Tax revenue Uptown vs Suburbs

[archiham04]

An off topic conversation recently asked if the additional suburban costs to society are outweighed by tax revenue.  My friends at Urban 3 in Asheville study this across the country and looked specifically at the Charlotte region.  I don't have the whole report, but   Here is a graphic representation of revenue per acre generated in our region. FWIW

Edited April 21, 2017 by archiham04

[kermit]

Great graphic!  I'll throw some gasoline on it:

Suburbanites (residents of low-density neighborhoods) are the largest welfare class in the US today. 

The massive subsidies that suburban residents receive have become invisible since they are so widely consumed and they distort the market-driven development process in ways which discourage walkable urbanization -- I think this is a serious problem, but those who currently receive these wealth transfers are probably OK with it.

The big subsidies are:

• The cost of providing municipal services to low density housing. Simply put, it costs more to provide police, fire, schools, swears, water etc. to low density places. Since suburban houses nearly always have a lower valuation (they are cheaper after all) they rarely generate sufficient property tax to pay the cost of providing services to them
• Subsidies for driving. The federal gas tax has not been raised since the Clinton administration, but the cost of maintenance and construction has climbed dramatically. Its currently estimated that the cost of driving is subsidized by 50% above user fees such as gas taxes or registration fees. This subsidy is a transfer of property and income taxes from non-drivers (and light drivers) to heavy drivers. Keeping driving artificially cheap via subsidy discourages the development of alternative modes of transportation and encourages sprawl. (You can add air quality, enforcement costs, accident cleanup and the military / political costs of maintaining car and oil oil culture).
• Subsidies for parking. Zoning which requires parking minimums for new (and repurposed) developments substantially increases construction and real estate costs and these expenses are passed on to all all users/customers/residents weather they have cars or not. When free parking is available everywhere it becomes more difficult to develop alternative modes of transportation and forces the development of sprawl (e.g. giant parking lots which make walking impossible).
• Other subsidies of note include the mortgage interest deduction and  the -massive- public health costs of car culture.

The subsidies above are multiple billions in aggregate and multiple orders of magnitude larger than any subsidy for transit, firm recruitment or infill development. While many here will say that this fiscal system is 'just the way it is' so we should look the other way, our current fiscal situation shows that sprawling landuse patterns are simply not sustainable.

just my 2 cents.

Edited April 24, 2017 by kermit

[cjd5050]

On 4/21/2017 at 2:47 PM, archiham04 said:

An off topic conversation recently asked if the additional suburban costs to society are outweighed by tax revenue.  My friends at Urban 3 in Asheville study this across the country and looked specifically at the Charlotte region.  I don't have the whole report, but   Here is a graphic representation of revenue per acre generated in our region. FWIW

Interesting graphic.  Not sure why people are sourcing numbers for Canada, specifically a report about Halifax, Nova Scotia to try and prove a point on a forum about Charlotte but to each their own I suppose.  

I maybe in the minority but I think that the numbers might be a bit different for Charlotte....

My friends at Urban 3 in Asheville study this across the country and looked specifically at the Charlotte region.  I don't have the whole report, but   Here is a graphic representation of revenue per acre generated in our region. FWIW

Would love to see the report if it's made public.   Though I am not sure one needs to use a computer model to show that a few blocks in Uptown home to WF, BOA and Duke produce the most revenue per acre but the picture is swell.

 

16 hours ago, kermit said:

Suburbanites (residents of low-density neighborhoods) are the largest welfare class in the US today. 

Bless your heart.  That's one way to look at it.

 

 

[nowensone]

^ It was perhaps stated a bit dramatically, but the point appears sound, what would be another way of looking at it?

[kermit]

2 hours ago, cjd5050 said:

I maybe in the minority but I think that the numbers might be a bit different for Charlotte....

Based on.....

[swh1972]

19 hours ago, kermit said:

The big subsidies are:

• The cost of providing municipal services to low density housing. Simply put, it costs more to provide police, fire, schools, swears, water etc. to low density places. Since suburban houses nearly always have a lower valuation (they are cheaper after all) they rarely generate sufficient property tax to pay the cost of providing services to the

By what means are lower density municipalities being subsidized?  I get the fact that in the same city, a more outlying area is being supported by more dense areas through tax revenue, but what about a self-sufficient incorporated suburb?  Take Cleveland, for example.   Is a western Cuyahoga County suburb somehow subsidized by downtown Cleveland even though they maintain their own Police, Fire, Schools, Roads?

