Issues

Transportation and Infrastructure

Real estate, and the infrastructure that supports it, represents 35% of the United States’ asset base – the largest asset class in the economy. As a result, depressions in real estate have generally caused recessions in the general economy. Two of the last three recessions, including the current one, have convincingly shown this. To get the United States’ economy moving again, resuscitating the real estate industry is key.

Transportation infrastructure is a particularly important part of this achieving this goal. Transportation drives development and the transportation system we select dictates the form and development of real estate. For the past three generations, U.S. transportation investment policy focused primarily on building roads, as the market wanted. However, this has now resulted in an over-supply of “drivable sub-urban” development. In today’s real estate market, particularly among the Millennial generation, demand is rapidly rising for “walkable urban” development, which is denser and mixes uses within walking distance. To develop walkable urban places, a balanced transportation system must be in place; cars and trucks but also rail transit, buses, biking and, of course, walking.

Federal Financing of Smart Growth Development

Federal programs play an important role in supporting the real estate sector and directing new development. With nearly $1 trillion in direct tax subsidies and $4 trillion in loan guarantees over the last five years, the U.S. government has a significant impact on the real estate market, including where new development is built and the types of real estate development created.

Current federal investments disproportionately subsidize larger-lot homes distant from transportation options, as opposed to smaller-lot homes in walkable urban communities which, as the market shows, consumers are increasingly demanding. Federal programs also heavily promote single-family homes over multifamily homes regardless of market and local need, and renter support is the smallest portion of all. The combination of these factors means that home ownership remains out of reach for too many people.

Economic Benefits of Smart Growth

Smart growth development has the potential to extensively benefit the economy of a town or city, kick-starting economic growth from current sluggish levels. Of the many smart growth strategies that benefit local economies, LOCUS has identified two development practices that are especially effective as economic catalysts: transit-oriented and mixed-use development.

In addition, many LOCUS developers are interested in the benefits that smart growth strategies can bring to rural communities – an area not traditionally associated with smart growth but one that can equally benefit from these strategies.