Too often local politicians approve residential development without consideration of its huge costs: roads, schools, police, fire, water, sewer, garbage, etc. These costs are paid by taxpayers, through local sales taxes, property taxes and assessments.
Local politicians justify unrestrained residential development on the theory that it will pump up the local tax base because developed land generates higher property taxes than undeveloped land. In reality, these politicians fail to calculate the full costs associated with providing infrastructure and services to the new development.
Even at the height of the bubble, taxes and impact fees generated by new development failed to cover basic infrastructure and services costs. When the bubble burst and property values collapsed, tax revenues also collapsed. But the recent development still requires infrastructure and services. These costs are largely fixed and local government is stuck with them. To compensate, politicians have raised taxes and diverted revenue.
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[From an article regarding urban sprawl and specifically unrestrained residential development - www.PriceOfSprawl.com]