SERVICE-CENTER COMMUNITIES: AN URBAN POLICY FOR MAINE?
by Evan D. Richert, Director, Maine State Planning Office
Four propositions, if true, signal the need for Maine to develop an urban policy:
Proposition no. 1: Maine is a rural state that depends on its urban places for economic and social well-being.
Proposition no. 2: The vitality of these urban places -- our cities, villages, and small-town centers -- is seeping away, led by a long-term flight of middle-income families to the countryside.
Proposition no. 3: The shifting population is putting difficult burdens on outlying towns, both fiscally and socially, as they are converted from rural towns to low-density suburbs.
Proposition no. 4: State policies contribute to the dual problems of the urban places and the
countryside by encouraging, often in the form of subsidies, the outward shift of population.
Service-Center Communities
Let us look at each of these propositions and see where they lead. But first a definition of "urban"
is in order, since it can be an alien term in a state like Maine. In Maine's case, it probably is more
accurate to refer to its "urban" places as hub communities, or service-center communities. The
State Planning Office has tentatively classified approximately 85 of the state's 497 communities as
service-center communities. These are places that a) are net importers of workers during the day,
b) have retail sales exceeding the needs of their own populations, and/or c) provide the
surrounding region with a variety of social, health, and economic services. They range from small,
such as Machias, Madawaska, and Jackman, to large, such as Lewiston, Bangor, and Portland.
They include some clusters of communities (Rockland-Thomaston-Rockport-Camden). While
most are traditional centers, some older suburban towns have evolved into service centers in their
own right (like Falmouth and Scarborough). Often, size is less important than location. For
example, tiny Jackman is a hub for a large rural hinterland, while Gorham, with a population of
more than 10,000, is a net exporter, rather than importer, of workers to the larger metropolitan
complex nearby.
The Propositions
Now for the propositions.
Proposition no. 1: Maine is a rural state that depends on its urban places for economic and social well-being.
Maine depends heavily on these 85 service-center communities. While they constitute only one-sixth of the state's municipalities, about 76% of the state's jobs are located there. They are also where we shop for virtually all of our goods and services, accounting for 84% of the state's taxable retail sales in 1995. Moreover, people in need turn there for social services: 82% of all subsidized housing units for the poor and elderly are in these communities. (Figure 1 illustrates these figures) Even beyond such statistics, these urban places tend to be the state's health centers, the incubators of innovation and enterprise (whether in industrial parks or in business districts, where critical masses of supporting activities exist), and the storehouses of our collective memories and knowledge, with libraries, museums, and educational institutions.
Until relatively recently, most Mainers also called these 85 communities home. As recently as 1960, 64% of the state's population lived in them. This settlement was typical of a New England-style "village-and-countryside" pattern. For, while these communities contained 64% of the population, they constituted less than 20% of the Maine's organized land area. Each service-center community or cluster of communities tended to be surrounded by a wide rural hinterland.
Proposition no. 2: The vitality of these urban places -- our cities, villages, and small-town centers -- is seeping away, led by a long-term flight of middle-income families to the countryside.
Since 1960 the share of the service-center communities' population has declined steadily, as Figure 2 shows. By 1990, the share had dropped to a bare majority (53%), and by 2000 it will be (and probably already is) less than half. Conversely, some 253 scattered outlying towns, primarily those 20 to 30 minutes away from the service centers, are gaining the lion's share of the growth. From 1960 to 1990, their populations increased by 95%. The state grew by 261,000 people, and these outlying towns received 211,000 of them, or about 81% of the total. During this period, they increased their share of the state's population from 23% to 35%. Much of the growth was the result of outward migration of middle-income households from service-center communities to the erstwhile rural towns. As of the 1990 Census, the median household income of the outlying growth towns was $30,400, 13% higher than in the service-centers.
Conversely, a rising share of the service-center communities' population is dependent. More than a quarter of their households had incomes of under $15,000, and 12% were living in poverty (vs. 7% in the 107 fastest-growing outlying towns). While the service-center communities accounted for 48% of the state's families with children, they contained 64% of the female-headed households with children, many of whom live in poverty. Fifteen percent of the service-centers' population are 65-years old or older, compared with less than 10% in the fastest-growing outlying towns. And service-center communities' school-aged students are twice as likely to be in special-education classes than those in the growing outlying towns.
