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.

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