The mortgage interest deduction (MID) has been the subject of much discussion after President Obama’s debt commission suggested its reduction. It has been argued that in addition to reducing deficits, such reform could also help slow the growth of sprawl. The argument is that the deduction encourages people to buy larger homes on larger, exurban lots, and that reducing the subsidy will slow the growth of sprawl. That may be correct, but how important is it?
Sprawl has been malfunctioning for decades, and is one of the primary factors in the recent mortgage crisis, escalating transportation and infrastructure costs, deteriorating environment, and growing health problems. We certainly need to stop the growth of sprawl, but the MID is only one of many incentives that have made sprawl the predominant form of growth, and besides, slowing growth does nothing with the huge surplus of sprawl that already exists. If the goal is to effectively deal with sprawl, we will be better served by encouraging its repair.
The common perception of sprawl is the multitude of housing subdivisions built in the exurbs. That is correct, but sprawl is also composed of such elements as office parks and shopping malls, and these places are failing as fast as the subdivisions. The problem is that we have created a landscape dominated by segregated, single-use pods, where residences are separated from stores, which are separated from offices, etc., and cars are required to reach every destination.
The way to repair sprawl is to strategically redevelop certain portions of it – by making it walkable and by adding options for housing, working, shopping, and transportation. Failed office parks and shopping malls, for example, are prime candidates for sprawl repair because they are typically in good locations, under single ownership, and are substantial parcels (their parking lots represent possibly the largest depository of underutilized real estate in the country). These failed, sprawling behemoths have the potential to be transformed into complete, sustainable communities that provide most of the daily needs for the people who live and work there. Such places are in high demand, but there is unfortunately a whole host of obstacles to their creation – whether land-development regulations that don’t allow them or difficulty in securing funding. The focus, therefore, should be on making sprawl repair possible and desirable.
That task is best addressed by local stakeholders. Citizens, elected leaders, and municipal staffs must decide these places are worth saving and do what is necessary to encourage their repair.
Local officials can change zoning ordinances to allow higher densities, mixed uses, and expedited permitting for sprawl repair projects. At the state level, legislation and policies can be created to enable this type of zoning and provide financial incentives. Rather than continuing to pour money into sprawling infrastructure projects that make the problems worse, states can direct funding to the transformation of failing sprawl into functioning, sustainable communities. Projects expected to benefit their larger regions should be eligible for such funding, as well as indirect incentives such as tax deferrals, the right to use tax money for improvements, and reduction of fees, among others.
These repaired, sustainable communities would serve as amenities for their inhabitants and their entire regions while also aiding the real estate markets and giving much-needed boosts to the local economies.
Sprawl is draining our resources, damaging our environment, and worsening our health. Reducing the MID might slow the growth of sprawl, but other regulatory and financial incentives would be much more effective for truly dealing with the larger problem of existing sprawl.