[kermit]

16 minutes ago, swh1972 said:

By what means are lower density municipalities being subsidized?  I get the fact that in the same city, a more outlying area is being supported by more dense areas through tax revenue, but what about a self-sufficient incorporated suburb?  Take Cleveland, for example.   Is a western Cuyahoga County suburb somehow subsidized by downtown Cleveland even though they maintain their own Police, Fire, Schools, Roads?

If a suburb is an incorporated municipality which provides all of its own municipal services (e.g. Police, fire, schools and roads) then it will recieve no direct subsidy. This is generally fine while there is room for new houses to be built which will contribte new revenue. However when housing growth slows or stops the unsustainability of the system becomes more apparent -- either tax rate need to rise towards the level of expenses (what are the tax rates in Avon Lake in comparison to Cleveland?) or these communities will end up in a fiscal meltdown (e.g. Union County).

The cross subsidy arrives when the incorporated suburb requires a bailout (e.g. shutting down a local police department and forcing the county to provide police services). The subsidy also exists in every municipality which has both high and low density residential areas -- like Charlotte. 

Edited April 24, 2017 by kermit

[archiham04]

I would argue that separate "self supported" adjacent municipalities are likely subsidized by their larger denser neighboring municipalities more than you think.  One examples of a cost not supported by the "self sustained" community would be the accommodation of the workforce, or lower income communities that service that community.  Most lower income communities require expensive education, policing and healthcare.  The people who work in the restaurants and Walmarts in the affluent suburbs, probably do not live there. They are likely commuting from the denser neighborhoods.

Similarly, or perhaps conversely, many of the suburbanites commute into the denser area for work.  Keeping the area safe and the roads clear on their way to work is also expensive.

[cjd5050]

1 hour ago, kermit said:

Based on.....

Let's just take the line item of 'police'.  I read it as a per household cost or taking the entire police budget and then dividing that by the number of homes.  This of course is assuming both equal coverage and equal use of all services.  But this is not the case. 

Do you know how much a murder or violent crime investigation costs?  Do you know how much it costs to respond to a domestic case?  Do you know how much it costs to run a traffic stop like a DUI?  Let's work backwards.  

> A traffic stop can be managed via a patrol officer.  Patrol officers are typically the lowest paid officers in a department.  They do everything up to handing off to booking.  Booking and jail management costs are the same.  

> A domestic is typically going to have multiple cars responding.  So there is twice the use of patrol resources but they, like traffic, hand off to booking.  But it does not stop there. Domestics are then worked by Detectives and support services are called in.  This is all a use of resources and different rates of patrol, detectives and outreach services.

> A murder/violent crime starts with patrol or the first response and then detectives are called to the site.  By and large an arrest is not made on site.  Typically you need to bring in the crime scene resources and have them work the material.  Then you have detectives work the case for an extended period of time.  Hopefully an arrest is made and they are handed off to booking.  Sometimes this requires the ERT to be called in. Again, a much different use of resources.  

All of this is done inside of the same budget.  So if we look at how much police service consumed rather than a simple number of dividing the budget over homes, you see that urban areas cost more to police because they are also where more crime happens.  

Beyond that and on the issue of size.  Halifax and Charlotte are not the same size.  The more 'rural' areas might only be services continually via patrol whereas the 'urban' areas will be serviced by patrol, bike and mounted units.  Additionally, the public safety unit typically focuses on some areas over others.  

[cjd5050]

3 hours ago, nowensone said:

^ It was perhaps stated a bit dramatically, but the point appears sound, what would be another way of looking at it?

I think a more accurate way to look at it is how much of a particular 'service' does a unit consume.  

So for things like roads, the suburban unit is going to 'consume' much more than an urban unit.  I think we all agree on this.  But then if you look at consumption of public transportation, my take is that it would be just as uneven but urban units would be consuming much more than suburban units.  

Then there are things like public grants.  I am not sure what category those would go into but I have friends who live in a transitioning neighborhood and they qualify for a pretty large community improvement grant.  I am all for it as it will help that community thrive.  That said, my neighborhood applied for a similar grant a few years ago and was told that our home values where too high to qualify.  Studies like this take that entire pie and divid it up over the number of units but don't consider that some units are not even allowed to consume some resources or don't use some resources.  

It works both ways of course.  My point it that it's a very nuanced conversation and much more complex than a clip art infographic with some basic numbers can define.

[archiham04]

^I'll work on getting a better report form Urban3 they are very thorough and use both specifics and broad based perspectives to illustrate the efficiency of urban areas.

