Development pattern productivity, continued further

Posted on March 27, 2015 by Betsey Buckheit

Last week, I anticipated the Northfield City Council’s discussion of amendments to the Land Development Code by comparing the tax revenue from a selection of different development patterns around town (thanks to David Delong for mentioning Community Resource Bank – 3 stories on the highway with less than minimum parking – a variance was granted to reduce the parking lot size – would be valued at $2,294,118 per acre with tax revenue of $95,894 which narrowly beats the downtown block and is 5x better than neighboring Target; multistory development wins on or off the highway). The ensuing Council discussion was somewhat encouraging, mostly predictable, and once unintentionally funny.

Encouraging: My previous post had its intended effect of inserting into the discussion the idea that low density, sprawling development is less valuable to the city’s tax base than more compact, multi-story development.

Predictable: The usual backlash complaining proposed regulations will kill all development along with the (false) presumption that asking questions about how we develop indicates a desire to preserve Northfield circa the Defeat of Jesse James.

More encouragement: let’s see if we can nudge the conversation past the adversarial stance where questions about how we develop are perceived as advocating for no development whatsoever to acknowledging:

1. Cities (with help from higher levels of government) adopted policies and spent money on infrastructure which encouraged and enabled the low density, low productivity pattern. In the news recently is this report on the policies which have encouraged unproductive development and its costs (See also CityLab, Washington Post, and the press release for the report). “The market” is not free, but the highest and best uses are strongly determined by government action.

2. Developers are not altruistic and will act to reduce their costs and increase their profit. Since government has helped make sprawl profitable for them and create the market for it, we shouldn’t be too surprised about fears that shifting regulations away from sprawl will hurt business. Private sector development has to be able to make money.

3. Cities need to make development deals which allow developers to make money, but also increase the city’s long-term economic and environmental health.

Developer costs and municipal costs: can we consider municipal costs in development regulations? (Image: Strong Towns/Joe Minicozzi)

4. Reversing the unsustainable pattern of low density, high infrastructure cost, low tax revenue development will require a comprehensive and sustained effort involving leadership, education, policy and regulatory change, encouragement (and incentives), collaboration with other units of government and patience. The current proposed LDC changes are just a chance to open the conversation, but will change nothing on their own.

Encourage the Council to continue to ask questions about how to promote the development which is sustainable and creates wealth for all taxpayers.

Development pattern productivity, continued

Posted on March 17, 2015 by Betsey Buckheit

“No additional financial impacts are anticipated,” claims the staff report accompanying proposed revisions to Northfield’s nightmare land development regulations. Yet the proposed changes will change zoning around Northfield’s downtown to make lower density, less compact development the default pattern and this does have financial impacts for the City of Northfield.

The motivation for the changes is to make development easier and help cure Northfield’s purported reputation hostility to business, developers and development. Yet the discussion has only focused on making it easier and cheaper for developers and not on the longer term impacts for the City of Northfield and its taxpayers.

Mayor Graham was the first (but certainly not the last) person to call me anti-growth and anti-business, so let me say again that neither is true. I wholeheartedly support making the development permit process easy, predictable and cheap for developers. I urge the Council, Economic Development Authority, NDDC, and Chamber to work to encourage business and development in Northfield by retaining current business and attracting new companies.

But, and of course there was a but, I continue to advocate for the City to work to make developing in a pattern which will sustain the City financially the easiest choice rather than changing the regulations to development which is less profitable for the City the norm. Tonight, the Council should have a robust discussion about how to make the most productive use of land in Northfield for the taxpayers and how to help developers make money in the short term so the City can prosper in the long term.

Private development depends on a great deal of public infrastructure water, wastewater, stormwater, and roads. While developers usually pay for the required improvements (but the proposed business park plans also proposed to subsidize this, too), the infrastructure is all dedicated to the City – to me and my fellow taxpayers – to maintain, repair and eventually replace. It matters a great deal whether the development the City permits can pay for the costs to maintain the infrastructure and some development patterns yield more revenue.

