By Taylor Anderson
This is the second in a three part series on The Case for Main Street. The first article discussed the historical perspective for supporting our cities’ downtowns – why the traditional and centuries old method to development patterns have stood the test of time and why many cities are returning to that pattern.
In the first article, it was mentioned that the cost of typical suburban automobile focused development patterns of large parking lots and big box stores, along with the infrastructure required to support that pattern, is financially unsustainable. This article will go through the numbers behind that statement.
First things first – a primer on suburban economics. The suburban development pattern of low taxes and low density is dependent on one key ingredient to maintain that pattern – growth. The new growth, via its property taxes, subsidizes the existing developments. A simple way of stating this is the taxes from a new subdivision, which won’t need its roads repaved or storm drain pipes replaced for several years, pays for the roads to be repaved and aging storm drain pipes to be replaced in the older areas of the community. This pattern can be maintained for a number of years, perhaps decades, before horizontal growth is no longer possible. Quite simply, the municipality runs out of land to continue the pattern of low density development and low taxes.
At that point an inflection occurs – there are two choices on the table. The municipality must either raise taxes (since new growth no longer subsidizes the old infrastructure maintenance costs) or cut services. In most cases, it’s a combination of the two. Gwinnett County is quickly reaching that inflection point. There is no way to stop it – simply stopping growth will bring on the inflection point sooner. Rampant, disorganized growth will only make the inflection point more painful when it arrives.
There is another option, however, which many of Gwinnett County’s cities, and even portions of the unincorporated area, are working towards. Keeping in mind that there is no silver bullet once a community reaches the inflection point, the way to continue growth (and Gwinnett County is projected to attract 500,000 people over the next 25 years) is an organized and planned pattern of concentrated, appropriate density in a downtown.
A good measure of the benefits of the traditional downtown developed pattern, discussed in the first article in this series, is to compare property tax generation on a per acre basis against the typical suburban autocentric development pattern. About five years ago, a few stakeholders in Gwinnett County teamed up and hired Joe Minicozzi of Urban3 to analyze Gwinnett County’s property tax generation on a per acre basis. Among the findings in that analysis was the example that just 10.5 acres of the Bank of Buford property located in downtown Buford would generate the same amount of property taxes as the entire 113 acre Sugarloaf Mills mall.
Other examples of the unsustainable autocentric suburban growth pattern can be found by looking at Gwinnett’s WalMart’s recent property tax valuations. While Gwinnett’s overall growth in the real estate digest is expected to be between 8-12%, Gwinnett’s WalMart’s have appealed and won property valuations. In the last two years, Suwanee WalMart’s taxable value is down 30%. Buford’s WalMart is down 23%. Lilburn’s WalMart is down 30%. Meanwhile, residential property valuations are up significantly over the same time period. More to the point of this article, Suwanee Town Center’s mixed-use development in the same time period is up between 22% and 52%. Randomly selected parcels within downtown Lawrenceville showed an increase in valuations between 29% and 272%. Why are autocentric developments down double digits in what many would consider one of the strongest real estates markets in decades? Why are walkable, people oriented parcels up double (and in some cases triple) digits in that same time period?
Keep in mind this analysis doesn’t include many of the hidden costs such as the cost of maintenance of the infrastructure to service the autocentric developments. Such developments are typically located at the intersections of 4-8 lane roads with multiple stoplights and large amounts of infrastructure to support them. Meanwhile, our downtowns are serviced by 2-3 lane roads. Still another benefit is the ease of which downtown, people centric parcels can be re-developed versus big box developments.
There is certainly much, much more that can be discussed on the financial perspective of our development pattern than can be written in this space. The first two articles in this series have been on the historical perspective and the financial perspective. The third, and final, article will focus on the community perspective.