Planning a city with ROI in mind

Ten years ago, I stood with a farmer at the front of a long driveway. We discussed how homes were popping-up on farmland. “Look at this,” he said. “The house is 150 feet from the road. What a waste of space.” To him, the gracious setback represented a loss in value of more than a half an acre of corn.

A few years ago, I was introduced to a similar concept applied to urban planning. Instead of a farmer, there is the city and its residents. Instead of corn being the crop, it is taxable value and the needed yield for the city to be sustained.

The person most responsible for introducing this perspective is nationally recognized planner Joe Minicozzi. He was recently in Traverse City for the annual Michigan Municipal League conference. Minicozzi helps municipalities identify what type of land use in their community has the highest return on investment. The basic principle he uses is taxable value per acre, which helps turn an oranges-to-apples comparison to a more useful corn-to-corn comparison.

This can be demonstrated by comparing properties in Traverse City. On the high-value, high-yield side we have Radio Center II which has a value of nearly $566,000 per acre. It’s compact, fills the property and is downtown. On the low-value, low-yield side are many commercial properties lining Eighth Street. These smaller, single-story buildings are surrounded by parking lots, border an uninviting street and their taxable value is about $18,000 per acre, which is the equivalent value to most single-family residential homes. In fact, along Eighth Street many commercial property values per acre are below the majority of homes in the city.

Our commercial districts need to show a higher rate of return. This is a critical missing piece to recent discussions. It is a tool that can help inform our initial opinions and biases toward projects, both public and private.

If the community chooses to have streets designed to facilitate traffic at high speeds, let’s consider what it does for the adjacent land use and revenue. If the community chooses to reduce current allowable building heights, let’s consider the impact to the City’s long-term budget. Basically, if we choose to have less efficient yield, we need to ask: what are the services and programs that we will struggle to maintain? What opportunities will we miss?

Economically, the individual farmer I talked to is likely fine. He can cash out as the sprawl encroaches. There is a social and environmental cost to the loss of farmland that we need to discuss, but the individual can move on. The city doesn’t have the option of cashing out and as the years pass, and costs of services increase, it’s critical that each harvest be bountiful. The higher the yield, the more services —smooth streets, clear sidewalks, economic development, stable tax rates — can be better realized.

Posted in Social Capital

A Summary of Potential Benefits of Accessory Dwelling Units

Next Tuesday (President’s Day is Monday), the City Commission will consider new ordinance language that will encourage Accessory Dwelling Units in the City, including single family neighborhoods. Tuesday’s action is to consider setting a hearing date, which would be no earlier than the regular meeting on March 16.


Illustration of an attached ADU, via City of Minneapolis.

ADUs are apartments built off of a primary dwelling, a converted garage, or stand alone cottage in the backyard. They are currently allowed in mixed-use districts, in North Traverse Heights, or by special land use permit. The new language would establish Traverse City as a leader in the state of Michigan for embracing ADUs. However, there are limits to the proposed ordinance.

The proposed new language sets the following limits:
• A maximum of ten newly​ ​registered ADUs per year.
• Only allowed on lots larger than 5,000 square feet.
• A maximum of two dwellings per parcel.
• ADU design must clearly be incidental to the​ ​principal house and the exterior appear​ ​to be single-family.
• Typically, the primary dwelling may only have one entrance facing the street.
• To be approved, site plans, floor plans,​ ​elevation drawings and building plans​ ​need to be submitted, and approved, with the application.
• The ADU must be between 250 and 800 square feet.
• The property owner must live on the premise (either dwelling) as a principal residence.
• All ADUs must be registered with the City.

What are the benefits?

ADUs have long been promoted by urban planners as a solution to diversifying the housing stock of a community, but have often been met with resistance by fears of negative impacts. Traverse City has struggled in the past to embrace ADUs. Fortunately, as more communities have increased allowance, there is an increasing amount of evidence to support them as a friendly way to add housing without substantially altering the character of a community.

ADUs provide much-needed workforce housing as well welcome income and value to homeowners. The AARP has promoted them since the 1980’s as a way to help senior citizens age-in-place. Many older people use them to house care-givers or family, to downsize, or simply as a way to supplement retirement income. Traverse City’s senior population, like the rest of the country, is growing, so this is a growing local issue.

For consideration, the chart below offers some of the potential benefits of ADUs.

Potential Explanation
ADUs help your neighbors age in place ADUs are a potential income source, a place to downsize into, both of those combined, or as caregiver residence.
ADUs have minimal parking impact ADUs in walkable context often attract residents less dependent on the automobile and renters typically own fewer cars than home owners.
ADUs serve affordable housing goals without public assistance ADUs provide a variety of housing sizes and rental rates, supplemental incomes, and come without land cost which all contribute to housing affordability. In addition, a significant number of ADU owners will build for family or friends, thus offering free or reduced rents.
ADUs are fiscally efficient The creation of new housing within the existing network of streets, sidewalks, and utilities poses no, or limited, added costs to public services.
ADUs can improve home values Walkable, denser neighborhoods do better in the market place, traditional locations for ADUs. Homes with ADUs will also have a higher taxable value.
ADUs provide environmental benefits More efficient sized housing reduces energy demands and shorter trips to jobs and services provide transportation choices and reduced emissions.
ADUs often help reduce traffic problems By providing housing near shops and services, total vehicle miles traveled in the community are likely to decline, thus reducing negative aspects of traffic.
ADUs have economic benefit New opportunities for ADUs in a community spur construction and increase property values. In Michigan, taxable value of rental units benefit non-homestead millages, benefiting the school system.
ADUs often provide a social benefit Individuals benefit by having family or friends live near-by, or by relationships formed with renters, i.e. the Fonzie effect. Having a trusted tenant nearby helps with things like pet sitting and added security.
ADUs encourage creative entrepreneurship ADU ownership often creates new, non-traditional developers more connected to community. Many home owners will build ADUs for a social benefit as well as an economic one.
ADUs promote property owner rights Built within the protections of public health, safety, and welfare, ADUs allow homeowners to use their property as they see fit.
ADUs create options for changing demographics As household sizes have decreased traditional density has decreased, ADUs offer hidden, low-intensity options for increasing the population base in a city–helping to reduce sprawl.
* Download this chart: Benefits of ADUs

Information sourced from a variety of sources, including, but not limited to:, AARP, Smart Growth America, The City of Portland, Networks Northwest [pdf]HUD: Accessory Dwelling Units: Case Study [pdf], 


What are the possibilities for ADUs in Traverse City? Concerns? 

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Posted in Economic Development, Housing