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Lies Cities Tell Themselves

Urban leaders like to complain that suburbs are a drain on their prosperity. The facts are otherwise.

The Center for the Performing Arts, a large concert venue, was built in Carmel, Ind., outside of Indianapolis. Suburbs are often viewed as dependent on cities, but when they construct a nonprofit such as a concert hall, cities are not happy. (Center for the Performing Arts)
The leadership in most metro areas is concentrated in the heart of the big city. And the political priorities of the metro align with those of the center, especially enhancing the health of downtown. Regionalism, one of the buzzwords of the last few decades, has been primarily about keeping the suburbs invested in the health of the city.

Concern about the city and downtown is of course important. But this has led to a set of beliefs that are simply not true in the way urban leaders typically think about them.

Primary among them is the idea that the central city is subsidizing the rest of its region in a variety of ways. Research does show that cities are often net tax exporters to their state governments. Leaders in Louisville, for example, have long argued that they export a net of $700 million in tax revenue to the state. But in many other ways, the subsidization idea is false or overstated.

For example, it’s said that the suburbs are dependent on the city for their health and prosperity. Or that, at a minimum, the way to grow a region is to invest in the urban core. But it’s equally true the other way. The city is dependent on the suburbs, too. For example, the planning firm Urban3 has become famous for its maps showing the value per acre of properties in urban areas, showing how much more assessed value and tax revenue come from high density vs. low-density development. This is true at some level. But the high values in city centers are not primarily a product of density per se, but of their ability to concentrate activity from a vast catchment area.

That is, the value of high-density areas is dependent on the lower-density ones that surround it. Remove the peripheral catchment area, and their value would plummet. Take Manhattan away from the vast New York region and isolate it, and the values of its buildings would be far lower once it could no longer draw suburban commuters and have access to air connections supported by a huge region.

We also see various arguments about suburbanites not paying their fair share of urban costs. Cities without commuter taxes frequently argue for them. (Some even argue for regional financing of the city even for people who don’t commute.) Others think cities are overly burdened by large numbers of tax-exempt nonprofits.

These arguments implicitly view jobs and nonprofit entities as net negatives rather than positives. If commuters really aren’t paying their fair share and thus are a net tax drain, then cities should want to foist off those downtown office jobs on the suburbs. Let the suburbs pay to subsidize services for commuters. Yet we never see city leaders agitating for this. In fact, they always celebrate when a new company with a large pool of suburban workers expands downtown.

Similarly, if nonprofits like zoos, museums, concert halls and hospitals were a burden, cities would be delighted for the suburbs to take them off their hands. But would city leaders see it as a positive if these institutions moved to the suburbs? It’s unimaginable. Indeed, here in Indianapolis, the suburb of Carmel called the city’s bluff on this by building a major performing arts complex that included a lavish concert hall and multiple theaters. This has not exactly been embraced by people in the city.

The truth is that a city and its suburbs are in a symbiotic relationship as part of an overall region. It’s not the case that the suburbs are parasites on the city. Downtown is not just serving suburbanites, it’s also dependent on them. Having major employers that people commute to is an asset, not a liability. Many major nonprofit institutions are likewise major assets and economic draws, not a burden.

City leaders understand this full well when the institutions they bemoan as subsidies to the suburbs reverse direction and actually move to suburban territory. They need to avoid the type of naïve logic that fails to recognize the ways they need and benefit from suburbs as well as contribute to them.

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
An urban analyst, consultant and writer. He can be reached at or on Twitter at @aaron_renn.
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