The document discusses the financial challenges facing many cities and towns and proposes an alternative approach. It notes that the traditional models of growth through debt, government spending, and ever-increasing development are no longer sustainable. It advocates for building financial strength and resilience by focusing on incremental projects that generate positive returns, leveraging existing public infrastructure, and revitalizing communities through small-scale urbanism. Local leaders are urged to transform their communities by emphasizing resilience over rapid growth.

1. The mission of Strong Towns is to support a
model for growth that allows America's towns
to become financially strong and resilient.

2. 3 Questions
• Why are our cities and towns so short of
resources despite decades of robust growth?
• Why do we struggle at the local level just to
maintain our basic infrastructure?
• What do we do now that the economy has
changed so dramatically?

3. BIG Concepts
1. The current path cities are are
on is not financially stable.
2. The future for most cities is not
going to resemble the recent
past.
3. The main determinant of future
prosperity for cities will be the
ability of local leaders to
transform their communities.

4. Macro Trends - Housing
Even if it market returns, we can’t
grow our way out of it

5. Macro Trends - Housing

6. Macro Trends - Housing

7. Commercial Real Estate

8. Commercial Real Estate
Retail: A glut of excess space
• Between 1990 and 2005,
consumer spending per capita
rose 14% (inflation adjusted), yet
retail space per capita rose 100%.
• We have six times the retail space
per capita of any European
country.
• Vacant retail space is up 42% since
2006.
Source: Redfields to Greenfields

9. 4 Mechanisms of Growth
Can we grow our way out of this?
The “Mechanisms of Growth” we have used during
the modern era:
1. Government Transfer Payments
2. Federal/State Transportation Spending
3. Debt, both private and public
4. The Growth Ponzi Scheme

10. 1. Gov’t Transfer Payments

11. 2. Federal Transportation Spending

12. 2. State Transportation Spending
Mn/DOT Statewide Transportation Plan
August 2009
• $65 billion in projected needs
• $15 billion in projected revenue
• $50 billion 20-year shortfall ($2.5 billion/year)
*Shortfall equates to an $0.83/gal gas tax
increase

13. 3. Private & Public Sector Debt

14. 4. Growth Ponzi Scheme
The “pain free” solution … New Growth
Revenue from new …is used to pay for
development….. existing liabilities.

15. 4. Growth Ponzi Scheme
Investment in the community….
Strong Incentives
• Initial cost to the public for new growth: minimal
• Benefit to the public budget for new growth: substantial
The catch is that the public agrees to maintain the
improvement forever. growth…
…creates new
…which
increases
property tax
revenue.

16. 4. Growth Ponzi Scheme
The critical assumptions to this strategy:
1. Either growth continues at ever
accelerating rates, or
2. The pattern of development ultimately
generates more revenue than it costs to
maintain.

17. 4. Growth Ponzi Scheme
Cumulative Cash Flow - One Life Cycle
$100,000
$80,000
$60,000
$40,000
$20,000
$-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
$(20,000)
$(40,000)
$(60,000)
$(80,000)
$(100,000)

18. Afton Hills Road Rehabilitation
Road Maintenance Project
• $354,000 total cost
• 79 years to recoup public expense
from tax base
• To break even requires a 46%
increase in property tax rates

19. North Sleuter Road Project
Road Improvement Project
• Costs to be 100% assessed (no public cost)
• Long-term maintenance paid by the public
• $154,000 estimated long-term maintenance
cost
• $79,000 estimated long-term revenue from
served properties
• To break even requires a 25% increase in
property tax rates

20. Industrial Park Investment
Sewer and Water Extension
• $1.9 million total cost
• 25 lots served
• $76,640 per lot
• $8 million of new commercial/industrial
development needed immediately to
break even

21. Backus Wastewater System
Sewer Rehab Project
• $3.3 million total cost
• $26,830 per Backus family
• Median household income: $26,875

22. Tower Historic Harbor
Harbor Rehabilitation Project
• $9 million dredging and infrastructure
project
• $4.2 million additional for infrastructure
rehab
• Total investment of $45,000 per family
• Payoff in 71 years – if all $32 million in new
development happens immediately

23. Bemidji Convention Center
Convention Center & Hockey Rink
• $75 million clean-up, & infrastructure
(State, TIF, local sales tax & debt)
• Total investment of $5,500 per family
• After 2 years of missed projections,
bailed out by local businesses

28. Elk Run @ Pine Island
Bio Business Park in a Small Town
• $34 million for DDI intersection to
development
• $600k local infrastructure in the ground
• Total investment of $11,500 per family
• Payoff in 12 years – if they dropped
everything & dedicated to infrastructure

31. Implications
Serious implications for the future
• The “Mechanisms of Growth” we have
become accustomed to are waning.
• Local governments are going to be forced to
absorb the local costs of the current
development pattern.
• This can’t be done in the current pattern of
development without large tax increases
and/or large cuts in service.

32. Future Risks and Volatility
Fuel Prices Interest Rates
Currency Fluctuation Black Swan Event

33. Dead Ideas
• We can continue the current development
pattern and not care about the Return on
Investment (ROI).
Cumulative Cash Flow - One Life Cycle
$100,000
$80,000
$60,000
$40,000
$20,000
$-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
$(20,000)
$(40,000)
$(60,000)
$(80,000)
$(100,000)

34. Dead Ideas
• Our local financial problems can be solved by
bringing in more growth.

35. Dead Ideas
• A large employer, particularly a manufacturer,
will solve our financial problems.

36. Dead Ideas
• Property owners have a right to develop their
property and the public then has an obligation
to maintain the infrastructure.

37. What does a resilient community look like?

38. The New Economy
• 1950’s – 1980’s: Emphasis on growth through
savings and investment.
• 1980’s – 2010: Emphasis on growth through debt
accumulation.
• New Economy: Emphasis on building resiliency.

39. STEP 1:
Building an environment that captures
a positive ROI

43. $1,136,500
$803,200

44. $317,992
Total
$23,284
Per acre

45. $28,744
Total
$82,125
Per acre
You can fit 40 Pub500s in Target footprint

46. Mankato - 1870

47. STEP 2:
Leveraging Public Infrastructure

51. • New “Justice
Center”
• $X million
• County Gov’t
& DOT Offices
• $X Million

55. STEP 3:
Revitalizing is about
Incremental Urbanism

56. STEP 3:
Revitalizing is about
Incremental Urbanism

57. What is incremental urbanism?
• Small is beautiful
– Little Projects have a Big Impact
• Many Projects & Experiments
– Some will succeed. Some will fail

58. What we’ve been doing …

59. What we’ve been doing …

60. What we’ve been doing …

61. This is what we should be doing …

62. This is what we should be doing …

63. This is what we should be doing …

64. This is what we should be doing …

65. This is what we should be doing …

66. Learn how to DIY.
These are great, but …
It needs to goes beyond yoga & bike lanes …

67. This is what we should be doing …

68. This is what we should be doing …

69. This is what we should be doing …

70. This is what we should be doing …

71. STEP 4:
Connect

72. Strong Towns Network

73. Peer collaboration

74. Expert advice

75. Strong Towns University

76. Strong Towns University

77. BIG Concepts
1. The current path cities are are
on is not financially stable.
2. The future for most cities is not
going to resemble the recent
past.
3. The main determinant of future
prosperity for cities will be the
ability of local leaders to
transform their communities.