[cjd5050]

7 minutes ago, archiham04 said:

^I'll work on getting a better report form Urban3 they are very thorough and use both specifics and broad based perspectives to illustrate the efficiency of urban areas.

Thanks.  Would love to read it.  Noticed they did something for Buffalo NY as well.  Looked interesting.  

[kermit]

Sure, policing costs are uneven, and there will certainly be higher investigative costs in cities  (although that differential has been dropping for more than a decade). Having said that, patrolling costs per household will certainly be lower in dense areas -- as will the cost of fire protection, school transportation, water, sewer, garbage, parks......

Focusing on minutia distracts from the core issue: high density areas are clearly paying more per acre in taxes than low density areas and the total cost of servicing urban residents is lower  (we can quibble about specifics if you really need to). Regardless of the details of municipal budgets, suburbanites are consuming a disproportionate share of resources. This subsidy is preventing market forces from influencing urban form.

Edited April 25, 2017 by kermit

[cjd5050]

15 hours ago, kermit said:

Focusing on minutia distracts from the core issue: 

Focusing on the minutia detracts you from making broad stroke statements without backing it up with data.   Thought this was Urban Planet not Buzzfeed.  

 

15 hours ago, kermit said:

high density areas are clearly paying more per acre in taxes than low density areas and the total cost of servicing urban residents is lower  (we can quibble about specifics if you really need to). Regardless of the details of municipal budgets, suburbanites are consuming a disproportionate share of resources. This subsidy is preventing market forces from influencing urban form.

See this is where the wheels fall off for you. You pivoted from Commercial/Residential to just Residential.  

People are not clearly paying more per acre in low density areas.  An acre walking distance from the urban core could have 10 townhouses valued at $100k each whereas a suburban area could have 4 homes valued at $1,000,000 each.  $4m per acre is > $1m per acre.  Details and data matter.  

I'll give you that a mid to high value condo building pays way more than every other location or type out there.  I know, I lived in one for 10+ years.  But the reason why the location of data matters is we're not talking about Manhattan or Halifax.  We're talking about Charlotte and your broad stroke theory does not pay out by and large.  

Here is a comparison of two zip codes.  28206 which buts up to Uptown and by all accounts outside of Manhattan would be considered urban.  28277 is mostly big bad Ballantyne/Piper Glenn and by all accounts it would be considered suburban.

28206
> Land Area: 7.1 sq. mi.
> 12,305 2015 ACS 5-Year Est
> 1733 people per sq. mi.
> $33,824 avg. household income
> 4,663 housing units
> 656.8 units per sq. mi.
> 1733 people per sq. mi.
> $86,100 avg. house value

28277
> Land Area: 23.4 sq. mi.
> 67,095 2015 ACS 5-Year Est.
> 2867 people per sq. mi.
> $130,138 avg. household income
> 25,176 housing units
> 1075 units per sq. mi.
> 2,867 people per sq. mi.
> $283,800 avg. house value

By every metric 28277 is more 'urban' than 28206 unless you throw in the proximity to the central business district.  It has a higher population density.  It has more units per square mile and it has a much higher per unit value.  

We don't pay taxes on what services we consume.  We have already discussed this above.  We don't pay taxes on a per unit basis.  What we do do is pay taxes on a unit valuation basis and then redistribute the resources from those taxes over the entire area.  Often unequally.  

 

So again, just how is it absolute that suburbanites (residents of low-density neighborhoods) are the largest welfare class in the US today.   Any type of numbers would work. If not this should work.

 

 

 

 

 

Edited April 25, 2017 by cjd5050

[archiham04]

Here is a map of zip codes for those interested. Your have compared of one of the poorest zips in the county with one of the wealthiest.  28206 also has very little residentially zoned property, and 28277 has mostly zoned residential.  28206 is small.  28277 is large.  It made me wonder if perhaps comparing the whole urban area with the whole suburban area would bring the same results... that brought up an interesting question.  Where in Charlotte do we go from urban to Suburban?  I personally believe that to the south and east, development patterns certainly shift at Briar Creek.  Not sure about North and West.

[Windsurfer]

"What we do do is pay taxes on a unit valuation basis and then redistribute the resources from those taxes over the entire area.  Often unequally. "

Which is my grievance with beltways, and infrastructure put in place in order to enable the Ballantynes of the planet. And, speaking of costs, how exactly do we measure environmental degradation? That's going to be a huge cost in the future.

I'd love to see the stats on 28206 in a couple of years once all the new apartments and condos under construction are built. It's definitely becoming a lot more dense. 