Such demographic shifts underlie some of the palpable loss of vitality of many of the traditional service centers: the vacant or under-used downtowns, deterioration of older neighborhoods, the perceptions of unsafe streets, and the struggle to maintain enduring in-town institutions, whether churches or schools or department stores. Less visible, perhaps, but acutely felt by officials and residents, is the cost of keeping up a service-center community -- that is, of maintaining an aging infrastructure with the resources of a stagnant population base, serving daytime commuters, and providing for the special needs of dependent populations. Based on a methodology used by the Maine Municipal Association to measure property- tax burdens (comparing taxes paid to household income), the median homeowner's tax burden in a service-center community is 5.1%, or 46% higher than the statewide median of 3.5%. Of the 25 municipalities with the highest tax burdens, 16 are service-center communities, whose tax burdens go as high as 10.5%. This high tax burden, created in part by an outward shifting population, in circular fashion induces yet greater flight from service centers.
Proposition no. 3: The shifting population is putting difficult burdens on outlying towns, both fiscally and socially, as they are converted from rural towns to low-density suburbs.
The service-center communities' loss is not entirely the growing, outlying communities' gain. While there is almost always a visceral pride in the growth of a community -- after all, growth is an indication of a town's desirability -- there are costs, too. The costs come in three invoices: a fiscal invoice, a "rural character" invoice, and an environmental invoice.
The fiscal invoice does not come at once. Most rural towns that are recipients of growth do all they can to absorb the growth at the margin, using whatever resources are at hand -- the volunteer fire department, the undersized town hall, existing public works equipment, existing classrooms -- to make do. Eventually, though, they are forced to add capacity, and throughout the 1980s and into the 1990s many have been doing so. While the median property-tax burden of the 253 outlying growth towns (3.4%) is still a bit below the statewide median, the property taxes actually collected to service their populations increased from 1984 to 1994 by 119% after accounting for inflation. This was half again as much as the statewide increase of 79% and much faster than the 65% increase experienced by service-center communities, as Figure 3 shows.
The "rural character" invoice comes due gradually and subtly. The comprehensive plans of most of the outlying growing towns invariably cite "maintaining our rural character" as a top priority, although they often confuse "rural" with "low density suburb." In fact, because the dominant pattern of settlement is "sprawl," the rural landscape has been transformed. Most significantly, it has changed from a working landscape to a commuting landscape. Land previously organized for production and active use -- such as farming, wood lots, gravel pits, and outdoor recreation -- increasingly is organized for consumption. A once active relationship between rural residents and rural land, in which land meant livelihood, is steadily converting to a passive, suburban relationship. The impacts, including diminished access for recreation, loss of farm and managed woodland, changed scenery, strip commercial development along once rural collector roads, and conflicts over uses (sludge spreading, energy facilities, gravel pits) that used to be accommodated in rural areas, are less tangible than fiscal costs, but to some no less important.
The environmental invoice also is hard to quantify, although strong evidence exists that the more spread out the development, the greater is its cost. After two years of study and debate, the Maine Environmental Priorities Project, a risk-ranking project, completed its review of 15 areas of environmental risk in Maine. Of these, based on the facts available to it, six of the areas were ranked as high concerns: indoor air, outdoor air, aquatic ecosystems (especially lakes and estuaries), terrestrial ecosystems, surface waters, and drinking water. And of these, the project drew a connection between a sprawling pattern of development and four of the areas: outdoor air, aquatic ecosystems, terrestrial ecosystems, and surface waters.
The reasons are twofold. First, most pollution of concern today is from so-called non-point sources, carried in storm water as it runs off the ground into lakes and streams or emitted from hundreds of thousands of automobile tailpipes into the air. The Maine Department of Environmental Protection (DEP) considers more than 230 of the state's lakes to be threatened and likely to suffer accelerated eutrophication in the next generation, if current patterns of development continue. And gains in automobile efficiency and related air quality have been eaten up by the greater numbers of miles traveled. Second, a spreading-out pattern of development cuts the landscape into smaller and smaller patches, upsetting the interior habitat required by many species, from songbirds to shy mammals, and disrupting related ecosystems.
Proposition no. 4: State policies contribute to the dual problems of the urban places and the countryside by encouraging, often in the form of subsidies, the outward shift of population.
