Suburban Development: The Growth Ponzi Scheme We Can No Longer Ignore

I’ll admit it—before diving into this topic, I’d never thought to equate suburban development with a Ponzi scheme. But after reading Charles Marohn’s insights from Strong Towns, the parallels are impossible to ignore. Suburban expansion—the hallmark of North American development since World War II—relies on the illusion of financial sustainability. It’s growth that looks good on paper but comes with a crippling long-term price tag.

How Suburban Infrastructure Really Works

Think about it: most suburban streets function more like glorified private driveways than public assets. These wide, winding streets rarely see traffic beyond the handful of homeowners who live there. And yet, the rest of the city foots the bill to maintain them.

Here’s the crux of the issue—the property taxes generated by suburban homes don’t come close to covering the cost of maintaining the infrastructure those homes require. Roads, sewer lines, water mains, streetlights—all of these come with ongoing maintenance and replacement costs. Instead of closing the funding gap, municipalities often double down on the problem, approving new suburban developments to generate temporary tax revenue. It’s a vicious cycle that props up today’s budgets by borrowing from the future, much like a Ponzi scheme.

Breaking Down the Numbers

Let’s put this into perspective with some real-world figures. In Canada, suburban sprawl comes with massive infrastructure costs. A 2013 report by the Smart Prosperity Institute highlighted that sprawling suburban development necessitates new infrastructure, leading to significant capital expenditures for municipalities. While new developments generate additional property tax revenues, they also impose ongoing costs, including future infrastructure maintenance liabilities.

Take Toronto as an example. Suburban expansion after World War II was fueled by highway construction and transit services extending into suburban areas. While this initially seemed like progress, it drastically increased the Toronto Transit Commission’s (TTC) operational costs. Over time, the financial strain led to service reductions and fare hikes, which ultimately decreased ridership. Urban planner John Sewell observed that highway-induced sprawl compelled the TTC to extend services to low-density suburbs, escalating costs and weakening the quality of urban transit services (source).

Why Suburban Growth Feels Like a Ponzi Scheme

The term “Ponzi scheme” may feel dramatic, but it’s fitting. Municipalities are using revenue from new development to pay for obligations tied to older developments, creating an endless need for growth. When the cycle stops—due to economic downturns, population stagnation, or other factors—the financial cracks become impossible to ignore.

This isn’t just about bad planning. It’s a systemic issue baked into the way cities and towns across North America, including Canada, have approached development for decades. Suburban expansion has been sold to us as progress, but in reality, it’s a financial liability that urban taxpayers are left subsidizing.

My Take: What Needs to Change

Pause the Sprawl: Stop approving new subdivisions until existing infrastructure obligations are under control. Adding more roads and services when we can’t maintain what we already have is madness.
Adopt Incremental Growth: Instead of sprawling outward, focus on strengthening existing neighbourhoods with small, incremental investments. Pre-WWII cities were built this way, and they’ve proven to be more resilient.
Shift the Tax Burden: Suburban homeowners should pay more in property taxes to reflect the true cost of their infrastructure. It’s not fair for urban taxpayers to subsidize what are essentially private driveways.
Prioritize Maintenance: Infrastructure maintenance must become a top priority. It’s far cheaper to keep a road in good condition than to rebuild it after years of neglect.

Case Studies Highlighting the Problem

Strong Towns provides several case studies that bring this issue into focus. Take Lafayette, Louisiana, for example. If the city used accrual accounting—where long-term liabilities are accounted for upfront—they’d have been bankrupt decades ago. Similarly, Kansas City’s suburban sprawl has saddled the city with enormous maintenance costs it can’t afford. Here in Canada, suburban areas of the GTA, such as Vaughan and Markham, show similar patterns of infrastructure liabilities far outstripping tax revenue. Vaughan’s constant push for new subdivisions often results in stretched services and underfunded maintenance for older developments (source).

The Path Forward: Building Resilient Cities

It’s not all doom and gloom. There’s a better way, and it starts with rethinking our approach to development. Resilience—not efficiency—should be the goal. This means prioritizing small, flexible projects that can be adapted over time instead of locking ourselves into massive, irreversible developments. It also means embracing transparency and being honest about the long-term costs of our decisions.

I’m excited to be writing more about urbanism and planning in the coming weeks. Call it a distraction from politics 🙂 If there are any topics you’d like me to cover, please get in touch and we’ll talk about it!