Saving city budgets through property taxes?

[Nords]

A very interesting Atlantic article on why cities should encourage investors to renovate downtown property for its higher property-tax assessment:
The Simple Math That Can Save Cities From Bankruptcy - Jobs & Economy - The Atlantic Cities

It's non-intuitive, but it turns out that urban development yields more tax revenue than suburban commercial development. Suburban housing developments are the lowest yields of all, and come with high infrastructure costs.

We tend to think that broke cities have two options: raise taxes, or cut services. Minicozzi, though, is trying to point to the basic but long-buried math of our tax system that cities should be exploiting instead: Per-acre, our downtowns have the potential to generate so much more public wealth than low-density subdivisions or massive malls by the highway. And for all that revenue they bring in, downtowns cost considerably less to maintain in public services and infrastructure.

Asheville has a Super Walmart about two-and-a-half miles east of downtown. Its tax value is a whopping $20 million. But it sits on 34 acres of land. This means that the Super Walmart yields about $6,500 an acre in property taxes, while that remodeled JCPenney downtown is worth $634,000 in tax revenue per acre. (Add sales tax revenue, and the downtown property is still worth more than six times as much as the Walmart per acre.)

The interesting part of the article is at the bottom: a Google Map utility graphs the relative amounts of property tax coming from each street address. The "height" of the property on the map is actually its tax dollars/acre, not its physical height.

 

[Midpack]

I am still trying to wrap my head around this article, I must be missing something.

That urban property tax $ revenue per acre is higher and therefore more attractive to municipalities is no surprise at all, that's one of the main reasons businesses and homeowners fled to suburbs. It's interesting that the prop tax on the suburban WalMart is $6500/acre and the downtown JCP is $634,000/acre but who really cares? Makes WalMart look pretty smart and makes me wonder what JCP was thinking to open downtown - JCP in general has not competed well. The article says WalMart pays $20M per yr in property taxes and JCP pays $11M per yr. I'd think city council would be more interested in total revenue than per acre.

They also gloss over who pays for redevelopment costs for derelict urban buildings, city (ouch) or business (usually more costly than greenfield).

I'll bet there's less road traffic at WalMart and it's easy and free to park there, downtown JCP not so. Downtown parking is an issue that keeps people away in most cities of any size.

I am sure cities can increase total property tax revenue and maybe reduce infrastructure costs if they can convince commercial and residential to come back to the denser urban core, but what's in it for business and residents other than increased taxes?

 

[Nords]

I am still trying to wrap my head around this article, I must be missing something.
I am sure cities can increase total property tax revenue and maybe reduce infrastructure costs if they can convince commercial and residential to come back to the denser urban core, but what's in it for business and residents other than increased taxes?

It's probably a "City Mouse-Country Mouse" perpetual debate.

I think the residents of a high rise would actually pay lower taxes per resident, but the high rise would yield more taxes per acre. So if people returned to the core then they'd be able to pay lower individual taxes while giving the city more total taxes and lower infrastructure costs... and no bankruptcy?

But I'm not sure who'd volunteer to be the first to move to downtown Detroit.

 

[bld999]

"I am sure cities can increase total property tax revenue and maybe reduce infrastructure costs if they can convince commercial and residential to come back to the denser urban core, but what's in it for business and residents other than increased taxes?"

Where I live, in seattle, some residents and developers have recognized that in-city living suits them well. They can walk to much of the shopping they need, dine, attend events, all without a car. If they want to take a road trip, they rent a car, but don't need to own one. There is a train to the airport that is subsidized. Some public policy stuff helps this run, but mostly the private developers are taking risks and presenting towers as places to live, most with shops on the ground floor, grocery, etc. The people who live there find value in it, or they would leave. Is it for everybody, no.

Popular, lively, coastal cities have have an easier time pulling this off, in the case of seattle, there is plenty of tech money around, and the businesses realize that commutes suck, so Amazon, Gates Foundation, etc, locate in Seattle rather than continuing eastward into the brush, which initially would have been cheaper. Now some of the east-siders get to commute back into seattle..

 

[MichaelB]

I am still trying to wrap my head around this article, I must be missing something.

./.

I am sure cities can increase total property tax revenue and maybe reduce infrastructure costs if they can convince commercial and residential to come back to the denser urban core, but what's in it for business and residents other than increased taxes?

I don't think you're missing anything. What has to be in it for business is local demand. If it is not there they won't invest, and if it is, they might. The US is overbuilt, so one municipal entity needs to take away demand from another closeby. Easier said than done, but it can be done. As to the title of the article, I think it is better written as The Simple Math that can Save Some Cities (and Hurry Others to Their Grave).

 

[haha]

Now some of the east-siders get to commute back into seattle..

Returning toward a flow that was the rule from the original opening of the 520 bridge until the rise of Eastside tech businesses.

The new development in South Lake Union spurred by Amazon's continued success and movement into SLU has completely transformed a formerly seedy down-at-the-heels area. I read recently that Amazon is closing on Walmart as the largest retail seller in America. If that isn't a tidal change I have never seen one.

The Whole Foods at Westlake and Denny Way across from Amazon's new site does a huge lunchtime business, and as the weather warms there are always people sitting on the patio having coffee or lunch. This is an exciting time to be in Seattle. I first came during Viet-Nam, and there were mostly servicemen and hookers in hot pants on the sidewalks back then.

Now, somebody is buying those $3mm condos overlooking the Market, and on into Belltown. Plus keeping very expensive restaurants downtown open and busy.

As to the title of the article, I think it is better written as The Simple Math that can Save Some Cities (and Hurry Others to Their Grave).

This is so clearly true. New York gets bigger and richer every year, not so Buffalo or Cleveland. I think each region will have a few very successful, expensive cities with high paid knowledge jobs. And to get these they need quality education and high grade natural and human environment, as the workers for these industries come from all over the world, and can go wherever they wish. And the big cities with these aspects will get bigger, like snowballs rolling down an hill.

Ha