Throughout much of human history, mixed-use development — buildings or neighborhoods that combine commercial and residential usage — was the norm. That changed in the early 20th Century when the rise of pollution associated with industrialization caused people to want to seperate themselves from areas containing factories. The rise of the automobile also encouraged the trend for people to live far away from where they worked. Now, many see the benefits of going in the opposite direction. As cities have deindustrialized (and gas prices have risen), sustainable development and walkability are seen as desirable elements by those choosing a place to live. But, what are the benefits of mixed-use development for the cities themselves? Joseph Minicozzi at Planetizen takes a look at the property tax implications of different development types, runs the numbers, and finds that there’s a real payoff for encouraging dense mixed-use development.
Many policy decisions seem to create incentives for businesses and property developers to expand just about anywhere, without regard for the types of buildings they are erecting. In this article, I argue that the best return on investment for the public coffers comes when smart and sustainable development occurs downtown.
We’ll use the city of Asheville as an example. Asheville realizes an astounding +800 percent greater return on downtown mixed-use development projects on a per acre basis compared to when ground is broken near the city limits for a large single-use development like a Super Walmart. A typical acre of mixed-use downtown Asheville yields $360,000 more in tax revenue to city government than an acre of strip malls or big box stores.
Minicozzi looks at specific examples of Asheville, North Carolina landmarks:
Our next test case involved a comparison of a high-visibility shopping mall located just outside of downtown with a historic downtown building, dubbed the Old Penney’s building, which we had restored into a six-story mixed-use structure. Once we ran the numbers, just as before, the results were dramatic. Whereas the mall, considered one of the county’s biggest revenue generators, yielded $8,000 an acre in annual County property tax, the downtown building’s yield was $250,000 per acre in County property tax.
He concludes that when cities look at development, they need to look at per unit productivity rather than the overall value of a development project. When they do, they’ll find that mixed-use development provides a property tax bonus and a bigger bang for the buck.
You can read the entire article here.