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!

Downtown Development Pattern Produces Best ROI for Taxes - Part 1

I don’t know about you, but I love exploring downtowns in a community. It seems like every time we’re traveling, I want to take the “long way” and pass through the downtown. Downtowns are the heart of a community and can tell someone a lot about what is important to the community and how alive the community is. But downtowns (and especially vibrant downtowns) also play another role in a city – tax revenue. You heard me right, tax revenue.

A recent exploration of the impact that downtowns have on tax revenue in many communities, both large and small, found that downtowns and downtown type development patterns generate the most amount of property tax per acre when compared to the rest of the city.

This got me thinking about similar implications that our downtown has on our city’s property taxes, so I ran an analysis to see. It turned out the same was true for Elizabethton. It wasn’t a surprise that downtown has higher tax assessments per acre that did other areas of the city, the surprise was how much of an increase there was! The median tax assessment per acre in downtown was approximately $383,000 while the median tax assessment per acre along the West Elk commercial corridor was only $197,000 – a difference of $186,000 in assessment or what would translate into approximately $3,300 per acre in city property taxes. It’s also important to note that this downtown median tax assessment value is the way our downtown is now, not if every building has a store or restaurant and the second and third floors were fixed-up.

Some of you may be saying, “This may be true, but the sales tax Walmart, Ingles, and Lowe's generates are more than enough to make up this difference.” This is a true statement, but as we saw in the years following the 2008 collapse of the stock market, sales taxes can fluctuate. If the local economy is doing well, unemployment is low, and consumer confidence is high, sales tax collections can make up this difference with no problems. If, however, the local economy is performing poorly, unemployment is high and consumer confidence is low people will only purchase what they absolutely need and limit their travel because driving your car out of the way to shop costs money causing sales taxes to plummet. Even with less revenue the city must still provide water service, police and fire protection, pave roads, etc. Sales taxes are not a reliable source of revenue.

Next week I want to take this a step further and talk about why this reality is the way it is and what the implications are if we changed our development policies towards more downtown style development. Until then, let’s talk about it!

AirBnBs Could Increase Tourism Economy for Elizabethton

We all have heard a lot of talk about crafting a Tourism based economy and there are some initiatives to help move that idea forward. The City Planning Office has developed day-trip itineraries with three different activity categories making it easy for anyone to find something of interest in Elizabethton. We are also working with the County Mayor’s Office to gather support for a hotel analysis study to determine the feasibility to a new hotel here. But until a hotel is possible, there is another tool that some rural communities are using to increase tourism – AirBnB.

For those of you who haven’t heard of it, AirBnB is an online intermediary (like Uber) that matches property owners who are looking to do short-term rentals with interested travelers who need a place to stay. It has become a wildly popular way to travel for college students and other leisure travelers to find places to stay that are interesting and near their destination. A host home provides a room or an entire apartment or home for a short period of time to the traveler with the transaction occurring via the AirBnB website. The traveler gets a place to stay and the host gets a little extra cash in their wallet.

For Elizabethton, AirBnB offers an opportunity for us, as a community, to open up our homes and apartments to visitors who will bring money to spend in our local community. Since we do not yet have a hotel, AirBnB has the power to give Elizabethton a tourism based economy without actually having a hotel. Additionally, if short-term rentals increase more visitors will be tracked visiting our city and county making it more attractive for a hotel to locate here. It would be similar to a tourist driving to Gatlinburg and renting a cabin for a week, except that the cabin would be YOUR cabin here in Carter County and it would be found through AirBnB rather than some regional or national rental agency.

Now, AirBnB is certainly not a one solution fix; there are some concerns with AirBnB rentals. One most people living in a quiet, single-family, residential neighborhood in Elizabethton don’t want a houseful of six to eight people moving in and out every week. Additionally, capturing the appropriate taxes, such as the Occupancy Tax that pays for our Tourism activities and the Sales Tax that helps fund our school systems is difficult to identify and collect when people are renting out a room for the night or their house for a week. These are taxes potentially lost which might otherwise be captured if a hotel or other formal lodging facility was present.

Various cities see the benefits of encouraging AirBnB and provide regulations to allow them. Other cities ban them outright because of some of the problems. What are your thoughts? Is this something we should take a serious look at in our community? Let’s talk about it!

The Status of Affordable Housing in Elizabethton

Housing is something everyone needs. Rich or poor, employed or unemployed, single or married, we all need some type of housing. In Elizabethton, housing takes two main forms – apartments and detached single-family homes. One is renter-occupied and the other is commonly owner-occupied. Either of these types can be analyzed to determine if they are affordable for the people who live in Elizabethton or not.

