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Does Infrastructure Drive or Drag Economic Growth?

February 24, 2014 7 minute Read by Machir Stull

As part of its research into maximizing economic growth, the Bush Institute asked Patrick Kennedy to share in this guest blog his views on how cities can encourage greater growth. Kennedy specializes in how urban design, the right infrastructure and the maximum use of real estate can generate growth as well as meaningful, timeless places. A partner in the Space Between Design Studio, Kennedy also created ANewDallas.com to promote better transportation and economic development in and around downtown Dallas neighborhoods. We present this blog as a way to stimulate discussion about how urban policies affect economic growth.

by Patrick Kennedy 


It is a truism among urban planners that infrastructure shapes the real estate market.  In other words, the value of land typically fluctuates with its accessibility.  Which is why, in most cities, real estate becomes more valuable as it gets closer to the city center. 

In downtown Dallas, however, the real estate market is upside down: Land costs are too high, and demand is too low.  The costs are driven up by owners holding underdeveloped land as they wait for a windfall when the next high-rise condominium tower lands on their parking lot. And demand is low because freeways have funneled it away from the city, out to the suburbs.

The result?  Our downtown is scattered with half-empty parking lots, sparse foot traffic and little vibrancy.  The root of the problem is simple: infrastructure.  In Dallas, our current infrastructure (i.e. highways) favors continued spillage northward, undercutting the productivity of the land in the city center. 

But Dallas is hardly alone.  Across much of the Sun Belt—from Phoenix to Atlanta—metro areas are spread too thin, sustained by car-based infrastructure.  Sun Belt cities have long prioritized the free flow of automobile traffic above all else as a deluded notion of mobility, leading to exorbitant public spending on highly inefficient and costly infrastructure.

In these terms, the design of our cities can serve as a drag on economic growth.  As outlined below, however, purposeful urban planning can also stimulate the economy.  For far too long, the Dallas infrastructure has done the former.  But a decaying freeway near downtown Dallas presents an opportunity to turn it all around. 

Dallas Infrastructure

Studies show that in Dallas, 96% of all trips are by car.  In Houston, it is 95%.  But highways are not free—quite the opposite, in fact.  Which is why it is no surprise that the state agency tasked with building and maintaining highways for such car-dependent cities is billions of dollars in debt—$35 billion to be exact.  Half of the Texas Department of Transportation’s annual budget (i.e. our tax dollars) goes directly to debt service.  Talk about waste.

But the impact on everyday people is not just limited to tax dollars.  In 2013, the average annual cost of owning and maintaining one car was $9,000.  In cities like Dallas and Houston, where the infrastructure caters to car ownership without alternatives, citizens are forced to forfeit this money just to participate in the local economy.  Nearly $4 billion per year could stay in the local economy if just half the households in Dallas County possessed the choice to give up one car.  Clearly, increased choice in transportation begets financial independence and empowerment.

Which leads to IH-345, the obscure name for for the sinuous, 1.4-mile elevated freeway that runs between downtown Dallas and Deep Ellum. The freeway connects US 175 to I-30 and I-45.  It’s also on year 41 of a 40-year lifespan and has already been repaired four times in the past 14 years. 

The Texas Department of Transportation has offered two recommendations for the freeway: (1) keep repairing it, or (2) rebuild it entirely, at a price likely in the hundreds of millions. But I recommend a third option: Tear it out completely, and replace it with a boulevard.

I know what you are thinking: Where will all the traffic go?  For starters, regional traffic should not be there in the first place.  Rather than driving economic growth, regional traffic just passes through, leaving pollution and congestion in its wake. Those drivers will find another way to get to the far reaches of the Metroplex, such as I-635. 

Local traffic will also be fine.  Studies show the Deep Ellum and East Dallas traffic grids can handle an additional 252,000 trips per day, well above what IH-345 moves daily.  The increased traffic in the area will also decrease urban decay, as higher visibility spurs investment.

In the short term, drivers will adapt to the loss of the thoroughfare.  They will take different routes, ride DART, carpool, or simply get where they are going without cars.  And in the long term, the move will really pay off.  Just as the system of freeways has shifted population outward, removing IH-345 from downtown Dallas would help draw people back into the city.

From an economic growth perspective, tearing out the freeway would also reposition 245 acres for redevelopment into walkable neighborhoods, while opening the area to an additional 20,000 new residents and 10,000 new jobs, with a variety of housing and transportation choices.  The exact kind of place the highway replaced.

Currently, only $19 million in improvements exist on those 245 acres, and Dallas collects a mere $3 million per year in property tax revenue. By removing the highway, re-stitching the grid, and creating developable blocks, our city would see $4 billion in new investment within 15 years and generate $100 million a year in property tax revenue.  Small businesses would line the streets.  From an economic growth perspective, tearing out the freeway—at an approximate, one-time cost of $80 million—is a no-brainer.


World class cities are not just random locations where outsiders converge for economic activity.  Instead, they are designed to perpetually inspire and create economic growth from within.  Through interconnectivity, cities like New York, Paris and Vancouver become platforms for social and economic exchange, all the while catering to population density, walkable neighborhoods and a variety of transportation options.  This is a sustainable model for economic growth, far too often overlooked in Dallas.  Rather than subsidizing people to live far away from one another and our city’s core, we need to take steps to draw people back to the city.  We can start by tearing out IH-345. 

For more information about new urbanism and the proposed tear out of IH-345, please visit anewdallas.com.

Image by Kevin Buehler