Will big box stores financially ruin your city or town?

[somecyguy]

Except strong towns just seems to favor a particular style of development and goes out of its way to cherry pick data to support its points. Plenty of cities are and will be doing just fine with current development plans. The apocalyptic 'every town is going to fail if they dont all live in high rises and have dense commercial development' talk is a bit of a joke.

Yes and no. Like most everything, there has to be a middle ground. Again picking from my local area, Cedar Rapids, has been pushing more downtown commercial projects to point of being annoying about it. But when you step back, it makes sense why. The infrastructure is already there. Walmart wanted to build a new large superstore on the far SE corner of the city along a major road, but both the neighborhood and city council voted it down.

There was a similar thread on here talking about cul de sacs and the overhead involved with the inefficient expansion of cities. I think similar thinking needs applied when commercial developers ask to rezone new land. It has the same effect of stretching the city resources. Especially when cities toss around TIF money like m&ms.

 

[jbhtexas]

This is why I shared a link to the entire article. The point of the paragraph is abundantly clear (I believe) if you read the entire post. I suggest you read it. It is short.

This quick and dirty – the development pattern normally required for big box stores is a financial loser long term for cities….even if they are fortunate enough to have a second user come in. They still hemorrhage in the red as far as the city financial bottom-line. The development is simply not dense enough. A city isn’t getting enough property taxes per acre to make financial sense.

I read the article. The paragraph still doesn't make sense, and the article as a whole is rather shaky...lots of proclamations about what will happen in the future with little or no fact to back them up, and a lot of judgement about past development based on hindsight.

There seems to be an assumption that we can make everything "high density". Many things we need aren't going to be high density, and a great many people have indicated that they don't want to live that way, and that they prefer some things to be "low density". Are you going to force everybody into a high density model?

Is property tax the only way to raise revenue? In my city, 48% of the general tax revenue comes from property tax, and 40% comes from sales tax. In that comparison of the two city blocks in the article you quoted, how much sales tax is generated by each of the two blocks? If the low density businesses need to generate more TOTAL revenue per acre, then tweak up the sales tax on those businesses, and let the consumers decide where they want to shop.

 

[isufbcurt]

So was the city of Ames right in not wanting the new mall built 10 years or so ago?

Have you been to the current Ames Mall? That should answer your question.

Hint: it's the Southridge Mall of Ames

 

[Cyclonepride]

I read the article. The paragraph still doesn't make sense, and the article as a whole is rather shaky...lots of proclamations about what will happen in the future with little or no fact to back them up, and a lot of judgement about past development based on hindsight.

There seems to be an assumption that we can make everything "high density". Many things we need aren't going to be high density, and a great many people have indicated that they don't want to live that way, and that they prefer some things to be "low density". Are you going to force everybody into a high density model?

Is property tax the only way to raise revenue? In my city, 48% of the general tax revenue comes from property tax, and 40% comes from sales tax. In that comparison of the two city blocks in the article you quoted, how much sales tax is generated by each of the two blocks? If the low density businesses need to generate more TOTAL revenue per acre, then tweak up the sales tax on those businesses, and let the consumers decide where they want to shop.

I don't think that would be legal.

 

[jbhtexas]

I don't think that would be legal.

Dear Cyclonepride,

Cities are quite creative when it comes to passing sundry consumption taxes.

Sincerely,
Your local additional hotel room tax
Your local additional car rental tax
et al.

 

[capitalcityguy]

Except strong towns just seems to favor a particular style of development and goes out of its way to cherry pick data to support its points. Plenty of cities are and will be doing just fine with current development plans. The apocalyptic 'every town is going to fail if they dont all live in high rises and have dense commercial development' talk is a bit of a joke.

There is no cherry picking. Strong Towns analyzes this data all around the US and also Canada. Just saying it is bias, doesn’t make it so.

Who said anything about high-rises? If you took 5 minutes to actually watch the video I linked to where I mention in the comment that it references Mills Fleet Farm, you’d know it was comparing the big box store to one-story strip of buildings. Yes, one story.

Listen, there is no “dog in the fight” from a Strong Town’s perspective. That is why I stated earlier that the discussion can be agnostic and keeps out people’s special interests and biases and just talk numbers. That is why IMO this thread hasn’t degenerated like so many others tend to. We are talking numbers here. Not subjective likes/dislikes or preferences.

