Megaprojects Fall Hard

Nearly nine years ago when I was moving back to Virginia, I had to pick a place to live. Somehow, we ended up in southwestern Chesterfield with a house on a lot with huge loblolly pine trees -- an attraction that I guess involved me somehow channeling Eastern North Carolina where I had lived off an on since I was 18 months old.

It is the outer edge of fast-growing suburbia, exurbia, I guess, but I am sure EMR will set me straight. Traffic wasn't too bad and here and there were old farms with giant oak trees still flanking U.S.360, better known as Hull Street.

How things have changed. First, there was a mad rush of strip malls and new subdivisions. The old farm is now a Super Wal-Mart in the making. New restaurants of all types popped up, generally enriching the choices if you can get past the dearth of decent service. The labor pool out here in exurbia is truly thin. Last week, when a relative was visiting and we tried out a new seafood joint, it took three waiters and 45 minutes just to get our drink order straight.

Now comes the news that one of the largest planned subdivisions -- Lower Magnolia Green -- has defaulted on a $96.9 million loan and the land is up for auction. The plan had been for 3,550 new homes although not that many have been built and even fewer occupied, leaving owners in the lurch because it seems that some promised amenities won't be coming anytime soon. I wondered what was going on since every time I drove past, I saw some bulldozers, but they hadn't been moved in weeks.

This is the second time since the recession began that Chesterfield has seen a major subdivision tank. Last fall, as economic storm wailed, an even bigger project called Branner Station with 4,988 homes was put on indefinite hold. I know that plenty of projects in even faster-growing Loudoun and Prince William Counties have suffered similar fates.

Not a bad thing, actually. Chesterfield needs a breather. The Magnolia Green project dates back to the early 1990s when Chesterfield's Republican board was packed with pro-growth types. It wasn't so much that they were bankrolled by developers, although they were, it was that growth became a kind of religious mantra for them. And we've been paying for the consequences ever since with overstuffed schools, roads, bad waiters, etc.

The popping of the real estate balloon did Magnolia Green in. And that brings up another point. One of my favorite economic columnists is James Surowiecki of The New Yorker. His most recent work looks at the financial services industry and there is a tie to Chesterfield's woes with overbuilding.

To understand what has been happening in finance in the past few years, Surowiecki says we have to deconstruct the various phases of financing. Banking used to be considered a boring, plodding career path. Rather than being an end unto themselves, banks merely worked to serve more creative endeavors, such as setting up U.S. Steel and International Harvester in the late 19th Century or helping electrify cities and the countryside in the 1920s. My grandfather was part of that. We was a bank president in Western Massachusetts, among his other businesses, and helped wire his town with light bulbs. The next wave came with financing info tech in the 1980s and 1990s.

But this latest banking boom is very much a different animal. As Surowiecki writes: "The housing bubble was unique, and uniquely awful. Each of the previous waves had come in response to a profound shift in the real economy. With the housing bubble, by contrast, there was no meaningful development in the real economy that could explain why homes were suddenly such much attractive or valuable. The only thing that had changed, really, was that banks were flinging cheap money at would-be homeowners, essentially conjuring up profits out of nowhere."

As banks joined in the party and raked in profits, at least for a while, we ended up with "acres of empty houses in Phoenix," Surowiecki writes." Or, for that matter, lots of ripped up red clay and idle bulldozers in Chesterfield.

What's next? Perhaps a rethink of how Virginia's county boards and their planning staffs consider such mega-projects in the future. They may be distracted with budget shortfalls, but the chance is right now to make a major shift in philosophy. Will they seize it? I hope so.

Peter Galuszka

NOTES ON A & M SETTLEMENT PATTERN COMMENTS

TMT:

EMR read that WaPo story about “commuters” from Page County too. It was painful.

Steve and Ricky made location decision that they THOUGHT were in their best interest.

But it turns out they were not in their best interest.

What they believed to be good decisions turned out to be bad decisions because many other equally uninformed citizens believed the same things.

They watched the same evening news and the same sit coms, they consumed based on the same advertising... They all made mistakes and the collective impact is dysfunctional human settlement patterns.

If Steve and Ricky had only known something about the collective impact of least-common-denominator settlement pattern and consumption decisions ...

But then Steve smokes so his decisions about human settlement patterns (and other forms of consumption) might have been just as bad as his decision about human health...

If location-variable costs had been fairly allocated Steve and Ricky (and their “wifey’s” and all the others who made similar decisions) would never have been tempted to make those bad decisions.

The Steves and Rickys of the world are why if markets are to work they must be informed. The playing fields need to be leveled, not tipped in favor of the Masters of the Universe.

The Steves and the Rickys are why there needs to be an end to the Business-As-Usual political duopoly. Both parties try to dupe citizens into NOT looking out for their own REAL self interest. (Want a current example? Try the McDonnell / Bolling “More Energy, More Jobs” Program. Or the programs of the candidates from the other clan.)

