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. For part 1, click here.
In the previous post, we looked at various types of housing throughout Dallas and evaluated the property tax revenue per acre collected every year in order to analyze a neighborhood’s financial contribution to city operations. Using a well-maintained, single-family neighborhood as our standard, $30,000 collected per acre annually is our baseline to which we judge the financial performance of our land use.
As we look at the productivity of our neighborhoods, we see that the desirability of an area reflects positively in property tax return for the city. More often than not, the attractiveness of a neighborhood is related to the commercial amenities located in the vicinity of the residents. These third places, where people work and play, not only help define the community, but also contribute to the functioning of our city by paying property tax and sales tax.
We should expect higher revenue from our commercial spaces because they see more activity than our homes. From entertainment to employment, commercial spaces bring people together to spend money. As important cogs in our economy, they must also pay their share for the municipal services they require.
First, let’s take a look at the most common commercial space in our city:
These huge commercial centers were at the heart of the suburban movement of the latter half of the 20th century throughout our country. The trend seems to be that as these strip malls age, they become less productive. Since parked cars do not foster activity or pay tax, excessive parking spaces limit the number of uses and prohibit productive land use. Old Town at Lovers and Greenville breaks from the model slightly by offering more commercial spaces given the size of the parking lots, but the form is essentially a strip mall. Timbercreek Crossing is also a slightly different model, as it offers a density of big box stores separated by seas of parking lots.
Also, keep in mind how we access these places. The strip centers listed above invariably require six lane arterial roads with elevated medians, which are expensive pieces of infrastructure to build and maintain. It is rare to visit these places by any means outside of driving, since six lanes of cars is intimidating for pedestrians and cyclists alike. As such, strip centers are required either by law or by investors to provide enough parking at all times to accommodate the amount of cars at peak shopping season.
Still, neighborhoods need grocery stores, banks, restaurants, and other amenities in order to function. Our city requires people to drive significant distances to reach the commercial centers to perform daily chores. Given the services that these commercial properties require to operate, the city does not receive a favorable return, especially considering the amount of land these developments occupy, the declining value of the structures as they age, and the type of infrastructure required to access them.
In contrast, here are examples of more efficient uses of space:
These four buildings represent some of the most attractive real estate in Dallas for customers, business owners, and investors, collectively. Additionally, these smaller developments perform exceptionally well as investments for the city. Where strip centers perform slightly better than our standard of mature single-family homes, the pre-WWII form of development can quadruple the property tax yield of modern land use. Even though they have cost more over time to maintain, investing in these properties and the neighborhoods surrounding them yields a favorable return on investment for the city. These are older developments built off former streetcar lines and follow a pattern of development that is in high demand but woefully low supply.
Consider how we access these places. Because they follow the form built during the streetcar era, they are scaled in a fashion that suits the pedestrian and can serve as social centers for the surrounding community. The two- and four-lane roads that feed these places can safely accommodate multiple modes of transportation. Because the roads are smaller, the cost to maintain them are considerably lower than the six-lane arterials in more suburban environments.
Still, parking issues in traditional commercial centers persist because they were constructed in a time before the automobile was the primary mode of transportation. While Lowest Greenville Avenue and the Bishop Arts District were built in a different era to serve a smaller and more local community, they now draw from an entire region that requires cars and highways to access fun places. Traditional neighborhood destinations have become desirable regional destinations. The question is, how much parking is necessary before it adversely affects the city’s property tax yield?
The last analysis of this post compares the traditional form of urban development against the modern form of suburban development:
The mixed-tenant building and Taco Cabana sit only a few blocks from each other, but the development style, the variety of uses, and the financial productivity of these places differ entirely. Taco Cabana has more land dedicated to the automobile, with a larger parking lot and a drive-thru, that decreases the potential uses of the area and, in turn, devalues the land. In the 95 years that the mixed tenant building has existed, how many different businesses and uses has that building served? How many other uses, outside of fast food, can the Taco Cabana building serve?
As a typical American city that sprawled out during the latter half of the 20th Century, Dallas has prioritized automobile dependency at the expense of efficient land use. Moving forward, our suburban cities need balance between car-centric development and traditional smaller development. How can we redevelop our existing structures to better reflect traditional commercial centers in use and property tax yield? What prevents us from building these traditional developments?