Why Walkability Matters To Your Community
This article, written by Hazel Borys, was originally published at PlaceShakers and Newsmakers, and has been shared with permission with The Town of Whitehall.
Why does city planning matter to people who aren’t urban designer types? As Hazel Borys said, “For the last 75 years, we’ve been engaged in a Ponzi scheme of paying for the far-flung suburbs with money generated downtown, in compact neighborhoods, and from other levels of government. These sprawling bedroom communities, strip malls, and big boxes arranged in patterns where everyone needs a car are providing a negative return on investment. The roads, water, and sewer cost almost double for these dispersed places, while the return to city and private coffers pale in comparison. Compact neighborhoods return at least 10x more revenue per acre to the City, and often 1,000x more income per acre. At a time when less than half of our population doesn’t drive – because they’re too young, too old, too poor, or just choose not to – isn’t it about time that we change our zoning laws to make the sorts of places that will stop bankrupting our cities?”
Urban design should take into account the real option theory of land development. Generally in finance, beta is the volatility of an asset in comparison to the market. As beta decreases, the required rate of return also decreases, because people don’t need to be paid so handsomely if they aren’t taking as much non-diversifiable risk. Looking at ROI on transportation investment, the more walkable the place, the greater return. And yet with generally lower risk over time.
However, neither governments nor bankers invest based on levels of urban risk and return, partly because they are only recently being quantified. Take for instance our investments in infrastructure over the last 60 years, where wide, fast roads were assumed to be high return investments.
Instead, they have failed to pay for themselves, leaving us with an estimated $2.2 trillion of infrastructure repairs needed to get above our current grade of a “D,” last time American Society of Civil Engineers checked.
Looking at ROI on transportation investment, the more walkable the place, the greater return. And yet with generally lower risk over time. To correct this misalignment, bankers are beginning to consider how to retool deeply homogeneous bundled mortgages into the new world of mixed-use projects that generate the highest levels of walkability.