Count the ways: Residential growth benefits everyone
Des Moines Register
Ted Grob • November 23, 2007

City councils are faced with a dilemma concerning new
development. On one hand, they want new residents and the
new businesses and jobs that follow. On the other, new
development brings complaints from existing residents
(voters) and environmental groups because of three
misconceptions:

MYTH 1: The city pays for improvements at new developments.

Fact: Residential developers pay for improvements, many of
which must be guaranteed for four years.
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Two years ago, my company developed a 90-acre parcel that
will add $68 million of new construction, 750 new residents
to use local commerce, $13 million in new office buildings,
25 new businesses and 50 to 100 new permanent jobs. We
installed, paid for and gave to the city $93,000 worth of
turn lanes, 2.5 miles of new streets, a half-acre
storm-water detention pond with fountains, half of a
1,330-foot bike trail, a $150,000, tree-lined 2.5-acre park,
57 new streetlights, $35,000 worth of handicap ramps and 8.5
miles of new storm sewer, sanitary sewer and water lines. We
also donated $26,000 in public art. Plus, we paid $55,000 in
inspection fees.

Would the situation have changed had we been Kodak coming to
town, promising this dollar investment and these employment
numbers? Is it conceivable that city officials would have
waived many requirements and met us at the edge of town with
a key to the city? Most just levy new fees, increase old
ones and implement new regulations.

MYTH 2: Existing property owners are harmed.

Fact: Homeowner equities, which represent 75 percent of the
wealth in the United States, put this false perception to
rest. They explain why new residential growth is valuable to
communities and to a greater extent, their citizens.

The proof also is in a new report that Iowa Research and
Appraisal recently completed for the Home Builders
Association of Greater Des Moines. The report, "Analysis of
the Effects of Construction Activity on Residential Real
Estate," compares two Iowa communities with virtually the
same populations: slow-growing Fort Dodge and fast-growing
Ankeny.

Over a six-year period, residents in Ankeny saw the equity
in their homes increase almost three times faster than did
those in Fort Dodge, the study shows. An average Ankeny home
increased in value by $48,000, while an average Fort Dodge
home gained $17,000. Ankeny issued 5,670 building permits
and Fort Dodge only 158. (A copy of the study is available
from the association for $50.)

Existing residents of growing communities benefit in six
ways: They see a greater increase in their net worth. They
make more money when they sell. They can use equity to start
a small business. They have money to borrow via
tax-deductible loans. Seniors can tap into home equity via
reverse mortgages, which allow them to stay in their homes
longer. (In the past decade, such mortgages have increased
tenfold.) Finally, new houses attract highly taxable new
commercial operators and the jobs they bring.

MYTH 3: Residential development doesn't pay its own way.

Fact: If this perception is accurate, why do some
communities offer tax abatement to encourage home building
or sue each other to see who is going to annex the next
parcel of land? Why are builders offered free lots in cities
with no growth to come there to build? Why do commercial
users such as Jordan Creek Town Center locate in cities with
the fastest residential growth?

The greatest paradox of residential development is that
existing residents who own homes, like shopping conveniences
and realize financial gains complain to community leaders
about new neighbors who want to do the same.

TED GROB is the president/owner of Savannah Homes, a
residential and commercial developer and builder based in
West Des Moines. He is a board member of the Developers
Council, a subcommittee of the Home Builders Association of
Greater Des Moines.