To help the Council consider what I mean about more productive vs. less productive development patterns, let’s do the numbers. Following in the footsteps of Strong Towns “Taco Johns math” in Brainerd and Joe Minicozzi’s work in Asheville, NC (and an additional example from Rochester), I offer three examples of different development patterns in Northfield with taxable market values and tax revenues (from Rice County public records) compared on a per acre basis to compare apples to apples. The downtown block is by far the most efficient and highest producing use of land on a per acre basis.

When considering how to zone and regulate land, the City’s interest should be to guide development in a pattern which produces the most tax revenue for the least cost in terms of infrastructure. The proposed revisions to the LDC help create lower density and lower productivity for the City.

Downtown Block

The development pattern is on a traditional grid street pattern with mostly two-story construction (there are a couple of single story buildings plus the taller First National Bank and Grand Event Center), zero setbacks, and sidewalks. This block has a mix of residential (apartments on upper floors along Division Street as well as an apartment building on Washington), retail and service businesses at street level plus additional business uses on upper floors (this makes for greater density of jobs, too).

Downtown block bounded by Division, Washington, 3rd and 4th Streets

Total acres: 1.71 (not including city parking lots)
Total Market value: $4,192,400 (not including value of parking lots)
Total Tax revenue (State, county & city level): $148,586
Value per acre: $2,451,696 (w/o parking)
Tax revenue per acre: $86,892 (w/o parking)

Southgate Mall development, Highway 3

This development was built in 1976, well into the suburban, highway and automobile-oriented phase. The single-story structure with parking in front on a state highway frontage road is difficult to reach except by car. The sidewalk and new-ish bike trail along the river behind this development get pedestrians and bicycles close, but there is still no direct access. The highway oriented development requires considerably more infrastructure – a frontage road and a state trunk highway – as well as requiring off-street parking for additional distance for pipes and more stormwater runoff to manage.

Southgate development, Highway 3 south

Total acres: 1.16
Total market value: $152,500
Total tax Revenue: $4,982
Value per acre: $131,466
Tax revenue per acre: $4,295

Target/Cub development

Moving further south on Highway 3, the early 21st century big box development of Target and Cub (plus Applebee’s Restaurant) is also single-story, requiring a much greater amount of land for parking and the location at the far south end of town makes it less accessible for many on foot or bicycle. Additional improvements to highway intersections and local connections streets added to the public cost.

Target, Cub Foods and Applebees development, Highway 3 south

Total acres: 26.4 (13.8 for Applebees/Cub + 12.6 for Target)
Total market value: $10,721,700
Total tax revenue: $446,882
Per acre value: $406,125
Per acre tax revenue: $16,927

On a per acre comparison, the denser, multi-story, mixed use downtown block is the clear winner as I’ve argued before, but now provide the numbers. As luck would have it, the proposed land development regulations share an agenda with a proposed resolution supporting a state omnibus transportation funding bill that provides additional dedicated state funding for city streets (including non-MSA street maintenance, construction and reconstruction). How much of the pain the omnibus transportation funding bill is trying to solve is self-inflicted by building more than we can afford?

Consider why Northfield and other cities need more money for local roads; one reason is that cities have built a great deal of infrastructure to support very low return development that cannot support itself. Working toward revising how we build can also help change how resilient and prosperous Northfield will be in the future.

Strong Towns in Northfield

Posted on February 4, 2014 by Betsey Buckheit

PLAN TO ATTEND! The NDDC has invited the Strong Towns organization to Northfield for one of their “Curbside Chats”. The event will be held on Monday, February 17, 5:30-7:30 pm, in the Archer House Riverview Conference Room on the lower level. The Curbside Chats are designed city officials and community leaders, but the strong towns are built from the grassroots, so the public is welcome and your voices needed at this free event.

