Less Parking, High Density means more Revenue

Property values are something that are vital to the cities in Tennessee and, for the most part, most cities in modern America. Almost every state has a revenue model that allows cities and counties to collect property taxes to pay for services. It is important for cities to, therefore, protect and increase property values. This is why we have a property maintenance officer, this is why cities condemn and demolish old, dilapidated homes and buildings, and this is why cities control development patterns – all to protect and increase the property values.

One way of comparing property values is by using a similar unit. An analysis suggests using the value per acre as a measure to compare developments. Using this process, can you guess which buildings in the city are the most valuable? Walmart? Lowes? Maybe one of our shopping centers? Oh, what about Snap-On? Certainly, these businesses do provide a lot of property taxes to the city and county, but the answer is no. On a per acre basis, the most valuable commercial property in the city is the Downtown Branch of Carter County Bank. The value, $5,765,670 (per acre of course). In other words, if we had an entire acre of property and built nothing else on it except buildings like the Downtown Branch that property would have a value of just over $5.7 million! Walmart on the other-hand, has a per acre value of $523,907, Lowes $537,179, and West Towne Shopping Center $392,903.

So, what could cause such a deviation in these values? After all, it’s not like Walmart or Lowes is a cheap building. Well, one of the biggest differences is the use of the property. Think about the Downtown Branch of Carter County Bank – the building takes up almost all the property and has a second story that is used for offices. Walmart, Lowes, and West Towne have huge buildings (in comparison) but have even bigger parking lots. Walmart alone has just under 9 acres of parking lot! The value of the parking lot is essentially $0. Having a vacant property with a parking lot on it provides little to no increase in the property value.

While parking lots are a necessity, an almost 9-acre parking lot (which was required by the city at the time) seems a little excessive. How many times a year do you see it full? Even requiring Walmart to have 1 less acre of parking could have resulted in having another restaurant like the size of Bojangles or Captain D’s. These would have generated at least increased the property value more than a parking lot resulting in additional tax revenues.

While the answer is certainly not getting rid of parking requirements, it might serve us well to reduce parking requirements and encourage denser development. This will help ensure that the city is getting the best return on our investment both when we invest roads and water and sewer infrastructure into a project. Let’s talk about it!