The ST site if full of data supporting the fragility of current development pattern vs traditional. It is not just speculation.

Feel free to provide a source to counter the many examples provided that show the difference in property tax received per acre when you develop in a more suburban style vs traditional. The numbers don’t lie. One is very much more productive. Period. The really is no disagreement there. Sure, make the argument that suburban can be still be productive enough, but I’ve never seen anyone actually able to present the calculations to support that. I would welcome that here if you have it or can source it.

 

[capitalcityguy]

You also tend to link to extremely biased sites that go in trying to prove a point and only pull cases that supports their viewpoint. Your use of 'infrastructure' including the parking lots themselves that the businesses themselves pay to maintain is also pretty misleading.

Also, while many times the parking lots are empty, usage varies. For example, many times JCTC parking lots are empty, other times finding a spot can be a challenge (notably during the holiday season). If not for that planning it would create traffic issues on all the surrounding roads, or ultimately hurt business when people do not want to mess with parking on side roads nearby.

I don’t include parking lots as infrastructure, neither did the article or any of the video’s I linked to.

Based on your last comment I responded to and now this one, it seems you haven’t even accessed anything I linked to. That is your choice of course, but doesn’t really make for a very productive conversation.

What the parking lot is hurting is that its footprint is a lost opportunity for a much denser, higher property tax paying building to be present on that location. When you burden a city with that much surface parking, it takes away from property tax generation opportunity that buildings provide over parking lots.

 

[alarson]

I don’t include parking lots as infrastructure, neither did the article or any of the video’s I linked to.

Based on your last comment I responded to and now this one, it seems you haven’t even accessed anything I linked to. That is your choice of course, but doesn’t really make for a very productive conversation.

What the parking lot is hurting is that its footprint is a lost opportunity for a much denser, higher property tax paying building to be present on that location. When you burden a city with that much surface parking, it takes away from property tax generation opportunity that buildings provide over parking lots.

You post links to this site and similar *constantly*. All with different flavors of the same cherry picked, misleading articles that do their research backwards- have a destination in mind and find ways to 'prove' it.

 

[SoapyCy]

You post links to this site and similar *constantly*. All with different flavors of the same cherry picked, misleading articles that do their research backwards- have a destination in mind and find ways to 'prove' it.

on what basis are you opposed to the message? what style of built environment do you prefer?

 

[Cyclonepride]

Dear Cyclonepride,

Cities are quite creative when it comes to passing sundry consumption taxes.

Sincerely,
Your local additional hotel room tax
Your local additional car rental tax
et al.

The above would apply equally to all hotels or all car rental places. You could not pass a consumption tax on Walmart without it applying to Eddy's shoe store.

 

[capitalcityguy]

You post links to this site and similar *constantly*. All with different flavors of the same cherry picked, misleading articles that do their research backwards- have a destination in mind and find ways to 'prove' it.

Fine, counter the argument...just once with sourced information . I'd love to see it. It would be very educational.

Or, explain how one example I've provided is somehow "cherry picked".

In the meantime, more data.

Look at this map of Polk County highlighting property tax generated per acre. Can you pick out downtown? Is that just a tad more productive or is it apples and oranges?

https://static1.squarespace.com/sta...49758a31d/1441229127344/polk.jpg?format=1500w


or check out the comparison of the Walmart in Windsor Heights to an old building on 4th St downtown:

https://static1.squarespace.com/sta...7c27b2/1441216971527/Slide44.JPG?format=1500w



How do you look at those numbers and casually brush off preferences as some type of subjective bias? Look at the numbers of one small building on a postage stamp lot vs a Walmart that ties up acres and acres of city property.

Source: http://www.arcgis.com/apps/MapJournal/index.html?appid=11cc819544c347cab87fcb8a7c9846e2

 

[SoapyCy]

i don't understand how this thread can turn into an argument about facts.

 

[EnhancedFujita]

Fine, counter the argument...just once with sourced information . I'd love to see it. It would be very educational.

Or, explain how one example I've provided is somehow "cherry picked".

In the meantime, more data.

