White Pine - The Sustainable Real Estate Journal

Sustainable Design Principles and Innovation,
Merging Building Technology with the Forces of Nature

Resilient, Profitable Land Planning and Development

                           by Don Kulak

One cannot argue with the fact that most all municipalities in this country lack necessary funds for proper infrastructure maintenance. Antiquated sewer systems regularly overflow, roads and bridges are in need repair, power lines require maintenance, etc. When the need arises to update any of these systems, the typical response is that there is no money to do it.

Why is this? The answer lies in development priorities, subsidies, and property tax structure. The current system encourages new, glitzy developments, both residential and commercial, over sustainable retrofits and additions to existing structures and/or strategic land use in downtown and nearby areas.

Larger developments and new buildings normally take priority in most cities and townships for several reasons.

  1. Big and new is perceived as better
  2. Larger developments have more financial backing and can more easily cut through legal red tape
  3. There is the illusion that large, new developments will bring in more tax revenue compared with smaller, existing building renovations
  4. These types of developments are equated with with economic prosperity

Now we will look at the numbers and see how new development, big box stores in particular, generate far less revenue for the municipality than investment in downtown retrofits.  

Charles Marohn, an engineer and land use planner in Minnesota, looks at why cities and municipalities across are for the most part, broke. In his excellent book, “Strong Towns,” he analyzed various types of properties and the tax revenue they create. His analysis was based on tax dollars generated per acre, rather than the total taxes paid. This seems to be a better way to demonstrate a property’s efficiency and productivity from a tax revenue standpoint.

Sprawling big box stores outside city limits take up a lot of land, and when you calculate total taxes paid per acre, it is substantially less than a smaller, older building in the downtown area. Given this reality, government officials remain reluctant to invest in retrofits when a big box store wants to build a new facility in their backyard. And, with this new facility comes new infrastructure expenses in the form of roads, sewer and water lines, electric, phone lines…   Most of this is on the developer, but down the road it is the city or county’s responsibility to keep it maintained, and at great expense.

What is the better investment for the city, to invest in downtown or throw-away buildings on the outskirts? Let’s face it, when the building starts to deteriorate, Wal Mart will pack up, leave and repeat the process all over again somewhere else. Why? because most towns are happy to have a brand-new Wal Mart, and will pay them to come to their areas in the form of tax subsidies.

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