A cherished right of Americans is to live where they choose. For a variety of reasons, most today are choosing the countryside. Not surprisingly, social policy reflects this social will, facilitating the flight to formerly rural towns. For years federal policy, led by home-financing practices and road building, has subsidized this outward shift of population. In smaller but no less significant ways, so has state policy: in school construction, the financing of school bus transportation, formulas relating to road building and maintenance, the formula for community revenue sharing, and the averaging of utility rates without regard to actual costs of service.
Some of these policies are based on notions of "equity" (assuming that rural communities have less ability to pay, and that all citizens have an equal right to certain public benefits regardless of location). This is not indefensible public policy. It assumes, however, that rural Maine is uniformly economically disadvantaged, when in fact a large share of "rural" Mainers are suburbanites who are better off economically than many service-center residents. Moreover, it helps to maintain disparity between property-tax burdens that perpetuates the shift toward outlying communities and the dual sets of problems for service center and outlying communities described above.
It also is costly public policy, as the single example of the state's school construction trends shows. In 1995, as Figure 4 shows, 27,000 fewer K-12 students were in the state's public schools than there were in 1970. But, in part due to the shifting population patterns, there were 37,000 fewer students in service-center communities, 10,000 fewer in the state's most rural communities, and 20,000 more students in the 253 growing outlying towns -- and nearly 17,000, or 81%, of these were concentrated in the 107 fastest-growing towns.
As a result, despite the overall decline of 27,000 students, or 11% of the student base, from 1975
to 1995 state government alone -- not counting the local level -- committed $727 million to new
school construction. Some of this was to replace old schools and some was to consolidate schools
(including schools in SADs) to gain efficiencies. Nevertheless, it is estimated that on the order of
$400 million went to build new schools in outlying communities to accommodate growth. The
capacity-building was redundant, since at the same time local officials were closing schools in
service centers for lack of students. And redundancy translates into a current biennial bill of
perhaps $50 million in the state budget, where the costs of the new construction are amortized.
Elements of an "Urban" Policy
A good "urban" -- or, in Maine's case, "service center" -- policy would recognize the importance to the state of healthy urban places and seek to reverse long-term decline. Just as important, good urban policy must inherently also be good rural policy. One must be the flip side of the other. The goals must be complementary, putting neither at a disadvantage while seeking to achieve their respective roles as expressed repeatedly in local comprehensive plans and other public forums. Such complementary goals might be,
to restore and maintain the economic health, job-creating power, and livability of our urban places, and
to preserve the open character, productivity, and working landscapes of our rural places.
The goals are entirely compatible, and the achievement of one will contribute automatically to the other.
The elements of a service-center policy should consider four broad areas: investment in
infrastructure, fiscal stability, redevelopment and preservation of neighborhoods and downtowns,
and reduced state subsidies for sprawl. What follows is a sampling of ideas related to each of
these areas -- ideas that have been offered for discussion around the state but have yet to be fully
tested, debated, or accepted for implementation.
Investment in Regional Infrastructure
Regional Infrastructure Planning Grants: The State Planning Office could redirect a portion of Growth Management planning grants to regional infrastructure plans -- infrastructure which either enhances capacity for growth of regional service centers, or which solves problems common to service centers and adjacent towns. Municipal Infrastructure Trust Fund: The Municipal Infrastructure Trust Fund has existed in statute since 1994 to help implement local comprehensive plans. One proposal is to seed the trust fund with a $10 million bond issue, using these dollars to leverage other state and/or federal sources. Dollars would be used as a revolving loan fund to implement the regional infrastructure plans.
Optional Local Sales Tax for Infrastructure: Of growing interest to officials of service-center
communities is enabling an optional sales tax to substitute for the property tax in financing needed
infrastructure. One model comes from Georgia, where counties have the option, if voted at
referendum, to assess a maximum sales tax of 1% for up to 5 years for eligible facilities. Once the
facility is paid off, the tax stops.
Fiscal Stability
Property-Tax Relief: The property tax is an important and useful form of raising revenue. However, Maine's reliance on the property tax is disproportionately high compared with the United States as a whole. Further, it places the full burden of maintaining the facilities and services of service-center communities used by nonresidents and residents alike on local property owners. Better balance among the property, income, sales, and other taxes may provide local officials with flexibility to maintain services while relieving some of the high property-tax burden in most service-center communities.
Tax-Exempt Property: Service-center communities have growing concern about the conversion of for-profit activities to tax-exempt nonprofit organizations. They argue for limiting the conversion of existing, taxable residential facilities to tax-exempt facilities. This limit might apply perhaps where tax-exempt properties already exceed some threshold of total assessed property value in the community.
