Downtown Development Pattern Produces Best ROI for Taxes - Part 2

Last week we talked about the return on investment cities see from downtown style development patterns verses modern development patterns. This week, I want to look at why this is the case and what are the implications of changing our regulations to encourage this development pattern.

So why is it that a downtown development style has a higher tax assessment per acre value that other commercial developments. One big issue is parking. Downtown style development has shared parking areas either on-street or in public owned off-street lots. By itself, the Walmart building may have a somewhat comparable assessment value to a single-story building in downtown, but when we spread that value out over its entire parking lot (which adds little or no value to the property) it substantially decreases Walmart’s per acre assessment value.

Another reason is density. If we split each of Walmart’s departments up into a store in downtown, combined, all the stores would not equal the same acreage that Walmart currently occupies. That’s because some may utilize a second floor for shopping, storage, or offices and there would not be as much space made available for large areas of displays (think of the bakery section at Walmart and how much space it takes up verses a downtown bakery you’ve been in before). This allows more stores and shops to locate in an acre of downtown style development than that of our modern style of development.

One last reason is mixed land uses. In most North American cities and towns, we separate the land uses – residential over here, shopping over there, and offices somewhere in between. But in downtown style developments we take advantage of the height to put multiple uses in one building, such as a store on the first floor, a law office on the second floor, and condos or apartments on the third and fourth floor make the land the building sits on worth more and therefore more money for the building owner and a higher tax assessment for the city.

So what benefits could our community see if we focused more on this older style of development. First would be lower taxes. If we can increase the tax assessment on a piece of property already in the city limits without having to expand the police or fire service, build new roads, add a new garbage route, etc, then that means the expenses are split more ways meaning no tax increases or even lower taxes.

Another is more jobs. We all know that small businesses are collectively the largest employer in the nation and in almost any local economy. More mixed-use, downtown style development would provide the opportunity for new innovative businesses to start and be successful. It could also mean newer small businesses that might locate in the first floor of buildings which will result in more jobs being created. This is a process that won’t happen over night, but over a 10 or 20-year period we will see more small businesses and jobs being created. The best part is we can look to communities who have implemented these types of development policies to see the benefits.

Traditional, downtown pattern of development is a more sustainable type of development that can help put Elizabethton on a path to fiscal success. Now, no-one is suggesting that everyone live downtown on the third floor, but there are people interested in this type of living and from study after study, case after case, we only have benefits to reap. Is it time for us to reevaluate and alter our regulations? Let’s talk about it!