[archiham04]

Unfortunately zips don't break off where I think the urban area stops, so maybe 28202,03,04,05,06,07, and 08. Also some of 09,11, and 16... are urban?

Edited April 25, 2017 by archiham04

[Tyrone Wiggum]

Given that anecdotal evidence is the best kind of evidence..../s

When I lived in Oak Park, I was technically a "suburbanite."  Nevermind that Chicago overlapped our northern border, or that we directly abutted to the murder capital of the city, or that it took me less than half as long to get to the loop from my house as it did from ORD; we weren't TRUE Chicagoans (no true Scotsman! Like such as.  And also...).

The property taxes on my nice but modest 2,100 sf home last year were nearly $17,000.  Subsidies?  My taxes helped pay for the village schools, roads, libraries, OPRFFD/PD, water district, community college, etc.  Come to think of it, the only thing that that was subsidized was taking the IKE downtown, which I didn't do a whole lot since I could hop on the L and be at State/Lake in 20-25 minutes on my Ventra card.

OTOH, when we looked at moving to Gold Coast, my property taxes would have been cut by over 60% for the same size house with the same size mortgage.  Granted, the kiddos would have wound up in private school, but Illinois' tax code - and its effect on public schools -  is a cluster of such epic proportions that I probably don't need to rehash it with a bunch of fellow data wonks.  

I realize that Fort Mill and Lake Norman != Oak Park (or Schaumburg, or even Barrington), but I was fortunate enough to pay for the privilege of living in a better school district with almost no crime and phenomenal services that ultimately wound up having me subsidize Chicago vis-a-vis sales and income tax.

Corporate welfare is bad.  Cognitive dissonance is bad.  White flight is bad.  But, two things:  1) I already get subsidies from empty-nesters and retirees and DINK's as it is, and I will be subsidizing schools myself before I know it, and; 2) income redistribution happens across the entire swath of the tax code, and though I'm in the camp that it's the price of civilization, them's the breaks.

Finally, I realize OPRF is over 11k/sqmi, so it's not exactly low density, but I've heard the same argument in the 312, and every time a simple "so what did you pay in property tax last year?" ends that convo with all haste.

/Rant

 

 

Edited April 25, 2017 by Tyrone Wiggum
My grammar sucks

[cjd5050]

2 hours ago, archiham04 said:

Here is a map of zip codes for those interested. Your have compared of one of the poorest zips in the county with one of the wealthiest.  28206 also has very little residentially zoned property, and 28277 has mostly zoned residential.  28206 is small.  28277 is large. 

I understand that.  

My point was this is a very interesting and layered topic.  To simply say 'urban' pays more than 'suburban' or even bold enough to say "Suburbanites (residents of low-density neighborhoods) are the largest welfare class in the US today" is pretty silly.  

 

1 hour ago, archiham04 said:

Where in Charlotte do we go from urban to Suburban?

I think Charlotte has sporadic occurrences of urban and suburban development.  I don't think it's fair to say it's based on a distance from a specific area, say Uptown.  

I think there are some areas in 28277 that do a better use of land and give far more than they take even when you consider the infrastructure costs that were needed to allow these areas to exist.  

 

 

[cjd5050]

2 hours ago, Windsurfer said:

"What we do do is pay taxes on a unit valuation basis and then redistribute the resources from those taxes over the entire area.  Often unequally. "

Which is my grievance with beltways, and infrastructure put in place in order to enable the Ballantynes of the planet. And, speaking of costs, how exactly do we measure environmental degradation? That's going to be a huge cost in the future.

I'd love to see the stats on 28206 in a couple of years once all the new apartments and condos under construction are built. It's definitely becoming a lot more dense. 

So what is the alternative?  Do we say everything needs to evolve to Manhattan?  Because it can't.

Ballantynes are always going to exist as long as Dillworths exist.  They are connected.  If you can find a way to run mass transit down the inner ring of Charlotte to build condos where estates currently exist...I'll move there.  

The challenge I have is I don't see a plan other than wagging a finger at people who happen to live on a half acre in Ballantyne and overlooking the half acre in Dillworth.  

[KJHburg]

Here is a graph of city of Raleigh page 10 of their downtown report showing property values per acre and of course Charlotte's would be even bigger spike uptown.

http://godowntownraleigh.com/_files/sodlosres.pdf    That being said we will always have the suburbs and there is nothing is wrong with that either. Suburban Charlotte is getting more dense and I would remind everyone Dilworth and Myers Park were once brand new suburbs the latter being a greenfield development on Myers farm. 

Has anyone seen a tax value map like this for Charlotte? There would be a secondary spike in the SouthPark area too. 

