Zimmerman: Density rules

October 11, 2013 

Mark Zimmerman


The move toward denser development is intensifying in Chapel Hill. A pair of renowned community-growth experts have weighed in with an analysis recommending density as a land-use goal. But some neighborhood proponents think density is just a black hole sucking life from the community. Who’s right?

Transportation advocates have long pushed for concentrating development along bus lines and major thoroughfares. For that and other reasons, the new 2020 Comprehensive Plan focuses future development in six areas of town adjacent to traffic corridors.

Just how much development will be allowed in these areas is the subject of debate. If the experience of the Central West Steering Committee, tasked with recommending a plan for one of the areas at the corner of MLK Boulevard and Estes Drive, is any indication, that debate will be acrimonious.

Enter Chuck Marohn, of Strong Towns, and Joe Minicozzi, of Urban3, two firms specializing in smart community planning. They’ve been making a joint presentation on behalf of the town entitled “Dollars and Sense, The Economics of Land Development Patterns,” which models best practices from other communities and evaluates Chapel Hill’s development record from a cost-benefit perspective.

Mr. Marohn explains the costs to government – meaning taxpayers – for new development are rarely recouped through increased sales and property taxes. The further out and less dense a development is, the less return on public investment. That’s because it costs more for a town to provide services and maintain infrastructure, and the value of the property is lower than intensely developed land.

Eventually, he argues, that burden can imperil other government services. The answer is to keep development compact and close by.

Taking that principle to heart, Mr. Minicozzi suggests evaluating development through the lens of what land yields, much the way farmers do: Maximize your return by seeking the most tax revenue, residences and/or jobs per acre.

To illustrate the point, he compared a three-story mixed-use building on two-tenths of an acre in downtown Asheville to a 34-acre Walmart on the outskirts of town. The difference in yield is striking. Per acre, the little building generates $717,600 in taxes, 90 residents and 73.4 jobs vs Walmart’s $54,000 in taxes, no residents and 5.9 jobs.

Minicozzi then analyzed all the property in Orange County, including the towns, on a tax value per acre. The best yield comes from Greenbridge and 140 West Franklin, with $445,910 and $295,455 in taxes per acre respectively, versus the Hillsborough Walmart and Chapel Hill’s University Mall at $5,259 and $7,455.

What are we to make of all this? Well, in one respect these presentations are simply stating the obvious. The more you build on a parcel of land, the higher its value. Still, having this data to compare returns will be a good tool for evaluating new plans.

On the other hand, relying on density alone is limiting. If public investment had to pay for itself, none of the current neighborhoods in Chapel Hill or Carrboro would have passed the test, and certainly there would be no roads to rural farms or subdivisions. The very reason people want to live here would be gone.

Furthermore, governments don’t live by yield alone. They need total revenues. In the Asheville example, the downtown building actually generates only $90,000 in taxes and 15 jobs to Walmart’s $1.8 million in taxes and 200 jobs. Yield is good only if you have a lot of it. Dense development can help us pay for our current standard of living, but so will a big box store, especially on existing roads.

Finally, why should government spending that provides infrastructure and services for housing or jobs or shopping require any return? No other budget expenditure is held to that standard.

What do we conclude about all this? Well, density is a useful tool as a relative measure of use of land. But it is not an end in itself. It’s an advantage but not a requirement.

Developers often speak of a land’s highest and best value. Density only talks to highest use. The best use may be something else. It may be parks or trails or bike lanes, but it may be other things citizens want, such as places to live with yards and privacy and convenient places to work and shop, even if they don’t pay for themselves.

Mark Zimmerman owns a small business and lives in Chapel Hill. He can be reached at markrzim@gmail.com.

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