Look at this map of Polk County highlighting property tax generated per acre. Can you pick out downtown? Is that just a tad more productive or is it apples and oranges?

https://static1.squarespace.com/sta...49758a31d/1441229127344/polk.jpg?format=1500w


or check out the comparison of the Walmart in Windsor Heights to an old building on 4th St downtown:

https://static1.squarespace.com/sta...7c27b2/1441216971527/Slide44.JPG?format=1500w



How do you look at those numbers and casually brush off preferences as some type of subjective bias? Look at the numbers of one small building on a postage stamp lot vs a Walmart that ties up acres and acres of city property.

Source: http://www.arcgis.com/apps/MapJournal/index.html?appid=11cc819544c347cab87fcb8a7c9846e2

While that data does make a good point, it is still missing some of the reality of how things develop. First off, the DSM metro is made up of like 15 different communities. Each community relies on growth of tax base (specifically commercial tax base), you can't just say Urbandale should forgo development because downtown Des Moines is higher value. So each community then needs to understand that the old big box style of development isn't sustainable, but there needs to be a viable alternative. Sure denser development does generate more tax value and require less services, but someone in the development community needs to build it. Developers are risk adverse, so they are much more likely to propose a big-box-esqe commercial development than something you'd find in the older value rich developments of pre-WWII. The City's can do all the rules and regulations they want, but if someone isn't willing to build differently then it won't matter. Luckily we have some new projects coming online in the metro that hopefully will show that a different style of development is possible and profitable.

 

[jbhtexas]

The above would apply equally to all hotels or all car rental places. You could not pass a consumption tax on Walmart without it applying to Eddy's shoe store.

The above illustrates that a precedent has already been set that consumption taxes don't have to be uniform. Presently, it is common that the tax difference is based on business type, as with the hotel and car rental taxes. Is there a law that says that business type is the only distinction on which different consumption tax rates can be based? Why can't the difference be property tax generated per acre?

The city can pass any consumption taxes they want. And they certainly might then be taken to court to prove that their tax is fair.

 

[capitalcityguy]

Here’s another example with a nod to Cyclonepride’s hometown of Indianola (unless I’m misremembering where he’s indicated in the past that he lives? ).

One small building on the town square/downtown vs your Walmart:

https://static1.squarespace.com/sta...7c291c/1441217018282/Slide62.JPG?format=1500w

Consider all that valuable land Walmart chews up and all the infrastructure that is required to support it, and then look how little per acre the city recoups in property taxes compared to the little downtown store front who’s existence costs the city very little in terms of infrastructure costs.

E. Salem : $3.2+ million per acre property tax generation
Walmart: $459, 115 per acre generation in property taxes

I mean if this was college football, the downtown Indianola building would be Texas and the Walmart would be Appalachian St.

Think about how a city has disadvantaged itself if it values and continues to favor big boxes at the risk of losing (or not building) more E Salem’s type buildings/developments? This is the real eye-opener when you start putting paper to pen and considering the productivity differences of these different types of developments.

 

[cycloneworld]

What is new to many/most, is the realization of the financial hole that big box development is putting our cities and towns into that we’ll have to wrestle with for the next few decades.

The immediate question – is your city/town still subsidizing/encouraging these things to get built?? A lot of these seem to still be going up on the edges of cities everywhere….

The question is then - what do you expect cities to do to continue to grow? Or not lose population to the nearby town that has all of these things?

Not saying big box stores are great but it CAN work. Look at West Des Moines and Jordan Creek. Look at West Glen with Target as the anchor. The area out by Bass Pro in Altoona is starting to take off. These things can work with decent planning.

If you are say Marshalltown or Indianola, what do you do? It's almost a necessity to keep up with the Jones and not lose people to the West Des Moines of the world.

 

[boone7247]

Here’s another example with a nod to Cyclonepride’s hometown of Indianola (unless I’m misremembering where he’s indicated in the past that he lives? ).

One small building on the town square/downtown vs your Walmart:

https://static1.squarespace.com/sta...7c291c/1441217018282/Slide62.JPG?format=1500w

Consider all that valuable land Walmart chews up and all the infrastructure that is required to support it, and then look how little per acre the city recoups in property taxes compared to the little downtown store front who’s existence costs the city very little in terms of infrastructure costs.

