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Re: SG-W:/ Tax cost of residential development



There was an excellent survey of the literature on this question (the costs of different kinds of development) prepared by the Office of Technology Assessment, a scientific research branch of the Congress.  The report can be found online at www.smartgrowth.org/library/TTRoMA.html.   I think this article goes into enough depth about the methodologies and content of the different studies that it might answer your question about urban residential vs. suburban residential development.

Since new school capacity is frequently necessitated by new residential development, I expect it may be the case that even urban residential development "doesn't pay its own way".  Witness the current school crowding issue in the Ann Arbor schools.  In Michigan, most school operating funds now come from statewide taxes, rather than locally-collected property taxes, so we're somewhat insulated from this effect.  But while operating funds come from the state, funds for new buildings are still generated locally, so we would take a hit within Ann Arbor if new residential development proceeded to the point that new school buildings are required, which is apparently the case.

>>> "Jodi Mullet & Ken Clark" <jamullet@umich.edu> 10/27/99 12:08PM >>>
Congratulations to Doug on a great job this morning on WEMU.  This despite
being GRILLED by David Fair.  A far worse grilling than I would expect even
from the News.

I have a question, though.  Doug mentioned, and it also came up at a recent
AA Democrats meeting, that there are studies that show that residential
development doesn't result in as much tax revenue as it costs.  Dick Corpron
of the Ann Arbor Planning Commission mentioned a study that he was involved
in that concluded that business development pays its own way, but
residential development does not.

I have seen studies of *suburban* residential development that says this.
That is, suburban residential development doesn't produce as much in taxes
as are needed for infrastructure and services increases necessary to support
it as compared to other land uses.  I have not seen studies that say that
*urban* residential development is also subsidized.

This is an important question.  If there are non-flawed studies that say
that urban residential development doesn't pay for itself, than developers
would be right to say that Ann Arbor should concentrate on office
development and become a commuter mecca, even if it means tearing down
existing neighborhoods to build more office development.  I suspect that
there is no study saying that urban residential development is a drain on
tax coffers, or any study saying that is seriously flawed.  Flaws could
include: assuming large infrastructure increases are needed in an urban
area, accounting only for single-family detached housing, ignoring any
social costs/benefits.

I would like to be sure that when people talk about urban residential
development being a drain on taxes, we're careful that the studies cited
actually apply and are truly relevant to the discussion.  I'm very worried
that claims that urban residential development, like suburban residential
development, are subsidised is not correct, and making them is actually
playing into the hands of developers.

So, does anyone know of a study saying that *urban* residential development
doesn't pay its own way?

Ken Clark



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===============================================================
smartgrowth-washtenaw:  Internet List and Forum for issues relating to
sprawl, smart growth, and preservation of the quality of life in Washtenaw
County.

Postings to:  smartgrowth-washtenaw@great-lakes.net      For info, send
email to majordomo@great-lakes.net  with a one-line message body of  "info
smartgrowth-washtenaw"
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