by Ron Beitler

Nice event today at Desales. Great work by the organizers. Three presentations of note: one on economic forecasting, another about large projects in the valley and, lastly, what I was really interested in, current real estate development trends.

Lower Macungie was mentioned in the final one-hour presentation no less then a dozen times due to our explosive growth in Industrial distribution warehouses. One of the panelists was Mr. David Jaindl of the Jaindl Land Development Co. The panel was moderated by Don Cunningham of LVEDC.

Here are a couple initial thoughts:

One of the biggest assumptions I like to challenge are the economic benefits of distribution warehouses. Yes, we are the storage closet of the NE. Our highway infrastructure, cheap greenfields and geographic location in the NE all contribute. It’s smart to cash in on this. Projects like Chrin Interchange, FEDEX and development in Upper Macungie are truly no-brainers. The problem is with any good idea we often get caught up and take it too far. On the one hand we want to cash in on our physical attributes. On the other we have must do a better job at striking balance between the costs and benefits.

Lifecycle cost-and-benefit exercises are not being completed and this represents a huge problem. Leaders continually throw out big assumptions and generalizations that simply aren’t supported beyond the first life cycle and one time windfall. The second big hole in often oversimplified arguments being made is something I’ve talked about many times. That is a simple reconciling of jobs per acre of land + public infrastructure costs and liabilities. Warehouses are notorious low per-acre economic development engines. Compare a distribution warehouse built on a former greenfield in an area where new infrastructure must be built to one acre of economic development generated in an urban setting where infrastructure exists with a denser land use pattern. The old economy generalizations and assumptions reek of the sprawl growth Ponzi scheme. As I always reinforce, I’m not anti development. Far from it. Rather I’m pro-smart growth economic development. And it isn’t solely an environmental or quality of life argument as is often made (although I recognize elements of both). It boils down to a financial and sustainable economic growth argument.

Question from the audience asking about how townships pay for impacts and liabilities created by distribution warehouses. I’m so happy people are starting to think beyond the generalized old economy smoke and mirrors. Many of these projects do make sense since they capitalize on existing infrastructure and geography. However, it’s been my contention for four years that warehouse proliferation in Lower Macungie will cost Lower Macungie residents in the long run. Both in terms of quality of life and also taxes. The oversimplified answer given by panelists was “these warehouses are a windfall for local governments”. That’s simply not true. Yes, they are an undeniable windfall for a school district. Problem is the school district doesn’t have to maintain the roads, stormwater and provide services like fire and police. The school district doesn’t have to pay for future improvements when traffic predictions prove grossly inaccurate, as they almost always are. Look to the 222 bypass predicted to handle traffic for 20 years. Here we are seven years in and it’s at capacity. Further, Upper Macungie warehouses are in close proximity to major interchanges. Lower Macungie’s are not.

The most frequent communication I get from residents are dealing with issues of tractor trailers on our local roads. Second extremely frustrating answer. Panelists talked about developers paying for up-front improvements and upgrades. Yes, this usually equals a feather in the cap for politicians who are able to report back to residents they got this and that. But rarely if ever are the numbers crunched over the long run. Who maintains the roads when the developer moves on to the next greenfield? It’s not the school district with their windfall. Who builds our 3rd fire station? Pays for a future police force? ect. ect.Here is the equation:

1. Take the land consumed in acres.

2. Calculate total property taxes per acre per unit of government (separate muni and school district).

3. Calculate jobs per acre.

4. Subtract public liabilities created beyond the first life cycle (when the developer moves on the to the next greenfield, the traffic projections have proven tragically inaccurate and the community is drowning in tractor trailers.) Only the above exercise truly paints the accurate picture on whether the public is getting a return investment of our taxpayer dollars to extend public infrastructure to the inefficient locations.

City Center development is exciting. It’s really hard not to get caught up in the excitement. Yes, I was critical of some aspects of the NIZ at first. But moving forward I honestly do have some high hopes for what’s going on in downtown Allentown. I’m pulling for it. How can you not? I’ll be writing a post specifically about this later on this week.

(Cross posted from the Smart Growth for Lower Macungie blog.)