Productive Land Use: Making the Most of Residential Properties, Neighborhood by Neighborhood
Share News:
The city of Dallas is operating at a razor-thin margin, and cannot afford to waste its opportunities. Infrastructure alone will cost $900 million dollars to just bring our streets up to a satisfactory level. Meanwhile, the city is still responsible for public safety, code compliance, parks and recreation, among many other services that require money to operate. In order to address this deficit, we often talk about raising taxes or cutting services, but what we don’t often consider more efficient and productive land use.
According to the 2016 City Budget, property tax currently contributes to almost 50 percent of revenue to the general fund. In the same document, about 8 percent of the general fund ($90 million) has been allocated to the streets department, and about half of that is dedicated to maintenance and repair. If the city continues to operate this way, it will take 20 years to repair our streets to a satisfactory level according to 2015 standards and finances. At the same time, police response times are embarrassingly abysmal as streets continue to deteriorate.
The Productive Land Use Series will focus on annual property tax revenue at the neighborhood level. Since land is the city’s primary resource, this series will delve into how we are using our land and if we can use it more efficiently. The base unit of measurement will be the acre in order to measure the productivity of a community. Using publicly available data, we will take a look at specific structures in different neighborhoods and various developments in Dallas through the lens of Google Earth and the Dallas County Appraisal District. More data is available, but for this post, I’ve chosen to take a look at the acreage, the estimated taxes paid (via dcad.org), city taxes collected per acre, total taxes collected per acre, and the age of the building.
In this series, we will take a hard look at empirical data behind our City’s finances. For this study, I will suspend politics and culture in an effort to present data in its rawest form. Admittedly, analyzing the numbers is the equivalent of eating your vegetables in a meat-heavy diet. Still, in order to strategize for the long term prosperity of Dallas, we have to understand how a city builds wealth.
To start, let’s take a look at typical single family dwellings.
While this analysis shows different houses of varying age, size, and neighborhoods, the total taxes yielded per acre lie within the same range. This means that a stable, well-maintained, single-family neighborhood will perform at about $30,000 per acre annually. This estimated figure will serve as the standard for this observation.
Next, what if the single family neighborhood is not so productive?
Total taxes paid and total taxes per acre are considerably lower in under-performing neighborhoods, yielding a fraction of the taxes from the areas above. These houses in this set are located at roughly the same distances from downtown Dallas, built in the same era of the 20th century, and reflect a very similar architecture.
Next, I’d like to show you the next incremental level of density: the duplex.
What we see is that the financial performance of the duplex is tied to the desirability of the area surrounding it. Density in an attractive area may double the value of the property, whereas density may have little effect in an area that is not desirable. In other words, density for the sake of density is not necessarily a strategy that yields the city a high return on investment. On the other hand, strategic planning and architectural design can make even the smallest plot of land very valuable to the city.
And what about large multifamily developments of at least 300 units?
Here we see the same trend with large multifamily. The more desirable the area, the stronger case for density. The developments in Deep Ellum and Mockingbird Station are adjacent to DART Rail lines and entertainment, which make them financially productive, desirable residences. The data shows us that sprawling apartment complexes may be an efficient way to house hundreds of people, but they aren’t necessarily the most efficient use of space, especially as they age.
In the next post, we will take a look at the financial productivity of commercial spaces that influence the residential areas surrounding them. The businesses located in an area can help to differentiate a neighborhood and influence its desirability. How do commercial strip centers affect a neighborhood? How well do the oldest developments in our city perform financially?
7 Comments
Leave a Comment
Brandon, come to Garland. PLEASE! We need a objective study like this, especially focusing on the area of S. Garland as we rally to demand smart, sustainable redevelopment.
As a matter of fact, I’ve given this presentation to Mayor Athas of Garland, who has in turn used some of my data for his own presentation. We have done some consulting work for Downtown Garland, but this analysis needs to be done everywhere. Garland has some pretty smart staff, but if residents and elected officials get on the same page, it’s possible to see good things happen!
Brandon, working with the Mayor regarding downtown Garland is one aspect but I wouldn’t rely on it as the sole activity for the city. There are some citizen groups, such as Friends of South Garland, who would love to take a closer look at data pertaining to not only the city as a whole but their area in particular. Understanding the micro as well as the macro could be helpful to the organized efforts of citizens working with business leaders and their city representatives to drive change.
Perhaps it was not so brilliant to spend $30 million on a golf course that only 1/10 of 1% of Dallasites will ever use.
Ditto on the half billion plus that has gone into the Trinity River in a myriad of unco-ordinated signature projects which has left us without a river presence.
Or the $28 milllion that went into the black hole on the Lake Highlands Town Center, where the current highest and best use might be to stack bales of hay.
Or, the real root cause of our atrocious streets. When John Ware was Dallas City Manager, he was talked into
creating a new sports stadium with the luxury suites that a hallmark of a profitable sports team ( the ReUnion Arena was great except that as it did not have the luxury suites, cash flow was constrained, thus the teams market value.
So all city resources went into building the American Airlines Center.
Anyhow, John Ware put every single core function of the City of Dallas on the bare minimum to get by, especially the absolutely essential street maintenance, which has now cascaded up to the point where it would have taken $900 million to bring them up to standards set by the City, and that was PRIOR to the destructive spring monsoons that we had that washed out many street and bridge infrastructure.
Anyhow, Tom Hicks was able to sell his hockey team at a very nice profit. John Ware took his pension from the City of Dallas and became president of a Tom Hicks company.
And you are left with streets that are what one would expect in a Third World country. Think about that when you are in the shop having the suspension on your car replaced yet again.
I found this article very interesting but what I would like to see is an analysis of the lost tax revenues from all of the tax exempt faith based institutions that use our same city services, roads, parks, police, fire and of course streets! Take for example the proud downtown billion dollar project that First Baptist Church constructed and the intensity of its compound and demand and use of our city assets while paying NO property taxes. If this was anyone else’s business center, I figure they would be contributing well over $25,000,000 dollars per year between all of the property taxing entities if they valued the campus at over a billion dollars.
Herschel, we are glad you are back safely from Mexico! This is an interesting observation we would like to dig into deeper!
Your analysis about duplexes and multifamily is way off. You can see based on your own numbers that duplexes even in relatively undesirable areas are comparable to good single family, and that good multifamily dominates single family. it’s even more apparent in apartments. Lousy north Dallas garden apartments dominate single family on an acre by acre basis.
”
The data shows us that sprawling apartment complexes may be an efficient way to house hundreds of people, but they aren’t necessarily the most efficient use of space, especially as they age.
”
How does $59,000 or even $45,000 per acre even start to compare unfavorably with $30k? Really all you are showing is that Dallas has too much single family.