over the long term. The other model I described to him is probably typical, he said, of a development style that winds up saddling cities with crushing debt, pressuring them to venture deeper and deeper into a "growth Ponzi scheme" that can have only financial ruin as its eventual and inescapable outcome.

Pretty bleak picture, eh? But Marohn, 42, didn't come to it casually. A civil engineer working for both municipalities and private companies when he was young, he came to wonder who was putting a sharp pencil to the true costs of development and infrastructure.

Nobody.

He found two major reasons why American cities embraced sprawl and auto-dependent growth with such blind enthusiasm after World War II. It really worked, for a while. New development did pay its own way and then some. And it was what people wanted.

"I was there, too," he said. "I worked for developers for a number of years and for cities, doing these kinds of projects. The thing is that the developers are right. They do pay for the infrastructure.

"For the city, the cost to build that new development is very, very low. You might have some staff time or other costs, but the bulk of the cost is being paid for as part of that development transaction.

"Here's the catch. As part of doing that project, the city takes on the long-term liability to maintain it. The city says, 'OK, you build it, and then we'll take over, and we'll fix it. We'll maintain it indefinitely. When the road gets bad, we'll replace it.'

"Well that works really well. The city will be cash-flow positive. The city will have a lot of money through the first life cycle, because everything was paid for by someone else and the city wasn't having costs. You've got basically 25 years of cash-flow positive.

"The problem is when you get to the end of that first life cycle, then you have to go out and fix stuff. What we [Strong Cities] find is that the money isn't there. There isn't enough cash to actually fix stuff.

"So cities respond in two ways. Cities respond by trying to create more growth. If you can create more growth, you get a lot of cash, and you can use that cash to make good on all the promises you made a generation ago.

"The second thing you do is you take on debt, and cities have become really, really good at creative ways to take on debt to do basic maintenance that should be paid for from cash flow.

"So it creates a Ponzi scheme, a kind of situation where a city enjoys essentially one generation of growth, and then you've got another generation of kind of hanging on.

"We call that the stagnation generation, where you try to maintain the same level of service, and you may cut back a little bit, but you also take on a bunch of debt.

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"And then you reach the generation of steep decline."

So, wait. All growth is bad? Growth bankrupts us no matter what? So what should we do? Shoot ourselves? Stop eating? Stop having sex?

No, not really. The work Marohn and fellow contributors to Strong Cities are doing is echoed by other experts who are telling us that our tax structure, our building policies and pretty much our whole culture are incentivizing growth that will in fact bankrupt us over time. But there is another kind of growth that communities can actually make money on and sustain over time.

And that's what takes us back to North Oak Cliff.

Marohn, who has analyzed infrastructure costs in varied settings across America, says the red flag is the automobile. Consistently where growth is auto-dependent, he finds, the costs of maintaining the infrastructure gradually but irresistibly outstrip a community's ability to pay. But real estate that is not totally dependent on cars can pay its own way, he says, because the maintenance costs are so much lower.

"The more people can walk, the more financially productive the place tends to be. When you have places where people don't walk or can't walk, those places tend to be the least financially productive.

"And by walk, I don't mean that you can physically get out and walk. I mean the place is designed so people can be comfortable walking."

In North Oak Cliff people can walk. But they are hardly living car-free. Especially in the old single-family residential areas of Oak Cliff, everybody has a car or two at the curb or in a driveway, because most people have to travel a distance to get to work, shopping or other activities.

But North Oak Cliff also has the quality Marohn refers to in his maxim as "chaotic but smart." Because growth and development in North Oak Cliff have been both piecemeal and incremental, stitched together by thousands of minds solving problems a curb and a streetlight at a time, North Oak Cliff has the quality of being enormously flexible in the future.

Marohn calls it "the way we did development before the Great Depression:" A couple built a small home. They had a child and added a room. They had another child and took the house up a story.

Oak Cliff is porous. Residential blocks adjoining the Bishop Arts commercial district include businesses occupying what were once homes, abutted by houses still occupied by families. And everybody's cool with it.

That makes it an area that can flex, that can add and subtract density according to where it works, all the time making fairly modest demands on the city in terms of the amount of infrastructure that must be maintained per person.

This may sound like a trivial observation, but I know people in North Oak Cliff who would rather live with a cracked curb than make some big stink that will just draw the code inspectors out. That's a big difference from West Dallas, where the institutional investors weren't comfortable going in until the city installed a $183 million decorative bridge (what will those maintenance costs be 25 years from now?) and also committed to another $20 million or more in infrastructure improvements (so we don't even get the 25-year free ride at the beginning).

That's what takes us to "orderly but dumb."

"The city," Marohn says, "likes orderly. One of the primary functions of orderly is that the city is able to figure out, 'Here is how many apartment buildings we need, and here is where they are going to be. Here is how much commercial we need. Here is where it's going to be.' And they are able to finely calibrate that from the top down.

"But the reality is that cities have never been able to do the math. What you wind up with is being able to do things that look good in the short term but have no ability to withstand the test of time.

"We can go back to 'urban renewal.' We can go back to the projects to get rid of blight. We can go back to all kinds of things and look at the projects we built in the '60s and then just see that despite our best intentions, despite the fact that we thought we knew what we were doing, time has revealed that we are not as smart as we think we are."

Meanwhile the kind of development put in place under the orderly but dumb regime is maxed out, massive, inflexible and hungry for public infrastructure maintenance.

One of the best things about the "chaotic but smart" approach of North Oak Cliff, he says, is that by keeping things relatively small and random you limit the size of your mistakes.

"The chaotic but smart approach is the one you describe in the other neighborhood [North Oak Cliff]," he said, "where you've got people trying things on a small scale. There will be failure. Things that will be tried won't work. But they won't be large-scale failures. They'll be small-scale failures that over time can be overcome.

"That's a huge difference in terms of the ability to be resilient and withstand fluctuations in the market over time."

With David Jensen in mind, the guy I have written about who lives in a small warehouse in West Dallas in the path of The Big Plan, I thought to myself, "Yeah, and another big difference is that North Oak Cliff is able to do it all without using eminent domain to toss anybody out of his home."

But then I guess that's another whole story.

Email the author at jim.schutze@dallasobserver.com.


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