Bacon's Rebellion

Democracy Thrives in Sunlight

The Chuck and Joe Traveling Municipal Salvation Show

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by

James A. Bacon
in , , ,

The Joe and Chuck Traveling Municipal Salvation Show
Joe Minicozzi (left) and Chuck Marohn

Chuck Marohn and Joe Minicozzi, principals with Strong Towns and Urban3 respectively, travel the country telling cities, towns and counties how to build better communities while remaining fiscally solvent. I have borrowed heavily from both Chuck and Joe in my writing about land use, transportation and community building, and it’s reassuring to see that as their own thinking evolves, it has moved in concert with mine.

Most recently, Chuck has blogged about the paucity of useful information cities have to guide them in make zoning and capital spending decisions. He makes many of the same points I did in my recent post, “How Planners Can Rescue Virginia from the Fiscal Abyss.” Writes Chuck:

Despite running corporations (most cities are “incorporated” municipalities) that have billions of dollars in assets and liabilities and annual cash flows in the tens, and sometimes hundreds, of millions of dollars, few ever ponder some shockingly simple questions.

  • What are our total assets, the value of the tax base that constitutes our community’s wealth?
  • What are the long term obligations for infrastructure maintenance associated with sustaining those assets?
  • In terms of geography, what parts of our community have a positive Net Present Value (cash from long term assets minus the cost of long term liabilities) and which have a negative Net Present Value?

The answers to these questions constitute a community’s balance sheet, the most basic of accounting requirements for any family or business but one which cities largely ignore. …

Since we don’t know the answer to these basic questions, we can’t even begin to ponder some more sophisticated, but obvious, things that all cities face.

  • How does that tax base change in response to certain policy decisions?
  • What types of land use patterns create the most wealth for the community?
  • What types of land use patterns experience the greatest degree of volatility?
  • How does a park impact Net Present Value? How far from the park does that effect extend?
  • How does a stroad impact Net Present Value? How far from the stroad does that effect extend?
  • Where can we deploy limited resources to have the greatest overall impact?

Keep up the good work, Chuck and Joe!

— JAB

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5 responses to “The Chuck and Joe Traveling Municipal Salvation Show”

  1. larryg Avatar
    larryg

    I like the questions but am a little incredulous that _no_ cities do this.

    I think you can also get wrapped around the axle on some of the metrics.

    for instance – residential – only the high end houses actually pay more taxes than services they consume but should maximizing that kind of residential be a goal and if it is, how do you think of “affordable” housing?

    next – commercial. rooftops do generate a need for services – but you’re not going to sell more services and goods that the organic need. Incentivizing more commercial only introduces more business vying for the same size pie.

    net jobs come when you sell goods and services beyond your tax borders.

    a city may have a hospital and more doctors – that, in turn draw people from beyond it’s borders. That increases the wealth of the city but comes at the expense of the adjacent county which is then encouraged to create it’s own goods and services it can capture taxes from.

    how can a city become more wealthy on it’s own without competing with and cannibalizing adjacent jurisdictions taxbase?

    and a city/urban area – can look at a economically depressed part of itself
    but what kind of changes would bring in a NET increase without cannibalizing parts of itself or adjacent jurisdiction?

    what can any urban area do – to increase NET value?

    take Richmond’s stadium idea. At the end of the day does it become competition to other parts of the city or Henrico/Chesterfield?

    you bring more people in that place to benefit restaurants there but does that increase restaurant sales overall for the city or just shift the business from one area to another?

  2. NewVirginia Avatar
    NewVirginia

    Just put up a similar post this morning:
    http://statchatva.org/2014/08/11/how-do-we-know-whether-development-pays-for-itself/

    1. James A. Bacon Avatar
      James A. Bacon

      Great job, Luke. We need to talk. Jim

  3. larryg Avatar
    larryg

    We have, codified in our local regulations – the stipulation that proposed new development – must pay for itself.

    it’s a laudable goal – because it’s accepted that only the higher end residential actually generates more in taxes than it consumes in services.

    there are some problems with implementing this though.

    1. – do you want ONLY housing stock that is only affordable by the wealthier folks?

    2. – how do you meet this goal when trying to provide affordable housing for workers who are not higher income? I’m talking about deputies, school teachers, and all manner of folks who cannot afford to live in high-dollar homes.

    3. Finally – we need to confront the 600 lb fiscal beast in the room. In most places, including Va – the “cost” is about 1/2 for schools.

    A home that generates 2-4K in taxes comes nowhere close to paying the local costs of educating one child – about 5K these days in places where the total cost is 10K and the cost is split between the locality and State (feds).

    A home or apartment that generates 1-2K and has two kids is in deficit to the tune of 10K or more … in “paying for itself”.

    Lately – developers have been proposing mixed-use where a certain percentage of the proposed developed is commercial – but what does this really accomplish if the taxes from that commercial are the same taxes that people would be paying if they visited other commercial in the area? You cannot create more commercial (taxes) than the rooftops will support. You end up with an excess of commercial, low-end barely profitable shops that can barely pay the lease and many places where many of the storefronts chronically have “for lease” signs on their doors.

    I think all you are going to find by mapping which properties “pay for themselves” is the realization that the other side of that “median” is houses that are “affordable” that do not pay for themselves but how you fix that without getting rid of affordable housing seems not an easy thing.

  4. larryg Avatar
    larryg

    I’d be curious to see a map that shows on a locality or even an MSA basis – the per capita or gross taxable sales of a given region.

    In other words – each household buys a certain amount of goods and services per year. I call that house a “rooftop”.

    I’m wondering if there is a real difference in the total number on a region to region basis.

    I think might see a difference if you selected an area that is wealthier than other areas but overall – whether someone lives in Portland, Ore or Daytona, Florida or Richmond, Va – would the amount the average household spends on goods and services be substantially different from one region to another?

    Should we be considering policies that presume that that number could be different – that we could increase the number higher tax-paying households as a way to have more of them “pay for themselves”?

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