Confronting Urban Sprawl: How Cities and Suburbs Can Both Win

In January, the nation's mayors met to discuss urban issues that ultimately center on the economic challenges confronting our large cities. The time is ripe for special emphasis to be given our troubled urban areas, particularly Detroit.

Both the U.S. and Michigan are enjoying their strongest economic growth in seven years. Add in the renewed optimism stemming from the robust spirit of the Archer administration and the combination is encouraging. Development priorities in southeast Michigan are beginning to focus on the emerging opportunities that exist in Detroit.

Over the past 20 years, no major Midwest urban area has been able to match the growth rates of its own neighboring suburbs. A survey of 28 large metropolitan areas, primarily in the Midwest, revealed that suburban population growth averaged 6.6 percent, while cities suffered an average 5.4 percent decline during the 1980s. Not surprisingly, suburban incomes grew 58 percent faster than city incomes over a comparable period.

Southeast Michigan is no exception. Since 1970, the city of Detroit's employment share of the seven-county region has fallen from 34 percent to 16 percent. Wayne County's share of the region's employment has also dropped, declining from 62 percent in 1970 to 41 percent by 1993. Two thriving counties, Oakland and Macomb, have seen their combined share of the region's employment rise from 27 percent to 46 percent over the same period. Given the current pace of urban sprawl, urban and regional authorities must wonder if metropolitan Detroit's migration will ultimately stretch as far as Flint or Lansing.

Fortunately, evidence reveals that suburban and urban economic fortunes are dependent upon each other. A 1992 study by the Federal Reserve Bank of Philadelphia analyzed 28 large metropolitan areas, primarily in the Midwest, and found that city and suburban population and income growth rates were positively correlated. To arrest urban decline, actions could include, the Bank advises, the "elimination of large differences in local tax rates, especially taxes on mobile factors such as labor."

Disturbingly, that message has often been disregarded when it comes to policy recommendations for solving the urban sprawl issue. Rather than addressing issues that regional governments can directly control, such as taxes, regulation (indirect taxes), and spending, policy prescriptions attempt to outwit the market.

One example is the Regional Development Initiative (RDI), published in 1991 by the Southeastern Michigan Council of Governments (SEMCOG). The RDI looked at the issue of urban sprawl in metropolitan Detroit and concluded that "the pattern of urban sprawl is unacceptable" and "will diminish the quality of life in Southeast Michigan."

Unfortunately, when identifying the dominant causes and recommendations for the urban sprawl issue, the RDI failed to recognize that the tax and regulatory disparities which exist between the city and its suburbs have heavily contributed to the problem. The fact that Detroit's total tax burden is nearly seven times higher than that of the average Michigan city has unquestionably been a factor. So are environmental laws-based as they often are on poor economics and bad science-because they encourage development of farmland versus existing, urban industrial sites.

The RDI, despite good intentions, also failed to recognize that urban sprawl is partly traceable to personal lifestyle choices such as family demand for more land away from congested urban areas. Interfering with the urban-suburban trade-off with a regional planning czar-like committee would threaten the long-term economic health of the entire metropolitan area. One wonders, if an RDI-type proposal had existed in 1700, whether Antoine Cadillac, the founder of Detroit, would have been restricted to the shores of France by King Louis XIV, who was confronting the dilemma of urban sprawl around Paris.

Why is SEMCOG's 1991 RDI proposal important in 1994? The perceived causes and solutions to urban sprawl are influencing legislative issues in the areas of taxes, regulation, and infrastructure spending. Regional issues such as merging Detroit's suburban and city transportation systems could include higher taxes on everyone. The establishment of a regional cultural authority to fund the arts could include a metro area service tax. Regional planning authorities are also determining the disbursement of millions in state and federal funds in Southeast Michigan.

Detroit needs a strategy that will address the urban sprawl problem and offer economic prosperity and growth opportunities to both city and suburbs. This strategy must include measures that will reduce the current tax disparity and alleviate costly environmental regulations. Solutions that will make the city competitively attractive to homeowners and businesses will insure the long-term success of our metropolitan economies.