tax revenue from development expansion: really?
November 24, 2016 6:32 AM   Subscribe

Years ago a "nonprofit" retirement community was given land as a consideration for locating on a limited portion in this small town. Now they intend to expand all over the open space used by public, severely impacting many neighborhoods. The city seems ready to pave the way for this, and the unsubstantiated argument is that it will bring in tax revenue needed for infrastructure repairs.

But I've heard that such hopes, whether as simple as in this case, or pitched as tax incentives, are often dashed. I'm trying to find studies or articles that back up this contention. I searched the website for the Project for Public Spaces, but didn't find anything particularly helpful. Can you point me to better sources?
posted by mmiddle to Law & Government (10 answers total) 2 users marked this as a favorite
Try googling something like "fiscal impact of residential development." Here's a study; scroll down to "in not a single instance" were the taxes from residential development higher than the costs of providing services to those new residents. Of course, the details matter. Do these studies adequately reflect the tax policies where you live? A developer could required to pay a fiscal impact fee, for instance. And if you all have tons of surplus capacity such that you won't need to, e.g., expand the sewer plant or hire more police officers, then the numbers might look much different for this one development.

The other thing I'd Google would be along the lines of "open space and property values." Depending on how taxes are assessed, could the loss of this open space cause other property taxes to go down? The Lincoln Institute did some studies awhile back, and I think the Trust for Public Lands did so as well.

Last, the most persuasive argument would be to find other methods by which they can get the money needed. That's a whole interesting topic, but you might try to find some smart planners in your state who can talk about various grants, loans, and fiscal tools that might be used.
posted by salvia at 6:59 AM on November 24, 2016 [1 favorite]

Can the city show increased tax revenue directly linked to the initial phase of the retirement community?

As with all things, the answer to whether it'll work or not is it depends. If it brings in desperately needed jobs to a small town with limited options, boosts spending in local shops, and has things like condos that are taxable (and comparably high property values because of the support system provided by the nursing center), it can be a win.

If they get lots of land for free and tax exemptions, only create a few marginal jobs, and most of what they consume comes in on Sysco trucks, it can be a negative.
posted by Candleman at 7:48 AM on November 24, 2016 [1 favorite]

The math developers of age-restricted communities present to municipalities is usually pretty simple: we give you property tax revenue, some jobs, sales tax revenue from our shopping, TONS of Medicare revenue for your hospitals and doctors, and we don't burden you with public school kids, criminals, or welfare recipients, nor as much traffic or water utilization as a similar-sized unrestricted development would impose.
posted by MattD at 9:53 AM on November 24, 2016 [2 favorites]

By and large, municipalities seem to see the math working out, as a lot of them are eager to entitle additional age-restricted developments after the first one(s) go up.

Monroe, New Jersey is a classic example.
posted by MattD at 9:55 AM on November 24, 2016 [1 favorite]

I would also want to look at the infrastructure projects that have been done and where the money for those actually came from. If they're saying this will benefit infrastructure but the only time they ever fix anything is with federal or state funding, then...
posted by rhizome at 10:12 AM on November 24, 2016 [1 favorite]

Thanks! I'll have to research these data points, but would like to assign a value to the public open space, with premium views of two mountain ranges, good walking trails, etc. - a type of "third place" for building community. I wonder if there's a formula or rule of thumb for that?
posted by mmiddle at 6:21 PM on November 24, 2016

There's a lot of research on that, but I don't know the answer. Keywords to try are "enhancement value" (probably the best in your case) and "contingent valuation."
posted by salvia at 10:22 PM on November 24, 2016 [1 favorite]

with premium views of two mountain ranges

IANAL, but in general this sounds like the umbrella of "air rights," and legally are extremely location-dependent. You'll want to talk to your zoning department and get the public records for the parcel(s) in question. There may be general zoning rules that limit the height. Also read up on easements and adverse possession. AFAIK, this is a huge area of law.
posted by rhizome at 11:43 PM on November 24, 2016 [1 favorite]

Try searching for tax increment financing. This is a financing tool used by local governments that uses the future incremental increase in property taxes that will theoretically result from a development to fund the development itself. A lot of folks hate TIF and you may find information that rebuts the argument that a specific type of development will result in future property tax revenues.
posted by donovangirl at 8:22 AM on November 25, 2016 [1 favorite]

growth never pays for itself.
posted by patnok at 4:56 AM on November 26, 2016 [1 favorite]

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