Tree-Growth Tax: Increasing reimbursements by the state to municipalities for tree-growth
properties would have a dual, beneficial effect. It would help to preserve the rural tax base while
slowing the conversion of rural land to suburban use. The current level of reimbursement is $2.1
million, well under the statutory 90% level.
Redevelopment and Preservation of Neighborhoods and Downtowns
Amended School Construction Policies: Several state school construction policies have been inimical to service-center communities and to the notion of efficient patterns of development. The Department of Education has indicated a willingness to consider several alternatives:
examining tuition-reimbursement policies to assure that new school construction does not occur (at state expense) if the demand could be met more efficiently with existing structures. This could be accomplished by an increase in tuition reimbursement, perhaps combined with renovating or adding to existing schools in a service-center community;
amending acreage requirements to assure that new or expanded schools will be located in existing neighborhoods or in other locally designated growth areas, rather than forced to outlying locations;
giving more serious consideration to renovation versus new construction where safety or other constraints do not make renovation impractical.
Enhanced "Brownfields" Program: Maine already has a notable "brownfields" program within the DEP, which could allow redevelopment of former urban sites with suspected contamination. But several changes deserve consideration. First, make it an explicit part of the state's economic development strategy; second, give new owners protection against long-term liability; third, extend the program to buildings as well as sites; and fourth, create an inventory of sites available to investors. The DEP, the Department of Economic and Community Development (DECD), and the State Planning Office are cooperating in making this part of the "service-center community" initiative.
Community Development Block Grants (CDBG) for Downtowns, Community Facilities, and Infrastructure: The DECD has agreed to incorporate bonus points to service-center communities proposing projects that will help redevelop or preserve their neighborhoods and downtowns, and/or that will benefit multiple communities. These grants represent $5.2 million of the CDBG's $16.8 million pot.
Optional Split-Rate Property Tax for Commercial-Industrial Properties: Enable communities, at their option, to tax differentially land that is zoned for commercial and industrial use and improvements upon such land. The improvements would be taxed at a lower mil rate and the land at a higher mil rate. The effect would be to reward investment and create jobs, principally in service-center communities. The split-rate tax currently is used as a redevelopment tool in cities in Pennsylvania and New York.
Home Ownership: The Maine State Housing Authority has initiated a New Neighbors program for
low-interest home-ownership loans in eligible neighborhoods in the central cities of Portland,
Lewiston, and Auburn. MSHA has agree to explore an extension of this home ownership
program, which is aimed at converting older neighborhood rental stock into affordable,
owner-occupied units, to all service-center communities.
Reduced State Subsidies for Sprawl
Second-Tier Formula for Revenue Sharing: The current community revenue-sharing formula is based primarily on population and a factor for tax effort. Some argue that this works against service-center communities, where most of the income is generated. At present, the 85 service-center communities generate roughly 80% of the revenues to be shared and provide 100% of the municipal services required of the businesses that produce the jobs and sales. But because the formula is population-based, they receive only 60% of the shared revenues. As a result, service-center communities argue for a second-tier formula for revenue sharing. That is, all communities would be held harmless as to existing sums. But the growth in tax revenue allocated to revenue-sharing would be distributed by a formula that recognizes the location of jobs as well as population.
Finding a Shared Vision: Maine's policies -- in (among other things) financing school construction and busing, providing road assistance to towns, funding of state and county police services, and distributing revenue-sharing dollars -- facilitate the outward shifting of population at the expense of service-center communities. As acknowledged earlier, these policies reflect the social will, and the social will is to spread out. But would the social will be any different if the benefits of spreading out were weighed against the full costs, or if those choosing to spread out were expected to more fully pay the costs? The state's Land and Water Resources Council presently is engaged in two tasks: examining the costs of "sprawl" (per resolution by the legislature); and examining the ways in which state policies and programs promote "sprawl" (per request of the Governor). When these tasks are complete, it may be worthwhile asking a broad-based, nongovernmental organization, such as Eco-Eco or the Maine Environmental Priorities Project, to convene a wide array of interests to carry out the following tasks:
weigh the benefits and costs of our current pattern of settlement
reach a common vision for Maine as to how we want future residents to experience this state, and
recommend the fundamental changes that should be made to the state's policies that affect and help finance the pattern of settlement, with the aim of bringing those policies into line with the goals for healthy urban and rural places.
