Local governments across the country have come under increasing fiscal strain in recent years, with several being forced to declare bankruptcy. The problems range from pension programs and decaying infrastructure to falling revenues from industrial and sales taxes as manufacturing gets offshored and shopping happens online. In Virginia, cities are further constrained by annexation laws that prevent them from expanding with their metropolitan area and gaining revenue from greenfield development or wealthier suburbs.
Meanwhile, the high mobility of Americans and increasing specialization of metro areas and cities have forced localities to behave like competitors in a market for residents and businesses, rather than as simple political entities administering a group of people. This makes it more important than ever for localities to understand which investments and spatial configurations create value and which don’t. The immediate problem is that we lack good ways of approaching the question.
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