Curbside Chats zero in on three “big ideas” central to Strong Towns thinking:

The current path cities are pursuing is not financially stable.
The future for most cities will not resemble the recent past.
The main determinant of future prosperity for cities will be local leaders’ ability to transform their communities.

I’ve written much on this blog about Strong Towns and ideas related to their mission. Here’s a good summary of my posts. But my interest goes back further than this blog.

When I served on the Planning Commission in 2001-2005, Northfield was approving hundreds of acres and hundreds of units of single family homes. The short term attraction was clear: creating jobs and expanding the local tax base. But longer term issues were raised by the Planning Commission, but dismissed by the Council such as:

If we build housing on all these acres, where might future commercial expansion take place?
If the city doesn’t negotiate with developers about street design and connections, how can the Northfield be able to plan for efficient service delivery in the future?
Will the increased tax revenue pay for the maintenance of the infrastructure added and the cost of delivering services to the new areas?

Strong Towns caught my attention in about 2010 with its message of the financial impact of the way cities have developed in the last 50 years or so. Certainly as a City Council member at the time, I could see that Northfield’s tax revenue was not keeping up with maintenance or service needs, so I was relieved, thrilled, and excited to see the questions I’d already asked be asked by people with more development experience and to see that message go from Brainerd, MN to national news.

Does Strong Towns have all the answers? No, but that’s where you come in. Come think with Strong Towns and your neighbors about the future of Northfield. I’ll be in Finland, but I can’t wait to hear what happens.

Not all development patterns have the same price tag

Posted on December 11, 2012 by Betsey Buckheit

And for my last Council meeting, the business park is on the agenda for discussion…so here’s one more attempt to ask questions about the cost and scope of this project.

The background as we know it: 530 acres annexed west of the hospital to be master-planned and developed as a business and residential development. Required improvements include roads (to TH 19, North Avenue, Decker Avenue, 320th Street, “Cedar” Ave. and new interior roadways), sewer (including lift station), water (including elevated storage tank) which “should not be assessed to business park property, increasing the cost of development.” Phase I is estimated at about $14 million in improvements; Phases II-IV would add another $15 million. The breakdown of the development expected includes not just the commercial/industrial development we hear about most, but a substantial amount of housing and retail.

That cost of development issue should make everyone pause…

Of course, it would raise the cost of development to completely prohibitive levels if the costs were assessed to the property. But, if the costs are not assessed to the property, that burden will fall to the City taxpayers (and state and perhaps federal taxpayers depending on the package of aid that’s cobbled together). Further subsidies to attract business like tax abatement, TIF, etc. will further increase taxpayers’ costs and decrease the tax benefits.

1. My general question: how can we grow the tax base and add jobs without massive subsidies (which is what those infrastructure improvements would be) which would effectively shrink tax revenue to pay off the improvements.

2. My more specific question: how can the Council, staff, business community and taxpayers learn how much it is likely to cost them (and what assumptions about the rate of growth and the economy underlie those projections) and will that cost ever be recouped through tax revenue.

3. I also have question the wisdom of master planning an area which will take decades to build out. My experience on the planning commission with residential development was that the master plan would be drafted, but within just a few years changes would be requested to adjust densities, change housing styles, subtract roads, change stormwater management, etc. Is it likely that the lot layout, use designations, environmental/landscaping/natural features, etc. in the business park will help development or will the plan constrain business development over time?

My bottom line: Northfield has not evaluated the cost of this project for taxpayers over the long term and has not explored meaningful alternatives to reduce cost. Indeed, the entire process has been conducted backwards with questions about feasibility, cost, location, etc. happening after the plan has been drawn without considering that not all development locations and patterns come with the same pricetag.

I am advocating for 2 things:

maximizing use of current infrastructure before building new (because we’ve already paid for it and are maintaining it). Extending infrastructure in the hope of development is a gamble with tax money I am not willing to take.
building in patterns which support density (to put more taxpayers per acre or per foot of pipe to support the infrastructure), but not for a particular look and feel.

