Sunday, June 10, 2018

Thaxton on balanced growth

Note: The Tischler Report that's the subject of these essays can be found here.

Land-use profit/loss study is valuable planning tool

By JON THAXTON Posted Mar 14, 2000 at 12:01 AM Updated May 8, 2006 at 7:42 AM

On Feb. 28, the Sarasota County Economic Development Board received a completely different kind of consultant’s report. Unlike the typical report that estimates the cost to build a library or repair a road, this report attempts to quantify the bottom-line profit or loss for the daily services government provides to our homes, our children and our businesses.

The concept is simple business mathematics: First you determine the price of production, subtract gross receipts, and the result equals your net profit or loss. Only in this case we are not talking about hypothetical widgets or doorstops, we’re talking about homes, businesses and schools and libraries.

The county contracted the economic consulting firm, Tischler and Associates, to estimate the fiscal and economic impacts of selected prototypical land uses in Sarasota County. In other words, compare how much it costs the county to produce the infrastructure (roads, schools, water, sewer, etc.), against how much money the county receives in taxes (real estate, gas, tourist, etc.) and fees (storm-water, recycling, utility, etc.).

The results are not what you might expect.

Most residential housing developments turned out to be a financial burden on the county. According to the Tischler report, a typical Sarasota subdivision, where lot sizes average 75 by 125 feet, and prices range from $150,000 to $230,000, costs the county $1.53 for every $1 of revenue it generates. OUCH! No higher math skills needed here. Surprisingly, even apartment complexes with 5.5 units per acre cost the county $2.65 for every dollar of revenue they generated.

The only residential land uses that cost the county less money for services than the revenue they generated were more expensive 5-acre ranchettes (57 cents spent for every dollar generated) and mobile home parks (75 cents spent for every dollar generated). Agriculture, commercial buildings and industrial sites also fared well in the fiscal and economic impact study, all costing significantly less money to service than the revenue they generate.

So how can these findings help us plan for a better community? First, the age-old assumption that agricultural and park lands take property off the tax rolls and would be more productive as subdivisions, is, at least in my opinion, officially hogwash. Using data from specific land uses in Sarasota, the Tischler report confirms that simply because a property produces more taxes, it does not assure that it will not be a liability to taxpayers. This may in part explain the multi-hundred-million-dollar revenue shortages needed for roads, schools and water.

A second point to consider when using this report for community planning is that it is only one of many planning tools required to make a community a quality place to live, work and play. We don’t want housing options to be limited to mobile home parks and expensive ranchettes out in the boondocks.

A significant force that affected the calculations found in this report is schools. Unlike typical residential suburban developments, commercial buildings, agriculture, industrial parks, rural residential and mobile home parks do not produce large numbers of school-age children. So, do we begin to award special benefits to those land uses that produce a positive revenue flow and penalize the less “profitable” ones? I personally do not want to live in a community that targets childless development. Education, just like ignorance, is a community expense -- only education is cheaper. We all share in the costs and benefits. Likewise, it is disturbing to imagine a community where affordable housing options are discouraged and forced into neighboring counties.

While the Tischler report raised as many questions as it answered, it was money well spent by the commissioners. The report has given us invaluable information to consider in our community planning process. However, it is somewhat unsettling now to realize how many decisions were made in the past without the benefit of this knowledge.

Thaxton update 2006

Tax base needs to be built upon a balance of various land uses

I believe that the Tischler report has influenced both nongovernmental initiatives and numerous, though not all, County Commission development decisions.

In 1999 the County Commission and the Economic Development Board hired Tischler & Associates to conduct an economic and fiscal impact analysis for 19 prototypical Sarasota County land uses. The economic analysis measured broad impacts to the general economy, and the fiscal impact analysis determined the cost and revenues from new development on the county budget.

The report concluded that most forms of residential development are likely to generate budget deficits. The findings suggested that developing residential homes from vacant land produced a net tax loss, despite an increase in gross tax revenues. Ultimately, the cost of infrastructure and services required by the new residential development exceeds the increased tax revenues generated. The report also concluded that many forms of commercial development, high-end residential development and agriculture produced a net tax benefit to the county budget.

When the report was issued in February 2000, many in the residential development industry feared the Tischler report would be misinterpreted and misused by government officials and anti-growth advocates as a means to stop growth. In response to these fears, I wrote a guest column, published in the Herald-Tribune, that suggested the report’s conclusions should not be used as a single factor to determine whether development should be approved or what kind of development should be approved. Instead, I argued, the information should be used as a tool, along with many other tools available to the community, to support an appropriate rate, form and amount of new development.

Last week two groups with completely different positions asked me: What has been done with the Tischler report? Has the county used the report’s findings to influence development decisions? Or has the report found a comfortable place on that notorious government shelf where it will forever remain dormant and unused?

I believe that the Tischler report has influenced both nongovernmental initiatives and numerous, though not all, County Commission development decisions.

While the Tischler report and many other studies have demonstrated a potential net negative fiscal impact for many forms of residential development, a decision to approve only “profitable” forms of development isn’t that simple. Unlike a for-profit corporation, government’s role often is to provide services that are not profit centers, such as indigent health care and education.

One of the main reasons that many forms of residential development don’t “pay their own way” is schools. Residential development that doesn’t generate school-age children was found to produce a net tax benefit. Conversely, most homes priced in the affordable and work-force ranges produce net tax revenue losses. Then are we to approve only childless and million-dollar homes? That is not the kind of community that I want to live in, and it certainly isn’t the standard that has made Sarasota the community that it is today.

Managing a viable community involves a great deal more than one economic measurement of profit and loss. A tax base built upon a balance of various land uses is essential to a stable economy and a livable community. This often requires using revenue from one land use to support another.

That is not to say the Tischler report has been ignored -- it has not. The report provided additional evidence that the county needs to diversify its ad valorem tax base, to reduce dependence on residential properties. The county also refocused its economic development strategies based upon this finding. Nonpolluting “export” industries with high-paying jobs have become the target for economic development policies, replacing a priority on tourism and housing development.

Additionally most elected officials now realize that growth, simply for the sake of adding properties to the tax rolls is not a sound reason to approve development. It may have been valid at one time, or under different funding scenarios, but not anymore. Today’s development should be scrutinized at a higher level that includes a comprehensive balance of benefits and responsibilities.

Sarasota County Commissioner Jon Thaxton (District 5) served on the state’s Impact Fee Task Force.