Thursday, February 19, 2009

Build Districts

For the last several blog posts, I wrote about the need for a different option to balance the divide between how urban services are funded and how those benefits are distributed. Empty lots and surface parking are given an enormous tax advantage over lots with buildings. As a result, buildings are conserved while land and infrastructure are wasted, contributing to high taxes, high government waste, dying urban areas and urban sprawl. Taxing buildings has been lamented for its negative effects, or deadweight losses, for many years and a number of remedies have been suggested, most notably split rate taxation which is a hybrid of a standard property tax and a full land tax, reducing the penalty on buildings. The problem with this approach and a pure land tax is that those land owners who have bet on low land taxes get slammed at the same time that anyone living, working, or shopping in the affected area receives a much needed break. Those land owners are generally wealthy and influential, and they own the key sites for green redevelopment. Those land owners are key allies for a bright green future.

Build Districts are designed to benefit these land owners in a way that is supportive of healthy cities instead of erosive. They cap property taxes selectively, capping only the building tax burden at two and a half times the land tax burden. So you get the tax benefits of a land tax system without the problems, at least for new construction. I looked at switching existing buildings over also, but the costs are too high in the short term.

A Build District is established as a tax benefit district drawn around an urban neighborhood looking for redevelopment. A high percentage of the available lots will quickly be developed (how quickly is to be determined, there has been no thorough economic modeling yet) to take advantage of the tax break. These new and rehabilitated buildings bring new tax revenues. For maximum effect, all of these revenues should be plowed back into the area in the form of street improvements (buried power lines, better sidewalks, better transit service, street trees, etc.) and services (internet, power, sewer, health care, etc.). Selection of how to spend the money should be done in a public democratic process including the residents and owners of the district and other stakeholders.

The tax cap itself will likely raise land values, as will the street improvements and enhanced services. It is my hope that these rising land values and recycled revenue will create a virtuous cycle promoting a sustainable, quality community. Older buildings can become included as beneficiaries of the district, either by being bought into the tax cap out of revenues from new construction, or in part through rehabilitation and additions. A mature Build District should hopefully be fully developed, with a wealth of amenities, a low cost of living, superior environmental and health performance, and a revenue system nearly identical to what would have resulted from a land tax.

There are some preconditions for a Build District. It ought to work without these plugins, but should be much more effective with them. Basic steps to preserve historic and culturally significant structures should be taken. Zoning should allow development with a walkable, urban character and richness. On-street parking should be managed with prices to ensure an adequate supply of on-street parking while off-street parking requirements for new construction and uses should be waived. 

This is what I have so far. I suspect that this will become a book before too long. I appreciate any questions or comments you may have. I have asked for funding for this work here. Please vote for my idea if you think that it is worth pursuing. Thank you for reading.

The image depicts the theoretical Roanoke Build District, with blue representing existing buildings and green representing potential new construction, most of which is currently off-street surface parking.


Ethan said...

Hi Lyle, this is an interesting idea - I've been interested in land uses that generate communities. I know that you talk about the type of development here. Would it be useful to control which types of businesses move into build districts? Which types would create the cycle that you describe?

Lyle Solla-Yates said...

Ethan, thank you for the question. It very well may be useful. A Business Improvement District could be organized in a build district to research especially desirable uses and attract or start those businesses. Eco-industrial parks are a great example of this kind of thinking, where the wastes from one business become the resources for its neighbors. Commercial uses have similar efficiencies. Restaurants and offices benefit from proximity to each other. Corner groceries and residential uses likewise benefit each other.
The key I think is to nurture sustainable growth rather than impose requirements that increase costs. I'll post more on this topic soon.


Tree hugging said...

I think a good intermediate step to developing walkable communities is find ways to retrofit traditional shopping centers into walkable communities. How do you do that? Two words, Parking Garages.

If you take a big shopping center like Albemarle square and put in a parking garage, then the former sea of parking can be redeveloped as greenspace and residential. Most shopping centers already contain elements of a walkable community including grocery stores, movie theaters, drug stores, or restaurants. Once you make parking vertical you are mostly there. You can even put housing, business or parks above or below the garage. I think the benefit is powerful enough that local government should share costs of building the garages as an incentive for redevelopment.

Yes, ideally, one would eliminate most parking altogether and rely more on mass transit, but this is a great first step.