Should Dallas Look at Land in Taxable Value Per Acre? Asheville Planner Wants City to Shift Perspective on Density
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Experts weighed in recently on introducing higher-density development in single-family neighborhoods and talked about how the city can be more effective in planning for the future as the ForwardDallas comprehensive land use plan inches closer to a July adoption date.
MetroTex Association of Realtors requested a presentation on the “Economics of Land Use” from Joe Minicozzi, principal of Urban3 and a founding member of the Asheville, N.C., Design Center. The MetroTex “research project” also incorporated information from the Texas Real Estate Research Center at Texas A&M University and proprietary MLS data, said Ashley Gentry, chairman of the MetroTex board of directors.
Since the work was already done, District 1 Councilman Chad West asked that it be presented at the Jan. 23 meeting of the City Council’s Government Performance and Financial Management Committee.
“I’m looking for how it could be relevant to decisions that we make with our own city property and in our land use evaluations with ForwardDallas,” said West, who chairs the GPFM.
The councilman explained that Dallas reviews fire access, building height, setback encroachments, traffic impacts, and environmental concerns when evaluating land use for new development, but they don’t spend a lot of time on financial impacts.
‘What’s The Headline?’
District 9 Councilwoman Paula Blackmon asked for a key takeaway from the presentation.
“What’s the headline?” she said. “What are the quick wins? What is our North Star? What should be guiding us?”
The purpose of the presentation, Minicozzi said, was to share the data with the Dallas Planning Department and “use it as a tool to find areas of sunken development or an area where you see there’s a spine of development … It will help you to see where the underproduction is happening.”
“I would start to think about your investment, your roads,” he said. “It’s like a two-drink minimum. Are you at least getting the revenue back in taxation for your investment of infrastructure to that parcel? If you’re not, that’s a subsidy, but you should be choosing to go toward affordable housing needs. If you want to choose to subsidize artists, it’s your choice; it’s your community. But don’t leak your money out in development patterns where a developer may be exploiting your infrastructure by underbuilding.”
Cities need to be honest about where the money is leaking, Minicozzi added.
“How many traffic lights does that strip mall need and what’s it costing?” he said. “Think through the leakage. Be aware that you have to pick up the cost of the road. The roads are the killers. Inside your budget, you typically don’t look at the replacement cost of your road, you just bond out and get more money. In any business, I’m going to have a reserve account for my air conditioners. I know my air conditioners are going to last 20 years, so I have to squirrel away some revenue because 20 years from now I need to buy more air conditioners. Think of your roads the same way.”
Single-Family Housing And Density
Countywide, single-family residential is valued at about $1 million per acre. Duplexes range from $400,000 an acre to $22 million.
“That’s ridiculously productive,” Minicozzi said.
The city can grow its wealth by “thickening up,” he explained. Townhomes can add $4 million per acre in value.
“These are again great lessons as you start to find ways to fill in vacant land,” he said. “This is a way to harvest wealth and harvest your productivity — a lot less street frontage here than in single-family detached.”
But people want single-family housing, said District 12 Councilwoman Cara Mendelsohn.
“If that’s not offered as part of a protected neighborhood … they’re going to choose [other cities],” she said. “We should have the full array, both of housing and retail, even density. It’s pretty dense up in District 12.”
She questioned whether higher density and reduction in minimum lot size would drive residents out of neighborhoods or even out of Dallas.
There’s a desire and a demand, but “it is location-specific as to what the city is going to embrace and support,” Gentry said, explaining that a citywide reduction in lot size probably won’t work.
“It’s not a one-size-fits-all, unfortunately,” Gentry said. “We know [from] anybody who’s looked at renting or purchasing real estate, different factors are going into play.”
West said there is a place for single-family neighborhoods and a place for density.
“This financial piece should be a part of that discussion at all times,” he said.
Interim Director of Planning and Urban Design Andrea Gilles said some of that work is being done through ForwardDallas.
“If we recommend certain development patterns in X area, what kind of impact does that have versus a different type of development pattern, and part of that impact being a financial and fiscal impact?” Gilles said. “We can have a more honest and transparent conversation of all of the considerations that go into different development patterns. I think what we could do more of is bring to the forefront some of those financial considerations more often than not.”
Partnering With Dallas County
Minicozzi talked about his efforts working with a real estate developer in Asheville, N.C., to revitalize the downtown, taking the area from $300,000 of taxable value to $11 million.
If city officials look only at gross real estate value, they’re missing efficiency and productivity, he said.
“The simple language we encourage to look at real estate is on a per-acre basis,” he said. “We understand the efficiency of a gallon of gas. We should understand the efficiency of an acre of land.”
For every dollar of taxes, someone is paying to the county in taxes on a single-family home, someone else in a prime city is paying five times that amount to the same county in county taxes, he said.
Dallas is a shareholder partner inside the corporation of Dallas County, taking up about 34 percent of the county’s area. Minicozzi encouraged city leaders to make sure the county is a key contributor to city investments.
“What’s good for the downtown is good for the city but it’s unbelievable for county production,” he said. “What does the county put back into the downtown? Do they build a dog park or a sidewalk? Think about that, as you’re all in it together and you all reap the rewards together,” Minicozzi said.
