Government

Differing time horizons

by LutzP, on Panoramio

by LutzP, on Panoramio

I’ve recently found myself making a point about the differing time horizons of the various parties to land-use development.  I’ve made the comment in private communications and in face-to-face conversations.  But I haven’t put it into my public writing.  Today, I’ll remedy that omission.

Developers, consumers, and citizens view land-use decisions with different time horizons.

This fact isn’t limited to land use either.  If you tell your four-year-old to eat her vegetables, you’re thinking about her being a healthy adult twenty years from now.  She’s thinking about the “yucky” flavor in the next ten seconds.  If you give a student detention, you’re trying to teach values that’ll lead to a responsible adulthood.  He’s thinking about missing the pickup basketball game after school.

The same differences apply to land use, although there are more people involved and the stakes have a greater impact on the community.

For this discussion, I’ll use the development of single-family homes.  Similar analyses could be made of apartments, retail, or office space.  The time horizons would be different, but the underlying lessons would be the same. 

The developer of a single-family home subdivision has a time horizon of perhaps three to six years.  (There are horror stories of projects that involved multiple appeals and court cases, eventually consuming decades.  But let’s put those aside as special cases.)  Over those three to six years, the developer must secure approvals, construct houses, market homes, and close deals.  After those tasks are complete, he’s done.  He may never think about your community again.

The developer isn’t evil for thinking in a three to six year window.  He’s only responding to the imperatives of the marketplace.  He’s doing what he must to meet the needs of his investors and his lenders.  He’s doing what he must if he wants to remain in business.

Homebuyers, and their mortgage lenders, have slightly longer windows.  Homeowners care that their investments retain, and hopefully gain, value until they sell.  Mortgage lenders care that their mortgages are repaid.

Half of all mortgages are repaid within seven years, which means that most new homes have turned over after ten to twelve years.  So initial buyers and lenders have time horizons of ten to twelve years.

Where the differing time horizons become really interesting are with the citizens.  For this discussion, I’ll consider citizens and the cities to be the same thing.  Some may look askance at the melding.  But cities are the collective will of its citizens, expressed through a political process.  If there sometimes seems to be a disconnection, it’s because we don’t have a good political process or because we have difficulty comprehending that the collective will is different than our own beliefs.

(Let me offer a clarification here.  I often argue against drivable suburban development, which some argue represents the collective will of a community.  But in my disagreement, I don’t argue that drivable suburbia doesn’t represent the will of the community.  I argue that that the collective will is wrong.  And that it’s my task to change that will, one mind at a time.)

So, what is the time horizon of the city/citizens?  There are two.  Some citizens will look at the impact fees that are charged for new development, particularly if those fees can be applied to fix infrastructure that is failing elsewhere in the community.  A focus on impact fees has a time horizon of perhaps two years.

Other citizens will look at the longer term functioning of their communities, which includes the generation of sufficient tax revenue to maintain infrastructure and the resilience to respond to the changes that the future will bring.  That time horizon is at least fifty years with a hundred years being a better guess.

That dichotomy between a two-year horizon and a hundred-year horizon is key to politics in many towns.  Despite the different ways in which the divide might be papered over, some politicians like to argue about how the city will function over two years and others like to argue the hundred year perspective.

There are many arguments that can be made for either the two-year or the hundred-year perspective.  Personally, I’m a hundred-year guy.  I’d like my community to thrive in the short-term, but care more about leaving a community that will thrive in the long-term.

But I don’t intend to offer the arguments for both sides, at least not in this post.

For today, the message is only that developers are looking at perhaps five-year windows, homeowners are looking at ten-year windows, and the community is split between those who look at two-year windows and those who look at hundred-year windows.

There is no magic solution to resolving the different time horizons.  But understanding the differing perspectives can at least provide a better basis for communication, from which good compromises might flow.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. – Dave Alden (davealden53@comcast.net)

Written by Dave Alden

Dave Alden

Dave Alden is a Registered Civil Engineer. A University of California graduate, he has worked on energy and land-use projects in California, Oregon, and Washington. He was also the president of a minor league baseball team for two seasons. He lives on the west side of Petaluma with his wife and two dogs. The blog that he writes can be found at http://northbaydesignkit.blogspot.com.

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