CHAPEL HILL — Towns get a bigger return on developers’ investments when a project rises from a smaller lot, instead of spreading out across a larger site, a pair of growth experts told community members recently.
In Chapel Hill, that means projects like East 54, Greenbridge and 140 West generate more combined sales- and property-tax revenues from their compact spaces than projects such as University Mall and Meadowmont, which have similar square footage but more acreage, said Joe Minicozzi, founder of Urban3, a private consulting company in Asheville.
By stacking more value on less land, those projects also pay more quickly for the infrastructure and services required to open and maintain them, said Minicozzi and Chuck Marohn, a professional engineer and certified planner.
The first step for communities planning their future is to have a rational discussion about growth, the men said. Those that plan successfully will learn from their mistakes and make land-use decisions for a strong financial foundation, they said. It’s not all about density, Marohn said.
“As a planner, sometimes you see every problem as a nail with a hammer,” he said. “I’ve seen planners destroy cities by trying to solve a problem by adding density. Density is the outcome of a productive place. It’s not the cause of a productive place.”
Chapel Hill is talking now about how a form-based code can generate more tax value from a limited area.
Form-based codes guide how a community expects to grow. They are different from conventional zoning, because the codes lay out in simple terms what and where developers can build. They create predictability and encourage more discussion, because everyone can understand them, Marohn said.
A town’s code might include building heights and uses, parking arrangements, streetscapes, transit connections and how new developments are expected to blend into existing homes and businesses. Traditional zoning only dictates what use, height and square footage is allowed on a lot. Developers negotiate other details with towns before getting a permit to build.
We’ve come a long way, the men said during a September talk titled the “True Cost and Benefits of Development” at the Chapel Hill Public Library.
If you wanted to go into business in the early 20th century, you built a building and opened shop, Marohn said. There were no codes or zoning regulations. Compact, walkable towns sprang up wherever people could travel easily by bike, carriage or foot.
After the Depression wrecked the nation’s economy, state and federal government became more concerned with creating local jobs and growth. What followed was a growing reliance on savings and private, state and federal money, Marohn said. The local cost of growth was nominal – staff time, some public dollars – compared to the benefits of taxes and jobs, he said.
The automobile furthered the shift, resulting in sprawl, suburbs and half-empty strip malls far from the town center, Marohn said. Towns and counties took on a greater amount of taxpayer debt to help finance economic growth.
The real cost of “free” development came due about 20 or 30 years after construction, he said. Towns and counties were stuck with major maintenance and repair costs, on top of the cost of providing services to businesses and homes. The property taxes generated by those buildings and subdivisions couldn’t cover the bills anymore.
Marohn said today’s economy has maxed out private and public sector investment, putting even more financial responsibility on local governments. If projects don’t bring the highest returns, towns will be forced to make large tax increases or cut services, he said.
“As long as we continue to build in a way that is financially unproductive, there is no amount of tax increase, there is no amount of service cut that will ultimately be able to make up for that,” Marohn said.