Choosing Differentiation

Achieving Competitive Differentiation

America’s fastest growing town takes a smart growth approach
  • Duration: 2014
  • Goal: demonstrate how smart growth aids competitive differentiation for cities and how such differentiation leads to better economic outcomes
  • Partners: Dover Kohl & Partners
  • Deliverables: Economic analysis of tax collection
  • Interesting issues addressed: Global city competition for investment and residents, consumer choice, the relationship between incentives and business attractiveness, differentiation strategies for cities and regions
Our client is by some measures the fastest growing town in the United States. As with all fast-growing cities, the benefits of growth are beginning to be offset by the drawbacks of growth (traffic, understaffed agencies, sprawl, etc). The city is home to one of the state’s largest universities and a number of stable employers. Rather than continue to work around the city’s older planning and zoning rules that were exacerbating the growth challenges, the city decided to undertake the effort of recreating the planning and zoning rules to reflect best practices for urban planning and design, including walkable streets, more pocket parks, neighborhoods that feel like real places and extensive citizen engagement.
The challenge was to demonstrate that there is an economic justification for having such a new urbanism, smart growth plan in place.
Key question and answer
The key question for the engagement was then how to justify the economic benefits of new urbanist smart growth? Our answer, which was grounded in our extensive work in Asia and the Middle East, is that competitive differentiation supports consumer choice, and consumer choice, in turn, supports the wider effective demand to live, work and visit a place — all of the components of positive economic results.
The analysis that we performed established that competitive differentiation among cities is happening and the cities that are best differentiated are securing more businesses, visitors, and residents than cities that do not undertake such efforts. We then evaluated the city’s current assets and advantages that could be leveraged into a wider differentiation strategy that ranged broadly across not only the physical planning aspects of the city’s differentiation, but also it’s ability to work with the university to create a sustainable engine of innovation and job growth. Rather than rely on the typical (but completely opaque) multiplier based economic analysis for a future that can not be quantified yet in any meaningful way, we assessed the property and income tax potential for a typical block of land under the existing and proposed planning codes to show the difference between the two. The results showed that city governments can generate more taxes from the same land area AND help to create places that people want to live in, simply by becoming a more competitive city, one that takes people’s preferences into account when designing the overarching planning and zoning rules that govern the city’s form.

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