The Steves and Rickys are the reason there must be an end to what now passes for ‘journalism,’ The current pap fails to get to the root causes of most citizen concerns about the future – and makes those who are caught in reality seem like victims rather than coconspirators. See THE ESTATES MATRIX

Steve and Ricky might have learned about the how to make smarter decisions. Books and journals written since the 1920s lay the issue out in detail.. The 1920s was when the impact of today’s settlement patterns first started to draw attention and criticism.

More when we get to Larry’s observations.

Accurate:

Good to learn the details of your relocation decision.

You will find a lot more folks in the Houston NUR that agree with your outlook on life than you did in the Portland NUR. Tom DeLay is a local hero. Many seem to hold Bob Barr, Ron Paul and Mike Huckabee in high regard.

EMR knows something about Houston – an A & E firm for whom he was a Sr. VP planned and engineered large projects in the Region, SPI had an office there for a few years and EMR visits from time to time.

Let us know how you like the weather in July, August, September and October. Some really like it. Some, not so much.

Where did you decide to buy your $100k home? Is it near your new work and great places to get Services / Recreation / Amenity?

Have you been riding the new Light Rail system? Let us know what is happening around the stations? Does it look anything like what is happening around the Light Rail stations in the Portland NUR?

Has TexDOT figured out a way to pay for more circumferential expressways?

After you have been there a year and add up ALL your costs, let us know what you think about the total cost of living. One reason house prices are so low in the Region is that the property taxes are so high.

Depending on what you choose to do, living CAN BE cheaper in Texas and in the Houston NUR than many other places. That is because Households, Agencies, Enterprises and Institutions have been subsidized by the consumption of Natural Capital, not just in Texas but world-wide.

Look forward to getting your report.

Groveton:

You have a point about Mosquitoes and Alligators.

In the context that Larry presented, however, EMR still goes with the reverse roles. It is human settlement patterns that have citizens and their Organizations in their jaws – folks like Steve and Ricky. They think it is ‘the economy’ but it is the distribution of human activity at and near the surface of the planet.

In the long term and with respect to collective impact, mosquitoes HAVE BEEN far more deadly – like dysfunctional human settlement patterns.

No one pays much attention to the settlement pattern until it bites them – like it did to Steve and Ricky in Page County.

Mosquitos and alligators or alligators and mosquitos, either way, human settlement patterns control the economic, social and physical trajectory of society.

Larry:

You did not bother to read Deep Economy before you started asking questions about the small Urban enclaves in Georgia.

EMR could provide you with insights based on small towns in where he has lived, worked and visited in Georgia, Montana or in the Heart Land (See Column of 3 Oct 2005) or on jobs (24 May 2004) but then you would not believe EMR if he took off a month a spelled it all out for you again. You would dive into the pepper silo looking for flyspecks.

If you are serious about finding some answers to your questions, here are some places to start:

You could read Mike Shuman’s Going Local: Creating self-Reliant Communities in a Global Age. Many specifics are compatible with McKibben’s perspectives in Deep Economy.

You could look in on Rosseta, PA to get some clues – or at least read about it in Chapter 1 of Gladwell’s Outliers.

It you do not want to go that far, check out Abingdon to see why it is different than Luray (in Page County).

Or if you want to do your research in Georgia check out why Tifton, Dahlonega, Madison and St. Marys make ‘best small towns’ and ‘most charming towns and villages’ lists and the places you describe do not.

You could become a leader in one of these places and attract other ‘Lone Eagles’ to build Balance. Or you could help them evolve a Water Buffalo Commons when everyone moves to the Atlanta NUR, one of the smaller MSAs or one of the 12 Micropolitan Areas in the state.

Bet there are a lot of Steves and Rickys in the Georgia towns you describe. Hope they make good decisions about where to go next.

Some time ago EMR suggested that if a nation-state sets out to create a consumer driven economy, they must have a comprehensive strategy to educate the citizens in something beside Mass OverConsumption.

Bad information and Myths about the way the world works wastes a lot of lives.

EMR

A & M SETTLEMENT PATTERNS

There is no escaping the economic, social and physical importance of human settlement patterns.

Larry Gross has it ‘almost’ right concerning human settlement patterns in his comment following A & A HOUSING. He just has the alligator and the mosquitos mixed up.

It is human settlement pattern that is the ALLIGATOR.

Economic Prosperity (including the type and location of Jobs), Social Stability and Physical (environmental) Sustainability are more than just MOSQUITOES but they are determined and controlled by human settlement patterns.

Sorry Larry, the cumulative impact of 12.5 Percenter decisions cannot be papered over with cute analogies.

For a refresher on reality check out Bill McKibben’s Deep Economy: The Wealth of Communities and the Durable Future. McKibben presents a profoundly important but partially flawed and a little out of date perspective on the trajectory of civilization. More on both the good and the bad of this important book soon.

EMR