A little digest of other things I’ve written and where I get my information:

From this blog (with links to many places):

The cost of doing business: On the New York Times series on business subsidies. Of special note, the difficulty for local governments to determine costs.
Business incentives and Cabela’s: Detailing the amount of money Cabela’s has received in subsidies and whether it matters.
League of MN Cities Community Conversations report is out: LMC projects that without policy changes, cities will be bankrupt in the near future. However, the LMC does not consider development pattern or the subsidy issue directly (unfortunately).
How streets got this way: The prevailing opinions on development, zoning, etc. are not free-market issues, but products of regulatory incentives
Fixing the problem by looking at development pattern rather than just “grow the tax base” or “raise taxes” – how we development can be more or less expensive depending on how well we utilize our infrastructure dollars.
Not just liberal types believe in downtown: Opposing the museum theory of downtown by asking about the tax value of dense urban development vs. suburban style business parks.
Another business park: the highly subsidized Elk Run business park is still empty.
What can government do? to encourage job development without massive subsidy.
Infrastructure is important, is crumbling, and needs serious policy change, not just dollars.
Council talks business park: Same questions, no answers.

From other places:

Generally, see Strong Towns for much more information and links to even more (full disclosure: I give $$ to Strong Towns because I think their questions are critical). The Friday Digest on their blog give a wealth of information.
Report on effectiveness of business subsidies from the Lincoln Institute of Land Policy (mostly state level subsidies):
Comparing the value of development patterns: From New Zealand, Asheville NC, and Northfield.

Different debate questions

Posted on October 18, 2012 by Betsey Buckheit

Presidential debates usually make me think about moving to Canada since the likelihood of either candidate actually answering a question is abysmally low and the only excitement comes from the random zinger of a comment, factual screw up, or public speaking trainwreck (I depend on the Brits for the most entertaining and pointed commentary and American media for the transcript). I’d like to believe, however naively, that the President of the United States does more than repeat familiar phrases or score points for verbal jabs in the course of his employment.

I would like some answers from candidates, though, and Chuck Marohn has a different list of questions over on Strong Towns which get at some of the issues I care about. It might be fun to ask them on the local level, too, and see if we can get beyond repeating the usual answers and catchphrases about growth, infrastructure, regulation and the like to ask what would really work and what it would cost.

New CommunityMatters partnership

Posted on July 1, 2012 by Betsey Buckheit

Community that matters

Some of my favorite organizations have formed a new CommunityMatters partnership dedicated to the idea that people have the power to shape and strengthen their communities; CommunityMatters plans to provide some tools to help do it. Strong Towns, Project for Public Spaces plus 4 other partners and supported by the Orton Foundation form the partnership. One of the first projects is the Citizens’ Institute for Rural Design which brings together the CM partners plus the USDA and NEA to convene workshops intended to help rural communities enhance economic vitality and quality of life. Bill Roper of the Orton Family Foundation said:

Over recent decades too many small towns have gone from the unique to the uniform, subject to cookie-cutter design and development. But people have the power to weave a new community narrative for the future, one that enhances their town’s unique heart and soul. This uniqueness is core to small towns’ lasting economic success built on local assets. We are excited to bring all the knowledge, skills and resources of this partnership to aid America’s rural communities and help them thrive.

Sounds a lot like recent economic development conversations in Northfield highlighting local assets and unique features – I’m looking forward to learning more.

Northfield, a resilient town

Posted on February 16, 2012 by Betsey Buckheit

Ooh, what a nice little surprise in my Facebook newsfeed this morning – Strong Towns posted a link to their blog post about a recent conference on Back to Basics (of building strong, engaged communities) in Pine River, MN with this comment: “Video from the Back to Basics Q&A, including Chuck Marohn expressing his affection for Northfield.” Watch this video and hear Chuck tell everyone what a great place we have here. Thanks, Chuck!

Small town, Big picture

Betsey Buckheit

Tag Archives: Strong Towns