Paying for the Public Infrastructure in Urban Development — A Review Article*

Abstract

BEFORE the present style of land-use planning legislation was introduced in Britain, developers often built new housing estates along the edges of the main roads leading out of established towns, giving rise to the term In present-day U.S.A., the highway traveller entering a small midWestern or Western community might well encounter a significant announcement at the city limit: Hicksville: population 1346. We're only small but we're growing fast. In contrast, residents in some affluent low-density suburban or semi-rural communities in the East and in California are fighting hard to prevent further development in their localities. And in present-day Britain, city councils still sometimes welcome new office blocks because of the major contribution to the city coffers from the high level of rates (taxes) levied on such buildings. The common element in these four situations is the economic nexus between the development and the local community. Specifically, the community at large is (or should be) interested not only in the receipts from local taxes payable as a result of the development and in community expenditures incurred because of the additional demand for community services ranging from education to sewage, but also in the other external effects of the development such as increased employment and business opportunites, pollution and congestion. Attitudes and actions both on the part of the community and on the part of the developer depend on institutional arrangements as well as on the degree of information and understanding possessed by participants. In Britain, the developer has long been required to pay the capital costs of new roads fronting new properties, and this helps to explain his preference for the old style of ribbon development. The city councillor who welcomes a new office block to a crowded city does so (if he is sincere) because he perceives the direct benefit of rates paid to the city, while finding it all too easy to overlook the indirect costs, not only the service costs incurred by the city administration but also congestion costs, etc. directly affecting the community at large. The other important feature in both countries is the tendency for developers, builders, estate agents and the like to seek, and to secure, elected office in local