Arkansas: A study in the effects of accelerated depreciation

I was really looking forward to Arkansas. From the year I spent in North Carolina, I gained a certain affection for the South, and so as soon as I heard that my colleague and I would have the opportunity to film there, I started fantasizing about escaping the damp end-of-March New York chill and enjoying some good barbecue and fried catfish.
But most of my experience in Arkansas could have been re-created on any strip mall in America. To their credit, Fayetteville and Little Rock did have small historic downtown areas, but the vast majority of the state appeared to be a continual repetition of the same twenty stores you'd encounter on the Connecticut Post Road or on any other suburban commercial development in America.
In this wasteland of national chain stores, I was excited when we finally encountered one small example of localism - a Chick-Fil-A near our hotel in the strip outside of Fayetteville. But as we were enjoying our sweet tea and chicken sandwiches, my colleague informed me that there is in fact a Chick-Fil-A in the NYU food court, erasing my last hope that we'd found something attributable to the fact that we were south of the Mason-Dixon line.
I recently finished reading Building Suburbia by Yale architecture and urbanism professor Dolores Hayden. In the chapter on "edge nodes" she explains how not only were the creation of suburban commercial strips subsidized by federal dollars for highway construction, but additional federal commercial real-estate tax breaks also created incentives for the construction of cheap, suburban commercial sprawl at the cost of older businesses and building stock in historic downturn urban areas.
In 1954, the Republican controlled Congress re-wrote the tax code to permit a seven-year "accelerated depreciation" period for greenfield income-producing property. Previously, the tax code only allowed "straight-line" depreciation, but this new accounting method allowed companies to defer corporate income taxes by reducing taxable income in current years in exchange for paying increased taxable income in future years. This created a huge incentive for companies to sell the property after the first seven years to another owner who could then repeat the accelerated deprecation cycle.
Hayden writes:
"Commercial real estate became a tax-shelter, and venture capitalist were attracted to it, accelerating the turnover of cheap building. Each new round of accelerated depreciation led to another set of profitable losses. After several rounds, structures were abandoned in favor of new buildings in more distant sites. Nothing could have been more damaging to older business in both big cities and small towns."The accelerated deprecation tax break was created by the Eisenhower Administration as an incentive to encourage more construction and growth, and it served that purpose quite effectively. By the time the Tax Reform Act of 1986 eliminated the incentive, there was a huge glut of cheaply constructed strip mall commercial real-estate.
The development of commercial development further and further from urban centers created a world where individually-owned automobiles have become an absolute necessity. I like to imagine that with a bicycle, rain gear and a pair of warm gloves, I could manage to get by pretty much anywhere in America. But with a vast majority of its commercial buildings located along the interstate, Arkansas is the kind of place that life without a car seems, even to me, pretty much unfeasible. There is even a certain pride in the car dependent lifestyle: as my colleague, who was born and raised in Arkansas boasted, in the Razorback state you drive ten feet to the end of your driveway to pick up your mail.
Other than an increase in the price of gasoline, I'm really not sure what could create the kind of incentive needed to encourage urban density. As long as we a have steady supply of cheap gas and undeveloped rural acreage, it seems inevitable that strip-mall development will continue to consume Arkansas and the rest of rural America.
Photo: Entering Bentonville, Arkansas, the birthplace of Wal-Mart.

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