The city’s director of public works is quoted as saying that “Omaha’s policy on unimproved roads is a matter of equity. When the houses were built two generations ago with subpar streets, he said, the builder and homeowner saved money.”
I’m curious: when new housing is built, who typically pays for the streets? Does the developer pay for it (and presumably pass the cost on the initial home buyer)? Do taxes pay for it, or bonds? Is it a combination? Or is it done differently depending on the community?
It may vary by region but, in my experience, the developer pays for new roads in a new development. As you suggest, the cost would be passed along to those who buy the property (or a portion thereof) from the developer. The municipality would take on the costs of laying major roads since, without them, no one would develop the land adjacent and they wouldn’t get any tax revenue.
Once laid and the development completed, the cost of maintaining the roads would likely be borne by the municipality via property taxes, etc.
It will depend on the location. The areas I know about have required developers to build roadways and other infrastructure when needed for a very long time. I recall at least two lawsuits against developers who did a substandard job on the roads and sewers. I also remember a development that had dirt roads for years because the developer went broke. I assume the town eventually paid for them.
After the fact localities will pay for their own local roads, states will pay for their state roads, and the Feds pay for Interstate and US Highways. However, in reality Federal money is used for a lot of infrastructure improvements, passing through the states and sometimes down to the locality. I imagine bonds used for road construction costs are mainly done at the state level.
Around here we lost the only road that directly connected us to an adjoining town (it’s a short border and railroad tracks run along it). It turned out neither town had built the road, it was originally built by a factory to make it easier for employees to get there way back before the Northeast Industrial Dissolution. The road was closed temporarily for repairs on one side of the town, and after examining the records neither town felt obligated to reopen it again and keep up the maintenance.
Gravel roads aren’t the worst thing on earth. They need regular maintenance because ruts and holes develop and heavy oil binders if used will wash out, but overall from the initial construction through the life of the road the costs are lower than solid pavement. Plowing is generally unnecessary for just a few inches of snow, and only heavy ice build ups would require salting.
The developer has to put up a bond with the city which is supposed to help cover the costs of finishing infrastructure if something goes bust. During the housing crash, there were a lot of developers who went bankrupt and left half-completed subdivisions that often lacked completed infrastructure and the projects were so incomplete that the bonds barely covered anything, leaving the municipality on the hook and homeowners without completed street lights, sidewalks, completed storm sewers or finished roads for years.
In my experience gravel roads suck. They rut easily, are a dusty mess and and fine dust collects under your vehicle and encourages rusting (it gets wet and takes forever to dry) unless you wash your car all the time to get rid of it. Obviously easier to maintain and I understand the city’s position and circumstance but I wouldn’t be happy about it either.
In my experience, the developers generally build the roads AND the underground infrastructure- water piping and sanitary sewers. They typically have to conform to one or more of the standards for the city they’re part of, the county’s if in unincorporated land outside of any ETJs*, and/or the city whose ETJ the development is part of.
Once built, the road and water/sewer upkeep and service is provided either by a MUD (municipal utility district), which is an entity organized for that purpose, or if part of a city, by the city itself. That’s why ETJs are important- if they stick to the standards, hooking up a new area to existing city services is a lot easier than having to adapt everything.
ETJ = extraterritorial jurisidiction. In Texas, cities have control some distance past their boundaries in terms of what public works standards new developments have to adhere to. So if you’re building a development a mile from say… the Austin border in unncorporated Travis county, you’ll still have to adhere to Austin standards, as you’ll be within the Austin ETJ.
One municipality I lived in, the developers built the roads inside the development and the parks, streetlights, etc. for a large development. Then (the real estate guy said) after 5 years the developer passed them on to the city to maintain (including title, I assume), but for the first 5 years the developer did road repairs, cut the grass in the park, etc. By the time the 5 years were up, the entire subdivision should have been sold out, the developer would have made enough money to justify the expenses.
In the UK, a developer has to build or pay the utility companies to build everything; roads, sewers, water, power, lighting, to the standard laid down by the local authority. They will get inspected as they build, but at the end, the local authority will ‘adopt’ the roads after a thorough inspection to ensure that they are built to the same standard as all the other roads.
In Kansas, it’s fairly common for the city to build at least some of the infrastructure for new developments and then recoup the cost through special assessments (extra property taxes) on those properties.
Sometimes that process goes really wrong and the rest of the city’s taxpayers end up stuck with the bills.
You are talking about local city streets – I don’t know the answer. For US highways and interstates there is a federal/state “matching ratio” for both new construction and maintenance.
When the US Interstate system was first planned the typical federal/state matching ratio for new highway construction was 50/50, and likewise for maintenance it was 50/50. Because the Interstate was so expensive the federal/state matching ratio actually used was 90/10 and for some western states it was 95/5. However after construction the states initially had to assume 100% of the maintenance. This led to divergence in road condition and I think the federal match for intestate maintenance is higher now.
I think the federal/state match for new construction of non-interstate highways is 75/25, but I don’t know what the ratio is for maintenance.
Within each state there is typically a formula to distribute highway funds on a county basis. It might be something like 50% weighted by county population plus 25% by county square mile area plus 25% by # of registered vehicles, or something similar.
How this impacts city streets, I don’t know. Regarding Omaha, a quick check shows the population has generally trended upward although there was a downturn in 2010. However the current population is the same as in 2007, so to the extent this reflects local tax revenue it would seem no worse than 2007: Omaha, Nebraska Population History | 1870 - 2022
Our home is the last of three on a private gravel road. Every two years we share the cost of a few loads of gravel. There are perpetual potholes and sections that are wash boarded. When snow falls we all just drive through it. And we like it that way.
I live in a townhouse development in Pennsylvania that built its own roads and still maintains those roads. The HOA fees go toward the road maintenance, including snow removal and any future paving or repairs that must be done. I would guess responsibility of maintaining roads is a municipal issue, with any sort of arrangement being possible.
Around here the developer builds the roads and infrastructure for new subdivisions following state guidelines. Once completed the roads are accepted into the county road system. The exception is when the subdivision wants to be a gated community. Those tend to be popular until the residents have to pay for road repairs. Then they tear down the gates and want the county to take responsibility. At that time the county finds that the developer didn’t meet the requirements, which angers the residents who complain to the county and long before then the developer has cashed all the checks. Never a pleasant time.
For new (not upgrading an existing rural road) roads outside a housing development or an industrial park or shopping center, the county pays to build the road. That doesn’t happen very often due to the expense. But when it does-talk about winning the lottery! The property owners along the brand-new road do very well.