[kermit]

Cjd's cherry-picking did a good job of revealing my sloppy language. I did not intend to imply that every suburban community was draining resources from cities -- rather, on average, low-density neighborhoods cost communities more than they contribute in taxes. I was making this statement based on the total assessed vakue of real estate in these places, commercial, residential and industrial. I also assumed that everyone understood I was referring to the economic systems within municipal boundaries -- low demsity portions of Charlotte consume more and produce less than high density areas (with high-value locations like Btyne being an exception) For the sake of clarity lets leave suburbs beyond the city limits out of the discussion for now. My apologies for a lack of clarity.

Wiggam's Oak Park anecdote is consistent with the basic concept I was trying to communicate. Oak Park, as a mature municipality just outside the Chicago city limits had to finance itself. It had no significant revenue streams from new construction so it was forced to raise property taxes to the point where the municipality could suport itself. The cheaper property taxes of the Gold Coast are explained by the higher density there -- 15-20 equivalently sized living units can be stacked onto the same footprit as Tyron Wiggums' Oak Park house on N Michigan ave. 

I wasn't implying the suburbs should go away, only that their subsidy encourages unsustainable urban land use patterns. Its sophmoric to say I am suggesting we turn everywhere into Manhattan or that there is no solution. The way to fix the problem is straightforward -- END THE SUBSIDIES:

• Institute development impact fees to pay the true freight for the new schools, firetrucks, public works guys, parks, etc.
• create a low-density 'special use district' surtax to cover the increased maintenance costs of infrastructure in low demsity neighborhoods (alternatively high-density area residents would recieve a high-density property tax rebate)
• riase the gas tax (or institute mileage charges) to the level necessary to end subsidized driving to work, the store, etc. (yes I want to end transit subsidies as well) 
• Eliminate all parking requirements from zoning. Institute a parking space tax for all free spots everywhere (or provide a significant tax credit to people who do not own a car). Free parking is a tax on those who do not drive thus it encourages driving, 
• add health insurance surcharges on drivers (treat them like smokers due to driving's similar impact on public health).
• address hosuing affordability by allowing for more granny flats, multi family and attached single family (townhouses) in infill sites by right. Address NIMBYism by lowering the property taxes of people who see their neighborhoods get more demse (it would be revenue neutral).

While I recongize my statement 'suburbanites are the biggest welfare class in the US' is a bit sensationalistic, I believe it to be accurate (subsidies for drivimg alone are wnough to make the statement true).  I did use the phrase with the intention of generating more traffic in the thread -- it worked.

 

Edited April 26, 2017 by kermit

[asthasr]

The easiest way to see why suburban development is "subsidized" is to look at tax increment financing and the cities and towns that are going bankrupt from not being able to meet their obligations. Detroit is the most famous case, of course, but there are many more that face an impossible infrastructure maintenance burden which they simply will never meet. This is an amazing circumstance, in which we cannot pay for the places that are supposed to be the economic engines of their regions!

[cjd5050]

4 hours ago, asthasr said:

The easiest way to see why suburban development is "subsidized" is to look at tax increment financing and the cities and towns that are going bankrupt from not being able to meet their obligations. Detroit is the most famous case, of course, but there are many more that face an impossible infrastructure maintenance burden which they simply will never meet. This is an amazing circumstance, in which we cannot pay for the places that are supposed to be the economic engines of their regions!

I grew up in the rust belt in Buffalo which is similar to Detroit in many ways.  The challenges those cities face go way beyond subsidized suburban development.  

What's interesting to me is that the consensus here is that suburban residents 'rob' something from 'urban' residents but somehow the same people seem to champion companies and people leaving other cities and relocating to Charlotte.  

Somehow people and companies moving from the urban center to the suburbs in the same region is bad but people and companies moving from one region to another is acceptable.  A little bit of hypocrisy no?

Edited April 26, 2017 by cjd5050

[kermit]

11 minutes ago, cjd5050 said:

  What's interesting to me is that the consensus here is that suburban residents 'rob' something from 'urban' residents...

Its not really residents, they are just passive participants going where the manipulated market takes them. Its federal, state and local governments who designed the massive social engineering project known as suburbanization. Highway construction, mortgage interest deductions, VA loans and our current system of taxation were all designed to drive the middle class into the burbs. This had the unintentional (?) affect of discouraging urban growth. If we ever want to be a country where more than just the elite get the choice of living in walkable neighborhoods (in addition to the choice of the burbs) then we gotta change this syetem of subsidies that are invisible to the majority of Americans.