E. Salem : $3.2+ million per acre property tax generation
Walmart: $459, 115 per acre generation in property taxes

I mean if this was college football, the downtown Indianola building would be Texas and the Walmart would be Appalachian St.

Think about how a city has disadvantaged itself if it values and continues to favor big boxes at the risk of losing (or not building) more E Salem’s type buildings/developments? This is the real eye-opener when you start putting paper to pen and considering the productivity differences of these different types of developments.

I get what you are trying to say but at the same time. E. Salem doesn't generate $3.2m as it isn't a full acre. And in order to have everything under a Walmart roof you need more space that what is available at E. Salem. Now you can argue that the Walmart parking lot is to big that is fine, I tend to agree. Which location actually derives more revenue for the municipality? I would bet it is Walmart. It may take up for acres, but between property taxes and sales taxes it generates far greater revenues for the municipality than E. Salem. Now you are going to argue that E. Salem is next to East John Doe and South Jane Doe and so on and so forth. But guess what you get to much density in a town like Indianola and people aren't going to go there because they don't want to, hence why we have had urban sprawl.

What I think will happen, is developers, city planners, city councils will recognize that yes they are giving up some per acre revenue with Walmart, but at the same time we can't have all of our commercial real estate in a 8 block area downtown. So lets find better ways to doing things. Which is the point of capitalism. If we take all the regulation and tax breaks away and let capitalism work, things will work themselves out and we will have proper buildings and cities will generate the revenue they need.

I look at where I live, Mt Prospect, IL. We have all the above types of commercial buildings. Have had for quite some time, most of the cities residential units were built in the 50s/60s/70s. The city has one of the healthiest financial reports I have seen. But that is mainly because they have done smart planning at various stages of the city's life. Benefit from the fact that most of their develop-able land is developed. Cities like Indianola should not annex more land, they should require building to be built within the footprint of the current city. But that is the problem when you are city of 10 - 50k and have nothing but fields to surround you, it is easier to annex and let the big box build their than to say no. Build in our existing footprint. But I think the cities are starting to figure it out.
They will have to when the younger generations continue to want to live in city centers, and really don't want to drive to places.

 

[cycloneworld]

That is the problem. The cities NEVER recoup the cost and the properties don’t ever generate enough property taxes to cover their existence. This is the point here. The subsidies only make it worse.

That is the hard lesson we are now learning…after decades and decades of repeating this mistake.

Why haven’t we noticed it before?

We’ve backfilled the financial holes in our budgets, by building more and more on the edges of our cities…always bringing in new revenue and thus hiding the shortfalls.

How long can you run this scheme before it catches up to you?

You’d think Bernie Madoff invented this way to build cities.

It really is the Illusion of Wealth.

https://youtu.be/sD47xo3c7WU

It is okay for cities to have loss-leader areas. The key is to not have too many. There is certainly a trade off of building and encouraging developments that people actually want and tax revenue. If it was all about revenue, cities would pack in rows and rows of single family houses on 60 ft lots. But not many people would live there because there would be no amenities to use.

Cities have to balance amenities, growth, and infrastructure spending. It is not as easy as "DONT ALLOW BIG BOX STORES".

 

[scyclonekid]

Another potential thread derail, but when I read this I immediately thought of the whole cable/satellite business model. Cities - instead of incentivizing existing businesses to remain successful, they incentivize new ones which drive the old ones away.

Much like the cable/satellite business model: Instead of working to keep customers by reducing costs for long term customers they incentivize NEW customers with low cost short term come-on rates that, when they expire, sends their 'customers' running to the next cheapo offer from the competitors. I think it's stupid.[/QUOTE yep.

 

[cycloneworld]

new always works. at one time southridge was the nice mall. times change and businesses have no loyalty to neighborhoods. that's why planners and groups like ST advocate for sustainable growth. again, i think the main point is smaller lots can be more easily redeveloped than huge big box stores.

While I agree with you about sustainable growth, Southridge Mall was built in 1975. It had a GREAT run and caused that area of the south side to really revitalize. Under no circumstances would I consider it a failure because 40 years later it is struggling.