To determine whether the housing is affordable or not, we use the 30 percent rule. This rule states that no more than 30 percent of your income should be dedicated towards your housing expenses. This rule is typically used in personal finance budgeting. It is also defined by the U.S. Department of Housing and Urban Development. Because the U.S. Census Bureau tracks aggregated household income as well as housing expenses (mortgage and rents), planners can use this data to determine the approximate affordability of housing in a community.

Let’s start by looking at owner-occupied units in Elizabethton. Approximately 53 percent of all of the people who own their home have a mortgage while 47 percent own their home without a mortgage. Because a mortgage can have such a large impact on a family budget I want to look at these groups separately. When it comes to affordability of homes without a mortgage, we are doing pretty good. Just over 91 percent of these households can easily afford their own home. This story changes, however, when we look at those with mortgages. Just over 1/3rd or 33 percent of the households do not live in a home where their home expenses are less than 30 percent of their household income.

Looking at renter-occupied units this number gets a little worse. 43 percent (almost half) of all renter-occupied units, including apartments, condos, and single-family homes, pay more than 30 percent of their household income in rental expenditures. This is quite alarming! This data then begs the question, what do we do about it or, maybe, should we do anything about it?

Elizabethton, in the history of the city Planning Department, has never had any types of regulations on providing housing for a specific type of family or income level. The free-market has been allowed to work in Elizabethton – if there was demand, the apartments or housing subdivisions were built. So when almost half of the renters in the city and over 1/3rd of the homeowners with a mortgage live in housing that is not affordable, is it time for the city to step in? Some cities have done this and require certain numbers of affordable units in each development. Others have not and claim they will never interfere with the local housing market. What do you think? Which side of the table should Elizabethton land on this topic? Let’s talk about it!

Spring is Coming...and so are Property Maintenance Issues

With each day, the air gets a little warmer, the sun shines a little brighter, and before you know it the grass will be a foot tall and the paint on the siding will be peeling. Sorry to ruin that perfect picture, but in the Planning and Economic Development Department, that's what we think about when spring arrives.

Property maintenance complaints kick into high gear during late spring and into summer. Often times it's people leaving junk or trash lying around their house. Sometime it's a feud between two neighbors trying to get the other in trouble. Nevertheless, property maintenance is one of the biggest problems we have when it comes to housing in Elizabethton. The property maintenance problems help contribute to the lack of quality housing and low home values that data sources suggest we have here. Additionally, unmaintained properties contribute to blight and can make entire neighborhoods undesirable.

Each year since I've been in my current position we have tried to set up our game when it comes to property maintenance. One year we adopted new, modern, nationally accepted standards for property maintenance – the International Property Maintenance Code. The year after that we developed and implemented the neighborhood sweep program where four staff members spend an entire morning canvassing a neighborhood going door-to-door identifying property maintenance issues and notifying the property owner. The neighborhood is then reviewed again for compliance. This programs starts in April each year and end in October. We have seen a lot of success with this program!

Our improvement this year is our online reporting system. Implementing this program will allow citizens and residents to report our most common property maintenance violations online. Citizens can also submit a picture of the property so that the Code Officer can get a better idea of the violation. Once the violation has been submitted, our officer can review and visit the site to determine whether there is a property maintenance violation.

The goal of this program is to make reporting these properties more accessible and not to require a visit to city hall to report a violation. Additionally, it will give our staff more eyes on the street so that we can find violations early before they become worse.

What are your thoughts on the role of property maintenance in our community? What else do you think we can or should be doing to combat property maintenance violations? Let's talk about it!

Visit http://www.elizabethton.org/departments/report_a_violation.php to report a violation.

Higher Density Could Bring Positives for Elizabethton

Density -- the word itself brings to mind large high rises in the middle of a large bustling city. But I want to convince you that density does not just apply to large metropolitan areas, but can be extremely beneficial, useful, and even bring more life to our city.

I was recently reading the Urban Land magazine when I came across an article entitled, “Density is Critical for Cities to Realize Advantages and Avoid Decline.” The article summarized a report recently released talking about the importance density plays in the success or failure of a city or community. The article gave me four takeaways that we can apply to Elizabethton.

First is finding the right locations for mixed-used development. Often this terms confuses people. Mixed-use development is development that accommodates multiple uses such as residential and commercial. Downtown is a great example of mixed-use development. We need to identify areas in our community that can viably utilize mixed-use development and create regulations to accommodate and encourage this type of development.

