There is a growing body of evidence that shows how sprawl is bankrupting communities that cannot keep up with the maintenance of all the infrastructure required to serve the sprawl. New infrastructure (streets, water, sewer, electric, gas) is often conditioned on the developer to install, but they have no obligation to maintain it. That responsibility falls on the local jurisdiction. However, the taxes generated by sprawling developments come nowhere close to being able to pay for the maintenance on the infrastructure. The infrastructure put in place to support the past 70 years of sprawl is needing replacement and many cities are finding themselves without the financial resources for that maintenance.
Chuck Marohn, of Strong Towns, discusses this issue at length and travels the country repeating this message. He compares our post WWII method of growth to a Ponzi scheme. We need continued growth to pay for our long-term liabilities which is simply not sustainable. That’s generally how it’s worked over the past 70 years. Cities approve new development, collect development fees and use those fees to maintain the previously installed infrastructure. They need to continually grow to keep up with maintenance demands. When growth slows, so does infrastructure maintenance.
Part of the problem is that the tax revenue generated by sprawling development is not sufficient to maintain the infrastructure that serves it. Chuck wrote an article comparing a traditional pattern of pedestrian-friendly small-town development with a new auto-oriented fast food development. He analyzed the tax base value of each and found that the traditional development pattern, even though it was ‘old and blighted’, was 41% more valuable than the new auto-oriented development. Read the full article here. That article serves as the inspiration for this post. I was also inspired by the work of Joe Minicozzi of Urban 3. At the New Partners for Smart Growth Conference session I attended he introduced me to the idea of looking at property taxes on a per acre basis to give an apples to apples comparison of how ‘valuable’ a property is to a community’s coffers. A good summary of his work can be found in this Planetizen article.
So I’ve looked at property tax data from 2013 (available from the Sonoma County Treasurer-Tax Collector website) for 2 types of development found in downtown Sebastopol. The first type is a traditional Main Street development pattern of small lots with buildings built out to the front and side property lines. Most of the buildings along this block are single story structures. The predominant use is retail. There is very little mixed use. I compared the amount of property tax generated by these ‘traditional’ properties to three ‘sprawl’ type developments adjacent to the traditional development (yes, 3 sprawl shopping center type developments right on Main St!). The first of these two properties contains a Rite Aid. I think this store was constructed in the 1960’s. It’s a single store sitting at the back of the lot with a parking lot fronting Main Street. The second property was developed more recently (1980’s?) and contains a Safeway, again sitting at the back of the lot behind a large parking lot fronting Main Street. The third is the Whole Foods shopping center which I also believe was built in the 1960’s.
Downtown Sebastopol showing properties compared in this post.
Block of Main Street with traditional development, although not much mixed-use and mostly single-story buildings. This block generates $45,059.08 per acre in property taxes.
The traditional block contains 12 properties fronting Main Street with lot sizes varying from 0.05 acres to 0.36 acres. These 12 properties generated $91,920.53 in property taxes in 2013. The total acreage of the 12 lots is 2.04 acres. In contrast, the Rite Aid property generated $29,531.62 in property taxes and is 1.35 acres. The Safeway property (actually 2 separate parcels) generated $65,199.17 in property taxes and is 3.64 acres in total. Whole Foods’ shopping center generate $44,042.60 and is 1.64 acres. Safeway looks like it generates a good deal of money for a single business, but when you look at it on a per acre basis the picture is quite different.
Rite Aid which generates $21,875.27 per acre in property taxes.
Safeway generates 17,911.86 per acre in property taxes.
Whole Foods center generated $26,823.10 per acre in 2013. This property is directly across the street from the Basso Building (below)
The traditional block of Main Street generated $45,059.08/acre in property taxes in 2013. Rite Aid generated less than half that at $21,875.27/acre and Safeway generated even less per acre – $17,911.86/acre. Whole Foods center generated a little more than half the traditional block at $26,823.10/acre. Better than Rite Aid and Safeway. (Part of the reason for the higher per/acre value of this shopping center can be attributed to it’s much lower ratio of parking than Rite Aid or Safeway as anyone that tries to parking in this lot can attest.) I’d like reiterate that the traditional Main Street block is a very low density development with mostly older 1-story buildings and little mix of uses. The newest building on the block, which was built roughly 11 years ago, is a 2-story building sitting on 0.36 acres. It generated $42,775.17 in property taxes in 2013 for a per acre rate of $118,819.92!
The Basso Building on Main Street generated $118,819.92 per acre in property taxes, a whopping 6.6 times more than Safeway!
This higher density (and it’s only a 2-story building) generates 6.6 times the property tax per acre than Safeway! Imagine if the whole block were developed to this value. Why would a city allow a Safeway-type development? We certainly need places to buy groceries and I have nothing against Safeway per se, but what if it were part of a mixed-use development? What if Safeway had offices or residences above it? What if the building was up at the sidewalk, with structured parking behind? It would generate a great deal more in property tax revenue than in its current sprawling configuration. So in addition to contributing a fraction of the property taxes of more traditional development Safeway and Rite Aid properties completely kill the pedestrian-oriented function of the Main Street block to the south.
The City of Sebastopol will be conducting a public meeting to get input on ideas for the development of a prime 2+ acre property in the heart of downtown. The property is privately owned, but the owner is interested in selling and is open to hear what ideas the community has for it’s future. It will be important to keep the value of a new development in mind when considering what to build there. It is obvious to me from this analysis that it is imperative that this parcel should be developed as a mixed-use multi-story project. It will be crucial to get this right. We cannot afford to approve a single-story, single-use structure on this property. It was never discussed in this manner, but it is another argument against the proposed CVS/Chase project located a block away.
This is the property to be discussed in a public workshop. It is directly across the street from the town plaza. It used to be a lumber yard and is not a tractor sales store. Not the highest and best use of a property in the center of downtown.
This was an easy analysis to complete and I’d encourage others to do the same in their communities. It’s really eye-opening to realize how much better traditional urban development patterns contribute to a communities tax base. And it’s a conversation that is long overdue.