Next, we must have a plan to accommodate higher density levels in our community and share those plans with developers. We must develop a plan for higher density and work to improve infrastructure create more accommodating land-uses. We also must share this information with developers which will help encourage them to create higher density development in areas of the community that can accommodate it.

We must also look at density on a regional scale. We must not confine our planning and views to only the city limits, but look beyond those limits to observe the type of development that is occurring there. We must work with our county officials and neighboring cities to ensure that our development can be compatible with other development within the region.

Lastly, we must reimagine our community. Elizabethton is a great small city with many benefits that our surrounding communities do not have, but we must step back to look to the future of our community. One where higher density and midsize building developments occur. This doesn’t mean we lose our identity as a small city, it means that we look for ways to increase our sustainability as a city and ways to grow and become more attractive for others to move here.

Higher density provides many benefits to our city. Promoting more businesses and residences already within our city limits mean property taxes are shared between more property owners, utility expenses are shared between more customers, and more houses means more retail and shopping opportunities will be attracted to Elizabethton. We are already starting to see the effects of low density development in our community. How should we proceed in creating higher density locally? Let’s talk about it!

High Density Residential Could Breath New Life into Downtown

The last few weeks I’ve talked about transportation options for Elizabethton’s future, but one major element of the conversation has been left out -- land use. Land use is a term used in the planning community which tells us how specific pieces of property are being used by our citizens and businesses. For example, I would categorize most of the Blackbottom neighborhood as a single-family residential land use or the West Elk Avenue area as a retail commercial land use.

Land use gives us an idea of what types of uses the property currently is and commonly a descriptor lets us know what the density or category it is being used as. Land use is critical to transportation. If there is a high density residential land-use, for example, cities need to create wider streets for more cars, wider sidewalks for more pedestrians, and bike lanes for people to bike.

As we look to the coming year, the Planning Commission has shown interest in moving forward with creating higher densities in and around the downtown area. This type of density would allow for small condo buildings, townhomes, and apartments. Unlike other parts of residential we’re encouraging in downtown, this area will be strictly residential. With higher densities of people come the need for more and better sidewalks, the installation of bike lanes, and the need to make our streets more user friendly for multiple people, not just cars. Even golf carts can have a role to play in helping create this higher density residential district.

This type of land use will impact the types of transportation infrastructure we, as a city, offer and could result in narrower roads with different parking arrangements for Elk Avenue and E Street, the addition of bike lanes to Sycamore Street and Main Street, one or two transit bus stops in downtown, and don’t forget the addition of golf carts.

Now, all of this will certainly not happen at once and it may even take a decade to put all of the infrastructure in place. But higher density residential areas can bring a lot of positives to our community. The more people who live here, the more ways the city taxes are split, the more ways utility infrastructure costs are split, and it can help bring life back to our downtown buildings and businesses. Let’s talk about it!

Finding a Place to Call Home – The State of Housing in Elizabethton

As I discussing in my first column part of my job is to look into the future of Elizabethton and prepare the city to handle any issues that might arise. This week I would like to look at Housing in Elizabethton. Often housing is one of the more difficult areas for a city to prepare for simply because cities do not build houses!

When urban planners look to into the future, there are a few indicators we consider to determine what direction housing needs to be moving in. Vacancy rate and housing mix are two of the big ones that give us a sense of what cities will need in the future.

In Elizabethton, our housing vacancy rate gives us a good indication if we need new or additional housing. We have a vacant housing rate of just over 12 percent currently. This number typically is close to 10 percent, so 12 percent would indicate that there is not necessarily a high demand for new housing units.

To determine our future housing mix we look to current vacancy rates in owner-occupied and rental-occupied units. Elizabethton has a vacancy rate of 0.9 percent for owner-occupied homes, while the rental vacancy rate is around 9 percent. These vacancy rates should typically be around 2.5 to 3 percent for homeowner units and 5 to 6 percent for rental units. This gives us an indication that we need more owner-occupied units and less rental units.

But wait, we just said we did not need any new housing! Well, this is correct. The existing housing in Elizabethton is enough, but it needs to be transferred to owner-occupied rather than rental property.
These statistics show that there is definitely some work to be done to prepare Elizabethton’s housing for the future. What do you think? Do we need more housing or not? Do we need to provide more housing that can be rented or purchased? Let’s talk about it!

(The data used in this article comes from the US Census Bureau’s 2012 American Community Survey.)